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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-6862
DONALDSON, LUFKIN & JENRETTE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 13-1898818
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
277 Park Avenue, New York, New York 10172
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (212) 892-3000
Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Title of Each Class Name of Each Exchange on Which Registered
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<S> <C>
Common Stock, par value $0.10 per share New York Stock Exchange
Series A Fixed/Adjustable Rate Cumulative
Preferred Stock, $50 liquidation
preference per share New York Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period than the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [X].
Cover Page 1 of 2
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As of March 21, 1997, the latest practicable date, there were 54,504,664 shares
of Common Stock, $0.10 par value, outstanding.
At March 21, 1997 the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $461.9 million. For purposes
of this information, the outstanding shares of Common Stock owned by directors
and executive officers of the registrant were deemed to be shares of Common
Stock held by affiliates.
DOCUMENTS INCORPORATED BY REFERENCE:
The information required to be furnished pursuant to Part III of this Form 10-K
is set forth in, and incorporated by reference from, the registrant's
definitive proxy statement for the annual meeting of stockholders to be held
April 16, 1997, which definitive proxy statement (the "Proxy Statement") was
filed by the registrant with the Securities and Exchange Commission on March
11, 1997 not later than 120 days after the year ended December 31, 1996.
Cover Page 2 of 2
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PART I
ITEM 1. BUSINESS
Donaldson, Lufkin & Jenrette, Inc. (the "Company") is a leading
integrated investment and merchant bank that serves institutional, corporate,
governmental and individual clients both domestically and internationally. The
Company is a holding company which conducts its business through various
subsidiaries including its principal broker-dealer subsidiary, Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC"). The business of the Company
includes securities underwriting; sales and trading; merchant banking;
financial advisory services; investment research; correspondent brokerage
services; and asset management.
Founded in 1959, the Company initially focused on providing in-depth
investment research to institutional investors. In 1970, the Company became the
first member firm of the New York Stock Exchange ("NYSE") to be owned publicly.
Fifteen years later, the Company was purchased by The Equitable Life Assurance
Society of the United States ("Equitable Life"). Prior to October 1995 the
Company was an independently operated indirect wholly owned subsidiary of The
Equitable Companies Incorporated ("Equitable"). After the completion of an
initial public offering in October 1995, Equitable's ownership in the Company
was reduced from 100% to 80.2%. At December 31, 1996, following a sale by
Equitable to AXA of 85,000 shares of DLJ stock, the Equitable owned 79.9% of
DLJ's issued and outstanding common stock. Equitable is a diversified financial
services organization and one of the world's largest investment management
organizations. AXA, a French holding company for an international group of
insurance and related financial services companies, is Equitable's largest
stockholder, beneficially owning, at December 31, 1996, $392.2 million of
Equitable's Series E convertible preferred stock and approximately 60.8% of
Equitable's outstanding common stock (without giving effect to the conversion
of the Series E convertible preferred stock beneficially owned by AXA).
The Company's business activities are highly integrated and constitute
a single industry segment. The assets and revenues related to the Company's
foreign operations are not significant, however the Company has begun expanding
its activities abroad.
The Company conducts its business through three principal operating
groups: the Banking Group, which includes the Company's Investment Banking,
Merchant Banking and Emerging Markets Groups; the Capital Markets Group,
consisting of the Company's Fixed Income, Institutional Equities and Equity
Derivatives Divisions, Autranet, a distributor of investment research products,
as well as Sprout, its venture capital affiliate; and the Financial Services
Group, comprised of the Pershing Division, the Investment Services Group and
the Asset Management Group.
Banking Group. The Company's Banking Group is a major participant in
the raising of capital and the providing of financial advice to companies
throughout the U.S. and has significantly expanded its activities abroad.
Through its Investment Banking Group, the Company manages and underwrites
public offerings of securities, arranges private placements and provides
advisory and other services in connection with mergers, acquisitions,
restructurings and other financial transactions. Its Merchant Banking Group
pursues direct investments in a variety of areas through a number of investment
vehicles funded with capital provided primarily by institutional investors, the
Company and its employees. The Emerging Markets Group specializes in client
advisory services for mergers, acquisitions and financial restructurings, as
well as merchant banking and the underwriting, placement and trading of equity,
debt and derivative securities in Latin America, Asia and Eastern Europe.
Capital Markets Group. The Capital Markets Group encompasses a broad
range of activities including trading, research, origination and distribution
of equity and fixed-income securities, private equity investments and venture
capital. Its Fixed Income Division provides institutional clients with
research, trading and sales services for a broad range of fixed-income
products, including high-yield corporate, investment-grade corporate, U.S.
government and mortgage-backed securities. The Institutional Equities Division
provides institutional clients with research, trading and sales services in
U.S. listed and over-the counter ("OTC") equity securities. In addition, the
Company's Equity Derivatives Division provides a broad range of equity and
index option products. Autranet is the oldest and most successful distributor
of research and investment material. Sprout is one of the oldest and largest
groups in the private equity investment and venture capital industry.
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Financial Services Group. The Financial Services Group provides a
broad array of services to individual investors and the financial
intermediaries which represent them. Pershing is a leading provider of
correspondent brokerage services, clearing transactions for over 550 U.S.
brokerage firms which collectively maintain over 1.4 million client accounts.
The Company's Investment Services Group provides high-net-worth individuals and
medium to smaller sized institutions with access to the Company's equity and
fixed-income research, trading services and underwriting. Through its Asset
Management Group the Company provides cash management, investment advisory and
trust services primarily to high-net-worth individual and institutional
investors.
The following table illustrates the Company's revenue breakdown by its
principal operating groups, net of all interest. Net revenues, however, are not
necessarily indicative of the profitability of each group.
NET REVENUES BY OPERATING GROUP:
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YEARS ENDED DECEMBER 31,
1992 1993 1994 1995 1996
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(in millions)
Banking Group............. $ 428.4 $ 491.8 $ 390.0 $ 689.2 $ 935.8
Capital Markets Group..... 713.0 994.6 638.1 780.0 1,015.2
Financial Services Group.. 336.9 455.3 458.2 619.5 827.6
Other..................... (26.5) (38.1) 18.6 (10.7) (21.1)
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Total net revenues........ $1,451.8 $1,903.6 $1,504.9 $2,078.0 $2,757.5
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The Company currently conducts its operations through 17 offices in 14
locations in the U.S., including Atlanta, Austin, Boston, Chicago, Dallas,
Houston, Jersey City, Los Angeles, Menlo Park, Miami, New York, Oak Brook,
Philadelphia and San Francisco. The Company also has 11 international offices
located in 10 cities, including Bangalore, Buenos Aires, Geneva, Hong Kong,
London, Lugano, Mexico City, Paris, Sao Paulo and Tokyo and conducts business
through a joint venture in South Africa.
BANKING GROUP
The Company's Banking Group is a major participant in the raising of
capital, the investing of capital and the providing of financial advice to
companies throughout the U.S. and has significantly expanded its activities
abroad, through its Investment Banking Group, Merchant Banking Group and
Emerging Markets Group. The Banking Group's approximately 600 professionals
operate from nine of the Company's domestic offices and six of its
international offices.
INVESTMENT BANKING
The Company's Investment Banking Group provides a full range of
capital raising and financial advisory services to its clients. The Investment
Banking Group underwrites public offerings of securities and arranges private
placements and has a particular focus on capital raising transactions in the
public equity and high-yield debt markets.
The Company's investment banking strategy is to concentrate a major
portion of its business development efforts within those industries in which
the Company has established a leadership position in providing investment
banking services. Industry specialty groups include chemicals, energy,
entertainment, environmental, financial services, forest products, gaming,
health care, industrial, insurance, media/communications, oil and gas, real
estate finance, retailing, satellite, technology and utilities. These groups
are responsible for initiating, developing and maintaining client relationships
and for executing transactions involving these clients. The Investment Banking
Group has focused primarily on those industries in which the Company also has a
strong research capability.
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In addition to being structured according to distinct industry groups,
the Company has a number of professionals who specialize in specific types of
transactions. These include mergers and acquisitions ("M&A"), equity offerings,
high-yield securities and other transaction specialties.
Mergers and Acquisitions. The Company is active in arranging various
M&A transactions for its clients. The Company participates in a broad range of
domestic and international assignments including acquisitions, divestitures,
strategic restructurings, proxy contests, leveraged buyouts and defenses
against unsolicited takeovers.
Equity Offerings. The equity capital markets group focuses on
providing financing for issuers of equity and convertible equity securities in
the public markets. The group assists in the origination, and is responsible
for the structuring and execution of transactions for a broad range of Banking
Group clients.
High-Yield Securities. The high-yield securities group focuses on
providing financing in the public and private capital markets. The group is
responsible for originating, structuring and executing high-yield transactions
across a wide range of companies and industries, as well as managing client
relationships with both high-yield corporate issuers and financial sponsors of
leveraged transactions. In 1996, for the fourth consecutive year, DLJ was the
number one ranked underwriter of high-yield bonds.
Other Transaction Specialties. The Company is also active in a variety
of other transaction specialties which provide capital raising and advisory
services for its clients. The private capital placements group raises capital
within the private debt and equity markets. Formed in 1994, the Company's
private fund group raises private limited partnership capital, primarily from
institutional investors, for direct investment by domestic and international
investment firms and for certain of the Company's merchant banking activities.
The private fund group raised over $7.0 billion in private capital in 1996. The
project finance group raises non-recourse financing for a diverse client base
of publicly and privately held companies for specific projects. Additionally,
the Company's restructuring group provides advisory services to financially
distressed companies. The counter-cyclical nature of the restructuring
business acts as a balance to other investment banking activities. The Company
also participates in the structured finance industry through its asset-backed
transactions group, and specializes in securitizing cash flow generating assets
through public or private offerings of debt or pass-through certificates.
In January 1997, the Company reached an agreement to acquire (the
"Acquisition") a London based financial advisory firm, Phoenix Group Limited
(Phoenix). Phoenix is an international financial advisory and investment
management business with offices in London and Hong Kong. It has two principal
operations, a corporate finance and advisory business and a private equity fund
management business investing in unquoted securities. It also makes investments
as principal. As a portion of the total consideration paid in connection with
the Acquisition, the Company issued on March 26, 1997, $28,779,000 aggregate
principal amount of 5% Junior Subordinated Convertible Debentures due 2004 (the
"Convertible Debentures") to the current shareholders of Phoenix, pursuant to
Regulation S under the Securities Act of 1933, as amended. The Convertible
Debentures are convertible into Common Stock of the Company beginning 40 days
after issuance at a conversion price of $42.00 per share. The Acquisition
does not have a material effect on the Company's results of operations.
MERCHANT BANKING
The Company entered the merchant banking investment business in 1985
and believes that it has one of the most consistently successful records in
this area over the past 10 years. Through the Merchant Banking Group, the
Company has grown to become a major participant in the asset management
business by pursuing direct investments in a variety of industries and managing
capital provided primarily by pension funds, endowments, charitable
organizations, high-net-worth individuals, the Company and its employees. The
Merchant Banking Group is closely integrated with other parts of the Company
drawing upon all of its resources including debt and equity research and
high-yield financing as well as the industry specialty groups within the
Investment Banking Group.
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The Merchant Banking Group manages seven distinct capital funds with
total committed capital of approximately $8.0 billion. These funds include DLJ
Merchant Banking Partners, L.P. and affiliated entities ("DLJMBP"), which
focuses primarily on equity investments in leveraged transactions, the DLJ
Bridge Fund (as described below), a leader in domestic bridge financing, DLJ
Investment Partners, L.P., which focuses on opportunities in lower risk
investments in debt or equity mezzanine securities and corporate joint
ventures, DLJ Real Estate Capital Partners, L.P., which makes investments in
public and private debt and equity in the real estate markets and DLJ Global
Retail Partners, L.P., which pursues investment opportunities in early stage
retailers. During 1996, the Group closed DLJ Merchant Banking Partners II,
L.P., a $3.0 billion fund that will begin making private equity investments in
1997 and the $900 million DLJ Senior Debt Fund. Through the Senior Debt Fund,
the Company arranges and syndicates financing primarily to non-investment
grade borrowers. Such financings involve significant risks based upon the
underlying credit of the borrower and overall market conditions. The Company
is also considering expanding its fund management in the future to include
additional areas of investment. Future funds may include an emerging markets
merchant banking fund, which will target investment opportunities across a
variety of industries in Latin America and Asia; and industry-specific funds
in sectors where the Company possesses industry expertise or has a history of
successful client relationships.
Leveraged Equity Investing. In 1992, the Company established DLJMBP, a
dedicated $1 billion fund which includes commitments of up to $300 million by
the Company and its employees. Employee participation ranges from approximately
30% to 40% of the Company's and its affiliates' overall investment in each
transaction. Since it was established, the fund has invested $865 million in 31
companies with an aggregate transaction value of $7.4 billion. Prior to 1992,
the Company raised funds on a transaction by transaction basis. DLJMBP makes
investments in equity and mezzanine securities arising from leveraged
acquisitions, leveraged recapitalizations, restructurings of over-leveraged
companies and other similar types of transactions which generally involve
significant financial leverage. DLJ Merchant Banking, Inc., a wholly owned
subsidiary of the Company, is the General Partner of DLJMBP.
DLJ Bridge Fund. One of the Company's strengths has been its bridge
lending business. Established in 1987, DLJ Bridge Finance, Inc., a wholly owned
subsidiary of the Company, manages a $1.28 billion bridge facility (the "DLJ
Bridge Fund") that provides short-term loans in connection with merchant
banking transactions for the Company's clients and the Company's own merchant
banking activities. The DLJ Bridge Fund includes a $750 million commitment of
subordinated debt from Equitable and a $500 million commitment of senior
revolving debt by a commercial bank syndicate. Commitments by Equitable and the
commercial bank syndicate are subject to approval by each of Equitable and the
commercial bank syndicate, as the case may be, on a transaction by transaction
basis. Such commitments will expire December 31, 1997. Equitable's commitment
is also subject to annual review and approval by the State of New York
Insurance Department. In addition, the Company has committed to invest up to
$31.3 million through an equity commitment of 2-1/2% of the DLJ Bridge Fund.
Since the Company began making bridge commitments in 1985, over $15.5 billion
of bridge loans have been committed to facilitate 109 transactions.
Approximately $5.9 billion of such commitments have been funded. At December
31, 1996, the DLJ Bridge Fund had a $189 million bridge loan outstanding.
The Company has agreed to pay Equitable the first $25 million of
aggregate principal losses incurred by Equitable with respect to all bridge
loans outstanding on September 30, 1995 and the first $25 million of aggregate
principal losses incurred by Equitable with respect to bridge loans made after
September 30, 1995. To the extent such payments by the Company do not fully
cover any such losses incurred by Equitable, Equitable is entitled to receive
all other distributions otherwise payable to the Company with respect to DLJ
Bridge Fund activities until such losses have been recovered. The Company has
also agreed to pay Equitable the amount, if any, by which any principal loss on
an individual loan exceeds $150 million. In addition, Equitable is entitled to
one-third of any equity securities obtained in connection with any bridge loan.
Pursuant to arrangements between the Company and the commercial bank syndicate,
the Company is at risk for a significant portion of any bank loans funded by
such banks. However, substantially all of the bridge loans have been made
without using the bank commitment.
Bridge lending involves significant risk based upon both the
underlying credit of the borrower and market conditions governing refinancing
of the loan. The DLJ Bridge Fund has outstanding a bridge loan made prior to
September 30, 1995 aggregating $189 million (including interest) to a borrower
which is experiencing financial difficulties. The Company has reserved for any
expected
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loss to it from such bridge loan. If the amount of the loss from such bridge
loan is in excess of $25 million, distributions to the Company with respect to
DLJ Bridge Fund activities would be eliminated until such loss has been
recovered. In October 1996, a planned acquisition of such company was
announced, which if completed, would result in the realization by the Company
of amounts previously reserved, plus interest. The transaction is expected to
close in the second quarter of 1997. The Company does not believe that the loss
of future income from DLJ Bridge Fund activities would have a material adverse
impact on its results of operations or financial condition.
DLJ Investment Partners. DLJ Investment Partners, L.P. commenced
operation in December 1995 to pursue investments primarily in debt or equity
mezzanine securities and corporate joint ventures. The fund has committed
capital of $250 million of which $50 million will be provided by the Company
and its employees.
DLJ Real Estate Capital Partners. DLJ Real Estate Capital Partners,
L.P., focuses on debt and equity investments in a broad range of real estate
and real estate-related assets. The fund has committed capital of approximately
$650 million from its general and limited partners, including $100 million from
the Company and its employees.
Global Retail Partners. Global Retail Partners, which commenced
operation in February 1996, pursues investment opportunities in early stage
retailers. The fund has committed capital of approximately $150 million.
EMERGING MARKETS
The Emerging Markets Group is a growing participant in the financial
services industry in certain developing economies in Latin America, Asia,
Eastern Europe and South Africa. The group combines specialized market and
geographic knowledge and experience with the traditional strengths and skills
of the Company. The group employs approximately 100 professionals who are
responsible for originating and executing transactions in their respective
areas of expertise, maintaining client relationships and building the Company's
presence in targeted markets where the Company believes it can be a leading
financial services provider or investor.
In Latin America, the group has four principal lines of business:
investment banking, which focuses on international capital raising and
financial advisory services; merchant banking, which utilizes the Company's
expertise in this area to target growth companies and other specific investment
opportunities; sales and trading, which is involved primarily in principal
trading of Latin American debt securities, with an emphasis on Brady Bonds,
local debt instruments and Latin American equity securities; and Latin American
derivatives, in particular, the structuring, placement and trading of products,
which are based on Latin American securities, currencies and indices.
In Europe the group is also involved in sales and trading of Eastern
European debt securities with emphasis on local debt instruments in Russia and
derivatives, in particular, the structuring, placement and trading of products
based on Russian loans.
The group is also active in the Asia-Pacific region and offers
investment banking services through the Company's Hong Kong office which is
dedicated to building the Company's capital raising, financial advisory and
merchant banking presence in this region.
In addition, the Company has invested approximately $7 million in
Pleiade Investments, a South African merchant bank affiliated with New Africa
Investment Ltd. The Company believes that this alliance will enhance its
ability to develop investment banking relationships in the region.
CAPITAL MARKETS GROUP
The Capital Markets Group encompasses a broad range of activities
including trading, research, origination and distribution of equity and
fixed-income securities, private equity investments and venture capital through
its Fixed Income Division, Institutional Equities Division,
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Autranet, Equity Derivatives Division and Sprout. The Company's focus is
primarily client-driven, in contrast to that of many other securities firms
which emphasize proprietary trading. The Capital Markets Group has
approximately 1,500 professionals.
FIXED INCOME
The Fixed Income Division with its 600 professionals provides
institutional clients with research, trading and sales services for a broad
range of fixed-income products, and distributes fixed-income securities in
connection with offerings underwritten by the Company. Its principal areas of
activity are in high-yield corporate, investment-grade corporate, U.S.
government and mortgage-backed securities. The Fixed Income Division's research
professionals include credit analysis teams knowledgeable in high-yield
corporate, investment-grade corporate and mortgage-backed securities as well as
quantitative and economic research.
High-Yield Securities. The High-Yield Securities department provides
institutional clients with research, trading and sales services and distributes
non-investment-grade securities in connection with offerings underwritten by
the Company.
Investment-Grade Corporate Bonds. The Company has been a major
participant in the secondary trading and distribution of investment-grade
corporate debt instruments and has consistently ranked as one of the top
providers of credit research on those securities. While its emphasis has
traditionally been on trading and distributing secondary issues, the Corporate
Bond department has played an increasing role in the distribution of primary
issues.
Government Bonds. The Company is a primary dealer in U.S. government
securities designated by the Federal Reserve Bank of New York. The Government
Bond department's activities include making secondary markets in, and
participating in the underwriting of U.S. Treasury bills, notes and bonds, and
securities of Federal agencies. The Company is a member of every major agency
underwriting group, including Federal National Mortgage Association ("Fannie
Mae"), Federal Farm Credit, Federal Home Loan Bank and Student Loan Mortgage
Association ("Sallie Mae"). The Company also engages in the "stripping" of
government and government-guaranteed bonds to create zero-coupon securities. It
also trades treasury futures and options and develops hedging programs for its
clients. The Government Bond department also maintains a money desk which
provides financing for its daily trading inventory positions, and to a lesser
extent those of other fixed-income departments through the use of repurchase
agreements and also acts as an intermediary between borrowers and lenders of
short-term funds utilizing repurchase and reverse repurchase agreements. The
department's economic research group provides analyses and forecasts of
macroeconomic and government policy trends, together with advice on
interest-rate fluctuations, for the benefit of institutional clients and the
Company's trading operations.
Mortgage Securities. The Company trades and makes markets in
Government National Mortgage Association securities, Federal Home Loan Mortgage
Corporation participation certificates, Fannie Mae obligations, non-agency
mortgage-backed securities, and various asset-backed securities. The Mortgage
Securities department also issues, trades and makes markets in Collateralized
Mortgage Obligations ("CMOs"), which are debt obligations secured by the cash
flow from a pool of mortgages or mortgage securities, as well as in other
mortgage-related derivative products. In addition, the Company's wholly owned
subsidiary, DLJ Mortgage Capital, Inc. ("DLJMC"), purchases fixed-rate and
adjustable-rate residential, multifamily and commercial whole loans to
securitize into rated or non-rated mortgage pass-through securities both as a
principal and as an agent.
INSTITUTIONAL EQUITIES
The Institutional Equities Division provides institutional clients
with research, trading and sales services in U.S. listed and OTC equities, and
distributes equity securities in connection with offerings underwritten by the
Banking Group.
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Domestic Institutional Sales and Listed Equity Trading. The Company's
equity trading operations and sales coverage of major U.S. institutions are
conducted by over 70 traders and institutional equity salespeople from nine of
the Company's domestic offices. Smaller U.S. institutions are covered by
account executives in the regional offices of the Investment Services Group,
which is part of the Company's Financial Services Group.
In listed equity securities, the Company acts as both an agent and
principal in executing trades in the secondary market. Much of the Company's
institutional business consists of large block trades of 10,000 or more shares.
In such transactions, the Company frequently provides its clients with
liquidity by taking a long or short position as a principal to facilitate the
client's purchase or sale of stock in the event that a counterparty buyer or
seller is not immediately available.
International Sales. The Company's international equity sales
organization consists of approximately 45 salespeople operating from five of
the Company's international offices and one domestic office.
OTC Trading. The Company makes markets in approximately 400 securities
traded on the National Association of Securities Dealers ("NASD") Automated
Quotation System ("Nasdaq"). The Company conducts these activities as a dealer,
buying and selling the securities as a principal. The Company's market-making
is concentrated in stocks that are followed by the equity research department
or underwritten by the Company. The Company's market-making strengths are in
the communications, consumer, entertainment, financial services, health care
and technology sectors.
Equity Research. The Company's equity research department consists of
approximately 110 professional investment research analysts and associates who
are engaged in the analysis of economic trends and a broad range of industries
and companies. The department produces publications, studies and forecasts on
economic conditions, financial markets, portfolio strategy, quantitative
analysis, industry developments and individual companies.
The Company's equity research analysts are also utilized as important
resources in obtaining investment banking business and assessing merchant
banking transactions, as well as developing and maintaining banking
relationships with clients through continued involvement after the execution of
specific transactions.
AUTRANET
Autranet Inc., a registered broker-dealer and member firm of the NYSE
is active in the distribution of investment research products purchased from
approximately 430 sources known as "independent originators." Independent
originators are research specialists, not primarily employed by securities
firms, and range in size and scope from large economic consulting firms to
individual freelance analysts. Autranet generates its revenues from a client
base of over 400 domestic and international institutions.
EQUITY DERIVATIVES
The Equity Derivatives Division provides institutional clients with
research, trading and sales services in a broad range of equity options
products and in convertible securities.
Equity Options. The Company's activities in equity derivative products
have focused primarily on product innovations in the design and origination of
custom-tailored OTC options to meet the specific needs of customers rather than
on the assumption of trading risk or an emphasis on execution volume. The
Company now offers options based on U.S. equities and equity indices; 15
foreign currencies; equities from 12 European and Asian countries; commodities
and precious metals; and over 30 various fixed-income instruments in both
domestic and international markets. The Company has expanded its sales effort
for its proprietary options and futures products into Europe in recent years.
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Convertible Securities. The Company is a market-maker in convertible
securities, dealing primarily with an expanding base of institutional clients.
While its emphasis has been in trading and distributing secondary issues, the
Company has also been effective in the primary distribution of convertible
securities underwritten by the Company.
SPROUT
Founded in 1969, Sprout is one of the oldest and largest groups in the
private equity investment and venture capital industry. Since the
capitalization of Sprout's first fund at $11.5 million, nine major investment
partnerships have been formed primarily for large institutional investors.
Present funds under management have original capital of approximately $1
billion, and include, among others, Sprout VII, a multi-stage venture fund; and
Sprout Growth II, a late-stage equity fund.
Sprout's investors are major public and corporate pension funds,
endowments, insurance companies and wealthy individuals. To accommodate their
growing interest, Sprout has committed to significant leadership positions in
the industries in which it concentrates: health care, technology, retail and
other services.
FINANCIAL SERVICES GROUP
The Financial Services Group is comprised of Pershing, a leading
provider of correspondent brokerage services, the Investment Services Group,
which provides the full range of the Company's investment products and services
to high-net-worth individuals and medium to smaller sized institutions, and the
Asset Management Group which acts as a cash manager and investment counselor
primarily to high-net-worth individuals and institutions. The Financial
Services Group's 1,200 professionals operate out of 17 of the Company's
domestic offices and two of the Company's international offices.
PERSHING DIVISION
Pershing is one of the leading providers of correspondent brokerage
services to the world's financial institutions. Founded in 1939 and acquired by
the Company in 1977, Pershing operates out of seven of the Company's domestic
offices and London. Pershing provides execution and clearance services to over
550 correspondent U.S. brokerage firms, ranging from small investment boutiques
to large financial institutions, which collectively maintain over 1.4 million
client accounts holding more than $140 billion of assets at December 31, 1996.
During 1996, Pershing participated in over 10% of the trading volume on the
NYSE. Pershing maintains broad execution coverage of all U.S. securities
exchanges, supported by extensive in-house trading desks for institutional
block and retail orders, as well as OTC securities, all fixed-income products,
mutual funds and money market funds. As a wholesaler of trading, execution,
clearing and information management activities, Pershing offers its service on
a fee-for-services basis.
Through their affiliation with Pershing, correspondent firms also have
access to a broad selection of investment products for their customers,
including investment related insurance products, retirement plans, a precious
metals storage program, central asset accounts, and managed wrap accounts. In
addition, Pershing makes available to its correspondents information and
recommendations provided through its own research analysts' action-oriented
opinions and advice.
Sophisticated communications and information management are a
cornerstone of Pershing's service. Pershing's computer-directed communications
system provides Pershing's correspondents with a link to major financial
markets around the world. Pershing's proprietary software systems allow on-line
order entry and reporting. Pershing also maintains extensive operational and
informational systems for its correspondents.
Pershing's PC Financial Network, which began operations in 1989,
provides securities transaction services to the subscribers of PRODIGY, America
On-Line, Reuters Money Network, Apple's e-World and On-Line Resources'
Screenphone, and has become the nation's largest on-line discount broker.
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INVESTMENT SERVICES GROUP
The Investment Services Group offers a full range of investment and
portfolio services to high-net-worth individual investors and medium to smaller
size financial institutions, corporations and professional investors. These
services are provided by approximately 300 account executives located in 10 of
the Company's domestic offices. In 1997, the group expanded overseas and opened
an office in London, as part of the Company's London broker-dealer subsidiary.
Due to the close working relationships between account executives and
the Company's research analysts and traders, the group's clients are provided
with the same comprehensive coverage that characterizes the Company's
traditional institutional businesses. The group also offers the "Portfolio
Advisory Service" to its clients, a wrap fee account based solely on the
Company's research, which has over $680 million in assets under management at
December 31, 1996.
ASSET MANAGEMENT GROUP
The Asset Management Group consists of DLJ Investment Management
Corporation and Wood Struthers and Winthrop. The group specializes in
individual and institutional investment management.
DLJ Investment Management Corporation was established in 1996 to
manage funds for institutional clients. At December 31, 1996, the Company had
approximately $1 billion of assets dedicated to its strategic cash managment
discipline.
Wood, Struthers and Winthrop Management Corp., founded in 1871 and
acquired by the Company in 1977, is a growing asset manager, managing over $5.0
billion in assets at December 31, 1996. Wood, Struthers & Winthrop targets
sophisticated individual investors, as well as charitable endowments,
foundations and trusts, corporations and Employee Retirement Income Security
Act of 1974 ("ERISA") plans. Wood, Struthers & Winthrop manages portfolios of
both stocks and bonds, balancing risk and return to meet a client's objectives
for growth and capital preservation. The 43 person professional staff of Wood,
Struthers & Winthrop is experienced in portfolio management, investment
research, tax advice, financial planning and in providing personalized service
to all of its clients. Through its Wood Struthers and Winthrop Capital Inc.
subsidiary the firm manages a $1 billion portfolio of private placements which
it originated.
Wood, Struthers & Winthrop is the investment advisor to the Company's
Winthrop Focus Funds, a domestic family of diversified open-end mutual funds
which are distributed principally through the Company and Equitable. The Focus
Funds consist of three U.S. equity funds and two fixed-income funds and
aggregate approximately $534 million. In addition, Wood, Struthers & Winthrop
is the advisor to the Winthrop Opportunity Funds, a family of diversified
open-end international mutual funds. These funds consist of a developing
markets equity fund and an established markets equity fund, and will be
distributed through the Company and Equitable.
Wood, Struthers & Winthrop has a limited purpose trust company
subsidiary, Winthrop Trust Company, which to provides tax, financial planning,
custody and personal fiduciary services to its high-net-worth individual and
family clients. At December 31, 1996, Winthrop Trust Company had received
fiduciary appointments aggregating in excess of $600 million.
COMPETITION
The Company encounters significant competition in all aspects of the
securities business and competes worldwide directly with other domestic and
foreign securities firms, a number of which have greater capital, financial and
other resources than the Company. In addition to competition from firms
currently in the securities business, there has been increasing competition
from other sources, such as commercial banks and investment boutiques. As a
result of pending legislative and regulatory initiatives in the U.S. to remove
or relieve certain restrictions on commercial banks, it is anticipated that
competition in some markets currently dominated by investment banks may
increase in the near future. Such competition could also affect the Company's
ability to attract and retain highly skilled individuals to conduct its various
businesses. The principal competitive factors influencing the Company's
business are its professional staff, the firm's reputation in the
9
<PAGE>
marketplace, its existing client relationships, the ability to commit capital
to client transactions and its mix of market capabilities. The Company's
ability to compete effectively in securities brokerage and investment banking
activities will also be influenced by the adequacy of its capital levels.
EMPLOYEES
At December 31, 1996, the Company had approximately 5,900 employees.
Professional personnel receive salary as well as incentive compensation in the
form of bonus and, in certain instances, through long-term incentive and/or
other compensation plans. Most of the Company's securities sales force
personnel receive a percentage of their gross revenues or a percentage of a
specified revenue pool as compensation. Other employees receive a salary and,
in certain cases, overtime compensation and compensation in the form of profit
sharing. None of the Company's employees is represented by a labor union.
REGULATION
The Company's business and the securities industry in general are
subject to extensive regulation in the U.S. at both the Federal and state
level, as well as by industry Self Regulatory Organizations ("SRO's"). A number
of Federal regulatory agencies are charged with safeguarding the integrity of
the securities and other financial markets and with protecting the interests of
customers participating in those markets. The Securities and Exchange
Commission (the "Commission") is the Federal agency that is primarily
responsible for the regulation of broker-dealers and investment advisors doing
business in the U.S., and the Commodity Futures Trading Commission ("CFTC") is
primarily responsible for the regulation of futures commission merchants. In
addition, the Department of the Treasury and the Municipal Securities
Rulemaking Board have the authority to promulgate regulations relating to U.S.
government and agency securities and to municipal securities, respectively, and
the Board of Governors of the Federal Reserve System promulgates regulations
applicable to securities credit transactions involving broker-dealers and
certain other U.S. institutions. Broker-dealers and investment advisers are
subject to registration and regulation by state securities regulators in those
states in which they conduct business. Industry SRO's, each of which has
authority over the firms that are its members, include the NASD, the NYSE, and
other securities exchanges, the National Futures Association ("NFA") and the
commodities exchanges.
Each of DLJSC, Pershing Trading Company, L.P. ("Pershing Trading") and
Autranet (collectively, the "U.S. Broker-Dealers") is registered as a
broker-dealer with the Commission and is a member of, and subject to regulation
by, a number of securities industry SRO's, including the NYSE and the NASD.
Both DLJSC and Pershing Trading are, in addition to being NYSE members, members
of most other major U.S. securities exchanges. DLJSC is also registered as a
broker-dealer in all 50 states and the District of Columbia, as a futures
commission merchant with the CFTC, as an investment advisor with the Commission
and in certain states, is also designated a primary dealer in U.S. government
securities by the Federal Reserve Bank of New York. In connection with its
business as a futures commission merchant, DLJSC is also a member of, and
subject to regulation by, the NFA and the Chicago Board of Trade ("CBOT"). Both
Pershing Trading and Autranet are registered as broker-dealers in a number of
states. Wood, Struthers & Winthrop Management Corp. and DLJ Investment
Partners, Inc. are registered with the Commission and, in certain states as an
investment adviser. The Company also has certain other direct and indirect
subsidiaries that are registered with the Commission and certain states or with
other regulatory authorities as broker-dealers or investment advisers. Winthrop
Trust Company is regulated by the New York State Banking Department.
As a result of registration and SRO memberships, the U.S.
Broker-Dealers are subject to overlapping schemes of regulation which cover all
aspects of their securities business. Such regulations cover matters including
capital requirements, the use and safekeeping of customers' funds and
securities, recordkeeping and reporting requirements, supervisory and
organizational procedures intended to assure compliance with securities laws
and rules of the SRO's and to prevent the improper trading on "material
nonpublic" information, employee-related matters, limitations on extensions of
credit in securities transactions, and clearance and settlement procedures. A
particular focus of the applicable regulations concerns the relationship
between broker-dealers and their customers. As a result, the U.S.
Broker-Dealers in some instances may be
10
<PAGE>
required to make "suitability" determinations as to certain customer
transactions, are limited in the amounts that they may charge customers, cannot
trade ahead of their customers and must make certain required disclosures to
their customers.
As investment advisers registered with the Commission, Wood, Struthers
& Winthrop Management Corp. and DLJSC are subject to the requirements of the
Investment Advisers Act of 1940 and the Commission's regulations thereunder.
Such requirements relate to, among other things, limitations on the ability of
investment advisers to charge performance-based or non-refundable fees to
clients, recordkeeping and reporting requirements, disclosure requirements,
limitations on principal transactions between an adviser or its affiliates and
advisory clients, as well as general anti-fraud prohibitions. The state
securities law requirements applicable to registered investment advisers are in
certain cases more comprehensive than those imposed under the Federal
securities laws.
DLJSC, as a registered futures commission merchant, is subject to the
capital and other requirements of the CFTC under the Commodity Exchange Act.
These requirements include the provision of certain disclosure documents,
prohibitions against trading ahead of customers and other fraudulent trading
practices, provisions as to the handling of customer funds and reporting and
recordkeeping requirements.
The U.S. Broker-Dealers are also subject to "Risk Assessment Rules"
imposed by the Commission and, in the case of DLJSC, by the CFTC. These rules
require, among other things, that certain broker-dealers and futures commission
merchants maintain and preserve certain information, describe risk management
policies and procedures and report on the financial condition of certain
affiliates whose financial and securities activities are reasonably likely to
have a material impact on the financial and operational condition of the
broker-dealers or futures commission merchants. Affiliates of the U.S.
Broker-Dealers and the activities conducted by such affiliates may not be
subject to regulation by the Commission or the CFTC. However, the possibility
exists that, on the basis of the information that they obtain from the Risk
Assessment Rules, the Commission or CFTC could seek legislative or regulatory
changes in order to expand their authority over the Company's unregulated
subsidiaries either directly or through their existing authority over the
Company's regulated subsidiaries.
In addition to being regulated in the U.S., the Company's business is
subject to regulation by various foreign governments and regulatory bodies. The
Company does business in the international equity and fixed income markets and
undertakes investment banking activities through several of its London
subsidiaries. These broker-dealer subsidiaries that are subject to regulation
by the Securities and Futures Authority of the United Kingdom pursuant to the
United Kingdom Financial Services Act of 1986, which governs all aspects of a
United Kingdom investment business, including regulatory capital, sales and
trading practices, use and safekeeping of customer funds and securities,
recordkeeping, margin practices and procedures, registration standards for
individuals, periodic reporting and settlement procedures. In addition, the
Company has subsidiaries that are broker-dealers subject to regulation,
including capital requirements imposed by the Securities and Futures Commission
of Hong Kong and the Ontario Securities Commission.
Additional legislation and regulations, including those relating to
the activities of affiliates of broker-dealers, changes in rules promulgated by
the Commission, the CFTC or other U.S. or foreign governmental regulatory
authorities and SRO's or changes in the interpretation or enforcement of
existing laws and rules may adversely affect the manner of operation and
profitability of the Company.
The Company's businesses may be materially affected not only by
regulations applicable to it as a financial market intermediary, but also by
regulations of general application. For example, the volume of the Company's
underwriting, merger and acquisition and merchant banking businesses in any
year could be affected by, among other things, existing and proposed tax
legislation, antitrust policy and other governmental regulations and policies
(including the interest rate policies of the Federal Reserve Board) and changes
in interpretation or enforcement of existing laws and rules that affect the
business and financial communities. From time to time, various forms of
anti-takeover legislation and legislation that could affect the benefits
associated with financing leveraged transactions with high-yield securities
have been proposed that, if
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<PAGE>
enacted, could adversely affect the volume of merger and acquisition and
merchant banking business, which in turn could adversely affect the Company's
underwriting, advisory and trading revenues related thereto.
The Company believes that it is in material compliance with the
regulations described herein.
In addition, several states, including New York, which is Equitable
Life's state of domicile, regulate transactions between an insurer and its
affiliates under insurance holding company acts. Under such laws and an
undertaking submitted by Equitable Life to the New York State Insurance
Department, certain transactions between the Company, on the one hand, and
Equitable Life and its subsidiaries on the other, may be subject to prior
notice or approval of the New York State Insurance Department depending on the
size of such transactions.
CAPITAL REQUIREMENTS
As broker-dealers registered with the Commission and member firms of
the NYSE, each of DLJSC, Pershing Trading and Autranet is subject to the
capital requirements of the Commission and of the NYSE. These capital
requirements specify minimum levels of capital, computed in accordance with
regulatory requirements ("net capital"), that the U.S. Broker-Dealers are
required to maintain and also limit the amount of leverage that the U.S.
Broker-Dealers are able to obtain in their businesses. As a futures commission
merchant, DLJSC is also subject to the capital requirements of the CFTC and the
CBOT.
Each of the U.S. Broker-Dealers has elected to compute its net capital
requirement under the "alternative method" permitted by the Commission. Under
this alternative method, each U.S. Broker-Dealer is required by the Commission
to maintain minimum regulatory net capital, computed in accordance with the
Commission's regulations, equal to the greater of $250,000 or 2% of the
aggregate debit balances arising from customer transactions calculated in
accordance with Commission regulations. The NYSE imposes certain more stringent
capital requirements on its member firms than those imposed by the Commission.
Further, under CFTC and CBOT capital regulations, DLJSC must maintain capital
in an amount equal to at least 4% of the funds required to be segregated under
the Commodity Exchange Act.
The aggregate debit balances referred to in the preceding paragraph
are the money owed to a broker-dealer by its customers and certain other
customer-related assets. "Net capital" is essentially defined as net worth
(assets minus liabilities, as determined under generally accepted accounting
principles), plus qualifying subordinated borrowings, less the value of all of
a broker-dealer's assets that are not readily convertible into cash (such as
goodwill, furniture, prepaid expenses, exchange seats and unsecured
receivables), and further reduced by certain percentages (commonly called
"haircuts") of the market value of a broker-dealer's positions in securities
and other financial instruments.
A failure by a U.S. Broker-Dealer to maintain its minimum required
capital would require it to cease executing customer transactions until it
returned to capital compliance, and could cause it to lose its membership on an
exchange, its right to registration with the Commission or CFTC, or require its
liquidation. Further, the decline in a U.S. Broker-Dealer's net capital below
certain "early warning levels," even though above minimum capital requirements,
could cause material adverse consequences to the firm. For example, the
Commission's capital regulations prohibit payment of dividends, redemption of
stock and the prepayment of subordinated indebtedness if a broker-dealer's net
capital thereafter would be less than 5% of aggregate debit items (or 7% of the
funds required to be segregated pursuant to the Commodity Exchange Act ("CEA"))
and prohibit principal payments in respect of subordinated indebtedness if a
broker-dealer's net capital thereafter would be less than 5% of aggregate debit
items (or 6% of the funds required to be segregated pursuant to the CEA). Under
NYSE Rule 326, a broker-dealer that is a NYSE member is required to reduce its
business if its net capital (after giving effect to scheduled maturities of
subordinated indebtedness or other planned withdrawals of regulatory capital
during the following six months) is less than 4% of aggregate debit items (or
6% of the funds required to be segregated pursuant to the CEA) for 15
consecutive business days. NYSE Rule 326 also prohibits the expansion of a
member's business if its net capital (after giving effect to scheduled
maturities of subordinated indebtedness or other planned withdrawals of
regulatory capital during the following
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six months) is less than 5% of aggregate debit items (or 7% of the funds
required to be segregated pursuant to the CEA) for 15 consecutive business
days.
The Commission's capital rules also (i) require that the U.S.
Broker-Dealers notify the Commission and the NYSE and, in the case of DLJSC,
the CFTC, in writing, two business days prior to making withdrawals or other
distributions of equity capital or lending money to certain related persons, if
those withdrawals would exceed, in any 30 day period, 30% of the
broker-dealer's excess net capital and that they provide such notice within two
business days after any such withdrawal or loan that would exceed, in any 30
day period, 20% of the broker-dealer's excess net capital, (ii) prohibit a U.S.
Broker-Dealer from withdrawing or otherwise distributing equity capital or
making related party loans if after such distribution or loan, the U.S.
Broker-Dealer has net capital of less than 5% of aggregate debit items (or 7%
of the funds required to be segregated pursuant to the CEA) and in certain
other circumstances (iii) provide that the Commission may, by order, prohibit
withdrawals of capital from the U.S. Broker-Dealers for a period of up to 20
business days, if the withdrawals would exceed, in any 30 day period, 30% of
the broker-dealer's excess net capital and the Commission believes such
withdrawals would be detrimental to the financial integrity of the firm or
would unduly jeopardize the broker-dealer's ability to pay its customer claims
or other liabilities.
Compliance with regulatory capital requirements could limit those
operations of the U.S. Broker Dealers that require the intensive use of
capital, such as DLJSC's underwriting and trading activities, and the financing
of customer account balances, and also could restrict the Company's ability to
withdraw capital from the U.S. Broker-Dealers, which in turn could limit the
Company's ability to pay dividends, pay interest, repay debt and redeem or
purchase shares of its outstanding capital stock.
The Company believes that at all times the U.S. Broker-Dealers have
been in compliance in all material respects with the applicable minimum capital
rules of the Commission, the NYSE, the CFTC and the CBOT. As of December 31,
1996, DLJSC was required to maintain minimum "net capital," in accordance with
Commission and CFTC rules, of approximately $70.1 million and had total net
capital of approximately $654.1 million (including $305.3 million of
subordinated debt borrowed under various agreements), or approximately $584.0
million in excess of 2% of aggregate debit items and approximately $489.1
million in excess of 5% of aggregate debit items.
ITEM 2. PROPERTIES
The Company's principal executive offices are presently located at 277
Park Avenue, New York, New York and occupy approximately 793,000 square feet
under a lease expiring in 2016. The Company also leases space at 120 Broadway,
New York, New York, aggregating approximately 94,000 square feet. This lease
expires in 2006.
Pershing also leases approximately 440,000 square feet in Jersey City,
New Jersey, under leases which expire at various dates through 2009.
The Company also purchased land and a building with approximately
133,000 square feet in Florham Park, New Jersey in February 1996.
The Company leases an aggregate of approximately 500,000 square feet
for its domestic and international regional offices, the leases for which
expire at various dates through 2014. Other domestic offices are located in
Atlanta, Austin, Boston, Chicago, Dallas, Houston, Jersey City, Los Angeles,
Menlo Park, Miami, Oak Brook, Philadelphia and San Francisco. Its foreign
office locations are Bangalore, Buenos Aires, Geneva, Hong Kong, London,
Lugano, Mexico City, Paris, Sao Paulo and Tokyo. In 1996, the Company's
principal London subsidiary entered into a lease for approximately 76,000
square feet to accommodate the expansion of its international operations. Such
lease expires in 2008.
The Company believes that its present facilities are adequate for its
current needs.
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ITEM 3. LEGAL PROCEEDINGS
Beginning on March 25, 1991, Dayton Monetary Associates and Charles
Davison, along with more than 200 other plaintiffs, filed several complaints
against DLJSC and a number of other financial institutions and several
individuals in the U.S. District Court for the Southern District of New York.
The plaintiffs allege that DLJSC and other defendants violated civil provisions
of RICO by inducing plaintiffs to invest over $40 million during the years 1978
through 1982 in The Securities Groups, a number of tax shelter limited
partnerships. The plaintiffs seek recovery of the loss of their entire
investment and an approximately equivalent amount of tax-related damages.
Judgments for damages under RICO are subject to trebling. Discovery is complete
and motions for summary judgement are pending. No trial date has been set by
the court. DLJSC believes that it has meritorious defenses to the complaints
and is contesting the suits vigorously. Although there can be no assurance, the
Company does not believe that the ultimate outcome of this litigation will have
a material adverse effect on its consolidated financial condition. Due to the
early stage of such litigation, based upon the information currently available
to it, management cannot make an estimate of loss, if any, or predict whether
or not such litigation will have a material adverse effect on the Company's
results of operations in any particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550 million
principal amount of subordinated redeemable discount debentures of National
Gypsum Corporation ("NGC") canceled in connection with a Chapter 11 plan of
reorganization for NGC consummated in July 1993. The State Court named
plaintiff also filed an adversary proceeding in the Bankruptcy Court for the
Northern District of Texas seeking a declaratory judgment that the confirmed
NGC plan of reorganization does not bar the class action claims. Subsequent to
the consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a value
substantially in excess of, the values upon which NGC's plan of reorganization
was based. The two actions arise out of DLJSC's activities as financial advisor
to NGC in the course of NGC's Chapter 11 reorganization proceedings. The class
action complaint alleges that the plan of reorganization submitted by NGC was
based upon projections by NGC and DLJSC which intentionally understated
forecasts, and provided misleading and incorrect information in order to hide
NGC's true value and that defendants breached their fiduciary duties by, among
other things, providing false, misleading or incomplete information to
deliberately understate the value of NGC. The class action complaint seeks
compensatory and punitive damages purportedly sustained by the class. DLJSC
intends to defend itself vigorously against all of the allegations contained in
the complaint. Although there can be no assurance, the Company does not believe
that the ultimate outcome of this litigation will have a material adverse
effect on its consolidated financial condition. Due to the early stage of such
litigation, based upon the information currently available to it, management
cannot make an estimate of loss, if any, or predict whether or not such
litigation will have a material adverse effect on the Company's results of
operations in any particular period.
In November and December 1995, DLJSC, along with various other
parties, was named as a defendant in a number of purported class actions filed
in the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the Federal securities laws arising out of a
public offering in 1994 of $435 million of first mortgage notes of Harrah's
Jazz Company and Harrah's Jazz Finance Corp. The complaints seek to hold DLJSC
liable for various alleged misstatements and omissions contained in the
prospectus dated November 9, 1994. On February 26, 1997, the parties have
agreed to a settlement of these actions, subject to the District Court's
approval.
On January 26, 1996, a purported purchaser of certain notes and
warrants to purchase shares of common stock of Rickel Home Centers, Inc.
("Rickel") filed a class action complaint against DLJSC and certain other
defendants for unspecified compensatory and punitive damages in the United
States District Court for the Southern District of New York. The suit was
brought on behalf of the purchasers of 126,457 units consisting of $126,457,000
aggregate principal amount of 13 1/2% senior notes due 2001 and 126,457
warrants to purchase shares of common stock of Rickel (the "Units") issued by
Rickel in October 1994. The complaint alleges violations of federal securities
laws and common law fraud against DLJSC, as the underwriter of the Units and as
an owner of 7.3% of the common stock of Rickel, Eos Partners, L.P. and General
Electric Capital
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Corporation, each as owners of 44.2% of the common stock of Rickel, and members
of the Board of Directors of Rickel, including a DLJSC Managing Director. The
complaint seeks to hold DLJSC liable for alleged misstatements and omissions
contained in the prospectus and registration statement filed in connection with
the offering of the Units, alleging that the defendants knew of financial
losses and a decline in value of Rickel in the months prior to the offering and
did not disclose such information. The complaint also alleges that Rickel
failed to pay its semi-annual interest payment due on the Units on December 15,
1995, and that Rickel filed a voluntary petition for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code on January 10, 1996. DLJSC
intends to defend itself vigorously against all of the allegations contained in
the complaint. Although there can be no assurance, the Company does not believe
that the outcome of this litigation will have a material adverse effect on its
consolidated financial condition. Due to the early stage of this litigation,
based on the information currently available to it, management cannot make an
estimate of loss, if any, or predict whether or not such litigation will have a
material adverse effect on the Company's results of operations in any
particular period.
In addition to the matters described above, the Company has been named
as a defendant in various civil actions and arbitrations arising out of its
activities as a broker-dealer in securities, as an underwriter and as an
employer and arising out of alleged employee misconduct. The Company is also
involved, from time to time, in proceedings with, and investigations by,
governmental agencies and SRO's. See "Regulation." In particular, the Company
has been a defendant in various lawsuits filed in connection with certain
mortgage related securities previously structured and/or underwritten by the
Company and two of its subsidiaries are the subject of an investigation by the
Commission with respect to these transactions. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources." The Company does not believe that any such matters, claims
or investigations will have a material adverse effect on its results of
operations or its consolidated financial condition.
DLJSC has consented to the entry of certain administrative orders,
pursuant to which it has been ordered to permanently cease and desist from
committing or causing any current or future violation of certain Federal
securities laws. In particular, on September 22, 1992, the Commission initiated
an administrative proceeding pursuant to Section 8A of the Securities Act and
Sections 15(b), 19(h) and 21C of the Exchange Act, against DLJSC, as
respondent, relating to the 1986 initial public offering of common stock of
Matthews & Wright Group Inc. ("M&W"), in which DLJSC acted as a co-managing
underwriter. Simultaneously, without admitting or denying the Commission's
findings, and prior to a hearing pursuant to the Commission's Rules of
Practice, DLJSC settled the proceeding by consenting to the entry of the
administrative order finding that in light of all the information known and
available to DLJSC, DLJSC failed to adequately and reasonably investigate
certain aspects of M&W's business activities and therefore did not have a
reasonable basis to believe that certain representations in the registration
statement regarding bond offerings underwritten by M&W and closed by M&W in
December 1985 and August 1986 were accurate and complete. The administrative
order censured DLJSC and ordered that DLJSC permanently cease and desist from
committing or causing any violation, and from committing or causing any future
violation, of Section 17(a) and Section 10(b) of the Exchange Act and Rule
10b-5 thereunder. As part of the settlement, DLJSC applied for and received a
determination that the entry of the administrative order would not disqualify
DLJSC from the exemptions under Commission Regulations A, B, D and E
promulgated under the Securities Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1996, no matters were submitted to a vote of
security holders.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET AND DIVIDEND INFORMATION
The principal market for trading DLJ Common Stock is the New York Stock
Exchange. Its stock symbol is "DLJ."
QUARTERS
1996 1st 2nd 3rd 4th
---- --- --- --- ---
High..................... 33 1/2 34 3/4 35 1/8 36
Low...................... 28 5/8 30 3/8 27 5/8 32 1/8
Common dividends......... $0.125 $0.125 $0.125 $0.125
QUARTERS
1995 1st 2nd 3rd 4th
---- --- --- --- ---
High.................... - - - 33 1/2
Low..................... - - - 28 7/8
Common dividends........ $0.163 $ - $ - $0.125
The approximate number of holders of DLJ Common Stock at March 5,
1997, was 6,500. Information on market price of the Company's Common
Stock is from the date of the completion of the Initial Public
Offering ("IPO"), October 30, 1995. Effective with the IPO, the
Company established a policy of paying quarterly dividends on its
common shares at the annual rate of $0.50 per year.
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ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(In millions, except share and per share data and financial ratios)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES
Commissions..................... $ 573.3 $ 460.2 $ 376.1 $ 358.8 $ 289.7
Underwritings................... 714.2 441.5 261.1 574.6 350.3
Fees............................ 470.0 369.1 281.3 211.3 158.1
Interest, net (1)............... 1,074.2 904.1 791.9 657.3 381.7
Principal transactions-net:
Trading........................ 435.4 364.9 165.7 381.5 272.0
Investment..................... 163.0 163.7 97.6 79.9 195.9
Other........................... 60.7 55.1 35.0 21.9 16.4
-------- -------- -------- -------- --------
Total revenues................ 3,490.8 2,758.6 2,008.7 2,285.3 1,664.1
-------- -------- -------- -------- --------
COSTS AND EXPENSES
Compensation and benefits....... 1,538.8 1,261.4 897.8 1,200.4 886.6
Compensation expense-
restricted stock units ........ - 6.2 - - -
Interest........................ 733.2 680.6 503.8 381.7 212.3
Brokerage, clearing, exchange
fees and other................. 201.3 168.1 135.6 133.8 114.1
Occupancy and equipment ........ 159.3 127.1 90.1 80.0 71.2
Communications.................. 53.7 42.8 36.6 31.9 28.7
Other operating expenses........ 330.7 173.9 139.8 155.5 106.2
-------- -------- -------- -------- --------
Total costs and expenses...... 3,017.0 2,460.1 1,803.7 1,983.3 1,419.1
-------- -------- -------- -------- --------
Income before provision for
income taxes......... 473.8 298.5 205.0 302.0 245.0
Provision for income taxes........ 182.5 119.4 82.0 115.9 98.0
-------- -------- -------- -------- --------
Net income........................ $ 291.3 $ 179.1 $ 123.0 $ 186.1 $ 147.0
======== ======== ======== ======== ========
Dividends on preferred stock...... $ 18.7 $ 19.9 $ 21.0 $ - $ -
======== ======== ======== ======== ========
Earnings applicable to
common shares................... $ 272.6 $ 159.2 $ 102.0 $ 186.1 $ 147.0
======== ======== ======== ======== ========
Weighted average common
shares outstanding (2). ........ 59,918 51,657
======== ========
Earnings per common share (2)..... $ 4.55 $ 3.08
======== ========
Pro forma weighted average
common shares outstanding (3)... 51,475
========
Pro forma earnings per
common share (3)................ $ 1.98
========
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(In millions, except share and per share data and financial ratios)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Securities purchased under
agreements to resell and
securities borrowed.................. $29,954.2 $27,793.1 $19,166.9 $21,575.2 $14,378.4
Total assets........................... 55,503.7 44,576.5 33,261.6 38,766.7 24,436.2
Securities sold under agreements to
repurchase and securities loaned..... 32,103.1 29,369.0 20,385.4 24,116.7 14,732.4
Long-term borrowings (4,5)............. 1,541.6 983.4 539.9 549.0 478.6
Redeemable preferred stock (5)......... 200.0 225.0 225.0 225.0 -
Stockholders' equity (6). ............. 1,647.2 1,198.7 820.3 750.3 454.6
OTHER FINANCIAL DATA (AT END OF PERIOD):
Book value per common share
outstanding.......................... $ 24.79 $ 20.50 $ 16.41 $ 15.01 $ 9.09
Ratio of net assets to
stockholders' equity (7)............. 15.51x 14.00x 17.18x 22.91x 22.12x
Ratio of long-term borrowings
to total capitalization (8).......... 0.44 0.37 0.30 0.34 0.51
Return on average equity (9)........... 20.6% 17.1% 13.1% 30.5% 36.8%
Ratio of earnings to fixed charges..... 1.16x 1.11x 1.10x 1.20x 1.21x
Ratio of earnings to combined fixed
charges and preferred stock
dividends (10)....................... 1.16x 1.10x 1.09x - -
</TABLE>
(1) Interest is net of interest expense to finance U.S. government and agency
instruments of $2.1 billion, $2.0 billion, $1.6 billion, $1.1 billion and
$0.9 billion, respectively.
(2) Earnings per common share has been calculated by dividing earnings
applicable to common shares (net income less preferred dividends) by the
weighted average number of common shares and common share equivalents
outstanding. Common share equivalents include shares of common stock
issuable under the Restricted Stock Unit Plan and the dilutive effect of
options under the treasury stock method. Weighted average common shares
and common share equivalents outstanding are substantially the same for
both primary and fully diluted earnings per common share.
(3) Pro forma earnings per common share are calculated by dividing earnings
applicable to common shares, (net income less preferred dividends) by the
pro forma weighted average number of common shares and common share
equivalents outstanding. Pro forma common shares outstanding represent
actual historical shares outstanding adjusted for the dilutive effect of
the Restricted Stock Units (RSUs) using the treasury stock method.
(4) In February 1996, the Company issued $250 million of 5 5/8% Medium-Term
Notes due February 15, 2016. The notes are repayable by the Company, in
whole or in part, at the option of the holders on February 15, 2001.
(5) In the third quarter of 1996, the Company and its wholly owned Trust
completed an offering from a shelf registration of $200 million of the
Trust's 8.42% mandatorily redeemable preferred stock which is fully and
unconditionally guaranteed by the Company. The preferred stock is
redeemable, in whole or in part, at the option of the Company on or after
August 31, 2001. The only assets of the Trust are the 8.42% Junior
Subordinated Debentures of the Company due 2046 (See Note 11 to the
Consolidated Financial Statements).
In October 1996, the Company exercised its option under the terms of the
$8.83 Cumulative Preferred Stock agreement to exchange all 2.25 million
shares outstanding for $225 million in aggregate principal amount of 9.58%
Subordinated Exchange Notes due October 15, 2003. The notes are
redeemable, in whole or in part, at the option of the Company at any time.
(6) In November 1996, the Company issued 4.0 million shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, Series A, with a
liquidation preference of $50 per share.
(7) Net assets are total assets excluding securities purchased under
agreements to resell and securities borrowed.
(8) Long-term borrowings and total capitalization (the sum of long-term
borrowings, preferred stock and stockholders' equity) exclude current
maturities of long-term borrowings.
(9) After payment of dividends on the Company's Cumulative Exchangeable $8.83
Preferred Stock.
(10) For the purpose of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends (i) earnings consist of income
before the provision for income taxes and fixed charges and (ii) fixed
charges consist of interest expense and one-third of rental expense which
is deemed representative of an interest factor. No preferred dividends
were paid until 1994.
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS ENVIRONMENT
The Company's principal business activities, investment and merchant
banking, securities sales and trading and correspondent brokerage services are,
by their nature, highly competitive and subject to general market conditions,
volatile trading markets and fluctuations in the volume of market activity.
Consequently, the Company's net income and revenues have been and are likely to
continue to be, subject to wide fluctuations, reflecting the impact of many
factors beyond the Company's control, including securities market conditions,
the level and volatility of interest rates, competitive conditions and the size
and timing of transactions.
The strong market conditions that existed in 1995 continued to improve
during 1996 resulting in higher levels of underwriting and merger and
acquisition activity. Record levels were achieved by major stock indices, such
as the Dow Jones Industrial Average, the Standard & Poor's 500 Index and the
NASDAQ composite. These favorable market conditions combined with rising stock
prices created a robust investment banking atmosphere.
RECENT DEVELOPMENTS
In October 1996, the Company exercised its option under the terms of
the $8.83 Cumulative Preferred Stock agreement to exchange all 2.25 million
shares outstanding for $225 million in aggregate principal amount of 9.58%
Subordinated Exchange Notes due October 15, 2003. The notes are redeemable, in
whole or in part, at the option of the Company at any time.
In November 1996, the Company issued 4.0 million shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, Series A, with a liquidation
preference of $50 per share.
During the third quarter of 1995, the Company provided $28.8 million
for a potential loss with respect to a bridge loan aggregating $150 million to
a company experiencing financial difficulties. In October 1996, a planned
acquisition of such company was announced, which, if completed, would result in
the realization by the Company of amounts previously reserved, plus interest.
The transaction is expected to close in early 1997.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Total revenues for 1996 were $3.5 billion, an increase of $732.1
million or 26.5% over 1995. Revenues increased in most of the Company's major
areas of activity during 1996.
Commission revenues increased by $113.1 million or 24.6% to $573.3
million due to increased business in all areas, and is generally consistent
with the overall growth in listed share volume on major equity exchanges.
Underwriting revenues increased by $272.6 million or 61.7% to $714.2
million. The Company experienced increases in all areas of underwriting during
1996.
Fee revenues increased by $100.9 million or 27.3% to $470.0 million.
Overall, merger and acquisition ("M&A"), asset management and other advisory
services activities have increased during 1996. In 1996, the Company closed DLJ
Merchant Banking Partners II, L.P. and related investment entities with total
committed capital in excess of $3.0 billion. At December 31, 1996, the Company
has approximately $8.0 billion of committed capital related to its merchant
banking activities.
19
<PAGE>
Interest, net of interest expense to finance U.S. government, agency
and mortgage-backed securities, increased by $170.1 million or 18.8% to $1.1
billion. Higher levels of foreign fixed income securities in the Company's
Emerging Markets business accounted for approximately one half of the increase.
The remaining increase was due to higher levels of inventory in the Fixed
Income Division and increased margin balances at Pershing.
Principal transactions, trading revenues increased by $70.5 million or
19.3% to $435.4 million. Most of the increase took place in the Fixed Income
Division due to improved trading results in high-grade corporates and
high-yield securities.
Principal transactions, investment revenues decreased by $0.7 million
or 0.4% to $163.0 million. Realized gains on investments were $213.3 million.
Net unrealized carrying values decreased by $50.3 million, which includes the
elimination of net unrealized appreciation of $47.6 million on investments sold
and a decrease in net unrealized appreciation of $2.7 million on retained
investments.
Other revenues, consisting primarily of dividends and miscellaneous
transaction revenues, increased by $5.5 million or 10.0% to $60.7 million due
to increased business activity.
Total costs and expenses for 1996 were $3,017.0 million, an increase
of $556.8 million or 22.6% over 1995.
Compensation and benefits increased $271.2 million or 21.4% to
$1,538.8 million. Most of the increase was due to increased variable incentive
and production-related compensation, which resulted from higher revenues and
operating results. Incentive and production-related compensation increased by
26.7% in 1996, while base compensation, including benefits and payroll taxes,
increased by 9.6% due to expansion in various business groups. At December 31,
1996, full-time personnel totaled 5,885 compared to 4,918 at December 31, 1995,
an increase of 967 or 19.7%.
Interest expense increased $52.6 million or 7.7% to $733.2 million.
Most of this increase was related to expanded levels of inventory of
fixed-income related products including equity derivatives and foreign local
fixed-income securities.
All other expenses, as noted below, increased by $233.1 million or
45.5% to $745.0 million in 1996.
Brokerage, clearing, exchange fees and other expenses increased by
$33.2 million due to increased share volume, underwriting related expenses and
transaction fee payments. Occupancy and equipment costs increased by $32.2
million as a result of the expansion of the Company's principal office in the
U.S. and the expansion of the Company's other domestic and overseas offices.
Communications costs increased by $10.9 million due to expanded facilities and
growth in professional staff. All other operating expenses increased by $156.8
million. Included therein are data processing, professional fees, travel and
entertainment, and printing and stationery which increased by $82.1 million
reflecting an overall increase in the level of business activity. In addition,
during 1996, $35.7 million of expenses were incurred in connection with
mortgage-related securities previously underwritten by the Company.
The Company's income tax provision for 1996 and 1995 was $182.5
million and $119.4 million, respectively, which represented a 38.5% and 40%
effective tax rate for each period.
Net income for 1996 was $291.3 million, up $112.2 million or 62.6%
from the comparable 1995 period. Earnings per common share using the treasury
stock method were $4.55 and $3.08 for 1996 and 1995, respectively.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Total revenues for 1995 were approximately $2.8 billion, an increase
of $750.0 million or 37.3% over 1994. Revenues increased in all of the
Company's major areas of activity during 1995.
20
<PAGE>
Commission revenues increased by $84.1 million or 22.4% to $460.2
million due to increased business in all areas and is generally consistent with
the overall growth in listed share volume on major equity exchanges.
Underwriting revenues increased by $180.5 million or 69.1% to $441.5
million. The Company experienced increases in all areas of underwriting during
1995.
Fee revenues increased by $87.8 million or 31.2% to $369.1 million due
primarily to increased M&A and other advisory fees in the Investment Banking
group.
Interest, net of interest expense to finance U.S. government, agency
and mortgage-backed securities, increased by $112.2 million or 14.2% to $904.1
million. Higher interest rates earned at Pershing on higher levels of customer
margin balances and securities loaned/borrowed activity accounted for most of
the increase which was offset in part by lower interest income earned on
reduced levels of inventory in the Fixed Income Division.
Principal transactions, trading revenues increased by $199.2 million
or 120.2% to $364.9 million. Most of this increase was due to improved trading
results in mortgage-backed and high-yield securities both of which had negative
trading results in 1994.
Principal transactions, investment revenues increased by $66.1 million
or 67.7% to $163.7 million. Realized gains on investments were $261.5 million.
Net changes in unrealized carrying values were reduced by $97.8 million, which
includes the elimination of net unrealized appreciation of $39.2 million on
investments sold and a reduction in net unrealized appreciation of $58.6
million on retained investments. This latter amount includes a provision for an
estimated loss of $28.8 million on a bridge loan. During the third quarter of
1995, the Company provided for the potential loss with respect to this bridge
loan aggregating $150 million to a company experiencing financial difficulties.
This loss was substantially offset by gains from other principal investments.
If the amount of the loss from such bridge loan is in excess of $25 million,
pursuant to the terms of an agreement with Equitable, distribution to the
Company with respect to its $1.25 billion bridge facility would be eliminated
until such loss has been recovered. While there can be no assurance, the
Company does not anticipate incurring any future losses from its current
merchant banking investments which would have a material adverse effect on the
Company's results of operations or financial condition.
Other revenues consisting primarily of dividends and miscellaneous
transaction revenues, increased by $20.1 million or 57.4% to $55.1 million. The
increase consists primarily of dividends received on equity securities.
Total costs and expenses for 1995 were approximately $2.5 billion, an
increase of $656.4 million or 36.4% over 1994.
Compensation and benefits increased $369.8 million or 41.2% to
$1,267.6 million. Most of the increase was due to increased variable incentive
and production-related compensation, which resulted from higher revenues and
operating results. Incentive and production-related compensation increased by
49.3% in 1995, while base compensation, including benefits and all payroll
taxes, increased by 23.6% primarily due to expansion in various business
groups. At December 31, 1995, full-time personnel totaled 4,918 compared to
4,566 at the end of 1994, an increase of 352 or 7.7%.
Interest expense increased $176.8 million or 35.1% to $680.6 million.
Most of this increase was related to business at Pershing. The remaining
increase was attributable to the impact of higher short-term interest rates on
expanded levels of whole loan related products.
Other expenses, as noted below, increased by $109.8 million or 27.3%
to $511.9 million in 1995.
21
<PAGE>
Brokerage, clearing, exchange fees and other expenses increased by
$32.5 million due to increased share volume, underwriting related expenses and
transaction fee payments. Occupancy and equipment costs increased by $37.0
million as a result of the decision to relocate certain of the Company's
overseas and U.S. offices. Communications costs increased by $6.2 million and
all other operating expenses, which include data processing, professional fees,
travel and entertainment, and printing and stationery, increased by $34.1
million.
The Company's income tax provision for 1995 and 1994 was $119.4
million and $82.0 million, respectively, which represented a 40% effective tax
rate for both periods.
Net income for 1995 was $179.1 million, up $56.1 million or 45.6% from
the comparable 1994 period. Earnings per common share in 1995 and pro forma
earnings per common share giving effect to the dilutive effect of the
restricted stock units using the treasury stock method were $3.08 and $1.98 for
1995 and 1994, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets are highly liquid with the majority consisting of
securities inventories and collateralized receivables, both of which fluctuate
depending on the levels of proprietary trading and customer business. Such
collateralized receivables consist primarily of resale agreements and
securities borrowed, both of which are secured by U.S. government and agency
securities, and marketable corporate debt and equity securities. In addition,
the Company has significant receivables from customers, brokers and dealers
which turn over frequently. As a securities dealer, the Company may carry
significant levels of trading inventories to meet client needs. As such, the
Company's total assets or the individual components of total assets vary
significantly from period to period because of changes relating to customer
needs, economic and market conditions and proprietary trading strategies. A
relatively small percentage of total assets is fixed or held for a period of
longer than one year. The Company's total assets at December 31, 1996 and 1995
were $55.5 billion and $44.6 billion, respectively.
The majority of the Company's assets are financed through daily
operations by repurchase agreements, securities sold not yet purchased,
securities loaned, bank loans, and through payables to customers and brokers
and dealers. Short-term funding is generally obtained at rates related to
Federal funds, LIBOR and money market rates. Other borrowing costs are
negotiated depending upon prevailing market conditions. The Company monitors
overall liquidity by tracking the extent to which unencumbered marketable
assets exceed short-term unsecured borrowings.
The Company maintains borrowing relationships with a broad range of
banks, financial institutions, counterparties and others aggregating $6.0
billion, at December 31, 1996, in uncommitted and committed bank credit lines
with 50 domestic and international banks. These include $4.0 billion of
uncommitted bank credit lines, $1.28 billion of secured committed bank lines
and $650 million of unsecured committed bank lines.
Certain of the Company's businesses are capital intensive. In addition
to normal operating requirements, capital is required to cover financing and
regulatory charges on securities inventories, merchant banking investments and
investments in fixed assets. The Company's overall capital needs are
continually reviewed to ensure that its capital base can appropriately support
the anticipated needs of its business units as well as the regulatory capital
requirements of subsidiaries. Based upon these analyses, management believes
that the Company's debt and equity base is adequate for current operating
levels. The Company has been active in raising additional long-term financing,
including extending the maturity of its senior subordinated revolving credit
agreement of $250.0 million, and increasing the amount of the credit available
thereunder to $325.0 million in 1995 (of which $206.5 million was outstanding
as of December 31, 1996). The Company increased the amount of credit available
under its unsecured credit facility to $650 million. There were no borrowings
outstanding under this facility at December 31, 1996.
22
<PAGE>
Mortgages, other receivables collateralized by real estate assets and
real estate owned, amounting to $405.2 million in 1996 and $466.1 million in
1995, generally represent the Company's interest in mortgages receivable
including certain mortgage-related securities previously underwritten by the
Company which were primarily repurchased in 1994, and are carried at amounts
approximating fair value, determined by, among other things, the discounted
cash flows and/or estimated sales prices of the underlying properties.
The Company issues structured notes which are customized financing
instruments in which the amount of interest or principal paid on the debt
obligation is linked to the return on specific cash market financial
instruments. At December 31, 1996 and 1995, the Company had issued long-term
structured notes with principal amounts of $216.2 million and $24.5 million
outstanding, respectively. The Company expects the volume of this activity to
increase in the future. The Company covers its obligations on structured notes
primarily by purchasing or selling the securities to which the value of its
structured notes are linked.
On October 30, 1995, the Company completed an initial public offering
("IPO") of its shares. The Company's net proceeds from the IPO totaled $81.2
million. Concurrent with the IPO, the Company completed the offering of $500
million aggregate principal amount of 6 7/8% Senior Notes due November 1, 2005
(the "Senior Debt Offering"). The proceeds from the Senior Debt Offering
totaled $493.5 million (net of underwriting discounts and commissions).
On February 12, 1996, a shelf registration statement, which enables
the Company to issue up to $500 million in aggregate public offering price of
Senior Debt Securities and/or Preferred Stock, was declared effective by the
Securities and Exchange Commission. On February 15, 1996, the Company completed
an offering under such shelf registration statement of $250 million aggregate
principal amount of its 5 5/8% Medium-Term Notes due February 15, 2016. The
notes are repayable by the Company, in whole or in part, at the option of the
holders on February 15, 2001. Net proceeds to the Company from this offering
were $248.3 million (net of underwriting discounts and commissions). During the
third quarter of 1996, the Company and its wholly owned Trust completed an
offering from a shelf registration of $200 million of the Trust's 8.42%
mandatorily redeemable preferred stock. The preferred stock is redeemable, in
whole or in part, at the option of the Company on or after August 31, 2001.
In March 1996, the Company moved its principal offices from 140
Broadway to 277 Park Avenue in New York City. The Company financed expenditures
related to the move from available operating capital.
On October 23, 1996, the Company exercised its option under the terms
of the $8.83 Cumulative Preferred Stock agreement to exchange all 2.25 million
shares outstanding for $225 million in aggregate principal amount of 9.58%
Subordinated Exchange Notes due October 15, 2003. The notes are redeemable, in
whole or in part, at the option of the Company at any time.
In November 1996, the Company issued 4.0 million shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, Series A, with a liquidation
preference of $50 per share.
The Company's credit ratings of its long-term debt at December 31,
1996 are as follows: Duff & Phelps A; Fitch A; IBCA A; Moody's Baa1; Standard &
Poors A-; and Thomson Bank Watch A+.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC") is
subject to the capital requirements of the Securities and Exchange Commission,
the New York Stock Exchange, Inc., the Commodities Futures Trading Commission
and the Chicago Board of Trade, all of which are supposed to ensure the general
capital adequacy and liquidity of broker-dealers and/or futures commission
merchants. DLJSC has consistently maintained capital substantially in excess of
the minimum requirements of such capital rules. At December 31, 1996, DLJSC had
aggregate regulatory "net capital," after adjustments required by Rule 15c3-1
under the Exchange Act of 1934, of approximately $654.1 million, which exceeded
minimum net capital requirements by $584.0 million and which exceeded the net
capital required by DLJSC's most restrictive debt covenants by $417.0 million.
23
<PAGE>
The Company's overall capital and funding needs are continually
reviewed to ensure that its capital base can support the estimated needs of its
business units.
CASH FLOWS
The Company's consolidated statements of cash flows classify cash
flows into three broad categories: cash flows from operating activities,
investing activities and financing activities. The Company's net cash flows are
principally associated with operating and financing activities, which support
the Company's trading, customer and banking activities.
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Cash and cash equivalents at December 31, 1996, 1995 and 1994 totaled
$158.8 million, $107.8 million and $94.9 million, respectively, an increase
(decrease) of $51.1 million, $12.9 million and $(48.0) million, respectively,
for the comparable periods.
Cash (used in) provided by operating activities totaled $(1.7)
billion, $194.4 million and $2.1 billion in 1996, 1995 and 1994, respectively,
and reflects an increase in operating assets and liabilities.
In 1996, there were increases in securities sold not yet purchased of
$2.7 billion, payables to brokers, dealers and other of $2.3 billion and
payables to customers of $1.3 billion. These increases were more than offset by
increases in assets including trading inventories of $4.9 billion, receivables
from brokers, dealers and other of $2.4 billion, and receivables from customers
of $813.3 million. In 1995, there were increases in assets including trading
inventories of $1.8 billion, receivables from customers of $707.3 million and
securities borrowed of $354.5 million. These increases in operating assets were
offset by increases in liabilities, including securities sold not yet purchased
of $1.2 billion, payables to customers of $604.6 million and securities loaned
of $595.5 million. In 1994 there were decreases in operating assets, including
trading inventories of $2.6 billion, securities borrowed of $1.3 billion and
receivables from brokers, dealers and other of $1.0 billion. These decreases
were partially offset by decreases in operating liabilities including
securities loaned of $1.2 billion, payables to brokers, dealers and other of
$864.9 million and securities sold not yet purchased of $470.1 million.
In 1996 and 1995, net cash used in investing activities of $75.0
million and $220.5 million, respectively, consisted primarily of fixed asset
purchases related to the Company's move of its principal offices and purchases
of mortgage receivables collateralized by real estate assets in 1995.
Additionally, in 1996, cash was provided from the sales of long-term corporate
development investments. In 1994, the Company used $267.5 million for investing
activities which was comprised primarily of $162.5 million of increases in
other assets (primarily reflecting receivables and advances acquired relating
to the whole loan securitization business).
In 1996, net cash provided by financing activities totaled $1.9
billion, of which, $1.2 billion was provided by short-term financings. Cash of
$105.5 million was used to repay Swiss Franc Bonds which matured in January
1996, $249.5 million was provided by the issuance of medium-term notes, $200.0
million was provided by the issuance of mandatorily redeemable preferred
securities by the Company's wholly owned Trust, and $200.0 million was provided
by the issuance of Series A Cumulative Preferred Stock of the Company. In 1995
and 1994, cash of $541.8 million and $1.9 billion, respectively, was used to
repay short-term funding (principally repurchase agreements). Additionally, in
1995, $496.8 million was provided from the issuance of Senior Notes, $100
million from the issuance of restricted stock units, $81.2 million from the
issuance of Common Stock in the IPO and $250 million from a secured term loan
agreement. This loan agreement as well as $79.0 million of other long-term debt
was repaid in 1995.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivatives are financial instruments, the payments on which are
linked to the prices, or relationships between prices, of securities or
commodities, interest rates, currency exchange rates or other financial
measures (collectively referred to as "cash market instruments"). Derivatives
enable the Company and its clients to manage their exposure to interest rates
and currency exchange rates, and security and other price risks. Derivatives
include swaps, futures or forward
24
<PAGE>
contracts and options. Certain types of derivatives, including forwards and
certain options, are traded in the over the counter ("OTC") markets. Other
types of derivatives, including futures contracts and listed options are traded
on regulated exchanges. The Company's involvement in derivative products is
related primarily to revenue generation through the provision of products to
its clients as opposed to covers of the Company's own positions.
The Company's derivative activities are not as extensive as many of
its competitors. Instead, the Company has focused its derivative activities on
writing OTC options contracts to accommodate its customers' needs, trading in
forward contracts in U.S. government and agency issued or guaranteed securities
and trading in futures contracts on equity-based indices, interest rate
instruments, and foreign currencies, and issuing structured notes. The
Company's involvement in swap contracts, which generally involve greater risk
and volatility, is not significant.
Options:
As part of customer accommodations, the Company writes option contracts
specifically designed to meet customers' needs. As a writer of OTC option
contracts, the Company receives a cash premium at the beginning of the contract
period and bears the risk of unfavorable changes in the value of the financial
instruments underlying the options. Options written do not expose the Company
to credit risk since they obligate the Company (not its counterparty) to
perform. With respect to the financial instruments underlying these options,
the Company makes a determination that credit exposures are appropriate for the
particular counterparty with whom business is conducted. The Company generally
covers its market risk associated with the options business by purchasing or
selling cash or other derivative financial instruments on a proprietary basis
to cover the options written. Such purchases and sales may include debt and
equity securities, futures and forward contracts and options. The Company
reviews the creditworthiness of the counterparties of such covering
transactions. Future cash requirements for options written are equal to the
fair value of the options. Option contracts are typically written for a
duration of less than 13 months and are included in the consolidated statements
of financial condition at fair value. Option premiums are recognized as revenue
over the life of the option contracts on a straight-line basis or are
recognized as revenue through the change in the fair value of the option.
The notional (contract) value of the written options was $8.6 billion and $3.7
billion at December 31, 1996 and 1995, respectively. Such options contracts are
covered by the following financial instruments which the Company has purchased
or sold on a proprietary basis and are reflected in the table below at either
the underlying contract (notional) amounts for derivative instruments or at
market value for cash instruments:
December 31,
1996 1995
------- -------
(In millions)
U.S. government, mortgage-backed
securities and options thereon........... $ 4,679 $ 1,569
Foreign sovereign debt securities........... 2,460 666
Equity swap contracts....................... 70 408
Futures contracts........................... 306 183
Equities and other.......................... 1,097 911
------- -------
Total.............................. $ 8,612 $ 3,737
======= =======
Forwards and Futures Trading:
As part of the Company's trading activities, including trading
activities in the related cash market instruments, the Company enters into
forward and futures contracts primarily involving securities, foreign
currencies, indices and forward rate agreements, as well as options on futures
contracts. Such forward and futures contracts are entered into as part of the
Company's covering transactions and are not used for speculative purposes.
25
<PAGE>
Forward contracts generally call for the purchase or sale by the
Company, on a delayed settlement basis, of debt securities or currencies, or
other financial instruments. Futures contracts and options on futures contracts
are exchange traded contracts which settle daily and generally call for the
purchase or sale by the Company of a financial instrument at a specified future
date at a specified price. The Company generally profits when the value of
assets that it has purchased on a delayed settlement basis rises or the value
of assets that it has sold on a delayed settlement basis falls. Conversely, the
Company generally incurs losses when assets purchased for delayed settlement
decline in value or sold assets increase in value. Forward and futures
contracts, unlike cash market transactions in the financial instruments to
which such forwards or futures relate, have both on-and off-balance sheet
implications. The notional contractual value of forward and futures contracts
are treated as off-balance sheet items, while the related unrealized gains and
losses are included in assets and liabilities.
The average monthly net unrealized gains (losses) were approximately
$(10.0) million and $(4.0) million for forward contracts and $2.0 million and
$(6.0) million for futures contracts for the years ended December 31, 1996 and
1995, respectively. Net unrealized gains (losses) of approximately $(3.0)
million and $(3.0) million related to forward contracts and approximately $6.0
million and $0.2 million related to futures contracts at December 31, 1996 and
1995, respectively, were included in the receivables from or payables to
brokers, dealers and other captions in the Company's consolidated statements of
financial condition. Unrealized gains and losses on forward and futures
contracts are recorded in earnings. Net trading gains (losses) on forward
contracts were $39.0 million, $149.0 million and $(157.0) million and net
trading gains (losses) on futures contracts were $8.0 million, $(58.0) million
and $59.0 million for the years ended December 31, 1996, 1995 and 1994,
respectively.
The notional contract and market values of the forward and futures
contracts at December 31, 1996 and 1995 were as follows:
December 31,
1996 1995
---- ----
(In millions)
Forward Contracts:
Purchased at notional (contract) value... $ 14,070 $ 18,186
Sold at notional (contract) value........ 17,917 17,066
Futures Contracts and Options on Future
Contracts:
Purchased at market value................ $ 1,420 $ 1,129
Sold at market value..................... 2,774 1,932
STRUCTURED NOTES:
Structured notes are customized financing instruments in which the
amount of interest or principal paid on a debt obligation is linked to the
return on specific cash market financial instruments. Prior to March 31, 1995,
structured notes were offered only by the Equities Derivatives Division. In
1995, the newly formed Emerging Markets Group also began offering derivatives
in the form of structured notes linked to Latin American sovereign debt and
equity securities. At December 31, 1996 and 1995, the Company had issued
long-term structured notes totaling $216.2 million and $24.5 million,
respectively. The Company expects the volume of this activity to increase in
the future. The Company covers its obligations on structured notes primarily by
purchasing or selling the securities to which the value of its structured notes
are linked.
26
<PAGE>
HIGH-YIELD TRANSACTIONS
The Company participates in the underwriting, trading and sales of
high-yield non-investment-grade securities. These securities generally involve
greater risk than investment-grade debt securities due to credit
considerations, liquidity of secondary trading markets and vulnerability to
general economic conditions.
The Company accounts for its high-yield inventory positions on a
market basis with unrealized gains and losses being recognized currently in
earnings. At December 31, 1996 and 1995 the Company had long inventory of
$502.6 million and $500.7 million, respectively, and short inventory of $378.5
million and $219.6 million, respectively, of high-yield securities which
accounted for less than 3.5% of the Company's overall inventory positions.
RISK MANAGEMENT
Exposure to risk and the ways in which the Company manages the various
types of risks on a day-to-day basis is critical to its survival and financial
success. The Company monitors its market and counterparty risk on a daily basis
through a number of control procedures designed to identify and evaluate the
various risks to which the Company is exposed.
The Company often acts as principal in customer-related transactions
in financial instruments which expose the Company to market risks. The Company
also engages in proprietary trading and arbitrage activities and makes dealer
markets in equity securities, investment-grade corporate debt, high-yield
securities, U.S. government and agency securities, mortgages and
mortgage-backed securities. In addition, the Company's Emerging Markets Group
trades a variety of securities, including Brady Bonds, local fixed-income
securities and options, and issues structured notes. As such, the Company may
be required to maintain certain amounts of inventories in order to facilitate
customer order flow. The Company covers its exposure to market risk by limiting
its net long or short position by selling or buying similar instruments and by
utilizing various derivative financial instruments such as futures, forward and
option contracts.
The Company manages risk exposure utilizing mechanisms involving
various levels of management. Position limits in trading and inventory accounts
are established and monitored on an ongoing basis. Current and proposed
underwriting, corporate development, merchant banking and other commitments are
subject to due diligence reviews by senior management as well as professionals
in the appropriate business and support units involved.
Trading activities generally result in the creation of inventory
positions. Position and exposure reports are prepared daily by operations staff
in each of the business groups engaged in trading activities for traders,
trading managers, department managers, divisional management and group
management personnel. Such reports are reviewed independently on a daily basis
by the Company's corporate accounting group. In addition, the corporate
accounting group prepares a consolidated summarized position report indicating
both long and short exposure, along with approved limits, which is distributed
to various levels of management throughout the Company, including the Chief
Executive Officer, and which enables senior management to control inventory
levels and monitor results of the trading groups. The Company also reviews and
monitors, at various levels of management, inventory aging, pricing,
concentration and securities ratings.
In addition to position and exposure reports, the Company produces a
daily revenue report which summarizes the trading, interest, commissions, fees,
underwriting and other revenue items for each of the business groups. Daily
revenue is reviewed for various risk factors and is independently verified by
the corporate accounting group. The daily revenue report is distributed to
various levels of management throughout the Company, including the Chief
Executive Officer, and together with the position and exposure report enables
senior management to monitor and control overall activity of the trading
groups.
27
<PAGE>
Credit risk related to various financing activities is reduced by the
industry practice of obtaining and maintaining collateral. The Company monitors
its exposure to counterparty risk on a daily basis through the use of credit
exposure information and the monitoring of collateral values. The Company has
several credit departments which are responsible for reviewing counterparties
to establish appropriate exposure limits for a variety of transactions. In
addition, the Company actively manages the credit exposure relating to its
trading activities by entering into master agreements which permit netting when
feasible, monitoring the creditworthiness of counterparties and their related
trading limits on an ongoing basis, requesting additional collateral when
deemed necessary and limiting the amount and duration of exposure to individual
counterparties.
All counterparties are reviewed on a regular basis to establish
appropriate exposure limits for a variety of transactions. In certain cases,
specific transactions are analyzed to determine the amount of potential
exposure that could arise, and the counterparty's credit is reviewed to
determine whether it supports such exposure. In addition to the counterparty's
credit status, the Company analyzes market movements that could affect exposure
levels. The Company considers four main factors that may affect trades in
determining trading limits: the settlement method; the time it will take for a
trade to settle (i.e., the maturity of the trade); the volatility that could
affect the value of the securities involved in the trade; and the size of the
trade. In addition to determining trading limits, the Company actively manages
the credit exposure relating to its trading activities by entering into master
netting agreements when feasible; monitoring the creditworthiness of
counterparties and the related trading limits on an ongoing basis and
requesting additional collateral when deemed necessary; diversifying and
limiting exposure to individual counterparties and geographic locations; and
limiting the duration of exposure. In certain cases, the Company may also close
out transactions or assign them to other counterparties when deemed necessary
or appropriate to mitigate credit risks.
The Company has established various committees to assist senior
management in managing risk associated with investment banking and merchant
banking transactions. The objectives of the committees are to review potential
clients and engagements, utilize experience with similar clients and
situations, perform credit analyses for certain commitments and to analyze the
Company's potential role as a principal investor. The Company seeks to control
the risks associated with its banking activities by a thorough review by
various committees of the details of all transactions prior to accepting an
engagement. Some of the committees which have been formed are the Fairness and
Valuation Opinion Committee, the Private Placement Committee, the Restructuring
Coordinating Committee, the Equity Commitment Committee, the High-Yield
Underwriting Committee, the Bridge Commitment Committee and the Banking Review
Committee.
From time to time, the Company makes investments in certain merchant
banking transactions or other long-term corporate development investments.
DLJ's merchant banking group has established several investment entities, each
of which has formed their own investment committee. These committees make all
investment and disposition decisions with respect to potential and existing
portfolio companies. In addition, senior officers of the Company meet on a
quarterly basis to review merchant banking and corporate development
investments. After a discussion of the financial and operational aspects of the
companies involved, recommendations regarding carrying values are made for each
investment to the Finance Committee. The Finance Committee then makes a
determination of fair value following a review of such recommendations.
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Donaldson, Lufkin & Jenrette, Inc.
We have audited the accompanying consolidated statements of financial condition
of Donaldson, Lufkin & Jenrette, Inc. and subsidiaries as of December 31, 1996
and 1995, the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related financial statement schedule.
These consolidated financial statements and related financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Donaldson, Lufkin & Jenrette, Inc. and subsidiaries as of December 31, 1996 and
1995, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
- ----------------------------
KPMG Peat Marwick LLP
February 3, 1997
29
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Consolidated Statements of Financial Condition
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31,
1996 1995
----------- -----------
ASSETS
<S> <C> <C>
Cash and cash equivalents.................................. $ 158,831 $ 107,766
Cash and securities segregated for regulatory purposes or
deposited with clearing organizations ................... 836,406 454,470
Securities purchased under agreements to resell............ 20,598,738 18,748,224
Securities borrowed........................................ 9,355,483 9,044,909
Receivables:
Customers................................................ 3,169,293 2,355,973
Brokers, dealers and other............................... 4,001,131 1,622,858
Securities owned, at value:
U.S. government and agencies............................. 6,882,604 5,601,090
Corporate debt........................................... 4,424,649 3,469,899
Foreign sovereign debt................................... 3,116,201 734,238
Mortgage whole loans..................................... 275,510 359,756
Equities and other....................................... 1,029,094 656,290
Long-term corporate development investments.............. 204,403 284,498
Mortgages, other receivables collateralized by
real estate assets and real estate owned................. 405,221 466,066
Property, equipment and leasehold improvements, at cost,
(net of accumulated depreciation and amortization of
$163,004 and $137,640 respectively)...................... 282,513 192,446
Other assets and deferred amounts.......................... 763,595 478,011
----------- -----------
Total Assets............................................... $55,503,672 $44,576,494
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Consolidated Statements of Financial Condition
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Short-term borrowings.......................................... $ 1,162,896 $ 758,538
Securities sold under agreements to repurchase................. 29,378,291 26,744,797
Securities loaned.............................................. 2,724,773 2,624,213
Payables:
Customers................................................... 3,897,817 2,561,258
Brokers, dealers and other.................................. 3,345,424 1,025,574
Securities sold not yet purchased, at value:
U.S. government and agencies................................ 6,864,643 5,407,572
Corporate debt.............................................. 646,421 529,273
Foreign sovereign debt...................................... 1,265,553 186,861
Equities & other............................................ 665,053 580,721
Accounts payable and accrued expenses.......................... 1,721,255 1,397,465
Other liabilities.............................................. 442,667 353,116
------------ ------------
52,114,793 42,169,388
------------ ------------
Long-term borrowings........................................... 1,541,640 983,386
------------ ------------
Total liabilities........................................ 53,656,433 43,152,774
------------ ------------
Cumulative Exchangeable $8.83 Preferred Stock, at
redemption value............................................ - 225,000
------------ ------------
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely debentures
of the Company.............................................. 200,000 -
------------ ------------
Stockholders' Equity:
Series A Preferred Stock, at liquidation preference......... 200,000 -
Common stock ($0.10 par value; 150,000,000 shares
authorized; 53,300,000 shares issued and outstanding)..... 5,330 5,330
Restricted stock units (5,179,147 units authorized;
5,081,793 and 5,179,147 units issued and
outstanding in 1996 and 1995, respectively)............... 104,167 106,163
Paid-in capital............................................. 365,989 363,993
Retained earnings........................................... 969,856 723,859
Cumulative translation adjustment........................... 1,897 (625)
------------ ------------
Total stockholders' equity............................... 1,647,239 1,198,720
------------ ------------
Total Liabilities and Stockholders' Equity..................... $ 55,503,672 $ 44,576,494
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Commissions................................................. $ 573,335 $ 460,196 $ 376,072
Underwritings............................................... 714,183 441,547 261,094
Fees........................................................ 469,986 369,094 281,293
Interest, net of interest to finance U.S. government,
agency and mortgage-backed securities of $2,132,593,
$2,019,153, and $1,612,823, respectively................... 1,074,223 904,078 791,888
Principal transactions-net:
Trading.................................................... 435,382 364,886 165,727
Investment................................................. 162,975 163,695 97,588
Other....................................................... 60,672 55,133 35,021
----------- ----------- -----------
Total revenues............................................ 3,490,756 2,758,629 2,008,683
----------- ----------- -----------
Costs and Expenses:
Compensation and benefits................................... 1,538,754 1,261,437 897,828
Compensation expense-restricted stock units................. - 6,163 -
Interest.................................................... 733,207 680,616 503,832
Brokerage, clearing,
exchange fees and other.................................... 201,292 168,116 135,623
Occupancy and equipment..................................... 159,330 127,094 90,059
Communications.............................................. 53,657 42,807 36,585
Other operating expenses.................................... 330,716 173,896 139,756
----------- ----------- -----------
Total costs and expenses.................................. 3,016,956 2,460,129 1,803,683
----------- ----------- -----------
Income before provision for income taxes....................... 473,800 298,500 205,000
----------- ----------- -----------
Provision for income taxes..................................... 182,500 119,400 82,000
----------- ----------- -----------
Net income..................................................... $ 291,300 $ 179,100 $ 123,000
=========== =========== ===========
Dividends on preferred stock................................... $ 18,653 $ 19,868 $ 20,970
=========== =========== ===========
Earnings applicable to common shares........................... $ 272,647 $ 159,232 $ 102,030
=========== =========== ===========
Weighted average common shares outstanding..................... 59,918 51,657
=========== ===========
Earnings per common share...................................... $ 4.55 $ 3.08
=========== ===========
Pro forma weighted average common shares outstanding........... 51,475
===========
Pro forma earnings per common share............................ $ 1.98
===========
</TABLE>
See accompanying notes to consolidated financial statements.
32
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 1994, 1995 and 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Series A Restricted Cumulative
Preferred Common Stock Paid-in Retained Translation
Stock Stock Units Capital Earnings Adjustment Total
--------- -------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1993......................... $ 0 $ 1,000 $ 0 $ 232,080 $ 518,049 $ (835) $ 750,294
Net income..................... - - - - 123,000 - 123,000
Dividends:
Common stock
($0.65 per share)........... - - - - (32,524) - (32,524)
Preferred stock
($9.32 per share)........... - - - - (20,970) - (20,970)
Translation adjustment......... - - - - - 491 491
--------- -------- ---------- --------- ---------- ----------- -----------
Balances at December 31,
1994......................... 0 1,000 0 232,080 587,555 (344) 820,291
Net income..................... - - - - 179,100 - 179,100
Dividends:
Common stock
($0.45 per share)........... - - - - (22,928) - (22,928)
Preferred stock
($8.83 per share)........... - - - - (19,868) - (19,868)
Stock split.................... - 4,000 - (4,000) - - -
Additional capital contri-
bution from Equitable....... - - - 55,000 - - 55,000
Net proceeds from issu-
ance of common stock
in Initial Public Offering.. - 330 - 80,913 - - 81,243
Issuance of restricted
stock units................. - - 106,163 - - - 106,163
Translation adjustment......... - - - - - (281) (281)
--------- -------- ---------- --------- ---------- ----------- -----------
Balances at December 31,
1995......................... 0 5,330 106,163 363,993 723,859 (625) 1,198,720
Net income..................... - - - - 291,300 - 291,300
Dividends:
Common stock
($0.50 per share)........... - - - - (26,650) - (26,650)
Preferred stock
($8.29 per share)........... - - - - (18,653) - (18,653)
Forfeiture of restricted
stock units................. - - (1,996) 1,996 - - -
Issuance of Series A
preferred stock.............. 200,000 - - - - - 200,000
Translation adjustment......... - - - - - 2,522 2,522
--------- -------- ---------- --------- ---------- ----------- -----------
Balances at December 31,
1996......................... $ 200,000 $ 5,330 $ 104,167 $ 365,989 $ 969,856 $ 1,897 $ 1,647,239
========= ======== ========== ========= ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
33
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 291,300 $ 179,100 $ 123,000
------------ ------------ ------------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization................................... 53,485 38,082 24,382
Deferred taxes.................................................. (120,022) (119,657) (55,805)
(Increase) decrease in unrealized appreciation of long-
term corporate development investments........................ 50,283 97,792 (17,481)
Compensation expense-restricted stock units..................... - 6,163 -
Other-net....................................................... 346 1,062 982
------------ ------------ ------------
275,392 202,542 75,078
(Increase) decrease in operating assets:
Cash and securities segregated for regulatory
purposes or deposited with clearing organizations............. (381,936) 278,540 197,772
Securities purchased under agreements to resell................. 9,191 (5,462,395) 620,133
Securities borrowed............................................. (310,574) (354,478) 1,337,057
Receivables from customers...................................... (813,320) (707,330) (384,805)
Receivables from brokers, dealers and other..................... (2,378,273) (177,131) 1,008,110
Securities owned, at value...................................... (4,906,785) (1,796,269) 2,619,844
Other assets and deferred amounts............................... (143,500) (14,156) (75,884)
(Decrease) increase in operating liabilities:
Securities sold under agreements to repurchase.................. (9,191) 5,462,395 (620,133)
Securities loaned............................................... 100,560 595,548 (1,164,538)
Payables to customers........................................... 1,336,559 604,648 (332,807)
Payables to brokers, dealers and other.......................... 2,319,850 (75,226) (864,852)
Securities sold not yet purchased, at value..................... 2,737,243 1,172,509 (470,056)
Accounts payable and accrued expenses........................... 323,790 450,166 35,911
Other liabilities............................................... 89,551 15,293 153,177
Translation adjustment.......................................... 2,522 (281) 491
------------ ------------ ------------
Net cash (used in) provided by operating activities.................. $ (1,748,921) $ 194,375 $ 2,134,498
------------ ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
34
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from investing activities:
Net (payments for) proceeds from:
Purchases of long-term corporate development
investments...................................................... $ (87,600) $ (98,396) $ (77,450)
Sales of long-term corporate development investments............... 117,412 78,078 58,650
Purchases of property, equipment and leasehold improvements........ (142,597) (141,935) (48,630)
Purchases of mortgages, other receivables collateralized by real
estate assets and real estate owned.............................. (1,950) (117,518) (290,404)
Sales of mortgages, other receivables collateralized by real
estate assets and real estate owned.............................. 34,274 16,958 127,887
Other assets....................................................... 5,504 42,272 (37,500)
----------- ----------- -----------
Net cash used in investing activities.................................. (74,957) (220,541) (267,447)
----------- ----------- -----------
Cash flows from financing activities:
Net proceeds from (payments for):
Short-term financings.............................................. 1,187,338 (541,832) (1,851,473)
Structured notes................................................... 191,764 24,470 -
Issuance of common stock in Initial Public Offering................ - 81,243 -
Issuance of restricted stock units................................. - 100,000 -
Senior Debt Offering............................................... - 496,755 -
Convertible debentures............................................. 43,500 - -
Medium-Term notes.................................................. 249,515 - -
Swiss Franc Bonds.................................................. (105,513) - -
Subordinated debt financings....................................... (43,171) 175 49,586
Other long-term debt............................................... (3,187) (69,937) (41,714)
Senior notes payable............................................... - (9,000) (18,000)
Company obligated mandatorily redeemable preferred securities...... 200,000 - -
Issuance of Series A Preferred Stock............................... 200,000 - -
Dividends.......................................................... (45,303) (42,796) (53,494)
Secured term loan agreement........................................ - 250,000 -
Secured term loan agreement........................................ - (250,000) -
----------- ----------- -----------
Net cash provided by (used in) financing activities.................... 1,874,943 39,078 (1,915,095)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents....................... 51,065 12,912 (48,044)
Cash and cash equivalents at beginning of year........................ 107,766 94,854 142,898
----------- ----------- -----------
Cash and cash equivalents at end of year.............................. $ 158,831 $ 107,766 $ 94,854
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
1. Summary of Significant Accounting Policies
The consolidated financial statements include Donaldson, Lufkin & Jenrette,
Inc. and its subsidiaries ("DLJ" or the "Company"). All significant
intercompany balances and transactions have been eliminated. The Company is a
majority owned subsidiary of the Equitable Companies Incorporated and its
subsidiaries (together, "Equitable"). The Company's separate financial
statements reflect Equitable's cost basis established at the time of
Equitable's acquisition of the Company in 1985.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Substantially all of the Company's financial assets and liabilities, as well as
financial instruments with off-balance sheet risk, are carried at market or
fair values or are carried at amounts which approximate fair value because of
their short-term nature. Estimates of fair value are made at a specific point
in time, based on relevant market information and information about the
financial instrument, specifically, the value of the underlying financial
instrument. These estimates do not reflect any premium or discount that could
result from offering for sale at one time the Company's entire holdings of a
particular financial instrument.
For purposes of the consolidated financial statements, the Company considers
all demand deposits held in banks, and certain highly liquid investments with
maturities of 90 days or less other than those held for sale in the ordinary
course of business to be cash equivalents.
Receivables from and payables to customers include amounts due on cash and
margin transactions. Securities owned by customers are held as collateral for
these receivables. Such collateral is not reflected in the consolidated
financial statements.
Securities borrowed and securities loaned are financing arrangements which are
recorded at the amount of cash collateral advanced or received. Securities
borrowed transactions require the Company to deposit cash, letters of credit or
other collateral with the lender. With respect to securities loaned, the
Company receives collateral in the form of cash or other collateral in an
amount generally in excess of the market value of securities loaned. The
Company monitors the market value of securities borrowed and loaned on a daily
basis with additional collateral obtained or refunded as necessary.
Securities sold under agreements to repurchase (repurchase agreements) and
securities purchased under agreements to resell (resale agreements) are treated
as financing arrangements and are carried at contract amounts reflective of the
amounts at which the securities will be subsequently reacquired or resold as
specified in the respective agreements. Interest is accrued on such contract
amounts and is included in receivables from and payables to brokers, dealers
and other in the accompanying consolidated statements of financial condition.
The Company takes possession of the underlying assets purchased under
agreements to resell and obtains additional collateral when the market value
falls below the contract value. Repurchase and resale agreements with the same
counterparty, same maturity date, which settle through the Federal Reserve
system and which are subject to master netting agreements are presented net in
the consolidated financial statements.
36
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
U.S. government and agency securities, mortgage-backed securities, options,
futures and forward transactions and certain other debt obligations are
recorded in the consolidated financial statements on a trade date basis. All
other securities are recorded on a settlement date basis and adjustments are
made to a trade date basis, if significant.
Securities owned (other than long-term corporate development investments) are
carried at market value. Changes in unrealized appreciation (depreciation)
arising from fluctuations in market value or upon realization of security
positions are reflected in revenues, principal transactions-net, trading.
Long-term corporate development investments represent the Company's involvement
in private debt and equity investments which generally have no readily
available market or may otherwise be restricted as to resale under the
Securities Act of 1933. Accordingly, these investments are carried at estimated
fair value as determined by the Finance Committee of the Board of Directors.
The cost of these investments was $246.4 million and $276.2 million at December
31, 1996 and 1995, respectively. The (decrease) increase in net unrealized
appreciation of long-term corporate development investments amounted to $(50.3)
million, $(97.8) million and $17.5 million for the years ended December 31,
1996, 1995 and 1994, respectively. Changes in net unrealized appreciation
arising from changes in fair value or upon realization are reflected in
revenues, principal transactions-net, investment.
Mortgages, other receivables collateralized by real estate assets and real
estate owned generally represent the Company's interest in mortgages receivable
and are carried at amounts approximating fair value, determined by reference to
the cash flows and/or estimated sales prices of the underlying properties.
Property and equipment are carried at cost and are depreciated on a
straight-line basis over the estimated useful life of the related assets
ranging from three to eight years. Leasehold improvements are amortized over
the lesser of the useful life of the improvement or term of the lease. Exchange
memberships owned by the Company are included in other assets and are carried
at cost.
Assets and liabilities of foreign subsidiaries denominated in non-U.S. dollar
currencies are translated at exchange rates prevailing at the date of the
consolidated statements of financial condition. Revenues and expenses are
translated at average exchange rates during the period. The gains or losses
resulting from translating foreign currency financial statements into U.S.
dollars are included as a separate component of stockholders' equity. Gains or
losses resulting from foreign currency transactions are included in the
consolidated statements of income.
The Company is included in the consolidated Federal income tax returns filed by
Equitable. DLJ provides taxes as if the Company files a separate tax return.
Related current and deferred tax receivables or liabilities with Equitable are
included in other assets or liabilities in the consolidated statements of
financial condition. Deferred tax expenses and benefits are recognized in the
consolidated financial statements for the changes in deferred tax liabilities
and assets. Under a tax sharing agreement with Equitable, all Federal taxes
payable by the Company are payable to Equitable for periods while the Company
is at least 80% owned by Equitable. Effective January 1, 1997, Equitable's
ownership for tax purposes declined to under 80% and therefore, the Company
will begin to file its own U.S. consolidated Federal income tax return separate
and apart from Equitable.
All liabilities related to postretirement and postemployment benefits have been
provided for and the related costs are not significant.
37
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise price.
On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation", which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 also allows entities to continue to apply
the provisions of APB Opinion No. 25 and provide pro forma net income and pro
forma earnings per share disclosures for employee stock option grants made in
1995 and future years as if the fair-value-based method defined in SFAS No. 123
had been applied. The Company has elected to continue to apply the provisions
of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS
No. 123.
In June 1996, the Financial Accounting Standards Board (FASB) issued SFAS No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". SFAS No. 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996 and is to be applied prospectively. This Statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of a financial-components approach that focuses on control. It
distinguishes transfers of financial assets that are sales from transfers that
are secured borrowings. In December 1996, the FASB issued SFAS No. 127
"Deferral of the Effective Date of Certain Provisions of FASB Statement No.
125" which delays until January 1, 1998 the effective date for certain
provisions. The Company is currently evaluating the impact of this standard on
its consolidated financial statements.
Certain reclassifications have been made to prior year consolidated financial
statements to conform to the 1996 presentation.
2. Equity Distribution and Senior Debt Offering
On October 30, 1995, the Company completed an initial public offering (the
"Initial Public Offering" or "IPO"). Of the 10.6 million shares of Common Stock
sold in the IPO, 7.3 million shares were sold by Equitable and 3.3 million
shares were sold by the Company, at $27.00 per share. This transaction had the
effect of reducing Equitable's ownership in the Company from 100 percent to
80.2 percent. Equitable's ownership will be further reduced upon the vesting of
forfeitable restricted stock units ("RSUs") acquired by, and/or the exercise of
certain options granted to, certain of the Company's employees in connection
with the IPO. (See Note 13-Employee Benefit Plans for a discussion of RSUs and
options issued in connection with the IPO.) Proceeds to the Company from the
IPO amounted to approximately $81.2 million, net of related expenses.
Concurrent with the IPO, the Company completed the public offering of $500
million aggregate principal of 6 7/8% Senior Notes due November 1, 2005 ("the
Senior Debt Offering"). (See Note 5) Proceeds from the Senior Debt Offering
amounted to approximately $493.5 million (net of underwriting discounts and
commissions) and, along with the proceeds from the IPO, were primarily used to
repay certain outstanding indebtedness.
38
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
3. Related Party Transactions
In the normal course of business, the Company provides brokerage services
including clearance, investment banking and related activities for Equitable
and certain of its affiliates. The amounts related to such activities are not
significant. The Company also manages a bridge facility that provides
short-term loans in connection with merchant banking transactions. The facility
includes a $500 million commitment of senior revolving debt from a commercial
bank syndicate and a $750 million commitment of subordinated debt from
Equitable. The Company has agreed to pay Equitable the first $25 million of
aggregate principal losses incurred by Equitable with respect to all bridge
loans outstanding on September 30, 1995 and the first $25 million of aggregate
principal losses incurred by Equitable with respect to bridge loans made after
September 30, 1995, plus the amount, if any, by which any individual loss
exceeds $150 million. Additionally, Equitable has committed $250 million to a
facility formed for the purpose of making senior credit facilities available to
corporate borrowers.
Amounts payable to Equitable and its affiliates consist primarily of federal
income taxes pursuant to a federal income tax sharing agreement between the
Company and Equitable amounting to $24.4 million and $71.6 million at December
31, 1996 and 1995, respectively, and are included in other liabilities in the
accompanying consolidated statements of financial condition. The Company does
not pay or receive interest on the outstanding balances with Equitable. The
average balances outstanding amounted to $74.9 million and $107.8 million at
December 31, 1996 and 1995, respectively. Dividends on common stock of $21.4
million, $21.6 million and $32.5 million were paid or accrued to Equitable for
the years ended December 31, 1996, 1995 and 1994, respectively.
4. Cash and Securities Segregated Under Federal and Other Regulations
Cash of $13.2 million and $9.9 million and securities with a market value of
$770.0 million and $409.7 million as of December 31, 1996 and 1995,
respectively, have been segregated in special reserve bank accounts for the
benefit of customers in accordance with regulations of the Securities and
Exchange Commission and the Commodities Futures Trading Commission.
5. Borrowings
Short-term borrowings are from banks and other financial institutions and are
generally demand obligations, at interest rates approximating Federal fund
rates. Such borrowings are generally used to finance securities inventories, to
facilitate the securities settlement process and to finance securities
purchased by customers on margin. At December 31, 1996 and 1995, securities
owned by the Company, aggregating $363.6 million and $178.1 million,
respectively, were pledged to secure certain of these borrowings.
39
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
Short-term borrowings and repurchase agreements and the weighted average
interest rates related to these borrowings at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Weighted Average
Amounts Interest Rates
December 31, December 31,
1996 1995 1996 1995
-------- -------- -------- --------
(In millions)
<S> <C> <C> <C> <C>
Securities sold under agreements to repurchase.... $ 29,378 $ 26,745 6.08% 5.69%
Bank loans........................................ 669 400 6.89 6.21
Borrowings from other financial institutions...... 197 358 6.95 6.28
</TABLE>
Additionally, included in short-term borrowings at December 31, 1996 are $297.0
million of structured notes with maturities of less than one year. The weighted
average interest rate of such notes issued with a stated coupon was 5.40%.
The Company also finances its activities through long-term borrowing
arrangements. Long-term borrowings, including current maturities of $112.0
million and $110.3 million at December 31, 1996 and 1995, respectively, consist
of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
------ ------
(In thousands)
<S> <C> <C>
Senior notes, 6 7/8% due in 2005..................................... $ 497,160 $ 496,836
Senior subordinated revolving credit agreement
due in 1998........................................................ 206,500 250,000
Subordinated exchange notes, 9 5/8% due in 2003...................... 225,000 -
Structured notes..................................................... 216,234 24,470
Medium-term notes, 5 5/8% due in 2016................................ 249,537 -
Medium-term notes, 7.88% due in 1997................................. 88,000 88,000
Swiss Franc bonds, 10.55% due in 1996................................ - 105,513
Junior subordinated convertible debentures, 6.1875%
due in 2001......................................................... 43,500 -
Other................................................................ 15,709 18,567
----------- ---------
Total long-term borrowings...................................... $ 1,541,640 $ 983,386
=========== =========
Scheduled maturities of long-term borrowings are as follows:
December 31,
1996 1995
------ ------
(In thousands)
1996........................... $ - $ 110,333
1997........................... 112,010 105,923
1998........................... 230,018 250,126
1999........................... 42,654 814
2000........................... 70 19,354
2001-2016...................... 1,156,888 496,836
----------- ---------
$ 1,541,640 $ 983,386
=========== =========
</TABLE>
40
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
The commitment under the senior subordinated revolving credit agreement was
increased to $325 million in January 1995. Interest on the senior subordinated
revolving credit agreement is 6.375% and 6.75% at December 31, 1996 and 1995,
respectively and is calculated based on the London Interbank Offered Rate
("LIBOR").
In March 1995, the Company entered into a secured term loan agreement for
$250.0 million which was collateralized by bonds secured by real estate assets
and originally due in 1999. In October 1995, this agreement was repaid in full
with the proceeds of the IPO and the Senior Debt Offering.
In October 1995, the Company issued at a discount $500 million aggregate
principal amount of 6 7/8% Senior Notes due November 1, 2005 (the "Senior
Notes") in the Senior Debt Offering. Interest is payable semi-annually in
arrears on May 1 and November 1 commencing on May 1, 1996. The Senior Notes are
not redeemable by the Company prior to maturity and are not entitled to any
sinking fund.
In January 1996, the Swiss Franc bonds of $105.5 million plus accrued interest
were repaid in full.
In February 1996, a shelf registration statement, which enables the Company to
issue from time to time up to $500 million in aggregate public offering price
of Senior Debt Securities and/or Preferred Stock, was declared effective by the
Securities and Exchange Commission. On February 15, 1996, the Company completed
an offering under such shelf registration statement of $250 million aggregate
principal amount of its 5 5/8% Medium-Term Notes due February 15, 2016. The
notes are repayable by the Company, in whole or in part, at the option of the
holders on February 15, 2001.
Structured notes are customized financing instruments in which the amount of
interest or principal paid on the debt obligation is linked to the return on
specific cash market financial instruments. At December 31, 1996 the weighted
average interest rate of structured notes issued with a stated coupon was
11.12%. The notes mature at various dates through 2007.
In July 1996, $43.5 million junior subordinated convertible debentures were
issued by a subsidiary of the Company. The debentures are convertible, in whole
or in part, at the option of an affiliate, into adjustable rate cumulative
redeemable preferred stock of the subsidiary on or after July 31, 1997.
In October 1996, the Company exercised its option under the terms of the $8.83
Cumulative Preferred Stock agreement to exchange all 2.25 million shares
outstanding for $225 million in aggregate principal amount of 9.58%
Subordinated Exchange Notes due 2003. The notes are redeemable, in whole or in
part, at the option of the Company at any time (See Note 11-Preferred
Securities).
Interest paid on all borrowings and financing arrangements amounted to $2.8
billion, $2.7 billion and $2.1 billion for the years ended December 31, 1996,
1995 and 1994, respectively.
The Company has committed credit facilities which enables it to borrow up to
$1.28 billion on a secured basis and $650 million on an unsecured basis.
Interest rates to be charged are based upon Federal funds, Eurodollar or
negotiated rates, as applicable. There were no borrowings outstanding at
December 31, 1996 and 1995 under these agreements.
41
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
6. Income Taxes
Income taxes included in the consolidated statements of income represent the
following:
<TABLE>
<CAPTION>
Current Deferred Total
--------- ---------- ---------
(In thousands)
<S> <C> <C> <C>
Year ended December 31, 1996:
U.S. Federal............................... $ 222,225 $ (88,970) $ 133,255
Foreign.................................... 16,045 - 16,045
State and local............................ 64,252 (31,052) 33,200
--------- ---------- ---------
$ 302,522 $ (120,022) $ 182,500
========= ========== =========
Year ended December 31, 1995:
U.S. Federal............................... $ 197,200 $ (104,700) $ 92,500
Foreign.................................... 760 - 760
State and local............................ 41,097 (14,957) 26,140
--------- ---------- ---------
$ 239,057 $ (119,657) $ 119,400
========= ========== =========
Year ended December 31, 1994:
U.S. Federal............................... $ 115,067 $ (45,417) $ 69,650
Foreign.................................... 1,305 - 1,305
State and local............................ 21,433 (10,388) 11,045
--------- ---------- ---------
$ 137,805 $ (55,805) $ 82,000
========= ========== =========
</TABLE>
The difference between the "expected" Federal tax rate and expense computed by
applying the statutory tax rate to income before provision for income taxes and
the effective tax rate and expense is as follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- -------------------- --------------------
Percent Percent Percent
of of of
Pre-tax Pre-tax Pre-tax
Amount Income Amount Income Amount Income
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected"
tax provision............ $ 165,830 35.0% $ 104,475 35.0% $ 71,750 35.0%
Non-taxable income
and expense items........ (4,910) (1.1) (2,560) (0.9) 2,223 1.1
State and local taxes,
net of related Federal
income tax benefit....... 21,580 4.6 17,485 5.9 8,027 3.9
---------- ------- ---------- ------- ---------- -------
$ 182,500 38.5% $ 119,400 40.0% $ 82,000 40.0%
========== ======= ========== ======= ========== =======
</TABLE>
42
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1996
and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Inventory..................................... $ 15,463 $ 7,705
Investments................................... 56,612 59,116
Other liabilities and accrued expenses........ 385,040 305,197
Fixed assets.................................. 13,737 5,418
Other......................................... - 3,700
Deferred tax liabilities:
Inventory..................................... (49,349) (52,334)
Investments................................... (34,072) (64,026)
Fixed assets.................................. (3,796) (1,139)
Other......................................... (282) (306)
--------- ---------
Net deferred tax asset............................. $ 383,353 $ 263,331
========= =========
</TABLE>
There are no valuation allowances recorded against deferred tax assets at
December 31, 1996 and 1995 since management has determined that there is
sufficient taxable income from carryback years and anticipated future reversals
of existing taxable temporary differences to offset the tax benefit of
deductible temporary differences.
Although realization is not assured, management believes it is more likely than
not that all of the deferred tax assets will be realized. The amount of the
deferred tax assets considered realizable, however, could be reduced in the
near term if estimates of future taxable income during the carryforward period
are reduced.
An affiliate of Equitable is included in the combined return for certain state
and local tax returns filed by the Company. Effective January 1, 1997,
Equitable's ownership for tax purposes declined to under 80% and therefore such
affiliate will no longer be included in the Company's state and local tax
returns.
Net Federal income tax equivalents paid to Equitable were $267.5 million,
$277.8 million and $87.0 million in the years ended December 31, 1996, 1995 and
1994, respectively.
7. Net Capital
The Company's wholly owned principal subsidiary, Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC") is a registered broker-dealer, a registered
futures commission merchant and member firm of The New York Stock Exchange,
Inc. (the "NYSE") and, accordingly is subject to the minimum net capital
requirements of the Securities and Exchange Commission, NYSE and the
Commodities Futures Trading Commission. As such, it is subject to NYSE's net
capital rule which conforms to the Uniform Net Capital Rule pursuant to rule
15c3-1 of the Securities Exchange Act of 1934. Under the alternative method
permitted by this rule, the required net capital, as defined, shall not be less
than two percent of aggregate debit balances arising from customer
transactions, as defined, or four percent of segregated funds, as defined,
whichever is greater. The NYSE may also require a member firm to reduce its
business if its net capital is less than four percent of aggregate debit
balances and may prohibit a member firm from expanding its business and
declaring cash dividends if its net capital is less than five percent of
aggregate debit balances. At December 31, 1996, DLJSC's net capital of
approximately $654.1 million was 21% of aggregate debit balances and in excess
of the minimum requirement by approximately $584.0 million.
43
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
Certain other U.S. and foreign subsidiaries of the Company are subject to net
capital requirements of their respective regulatory agencies. At December 31,
1996 and 1995 the Company and its subsidiaries were in compliance with all
applicable regulatory capital adequacy requirements.
8. Derivative Financial Instruments
Substantially all of the Company's business related to derivatives is by its
nature trading activities which are primarily for the purpose of customer
accommodations. The Company's derivative activities consist primarily of option
writing and trading in forward and futures contracts. Derivative financial
instruments have both on-and off-balance sheet implications depending on the
nature of the contracts. The Company's involvement in swap contracts is not
significant.
Accounting Policies
Changes in unrealized gains or losses on all derivative instruments are
included in the consolidated statements of income in principal
transactions-net, trading. Changes in the value of options contracts are
included in the consolidated statements of income. Fair value of the options
includes the premiums which are deferred and are recognized as revenue over the
life of the option contracts on a straight-line basis or are recognized as
revenue through the change in the fair value of the option. The notional
amounts of forward and futures contracts are treated as off-balance sheet
items. Changes in unrealized gains and losses on forward and futures contracts
are included in the consolidated statements of income with corresponding
offsetting amounts reflected as assets or liabilities.
Options
As part of customer accommodations the Company writes option contracts
specifically designed to meet customers' needs. As a writer of over the counter
("OTC") option contracts, the Company receives a cash premium at the beginning
of the contract period and bears the risk of unfavorable changes in the value
of the financial instruments underlying the options. Options written do not
expose the Company to credit risk since they obligate the Company (not its
counterparty) to perform. With respect to the financial instruments underlying
these options, the Company makes a determination that credit exposures are
appropriate for the particular counterparty with whom business is conducted.
The Company generally covers its market risk associated with the options
business by purchasing or selling cash or other derivative financial
instruments on a proprietary basis to cover the options written. Such purchases
and sales may include debt and equity securities, futures and forward contracts
and options. The Company reviews the creditworthiness of the counterparties of
such covering transactions. Future cash requirements for options written are
equal to the fair value of the options. Option contracts are typically written
for a duration of less than 13 months and are included in the balance sheet at
fair value. Option premiums are recognized as revenue over the life of the
option contracts on a straight-line basis or are recognized as revenue through
the change in the fair value of the option.
The notional (contract) value of the written options was $8.6 billion and $3.7
billion at December 31, 1996 and 1995, respectively. Such options contracts are
covered by the following financial
44
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
instruments which the Company has purchased or sold on a proprietary basis and
are reflected in the table below at either the underlying contract (notional)
amounts for derivative instruments or at market value for cash instruments:
<TABLE>
<CAPTION>
December 31,
1996 1995
------- -------
(In millions)
<S> <C> <C>
U.S. government, mortgage-backed
securities and options thereon................. $ 4,679 $ 1,569
Foreign sovereign debt securities................... 2,460 666
Equity swap contracts............................... 70 408
Currency forward contracts.......................... 18 -
Futures contracts................................... 306 183
Equities and other.................................. 1,079 911
------- -------
Total.................................... $ 8,612 $ 3,737
======= =======
</TABLE>
The trading revenues from option writing activity (net of related interest
expense) were approximately $71.2 million, $96.0 million and $100.3 million for
the years ended December 31, 1996, 1995 and 1994, respectively. The fair value
of options is measured by the unamortized premiums and the intrinsic value
determined from various pricing sources. The average fair value of the options
was approximately $172.7 million and $128.7 million for the years ended
December 31, 1996 and 1995, respectively. The fair value of options was
approximately $241.9 million and $154.4 million at December 31, 1996 and 1995,
respectively, and were included as liabilities in the accompanying consolidated
statements of financial condition.
Forwards and Futures
As part of its trading activities, the Company enters into forward purchases
and sales contracts for mortgage-backed securities and foreign currencies. The
Company also enters into futures contracts on equity-based indices, foreign
currencies and other financial instruments as well as options on futures
contracts. Forward and futures contracts are treated as off-balance sheet
items. Changes in unrealized gains and losses on forward and futures contracts
are included in the consolidated statements of income with corresponding
offsetting amounts reflected as assets or liabilities. Market risk for a
forward and future is the movement of price on the notional value of the
contracts. Cash requirements at inception equal the original margin on futures
contracts. Generally, no cash is required at inception for forward contracts.
The cash requirement at settlement is equal to the notional value on the
contract for a forward contract and the daily changes in market value for a
futures contract. The performance of forward contracts is dependent on the
financial reliability of the counterparty and exposes the Company to credit
risk. The Company monitors credit exposure of forward contracts by limiting
transactions with specific counterparties, reviewing credit limits and adhering
to internally established credit extension policies. Futures contracts and
options on futures contracts are exchange-traded financial instruments that
generally do not represent exposure to credit risk due to daily cash
settlements of the change in market value with the exchanges. The credit risk
with the futures exchange is limited to the net positive change in the market
value for a single day. The following is a summary of the values of these
contracts at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
December 31,
1996 1995
-------- --------
(In millions)
<S> <C> <C>
Forward Contracts:
Purchased at notional (contract) value................ $ 14,070 $ 18,186
Sold at notional (contract) value..................... 17,917 17,066
Futures Contracts and Options on Futures Contracts:
Purchased at market value............................. $ 1,420 $ 1,129
Sold at market value.................................. 2,774 1,932
</TABLE>
45
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
The following is a summary of the values of these contracts included in the
consolidated financial statements at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
December 31,
1996 1995
------ ------
(In millions)
<S> <C> <C>
Forward Contracts:
Average fair values included in liabilities during
the period............................................. $ (10) $ (4)
Unrealized gains included in total assets
at end of period....................................... 44 48
Unrealized losses included in total liabilities at
end of period......................................... 46 51
Futures Contracts:
Average fair values included in assets during
the period............................................. $ 2 $ -
Average fair values included in liabilities during
the period............................................. - (6)
Unrealized gains included in total assets
at end of period....................................... 6 -
</TABLE>
Net trading gains (losses) on forward contracts were $39.0 million, $149.0
million and $(157.0) million and net trading gains (losses) on futures
contracts were $8.0 million, $(58.0) million and $59.0 million for the years
ended December 31, 1996, 1995 and 1994, respectively.
Average fair values during the period were computed using month-end averages.
The fair values of futures contracts are measured by reference to quoted market
prices. Fair values of forward contracts are estimated on the basis of dealer
quotes, pricing models or quoted prices for financial instruments with similar
characteristics. The Company generally enters into futures and forward
transactions for periods of 90 days or less. The remaining maturities for all
options, forwards and futures are less than 13 months.
9. Financial Instruments With Off-Balance Sheet Risk
In the normal course of business, the Company's customer, trading and
correspondent clearance activities involve the execution, settlement and
financing of various securities and financial instrument transactions. The
execution of these transactions includes the purchase and sale (including
"short sales") of securities, the writing of options, and the purchase and sale
of financial futures contracts and forward purchase and sales contracts for
mortgage-backed securities and foreign currencies. These activities may expose
the Company to off-balance sheet risk in the event the customer or counterparty
to the transaction is unable to fulfill its contractual obligations and margin
requirements are not sufficient to fully cover losses. In these situations, the
Company may be required to purchase or sell financial instruments at prevailing
market prices which may not fully cover the obligations of its customers or
counterparties. The Company limits this risk by requiring customers and
counterparties to maintain margin collateral that is in compliance with
regulatory and internal guidelines. Additionally, with respect to the Company's
correspondent clearance activities, introducing correspondent brokers are
required to guarantee the performance of their customers in meeting contractual
obligations.
The Company's financing and securities settlement activities involve the
Company using securities as collateral in support of various secured financing
sources. In the event the counterparty does not meet its contracted obligation
to return securities used as collateral, the Company may be exposed to the risk
of reacquiring the securities at prevailing market prices in order to satisfy
its obligations. The Company controls this risk by monitoring the market value
of securities pledged on a daily basis and by requiring adjustments of
collateral levels in the event of excess market exposure.
46
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
The Company's activities include entering into forward contracts which provide
for the future delivery or receipt of securities at a specified price or yield.
Risk arises from the potential inability of counterparties to perform under the
terms of the contracts and from changes in securities value and interest rates.
The Company controls the risk by monitoring the market value of the securities
contracted for on a daily basis and reviewing the creditworthiness of the
counterparties. The Company reflects the changes in the market value of these
instruments in the consolidated statements of income. The settlement of these
transactions is not expected to have a material adverse effect on the Company's
consolidated financial statements.
Risks associated with letters of credit, guarantees or underwriting commitments
are not significant.
10. Concentrations of Credit Risk
As a securities broker and dealer, the Company is engaged in various securities
trading and brokerage activities servicing a diverse group of domestic and
foreign corporations, governments, institutional and individual investors. A
substantial portion of the Company's transactions are executed with and on
behalf of institutional investors including other brokers and dealers, mortgage
brokers, commercial banks, U.S. governmental agencies, mutual funds and other
financial institutions and are generally collateralized. The Company's exposure
to credit risk associated with the nonperformance of these counterparties in
fulfilling their contractual obligations pursuant to securities transactions,
can be directly impacted by volatile securities markets, credit markets and
regulatory changes. Credit risk is the amount of accounting loss the Company
would incur if a counterparty failed to perform its obligations under
contractual terms and the collateral held, if any, was deemed insufficient. All
counterparties are reviewed on a regular basis to establish appropriate
exposure limits for a variety of transactions. In certain cases, specific
transactions are analyzed to determine the amount of potential exposure that
could arise, and the counterparty's credit is reviewed to determine whether it
supports such exposure. In addition to the counterparty's credit status, the
Company analyzes market movements that could affect exposure levels. The
Company considers four main factors that may affect trades in determining
trading limits: the settlement method; the time it will take for a trade to
settle (i.e., the maturity of the trade); the volatility that could affect the
value of the securities involved in the trade; and the size of the trade. In
addition to determining trading limits, the Company actively manages the credit
exposure relating to its trading activities by entering into master netting
agreements when feasible; monitoring the creditworthiness of counterparties and
the related trading limits on an ongoing basis and requesting additional
collateral when deemed necessary; diversifying and limiting exposure to
individual counterparties and geographic locations; and limiting the duration
of exposure. In certain cases, the Company may also close out transactions or
assign them to other counterparties when deemed necessary or appropriate to
mitigate credit risks.
The Company's customer securities activities are transacted on either a cash or
margin basis. In margin transactions, the Company extends credit to the
customer, subject to various regulatory and internal margin requirements,
collateralized by cash and securities in the customer's account. The Company
seeks to control the risks associated with its customer activities by requiring
customers to maintain margin collateral in compliance with various regulatory
and internal guidelines. The Company monitors required margin levels daily and,
pursuant to such guidelines, requires the customers to deposit additional
collateral, or reduce positions, when necessary.
11. Preferred Securities
During the third quarter of 1996, the Company and its wholly owned trust, DLJ
Capital Trust I (the "Trust") completed an offering from a shelf registration
of $200 million of the Trust's 8.42% mandatorily redeemable preferred
securities. The Trust exists for the sole purpose of issuing preferred
securities and common securities and investing the proceeds in an equivalent
amount of junior subordinated debentures of the Company. The only assets of its
Trust at December 31, 1996 were $200 million of 8.42% Junior Subordinated
Debentures of the Company due 2046. The Junior Subordinated Debentures are
redeemable by the Company, in whole or in part, on or after August 31, 2001.
The Trust must redeem its preferred securities having an aggregate liquidation
amount equal to the aggregate principal amount of junior subordinated
debentures redeemed.
47
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
The Company guarantees payment to the holders of the preferred securities
issued by the Trust, to the extent the Company has made principal and interest
payments on the Junior Subordinated Debentures. The Company has issued a full
and unconditional guarantee of the Trust's obligations under the preferred
securities of the Trust.
In addition, in October 1996, the Company exercised its option under the terms
of the $8.83 Cumulative Preferred Stock agreement to exchange all 2.25 million
shares outstanding for $225 million in aggregate principal amount of 9.58%
Subordinated Exchange Notes due October 15, 2003. The notes are redeemable, in
whole or in part, at the option of the Company, at any time.
12. Stockholders' Equity
In August 1995, the Company amended its Certificate of Incorporation whereby
the amount of total authorized shares of Common Stock was increased to 150.0
million shares and the Company declared a 5-to-1 stock split ("the 1995 Stock
Split"). All share, per share and dividend per share amounts have been
retroactively restated to reflect this split.
In October 1995, Equitable made a capital contribution to the Company of a
portion of its investment in a New York Stock Exchange listed company valued at
$55.0 million at the time of the contribution. Such shares were recorded at
Equitable's carrying value immediately prior to the contribution, marked to
market as appropriate, and sold in 1996 at a nominal profit.
In October 1995, the Company completed the Initial Public Offering resulting in
the sale of 3.3 million shares of Common Stock at $27.00 per share. Proceeds to
the Company amounted to approximately $81.2 million, net of related expenses.
In connection with the Initial Public Offering, the Company adopted the 1995
Restricted Stock Unit Plan and granted approximately 5.2 million units under
this plan.
On November 19, 1996, the Company issued 4.0 million shares of Fixed/Adjustable
Rate Cumulative Preferred Stock, Series A, with a liquidation preference of $50
per share. Dividends on the preferred stock are cumulative and payable
quarterly at a rate of 5.94% per annum through November 30, 2001. Thereafter,
the dividend rate will be adjusted based on various indices, not to be less
than 6.44% nor higher than 12.44%. The preferred stock is redeemable, in whole
or in part, at the option of the Company, on or after November 30, 2001. At
December 31, 1996, 4.0 million shares of such preferred stock were authorized,
issued and outstanding.
13. Employee Benefit Plans
Long-Term Incentive Plan
The Company has two long-term incentive compensation plans ("1991 LTI Plan" and
"1994 LTI Plan"). Certain members of management agreed with the Company in 1993
not to participate in the 1994 LTI Plan but instead to extend the performance
period under which units in the 1991 LTI Plan are valued from three to six
years. Units in the plans are awarded to participants at the discretion of
senior management. Participants generally vest in their unit awards at the rate
of 33% per annum, with 100% vesting at the end of each three-year period. These
LTI Plans ended December 31, 1996. The value of the participants' units is
based upon the Company's cumulative average performance, as defined, over the
relevant three or six-year performance period. Such value shall be paid 50%
within 120 days of the later of the final vesting date or the end of the
performance period with the remaining 50% payable within one year thereafter.
(See "1995 Restricted Stock Unit Plan"). Amounts charged to expense for the
1991 LTI Plan and 1994 LTI Plan were $190.5 million, $132.8 million and $92.6
million for the years ended December 31, 1996, 1995 and 1994, respectively.
1996 Incentive Compensation Plan
In the second quarter of 1996, the stockholders approved the 1996 Incentive
Compensation Plan (the "Incentive Plan") which is effective January 1, 1996.
Awards under the Incentive Plan are determined by the Compensation and
Management Committee of the Board of Directors. The
48
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
Incentive Plan provides for the creation of short-term and long-term award
pools to be awarded to key employees of the Company. Short-term award pools are
for a performance period up to two years and are based on 10% of pre-tax
earnings, as defined. Long-term award pools are for performance periods of
three to 10 years and are based on a percentage of pre-tax earnings and vary
with the Company's average return on common equity during the performance
period. Participants may receive awards in the form of cash, options, shares or
restricted stock units, however, stock-based payments are limited to a total of
8.8 million shares. Under certain circumstances, participants may defer the
receipt of part or all of any award.
1995 Restricted Stock Unit Plan
In October 1995, the Company adopted the 1995 Restricted Stock Unit Plan (the
"Plan"). Each RSU granted under the Plan represents the right under certain
circumstances to receive a share of Common Stock. Certain of the Company's
employees received RSUs in exchange for a reduction in their interests in
certain cash compensation arrangements maintained by the Company aggregating
$100.0 million. These units are subject to forfeiture in certain circumstances
and will vest annually in specified proportions from February 1997 through
February 2000. Units that are forfeited under the Plan will become eligible for
subsequent grants. The number of units granted under the Plan was 5,179,147
units. Compensation expense for such awards, determined based on the difference
between the fair value of the RSUs and the amount of cash compensation
exchanged therefor, amounted to approximately $6.2 million and was recorded in
the fourth quarter of 1995. As of December 31, 1996, 97,354 restricted stock
units were forfeited.
Stock Option Plans
In October 1995, the Company adopted the 1995 and 1996 Stock Option Plans.
Under the Company's 1995 Stock Option Plan, options to purchase an aggregate of
9,168,678 shares of Common Stock (the maximum allowable under the 1995 Stock
Option Plan) with an exercise price of $27.00 were granted to certain
employees. Such options were granted to employees in exchange for their
foregoing future interests under certain cash compensation arrangements
aggregating $55.7 million. The options are subject to forfeiture in certain
circumstances and will vest in two equal installments in February 1997 and
February 1998 and are exercisable for a period of up to 10 years from the date
of the grant. Options that are forfeited under the 1995 Stock Option Plan will
become eligible for subsequent grant under the 1996 Stock Option Plan.
The 1996 Stock Option Plan (the "1996 Plan") provides for the granting of
options to key employees, consultants or other service providers to the Company
after the Initial Public Offering. Options to purchase a maximum of 8,789,851
shares of Common Stock, exclusive of forfeitures from the 1995 Stock Option
Plan, are available under the 1996 Plan. The options are exercisable for up to
10 years from the date of grant, are subject to forfeiture in certain
circumstances and will vest in four equal installments commencing one year
after the date of grant. No options will become exercisable prior to February
1997. Options that are forfeited under the 1996 Plan become eligible for
subsequent grant under that plan.
In 1996, the Company adopted the Non-Employee Directors Stock Plan (the "Plan")
to provide compensation to the Company's non-employee directors in the form of
equity. Each non-employee director was granted stock options to purchase 4,000
shares of the Company's common stock on the date the Plan was adopted and will
be granted an additional 4,000 stock options on the date of their annual
re-election to the Board of Directors. Such stock options are granted at a
price equal to the fair value of the stock at the date of grant. The options
are exercisable for up to 10 years from the date of grant and vest in four
equal annual installments commencing one year from the date of grant. In
addition, non-employee directors may be granted other equity-based awards on a
discretionary basis. The total number of shares issuable under the Plan is
200,000. Any shares issued under the Plan will reduce the number of shares
issuable under the Company's 1996 Stock Option Plan. At December 31, 1996,
stock options to purchase 24,000 shares of the Company's common stock were
issued and outstanding.
49
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
A summary of the Company's stock option activity follows:
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
------ --------------
<S> <C> <C>
Outstanding at January 1, 1995 - $ -
Granted.................................. 9,168,678 27.00
---------- -------
Outstanding at December 31, 1995 9,168,678 27.00
Granted.................................. 2,134,000 32.54
Forfeited................................ (172,346) 27.00
---------- -------
Outstanding at December 31, 1996 11,130,332 $ 28.06
========== =======
</TABLE>
Exercise prices for options outstanding at December 31, 1996 ranged from $27.00
to $33.50. The weighted average fair value of options granted during 1996 was
$9.35 per share. The average remaining contractual life of options outstanding
at December 31, 1996 was nine years.
The Company applies APB Opinion 25 in accounting for its stock option plans
and, accordingly, does not recognize any compensation cost associated with such
plans in the consolidated financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its options
under SFAS No. 123, the Company's net income and earnings per common share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Net income (in thousands) As reported $ 291,300 $ 179,100
Pro forma $ 273,800 $ 176,200
Earnings per common share As reported $ 4.55 $ 3.08
Pro forma $ 4.33 $ 3.04
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for options granted during 1996 and 1995, respectively:
dividend yield of 1.54% and 1.85%; expected volatility of 25% for both years,
risk-free interest rates of 6.07% and 5.86%; and an expected life of five years
for all grants.
Other Plans
The Company has a defined contribution employee benefit plan covering
substantially all of the Company's full-time and certain qualified part-time
employees. Company contributions to this plan are determined by the Board of
Directors of the Company annually and were $7.4 million, $6.1 million and $4.9
million for 1996, 1995 and 1994, respectively.
Certain key employees of the Company participate in various other deferred
compensation arrangements which include equity investments in selected merchant
banking activities of the Company paid for by such employees and other
non-qualified plans which are funded by insurance contracts.
14. Leases, Commitments and Contingent Liabilities
The Company leases office space and equipment under cancelable and
non-cancelable lease agreements which expire on various dates through the year
2016. Rent expense for the years ended December 31, 1996, 1995 and 1994
aggregated $76.6 million, $66.2 million and $55.7 million, respectively.
Sublease revenue aggregated $1.0 million for each of the years ended December
31, 1996, 1995 and 1994.
50
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
At December 31, 1996 minimum rental commitments, exclusive of sublease revenue,
escalation and renewal options, on all non-cancelable leases in excess of one
year, are as follows:
<TABLE>
<CAPTION>
Total Lease
Period Commitments
------ -----------
(In thousands)
<S> <C>
1997..................................... $ 58,495
1998..................................... 58,020
1999..................................... 59,148
2000..................................... 54,746
2001..................................... 54,028
2002-2016................................ 642,415
---------
Total............................. $ 926,852
=========
</TABLE>
In the normal course of business, the Company issues letters of credit for
which it is contingently liable for $163.0 million and $142.0 million at
December 31, 1996 and 1995, respectively.
Subsidiaries of the Company have outstanding commitments to provide financings
to third parties in the total amount of $784.0 million, of which $734.0 million
was unfunded at December 31, 1996.
15. Legal Proceedings
The Company has been named as a defendant in a number of actions relating to
its various businesses including various civil actions and arbitrations arising
out of its activities as a broker-dealer in securities, as an underwriter and
as an employer and arising out of alleged employee misconduct. The Company is
also involved, from time to time, in proceedings with, and investigations by,
governmental agencies and self regulatory organizations. Some of the actions
have been brought on behalf of various classes of claimants and seek damages of
material or indeterminate amounts. While the ultimate outcome of litigation
involving the Company cannot be predicted with certainty, management, having
reviewed these actions with its counsel, believes it has meritorious defenses
to all such actions and intends to defend each of these vigorously.
Although there can be no assurance that such actions, proceedings,
investigations and litigation will not have a material adverse effect on the
results of operations of the Company in any future period, depending in part on
the results for such period, in the opinion of management of the Company, based
upon advice of counsel, the ultimate resolution of such actions, proceedings,
investigations and litigation against the Company will not have a material
adverse effect on the consolidated financial condition and/or results of
operations of the Company; except, due to the early stage of the three actions
described below, based upon information currently available to it, management
cannot make an estimate of loss, if any, or predict whether or not such
litigation will have a material adverse effect on the Company's results of
operations in any particular period.
In October 1995, DLJSC was named as a defendant in a purported class action
filed in a Texas State Court on behalf of the holders of $550 million principal
amount of subordinated redeemable discount debentures of National Gypsum
Corporation ("NGC") canceled in connection with a Chapter 11 plan of
reorganization for NGC consummated in July 1993. The State Court named
plaintiff also filed an adversary proceeding in the Bankruptcy Court for the
Northern District of Texas seeking a declaratory judgment that the confirmed
NGC plan of reorganization does not bar the class action claims. Subsequent to
the consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a value
substantially in excess of, the values upon which NGC's plan of reorganization
was based. The two actions arise out of DLJSC's activities as financial advisor
to NGC in the course of NGC's Chapter 11 reorganization proceedings. The class
action complaint alleges that the plan of reorganization submitted by NGC was
based upon projections by NGC and DLJSC which intentionally understated
forecasts, and provided misleading and incorrect information in order to hide
NGC's true value and that defendants breached their fiduciary duties by, among
other things, providing false, misleading or incomplete information to
deliberately understate the value of NGC. The class action complaint seeks
compensatory and punitive damages purportedly sustained by the class.
51
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
The Texas State Court action which was removed to the Bankruptcy Court, has
been remanded back to the state court, which remand is being opposed by DLJSC.
DLJSC intends to defend itself vigorously against all of the allegations
contained in the complaint. Although there can be no assurance, the Company
does not believe that the ultimate outcome of this litigation will have a
material adverse effect on its consolidated financial condition.
In November and December 1995, DLJSC, along with various other parties, was
named as a defendant in a number of purported class actions filed in the U.S.
District Court for the Eastern District of Louisiana. The complaints allege
violations of the Federal securities laws arising out of a public offering in
1994 of $435 million of first mortgage notes of Harrah's Jazz Company and
Harrah's Jazz Finance Corp. The complaints seek to hold DLJSC liable for
various alleged misstatements and omissions contained in the prospectus dated
November 9, 1994. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaints. Although there can be no assurance,
the Company does not believe that the ultimate outcome of this litigation will
have a material adverse effect on its consolidated financial condition.
On January 26, 1996, a purported purchaser of certain notes and warrants to
purchase shares of common stock of Rickel Home Centers, Inc. ("Rickel") filed a
class action complaint against DLJSC and certain other defendants for
unspecified compensatory and punitive damages in the United States District
Court for the Southern District of New York. The suit was brought on behalf of
the purchasers of 126,457 units consisting of $126,457,000 aggregate principal
amount of 13 1/2% senior notes due 2001 and 126,457 warrants to purchase shares
of common stock of Rickel (the "Units") issued by Rickel in October 1994. The
complaint alleges violations of Federal securities laws and common law fraud
against DLJSC, as the underwriter of the Units and as an owner of 7.3% of the
common stock of Rickel, Eos Partners, L.P. and General Electric Capital
Corporation, each as owners of 44.2% of the common stock of Rickel, and members
of the Board of Directors of Rickel, including a DLJSC Managing Director. The
complaint seeks to hold DLJSC liable for alleged misstatements and omissions
contained in the prospectus and registration statement filed in connection with
the offering of the Units, alleging that the defendants knew of financial
losses and a decline in value of Rickel in the months prior to the offering and
did not disclose such information. The complaint also alleges that Rickel
failed to pay its semi-annual interest payment due on the Units on December 15,
1995 and that Rickel filed a voluntary petition for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code on January 10, 1996. DLJSC
intends to defend itself vigorously against all of the allegations contained in
the complaint. Although there can be no assurance, the Company does not believe
that the ultimate outcome of this litigation will have a material adverse
effect on its consolidated financial condition.
16. Earnings Per Share
Earnings per common share and pro forma earnings per common share are computed
by dividing net income applicable to common shares after deducting the
dividends on preferred stock requirements by the weighted average or the pro
forma number of shares of common stock and common stock equivalents outstanding
during each period presented (adjusted for the 1995 Stock Split, See Note 12).
Weighted average common shares and common share equivalents outstanding are
substantially the same for both primary and fully diluted earnings per common
share. The Restricted Stock Units issued in October 1995 are considered common
stock equivalents upon issuance and also have a dilutive effect on the
Company's historical earnings per share amounts. Weighted average common shares
and common share equivalents outstanding have been adjusted for the dilutive
effect of the units on the Company's historical pro forma earnings per share
using the treasury stock method.
52
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements-(Continued)
17. Industry Segment and Geographic Area Data
The Company is primarily engaged in a single line of business as a securities
broker-dealer, which comprises several types of services, such as principal and
agency transactions, underwriting and investment banking and correspondent
clearing. These activities constitute a single business segment.
The assets and revenues related to the Company's foreign operations are not
significant, however the Company has begun expanding its activities abroad.
18. Quarterly Data (Unaudited)
The following table sets forth selected highlights for each of the fiscal
quarters during the years ended December 31, 1996 and 1995 (dollars in
thousands, except per share data):
<TABLE>
<CAPTION>
Income
Before Earnings
Provision Per
Total For Income Net Common
Revenues Taxes Income Share *
----------- ---------- --------- ------
<S> <C> <C> <C> <C>
1996:
First quarter......................... $ 775,910 $ 108,500 $ 65,100 $ 1.01
Second quarter........................ 991,209 157,300 97,000 1.53
Third quarter......................... 771,007 92,000 56,100 0.86
Fourth quarter........................ 952,630 116,000 73,100 1.15
----------- --------- --------- ------
Total year.............. $ 3,490,756 $ 473,800 $ 291,300 $ 4.55
=========== ========= ========= ======
1995:
First quarter......................... $ 582,440 $ 62,500 $ 37,500 $ 0.63
Second quarter........................ 691,298 70,000 42,000 0.72
Third quarter......................... 687,522 70,000 42,000 0.72
Fourth quarter........................ 797,369 96,000 57,600 0.93
----------- --------- --------- ------
Total year.............. $ 2,758,629 $ 298,500 $ 179,100 $ 3.08
=========== ========= ========= ======
</TABLE>
* The sum of the quarters' earnings per common share may not equal the total
year amounts due to the effect of averaging the number of shares of common
stock and common stock equivalents throughout the year.
53
<PAGE>
SCHEDULE I
DONALDSON, LUFKIN & JENRETTE, INC.
(Parent Company Only)
Condensed Statements of Financial Condition
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31,
1996 1995
----------- -----------
ASSETS
<S> <C> <C>
Cash and cash equivalents..................................... $ 7,747 $ 4,843
Receivables from brokers, dealers and other .................. 1,292 976
Securities owned, at value.................................... 40,102 67,499
Receivables from subsidiaries................................. 2,232,198 2,284,187
Investment in subsidiaries, at equity......................... 1,905,023 1,093,905
Other assets and deferred amounts............................. 526,369 415,868
----------- -----------
Total Assets.................................................. $ 4,712,731 $ 3,867,278
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
54
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
(Parent Company Only)
Condensed Statements of Financial Condition
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31,
1996 1995
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Short-term borrowings....................................................... $ 335,912 $ 580,469
Accounts payable and accrued expenses....................................... 999,713 793,295
Due to Equitable............................................................ 24,417 71,609
Other liabilities........................................................... 437,096 304,716
----------- -----------
1,797,138 1,750,089
8.42% Junior subordinated debentures, held by a
subsidiary trust ....................................................... 206,224 -
----------- -----------
Other long-term borrowings................................................. 1,062,130 693,469
----------- -----------
Total liabilities................................................... 3,065,492 2,443,558
----------- -----------
Cumulative Exchangeable $8.83 Preferred Stock,
at redemption value..................................................... - 225,000
----------- -----------
Stockholders' Equity:
Series A Preferred Stock, at liquidation preference..................... 200,000 -
Common stock ($0.10 par value; 150,000,000 shares
authorized; 53,300,000 and 50,000,000 shares issued and
outstanding).......................................................... 5,330 5,330
Restricted stock units (5,179,147 authorized; 5,081,793 and
5,179,147 units issued and outstanding in 1996 and 1995,
respectively) ........................................................ 104,167 106,163
Paid-in capital......................................................... 365,989 363,993
Retained earnings....................................................... 969,856 723,859
Cumulative translation adjustment....................................... 1,897 (625)
----------- -----------
Total stockholders' equity........................................... 1,647,239 1,198,720
----------- -----------
Total Liabilities and Stockholders' Equity.................................. $ 4,712,731 $ 3,867,278
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
55
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
(Parent Company Only)
Condensed Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---------- --------- ---------
<S> <C> <C> <C>
Revenues:
Dividends from affiliates................................ $ 57,094 $ 107,371 $ 25,000
Interest from affiliates................................. 151,774 138,710 111,483
Allocations to affiliates................................ 16,805 14,709 14,097
Other.................................................... 23,508 11,995 37,344
---------- --------- ---------
Total revenues...................................... 249,181 272,785 187,924
---------- --------- ---------
Costs and Expenses:
Compensation and benefits................................ 144,574 129,049 75,017
Interest and operating expenses.......................... 110,447 82,421 69,409
---------- --------- ---------
Total costs and expenses............................ 255,021 211,470 144,426
---------- --------- ---------
Income (loss) before income tax benefit and equity
in undistributed net income of subsidiaries.............. (5,840) 61,315 43,498
---------- --------- ---------
Income tax benefit........................................... 51,766 25,865 2,170
---------- --------- ---------
Income before equity in undistributed
net income of subsidiaries............................... 45,926 87,180 45,668
---------- --------- ---------
Equity in undistributed net income of subsidiaries........... 245,374 91,920 77,332
---------- --------- ---------
Net income................................................... $ 291,300 $ 179,100 $ 123,000
========== ========= =========
Dividends on preferred stock................................. $ 18,653 $ 19,868 $ 20,970
========== ========= =========
Earnings applicable to common shares......................... $ 272,647 $ 159,232 $ 102,030
========== ========= =========
Weighted average common shares outstanding................... 59,918 51,657
========== =========
Earnings per common share.................................... $ 4.55 $ 3.08
========== =========
Pro forma weighted average common shares
outstanding ............................................. 51,475
=========
Pro forma earnings per common share.......................... $ 1.98
=========
</TABLE>
See accompanying notes to condensed financial statements.
56
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
(Parent Company Only)
Condensed Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---------- --------- -----------
<S> <C> <C> <C>
Net cash provided by operating activities..................... $ 194,255 $ 168,857 $ 822,766
---------- --------- -----------
Cash flows from investing activities:
Net (payments for) proceeds from:
Dividends from affiliates................................ 57,094 107,371 25,000
Investment in subsidiaries............................... (563,222) (74,314) (78,678)
Other assets............................................. 3,111 (9,061) (16,353)
---------- --------- -----------
Net cash (used in) provided by investing activities.......... (503,017) 23,996 (70,031)
---------- --------- -----------
Cash flows from financing activities:
Net (payments for) proceeds from:
Short-term borrowings..................................... (244,557) (212,209) (1,181,943)
Issuance of common stock in Initial
Public Offering......................................... - 81,243 -
Issuance of restricted stock units........................ - 100,000 -
Senior Debt Offering...................................... - 496,755 -
Medium-Term Notes......................................... 249,515 - -
Swiss Franc Bonds......................................... (105,513) - -
Other long-term debt...................................... (687) (16,070) -
Senior notes payable...................................... - (9,000) (18,000)
Junior subordinated debentures............................ 206,224 - -
Issuance of Series A Preferred Stock...................... 200,000 - -
Dividends................................................. (45,303) (42,796) (53,494)
Receivables from subsidiaries............................. 51,989 (609,467) 440,781
---------- --------- -----------
Net cash provided by (used in) financing activities........... 311,668 (211,544) (812,656)
---------- --------- -----------
Increase (decrease) in cash and cash equivalents.............. 2,904 (18,691) (59,921)
---------- --------- -----------
Cash and cash equivalents at beginning of year............... 4,843 23,534 83,455
---------- --------- -----------
Cash and cash equivalents at end of year...................... $ 7,747 $ 4,843 $ 23,534
========== ========= ===========
</TABLE>
See accompanying notes to condensed financial statements.
57
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
(Parent Company Only)
Notes to Condensed Financial Statements
1. Basis of Presentation
The condensed financial statements of Donaldson, Lufkin & Jenrette, Inc.
("Parent Company Only") should be read in conjunction with the
consolidated financial statements of Donaldson, Lufkin & Jenrette, Inc.
and subsidiaries ("DLJ" or the "Company") and the notes thereto.
Investments in subsidiaries are accounted for under the equity method.
Certain reclassifications have been made to prior year condensed
financial statements to conform to the 1996 presentation.
2. Related Party Transactions
Receivables from subsidiaries include $1,303.8 million and $874.0
million loaned under master note agreements at December 31, 1996 and
1995, respectively. Substantially all receivables from subsidiaries
provide for interest based on Federal funds rates.
The amount of cash dividends paid to the Company by consolidated
subsidiaries of the Company amounted to $57.1 million, $107.4 million
and $25.0 million for the years ended December 31, 1996, 1995, and 1994,
respectively. There are no restrictions on the payment of dividends,
except for those stipulated in certain debt agreements and in the
Uniform Net Capital Rules applicable to brokers and dealers and futures
commission merchants, which provide for certain minimum amounts of
capital to be maintained to satisfy regulatory requirements in the
Company's principal broker-dealer subsidiary, Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") and under certain
circumstances limits the amount of excess capital that can be withdrawn.
The regulatory requirements, including the Uniform Net Capital rules,
are designed to measure the general financial integrity and liquidity of
registered broker-dealers and futures commission merchants and provide
minimum acceptable net capital levels to satisfy commitments to
customers. Unless an adequate level of capital is maintained, regulated
broker-dealer subsidiaries would be prohibited from paying dividends to
the Company.
3. Long-term Borrowings
Long-term borrowings from banks of $1,062.1 million and $693.5 million
include current maturities of $90.4 million and $105.5 million at
December 31, 1996 and 1995, respectively. The following table sets
forth the maturity of long-term borrowings at December 31, 1996 and
1995:
<TABLE>
<CAPTION>
December 31,
1996 1995
----------- ---------
(In thousands)
<S> <C> <C>
1996 .................... $ - $ 105,513
1997...................... 91,120
90,433
1998...................... - -
1999...................... -
-
2000...................... - -
2001-2005................. 971,697 496,836
----------- ---------
$ 1,062,130 $ 693,469
=========== =========
</TABLE>
58
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
(Parent Company Only)
Notes to Condensed Financial Statements
During the third quarter of 1996, the Parent Company and its wholly
owned trust, DLJ Capital Trust I (the "Trust") completed an offering
from a shelf registration of $200 million of the Trust's 8.42%
mandatorily redeemable preferred securities. The Trust exists for the
sole purpose of issuing preferred securities and common securities and
investing the proceeds in an equivalent amount of junior subordinated
debentures of the Parent Company. The only assets of its Trust at
December 31, 1996 were $200 million of 8.42% Junior Subordinated
Debentures of the Parent Company due 2046. The Junior Subordinated
Debentures are redeemable by the Parent Company, in whole or in part, on
or after August 31, 2001. The Trust must redeem its preferred securities
having an aggregate liquidation amount equal to the aggregate principal
amount of junior subordinated debentures redeemed.
The Parent Company guarantees payment to the holders of the preferred
securities issued by the Trust, to the extent the Parent Company has
made principal and interest payments on the Junior Subordinated
Debentures. The Parent Company has issued a full and unconditional
guarantee of the Trust's obligations under the preferred securities of
the Trust.
The Parent Company maintains a committed credit facility which enables
it to borrow up to $650 million on an unsecured basis. Such facility was
increased in 1996 from $340 million in 1995. There were no borrowings
outstanding at December 31, 1996 and 1995 under this agreement.
4. Contingent Liabilities
From time to time the Parent Company issues guarantees of the
obligations of certain subsidiaries. The amounts of such items in the
aggregate are not considered excessive in relation to the normal
operating levels of the Company and management does not anticipate, as
of December 31, 1996, losses as a result of these transactions.
59
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
60
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required to be furnished pursuant to this item is
incorporated herein by reference from the Registrant's Proxy Statement under
the caption "Election of Directors" which appears on pages 3-6 for the
following directors:
John Chalsty Jerry M. de St. Paer
Joe L. Roby Denis Duverne
Carl B. Menges Louis Harris
Anthony F. Daddino Henri G. Hottinguer
Hamilton E. James W. Edwin Jarmain
Richard S. Pechter Francis Jungers
Theodore P. Shen Joseph J. Melone
Claude Bebear W.J. Sanders III
Henri de Castries John C. West
The information required to be furnished pursuant to this item with regards to
executive officers of the Registrant that has not been included in the
Registrant's Proxy Statement is as follows:
Michael M. Bendik was appointed Senior Vice President and Chief Accounting
Officer in 1983. Mr. Bendik joined the Company as an accounting supervisor in
1974 and since then has held various executive positions at the Company until
his appointment as Senior Vice President and Chief Accounting Officer.
Michael A. Boyd was appointed Senior Vice President and General Counsel in
1975. Mr. Boyd joined the Company in 1971 as an Associate General Counsel of
the Company and General Counsel of its then subsidiary Alliance Capital
Management Corporation.
Gerald B. Rigg was appointed Senior Vice President and Director of Human
Resources in 1986. Mr. Rigg joined the Company in 1971 as a salesman in the
Company's Institutional Equities Division. Since then Mr. Rigg has held various
executive positions at the Company until his election as Senior Vice President
and Director of Human Resources.
ITEM 11. EXECUTIVE COMPENSATION
The information required to be furnished pursuant to this item is set
forth under the caption "Executive Compensation" of the Proxy Statement, and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required to be furnished pursuant to this item is set
forth under the captions "Voting Securities" and "Security Ownership
Management" of the Proxy Statement, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be furnished pursuant to this item is set
forth under the caption "Certain Relationships and Related Party Transactions"
of the Proxy Statement, and is incorporated herein by reference.
61
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
FORM 10-K
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
FOR THE YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
Part IV EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Page Number
Item 14 (a) (1) Financial Statements -----------
<S> <C>
Independent Auditors' Report....................................................... 29
Consolidated Statements of Financial Condition at December 31, 1996 and 1995....... 30
Consolidated Statements of Income for the years ended December 31, 1996, 1995 and
1994............................................................................... 32
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994................................................... 33
Consolidated Statements of Cash Flows for years ended December 31, 1996, 1995 and
1994............................................................................... 34
Notes to Consolidated Financial Statements......................................... 36
Item 14 (a) (2) Financial Statement Schedule
Schedule I Condensed Financial Information of Registrant.......................... 54
Item 14 (a) (3) Exhibits
</TABLE>
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Restated Certificate of Incorporation of Registrant
3.2 By-laws of the Registrant
4.1 Registration Rights and Indemnification Agreement
4.2 Specimen Stock Certificate of the Registrant
4.7 Certificate of Designation of the Registrant's
Fixed/Adjustable Rate Cumulative Preferred Stock, Series A
10.1 Donaldson, Lufkin & Jenrette, Inc. 1991-1993 Long-term
Incentive Plan
10.2 Amendment No. 1 to the Donaldson, Lufkin & Jenrette, Inc.
1991-1993 Long-term Incentive Plan
62
<PAGE>
Item 14 (a) (3) Exhibits (Continued)
EXHIBIT NO. DESCRIPTION
----------- -----------
10.3 Amendment No. 2 to the Donaldson, Lufkin & Jenrette, Inc.
1991-1993 Long-term Incentive Plan
10.4 Donaldson, Lufkin & Jenrette, Inc. 1994-1996 Long-term
Incentive Plan
10.5 Amendment No. 1 to the Donaldson, Lufkin & Jenrette, Inc.
1994-1996 Long-term Incentive Plan
10.6 Donaldson, Lufkin & Jenrette, Inc. 1995 Restricted Stock
Unit Plan
10.7 Donaldson, Lufkin & Jenrette, Inc. 1995 Stock Option Plan
10.8 Donaldson, Lufkin & Jenrette, Inc. 1996 Stock Option Plan
10.9 Deferred Compensation Agreement, dated December 30, 1983,
between Michael M. Bendik and the Registrant
10.10 Deferred Compensation Agreement, dated December 30, 1983,
between Michael A. Boyd and the Registrant
10.11 Deferred Compensation Agreement, dated December 30, 1983,
between John S. Chalsty and the Registrant
10.12 Deferred Compensation Agreement, dated December 30, 1983,
between Anthony F. Daddino and the Registrant
10.13 Deferred Compensation Agreement, dated December 30, 1983,
between Richard H. Jenrette and the Registrant
10.14 Deferred Compensation Agreement, dated December 30, 1983,
between Carl B. Menges and the Registrant
10.15 Deferred Compensation Agreement, dated December 30, 1983,
between Richard S. Pechter and the Registrant
10.16 Deferred Compensation Agreement, dated December 30, 1983,
between Gerald B. Rigg and the Registrant
10.17 Deferred Compensation Agreement, dated December 30, 1983,
between Joe L. Roby and the Registrant
10.18 Deferred Compensation Agreement, dated December 30, 1983,
between Theodore P. Shen and the Registrant
10.19 Letter agreement between the Registrant and ACMC, Inc.,
dated as of August 25, 1995, regarding certain state and
local tax sharing arrangements
10.20 Insurance Agreement, dated August 27, 1992, by and between
the Registrant and Thomas E. Siegler, as Trustee and Owner
of the 1992 Chalsty Insurance Trust, dated August 25, 1995
10.21 Amendment, dated August 28, 1992, to the Insurance
Agreement, dated August 27, 1992, by and between the
Registrant and Michael Cappiccille, as Trustee and Owner
10.22 Federal tax sharing agreement
63
<PAGE>
Item 14 (a) (3) Exhibits (Continued)
EXHIBIT NO. DESCRIPTION
----------- -----------
10.23 Agreement of lease between 99 Bishopsgate Limited,
Landlord, and DLJ International Limited, Tenant and the
Registrant, Tenant's Guarantor, 99 Bishopsgate London, EC2,
dated as of October 24, 1996.
10.30 Agreement of Lease between Stanley Stahl D/B/A Stahl Park
Avenue Co., Landlord, and the Registrant, Tenant, 277 Park
Avenue, New York, New York, dated as of October 26, 1994
10.31 First Amendment of Lease by and between Stanley Stahl D/B/A
Stahl Park Avenue Co. and the Registrant, dated as of March
30, 1995
10.32 Amended and Restated Equitable Credit Agreement, dated
March 1, 1994, among the Registrant, The Equitable Life
Assurance Society of the United States, Equitable Variable
Life Insurance Company, DLJ Bridge Finance, Inc., DLJ
Capital Corporation and DLJ Investment Inc.
10.33 Preferred Stock purchase agreement between the Registrant
and The Equitable Life Assurance Society of the United
States
10.34 Master Repurchase Agreement between Column Financial, Inc.
and DLJ Mortgage Capital, Inc. dated as of November 1, 1993
10.35 Mortgage Loan Purchase Agreement between Column Financial,
Inc. and DLJ Mortgage Acceptance Corp. dated as of December
1, 1994
10.36 First Amendment to the Amended and Restated Equitable
Credit Agreement dated March 1, 1994, among the Registrant,
The Equitable Life Assurance Society of the United States,
Equitable Variable Life Insurance Company, DLJ Bridge
Finance, Inc., DLJ Capital Corporation and DLJ Investment
Inc.
10.37 Agreement of lease between Broadpine Realty Holding
Company, Inc. and the Registrant, Tenant, 120 Broadway, New
York, New York, dated as of November 10, 1995
10.38 Donaldson, Lufkin & Jenrette, Inc. 1996 Incentive
Compensation Plan
10.39 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Michael M. Bendik and the
Registrant
10.40 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Michael A. Boyd and the
Registrant
10.41 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between John S. Chalsty and the
Registrant
10.42 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Anthony F. Daddino and the
Registrant
10.43 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Hamilton E. James and the
Registrant
10.44 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Carl B. Menges and the Registrant
64
<PAGE>
Item 14 (a) (3) Exhibits (Continued)
EXHIBIT NO. DESCRIPTION
----------- -----------
10.45 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Richard S. Pechter and the
Registrant
10.46 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Gerald B. Rigg and the Registrant
10.47 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Joe L. Roby and the Registrant
10.48 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Theodore P. Shen and the
Registrant
10.49 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Michael M. Bendik and the
Registrant
10.50 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Michael A. Boyd and the
Registrant
10.51 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between John S. Chalsty and the
Registrant
10.52 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Anthony F. Daddino and the
Registrant
10.53 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Hamilton E. James and the
Registrant
10.54 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Carl B. Menges and the Registrant
10.55 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Richard S. Pechter and the
Registrant
10.56 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Gerald B. Rigg and the Registrant
10.57 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Joe L. Roby and the Registrant
10.58 1995 Restricted Stock Unit Plan Agreement (Premium), dated
October 24, 1995, between Theodore P. Shen and the
Registrant
10.59 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Michael M. Bendik and the Registrant
10.60 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Michael A. Boyd and the Registrant
10.61 1995 Stock Option Plan Agreement, dated October 24, 1995,
between John S. Chalsty and the Registrant
10.62 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Anthony F. Daddino and the Registrant
10.63 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Hamilton E. James and the Registrant
65
<PAGE>
Item 14 (a) (3) Exhibits (Continued)
EXHIBIT NO. DESCRIPTION
----------- -----------
10.64 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Carl B. Menges and the Registrant
10.65 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Richard S. Pechter and the Registrant
10.66 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Gerald B. Rigg and the Registrant
10.67 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Joe L. Roby and the Registrant
10.68 1995 Stock Option Plan Agreement, dated October 24, 1995,
between Theodore P. Shen and the Registrant
10.69 Amendment No. 1 to LTI-IV Unit Award Agreement, dated
October 24, 1995, between Michael M. Bendik and the
Registrant
10.70 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Michael A. Boyd and the
Registrant
10.71 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between John S. Chalsty and the
Registrant
10.72 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Anthony F. Daddino and the
Registrant
10.73 Amendment No. 1 to LTI-IV Unit Award Agreement, dated
October 24, 1995, between Hamilton E. James and the
Registrant
10.74 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Carl B. Menges and the Registrant
10.75 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Richard S. Pechter and the
Registrant
10.76 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Gerald B. Rigg and the Registrant
10.77 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Joe L. Roby and the Registrant
10.78 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Theodore P. Shen and the
Registrant
10.79 Insurance Agreement dated November 29, 1995, by and between
the Registrant and Kayla L. Pechter and Philip M. Satow, as
Trustees and Owners of the 1995 Pechter Insurance Trust,
dated August 22, 1995
10.80 Insurance Agreement dated October 31, 1995, by and between
the Registrant and Winthrop Trust Company, as Trustee and
Owner of the Anthony F. Daddino Insurance Trust, dated
August 25, 1995
66
<PAGE>
Item 14 (a) (3) Exhibits (Continued)
EXHIBIT NO. DESCRIPTION
----------- -----------
10.81 Insurance Agreement dated February 1, 1996 by and between
the Registrant and Jeanette Eliasberg as Trustee and Owner
of the Trust created under Agreement dated December 22,
1993 between Theodore P. Shen, as Grantor and Jeanette
Eliasberg as Trustee.
10.82 Insurance Agreement dated February 1, 1996 by and between
the Registrant and Jeanette Eliasberg as Trustee and Owner
of the Trust created under Agreement dated December 22,
1993 between Theodore P. Shen, as Grantor and Jeanette
Eliasberg as Trustee.
10.83 Insurance Agreement dated February 1, 1996 by and between
the Registrant and Jeanette Eliasberg as Trustee and Owner
of the Trust created under Agreement dated December 22,
1993 between Theodore P. Shen, as Grantor and Jeanette
Eliasberg as Trustee.
10.84 Insurance Agreement dated January 4, 1996 by and between
the Registrant and Dan Curtis Roby as Trustee and Owner of
the Roby 1995 Insurance Trust dated November 27, 1995.
10.85 Second Amendment of Lease by and between Stanley Stahl
D/B/A Stahl Park Avenue Co. and the Registrant, dated
August 24, 1995.
10.86 Third Amendment of Lease by and between Stanley Stahl D/B/A
Stahl Park Avenue Co. and the Registrant, dated October 6,
1995.
10.87 Fourth Amendment of Lease by and between Stanley Stahl
D/B/A Stahl Park Avenue Co. and the Registrant, dated April
29, 1996.
10.88 1996 Non-Employee Directors Stock Plan
10.89 1996 Stock Option Plan Agreement, dated May 16, 1996,
between Joe L. Roby and the Registrant.
10.90 Donaldson, Lufkin & Jenrette, Inc. 1996 Incentive
Compensation Plan.
11.1 Statement re computation of per share earnings
12.1 Computation of ratio of earnings to fixed charges and ratio
of earnings to combined fixed charges and preferred stock
dividends
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule
67
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized, on the 27th day of
March 1997.
Donaldson, Lufkin & Jenrette, Inc.
(Registrant)
By: /s/ Joe L. Roby
--------------------------------
Joe L. Roby
President and Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has to be signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 27th day of March 1997.
NAME TITLE
---- -----
/s/ John S. Chalsty
- ------------------------
John S. Chalsty Chairman of the Board and Chief Executive Officer;
Director
/s/ Joe L. Roby
- ------------------------
Joe L. Roby President and Chief Operating Officer; Director
/s/ Anthony F. Daddino
- ------------------------
Anthony F. Daddino Executive Vice President and Chief Financial
Officer; Director
/s/ Carl B. Menges
- ------------------------
Carl B. Menges Vice Chairman; Director
/s/ Hamilton E. James
- ------------------------
Hamilton E. James Managing Director; Director
/s/ Richard S. Pechter
- ------------------------
Richard S. Pechter Managing Director; Director
/s/ Theodore P. Shen
- ------------------------
Theodore P. Shen Managing Director; Director
/s/ Michael M. Bendik
- ------------------------
Michael M. Bendik Senior Vice President and Chief Accounting Officer
68
<PAGE>
NAME TITLE
---- -----
/s/ Michael A. Boyd
- ------------------------
Michael A. Boyd Senior Vice President and General Counsel
/s/ Gerald B. Rigg
- ------------------------
Gerald B. Rigg Senior Vice President and Director of Human Resources
/s/ Claude Bebear
- ------------------------
Claude Bebear Director
/s/ Henri de Castries
- ------------------------
Henri de Castries Director
/s/ Jerry M. de St. Paer
- ------------------------
Jerry M. de St. Paer Director
/s/ Denis Duverne
- ------------------------
Denis Duverne Director
/s/ Louis Harris
- ------------------------
Louis Harris Director
/s/ Henri G. Hottinguer
- ------------------------
Henri G. Hottinguer Director
/s/ W. Edwin Jarmain
- ------------------------
W. Edwin Jarmain Director
/s/ Francis Jungers
- ------------------------
Francis Jungers Director
/s/ Joseph J. Melone
- ------------------------
Joseph J. Melone Director
/s/ W.J. Sanders III
- ------------------------
W.J. Sanders III Director
/s/ John C. West
- ------------------------
John C. West Director
69
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
3.2 By-laws of the Registrant (Incorporated by reference to
the corresponding exhibit to the Registrant's
Registration Statement on Form S-1, Registration No.
33-96276).
4.1 Registration Rights and Indemnification Agreement
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
4.2 Specimen Stock Certificate of the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
4.7 Certificate of Designation of the Registrant's
Fixed/Adjustable Rate Cumulative Preferred Stock,
Series A (Incorporated by reference to Exhibit 4.3 to
the Registrant's Registration Statement on Form S-3,
File No. 33-80771.
10.1 Donaldson, Lufkin & Jenrette, Inc. 1991-1993 Long-term
Incentive Plan (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
10.2 Amendment No. 1 to the Donaldson, Lufkin & Jenrette,
Inc. 1991-1993 Long-term Incentive Plan (Incorporated
by reference to the corresponding exhibit to the
Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.3 Amendment No. 2 to the Donaldson, Lufkin & Jenrette,
Inc. 1991-1993 Long-term Incentive Plan (Incorporated
by reference to the corresponding exhibit to the
Registrant's annual report on Form 10-K for the fiscal
year ended December 31, 1995).
10.4 Donaldson, Lufkin & Jenrette, Inc. 1994-1996 Long-term
Incentive Plan (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
10.5 Amendment No. 1 to the Donaldson, Lufkin & Jenrette,
Inc. 1994-1996 Long-term Incentive Plan (Incorporated
by reference to the corresponding exhibit to the
Registrant's annual report on Form 10-K for the fiscal
year ended December 31, 1995).
10.6 Donaldson, Lufkin & Jenrette, Inc. 1995 Restricted
Stock Unit Plan (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.7 Donaldson, Lufkin & Jenrette, Inc. 1995 Stock Option
Plan (Incorporated by reference to the corresponding
exhibit to the Registrant's annual report on Form 10-K
for the fiscal year ended December 31, 1995).
70
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.8 Donaldson, Lufkin & Jenrette, Inc. 1996 Stock Option
Plan (Incorporated by reference to Annex A of the
Registrant's Proxy Statement on Schedule 14Afiled on
March 22, 1996 and furnished to shareholders in
connection with the soliciatation of proxies for the
Registrant's annual meeting of shareholders to be held
on April 30, 1996.
10.9 Deferred Compensation Agreement, dated December 30,
1983, between Michael M. Bendik and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.10 Deferred Compensation Agreement, dated December 30,
1983, between Michael A. Boyd and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.11 Deferred Compensation Agreement, dated December 30,
1983, between John S. Chalsty and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.12 Deferred Compensation Agreement, dated December 30,
1983, between Anthony F. Daddino and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.13 Deferred Compensation Agreement, dated December 30,
1983, between Richard H. Jenrette and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.14 Deferred Compensation Agreement, dated December 30,
1983, between Carl B. Menges and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.15 Deferred Compensation Agreement, dated December 30,
1983, between Richard S. Pechter and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
71
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.16 Deferred Compensation Agreement, dated December 30,
1983, between Gerald B. Rigg and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.17 Deferred Compensation Agreement, dated December 30,
1983, between Joe L. Roby and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.18 Deferred Compensation Agreement, dated December 30,
1983, between Theodore P. Shen and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.19 Letter agreement between the Registrant and ACMC, Inc.,
dated as of August 25, 1995, regarding certain state
and local tax sharing arrangements (Incorporated by
reference to the corresponding exhibit to the
Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.20 Insurance Agreement, dated August 27, 1992, by and
between the Registrant and Thomas E. Siegler, as
Trustee and Owner of the 1992 Chalsty Insurance Trust,
dated August 25, 1995 (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
10.21 Amendment, dated August 28, 1992, to the Insurance
Agreement, dated August 27, 1992, by and between the
Registrant and Michael Cappiccille, as Trustee and
Owner (Incorporated by reference to the corresponding
exhibit to the Registrant's Registration Statement on
Form S-1, Registration No. 33-96276).
10.22 Federal tax sharing agreement (Incorporated by
reference to the corresponding exhibit to the
Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.23 Agreement of lease between 99 Bishopsgate Limited, 82
Landlord, and DLJ International Limited, Tenant and the
Registrant, Tenant's Guarantor, 99 Bishopsgate London,
EC2, dated as of October 24, 1996.
10.30 Agreement of Lease between Stanley Stahl D/B/A Stahl
Park Avenue Co., Landlord, and the Registrant, Tenant,
277 Park Avenue, New York, New York, dated as of
October 26, 1994 (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
10.31 First Amendment of Lease by and between Stanley Stahl
D/B/A Stahl Park Avenue Co. and the Registrant, dated
as of March 30, 1995 (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
72
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.32 Amended and Restated Equitable Credit Agreement, dated
March 1, 1994, among the Registrant, The Equitable Life
Assurance Society of the United States, Equitable
Variable Life Insurance Company, DLJ Bridge Finance,
Inc., DLJ Capital Corporation and DLJ Investment Inc.
(Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-1,
Registration No. 33-96276).
10.33 Preferred Stock purchase agreement between the
Registrant and The Equitable Life Assurance Society of
the United States (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
10.34 Master Repurchase Agreement between Column Financial,
Inc. and DLJ Mortgage Capital, Inc. dated as of
November 1, 1993 (Incorporated by reference to the
corresponding exhibit to the Registrant's Registration
Statement on Form S-1, Registration No. 33-96276).
10.35 Mortgage Loan Purchase Agreement between Column
Financial, Inc. and DLJ Mortgage Acceptance Corp. dated
as of December 1, 1994 (Incorporated by reference to
the corresponding exhibit to the Registrant's
Registration Statement on Form S-1, Registration No.
33-96276).
10.36 First Amendment to the Amended and Restated Equitable
Credit Agreement dated March 1, 1994, among the
Registrant, The Equitable Life Assurance Society of the
United States, Equitable Variable Life Insurance
Company, DLJ Bridge Finance, Inc., DLJ Capital
Corporation and DLJ Investment Inc. (Incorporated by
reference to the corresponding exhibit to the
Registrant's annual report on Form 10-K for the fiscal
year ended December 31, 1995).
10.37 Agreement of lease between Broadpine Realty Holding
Company, Inc. and the Registrant, Tenant, 120 Broadway,
New York, New York, dated as of November 10, 1995
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.38 Donaldson, Lufkin & Jenrette, Inc. 1996 Incentive
Compensation Plan (Incorporated by reference to Annex B
of the Registrant's Proxy Statement on Schedule 14A
filed on March 22, 1996 and furnished to shareholders
in connection with the solicitation of proxies for the
Registrant's annual meeting of shareholders to be held
on April 30, 1996.
10.39 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Michael M. Bendik and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.40 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Michael A. Boyd and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.41 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between John S. Chalsty and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
73
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.42 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Anthony F. Daddino and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.43 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Hamilton E. James and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.44 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Carl B. Menges and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.45 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Richard S. Pechter and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.46 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Gerald B. Rigg and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.47 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Joe L. Roby and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.48 1995 Restricted Stock Unit Plan Agreement (Base), dated
October 24, 1995, between Theodore P. Shen and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.49 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Michael M. Bendik and
the Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.50 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Michael A. Boyd and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.51 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between John S. Chalsty and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.52 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Anthony F. Daddino and
the Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
74
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.53 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Hamilton E. James and
the Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.54 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Carl B. Menges and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.55 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Richard S. Pechter and
the Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.56 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Gerald B. Rigg and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.57 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Joe L. Roby and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.58 1995 Restricted Stock Unit Plan Agreement (Premium),
dated October 24, 1995, between Theodore P. Shen and
the Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.59 1995 Stock Option Plan Agreement, dated October 24,
1995, between Michael M. Bendik and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.60 1995 Stock Option Plan Agreement, dated October 24,
1995, between Michael A. Boyd and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.61 1995 Stock Option Plan Agreement, dated October 24,
1995, between John S. Chalsty and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.62 1995 Stock Option Plan Agreement, dated October 24,
1995, between Anthony F. Daddino and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.63 1995 Stock Option Plan Agreement, dated October 24,
1995, between Hamilton E. James and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
75
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.64 1995 Stock Option Plan Agreement, dated October 24,
1995, between Carl B. Menges and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.65 1995 Stock Option Plan Agreement, dated October 24,
1995, between Richard S. Pechter and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.66 1995 Stock Option Plan Agreement, dated October 24,
1995, between Gerald B. Rigg and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.67 1995 Stock Option Plan Agreement, dated October 24,
1995, between Joe L. Roby and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.68 1995 Stock Option Plan Agreement, dated October 24,
1995, between Theodore P. Shen and the Registrant
(Incorporated by reference to the corresponding exhibit
to the Registrant's annual report on Form 10-K for the
fiscal year ended December 31, 1995).
10.69 Amendment No. 1 to LTI-IV Unit Award Agreement, dated
October 24, 1995, between Michael M. Bendik and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.70 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Michael A. Boyd and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.71 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between John S. Chalsty and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.72 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Anthony F. Daddino and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.73 Amendment No. 1 to LTI-IV Unit Award Agreement, dated
October 24, 1995, between Hamilton E. James and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.74 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Carl B. Menges and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
76
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.75 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Richard S. Pechter and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.76 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Gerald B. Rigg and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.77 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Joe L. Roby and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.78 Amendment No. 2 to LTI-III Unit Award Agreement, dated
October 24, 1995, between Theodore P. Shen and the
Registrant (Incorporated by reference to the
corresponding exhibit to the Registrant's annual report
on Form 10-K for the fiscal year ended December 31,
1995).
10.79 Insurance Agreement dated November 29, 1995, by and
between the Registrant and Kayla L. Pechter and Philip
M. Satow, as Trustees and Owners of the 1995 Pechter
Insurance Trust, dated August 22, 1995 (Incorporated by
reference to the corresponding exhibit to the
Registrant's annual report on Form 10-K for the fiscal
year ended December 31, 1995).
10.80 Insurance Agreement dated October 31, 1995, by and
between the Registrant and Winthrop Trust Company, as
Trustee and Owner of the Anthony F. Daddino Insurance
Trust, dated August 25, 1995 (Incorporated by reference
to the corresponding exhibit to the Registrant's annual
report on Form 10-K for the fiscal year ended December
31, 1995).
10.81 Insurance Agreement dated February 1, 1996 by and
between the Registrant and Jeanette Eliasberg as
Trustee and Owner of the Trust created under Agreement
dated December 22, 1993 between Theodore P. Shen, as
Grantor and Jeanette Eliasberg as Trustee.
(Incorporated herein by reference to the corresponding
exhibit to the Registrant's quarterly report on Form
10-Q for the period ended June 30, 1996).
10.82 Insurance Agreement dated February 1, 1996 by and
between the Registrant and Jeanette Eliasberg as
Trustee and Owner of the Trust created under Agreement
dated December 22, 1993 between Theodore P. Shen, as
Grantor and Jeaette Eliasberg as Trustee. (Incorporated
herein by reference to the corresponding exhibit to the
Registrant's quarterly report on Form 10-Q for the
period ended June 30, 1996).
10.83 Insurance Agreement dated February 1, 1996 by and
between the Registrant and Jeanette Eliasberg as
Trustee and Owner of the Trust created under Agreement
dated December 22, 1993 between Theodore P. Shen, as
Grantor and Jeanette Eliasberg as Trustee.
(Incorporated herein by reference to the corresponding
exhibit to the Registrant's quarterly report on Form
10-Q for the period ended June 30, 1996).
77
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- --------
10.84 Insurance Agreement dated January 4, 1996 by and
between the Registrant and Dan Curtis Roby as Trustee
and Owner of the Roby 1995 Insurance Trust dated
November 27, 1995. (Incorporated herein by reference to
the corresponding exhibit to the Registrant's quarterly
report on Form 10-Q for the period ended June 30,
1996).
10.85 Second Amendment of Lease by and between Stanley Stahl
D/B/A Stahl Park Avenue Co. and the Registrant, dated
August 24, 1995. (Incorporated herein by reference to
the corresponding exhibit to the Registrant's quarterly
report on Form 10-Q for the period ended June 30,
1996).
10.86 Third Amendment of Lease by and between Stanley Stahl
D/B/A Stahl Park Avenue Co. and the Registrant, dated
October 6, 1995. (Incorporated herein by reference to
the corresponding exhibit to the Registrant's quarterly
report on Form 10-Q for the period ended June 30,
1996).
10.87 Fourth Amendment of Lease by and between Stanley Stahl
D/B/A Stahl Park Avenue Co. and the Registrant, dated
April 29, 1996. (Incorporated herein by reference to
the corresponding exhibit to the Registrant's quarterly
report on Form 10-Q for the period ended June 30,
1996).
10.88 1996 Non-Employee Directors Stock Plan (Incorporated by
reference to Annex A of the Registrant's Proxy
Statement on Schedule 14A filed on March 11, 1997 and
furnished to shareholders in connection with
solicitation of proxies for the Registrant's annual
meeting of shareholders to be held on April 16, 1997.
10.89 1996 Stock Option Plan Agreement, dated May 16, 1996, 593
between Joe L. Roby and the Registrant.
10.90 Donaldson, Lufkin & Jenrette, Inc. 1996 Incentive
Compensation Plan. (Incorporated herein by reference to
Annex B of the Company's Proxy Statement on Schedule 14
A).
11.1 Statement re computation of per share earnings 596
12.1 Computation of ratio of earnings to fixed charges and 597
ratio of earnings to combined fixed charges and preferred
stock dividends
21.1 Subsidiaries of the Registrant (Incorporated by
reference to the corresponding exhibit to the
Registrant's annual report on Form 10-K for the fiscal
year ended December 31, 1995).
23.1 Consent of KPMG Peat Marwick LLP 599
27 Financial Data Schedule 600
</TABLE>
78
<PAGE>
DATED 24th October 1996
------------------------------------------------------------
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES PLC
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
and
DONALDSON, LUFKIN & JENRETTE, INC.
------------------------------------------------------------
UNDERLEASE
of
Twenty-sixth Floor 99 Bishopsgate London EC2
------------------------------------------------------------
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P17/30608932
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions
Building
Common Parts
Development
Electricity Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insurance Rent
Insured Risks
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
(13) Use
(14) Signs
<PAGE>
CLAUSE HEADING PAGE
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangerous and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Arbitration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
8. Landlord's Guarantor
9. Tenant's option to determine
<PAGE>
LEASE PARTICULARS
- -------------------------------------------------------------------------------
1. DATE 24TH OCTOBER 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE FIRST ABOVE
WRITTEN
- -------------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette International
Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Lufkin & Jenrette, Inc.
- -------------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the 26th floor
of the Building shown for identification
only edged red on Plan 1.
- -------------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- -------------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 23rd October 2011
AND EXPIRY DATES
- -------------------------------------------------------------------------------
6. INITIAL RENT : pounds sterling 482,850
- -------------------------------------------------------------------------------
7. RENT COMMENCEMENT DATE : 25th March 1998
- -------------------------------------------------------------------------------
8. TENANT'S BREAK RIGHT : 24th October 2008
- -------------------------------------------------------------------------------
9. CAPITAL SUM : pounds sterling 241,425 inclusive of VAT
<PAGE>
CLAUSE HEADING PAGE
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
<PAGE>
THIS UNDERLEASE made the 24th day of October One thousand nine hundred and
ninety six
BETWEEN:-
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under Section
21A to the Companies Act 1985 under company number FC018588 and branch
number BR002962) whose principal place of business is at 100 Park Lane
London W1Y 4AR (the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) HAMMERSON U.K. PROPERTIES PLC whose registered office is at 100 Park Lane
London W1Y 4AR (Co. Regn. No. 298351) (the "LANDLORD'S GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered office
is at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn. No. 2475089)
(the "TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the State
of Delaware United States of America whose address for the purposes of this
lease is 277 Park Avenue New York New York 10172 (the "GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by clause 2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person acting on
behalf of or in connection with any organisation (or on his own behalf)
which carries out activities directed towards overthrowing or
influencing by force or violence Her Majesty's Government in the
United Kingdom or any other government de jure or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even date
herewith and made between the Landlord and the Tenant governing the
initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part) having a
frontage to the west side of Bishopsgate and a return frontage to the
south side of Wormwood Street and all buildings fixtures and other
structures whatsoever from time to time thereon and the appurtenances
thereof which land (together with the building now erected thereon)
is known as 99 Bishopsgate London EC2 and is for the purpose of
identification shown verged by a blue line on the Building Plan
together with any adjoining areas designated by the Landlord or the
Management Company
(4) "COMMON PARTS" means all parts of the Building which are from time to
time intended for the common use and enjoyment of the tenants and
occupiers of the Building and persons claiming through or under them
(whether or not other
1
<PAGE>
parties are also entitled to use and enjoy the same) and reasonably
designated as such by the Landlord and including without prejudice to
the generality of the foregoing the pedestrian ways circulation areas
lobby entrance halls lifts lift shafts fire escapes landings
staircases passages forecourts car park landscaped areas plant rooms
management suites and any other areas which are from time to time
during the Term reasonably provided by the Landlord for common use by
or benefit of the tenants and occupiers of the Building But excluding
(for the avoidance of doubt) any premises intended to be let to any
party or for occupation by the Landlord or the Management Company
other than for the provision of the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by Planning
Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the Tenant
in accordance with its covenant contained at clause 5(4) being a fair
and reasonable proportion as determined by the Landlord of the total
cost of the provision of electricity to the Building as a whole
(including the provision of any security for the supply of electricity
to the Building which may from time to time be required by the
relevant undertaker responsible for the supply of electricity chosen
by the Landlord) which proportion shall so far as practicable (save
where the same are not in working order) be calculated using readings
taken in such manner and at such times as the Landlord shall from time
to time determine of the check meters relating to the Premises from
time to time installed but otherwise shall be determined in such
manner as the Landlord shall in its discretion consider to be fair and
reasonable in all the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation now
or hereafter to be enacted or made and all subordinate legislation
whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the
Premises dated 29th September 1975 made between The Prudential
Assurance Company Limited (1) and Bishopsgate Developments Limited (2)
and "Superior Landlord" means the person for the time being entitled
to the reversion immediately expectant on the term granted by the Head
Lease and every other person having an interest in reversion to that
term
(9) "GROUP COMPANY" means a company which is either the holding company of
the Tenant or a wholly owned subsidiary of the Tenant or the Tenant's
holding company (as both expressions are defined in Section 736
Companies Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of the amount
which the Landlord may reasonably expend:-
(a) in effecting and maintaining insurance against the occurrence of
the Insured Risks in relation to the Building in such sum as
represents its then full current replacement cost with such
allowance as the Landlord from time to time considers appropriate
in respect of related liabilities and expenses (including without
limitation liability to pay any fees or charges on the submission
of an application for planning permission and costs which might
be incurred in complying with any Enactment in carrying out
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any replacement work and sums in respect of architects'
engineers' and quantity surveyors' and other professional fees
and incidental expenses incurred in relation to any works of
debris removal and of replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of the
Landlord in relation to the Building and anything done therein
and
(c) in professional fees relating to insurance including fees for
insurance valuations carried out at reasonable intervals by an
independent insurance valuer (but no more than once in any year)
and all reasonable fees and expenses payable to advisers in
connection with effecting and maintaining insurance policies and
claims and
(d) equivalent to the total of all reasonable excess sums (being for
the avoidance of doubt the first part of any insurance claim)
which the insurers are not liable to pay out on any insurance
claim in respect of the Building and which the Landlord or the
Management Company may have expended in replacing the damaged or
destroyed parts of the Building
(11) "INSURANCE RENT" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises of
the Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in effecting
and maintaining insurance against up to six years' loss of the
rents first and secondly hereinafter reserved and Service Charge
having regard to potential increases of rent in accordance with
schedule 4 and with any addition to the amount insured as the
Landlord may decide in respect of VAT and
(c) (without prejudice to all other provisions of this lease relating
to the use of the Premises and the vitiation of any policy of
insurance) any reasonable amount which the Landlord may expend in
paying all additional premiums and loadings on any policy or
policies of insurance required to be paid as a result of anything
done or omitted (in breach of the terms of this lease) by the
Tenant and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot
civil commotion strikes labour and political disturbances and
malicious damage aircraft and aerial devices (other than hostile
aircraft and devices) and articles accidentally dropped from them
storm tempest flood bursting or overflowing of water tanks and pipes
impact earthquake and accidental damage to underground water oil and
gas pipes or electricity wires and cables subsidence ground slip and
heave and such other usual commercial risks or perils against the
occurrence of which the Landlord may from time to time in its
reasonable discretion deem it desirable to insure subject to such
exclusions and limitations as are from time to time commonly
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imposed by insurers and subject also to the exclusion of such of the
risks specifically hereinbefore mentioned as the Landlord may in its
reasonable discretion decide where insurance cover in respect of the
risk in question is not for the time being available in the London
insurance market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either the
base rate of Barclays Bank plc or such other bank (being for the time
being generally recognised as a clearing bank in the London market) as
the Landlord may from time to time use for general banking purposes or
if the base rate cannot be ascertained then above such other rate as
the Landlord may reasonably specify (and so that whenever there is
reference in this lease to the payment of interest at the Interest
Rate such interest shall be calculated on a daily basis and compounded
with quarterly rests on the usual quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the
Building from time to time (whether or not within the Premises or
other premises let or intended to be let by the Landlord) comprising
or used in connection with the following systems (to the extent
specified in the following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building
(including sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but
excluding portable fire extinguishers installed by the Tenant
or other tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the
building security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply
into the Building so far as (and including) the electrical
riser busbars connecting to the distribution boards at each
level in the Building which is let or intended to be let by
the Landlord
(vii) the whole of the air handling system and the electricity
supply and control systems for the same
(viii) the standby generators and associated cabling wiring and duct
work
but excluding in each case any "stand alone" systems installed by the
Tenant or any other tenant or occupier of the Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to be
for separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by the
Code of Measuring Practice - Fourth Edition (RICS/ISVA 1993) (or if
there shall be no such edition or no such expression for the time
being the nearest equivalent thereto)
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GMW 99 Bishopsgate EC2
Twenty Six Floor Tower GRAPHIC
<PAGE>
99 Bishopsgate London, EC2
Building Plan
<PAGE>
(17) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of such
hours at the reasonable discretion of the Landlord provided that such
hours will automatically expand if any other tenant in the Building is
granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the actual
cost to the Management Company of carrying out or providing any of the
Services at the request of the Tenant outside Normal Business Hours
other than any services which are stated to be provided 24 hours a day
(including without prejudice to the generality of the foregoing costs
and expenses in the nature of those set out in Part II of schedule 6)
or in the event of any of the Services being carried out or provided
outside Normal Business Hours to the Tenant and any other tenant or
tenants of the Building a fair proportion thereof (on a fair and
reasonable basis between the Tenant and any other tenant or occupier
making use of such Services) as reasonably determined by the Landlord.
PROVIDED THAT during the first year of the Term the cost of providing
air conditioning outside Normal Business Hours shall not exceed 88
pounds sterling per hour (in respect of the Premises being the only
user of air conditioning at the relevant time) or 48 pounds sterling
per hour per floor on the basis that any five of floors 18, 20 and 22
to 26 of the Building are simultaneously using such air conditioning
over the whole of such
floors
(19) "PERMITTED PART" means any part or parts of the Premises capable of
separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose within
Class B 1(a) (but not for any other purpose within that Use Class) of
the schedule to the Town and Country Planning (Use Classes) Order 1987
and for the avoidance of doubt use of the Premises for data processing
investor services business trading operators and investment banking
complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and buildings
and every planning permission statutory consent and agreement made
under any Enactment relating to the Building
(22) "PLANS" means the plans annexed hereto and "Building Plan" means that
one of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all
permitted additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their use
and occupation and any court of law and the companies or authorities
responsible for the supply of water gas and electricity or any of them
and any of their duly authorised officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed hereto
or in the event that materials listed in the specification are not
available from time to time or appropriate for use (in the Landlord's
reasonable opinion) then reference to such materials will be
substituted by reference to materials of not materially less quality
which perform a similar function PROVIDED THAT save to the extent
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that items of plant and equipment have been altered during the Term
the Tenant shall not be required to replace existing items of plant
and equipment for new items subject to the existing items being in
good working order
(25) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and every
fifth anniversary of that date during the Term (and the last day
of the Term)
(b) any date so stipulated by virtue of paragraph 5 of schedule 4
(26) "SERVICES" means the services and other matters specified in clause 6
and Part I of schedule 6
(27) "SERVICE MEDIA" means those parts of the Building comprising gas water
drainage electricity telephone telex signal and telecommunications
heating cooling ventilation air conditioning fire alarm and other
pipes drains sewers mains cables wires supply lines ducts conduits
flues and all other common conducting media plant appliances and
apparatus for the provision supply control and monitoring of services
to or from the Building and other common equipment
(28) "TERM" means a term of years commencing on the date hereof and
expiring on 23rd October 2011 and includes any period of holding over
or extension whether by any Enactment or common law
(29) "TERMINATION NOTICE" means not less than 12 months and 1 day's prior
written notice unless either:
(a) any Enactment or decision not capable of appeal on a point of law
confirming that the Tenant is not entitled to a new tenancy on
the expiration of such notice is in force or upheld as at 22nd
October 2007 (in which case not less than 6 months prior written
notice need be given); or
(b) any other tenant enters into a lease prior to September 1998 of
premises comprising at least a floor of the building within the
security of tenure protections of the Landlord and Tenant Act
1954 for a term of not less than 10 years (without break rights)
and is granted right to determine such lease on less than such 12
months' and 1 day's prior written notice (in which case the
notice period hereunder shall be reduced to such notice period as
is granted to such tenant in such circumstances)
(30) "VAT" means Value Added Tax as referred to in the Value Added Tax Act
1994 (or any tax of a similar nature which may be substituted for or
levied instead of it by statutes)
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa and
words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and
"Guarantor" wherever the context so admits include their respective
successors in title and
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where a party comprises more than one person covenants and obligations
of that party take effect as joint and several covenants and
obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit or
suffer it to be done (or omitted) and to prevent (or as the case may
be to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference to the
relevant clause sub-clause schedule or paragraph of this lease
and clause and schedule headings shall not affect the
construction of this lease
(b) any right of (or covenant to permit) the Landlord or the
Management Company to enter the Premises shall also be construed
(subject always to the proviso to clause 4(9)) as entitling the
Landlord to remain on the Premises with or without equipment and
permitting such right to be exercised by all persons authorised
by the Landlord for as short a period as reasonably practicable
and making good all damage caused and causing as little
inconvenience as reasonably possible save where the right of
entry is exercised to remedy any breach hereunder where the
Landlord only undertakes to make good damage caused
(c) any consent licence or approval of the Landlord or words to
similar effect mean a consent licence or other approval in
writing signed by or on behalf of the Landlord and given before
the act requiring consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it for
the time being in force except in relation to the Town and
Country Planning (Use Classes) Order 1987 which shall be
interpreted exclusively by reference to the original provisions
of Statutory Instrument 1987 No 764 whether or not the same may
at any time have been revoked or modified
(f) the last year of the Term includes the final year of the Term if
it shall determine otherwise than by effluxion of time and
references to the expiry of the Term include such other
determination
(5) (a) Where the context permits rents or other sums being due from the
Tenant to the Landlord or the Management Company mean that they
are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is
required under this lease the relevant provision shall be
construed as also requiring (and any consent licence or approval
given by the Landlord shall be deemed subject to the need for)
the consent licence or approval of the Superior Landlord (for
which the Landlord shall apply at the Tenant's reasonable cost)
where the same is required under the Head Lease except that
nothing in this lease or in any consent licence or approval by
the
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Landlord shall imply that the Superior Landlord's consent licence
or approval will not be unreasonably withheld or delayed
(c) references to any right of (or covenant to permit) the Landlord
to enter the Premises shall extend to the Superior Landlord and
to all persons authorised by it and shall be construed in the
manner required by clause 2(4)(b) but in relation to the Superior
Landlord and those with its authority
(d) the rights excepted and reserved in schedule 3 are also \
excepted and reserved for the benefit of the Superior Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor and in consideration of the
payment by the Landlord to the Tenant of the sum of Two hundred and forty
one thousand four hundred and twenty five pounds (241,425 pounds sterling)
paid on the date hereof (receipt of which is acknowledged by the Tenant)
DEMISES unto the Tenant ALL THAT the Premises TOGETHER WITH the easements
and rights specified in schedule 2 exercisable in common with the Landlord
and all others with its authority or otherwise from time to time entitled
thereto EXCEPT and RESERVED unto the Landlord and all other persons
authorised by it from time to time during the Term or otherwise from time
to time entitled thereto (including the Management Company in relation to
the provision of the Services) the easements and rights specified in
schedule 3
TO HOLD the Premises unto the Tenant (together with and except and reserved
as aforesaid) for the Term SUBJECT to all rights easements covenants
stipulations and other matters affecting the same and SUBJECT to the
provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 24th March
1998 a peppercorn (if demanded) and thereafter until the first Review Date
(and thereafter as determined pursuant to schedule 4) the yearly rent of
Four hundred and eighty two thousand eight hundred and fifty Pounds
(482,850 pounds sterling) exclusive of VAT (subject to clause 5(6))
payable by equal quarterly payments to be made in advance on the usual
quarter days in every year the first such payment to be made on 25th
March 1998
SECONDLY as additional rent from time to time the Insurance Rent payable on
demand
THIRDLY as additional rent on demand (in addition and without prejudice to
the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as rent
or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days following the
due date (or in the case of money due only on demand within fourteen
days after the date of demand) calculated for the period commencing on
the due date for payment and ending on the date the sum and the
interest is received in cleared funds by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to demand or
accept any payment having regard to a breach of any of the Tenant's
obligations under this lease of
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which the Tenant has received notice calculated for the period
commencing on the due date for payment and ending on the date the sum
(and the interest) is subsequently received by the Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may become
liable to account to H.M. Customs & Excise (or other relevant body to whom
account has for the time being to be made) on the supply by the Landlord to
the Tenant under or in connection with the provisions of this lease or the
interest created by it and of any other supplies whether of goods or
services such rent fourthly reserved to be due for payment
contemporaneously with the other rents or sums to which it relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable on
demand (either annually or by instalments) as the Landlord shall determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause 4(30)
also with the Management Company) throughout the Term subject to clause
4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the manner
set out in clause 3 without deduction or set off and (unless for the
time being the Landlord shall have required in writing to the
contrary) to pay the rent first reserved (together with any sum in
respect of the rent fourthly reserved as may be applicable thereto) by
banker's standing order to such bank as the Landlord may from time to
time nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any
amount to the Landlord hereunder by way of reimbursement or indemnity
to pay on the production of a valid VAT invoice to the Landlord (as
applicable) in addition an amount equivalent to any VAT incurred by
the Landlord save to the extent that the Landlord obtains credit for
such VAT incurred by the Landlord pursuant to sections 24 25 and 26
Value Added Tax Act 1994 or any regulations made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now or
hereafter assessed charged or imposed upon the Premises or upon their
owner or occupier (and a proper proportion determined by the Landlord
attributable to the Premises of any rates taxes charges and other
outgoings now or hereafter assessed charged or imposed upon the
Premises in common with other premises or upon the owners or occupiers
thereof) and (to the extent the Tenant does not pay it directly to the
relevant supplier) the total cost (including meter rents) of all water
(including chilled water) electricity and gas separately metered
and/or exclusively supplied to the Premises during the Term as
reasonably determined by the Landlord excluding (without prejudice to
the rent fourthly reserved and clause 4(2)) any tax payable by the
Landlord as a direct result of any actual or implied dealing with the
reversion of this lease or of the Landlord's receipt of income
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COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every Public
Authority (including the due and proper execution of any works) in
respect of the Premises their use occupation employment of personnel
in them and any work being carried out to them (whether the
requirements are imposed upon the owner lessee or occupier) and not to
do or omit anything by which the Landlord may become liable to make
any payment or do anything under any Enactment or requirement of a
Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5 working
days of receipt of the same to give to the Landlord notice of (and a
certified copy of) any notice permission direction requisition order
or proposal made by any Public Authority and without delay to comply
in all respects at the Tenant's cost with the provisions thereof save
that the Tenant shall if so required by and at the cost of the
Landlord make or join in making such objections or representations in
respect of any of them as the Landlord may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of schedule 2) in good and substantial
repair and condition (damage by any of the Insured Risks excepted to
the extent that the insurance money shall not have been rendered
irrecoverable subject to clause 5(2)(b) or insufficient because of
some act or default of the Tenant or of any person deriving title
under or through it or their respective servants or agents or
invitees) and to replace whenever necessary during the Term and on
expiry of the Term the landlord's fixtures and fittings (including any
fitted carpets) in the Premises which may have become beyond economic
repair with items of the same type and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of decorative
order and finish and properly cleansed and tidy and (without
prejudice to the foregoing) as often as the same shall be
necessary (and not less frequently than once in every fifth year
of the Term but not more than once in any 18 month period) and
also in the last year of the Term to clean paint polish or
otherwise treat as the case may be all inside surfaces of wood
and metal work of the Premises usually or requiring to be painted
polished or otherwise treated with two coats at least of high
quality paint or polish vinyl wall coverings (where applicable)
or other appropriate materials in a good and workmanlike manner
(and during the last year of the Term in the colour scheme
specified and otherwise in accordance with the Reinstatement
Specification) PROVIDED ALWAYS THAT the Tenant shall not be
obliged to carry out any such decorative treatment if the need
for it is caused by damage by any of the Insured Risks to the
extent (subject to clause 5(2)(b)) that the insurance money shall
not have been rendered irrecoverable or insufficient because of
some act or default of the Tenant or of any person deriving title
under or through it or their respective servants agents or
invitees
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(b) To clean the inside of all external window glazing in the
Premises at least once in every month using reputable contractors
(c) To enter into and maintain contracts for the regular inspection
maintenance and servicing of all fixed plant and equipment
comprised in the Premises which has or is likely to have any
impact on the Landlord's Services Equipment by reputable
contractors approved by the Landlord (such approval not to be
unreasonably withheld) and to obtain satisfactory test
certificates as may be reasonably required by the insurers and
whenever reasonably required to produce copies of such contracts
and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in areas
designated for such purpose from time to time by the Landlord and to
comply with all requirements of any Public Authority and any
reasonable regulations made by the Landlord pursuant to clause 4(27)
in relation to control over and disposal of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable security
requirements on reasonable prior written notice (except in an
emergency) to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease have
been observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and make
connections to any part of the Building including the Service
Media (PROVIDED that the Landlord will procure that such entry
takes place outside Normal Business Hours where practicable)
(e) during the last six months of the Term (or at any time in the
case of a disposal of the Landlord's interest) to show the
Premises to prospective purchasers or tenants and their agents
(f) exercise the rights described in schedule 3
Compliance with notices relating to repair or condition
(10) (a) To comply with any notice requiring the Tenant to remedy any
breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with any
such notice to permit the Landlord and any authorised person to
enter the Premises to remedy the breach as the Tenant's agent and
at the Tenant's proper cost the Landlord making good any damage
caused
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(c) To pay to the Landlord on demand all the proper costs and
expenses incurred by the Landlord under the provisions of this
sub-clause
ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements belonging to
the Premises and not knowingly to give any acknowledgment that
they are enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give notice
to the Landlord forthwith of any encroachment which might have
that effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from the
demise of the Premises) any works affecting any structural parts
of the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in respect
of areas not included in the Premises not to install or erect any
exterior lighting shade or awning or place any structure or other
thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this sub-clause
and subject to the provisos to this paragraph (c) not to make any
other alteration or addition to the Premises (including all
electrical and other plant and equipment and the installation and
removal of demountable partitioning) except:-
(i) in accordance with plans and specifications (adequately
describing the work in question and the manner in which
the work will be carried out) previously submitted at the
Tenant's expense in triplicate to and approved by the
Landlord (such approval not to be unreasonably withheld or
delayed PROVIDED THAT the Landlord shall respond to the
Tenant's submission within 10 working days in the case of
minor alterations (excluding any alterations which affect
any of the Landlord's Services Equipment) and if the
Landlord fails to respond within 10 working days as
aforesaid it shall be deemed to have accepted such minor
alterations AND PROVIDED FURTHER that the initial fitting
out of the Premises following the date hereof shall be
governed by the Agreement for Initial Alterations
(ii) in a manner which shall not materially and adversely
affect the Landlord's Services Equipment any Service Media
or the provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public Authority
(and in particular in relation to any electrical
installation in accordance with the terms and conditions
laid down by the Institution of Electrical Engineers and
the Regulations of the Electricity Supply
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Authority) and the insurance company with whom the
Premises are for the time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out
until the Landlord has issued its consent in writing to
which the Tenant shall if required join as a party
(II) once any such alterations or additions have been carried
out the Tenant shall supply to the Landlord as-built plans
in triplicate (together with a computer aided design disk
and 35 mm slides) showing the works as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by the
Tenant
(ii) all work done in connection with the original fitting out
by the Tenant in pursuance of the Agreement for Initial
Alterations
and to restore and make good the Premises in accordance with the
Reinstatement Specification in a proper and workmanlike manner to
the condition and design which existed before the alterations or
additions were made with all services properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the Premises)
which may be or become or cause a nuisance obstruction or damage
to any person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal or immoral trade business or
activity or for residential purposes and not to use the Common
Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this
sub-clause) except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the Building
save for the right granted pursuant to paragraph 3 of schedule 2
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or advertisement
except the approved signs referred to in paragraph 3 of schedule
2
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ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of the
Premises the Tenant shall first by an irrevocable unconditional
written notice ("the Tenant's Notice") served upon the Landlord
offer to surrender or assign this lease upon such financial terms
and conditions as the Tenant may desire
(b) If the Landlord wishes to accept such surrender or assignment it
shall within twenty-one days of receipt of the Tenant's Notice
serve a counter-notice ("the Counter-Notice") upon the Tenant
stating as much
(c) If the Landlord serves a Counter-Notice on the Tenant then the
Tenant shall surrender or assign (at the Landlord's option) the
Premises to the Landlord (or as the Landlord may direct) within
six months of receipt of the Counter-Notice either with vacant
possession or subject only to a permitted underletting and the
Tenant's liability hereunder shall cease in respect of any
matters arising following the date of such assignment or
surrender but without prejudice to any antecedent breaches of
covenant
(d) If the Landlord does not serve a Counter-Notice then the Tenant
must (if it wishes to assign) complete its assignment on terms
greater than 95 per cent in value of the terms and conditions
stipulated in the Tenant's Notice within six months from the date
of the Tenant's Notice and if the Tenant shall fail to complete
within such period if it still wishes to assign the whole of the
Premises it must reinstate the procedure set out in this clause
4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15) not
to assign mortgage charge or underlet or in any other manner part
with possession of any part (being less than the whole) of the
Premises or agree to do so except that the Tenant may underlet
the whole of (but not more or less than) any Permitted Part or
Permitted Parts in accordance with paragraphs (h) and (i) of this
sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15) not
to assign underlet or otherwise part with possession of or the
whole of the Premises or agree to do so except that the Tenant
may assign or underlet the whole of the Premises in accordance
with paragraph (g) or (h) respectively of this sub-clause
(Assignment)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2 months
before completion of the assignment which consent shall not
be unreasonably withheld or delayed but which may be granted
subject to any one or more of the conditions referred to in
paragraph (g)(ii) and which may be withheld if any one or
more of the circumstances referred to in paragraph (g)(iii)
exist
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(ii) The conditions referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(1A) Landlord and
Tenant Act 1927) are:
authorised guarantee
(a) that the Tenant shall enter into an authorised
guarantee agreement (as defined in section 16 Landlord
and Tenant (Covenants) Act 1995) with the Landlord in a
form which the Landlord reasonably requires
third party guarantee/rent deposit
(b) that if so reasonably required by the Landlord the
proposed assignee shall have procured covenants with
the Landlord by a guarantor or guarantors (not being
the Tenant or any guarantor) reasonably acceptable to
the Landlord in a form acceptable to the Landlord
(acting reasonably);
intra group dealings
(c) if the proposed assignee is a Group Company the Tenant
shall have procured either:
(A) if the Tenant's obligations under this lease are
guaranteed by another Group Company that such
Group Company covenants with the Landlord on the
same terms (mutatis mutandis) as those contained
in clause 10; or
(B) if there is no guarantor of the Tenant's
obligations under this lease and if the assignee
is not at the date of the application for consent
to the proposed assignment in the reasonable
opinion of the Landlord of financial standing
equivalent to or greater than the Tenant at the
date of this lease that the proposed assignee
procures covenants by a Group Company which is not
the Tenant or the proposed assignee and which is
in the reasonable opinion of the Landlord of
financial standing equivalent to or greater than
the Tenant in the same terms (mutatis mutandis) as
those contained in clause 10; and
(iii) The circumstances referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(lA) Landlord and
Tenant Act 1927) are:-
(a) where the Tenant's solicitors have not given an
undertaking to the Landlord's solicitors to pay all
reasonable legal surveyor's and management costs
disbursements and VAT arising on the application for
consent to such assignment whether or not consent is
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granted unless the Landlord unreasonably withholds
consent in circumstances where it is required to be
reasonable; and/or
(b) where any of the rents and Interim Sum due from the
Tenant to the Landlord or the Management Company
respectively under this lease remain unpaid at the date
of the application for consent to the proposed
assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted Part
(each being referred to in this paragraph as the premises)
except:-
(i) to a person who before the underletting shall have
covenanted with the Landlord to observe and perform the
Tenant's obligations under this lease during the sub-term
to the extent they relate to the premises demised by the
underletting (other than the payment of rents) and a
covenant not to assign the whole of the premises without
the Landlord's consent (which shall not be unreasonably
withheld or delayed) and an unqualified covenant not to
assign part of the premises or to underlet or otherwise
part with possession or share the occupation of the
premises or any part of them
(ii) by reserving as a yearly rent without payment of a fine or
premium (in addition to the service and insurance and
other rents payable under this lease except the rent first
hereby reserved or (in the case of underletting of a
Permitted Part) a pro rata proportion of them) an amount
equal to:-
(a) (in the case of an underletting of the Premises) the
then open market rack rental value of the Premises
(b) (in the case of an underletting of a Permitted Part) a
pro rata proportion of the then open market rack
rental value of the Premises
the proportion in each case being calculated by reference
to the Net Internal Area of the Permitted Part in relation
to the Net Internal Area of the Premises, in all cases
such rent to be payable by equal quarterly instalments in
advance on the usual quarter days and to be approved by
the Landlord prior to the underletting (such approval not
to be unreasonably withheld or delayed) but the amount of
such rent and the approval of the Landlord thereto may not
be used as evidence by the Tenant for the purpose of any
rent review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the underlease
is reviewed upwards only at not greater than five year
intervals during the sub-term in accordance with the
same
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principles (mutatis mutandis) and at the times as
apply to the rent first reserved by this lease
(b) requiring the underlessee to observe and perform all
the covenants and other provisions binding on the
Tenant under this lease (other than the covenant by the
Tenant to pay rents) to the extent they relate to the
premises and containing:-
(A) a condition for re-entry by the underlessor on
breach of any covenant by the underlessee
(B) a qualified covenant not to assign the whole of
the premises and an absolute covenant not to
assign part of the premises or to underlet or
otherwise part with possession or share the
occupation of the premises or any part of them
(iv) with the Landlord's consent issued within three months
before completion of the underletting which consent (subject
to compliance with the foregoing conditions precedent) shall
not be unreasonably withheld or delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the entrance
to or the reception area of the Premises
(ii) to except from the underlease all necessary circulation
areas and plant and equipment which will serve the
Premises in common and to reserve a separate service
charge rent in respect of their maintenance repair and
renewal
(iii) not as a result of the grant to create or permit the
creation of more than three separate occupations affecting
the whole of the Premises (occupations in right of this
lease counting as one occupation)
(iv) not to grant or agree to grant the underlease without
providing for the exclusion of sections 24 to 28 inclusive
of the Landlord and Tenant Act 1954 in relation to the
underlease in pursuance of an Order duly made under
section 38(4) of that Act before the date of grant
(j) To enforce the observance and performance by every such
underlessee and its successors in title of the provisions of the
underlease and not expressly or impliedly to waive any breach of
them nor vary the terms of any underlease
(k) Not to agree any reviewed rent payable under an underlease
without the Landlord's consent and if the rent review under any
underlease is to be determined by an independent person not to
agree his appointment without the Landlord's consent (PROVIDED
ALWAYS THAT the Landlord shall not unreasonably withhold or delay
any consent required
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under this sub-paragraph) and to procure that any representations
which the Landlord may wish to make in relation to the rent
review are duly submitted to the independent person and to
provide to the Landlord promptly on the same becoming available
copies of any representattons made by or on behalf of the Tenant
or the underlessee in relation to such rent review
(SHARING OCCUPATION)
(I) Not to part with or share the occupation of the Premises or any
part of them except that the Tenant may share occupation with a
company which is (but only for so long as it remains) either the
holding company of the Tenant or a majority-owned subsidiary of
the Tenant or of the Tenant's holding company (as those
expressions are defined in section 736 Companies Act 1985) so
long as the Tenant does not grant the person sharing occupation
exclusive possession (so that such company occupies as licensee
only without creating any relationship of landlord and tenant)
nor otherwise transfer or create a legal estate and the Tenant
shall notify the Landlord of the identity of each company in
occupation
REGISTRATION
(16) (a) Within twenty-one days after any disposition or devolution of
this lease or of any estate or interest in or derived out of it
to give notice in duplicate of the relevant transaction to the
Landlord for registration with a certified copy of the relevant
instrument and to pay to the Landlord a fair and reasonable fee
for each such registration of not less than twenty five pounds
(b) To register with the Landlord particulars of the determination of
every rent review under any underlease of the Premises within
fourteen days after the date of determination
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels'
solicitors' surveyors' and bailiffs' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146 Law of
Property Act 1925 or in contemplation of any proceedings under
section 146 or 147 of that Act notwithstanding that forfeiture is
avoided otherwise than by relief granted by the court and
(b) every reasonable step taken during or after the expiry of the
Term in connection with the enforcement of the Tenant's
obligations under this lease including the service or proposed
service of all notices and schedules of dilapidations and
(c) every application for consent licence or approval under this
lease but not if the application is unreasonably refused or
delayed or granted subject to unreasonable conditions (where such
consent is not to be unreasonably withheld or delayed)
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MACHINERY
(18) Not to install in the Premises any plant or machinery other than usual
office equipment without the Landlord's consent which shall not be
unreasonably withheld PROVIDED ALWAYS THAT no plant or machinery shall
be installed or operated in the Premises and nothing shall be done or
omitted in them which may cause:-
(a) the efficiency of the heating ventilation air conditioning and
cooling system installed in the building to be diminished or
impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other part
of the Building or other adjoining property or persons outside
the Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the rights
granted by this lease in a way which causes nuisance or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises and
(to the extent they lie within the Premises) to keep them
clear and functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the
Premises
nor to overload or cause undue strain to the Service Media or any
other part of the Building and in particular not to suspend any undue
weight from the ceilings or walls of the Premises and not to exceed
the following floor loadings:-
floor finishings: : 4 kN/m2 (80lbs per sq.ft)
live load : 1 kN/m2 (20lbs per sq.ft)
(e) any requisite notice erected on the Premises including any
erected by the Landlord in accordance with its powers under this
lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of goods
is carried out only by using the service accesses and goods lifts
designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to
comply with the provisions and requirements of Planning Law relating
to or affecting
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(a) (i) the Premises
(ii) any operations works acts or things carried out executed
done or omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any other
rights hereunder in respect of) any other parts of the
building
(b) Subject to the provisions of paragraph (c) of this sub-clause as
often as occasion requires during the Term at the Tenant's
expense to obtain and if appropriate renew all planning
permissions (and serve all notices) required under Planning Law
in respect of the Premises whether for the carrying out by the
Tenant of any operations or the institution or continuance by the
Tenant of any use of the Premises or any part thereof or
otherwise
(c) Not without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) to apply for any planning
permission relating to the Premises (and not to apply for any
such planning permission relating to any other part of the
Building) but so that subject to compliance with paragraph (e) of
this sub-clause the Landlord's consent shall not be unreasonably
withheld or delayed to the making of a planning application in
respect of the Premises relating to any operations or use or
other thing (if any) which assuming it to be implemented in
accordance with Planning Law would otherwise not be in breach of
the provisions of this lease
(d) If the Landlord so requires in connection with any relevant
proposal by the Tenant to apply for a determination under section
191 or 192 Town and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by the
Tenant (which it hereby agrees to consider and determine with all
due expedition) for planning permission to submit a draft of the
application to the Landlord for its approval and to give effect
to its reasonable requirements in respect thereof and if and to
the extent the Landlord so requires to lodge the application with
the relevant authority in the joint names of the Landlord and the
Tenant and in duplicate
(f) Not to implement any planning permission before the Landlord has
acknowledged that its terms are acceptable nor before the
Landlord has received any cash or other security which it
reasonably requires for compliance with any conditions imposed by
the planning permission
(g) If the Landlord at the Landlord's cost reasonably requires or the
Tenant desires to lodge and progress diligently an appeal against
any refusal of an application for planning permission lodged in
respect of the Premises by the Tenant or by any person claiming
under or through the Tenant (whether or not lodged in its name
alone) the Landlord undertakes to cooperate fully with the Tenant
in respect of any such appeal unless such
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appeal would be likely to have a material and adverse effect on
the Landlord's interests in the Building
(h) Unless the Landlord otherwise directs to complete before the
expiry of the Term all works on the Premises required as a
condition of any planning permission implemented by the Tenant or
by any person claiming under or through it
(i) If the Tenant receives or is entitled to receive any statutory
compensation under any Enactment in relation to its interest in
the Premises the Tenant shall on any determination of its
interest prior to the expiry of this lease by effluxion of time
forthwith make such provision as is just and equitable for the
Landlord to receive its due benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs
claims damages demands and any other liability or consequence arising
out or in respect of any breach of any of the Tenant's obligations
under this lease (including all costs reasonably incurred by the
Landlord in an attempt to mitigate any such breach) or of any act
omission or negligence of the Tenant or any person at the Premises
with the Tenant's authority
DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably to
have become aware of the same) to give notice forthwith to the
Landlord of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing
anything in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed by
the Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the
Landlord may from time to time reasonably require to be displayed at
the Premises in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the
Tenant) relating to the Building or any part of it becomes void
or voidable or by which the rate of premium on such policy may be
increased
(b) To comply with all proper requirements of the insurers and to
provide and maintain unobstructed appropriate operational fire
fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
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(i) any incidence of any Insured Risk on the Premises and of any
other event which ought reasonably to be brought to the
attention of insurers and of which the Tenant ought
reasonably to be aware
(ii) the insurable value of any fixture installed in the Premises
by the Tenant or any person claiming under or through the
Tenant
(d) That if at any time the Tenant or any person claiming under or
through it shall be entitled to the benefit of any insurance of
the Premises to cause all money paid under such insurance to be
applied in making good the loss or damage in respect of which it
was paid
(e) Subject to clause 5(2)(b) if the whole or any part of the
Building is damaged or destroyed by any of the Insured Risks at
any time during the Term and the insurance money under any
insurance policy effected by the Landlord is rendered wholly or
partially irrecoverable because of some act or default of the
Tenant or any person deriving title under or through the Tenant
or their respective servants agents or invitees forthwith to pay
the Landlord the whole amount of the insurance money so
irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept placed
stored or used in or upon or about the Premises any materials
substance or other thing of a dangerous inflammable combustible
explosive corrosive or offensive nature or any materials substance or
other thing which may in any way cause pollution injury or harm by
percolation corrosion contamination migration release or otherwise on
beneath or in the vicinity of the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and tenant's
fixtures and quietly to yield up the Premises reinstated in
accordance with the Reinstatement Specification and restored and
made good to the extent required under clause 4(12)(d) and in the
state of repair condition decorative order and layout otherwise
required by this lease and any licences or consents issued in
pursuance of it and to make good any damage so caused in a proper
and workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and
dispose of any chattels which may be left in the Premises within
28 days after the Tenant has quit them (without being obliged to
obtain any consideration for the disposal) and the Tenant
irrevocably declares that any such chattels will stand abandoned
by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the Landlord
from time to time and notified to the Tenant in writing
for the good management of the Building PROVIDED ALWAYS
THAT no such regulations shall purport to amend the terms
expressed in
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this lease and if there is any inconsistency between the
terms of this lease and the regulations the terms of this
lease shall prevail
(ii) all covenants stipulations and other matters affecting the
Premises and not to interfere with any rights easements
or other matters affecting the Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's visitors
to the Premises observe such security regulations which may apply to
them
HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on the part
of the lessee contained in the Head Lease so far as they relate
to the Premises except the covenant for the payment of rent and
except also so far as the obligations relating to insurance fall
to be observed and performed by the Landlord pursuant to clause
5(2)
(b) Not to do or omit any act or thing which would or might cause the
Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management Company
at the times and in the manner provided for in clause 6 and schedule 5
without deduction or set off and to pay the Outside Normal Business
Hours Charge within 10 days of demand (either annually or by monthly
instalments) as the Management Company shall reasonably determine
PROVIDED THAT for the period from the date hereof until the earlier of
25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works contemplated
by the Agreement for Initial Alterations the Service Charge payable by
the Tenant in any Accounting Period shall not exceed 32,190 pounds
sterling inclusive of VAT and PROVIDED FURTHER that the Service
Charge payable in respect of the twelve month period from the earlier
of 25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works contemplated
by the Agreement for Initial Alterations shall be 74,573.50 pounds
sterling exclusive of VAT]
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained in
this lease the Tenant may peaceably hold and enjoy the Premises
without any lawful interruption by the Landlord or any person
rightfully claiming through under or in trust for it
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INSURANCE
(2) (a) To keep the Building (except all tenants' plant and equipment and
trade fixtures) insured against the Insured Risks in the full
current replacement cost
(b) to use reasonable endeavours to procure that the interest of the
Tenant is noted on the insurance policy and to use reasonable
endeavours to further procure that the insurers waive any rights
of subrogation against the Tenant (or any lawful subtenant
occupier or invitee) and the Landlord will notify the Tenant if
it is unable so to procure and will duly consider the
representations of the Tenant regarding alternative insurers who
may be prepared to procure that the insurers waive any
subrogation rights and/or note the interest of the Tenant and
will also permit the Tenant to make representations to the
insurers regarding the noting of the Tenant's interest and/or
waiver of rights of subrogation
(c) On request to supply the Tenant (but not more frequently than
once in any period of twelve months) with evidence of such
insurance
(d) If and whenever during the Term the Building (except as
aforesaid) is damaged or destroyed by an Insured Risk and to the
extent that payment of the insurance monies is not refused
because of any act neglect default or omission of the Tenant or
of any person deriving title under or through the Tenant or their
respective servants agents and invitees subject to clause 5(2)(b)
above the Landlord will with all convenient speed take the
necessary steps to obtain any requisite planning permissions and
consents and if they are obtained to lay out the money received
from the insurance of the Building (except sums in respect of
public liability and employer's liability and loss of rent)
towards replacing (but not necessarily in facsimile
reinstatement) the damaged or destroyed parts (except as
aforesaid) and in the case of the Premises to the Reinstatement
Specification as soon as reasonably practicable (and the Landlord
shall keep the Tenant informed of progress of any such insurance
claims and the Landlord's proposals for compliance with this
provision) PROVIDED ALWAYS THAT the Tenant shall have no claim
against the Landlord under this clause 5(2)(c) in respect of the
manner of replacement of the interior of any Lettable Unit other
than the Premises or any alteration to the Common Parts and
PROVIDED FURTHER THAT the Landlord shall not be liable to carry
out the replacement if it is unable (having used all reasonable
endeavours) to obtain every planning permission and consent
necessary to execute the relevant work in which event the
Landlord shall be entitled to retain all the insurance money
received by it and if the Landlord so retains the insurance money
the Tenant shall be entitled to determine this lease on not less
than one month's prior written notice
(e) In the event that the Premises have not been reinstated to the
Reinstatement Specification or essential means of access thereto
within the Building is not available in the circumstances
contemplated in subclause 5(2)(d) by the date five years and
eleven months following the date of such damage or destruction by
an Insured Risk the Tenant may
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determine this lease on not less than one month's prior written
notice such notice to be served (if at all) within one month
after expiry of such five years and eleven months period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform so far
as the Tenant is not liable for such performance under the terms
of this lease but so far only as to preserve the existence of
this lease the covenants and conditions on the part of the lessee
contained in the Head Lease
(b) On the request and at the reasonable expense of the Tenant to
take all reasonable steps to enforce the covenants on the part of
the Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's reasonable expense
(to the extent possible under the Head Lease) to obtain the
consent of the Superior Landlord wherever the Tenant makes
application for any consent required under this lease where the
consent of both the Landlord and the Superior Landlord is needed
by virtue of this lease and the Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide or
procure the provision of electricity to the Premises to the extent
necessary to meet the requirements of the Tenant having regard to the
overall electricity services design standards for the Building as a
whole and to all relevant statutory provisions from time to time
regulating the supply and utilisation of electricity and the terms and
conditions relative thereto from time to time imposed by the
electricity provider chosen by the Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as it
requires from time to time for the due and proper provision of the
Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT liability
on the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply made
hereunder by the Landlord to the Tenant the Landlord shall no
later than thirty days after the due date for payment in respect
of such supply issue a valid VAT invoice or audit note (as the
case may be) to the Tenant
(b) Subject to (6)(c) below all consideration payable by the Landlord
to the Tenant shall be exclusive of VAT which the Landlord shall
pay in addition on production of a valid VAT invoice
(c) The capital sum referred to in clause 3 above shall be inclusive
of VAT save that if the Landlord is at any stage able to recover
such VAT the Landlord shall pay to the Tenant a further amount
equal to VAT on the capital sum
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NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its
postal address from time to time
NOTIFICATION OF NOTICES
(8) The Landlord will inform the Tenant as soon as reasonably practicable
but in any event within 5 working days of receipt of the same of any
notice served by the Superior Landlord alleging a breach of the Head
Lease which would threaten the existence of this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate the
structure of the Building (including the structure of the roofs
foundations external and internal walls and columns and structural
slabs of the ceilings and floors) the external surfaces of the
Building (including the whole of the glazing within the external walls
of the Building) and the Common Parts and (where consistent with an
obligation to repair) to replace the same
(2) To keep the Service Media designed for common or general use and the
Landlord's Services Equipment in good and substantial repair and in
clean condition and at all times in good and safe working order
(3) To keep the lifts in the Building clean and in good and substantial
repair and condition and at all times in good and safe working order
(4) Provide heat and air conditioning and chilled water to the Premises
(subject to the Tenant paying Outside Normal Business Hours Charge in
relation to the provision of such services outside Normal Business
Hours) such heat being sufficient to maintain an air temperature in
the Premises measured at the main trunk connections to the floor as
follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29C DB 20C WB
Winter -4C DB 100% relative humidity
Internal Conditions Office
Accommodation-
Summer 22C DB + 1C
Winter 20C DB minimum
Humidity Office Accommodation -
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Summer 50% +/- 10%
Winter 5O%+/- 10%
(5) To ensure that the Common Parts are at all times kept clean tidy and
unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part
thereof designed to receive the same to the extent necessary to meet
the reasonable requirements of the Tenant and other lawful occupiers
of the Premises
(7) To comply with the requirements of any statute (already or in the
future to be passed) or any government department local authority
other public or competent authority or court of competent jurisdiction
relating to the Building or any part for which any tenant or occupier
of the Building is not directly or exclusively liable
(8) To ensure that at all times (meaning for the avoidance of doubt 24
hours a day during the Term) there are both such security officers at
and patrolling the Building as is reasonably appropriate for premises
of the same size and nature as the Building and that the main
reception to the Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate to
provide to a high class office building in the City of London
outside Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the Tenant
shall previously request (but subject to the Tenant being
responsible for the Outside Normal Business Hours Charge)
(having regard in all cases to and in accordance with the overall
design standards for the Building as a whole and subject to the
limitations contained in Clause 7(6)) in an efficient and economic
manner and in accordance with good estate management provided that the
Management Company shall be entitled to employ such managing agents
professional advisers contractors and other persons as it shall from
time to time reasonably think fit for the purpose of the performance
of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any of
the Common Parts or interruption in the provision of the Services or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or the Common
Parts or temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance or
replacement thereof or any part thereof or any plant machinery equipment
installations or apparatus used in connection therewith or damage thereto
or destruction thereof by any risk
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(whether or not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions or
shortage of fuel materials supplies or labour or whole or partial failure
or stoppage of any mains supply due to any circumstances beyond the control
of the Management Company PROVIDED ALWAYS that the Management Company shall
use all reasonable endeavours to minimise the adverse effects of any such
circumstances and to remedy any such interruption closure or diversion as
soon as reasonably practicable PROVIDED FURTHER that in the event of the
Landlord or the Management Company being unable to provide air conditioning
or electricity to the Premises in such circumstances the Tenant shall be
entitled to carry out (the Landlord and Management Company affording the
Tenant reasonable access to do so) all necessary remedial works to such
electricity or air conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike manner
and make good all damage caused causing as little inconvenience to the
Landlord Management Company and other tenants as reasonably
practicable
(b) the Landlord or the Management Company shall be responsible for the
costs of the Tenant in carrying out such remedial works when such
works are being carried out as a consequence of any breach of the
Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:-
Forfeiture and re-entry
(1) Without prejudice to any other remedies and powers contained in this
lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for twenty-one
days after becoming payable (whether or not formally demanded) or
(b) any of the Tenant's covenants in this lease are not performed or
observed in the manner and at the times herein specified or
(c) the guarantee granted by the Guarantor or any other guarantor of
the Tenant's obligations is or becomes unenforceable (in whole or
in part) for any reason whatsoever and no suitable alternative
security is provided to the Landlord within a period of one month
or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent company)
or compulsorily or has a provisional liquidator or a receiver
(including an administrative receiver) appointed or its directors
pass a resolution to petition for an administration order or one
or more of them swears an affidavit in support of such a petition
or is the subject of an administration order or a petition for
one or of a voluntary arrangement or a proposal for one under
Part I Insolvency Act 1986
(e) being a company incorporated outside the United Kingdom is the
subject of any proceedings or event analogous to those referred
to in clause 7(1)(d) in the country of its incorporation
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(f) being an individual is the subject of a bankruptcy petition or
bankruptcy order or of any application or order or appointment
under section 253 or section 273 or section 286 Insolvency Act
1986 or otherwise becomes bankrupt or insolvent or dies
the Landlord may at any time thereafter (and notwithstanding the
waiver of any previous right of re-entry) re-enter the Premises
without prejudice to the Tenant's right to relief against forfeiture
whereupon this lease shall absolutely determine but without prejudice
to either partys right of action against the other in respect of any
antecedent breach of the covenants in this lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in relation
to the Building and (subject only to those easements expressly granted
by this lease) neither the Tenant nor the Premises shall be entitled
to any easement or quasi-easement whatsoever and nothing herein
contained or implied shall give the Tenant the benefit of or the right
to enforce or to have enforced or to prevent the release or
modification of any right easement covenant condition or stipulation
enjoyed or entered into by any tenant of the Landlord in respect of
property not demised by this lease or prevent or restrict the
development or use of the remainder of the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant
supply authorities and any other competent authority the Common Parts
and the Service Media are at all times subject to the exclusive
control and management of the Landlord who may from time to time (if
it shall be necessary or reasonable to do so for the benefit of the
Building or otherwise in keeping with the principles of good estate
management) alter divert substitute stop up or remove any of them
(leaving available for use by the Tenant reasonable and sufficient
means of access to and egress from and servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be served
under this lease shall be validly served if served in accordance
with section 196 Law of Property Act 1925 as amended by the
Recorded Delivery Service Act 1962 or (in the case of any notice
to be served on the Tenant) by sending it to the Tenant at the
Premises PROVIDED THAT whilst the Tenant hereunder is Donaldson
Lufkin & Jenrette International Limited such notice shall also be
served on the offices for the time being of SJ Berwin & Co
(attention: Edward Page) or such other firm of solicitors
notified in writing to the Landlord and 277 Park Avenue New York
New York 10172
(b) If the Tenant or any guarantor comprises more than one person it
shall be sufficient for all purposes if notice is served on one
of them but a notice duly served on the Tenant will not need to
be served on any guarantor
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RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment and
tenant's fixtures) or the means of access to the Premises within
the Building are damaged or destroyed by any of the Insured Risks
so that the Premises are incapable of beneficial occupation and
use and
(b) subject to clause 5(2)(b)the insurance of the Building or the
payment of any insurance money has not been vitiated by the act
neglect default or omission of the Tenant or of any person
deriving title under or through the Tenant their respective
servants agents and invitees
the rent first reserved by this lease and the Service Charge or a fair
proportion of them according to the nature and extent of the damage
sustained shall be suspended and cease to be payable from the date of
destruction or damage until whichever is the earlier of the date on
which the Premises are reinstated to the Reinstatement Specification
and if applicable the essential means of access within the Building
are available and the date of expiry of the period for which insurance
of loss of rent is effected and any dispute about such suspension
shall be referred to the award of a single arbitrator to be appointed
in default of agreement on the application of the Landlord or the
Tenant to the President for the time being of The Royal Institution of
Chartered Surveyors in accordance with the Arbitration Acts 1950 and
1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or temporary
closure or diversion of any of the Common Parts or Service Media by
reason of necessary inspection repair maintenance or replacement
thereof or any part thereof or any plant machinery equipment
installations or apparatus used in connection therewith or damage
thereto or destruction thereof by any risk (whether or not an Insured
Risk) or by reason of electrical mechanical or other defect or
breakdown or frost or other inclement conditions or shortage of fuel
materials supplies or labour or whole or partial failure or stoppage
of any mains supply due to any circumstances beyond the control of the
Landlord PROVIDED ALWAYS that the Landlord shall use all reasonable
endeavours to minimise the adverse effects of any such circumstances
and to remedy any such interruption closure or diversion as soon as
reasonably practicable PROVIDED FURTHER that in the event of the
Landlord or the Management Company being unable to provide air
conditioning or electricity to the Premises in such circumstances the
Tenant shall be entitled to carry out (the Landlord and Management
Company affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike manner
and make good all damage caused causing as little inconvenience to the
Landlord Management Company and other tenants as reasonably
practicable)
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(b) the Landlord or the Management Company shall be responsible for the
costs of the Tenant in carrying out such remedial works when such
works are being carried out as a consequence of any breach of the
Landlords or Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the
Landlord or by the Tenant notwithstanding any direction or prior
agreement as to liability for payment and any sums so paid for which
the party who pays them initially is not ultimately liable shall be
repayable on demand by the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase in
the amount of the rent reserved and made payable by virtue of schedule
4 a memorandum recording the increase shall be attached to this lease
and to the counterpart and such memorandum shall be signed by or on
behalf of the Landlord and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are authorised
under Planning Law to be used or are otherwise fit for any specific
purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or occupier
of any part of the Building relating to any easement or right
affecting the Building or any part of it shall (unless the
Landlord shall by notice to the parties concerned renounce its
power to determine it) be referred to the Landlord whose decision
acting reasonably (acting in the capacity of an expert) shall be
binding upon the parties to the dispute but the Landlord shall
give written reasons for his decision
(b) Where any issue (other than one relating to a rent review)
arising out of or under or relating to the Head Lease which also
affects or relates to the provisions of this lease is to be
determined as provided in the Head Lease the determination of
such issue pursuant to the provisions of the Head Lease shall be
binding on the Tenant as well as the Landlord for the purposes
both of the Head Lease and this lease
COMPENSATION
(11) Except where any Enactment prohibits the right to compensation being
reduced or excluded by agreement, neither the Tenant nor any occupier
of the Premises shall be entitled on quitting them to claim from the
Landlord any compensation under the Landlord and Tenant Act 1954
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RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a proposal to alter
the entry for the Premises in the local non-domestic rating list
it shall notify the other party of its intention and shall
incorporate in the proposal such proper and reasonable
representations as may be made by or on behalf of that party
(b) The Tenant shall not agree the level of rates liability
attributable to the Premises following the date hereof without
the Landlord's consent (such consent not to be unreasonably
withheld or delayed) PROVIDED that for the avoidance of doubt the
Landlord shall not be entitled to refuse its consent to any level
of rates which the Tenant has negotiated with the appropriate
rating authority which is lower than any level of rates
negotiated by or on behalf of the Landlord in respect of the
Building on a pro rata basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises shall be kept
secure or that any security service to the Common Parts shall be
effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the Landlord
the English courts shall have exclusive jurisdiction in relation to
disputes arising under or connected with this lease and the Tenant
agrees that any process may be served on it by leaving a copy of the
relevant document at the Premises provided however that the Landlord
shall retain the right at its sole election to sue the Tenant
elsewhere including in the courts of the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy of
the reversion immediately expectant on the determination of this lease
whether pursuant to Section 19 Landlord and Tenant (Covenants) Act
1995 or otherwise any covenant on the part of the Tenant to obtain the
consent of the Landlord under this lease to any dealing shall be
deemed to include a further covenant also to obtain the consent of the
lessor under such tenancy to such dealing
8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants and
agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the manner
and at the times herein specified and that if there is default in
performing and observing any of the Landlord's obligations
(notwithstanding any time or indulgence granted by the Tenant to the
Landlord or compromise, neglect or forbearance on the part of the
Tenant in enforcing the observance of the Landlord's obligations in
this lease) the Landlord's Guarantor
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will observe and perform (or procure the performance and observance
of) the obligations in respect of which the Landlord shall be in
default
(2) The Landlord's Guarantor at the request of the Management Company and
in consideration of the Tenant agreeing to pay the Service Charge
covenants and agrees with the Tenant that all of the Management
Company's obligations contained in this lease will be performed and
observed in the manner and at the times herein specified and that if
there is default in performing and observing any of the Management
Company's obligations (notwithstanding any time or indulgence granted
by the Tenant to the Management Company or compromise, neglect or
forbearance on the part of the Tenant in enforcing the observance of
the Management Company's obligations in this lease) the Landlord's
Guarantor will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Management
Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of this
clause) determine this lease as at 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on 24th October
2008
(3) If the Tenant duly serves the Termination Notice it shall procure that
vacant possession of the Premises will be available on 24th October
2008 free of occupation by and of any estate or interest rested in the
Tenant or any third party and this lease shall not determine as a
result of any notice served by the Tenant if the Tenant is in material
breach of any of its covenant to pay the rents and Interim Sum
contained in this lease (including those contained in this sub-
clause) as at 24th October 2008 except to the extent if at all the
Landlord in its absolute discretion waives compliance with any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during the
Term and any period of holding over continuation or extension thereof
whether by an Enactment common law or otherwise (subject to clause 4(15)):-
(1) The rents reserved by this lease (whether or not ascertained as to
amount) will be duly paid and that all the Tenant's obligations
contained in it will be performed and observed in the manner and at
the times herein specified and that if there is any default in paying
the rents or in performing and observing the Tenant's obligations
(notwithstanding any time or indulgence granted by the Landlord to the
Tenant or compromise neglect or forbearance on the part of the
Landlord in enforcing the observance and performance of the Tenant's
obligations in this lease or any refusal by the Landlord to accept
rents tendered by or on behalf of the Tenant) the Guarantor will
observe and perform the obligations in respect of which the Tenant
shall be in default and will on demand and on a full indemnity basis
pay to the Landlord an amount equivalent to the rents or other amounts
not paid and/or any loss damage costs charges expenses or any other
liability incurred or suffered by the Landlord as a result of the
default (and in the event of non-payment shall pay interest at the
Interest Rate from the date of demand to the
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Guarantor until the date of payment) and will otherwise indemnify and
hold harmless the Landlord against all actions claims costs damages
demands expenses losses and proceedings arising from or incurred by
the Landlord as a result of such non-performance or non-observance
(2) If any liquidator or other person having power to do so disclaims this
lease or if it shall be forfeited or if the Tenant ceases to exist and
if the Landlord by written notice served within three months after the
date of disclaimer or forfeiture or the Landlord having actual
knowledge of the cesser of existence of the Tenant (each a "Trigger
Event") requires the Guarantor to accept a lease of the Premises for a
term computed from the date of the Trigger Event to the date on which
the Term would have expired by effluxion of time and at the same rents
and subject to the same covenants stipulations conditions and
provisions (except that the Guarantor shall not be required to procure
that any other person is made party to that lease as guarantor) as are
reserved by and contained in this lease immediately before the Trigger
Event and with coincidental Review Dates (the said new lease and the
rights and liabilities thereunder to take effect as from the date of
such Trigger Event) the Guarantor shall forthwith accept such lease
accordingly and execute and deliver to the Landlord a counterpart of
it and indemnify the Landlord upon demand against the costs incurred
on the grant of the new lease
(3) The liability of the Guarantor hereunder shall not be released reduced
affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this lease
or any of them agreed between the Landlord and the Tenant or
(b) the surrender by the Tenant of part of the Premises (in which
event the liability of the Guarantor shall continue in relation
to the Tenant's obligations in respect of the part of the
Premises not so surrendered) or
(c) any legal limitation immunity disability incapacity occurrence of
insolvency or the winding-up of the Tenant or
(d) (without limitation to the foregoing) of any other act or thing
act or thing by which (but for this provision) the Guarantor
would have been discharged or released (in each case in whole or
in part) from liability under this guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in
accordance with clause 8(2) the Guarantor shall pay to the Landlord on
demand (in addition to any other loss damage costs charges expenses or
other liability which the Guarantor may be required to make good
hereunder and without prejudice to any other rights of the Landlord)
an amount equal to the rents which would have been payable hereunder
but for such Trigger Event (so far as such rents do not otherwise
continue to be payable) for the period commencing on the date of such
Trigger Event and ending on whichever is the earlier of the date one
year after the date of such Trigger Event and the date (if any) upon
which rent is first payable in respect of the whole of the Premises on
a reletting thereof
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(5) Without prejudice to the rights of the Landlord against the Tenant the
Guarantor shall be a principal obligor in respect of its obligations
under this clause and not merely a surety and accordingly the
Guarantor shall not be discharged nor shall its liability hereunder be
affected by any act or thing or means whatsoever by which its said
liability would not have been discharged if it had been a primary
debtor
(6) The Guarantor shall pay all reasonable charges (including legal and
other costs on a full indemnity basis) incurred by the Landlord in
relation to the Landlord's enforcement of this guarantee and indemnity
against the Guarantor or for enforcing payment by the Guarantor of
amounts indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee and
indemnity against the Guarantor without having first enforced the
covenants and terms of this lease against the Tenant and also without
first having recourse to any other rights or security which the
Landlord may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security
held by the Landlord in respect of the obligation of the Tenant under
this lease or to any right of subrogation in respect of any such
security until all the obligations owed to the Landlord by the Tenant
and the Guarantor hereunder have been fully and unconditionally
fulfilled and discharged
(9) The Guarantor shall not claim in any liquidation bankruptcy
composition or scheme of arrangement in respect of the Tenant in
competition with the Landlord and if and to the extent that it
receives the same shall remit to (and until remission shall hold in
trust for) the Landlord all and any monies received from any
liquidator trustee receiver or out of any composition or arrangement
or from any supervisor thereof until all the obligations of the Tenant
and the Guarantor hereunder owed to the Landlord have been fully and
unconditionally fulfilled and discharged
(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the necessity
for any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains the
Tenant this guarantee and indemnity shall only apply if and for so
long as the total shareholders funds and reserves of Donaldson, Lufkin
& Jenrette International Limited are or fall below the value of Fifty
million pounds (pounds sterling 50,000,000) AND Donaldson, Lufkin &
Jenrette International Limited and Donaldson, Lufkin & Jenrette Inc.
shall notify the Landlord at the beginning of each period in which
this guarantee and indemnity applies and again when it ceases to apply
AND for the avoidance of doubt this guarantee (subject to compliance
by the Tenant with clause 4(15)) shall automatically cease on any
lawful assignment of this lease (but without prejudice to either
party's rights against the other in respect of any antecedent breaches
of this lease) unless in the circumstances contemplated by clause
4(l5)(g)(ii)(b) it is reasonable for Donaldson Lufkin & Jenrette Inc.
to remain the guarantor hereunder of the liabilities of Donaldson,
Lufkin & Jenrette International Limited PROVIDED FURTHER that
Donaldson, Lufkin & Jenrette Inc shall in such circumstances
automatically be released on a second assignment of this lease
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11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effet
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the twenty-sixth floor and being part of
the Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and all
materials lying between the upper surface of the structural floor slab
and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact on
the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the external
windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in
the external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress to
and from the Premises to use the Common Parts and to use all means
of escape but only when needed in an emergency and
(2) to use the Service Media
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2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authoried sub-tenants or permitted occupiers (subject to a maximum of
four names at any particular time) on the signboard in the entrance lobby
of the Building provided by the Landlord pursuant to paragraph 14 of
Part I of schedule 6 and the right to install a sign displaying the name
of the Tenant at the entrance to the Premises the precise location size
and style of such sign to be subject to the approval of the Landlord
(such approval not to be unreasonably withheld or delayed)
4. The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area at all
reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and maintenance
(on reasonable prior written notice to the Landlord) those works or
installations within or on the Building (but outside the Premises) for
which consent has been given pursuant to the Agreement for Initial
Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to the Tenant being responsible for all elements of
Service Cost relating to such toilets should any other tenant of
accommodation in the Building object to meeting any proportion of Service
Cost in relation to such facilities (on the basis of such exclusive use)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of
them to the Premises and the lights windows and openings thereof may be
affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the Premises
as often as may be necessary for the purpose of complying with the
covenants of the Head Lease for all the purposes for which the Tenant
covenants in this lease to permit entry and for all purposes in
connection with the carrying out of the Services and for the purposes of
complying with any statutory requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or neighbouring
land
4. The right to erect and maintain scaffolding on or against any part of the
Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
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5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the purpose
of repairing that other part of the Building making good any damage so
caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved
by this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably
be expected to be payable following the expiry of any period at the
beginning of the term which might be negotiated in the open market
for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated
in the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free or
concessionary rent period or capital sum or fitting out
contribution and has used the same fully to fit out the Premises
for the Permitted Use to the lessee's particular requirements) if
the Premises had been let in the open market by a willing lessor to
a willing lessee with vacant possession on the relevant Review Date
without fine or premium for a term of ten years computed from the
relevant Review Date taking into account the lessee's right at the
expiration of the term to be granted a new tenancy under Part II
Landlord and Tenant Act 1954 and otherwise upon the provisions
(save as to the amount of the rent first reserved by this lease but
including the provisions for rent review at five-yearly intervals)
contained in this lease and on the assumption if not a fact that
the said provisions have been fully complied with and on the
further assumptions that:-
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(a) the Permitted Use and the Premises comply with Planning Law
and every other Enactment free from any onerous condition
restriction and limitation and that the lessee may lawfully
implement and carry on the Permitted Use
(b) no work has been carried out to the Premises which has
diminished their rental value
(c) in case the Building or any part of it has been destroyed or
damaged it has been fully restored
(d) the Premises have been fitted out to no less standard than
that set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other
permitted occupier or their respective predecessors in title
has been or is in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying on in
them of the business of the Tenant or any underlessee or
their respective predecessors in title or other permitted
occupier
(iii) (without prejudice to paragraphs 1(2)(b) and l(2)(c) of this
schedule) any works carried out to the Premises during the
Term by the Tenant or any permitted underlessee in either
case at its own expense in pursuance of a licence granted by
the Landlord where required and otherwise than in pursuance
of any obligation to the Landlord
(iv) the works carried out to the Premises by the Tenant or
carried out by the Landlord at the expense of the Tenant
pursuant to the Agreement for Initial Alterations
(3) "Review Surveyor" means an independent chartered surveyor appointed
pursuant to paragraph 3(1) of this schedule and if to be nominated
by or on behalf of the President for the time being of the Royal
Institution of Chartered Surveyors the said President to be
requested to nominate an independent chartered surveyor having not
less than ten years practice in the City of London next before the
date of his appointment and recent substantial experience in the
letting and valuation of office premises of a similar character and
quality to those of the Premises and who is a partner or director
of a leading firm or company of surveyors having specialist market
and valuation knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
(1) the Current Rent (ignoring for this purpose any rent cesser
pursuant to clause 7(5)) and
(2) the Review Rent
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3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant
to assess the Review Rent or (in the absence of agreement at any
time about his appointment) be nominated to assess the Review Rent
by or on behalf of the President for the time being of The Royal
Institution of Chartered Surveyors on the application of the
Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review Surveyor)
he shall act as an arbitrator and the arbitration shall be
conducted in accordance with the Arbitration Acts 1950 and 1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting
each of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired
by the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the determination
in accordance with his own judgment (including any determination
concerning any party's liability for the costs of the reference to
him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4. If the Review Rent has not been agreed or assessed by the relevant Review
Date the Tenant shall:-
(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or
assessment of the Review Rent the amount (if any) by which the
Review Rent for the period commencing on the relevant Review Date
and ending on the quarter day following the date of payment exceeds
the Current Rent paid on account for the same period plus interest
at three per cent below the Interest Rate for each installment of
rent due on and after the relevant Review Date on the difference
between what would have been paid on that rent day had the Review
Rent been fixed and the amount paid on account (the interest being
payable from the date on which the installment was due up to the
date of payment of the shortfall)
S. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is released
the Landlord may at any time within six months after the date of release
give to the Tenant not less than one month's
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notice requiring an additional rent review as at the next following
quarter day which shall for the purposes of this lease be a Review Date -
SCHEDULE S
(THE SERVICE CHARGE)
1. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 31st December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the
Building (whether or not pursuant to the terms of this Underlease) the
Management Company or the Tenant shall be entitled if reasonable to
require that the same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge
for each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting
Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the
provisions of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service
Cost and Service Charge for each Accounting Period served pursuant to
paragraph 5 of this schedule and prepared by the Management Company's
surveyor or auditor
"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company in
any Accounting Period in carrying out or procuring the carrying out
of the Services and providing each item of the Services including
(without prejudice to the generality of the foregoing) the costs
and expenses set out in Part II of schedule 6 (insofar as the same
are reasonable and properly incurred) and any other reasonable
costs and expenses properly incurred by the Management Company or
with the Management Company's authority in connection with the
Services but excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the
Services outside Normal Business Hours at the specific
request of the Tenant (which shall
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be charged direct to the Tenant) or of any other tenant or
tenants of the Building and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and which
is recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage caused
by any of the Insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items of
plant machinery equipment and other capital items is calculated on
such life expectancy of the said items as the Management Company
may from time to time reasonably determine to the intent that a
fund be accumulated sufficient to cover the cost of replacement of
the said items by the end of their anticipated life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting Period
shall be a fair proportion of the Service Cost attributable to the
Premises from time to time as properly determined by the Management
Company (and so in proportion for any Accounting Period not falling
wholly within the Term the Service Cost in any such case being
deemed to accrue on a day to day basis for the purpose of
apportionment)
(B) If at any time and from time to time during the Term the method or
basis of calculating or ascertaining the cost of any item of the
Services shall alter or the basis of calculating or ascertaining
the Service Cost in relation to any item of the Services shall
change and as a result it is reasonable that there be an alteration
or variation of the calculation of the Service Charge in order to
achieve a fairer and better apportionment of the Service Cost
amongst the tenants of the Building then and in every such case the
Management Company shall vary and amend the Service Charge and make
appropriate adjustments thereto provided always that in the event
of any dispute between the Management Company and the Tenant and
the other tenants of the Building or any of them the same shall be
referred to the Expert for determination (the Expert to act as an
expert and not as an arbitrator) whose decision shall save in the
case of manifest error be binding on the parties (including his
decisions as to the responsibility for his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the
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Building let or occupied or designed contracted or adapted for
letting or occupation (other than management accommodation) is
fully let on terms which include service charge provisions
consistent with the service charge provisions contained in this
lease (save where otherwise specified herein) and such proportion
shall not be increased or altered by reason of the fact that at
any time any part of such accommodation may be vacant or that any
tenant or other occupier of any other part of the Building may
default in payment of its due proportion of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance with
a programme of non equal expenditure in which event the Management
Company shall serve notice to such effect upon the Tenant and shall
thereupon be entitled to require amounts of the Interim Sum to be
paid by advance quarterly instalments of unequal amounts reasonably
stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the
consumption of and supply charges in respect of electricity
consumed within the Premises (save for any amounts which are
invoiced directly by London Electricity plc to the Tenant) such
sums not to exceed a fair and proper estimate of amounts reasonably
anticipated by the Management Company as falling due within the
next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company shall
be entitled in addition to require the Tenant to pay along with
payments of the Interim Sum a fair and proper estimate of amounts
likely to be payable by the Tenant in the next quarter on account
of such Services in accordance with the terms of this lease
(D) The Interim Sum for the Accounting Period ending 31st December 1996
shall be pounds sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or cause
to be served on the Tenant written notice of the Interim Sum for
the relevant Accounting Period Provided that without prejudice to
the provisions of paragraphs 6 and 7 of this schedule if the
written notice aforesaid shall be served after the first occurring
quarter day in the relevant Accounting Period the Tenant shall
until service of the written notice aforesaid make payments on
account of the Interim Sum for the relevant Accounting Period on
the days and in the manner provided by sub-paragraph (A) of this
paragraph of this schedule at an annual rate equal to the Interim
Sum for the immediately preceding Accounting Period
5. (A) As soon as practicable after the expiry of every Accounting Period
(and in any event within 4 months after such expiry) the Management
Company shall serve or cause to be served a Service Charge
Certificate on the Tenant for the relevant Accounting Period
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(B) A Service Charge Certificate shall contain a summary of the Service
Cost in respect of the Accounting Period to which it relates and
the relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service
Charge Certificate by giving notice thereof in writing to the
Management Company within three months of the date of service on
the Tenant of the relevant Service Charge Certificate and upon
receipt of such a notice the Management Company shall furnish to
the Tenant all such relevant details in its possession or control
or which can reasonably be obtained by it as relate to the
expenditure under the item or items in question at the cost of the
Tenant (include all books of account receipts demands and invoices)
PROVIDED ALWAYS that notwithstanding the giving of any such notice
the Tenant shall nevertheless pay all Interim Sums and Service
Charges as and when they fall due or as may be underpaid from time
to time (but without prejudice to any challenge claim or dispute
that the Tenant may have made or may make in the future in respect
of its Service Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay to
the Management Company or as it shall direct a sum equal to the amount by
which the Service Charge exceeds the Interim Sum provided that and the
Tenant hereby acknowledges that if there shall be any such excess in
respect of the Accounting Period the amount of such excess shall be a
debt due from the Tenant to the Management Company and in the event that
such excess is not received in cleared funds by the Management Company
within 14 days of the due date for payment it shall attract interest at
the Interest Rate calculated for the period commencing on the due dates
for payment and ending on the date the sum is subsequently received by
the Management Company notwithstanding that the Term may have expired or
been determined before the service by or on behalf of the Management
Company of the relevant Service Charge Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it shall
attract interest at the Interest Rate for the period commencing as the
due date for payment and ending on the date that the sum due is received
in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph 9
of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly
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adhered to) Provided that the Tenant gives notice with full particulars
of its ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve
the relevant issue but if they cannot do so the issue in dispute
shall be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest error
be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the dispute
shall be paid as soon as reasonably practicable after such
resolution and any sum due to or payable by the Management Company
shall then be paid or allowed (as the case may be) immediately
together with interest at three per cent below the Interest Rate on
such sum during the period which it has been underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited
to) the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of
schedule 6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of
such Services is greater) than would normally apply in the context of
the general management of the Building in accordance with this lease as
a result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof determined
by the Management Company) within 10 working days following a demand by
the Management Company
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SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant
parts of it described in paragraphs (ii) and (iii) of schedule 1
2. Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the Common
Parts and the car park shall be operational 24 hours a day 7 days a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout Normal
Business Hours and at the request of the Tenant outside those hours
subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule 1 and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists
are not present) and the car park within the Building including where
reasonably appropriate in the Management Company's
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judgment closed circuit television and/or other plant and equipment for
the purpose of surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and (and
where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in the
Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided by
the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the Premises
or
(2) reasonably calculated to be for the benefit of the Tenant and other
tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference
to the particular matters or things shall be deemed to be and in
each case shall be without prejudice to the generality of the
wording preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the
provision of or add to or procure
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the addition to any item of Services matter or thing specified in
this schedule if the Management Company shall having regard to
the principles of good estate management reasonably deem it
desirable or expedient so to do but before so doing the
Management Company shall notify all the tenants in the Building
but in the event of any failure of any of the Services shall use
all reasonable endeavours to restore the said Service
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due to
circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company employed
or retained by or on behalf of the Management Company or its agents
(including without limitation managing agents fees) for or in connection
with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other duties
in or about the Building or any part of it relating to the general
management administration security maintenance protection and
cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and not
by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice to
the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in kind
and other emoluments and National Insurance and other statutory
contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided
rent free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
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(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part
of this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the same
is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in unforeseen
or emergency circumstances to finance the provision of the Services and
the costs referred to in this Part of this schedule or any of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any other
amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the Management
Company pursuant to sections 24 25 and 26 Value Added Tax Act 1994 or any
regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable Life
Assurance Society (3)
50
<PAGE>
SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
Part I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of, input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1994 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part XIV of the Value Added Tax Regulations 1995.
"VAT YEAR CERTIFICATE" means the certificate to be provided by the Tenant
following the end of the Tenant's VAT Year in the form set out in Part II
of this Schedule.
2. Payment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to the
rent first reserved without any adjustment of rent first reserved under
this schedule.
3. Adjustment of rent first reserved and pavment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on
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<PAGE>
the due date for payment of the next installment of the rent first
reserved (and on the due date for subsequent instalments), subject
however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served a
VAT Year Certificate specifying in paragraph 1 thereof the same estimated
proportion as stated in the previous VAT Year Certificate served, or if
no previous VAT Year Certificate has been served by the Tenant at any
time prior to the due date for any VAT Year Certificate an estimated
proportion of nil per cent. If the Tenant fails to serve a VAT Year
Certificate on more than one consecutive occasion the Tenant shall be
deemed, on the second failure and any subsequent failure, until service
of the next VAT Year Certificate, to have served a VAT Year Certificate
specifying in paragraph 1 thereof an estimated proportion of nil per
cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at that
time) be adjusted on the basis of the last VAT Year Certificate. The
adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an amount
to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form set
out in the VAT Year Certificate. The Tenant's Auditor's certificate shall
be provided at least eight days prior to the date of payment of the rent
first reserved to which such certificate relates, together with the
Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant shall
pay in accordance with paragraph 4.1 above the amount stipulated in
accordance with paragraph 3 of such VAT Year Certificate (as revised, if
required) on the date for payment of the rent first reserved.
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or will
obtain a Tax Credit differing from the proportion previously taken into
account in calculation any payment, any such difference shall be taken
into account (after having determined the amount of rent first reserved
payable in respect of the next quarter in accordance with paragraph 3
above) in calculating the next actual payment of rent first reserved
(either by increase or
52
<PAGE>
decrease), the amount of which shall be set out in paragraph 3 of the VAT
Year Certificate.
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the amount which
should have been paid, from such due date until the date of payment of
the adjusted amount pursuant to paragraph 4.3. Where the actual amount
paid (the "Initial Payment") on the due date for payment of any sum was
subsequently adjusted on payment of any later installment of the rent
first reserved ("the Adjusted Payment") in accordance with paragraph 4.6
of Part I of this Schedule 8 and paragraph 3(b) of the VAT Year
Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions of
this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or accepting
a method of attribution designed or maximise its Tax Credit and covenants
not to enter any arrangement which has the specific purpose of increasing
the amount by which the rent first reserved is decreased by virtue of
this schedule 8..
53
<PAGE>
Part II
-------
VAT YEAR CERTIFICATE
--------------------
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ]
made between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises on
[ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant to
that paragraph:
1. Our VAT Year which included the following quarter days [ ], ended on
[ ], ended on [ ].
(a) The part of the VAT charged on the rent first reserved paid in the
VAT Year for or in respect of which we estimate/have determined (in
accordance, where relevant, with the return made, or to be made, for
the prescribed accounting period next following the end of the VAT
Year) we will be unable to obtain credit or repayment is a
proportion of [ ] per cent of the total VAT charged.
(b) The following Table sets out the part of the VAT charged which was
expected to be irrevocable during the VAT Year where it has been
determined on the basis of paragraph 2(a) above that that differs
from the amount of VAT for or in respect of which we actually
obtained, or will be able to obtain, credit or repayment.
Dates Rent first reserved Estimate Adjustment Determination
----- ------------------- -------- ---------- -------------
* ** ***
* estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out initially in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which
we estimated we would be unable to obtain credit or repayment as
set out in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now
estimated/determined we shall be unable to obtain credit or
repayment, in accordance with Sections 24-26 of the Value Added
Tax Act 1994 and the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved so as to ensure that the amount of rent first reserved payable
in the VAT Year to which this VAT Year Certificate relates is as provided
in paragraph 3 of Part I of Schedule 8 to the Lease in accordance with
the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and
the VAT thereon shall be pounds sterling [ ], and that the
interest payable by the Tenant to the Landlord/Landlord to the Tenant,
in accordance with paragraph 4.7 of Part I schedule 8 to the Lease shall
be pounds sterling [ ].
4. We hereby declare that:
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<PAGE>
(a) we have complied with the covenant imposed upon us by paragraph 6.2
of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declaration are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
Tenant's Auditors
55
<PAGE>
THE COMMON SEAL of 99 BISHOPSGATE )
LIMITED was hereunto affixed in the presence of:- )
[SEAL HERE] Director /s/
Secretary /s/
THE COMMON SEAL of 99 BISHOPSGATE )
MANAGEMENT LIMITED was hereunto )
affixed in the presence of:- )
[SEAL HERE] Director /s/
Secretary /s/
THE COMMON SEAL of HAMMERSON U.K. )
PROPERTIES plc was hereunto affixed in the )
presence of:- )
[SEAL HERE] Director /s/
Secretary /s/
56
<PAGE>
DATED 24th OCTOBER 1996
- ------------------------------------------------------------------------------
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES plc
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
and
DONALDSON, LUFKIN & JENRETTE, INC.
- ------------------------------------------------------------------------------
UNDERLEASE
of
Twenty-fifth Floor 99 Bishopsgate London EC2
- ------------------------------------------------------------------------------
Herbert Smith
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P17/30433514
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions
Building
Common Parts
Development
Electricity Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insurance Rent
Insured Risks
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
(13) Use
(14) Signs
<PAGE>
CLAUSE HEADING PAGE
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangerous and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Arbitration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
8. Landlord's Guarantor
9. Tenant's option to determine
<PAGE>
CLAUSE HEADING PAGE
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
<PAGE>
LEASE PARTICULARS
- -----------------------------------------------------------------------------
1. DATE 24th OCTOBER 1998
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE FIRST
ABOVE WRITTEN
- -----------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette International
Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Lufkin & Jenrette, Inc.
- -----------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the 25th floor
of the Building shown for identification
only edged red on Plan 1.
- -----------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- -----------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 23rd October 2011
AND EXPIRY DATES
- -----------------------------------------------------------------------------
6. INITIAL RENT : (pounds sterling) 456,322.50
- -----------------------------------------------------------------------------
7. RENT COMMENCEMENT DATE: 25th March 1998
- -----------------------------------------------------------------------------
8. TENANT'S BREAK RIGHT : 24th October 2008
- -----------------------------------------------------------------------------
9. CAPITAL SUM : (pounds sterling) 228,161.25 inclusive of
VAT
<PAGE>
THIS UNDERLEASE made the 24th day of OCTOBER One thousand nine hundred and
ninety six
BETWEEN:-
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under Section
21 A to the Companies Act 1985 under company number FC018588 and branch
number (BR002962) whose principal place of business is at 100 Park Lane
London W1Y 4AR(the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at Park Lane
London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) HAMMERSON U.K. PROPERTIES plc whose registered office is at 100 Park Lane
London W1Y 4AR (Co. Regn. No.298351) (the "LANDLORD'S GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED registered office is
at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn. No. 2475089) (the
"TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the
State of Delaware United States of America whose address for the purposes
of this lease is 277 Park Avenue New York New York 10172 (the "GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by
clause 2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person
acting on behalf of or in connection with any organisation (or
on his own behalf) which carries out activities directed towards
overthrowing or influencing by force or violence Her Majesty's
Government in the United Kingdom or any other government de jure
or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even
date herewith and made between the Landlord and the Tenant
governing the initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part)
having a frontage to the west side of Bishopsgate and a return
frontage to the south side of Wormwood Street and all buildings
fixtures and other structures whatsoever from time to time
thereon and the appurtenances thereof which land (together with
the building now erected thereon) is known as 99 Bishopsgate
London EC2 and is for the purpose of identification shown verged
by a blue line on the Building Plan together with any adjoining
areas designated by the Landlord or the Management Company
(4) "COMMON PARTS" means all parts of the Building which are from
time to time intended for the common use and enjoyment of the
tenants and occupiers of the Building and persons claiming
through or under them (whether or not other
1
<PAGE>
parties are also entitled to use and enjoy the same) and reasonably
designated as such by the Landlord and including without prejudice to
the generality of the foregoing the pedestrian ways circulation areas
lobby entrance halls lifts lift shafts fire escapes landings staircases
passages forecourts car park landscaped areas plant rooms management
suites and any other areas which are from time to time during the Term
reasonably provided by the Landlord for common use by or benefit of the
tenants and occupiers of the Building But excluding (for the avoidance
of doubt) any premises intended to be let to any party or for occupation
by the Landlord or the Management Company other than for the provision
of the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by Planning Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the Tenant
in accordance with its covenant contained at clause 5(4) being a fair
and reasonable proportion as determined by the Landlord of the total
cost of the provision of electricity to the Building as a whole
(including the provision of any security for the supply of electricity
to the Building which may from time to time be required by the relevant
undertaker responsible for the supply of electricity chosen by the
Landlord) which proportion shall so far as practicable (save where the
same are not in working order) be calculated using readings taken in
such manner and at such times as the Landlord shall from time to time
determine of the check meters relating to the Premises from time to time
installed but otherwise shall be determined in such manner as the
Landlord shall in its discretion consider to be fair and reasonable in
all the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation now
or hereafter to be enacted or made and all subordinate legislation
whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the Premises
dated 29th September 1975 made between The Prudential Assurance Company
Limited (1) and Bishopsgate Developments Limited (2) and "Superior
Landlord" means the person for the time being entitled to the reversion
immediately expectant on the term granted by the Head Lease and every
other person having an interest in reversion to that term
(9) "GROUP COMPANY" means a company which is either the holding company of
the Tenant or a wholly owned subsidiary of the Tenant or the Tenant's
holding company (as both expressions are defined in Section 736
Companies Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of the amount
which the Landlord may reasonably expend:-
(a) in effecting and maintaining insurance against the occurrence of
the Insured Risks in relation to the Building in such sum as
represents its then full current replacement cost with such
allowance as the Landlord from time to time considers
appropriate in respect of related liabilities and expenses
(including without limitation liability to pay any fees or
charges on the submission of an application for planning
permission and costs which might be incurred in complying with
any Enactment in carrying out
2
<PAGE>
any replacement work and sums in respect of architects'
engineers' and quantity surveyors' and other professional fees
and incidental expenses incurred in relation to any works of
debris removal and of replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of the
Landlord in relation to the Building and anything done therein
and
(c) in professional fees relating to insurance including fees for
insurance valuations carried out at reasonable intervals by an
independent insurance valuer (but no more than once in any year)
and all reasonable fees and expenses payable to advisers in
connection with effecting and maintaining insurance policies and
claims and
(d) equivalent to the total of all reasonable excess sums (being for
the avoidance of doubt the first part of any insurance claim)
which the insurers are not liable to pay out on any insurance
claim in respect of the Building and which the Landlord or the
Management Company may have expended in replacing the damaged or
destroyed parts of the Building
(11) "INSURANCE RENT" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises of
the Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in effecting
and maintaining insurance against up to six years' loss of the
rents first and secondly hereinafter reserved and Service Charge
having regard to potential increases of rent in accordance with
schedule 4 and with any addition to the amount insured as the
Landlord may decide in respect of VAT and
(c) (without prejudice to all other provisions of this lease relating
to the use of the Premises and the vitiation of any policy of
insurance) any reasonable amount which the Landlord may expend in
paying all additional premiums and loadings on any policy or
policies of insurance required to be paid as a result of anything
done or omitted (in breach of the terms of this lease) by the
Tenant and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot civil
commotion strikes labour and political disturbances and malicious damage
aircraft and aerial devices (other than hostile aircraft and devices)
and articles accidentally dropped from them storm tempest flood bursting
or overflowing of water tanks and pipes impact earthquake and accidental
damage to underground water oil and gas pipes or electricity wires and
cables subsidence ground slip and heave and such other usual commercial
risks or perils against the occurrence of which the Landlord may from
time to time in its reasonable discretion deem it desirable to insure
subject to such exclusions and limitations as are from time to time
commonly
3
<PAGE>
imposed by insurers and subject also to the exclusion of such of the
risks specifically hereinbefore mentioned as the Landlord may in its
reasonable discretion decide where insurance cover in respect of the
risk in question is not for the time being available in the London
insurance market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either the base
rate of Barclays Bank plc or such other bank (being for the time being
generally recognised as a clearing bank in the London market) as the
Landlord may from time to time use for general banking purposes or if
the base rate cannot be ascertained then above such other rate as the
Landlord may reasonably specify (and so that whenever there is reference
in this lease to the payment of interest at the Interest Rate such
interest shall be calculated on a daily basis and compounded with
quarterly rests on the usual quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the Building
from time to time (whether or not within the Premises or other premises
let or intended to be let by the Landlord) comprising or used in
connection with the following systems (to the extent specified in the
following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building (including
sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but excluding
portable fire extinguishers installed by the Tenant or other
tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the building
security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply into
the Building so far as (and including) the electrical riser
busbars connecting to the distribution boards at each level in
the Building which is let or intended to be let by the Landlord
(vii) the whole of the air handling system and the electricity supply
and control systems for the same
(viii) the standby generators and associated cabling wiring and duct work
but excluding in each case any "stand alone" systems installed by the
Tenant or any other tenant or occupier of the Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to be
for separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by the
Code of Measuring Practice - Fourth Edition (RICS/ISVA 1993) (or if
there shall be no such edition or no such expression for the time being
the nearest equivalent thereto)
4
<PAGE>
[GRAPHIC]
<PAGE>
[GRAPHIC]
99 Bishopsgate, London, EC2
North
BUILDING PLAN
<PAGE>
(17) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of such
hours at the reasonable discretion of the Landlord provided that such
hours will automatically expand if any other tenant in the Building is
granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the actual
cost to the Management Company of carrying out or providing any of the
Services at the request of the Tenant outside Normal Business Hours
other than any services which are stated to be provided 24 hours a day
(including without prejudice to the generality of the foregoing costs
and expenses in the nature of those set out in Part II of schedule 6) or
in the event of any of the Services being carried out or provided
outside Normal Business Hours to the Tenant and any other tenant or
tenants of the Building a fair proportion thereof (on a fair and
reasonable basis between the Tenant and any other tenant or occupier
making use of such Services) as reasonably determined by the Landlord.
PROVIDED THAT during the first year of the Term the cost of providing
air conditioning outside Normal Business Hours shall not exceed
(pounds sterling) 88 per hour (in respect of the Premises being the only
user of air conditioning at the relevant time) or (pounds sterling) 48 per
hour per floor on the basis that any five of floors 18, 20 and 22 to 26 of
the Building are simultaneously using such air conditioning over the whole
of such floors
(19) "PERMITTED PART" means any part or parts of the Premises capable of
separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose within
Class B1(a) (but not for any other purpose within that Use Class) of the
schedule to the Town and Country Planning (Use Classes) Order 1987 and
for the avoidance of doubt use of the Premises for data processing
investor services business trading operators and investment banking
complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and buildings and
every planning permission statutory consent and agreement made under any
Enactment relating to the Building
(22) "PLANS" means the plans annexed hereto and "Building Plan" means that one
of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all permitted
additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their use
and occupation and any court of law and the companies or authorities
responsible for the supply of water gas and electricity or any of them
and any of their duly authorised officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed hereto or
in the event that materials listed in the specification are not
available from time to time or appropriate for use (in the Landlord's
reasonable opinion) then reference to such materials will be substituted
by reference to materials of not materially less quality which perform a
similar function PROVIDED THAT save to the extent
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that items of plant and equipment have been altered during the
Term the Tenant shall not be required to replace existing items
of plant and equipment for new items subject to the existing
items being in good working order
(25) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and every
fifth anniversary of that date during the Term (and the
last day of the Term)
(b) any date stipulated by virtue of paragraph 5 of schedule 4
(26) "SERVICES" means the services and other matters specified in
clause 6 and Part I of schedule 6
(27) "SERVICE MEDIA" means those parts of the Building comprising gas
water drainage electricity telephone telex signal and
telecommunications heating cooling ventilation air conditioning
fire alarm and other pipes drains sewers mains cables wires
supply lines ducts conduits flues and all other common conducting
media plant appliances and apparatus for the provision supply
control and monitoring of services to or from the Building and
other common equipment
(28) "TERM" means a term of years commencing on the date hereof and
expiring on 23rd October 2011 and includes any period of holding
over or extension whether by any Enactment or common law
(29) "TERMINATION NOTICE" means not less than 12 months and 1 day's
prior written notice unless either:
(a) any Enactment or decision not capable of appeal on a point
of law confirming that the Tenant is not entitled to a new
tenancy on the expiration of such notice is in force or
upheld as at 22nd October (in which case not less than
6 months prior written notice need be given); or
(b) any other tenant enters into a lease prior to September
1998 of premises comprising at least a floor of the
building within the security of tenure protections of the
Landlord and Tenant Act 1954 for a term of not less than
10 years (without break rights) and is granted right to
determine such lease on less than such 12 months' and 1
day's prior written notice (in which case the notice
period hereunder shall be reduced to such notice period as
is granted to such tenant in such circumstances)
(30) "VAT" means Value Added Tax as referred to in the Value Added Tax
Act 1994 (or any tax of a similar nature which may be substituted
for or levied instead of it by statutes)
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa
and words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and
"Guarantor" wherever the context so admits include their
respective successors in title and
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where a party comprises more than one person covenants and obligations
of that party take effect as joint and several covenants and obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit or
suffer it to be done (or omitted) and to prevent (or as the case may be
to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference to the
relevant clause sub-clause schedule or paragraph of this lease and
clause and schedule headings shall not affect the construction of
this lease
(b) any right of (or covenant to permit) the Landlord or the Management
Company to enter the Premises shall also be construed (subject
always to the proviso to clause 4(9)) as entitling the Landlord to
remain on the Premises with or without equipment and permitting such
right to be exercised by all persons authorised by the Landlord for
as short a period as reasonably practicable and making good all
damage caused and causing as little inconvenience as reasonably
possible save where the right of entry is exercised to remedy any
breach hereunder where the Landlord only undertakes to make good
damage caused
(c) any consent licence or approval of the Landlord or words to similar
effect mean a consent licence or other approval in writing signed by
or on behalf of the Landlord and given before the act requiring
consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it for the
time being in force except in relation to the Town and Country
Planning (Use Classes) Order 1987 which shall be interpreted
exclusively by reference to the original provisions of Statutory
Instrument 1987 No 764 whether or not the same may at any time have
been revoked or modified
(f) the last year of the Term includes the final year of the Term if
it shall determine otherwise than by effluxion of time and
references to the expiry of the Term include such other
determination
(5) (a) Where the context permits rents or other sums being due from
the Tenant to the Landlord or the Management Company mean that
they are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is
required under this lease the relevant provision shall be
construed as also requiring (and any consent licence or approval
given by the Landlord shall be deemed subject to the need for)
the consent licence or approval of the Superior Landlord (for
which the Landlord shall apply at the Tenant's reasonable cost)
where the same is required under the Head Lease except that
nothing in this lease or in any consent licence or approval by
the
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Landlord shall imply that the Superior Landlord's consent licence or
approval will not be unreasonably withheld or delayed
(c) references to any right of (or covenant to permit) the Landlord to
enter the Premises shall extend to the Superior Landlord and
to all persons authorised by it and shall be construed in the manner
required by clause 2(4)(b) but in relation to the Superior Landlord
and those with its authority
(d) the rights excepted and reserved in schedule 3 are also excepted and
reserved for the benefit of the Superior Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor and in consideration of the
payment by the Landlord to the Tenant of the sum of Two hundred and
twenty eight thousand one hundred and sixty one pounds and 25 pence
((pounds sterling)228,161.25) paid on the date hereof (receipt of which is
acknowledged by the Tenant) DEMISES unto the Tenant ALL THAT the
Premises TOGETHER WITH the easements and rights specified in schedule 2
exercisable in common with the Landlord and all others with its
authority or otherwise from time to time entitled thereto EXCEPT and
RESERVED unto the Landlord and all other persons authorised by it from
time to time during the Term or otherwise from time to time entitled
thereto (including the Management Company in relation to the provision
of the Services) the easements and rights specified in schedule 3
TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the Term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT
to the provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 24th March
1998 a peppercorn (if demanded) and thereafter until the first Review
Date (and thereafter as determined pursuant to schedule 4) the yearly
rent of Four hundred and fifty six thousand three hundred and twenty two
pounds and fifty pence ((pounds sterling)456,322.50) exclusive of VAT
(subject to clause 5(6)) payable by equal quarterly payments to be made
in advance on the usual quarter days in every year the first such payment
to be made on 25th March 1998
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice
to the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as
rent or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days
following the due date (or in the case of money due only on
demand within fourteen days after the date of demand) calculated
for the period commencing on the due date for payment and ending
on the date the sum and the interest is received in cleared funds
by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to demand
or accept any payment
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having regard to a breach of any of the Tenant's obligations under
this lease of which the Tenant has received notice calculated for
the period commencing on the due date for payment and ending on the
date the sum (and the interest) is subsequently received by the
Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant
body to whom account has for the time being to be made) on the supply by
the Landlord to the Tenant under or in connection with the provisions of
this lease or the interest created by it and of any other supplies
whether of goods or services such rent fourthly reserved to be due for
payment contemporaneously with the other rents or sums to which it
relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable
on demand (either annually or by instalments) as the Landlord shall
determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause
4(30) also with the Management Company) throughout the Term subject
to clause 4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the
manner set out in clause 3 without deduction or set off and
(unless for the time being the Landlord shall have required in
writing to the contrary) to pay the rent first reserved (together
with any sum in respect of the rent fourthly reserved as may be
applicable thereto) by banker's standing order to such bank as
the Landlord may from time to time nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any
amount to the Landlord hereunder by way of reimbursement or
indemnity to pay on the production of a valid VAT invoice to the
Landlord (as applicable) in addition an amount equivalent to any
VAT incurred by the Landlord save to the extent that the Landlord
obtains credit for such VAT incurred by the Landlord pursuant to
sections 24 25 and 26 Value Added Tax Act 1994 or any regulations
made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now
or hereafter assessed charged or imposed upon the Premises or
upon their owner or occupier (and a proper proportion determined
by the Landlord attributable to the Premises of any rates taxes
charges and other outgoings now or hereafter assessed charged or
imposed upon the Premises in common with other premises or upon
the owners or occupiers thereof) and (to the extent the Tenant
does not pay it directly to the relevant supplier) the total cost
(including meter rents) of all water (including chilled water)
electricity and gas separately metered and/or exclusively
supplied to the Premises during the Term as reasonably determined
by the Landlord excluding (without prejudice to the rent fourthly
reserved and clause 4(2)) any tax payable by the Landlord as a
direct result of any actual or implied dealing with the reversion
of this lease or of the Landlord's receipt of income
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COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every Public
Authority (including the due and proper execution of any works) in
respect of the Premises their use occupation employment of personnel in
them and any work being carried out to them (whether the requirements
are imposed upon the owner lessee or occupier) and not to do or omit
anything by which the Landlord may become liable to make any payment or
do anything under any Enactment or requirement of a Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5 working days
of receipt of the same to give to the Landlord notice of (and a
certified copy of) any notice permission direction requisition order or
proposal made by any Public Authority and without delay to comply in all
respects at the Tenant's cost with the provisions thereof save that the
Tenant shall if so required by and at the cost of the Landlord make or
join in making such objections or representations in respect of any of
them as the Landlord may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of Schedule 2) in good and substantial
repair and condition (damage by any of the Insured Risks excepted to the
extent that the insurance money shall not have been rendered
irrecoverable subject to clause 5(2)(b) or insufficient because of some
act or default of the Tenant or of any person deriving title under or
through it or their respective servants or agents or invitees) and to
replace whenever necessary during the Term and on expiry of the Term the
landlord's fixtures and fittings (including any fitted carpets) in the
Premises which may have become beyond economic repair with items of the
same type and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of decorative
order and finish and properly cleansed and tidy and (without
prejudice to the foregoing) as often as the same shall be necessary
(and not less frequently than once in every fifth year of the Term
but not more than once in any 18 month period) and also in the last
year of the Term to clean paint polish or otherwise treat as the
case may be all inside surfaces of wood and metal work of the
Premises usually or requiring to be painted polished or otherwise
treated with two coats at least of high quality paint or polish
vinyl wall coverings (where applicable) or other appropriate
materials in a good and workmanlike manner (and during the last year
of the Term in the colour scheme specified and otherwise in
accordance with the Reinstatement Specification) PROVIDED ALWAYS
THAT the Tenant shall not be obliged to carry out any such
decorative treatment if the need for it is caused by damage by any
of the Insured Risks to the extent (subject to clause 5(2)(b)) that
the insurance money shall not have been rendered irrecoverable or
insufficient because of some act or default of the Tenant or of any
person deriving title under or through it or their respective
servants agents or invitees
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(b) To clean the inside of all external window glazing in the Premises
at least once in every month using reputable contractors
(c) To enter into and maintain contracts for the regular inspection
maintenance and servicing of all fixed plant and equipment comprised
in the Premises which has or is likely to have any impact on the
Landlord's Services Equipment by reputable contractors approved by
the Landlord (such approval not to be unreasonably withheld) and to
obtain satisfactory test certificates as may be reasonably required
by the insurers and whenever reasonably required to produce copies
of such contracts and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in areas
designated for such purpose from time to time by the Landlord and to
comply with all requirements of any Public Authority and any reasonable
regulations made by the Landlord pursuant to clause 4(27) in relation to
control over and disposal of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable security
requirements on reasonable prior written notice (except in an emergency)
to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease have been
observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and make
connections to any part of the Building including the Service Media
(PROVIDED that the Landlord will procure that such entry takes place
outside Normal Business Hours where practicable)
(e) during the last six months of the Term (or at any time in the case
of a disposal of the Landlord's interest) to show the Premises to
prospective purchasers or tenants and their agents
(f) exercise the rights described in schedule 3
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy any
breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with any
such notice to permit the Landlord and any authorised person to
enter the Premises to remedy the breach as the Tenant's agent and at
the Tenant's proper cost the Landlord making good any damage caused
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(c) To pay to the Landlord on demand all the proper costs and expenses
incurred by the Landlord under the provisions of this sub-clause
ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements belonging to
the Premises and not knowingly to give any acknowledgment that they
are enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give notice to
the Landlord forthwith of any encroachment which might have that
effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from the
demise of the Premises) any works affecting any structural parts of
the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in respect of
areas not included in the Premises not to install or erect any
exterior lighting shade or awning or place any structure or other
thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this sub-clause and
subject to the provisos to this paragraph (c) not to make any other
alteration or addition to the Premises (including all electrical and
other plant and equipment and the installation and removal of
demountable partitioning) except:-
(i) in accordance with plans and specifications (adequately
describing the work in question and the manner in which the
work will be carried out) previously submitted at the Tenant's
expense in triplicate to and approved by the Landlord (such
approval not to be unreasonably withheld or delayed PROVIDED
THAT the Landlord shall respond to the Tenant's submission
within 10 working days in the case of minor alterations
(excluding any alterations which affect any of the Landlord's
Services Equipment) and if the Landlord fails to respond within
10 working days as aforesaid it shall be deemed to have
accepted such minor alterations AND PROVIDED FURTHER that the
initial fitting out of the Premises following the date hereof
shall be governed by the Agreement for Initial Alterations
(ii) in a manner which shall not materially and adversely affect the
Landlord's Services Equipment any Service Media or the
provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public Authority (and in
particular in relation to any electrical installation in
accordance with the terms and conditions laid down by the
Institution of Electrical Engineers and the Regulations of the
Electricity Supply
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Authority) and the insurance company with whom the Premises are
for the time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out until the
Landlord has issued its consent in writing to which the Tenant
shall if required join as a party
(II) once any such alterations or additions have been carried out
the Tenant shall supply to the Landlord as-built plans in
triplicate (together with a computer aided design disk and 35
mm slides) showing the works as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by the
Tenant
(ii) all work done in connection with the original fitting out by
the Tenant in pursuance of the Agreement for Initial
Alterations
and to restore and make good the Premises in accordance with the
Reinstatement Specification in a proper and workmanlike manner to
the condition and design which existed before the alterations or
additions were made with all services properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the Premises) which
may be or become or cause a nuisance obstruction or damage to any
person or property
(b) for a sale by auction or for any public meeting or for any dangerous
noxious noisy illegal or immoral trade business or activity or for
residential purposes and not to use the Common Parts for the
transaction of any business or
(c) (without prejudice to the preceding paragraphs of this sub-clause)
except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the Building save
for the right granted pursuant to paragraph 3 of schedule 2
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or advertisement
except the approved signs referred to in paragraph 3 of schedule 2
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ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of the
Premises the Tenant shall first by an irrevocable unconditional
written notice ("the Tenant's Notice") served upon the Landlord
offer to surrender or assign this lease upon such financial terms
and conditions as the Tenant may desire
(b) If the Landlord wishes to accept such surrender or assignment it
shall within twenty-one days of receipt of the Tenant's Notice serve
a counter-notice ("the Counter-Notice") upon the Tenant stating as
much
(c) If the Landlord serves a Counter-Notice on the Tenant then the
Tenant shall surrender or assign (at the Landlord's option) the
Premises to the Landlord (or as the Landlord may direct) within six
months of receipt of the Counter-Notice either with vacant
possession or subject only to a permitted underletting and the
Tenant's liability hereunder shall cease in respect of any matters
arising following the date of such assignment or surrender but
without prejudice to any antecedent breaches of covenant
(d) If the Landlord does not serve a Counter-Notice then the Tenant must
(if it wishes to assign) complete its assignment on terms greater
than 95 per cent in value of the terms and conditions stipulated in
the Tenant's Notice within six months from the date of the Tenant's
Notice and if the Tenant shall fail to complete within such period
if it still wishes to assign the whole of the Premises it must
reinstate the procedure set out in this clause 4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15) not to
assign mortgage charge or underlet or in any other manner part with
possession of any part (being less than the whole) of the Premises
or agree to do so except that the Tenant may underlet the whole of
(but not more or less than) any Permitted Part or Permitted Parts in
accordance with paragraphs (h) and (i) of this sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15) not to
assign underlet or otherwise part with possession of or the whole of
the Premises or agree to do so except that the Tenant may assign or
underlet the whole of the Premises in accordance with paragraph (g)
or (h) respectively of this sub-clause
(ASSIGNMENT)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2 months before
completion of the assignment which consent shall not be
unreasonably withheld or delayed but which may be granted
subject to any one or more of the conditions referred to in
paragraph (g)(ii) and which may be withheld if any one or more
of the circumstances referred to in paragraph (g)(iii) exist
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(ii) The conditions referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(1A) Landlord and
Tenant Act 1927) are:
AUTHORISED GUARANTEE
(a) that the Tenant shall enter into an authorised guarantee agreement
(as defined in section 16 Landlord and Tenant (Covenants) Act 1995)
with the Landlord in a form which the Landlord reasonably requires
THIRD PARTY GUARANTEE/RENT DEPOSIT
(b) that if so reasonably required by the Landlord the proposed assignee
shall have procured covenants with the Landlord by a guarantor or
guarantors (not being the Tenant or any guarantor) reasonably
acceptable to the Landlord in a form acceptable to the Landlord
(acting reasonably);
INTRA GROUP DEALINGS
(c) if the proposed assignee is a Group Company the Tenant shall have
procured either:
(A) if the Tenant's obligations under this lease are
guaranteed by another Group Company that such Group
Company covenants with the Landlord on the same terms
(mutatis mutandis) as those contained in clause 10; or
(B) if there is no guarantor of the Tenant's obligations under
this lease and if the assignee is not at the date of the
application for consent to the proposed assignment in the
reasonable opinion of the Landlord of financial standing
equivalent to or greater than the Tenant at the date of
this lease that the proposed assignee procures covenants
by a Group Company which is not the Tenant or the proposed
assignee and which is in the reasonable opinion of the
Landlord of financial standing equivalent to or greater
than the Tenant in the same terms (mutatis mutandis) as
those contained in clause 10; and
(iii) The circumstances referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(1A) Landlord and
Tenant Act 1927) are:-
(a) where the Tenant's solicitors have not given an
undertaking to the Landlord's solicitors to pay all
reasonable legal surveyor's and management costs
disbursements and VAT arising on the application for
consent to such assignment whether or not consent is
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granted unless the Landlord unreasonably withholds consent
in circumstances where it is required to be reasonable;
and/or
(b) where any of the rents and Interim Sum due from the Tenant
to the Landlord or the Management Company respectively
under this lease remain unpaid at the date of the
application for consent to the proposed assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted Part
(each being referred to in this paragraph as the premises) except:-
(i) to a person who before the underletting shall have covenanted
with the Landlord to observe and perform the Tenant's
obligations under this lease during the sub-term to the extent
they relate to the premises demised by the underletting (other
than the payment of rents) and a covenant not to assign the
whole of the premises without the Landlord's consent (which
shall not be unreasonably withheld or delayed) and an
unqualified covenant not to assign part of the premises or to
underlet or otherwise part with possession or share the
occupation of the premises or any part of them
(ii) by reserving as a yearly rent without payment of a fine or
premium (in addition to the service and insurance and other
rents payable under this lease except the rent first hereby
reserved or (in the case of underletting of a Permitted Part) a
pro rata proportion of them) an amount equal to:-
(a) (in the case of an underletting of the Premises) the then
open market rack rental value of the Premises
(b) (in the case of an underletting of a Permitted Part) a pro
rata proportion of the then open market rack rental value
of the Premises
the proportion in each case being calculated by reference
to the Net Internal Area of the Permitted Part in relation
to the Net Internal Area of the Premises, in all cases
such rent to be payable by equal quarterly instalments in
advance on the usual quarter days and to be approved by
the Landlord prior to the underletting (such approval not
to be unreasonably withheld or delayed) but the amount of
such rent and the approval of the Landlord thereto may not
be used as evidence by the Tenant for the purpose of any
rent review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the
underlease is reviewed upwards only at not greater
than five year intervals during the sub-term in
accordance with the same
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principles (mutatis mutandis) and at the times as
apply to the rent first reserved by this lease
(b) requiring the underlessee to observe and perform
all the covenants and other provisions binding on the
Tenant under this lease (other than the covenant by
the Tenant to pay rents) to the extent they relate to
the premises and containing:-
(A) a condition for re-entry by the underlessor on
breach of any covenant by the underlessee
(B) a qualified covenant not to assign the whole of
the premises and an absolute covenant not to
assign part of the premises or to underlet or
otherwise part with possession or share the
occupation of the premises or any part of them
(iv) with the Landlord's consent issued within three months
before completion of the underletting which consent
(subject to compliance with the foregoing conditions
precedent) shall not be unreasonably withheld or delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the entrance
to or the reception area of the Premises
(ii) to except from the underlease all necessary circulation
areas and plant and equipment which will serve the
Premises in common and to reserve a separate service
charge rent in respect of their maintenance repair and
renewal
(iii) not as a result of the grant to create or permit the
creation of more than three separate occupations affecting
the whole of the Premises (occupations in right of this
lease counting as one occupation)
(iv) not to grant or agree to grant the underlease without
providing for the exclusion of sections 24 to 28 inclusive
of the Landlord and Tenant Act 1954 in relation to the
underlease in pursuance of an Order duly made under
section 38(4) of that Act before the date of grant
(j) To enforce the observance and performance by every such underlessee
and its successors in title of the provisions of the underlease and
not expressly or impliedly to waive any breach of them nor vary the
terms of any underlease
(k) Not to agree any reviewed rent payable under an underlease without
the Landlord's consent and if the rent review under any underlease
is to be determined by an independent person not to agree his
appointment without the Landlord's consent (PROVIDED ALWAYS THAT the
Landlord shall not unreasonably withhold or delay any consent
required
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under this sub-paragraph) and to procure that any representations
which the Landlord may wish to make in relation to the rent review
are duly submitted to the independent person and to provide to the
Landlord promptly on the same becoming available copies of any
representations made by or on behalf of the Tenant or the
underlessee in relation to such rent review
(SHARING OCCUPATION)
(1) Not to part with or share the occupation of the Premises or any part
of them except that the Tenant may share occupation with a company
which is (but only for so long as it remains) either the holding
company of the Tenant or a majority-owned subsidiary of the Tenant
or of the Tenant's holding company (as those expressions are defined
in section 736 Companies Act 1985) so long as the Tenant does not
grant the person sharing occupation exclusive possession (so that
such company occupies as licensee only without creating any
relationship of landlord and tenant) nor otherwise transfer or
create a legal estate and the Tenant shall notify the Landlord of
the identity of each company in occupation
REGISTRATION
(16) (a) Within twenty-one days after any disposition or devolution of
this lease or of any estate or interest in or derived out of it to
give notice in duplicate of the relevant transaction to the Landlord
for registration with a certified copy of the relevant instrument
and to pay to the Landlord a fair and reasonable fee for each such
registration of not less than twenty five pounds
(b) To register with the Landlord particulars of the determination of
every rent review under any underlease of the Premises within
fourteen days after the date of determination
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels' solicitors'
surveyors and bailiffs' fees) properly incurred by the Landlord in and
incidental to:
(a) the preparation and service of a notice under section 146 Law of
Property Act 1925 or in contemplation of any proceedings under
section 146 or 147 of that Act notwithstanding that forfeiture is
avoided otherwise than by relief granted by the court and
(b) every reasonable step taken during or after the expiry of the Term
in connection with the enforcement of the Tenant's obligations under
this lease including the service or proposed service of all notices
and schedules of dilapidations and
(c) every application for consent licence or approval under this lease
but not if the application is unreasonably refused or delayed or
granted subject to unreasonable conditions (where such consent is
not to be unreasonably withheld or delayed)
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MACHINERY
(18) Not to install in the Premises any plant or machinery other than usual
office equipment without the Landlord's consent which shall not be
unreasonably withheld PROVIDED ALWAYS THAT no plant or machinery shall be
installed or operated in the Premises and nothing shall be done or
omitted in them which may cause:-
(a) the efficiency of the heating ventilation air conditioning and
cooling system installed in the building to be diminished or
impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other part of
the Building or other adjoining property or persons outside the
Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the rights
granted by this lease in a way which causes nuisance or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises and (to
the extent they lie within the Premises) to keep them clear and
functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the Premises
nor to overload or cause undue strain to the Service Media or any
other part of the Building and in particular not to suspend any
undue weight from the ceilings or walls of the Premises and not to
exceed the following floor loadings:-
floor finishings: : 4 kN/m2 (80lbs per sq.ft)
live load : 1kN/m2 (20lbs per sq.ft)
(e) any requisite notice erected on the Premises including any erected
by the Landlord in accordance with its powers under this lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of goods is
carried out only by using the service accesses and goods lifts designated
by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to comply
with the provisions and requirements of Planning Law relating to or
affecting
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(a) (i) the Premises
(ii) any operations works acts or things carried out executed done
or omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any other rights
hereunder in respect of) any other parts of the building
(b) Subject to the provisions of paragraph (c) of this sub-clause as
often as occasion requires during the Term at the Tenant's expense
to obtain and if appropriate renew all planning permissions (and
serve all notices) required under Planning Law in respect of the
Premises whether for the carrying out by the Tenant of any
operations or the institution or continuance by the Tenant of any
use of the Premises or any part thereof or otherwise
(c) Not without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) to apply for any planning
permission relating to the Premises (and not to apply for any such
planning permission relating to any other part of the Building) but
so that subject to compliance with paragraph (e) of this sub-clause
the Landlord's consent shall not be unreasonably withheld or delayed
to the making of a planning application in respect of the Premises
relating to any operations or use or other thing (if any) which
assuming it to be implemented in accordance with Planning Law would
otherwise not be in breach of the provisions of this lease
(d) If the Landlord so requires in connection with any relevant proposal
by the Tenant to apply for a determination under section 191 or 192
Town and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by the
Tenant (which it hereby agrees to consider and determine with all
due expedition) for planning permission to submit a draft of the
application to the Landlord for its approval and to give effect to
its reasonable requirements in respect thereof and if and to the
extent the Landlord so requires to lodge the application with the
relevant authority in the joint names of the Landlord and the Tenant
and in duplicate
(f) Not to implement any planning permission before the Landlord has
acknowledged that its terms are acceptable nor before the Landlord
has received any cash or other security which it reasonably requires
for compliance with any conditions imposed by the planning
permission
(g) If the Landlord at the Landlord's cost reasonably requires or the
Tenant desires to lodge and progress diligently an appeal against
any refusal of an application for planning permission lodged in
respect of the Premises by the Tenant or by any person claiming
under or through the Tenant (whether or not lodged in its name
alone) the Landlord undertakes to cooperate fully with the Tenant in
respect of any such appeal unless such
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appeal would be likely to have a material and adverse effect on the
Landlord's interests in the Building
(h) Unless the Landlord otherwise directs to complete before the expiry
of the Term all works on the Premises required as a condition
of any planning permission implemented by the Tenant or by any
person claiming under or through it
(i) If the Tenant receives or is entitled to receive any statutory
compensation under any Enactment in relation to its interest in the
Premises the Tenant shall on any determination of its interest prior
to the expiry of this lease by effluxion of time forthwith make such
provision as is just and equitable for the Landlord to receive its
due benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs claims
damages demands and any other liability or consequence arising out or in
respect of any breach of any of the Tenant's obligations under this lease
(including all costs reasonably incurred by the Landlord in an attempt to
mitigate any such breach) or of any act omission or negligence of the
Tenant or any person at the Premises with the Tenant's authority
DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably to
have become aware of the same) to give notice forthwith to the Landlord
of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing anything
in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed by the
Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the
Landlord may from time to time reasonably require to be displayed at
the Premises in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy (relevant
extracts of which shall have been provided to the Tenant) relating to
the Building or any part of it becomes void or voidable or by which
the rate of premium on such policy may be increased
(b) To comply with all proper requirements of the insurers and to
provide and maintain unobstructed appropriate operational fire
fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
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(i) any incidence of any Insured Risk on the Premises and of any
other event which ought reasonably to be brought to the
attention of insurers and of which the Tenant ought reasonably
to be aware
(ii) the insurable value of any fixture installed in the Premises by
the Tenant or any person claiming under or through the Tenant
(d) That if at any time the Tenant or any person claiming under or
through it shall be entitled to the benefit of any insurance of the
Premises to cause all money paid under such insurance to be applied
in making good the loss or damage in respect of which it was paid
(e) Subject to clause 5(2)(b) if the whole or any part of the Building
is damaged or destroyed by any of the Insured Risks at any time
during the Term and the insurance money under any insurance policy
effected by the Landlord is rendered wholly or partially
irrecoverable because of some act or default of the Tenant or any
person deriving title under or through the Tenant or their
respective servants agents or invitees forthwith to pay the Landlord
the whole amount of the insurance money so irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept placed
stored or used in or upon or about the Premises any materials substance
or other thing of a dangerous inflammable combustible explosive corrosive
or offensive nature or any materials substance or other thing which may
in any way cause pollution injury or harm by percolation corrosion
contamination migration release or otherwise on beneath or in the
vicinity of the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and tenant's
fixtures and quietly to yield up the Premises reinstated in
accordance with the Reinstatement Specification and restored and
made good to the extent required under clause 4(12)(d) and in the
state of repair condition decorative order and layout otherwise
required by this lease and any licences or consents issued in
pursuance of it and to make good any damage so caused in a proper
and workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and dispose
of any chattels which may be left in the Premises within 28 days
after the Tenant has quit them (without being obliged to obtain any
consideration for the disposal) and the Tenant irrevocably declares
that any such chattels will stand abandoned by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the Landlord from
time to time and notified to the Tenant in writing for the good
management of the Building PROVIDED ALWAYS THAT no such
regulations shall purport to amend the terms expressed in
<PAGE>
this lease and if there is any inconsistency between the terms
of this lease and the regulations the terms of this lease shall
prevail
(ii) all covenants stipulations and other matters affecting the
Premises and not to interfere with any rights easements or
other matters affecting the Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's visitors to
the Premises observe such security regulations which may apply to them
HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on the part of
the lessee contained in the Head Lease so far as they relate to the
Premises except the covenant for the payment of rent and except also
so far as the obligations relating to insurance fall to be observed
and performed by the Landlord pursuant to clause 5(2)
(b) Not to do or omit any act or thing which would or might cause the
Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management Company at
the times and in the manner provided for in clause 6 and schedule 5
without deduction or set off and to pay the Outside Normal Business Hours
Charge within 10 days of demand (either annually or by monthly
instalments) as the Management Company shall reasonably determine
PROVIDED THAT for the period from the date hereof until the earlier of
25th June 1997 and the date on which the Tenant commences full beneficial
occupation of the Premises following the works contemplated by the
Agreement for Initial Alterations the Service Charge payable by the
Tenant in any Accounting Period shall not exceed (pounds sterling)32,211
inclusive of VAT and PROVIDED FURTHER that the Service Charge payable in
respect of the twelve month period from the earlier of 25th June 1997 and
the date on which the Tenant commences full beneficial occupation of the
Premises following the works contemplated by the Agreement for Initial
Alterations shall be (pounds sterling)74,622.15 exclusive of VAT
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained in
this lease the Tenant may peaceably hold and enjoy the Premises
without any lawful interruption by the Landlord or any person
rightfully claiming through under or in trust for it
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<PAGE>
INSURANCE
(2) (a) To keep the Building (except all tenants' plant and equipment and
trade fixtures) insured against the Insured Risks in the full current
replacement cost
(b) to use reasonable endeavours to procure that the interest of the
Tenant is noted on the insurance policy and to use reasonable
endeavours to further procure that the insurers waive any rights of
subrogation against the Tenant (or any lawful subtenant occupier or
invitee) and the Landlord will notify the Tenant if it is unable so
to procure and will duly consider the representations of the Tenant
regarding alternative insurers who may be prepared to procure that
the insurers waive any subrogation rights and/or note the interest
of the Tenant and will also permit the Tenant to make
representations to the insurers regarding the noting of the Tenant's
interest and/or waiver of rights of subrogation
(c) On request to supply the Tenant (but not more frequently than once
in any period of twelve months) with evidence of such insurance
(d) If and whenever during the Term the Building (except as aforesaid)
is damaged or destroyed by an Insured Risk and to the extent that
payment of the insurance monies is not refused because of any act
neglect default or omission of the Tenant or of any person deriving
title under or through the Tenant or their respective servants
agents and invitees subject to clause 5(2)(b) above the Landlord
will with all convenient speed take the necessary steps to obtain
any requisite planning permissions and consents and if they are
obtained to lay out the money received from the insurance of the
Building (except sums in respect of public liability and employer's
liability and loss of rent) towards replacing (but not necessarily
in facsimile reinstatement) the damaged or destroyed parts (except
as aforesaid) and in the case of the Premises to the Reinstatement
Specification as soon as reasonably practicable (and the Landlord
shall keep the Tenant informed of progress of any such insurance
claims and the Landlord's proposals for compliance with this
provision) PROVIDED ALWAYS THAT the Tenant shall have no claim
against the Landlord under this clause 5(2)(c) in respect of the
manner of replacement of the interior of any Lettable Unit other
than the Premises or any alteration to the Common Parts and PROVIDED
FURTHER THAT the Landlord shall not be liable to carry out the
replacement if it is unable (having used all reasonable endeavours)
to obtain every planning permission and consent necessary to execute
the relevant work in which event the Landlord shall be entitled to
retain all the insurance money received by it and if the Landlord so
retains the insurance money the Tenant shall be entitled to
determine this lease on not less than one month's prior written
notice
(e) In the event that the Premises have not been reinstated to the
Reinstatement Specification or essential means of access thereto
within the Building is not available in the circumstances
contemplated in subclause 5(2)(d) by the date five years and eleven
months following the date of such damage or destruction by an
Insured Risk the Tenant may
24
<PAGE>
determine this lease on not less than one month's prior written
notice such notice to be served (if at all) within one month
after expiry of such five years and eleven months period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform so
far as the Tenant is not liable for such performance under the terms
of this lease but so far only as to preserve the existence of this
lease the covenants and conditions on the part of the lessee
contained in the Head Lease
(b) On the request and at the reasonable expense of the Tenant to take
all reasonable steps to enforce the covenants on the part of the
Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's reasonable expense (to
the extent possible under the Head Lease) to obtain the consent of
the Superior Landlord wherever the Tenant makes application for any
consent required under this lease where the consent of both the
Landlord and the Superior Landlord is needed by virtue of this
lease and tlie Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide or
procure the provision of electricity to the Premises to the extent
necessary to meet the requirements of the Tenant having regard to the
overall electricity services design standards for the Building as a
whole and to all relevant statutory provisions from time to time
regulating the supply and utilisation of electricity and the terms and
conditions relative thereto from time to time imposed by the electricity
provider chosen by the Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as it
requires from time to time for the due and proper provision of the
Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT liability on
the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply made
hereunder by the Landlord to the Tenant the Landlord shall no later
than thirty days after the due date for payment in respect of such
supply issue a valid VAT invoice or audit note (as the case may be
to the Tenant)
(b) Subject to (6)(c) below all consideration payable by the Landlord
to the Tenant shall be exclusive of VAT which the Landlord shall
pay in addition on production of a valid VAT invoice
(c) The capital sum referred to in clause 3 above shall be inclusive
of VAT save that if the Landlord is at any stage able to recover
such VAT the Landlord shall pay to the Tenant a further amount
equal to VAT on the capital sum
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NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its postal
address from time to time
NOTIFICATION OF NOTICES
(8) The Landlord will inform the Tenant as soon as reasonably practicable but
in any event within 5 working days of receipt of the same of any notice
served by the Superior Landlord alleging a breach of the Head Lease which
would threaten the existence of this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate the
structure of the Building (including the structure of the roofs
foundations external and internal walls and columns and structural
slabs of the ceilings and floors) the external surfaces of the
Building (including the whole of the glazing within the external
walls of the Building) and the Common Parts and (where consistent
with an obligation to repair) to replace the same
(2) To keep the Service Media designed for common or general use and the
Landlord's Services Equipment in good and substantial repair and in
clean condition and at all times in good and safe working order
(3) To keep the lifts in the Building clean and in good and substantial
repair and condition and at all times in good and safe working order
(4) Provide heat and air conditioning and chilled water to the
Premises (subject to the Tenant paying Outside Normal Business
Hours Charge in relation to the provision of such services
outside Normal Business Hours) such heat being sufficient to
maintain an air temperature in the Premises measured at the main
trunk connections to the floor as follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29(degrees)C DB 20(degrees)C WB
Winter -4(degrees)C DB 100% relative humidity
Internal Conditions Office
Accommodation -
Summer 22(degrees)C DB + 1(degrees)C
Winter 20(degrees)C DB minimum
Humidity Office Accommodation -
26
<PAGE>
Summer 50% +/-10%
Winter 50%+/- 10%
(5) To ensure that the Common Parts are at all times kept clean tidy and
unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part thereof
designed to receive the same to the extent necessary to meet the
reasonable requirements of the Tenant and other lawful occupiers of the
Premises
(7) To comply with the requirements of any statute (already or in the future
to be passed) or any government department local authority other public
or competent authority or court of competent jurisdiction relating to the
Building or any part for which any tenant or occupier of the Building is
not directly or exclusively liable
(8) To ensure that at all times (meaning for the avoidance of doubt 24 hours
a day during the Term) there are both such security officers at and
patrolling the Building as is reasonably appropriate for premises of the
same size and nature as the Building and that the main reception to the
Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate to
provide to a high class office building in the City of London
outside Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the Tenant
shall previously request (but subject to the Tenant being
responsible for the Outside Normal Business Hours Charge)
(having regard in all cases to and in accordance with the overall design
standards for the Building as a whole and subject to the limitations
contained in Clause 7(6)) in an efficient and economic manner and in
accordance with good estate management provided that the Management
Company shall be entitled to employ such managing agents professional
advisers contractors and other persons as it shall from time to time
reasonably think fit for the purpose of the performance of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any of the
Common Parts or interruption in the provision of the Services or stoppage or
severance affecting any of the Service Media or any interruption to the supply
of electricity to the Premises or the Common Parts or temporary closure or
diversion of any of the Common Parts or Service Media by reason of necessary
inspection repair maintenance or replacement thereof or any part thereof or
any plant machinery equipment installations or apparatus used in connection
therewith or damage thereto or destruction thereof by any risk
<PAGE>
(whether or not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions or
shortage of fuel materials supplies or labour or whole or partial failure
or stoppage of any mains supply due to any circumstances beyond the
control of the Management Company PROVIDED ALWAYS that the Management
Company shall use all reasonable endeavours to minimise the adverse
effects of any such circumstances and to remedy any such interruption
closure or diversion as soon as reasonably practicable PROVIDED FURTHER
that in the event of the Landlord or the Management Company being unable
to provide air conditioning or electricity to the Premises in such
circumstances the Tenant shall be entitled to carry out (the Landlord and
Management Company affording the Tenant reasonable access to do so) all
necessary remedial works to such electricity or air conditioning PROVIDED
THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable
(b) the Landlord or the Management Company shall be responsible for the
costs of the Tenant in carrying out such remedial works when such
works are being carried out as a consequence of any breach of the
Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in
this lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for twenty-one
days after becoming payable (whether or not formally demanded)
or
(b) any of the Tenant's covenants in this lease are not performed
or observed in the manner and at the times herein specified or
(c) the guarantee granted by the Guarantor or any other guarantor
of the Tenant's obligations is or becomes unenforceable (in
whole or in part) for any reason whatsoever and no suitable
alternative security is provided to the Landlord within a
period of one month or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent
company) or compulsorily or has a provisional liquidator or a
receiver (including an administrative receiver) appointed or
its directors pass a resolution to petition for an
administration order or one or more of them swears an affidavit
in support of such a petition or is the subject of an
administration order or a petition for one or of a voluntary
arrangement or a proposal for one under Part I Insolvency Act
1986
(e) being a company incorporated outside the United Kingdom is the
subject of any proceedings or event analogous to those referred
to in clause 7(1)(d) in the country of its incorporation
28
<PAGE>
(f) being an individual is the subject of a bankruptcy petition or
bankruptcy order or of any application or order or appointment
under section 253 or section 273 or section 286 Insolvency Act
1986 or otherwise becomes bankrupt or insolvent or dies
the Landlord may at any time thereafter (and notwithstanding the
waiver of any previous right of re-entry) re-enter the Premises
without prejudice to the Tenant's right to relief against forfeiture
whereupon this lease shall absolutely determine but without
prejudice to either partys right of action against the other in
respect of any antecedent breach of the covenants in this lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in relation to
the Building and (subject only to those easements expressly granted by
this lease) neither the Tenant nor the Premises shall be entitled to any
easement or quasi-easement whatsoever and nothing herein contained or
implied shall give the Tenant the benefit of or the right to enforce or
to have enforced or to prevent the release or modification of any right
easement covenant condition or stipulation enjoyed or entered into by
any tenant of the Landlord in respect of property not demised by this
lease or prevent or restrict the development or use of the remainder of
the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant supply
authorities and any other competent authority the Common Parts and the
Service Media are at all times subject to the exclusive control and
management of the Landlord who may from time to time (if it shall be
necessary or reasonable to do so for the benefit of the Building or
otherwise in keeping with the principles of good estate management) alter
divert substitute stop up or remove any of them (leaving available for
use by the Tenant reasonable and sufficient means of access to and egress
from and servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be
served under this lease shall be validly served if served in
accordance with section 196 Law of Property Act 1925 as amended
by the Recorded Delivery Service Act 1962 or (in the case of
any notice to be served on the Tenant) by sending it to the
Tenant at the Premises PROVIDED THAT whilst the Tenant
hereunder is Donaldson Lufkin & Jenrette International Limited
such notice shall also be served on the offices for the time
being of SJ Berwin & Co (attention: Edward Page) or such other
firm of solicitors notified in writing to the Landlord and 277
Park Avenue New York New York 10172
(b) If the Tenant or any guarantor comprises more than one person
it shall be sufficient for all purposes if notice is served on
one of them but a notice duly served on the Tenant will not
need to be served on any guarantor
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<PAGE>
RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment and
tenant's fixtures) or the means of access to the Premises within
the Building are damaged or destroyed by any of the Insured Risks
so that the Premises are incapable of beneficial occupation and
use and
(b) subject to clause 5(2)(b)the insurance of the Building or the
payment of any insurance money has not been vitiated by the act
neglect default or dmission of the Tenant or of any person
deriving title under or through the Tenant their respective
servants agents and invitees
the rent first reserved by this lease and the Service Charge or a fair
proportion of them according to the nature and extent of the damage
sustained shall be suspended and cease to be payable from the date of
destruction or damage until whichever is the earlier of the date on which
the Premises are reinstated to the Reinstatement Specification and if
applicable the essential means of access within the Building are
available and the date of expiry of the period for which insurance of
loss of rent is effected and any dispute about such suspension shall be
referred to the award of a single arbitrator to be appointed in default
of agreement on the application of the Landlord or the Tenant to the
President for the time being of The Royal Institution of Chartered
Surveyors in accordance with the Arbitration Acts 1950 and 1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the provisions
of clause 7(3)) any closure of any of the Common Parts or stoppage or
severance affecting any of the Service Media or any interruption to the
supply of electricity to the Premises or temporary closure or diversion
of any of the Common Parts or Service Media by reason of necessary
inspection repair maintenance or replacement thereof or any part thereof
or any plant machinery equipment installations or apparatus used in
connection therewith or damage thereto or destruction thereof by any risk
(whether or not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions or
shortage of fuel materials supplies or labour or whole or partial failure
or stoppage of any mains supply due to any circumstances beyond the
control of the Landlord PROVIDED ALWAYS that the Landlord shall use all
reasonable endeavours to minimise the adverse effects of any such
circumstances and to remedy any such interruption closure or diversion as
soon as reasonably practicable PROVIDED FURTHER that in the event of the
Landlord or the Management Company being unable to provide air
conditioning or electricity to the Premises in such circumstances the
Tenant shall be entitled to carry out (the Landlord and Management
Company affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable)
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(b) the Landlord or the Management Company shall be responsible for the
costs of the Tenant in carrying out such remedial works when such
works are being carried out as a consequence of any breach of the
Landlords or Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the Landlord
or by the Tenant notwithstanding any direction or prior agreement as to
liability for payment and any sums so paid for which the party who pays
them initially is not ultimately liable shall be repayable on demand by
the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase in the
amount of the rent reserved and made payable by virtue of schedule 4 a
memorandum recording the increase shall be attached to this lease and to
the counterpart and such memorandum shall be signed by or on behalf of
the Landlord and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are authorised
under Planning Law to be used or are otherwise fit for any specific
purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or occupier
of any part of the Building relating to any easement or right
affecting the Building or any part of it shall (unless the Landlord
shall by notice to the parties concerned renounce its power to
determine it) be referred to the Landlord whose decision acting
reasonably (acting in the capacity of an expert) shall be binding
upon the parties to the dispute but the Landlord shall give written
reasons for his decision
(b) Where any issue (other than one relating to a rent review) arising
out of or under or relating to the Head Lease which also affects or
relates to the provisions of this lease is to be determined as
provided in the Head Lease the determination of such issue pursuant
to the provisions of the Head Lease shall be binding on the Tenant
as well as the Landlord for the purposes both of the Head Lease and
this lease
COMPENSATION
(11) Except where any Enactment prohibits the right to compensation being
reduced or excluded by agreement, neither the Tenant nor any occupier of
the Premises shall be entitled on quitting them to claim from the
Landlord any compensation under the Landlord and Tenant Act 1954
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RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a proposal to
alter the entry for the Premises in the local non-domestic rating
list it shall notify the other party of its intention and shall
incorporate in the proposal such proper and reasonable
representations as may be made by or on behalf of that party
(b) The Tenant shall not agree the level of rates liability attributable
to the Premises following the date hereof without the Landlord's
consent (such consent not to be unreasonably withheld or delayed)
PROVIDED that for the avoidance of doubt the Landlord shall not be
entitled to refuse its consent to any level of rates which the
Tenant has negotiated with the appropriate rating authority which is
lower than any level of rates negotiated by or on behalf of the
Landlord in respect of the Building on a pro rata basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed
to constitute a warranty by the Landlord that the Premises shall
be kept secure or that any security service to the Common Parts
shall be effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the
Landlord the English courts shall have exclusive jurisdiction in
relation to disputes arising under or connected with this lease
and the Tenant agrees that any process may be served on it by
leaving a copy of the relevant document at the Premises provided
however that the Landlord shall retain the right at its sole
election to sue the Tenant elsewhere including in the courts of
the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy
of the reversion immediately expectant on the determination of
this lease whether pursuant to Section 19 Landlord and Tenant
(Covenants) Act 1995 or otherwise any covenant on the part of the
Tenant to obtain the consent of the Landlord under this lease to
any dealing shall be deemed to include a further covenant also to
obtain the consent of the lessor under such tenancy to such
dealing
8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants
and agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the
manner and at the times herein specified and that if there is
default in performing and observing any of the Landlord's
obligations (notwithstanding any time or indulgence granted by
the Tenant to the Landlord or compromise, neglect or forbearance
on the part of the Tenant in enforcing the observance of the
Landlord's obligations in this lease) the Landlord's Guarantor
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will observe and perform (or procure the performance and observance of)
the obligations in respect of which the Landlord shall be in default
(2) The Landlord's Guarantor at the request of the Management Company and in
consideration of the Tenant agreeing to pay the Service Charge covenants
and agrees with the Tenant that all of the Management Company's
obligations contained in this lease will be performed and observed in the
manner and at the times herein specified and that if there is default in
performing and observing any of the Management Company's obligations
(notwithstanding any time or indulgence granted by the Tenant to the
Management Company or compromise, neglect dr forbearance on the part of
the Tenant in enforcing the observance of the Management Company's
obligations in this lease) the Landlord's Guarantor will observe and
perform (or procure the performance and observance of) the obligations in
respect of which the Management Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of this
clause) determine this lease as at 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on
24th October 2008
(3) If the Tenant duly serves the Termination Notice it shall procure
that vacant possession of the Premises will be available on
24th October 2008 free of occupation by and of any estate or interest
rested in the Tenant or any third party and this lease shall not
determine as a result of any notice served by the Tenant if the
Tenant is in material breach of any of its covenant to pay the rents
and Interim Sum contained in this lease (including those contained in
this sub-clause) as at 24th October 2008 except to the extent if at
all the Landlord in its absolute discretion waives compliance with
any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during
the Term and any period of holding over continuation or extension
thereof whether by an Enactment common law or otherwise (subject to
clause 4(15)):-
(1) The rents reserved by this lease (whether or not ascertained as to
amount) will be duly paid and that all the Tenant's obligations
contained in it will be performed and observed in the manner and at
the times herein specified and that if there is any default in paying
the rents or in performing and observing the Tenant's obligations
(notwithstanding any time or indulgence granted by the Landlord to
the Tenant or compromise neglect or forbearance on the part of the
Landlord in enforcing the observance and performance of the Tenant's
obligations in this lease or any refusal by the Landlord to accept
rents tendered by or on behalf of the Tenant) the Guarantor will
observe and perform the obligations in respect of which the Tenant
shall be in default and will on demand and on a full indemnity basis
pay to the Landlord an amount equivalent to the rents or other
amounts not paid and/or any loss damage costs charges expenses or
any other liability incurred or suffered by the Landlord as a
result of the default (and in the event of non-payment shall pay
interest at the Interest Rate from the date of demand to the
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Guarantor until the date of payment) and will otherwise indemnify and
hold harmless the Landlord against all actions claims costs damages
demands expenses losses and proceedings arising from or incurred by the
Landlord as a result of such non-performance or non-observance
(2) If any liquidator or other person having power to do so disclaims this
lease or if it shall be forfeited or if the Tenant ceases to exist and if
the Landlord by written notice served within three months after the date
of disclaimer or forfeiture or the Landlord having actual knowledge of
the cesser of existence of the Tenant (each a "Trigger Event") requires
the Guarantor to accept a lease of the Premises for a term computed from
the date of the Trigger Event to the date on which the Term would have
expired by effluxion of time and at the same rents and subject to the
same covenants stipulations conditions and provisions (except that the
Guarantor shall not be required to procure that any other person is made
party to that lease as guarantor) as are reserved by and contained in
this lease immediately before the Trigger Event and with coincidental
Review Dates (the said new lease and the rights and liabilities
thereunder to take effect as from the date of such Trigger Event) the
Guarantor shall forthwith accept such lease accordingly and execute and
deliver to the Landlord a counterpart of it and indemnify the Landlord
upon demand against the costs incurred on the grant of the new lease
(3) The liability of the Guarantor hereunder shall not be released reduced
affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this lease or
any of them agreed between the Landlord and the Tenant or
(b) the surrender by the Tenant of part of the Premises (in which event
the liability of the Guarantor shall continue in relation to the
Tenant's obligations in respect of the part of the Premises not so
surrendered) or
(c) any legal limitation immunity disability incapacity occurrence of
insolvency or the winding-up of the Tenant or
(d) (without limitation to the foregoing) of any other act or thing act
or thing by which (but for this provision) the Guarantor would have
been discharged or released (in each case in whole or in part) from
liability under this guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in accordance
with clause 8(2) the Guarantor shall pay to the Landlord on demand (in
addition to any other loss damage costs charges expenses or other
liability which the Guarantor may be required to make good hereunder and
without prejudice to any other rights of the Landlord) an amount equal to
the rents which would have been payable hereunder but for such Trigger
Event (so far as such rents do not otherwise continue to be payable) for
the period commencing on the date of such Trigger Event and ending on
whichever is the earlier of the date one year after the date of such
Trigger Event and the date (if any) upon which rent is first payable in
respect of the whole of the Premises on a reletting thereof
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(5) Without prejudice to the rights of the Landlord against the Tenant the
Guarantor shall be a principal obligor in respect of its obligations
under this clause and not merely a surety and accordingly the Guarantor
shall not be discharged nor shall its liability hereunder be affected by
any act or thing or means whatsoever by which its said liability would
not have been discharged if it had been a primary debtor
(6) The Guarantor shall pay all reasonable charges (including legal and other
costs on a full indemnity basis) incurred by the Landlord in relation to
the Landlord's enforcement of this guarantee and indemnity against the
Guarantor or for enforcing payment by the Guarantor of amounts
indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee and
indemnity against the Guarantor without having first enforced the
covenants and terms of this lease against the Tenant and also without
first having recourse to any other rights or security which the Landlord
may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security held
by the Landlord in respect of the obligation of the Tenant under this
lease or to any right of subrogation in respect of any such security
until all the obligations owed to the Landlord by the Tenant and the
Guarantor hereunder have been fully and unconditionally fulfilled and
discharged
(9) The Guarantor shall not claim in any liquidation bankruptcy composition
or scheme of arrangement in respect of the Tenant in competition with the
Landlord and if and to the extent that it receives the same shall remit
to (and until remission shall hold in trust for) the Landlord all and any
monies received from any liquidator trustee receiver or out of any
composition or arrangement or from any supervisor thereof until all the
obligations of the Tenant and the Guarantor hereunder owed to the
Landlord have been fully and unconditionally fulfilled and discharged
(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the necessity for
any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains the
Tenant this guarantee and indemnity shall only apply if and for so long
as the total shareholders funds and reserves of Donaldson, Lufkin &
Jenrette International Limited are or fall below the value of Fifty
million pounds ((pounds sterling)50,000,000) AND Donaldson, Lufkin &
Jenrette International Limited and Donaldson, Lufkin & Jenrette Inc.
shall notify the Landlord at the beginning of each period in which this
guarantee and indemnity applies and again when it ceases to apply AND for
the avoidance of doubt this guarantee (subject to compliance by the
Tenant with clause 4(15)) shall automatically cease on any lawful
assignment of this lease (but without prejudice to either party's rights
against the other in respect of any antecedent breaches of this lease)
unless in the circumstances contemplated by clause 4(15)(g)(ii)(b) it is
reasonable for Donaldson, Lufkin & Jenrette Inc. to remain the guarantor
hereunder of the liabilities of Donaldson, Lufkin & Jenrette International
Limited PROVIDED FURTHER that Donaldson, Lufkin & Jenrette Inc shall in
such circumstances automatically be released on a second assignment of
this lease
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11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the twenty-fifth floor and being part of
the Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and all
materials lying between the upper surface of the structural floor slab
and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact on
the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the external
windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii)the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in the
external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress to
and from the Premises to use the Common Parts and to use all means
of escape but only when needed in an emergency and
(2) to use the Service Media
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2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authorised sub-tenants or permitted occupiers (subject to a maximum
of four names at any particular time) on the signboard in the entrance
lobby of the Building provided by the Landlord pursuant to paragraph 14
of Part I of schedule 6 and the right to install a sign displaying the
name of the Tenant at the entrance to the Premises the precise location
size and style of such sign to be subject to the approval of the Landlord
(such approval not to be unreasonably withheld or delayed)
4. The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area at all
reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and maintenance
(on reasonable prior written notice to the Landlord) those works or
installations within or on the Building (but outside the Premises) for
which consent has been given pursuant to the Agreement for Initial
Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to the Tenant being responsible for all elements of
Service Cost relating to such toilets should any other tenant of
accommodation in the Building object to meeting any proportion of Service
Cost in relation to such facilities (on the basis of such exclusive use)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of
them to the Premises and the lights windows and openings thereof may be
affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the Premises
as often as may be necessary for the purpose of complying with the
covenants of the Head Lease for all the purposes for which the Tenant
covenants in this lease to permit entry and for all purposes in
connection with the carrying out of the Services and for the purposes of
complying with any statutory requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or neighbouring
land
4. The right to erect and maintain scaffolding on or against any part of the
Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
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5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the purpose
of repairing that other part of the Building making good any damage so
caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved by
this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably be
expected to be payable following the expiry of any period at the
beginning of the term which might be negotiated in the open market
for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated in
the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free or
concessionary rent period or capital sum or fitting out contribution
and has used the same fully to fit out the Premises for the
Permitted Use to the lessee's particular requirements) if the
Premises had been let in the open market by a willing lessor to a
willing lessee with vacant possession on the relevant Review Date
without fine or premium for a term often years computed from the
relevant Review Date taking into account the lessee's right at the
expiration of the term to be granted a new tenancy under Part II
Landlord and Tenant Act 1954 and otherwise upon the provisions (save
as to the amount of the rent first reserved by this lease but
including the provisions for rent review at five-yearly intervals)
contained in this lease and on the assumption if not a fact that the
said provisions have been fully complied with and on the further
assumptions that:-
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(a) the Permitted Use and the Premises comply with Planning Law and
every other Enactment free from any onerous condition
restriction and limitation and that the lessee may lawfully
implement and carry on the Permitted Use
(b) no work has been carried out to the Premises which has
diminished their rental value
(c) in case the Building or any part of it has been destroyed or
damaged it has been fully restored
(d) the Premises have been fitted out to no less standard than that
set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other permitted
occupier or their respective predecessors in title has been or
is in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying on in
them of the business of the Tenant or any underlessee or their
respective predecessors in title or other permitted occupier
(iii) (without prejudice to paragraphs 1(2)(b) and 1(2)(c) of this
schedule) any works carried out to the Premises during the Term
by the Tenant or any permitted underlessee in either case at
its own expense in pursuance of a licence granted by the
Landlord where required and otherwise than in pursuance of any
obligation to the Landlord
(iv) the works carried out to the Premises by the Tenant or carried
out by the Landlord at the expense of the Tenant pursuant to
the Agreement for Initial Alterations
(3) "Review Surveyor" means an independent chartered surveyor appointed
pursuant to paragraph 3(1) of this schedule and if to be nominated
by or on behalf of the President for the time being of the Royal
Institution of Chartered Surveyors the said President to be
requested to nominate an independent chartered surveyor having not
less than ten years practice in the City of London next before the
date of his appointment and recent substantial experience in the
letting and valuation of office premises of a similar character and
quality to those of the Premises and who is a partner or director of
a leading firm or company of surveyors having specialist market and
valuation knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
(1) the Current Rent (ignoring for this purpose any rent cesser pursuant
to clause 7(5)) and
(2) the Review Rent
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3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant to
assess the Review Rent or (in the absence of agreement at any time
about his appointment) be nominated to assess the Review Rent by or
on behalf of the President for the time being of The Royal
Institution of Chartered Surveyors on the application of the
Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review Surveyor)
he shall act as an arbitrator and the arbitration shall be conducted
in accordance with the Arbitration Acts 1950 and 1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting each
of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired by
the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the determination
in accordance with his own judgment (including any determination
concerning any party's liability for the costs of the reference to
him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4. If the Review Rent has not been agreed or assessed by the relevant Review
Date the Tenant shall:-
(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or assessment
of the Review Rent the amount (if any) by which the Review Rent for
the period commencing on the relevant Review Date and ending on the
quarter day following the date of payment exceeds the Current Rent
paid on account for the same period plus interest at three per cent
below the Interest Rate for each installment of rent due on and
after the relevant Review Date on the difference between what would
have been paid on that rent day had the Review Rent been fixed and
the amount paid on account (the interest being payable from the date
on which the installment was due up to the date of payment of the
shortfall)
5. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is released
the Landlord may at any time within six months after the date of release
give to the Tenant not less than one month's
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notice requiring an additional rent review as at the next following
quarter day which shall for the purposes of this lease be a Review Date
SCHEDULE 5
(THE SERVICE CHARGE)
1. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 3 1st December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the Building
(whether or not pursuant to the terms of this Underlease) the Management
Company or the Tenant shall be entitled if reasonable to require that the
same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge for
each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the provisions
of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service Cost
and Service Charge for each Accounting Period served pursuant to
paragraph 5 of this schedule and prepared by the Management Company's
surveyor or auditor
"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company in
any Accounting Period in carrying out or procuring the carrying out
of the Services and providing each item of the Services including
(without prejudice to the generality of the foregoing) the costs and
expenses set out in Part II of schedule 6 (insofar as the same are
reasonable and properly incurred) and any other reasonable costs and
expenses properly incurred by the Management Company or with the
Management Company's authority in connection with the Services but
excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the Services
outside Normal Business Hours at the specific request of the
Tenant (which shall
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be charged direct to the Tenant) or of any other tenant or
tenants of the Building and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and which is
recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage caused
by any of the Insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items of
plant machinery equipment and other capital items is calculated on
such life expectancy of the said items as the Management Company may
from time to time reasonably determine to the intent that a fund be
accumulated sufficient to cover the cost of replacement of the said
items by the end of their anticipated life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting
Period shall be a fair proportion of the Service Cost attributable
to the Premises from time to time as properly determined by the
Management Company (and so in proportion for any Accounting Period
not falling wholly within the Term the Service Cost in any such case
being deemed to accrue on a day to day basis for the purpose of
apportionment)
(B) If at any time and from time to time during the Term the method or
basis of calculating or ascertaining the cost of any item of the
Services shall alter or the basis of calculating or ascertaining the
Service Cost in relation to any item of the Services shall change
and as a result it is reasonable that there be an alteration or
variation of the calculation of the Service Charge in order to
achieve a fairer and better apportionment of the Service Cost
amongst the tenants of the Building then and in every such case the
Management Company shall vary and amend the Service Charge and make
appropriate adjustments thereto provided always that in the event of
any dispute between the Management Company and the Tenant and the
other tenants of the Building or any of them the same shall be
referred to the Expert for determination (the Expert to act as an
expert and not as an arbitrator) whose decision shall save in the
case of manifest error be binding on the parties (including his
decisions as to the responsibility for his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the
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Building let or occupied or designed contracted or adapted for
letting or occupation (other than management accommodation) is fully
let on terms which include service charge provisions consistent with
the service charge provisions contained in this lease (save where
otherwise specified herein) and such proportion shall not be
increased or altered by reason of the fact that at any time any part
of such accommodation may be vacant or that any tenant or other
occupier of any other part of the Building may default in payment of
its due proportion of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance with
a programme of non equal expenditure in which event the Management
Company shall serve notice to such effect upon the Tenant and shall
thereupon be entitled to require amounts of the Interim Sum to be
paid by advance quarterly instalments of unequal amounts reasonably
stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the
consumption of and supply charges in respect of electricity consumed
within the Premises (save for any amounts which are invoiced
directly by London Electricity plc to the Tenant) such sums not to
exceed a fair and proper estimate of amounts reasonably anticipated
by the Management Company as falling due within the next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company shall
be entitled in addition to require the Tenant to pay along with
payments of the Interim Sum a fair and proper estimate of amounts
likely to be payable by the Tenant in the next quarter on account of
such Services in accordance with the terms of this lease
(D) The Interim Sum for the Accounting Period ending 31st December 1996
shall be pounds sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or cause
to be served on the Tenant written notice of the Interim Sum for the
relevant Accounting Period Provided that without prejudice to the
provisions of paragraphs 6 and 7 of this schedule if the written
notice aforesaid shall be served after the first occurring quarter
day in the relevant Accounting Period the Tenant shall until service
of the written notice aforesaid make payments on account of the
Interim Sum for the relevant Accounting Period on the days and in
the manner provided by sub-paragraph (A) of this paragraph of this
schedule at an annual rate equal to the Interim Sum for the
immediately preceding Accounting Period
5. (A) As soon as practicable after the expiry of every Accounting
Period (and in any event within 4 months after such expiry) the
Management Company shall serve or cause to be served a Service
Charge Certificate on the Tenant for the relevant Accounting Period
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(B) A Service Charge Certificate shall contain a summary of the Service
Cost in respect of the Accounting Period to which it relates and the
relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service
Charge Certificate by giving notice thereof in writing to the
Management Company within three months of the date of service on the
Tenant of the relevant Service Charge Certificate and upon receipt
of such a notice the Management Company shall furnish to the Tenant
all such relevant details in its possession or control or which can
reasonably be obtained by it as relate to the expenditure under the
item or items in question at the cost of the Tenant (include all
books of account receipts demands and invoices) PROVIDED ALWAYS that
notwithstanding the giving of any such notice the Tenant shall
nevertheless pay all Interim Sums and Service Charges as and when
they fall due or as may be underpaid from time to time (but without
prejudice to any challenge claim or dispute that the Tenant may have
made or may make in the future in respect of its Service Charge
liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay to
the Management Company or as it shall direct a sum equal to the amount by
which the Service Charge exceeds the Interim Sum provided that and the
Tenant hereby acknowledges that if there shall be any such excess in
respect of the Accounting Period the amount of such excess shall be a
debt due from the Tenant to the Management Company and in the event that
such excess is not received in cleared funds by the Management Company
within 14 days of the due date for payment it shall attract interest at
the Interest Rate calculated for the period commencing on the due dates
for payment and ending on the date the sum is subsequently received by
the Management Company notwithstanding that the Term may have expired or
been determined before the service by or on behalf of the Management
Company of the relevant Service Charge Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it shall
attract interest at the Interest Rate for the period commencing as the
due date for payment and ending on the date that the sum due is received
in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph 9
of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly
<PAGE>
adhered to) Provided that the Tenant gives notice with full particulars
of its ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve the
relevant issue but if they cannot do so the issue in dispute shall
be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest error
be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the
dispute shall be paid as soon as reasonably practicable after such
resolution and any sum due to or payable by the Management Company
shall then be paid or allowed (as the case may be) immediately
together with interest at three per cent below the Interest Rate
on such sum during the period which it has been underpaid or
overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited to)
the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of schedule
6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of such
Services is greater) than would normally apply in the context of the
general management of the Building in accordance with this lease as a
result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof determined
by the Management Company) within 10 working days following a demand by
the Management Company
<PAGE>
SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant parts
of it described in paragraphs (ii) and (iii) of schedule 1
2. Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the Common
Parts and the car park shall be operational 24 hours a day 7 days a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout Normal
Business Hours and at the request of the Tenant outside those hours
subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule 1 and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists are
not present) and the car park within the Building including where
reasonably appropriate in the Management Company's
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judgment closed circuit television and/or other plant and equipment for
the purpose of surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and (and
where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in the
Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided by
the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the Premises
or
(2) reasonably calculated to be for the benefit of the Tenant and other
tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference to
the particular matters or things shall be deemed to be and in each
case shall be without prejudice to the generality of the wording
preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the provision
of or add to or procure
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the addition to any item of Services matter or thing specified in
this schedule if the Management Company shall having regard to the
principles of good estate management reasonably deem it desirable or
expedient so to do but before so doing the Management Company shall
notify all the tenants in the Building but in the event of any
failure of any of the Services shall use all reasonable endeavours
to restore the said Service
(iii) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due to
circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company employed
or retained by or on behalf of the Management Company or its agents
(including without limitation managing agents fees) for or in connection
with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other duties
in or about the Building or any part of it relating to the general
management administration security maintenance protection and
cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and not
by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice to
the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in kind
and other emoluments and National Insurance and other statutory
contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided rent
free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
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(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part of
this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the same
is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in unforeseen
or emergency circumstances to finance the provision of the Services and
the costs referred to in this Part of this schedule or any of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any other
amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the Management
Company pursuant to sections 24 25 and 26 Value Added Tax Act 1994 or any
regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable Life
Assurance Society (3)
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SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
PART I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of, input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1994 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part XIV of the Value Added Tax Regulations 1995.
"VAT YEAR CERTIFICATE" means the certificate to be provided by the Tenant
following the end of the Tenant's VAT Year in the form set out in Part II
of this Schedule.
2. Pavment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to the
rent first reserved without any adjustment of rent first reserved under
this schedule.
3. Adjustment of rent first reserved and payment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on
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the due date for payment of the next installment of the rent first
reserved (and on the due date for subsequent instalments), subject
however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served a
VAT Year Certificate specifying in paragraph 1 thereof the same estimated
proportion as stated in the previous VAT Year Certificate served, or if
no previous VAT Year Certificate has been served by the Tenant at any
time prior to the due date for any VAT Year Certificate an estimated
proportion of nil per cent. If the Tenant fails to serve a VAT Year
Certificate on more than one consecutive occasion the Tenant shall be
deemed, on the second failure and any subsequent failure, until service
of the next VAT Year Certificate, to have served a VAT Year Certificate
specifying in paragraph 1 thereof an estimated proportion of nil per
cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at that
time) be adjusted on the basis of the last VAT Year Certificate. The
adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an amount
to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form set
out in the VAT Year Certificate. The Tenant's Auditor's certificate shall
be provided at least eight days prior to the date of payment of the rent
first reserved to which such certificate relates, together with the
Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant shall
pay in accordance with paragraph 4.1 above the amount stipulated in
accordance with paragraph 3 of such VAT Year Certificate (as revised, if
required) on the date for payment of the rent first reserved
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or will
obtain a Tax Credit differing from the proportion previously taken into
account in calculation any payment, any such difference shall be taken
into account (after having determined the amount of rent first reserved
payable in respect of the next quarter in accordance with paragraph 3
above) in calculating the next actual payment of rent first reserved
(either by increase or
<PAGE>
decrease), the amount of which shall be set out in paragraph 3 of the VAT
Year Certificate.
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the amount which
should have been paid, from such due date until the date of payment of
the adjusted amount pursuant to paragraph 4.3. Where the actual amount
paid (the "Initial Payment") on the due date for payment of any sum was
subsequently adjusted on payment of any later installment of the rent
first reserved ("the Adjusted Payment") in accordance with paragraph 4.6
of Part I of this Schedule 8 and paragraph 3(b) of the VAT Year
Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions of
this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or accepting
a method of attribution designed or maximise its Tax Credit and covenants
not to enter any arrangement which has the specific purpose of increasing
the amount by which the rent first reserved is decreased by virtue of
this schedule 8.
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PART II
VAT YEAR CERTIFICATE
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ] made
between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises on
[ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant to
that paragraph:
1. Our VAT Year which included the following quarter days [ ], ended on
[ ], ended on [ ].
(a) The part of the VAT charged on the rent first reserved paid in the
VAT Year for or in respect of which we estimate/have determined (in
accordance, where relevant, with the return made, or to be made, for
the prescribed accounting period next following the end of the VAT
Year) we will be unable to obtain credit or repayment is a
proportion of [ ] per cent of the total VAT charged.
(b) The following Table sets out the part of the VAT charged which was
expected to be irrevocable during the VAT Year where it has been
determined on the basis of paragraph 2(a) above that that differs
from the amount of VAT for or in respect of which we actually
obtained, or will be able to obtain, credit or repayment.
Dates Rent first reserved Estimate Adjustment Determination
----- ------------------- --------- ---------- -------------
* ** ***
* estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out initially in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which
we estimated we would be unable to obtain credit or repayment as
set out in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now
estimated/determined we shall be unable to obtain credit or
repayment, in accordance with Sections 24-26 of the Value Added
Tax Act 1994 and the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved so as to ensure that the amount of rent first reserved payable
in the VAT Year to which this VAT Year Certificate relates is as
provided in paragraph 3 of Part I of Schedule 8 to the Lease in
accordance with the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and the VAT
thereon shall be pounds sterling [ ], and that the interest payable
by the Tenant to the Landlord/Landlord to the Tenant, in accordance with
paragraph 4.7 of Part I schedule 8 to the Lease shall be pounds sterling
[ ].
4. We hereby declare that:
54
<PAGE>
(a) we have complied with the covenant imposed upon us by paragraph 6.2
of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declaration are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
55
Tenant's Auditors
<PAGE>
THE COMMON SEAL of 99 BISHOPSGATE )
LIMITED was hereunto affixed in the presence of:- )
[SEAL OMITTED]
Director /s/
Director /s/
THE COMMON SEAL of 99 BISHOPSGATE )
MANAGEMENT LIMITED was hereunto )
affixed in the presence of:- )
[SEAL OMITTED]
Director /s/
Director /s/
THE COMMON SEAL of HAMMERSON U.K. )
PROPERTIES PLC was hereunto affixed in the )
presence of: )
[SEAL OMITTED]
Director /s/
Director /s/
56
<PAGE>
<PAGE>
DATED 24th OCTOBER 1996
- ------------------------------------------------------------------------------
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES PLC
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
and
DONALDSON, LUFKIN & JENRETTE, INC.
- ------------------------------------------------------------------------------
UNDERLEASE
of
Twenty-fourth Floor 99 Bishopsgate London EC2
- ------------------------------------------------------------------------------
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P17/30608932
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions
Building
Common Parts
Development
Electricity Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insurance Rent
Insured Risks
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
(13) Use
(14) Signs
<PAGE>
CLAUSE HEADING PAGE
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangerous and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Arbitration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
8. Landlord's Guarantor
9. Tenant's option to determine
<PAGE>
CLAUSE HEADING PAGE
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
<PAGE>
LEASE PARTICULARS
- ------------------------------------------------------------------------------
1. DATE 24th OCTOBER 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE FIRST
ABOVE WRITTEN
- ------------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette international
Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Luficin & Jenrette, Inc.
- ---------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the 24th floor
of the Building shown for identification
only edged red on Plan 1.
- ---------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- ---------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 23rd October 2011
AND EXPIRY DATES
- ---------------------------------------------------------------------------
6. INITIAL RENT : pounds sterling 456,195
- ---------------------------------------------------------------------------
7. RENT COMMENCEMENT DATE: 25th March 1998
- ---------------------------------------------------------------------------
8. TENANT'S BREAK RIGHT : 24th October 2008
- ---------------------------------------------------------------------------
9. CAPITAL SUM : pounds sterling 228,O97.5O inclusive of
VAT HS.
<PAGE>
THIS UNDERLEASE made the 24th day of October
hundred and ninety six
BETWEEN:-
[SEAL OMITTED]
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under
Section to the Companies Act 1985 under company number FC018588
whose principal place of business is at 100 Park Lane London W1Y4AR
(the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at Park
Lane London WlY 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) HAMMERSON U.K. PROPERTIES PLC whose registered office is at 100 Park
Lane London WlY 4AR (Co. Regn. No. 298351) (the "LANDLORD'S GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered
office is at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn.
2475089) (the "TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the
State of Delaware United States of America whose address for the purposes
of this lease is 277 Park Avenue New York New York 10172 (the "GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by clause
2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person acting
on behalf of or in connection with any organisation (or on his own
behalf) which carries out activities directed towards overthrowing
or influencing by force or violence Her Majesty's Government in
the United Kingdom or any other government de jure or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even
date herewith and made between the Landlord and the Tenant
governing the initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part)
having a frontage to the west side of Bishopsgate and a return
frontage to the south side of Wormwood Street and all buildings
fixtures and other structures whatsoever from time to time
thereon and the appurtenances thereof which land (together with
the building now erected thereon) is known as 99 Bishopsgate
London EC2 and is for the purpose of identification shown verged
by a blue line on the Building Plan together with any adjoining
areas designated by the Landlord or the Management Company
(4) "COMMON PARTS" means all parts of the Building which are from
time to time intended for the common use and enjoyment of the
tenants and occupiers of the Building and persons claiming
through or under them (whether or not other
<PAGE>
parties are also entitled to use and enjoy the same) and reasonably
designated as such by the Landlord and including without prejudice to the
generality of the foregoing the pedestrian ways circulation areas lobby
entrance halls lifts lift shafts fire escapes landings staircases
passages forecourts car park landscaped areas plant rooms management
suites and any other areas which are from time to time during the Term
reasonably provided by the Landlord for common use by or benefit of the
tenants and occupiers of the Building But excluding (for the avoidance of
doubt) any premises intended to be let to any party or for occupation by
the Landlord or the Management Company other than for the provision of
the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by Planning Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the provision
of electricity to the Premises for consumption by the Tenant in
accordance with its covenant contained at clause 5(4) being a fair and
reasonable proportion as determined by the Landlord of the total cost of
the provision of electricity to the Building as a whole (including the
provision of any security for the supply of `electricity to the Building
which may from time to time be required by the relevant undertaker
responsible for the supply of electricity chosen by the Landlord) which
proportion shall so far as practicable (save where the same are not in
working order) be calculated using readings taken in such manner and at
such times as the Landlord shall from time to time determine of the check
meters relating to the Premises from time to time installed but otherwise
shall be determined in such manner as the Landlord shall in its
discretion consider to be fair and reasonable in all the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation now or
hereafter to be enacted or made and all subordinate legislation
whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the Premises
dated 29th September 1975 made between The Prudential Assurance Company
Limited (1) and Bishopsgate Developments Limited (2) and "Superior
Landlord" means the person for the time being entitled to the reversion
immediately expectant on the term granted by the Head Lease and every
other person having an interest in reversion to that term
(9) "GROUP COMPANY" means a company which is either the holding company of
the Tenant or a wholly owned subsidiary of the Tenant or the Tenant's
holding company (as both expressions are defined in Section 736 Companies
Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of the amount
which the Landlord may reasonably expend:-
(a) in effecting and maintaining insurance against the occurrence of the
Insured Risks in relation to the Building in such sum as represents
its then full current replacement cost with such allowance as the
Landlord from time to time considers appropriate in respect of
related liabilities and expenses (including without limitation
liability to pay any fees or charges on the submission of an
application for planning permission and costs which might be
incurred in complying with any Enactment in carrying out
2
<PAGE>
any replacement work and sums in respect of architects' engineers'
and quantity surveyors' and other professional fees and incidental
expenses incurred in relation to any works of debris removal and of
replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the property
owners' liability and the employer's liability of the Landlord in
relation to the Building and anything done therein and
(c) in professional fees relating to insurance including fees for
insurance valuations carried out at reasonable intervals by an
independent insurance valuer (but no more than once in any year) and
all reasonable fees and expenses payable to advisers in connection
with effecting and maintaining insurance policies and claims and
(d) equivalent to the total of all reasonable excess sums (being for the
avoidance of doubt the first part of any insurance claim) which the
insurers are not liable to pay out on any insurance claim in respect
of the Building and which the Landlord or the Management Company may
have expended in replacing the damaged or destroyed parts of the
Building
(11) "INSURANCE RENT" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises of the
Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in effecting and
maintaining insurance against up to six years' loss of the rents
first and secondly hereinafter reserved and Service Charge having
regard to potential increases of rent in accordance with schedule 4
and with any addition to the amount insured as the Landlord may
decide in respect of VAT and
(c) (without prejudice to all other provisions of this lease relating to
the use of the Premises and the vitiation of any policy of
insurance) any reasonable amount which the Landlord may expend in
paying all additional premiums and loadings on any policy or
policies of insurance required to be paid as a result of anything
done or omitted (in breach of the terms of this lease) by the Tenant
and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or partial
caused by Acts of Terrorism fire lightning explosion riot civil commotion
strikes labour and political disturbances and malicious damage aircraft
and aerial devices (other than hostile aircraft and devices) and articles
accidentally dropped from them storm tempest flood bursting or
overflowing of water tanks and pipes impact earthquake and accidental
damage to underground water oil and gas pipes or electricity wires and
cables subsidence ground slip and heave and such other usual commercial
risks or perils against the occurrence of which the Landlord may from
time to time in its reasonable discretion deem it desirable to insure
subject to such exclusions and limitations as are from time to time
commonly
3
<PAGE>
imposed by insurers and subject also to the exclusion of such of the
risks specifically hereinbefore mentioned as the Landlord may in its
reasonable discretion decide where insurance cover in respect of the risk
in question is not for the time being available in the London insurance
market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either the base
rate of Barclays Bank plc or such other bank (being for the time being
generally recognised as a clearing bank in the London market) as the
Landlord may from time to time use for general banking purposes or if the
base rate cannot be ascertained then above such other rate as the
Landlord may reasonably specify (and so that whenever there is reference
in this lease to the payment of interest at the Interest Rate such
interest shall be calculated on a daily basis and compounded with
quarterly rests on the usual quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the Building
from time to time (whether or not within the Premises or other premises
let or intended to be let by the Landlord) comprising or used in
connection with the following systems (to the extent specified in the
following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building (including
sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but excluding
portable fire extinguishers installed by the Tenant or other tenants
of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the building
security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply into the
Building so far as (and including) the electrical riser busbars
connecting to the distribution boards at each level in the Building
which is let or intended to be let by the Landlord
(vii) the whole of the air handling system and the electricity supply and
control systems for the same
(viii) the standby generators and associated cabling wiring and duct work
but excluding in each case any "stand alone" systems installed by
the Tenant or any other tenant or occupier of the Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to be for
separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by the
Code of Measuring Practice - Fourth Edition (RICS/ISVA 1993) (or if there
shall be no such edition or no such expression for the time being the
nearest equivalent thereto)
4
<PAGE>
GMW
99 Bishopsgate EC2 Twenty Fourth Floor Tower
[GRAPHIC OMITTED]
<PAGE>
99 Bishopsgate London, EC2 Building Plan
[GRAPHIC OMITTED]
<PAGE>
(17) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of such
hours at the reasonable discretion of the Landlord provided that such
hours will automatically expand if any other tenant in the Building is
granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the actual cost
to the Management Company of carrying out or providing any of the
Services at the request of the Tenant outside Normal Business Hours other
than any services which are stated to be provided 24 hours a day
(including without prejudice to the generality of the foregoing costs and
expenses in the nature of those set out in Part II of schedule 6) or in
the event of any of the Services being carried out or provided outside
Normal Business Hours to the Tenant and any other tenant or tenants of
the Building a fair proportion thereof (on a fair and reasonable basis
between the Tenant and any other tenant or occupier making use of such
Services) as reasonably determined by the Landlord. PROVIDED THAT during
the first year of the Term the cost of providing air conditioning outside
Normal Business Hours shall not exceed pounds sterling 88 per hour (in
respect of the Premises being the only user of air conditioning at the
relevant time) or pounds sterling 48 per hour per floor on the basis that
any five of floors 18, 20 and 22 to 26 of the Building are simultaneously
using such air conditioning over the whole of such floors
(19) "PERMITTED PART" means any part or parts of the Premises capable of
separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose within
Class B 1(a) (but not for any other purpose within that Use Class) of the
schedule to the Town and Country Planning (Use Classes) Order 1987 and
for the avoidance of doubt use of the Premises for data processing
investor services business trading operators and investment banking
complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force relating
to the use development and occupation of land and buildings and every
planning permission statutory consent and agreement made under any
Enactment relating to the Building
(22) "PLANS" means the plans annexed hereto and "Building Plan" means that one
of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all permitted
additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their use
and occupation and any court of law and the companies or authorities
responsible for the supply of water gas and electricity or any of them
and any of their duly authorised officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed hereto or
in the event that materials listed in the specification are not available
from time to time or appropriate for use (in the Landlord's reasonable
opinion) then reference to such materials will be substituted by
reference to materials of not materially less quality which perform a
similar function PROVIDED THAT save to the extent
5
<PAGE>
that items of plant and equipment have been altered during the Term the
Tenant shall not be required to replace existing items of plant and
equipment for new items subject to the existing items being in good
working order
(26) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and every fifth
anniversary of that date during the Term (and the last day of the
Term)
(b) any date so stipulated by virtue of paragraph 5 of schedule 4
(27) "SERVICES" means the services and other matters specified in clause 6 and
Part I of schedule 6
(28) "SERVICE MEDIA" means those parts of the Building comprising gas water
drainage electricity telephone telex signal and telecommunications
heating cooling ventilation air conditioning fire alarm and other pipes
drains sewers mains cables wires supply lines ducts conduits flues and
all other common conducting media plant appliances and apparatus for the
provision supply control and monitoring of services to or from the
Building and other common equipment
(29) "TERM" means a term of years commencing on the date hereof and expiring
on 23rd October 2011 and includes any period of holding over or extension
whether by any Enactment or common law
(30) "TERMINATION NOTICE" means not less than 12 months and 1 day's prior
written notice unless either:
(a) any Enactment or decision not capable of appeal on a point of law
confirming that the Tenant is not entitled to a new tenancy on the
expiration of such notice is in force or upheld as at 22nd October
2007 (in which case not less than 6 months prior written notice need
be given); or
(b) any other tenant enters into a lease prior to September 1998 of
premises comprising at least a floor of the building within the
security of tenure protections of the Landlord and Tenant Act 1954
for a term of not less than 10 years (without break rights) and is
granted right to determine such lease on less than such 12 months'
and 1 day's prior written notice (in which case the notice period
hereunder shall be reduced to such notice period as is granted to
such tenant in such circumstances)
(31) "VAT" means Value Added Tax as referred to in the Value Added Tax Act
1994
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa and words
importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and "Guarantor"
wherever the context so admits include their respective successors in
title and
6
<PAGE>
where a party comprises more than one person covenants and obligations of
that party take effect as joint and several covenants and obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit or
suffer it to be done (or omitted) and to prevent (or as the case may be
to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference to the
relevant clause sub-clause schedule or paragraph of this lease and
clause and schedule headings shall not affect the construction of
this lease
(b) any right of (or covenant to permit) the Landlord or the Management
Company to enter the Premises shall also be construed (subject
always to the proviso to clause 4(9)) as entitling the Landlord to
remain on the Premises with or without equipment and permitting such
right to be exercised by all persons authorised by the Landlord for
as short a period as reasonably practicable and making good all
damage caused and causing as little inconvenience as reasonably
possible save where the right of entry is exercised to remedy any
breach hereunder where the Landlord only undertakes to make good
damage caused
(c) any consent licence or approval of the Landlord or words to similar
effect mean a consent licence or other approval in writing signed by
or on behalf of the Landlord and given before the act requiring
consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it for the
time being in force except in relation to the Town and Country
Planning (Use Classes) Order 1987 which shall be interpreted
exclusively by reference to the original provisions of Statutory
Instrument 1987 No 764 whether or not the same may at any time have
been revoked or modified
(f) the last year of the Term includes the final year of the Term if it
shall determine otherwise than by effluxion of time and references
to the expiry of the Term include such other determination
(5) (a) Where the context permits rents or other sums being due from the
Tenant to the Landlord or the Management Company mean that they are
exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is required
under this lease the relevant provision shall be construed as also
requiring (and any consent licence or approval given by the Landlord
shall be deemed subject to the need for) the consent licence or
approval of the Superior Landlord (for which the Landlord shall
apply at the Tenant's reasonable cost) where the same is required
under the Head Lease except that nothing in this lease or in any
consent licence or approval by the
7
<PAGE>
Landlord shall imply that the Superior Landlord's consent licence or
approval will not be unreasonably withheld or delayed
(c) references to any right of (or covenant to permit) the Landlord to
enter the Premises shall extend to the Superior Landlord and to all
persons authorised by it and shall be construed in the manner
required by clause 2(4)(b) but in relation to the Superior Landlord
and those with its authority
(d) the rights excepted and reserved in schedule 3 are also excepted and
reserved for the benefit of the Superior Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor and in consideration of the
payment by the Landlord to the Tenant of the sum of Two hundred and
twenty eight thousand and ninety nine pounds and 50 pence (228,099.50)
paid on the date hereof (receipt of which is acknowledged by the Tenant)
DEMISES unto the Tenant ALL THAT the Premises TOGETHER WITH the easements
and rights specified in schedule 2 exercisable in common with the
Landlord and all others with its authority or otherwise from time to time
entitled thereto EXCEPT and RESERVED unto the Landlord and all other
persons authorised by it from time to time during the Term or otherwise
from time to time entitled thereto (including the Management Company in
relation to the provision of the Services) the easements and rights
specified in schedule 3
TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the Term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT
to the provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 24th
March 1998 a peppercorn (if demanded) and thereafter until the first
Review Date (and thereafter as determined pursuant to schedule 4) the
yearly rent of Four hundred and fifty six thousand one hundred and ninety
five Pounds (pounds sterling 456,195) exclusive of VAT (subject to clause
5(6)) payable by equal quarterly payments to be made in advance on the
usual quarter days in every year the first such payment to be made on
25th March 1998
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice
to the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether
as rent or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days following
the due date (or in the case of money due only on demand within
fourteen days after the date of demand) calculated for the period
commencing on the due date for payment and ending on the date the
sum and the interest is received in cleared funds by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to demand
or accept any payment having regard to a breach of any of the
Tenant's obligations under this lease of
8
<PAGE>
which the Tenant has received notice calculated for the period
commencing on the due date for payment and ending on the date the
sum (and the interest) is subsequently received by the Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant
body to whom account has for the time being to be made) on the supply
by the Landlord to the Tenant under or in connection with the
provisions of this lease or the interest created by it and of any
other supplies whether of goods or services such rent fourthly
reserved to be due for payment contemporaneously with the other
rents or sums to which it relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be
payable on demand (either annually or by instalments) as the Landlord
shall determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause
4(30) also with the Management Company) throughout the Term subject to
clause 4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the
manner set out in clause 3 without deduction or set off and (unless
for the time being the Landlord shall have required in writing to
the contrary) to pay the rent first reserved (together with any sum
in respect of the rent fourthly reserved as may be applicable
thereto) by banker's standing order to such bank as the Landlord may
from time to time nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any
amount to the Landlord hereunder by way of reimbursement or
indemnity to pay on the production of a valid VAT invoice to the
Landlord (as applicable) in addition an amount equivalent to any VAT
incurred by the Landlord save to the extent that the Landlord
obtains credit for such VAT incurred by the Landlord pursuant to
sections 24 25 and 26 Value Added Tax Act 1994 or any regulations
made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now or
hereafter assessed charged or imposed upon the Premises or upon
their owner or occupier (and a proper proportion determined by the
Landlord attributable to the Premises of any rates taxes charges and
other outgoings now or hereafter assessed charged or imposed upon
the Premises in common with other premises or upon the owners or
occupiers thereof) and (to the extent the Tenant does not pay it
directly to the relevant supplier) the total cost (including meter
rents) of all water (including chilled water) electricity and gas
separately metered and/or exclusively supplied to the Premises
during the Term as reasonably determined by the Landlord excluding
(without prejudice to the rent fourthly reserved and clause 4(2))
any tax payable by the Landlord as a direct result of any actual or
implied dealing with the reversion of this lease or of the Landlord's
receipt of income
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COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every
Public Authority (including the due and proper execution of any
works) in respect of the Premises their use occupation employment
of personnel in them and any work being carried out to them (whether
the requirements are imposed upon the owner lessee or occupier) and
not to do or omit anything by which the Landlord may become liable
to make any payment or do anything under any Enactment or
requirement of a Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5 working
days of receipt of the same to give to the Landlord notice of (and a
certified copy of) any notice permission direction requisition order
or proposal made by any Public Authority and without delay to comply
in all respects at the Tenant's cost with the provisions thereof
save that the Tenant shall if so required by and at the cost of the
Landlord make or join in making such objections or representations
in respect of any of them as the Landlord may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of Schedule 2) in good and
substantial repair and condition (damage by any of the Insured Risks
excepted to the extent that the insurance money shall not have been
rendered irrecoverable subject to clause 5(2)(b) or insufficient
because of some act or default of the Tenant or of any person
deriving title under or through it or their respective servants or
agents or invitees) and to replace whenever necessary during the
Term and on expiry of the Term the landlord's fixtures and fittings
(including any fitted carpets) in the Premises which may have become
beyond economic repair with items of the same type and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of
decorative order and finish and properly cleansed and tidy and
(without prejudice to the foregoing) as often as the same shall
be necessary (and not less frequently than once in every fifth
year of the Term but not more than once in any 18 month period)
and also in the last year of the Term to clean paint polish or
otherwise treat as the case may be all inside surfaces of wood
and metal work of the Premises usually or requiring to be
painted polished or otherwise treated with two coats at least
of high quality paint or polish vinyl wall coverings
(where applicable) or other appropriate materials in a good
and workmanlike manner (and during the last year of the Term
in the colour scheme specified and otherwise in accordance
with the Reinstatement Specification) PROVIDED ALWAYS THAT
the Tenant shall not be obliged to carry out any such
decorative treatment if the need for it is caused by damage
by any of the Insured Risks to the extent (subject to clause
5(2)(b)) that the insurance money shall not have been
rendered irrecoverable or insufficient because of some act
or default of the Tenant or of any person deriving title under
or through it or their respective servants agents or invitees
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(b) To clean the inside of all external window glazing in the
Premises at least once in every month using reputable
contractors
(c) To enter into and maintain contracts for the regular inspection
maintenance and servicing of all fixed plant and equipment
comprised in the Premises which has or is likely to have any
impact on the Landlord's Services Equipment by reputable
contractors approved by the Landlord (such approval not to be
unreasonably withheld) and to obtain satisfactory test
certificates as may be reasonably required by the insurers and
whenever reasonably required to produce copies of such
contracts and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in areas
designated for such purpose from time to time by the Landlord and to
comply with all requirements of any Public Authority and any
reasonable regulations made by the Landlord pursuant to clause 4(27)
in relation to control over and disposal of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable security
requirements on reasonable prior written notice (except in an
emergency) to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease have
been observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and
make connections to any part of the Building including the
Service Media (PROVIDED that the Landlord will procure that
such entry takes place outside Normal Business Hours where
practicable)
(e) during the last six months of the Term (or at any time in the
case of a disposal of the Landlord's interest) to show the
Premises to prospective purchasers or tenants and their agents
(f) exercise the rights described in schedule 3
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy
any breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with
any such notice to permit the Landlord and any authorised
person to enter the Premises to remedy the breach as the
Tenant's agent and at the Tenant's proper cost the Landlord
making good any damage caused
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(c) To pay to the Landlord on demand all the proper costs and
expenses incurred by the Landlord under the provisions of this
sub-clause
ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements
belonging to the Premises and not knowingly to give any
acknowledgment that they are enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give notice
to the Landlord forthwith of any encroachment which might have
that effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from
the demise of the Premises) any works affecting any structural
parts of the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in respect
of areas not included in the Premises not to install or erect
any exterior lighting shade or awning or place any structure or
other thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this sub-clause
and subject to the provisos to this paragraph (c) not to make
any other alteration or addition to the Premises (including all
electrical and other plant and equipment and the installation
and removal of demountable partitioning) except:-
(i) in accordance with plans and specifications (adequately
describing the work in question and the manner in which the
work will be carried out) previously submitted at the
Tenant's expense in triplicate to and approved by the
Landlord (such approval not to be unreasonably withheld or
delayed PROVIDED THAT the Landlord shall respond to the
Tenant's submission within 10 working days in the case of
minor alterations (excluding any alterations which affect
any of the Landlord's Services Equipment) and if the
Landlord fails to respond within 10 working days as
aforesaid it shall be deemed to have accepted such minor
alterations AND PROVIDED FURTHER that the initial fitting
out of the Premises following the date hereof shall be
governed by the Agreement for Initial Alterations
(ii) in a manner which shall not materially and adversely
affect the Landlord's Services Equipment any Service
Media or the provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public Authority
(and in particular in relation to any electrical
installation in accordance with the terms and conditions
laid down by the Institution of Electrical Engineers
and the Regulations of the Electricity Supply
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Authority) and the insurance company with whom the Premises are
for the time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out until the
Landlord has issued its consent in writing to which the Tenant
shall if required join as a party
(II) once any such alterations or additions have been carried out
the Tenant shall supply to the Landlord as-built plans in
triplicate (together with a computer aided design disk and 35
mm slides) showing the works as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by the
Tenant
(ii) all work done in connection with the original fitting out by
the Tenant in pursuance of the Agreement for Initial
Alterations
and to restore and make good the Premises in accordance with the
Reinstatement Specification in a proper and workmanlike manner to
the condition and design which existed before the alterations or
additions were made with all services properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the Premises)
which may be or become or cause a nuisance obstruction or
damage to any person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal or immoral trade business or
activity or for residential purposes and not to use the Common
Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this
sub-clause) except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the Building
save for the right granted pursuant to paragraph 3 of schedule
2
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or advertisement
except the approved signs referred to in paragraph 3 of
schedule 2
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ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of
the Premises the Tenant shall first by an irrevocable
unconditional written notice ("the Tenant's Notice") served
upon the Landlord offer to surrender or assign this lease upon
such financial terms and conditions as the Tenant may desire
(b) If the Landlord wishes to accept such surrender or assignment
it shall within twenty-one days of receipt of the Tenant's
Notice serve a counternotice ("the Counter-Notice") upon the
Tenant stating as much
(c) If the Landlord serves a Counter-Notice on the Tenant then the
Tenant shall surrender or assign (at the Landlord's option) the
Premises to the Landlord (or as the Landlord may direct) within
six months of receipt of the Counter-Notice either with vacant
possession or subject only to a permitted underletting and the
Tenant's liability hereunder shall cease in respect of any
matters arising following the date of such assignment or
surrender but without prejudice to any antecedent breaches of
covenant
(d) If the Landlord does not serve a Counter-Notice then the Tenant
must (if it wishes to assign) complete its assignment on terms
greater than 95 per cent in value of the terms and conditions
stipulated in the Tenant's Notice within six months from the
date of the Tenant's Notice and if the Tenant shall fail to
complete within such period if it still wishes to assign the
whole of the Premises it must reinstate the procedure set out
in this clause 4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign mortgage charge or underlet or in any other
manner part with possession of any part (being less than the
whole) of the Premises or agree to do so except that the Tenant
may underlet the whole of (but not more or less than) any
Permitted Part or Permitted Parts in accordance with paragraphs
(h) and (i) of this sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign underlet or otherwise part with possession of or
the whole of the Premises or agree to do so except that the
Tenant may assign or underlet the whole of the Premises in
accordance with paragraph (g) or (h) respectively of this
sub-clause
(ASSIGNMENT)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2 months
before completion of the assignment which consent shall
not be unreasonably withheld or delayed but which may
be granted subject to any one or more of the conditions
referred to in paragraph (g)(ii) and which may be
withheld if any one or more of the circumstances referred
to in paragraph (g)(iii) exist
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(ii) The conditions referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(lA) Landlord and
Tenant Act 1927) are:
AUTHORISED GUARANTEE
(a) that the Tenant shall enter into an authorised guarantee
agreement (as defined in section 16 Landlord and Tenant
(Covenants) Act 1995) with the Landlord in a form which the
Landlord reasonably requires
THIRD PARTY GUARANTEE/RENT DEPOSIT
(b) that if so reasonably required by the Landlord the proposed
assignee shall have procured covenants with the Landlord by a
guarantor or guarantors (not being the Tenant or any guarantor)
reasonably acceptable to the Landlord in a form acceptable to
the Landlord (acting reasonably);
INTRA GROUP DEALINGS
(c) if the proposed assignee is a Group Company the Tenant shall
have procured either:
(A) if the Tenant's obligations under this lease are
guaranteed by another Group Company that such Group
Company covenants with the Landlord on the same terms
(mutatis mutandis) as those contained in clause 10; or
(B) if there is no guarantor of the Tenant's obligations under
this lease and if the assignee is not at the date of the
application for consent to the proposed assignment in the
reasonable opinion of the Landlord of financial standing
equivalent to or greater than the Tenant at the date of
this lease that the proposed assignee procures covenants
by a Group Company which is not the Tenant or the proposed
assignee and which is in the reasonable opinion of the
Landlord of financial standing equivalent to or greater
than the Tenant in the same terms (mutatis mutandis) as
those contained in clause 10; and
(iii) The circumstances referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(1 A) Landlord and
Tenant Act 1927) are:-
(a) where the Tenant's solicitors have not given an undertaking to
the Landlord's solicitors to pay all reasonable legal
surveyor's and management costs disbursements and VAT arising
on the application for consent to such assignment whether or
not consent is
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granted unless the Landlord unreasonably withholds consent in
circumstances where it is required to be reasonable; and/or
(b) where any of the rents and Interim Sum due from the Tenant to
the Landlord or the Management Company respectively under this
lease remain unpaid at the date of the application for consent
to the proposed assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted Part
(each being referred to in this paragraph as the premises)
except:-
(i) to a person who before the underletting shall have
covenanted with the Landlord to observe and perform the
Tenant's obligations under this lease during the sub-term
to the extent they relate to the premises demised by the
underletting (other than the payment of rents) and a
covenant not to assign the whole of the premises without
the Landlord's consent (which shall not be unreasonably
withheld or delayed) and an unqualified covenant not to
assign part of the premises or to underlet or otherwise
part with possession or share the occupation of the
premises or any part of them
(ii) by reserving as a yearly rent without payment of a fine or
premium (in addition to the service and insurance and
other rents payable under this lease except the rent first
hereby reserved or (in the case of underletting of a
Permitted Part) a pro rata proportion of them) an amount
equal to:-
(a) (in the case of an underletting of the Premises) the
then open market rack rental value of the Premises
(b) (in the case of an underletting of a Permitted Part)
a pro rata proportion of the then open market rack
rental value of the Premises
the proportion in each case being calculated by reference
to the Net Internal Area of the Permitted Part in relation
to the Net Internal Area of the Premises, in all cases
such rent to be payable by equal quarterly instalments in
advance on the usual quarter days and to be approved by
the Landlord prior to the underletting (such approval not
to be unreasonably withheld or delayed) but the amount of
such rent and the approval of the Landlord thereto may not
be used as evidence by the Tenant for the purpose of any
rent review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the underlease
is reviewed upwards only at not greater than five year
intervals during the sub-term in accordance with the
same
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principles (mutatis mutandis) and at the times as
apply to the rent first reserved by this lease
(b) requiring the underlessee to observe and perform all
the covenants and other provisions binding on the
Tenant under this lease (other than the covenant by
the Tenant to pay rents) to the extent they relate to
the premises and containing:-
(A) a condition for re-entry by the underlessor on breach of
any covenant by the underlessee
(B) a qualified covenant not to assign the whole of the
premises and an absolute covenant not to assign part of
the premises or to underlet or otherwise part with
possession or share the occupation of the premises or any
part of them
(iv) with the Landlord's consent issued within three months before
completion of the underletting which consent (subject to
compliance with the foregoing conditions precedent) shall not
be unreasonably withheld or delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the entrance to or
the reception area of the Premises
(ii) to except from the underlease all necessary circulation areas
and plant and equipment which will serve the Premises in common
and to reserve a separate service charge rent in respect of
their maintenance repair and renewal
(iii) not as a result of the grant to create or permit the creation
of more than three separate occupations affecting the whole of
the Premises (occupations in right of this lease counting as
one occupation)
(iv) not to grant or agree to grant the underlease without providing
for the exclusion of sections 24 to 28 inclusive of the
Landlord and Tenant Act 1954 in relation to the underlease in
pursuance of an Order duly made under section 38(4) of that Act
before the date of grant
(j) To enforce the observance and performance by every such underlessee
and its successors in title of the provisions of the underlease and
not expressly or impliedly to waive any breach of them nor vary the
terms of any underlease
(k) Not to agree any reviewed rent payable under an underlease without
the Landlord's consent and if the rent review under any underlease
is to be determined by an independent person not to agree his
appointment without the Landlord's consent (PROVIDED ALWAYS THAT the
Landlord shall not unreasonably withhold or delay any consent
required
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under this sub-paragraph) and to procure that any representations
which the Landlord may wish to make in relation to the rent review
are duly submitted to the independent person and to provide to the
Landlord promptly on the same becoming available copies of any
representations made by or on behalf of the Tenant or the
underlessee in relation to such rent review
(SHARING OCCUPATION)
(l) Not to part with or share the occupation of the Premises or any
part of them except that the Tenant may share occupation with a
company which is (but only for so long as it remains) either the
holding company of the Tenant or a majority-owned subsidiary of
the Tenant or of the Tenant's holding company (as those
expressions are defined in section 736 Companies Act 1985) so long
as the Tenant does not grant the person sharing occupation
exclusive possession (so that such company occupies as licensee
only without creating any relationship of landlord and tenant) nor
otherwise transfer or create a legal estate and the Tenant shall
notily the Landlord of the identity of each company in occupation
REGISTRATION
(16)(a) Within twenty-one days after any disposition or devolution of
this lease or of any estate or interest in or derived out of it to
give notice in duplicate of the relevant transaction to the Landlord
for registration with a certified copy of the relevant instrument
and to pay to the Landlord a fair and reasonable fee for each such
registration of not less than twenty five pounds
(b) To register with the Landlord particulars of the determination of
every rent review under any underlease of the Premises within
fourteen days after the date of determination
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels'
solicitors' surveyors' and bailiffs' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146 Law of
Property Act 1925 or in contemplation of any proceedings under
section 146 or 147 of that Act notwithstanding that forfeiture is
avoided otherwise than by relief granted by the court and
(b) every reasonable step taken during or after the expiry of the
Term in connection with the enforcement of the Tenant's
obligations under this lease including the service or proposed
service of all notices and schedules of dilapidations and
(c) every application for consent licence or approval under this
lease but not if the application is unreasonably refused or
delayed or granted subject to unreasonable conditions (where
such consent is not to be unreasonably withheld or delayed)
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MACHINERY
(18) Not to install in the Premises any plant or machinery other than usual
office equipment without the Landlord's consent which shall not be
unreasonably withheld PROVIDED ALWAYS THAT no plant or machinery shall
be installed or operated in the Premises and nothing shall be done or
omitted in them which may cause:-
(a) the efficiency of the heating ventilation air conditioning and
cooling system installed in the building to be diminished or
impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other part of
the Building or other adjoining property or persons outside the
Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the rights
granted by this lease in a way which causes nuisance or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises and (to
the extent they lie within the Premises) to keep them clear and
functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the Premises
nor to overload or cause undue strain to the Service Media or any
other part of the Building and in particular not to suspend any
undue weight from the ceilings or walls of the Premises and not to
exceed the following floor loadings:-
floor finishings: : 4 kN/m2 (80lbs per sq.ft)
live load : 1kN/m2 (20lbs per sq.ft)
(e) any requisite notice erected on the Premises including any erected
by the Landlord in accordance with its powers under this lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of goods is
carried out only by using the service accesses and goods lifts
designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to comply
with the provisions and requirements of Planning Law relating to or
affecting
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(a) (i) the Premises
(ii) any operations works acts or things carried out executed done
or omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any other rights
hereunder in respect of) any other parts of the building
(b) Subject to the provisions of paragraph (c) of this sub-clause as
often as occasion requires during the Term at the Tenant's expense
to obtain and if appropriate renew all planning permissions (and
serve all notices) required under Planning Law in respect of the
Premises whether for the carrying out by the Tenant of any
operations or the institution or continuance by the Tenant of any
use of the Premises or any part thereof or otherwise
(c) Not without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) to apply for any planning
permission relating to the Premises (and not to apply for any such
planning permission relating to any other part of the Building) but
so that subject to compliance with paragraph (e) of this sub-clause
the Landlord's consent shall not be unreasonably withheld or delayed
to the making of a planning application in respect of the Premises
relating to any operations or use or other thing (if any) which
assuming it to be implemented in accordance with Planning Law would
otherwise not be in breach of the provisions of this lease
(d) If the Landlord so requires in connection with any relevant proposal
by the Tenant to apply for a determination under section 191 or 192
Town and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by the
Tenant (which it hereby agrees to consider and determine with all
due expedition) for planning permission to submit a draft of the
application to the Landlord for its approval and to give effect to
its reasonable requirements in respect thereof and if and to the
extent the Landlord so requires to lodge the application with the
relevant authority in the joint names of the Landlord and the Tenant
and in duplicate
(f) Not to implement any planning permission before the Landlord has
acknowledged that its terms are acceptable nor before the Landlord
has received any cash or other security which it reasonably requires
for compliance with any conditions imposed by the planning
permission
(g) If the Landlord at the Landlord's cost reasonably requires or the
Tenant desires to lodge and progress diligently an appeal against
any refusal of an application for planning permission lodged in
respect of the Premises by the Tenant or by any person claiming
under or through the Tenant (whether or not lodged in its name
alone) the Landlord undertakes to cooperate fully with the
Tenant in respect of any such appeal unless such
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appeal would be likely to have a material and adverse effect on the
Landlord's interests in the Building
(h) Unless the Landlord otherwise directs to complete before the expiry
of the Term all works on the Premises required as a condition of any
planning permission implemented by the Tenant or by any person
claiming under or through it
(i) If the Tenant receives or is entitled to receive any statutory
compensation under any Enactment in relation to its interest in the
Premises the Tenant shall on any determination of its interest prior
to the expiry of this lease by effluxion of time forthwith make such
provision as is just and equitable for the Landlord to receive its
due benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs claims
damages demands and any other liability or consequence arising out or in
respect of any breach of any of the Tenant's obligations under this lease
(including all costs reasonably incurred by the Landlord in an attempt to
mitigate any such breach) or of any act omission or negligence of the
Tenant or any person at the Premises with the Tenant's authority
DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably to
have become aware of the same) to give notice forthwith to the Landlord
of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing anything
in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed by the
Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the Landlord
may from time to time reasonably require to be displayed at the Premises
in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the Tenant)
relating to the Building or any part of it becomes void or voidable
or by which the rate of premium on such policy may be increased
(b) To comply with all proper requirements of the insurers and to
provide and maintain unobstructed appropriate operational fire
fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
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(i) any incidence of any Insured Risk on the Premises and of any
other event which ought reasonably to be brought to the
attention of insurers and of which the Tenant ought reasonably
to be aware
(ii) the insurable value of any fixture installed in the Premises by
the Tenant or any person claiming under or through the Tenant
(d) That if at any time the Tenant or any person claiming under or
through it shall be entitled to the benefit of any insurance of the
Premises to cause all money paid under such insurance to be applied
in making good the loss or damage in respect of which it was paid
(e) Subject to clause 5(2)(b) if the whole or any part of the Building
is damaged or destroyed by any of the Insured Risks at any time
during the Term and the insurance money under any insurance policy
effected by the Landlord is rendered wholly or partially
irrecoverable because of some act or default of the Tenant or any
person deriving title under or through the Tenant or their
respective servants agents or invitees forthwith to pay the Landlord
the whole amount of the insurance money so irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept placed
stored or used in or upon or about the Premises any materials substance
or other thing of a dangerous inflammable combustible explosive corrosive
or offensive nature or any materials substance or other thing which may
in any way cause pollution injury or harm by percolation corrosion
contamination migration release or otherwise on beneath or in the
vicinity of the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and tenant's
fixtures and quietly to yield up the Premises reinstated in
accordance with the Reinstatement Specification and restored and
made good to the extent required under clause 4(12)(d) and in the
state of repair condition decorative order and layout otherwise
required by this lease and any licences or consents issued in
pursuance of it and to make good any damage so caused in a proper
and workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and dispose
of any chattels which may be left in the Premises within 28 days
after the Tenant has quit them (without being obliged to obtain any
consideration for the disposal) and the Tenant irrevocably declares
that any such chattels will stand abandoned by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the Landlord
from time to time and notified to the Tenant in writing for
the good management of the Building PROVIDED ALWAYS THAT no
such regulations shall purport to amend the terms expressed in
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this lease and if there is any inconsistency between the terms of
this lease and the regulations the terms of this lease shall prevail
(ii) all covenants stipulations and other matters affecting the Premises
and not to interfere with any rights easements or other matters
affecting the Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's visitors to
the Premises observe such security regulations which may apply to them
HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on the part
of the lessee contained in the Head Lease so far as they relate to
the Premises except the covenant for the payment of rent and except
also so far as the obligations relating to insurance fall to be
observed and performed by the Landlord pursuant to clause 5(2)
(b) Not to do or omit any act or thing which would or might cause the
Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management
Company at the times and in the manner provided for in clause 6
and schedule 5 without deduction or set off and to pay the Outside
Normal Business Hours Charge within 10 days of demand (either
annually or by monthly instalments) as the Management Company
shall reasonably determine PROVIDED THAT for the period from the
date hereof until the earlier of 25th June 1997 and the date on
which the Tenant commences full beneficial occupation of the
Premises following the works contemplated by the Agreement for
Initial Alterations the Service Charge payable by the Tenant in
any Accounting Period shall not exceed pounds sterling 32,202
inclusive of VAT and PROVIDED FURTHER that the Service Charge
payable in respect of the twelve month period from the earlier
of 25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works
contemplated by the Agreement for Initial Alterations shall be
pounds sterling 74,601.30 exclusive of VAT
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained in this
lease the Tenant may peaceably hold and enjoy the Premises without any
lawful interruption by the Landlord or any person rightfully claiming
through under or in trust for it
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INSURANCE
(2) (a) To keep the Building (except all tenants' plant and equipment
and trade fixtures) insured against the Insured Risks in the full
current replacement cost
(b) to use reasonable endeavours to procure that the interest of the
Tenant is noted on the insurance policy and to use reasonable
endeavours to further procure that the insurers waive any rights of
subrogation against the Tenant (or any lawful subtenant occupier or
invitee) and the Landlord will notify the Tenant if it is unable so
to procure and will duly consider the representations of the Tenant
regarding alternative insurers who may be prepared to procure that
the insurers waive any subrogation rights and/or note the interest
of the Tenant and will also permit the Tenant to make
representations to the insurers regarding the noting of the Tenant's
interest and/or waiver of rights of subrogation
(c) On request to supply the Tenant (but not more frequently than once
in any period of twelve months) with evidence of such insurance
(d) If and whenever during the Term the Building (except as aforesaid)
is damaged or destroyed by an Insured Risk and to the extent that
payment of the insurance monies is not refused because of any act
neglect default or omission of the Tenant or of any person deriving
title under or through the Tenant or their respective servants
agents and invitees subject to clause 5(2)(b) above the Landlord
will with all convenient speed take the necessary steps to obtain
any requisite planning permissions and consents and if they are
obtained to lay out the money received from the insurance of the
Building (except sums in respect of public liability and employer's
liability and loss of rent) towards replacing (but not necessarily
in facsimile reinstatement) the damaged or destroyed parts (except
as aforesaid) and in the case of the Premises to the Reinstatement
Specification as soon as reasonably practicable (and the Landlord
shall keep the Tenant informed of progress of any such insurance
claims and the Landlord's proposals for compliance with this
provision) PROVIDED ALWAYS THAT the Tenant shall have no claim
against the Landlord under this clause 5(2)(c) in respect of the
manner of replacement of the interior of any Lettable Unit other
than the Premises or any alteration to the Common Parts and PROVIDED
FURTHER THAT the Landlord shall not be liable to carry out the
replacement if it is unable (having used all reasonable endeavours)
to obtain every planning permission and consent necessary to execute
the relevant work in which event the Landlord shall be entilted to
retain all the insurance money received by it and if the Landlord
so retains the insurance money the Tenant shall be entitled to
determine this lease on not less than one month's prior written
notice
(e) In the event that the Premises have not ben reinstated to the
Reinstatement Specification or essential means of access thereto
within the Building is not available in the circumstances
contemplated in subclause 5(2)(d) by the date five years and eleven
months following the date of such damage or destruction by an
Insured Risk the Tenant may
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determine this lease on not less than one month's prior written
notice such notice to be served (if at all) within one month after
expiry of such five years and eleven months period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform so
far as the Tenant is not liable for such performance under the terms
of this lease but so far only as to preserve the existence of this
lease the covenants and conditions on the part of the lessee
contained in the Head Lease
(b) On the request and at the reasonable expense of the Tenant to take
all reasonable steps to enforce the covenants on the part of the
Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's reasonable expense (to
the extent possible under the Head Lease) to obtain the consent of
the Superior Landlord wherever the Tenant makes application for any
consent required under this lease where the consent of both the
Landlord and the Superior Landlord is needed by virtue of this lease
and the Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide or
procure the provision of electricity to the Premises to the extent
necessary to meet the requirements of the Tenant having regard to the
overall electricity services design standards for the Building as a whole
and to all relevant statutory provisions from time to time regulating the
supply and utilisation of electricity and the terms and conditions
relative thereto from time to time imposed by the electricity provider
chosen by the Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as it
requires from time to time for the due and proper provision of the
Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT liability on
the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply made
hereunder by the Landlord to the Tenant the Landlord shall no later
than thirty days after the due date for payment in respect of such
supply issue a valid VAT invoice or audit note (as the case may be
to the Tenant)
(b) Subject to (6)(c) below all consideration payable by the Landlord to
the Tenant shall be exclusive of VAT which the Landlord shall pay in
addition on production of a valid VAT invoice
(c) The capital sum referred to in clause 3 above shall be inclusive of
VAT save that if the Landlord is at any stage able to recover such
VAT the Landlord shall pay to the Tenant a further amount equal to
VAT on the capital sum
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NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its
postal address from time to time
NOTIFICATION OF NOTICES
(8) The Landlord will inform the Tenant as soon as reasonably practicable but
in any event within 5 working days of receipt of the same of any notice
served by the Superior Landlord alleging a breach of the Head Lease which
would threaten the existence of this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate
the structure of the Building (including the structure of the
roofs foundations external and internal walls and columns and
structural slabs of the ceilings and floors) the external
surfaces of the Building (including the whole of the glazing
within the external walls of the Building) and the Common Parts
and (where consistent with an obligation to repair) to replace
the same
(2) To keep the Service Media designed for common or general use and
the Landlord's Services Equipment in good and substantial repair
and in clean condition and at all times in good and safe working
order
(3) To keep the lifts in the Building clean and in good and
substantial repair and condition and at all times in good and
safe working order
(4) Provide heat and air conditioning and chilled water to the
Premises (subject to the Tenant paying Outside Normal Business
Hours Charge in relation to the provision of such services
outside Normal Business Hours) such heat being sufficient to
maintain an air temperature in the Premises measured at the main
trunk connections to the floor as follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29degreesC DB 20degreesC WB
Winter -4degreesC DB 100% relative humidity
Internal Conditions Office
Accommodation-
Summer 22degreesC DB+1degreeC
Winter 20degreesC DB minimum
Humidity Office Accommodation-
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Summer 50%+/- 10%
Winter 50%+/- 10%
(5) To ensure that the Common Parts are at all times kept clean tidy and
unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part thereof
designed to receive the same to the extent necessary to meet the
reasonable requirements of the Tenant and other lawful occupiers of the
Premises
(7) To comply with the requirements of any statute (already or in the future
to be passed) or any government department local authority other public
or competent authority or court of competent jurisdiction relating to
the Building or any part for which any tenant or occupier of the
Building is not directly or exclusively liable
(8) To ensure that at all times (meaning for the avoidance of doubt 24
hours a day during the Term) there are both such security officers at
and patrolling the Building as is reasonably appropriate for premises of
the same size and nature as the Building and that the main reception to
the Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate to
provide to a high class office building in the City of London
outside Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the Tenant
shall previously request (but subject to the Tenant being
responsible for the Outside Normal Business Hours Charge)
(having regard in all cases to and in accordance with the overall design
standards for the Building as a whole and subject to the limitations
contained in Clause 7(6)) in an efficient and economic manner and in
accordance with good estate management provided that the Management
Company shall be entitled to employ such managing agents professional
advisers contractors and other persons as it shall from time to time
reasonably think fit for the purpose of the performance of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any of the
Common Parts or interruption in the provision of the Services or stoppage or
severance affecting any of the Service Media or any interruption to the supply
of electricity to the Premises or the Common Parts or temporary closure or
diversion of any of the Common Parts or Service Media by reason of necessary
inspection repair maintenance or replacement thereof or any part thereof or
any plant machinery equipment installations or apparatus used in connection
therewith or damage thereto or destruction thereof by any risk
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(whether or not an Insured Risk) or by reason of electrical mechanical
or other defect or breakdown or frost or other inclement conditions or
shortage of fuel materials supplies or labour or whole or partial
failure or stoppage of any mains supply due to any circumstances beyond
the control of the Management Company PROVIDED ALWAYS that the
Management Company shall use all reasonable endeavours to minimise the
adverse effects of any such circumstances and to remedy any such
interruption closure or diversion as soon as reasonably practicable
PROVIDED FURTHER that in the event of the Landlord or the Management
Company being unable to provide air conditioning or electricity to the
Premises in such circumstances the Tenant shall be entitled to carry out
(the Landlord and Management Company affording the Tenant reasonable
access to do so) all necessary remedial works to such electricity or air
conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other
tenants as reasonably practicable
(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach
of the Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:-
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in
this lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for
twenty-one days after becoming payable (whether or not
formally demanded) or
(b) any of the Tenant's covenants in this lease are not
performed or observed in the manner and at the times herein
specified or
(c) the guarantee granted by the Guarantor or any other
guarantor of the Tenant's obligations is or becomes
unenforceable (in whole or in part) for any reason
whatsoever and no suitable alternative security is provided
to the Landlord within a period of one month or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent
company) or compulsorily or has a provisional liquidator or
a receiver (including an administrative receiver) appointed
or its directors pass a resolution to petition for an
administration order or one or more of them swears an
affidavit in support of such a petition or is the subject
of an administration order or a petition for one or of a
voluntary arrangement or a proposal for one under Part I
Insolvency Act 1986
(e) being a company incorporated outside the United Kingdom is
the subject of any proceedings or event analogous to those
referred to in clause 7(1)(d) in the country of its
incorporation
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(f) being an individual is the subject of a bankruptcy petition
or bankruptcy order or of any application or order or
appointment under section 253 or section 273 or section 286
Insolvency Act 1986 or otherwise becomes bankrupt or
insolvent or dies
the Landlord may at any time thereafter (and notwithstanding the
waiver of any previous right of re-entry) re-enter the Premises
without prejudice to the Tenant's right to relief against
forfeiture whereupon this lease shall absolutely determine but
without prejudice to either parts right of action against the
other in respect of any antecedent breach of the covenants in this
lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in
relation to the Building and (subject only to those easements
expressly granted by this lease) neither the Tenant nor the
Premises shall be entitled to any easement or quasi-easement
whatsoever and nothing herein contained or implied shall give the
Tenant the benefit of or the right to enforce or to have enforced
or to prevent the release or modification of any right easement
covenant condition or stipulation enjoyed or entered into by any
tenant of the Landlord in respect of property not demised by this
lease or prevent or restrict the development or use of the
remainder of the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant
supply authorities and any other competent authority the Common
Parts and the Service Media are at all times subject to the
exclusive control and management of the Landlord who may from time
to time (if it shall be necessary or reasonable to do so for the
benefit of the Building or otherwise in keeping with the
principles of good estate management) alter divert substitute stop
up or remove any of them (leaving available for use by the Tenant
reasonable and sufficient means of access to and egress from and
servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be
served under this lease shall be validly served if
served in accordance with section 196 Law of Property Act
1925 as amended by the Recorded Delivery Service Act 1962 or
(in the case of any notice to be served on the Tenant) by
sending it to the Tenant at the Premises PROVIDED THAT
whilst the Tenant hereunder is Donaldson Lufkin & Jenrette
International Limited such notice shall also be served on
the offices for the time being of SJ Berwin & Co (attention:
Edward Page) or such other firm of solicitors notified in
writing to the Landlord and 277 Park Avenue, New York, New
York 10172
(b) If the Tenant or any guarantor comprises more than one
person it shall be sufficient for all purposes if notice is
served on one of them but a notice duly served on the
Tenant will not need to be served on any guarantor
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RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment
and tenant's fixtures) or the means of access to the
Premises within the Building are damaged or destroyed by
any of the Insured Risks so that the Premises are incapable
of beneficial occupation and use and
(b) subject to clause 5(2)(b) the insurance of the Building or
the payment of any insurance money has not been vitiated by
the act neglect default or omission of the Tenant or of any
person deriving title under or through the Tenant their
respective servants agents and invitees
the rent first reserved by this lease and the Service Charge or a
fair proportion of them according to the nature and extent of the
damage sustained shall be suspended and cease to be payable from
the date of destruction or damage until whichever is the earlier
of the date on which the Premises are reinstated to the
Reinstatement Specification and if applicable the essential means
of access within the Building are available and the date of expiry
of the period for which insurance of loss of rent is effected and
any dispute about such suspension shall be referred to the award
of a single arbitrator to be appointed in default of agreement on
the application of the Landlord or the Tenant to the President for
the time being of The Royal Institution of Chartered Surveyors in
accordance with the Arbitration Acts 1950 and 1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts
or stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or
temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance
or replacement thereof or any part thereof or any plant machinery
equipment installations or apparatus used in connection therewith
or damage thereto or destruction thereof by any risk (whether or
not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions
or shortage of fuel materials supplies or labour or whole or
partial failure or stoppage of any mains supply due to any
circumstances beyond the control of the Landlord PROVIDED ALWAYS
that the Landlord shall use all reasonable endeavours to minimise
the adverse effects of any such circumstances and to remedy any
such interruption closure or diversion as soon as reasonably
practicable PROVIDED FURTHER that in the event of the Landlord or
the Management Company being unable to provide air conditioning or
electricity to the Premises in such circumstances the Tenant shall
be entitled to carry out (the Landlord and Management Company
affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED
THAT:
(a) the Tenant shall carry our such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonable practicable)
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(b) the Landlord or the Management Company shall be responsible for the
costs of the Tenant in carrying out such remedial works when such
works are being carried out as a consequence of any breach of the
Landlords or Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the
Landlord or by the Tenant notwithstanding any direction or prior
agreement as to liability for payment and any sums so paid for
which the party who pays them initially is not ultimately liable
shall be repayable on demand by the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase in
the amount of the rent reserved and made payable by virtue of
schedule 4 a memorandum recording the increase shall be attached
to this lease and to the counterpart and such memorandum shall be
signed by or on behalf of the Landlord and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are
authorised under Planning Law to be used or are otherwise fit for
any specific purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or
occupier of any part of the Building relating to any
easement or right affecting the Building or any part of it
shall (unless the Landlord shall by notice to the parties
concerned renounce its power to determine it) be referred
to the Landlord whose decision acting reasonably (acting in
the capacity of an expert) shall be binding upon the
parties to the dispute but the Landlord shall give written
reasons for his decision
(b) Where any issue (other than one relating to a rent review)
arising out of or under or relating to the Head Lease which
also affects or relates to the provisions of this lease is
to be determined as provided in the Head Lease the
determination of such issue pursuant to the provisions of
the Head Lease shall be binding on the Tenant as well as
the Landlord for the purposes both of the Head Lease and
this lease
COMPENSATION
(11) Except where any Enactment prohibits the right to compensation being
reduced or excluded by agreement, neither the Tenant nor any
occupier of the Premises shall be entitled on quitting them to
claim from the Landlord any compensation under the Landlord and
Tenant Act 1954
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RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a proposal to
alter the entry for the Premises in the local non-domestic
rating list it shall notify the other party of its intention
and shall incorporate in the proposal such proper and
reasonable representations as may be made by or on behalf
of that party
(b) The Tenant shall not agree the level of rates liability
attributable to the Premises following the date hereof
without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) PROVIDED that for the
avoidance of doubt the Landlord shall not be entitled to
refuse its consent to any level of rates which the Tenant
has negotiated with the appropriate rating authority which
is lower than any level of rates negotiated by or on behalf
of the Landlord in respect of the Building on a pro rata
basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed
to constitute a warranty by the Landlord that the Premises shall
be kept secure or that any security service to the Common Parts
shall be effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the
Landlord the English courts shall have exclusive jurisdiction in
relation to disputes arising under or connected with this lease
and the Tenant agrees that any process may be served on it by
leaving a copy of the relevant document at the Premises provided
however that the Landlord shall retain the right at its sole
election to sue the Tenant elsewhere including in the courts of
the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy
of the reversion immediately expectant on the determination of
this lease whether pursuant to Section 19 Landlord and Tenant
(Covenants) Act 1995 or otherwise any covenant on the part of the
Tenant to obtain the consent of the Landlord under this lease to
any dealing shall be deemed to include a further covenant also to
obtain the consent of the lessor under such tenancy to such
dealing
8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants
and agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the
manner and at the times herein specified and that is there is
default in performing and observing any of the Landlord's
obligations (notwithstanding any time or indulgence granted by the
Tenant to the Landlord or compromise, neglect or forbearance on
the part of the Tenant in enforcing the observance of the
Landlord's obligations in this lease) the Landlord's Guarantor
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will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Landlord
shall be in default
(2) The Landlord's Guarantor at the request of the Management Company
and in consideration of the Tenant agreeing to pay the Service
Charge covenants and agrees with the Tenant that all of the
Management Company's obligations contained in this lease will be
performed and observed in the manner and at the times herein
specified and that if there is default in performing and
observing any of the Management Company's obligations
(notwithstanding any time or indulgence granted by the Tenant to
the Management Company or compromise, neglect or forbearance on
the part of the Tenant in enforcing the observance of the
Management Company's obligations in this lease) the Landlord's
Guarantor will observe and perform (or procure the performance
and observance of) the obligations in respect of which the
Management Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of
this clause) determine this lease as 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on
24th October 2008
(3) If the Tenant duly serves the Termination Notice it shall procure
that vacant possession of the Premises will be available on
24th October 2008 free of occupation by and of any estate or
interest rested in the Tenant or any third party and this lease
shall not determine as a result of any notice served by the
Tenant if the Tenant is in material breach of any of its covenant
to pay the rents and Interim Sum contained in this lease
(including those contained in this sub-clause) as at 24th October
2008 except to the extent if at all the Landlord in its absolute
discretion waives compliance with any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during
the Term and any period of holding over continuation or extension
thereof whether by an Enactment common law or otherwise (subject to
clause 4(15)):-
(1) The rents reserved by this lease (whether or not ascertained as
to amount) will be duly paid and that all the Tenant's
obligations contained in it will be performed and observed in the
manner and at the times herein specified and that if there is any
default in paying the rents or in performing and observing the
Tenant's obligations (notwithstanding any time or indulgence
granted by the Landlord to the Tenant or compromise neglect or
forbearance on the part of the Landlord in enforcing the
observance and performance of the Tenant's obligations in this
lease or any refusal by the Landlord to accept rents tendered by
or on behalf of the Tenant) the Guarantor will observe and
perform the obligations in respect of which the Tenant shall be
in default and will on demand and on a full indemnity basis pay
to the Landlord an amount equivalent to the rents or other
amounts not paid and/or any loss damage costs charges expenses or
any other liability incurred or suffered by the Landlord as a
result of the default (and in the event of non-payment shall pay
interest at the Interest Rate from the date of demand to the
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Guarantor until the date of payment) and will otherwise indemnify
and hold harmless the Landlord against all actions claims costs
damages demands expenses losses and proceedings arising from or
incurred by the Landlord as a result of such non-performance or
non-observance
(2) If any liquidator or other person having power to do so disclaims
this lease or if it shall be forfeited or if the Tenant ceases to
exist and if the Landlord by written notice served within three
months after the date of disclaimer or forfeiture or the Landlord
having actual knowledge of the cesser of existence of the Tenant
(each a "Trigger Event") requires the Guarantor to accept a lease
of the Premises for a term computed from the date of the Trigger
Event to the date on which the Term would have expired by
effluxion of time and at the same rents and subject to the same
covenants stipulations conditions and provisions (except that the
Guarantor shall not be required to procure that any other person
is made party to that lease as guarantor) as are reserved by and
contained in this lease immediately before the Trigger Event and
with coincidental Review Dates (the said new lease and the rights
and liabilities thereunder to take effect as from the date of
such Trigger Event) the Guarantor shall forthwith accept such
lease accordingly and execute and deliver to the Landlord a
counterpart of it and indemnify the Landlord upon demand against
the costs incurred on the grant of the new lease
(3) The liability of the Guarantor hereunder shall not be released
reduced affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this
lease or any of them agreed between the Landlord and the
Tenant or
(b) the surrender by the Tenant of part of the Premises (in
which event the liability of the Guarantor shall continue
in relation to the Tenant's obligations in respect of the
part of the Premises not so surrendered) or
(c) any legal limitation immunity disability incapacity
occurrence of insolvency or the winding-up of the Tenant
or
(d) (without limitation to the foregoing) of any other act or
thing act or thing by which (but for this provision) the
Guarantor would have been discharged or released (in each
case in whole or in part) from liability under this
guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in
accordance with clause 8(2) the Guarantor shall pay to the
Landlord on demand (in addition to any other loss damage costs
charges expenses or other liability which the Guarantor may be
required to make good hereunder and without prejudice to any
other rights of the Landlord) an amount equal to the rents which
would have been payable hereunder but for such Trigger Event (so
far as such rents do not otherwise continue to be payable) for
the period commencing on the date of such Trigger Event and
ending on whichever is the earlier of the date one year after the
date of such Trigger Event and the date (if any) upon which rent
is first payable in respect of the whole of the Premises on a
reletting thereof
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(5) Without prejudice to the rights of the Landlord against the Tenant
the Guarantor shall be a principal obligor in respect of its
obligations under this clause and not merely a surety and
accordingly the Guarantor shall not be discharged nor shall its
liability hereunder be affected by any act or thing or means
whatsoever by which its said liability would not have been
discharged if it had been a primary debtor
(6) The Guarantor shall pay all reasonable charges (including legal
and other costs on a full indemnity basis) incurred by the
Landlord in relation to the Landlord's enforcement of this
guarantee and indemnity against the Guarantor or for enforcing
payment by the Guarantor of amounts indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee
and indemnity against the Guarantor without having first enforced
the covenants and terms of this lease against the Tenant and also
without first having recourse to any other rights or security
which the Landlord may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security
held by the Landlord in respect of the obligation of the Tenant
under this lease or to any right of subrogation in respect of any
such security until all the obligations owed to the Landlord by
the Tenant and the Guarantor hereunder have been fully and
unconditionally fulfilled and discharged
(9) The Guarantor shall not claim in any liquidation bankruptcy
composition or scheme of arrangement in respect of the Tenant in
competition with the Landlord and if and to the extent that it
receives the same shall remit to (and until remission shall hold
in trust for) the Landlord all and any monies received from any
liquidator trustee receiver or out of any composition or
arrangement or from any supervisor thereof until all the
obligations of the Tenant and the Guarantor hereunder owed to the
Landlord have been fully and unconditionally fulfilled and
discharged
(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the
necessity for any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains
the Tenant this guarantee and indemnity shall only apply if and
for so long as the total shareholders funds and reserves of
Donaldson, Lufkin & Jenrette International Limited are or fall
below the value of Fifty million pounds (pounds sterling
50,000,000) and Donaldson, Lufkin & Jenrette International Limited
and Donaldson, Lufkin & Jenrette Inc. shall notify the Landlord at
the beginning of each period in which this guarantee and indemnity
applies and again when it ceases to apply AND for the avoidance of
doubt this guarantee (subject to compliance by the Tenant with
clause 4(15)) shall automatically cease on any lawful assignment
of this lease (but without prejudice to either party's rights
against the other in respect of any antecedent breaches of this
lease) unless in the circumstances contemplated by clause
4(15)(g)(ii)(b) it is reasonable for Donaldson Lufkin & Jenrette
Inc. to remain the guarantor hereunder of the liabilities of
Donaldson, Lufkin & Jenrette International Limited PROVIDED
FURTHER that Donaldson, Lufkin & Jenrette Inc shall in such
circumstances automatically be released on a second assignment of
this lease
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11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the twenty-fourth floor and being part of
the Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and
all materials lying between the upper surface of the structural floor
slab and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact
on the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the
external windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in
the external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress
to and from the Premises to use the Common Parts and to use all
means of escape but only when needed in an emergency and
(2) to use the Service Media
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2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authorised sub-tenants or permitted occupiers (subject to a maximum
of four names at any particular time) on the signboard in the entrance
lobby of the Building provided by the Landlord pursuant to paragraph 14
of Part I of schedule 6 and the right to install a sign displaying the
name of the Tenant at the entrance to the Premises the precise location
size and style of such sign to be subject to the approval of the
Landlord (such approval not to be unreasonably withheld or delayed)
4. The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area at all
reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and
maintenance (on reasonable prior written notice to the Landlord) those
works or installations within or on the Building (but outside the
Premises) for which consent has been given pursuant to the Agreement for
Initial Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to the Tenant being responsible for all elements of
Service Cost relating to such toilets should any other tenant of
accommodation in the Building object to meeting any proportion of
Service Cost in relation to such facilities (on the basis of such
exclusive use)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally)
any building notwithstanding that the access of light and air or either
of them to the Premises and the lights windows and openings thereof may
be affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the
Premises as often as may be necessary for the purpose of complying with
the covenants of the Head Lease for all the purposes for which the
Tenant covenants in this lease to permit entry and for all purposes in
connection with the carrying out of the Services and for the purposes of
complying with any statutory requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or
neighbouring land
4. The right to erect and maintain scaffolding on or against any part of
the Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
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5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the
purpose of repairing that other part of the Building making good any
damage so caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved
by this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably
be expected to be payable following the expiry of any period at
the beginning of the term which might be negotiated in the open
market for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated
in the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free
or concessionary rent period or capital sum or fitting out
contribution and has used the same fully to fit out the Premises
for the Permitted Use to the lessee's particular requirements) if
the Premises had been let in the open market by a willing lessor
to a willing lessee with vacant possession on the relevant Review
Date without fine or premium for a term often years computed from
the relevant Review Date taking into account the lessee's right
at the expiration of the term to be granted a new tenancy under
Part II Landlord and Tenant Act 1954 and otherwise upon the
provisions (save as to the amount of the rent first reserved by
this lease but including the provisions for rent review at
five-yearly intervals) contained in this lease and on the
assumption if not a fact that the said provisions have been fully
complied with and on the further assumptions that:-
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(a) the Permitted Use and the Premises comply with
Planning Law and every other Enactment free from any
onerous condition restriction and limitation and that
the lessee may lawfully implement and carry on the
Permitted Use
(b) no work has been carried out to the Premises which has
diminished their rental value
(c) in case the Building or any part of it has been
destroyed or damaged it has been fully restored
(d) the Premises have been fitted out to no less standard
than that set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other
permitted occupier or their respective predecessors in
title has been or is in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying
on in them of the business of the Tenant or any
underlessee or their respective predecessors in title
or other permitted occupier
(iii) (without prejudice to paragraphs 1(2)(b) and 1(2)(c)
of this schedule) any works carried out to the
Premises during the Term by the Tenant or any
permitted underlessee in either case at its own
expense in pursuance of a licence granted by the
Landlord where required and otherwise than in
pursuance of any obligation to the Landlord
(iv) the works carried out to the Premises by the Tenant or
carried out by the Landlord at the expense of the
Tenant pursuant to the Agreement for Initial
Alterations
(3) "Review Surveyor" means an independent chartered surveyor
appointed pursuant to paragraph 3(1) of this schedule and if to be
nominated by or on behalf of the President for the time being of
the Royal Institution of Chartered Surveyors the said President to
be requested to nominate an independent chartered surveyor having
not less than ten years practice in the City of London next before
the date of his appointment and recent substantial experience in
the letting and valuation of office premises of a similar
character and quality to those of the Premises and who is a
partner or director of a leading firm or company of surveyors
having specialist market and valuation knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
(1) the Current Rent (ignoring for this purpose any rent cesser pursuant to
clause 7(5)) and
(2) the Review Rent
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3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant
to assess the Review Rent or (in the absence of agreement at any
time about his appointment) be nominated to assess the Review
Rent by or on behalf of the President for the time being of The
Royal Institution of Chartered Surveyors on the application of
the Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review
Surveyor) he shall act as an arbitrator and the arbitration shall
be conducted in accordance with the Arbitration Acts 1950 and
1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting
each of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired
by the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the
determination in accordance with his own judgment (including any
determination concerning any party's liability for the costs of
the reference to him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4. If the Review Rent has not been agreed or assessed by the relevant
Review Date the Tenant shall:-
(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or
assessment of the Review Rent the amount (if any) by which the
Review Rent for the period commencing on the relevant Review Date
and ending on the quarter day following the date of payment
exceeds the Current Rent paid on account for the same period plus
interest at three per cent below the Interest Rate for each
installment of rent due on and after the relevant Review Date on
the difference between what would have been paid on that rent day
had the Review Rent been fixed and the amount paid on account
(the interest being payable from the date on which the
installment was due up to the date of payment of the shortfall)
5. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is released
the Landlord may at any time within six months after the date of release
give to the Tenant not less than one month's
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notice requiring an additional rent review as at the next following
quarter day which shall for the purposes of this lease be a Review Date
SCHEDULE 5
(THE SERVICE CHARGE)
1. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 31st December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the
Building (whether or not pursuant to the terms of this Underlease) the
Management Company or the Tenant shall be entitled if reasonable to
require that the same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge
for each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting
Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the
provisions of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service
Cost and Service Charge for each Accounting Period served pursuant to
paragraph 5 of this schedule and prepared by the Management Company's
surveyor or auditor
"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company in
any Accounting Period in carrying out or procuring the carrying
out of the Services and providing each item of the Services
including (without prejudice to the generality of the foregoing)
the costs and expenses set out in Part II of schedule 6 (insofar
as the same are reasonable and properly incurred) and any other
reasonable costs and expenses properly incurred by the Management
Company or with the Management Company's authority in connection
with the Services but excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the
Services outside Normal Business Hours at the specific
request of the Tenant (which shall
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be charged direct to the Tenant) or of any other tenant or
tenants of the Building and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and which
is recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage
caused by any of the Insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items of
plant machinery equipment and other capital items is calculated on
such life expectancy of the said items as the Management Company
may from time to time reasonably determine to the intent that a
fund be accumulated sufficient to cover the cost of replacement of
the said items by the end of their anticipated life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting Period
shall be a fair proportion of the Service Cost attributable to the
Premises from time to time as properly determined by the
Management Company (and so in proportion for any Accounting Period
not falling wholly within the Term the Service Cost in any such
case being deemed to accrue on a day to day basis for the purpose
of apportionment)
(B) If at any time and from time to time during the Term the method or
basis of calculating or ascertaining the cost of any item of the
Services shall alter or the basis of calculating or ascertaining
the Service Cost in relation to any item of the Services shall
change and as a result it is reasonable that there be an
alteration or variation of the calculation of the Service Charge
in order to achieve a fairer and better apportionment of the
Service Cost amongst the tenants of the Building then and in every
such case the Management Company shall vary and amend the Service
Charge and make appropriate adjustments thereto provided always
that in the event of any dispute between the Management Company
and the Tenant and the other tenants of the Building or any of
them the same shall be referred to the Expert for determination
(the Expert to act as an expert and not as an arbitrator) whose
decision shall save in the case of manifest error be binding on
the parties (including his decisions as to the responsibility for
his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the
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Building let or occupied or designed contracted or adapted for
letting or occupation (other than management accommodation) is
fully let on terms which include service charge provisions
consistent with the service charge provisions contained in this
lease (save where otherwise specified herein) and such proportion
shall not be increased or altered by reason of the fact that at
any time any part of such accommodation may be vacant or that any
tenant or other occupier of any other part of the Building may
default in payment of its due proportion of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance
with a programme of non equal expenditure in which event the
Management Company shall serve notice to such effect upon the
Tenant and shall thereupon be entitled to require amounts of the
Interim Sum to be paid by advance quarterly instalments of unequal
amounts reasonably stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the
consumption of and supply charges in respect of electricity
consumed within the Premises (save for any amounts which are
invoiced directly by London Electricity plc to the Tenant) such
sums not to exceed a fair and proper estimate of amounts
reasonably anticipated by the Management Company as falling due
within the next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company
shall be entitled in addition to require the Tenant to pay along
with payments of the Interim Sum a fair and proper estimate of
amounts likely to be payable by the Tenant in the next quarter on
account of such Services in accordance with the terms of this
lease
(D) The Interim Sum for the Accounting Period ending 31st December
1996 shall be pounds sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or
cause to be served on the Tenant written notice of the Interim Sum
for the relevant Accounting Period Provided that without prejudice
to the provisions of paragraphs 6 and 7 of this schedule if the
written notice aforesaid shall be served after the first occurring
quarter day in the relevant Accounting Period the Tenant shall
until service of the written notice aforesaid make payments on
account of the Interim Sum for the relevant Accounting Period on
the days and in the manner provided by sub-paragraph (A) of this
paragraph of this schedule at an annual rate equal to the Interim
Sum for the immediately preceding Accounting Period
5. (A) As soon as practicable after the expiry of every Accounting Period
(and in any event within 4 months after such expiry) the
Management Company shall serve or cause to be served a Service
Charge Certificate on the Tenant for the relevant Accounting
Period
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(B) A Service Charge Certificate shall contain a summary of the
Service Cost in respect of the Accounting Period to which it
relates and the relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service
Charge Certificate by giving notice thereof in writing to the
Management Company within three months of the date of service on
the Tenant of the relevant Service Charge Certificate and upon
receipt of such a notice the Management Company shall furnish to
the Tenant all such relevant details in its possession or control
or which can reasonably be obtained by it as relate to the
expenditure under the item or items in question at the cost of the
Tenant (include all books of account receipts demands and
invoices) PROVIDED ALWAYS that notwithstanding the giving of any
such notice the Tenant shall nevertheless pay all Interim Sums and
Service Charges as and when they fall due or as may be underpaid
from time to time (but without prejudice to any challenge claim or
dispute that the Tenant may have made or may make in the future in
respect of its Service Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay
to the Management Company or as it shall direct a sum equal to the
amount by which the Service Charge exceeds the Interim Sum provided that
and the Tenant hereby acknowledges that if there shall be any such
excess in respect of the Accounting Period the amount of such excess
shall be a debt due from the Tenant to the Management Company and in the
event that such excess is not received in cleared funds by the
Management Company within 14 days of the due date for payment it shall
attract interest at the Interest Rate calculated for the period
commencing on the due dates for payment and ending on the date the sum
is subsequently received by the Management Company notwithstanding that
the Term may have expired or been determined before the service by or on
behalf of the Management Company of the relevant Service Charge
Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it
shall attract interest at the Interest Rate for the period commencing as
the due date for payment and ending on the date that the sum due is
received in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph
9 of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly
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adhered to) Provided that the Tenant gives notice with full particulars
of its ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve
the relevant issue but if they cannot do so the issue in dispute
shall be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest
error be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the
dispute shall be paid as soon as reasonably practicable after
such resolution and any sum due to or payable by the Management
Company shall then be paid or allowed (as the case may be)
immediately together with interest at three per cent below the
Interest Rate on such sum during the period which it has been
underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited
to) the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of
schedule 6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of
such Services is greater) than would normally apply in the context of
the general management of the Building in accordance with this lease as
a result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof determined
by the Management Company) within 10 working days following a demand by
the Management Company
46
<PAGE>
SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant
parts of it described in paragraphs (ii) and (iii) of schedule 1
2. Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the
Common Parts and the car park shall be operational 24 hours a day 7 days
a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout Normal
Business Hours and at the request of the Tenant outside those hours
subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule 1 and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists
are not present) and the car park within the Building including where
reasonably appropriate in the Management Company's
47
<PAGE>
judgment closed circuit television and/or other plant and equipment for
the purpose of surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and
(and where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15 Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in
the Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided
by the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the
Premises or
(2) reasonably calculated to be for the benefit of the Tenant and
other tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matter or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference
to the particular matters or things shall be deemed to be and in
each case shall be without prejudice to the generality of the
wording preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the
provision of or add to or procure
48
<PAGE>
the addition to any item of Services matter or thing specified in
this schedule if the Management Company shall having regard to
the principles of good estate management reasonably deem it
desirable or expedient so to do but before so doing the
Management Company shall notify all the tenants in the Building
but in the event of any failure of any of the Services shall use
all reasonable endeavours to restore the said Service
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due
to circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company employed
or retained by or on behalf of the Management Company or its agents
(including without limitation managing agents fees) for or in connection
with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other
duties in or about the Building or any part of it relating to the
general management administration security maintenance protection
and cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and
not by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice
to the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in
kind and other emoluments and National Insurance and other
statutory contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided
rent free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
49
<PAGE>
(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part
of this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the
same is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in
unforeseen or emergency circumstances to finance the provision of the
Services and the costs referred to in this Part of this schedule or any
of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any
other amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the
Management Company pursuant to sections 24 25 and 26 Value Added Tax Act
1994 or any regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable
Life Assurance Society (3)
50
<PAGE>
SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
PART I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of, input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1994 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part XIV of the Value Added Tax Regulations 1995.
"VAT YEAR CERTIFICATE" means the certificate to be provided by the
Tenant following the end of the Tenant's VAT Year in the form set out in
Part II of this Schedule.
2. Payment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to
the rent first reserved without any adjustment of rent first reserved
under this schedule.
3. Adjustment of rent first reserved and payment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on
51
<PAGE>
the due date for payment of the next installment of the rent first
reserved (and on the due date for subsequent instalments), subject
however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served
a VAT Year Certificate specifying in paragraph 1 thereof the same
estimated proportion as stated in the previous VAT Year Certificate
served, or if no previous VAT Year Certificate has been served by the
Tenant at any time prior to the due date for any VAT Year Certificate an
estimated proportion of nil per cent. If the Tenant fails to serve a VAT
Year Certificate on more than one consecutive occasion the Tenant shall
be deemed, on the second failure and any subsequent failure, until
service of the next VAT Year Certificate, to have served a VAT Year
Certificate specifying in paragraph 1 thereof an estimated proportion of
nil per cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at
that time) be adjusted on the basis of the last VAT Year Certificate.
The adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an
amount to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form
set out in the VAT Year Certificate. The Tenant's Auditor's certificate
shall be provided at least eight days prior to the date of payment of
the rent first reserved to which such certificate relates, together with
the Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant shall
pay in accordance with paragraph 4.1 above the amount stipulated in
accordance with paragraph 3 of such VAT Year Certificate (as revised, if
required) on the date for payment of the rent first reserved.
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or
will obtain a Tax Credit differing from the proportion previously taken
into account in calculation any payment, any such difference shall be
taken into account (after having determined the amount of rent first
reserved payable in respect of the next quarter in accordance with
paragraph 3 above) in calculating the next actual payment of rent first
reserved (either by increase or
52
<PAGE>
decrease), the amount of which shall be set out in paragraph 3 of the
VAT Year Certificate.
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the amount which
should have been paid, from such due date until the date of payment of
the adjusted amount pursuant to paragraph 4.3. Where the actual amount
paid (the "Initial Payment") on the due date for payment of any sum was
subsequently adjusted on payment of any later installment of the rent
first reserved ("the Adjusted Payment") in accordance with paragraph 4.6
of Part I of this Schedule 8 and paragraph 3(b) of the VAT Year
Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions of
this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or
accepting a method of attribution designed or maximise its Tax Credit
and covenants not to enter any arrangement which has the specific
purpose of increasing the amount by which the rent first reserved is
decreased by virtue of this schedule 8.
<PAGE>
PART II
VAT YEAR CERTIFICATE
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ]
made between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises on
[ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant to
that paragraph:
1. Our VAT Year which included the following quarter days [ ], ended
on [ ], ended on [ ].
(a) The part of the VAT charged on the rent first reserved paid in
the VAT Year for or in respect of which we estimate/have
determined (in accordance, where relevant, with the return made,
or to be made, for the prescribed accounting period next
following the end of the VAT Year) we will be unable to obtain
credit or repayment is a proportion of [ ] per cent of the total
VAT charged.
(b) The following Table sets out the part of the VAT charged which
was expected to be irrevocable during the VAT Year where it has
been determined on the basis of paragraph 2(a) above that that
differs from the amount of VAT for or in respect of which we
actually obtained, or will be able to obtain, credit or
repayment.
Dates Rent first reserved Estimate Adjustment Determination
----- ------------------- -------- ---------- -------------
* ** ***
* estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out initially in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which
we estimated we would be unable to obtain credit or repayment as
set out in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now
estimated/determined we shall be unable to obtain credit or
repayment, in accordance with Sections 24- 26 of the Value Added
Tax Act 1994 and the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved as to ensure that the amount of rent first reserved payable in
the VAT Year to which this VAT Year Certificate relates is as provided
in paragraph 3 of Part I of Schedule 8 to the Lease in accordance with
the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and the VAT
thereon shall be pounds sterling [ ], and that the interest payable
by the Tenant to the Landlord/Landlord to the Tenant, in accordance with
paragraph 4.7 of Part I schedule 8 to the Lease shall be pounds sterling
[ ].
4. We hereby declare that:
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<PAGE>
(a) we have complied with the covenant imposed upon us by paragraph
6.2 of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declaration are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
Tenant's Auditors
<PAGE>
THE COMMON SEAL of 99 BISHOPSGATE )
LIMITED was hereunto affixed in the presence of:- )
[SEAL HERE] Director /s/
Director /s/
THE COMMON SEAL of 99 BISHOPSGATE )
MANAGEMENT LIMITED was hereunto )
affixed in the presence of:- )
[SEAL HERE] Director /s/
Director /s/
THE COMMON SEAL of HAMMERSON U.K. )
PROPERTIES plc was hereunto affixed in the )
presence of:- )
[SEAL HERE] Director /s/
Director /s/
56
<PAGE>
DATED 24TH OCTOBER 1996
- ------------------------------------------------------------------------------
99 BISHOPSGATE LIMITED
AND
99 BISHOPSGATE MANAGEMENT LIMITED
AND
HAMMERSON U.K. PROPERITES PLC
AND
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
AND
DONALDSON, LUFKIN & JENRETTE, INC.
------------------------------------------------
UNDERLEASE
of
Twenty-third Floor 99 Bishopsgate London EC2
------------------------------------------------
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P17/30433514
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions
Building
Common Parts
Development
Electricity Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insured Rent
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
(13) Use
(14) Signs
<PAGE>
CLAUSE HEADING PAGE
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangerous and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Abritration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
8. Landlord's Guarantor
9. Tenant's option to determine
<PAGE>
CLAUSE HEADING PAGE
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
CLAUSE HEADING
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
<PAGE>
LEASE PARTICULARS
- ------------------------------------------------------------------------------
1. DATE 24TH OCTOBER 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE FIRST ABOVE
WRITTEN
- ------------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette
International Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Lufkin & Jenrette, Inc.
- ------------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the
twenty-third floor of the Building
shown for identification only
edged red on Plan 1.
- ------------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- ------------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 23rd October 2011
AND EXPIRY DATES
- ------------------------------------------------------------------------------
6. INITIAL RENT : (pounds sterling) 423,835
- ------------------------------------------------------------------------------
7. RENT COMMENCEMENT : 25th March 1998
DATE
- ------------------------------------------------------------------------------
8. TENANT'S BREAK RIGHT : 24th October 2008
- ------------------------------------------------------------------------------
9. CAPITAL SUM : (pounds sterling) 211,917.50
inclusive of VAT
<PAGE>
THIS UNDERLEASE made the 24th day of October One thousand nine hundred and
ninety six
BETWEEN:
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under Section
21A to the Companies Act 1985 under company number FC018588 and branch
number BR002962) whose principal place of business is at 100 Part Lane
London W1Y 4AR (the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) HAMMERSON U.K. PROPERTIES plc whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 298351) (the "LANDLORD'S GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered
office is at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn. No.
2475089) (the "TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the
State of Delware United States of America whose addrress for the purposes
of this lease is 27 Park Avenue New York New York 10172 (the "GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by clause 2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person acting on
behalf of or in connection with any organisation or on his own behalf
which carries out activities directed towards overthrowing or
influencing by force or violence Her Majesty's Government in the
United Kingdom or any other government de jure or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even date
herewith and made between the Landlord and the Tenant governing the
initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part) having a
frontage to the west side of Bishopsgate and a return frontage to the
south side of Wormwood Street and all buildings fixtures and other
structures whatsoever from time to time thereon and the appurtenances
thereof which land (together with the building now erected thereon) is
known as 99 Bishopsgate London EC2 and is for the purpose of
identification shown verged by a blue line on the Building Plan
together with any adjoining areas designated by the Landlord or the
Management Company
(4) "COMMON PARTS" means all parts of the Building which are from time to
time intended for the common use and enjoyment of the tenants and
occupiers of the Building and persons claiming through or under them
(whether or not other
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parties are also entitled to use and enjoy the same) and reasonably
designated as such by the Landlord and including without prejudice to
the generality of the foregoing the pedestrian ways circulation areas
lobby entrance halls lifts lift shafts fire escapes landings staircases
passages forecourts car park landscaped areas plant rooms management
suites and any other areas which are from time to time during the Term
reasonably provided by the Landlord for common use by or benefit of the
tenants and occupiers of the Building but excluding (for the avoidance
of doubt) any premises intended to let to any party or for occupation
by the Landlord or the Management Company other than for the provision
of the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by Planning
Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the Tenant
in accordance with its covenant contained at clause 5(4)
being a fair proportion as determined by the Landlord of the total
cost of the provision of electricity to the Building as a whole
(including the provision of any security for the supply of electricity
to the Building which may from time to time be required by the
relevant undertaker responsible for the supply of electricity chosen
by the Landlord) which proportion shall so far as practicable be
calculated using readings taken in such manner and at such times as
the Landlord shall from time to time determine of the check meters
relating to the Premises from time to time installed but otherwise
shall be determined in such manner as the Landlord shall in its
discretion consider to be fair and reasonable in all the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation now
or hereafter to be enacted or made and all subordinate legislation
whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the
Premises dated 29th September 1975 made between The Prudential
Assurance Company Limited (1) and Bishopsgate Developments Limited (2)
and "Superior Landlord" means the person for the time being entitled
to the reversion immediately expectant on the term granted by the Head
Lease and every other person having an interest in reversion to that
term
(9) "GROUP COMPANY" means a company which is either the holding company of
the Tenant or a wholly owned subsidiary of the Tenant or the Tenant's
holding company (as both expressions are defined in Section 736
Companies Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of the amount
which the Landlord may reasonably and properly expend:-
(a) in effecting and maintaining insurance against the occurrence of
the Insured Risks in relation to the Building in such sum as in
the Landlord's reasonable opinion represents its then full current
replacement cost with such allowance as the Landlord from time to
time considers appropriate in respect of related liabilities and
expenses (including without limitation liability to pay any fees
or charges on the submission of an application for planning
permission and costs which might be incurred in complying with any
Enactment in carrying out
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any replacement work and sums in respect of architects' engineers'
and quantity surveyors' and other professional fees and incidental
expenses incurred in relationto any works of debris removal and of
replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of the
Landlord in relation to the Building and anything done therein and
(c) in professional fees relating to insurance including fees for
insurance valuations carried out at reasonable intervals by an
independent insurance valuations carried out at reasonable
intervals by an independent insurance valuer (but no more than once
in any year) and all reasonable fees and expenses payable to
advisers in connection with effecting and maintaining insurance
policies and claims and
(d) equivalent to the total of all reasonable excess sums (being for
the avoidance of doubt the first part of any insurance claim)
which the insurers are not liable to pay out on any insurance
claim in respect of the Building and which the Landlord or the
Management Company may have expended in replacing the damaged or
destroyed parts of the Building
(11) "INSURANCE RENT" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises of
the Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in effecting
and maintaining insurance against up to six years' loss of the
rent secondly hereinafter reserved and Service Charge and with any
addition to the amount insured as the Landlord may decide in
respect of VAT and
(c) (without prejudice to all other provisions of this lease relating
to the use of the Premises and the vitiation of any policy of
insurance) any reasonable amount which the Landlord may expend in
paying all additional premiums and loadings on any policy or
policies of insurance required to be paid as a result of anything
done or omitted (in breach of the terms of this leasse) by the
Tenant and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot
civil commotion strikes labour and political disturbances and
malicious damage aircraft and aerial devices (other than hostile
aircraft and devices) and articles accidentally dropped from them
storm tempest flood bursting or overflowing of water tanks and pipes
impact earthquake and accidental damage to underground water oil and
gas pipes or electricity wires and cables subsidence ground slip and
heave and such other usual commercial risks or perils against the
occurrence of which the Landlord may from time to time in its
reasonable discretion deem it desirable to insure subject to such
exclusions and limitations as are from time to time commonly
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imposed by the insurers and subject also to the exclusion of such of
the risks specifically hereinbefore mentioned as the Landlord may in
its reasonable discretion decide where insurance cover in respect of
the risk in question is not for the time being available in the London
insurance market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either the
base rate of Barclays Bank plc or such other bank (being for the time
being generally recognised as a clearing bank in the London market)
as the Landlord may from time to time nominate or if the base rate
cannot be ascertained then above such other rate as the Landlord may
reasonably specify (and so that whenever there is reference in this
lease to the payment of interest at the Interest Rate such interest
shall be calculated on a daily basis and compounded with quarterly
rests on the usual quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the
Building from time to time (whether or not with the Premises or other
premises let or intended to be let by the Landlord) comprising or
used in connection with the following systems (to the extent
specified in the following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building
(including sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but
excluding portable fire extinguishers installed by the Tenant
or other tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the
building security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply
into the Building so far as (and including) the electrical
riser busbars connecting to the distribution boards at each
level in the Building which is let or intended to be let by
the Landlord
(vii) the whole of the air handling system and the electricity
supply and control systems for the same
(viii) the standby generators and associated cabling wiring and duct
work
but excluding in each case any "stand alone" systems installed by the
Tenant or any other tenant or occupier of the Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to be
for separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by
the Code of Measuring Practice -Fourth edition (RICS/ISVA 1993) (or
if there shall be no such edition or no such exprression for the time
being the nearest equivalent thereto)
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[GRAPHIC]
GMW
Project
99 Bishopsgate EC2
Drawing Title
Twenty Third Floor Tower
<PAGE>
[GRAPHIC]
Building Plan
99 Bishopsgate London, EC2
<PAGE>
(17) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of
such hours at the reasonable discretion of the Landlord provided
that such hours will automatically expands if any other tenant in
the Building is granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the
actual cost to the Management Company of carrying out or providing
any of the Services at the request of the Tenant outside Normal
Business Hours other than any services which are stated to be
provided 24 hours a day (including without prejudice to the
generality of the foregoing costs and expenses in the nature of
those set out in Part II of schedule 6) or in the event of any of
the Services being carried out or provided outside Normal Business
Hours to the Tenant and any other tenant or tenants of the
Building a fair proportion thereof (on a fair and reasonable basis
between the Tenant and any other tenant or occupier making use of
such Services) as reasonably determined by the Landlord. PROVIDED
THAT during the first year of the Term the cost of providing air
conditioning outside Normal Business Hours shall not exceed pounds
sterling 88 per hour (in respect of the Premises being the only
user of air conditioning at the relevant time) or pounds sterling
48 per hour per floor on the basis that any five of floors 18, 20
and 22 to 26 of the Building are simultaneously using such air
conditioning over the whole of such floors
(19) "PERMITTED PART" means any part or parts of the Premises capable
of separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose
within Class B1(a) (but not for any other purpose within that Use
Class) of the schedule to the Town and Country Planning (Use
Classes) Order 1987 and for the avoidance of doubt use of the
Premises for data processing investor services business trading
operators and investment banking complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and
buildings and every planning permission statutory consent and
agreement made under any Enactment relating to the Building
(22) "PLANS" means the plans annexed hereto and "Building Plan" means
that one of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all
permitted additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their
use and occupation and any court of law and the companies or
authorities responsible for the supply of water gas and
electricity or any of them and any of their duly authorised
officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed
hereto or in the event that materials listed in the specification
are not available from time to time or appropriate for use (in the
Landlord's reasonable opinion) then reference to such materials
will be substituted by reference to materials of not materially
less quality which perform a similar function PROVIDED THAT save
to the extent
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that items of plant and equipment have been altered during
the Term the Tenant shall not be required to replace existing
items of plant and equipment for new items subject to the existing
items being in good working order
(25) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and
every fifth anniversary of that date during the Term (and
the last day of the Term)
(b) any date so stipulated by virtue of paragraph 5 of schedule 4
(26) "SERVICES" means the services and other matters specified in
clause 6 and Part I of schedule 6
(27) "SERVICE MEDIA" means those parts of the Building comprising gas
water drainage electricity telephone telex signal and
telecommunications heating cooling ventilation air conditioning
fire alarm and other pipes drains sewers mains cables wires supply
lines ducts conduits flues and all other common conducting media
plant appliances and apparatus for the provision supply control
and monitoring of services to or from the Building and other
common equipment
(28) "TERM" means a term of years commencing on the date hereof and
expiring on 23rd October 2011 and includes any period of holding
over or extension whether by any Enactment or common law
(29) "TERMINATION NOTICE" means not less than 12 months and 1 day's
prior written notice unless either:
(a) any Enactment or decision not capable of appeal on a point
of law confirming that the Tenant is not entitled to a new
tenancy on the expiration of such notice is in force or
upheld as at 22nd October 2007 (in which case not less
than 6 months prior written notice need be given); or
(b) any other tenant enters into a lease prior to September 1998
of premises comprising at least a floor of the building
within the security of tenure protections of the Landlord
and Tenant Act 1954 for a term of not less than 10 years
(without break rights) and is granted right to determine
such lease on less than such 12 months' and 1 day's prior
written notice (in which case the notice period hereunder
shall be reduced to such notice period as is granted to such
tenant in such circumstances)
(30) "VAT" means Value Added Tax as referred to in the Value Added Tax
Act 1994 (or any tax of a similar nature which may be substituted
for or levied instead of it by statutes)
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa and
words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and
"Guarantor" wherever the context so admits include their
respective successors in title and
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where a party comprises more than one person covenants and
obligations of that party take effect as joint and several
covenants and obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit
or suffer it to be done (or omitted) and to prevent (or as the
case may be to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference
to the relevant clause sub-clause schedule or paragraph of
this lease and clause and schedule headings shall not affect
the construction of this lease
(b) any right of (or covenant to permit) the Landlord or the
Management Company to enter the Premises shall also be
construed (subject always to the proviso to clause 4(9)) as
entitling the Landlord to remain on the Premises with or
without equipment and permitting such right to be exercised
by all persons authorised by the Landlord for as short a
period as reasonably practicable and making good all damage
caused and causing as little inconvenience as reasonably
possible save where the right of entry is exercised to
remedy any breach hereunder where the Landlord only
undertakes to make good damage caused
(c) any consent licence or approval of the Landlord or words to
similar effect mean a consent licence or other approval in
writing signed by or on behalf of the Landlord and given
before the act requiring consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the
Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it
for the time being in force except in relation to the Town
and Country Planning (Use Classes) Order 1987 which shall be
interpreted exclusively by reference to the original
provisions of Statutory Instrument 1987 No 764 whether or
not the same may at any time have been revoked or modified
(f) the last year of the Term includes the final year of the
Term if it shall determine otherwise than by effluxion of
time and references to the expiry of the Term include such
other determination
(5) (a) Where the context permits rents or other sums being due from
the Tenant to the Landlord or the Management Company mean
that they are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is
required under this lease the relevant provision shall be
construed as also requiring (and any consent licence or
approval given by the Landlord shall be deemed subject to
the need for) the consent licence or approval of the
Superior Landlord (for which the Landlord shall apply at the
Tenant's reasonable cost) where the same is required under
the Head Lease except that nothing in this lease or in any
consent licence or approval by the
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Landlord shall imply that the Superior Landlord's
consent licence or approval will not be unreasonably
withheld or delayed
(c) references to any right of (or covenant to permit) the
Landlord to enter Premises shall extend to the Superior
Landlord and to all persons authorised by it and shall be
construed in the manner required by clause 2(4)(b) but in
relation to the Superior Landlord and those with its
authority
(d) the rights excepted and reserved in schedule 3 are also
excepted and reserved for the benefit of the Superior
Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor and in consideration of the
payment by the Landlord to the Tenant of the sum of Two hundred and
eleven thousand nine hundred and seventeen pounds and 50 pence (pounds
sterling 211,917.50) paid on the date hereof (receipt of which is
acknowledged by the Tenant) DEMISES unto the Tenant ALL THAT the
Premises TOGETHER WITH the easements and rights specified in schedule 2
exercisable in common with the Landlord and all others with its
authority or otherwise from time to time entitled thereto EXCEPT and
RESERVED unto the Landlord and all other persons authorised by it from
time to time during the Term or otherwise from time to time entitled
thereto (including the Management Company in relation to the provision
of the Services) the easements and rights specified in schedule 3
TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the Term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT
to the provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 24th March
1998 a peppercorn (if demanded) and thereafter until the first Review
Date (and thereafter as determined pursuant to schedule 4) the yearly
rent of Four hundred and twenty three thousand eight hundred and thirty
five pounds (pounds sterling 423,835) exclusive of VAT (subject to clause
5(6)) payable by equal quarterly payments to be made in advance on the
usual quarter days in every year the first such payment to be made on
25th March 1998
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice
to the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as
rent or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days
following the due date (or in the case of money due only on
demand within fourteen days after the date of demand) calculated
for the period commencing on the due date for payment and ending
on the date the sum and the interest is received in cleared funds
by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to
demand or accept any payment having regard to a breach of any of
the Tenant's obligations under this lease of
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which the Tenant has received notice calculated for the period
commencing on the due date for payment and ending on the date the
sum (and the interest) is subsequently received by the Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant
body to whom account has for the time being to be made) on the supply by
the Landlord to the Tenant under or in connection with the provisions of
this lease or the interest created by it and of any other supplies
whether of goods or services such rent fourthly reserved to be due for
payment contemporaneously with the other rents or sums to which it
relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable
on demand (either annually or by instalments) as the Landlord shall
determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause
4(30) also with the Management Company) throughout the Term subject to
clause 4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the
manner set out in clause 3 without deduction or set off and
(unless for the time being the Landlord shall have required in
writing to the contrary) to pay the rent first reserved (together
with any sum in respect of the rent fourthly reserved as may be
applicable thereto) by banker's standing order to such bank as the
Landlord may from time to time nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any
amount to the Landlord hereunder by way of reimbursement or
indemnity to pay on the production of a valid VAT invoice to the
Landlord (as applicable) in addition an amount equivalent to any
VAT incurred by the Landlord save to the extent that the Landlord
obtains credit for such VAT incurred by the Landlord pursuant to
sections 24 25 and 26 Value Added Tax Act 1994 or any regulations
made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now
or hereafter assessed charged or imposed upon the Premises or upon
their owner or occupier (and a proper proportion determined by the
Landlord attributable to the Premises of any rates taxes charges
and other outgoings now or hereafter assessed charged or imposed
upon the Premises in common with other premises or upon the owners
or occupiers thereof) and (to the extent the Tenant does not pay
it directly to the relevant supplier) the total cost (including
meter rents) of all water (including chilled water) electricity
and gas separately metered and/or exclusively supplied to the
Premises during the Term as reasonably determined by the Landlord
excluding (without prejudice to the rent fourthly reserved and
clause 4(2)) any tax payable by the Landlord as a direct result of
any actual or implied dealing with the reversion of this lease or
of the Landlord's receipt of income
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COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every
Public Authority (including the due and proper execution of any
works) in respect of the Premises their use occupation employment
of personnel in them and any work being carried out to them
(whether the requirements are imposed upon the owner lessee or
occupier) and not to do or omit anything by which the Landlord may
become liable to make any payment or do anything under any
Enactment or requirement of a Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5
working days of receipt of the same to give to the Landlord notice
of (and a certified copy of) any notice permission direction
requisition order or proposal made by any Public Authority and
without delay to comply in all respects at the Tenant's cost with
the provisions thereof save that the Tenant shall if so required
by and at the cost of the Landlord make or join in making such
objections or representations in respect of any of them as the
Landlord may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of Schedule 2) in good and
substantial repair and condition (damage by any of the Insured
Risks excepted to the extent that the insurance money shall not
have been rendered irrecoverable subject to clause 5(2)(b) or
insufficient because of some act or default of the Tenant or of
any person deriving title under or through it or their respective
servants or agents or invitees) and to replace whenever necessary
during the Term and on expiry of the Term the landlord's fixtures
and fittings (including any fitted carpets) in the Premises which
may have become beyond economic repair with items of the same type
and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of
decorative order and finish and properly cleansed and tidy
and (without prejudice to the foregoing) as often as the
same shall be necessary (and not less frequently than once
in every fifth year of the Term but not more than once in
any 18 month period) and also in the last year of the Term
to clean paint polish or otherwise treat as the case may be
all inside surfaces of wood and metal work of the Premises
usually or requiring to be painted polished or otherwise
treated with two coats at least of high quality paint or
polish vinyl wall coverings (where applicable) or other
appropriate materials in a good and workmanlike manner (and
during the last year of the Term in the colour scheme
specified and otherwise in accordance with the Reinstatement
Specification) PROVIDED ALWAYS THAT the Tenant shall not be
obliged to carry out any such decorative treatment if the
need for it is caused by damage by any of the Insured Risks
to the extent (subject to clause 5(2)(b)) that the insurance
money shall not have been rendered irrecoverable or
insufficient because of some act or default of the Tenant or
of any person deriving title under or through it or their
respective servants agents or invitees
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(b) To clean the inside of all external window glazing in the
Premises at least once in every month using reputable
contractors
(c) To enter into and maintain contracts for the regular
inspection maintenance and servicing of all fixed plant and
equipment comprised in the Premises which has or is likely
to have any impact on the Landlord's Services Equipment by
reputable contractors approved by the Landlord (such
approval not to be unreasonably withheld) and to obtain
satisfactory test certificates as may be reasonably required
by the insurers and whenever reasonably required to produce
copies of such contracts and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in
areas designated for such purpose from time to time by the
Landlord and to comply with all requirements of any Public
Authority and any reasonable regulations made by the Landlord
pursuant to clause 4(27) in relation to control over and disposal
of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable
security requirements on reasonable prior written notice (except
in an emergency) to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease
have been observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and
make connections to any part of the Building including the
Service Media (PROVIDED that the Landlord will procure that
such entry takes place outside Normal Business Hours where
practicable)
(e) during the last six months of the Term (or at any time in
the case of a disposal of the Landlord's interest) to show
the Premises to prospective purchasers or tenants and their
agents
(f) exercise the rights described in schedule 3
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy any
breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with
any such notice to permit the Landlord and any authorised
person to enter the Premises to remedy the breach as the
Tenant's agent and at the Tenant's proper cost the Landlord
making good any damage caused
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(c) To pay to the Landlord on demand all the proper costs and
expenses incurred by the Landlord under the provisions of
this sub-clause
ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements
belonging to the Premises and not knowingly to give any
acknowledgment that they are enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give
notice to the Landlord forthwith of any encroachment which
might have that effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from
the demise of the Premises) any works affecting any
structural parts of the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in
respect of areas not included in the Premises not to install
or erect any exterior lighting shade or awning or place any
structure or other thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this
sub-clause and subject to the provisos to this paragraph (c)
not to make any other alteration or addition to the Premises
(including all electrical and other plant and equipment and
the installation and removal of demountable partitioning)
except:-
(i) in accordance with plans and specifications
(adequately describing the work in question and the
manner in which the work will be carried out)
previously submitted at the Tenant's expense in
triplicate to and approved by the Landlord (such
approval not to be unreasonably withheld or delayed
PROVIDED THAT the Landlord shall respond to the
Tenant's submission within 10 working days in the case
of minor alterations (excluding any alterations which
affect any of the Landlord's Services Equipment) and
if the Landlord fails to respond within 10 working
days as aforesaid it shall be deemed to have accepted
such minor alterations AND PROVIDED FURTHER that the
initial fitting out of the Premises following the date
hereof shall be governed by the Agreement for Initial
Alterations
(ii) in a manner which shall not materially and adversely
affect the Landlord's Services Equipment any Service
Media or the provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public
Authority (and in particular in relation to any
electrical installation in accordance with the terms
and conditions laid down by the Institution of
Electrical Engineers and the Regulations of the
Electricity Supply
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Authority) and the insurance company with whom
the Premises are for the time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out
until the Landlord has issued its consent in writing
to which the Tenant shall if required join as a party
(II) once any such alterations or additions have been
carried out the Tenant shall supply to the Landlord
as-built plans in triplicate (together with a computer
aided design disk and 35 mm slides) showing the works
as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by
the Tenant
(ii) all work done in connection with the original fitting
out by the Tenant in pursuance of the Agreement for
Initial Alterations
and to restore and make good the Premises in accordance with
the Reinstatement Specification in a proper and workmanlike
manner to the condition and design which existed before the
alterations or additions were made with all services
properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the
Premises) which may be or become or cause a nuisance
obstruction or damage to any person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal or immoral trade business or
activity or for residential purposes and not to use the
Common Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this
sub-clause) except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the
Building save for the right granted pursuant to paragraph 3
of schedule 2
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or
advertisement except the approved signs referred to in
paragraph 3 of schedule 2
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ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of the
Premises the Tenant shall first by an irrevocable
unconditional written notice (the "Tenant's Notice") served
upon the Landlord offer to surrender or assign this lease
upon such financial terms and conditions as the Tenant may
desire
(b) If the Landlord wishes to accept such surrender or
assignment it shall within twenty-one days of receipt of the
Tenant's Notice serve a counter-notice (the
"Counter-Notice") upon the Tenant stating as much
(c) If the Landlord serves a Counter-Notice on the Tenant then
the Tenant shall surrender or assign (at the Landlord's
option) the Premises to the Landlord (or as the Landlord may
direct) within six months of receipt of the Counter-Notice
either with vacant possession or subject only to a permitted
underletting and the Tenant's liability hereunder shall
cease in respect of any matters arising following the date
of such assignment or surrender but without prejudice to any
antecedent breaches of covenant
(d) If the Landlord does not serve a Counter-Notice then the
Tenant must (if it wishes to assign) complete its assignment
on terms greater than 95 per cent in value of the terms and
conditions stipulated in the Tenant's Notice within six
months from the date of the Tenant's Notice and if the
Tenant shall fail to complete within such period if it still
wishes to assign the whole of the Premises it must reinstate
the procedure set out in this clause 4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign mortgage charge or underlet or in any other
manner part with possession of any part (being less than the
whole) of the Premises or agree to do so except that the
Tenant may underlet the whole of (but not more or less than)
any Permitted Part or Permitted Parts in accordance with
paragraphs (h) and (i) of this sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign underlet or otherwise part with possession of
or the whole of the Premises or agree to do so except that
the Tenant may assign or underlet the whole of the Premises
in accordance with paragraph (g) or (h) respectively of this
sub-clause
(ASSIGNMENT)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2
months before completion of the assignment which
consent shall not be unreasonably withheld or delayed
but which may be granted subject to any one or more of
the conditions referred to in paragraph (g)(ii) and
which may be withheld if any one or more of the
circumstances referred to in paragraph (g)(iii) exist
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(ii) The conditions referred to in paragraph (g)(i) (which
are specified for the purposes of section 19(1A)
Landlord and Tenant Act 1927) are:
AUTHORISED GUARANTEE
(a) that the Tenant shall enter into an authorised
guarantee agreement (as defined in section 16
Landlord and Tenant (Covenants) Act 1995) with
the Landlord in a form which the Landlord
reasonably requires
THIRD PARTY GUARANTEE/RENT DEPOSIT
(b) that if so reasonably required by the Landlord
the proposed assignee shall have procured
covenants with the Landlord by a guarantor or
guarantors (not being the Tenant or any
guarantor) reasonably acceptable to the Landlord
in a form acceptable to the Landlord (acting
reasonably);
INTRA GROUP DEALINGS
(c) if the proposed assignee is a Group Company the
Tenant shall have procured either:
(A) if the Tenant's obligations under this
lease are guaranteed by another Group
Company that such Group Company covenants
with the Landlord on the same terms
(mutatis mutandis) as those contained in
clause 10; or
(B) if there is no guarantor of the Tenant's
obligations under this lease and if the
assignee is not at the date of the
application for consent to the proposed
assignment in the reasonable opinion of
the Landlord of financial standing
equivalent to or greater than the Tenant
at the date of this lease that the
proposed assignee procures covenants by a
Group Company which is not the Tenant or
the proposed assignee and which is in the
reasonable opinion of the Landlord of
financial standing equivalent to or
greater than the Tenant in the same terms
(mutatis mutandis) as those contained in
clause 10; and
(iii) The circumstances referred to in paragraph (g)(i)
(which are specified for the purposes of section
19(lA) Landlord and Tenant Act 1927) are:-
(a) where the Tenant's solicitors have not given an
undertaking to the Landlord's solicitors to pay
all reasonable legal surveyor's and management
costs disbursements and VAT arising on the
application for consent to such assignment
whether or not consent is
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granted unless the Landlord unreasonably
withholds consent in circumstances where it is
required to be reasonable; and/or
(b) where any of the rents and Interim Sum due from
the Tenant to the Landlord or the Management
Company respectively under this lease remain
unpaid at the date of the application for
consent to the proposed assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted
Part (each being referred to in this paragraph as the
premises) except:-
(i) to a person who before the underletting shall have
covenanted with the Landlord to observe and perform
the Tenant's obligations under this lease during the
sub-term to the extent they relate to the premises
demised by the underletting (other than the payment of
rents) and a covenant not to assign the whole of the
premises without the Landlord's consent (which shall
not be unreasonably withheld or delayed) and an
unqualified covenant not to assign part of the
premises or to underlet or otherwise part with
possession or share the occupation of the premises or
any part of them
(ii) by reserving as a yearly rent without payment of a
fine or premium (in addition to the service and
insurance and other rents payable under this lease
except the rent first hereby reserved or (in the case
of underletting of a Permitted Part) a pro rata
proportion of them) an amount equal to:-
(a) (in the case of an underletting of the Premises)
the then open market rack rental value of the
Premises
(b) (in the case of an underletting of a Permitted
Part) a pro rata proportion of the then open
market rack rental value of the Premises
the proportion in each case being calculated by
reference to the Net Internal Area of the Permitted
Part in relation to the Net Internal Area of the
Premises, in all cases such rent to be payable by
equal quarterly instalments in advance on the usual
quarter days and to be approved by the Landlord prior
to the underletting (such approval not to be
unreasonably withheld or delayed) but the amount of
such rent and the approval of the Landlord thereto may
not be used as evidence by the Tenant for the purpose
of any rent review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the
underlease is reviewed upwards only at not
greater than five year intervals during the
sub-term in accordance with the same
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principles (mutatis mutandis) and at the times
as apply to the rent first reserved by this lease
(b) requiring the underlessee to observe and perform
all the covenants and other provisions binding
on the Tenant under this lease (other than the
covenant by the Tenant to pay rents) to the
extent they relate to the premises and
containing:-
(A) a condition for re-entry by the underlessor
on breach of any covenant by the underlessee
(B) a qualified covenant not to assign the whole
of the premises and an absolute covenant not
to assign part of the premises or to
underlet or otherwise part with possession
or share the occupation of the premises or
any part of them
(iv) with the Landlord's consent issued within three months
before completion of the underletting which consent
(subject to compliance with the foregoing conditions
precedent) shall not be unreasonably withheld or
delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the
entrance to or the reception area of the Premises
(ii) to except from the underlease all necessary
circulation areas and plant and equipment which will
serve the Premises in common and to reserve a separate
service charge rent in respect of their maintenance
repair and renewal
(iii) not as a result of the grant to create or permit the
creation of more than four separate occupations
affecting the whole of the Premises (occupations in
right of this lease counting as one occupation)
(iv) not to grant or agree to grant the underlease without
providing for the exclusion of sections 24 to 28
inclusive of the Landlord and Tenant Act 1954 in
relation to the underlease in pursuance of an Order
duly made under section 38(4) of that Act before the
date of grant
(j) To enforce the observance and performance by every such
underlessee and its successors in title of the provisions of
the underlease and not expressly or impliedly to waive any
breach of them nor vary the terms of any underlease
(k) Not to agree any reviewed rent payable under an underlease
without the Landlord's consent and if the rent review under
any underlease is to be determined by an independent person
not to agree his appointment without the Landlord's consent
(PROVIDED ALWAYS THAT the Landlord shall not unreasonably
withhold or delay any consent required under this
sub-paragraph) and to procure that any representations which
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the Landlord may wish to make in relation to the rent
review are duly submitted to the independent person and to
provide to the Landlord promptly on the same becoming
available copies of any representations made by or on behalf
of the Tenant or the underlessee in relation to such rent
review
(SHARING OCCUPATION)
(l) Not to part with or share the occupation of the Premises or
any part of them except that the Tenant may share occupation
with a company which is (but only for so long as it remains)
either the holding company of the Tenant or a majority-owned
subsidiary of the Tenant or of the Tenant's holding company
(as those expressions are defined in section 736 Companies
Act 1985) so long as the Tenant does not grant the person
sharing occupation exclusive possession (so that such
company occupies as licensee only without creating any
relationship of landlord and tenant) nor otherwise transfer
or create a legal estate and the Tenant shall notify the
Landlord of the identity of each company in occupation
REGISTRATION
(16) (a) Within twenty-one days after any disposition or devolution
of this lease or of any estate or interest in or derived out
of it to give notice in duplicate of the relevant
transaction to the Landlord for registration with a
certified copy of the relevant instrument and to pay to the
Landlord a fair and reasonable fee for each such
registration of not less than twenty five pounds
(b) To register with the Landlord particulars of the
determination of every rent review under any underlease of
the Premises within fourteen days after the date of
determination
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels'
solicitors' surveyors and bailiffs' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146
Law of Property Act 1925 or in contemplation of any
proceedings under section 146 or 147 of that Act
notwithstanding that forfeiture is avoided otherwise than by
relief granted by the court and
(b) every reasonable step taken during or after the expiry of
the Term in connection with the enforcement of the Tenant's
obligations under this lease including the service or
proposed service of all notices and schedules of
dilapidations and
(c) every application for consent licence or approval under this
lease but not if the application is unreasonably refused or
delayed or granted subject to unreasonable conditions (where
such consent is not to be unreasonably withheld or delayed)
<PAGE>
MACHINERY
(18) Not to install in the Premises any plant or machinery other than
usual office equipment without the Landlord's consent which shall
not be unreasonably withheld PROVIDED ALWAYS THAT no plant or
machinery shall be installed or operated in the Premises and
nothing shall be done or omitted in them which may cause:-
(a) the efficiency of the heating ventilation air conditioning
and cooling system installed in the building to be
diminished or impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other
part of the Building or other adjoining property or persons
outside the Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the
rights granted by this lease in a way which causes nuisance
or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises
and (to the extent they lie within the Premises) to
keep them clear and functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the
Premises
nor to overload or cause undue strain to the Service Media
or any other part of the Building and in particular not to suspend
any undue weight from the ceilings or walls of the Premises and
not to exceed the following floor loadings:-
floor finishings: : 4kN/m2 (80lbs per sq.ft)
live load : 1kN/m2 (20lbs per sq.ft)
(e) any requisite notice erected on the Premises including any
erected by the Landlord in accordance with its powers under
this lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of
goods is carried out only by using the service accesses and goods
lifts designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to
comply with the provisions and requirements of Planning Law
relating to or affecting
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(a) (i) the Premises
(ii) any operations works acts or things carried out
executed done or omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any
other rights hereunder in respect of) any other parts
of the building
(b) Subject to the provisions of paragraph (c) of this
sub-clause as often as occasion requires during the Term at
the Tenant's expense to obtain and if appropriate renew all
planning permissions (and serve all notices) required under
Planning Law in respect of the Premises whether for the
carrying out by the Tenant of any operations or the
institution or continuance by the Tenant of any use of the
Premises or any part thereof or otherwise
(c) Not without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) to apply for any planning
permission relating to the Premises (and not to apply for
any such planning permission relating to any other part of
the Building) but so that subject to compliance with
paragraph (e) of this sub-clause the Landlord's consent
shall not be unreasonably withheld or delayed to the making
of a planning application in respect of the Premises
relating to any operations or use or other thing (if any)
which assuming it to be implemented in accordance with
Planning Law would otherwise not be in breach of the
provisions of this lease
(d) If the Landlord so requires in connection with any relevant
proposal by the Tenant to apply for a determination under
section 191 or 192 Town and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by
the Tenant (which it hereby agrees to consider and determine
with all due expedition) for planning permission to submit a
draft of the application to the Landlord for its approval
and to give effect to its reasonable requirements in respect
thereof and if and to the extent the Landlord so requires to
lodge the application with the relevant authority in the
joint names of the Landlord and the Tenant and in duplicate
(f) Not to implement any planning permission before the Landlord
has acknowledged that its terms are acceptable nor before
the Landlord has received any cash or other security which
it reasonably requires for compliance with any conditions
imposed by the planning permission
(g) If the Landlord at the Landlord's cost reasonably requires
or the Tenant desires to lodge and progress diligently an
appeal against any refusal of an application for planning
permission lodged in respect of the Premises by the Tenant
or by any person claiming under or through the Tenant
(whether or not lodged in its name alone) the Landlord
undertakes to cooperate fully with the Tenant in respect of
any such appeal unless such
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<PAGE>
appeal would be likely to have a material and adverse effect
on the Landlord's interests in the Building
(h) Unless the Landlord otherwise directs to complete before the
expiry of the Term all works on the Premises required as a
condition of any planning permission implemented by the
Tenant or by any person claiming under or through it
(i) If the Tenant receives or is entitled to receive any
statutory compensation under any Enactment in relation to
its interest in the Premises the Tenant shall on any
determination of its interest prior to the expiry of this
lease by effluxion of time forthwith make such provision as
is just and equitable for the Landlord to receive its due
benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs
claims damages demands and any other liability or consequence
arising out or in respect of any breach of any of the Tenant's
obligations under this lease (including all costs reasonably
incurred by the Landlord in an attempt to mitigate any such
breach) or of any act omission or negligence of the Tenant or any
person at the Premises with the Tenant's authority
DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably
to have become aware of the same) to give notice forthwith to the
Landlord of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing
anything in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed
by the Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the
Landlord may from time to time reasonably require to be displayed
at the Premises in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the
Tenant) relating to the Building or any part of it becomes
void or voidable or by which the rate of premium on such
policy may be increased
(b) To comply with all proper requirements of the insurers and
to provide and maintain unobstructed appropriate operational
fire fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
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(i) any incidence of any Insured Risk on the Premises and
of any other event which ought reasonably to be
brought to the attention of insurers and of which the
Tenant ought reasonably to be aware
(ii) the insurable value of any fixture installed in the
Premises by the Tenant or any person claiming under or
through the Tenant
(d) That if at any time the Tenant or any person claiming under
or through it shall be entitled to the benefit of any
insurance of the Premises to cause all money paid under such
insurance to be applied in making good the loss or damage in
respect of which it was paid
(e) Subject to clause 5(2)(b) if the whole or any part of the
Building is damaged or destroyed by any of the Insured Risks
at any time during the Term and the insurance money under
any insurance policy effected by the Landlord is rendered
wholly or partially irrecoverable because of some act or
default of the Tenant or any person deriving title under or
through the Tenant or their respective servants agents or
invitees forthwith to pay the Landlord the whole amount of
the insurance money so irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept
placed stored or used in or upon or about the Premises any
materials substance or other thing of a dangerous inflammable
combustible explosive corrosive or offensive nature or any
materials substance or other thing which may in any way cause
pollution injury or harm by percolation corrosion contamination
migration release or otherwise on beneath or in the vicinity of
the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and
tenant's fixtures and quietly to yield up the Premises
reinstated in accordance with the Reinstatement
Specification and restored and made good to the extent
required under clause 4(12)(d) and in the state of repair
condition decorative order and layout otherwise required by
this lease and any licences or consents issued in pursuance
of it and to make good any damage so caused in a proper and
workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and
dispose of any chattels which may be left in the Premises
within 28 days after the Tenant has quit them (without being
obliged to obtain any consideration for the disposal) and
the Tenant irrevocably declares that any such chattels will
stand abandoned by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the
Landlord from time to time and notified to the Tenant
in writing for the good management of the Building
PROVIDED ALWAYS THAT no such regulations shall purport
to amend the terms expressed in
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this lease and if there is any inconsistency
between the terms of this lease and the regulations
the terms of this lease shall prevail
(ii) all covenants stipulations and other matters affecting
the Premises and not to interfere with any rights
easements or other matters affecting the Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's
visitors to the Premises observe such security regulations which
may apply to them
HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on the
part of the lessee contained in the Head Lease so far as
they relate to the Premises except the covenant for the
payment of rent and except also so far as the obligations
relating to insurance fall to be observed and performed by
the Landlord pursuant to clause 5(2)
(b) Not to do or omit any act or thing which would or might
cause the Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management
Company at the times and in the manner provided for in clause 6
and schedule 5 without deduction or set off and to pay the
Outside Normal Business Hours Charge within 10 days of demand
(either annually or by monthly instalments) as the Management
Company shall reasonably determine PROVIDED THAT for the period
from the date hereof until the earlier of 25th June 1997 and the
date on which the Tenant commences full beneficial occupation of
the Premises following the works contemplated by the Agreement
for Initial Alterations the Service Charge payable by the Tenant
in any Accounting Period shall not exceed pounds sterling 32,190
inclusive of VAT and PROVIDED FURTHER that the Service Charge
payable in respect of the twelve month period from the earlier of
25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works
contemplated by the Agreement for Initial Alterations shall be
pounds sterling 74,573.50 exclusive of VAT.
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained
in this lease the Tenant may peaceably hold and enjoy the
Premises without any lawful interruption by the Landlord or any
person rightfully claiming through under or in trust for it
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INSURANCE
(2) (a) To keep the Building (except all tenants' plant and
equipment and trade fixtures) insured against the Insured
Risks in the full current replacement cost
(b) to use reasonable endeavours to procure that the interest of
the Tenant is noted on the insurance policy and to use
reasonable endeavours to further procure that the insurers
waive any rights of subrogation against the Tenant (or any
lawful subtenant occupier or invitee) and the Landlord will
notify the Tenant if it is unable so to procure and will
duly consider the representations of the Tenant regarding
alternative insurers who may be prepared to procure that the
insurers waive any subrogation rights and/or note the
interest of the Tenant and will also permit the Tenant to
make representations to the insurers regarding the noting of
the Tenant's interest and/or waiver of rights of subrogation
(c) On request to supply the Tenant (but not more frequently
than once in any period of twelve months) with evidence of
such insurance
(d) If and whenever during the Term the Building (except as
aforesaid) is damaged or destroyed by an Insured Risk and to
the extent that payment of the insurance monies is not
refused because of any act neglect default or omission of
the Tenant or of any person deriving title under or through
the Tenant or their respective servants agents and invitees
subject to clause 5(2)(b) above the Landlord will with all
convenient speed take the necessary steps to obtain any
requisite planning permissions and consents and if they are
obtained to lay out the money received from the insurance of
the Building (except sums in respect of public liability and
employer's liability and loss of rent) towards replacing
(but not necessarily in facsimile reinstatement) the damaged
or destroyed parts (except as aforesaid) and in the case of
the Premises to the Reinstatement Specification as soon as
reasonably practicable (and the Landlord shall keep the
Tenant informed of progress of any such insurance claims and
the Landlord's proposals for compliance with this provision)
PROVIDED ALWAYS THAT the Tenant shall have no claim against
the Landlord under this clause 5(2)(c) in respect of the
manner of replacement of the interior of any Lettable Unit
other than the Premises or any alteration to the Common
Parts and PROVIDED FURTHER THAT the Landlord shall not be
liable to carry out the replacement if it is unable (having
used all reasonable endeavours) to obtain every planning
permission and consent necessary to execute the relevant
work in which event the Landlord shall be entitled to retain
all the insurance money received by it and if the Landlord
so retains the insurance money the Tenant shall be entitled
to determine this lease on not less than one month's prior
written notice
(e) In the event that the Premises have not been reinstated to
the Reinstatement Specification or essential means of access
thereto within the Building is not available in the
circumstances contemplated in sub-clause 5(2)(d) by the date
five years and eleven months following the date of such
damage or destruction by an Insured Risk the Tenant may
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determine this lease on not less than one month's prior
written notice such notice to be served (if at all) within
one month after expiry of such five years and eleven months
period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform
so far as the Tenant is not liable for such performance
under the terms of this lease but so far only as to preserve
the existence of this lease the covenants and conditions on
the part of the lessee contained in the Head Lease
(b) On the request and at the reasonable expense of the Tenant
to take all reasonable steps to enforce the covenants on the
part of the Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's reasonable
expense (to the extent possible under the Head Lease) to
obtain the consent of the Superior Landlord wherever the
Tenant makes application for any consent required under this
lease where the consent of both the Landlord and the
Superior Landlord is needed by virtue of this lease and the
Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide
or procure the provision of electricity to the Premises to the
extent necessary to meet the requirements of the Tenant having
regard to the overall electricity services design standards for
the Building as a whole and to all relevant statutory provisions
from time to time regulating the supply and utilisation of
electricity and the terms and conditions relative thereto from
time to time imposed by the electricity provider chosen by the
Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as
it requires from time to time for the due and proper provision of
the Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT
liability on the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply
made hereunder by the Landlord to the Tenant the Landlord
shall no later than thirty days after the due date for
payment in respect of such supply issue a valid VAT invoice
or audit note (as the case may be to the Tenant)
(b) Subject to (6)(c) below all consideration payable by the
Landlord to the Tenant shall be exclusive of VAT which the
Landlord shall pay in addition on production of a valid VAT
invoice
(c) The capital sum referred to in clause 3 above shall be
inclusive of VAT save that if the Landlord is at any stage
able to recover such VAT the Landlord shall pay to the
Tenant a further amount equal to VAT on the capital sum
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NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its
postal address from time to time
NOTIFICATION OF NOTICES
(8) The Landlord will inform the Tenant as soon as reasonably
practicable but in any event within 5 working days of receipt of
the same of any notice served by the Superior Landlord alleging a
breach of the Head Lease which would threaten the existence of
this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate
the structure of the Building (including the structure of the
roofs foundations external and internal walls and columns and
structural slabs of the ceilings and floors) the external
surfaces of the Building (including the whole of the glazing
within the external walls of the Building) and the Common Parts
and (where consistent with an obligation to repair) to replace
the same
(2) To keep the Service Media designed for common or general use and
the Landlord's Services Equipment in good and substantial repair
and in clean condition and at all times in good and safe working
order
(3) To keep the lifts in the Building clean and in good and
substantial repair and condition and at all times in good and
safe working order
(4) Provide heat and air conditioning and chilled water to the
Premises (subject to the Tenant paying Outside Normal Business
Hours Charge in relation to the provision of such services
outside Normal Business Hours) such heat being sufficient to
maintain an air temperature in the Premises measured at the main
trunk connections to the floor as follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29 degrees C DB 20 degrees C WB
Winter -4 degrees C DB 100% relative humidity
Internal Conditions Office
Accommodation -
Summer 22 degrees C DB + 1 degree C
Winter 20 degrees C DB minimum
Humidity Office Accommodation -
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Summer 50%+/- 10%
Winter 50%+/- 10%
(5) To ensure that the Common Parts are at all times kept clean
tidy and unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure
the provision of electricity to the Premises and each and
every part thereof designed to receive the same to the
extent necessary to meet the reasonable requirements of the
Tenant and other lawful occupiers of the Premises
(7) To comply with the requirements of any statute (already or
in the future to be passed) or any government department
local authority other public or competent authority or court
of competent jurisdiction relating to the Building or any
part for which any tenant or occupier of the Building is not
directly or exclusively liable
(8) To ensure that at all times (meaning for the avoidance of
doubt 24 hours a day during the Term) there are both such
security officers at and patrolling the Building as is
reasonably appropriate for premises of the same size and
nature as the Building and that the main reception to the
Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as
in the Management Company's reasonable discretion are
appropriate to provide to a high class office building
in the City of London outside Normal Business Hours;
and
(c) such of the Services outside Normal Business Hours as
the Tenant shall previously request (but subject to
the Tenant being responsible for the Outside Normal
Business Hours Charge)
(having regard in all cases to and in accordance with
the overall design standards for the Building as a whole and
subject to the limitations contained in Clause 7(6)) in an
efficient and economic manner and in accordance with good
estate management provided that the Management Company shall
be entitled to employ such managing agents professional
advisers contractors and other persons as it shall from time
to time reasonably think fit for the purpose of the
performance of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any
of the Common Parts or interruption in the provision of the Services or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or the Common
Parts or temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance or
replacement thereof or any part thereof or any plant machinery equipment
installations or apparatus used in connection therewith or damage
thereto or destruction thereof by any risk
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(whether or not an Insured Risk) or by reason of electrical mechanical
or other defect or breakdown or frost or other inclement conditions or
shortage of fuel materials supplies or labour or whole or partial
failure or stoppage of any mains supply due to any circumstances beyond
the control of the Management Company PROVIDED ALWAYS that the
Management Company shall use all reasonable endeavours to minimise the
adverse effects of any such circumstances and to remedy any such
interruption closure or diversion as soon as reasonably practicable
PROVIDED FURTHER that in the event of the Landlord or the Management
Company being unable to provide air conditioning or electricity to the
Premises in such circumstances the Tenant shall be entitled to carry out
(the Landlord and Management Company affording the Tenant reasonable
access to do so) all necessary remedial works to such electricity or air
conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other
tenants as reasonably practicable
(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach
of the Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:-
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in
this lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for
twenty-one days after becoming payable (whether or not
formally demanded) or
(b) any of the Tenant's covenants in this lease are not
performed or observed in the manner and at the times herein
specified or
(c) the guarantee granted by the Guarantor or any other
guarantor of the Tenant's obligations is or becomes
unenforceable (in whole or in part) for any reason
whatsoever and no suitable alternative security is provided
to the Landlord within a period of one month or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent
company) or compulsorily or has a provisional liquidator or
a receiver (including an administrative receiver) appointed
or its directors pass a resolution to petition for an
administration order or one or more of them swears an
affidavit in support of such a petition or is the subject of
an administration order or a petition for one or of a
voluntary arrangement or a proposal for one under Part I
Insolvency Act 1986
(e) being a company incorporated outside the United Kingdom is
the subject of any proceedings or event analogous to those
referred to in clause 7(1)(d) in the country of its
incorporation
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(f) being an individual is the subject of a bankruptcy petition
or bankruptcy order or of any application or order or
appointment under section 253 or section 273 or section 286
Insolvency Act 1986 or otherwise becomes bankrupt or
insolvent or dies
the Landlord may at any time thereafter (and notwithstanding
the waiver of any previous right of re-entry) re-enter the
Premises without prejudice to the Tenant's right to relief against
forfeiture whereupon this lease shall absolutely determine but
without prejudice to either party's right of action against the
other in respect of any antecedent breach of the covenants in this
lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in
relation to the Building and (subject only to those easements
expressly granted by this lease) neither the Tenant nor the
Premises shall be entitled to any easement or quasi-easement
whatsoever and nothing herein contained or implied shall give the
Tenant the benefit of or the right to enforce or to have enforced
or to prevent the release or modification of any right easement
covenant condition or stipulation enjoyed or entered into by any
tenant of the Landlord in respect of property not demised by this
lease or prevent or restrict the development or use of the
remainder of the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant
supply authorities and any other competent authority the Common
Parts and the Service Media are at all times subject to the
exclusive control and management of the Landlord who may from time
to time (if it shall be necessary or reasonable to do so for the
benefit of the Building or otherwise in keeping with the
principles of good estate management) alter divert substitute stop
up or remove any of them (leaving available for use by the Tenant
reasonable and sufficient means of access to and egress from and
servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be
served under this lease shall be validly served if served in
accordance with section 196 Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 or (in the
case of any notice to be served on the Tenant) by sending it
to the Tenant at the Premises PROVIDED THAT whilst the
Tenant hereunder is Donaldson Lufkin & Jenrette
International Limited such notice shall also be served on
the offices for the time being of SJ Berwin & Co (attention:
Edward Page) or such other firm of solicitors notified in
writing to the Landlord and 277 Park Avenue New York New
York 10172
(b) If the Tenant or any guarantor comprises more than one
person it shall be sufficient for all purposes if notice is
served on one of them but a notice duly served on the Tenant
will not need to be served on any guarantor
<PAGE>
RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment
and tenant's fixtures) or the means of access to the
Premises within the Building are damaged or destroyed by any
of the Insured Risks so that the Premises are incapable of
beneficial occupation and use and
(b) subject to clause 5(2)(b)the insurance of the Building or
the payment of any insurance money has not been vitiated by
the act neglect default or omission of the Tenant or of any
person deriving title under or through the Tenant their
respective servants agents and invitees
the rent first reserved by this lease and the Service Charge
or a fair proportion of them according to the nature and extent of
the damage sustained shall be suspended and cease to be payable
from the date of destruction or damage until whichever is the
earlier of the date on which the Premises are reinstated to the
Reinstatement Specification and if applicable the essential means
of access within the Building are available and the date of expiry
of the period for which insurance of loss of rent is effected and
any dispute about such suspension shall be referred to the award
of a single arbitrator to be appointed in default of agreement on
the application of the Landlord or the Tenant to the President for
the time being of The Royal Institution of Chartered Surveyors in
accordance with the Arbitration Acts 1950 and 1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts
or stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or
temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance
or replacement thereof or any part thereof or any plant machinery
equipment installations or apparatus used in connection therewith
or damage thereto or destruction thereof by any risk (whether or
not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions
or shortage of fuel materials supplies or labour or whole or
partial failure or stoppage of any mains supply due to any
circumstances beyond the control of the Landlord PROVIDED ALWAYS
that the Landlord shall use all reasonable endeavours to minimise
the adverse effects of any such circumstances and to remedy any
such interruption closure or diversion as soon as reasonably
practicable PROVIDED FURTHER that in the event of the Landlord or
the Management Company being unable to provide air conditioning or
electricity to the Premises in such circumstances the Tenant shall
be entitled to carry out (the Landlord and Management Company
affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED
THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable)
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(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach of
the Landlords or Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the
Landlord or by the Tenant notwithstanding any direction or prior
agreement as to liability for payment and any sums so paid for
which the party who pays them initially is not ultimately liable
shall be repayable on demand by the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase
in the amount of the rent reserved and made payable by virtue of
schedule 4 a memorandum recording the increase shall be attached
to this lease and to the counterpart and such memorandum shall be
signed by or on behalf of the Landlord and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are
authorised under Planning Law to be used or are otherwise fit for
any specific purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or
occupier of any part of the Building relating to any
easement or right affecting the Building or any part of it
shall (unless the Landlord shall by notice to the parties
concerned renounce its power to determine it) be referred to
the Landlord whose decision acting reasonably (acting in the
capacity of an expert) shall be binding upon the parties to
the dispute but the Landlord shall give written reasons for
his decision
(b) Where any issue (other than one relating to a rent review)
arising out of or under or relating to the Head Lease which
also affects or relates to the provisions of this lease is
to be determined as provided in the Head Lease the
determination of such issue pursuant to the provisions of
the Head Lease shall be binding on the Tenant as well as the
Landlord for the purposes both of the Head Lease and this
lease
COMPENSATION
(11) Except where any Enactment prohibits the right to compensation
being reduced or excluded by agreement, neither the Tenant nor any
occupier of the Premises shall be entitled on quitting them to
claim from the Landlord any compensation under the Landlord and
Tenant Act 1954
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RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a proposal to
alter the entry for the Premises in the local non-domestic
rating list it shall notify the other party of its
intention and shall incorporate in the proposal such proper
and reasonable representations as may be made by or on
behalf of that party
(b) The Tenant shall not agree the level of rates liability
attributable to the Premises following the date hereof
without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) PROVIDED that for the
avoidance of doubt the Landlord shall not be entitled to
refuse its consent to any level of rates which the Tenant
has negotiated with the appropriate rating authority which
is lower than any level of rates negotiated by or on behalf
of the Landlord in respect of the Building on a pro rata
basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed
to constitute a warranty by the Landlord that the Premises shall
be kept secure or that any security service to the Common Parts
shall be effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the
Landlord the English courts shall have exclusive jurisdiction in
relation to disputes arising under or connected with this lease
and the Tenant agrees that any process may be served on it by
leaving a copy of the relevant document at the Premises provided
however that the Landlord shall retain the right at its sole
election to sue the Tenant elsewhere including in the courts of
the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy
of the reversion immediately expectant on the determination of
this lease whether pursuant to Section 19 Landlord and Tenant
(Covenants) Act 1995 or otherwise any covenant on the part of the
Tenant to obtain the consent of the Landlord under this lease to
any dealing shall be deemed to include a further covenant also to
obtain the consent of the lessor under such tenancy to such
dealing
8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants
and agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the
manner and at the times herein specified and that if there is
default in performing and observing any of the Landlord's
obligations (notwithstanding any time or indulgence granted by
the Tenant to the Landlord or compromise, neglect or forbearance
on the part of the Tenant in enforcing the observance of the
Landlord's obligations in this lease) the Landlord's Guarantor
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will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Landlord
shall be in default
(2) The Landlord's Guarantor at the request of the Management Company
and in consideration of the Tenant agreeing to pay the Service
Charge covenants and agrees with the Tenant that all of the
Management Company's obligations contained in this lease will be
performed and observed in the manner and at the times herein
specified and that if there is default in performing and observing
any of the Management Company's obligations (notwithstanding any
time or indulgence granted by the Tenant to the Management Company
or compromise, neglect or forbearance on the part of the Tenant in
enforcing the observance of the Management Company's obligations
in this lease) the Landlord's Guarantor will observe and perform
(or procure the performance and observance of) the obligations in
respect of which the Management Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of this
clause) determine this lease as at 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on 24th
October 2008
(3) If the Tenant duly serves the Termination Notice it shall procure
that vacant possession of the Premises will be available on 24th
October free of occupation by and of any estate or interest rested
in the Tenant or any third party and this lease shall not
determine as a result of any notice served by the Tenant if the
Tenant is in material breach of any of its covenant to pay the
rents and Interim Sum contained in this lease (including those
contained in this sub-clause) as at 24th October 2008 except to
the extent if at all the Landlord in its absolute discretion
waives compliance with any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during
the Term and any period of holding over continuation or extension
thereof whether by an Enactment common law or otherwise (subject to
clause 4(15)):-
(1) The rents reserved by this lease (whether or not ascertained as
to amount) will be duly paid and that all the Tenant's
obligations contained in it will be performed and observed in the
manner and at the times herein specified and that if there is any
default in paying the rents or in performing and observing the
Tenant's obligations (notwithstanding any time or indulgence
granted by the Landlord to the Tenant or compromise neglect or
forbearance on the part of the Landlord in enforcing the
observance and performance of the Tenant's obligations in this
lease or any refusal by the Landlord to accept rents tendered by
or on behalf of the Tenant) the Guarantor will observe and
perform the obligations in respect of which the Tenant shall be
in default and will on demand and on a full indemnity basis pay
to the Landlord an amount equivalent to the rents or other
amounts not paid and/or any loss damage costs charges expenses or
any other liability incurred or suffered by the Landlord as a
result of the default (and in the event of non-payment shall pay
interest at the Interest Rate from the date of demand to the
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Guarantor until the date of payment) and will otherwise
indemnify and hold harmless the Landlord against all actions
claims costs damages demands expenses losses and proceedings
arising from or incurred by the Landlord as a result of such
non-performance or non-observance
(2) If any liquidator or other person having power to do so disclaims
this lease or if it shall be forfeited or if the Tenant ceases to
exist and if the Landlord by written notice served within three
months after the date of disclaimer or forfeiture or the Landlord
having actual knowledge of the cesser of existence of the Tenant
(each a "Trigger Event") requires the Guarantor to accept a lease
of the Premises for a term computed from the date of the Trigger
Event to the date on which the Term would have expired by
effluxion of time and at the same rents and subject to the same
covenants stipulations conditions and provisions (except that the
Guarantor shall not be required to procure that any other person
is made party to that lease as guarantor) as are reserved by and
contained in this lease immediately before the Trigger Event and
with coincidental Review Dates (the said new lease and the rights
and liabilities thereunder to take effect as from the date of such
Trigger Event) the Guarantor shall forthwith accept such lease
accordingly and execute and deliver to the Landlord a counterpart
of it and indemnify the Landlord upon demand against the costs
incurred on the grant of the new lease
(3) The liability of the Guarantor hereunder shall not be released
reduced affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this
lease or any of them agreed between the Landlord and the
Tenant or
(b) the surrender by the Tenant of part of the Premises (in
which event the liability of the Guarantor shall continue in
relation to the Tenant's obligations in respect of the part
of the Premises not so surrendered) or
(c) any legal limitation immunity disability incapacity
occurrence of insolvency or the winding-up of the Tenant or
(d) (without limitation to the foregoing) of any other act or
thing act or thing by which (but for this provision) the
Guarantor would have been discharged or released (in each
case in whole or in part) from liability under this
guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in
accordance with clause 8(2) the Guarantor shall pay to the
Landlord on demand (in addition to any other loss damage costs
charges expenses or other liability which the Guarantor may be
required to make good hereunder and without prejudice to any other
rights of the Landlord) an amount equal to the rents which would
have been payable hereunder but for such Trigger Event (so far as
such rents do not otherwise continue to be payable) for the period
commencing on the date of such Trigger Event and ending on
whichever is the earlier of the date one year after the date of
such Trigger Event and the date (if any) upon which rent is first
payable in respect of the whole of the Premises on a reletting
thereof
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(5) Without prejudice to the rights of the Landlord against the Tenant
the Guarantor shall be a principal obligor in respect of its
obligations under this clause and not merely a surety and
accordingly the Guarantor shall not be discharged nor shall its
liability hereunder be affected by any act or thing or means
whatsoever by which its said liability would not have been
discharged if it had been a primary debtor
(6) The Guarantor shall pay all reasonable charges (including legal
and other costs on a full indemnity basis) incurred by the
Landlord in relation to the Landlord's enforcement of this
guarantee and indemnity against the Guarantor or for enforcing
payment by the Guarantor of amounts indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee
and indemnity against the Guarantor without having first enforced
the covenants and terms of this lease against the Tenant and also
without first having recourse to any other rights or security
which the Landlord may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security
held by the Landlord in respect of the obligation of the Tenant
under this lease or to any right of subrogation in respect of any
such security until all the obligations owed to the Landlord by
the Tenant and the Guarantor hereunder have been fully and
unconditionally fulfilled and discharged
(9) The Guarantor shall not claim in any liquidation bankruptcy
composition or scheme of arrangement in respect of the Tenant in
competition with the Landlord and if and to the extent that it
receives the same shall remit to (and until remission shall hold
in trust for) the Landlord all and any monies received from any
liquidator trustee receiver or out of any composition or
arrangement or from any supervisor thereof until all the
obligations of the Tenant and the Guarantor hereunder owed to the
Landlord have been fully and unconditionally fulfilled and
discharged
(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the
necessity for any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains
the Tenant this guarantee and indemnity shall only apply if and
for so long as the total shareholders funds and reserves of
Donaldson, Lufkin & Jenrette International Limited are or fall
below the value of Fifty million pounds (pounds sterling
50,000,000) AND Donaldson, Lufkin & Jenrette International Limited
and Donaldson, Lufkin & Jenrette Inc. shall notify the Landlord at
the beginning of each period in which this guarantee and indemnity
applies and again when it ceases to apply AND for the avoidance of
doubt this guarantee (subject to compliance by the Tenant with
clause 4(15)) shall automatically cease on any lawful assignment
of this lease (but without prejudice to either party's rights
against the other in respect of any antecedent breaches of this
lease) unless in the circumstances contemplated by clause
4(15)(g)(ii)(b) it is reasonable for Donaldson Lufkin & Jenrette
Inc. to remain the guarantor hereunder of the liabilities of
Donaldson, Lufkin & Jenrette International Limited PROVIDED
FURTHER that Donaldson, Lufkin & Jenrette Inc. shall in such
circumstances automatically be released on a second assignment of
this lease
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11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the twenty-third floor and being part of
the Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and
all materials lying between the upper surface of the structural floor
slab and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact
on the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the
external windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in
the external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress
to and from the Premises to use the Common Parts and to use all
means of escape but only when needed in an emergency and
(2) to use the Service Media
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2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authorised sub-tenants or permitted occupiers (subject to a maximum
of four names at any particular time) on the signboard in the entrance
lobby of the Building provided by the Landlord pursuant to paragraph 14
of Part I of schedule 6 and the right to install a sign displaying the
name of the Tenant at the entrance to the Premises the precise location
size and style of such sign to be subject to the approval of the
Landlord (such approval not to be unreasonably withheld or delayed)
4. The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area at all
reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and
maintenance (on reasonable prior written notice to the Landlord) those
works or installations within or on the Building (but outside the
Premises) for which consent has been given pursuant to the Agreement for
Initial Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to the Tenant being responsible for all elements of
Service Cost relating to such toilets should any other tenant of
accommodation in the Building object to meeting any proportion of
Service Cost in relation to such facilities (on the basis of such
exclusive use)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of
them to the Premises and the lights windows and openings thereof may be
affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the
Premises as often as may be necessary for the purpose of complying with
the covenants of the Head Lease for all the purposes for which the
Tenant covenants in this lease to permit entry and for all purposes in
connection with the carrying Out of the Services and for the purposes of
complying with any statutory requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or
neighbouring land
4. The right to erect and maintain scaffolding on or against any part of
the Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
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5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the
purpose of repairing that other part of the Building making good any
damage so caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved
by this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably
be expected to be payable following the expiry of any period at
the beginning of the term which might be negotiated in the open
market for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated
in the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free
or concessionary rent period or capital sum or fitting out
contribution and has used the same fully to fit out the Premises
for the Permitted Use to the lessee's particular requirements) if
the Premises had been let in the open market by a willing lessor
to a willing lessee with vacant possession on the relevant Review
Date without fine or premium for a term of ten years computed from
the relevant Review Date taking into account the lessee's right
at the expiration of the term to be granted a new tenancy under
Part II Landlord and Tenant Act 1954 and otherwise upon the
provisions (save as to the amount of the rent first reserved by
this lease but including the provisions for rent review at
five-yearly intervals) contained in this lease and on the
assumption if not a fact that the said provisions have been fully
complied with and on the further assumptions that:-
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(a) the Permitted Use and the Premises comply with Planning Law
and every other Enactment free from any onerous condition
restriction and limitation and that the lessee may lawfully
implement and carry on the Permitted Use
(b) no work has been carried out to the Premises which has
diminished their rental value
(c) in case the Building or any part of it has been destroyed or
damaged it has been fully restored
(d) the Premises have been fitted out to no less standard than
that set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other
permitted occupier or their respective predecessors in title
has been or is in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying on in
them of the business of the Tenant or any underlessee or
their respective predecessors in title or other permitted
occupier
(iii) (without prejudice to paragraphs 1(2)(b) and 1(2)(c) of this
schedule) any works carried out to the Premises during the
Term by the Tenant or any permitted underlessee in either
case at its own expense in pursuance of a licence granted by
the Landlord where required and otherwise than in pursuance
of any obligation to the Landlord
(iv) the works carried out to the Premises by the Tenant or
carried out by the Landlord at the expense of the Tenant
pursuant to the Agreement for Initial Alterations
(3) "Review Surveyor" means an independent chartered surveyor
appointed pursuant to paragraph 3(1) of this schedule and if to
be nominated by or on behalf of the President for the time being
of the Royal Institution of Chartered Surveyors the said
President to be requested to nominate an independent chartered
surveyor having not less than ten years practice in the City of
London next before the date of his appointment and recent
substantial experience in the letting and valuation of office
premises of a similar character and quality to those of the
Premises and who is a partner or director of a leading firm or
company of surveyors having specialist market and valuation
knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
(1) the Current Rent (ignoring for this purpose any rent cesser
pursuant to clause 7(5)) and
(2) the Review Rent
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3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant
to assess the Review Rent or (in the absence of agreement at any
time about his appointment) be nominated to assess the Review
Rent by or on behalf of the President for the time being of The
Royal Institution of Chartered Surveyors on the application of
the Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review
Surveyor) he shall act as an arbitrator and the arbitration shall
be conducted in accordance with the Arbitration Acts 1950 and
1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting
each of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired
by the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the
determination in accordance with his own judgment (including any
determination concerning any party's liability for the costs of
the reference to him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4. If the Review Rent has not been agreed or assessed by the relevant
Review Date the Tenant shall:-
(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or
assessment of the Review Rent the amount (if any) by which the
Review Rent for the period commencing on the relevant Review Date
and ending on the quarter day following the date of payment
exceeds the Current Rent paid on account for the same period plus
interest at three per cent below the Interest Rate for each
installment of rent due on and after the relevant Review Date on
the difference between what would have been paid on that rent day
had the Review Rent been fixed and the amount paid on account
(the interest being payable from the date on which the
installment was due up to the date of payment of the shortfall)
5. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is released
the Landlord may at any time within six months after the date of release
give to the Tenant not less than one month's
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notice requiring an additional rent review as at the next following
quarter day which shall for the purposes of this lease be a Review Date
SCHEDULE 5
(THE SERVICE CHARGE)
1. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 31st December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the
Building (whether or not pursuant to the terms of this Underlease) the
Management Company or the Tenant shall be entitled if reasonable to
require that the same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge
for each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting
Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the
provisions of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service
Cost and Service Charge for each Accounting Period served pursuant to
paragraph 5 of this schedule and prepared by the Management Company's
surveyor or auditor
"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company in
any Accounting Period in carrying out or procuring the carrying
out of the Services and providing each item of the Services
including (without prejudice to the generality of the foregoing)
the costs and expenses set out in Part II of schedule 6 (insofar
as the same are reasonable and properly incurred) and any other
reasonable costs and expenses properly incurred by the Management
Company or with the Management Company's authority in connection
with the Services but excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the
Services outside Normal Business Hours at the specific
request of the Tenant (which shall
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be charged direct to the Tenant) or of any other
tenant or tenants of the Building and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and which
is recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage
caused by any of the Insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items of
plant machinery equipment and other capital items is calculated on
such life expectancy of the said items as the Management Company
may from time to time reasonably determine to the intent that a
fund be accumulated sufficient to cover the cost of replacement of
the said items by the end of their anticipated life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting Period
shall be a fair proportion of the Service Cost attributable to the
Premises from time to time as properly determined by the
Management Company (and so in proportion for any Accounting Period
not falling wholly within the Term the Service Cost in any such
case being deemed to accrue on a day to day basis for the purpose
of apportionment)
(B) If at any time and from time to time during the Term the method or
basis of calculating or ascertaining the cost of any item of the
Services shall alter or the basis of calculating or ascertaining
the Service Cost in relation to any item of the Services shall
change and as a result it is reasonable that there be an
alteration or variation of the calculation of the Service Charge
in order to achieve a fairer and better apportionment of the
Service Cost amongst the tenants of the Building then and in every
such case the Management Company shall vary and amend the Service
Charge and make appropriate adjustments thereto provided always
that in the event of any dispute between the Management Company
and the Tenant and the other tenants of the Building or any of
them the same shall be referred to the Expert for determination
(the Expert to act as an expert and not as an arbitrator) whose
decision shall save in the case of manifest error be binding on
the parties (including his decisions as to the responsibility for
his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the
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Building let or occupied or designed contracted or adapted for
letting or occupation (other than management accommodation) is
fully let on terms which include service charge provisions
consistent with the service charge provisions contained in this
lease (save where otherwise specified herein) and such proportion
shall not be increased or altered by reason of the fact that at
any time any part of such accommodation may be vacant or that any
tenant or other occupier of any other part of the Building may
default in payment of its due proportion of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance
with a programme of non equal expenditure in which event the
Management Company shall serve notice to such effect upon the
Tenant and shall thereupon be entitled to require amounts of the
Interim Sum to be paid by advance quarterly instalments of unequal
amounts reasonably stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the
consumption of and supply charges in respect of electricity
consumed within the Premises (save for any amounts which are
invoiced directly by London Electricity plc to the Tenant) such
sums not to exceed a fair and proper estimate of amounts
reasonably anticipated by the Management Company as falling due
within the next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company
shall be entitled in addition to require the Tenant to pay along
with payments of the Interim Sum a fair and proper estimate of
amounts likely to be payable by the Tenant in the next quarter on
account of such Services in accordance with the terms of this
lease
(D) The Interim Sum for the Accounting Period ending 31st December
1996 shall be pounds sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or
cause to be served on the Tenant written notice of the Interim Sum
for the relevant Accounting Period Provided that without prejudice
to the provisions of paragraphs 6 and 7 of this schedule if the
written notice aforesaid shall be served after the first occurring
quarter day in the relevant Accounting Period the Tenant shall
until service of the written notice aforesaid make payments on
account of the Interim Sum for the relevant Accounting Period on
the days and in the manner provided by sub-paragraph (A) of this
paragraph of this schedule at an annual rate equal to the Interim
Sum for the immediately preceding Accounting Period
5. (A) As soon as practicable after the expiry of every Accounting Period
(and in any event within 4 months after such expiry) the
Management Company shall serve or cause to be served a Service
Charge Certificate on the Tenant for the relevant Accounting
Period
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(B) A Service Charge Certificate shall contain a summary of the
Service Cost in respect of the Accounting Period to which it
relates and the relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service
Charge Certificate by giving notice thereof in writing to the
Management Company within three months of the date of service on
the Tenant of the relevant Service Charge Certificate and upon
receipt of such a notice the Management Company shall furnish to
the Tenant all such relevant details in its possession or control
or which can reasonably be obtained by it as relate to the
expenditure under the item or items in question at the cost of the
Tenant (include all books of account receipts demands and
invoices) PROVIDED ALWAYS that notwithstanding the giving of any
such notice the Tenant shall nevertheless pay all Interim Sums and
Service Charges as and when they fall due or as may be underpaid
from time to time (but without prejudice to any challenge claim or
dispute that the Tenant may have made or may make in the future in
respect of its Service Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay
to the Management Company or as it shall direct a sum equal to the
amount by which the Service Charge exceeds the Interim Sum provided that
and the Tenant hereby acknowledges that if there shall be any such
excess in respect of the Accounting Period the amount of such excess
shall be a debt due from the Tenant to the Management Company and in the
event that such excess is not received in cleared funds by the
Management Company within 14 days of the due date for payment it shall
attract interest at the Interest Rate calculated for the period
commencing on the due dates for payment and ending on the date the sum
is subsequently received by the Management Company notwithstanding that
the Term may have expired or been determined before the service by or on
behalf of the Management Company of the relevant Service Charge
Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it
shall attract interest at the Interest Rate for the period commencing as
the due date for payment and ending on the date that the sum due is
received in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph
9 of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly
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adhered to) Provided that the Tenant gives notice with full particulars
of its ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve
the relevant issue but if they cannot do so the issue in dispute
shall be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest
error be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the
dispute shall be paid as soon as reasonably practicable after
such resolution and any sum due to or payable by the Management
Company shall then be paid or allowed (as the case may be)
immediately together with interest at three per cent below the
Interest Rate on such sum during the period which it has been
underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited
to) the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of
schedule 6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of
such Services is greater) than would normally apply in the context of
the general management of the Building in accordance with this lease as
a result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof determined
by the Management Company) within 10 working days following a demand by
the Management Company
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SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant
parts of it described in paragraphs (ii) and (iii) of schedule 1
2. inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the
Common Parts and the car park shall be operational 24 hours a day 7 days
a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout Normal
Business Hours and at the request of the Tenant outside those hours
subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule 1 and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists
are not present) and the car park within the Building including where
reasonably appropriate in the Management Company's
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judgment closed circuit television and/or other plant and equipment for
the purpose of surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and
(and where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in
the Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided
by the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the
Premises or
(2) reasonably calculated to be for the benefit of the Tenant and
other tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference
to the particular matters or things shall be deemed to be and in
each case shall be without prejudice to the generality of the
wording preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the
provision of or add to or procure
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the addition to any item of Services matter or thing specified in
this schedule if the Management Company shall having regard to
the principles of good estate management reasonably deem it
desirable or expedient so to do but before so doing the
Management Company shall notify all the tenants in the Building
but in the event of any failure of any of the Services shall use
all reasonable endeavours to restore the said Service
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due
to circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company
employed or retained by or on behalf of the Management Company or its
agents (including without limitation managing agents fees) for or in
connection with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other
duties in or about the Building or any part of it relating to the
general management administration security maintenance protection
and cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and
not by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice
to the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in
kind and other emoluments and National Insurance and other
statutory contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided
rent free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
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(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part
of this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the
same is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in
unforeseen or emergency circumstances to finance the provision of the
Services and the costs referred to in this Part of this schedule or any
of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any
other amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the
Management Company pursuant to sections 24 25 and 26 Value Added Tax Act
1994 or any regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable
Life Assurance Society (3)
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SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
PART I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of, input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1994 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part XIV of the Value Added Tax Regulations 1995.
"VAT YEAR CERTIFICATE" means the certificate to be provided by the
Tenant following the end of the Tenant's VAT Year in the form set out in
Part II of this Schedule.
2. Payment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to
the rent first reserved without any adjustment of rent first reserved
under this schedule.
3. Adjustment of rent first reserved and payment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on
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the due date for payment of the next installment of the rent first
reserved (and on the due date for subsequent instalments), subject
however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served
a VAT Year Certificate specifying in paragraph 1 thereof the same
estimated proportion as stated in the previous VAT Year Certificate
served, or if no previous VAT Year Certificate has been served by the
Tenant at any time prior to the due date for any VAT Year Certificate an
estimated proportion of nil per cent. If the Tenant fails to serve a VAT
Year Certificate on more than one consecutive occasion the Tenant shall
be deemed, on the second failure and any subsequent failure, until
service of the next VAT Year Certificate, to have served a VAT Year
Certificate specifying in paragraph 1 thereof an estimated proportion of
nil per cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at
that time) be adjusted on the basis of the last VAT Year Certificate.
The adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an
amount to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form
set out in the VAT Year Certificate. The Tenant's Auditor's certificate
shall be provided at least eight days prior to the date of payment of
the rent first reserved to which such certificate relates, together with
the Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant
shall pay in accordance with paragraph 4.1 above the amount stipulated
in accordance with paragraph 3 of such VAT Year Certificate (as revised,
if required) on the date for payment of the rent first reserved.
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or
will obtain a Tax Credit differing from the proportion previously taken
into account in calculation any payment, any such difference shall be
taken into account (after having determined the amount of rent first
reserved payable in respect of the next quarter in accordance with
paragraph 3 above) in calculating the next actual payment of rent first
reserved (either by increase or
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decrease), the amount of which shall be set out in paragraph 3 of the
VAT Year Certificate.
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the amount which
should have been paid, from such due date until the date of payment of
the adjusted amount pursuant to paragraph 4.3. Where the actual amount
paid (the "Initial Payment") on the due date for payment of any sum was
subsequently adjusted on payment of any later installment of the rent
first reserved (the "Adjusted Payment") in accordance with paragraph 4.6
of Part I of this Schedule 8 and paragraph 3(b) of the VAT Year
Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions of
this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or
accepting a method of attribution designed or maximise its Tax Credit
and covenants not to enter any arrangement which has the specific
purpose of increasing the amount by which the rent first reserved is
decreased by virtue of this schedule 8.
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PART II
VAT YEAR CERTIFICATE
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ]
made between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises on
[ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant to
that paragraph:
1. Our VAT Year which included the following quarter days [ ], ended on
[ ], ended on [
(a) The part of the VAT charged on the rent first reserved paid in the
VAT Year for or in respect of which we estimate/have determined
(in accordance, where relevant, with the return made, or to be
made, for the prescribed accounting period next following the end
of the VAT Year) we will be unable to obtain credit or repayment
is a proportion of [ ] per cent of the total VAT charged.
(b) The following Table sets out the part of the VAT charged which was
expected to be irrevocable during the VAT Year where it has been
determined on the basis of paragraph 2(a) above that that differs
from the amount of VAT for or in respect of which we actually
obtained, or will be able to obtain, credit or repayment.
Dates Rent first reserved Estimate Adjustment Determination
----- ------------------- -------- ---------- -------------
* ** ***
* estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out initially in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which
we estimated we would be unable to obtain credit or repayment as
set out in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now
estimated/determined we shall be unable to obtain credit or
repayment, in accordance with Sections 24-26 of the Value Added
Tax Act 1994 and the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved so as to ensure that the amount of rent first reserved payable
in the VAT Year to which this VAT Year Certificate relates is as
provided in paragraph 3 of Part I of Schedule 8 to the Lease in
accordance with the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and the VAT
thereon shall be pounds sterling [ ], and that the interest payable by
the Tenant to the Landlord/Landlord to the Tenant, in accordance with
paragraph 4.7 of Part I schedule 8 to the Lease shall be pounds sterling
[ ].
4. We hereby declare that:
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(a) we have complied with the covenant imposed upon us by paragraph 6.2
of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declarations are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
Tenant's Auditors
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(THE COMMON SEAL of 99 BISHOPSGATE
(LIMITED was hereunto affixed in the presence
(of:-
[SEAL OMITTED]
Director /s/
Director /s/
(THE COMMON SEAL of 99 BISHOPSGATE
(MANAGEMENT LIMITED was hereunto
(affixed in the presence of:-
[SEAL OMITTED]
Director /s/
Director /s/
(THE COMMON SEAL of HAMMERSON U.K.
(PROPERTIES plc was hereunto affixed in the
(presence of:
[SEAL OMITTED]
Director /s/
Director /s/
<PAGE>
23RD FLOOR, 99 BISHOPSGATE, LONDON, E.C.2.
99 BISHOPSGATE LIMITED (1)
99 BISHOPSGATE MANAGEMENT LIMITED (2)
HAMMERSON U.K. PROPERTIES PLC (3)
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED (4)
DONALDSON, LUFKIN & JENRETTE INC. (5)
------------------------------------
REINSTATEMENT SPECIFICATION
WHICH FORMS PART OF THE UNDERLEASE
DATED 24TH OCTOBER 1996
------------------------------------
<PAGE>
99 BISHOPSGATE - 23RD FLOOR
REINSTATEMENT SPECIFICATION
CEILING TILES
CAPL system 335 Tartan Grid System tiles generally 1200 x 450 mm plus 1200 x
300 nominal, face perforated to CAPL pattern D1522 including 10mm plain
borders. Panels finishes polyester powder paint incorporating acoustic
insulation 45 kg/m3, block tissue faced, Rockwool backed with an inverted
steel tray, "stitched" to ceiling panel.
The ceiling support system is a fixed element from which the tartan grid,
ceiling tiles, lighting fittings, air handling grilles, sprinklers, smoke
detectors, pa system and plenums are hung.
WIRING HARNESS
A pre-formed flexible wiring system comprising:-
Multi conductor home-run cable
Master distribution box
Extender cable
Whip end extender cable by MODULAR WIRING SYSTEMS EUROPE LTD
LIGHT FITTINGS
TYPE A
Moorlite ref SP300/13532/W2/SSLIHFGi2436/AH. 2 X 36 watt TB triphosphate
fluorescent colour temp 3500o K with Cat 2 semi-specular louvre, high
frequency control gear and air handling facilities to 41 l/s. Finished to RAL
9010 20% gloss.
TYPE AE
As type A but incorporates 3 hour emergency battery invertor packs.
TYPE A2
Moorlite ref SP300/135655/W2/SSL/HFG/2218/AH. 2 x 18 watt TB triphosphate
colour temp 3500o K with semi-specular louvre to LG3 cat 2, high frequency
control gear and air handling facilities to 41 l/s. Finished to RAL 9010 20%
gloss.
TYPE B
Moorlite ref SP300/13657/W2/SSLIHFG/2224/AH. 2 x 24 watt TCL fluorescent
colour temp 3500o K with semi-specular louvre to LG3 cat 2 gear and air
handling facilities to 41 l/s. Finished to RAL 9010 20% gloss.
<PAGE>
COMPUTER ADDRESSABLE LIGHTING MANAGEMENT SYSTEM
Lighting Management System which provides independent control and monitoring
of every luminaire, by DELMATIC type ZMC, comprising ZMC floor controllers and
ZMC 8 way output control module.
ACCESSORIES
Wandsworth type gridswitch series 3 with black inserts.
FIRE ALARM AND DETECTION SYSTEM
An intelligent analogue programmable addressable system by ADT type IRC-3
incorporating voice and public address comprising:-
Smoke detectors - Signature Series 4D.
Break glass call point - SIGA - KRi/SR/6S
Speakers - QFIT/SPECIAL/TF
SECURITY SYSTEM
A distributed intelligence structured wide area access control system by ADT
type Janus comprising: -
Magnalocks - DRYAD DS7001
Proximity readers - IDE/004/REA
Passcards - IDE/001/PC
Passive Infraced Detectors 360o - P55048
CCTV camera - CD/6252
Door controller - IDC
RAISED FLOOR
Fully accessible raised access floor installed with an average overall depth
of 125mm.
Panel Type: GCS Cornerlock
Panel Grade: Medium
Finish: Tate GCS Standard Finish
<PAGE>
FAN COIL UNITS
The office floor is served by a four pipe fan coil unit air-conditioning
system located within the suspended ceiling void. The units are as
manufactured by Senior Moducel of the Airtech range EVU 235 series. The units
are constructed from heavy gauge prime quality plastisol sheet steel
incorporating a multi-spigoted acoustically lined discharge plenum. The forged
brass 4 part control valve, as manufactured by Johnson Controls series VB55,
is proportionally controlled in sequence with the motor speed to achieve
maximum efficiency. The fan motor speed controller is manufactured by SIEBE
Ltd, model number 1262/1. The valve actuator is manufactured by Johnson
Controls model number VA7310.
PLENUMS
Conditioned air from the FCU's are distributed via sheet metal ductwork to
acoustically insulated plenum boxes as manufactured by Carrier of the Moduboot
35BD series. The plenum boxes are complete with fresh air collar where
required.
SUPPLY DIFFUSERS
The plenum box terminates with a linear diffuser to provide uniform air
distribution. The diffusers are manufactured by Carrier of the 35BD series
types AG and AH one-way and two-way directional blow. One number diffuser per
FCU is supplied complete with air sensor as manufactured by Sontay series
TT55, the sensor is completed with 3 metres of LSF cable. These diffusers are
constructed with an aspirator box to accommodate the sensor.
EXTRACT AIR DIFFUSERS
Air is extracted from the space via air handling luminaires (as specified
under the Electrical Services) and linear extract air diffusers. The extract
air diffusers are similar to the supply being manufactured by Carrier series
35BD type AG, 1 way directional blow. However these diffusers do not require a
fitted plenum box.
VOLUME CONTROL DAMPERS
Motorised isolation dampers are installed in the supply and extract ductwork
main branches to achieve quadrant control, via the BMS, to the floor. Volume
control dampers are installed to all the sub-branches to regulate the air
volume. The dampers are manufactured by Volume Control Devises, are stainless
steel, aerofoil multi-blade dampers.
The isolation damper actuators are as manufactured by SIEBE Ltd model no.
MF/6233.
<PAGE>
FIRE DAMPERS
Where fire dampers are installed they are of the fusible link type as
manufactured by Volume Control Devises series FB. The dampers comprise of
interlocking stainless steel aerofoil blades, stainless steel bearings and
peripheral gasketing, totally enclosed drive mechanism and double skin
galvanised 18 gauge spigot casing.
SPRINKLERS
A sprinkler system is installed throughout to comply with the requirements of
BS 5306, Part 2 1990 and the recommendations of the Loss Prevention Council.
The sprinkler heads as installed are flush mounted as manufactured by Reliable
Ltd.
VALVES
Commissioning Valves and Isolating Valves are installed to the return and
flow, respectively, of the Landlords and Tenants secondary CHW installation to
the floor. They are also installed to the LTHW constant temperature system to
the floor. The valves are as manufactured by Tour and Anderson Limited.
Commissioning Valves are typically as follows:-
Up to 50mm diameter TA Fig MD41. Ametal bronze commissioning set comprising of
MD20 double regulating valve and MDFO on fix plate. Isolation valves are
typically as follows: -
Up to 50mm diameter TA Fig 64. Ametal gate valve. 65mm and above TA Fig 35
lever operated butterfly valve.
PERIMETER HEATING
Perimeter heating is provided to offset heat losses to the glazing. The finned
heating element is manufactured by HCP Ltd, installed in an Architectural
perimeter rail provided by Permasteelisa, the cladding manufacturers.
VENETIAN BLINDS
Silver fine line aluminium blinds integral with the curtain walling system.
Supplied by Abba srl, Italy.
WALLS, CORE, COLUMN
Finished in emulsion paint
SKIRTING
Hardwood - American Cherry
<PAGE>
CARPET
Grade 3 Fusion Bonded with PVC based backing with printed overlay and inlays
and borders as required. From Milliken standard range.
FLOOR BOXES
3 compartment box with interchangeable plates. Minimum layout 1 box to 10 m(2).
DOORS
Veneer finish with hardwood lippings - American Cherry
<PAGE>
PLANS
23rd Floor General Arrangement Plan L23/AL (G) 3030C
Reflected Ceiling Plan - Level 23 L23/AL (C) 3127
Raised Floor Plan - Level 23 L23/AL (F) 3232
Floor Coordinated HL Services Layout, SE Zone 86822/CO/RD/2102
23rd Floor
Floor Coordinated HL Services Layout, NE Zone 86822/CO/RD/2101
23rd Floor
Floor Coordinated HL Services Layout, SW Zone 86822/CO/RD/2103
23rd Floor
Floor Coordinated HL Services Layout, NW Zone 86822/CO/ED/2104
23rd Floor
Electrical Services Lighting and Small Power Layout 86824/EL/RD/211
23rd Floor
<PAGE>
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Project no. Drawing no. Revision
2275 L23/AL(G)3030 C
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Report all errors and omissions to the Architect
Dimensions to be checked on site before fabrication
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DETAILS AND SETTING OUT OF EXISTING
ELEMENTS ON THIS DRAWING ARE DERIVED
FROM RECORD DRAWINGS BUT NOT
VERIFIED BY SURVEY.
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REV DESCRIPTION DATE SIG CHK
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C Hose reels revised, grillage revised.
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Levels revised. 09/11/95 JKM
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RECORD DRAWING 18/12/95
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Project no. Drawing no. Revision
2275 L23/AL(C)3127
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Notes: Do not remove this panel from the drawing
No dimension to be scaled from this drawing
Report all errors and omissions to the Architect
Dimensions to be checked on site before fabrication
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DETAILS AND SETTING OUT OF EXISTING
ELEMENTS ON THIS DRAWING ARE DERIVED
FROM RECORD DRAWINGS BUT NOT
VERIFIED BY SURVEY.
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Project no. Drawing no. Revision
2275 L23/AL(F)3232
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No dimension to be scaled from this drawing
Report all errors and omissions to the Architect
Dimensions to be checked on site before fabrication
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DETAILS AND SETTING OUT OF EXISTING
ELEMENTS ON THIS DRAWING ARE DERIVED
FROM RECORD DRAWINGS BUT NOT
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RECORD DRAWING
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Rev Description By M E P F Issue
Date Checked Date
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Engineer Drawn Date Checked Date
25/09/95
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Contract Name
99,BISHOPSGATE
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Drawing Title
23rd FLOOR
CO-ORDINATED H.L. SERVICES
LAYOUT.-N.W. ZONE
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[Matthew Hall Logo] MATTHEW HALL
Matthew Hall Limited
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Drawing Number Rev. COPYRIGHT
RESERVED
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86822/CO/RD/2104 Scale:
1.25
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NOTE: THIS DRAWING PRINTED IN PINK INDICATES THE ISSUE TO BE PRELIMINARY
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Date Checked Date
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Engineer Drawn Date Checked Date
19/09/95
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Contract Name
99,BISHOPSGATE
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Drawing Title
23rd FLOOR
CO-ORDINATED H.L. SERVICES
LAYOUT.-S.W. ZONE
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[Matthew Hall Logo] MATTHEW HALL
Matthew Hall Limited
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Drawing Number Rev. COPYRIGHT
RESERVED
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86822/CO/RD/2103 Scale:
1.25
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NOTE: THIS DRAWING PRINTED IN PINK INDICATES THE ISSUE TO BE PRELIMINARY
<PAGE>
RECORD DRAWING
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Date Checked Date
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Engineer Drawn Date Checked Date
30/08/95
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Contract Name
99,BISHOPSGATE
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Drawing Title
23rd FLOOR
COORDINATED HL SERVICES
LAYOUT, SE ZONE
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[Matthew Hall Logo] MATTHEW HALL
Matthew Hall Limited
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Drawing Number Rev. COPYRIGHT
RESERVED
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86822/CO/RD/2102 Scale:
1.25
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RECORD DRAWING
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Date Checked Date
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30/08/95
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Contract Name
99,BISHOPSGATE
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Drawing Title
23rd FLOOR
CO-ORDINATED H.L. SERVICES
LAYOUT, NE ZONE
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[Matthew Hall Logo] MATTHEW HALL
Matthew Hall Limited
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Drawing Number Rev. COPYRIGHT
RESERVED
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86822/CO/RD/2101 Scale:
1.25
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NOTE: THIS DRAWING PRINTED IN PINK INDICATES THE ISSUE TO BE PRELIMINARY
<PAGE>
PRODUCT SPECIFICATION NOTES
1/ MASTER DISTRIBUTION BOXES
COMPRISING OF A STEEL ENCLOSURE WITH 12 NO. INDIVIDUAL PORTS
EACH PROVIDING A 20A 240V 50HZ SINGLE PHASE CIRCUIT PORTS
ARE PROVISIONALLY APPOSITIONED FOR 4 NO. HVAC/SMALL POWER
AND 8 NO. FOR LIGHTING ALLOWANCE FOR FUTURE SPARE CAPACITY
HAS BEEN MADE
2/ HR CABLE
2 NO MULTI-POOL ARMOURED BUSWAYS OF UP TO 18 CONDUCTORS
3/ EXTENDER CABLE
3, 4 AND 5 CONDUCTOR ARMOURED CABLES PRE-TERMINATED IN
A MALE AND FEMALE PLUG ARRANGEMENT ONTO MDB AND "TEE"
COMPONENTS
4/ LIGHTING AND POWER TEES
FOR CONNECTING THE SYSTEM ONTO FIXED EQUIPMENT
5/ DATA/BUS CABLING
ARMOURED BELDEN TWISTED PAIR CABLE PRE-TERMINATED AND CUT
INTO PRE-SET LENGTHS. (REFER TO ABOVE NOTES) SHALL BE
ZIP TIED ONTO METALLIC FLEXIBLE BUSBAR.
6/ GENERAL
SYSTEM IS TESTED TO BS5486 PART 2 1988 AND MANUFACTURED
IN AN ISO 9000 ENVIRONMENT
RECORD DRAWING
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Rev Description By M E P F Issue
Date Checked Date
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Engineer Drawn Date Checked Date
26/9/95
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Contract Name
99,BISHOPSGATE
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Drawing Title
ELECTRICAL SERVICES
LIGHTING & SMALL POWER
LAYOUT 23rd FLOOR
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[Matthew Hall Logo] MATTHEW HALL
Matthew Hall Limited
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Drawing Number Rev. COPYRIGHT
RESERVED
--------------------
86824/el/RD/211 Scale:
1.25
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NOTE: THIS DRAWING PRINTED IN PINK INDICATES THE ISSUE TO BE PRELIMINARY
<PAGE>
DATED 24TH OCTOBER 1996
---------------------------------
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES PLC
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
UNDERLEASE
of
Twenty-second Floor 99 Bishopsgate London EC2
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P1 7/30608932
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
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<S> <C> <C> <C>
1. Definitions
Building
Common Parts
Development
Electricty Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insurance Rent
Insured Risks
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
(13) Use
(14) Signs
<PAGE>
CLAUSE HEADING PAGE
- ------------- ------------------------------------------------------- ------
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangeours and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Arbitration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
8. Landlord's Guarantor
9. Tenant's option to determine
<PAGE>
CLAUSE HEADING PAGE
- ------------- ------------------------------------------------------- ------
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
</TABLE>
<PAGE>
LEASE PARTICULARS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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1. DATE 24TH OCTOBER 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE FIRST ABOVE WRITTEN
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2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette International
Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Lufkin & Jenrette, Inc.
- ------- -------------------------- ----- --------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the 22nd floor of the
Building shown for identification only edged
red on Plan 1.
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4. BUILDING : 99 Bishopsgate London EC 2
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5. CONTRACTUAL TERM AND : Commencing on the date hereof and expiring
TERM COMMENCEMENT on 23rd October 2011
AND EXPIRY DATES
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6. INITIAL RENT : pounds sterling423,914
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7. RENT COMMENCEMENT DATE : 25th March 1998
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8. TENANT'S BREAK RIGHT : 28th October 2008
- ------- -------------------------- ----- --------------------------------------------
9. CAPITAL SUM : pounds sterling211,957 inclusive of VAT
- ------- -------------------------- ----- --------------------------------------------
</TABLE>
<PAGE>
THIS UNDERLEASE made the 24th day of October One thousand nine hundred and
ninety six
BETWEEN:-
[SEALS]
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House
Kumul Highway Port Vila Vanuatu (Co. Regn. No. 10469) registered
under Section 2IACo the Companies Act 1985 under company number
FCO18588 and branch number BR002962) whose principal place of
business is at 100 Park Lane London W1Y 4AR (the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at 100
Park Lane London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT
COMPANY")
(3) HAMMERSON U.K. PROPERTIES PLC whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 298351) (the "LANDLORD'S
GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered
office is at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn.
No. 2475089) (the "TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the
State of Delaware United States of America whose address for the
purposes of this lease is 277 Park Avenue New York New York 10172
(the "GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular intervention required by clause 2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person acting
on behalf of or in connection with any organisation (or on his own
behalf) which carries out activities directed towards overthrowing
or influencing by force or violence Her Majesty's Government in the
United Kingdom or any other government de jure or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even date
herewith and made between the Landlord and the Tenant governing the
initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part) having a
frontage to the west side of Bishopsgate and a return frontage to
the south side of Wormwood Street and all buildings fixtures and
other structures whatsoever from time to time thereon and the
appurtenances thereof which land (together with the building now
erected thereon) is known as 99 Bishopsgate London EC2 and is for
the purpose of identification shown verged by a blue line on the
Building Plan together with any adjoining areas designated by the
Landlord or the Management Company
(4) "COMMON PARTS" means all parts of the Building which are from time
to time intended for the common use and enjoyment of the tenants and
occupiers of the Building and persons claiming through or under them
(whether or not other
<PAGE>
parties are also entitled to use and enjoy the same) and reasonably
designated as such by the Landlord and including without prejudice
to the generality of the foregoing the pedestrian ways circulation
areas lobby entrance halls lifts lift shafts fire escapes landings
staircases passages forecourts car park landscaped areas plant rooms
management suites and any other areas which are from time to time
during the Term reasonably provided by the Landlord for common use
by or benefit of the tenants and occupiers of the Building But
excluding (for the avoidance of doubt) any premises intended to be
let to any party or for occupation by the Landlord or the Management
Company other than for the provision of the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by
Planning Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the
Tenant in accordance with its covenant contained at clause 5(4)
being a fair and reasonable proportion as determined by the
Landlord of the total cost of the provision of electricity to the
Building as a whole (including the provision of any security for
the supply of electricity to the Building which may from time to
time be required by the relevant undertaker responsible for the
supply of electricity chosen by the Landlord) which proportion
shall so far as practicable (save where the same are not in working
order) be calculated using readings taken in such manner and at
such times as the Landlord shall from time to time determine of the
check meters relating to the Premises from time to time installed
but otherwise shall be determined in such manner as the Landlord
shall in its discretion consider to be fair and reasonable in all
the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation
now or hereafter to be enacted or made and all subordinate
legislation whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the
Premises dated 29th September 1975 made between The Prudential
Assurance Company Limited (1) and Bishopsgate Developments Limited
(2) and "Superior Landlord" means the person for the time being
entitled to the reversion immediately expectant on the term granted
by the Head Lease and every other person having an interest in
reversion to that term
(9) "GROUP COMPANY" means a company which is either the holding company
of the Tenant or a wholly owned subsidiary of the Tenant or the
Tenant's holding company (as both expressions are defined in
Section 736 Companies Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same
is required by the Landlord to be calculated the aggregate of the
amount which the Landlord may reasonably expend:-
(a) in effecting and maintaining insurance against the occurrence
of the Insured Risks in relation to the Building in such sum as
represents its then full current replacement cost with such
allowance as the Landlord from time to time considers
appropriate in respect of related liabilities and expenses
(including without limitation liability to pay and fees or
charges on the submission of an application for planning
permission and costs which might be incurred in complying with
any Enactment in carrying out
<PAGE>
any replacement work and sums in respect of architects'
engineers' and quantity surveyors' and other professional fees
and incidental expenses incurred in relation to any works of
debris removal and of replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of the
Landlord in relation to the Building and anything done therein
and
(c) in professional fees relating to insurance including fees for
insurance valuations carried out at reasonable intervals by an
independent insurance valuer (but no more than once in any
year) and all reasonable fees and expenses payable to advisers
in connection with effecting and maintaining insurance policies
and claims and
(d) equivalent to the total of all reasonable excess sums (being
for the avoidance of doubt the first part of any insurance
claim) which the insurers are not liable to pay out on any
insurance claim in respect of the Building and which the
Landlord or the Management Company may have expended in
replacing the damaged or destroyed parts of the Building
(11) "INSURANCE RENT" means in respect of any period for which the same
is required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises
of the Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in
effecting and maintaining insurance against up to six years'
loss of the rents first and secondly hereinafter reserved and
Service Charge having regard to potential increases of rent in
accordance with schedule 4 and with any addition to the amount
insured as the Landlord may decide in respect of VAT and
(c) (without prejudice to all other provisions of this lease
relating to the use of the Premises and the vitiation of any
policy of insurance) any reasonable amount which the Landlord
may expend in paying all additional premiums and loadings on
any policy or policies of insurance required to be paid as a
result of anything done or omitted (in breach of the terms of
this lease) by the Tenant and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot
civil commotion strikes labour and political disturbances and
malicious damage aircraft and aerial devices (other than hostile
aircraft and devices) and articles accidentally dropped from them
storm tempest flood bursting or overflowing of water tanks and
pipes impact earthquake and accidental damage to underground water
oil and gas pipes or electricity wires and cables subsidence group
slip and heave and such other usual commercial risks or perils
against the occurrence of which the Landlord may from time to time
in its reasonable discretion deem it desirable to insure subject to
such exclusions and limitations as are from time to time commonly
<PAGE>
imposed by insurers and subject also to the exclusion of such of
the risks specifically hereinbefore mentioned as the Landlord may
in its reasonable discretion decide where insurance cover in
respect of the risk in question is not for the time being available
in the London insurance market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either the
base rate of Barclays Bank plc or such other bank (being for the
time being generally recognised as a clearing bank in the London
market) as the Landlord may from time to time use for general
banking purposes or if the base rate cannot be ascertained then
above such other rate as the Landlord may reasonably specify (and
so that whenever there is reference in this lease to the payment of
interest at the Interest Rate such interest shall be calculated on
a daily basis and compounded with quarterly rests on the usual
quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the
Building from time to time (whether or not within the Premises or
other premises let or intended to be let by the Landlord)
comprising or used in connection with the following systems (to the
extent specified in the following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building
(including sprinkler heads)
(ii) the whole of the fire alarm systems
(iii) the whole of the permanent fire fighting systems (but
excluding portable fire extinguishers installed by the
Tenant or other tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the
building security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply
into the Building so far as (and including) the electrical
riser busbars connecting to the distribution boards at each
level in the Building which is let or intended to be let by
the Landlord.
(vii) the whole of the air handling system and the electricity
supply and control systems for the same
(viii) the standby generators and associated cabling wiring and
duct work
but excluding in each case any "stand alone" systems installed by
the Tenant or any other tenant or occupier of the Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to
be for separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by
the Code of Measuring Practice -- Fourth Edition (RICS/ISVA 1993)
(or if there shall be no such edition or no such expression for the
time being the nearest equivalent thereto)
<PAGE>
[GRAPHICS OMITTED]
99 BISHOPSGATE EC2
TWENTY SECOND FLOOR TOWER
<PAGE>
[GRAPHICS OMITTED]
99 BISHOPSGATE LONDON, EC2
BUILDING PLAN
<PAGE>
(17) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of such
hours at the reasonable discretion of the Landlord provided that such
hours will automatically expand if any other tenant in the Building is
granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the actual cost
to the Management Company of carrying out or providing any of the
Services at the request of the Tenant outside Normal Business Hours other
than any services which are stated to be provided 24 hours a day
(including without prejudice to the generality of the foregoing costs and
expenses in the nature of those set out in Part II of schedule 6) or in
the event of any of the Services being carried out or provided outside
Normal Business Hours to the Tenant and any other tenant or tenants of
the Building a fair proportion thereof (on a fair and reasonable basis
between the Tenant and any other tenant or occupier making use of such
Services) as reasonably determined by the Landlord. PROVIDED THAT during
the first year of the Term the cost of providing air conditioning outside
Normal Business Hours shall not exceed pounds sterling 88 per hour (in
respect of the Premises being the only user of air conditioning at the
relevant time) or pounds sterling 48 per hour per floor on the basis that
any five of floors 18, 20 and 22 to 26 of the Building are simultaneously
using such air conditioning over the whole of such floors
(19) "PERMITTED PART" means any part or parts of the Premises capable of
separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose within
Class B1(a) (but not for any other purpose within that Use Class) of the
schedule to the Town and Country Planning (Use Classes) Order 1987 and
for the avoidance of doubt use of the Premises for data processing
investor services business trading operators and investment banking
complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and buildings and
every planning permission statutory consent and agreement made under any
Enactment relating to the Building
(22) "PLANS" means the plans annexed hereto and "Building Plan" means that one
of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all permitted
additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their use
and occupation and any court of law and the companies or authorities
responsible for the supply of water gas and electricity or any of them
and any of their duly authorised officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed hereto or
in the event that materials listed in the specification are not
available from time to time or appropriate for use (in the Landlord's
reasonable opinion) then reference to such materials will be substituted
by reference to materials of not materially less quality which perform a
similar function PROVIDED THAT save to the extent
5
<PAGE>
that items of plant and equipment have been altered during the
Term the Tenant shall not be required to replace existing items
of plant and equipment for new items subject to the existing
items being in good working order
(25) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and every
fifth anniversary of that date during the Term (and the last
day of the Term)
(b) any date so stipulated by virtue of paragraph 5 of schedule
4
(26) "Services" means the services and other matters specified in
clause 6 and Part I of schedule 6
(27) "Service Media" means those parts of the Building comprising gas
water drainage electricity telephone telex signal and
telecommunications heating cooling ventilation air conditioning
fire alarm and other pipes drains sewers mains cables wires
supply lines ducts conduits flues and all other common conducting
media plant appliances and apparatus for the provision supply
control and monitoring of services to or from the Building and
other common equipment
(28) "Term" means a term of years commencing on the date hereof and
expiring on 23rd October 2011 includes any period of holding over
or extension whether by any Enactment or common law
(29) "Termination Notice" means not less than 12 months and 1 day's
prior written notice unless either:
(a) any Enactment or decision not capable of appeal on a point
of law confirming that the Tenant is not entitled to a new
tenancy on the expiration of such notice is in force or
upheld as at 22nd October 2007 (in which case not less
than 6 months prior written notice need be given); or
(b) any other tenant enters into a lease prior to September
1998 of premises comprising at least a floor of the
building within the security of tenure protections of the
Landlord and Tenant Act 1954 for a term of not less than 10
years (without break rights) and is granted right to
determine such lease on less than such 12 months' and 1
day's prior written notice (in which case the notice period
hereunder shall be reduced to such notice period as is
granted to such tenant in such circumstances)
(30) "VAT" means Value Added Tax as referred to in the Value Added Tax
Act 1994 (or any tax of a similar nature which may be substituted
for or levied instead of it by statutes)
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa
and words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and
"Guarantor", wherever the context so admits include their
respective successors in title and
6
<PAGE>
where a party comprises more than one person covenants and obligations
of that party take effect as joint and several covenants and obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit or
suffer it to be done (or omitted) and to prevent (or as the case may be
to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference to the
relevant clause sub-clause schedule or paragraph of this lease
and clause and schedule headings shall not affect the
construction of this lease
(b) any right of (or covenant to permit) the Landlord or the Management
Company to enter the Premises shall also be construed (subject
always to the proviso to clause 4(9)) as entitling the Landlord to
remain on the Premises with or without equipment and permitting
such right to be exercised by all persons authorised by the
Landlord for as short a period as reasonably practicable and
making good all damage caused and causing as little inconvenience
as reasonably possible save where the right of entry is exercised
to remedy any breach hereunder where the Landlord only undertakes
to make good damage caused
(c) any consent licence or approval of the Landlord or words to
similar effect mean a consent licence or other approval in
writing signed by or on behalf of the Landlord and given before
the act requiring consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it for
the time being in force except in relation to the Town and
Country Planning (Use Classes) Order 1987 which shall be
interpreted exclusively by reference to the original provisions
of Statutory Instrument 1987 No 764 whether or not the same may
at any time have been revoked or modified
(f) the last year of the Term includes the final year of the Term if
it shall determine otherwise than by effluxion of time and
references to the expiry of the Term include such other
determination
(5) (a) Where the context permits rents or other sums being due from
the Tenant to the Landlord or the Management Company mean that
they are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is
required under this lease the relevant provision shall be
construed as also requiring (and any consent licence or approval
given by the Landlord shall be deemed subject to the need for)
the consent licence or approval of the Superior Landlord (for
which the Landlord shall apply at the Tenant's reasonable cost)
where the same is required under the Head Lease except that
nothing in this lease or in any consent licence or approval by
the
7
<PAGE>
Landlord shall imply that the Superior Landlord's consent
licence or approval will not be unreasonably withheld or
delayed
(c) references to any right of (or covenant to permit) the
Landlord to enter the Premises shall extend to the Superior
Landlord and to all persons authorised by it and shall be
construed in the manner required by clause 2(4)(b) but in
relation to the Superior Landlord and those with its
authority
(d) the rights excepted and reserved in schedule 3 are also
excepted and reserved for the benefit of the Superior
Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor and in consideration of the
payment by the Landlord to the Tenant of the sum of Two hundred and
eleven thousand nine hundred and fifty seven pounds (pounds sterling
211,957) paid on the date hereof (receipt of which is acknowledged by
the Tenant) DEMISES unto the Tenant ALL THAT the Premises TOGETHER WITH
the easements and rights specified in schedule 2 exercisable in common
with the Landlord and all others with its authority or otherwise from
time to time entitled thereto EXCEPT and RESERVED unto the Landlord and
all other persons authorised by it from time to time during the Term or
otherwise from time to time entitled thereto (including the Management
Company in relation to the provision of the Services) the easements and
rights specified in schedule 3
TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the Term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT
to the provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 24th March
1998 a peppercorn (if demanded) and thereafter until the first Review
Date (and thereafter as determined pursuant to schedule 4) the yearly
rent of Four hundred and twenty three thousand nine hundred and fourteen
Pounds (pounds sterling 423,914) exclusive of VAT (subject to clause
5(6)) payable by equal quarterly payments to be made in advance on the
usual quarter days in every year the first such payment to be made on
25th March 1998
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice
to the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as
rent or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days
following the due date (or in the case of money due only on
demand within fourteen days after the date of demand) calculated
for the period commencing on the due date for payment and ending
on the date the sum and the interest is received in cleared funds
by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to
demand or accept any payment having regard to a breach of any of
the Tenant's obligations under this lease of
8
<PAGE>
which the Tenant has received notice calculated for the period
commencing on the due date for payment and ending on the date the
sum (and the interest) is subsequently received by the Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant
body to whom account has for the time being to be made) on the supply by
the Landlord to the Tenant under or in connection with the provisions of
this lease or the interest created by it and of any other supplies
whether of goods or services such rent fourthly reserved to be due for
payment contemporaneously with the other rents or sums to which it
relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable
on demand (either annually or by instalments) as the Landlord shall
determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause
4(30) also with the Management Company) throughout the Term subject to
clause 4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the
manner set out in clause 3 without deduction or set off and
(unless for the time being the Landlord shall have required in
writing to the contrary) to pay the rent first reserved (together
with any sum in respect of the rent fourthly reserved as may be
applicable thereto) by banker's standing order to such bank as
the Landlord may from time to time nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any
amount to the Landlord hereunder by way of reimbursement or
indemnity to pay on the production of a valid VAT invoice to the
Landlord (as applicable) in addition an amount equivalent to any
VAT incurred by the Landlord save to the extent that the Landlord
obtains credit for such VAT incurred by the Landlord pursuant to
sections 24 25 and 26 Value Added Tax Act 1994 or any regulations
made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now
or hereafter assessed charged or imposed upon the Premises or
upon their owner or occupier (and a proper proportion determined
by the Landlord attributable to the Premises of any rates taxes
charges and other outgoings now or hereafter assessed charged or
imposed upon the Premises in common with other premises or upon
the owners or occupiers thereof) and (to the extent the Tenant
does not pay it directly to the relevant supplier) the total cost
(including meter rents) of all water (including chilled water)
electricity and gas separately metered and/or exclusively
supplied to the Premises during the Term as reasonably determined
by the Landlord excluding (without prejudice to the rent fourthly
reserved and clause 4(2)) any tax payable by the Landlord as a
direct result of any actual or implied dealing with the reversion
of this lease or of the Landlord's receipt of income
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COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every Public
Authority (including the due and proper execution of any works) in
respect of the Premises their use occupation employment of personnel in
them and any work being carried out to them (whether the requirements
are imposed upon the owner lessee or occupier) and not to do or omit
anything by which the Landlord may become liable to make any payment or
do anything under any Enactment or requirement of a Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5 working days
of receipt of the same to give to the Landlord notice of (and a
certified copy of) any notice permission direction requisition order or
proposal made by any Public Authority and without delay to comply in all
respects at the Tenant's cost with the provisions thereof save that the
Tenant shall if so required by and at the cost of the Landlord make or
join in making such objections or representations in respect of any of
them as the Landlord may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of Schedule 2) in good and substantial
repair and condition (damage by any of the Insured Risks excepted to the
extent that the insurance money shall not have been rendered
irrecoverable subject to clause 5(2)(b) or insufficient because of some
act or default of the Tenant or of any person deriving title under or
through it or their respective servants or agents or invitees) and to
replace whenever necessary during the Term and on expiry of the Term the
landlord's fixtures and fittings (including any fitted carpets) in the
Premises which may have become beyond economic repair with items of the
same type and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of decorative
order and finish and properly cleansed and tidy and (without
prejudice to the foregoing) as often as the same shall be
necessary (and not less frequently than once in every fifth year
of the Term but not more than once in any 18 month period) and
also in the last year of the Term to clean paint polish or
otherwise treat as the case may be all inside surfaces of wood and
metal work of the Premises usually or requiring to be painted
polished or otherwise treated with two coats at least of high
quality paint or polish vinyl wall coverings (where applicable)
or other appropriate materials in a good and workmanlike manner
(and during the last year of the Term in the colour scheme
specified and otherwise in accordance with the Reinstatement
Specification) PROVIDED ALWAYS THAT the Tenant shall not be
obliged to carry out any such decorative treatment if the need
for it is caused by damage by any of the Insured Risks to the
extent (subject to clause 5(2)(b)) that the insurance money shall
not have been rendered irrecoverable or insufficient because of
some act or default of the Tenant or of any person deriving title
under or through it or their respective servants agents or
invitees
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(b) To clean the inside of all external window glazing in the
Premises at least once in every month using reputable contractors
(c) To enter into and maintain contracts for the regular inspection
maintenance and servicing of all fixed plant and equipment
comprised in the Premises which has or is likely to have any
impact on the Landlord's Services Equipment by reputable
contractors approved by the Landlord (such approval not to be
unreasonably withheld) and to obtain satisfactory test
certificates as may be reasonably required by the insurers and
whenever reasonably required to produce copies of such contracts
and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in areas
designated for such purpose from time to time by the Landlord and to
comply with all requirements of any Public Authority and any reasonable
regulations made by the Landlord pursuant to clause 4(27) in relation to
control over and disposal of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable security
requirements on reasonable prior written notice (except in an emergency)
to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease have
been observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and make
connections to any part of the Building including the Service
Media (PROVIDED that the Landlord will procure that such entry
takes place outside Normal Business Hours where practicable)
(e) during the last six months of the Term (or at any time in the case
of a disposal of the Landlord's interest) to show the Premises to
prospective purchasers or tenants and their agents
(f) exercise the rights described in schedule 3
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy any
breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with any
such notice to permit the Landlord and any authorised person to
enter the Premises to remedy the breach as the Tenant's agent
and at the Tenant's proper cost the Landlord making good any
damage caused
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(c) To pay to the Landlord on demand all the proper costs and expenses
incurred by the Landlord under the provisions of this sub-clause
ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements belonging to
the Premises and not knowingly to give any acknowledgment that
they are enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give notice
to the Landlord forthwith of any encroachment which might have
that effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from the
demise of the Premises) any works affecting any structural parts
of the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in respect
of areas not included in the Premises not to install or erect any
exterior lighting shade or awning or place any structure or other
thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this sub-clause
and subject to the provisos to this paragraph (c) not to make any
other alteration or addition to the Premises (including all
electrical and other plant and equipment and the installation and
removal of demountable partitioning) except:-
(i) in accordance with plans and specifications (adequately
describing the work in question and the manner in which the
work will be carried out) previously submitted at the
Tenant's expense in triplicate to and approved by the
Landlord (such approval not to be unreasonably withheld or
delayed PROVIDED THAT the Landlord shall respond to the
Tenant's submission within 10 working days in the case of
minor alterations (excluding any alterations which affect
any of the Landlord's Services Equipment) and if the
Landlord fails to respond within 10 working days as
aforesaid it shall be deemed to have accepted such minor
alterations AND PROVIDED FURTHER that the initial fitting
out of the Premises following the date hereof shall be
governed by the Agreement for Initial Alterations
(ii) in a manner which shall not materially and adversely affect
the Landlord's Services Equipment any Service Media or the
provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public Authority
(and in particular in relation to any electrical
installation in accordance with the terms and conditions
laid down by the Institution of Electrical Engineers and
the Regulations of the Electricity Supply
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Authority) and the insurance company with whom the Premises
are for the time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out until
the Landlord has issued its consent in writing to which the
Tenant shall if required join as a party
(II) once any such alterations or additions have been carried
out the Tenant shall supply to the Landlord as-built plans
in triplicate (together with a computer aided design disk
and 35 mm slides) showing the works as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by the
Tenant
(ii) all work done in connection with the original fitting out
by the Tenant in pursuance of the Agreement for Initial
Alterations
and to restore and make good the Premises in accordance with the
Reinstatement Specification in a proper and workmanlike manner to
the condition and design which existed before the alterations or
additions were made with all services properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the Premises)
which may be or become or cause a nuisance obstruction or damage
to any person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal or immoral trade business or
activity or for residential purposes and not to use the Common
Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this sub-clause)
except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the Building
save for the right granted pursuant to paragraph 3 of schedule 2
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or advertisement
except the approved signs referred to in paragraph 3 of
schedule 2
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ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of the
Premises the Tenant shall first by an irrevocable unconditional
written notice ("the Tenant's Notice") served upon the Landlord
offer to surrender or assign this lease upon such financial terms
and conditions as the Tenant may desire
(b) If the Landlord wishes to accept such surrender or assignment it
shall within twenty-one days of receipt of the Tenant's Notice
serve a counter-notice ("the Counter-Notice") upon the Tenant
stating as much
(c) If the Landlord serves a Counter-Notice on the Tenant then the
Tenant shall surrender or assign (at the Landlord's option) the
Premises to the Landlord (or as the Landlord may direct) within
six months of receipt of the Counter-Notice either with vacant
possession or subject only to a permitted underletting and the
Tenant's liability hereunder shall cease in respect of any
matters arising following the date of such assignment or
surrender but without prejudice to any antecedent breaches of
covenant
(d) If the Landlord does not serve a Counter-Notice then the Tenant
must (if it wishes to assign) complete its assignment on terms
greater than 95 per cent in value of the terms and conditions
stipulated in the Tenant's Notice within six months from the date
of the Tenant's Notice and if the Tenant shall fail to complete
within such period if it still wishes to assign the whole of the
Premises it must reinstate the procedure set out in this clause
4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15) not
to assign mortgage charge or underlet or in any other manner part
with possession of any part (being less than the whole) of the
Premises or agree to do so except that the Tenant may underlet
the whole of (but not more or less than) any Permitted Part or
Permitted Parts in accordance with paragraphs (h) and (i) of this
sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15) not
to assign underlet or otherwise part with possession of or the
whole of the Premises or agree to do so except that the Tenant
may assign or underlet the whole of the Premises in accordance
with paragraph (g) or (h) respectively of this sub-clause
(ASSIGNMENT)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2 months
before completion of the assignment which consent shall not
be unreasonably withheld or delayed but which may be
granted subject to any one or more of the conditions
referred to in paragraph (g)(ii) and which may be withheld
if any one or more of the circumstances referred to in
paragraph (g)(iii) exist
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(ii) The conditions referred to in paragraph (g)(i) (which are specified for
the purposes of section 19(1A) Landlord and Tenant Act 1927) are:
AUTHORISED GUARANTEE
(a) that the Tenant shall enter into an authorised guarantee
agreement (as defined in section 16 Landlord and Tenant
(Covenants) Act 1995) with the Landlord in a form which the
Landlord reasonably requires
THIRD PARTY GUARANTEE/RENT DEPOSIT
(b) that if so reasonably required by the Landlord the proposed
assignee shall have procured covenants with the Landlord by a
guarantor or guarantors (not being the Tenant or any guarantor)
reasonably acceptable to the Landlord in a form acceptable to the
Landlord (acting reasonably);
INTRA GROUP DEALINGS
(c) if the proposed assignee is a Group Company the Tenant
shall have procured either:
(A) if the Tenant's obligations under this lease are guaranteed
by another Group Company that such Group Company covenants
with the Landlord on the same terms (mutatis mutandis) as
those contained in clause 10; or
(B) if there is no guarantor of the Tenant's obligations
under this lease and if the assignee is not at the
date of the application for consent to the proposed
assignment in the reasonable opinion of the
Landlord of financial standing equivalent to or
greater than the Tenant at the date of this lease
that the proposed assignee procures covenants by a
Group Company which is not the Tenant or the
proposed assignee and which is in the reasonable
opinion of the Landlord of financial standing
equivalent to or greater than the Tenant in the
same terms (mutatis mutandis) as those contained
in clause 10; and
(iii) The circumstances referred to in paragraph (g)(i) (which are specified
for the purposes of section 19(1A) Landlord and Tenant Act 1927) are:-
(a) where the Tenant's solicitors have not given an undertaking to
the Landlord's solicitors to pay all reasonable legal surveyor's
and management costs disbursements and VAT arising on the
application for consent to such assignment whether or not consent
is
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granted unless the Landlord unreasonably withholds
consent in circumstances where it is required to be
reasonable; and/or
(b) where any of the rents and Interim Sum due from the
Tenant to the Landlord or the Management Company
respectively under this lease remain unpaid at the
date of the application for consent to the proposed
assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted Part
(each being referred to in this paragraph as the premises) except:-
(i) to a person who before the underletting shall have
covenanted with the Landlord to observe and perform the
Tenant's obligations under this lease during the sub-term
to the extent they relate to the premises demised by the
underletting (other than the payment of rents) and a
covenant not to assign the whole of the premises without
the Landlord's consent (which shall not be unreasonably
withheld or delayed) and an unqualified covenant not to
assign part of the premises or to underlet or otherwise
part with possession or share the occupation of the
premises or any part of them
(ii) by reserving as a yearly rent without payment of a fine or
premium (in addition to the service and insurance and other
rents payable under this lease except the rent first hereby
reserved or (in the case of underletting of a Permitted
Part) a pro rata proportion of them) an amount equal to:-
(a) (in the case of an underletting of the Premises) the
then open market rack rental value of the Premises
(b) (in the case of an underletting of a Permitted Part) a
pro rata proportion of the then open market rack
rental value of the Premises
the proportion in each case being calculated by reference
to the Net Internal Area of the Permitted Part in relation
to the Net Internal Area of the Premises, in all cases such
rent to be payable by equal quarterly instalments in
advance on the usual quarter days and to be approved by the
Landlord prior to the underletting (such approval not to be
unreasonably withheld or delayed) but the amount of such
rent and the approval of the Landlord thereto may not be
used as evidence by the Tenant for the purpose of any rent
review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the
underlease is reviewed upwards only at not greater
than five year intervals during the sub-term in
accordance with the same
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principles (mutatis mutandis) and at the times as apply to
the rent first reserved by this lease
(b) requiring the underlessee to observe and perform all- the
covenants and other provisions binding on the Tenant under
this lease (other than the covenant by the Tenant to pay
rents) to the extent they relate to the premises and
containing:-
(A) a condition for re-entry by the underlessor on
breach of any covenant by the underlessee
(B) a qualified covenant not to assign the whole of the
premises and an absolute covenant not to assign part
of the premises or to underlet or otherwise part
with possession or share the occupation of the
premises or any part of them
(iv) with the Landlord's consent issued within three months before
completion of the underletting which consent (subject to
compliance with the foregoing conditions precedent) shall not be
unreasonably withheld or delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the entrance to or
the reception area of the Premises
(ii) to except from the underlease all necessary circulation areas and
plant and equipment which will serve the Premises in common and
to reserve a separate service charge rent in respect of their
maintenance repair and renewal
(iii) not as a result of the grant to create or permit the creation of
more than four separate occupations affecting the whole of the
Premises (occupations in right of this lease counting as one
occupation)
(iv) not to grant or agree to grant the underlease without providing
for the exclusion of sections 24 to 28 inclusive of the Landlord
and Tenant Act 1954 in relation to the underlease in pursuance of
an Order duly made under section 38(4) of that Act before the
date of grant
(j) To enforce the observance and performance by every such underlessee and
its successors in title of the provisions of the underlease and not
expressly or impliedly to waive any breach of them nor vary the terms of
any underlease
(k) Not to agree any reviewed rent payable under an underlease without the
Landlord's consent and if the rent review under any underlease is to be
determined by an independent person not to agree his appointment without
the Landlord's consent (PROVIDED ALWAYS THAT the Landlord shall not
unreasonably withhold or delay any consent required under this
sub-paragraph) and to procure that any representations which
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the Landlord may wish to make in relation to the rent review are
duly submitted to the independent person and to provide to the
Landlord promptly on the same becoming available copies of any
representations made by or on behalf of the Tenant or the
underlessee in relation to such rent review
(SHARING OCCUPATION)
(1) Not to part with or share the occupation of the Premises or any
part of them except that the Tenant may share occupation with a
company which is (but only for so long as it remains) either the
holding company of the Tenant or a majority-owned subsidiary of
the Tenant or of the Tenant's holding company (as those
expressions are defined in section 736 Companies Act 1985) so
long as the Tenant does not grant the person sharing occupation
exclusive possession (so that such company occupies as licensee
only without creating any relationship of landlord and tenant)
nor otherwise transfer or create a legal estate and the Tenant
shall notify the Landlord of the identity of each company in
occupation
REGISTRATION
(16) (a) Within twenty-one days after any disposition or devolution of
this lease or of any estate or interest in or derived out of it
to give notice in duplicate of the relevant transaction to the
Landlord for registration with a certified copy of the relevant
instrument and to pay to the Landlord a fair and reasonable fee
for each such registration of not less than twenty five pounds
(b) To register with the Landlord particulars of the determination of
every rent review under any underlease of the Premises within
fourteen days after the date of determination
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels'
solicitors' surveyors' and bailiffs' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146 Law of
Property Act 1925 or in contemplation of any proceedings under
section 146 or 147 of that Act notwithstanding that forfeiture is
avoided otherwise than by relief granted by the court and
(b) every reasonable step taken during or after the expiry of the
Term in connection with the enforcement of the Tenant's
obligations under this lease including the service or proposed
service of all notices and schedules of dilapidations and
(c) every application for consent licence or approval under this
lease but not if the application is unreasonably refused or
delayed or granted subject to unreasonable conditions (where such
consent is not to be unreasonably withheld or delayed)
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MACHINERY
(18) Not to install in the Premises any plant or machinery other than usual
office equipment without the Landlord's consent which shall not be
unreasonably withheld PROVIDED ALWAYS THAT no plant or machinery shall
be installed or operated in the Premises and nothing shall be done or
omitted in them which may cause:-
(a) the efficiency of the heating ventilation air conditioning and
cooling system installed in the building to be diminished or
impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other part
of the Building or other adjoining property or persons outside
the Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the rights
granted by this lease in a way which causes nuisance or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises and
(to the extent they lie within the Premises) to keep them
clear and functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the
Premises
nor to overload or cause undue strain to the Service Media or any other
part of the Building and in particular not to suspend any undue weight
from the ceilings or walls of the Premises and not to exceed the
following floor loadings:-
floor finishings: : 4 kN/m2 (801bs per sq.ft)
live load : 1 kN/m2 (201bs per sq.ft)
(e) any requisite notice erected on the Premises including any
erected by the Landlord in accordance with its powers under this
lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of goods is
carried out only by using the service accesses and goods lifts
designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to comply
with the provisions and requirements of Planning Law relating to or
affecting
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(a) (i) the Premises
(ii) any operations works acts or things carried out executed done or
omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any other rights
hereunder in respect of) any other parts of the building
(b) Subject to the provisions of paragraph (c) of this sub-clause as often
as occasion requires during the Term at the Tenant's expense to obtain
and if appropriate renew all planning permissions (and serve all
notices) required under Planning Law in respect of the Premises whether
for the carrying out by the Tenant of any operations or the institution
or continuance by the Tenant of any use of the Premises or any part
thereof or otherwise
(c) Not without the Landlord's consent (such consent not to be unreasonably
withheld or delayed) to apply for any planning permission relating to the
Premises (and not to apply for any such planning permission relating to
any other part of the Building) but so that subject to compliance with
paragraph (e) of this sub-clause the Landlord's consent shall not be
unreasonably withheld or delayed to the making of a planning application
in respect of the Premises relating to any operations or use or other
thing (if any) which assuming it to be implemented in accordance with
Planning Law would otherwise not be in breach of the provisions of this
lease
(d) If the Landlord so requires in connection with any relevant proposal by
the Tenant to apply for a determination under section 191 or 192 Town
and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by the Tenant
(which it hereby agrees to consider and determine with all due
expedition) for planning permission to submit a draft of the application
to the Landlord for its approval and to give effect to its reasonable
requirements in respect thereof and if and to the extent the Landlord so
requires to lodge the application with the relevant authority in the
joint names of the Landlord and the Tenant and in duplicate
(f) Not to implement any planning permission before the Landlord has
acknowledged that its terms are acceptable nor before the Landlord has
received any cash or other security which it reasonably requires for
compliance with any conditions imposed by the planning permission
(g) If the Landlord at the Landlord's cost reasonably requires or the Tenant
desires to lodge and progress diligently an appeal against any refusal
of an application for planning permission lodged in respect of the
Premises by the Tenant or by any person claiming under or through the
Tenant (whether or not lodged in its name alone) the Landlord undertakes
to cooperate fully with the Tenant in respect of any such appeal unless
such
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appeal would be likely to have a material and adverse effect on
the Landlord's interests in the Building
(h) Unless the Landlord otherwise directs to complete before the
expiry of the Term all works on the Premises required as a
condition of any planning permission implemented by the Tenant or
by any person claiming under or through it
(i) If the Tenant receives or is entitled to receive any statutory
compensation under any Enactment in relation to its interest in
the Premises the Tenant shall on any determination of its
interest prior to the expiry of this lease by effluxion of time
forthwith make such provision as is just and equitable for the
Landlord to receive its due benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs claims
damages demands and any other liability or consequence arising out or in
respect of any breach of any of the Tenant's obligations under this
lease (including all costs reasonably incurred by the Landlord in an
attempt to mitigate any such breach) or of any act omission or
negligence of the Tenant or any person at the Premises with the Tenant's
authority
DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably to
have become aware of the same) to give notice forthwith to the Landlord
of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing anything
in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed by the
Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the Landlord
may from time to time reasonably require to be displayed at the Premises
in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the
Tenant) relating to the Building or any part of it becomes void
or voidable or by which the rate of premium on such policy may be
increased
(b) To comply with all proper requirements of the insurers and to
provide and maintain unobstructed appropriate operational fire
fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
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(i) any incidence of any Insured Risk on the Premises and of
any other event which ought reasonably to be brought to the
attention of insurers and of which the Tenant ought
reasonably to be aware
(ii) the insurable value of any fixture installed in the
Premises by the Tenant or any person claiming under or
through the Tenant
(d) That if at any time the Tenant or any person claiming under or
through it shall be entitled to the benefit of any insurance of
the Premises to cause all money paid under such insurance to be
applied in making good the loss or damage in respect of which it
was paid
(e) Subject to clause 5(2)(b) if the whole or any part of the
Building is damaged or destroyed by any of the Insured Risks at
any time during the Term and the insurance money under any
insurance policy effected by the Landlord is rendered wholly or
partially irrecoverable because of some act or default of the
Tenant or any person deriving title under or through the Tenant
or their respective servants agents or invitees forthwith to pay
the Landlord the whole amount of the insurance money so
irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept placed
stored or used in or upon or about the Premises any materials substance
or other thing of a dangerous inflammable combustible explosive
corrosive or offensive nature or any materials substance or other thing
which may in any way cause pollution injury or harm by percolation
corrosion contamination migration release or otherwise on beneath or in
the vicinity of the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and tenant's
fixtures and quietly to yield up the Premises reinstated in
accordance with the Reinstatement Specification and restored and
made good to the extent required under clause 4(12)(d) and in the
state of repair condition decorative order and layout otherwise
required by this lease and any licences or consents issued in
pursuance of it and to make good any damage so caused in a proper
and workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and
dispose of any chattels which may be left in the Premises within
28 days after the Tenant has quit them (without being obliged to
obtain any consideration for the disposal) and the Tenant
irrevocably declares that any such chattels will stand abandoned
by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the Landlord
from time to time and notified to the Tenant in writing for
the good management of the Building PROVIDED ALWAYS THAT
no such regulations shall purport to amend the terms
expressed in
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this lease and if there is any inconsistency between
the terms of this lease and the regulations the terms
of this lease shall prevail
(ii) all covenants stipulations and other matters
affecting the Premises and not to interfere with any
rights easements or other matters affecting the
Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's
visitors to the Premises observe such security regulations which
may apply to them
HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on
the part of the lessee contained in the Head Lease so far
as they relate to the Premises except the covenant for the
payment of rent and except also so far as the obligations
relating to insurance fall to be observed and performed by
the Landlord pursuant to clause 5(2)
(b) Not to do or omit any act or thing which would or might
cause the Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management
Company at the times and in the manner provided for in clause 6
and schedule 5 without deduction or set off and to pay the
Outside Normal Business Hours Charge within 10 days of demand
(either annually or by monthly instalments) as the Management
Company shall reasonably determine PROVIDED THAT for the period
from the date hereof until the earlier of 25th June 1997 and the
date on which the Tenant commences full beneficial occupation of
the Premises following the works contemplated by the Agreement
for Initial Alterations the Service Charge payable by the Tenant
in any Accounting Period shall not exceed pounds sterling 32,196
inclusive of VAT and PROVIDED FURTHER that the Service Charge
payable in respect of the twelve month period from the earlier of
25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works
contemplated by the Agreement for Initial Alterations shall be
pounds sterling 74,587.40 exclusive of VAT
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained
in this lease the Tenant may peaceably hold and enjoy the
Premises without any lawful interruption by the Landlord or any
person rightfully claiming through under or in trust for it
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INSURANCE
(2) (a) To keep the Building (except all tenants' plant and equipment
and trade fixtures) insured against the Insured Risks in the full
current replacement cost
(b) to use reasonable endeavours to procure that the interest of the
Tenant is noted on the insurance policy and to use reasonable
endeavours to further procure that the insurers waive any rights
of subrogation against the Tenant (or any lawful subtenant
occupier or invitee) and the Landlord will notify the Tenant if
it is unable so to procure and will duly consider the
representations of the Tenant regarding alternative insurers who
may be prepared to procure that the insurers waive any subrogation
rights and/or note the interest of the Tenant and will also permit
the Tenant to make representations to the insurers regarding the
noting of the Tenant's interest and/or waiver of rights of
subrogation
(c) On request to supply the Tenant (but not more frequently than once
in any period of twelve months) with evidence of such insurance
(d) If and whenever during the Term the Building (except as aforesaid)
is damaged or destroyed by an Insured Risk and to the extent that
payment of the insurance monies is not refused because of any act
neglect default or omission of the Tenant or of any person
deriving title under or through the Tenant or their respective
servants agents and invitees subject to clause 5(2)(b) above the
Landlord will with all convenient speed take the necessary steps
to obtain any requisite planning permissions and consents
and if they are obtained to lay out the money received from the
insurance of the Building (except sums in respect of public
liability and employer's liability and loss of rent) towards
replacing (but not necessarily in facsimile reinstatement) the
damaged or destroyed parts (except as aforesaid) and in the case
of the Premises to the Reinstatement Specification as soon as
reasonably practicable (and the Landlord shall keep the Tenant
informed of progress of any such insurance claims and the
Landlord's proposals for compliance with this provision) PROVIDED
ALWAYS THAT the Tenant shall have no claim against the Landlord
under this clause 5(2)(c) in respect of the manner of replacement
of the interior of any Lettable Unit other than the Premises or
any alteration to the Common Parts and PROVIDED FURTHER THAT the
Landlord shall not be liable to carry out the replacement if it
is unable (having used all reasonable endeavours) to obtain every
planning permission and consent necessary to execute the relevant
work in which event the Landlord shall be entitled to retain all
the insurance money received by it and if the Landlord so retains
the insurance money the Tenant shall be entitled to determine this
lease on not less than one month's prior written notice
(e) In the event that the Premises have not been reinstated to the
Reinstatement Specification or essential means of access thereto
within the Building is not available in the circumstances
contemplated in subclause 5(2)(d) by the date five years and
eleven months following the date of such damage or destruction by
an Insured Risk the Tenant may
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determine this lease on not less than one month's prior written
notice such notice to be served (if at all) within one month
after expiry of such five years and eleven months period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform so far
as the Tenant is not liable for such performance under the terms
of this lease but so far only as to preserve the existence of this
lease the covenants and conditions on the part of the lessee
contained in the Head Lease
(b) On the request and at the reasonable expense of the Tenant to
take all reasonable steps to enforce the covenants on the part of
the Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's reasonable expense
(to the extent possible under the Head Lease) to obtain the
consent of the Superior Landlord wherever the Tenant makes
application for any consent required under this lease where the
consent of both the Landlord and the Superior Landlord is needed
by virtue of this lease and the Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide or
procure the provision of electricity to the Premises to the extent
necessary to meet the requirements of the Tenant having regard to the
overall electricity services design standards for the Building as a
whole and to all relevant statutory provisions from time to time
regulating the supply and utilisation of electricity and the terms and
conditions relative thereto from time to time imposed by the electricity
provider chosen by the Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as it
requires from time to time for the due and proper provision of the
Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT liability on
the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply made
hereunder by the Landlord to the Tenant the Landlord shall no
later than thirty days after the due date for payment in respect
of such supply issue a valid VAT invoice or audit note (as the
case may be to the Tenant)
(b) Subject to (6)(c) below all consideration payable by the Landlord
to the Tenant shall be exclusive of VAT which the Landlord shall
pay in addition on production of a valid VAT invoice
(c) The capital sum referred to in clause 3 above shall be inclusive
of VAT save that if the Landlord is at any stage able to-recover
such VAT the Landlord shall pay to the Tenant a further amount
equal to VAT on the capital sum
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NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its
postal address from time to time
NOTIFICATION OF NOTICES
(8) The Landlord will inform the Tenant as soon as reasonably
practicable but in any event within 5 working days of receipt of
the same of any notice served by the Superior Landlord alleging a
breach of the Head Lease which would threaten the existence of
this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate
the structure of the Building (including the structure of the
roofs foundations external and internal walls and columns and
structural slabs of the ceilings and floors) the external
surfaces of the Building (including the whole of the glazing
within the external walls of the Building) and the Common Parts
and (where consistent with an obligation to repair) to replace
the same
(2) To keep the Service Media designed for common or general use and
the Landlord's Services Equipment in good and substantial repair
and in clean condition and at all times in good and safe working
order
(3) To keep the lifts in the Building clean and in good and
substantial repair and condition and at all times in good and
safe working order
(4) Provide heat and air conditioning and chilled water to the
Premises (subject to the Tenant paying Outside Normal Business
Hours Charge in relation to the provision of such services
outside Normal Business Hours) such heat being sufficient to
maintain an air temperature in the Premises measured at the main
trunk connections to the floor as follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29 Degrees Celsius DB 20 Degrees Celsius WB
Winter -4 Degrees Celsius DB 100% relative humidity
Internal Conditions Office
Accommodation -
Summer 22 Degrees Celsius DB + 1 Degree Celsius
Winter 20 Degrees Celsius DB minimum
Humidity Office Accommodation -
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Summer 50% +/- 10%
Winter 50%+/- 10%
(5) To ensure that the Common Parts are at all times kept clean tidy and
unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part thereof
designed to receive the same to the extent necessary to meet the
reasonable requirements of the Tenant and other lawful occupiers of the
Premises
(7) To comply with the requirements of any statute (already or in the future
to be passed) or any government department local authority other public
or competent authority or court of competent jurisdiction relating to the
Building or any part for which any tenant or occupier of the Building is
not directly or exclusively liable
(8) To ensure that at all times (meaning for the avoidance of doubt 24 hours
a day during the Term) there are both such security officers at and
patrolling the Building as is reasonably appropriate for premises of the
same size and nature as the Building and that the main reception to the
Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate to
provide to a high class office building in the City of London
outside Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the Tenant
shall previously request (but subject to the Tenant being
responsible for the Outside Normal Business Hours Charge)
(having regard in all cases to and in accordance with the overall design
standards for the Building as a whole and subject to the limitations
contained in Clause 7(6)) in an efficient and economic manner and in
accordance with good estate management provided that the Management
Company shall be entitled to employ such managing agents professional
advisers contractors and other persons as it shall from time to time
reasonably think fit for the purpose of the performance of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any of the
Common Parts or interruption in the provision of the Services or stoppage or
severance affecting any of the Service Media or any interruption to the supply
of electricity to the Premises or the Common Parts or temporary closure or
diversion of any of the Common Parts or Service Media by reason of necessary
inspection repair maintenance or replacement thereof or any part thereof or
any plant machinery equipment installations or apparatus used in connection
therewith or damage thereto or destruction thereof by any risk
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(whether or not an Insured Risk) or by reason of electrical mechanical
or other defect or breakdown or frost or other inclement conditions or
shortage of fuel materials supplies or labour or whole or partial
failure or stoppage of any mains supply due to any circumstances beyond
the control of the Management Company PROVIDED ALWAYS that the
Management Company shall use all reasonable endeavours to minimise the
adverse effects of any such circumstances and to remedy any such
interruption closure or diversion as soon as reasonably practicable
PROVIDED FURTHER that in the event of the Landlord or the Management
Company being unable to provide air conditioning or electricity to the
Premises in such circumstances the Tenant shall be entitled to carry out
(the Landlord and Management Company affording the Tenant reasonable
access to do so) all necessary remedial works to such electricity or air
conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other
tenants as reasonably practicable
(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach
of the Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:-
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in
this lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for
twenty-one days after becoming payable (whether or not
formally demanded) or
(b) any of the Tenant's covenants in this lease are not
performed or observed in the manner and at the times
herein specified or
(c) the guarantee granted by the Guarantor or any other
guarantor of the Tenant's obligations is or becomes
unenforceable (in whole or in part) for any reason
whatsoever and no suitable alternative security is provided
to the Landlord within a period of one month or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent
company) or compulsorily or has a provisional liquidator or
a receiver (including an administrative receiver) appointed
or its directors pass a resolution to petition for an
administration order or one or more of them swears an
affidavit in support of such a petition or is the subject
of an administration order or a petition for one or of a
voluntary arrangement or a proposal for one under Part I
Insolvency Act 1986
(e) being a company incorporated outside the United Kingdom is
the subject of any proceedings or event analogous to those
referred to in clause 7(1)(d) in the country of its
incorporation
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(f) being an individual is the subject of a bankruptcy petition or
bankruptcy order or of any application or order or appointment
under section 253 or section 273 or section 286 Insolvency Act
1986 or otherwise becomes bankrupt or insolvent or dies
the Landlord may at any time thereafter (and notwithstanding the waiver
of any previous right of re-entry) re-enter the Premises without
prejudice to the Tenant's right to relief against forfeiture whereupon
this lease shall absolutely determine but without prejudice to either
partys right of action against the other in respect of any antecedent
breach of the covenants in this lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in relation to
the Building and (subject only to those easements expressly granted by
this lease) neither the Tenant nor the Premises shall be entitled to any
easement or quasi-easement whatsoever and nothing herein contained or
implied shall give the Tenant the benefit of or the right to enforce or
to have enforced or to prevent the release or modification of any right
easement covenant condition or stipulation enjoyed or entered into by
any tenant of the Landlord in respect of property not demised by this
lease or prevent or restrict the development or use of the remainder of
the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant supply
authorities and any other competent authority the Common Parts and the
Service Media are at all times subject to the exclusive control and
management of the Landlord who may from time to time (if it shall be
necessary or reasonable to do so for the benefit of the Building or
otherwise in keeping with the principles of good estate management)
alter divert substitute stop up or remove any of them (leaving available
for use by the Tenant reasonable and sufficient means of access to and
egress from and servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be served
under this lease shall be validly served if served in accordance
with section 196 Law of Property Act 1925 as amended by the
Recorded Delivery Service Act 1962 or (in the case of any notice
to be served on the Tenant) by sending it to the Tenant at the
Premises PROVIDED THAT whilst the Tenant hereunder is Donaldson
Lufkin & Jenrette International Limited such notice shall also be
served on the offices for the time being of SJ Berwin & Co
(attention: Edward Page) or such other firm of solicitors
notified in writing to the Landlord and 277 Park Avenue New York
New York 10172
(b) If the Tenant or any guarantor comprises more than one person it
shall be sufficient for all purposes if notice is served on one
of them but a notice duly served on the Tenant will not need to
be served on any guarantor
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RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment and
tenant's fixtures) or the means of access to the Premises within
the Building are damaged or destroyed by any of the Insured Risks
so that the Premises are incapable of beneficial occupation and
use and
(b) subject to clause 5(2)(b)the insurance of the Building or the
payment of any insurance money has not been vitiated by the act
neglect default or omission of the Tenant or of any person
deriving title under or through the Tenant their respective
servants agents and invitees
the rent first reserved by this lease and the Service Charge or a fair
proportion of them according to the nature and extent of the damage
sustained shall be suspended and cease to be payable from the date of
destruction or damage until whichever is the earlier of the date on
which the Premises are reinstated to the Reinstatement Specification and
if applicable the essential means of access within the Building are
available and the date of expiry of the period for which insurance of
loss of rent is effected and any dispute about such suspension shall be
referred to the award of a single arbitrator to be appointed in default
of agreement on the application of the Landlord or the Tenant to the
President for the time being of The Royal Institution of Chartered
Surveyors in accordance with the Arbitration Acts 1950 and 1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or temporary
closure or diversion of any of the Common Parts or Service Media by
reason of necessary inspection repair maintenance or replacement thereof
or any part thereof or any plant machinery equipment installations or
apparatus used in connection therewith or damage thereto or destruction
thereof by any risk (whether or not an Insured Risk) or by reason of
electrical mechanical or other defect or breakdown or frost or other
inclement conditions or shortage of fuel materials supplies or labour or
whole or partial failure or stoppage of any mains supply due to any
circumstances beyond the control of the Landlord PROVIDED ALWAYS that
the Landlord shall use all reasonable endeavours to minimise the adverse
effects of any such circumstances and to remedy any such interruption
closure or diversion as soon as reasonably practicable PROVIDED FURTHER
that in the event of the Landlord or the Management Company being unable
to provide air conditioning or electricity to the Premises in such
circumstances the Tenant shall be entitled to carry out (the Landlord
and Management Company affording the Tenant reasonable access to do so)
all necessary remedial works to such electricity or air conditioning
PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike manner
and make good all damage caused causing as little inconvenience to the
Landlord Management Company and other tenants as reasonably practicable)
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(b) the Landlord or the Management Company shall be responsible for the
costs of the Tenant in carrying out such remedial works when such works
are being carried out as a consequence of any breach of the Landlords or
Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the Landlord
or by the Tenant notwithstanding any direction or prior agreement as to
liability for payment and any sums so paid for which the party who pays
them initially is not ultimately liable shall be repayable on demand by
the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase in the
amount of the rent reserved and made payable by virtue of schedule 4 a
memorandum recording the increase shall be attached to this lease and to
the counterpart and such memorandum shall be signed by or on behalf of
the Landlord and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are authorised
under Planning Law to be used or are otherwise fit for any specific
purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or occupier
of any part of the Building relating to any easement or right
affecting the Building or any part of it shall (unless the
Landlord shall by notice to the parties concerned renounce its
power to determine it) be referred to the Landlord whose decision
acting reasonably (acting in the capacity of an expert) shall be
binding upon the parties to the dispute but the Landlord shall
give written reasons for his decision
(b) Where any issue (other than one relating to a rent review)
arising out of or under or relating to the Head Lease which also
affects or relates to the provisions of this lease is to be
determined as provided in the Head Lease the determination of
such issue pursuant to the provisions of the Head Lease shall be
binding on the Tenant as well as the Landlord for the purposes
both of the Head Lease and this lease
COMPENSATION
(11) Except where any Enactment prohibits the right to compensation being
reduced or excluded by agreement, neither the Tenant nor any occupier of
the Premises shall be entitled on quitting them to claim from the
Landlord any compensation under the Landlord and Tenant Act 1954
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RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a
proposal to alter the entry for the Premises in the local
non-domestic rating list it shall notify the other party of
its intention and shall incorporate in the proposal such
proper and reasonable representations as may be made by or
on behalf of that party
(b) The Tenant shall not agree the level of rates liability
attributable to the Premises following the date hereof
without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) PROVIDED that for
the avoidance of doubt the Landlord shall not be entitled to
refuse its consent to any level of rates which the Tenant
has negotiated with the appropriate rating authority which
is lower than any level of rates negotiated by or on behalf
of the Landlord in respect of the Building on a pro rata
basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed
to constitute a warranty by the Landlord that the Premises shall
be kept secure or that any security service to the Common Parts
shall be effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the
Landlord the English courts shall have exclusive jurisdiction in
relation to disputes arising under or connected with this lease
and the Tenant agrees that any process may be served on it by
leaving a copy of the relevant document at the Premises provided
however that the Landlord shall retain the right at its sole
election to sue the Tenant elsewhere including in the courts of
the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy
of the reversion immediately expectant on the determination of
this lease whether pursuant to Section 19 Landlord and Tenant
(Covenants) Act 1995 or otherwise any covenant on the part of the
Tenant to obtain the consent of the Landlord under this lease to
any dealing shall be deemed to include a further covenant also to
obtain the consent of the lessor under such tenancy to such
dealing
8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants
and agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the
manner and at the times herein specified and that if there is
default in performing and observing any of the Landlord's
obligations (notwithstanding any time or indulgence granted by
the Tenant to the Landlord or compromise, neglect or
forbearance on the part of the Tenant in enforcing the observance
of the Landlord's obligations in this lease) the Landlord's
Guarantor
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will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Landlord
shall be in default
(2) The Landlord's Guarantor at the request of the Management Company
and in consideration of the Tenant agreeing to pay the Service
Charge covenants and agrees with the Tenant that all of the
Management Company's obligations contained in this lease will be
performed and observed in the manner and at the times herein
specified and that if there is default in performing and observing
any of the Management Company's obligations (notwithstanding any
time or indulgence granted by the Tenant to the Management Company
or compromise, neglect or forbearance on the part of the Tenant in
enforcing the observance of the Management Company's obligations
in this lease) the Landlord's Guarantor will observe and perform
(or procure the performance and observance of) the obligations in
respect of which the Management Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of this
clause) determine this lease as at 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on 24th
October 2008
(3) If the Tenant duly serves the Termination Notice it shall procure
that vacant possession of the Premises will be available on
24th October 2008 free of occupation by and of any estate or
interest rested in the Tenant or any third party and this lease
shall not determine as a result of any notice served by the
Tenant if the Tenant is in material breach of any of its covenant
to pay the rents and Interim Sum contained in this lease
(including those contained in this sub-clause) as at
24th October 2008 except to the extent if at all the Landlord in
its absolute discretion waives compliance with any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during
the Term and any period of holding over continuation or extension
thereof whether by an Enactment common law or otherwise (subject to
clause 4(15)):-
(1) The rents reserved by this lease (whether or not ascertained as
to amount) will be duly paid and that all the Tenant's
obligations contained in it will be performed and observed in the
manner and at the times herein specified and that if there is any
default in paying the rents or in performing and observing the
Tenant's obligations (notwithstanding any time or indulgence
granted by the Landlord to the Tenant or compromise neglect or
forbearance on the part of the Landlord in enforcing the
observance and performance of the Tenant's obligations in this
lease or any refusal by the Landlord to accept rents tendered by
or on behalf of the Tenant) the Guarantor will observe and
perform the obligations in respect of which the Tenant shall be
in default and will on demand and on a full indemnity basis pay
to the Landlord an amount equivalent to the rents or other
amounts not paid and/or any loss damage costs charges expenses or
any other liability incurred or suffered by the Landlord as a
result of the default (and in the event of non-payment shall pay
interest at the Interest Rate from the date of demand to the
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Guarantor until the date of payment) and will otherwise indemnify and
hold harmless the Landlord against all actions claims costs damages
demands expenses losses and proceedings arising from or incurred by the
Landlord as a result of such non-performance or non-observance
(2) If any liquidator or other person having power to do so disclaims this
lease or if it shall be forfeited or if the Tenant ceases to exist and
if the Landlord by written notice served within three months after the
date of disclaimer or forfeiture or the Landlord having actual knowledge
of the cesser of existence of the Tenant (each a "Trigger Event")
requires the Guarantor to accept a lease of the Premises for a term
computed from the date of the Trigger Event to the date on which the
Term would have expired by effluxion of time and at the same rents and
subject to the same covenants stipulations conditions and provisions
(except that the Guarantor shall not be required to procure that any
other person is made party to that lease as guarantor) as are reserved
by and contained in this lease immediately before the Trigger Event and
with coincidental Review Dates (the said new lease and the rights and
liabilities thereunder to take effect as from the date of such Trigger
Event) the Guarantor shall forthwith accept such lease accordingly and
execute and deliver to the Landlord a counterpart of it and indemnify
the Landlord upon demand against the costs incurred on the grant of the
new lease
(3) The liability of the Guarantor hereunder shall not be released reduced
affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this lease
or any of them agreed between the Landlord and the Tenant or
(b) the surrender by the Tenant of part of the Premises (in which
event the liability of the Guarantor shall continue in relation
to the Tenant's obligations in respect of the part of the
Premises not so surrendered) or
(c) any legal limitation immunity disability incapacity occurrence of
insolvency or the winding-up of the Tenant or
(d) (without limitation to the foregoing) of any other act or thing
act or thing by which (but for this provision) the Guarantor
would have been discharged or released (in each case in whole or
in part) from liability under this guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in
accordance with clause 8(2) the Guarantor shall pay to the Landlord on
demand (in addition to any other loss damage costs charges expenses or
other liability which the Guarantor may be required to make good
hereunder and without prejudice to any other rights of the Landlord) an
amount equal to the rents which would have been payable hereunder but
for such Trigger Event (so far as such rents do not otherwise continue
to be payable) for the period commencing on the date of such Trigger
Event and ending on whichever is the earlier of the date one year after
the date of such Trigger Event and the date (if any) upon which rent is
first payable in respect of the whole of the Premises on a reletting
thereof
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(5) Without prejudice to the rights of the Landlord against the Tenant the
Guarantor shall be a principal obligor in respect of its obligations
under this clause and not merely a surety and accordingly the Guarantor
shall not be discharged nor shall its liability hereunder be affected by
any act or thing or means whatsoever by which its said liability would
not have been discharged if it had been a primary debtor
(6) The Guarantor shall pay all reasonable charges (including legal and
other costs on a full indemnity basis) incurred by the Landlord in
relation to the Landlord's enforcement of this guarantee and indemnity
against the Guarantor or for enforcing payment by the Guarantor of
amounts indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee and
indemnity against the Guarantor without having first enforced the
covenants and terms of this lease against the Tenant and also without
first having recourse to any other rights or security which the Landlord
may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security held
by the Landlord in respect of the obligation of the Tenant under this
lease or to any right of subrogation in respect of any such security
until all the obligations owed to the Landlord by the Tenant and the
Guarantor hereunder have been fully and unconditionally fulfilled and
discharged
(9) The Guarantor shall not claim in any liquidation bankruptcy composition
or scheme of arrangement in respect of the Tenant in competition with
the Landlord and if and to the extent that it receives the same shall
remit to (and until remission shall hold in trust for) the Landlord all
and any monies received from any liquidator trustee receiver or out of
any composition or arrangement or from any supervisor thereof until all
the obligations of the Tenant and the Guarantor hereunder owed to the
Landlord have been fully and unconditionally fulfilled and discharged
(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the necessity
for any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains the
Tenant this guarantee and indemnity shall only apply if and for so long
as the total shareholders funds and reserves of Donaldson, Lufkin &
Jenrette International Limited are or fall below the value of Fifty
million pounds (pounds sterling 50,000,000) AND Donaldson, Lufkin &
Jenrette International Limited and Donaldson, Lufkin & Jenrette Inc.
shall notify the Landlord at the beginning of each period in which
this guarantee and indemnity applies and again when it ceases to apply
AND for the avoidance of doubt this guarantee (subject to compliance by
the Tenant with clause 4(15)) shall automatically cease on any lawful
assignment of this lease (but without prejudice to either party's
rights against the other in respect of any antecedent breaches of this
lease) unless in the circumstances contemplated by clause 4(15)(g)(ii)(b)
it is reasonable for Donaldson Lufkin & Jenrette Inc. to remain the
guarantor hereunder of the liabilities of Donaldson, Lufkin & Jenrette
International Limited PROVIDED FURTHER that Donaldson, Lufkin & Jenrette
Inc shall in such circumstances automatically be released on a second
assignment of this lease
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11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the twenty-second floor and being part of
the Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and
all materials lying between the upper surface of the structural floor
slab and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact
on the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the
external windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in
the external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress
to and from the Premises to use the Common Parts and to use all
means of escape but only when needed in an emergency and
(2) to use the Service Media
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2 The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authotised sub-tenants or permitted occupiers (subject to a maximum
of four names at any particular time) on the signboard in the entrance
lobby of the Building provided by the Landlord pursuant to paragraph 14
of Part I of schedule 6 and the right to install a sign displaying the
name of the Tenant at the entrance to the Premises the precise location
size and style of such sign to be subject to the approval of the
Landlord (such approval not to be unreasonably withheld or delayed)
4 The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area at all
reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and
maintenance (on reasonable prior written notice to the Landlord) those
works or installations within or on the Building (but outside the
Premises) for which consent has been given pursuant to the Agreement for
Initial Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to free access for the tenant of the 21st floor unless
the tenant of the 21st floor has agreed to forego the right of access
subject to the Tenant being responsible for all elements of Service Cost
relating to such toilets should any other tenant of accommodation in the
Building object to meeting any proportion of Service Cost in relation to
such facilities (on the basis of such exclusive use)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of
them to the Premises and the lights windows and openings thereof may be
affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the
Premises as often as may be necessary for the purpose of complying with
the covenants of the Head Lease for all the purposes for which the
Tenant covenants in this lease to permit entry and for all purposes in
connection with the carrying out of the Services and for the purposes of
complying with any statutory requirements
3 The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or
neighbouring land
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4. The right to erect and maintain scaffolding on or against any part of
the Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the
purpose of repairing that other part of the Building making good any
damage so caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved
by this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably
be expected to be payable following the expiry of any period at
the beginning of the term which might be negotiated in the open
market for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated
in the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free
or concessionary rent period or capital sum or fitting out
contribution and has used the same fully to fit out the Premises
for the Permitted Use to the lessee's particular requirements) if
the Premises had been let in the open market by a willing lessor
to a willing lessee with vacant possession on the relevant Review
Date without fine or premium for a term often years computed from
the relevant Review Date taking Into account the lessee's right
at the expiration of the term to be granted a new tenancy under
Part II Landlord and Tenant Act 1954 and otherwise upon the
provisions (save as to the
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amount of the rent first reserved by this lease but including the
provisions for rent review at five-yearly intervals) contained in
this lease and on the assumption if not a fact that the said
provisions have been fully complied with and on the further
assumptions that:-
(a) the Permitted Use and the Premises comply with Planning Law
and every other Enactment free from any onerous condition
restriction and limitation and that the lessee may lawfully
implement and carry on the Permitted Use
(b) no work has been carried out to the Premises which has
diminished their rental value
(c) in case the Building or any part of it has been destroyed
or damaged it has been fully restored
(d) the Premises have been fitted out to no less standard than
that set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other
permitted occupier or their respective predecessors in
title has been or is in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying on in
them of the business of the Tenant or any underlessee or
their respective predecessors in title or other permitted
occupier
(iii) (without prejudice to paragraphs 1(2)(b) and 1(2)(c) of
this schedule) any works carried out to the Premises during
the Term by the Tenant or any permitted underlessee in
either case at its own expense in pursuance of a licence
granted by the Landlord where required and otherwise than
in pursuance of any obligation to the Landlord
(iv) the works carried out to the Premises by the Tenant or
carried out by the Landlord at the expense of the Tenant
pursuant to the Agreement for Initial Alterations
(3) "Review Surveyor" means an independent chartered surveyor
appointed pursuant to paragraph 3(1) of this schedule and if to
be nominated by or on behalf of the President for the time being
of the Royal Institution of Chartered Surveyors the said
President to be requested to nominate an independent chartered
surveyor having not less than ten years practice in the City of
London next before the date of his appointment and recent
substantial experience in the letting and valuation of office
premises of a similar character and quality to those of the
Premises and who is a partner or director of a leading firm or
company of surveyors having specialist market and valuation
knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
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(1) the Current Rent (ignoring for this purpose any rent cesser
pursuant to clause 7(5)) and
(2) the Review Rent
3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant
to assess the Review Rent or (in the absence of agreement at any
time about his appointment) be nominated to assess the Review
Rent by or on behalf of the President for the time being of The
Royal Institution of Chartered Surveyors on the application of
the Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review
Surveyor) he shall act as an arbitrator and the arbitration shall
be conducted in accordance with the Arbitration Acts 1950 and
1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting
each of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired
by the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the
determination in accordance with his own judgment (including any
determination concerning any party's liability for the costs of
the reference to him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4. If the Review Rent has not been agreed or assessed by the relevant
Review Date the Tenant shall:-
(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or
assessment of the Review Rent the amount (if any) by which the
Review Rent for the period commencing on the relevant Review Date
and ending on the quarter day following the date of payment
exceeds the Current Rent paid on account for the same period plus
interest at three per cent below the Interest Rate for each
installment of rent due on and after the relevant Review Date on
the difference between what would have been paid on that rent day
had the Review Rent been
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fixed and the amount paid on account (the interest being payable
from the date on which the installment was due up to the date of
payment of the shortfall)
5. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is
released the Landlord may at any time within six months after the date
of release give to the Tenant not less than one month's notice requiring
an additional rent review as at the next following quarter day which
shall for the purposes of this lease be a Review Date
SCHEDULE S
(THE SERVICE CHARGE)
1. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 31st December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the
Building (whether or not pursuant to the terms of this Underlease) the
Management Company or the Tenant shall be entitled if reasonable to
require that the same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge
for each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting
Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the
provisions of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service
Cost and Service Charge for each Accounting Period served pursuant to
paragraph 5 of this schedule and prepared by the Management Company's
surveyor or auditor
"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company
in any Accounting Period in carrying out or procuring the
carrying out of the Services and providing each item of the
Services including (without prejudice to the generality of the
foregoing) the costs and expenses set out in Part II of schedule
6 (insofar as the same are reasonable and properly incurred) and
any other
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reasonable costs and expenses properly incurred by the Management
Company or with the Management Company's authority in connection
with the Services but excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the
Services outside Normal Business Hours at the specific
request of the Tenant (which shall be charged direct to the
Tenant) or of any other tenant or tenants of the Building
and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and
which is recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage
caused by any of the Insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items of
plant machinery equipment and other capital items is calculated
on such life expectancy of the said items as the Management
Company may from time to time reasonably determine to the intent
that a fund be accumulated sufficient to cover the cost of
replacement of the said items by the end of their anticipated
life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting
Period shall be a fair proportion of the Service Cost
attributable to the Premises from time to time as properly
determined by the Management Company (and so in proportion for
any Accounting Period not falling wholly within the Term the
Service Cost in any such case being deemed to accrue on a day to
day basis for the purpose of apportionment)
(B) If at any time and from time to time during the Term the method
or basis of calculating or ascertaining the cost of any item of
the Services shall alter or the basis of calculating or
ascertaining the Service Cost in relation to any item of the
Services shall change and as a result it is reasonable that there
be an alteration or variation of the calculation of the Service
Charge in order to achieve a fairer and better apportionment of
the Service Cost amongst the tenants of the Building then
and in every such case the Management Company shall vary and
amend the Service Charge and make appropriate adjustments
thereto provided always that in the event of any dispute between
the Management Company and the Tenant and the other tenants of
the Building or any of them the same shall be referred to the
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Expert for determination (the Expert to act as an expert and not
as an arbitrator) whose decision shall save in the case of
manifest error be binding on the parties (including his decisions
as to the responsibility for his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the Building let or occupied or designed
contracted or adapted for letting or occupation (other than
management accommodation) is fully let on terms which include
service charge provisions consistent with the service charge
provisions contained in this lease (save where otherwise specified
herein) and such proportion shall not be increased or altered by
reason of the fact that at any time any part of such accommodation
may be vacant or that any tenant or other occupier of any other
part of the Building may default in payment of its due proportion
of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance
with a programme of non equal expenditure in which event the
Management Company shall serve notice to such effect upon the
Tenant and shall thereupon be entitled to require amounts of the
Interim Sum to be paid by advance quarterly instalments of unequal
amounts reasonably stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the
consumption of and supply charges in respect of electricity
consumed within the Premises (save for any amounts which are
invoiced directly by London Electricity plc to the Tenant) such
sums not to exceed a fair and proper estimate of amounts
reasonably anticipated by the Management Company as falling due
within the next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company
shall be entitled in addition to require the Tenant to pay along
with payments of the Interim Sum a fair and proper estimate of
amounts likely to be payable by the Tenant in the next quarter on
account of such Services in accordance with the terms of this
lease
(D) The Interim Sum for the Accounting Period ending 31st December
1996 shall be pound sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or
cause to be served on the Tenant written notice of the Interim Sum
for the relevant Accounting Period Provided that without prejudice
to the provisions of paragraphs 6 and 7 of this schedule if the
written notice aforesaid shall be served after the first occurring
quarter day in the relevant Accounting Period the Tenant shall
until service of the written notice aforesaid make payments on
account of the Interim Sum for the relevant Accounting Period on
the days and in the manner provided by sub-paragraph (A) of this
paragraph of this schedule at an annual rate equal to the Interim
Sum for the immediately preceding Accounting Period
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5. (A) As soon as practicable after the expiry of every Accounting Period
(and in any event within 4 months after such expiry) the
Management Company shall serve or cause to be served a Service
Charge Certificate on the Tenant for the relevant Accounting
Period
(B) A Service Charge Certificate shall contain a summary of the
Service Cost in respect of the Accounting Period to which it
relates and the relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service
Charge Certificate by giving notice thereof in writing to the
Management Company within three months of the date of service on
the Tenant of the relevant Service Charge Certificate and upon
receipt of such a notice the Management Company shall furnish to
the Tenant all such relevant details in its possession or control
or which can reasonably be obtained by it as relate to the
expenditure under the item or items in question at the cost of the
Tenant (include all books of account receipts demands and
invoices) PROVIDED ALWAYS that notwithstanding the giving of any
such notice the Tenant shall nevertheless pay all Interim Sums and
Service Charges as and when they fall due or as may be underpaid
from time to time (but without prejudice to any challenge claim or
dispute that the Tenant may have made or may make in the future in
respect of its Service Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay
to the Management Company or as it shall direct a sum equal to the
amount by which the Service Charge exceeds the Interim Sum provided that
and the Tenant hereby acknowledges that if there shall be any such
excess in respect of the Accounting Period the amount of such excess
shall be a debt due from the Tenant to the Management Company and in the
event that such excess is not received in cleared funds by the
Management Company within 14 days of the due date for payment it shall
attract interest at the Interest Rate calculated for the period
commencing on the due dates for payment and ending on the date the sum
is subsequently received by the Management Company notwithstanding that
the Term may have expired or been determined before the service by or on
behalf of the Management Company of the relevant Service Charge
Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it
shall attract interest at the Interest Rate for the period commencing as
the due date for payment and ending on the date that the sum due is
received in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph
9 of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
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9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly adhered
to) Provided that the Tenant gives notice with full particulars of its
ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve
the relevant issue but if they cannot do so the issue in dispute
shall be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest
error be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the
dispute shall be paid as soon as reasonably practicable after
such resolution and any sum due to or payable by the Management
Company shall then be paid or allowed (as the case may be)
immediately together with interest at three per cent below the
Interest Rate on such sum during the period which it has been
underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited
to) the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of
schedule 6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of
such Services is greater) than would normally apply in the context of
the general management of the Building in accordance with this lease as
a result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof determined
by the Management Company) within 10 working days following a demand by
the Management Company
46
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SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant
parts of it described in paragraphs (ii) and (iii) of schedule 1
2. Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the
Common Parts and the car park shall be operational 24 hours a day 7 days
a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout Normal
Business Hours and at the request of the Tenant outside those hours
subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule I and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists
are not present) and the car park within the Building including where
reasonably appropriate in the Management Company's
47
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judgment closed circuit television and/or other plant and equipment for
the purpose of surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and
(and where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14 Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in
the Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided
by the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the
Premises or
(2) reasonably calculated to be for the benefit of the Tenant and
other tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference
to the particular matters or things shall be deemed to be and in
each case shall be without prejudice to the generality of the
wording preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the
provision of or add to or procure
48
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the addition to any item of Services matter or thing specified in
this schedule if the Management Company shall having regard to the
principles of good estate management reasonably deem it desirable
or expedient so to do but before so doing the Management Company
shall notify all the tenants in the Building but in the event of
any failure of any of the Services shall use all reasonable
endeavours to restore the said Service
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due to
circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company employed
or retained by or on behalf of the Management Company or its agents
(including without limitation managing agents fees) for or in connection
with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other
duties in or about the Building or any part of it relating to the
general management administration security maintenance protection
and cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and
not by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice
to the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in kind
and other emoluments and National Insurance and other statutory
contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided
rent free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
49
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(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part
of this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the
same is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in
unforeseen or emergency circumstances to finance the provision of the
Services and the costs referred to in this Part of this schedule or any
of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any
other amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the
Management Company pursuant to sections 24 25 and 26 Value Added Tax Act
1994 or any regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable Life
Assurance Society (3)
50
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SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
PART I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of, input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1994 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part XIV of the Value Added Tax Regulations 1995.
"VAT YEAR CERTIFICATE" means the certificate to be provided by the
Tenant following the end of the Tenant's VAT Year in the form set out in
Part II of this Schedule.
2. Payment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to
the rent first reserved without any adjustment of rent first reserved
under this schedule.
3. Adjustment of rent first reserved and payment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on
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the due date for payment of the next installment of the rent first
reserved (and on the due date for subsequent instalments), subject
however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served
a VAT Year Certificate specifying in paragraph 1 thereof the same
estimated proportion as stated in the previous VAT Year Certificate
served, or if no previous VAT Year Certificate has been served by the
Tenant at any time prior to the due date for any VAT Year Certificate an
estimated proportion of nil per cent. If the Tenant fails to serve a VAT
Year Certificate on more than one consecutive occasion the Tenant shall
be deemed, on the second failure and any subsequent failure, until
service of the next VAT Year Certificate, to have served a VAT Year
Certificate specifying in paragraph 1 thereof an estimated proportion of
nil per cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at
that time) be adjusted on the basis of the last VAT Year Certificate.
The adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an
amount to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form
set out in the VAT Year Certificate. The Tenant's Auditor's certificate
shall be provided at least eight days prior to the date of payment of
the rent first reserved to which such certificate relates, together with
the Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant shall
pay in accordance with paragraph 4.1 above the amount stipulated in
accordance with paragraph 3 of such VAT Year Certificate (as revised, if
required) on the date for payment of the rent first reserved.
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or
will obtain a Tax Credit differing from the proportion previously taken
into account in calculation any payment, any such difference shall be
taken into account (after having determined the amount of rent first
reserved payable in respect of the next quarter in accordance with
paragraph 3 above) in calculating the next actual payment of rent first
reserved (either by increase or
52
<PAGE>
decrease), the amount of which shall be set out in paragraph 3 of the
VAT Year Certificate.
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the amount which
should have been paid, from such due date until the date of payment of
the adjusted amount pursuant to paragraph 4.3. Where the actual amount
paid (the "Initial Payment") on the due date for payment of any sum was
subsequently adjusted on payment of any later installment of the rent
first reserved ("the Adjusted Payment") in accordance with paragraph 4.6
of Part I of this Schedule 8 and paragraph 3(b) of the VAT Year
Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions of
this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or
accepting a method of attribution designed or maximise its Tax Credit
and covenants not to enter any arrangement which has the specific
purpose of increasing the amount by which the rent first reserved is
decreased by virtue of this schedule 8..
53
<PAGE>
PART II
VAT YEAR CERTIFICATE
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ]
made between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises on
[ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant to
that paragraph:
1. Our VAT Year which included the following quarter days [ ], ended
on [ ],ended on[ ].
(a) The part of the VAT charged on the rent first reserved paid in
the VAT Year for or in respect of which we estimate/have
determined (in accordance, where relevant, with the return made,
or to be made, for the prescribed accounting period next
following the end of the VAT Year) we will be unable to obtain
credit or repayment is a proportion of [ ] per cent of the total
VAT charged.
(b) The following Table sets out the part of the VAT charged which
was expected to be irrevocable during the VAT Year where it has
been determined on the basis of paragraph 2(a) above that that
differs from the amount of VAT for or in respect of which we
actually obtained, or will be able to obtain, credit or
repayment.
Dates Rent first reserved Estimate Adjustment Determination
* ** ***
* estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out initially in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which
we estimated we would be unable to obtain credit or repayment as
set out in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now
estimated/determined we shall be unable to obtain credit or
repayment, in accordance with Sections 24- 26 of the Value Added
Tax Act 1994 and the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved so as to ensure that the amount of rent first reserved payable
in the VAT Year to which this VAT Year Certificate relates is as
provided in paragraph 3 of Part I of Schedule 8 to the Lease in
accordance with the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and the VAT
thereon shall be pounds sterling [ ], and that the interest payable by
the Tenant to the Landlord/Landlord to the Tenant, in accordance with
paragraph 4.7 of Part I schedule 8 to the Lease shall be pounds sterling
[ ].
4. We hereby declare that:
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(a) we have complied with the covenant imposed upon us by paragraph
6.2 of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declaration are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
Tenant's Auditors
55
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[SEAL OMITTED] (THE COMMON SEAL of 99 BISHOPSGATE LIMITED
(LIMITED was hereunto affixed in the presence
(of:-
Director
Director
(THE COMMON SEAL of 99 BISHOPSGATE
(MANAGEMENT LIMITED was hereunto
(affixed in the presence of:-
[SEAL OMITTED] Director
Director
(THE COMMON SEAL of HAMMERSON
(U.K. PROPERTIES PLC was hereunto affixed in
(the presence of:-
[SEAL OMITTED] Director
Director
56
<PAGE>
DATED 24th of OCTOBER 1996
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES PLC
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
and
DONALDSON, LUFKIN & JENRETTE, INC.
UNDERLEASE
of
Twentieth Floor 99 Bishopsgate London EC2
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax:0171-496 0043
Ref: 129/P17/30433514
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions
Building
Common Parts
Development
Electricity Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insurance Rent
Insured Risks
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
<PAGE>
CLAUSE HEADING PAGE
(13) Use
(14) Signs
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangerous and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Arbitration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
<PAGE>
CLAUSE HEADING PAGE
8. Landlord's Guarantor
9. Tenant's option to determine
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
<PAGE>
LEASE PARTICULARS
- -------------------------------------------------------------------------------
1. DATE 24th October 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE
FIRST ABOVE WRITTEN
- -------------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette
International Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Lufkin & Jenrette, Inc.
- -------------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the 20th floor
of the Building shown for
identification only edged red on
Plan 1.
- -------------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- -------------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 23rd October 2011
AND EXPIRY DATES
- -------------------------------------------------------------------------------
6. INITIAL RENT : (pounds sterling) 456,195
- -------------------------------------------------------------------------------
7. RENT COMMENCEMENT DATE : 29th September 1998
- -------------------------------------------------------------------------------
8. TENANT'S BREAK RIGHT : 24th October 2008
<PAGE>
THIS UNDERLEASE made the 24th day of October One thousand nine hundred and
ninety six
BETWEEN: -
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under
Section 21A to the Companies Act 1985 under company number FC018588 and
branch number BR002962) whose principal place of business is at 100 Park
Lane London W1Y 4AR (the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) HAMMERSON U.K. PROPERTIES plc whose registered office is at 100 Park Lane
London W1Y 4AR (Co. Regn. No. 298351) (the "LANDLORD'S GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered
office is at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn.
No. 2475089) (the "TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the
State of Delaware United States of America whose address for the
purposes of this lease is 277 Park Avenue New York New York 10172 (the
"GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by clause
2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person acting
on behalf of or in connection with any organisation (or on his own
behalf) which carries out activities directed towards overthrowing
or influencing by force or violence Her Majesty's Government in
the United Kingdom or any other government de jure or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even
date herewith and made between the Landlord and the Tenant
governing the initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part) having
a frontage to the west side of Bishopsgate and a return frontage
to the south side of Wormwood Street and all buildings fixtures
and other structures whatsoever from time to time thereon and the
appurtenances thereof which land (together with the building now
erected thereon) is known as 99 Bishopsgate London EC2 and is for
the purpose of identification shown verged by a blue line on the
Building Plan together with any adjoining areas designated by the
Landlord or the Management Company
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(4) "COMMON PARTS" means all parts of the Building which are from time
to time intended for the common use and enjoyment of the tenants
and occupiers of the Building and persons claiming through or
under them (whether or not other parties are also entitled to use
and enjoy the same) and reasonably designated as such by the
Landlord and including without prejudice to the generality of the
foregoing the pedestrian ways circulation areas lobby entrance
halls lifts lift shafts fire escapes landings staircases passages
forecourts car park landscaped areas plant rooms management suites
and any other areas which are from time to time during the Term
reasonably provided by the Landlord for common use by or benefit
of the tenants and occupiers of the Building But excluding (for
the avoidance of doubt) any premises intended to be let to any
party or for occupation by the Landlord or the Management Company
other than for the provision of the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by
Planning Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the
Tenant in accordance with its covenant contained at clause 5(4)
being a fair and reasonable proportion as determined by the
Landlord of the total cost of the provision of electricity to the
Building as a whole (including the provision of any security for
the supply of electricity to the Building which may from time to
time be required by the relevant undertaker responsible for the
supply of electricity chosen by the Landlord) which proportion
shall so far as practicable (save where the same are not in
working order) be calculated using readings taken in such manner
and at such times as the Landlord shall from time to time
determine of the check meters relating to the Premises from time
to time installed but otherwise shall be determined in such manner
as the Landlord shall in its discretion consider to be fair and
reasonable in all the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation
now or hereafter to be enacted or made and all subordinate
legislation whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the
Premises dated 29th September 1975 made between The Prudential
Assurance Company Limited (1) and Bishopsgate Developments Limited
(2) and "Superior Landlord" means the person for the time being
entitled to the reversion immediately expectant on the term
granted by the Head Lease and every other person having an
interest in reversion to that term
(9) "GROUP COMPANY" means a company which is either the holding
company of the Tenant or a wholly owned subsidiary of the Tenant
or the Tenant's holding company (as both expressions are defined
in Section 736 Companies Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same
is required by the Landlord to be calculated the aggregate of the
amount which the Landlord may reasonably expend:-
(a) in effecting and maintaining insurance against the
occurrence of the Insured Risks in relation to the Building
in such sum as represents its
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then full current replacement cost with such allowance
as the Landlord from time to time considers appropriate in
respect of related liabilities and expenses (including
without limitation liability to pay any fees or charges on
the submission of an application for planning permission and
costs which might be incurred in complying with any
Enactment in carrying out any replacement work and sums in
respect of architects' engineers' and quantity surveyors'
and other professional fees and incidental expenses incurred
in relation to any works of debris removal and of
replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of
the Landlord in relation to the Building and anything done
therein and
(c) in professional fees relating to insurance including fees
for insurance valuations carried out at reasonable intervals
by an independent insurance valuer (but no more than once in
any year) and all reasonable fees and expenses payable to
advisers in connection with effecting and maintaining
insurance policies and claims and
(d) equivalent to the total of all reasonable excess sums (being
for the avoidance of doubt the first part of any insurance
claim) which the insurers are not liable to pay out on any
insurance claim in respect of the Building and which the
Landlord or the Management Company may have expended in
replacing the damaged or destroyed parts of the Building
(11) "INSURANCE RENT" means in respect of any period for which the same
is required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the
Premises of the Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in
effecting and maintaining insurance against up to six years'
loss of the rents first and secondly hereinafter reserved
and Service Charge having regard to potential increases of
rent in accordance with schedule 4 and with any addition to
the amount insured as the Landlord may decide in respect of
VAT and
(c) (without prejudice to all other provisions of this lease
relating to the use of the Premises and the vitiation of any
policy of insurance) any reasonable amount which the
Landlord may expend in paying all additional premiums and
loadings on any policy or policies of insurance required to
be paid as a result of anything done or omitted (in breach
of the terms of this lease) by the Tenant and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot
civil commotion
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strikes labour and political disturbances and malicious
damage aircraft and aerial devices (other than hostile aircraft
and devices) and articles accidentally dropped from them storm
tempest flood bursting or overflowing of water tanks and pipes
impact earthquake and accidental damage to underground water oil
and gas pipes or electricity wires and cables subsidence ground
slip and heave and such other usual commercial risks or perils
against the occurrence of which the Landlord may from time to time
in its reasonable discretion deem it desirable to insure subject
to such exclusions and limitations as are from time to time
commonly imposed by insurers and subject also to the exclusion of
such of the risks specifically hereinbefore mentioned as the
Landlord may in its reasonable discretion decide where insurance
cover in respect of the risk in question is not for the time being
available in the London insurance market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either
the base rate of Barclays Bank plc or such other bank (being for
the time being generally recognised as a clearing bank in the
London market) as the Landlord may from time to time use for
general banking purposes or if the base rate cannot be ascertained
then above such other rate as the Landlord may reasonably specify
(and so that whenever there is reference in this lease to the
payment of interest at the Interest Rate such interest shall be
calculated on a daily basis and compounded with quarterly rests on
the usual quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the
Building from time to time (whether or not within the Premises or
other premises let or intended to be let by the Landlord)
comprising or used in connection with the following systems (to
the extent specified in the following paragraphs of this
definition): -
(i) the whole of the sprinkler system within the Building
(including sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but
excluding portable fire extinguishers installed by the
Tenant or other tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the
building security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply
into the Building so far as (and including) the electrical
riser busbars connecting to the distribution boards at each
level in the Building which is let or intended to be let by
the Landlord
(vii) the whole of the air handling system and the electricity
supply and control systems for the same
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(viii) the standby generators and associated cabling wiring and
duct work
but excluding in each case any "stand alone" systems
installed by the Tenant or any other tenant or occupier of the
Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of
the Building which is intended by the Landlord at any material
time to be for separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by
the Code of Measuring Practice - Fourth Edition (RICS/ISVA 1993)
(or if there shall be no such edition or no such expression for
the time being the nearest equivalent thereto)
(17) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of
such hours at the reasonable discretion of the Landlord provided
that such hours will automatically expand if any other tenant in
the Building is granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the
actual cost to the Management Company of carrying out or providing
any of the Services at the request of the Tenant outside Normal
Business Hours other than any services which are stated to be
provided 24 hours a day (including without prejudice to the
generality of the foregoing costs and expenses in the nature of
those set out in Part II of schedule 6) or in the event of any of
the Services being carried out or provided outside Normal Business
Hours to the Tenant and any other tenant or tenants of the
Building a fair proportion thereof (on a fair and reasonable basis
between the Tenant and any other tenant or occupier making use of
such Services) as reasonably determined by the Landlord. PROVIDED
THAT during the first year of the Term the cost of providing air
conditioning outside Normal Business Hours shall not exceed 88 per
hour (in respect of the Premises being the only user of air
conditioning at the relevant time) or 48 per hour per floor on the
basis that any five of floors 18, 20 and 22 to 26 of the Building
are simultaneously using such air conditioning over the whole of
such floors
(19) "PERMITTED PART" means any part or parts of the Premises capable
of separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose
within Class B 1(a) (but not for any other purpose within that Use
Class) of the schedule to the Town and Country Planning (Use
Classes) Order 1987 and for the avoidance of doubt use of the
Premises for data processing investor services business trading
operators and investment banking complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and
buildings and every planning permission statutory consent and
agreement made under any Enactment relating to the Building
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(22) "PLANS" means the plans annexed hereto and "Building Plan" means
that one of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all
permitted additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or
their use and occupation and any court of law and the companies or
authorities responsible for the supply of water gas and
electricity or any of them and any of their duly authorised
officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed
hereto or in the event that materials listed in the specification
are not available from time to time or appropriate for use (in the
Landlord's reasonable opinion) then reference to such materials
will be substituted by reference to materials of not materially
less quality which perform a similar function PROVIDED THAT save
to the extent that items of plant and equipment have been altered
during the Term the Tenant shall not be required to replace
existing items of plant and equipment for new items subject to the
existing items being in good working order
(26) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and every
fifth anniversary of that date during the Term (and the last
day of the Term)
(b) any date so stipulated by virtue of paragraph 5 of schedule
4
(27) "SERVICES" means the services and other matters specified in
clause 6 and Part I of schedule 6
(28) "SERVICE MEDIA" means those parts of the Building comprising gas
water drainage electricity telephone telex signal and
telecommunications heating cooling ventilation air conditioning
fire alarm and other pipes drains sewers mains cables wires supply
lines ducts conduits flues and all other common conducting media
plant appliances and apparatus for the provision supply control
and monitoring of services to or from the Building and other
common equipment
(29) "TERM" means a term of years commencing on the date hereof and
expiring 23rd October 2011 and includes any period of holding over
or extension whether by any Enactment or common law
(30) "TERMINATION NOTICE" means not less than 12 months and 1 day's
prior written notice unless either:
(a) any Enactment or decision not capable of appeal on a point
of law confirming that the Tenant is not entitled to a new
tenancy on the expiration of such notice is in force or
upheld as at 22nd October
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[GRAPHIC OMITTED]
99 Bishopsgate EC2
Twentieth Floor Tower
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[GRAPHIC OMITTED]
99 Bishopsgate EC2
Building Plan
<PAGE>
2007 (in which case not less than 6 months prior written
notice need be given); or
(b) any other tenant enters into a lease prior to September
1998 of premises comprising at least a floor of the
building within the security of tenure protections of the
Landlord and Tenant Act 1954 for a term of not less than 10
years (without break rights) and is granted right to
determine such lease on less than such 12 months' and 1
day's prior written notice (in which case the notice period
hereunder shall be reduced to such notice period as is
granted to such tenant in such circumstances)
(30) "VAT" means Value Added Tax as referred to in the Value Added Tax
Act 1994 (or any tax of a similar nature which may be substituted
for or levied instead of it by statutes)
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa and
words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and
"Guarantor" wherever the context so admits include their
respective successors in title and where a party comprises more
than one person covenants and obligations of that party take
effect as joint and several covenants and obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit
or suffer it to be done (or omitted) and to prevent (or as the
case may be to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference
to the relevant clause sub-clause schedule or paragraph of
this lease and clause and schedule headings shall not
affect the construction of this lease
(b) any right of (or covenant to permit) the Landlord or the
Management Company to enter the Premises shall also be
construed (subject always to the proviso to clause 4(9))
as entitling the Landlord to remain on the Premises with
or without equipment and permitting such right to be
exercised by all persons authorised by the Landlord for as
short a period as reasonably practicable and making good
all damage caused and causing as little inconvenience as
reasonably possible save where the right of entry is
exercised to remedy any breach hereunder where the
Landlord only undertakes to make good damage caused
(c) any consent licence or approval of the Landlord or words
to similar effect mean a consent licence or other approval
in writing signed by or on behalf of the Landlord and
given before the act requiring consent licence or approval
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(d) the Premises (except in clause 4(15)) shall be construed
as extending where the context permits to any part of the
Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of
it for the time being in force except in relation to the
Town and Country Planning (Use Classes) Order 1987 which
shall be interpreted exclusively by reference to the
original provisions of Statutory Instrument 1987 No 764
whether or not the same may at any time have been revoked
or modified
(f) the last year of the Term includes the final year of the
Term if it shall determine otherwise than by effluxion of
time and references to the expiry of the Term include such
other determination
(5) (a) Where the context permits rents or other sums being due
from the Tenant to the Landlord or the Management Company
mean that they are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord
is required under this lease the relevant provision shall
be construed as also requiring (and any consent licence or
approval given by the Landlord shall be deemed subject to
the need for) the consent licence or approval of the
Superior Landlord (for which the Landlord shall apply at
the Tenant's reasonable cost) where the same is required
under the Head Lease except that nothing in this lease or
in any consent licence or approval by the Landlord shall
imply that the Superior Landlord's consent licence or
approval will not be unreasonably withheld or delayed
(c) references to any right of (or covenant to permit) the
Landlord to enter the Premises shall extend to the Superior
Landlord and to all persons authorised by it and shall be
construed in the manner required by clause 2(4)(b) but in
relation to the Superior Landlord and those with its
authority
(d) the rights excepted and reserved in schedule 3 are also
excepted and reserved for the benefit of the Superior
Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor DEMISES unto the Tenant ALL
THAT the Premises TOGETHER WITH the easements and rights specified in
schedule 2 exercisable in common with the Landlord and all others with
its authority or otherwise from time to time entitled thereto EXCEPT and
RESERVED unto the Landlord and all other persons authorised by it from
time to time during the Term or otherwise from time to time entitled
thereto (including the Management Company in relation to the provision
of the Services) the easements and rights specified in schedule 3
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TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the Term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT
to the provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 29th
September 1998 a peppercorn (if demanded) and thereafter until the first
Review Date (and thereafter as determined pursuant to schedule 4) the
yearly rent of Four hundred and fifty six thousand one hundred and
ninety five pounds (pounds sterling 456,195) exclusive of VAT (subject
to clause 5(6)) payable by equal quarterly payments to be made in
advance on the usual quarter days in every year the first such payment
to be made on 29th September 1998
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice
to the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as
rent or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days
following the due date (or in the case of money due only on demand
within fourteen days after the date of demand) calculated for the
period commencing on the due date for payment and ending on the
date the sum and the interest is received in cleared funds by the
Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to demand
or accept any payment having regard to a breach of any of the
Tenant's obligations under this lease of which the Tenant has
received notice calculated for the period commencing on the due
date for payment and ending on the date the sum (and the interest)
is subsequently received by the Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant
body to whom account has for the time being to be made) on the supply by
the Landlord to the Tenant under or in connection with the provisions of
this lease or the interest created by it and of any other supplies
whether of goods or services such rent fourthly reserved to be due for
payment contemporaneously with the other rents or sums to which it
relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable
on demand (either annually or by instalments) as the Landlord shall
determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause
4(30) also with the Management Company) throughout the Term subject to
clause 4(15):
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Rent
(1) To pay the rents reserved by this lease on the days and in the manner
set out in clause 3 without deduction or set off and (unless for the
time being the Landlord shall have required in writing to the contrary)
to pay the rent first reserved (together with any sum in respect of the
rent fourthly reserved as may be applicable thereto) by banker's
standing order to such bank as the Landlord may from time to time
nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any amount
to the Landlord hereunder by way of reimbursement or indemnity to pay on
the production of a valid VAT invoice to the Landlord (as applicable) in
addition an amount equivalent to any VAT incurred by the Landlord save
to the extent that the Landlord obtains credit for such VAT incurred by
the Landlord pursuant to sections 24 25 and 26 Value Added Tax Act 1994
or any regulations made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now or
hereafter assessed charged or imposed upon the Premises or upon their
owner or occupier (and a proper proportion determined by the Landlord
attributable to the Premises of any rates taxes charges and other
outgoings now or hereafter assessed charged or imposed upon the Premises
in common with other premises or upon the owners or occupiers thereof)
and (to the extent the Tenant does not pay it directly to the relevant
supplier) the total cost (including meter rents) of all water (including
chilled water) electricity and gas separately metered and/or exclusively
supplied to the Premises during the Term as reasonably determined by the
Landlord excluding (without prejudice to the rent fourthly reserved and
clause 4(2)) any tax payable by the Landlord as a direct result of any
actual or implied dealing with the reversion of this lease or of the
Landlord's receipt of income
COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every Public
Authority (including the due and proper execution of any works) in
respect of the Premises their use occupation employment of personnel in
them and any work being carried out to them (whether the requirements are
imposed upon the owner lessee or occupier) and not to do or omit anything
by which the Landlord may become liable to make any payment or do
anything under any Enactment or requirement of a Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5 working days
of receipt of the same to give to the Landlord notice of (and a
certified copy of) any notice permission direction requisition order or
proposal made by any Public Authority and without delay to comply in all
respects at the Tenant's
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cost with the provisions thereof save that the Tenant shall if so
required by and at the cost of the Landlord make or join in making such
objections or representations in respect of any of them as the Landlord
may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of Schedule 2) in good and substantial
repair and condition (damage by any of the Insured Risks excepted to the
extent that the insurance money shall not have been rendered
irrecoverable subject to clause 5(2)(b) or insufficient because of some
act or default of the Tenant or of any person deriving title under or
through it or their respective servants or agents or invitees) and to
replace whenever necessary during the Term and on expiry of the Term the
landlord's fixtures and fittings (including any fitted carpets) in the
Premises which may have become beyond economic repair with items of the
same type and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of decorative
order and finish and properly cleansed and tidy and (without
prejudice to the foregoing) as often as the same shall be necessary
(and not less frequently than once in every fifth year of the Term
but not more than once in any 18 month period) and also in the last
year of the Term to clean paint polish or otherwise treat as the case
may be all inside surfaces of wood and metal work of the Premises
usually or requiring to be painted polished or otherwise treated with
two coats at least of high quality paint or polish vinyl wall
coverings (where applicable) or other appropriate materials in a good
and workmanlike manner (and during the last year of the Term in the
colour scheme specified and otherwise in accordance with the
Reinstatement Specification) PROVIDED ALWAYS THAT the Tenant shall
not be obliged to carry out any such decorative treatment if the need
for it is caused by damage by any of the Insured Risks to the extent
(subject to clause 5(2)(b)) that the insurance money shall not have
been rendered irrecoverable or insufficient because of some act or
default of the Tenant or of any person deriving title under or through
it or their respective servants agents or invitees
(b) To clean the inside of all external window glazing in the Premises
at least once in every month using reputable contractors
(c) To enter into and maintain contracts for the regular inspection
maintenance and servicing of all fixed plant and equipment
comprised in the Premises which has or is likely to have any
impact on the Landlord's Services Equipment by reputable
contractors approved by the Landlord (such approval not to be
unreasonably withheld) and to obtain satisfactory test certificates
as may be reasonably required by the
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insurers and whenever reasonably required to produce copies of such
contracts and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in areas
designated for such purpose from time to time by the Landlord and to
comply with all requirements of any Public Authority and any reasonable
regulations made by the Landlord pursuant to clause 4(27) in relation to
control over and disposal of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable security
requirements on reasonable prior written notice (except in an emergency)
to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease have been
observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and make
connections to any part of the Building including the Service Media
(PROVIDED that the Landlord will procure that such entry takes place
outside Normal Business Hours where practicable)
(e) during the last six months of the Term (or at any time in the case of
a disposal of the Landlord's interest) to show the Premises to
prospective purchasers or tenants and their agents
(f) exercise the rights described in schedule 3
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy any breach
of its covenants
(b) If the Tenant shall not within a reasonable time comply with any such
notice to permit the Landlord and any authorised person to enter the
Premises to remedy the breach as the Tenant's agent and at the
Tenant's proper cost the Landlord making good any damage caused
(c) To pay to the Landlord on demand all the proper costs and expenses
incurred by the Landlord under the provisions of this sub-clause
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ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements belonging to the
Premises and not knowingly to give any acknowledgment that they are
enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give notice to
the Landlord forthwith of any encroachment which might have that
effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor (without
prejudice to the exclusion of structural parts from the demise of the
Premises) any works affecting any structural parts of the Building and
not to commit any waste
(b) Without prejudice to any other rights of the Landlord in respect of
areas not included in the Premises not to install or erect any
exterior lighting shade or awning or place any structure or other
thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this sub-clause and
subject to the provisos to this paragraph (c) not to make any other
alteration or addition to the Premises (including all electrical and
other plant and equipment and the installation and removal of
demountable partitioning) except:-
(i) in accordance with plans and specifications (adequately
describing the work in question and the manner in which the
work will be carried out) previously submitted at the Tenant's
expense in triplicate to and approved by the Landlord (such
approval not to be unreasonably withheld or delayed
PROVIDED THAT the Landlord shall respond to the Tenant's
submission within 10 working days in the case of minor
alterations (excluding any alterations which affect any of the
Landlord's Services Equipment) and if the Landlord fails to
respond within 10 working days as aforesaid it shall be deemed
to have accepted such minor alterations AND PROVIDED FURTHER
that the initial fitting out of the Premises following the
date hereof shall be governed by the Agreement for Initial
Alterations
(ii) in a manner which shall not materially and adversely affect
the Landlord's Services Equipment any Service Media or the
provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public Authority
(and in particular in relation to any electrical
installation in accordance with the terms and conditions laid
down by the
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Institution of Electrical Engineers and the Regulations of
the Electricity Supply Authority) and the insurance company
with whom the Premises are for the time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out until
the Landlord has issued its consent in writing to which the
Tenant shall if required join as a party
(11) once any such alterations or additions have been carried out
the Tenant shall supply to the Landlord as-built plans in
triplicate (together with a computer aided design disk and
35 mm slides) showing the works as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by the
Tenant
(ii) all work done in connection with the original fitting out by
the Tenant in pursuance of the Agreement for Initial
Alterations
and to restore and make good the Premises in accordance with the
Reinstatement Specification in a proper and workmanlike manner to
the condition and design which existed before the alterations or
additions were made with all services properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the Premises) which
may be or become or cause a nuisance obstruction or damage to any
person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal or immoral trade business or
activity or for residential purposes and not to use the Common
Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this sub-clause)
except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole antenna
wire or other apparatus on the outside of the Building save for the
right granted pursuant to paragraph 3 of schedule 2
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(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or
advertisement except the approved signs referred to in
paragraph 3 of schedule 2
ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of the
Premises the Tenant shall first by an irrevocable
unconditional written notice ("the Tenant's Notice") served
upon the Landlord offer to surrender or assign this lease
upon such financial terms and conditions as the Tenant may
desire
(b) If the Landlord wishes to accept such surrender or
assignment it shall within twenty-one days of receipt of the
Tenant's Notice serve a counter-notice ("the
Counter-Notice") upon the Tenant stating as much
(c) If the Landlord serves a Counter-Notice on the Tenant then
the Tenant shall surrender or assign (at the Landlord's
option) the Premises to the Landlord (or as the Landlord may
direct) within six months of receipt of the Counter-Notice
either with vacant possession or subject only to a permitted
underletting and the Tenant's liability hereunder shall cease
in respect of any matters arising following the date of such
assignment or surrender but without prejudice to any
antecedent breaches of covenant
(d) If the Landlord does not serve a Counter-Notice then the
Tenant must (if it wishes to assign) complete its assignment
on terms greater than 95 per cent in value of the terms and
conditions stipulated in the Tenant's Notice within six
months from the date of the Tenant's Notice and if the
Tenant shall fail to complete within such period if it still
wishes to assign the whole of the Premises it must reinstate
the procedure set out in this clause 4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign mortgage charge or underlet or in any other
manner part with possession of any part (being less than the
whole) of the Premises or agree to do so except that the
Tenant may underlet the whole of (but not more or less than)
any Permitted Part or Permitted Parts in accordance with
paragraphs (h) and (i) of this sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign underlet or otherwise part with possession of
or the whole of the Premises or agree to do so except that
the Tenant may assign or underlet the whole of the Premises
in accordance with paragraph (g) or (h) respectively of this
sub-clause
(ASSIGNMENT)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2 months
before completion of the assignment which consent shall not
be unreasonably withheld or delayed but which may be
granted
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subject to any one or more of the conditions referred to in paragraph
(g)(ii) and which may be withheld if any one or more of the
circumstances referred to in paragraph (g)(iii) exist
(ii) The conditions referred to in paragraph (g)(i) (which are specified for
the purposes of section 19(1A) Landlord and Tenant Act 1927) are:
AUTHORISED GUARANTEE
(a) that the Tenant shall enter into an authorised guarantee agreement
(as defined in section 16 Landlord and Tenant (Covenants) Act
1995) with the Landlord in a form which the Landlord reasonably
requires
THIRD PARTY GUARANTEE/RENT DEPOSIT
(b) that if so reasonably required by the Landlord the proposed
assignee shall have procured covenants with the Landlord by a
guarantor or guarantors (not being the Tenant or any guarantor)
reasonably acceptable to the Landlord in a form acceptable to the
Landlord (acting reasonably);
INTRA GROUP DEALINGS
(c) if the proposed assignee is a Group Company the Tenant
shall have procured either:
(A) if the Tenant's obligations under this lease are guaranteed
by another Group Company that such Group Company covenants
with the Landlord on the same terms (mutatis mutandis) as
those contained in clause 10; or
(B) if there is no guarantor of the Tenant's
obligations under this lease and if the assignee is
not at the date of the application for consent to
the proposed assignment in the reasonable
opinion of the Landlord of financial standing
equivalent to or greater than the Tenant at the
date of this lease that the proposed assignee
procures covenants by a Group Company which
is not the Tenant or the proposed assignee and
which is in the reasonable opinion of the
Landlord of financial standing equivalent to or
greater than the Tenant in the same terms
(mutatis mutandis) as those contained in clause
10; and
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(iii) The circumstances referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(1A) Landlord and
Tenant Act 1927) are:-
(a) where the Tenant's solicitors have not given an
undertaking to the Landlord's solicitors to pay all
reasonable legal surveyor's and management costs
disbursements and VAT arising on the application for
consent to such assignment whether or not consent is
granted unless the Landlord unreasonably withholds
consent in circumstances where it is required to be
reasonable; and/or
(b) where any of the rents and Interim Sum due from the
Tenant to the Landlord or the Management Company
respectively under this lease remain unpaid at the
date of the application for consent to the proposed
assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted Part
(each being referred to in this paragraph as the premises) except:-
(i) to a person who before the underletting shall have covenanted
with the Landlord to observe and perform the Tenant's
obligations under this lease during the sub-term to the extent
they relate to the premises demised by the underletting (other
than the payment of rents) and a covenant not to assign the
whole of the premises without the Landlord's consent (which
shall not be unreasonably withheld or delayed) and an
unqualified covenant not to assign part of the premises or to
underlet or otherwise part with possession or share the
occupation of the premises or any part of them
(ii) by reserving as a yearly rent without payment of a fine or
premium (in addition to the service and insurance and other
rents payable under this lease except the rent first hereby
reserved or (in the case of underletting of a Permitted
Part) a pro rata proportion of them) an amount equal to:-
(a) (in the case of an underletting of the Premises) the
then open market rack rental value of the Premises
(b) (in the case of an underletting of a Permitted Part) a
pro rata proportion of the then open market rack rental
value of the Premises
the proportion in each case being calculated by reference
to the Net Internal Area of the Permitted Part in relation
to the Net Internal Area of the Premises, in all cases such
rent to be payable by equal quarterly instalments in
advance on the usual
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quarter days and to be approved by the Landlord prior to the
underletting (such approval not to be unreasonably withheld or
delayed) but the amount of such rent and the approval of the
Landlord thereto may not be used as evidence by the Tenant for the
purpose of any rent review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the underlease is
reviewed upwards only at not greater than five year
intervals during the sub-term in accordance with the same
principles (mutatis mutandis) and at the times as apply to
the rent first reserved by this lease
(b) requiring the underlessee to observe and perform all the
covenants and other provisions binding on the Tenant under
this lease (other than the covenant by the Tenant to pay
rents) to the extent they relate to the premises and
containing:-
(A) a condition for re-entry by the underlessor on
breach of any covenant by the underlessee
(B) a qualified covenant not to assign the whole of the
premises and an absolute covenant not to assign part
of the premises or to underlet or otherwise part with
possession or share the occupation of the premises or
any part of them
(iv) with the Landlord's consent issued within three months before
completion of the underletting which consent (subject to
compliance with the foregoing conditions precedent) shall not be
unreasonably withheld or delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the entrance to or
the reception area of the Premises
(ii) to except from the underlease all necessary circulation areas and
plant and equipment which will serve the Premises in common and to
reserve a separate service charge rent in respect of their
maintenance repair and renewal
(iii) not as a result of the grant to create or permit the creation of
more than four separate occupations affecting the whole of the
Premises (occupations in right of this lease counting as one
occupation)
(iv) not to grant or agree to grant the underlease without providing
for the exclusion of sections 24 to 28 inclusive of the Landlord
and Tenant Act 1954 in relation to the underlease in pursuance
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of an Order duly made under section 38(4) of that Act before
the date of grant
(j) To enforce the observance and performance by every such
underlessee and its successors in title of the provisions of the
underlease and not expressly or impliedly to waive any breach of
them nor vary the terms of any underlease
(k) Not to agree any reviewed rent payable under an underlease without
the Landlord's consent and if the rent review under any underlease
is to be determined by an independent person not to agree his
appointment without the Landlord's consent (PROVIDED ALWAYS THAT the
Landlord shall not unreasonably withhold or delay any consent
required under this sub-paragraph) and to procure that any
representations which the Landlord may wish to make in relation to
the rent review are duly submitted to the independent person and to
provide to the Landlord promptly on the same becoming available
copies of any representations made by or on behalf of the Tenant or
the underlessee in relation to such rent review
(SHARING OCCUPATION)
(1) Not to part with or share the occupation of the Premises or any part
of them except that the Tenant may share occupation with a company
which is (but only for so long as it remains) either the holding
company of the Tenant or a majority-owned subsidiary of the Tenant
or of the Tenant's holding company (as those expressions are defined
in section 736 Companies Act 1985) 50 long as the Tenant does not
grant the person sharing occupation exclusive possession (so that
such company occupies as licensee only without creating any
relationship of landlord and tenant) nor otherwise transfer or
create a legal estate and the Tenant shall notify the Landlord of
the identity of each company in occupation
REGISTRATION
(16) (a) Within twenty-one days after any disposition or devolution of
this lease or of any estate or interest in or derived out of it to
give notice in duplicate of the relevant transaction to the Landlord
for registration with a certified copy of the relevant instrument
and to pay to the Landlord a fair and reasonable fee for each such
registration of not less than twenty five pounds
(b) To register with the Landlord particulars of the determination of
every rent review under any underlease of the Premises within
fourteen days after the date of determination
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PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels'
solicitors' surveyors' and bailiffs' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146 Law of
Property Act 1925 or in contemplation of any proceedings under
section 146 or 147 of that Act notwithstanding that forfeiture is
avoided otherwise than by relief granted by the court and
(b) every reasonable step taken during or after the expiry of the Term
in connection with the enforcement of the Tenant's obligations
under this lease including the service or proposed service of all
notices and schedules of dilapidations and
(c) every application for consent licence or approval under this lease
but not if the application is unreasonably refused or delayed or
granted subject to unreasonable conditions (where such consent is
not to be unreasonably withheld or delayed)
MACHINERY
(18) Not to install in the Premises any plant or machinery other than usual
office equipment without the Landlord's consent which shall not be
unreasonably withheld PROVIDED ALWAYS THAT no plant or machinery shall
be installed or operated in the Premises and nothing shall be done or
omitted in them which may cause:-
(a) the efficiency of the heating ventilation air conditioning and
cooling system installed in the building to be diminished or
impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other part
of the Building or other adjoining property or persons outside the
Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the rights
granted by this lease in a way which causes nuisance or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises and
(to the extent they lie within the Premises) to keep them
clear and functioning properly or
(ii) any Service Media
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(d) or stop-up or darken the windows and other openings of the Premises
nor to overload or cause undue strain to the Service Media or any other
part of the Building and in particular not to suspend any undue weight
from the ceilings or walls of the Premises and not to exceed the
following floor loadings:-
floor finishings: : 4 kN/m2 (80lbs per sq.ft)
live load : 1kN/m2 (20lbs per sq.ft)
(e) any requisite notice erected on the Premises including any erected
by the Landlord in accordance with its powers under this lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of goods is
carried out only by using the service accesses and goods lifts
designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to comply
with the provisions and requirements of Planning Law relating to or
affecting
(a) (i) the Premises
(ii) any operations works acts or things carried out executed
done or omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any other
rights hereunder in respect of) any other parts of the
building
(b) Subject to the provisions of paragraph (c) of this sub-clause as
often as occasion requires during the Term at the Tenant's expense
to obtain and if appropriate renew all planning permissions (and
serve all notices) required under Planning Law in respect of the
Premises whether for the carrying out by the Tenant of any
operations or the institution or continuance by the Tenant of any
use of the Premises or any part thereof or otherwise
(c) Not without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) to apply for any planning
permission relating to the Premises (and not to apply for any such
planning permission relating to any other part of the Building) but
so that subject to compliance with paragraph (e) of this sub-clause
the Landlord's consent shall not be unreasonably withheld or
delayed to the making of a planning application in respect of the
Premises relating to any operations or use or other thing (if any)
which assuming it to be implemented in accordance with Planning Law
would otherwise not be in breach of the provisions of this lease
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(d) If the Landlord so requires in connection with any relevant
proposal by the Tenant to apply for a determination under section
191 or 192 Town and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by the
Tenant (which it hereby agrees to consider and determine with all
due expedition) for planning permission to submit a draft of the
application to the Landlord for its approval and to give effect to
its reasonable requirements in respect thereof and if and to the
extent the Landlord so requires to lodge the application with the
relevant authority in the joint names of the Landlord and the
Tenant and in duplicate
(f) Not to implement any planning permission before the Landlord has
acknowledged that its terms are acceptable nor before the Landlord
has received any cash or other security which it reasonably
requires for compliance with any conditions imposed by the
planning permission
(g) If the Landlord at the Landlord's cost reasonably requires or the
Tenant desires to lodge and progress diligently an appeal against
any refusal of an application for planning permission lodged in
respect of the Premises by the Tenant or by any person claiming
under or through the Tenant (whether or not lodged in its name
alone) the Landlord undertakes to co-operate fully with the Tenant
in respect of any such appeal unless such appeal would be likely to
have a material and adverse effect on the Landlord's interests in
the Building
(h) Unless the Landlord otherwise directs to complete before the
expiry of the Term all works on the Premises required as a
condition of any planning permission implemented by the Tenant or
by any person claiming under or through it
(i) If the Tenant receives or is entitled to receive any statutory
compensation under any Enactment in relation to its interest in
the Premises the Tenant shall on any determination of its interest
prior to the expiry of this lease by effluxion of time forthwith
make such provision as is just and equitable for the Landlord to
receive its due benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs claims
damages demands and any other liability or consequence arising out or in
respect of any breach of any of the Tenant's obligations under this
lease (including all costs reasonably incurred by the Landlord in an
attempt to mitigate any such breach) or of any act omission or
negligence of the Tenant or any person at the Premises with the Tenant's
authority
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DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably to
have become aware of the same) to give notice forthwith to the Landlord
of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing
anything in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed
by the Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the Landlord
may from time to time reasonably require to be displayed at the Premises
in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the
Tenant) relating to the Building or any part of it becomes
void or voidable or by which the rate of premium on such
policy may be increased
(b) To comply with all proper requirements of the insurers and
to provide and maintain unobstructed appropriate operational
fire fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
(i) any incidence of any Insured Risk on the Premises and of
any other event which ought reasonably to be brought to
the attention of insurers and of which the Tenant ought
reasonably to be aware
(ii) the insurable value of any fixture installed in the
Premises by the Tenant or any person claiming under or
through the Tenant
(d) That if at any time the Tenant or any person claiming under
or through it shall be entitled to the benefit of any
insurance of the Premises to cause all money paid under such
insurance to be applied in making good the loss or damage in
respect of which it was paid
(e) Subject to clause 5(2)(b) if the whole or any part of the
Building is damaged or destroyed by any of the Insured Risks
at any time during the Term and the insurance money under
any insurance policy effected by the Landlord is rendered
wholly or partially irrecoverable because of some act or
default of the Tenant or any person deriving title under or
through the Tenant or their respective servants agents or
invitees forthwith to pay the Landlord the whole amount of
the insurance money so irrecoverable
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DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept placed
stored or used in or upon or about the Premises any materials substance
or other thing of a dangerous inflammable combustible explosive
corrosive or offensive nature or any materials substance or other thing
which may in any way cause pollution injury or harm by percolation
corrosion contamination migration release or otherwise on beneath or in
the vicinity of the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and tenant's
fixtures and quietly to yield up the Premises reinstated in
accordance with the Reinstatement Specification and restored
and made good to the extent required under clause 4(12)(d)
and in the state of repair condition decorative order and
layout otherwise required by this lease and any licences or
consents issued in pursuance of it and to make good any
damage so caused in a proper and workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and
dispose of any chattels which may be left in the Premises
within 28 days after the Tenant has quit them (without being
obliged to obtain any consideration for the disposal) and
the Tenant irrevocably declares that any such chattels will
stand abandoned by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the Landlord
from time to time and notified to the Tenant in writing for
the good management of the Building PROVIDED ALWAYS THAT
no such regulations shall purport to amend the terms
expressed in this lease and if there is any inconsistency
between the terms of this lease and the regulations the
terms of this lease shall prevail
(ii) all covenants stipulations and other matters affecting the
Premises and not to interfere with any rights easements or
other matters affecting the Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's visitors to
the Premises observe such security regulations which may apply to them
HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on the part of
the lessee contained in the Head Lease so far as they relate to the
Premises except the covenant for the payment of rent and except also
so far as
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the obligations relating to insurance fall to be observed
and performed by the Landlord pursuant to clause 5(2)
(b) Not to do or omit any act or thing which would or might
cause the Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management
Company at the times and in the manner provided for in clause 6
and schedule 5 without deduction or set off and to pay the Outside
Normal Business Hours Charge within 10 days of demand (either
annually or by monthly instalments) as the Management Company
shall reasonably determine PROVIDED THAT for the period from the
date hereof until the earlier of 25th June 1997 and the date on
which the Tenant commences full beneficial occupation of the
Premises following the works contemplated by the Agreement for
Initial Alterations the Service Charge payable by the Tenant in
any Accounting Period shall not exceed pounds sterling 32,202
inclusive of VAT and PROVIDED FURTHER that the Service Charge
payable in respect of the twelve month period from the earlier of
25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works
contemplated by the Agreement for Initial Alterations shall be
pounds sterling 74,601.30 exclusive of VAT
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained
in this lease the Tenant may peaceably hold and enjoy the Premises
without any lawful interruption by the Landlord or any person
rightfully claiming through under or in trust for it
INSURANCE
(2) (a) To keep the Building (except all tenants' plant and
equipment and trade fixtures) insured against the Insured
Risks in the full current replacement cost
(b) to use reasonable endeavours to procure that the interest of
the Tenant is noted on the insurance policy and to use
reasonable endeavours to further procure that the insurers
waive any rights of subrogation against the Tenant (or any
lawful subtenant occupier or invitee) and the Landlord will
notify the Tenant if it is unable so to procure and will
duly consider the representations of the Tenant regarding
alternative insurers who may be prepared to procure that the
insurers waive any subrogation rights and/or note the
interest of the Tenant and will also permit the Tenant to
make representations to the insurers regarding the noting of
the Tenant's interest and/or waiver of rights of subrogation
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(c) On request to supply the Tenant (but not more frequently
than once in any period of twelve months) with evidence of
such insurance
(d) If and whenever during the Term the Building (except as
aforesaid) is damaged or destroyed by an Insured Risk and to
the extent that payment of the insurance monies is not
refused because of any act neglect default or omission of
the Tenant or of any person deriving title under or through
the Tenant or their respective servants agents and invitees
subject to clause 5(2)(b) above the Landlord will with all
convenient speed take the necessary steps to obtain any
requisite planning permissions and consents and if they are
obtained to lay out the money received from the insurance of
the Building (except sums in respect of public liability and
employer's liability and loss of rent) towards replacing
(but not necessarily in facsimile reinstatement) the damaged
or destroyed parts (except as aforesaid) and in the case of
the Premises to the Reinstatement Specification as soon as
reasonably practicable (and the Landlord shall keep the
Tenant informed of progress of any such insurance claims and
the Landlord's proposals for compliance with this provision)
PROVIDED ALWAYS THAT the Tenant shall have no claim against
the Landlord under this clause 5(2)(c) in respect of the
manner of replacement of the interior of any Lettable Unit
other than the Premises or any alteration to the Common
Parts and PROVIDED FURTHER THAT the Landlord shall not be
liable to carry out the replacement if it is unable (having
used all reasonable endeavours) to obtain every planning
permission and consent necessary to execute the relevant
work in which event the Landlord shall be entitled to retain
all the insurance money received by it and if the Landlord
so retains the insurance money the Tenant shall be entitled
to determine this lease on not less than one month's prior
written notice
(e) In the event that the Premises have not been reinstated to
the Reinstatement Specification or essential means of access
thereto within the Building is not available in the
circumstances contemplated in subclause 5(2)(d) by the
date five years and eleven months following the date of such
damage or destruction by an Insured Risk the Tenant may
determine this lease on not less than one month's prior
written notice such notice to be served (if at all) within
one month after expiry of such five years and eleven months
period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform
so far as the Tenant is not liable for such performance
under the terms of this lease but so far only as to preserve
the existence of this lease the covenants and conditions on
the part of the lessee contained in the Head Lease
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(b) On the request and at the reasonable expense of the Tenant
to take all reasonable steps to enforce the covenants on the
part of the Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's reasonable
expense (to the extent possible under the Head Lease) to
obtain the consent of the Superior Landlord wherever the
Tenant makes application for any consent required under this
lease where the consent of both the Landlord and the
Superior Landlord is needed by virtue of this lease and the
Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide
or procure the provision of electricity to the Premises to the
extent necessary to meet the requirements of the Tenant having
regard to the overall electricity services design standards for
the Building as a whole and to all relevant statutory provisions
from time to time regulating the supply and utilisation of
electricity and the terms and conditions relative thereto from
time to time imposed by the electricity provider chosen by the
Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as
it requires from time to time for the due and proper provision of
the Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT
liability on the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply
made hereunder by the Landlord to the Tenant the Landlord
shall no later than thirty days after the due date for
payment in respect of such supply issue a valid VAT invoice
or audit note (as the case may be to the Tenant)
(b) Subject to (6)(c) below all consideration payable by the
Landlord to the Tenant shall be exclusive of VAT which the
Landlord shall pay in addition on production of a valid VAT
invoice
(c) The capital sum referred to in clause 3 above shall be
inclusive of VAT save that if the Landlord is at any stage
able to recover such VAT the Landlord shall pay to the
Tenant a further amount equal to VAT on the capital sum
NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its
postal address from time to time
NOTIFICATION OF NOTICES
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(8) The Landlord will inform the Tenant as soon as reasonably
practicable but in any event within 5 working days of receipt of
the same of any notice served by the Superior Landlord alleging a
breach of the Head Lease which would threaten the existence of
this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate
the structure of the Building (including the structure of the
roofs foundations external and internal walls and columns and
structural slabs of the ceilings and floors) the external surfaces
of the Building (including the whole of the glazing within the
external walls of the Building) and the Common Parts and (where
consistent with an obligation to repair) to replace the same
(2) To keep the Service Media designed for common or general use and
the Landlord's Services Equipment in good and substantial repair
and in clean condition and at all times in good and safe working
order
(3) To keep the lifts in the Building clean and in good and
substantial repair and condition and at all times in good and safe
working order
(4) Provide heat and air conditioning and chilled water to the
Premises (subject to the Tenant paying Outside Normal Business
Hours Charge in relation to the provision of such services outside
Normal Business Hours) such heat being sufficient to maintain an
air temperature in the Premises measured at the main trunk
connections to the floor as follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29 degrees C DB 20 degrees C WB
Winter -4 degrees C DB 100% relative
humidity
Internal Conditions Office
Accommodation -
Summer 22 degrees C DB + 1 degree C
Winter 20 degrees C DB minimum
Humidity Office Accommodation -
Summer 50% +/-10%
Winter 50% +/-10%
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(5) To ensure that the Common Parts are at all times kept clean tidy
and unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part
thereof designed to receive the same to the extent necessary to
meet the reasonable requirements of the Tenant and other lawful
occupiers of the Premises
(7) To comply with the requirements of any statute (already or in the
future to be passed) or any government department local authority
other public or competent authority or court of competent
jurisdiction relating to the Building or any part for which any
tenant or occupier of the Building is not directly or exclusively
liable
(8) To ensure that at all times (meaning for the avoidance of doubt 24
hours a day during the Term) there are both such security officers
at and patrolling the Building as is reasonably appropriate for
premises of the same size and nature as the Building and that the
main reception to the Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate
to provide to a high class office building in the City of
London outside Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the
Tenant shall previously request (but subject to the Tenant
being responsible for the Outside Normal Business Hours
Charge)
(having regard in all cases to and in accordance with the
overall design standards for the Building as a whole and subject
to the limitations contained in Clause 7(6)) in an efficient and
economic manner and in accordance with good estate management
provided that the Management Company shall be entitled to employ
such managing agents professional advisers contractors and other
persons as it shall from time to time reasonably think fit for the
purpose of the performance of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any
of the Common Parts or interruption in the provision of the Services or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or the Common
Parts or temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance or
replacement thereof or any part thereof or any plant machinery equipment
installations or apparatus used in connection therewith or damage
thereto or destruction thereof by any risk (whether or not an Insured
Risk) or by reason of electrical mechanical or other defect or breakdown
or frost or other inclement conditions or shortage of fuel materials
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supplies or labour or whole or partial failure or stoppage of any mains
supply due to any circumstances beyond the control of the Management
Company PROVIDED ALWAYS that the Management Company shall use all
reasonable endeavours to minimise the adverse effects of any such
circumstances and to remedy any such interruption closure or diversion
as soon as reasonably practicable PROVIDED FURTHER that in the event of
the Landlord or the Management Company being unable to provide air
conditioning or electricity to the Premises in such circumstances the
Tenant shall be entitled to carry out (the Landlord and Management
Company affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable
(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach of
the Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED
THAT:-
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in
this lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for
twenty-one days after becoming payable (whether or not
formally demanded) or
(b) any of the Tenant's covenants in this lease are not
performed or observed in the manner and at the times herein
specified or
(c) the guarantee granted by the Guarantor or any other
guarantor of the Tenant's obligations is or becomes
unenforceable (in whole or in part) for any reason
whatsoever and no suitable alternative security is provided
to the Landlord within a period of one month or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent
company) or compulsorily or has a provisional liquidator or
a receiver (including an administrative receiver) appointed
or its directors pass a resolution to petition for an
administration order or one or more of them swears an
affidavit in support of such a petition or is the subject of
an administration order or a petition for one or of a
voluntary arrangement or a proposal for one under Part I
Insolvency Act 1986
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(e) being a company incorporated outside the United Kingdom is
the subject of any proceedings or event analogous to those
referred to in clause 7(l)(d) in the country of its
incorporation
(f) being an individual is the subject of a bankruptcy petition
or bankruptcy order or of any application or order or
appointment under section 253 or section 273 or section 286
Insolvency Act 1986 or otherwise becomes bankrupt or
insolvent or dies
the Landlord may at any time thereafter (and notwithstanding
the waiver of any previous right of re-entry) re-enter the
Premises without prejudice to the Tenant's right to relief against
forfeiture whereupon this lease shall absolutely determine but
without prejudice to either party's right of action against the
other in respect of any antecedent breach of the covenants in this
lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in
relation to the Building and (subject only to those easements
expressly granted by this lease) neither the Tenant nor the
Premises shall be entitled to any easement or quasi- easement
whatsoever and nothing herein contained or implied shall give the
Tenant the benefit of or the right to enforce or to have enforced
or to prevent the release or modification of any right easement
covenant condition or stipulation enjoyed or entered into by any
tenant of the Landlord in respect of property not demised by this
lease or prevent or restrict the development or use of the
remainder of the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant
supply authorities and any other competent authority the Common
Parts and the Service Media are at all times subject to the
exclusive control and management of the Landlord who may from time
to time (if it shall be necessary or reasonable to do so for the
benefit of the Building or otherwise in keeping with the
principles of good estate management) alter divert substitute stop
up or remove any of them (leaving available for use by the Tenant
reasonable and sufficient means of access to and egress from and
servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be
served under this lease shall be validly served if served in
accordance with section 196 Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 or (in the
case of any notice to be served on the Tenant) by sending it
to the Tenant at the Premises PROVIDED THAT whilst the
Tenant hereunder is Donaldson Lufkin & Jenrette
International Limited such notice shall also be served on
the offices for the time being of SJ Berwin & Co (attention:
Edward Page) or such other firm of solicitors notified in
writing to the Landlord and 277 Park Avenue New York New York
10172
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(b) If the Tenant or any guarantor comprises more than one
person it shall be sufficient for all purposes if notice is
served on one of them but a notice duly served on the Tenant
will not need to be served on any guarantor
RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment
and tenant's fixtures) or the means of access to the
Premises within the Building are damaged or destroyed by any
of the Insured Risks so that the Premises are incapable of
beneficial occupation and use and
(b) subject to clause 5(2)(b)the insurance of the Building or
the payment of any insurance money has not been vitiated by
the act neglect default or omission of the Tenant or of any
person deriving title under or through the Tenant their
respective servants agents and invitees
the rent first reserved by this lease and the Service Charge
or a fair proportion of them according to the nature and extent of
the damage sustained shall be suspended and cease to be payable
from the date of destruction or damage until whichever is the
earlier of the date on which the Premises are reinstated to the
Reinstatement Specification and if applicable the essential means
of access within the Building are available and the date of expiry
of the period for which insurance of loss of rent is effected and
any dispute about such suspension shall be referred to the award
of a single arbitrator to be appointed in default of agreement on
the application of the Landlord or the Tenant to the President for
the time being of The Royal Institution of Chartered Surveyors in
accordance with the Arbitration Acts 1950 and 1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts
or stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or
temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance
or replacement thereof or any part thereof or any plant machinery
equipment installations or apparatus used in connection therewith
or damage thereto or destruction thereof by any risk (whether or
not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions
or shortage of fuel materials supplies or labour or whole or
partial failure or stoppage of any mains supply due to any
circumstances beyond the control of the Landlord PROVIDED ALWAYS
that the Landlord shall use all reasonable endeavours to minimise
the adverse effects of any such circumstances and to remedy any
such interruption closure or diversion as soon as reasonably
practicable PROVIDED FURTHER that in the event of the Landlord or
the Management Company being unable to provide air conditioning
or electricity to the Premises in such circumstances the Tenant
shall be entitled to carry out (the Landlord and Management
Company
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affording the Tenant reasonable access to do so) all
necessary remedial works to such electricity or air conditioning
PROVIDED THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable)
(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach of
the Landlords or Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the
Landlord or by the Tenant notwithstanding any direction or prior
agreement as to liability for payment and any sums so paid for
which the party who pays them initially is not ultimately liable
shall be repayable on demand by the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase
in the amount of the rent reserved and made payable by virtue of
schedule 4 a memorandum recording the increase shall be attached
to this lease and to the counterpart and such memorandum shall be
signed by or on behalf of the Landlord and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are
authorised under Planning Law to be used or are otherwise fit for
any specific purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or
occupier of any part of the Building relating to any
easement or right affecting the Building or any part of it
shall (unless the Landlord shall by notice to the parties
concerned renounce its power to determine it) be referred to
the Landlord whose decision acting reasonably (acting in the
capacity of an expert) shall be binding upon the parties to
the dispute but the Landlord shall give written reasons for
his decision
(b) Where any issue (other than one relating to a rent review)
arising out of or under or relating to the Head Lease which
also affects or relates to the provisions of this lease is
to be determined as provided in the Head Lease the
determination of such issue pursuant to the provisions of
the Head Lease shall be binding on the Tenant as well as the
Landlord for the purposes both of the Head Lease and this
lease
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COMPENSATION
(11) Except where any Enactment prohibits the right to compensation
being reduced or excluded by agreement, neither the Tenant nor any
occupier of the Premises shall be entitled on quitting them to
claim from the Landlord any compensation under the Landlord and
Tenant Act 1954
RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a proposal to
alter the entry for the Premises in the local non-domestic
rating list it shall notify the other party of its
intention and shall incorporate in the proposal such proper
and reasonable representations as may be made by or on
behalf of that party
(b) The Tenant shall not agree the level of rates liability
attributable to the Premises following the date hereof
without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) PROVIDED that for the
avoidance of doubt the Landlord shall not be entitled to
refuse its consent to any level of rates which the Tenant
has negotiated with the appropriate rating authority which
is lower than any level of rates negotiated by or on behalf
of the Landlord in respect of the Building on a pro rata
basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed
to constitute a warranty by the Landlord that the Premises shall
be kept secure or that any security service to the Common Parts
shall be effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the
Landlord the English courts shall have exclusive jurisdiction
in relation to disputes arising under or connected with this lease
and the Tenant agrees that any process may be served on it by
leaving a copy of the relevant document at the Premises provided
however that the Landlord shall retain the right at its sole
election to sue the Tenant elsewhere including in the courts of
the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy
of the reversion immediately expectant on the determination of this
lease whether pursuant to Section 19 Landlord and Tenant (Covenants)
Act 1995 or otherwise any covenant on the part of the Tenant to
obtain the consent of the Landlord under this lease to any dealing
shall be deemed to include a further covenant also to obtain the
consent of the lessor under such tenancy to such dealing
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8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants
and agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the
manner and at the times herein specified and that if there is
default in performing and observing any of the Landlord's
obligations (notwithstanding any time or indulgence granted by the
Tenant to the Landlord or compromise, neglect or forbearance on
the part of the Tenant in enforcing the observance of the
Landlord's obligations in this lease) the Landlord's Guarantor
will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Landlord
shall be in default
(2) The Landlord's Guarantor at the request of the Management Company
and in consideration of the Tenant agreeing to pay the Service
Charge covenants and agrees with the Tenant that all of the
Management Company's obligations contained in this lease will be
performed and observed in the manner and at the times herein
specified and that if there is default in performing and observing
any of the Management Company's obligations (notwithstanding any
time or indulgence granted by the Tenant to the Management Company
or compromise, neglect or forbearance on the part of the Tenant in
enforcing the observance of the Management Company's obligations
in this lease) the Landlord's Guarantor will observe and perform
(or procure the performance and observance of) the obligations in
respect of which the Management Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of this
clause) determine this lease as at 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on 24th
October 2008
(3) If the Tenant duly serves the Termination Notice it shall procure
that vacant possession of the Premises will be available on 24th
October 2008 free of occupation by and of any estate or interest
rested in the Tenant or any third party and this lease shall not
determine as a result of any notice served by the Tenant if the
Tenant is in material breach of any of its covenant to pay the
rents and Interim Sum contained in this lease (including those
contained in this subclause) as at 24th October 2008 except to
the extent if at all the Landlord in its absolute discretion
waives compliance with any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during
the Term and any period of holding over continuation or extension
thereof whether by an Enactment common law or otherwise (subject to
clause 4(15)):-
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(1) The rents reserved by this lease (whether or not ascertained as to
amount) will be duly paid and that all the Tenant's obligations
contained in it will be performed and observed in the manner and at the
times herein specified and that if there is any default in paying the
rents or in performing and observing the Tenant's obligations
(notwithstanding any time or indulgence granted by the Landlord to the
Tenant or compromise neglect or forbearance on the part of the Landlord
in enforcing the observance and performance of the Tenant's obligations
in this lease or any refusal by the Landlord to accept rents tendered
by or on behalf of the Tenant) the Guarantor will observe and perform
the obligations in respect of which the Tenant shall be in default and
will on demand and on a full indemnity basis pay to the Landlord an
amount equivalent to the rents or other amounts not paid and/or any loss
damage costs charges expenses or any other liability incurred or
suffered by the Landlord as a result of the default (and in the event of
non-payment shall pay interest at the Interest Rate from the date of
demand to the Guarantor until the date of payment) and will otherwise
indemnify and hold harmless the Landlord against all actions claims
costs damages demands expenses losses and proceedings arising from or
incurred by the Landlord as a result of such non-performance or non-
observance
(2) If any liquidator or other person having power to do so disclaims this
lease or if it shall be forfeited or if the Tenant ceases to exist and
if the Landlord by written notice served within three months after the
date of disclaimer or forfeiture or the Landlord having actual knowledge
of the cesser of existence of the Tenant (each a "Trigger Event")
requires the Guarantor to accept a lease of the Premises for a term
computed from the date of the Trigger Event to the date on which the
Term would have expired by effluxion of time and at the same rents and
subject to the same covenants stipulations conditions and provisions
(except that the Guarantor shall not be required to procure that any
other person is made party to that lease as guarantor) as are reserved
by and contained in this lease immediately before the Trigger Event and
with coincidental Review Dates (the said new lease and the rights and
liabilities thereunder to take effect as from the date of such Trigger
Event) the Guarantor shall forthwith accept such lease accordingly and
execute and deliver to the Landlord a counterpart of it and indemnify
the Landlord upon demand against the costs incurred on the grant of the
new lease
(3) The liability of the Guarantor hereunder shall not be released reduced
affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this lease
or any of them agreed between the Landlord and the Tenant or
(b) the surrender by the Tenant of part of the Premises (in which
event the liability of the Guarantor shall continue in relation to
the Tenant's obligations in respect of the part of the Premises
not so surrendered) or
(c) any legal limitation immunity disability incapacity occurrence of
insolvency or the winding-up of the Tenant or
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(d) (without limitation to the foregoing) of any other act or thing
act or thing by which (but for this provision) the Guarantor would
have been discharged or released (in each case in whole or in
part) from liability under this guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in
accordance with clause 8(2) the Guarantor shall pay to the Landlord on
demand (in addition to any other loss damage costs charges expenses or
other liability which the Guarantor may be required to make good
hereunder and without prejudice to any other rights of the Landlord) an
amount equal to the rents which would have been payable hereunder but
for such Trigger Event (so far as such rents do not otherwise continue
to be payable) for the period commencing on the date of such Trigger
Event and ending on whichever is the earlier of the date one year after
the date of such Trigger Event and the date (if any) upon which rent is
first payable in respect of the whole of the Premises on a reletting
thereof
(5) Without prejudice to the rights of the Landlord against the Tenant the
Guarantor shall be a principal obligor in respect of its obligations
under this clause and not merely a surety and accordingly the Guarantor
shall not be discharged nor shall its liability hereunder be affected by
any act or thing or means whatsoever by which its said liability would
not have been discharged if it had been a primary debtor
(6) The Guarantor shall pay all reasonable charges (including legal and
other costs on a full indemnity basis) incurred by the Landlord in
relation to the Landlord's enforcement of this guarantee and indemnity
against the Guarantor or for enforcing payment by the Guarantor of
amounts indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee and
indemnity against the Guarantor without having first enforced the
covenants and terms of this lease against the Tenant and also without
first having recourse to any other rights or security which the Landlord
may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security held
by the Landlord in respect of the obligation of the Tenant under this
lease or to any right of subrogation in respect of any such security
until all the obligations owed to the Landlord by the Tenant and the
Guarantor hereunder have been fully and unconditionally fulfilled and
discharged
(9) The Guarantor shall not claim in any liquidation bankruptcy composition
or scheme of arrangement in respect of the Tenant in competition with
the Landlord and if and to the extent that it receives the same shall
remit to (and until remission shall hold in trust for) the Landlord all
and any monies received from any liquidator trustee receiver or out of
any composition or arrangement or from any supervisor thereof until all
the obligations of the Tenant and the Guarantor hereunder owed to the
Landlord have been fully and unconditionally fulfilled and discharged
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(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the
necessity for any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains the
Tenant this guarantee and indemnity shall only apply if and for so
long as the total shareholders funds and reserves of Donaldson,
Lufkin & Jenrette International Limited are or fall below the value
of Fifty million pounds (pound sterling 50,000,000) AND Donaldson,
Lufkin & Jenrette International Limited and Donaldson, Lufkin &
Jenrette Inc. shall notify the Landlord at the beginning of each
period in which this guarantee and indemnity applies and again when
it ceases to apply AND for the avoidance of doubt this guarantee
(subject to compliance by the Tenant with clause 4(15)) shall
automatically cease on any lawful assignment of this lease (but
without prejudice to either party's rights against the other in
respect of any antecedent breaches of this lease) unless in the
circumstances contemplated by clause 4(15)(g)(ii)(b) it is
reasonable for Donaldson Lufkin & Jenrette Inc. to remain the
guarantor hereunder of the liabilities of Donaldson, Lufkin &
Jenrette International Limited PROVIDED FURTHER that Donaldson,
Lufkin & Jenrette Inc shall in such circumstances automatically be
released on a second assignment of this lease
11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the twentieth floor and being part of the
Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and
all materials lying between the upper surface of the structural floor
slab and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact
on the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the external
windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in
the external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress
to and from the Premises to use the Common Parts and to use all
means of escape but only when needed in an emergency and
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(2) to use the Service Media
2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authorised sub-tenants or permitted occupiers (subject to a maximum
of four names at any particular time) on the signboard in the entrance
lobby of the Building provided by the Landlord pursuant to paragraph 14
of Part I of schedule 6 and the right to install a sign displaying the
name of the Tenant at the entrance to the Premises the precise location
size and style of such sign to be subject to the approval of the
Landlord (such approval not to be unreasonably withheld or delayed)
4. The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area
at all reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and
maintenance (on reasonable prior written notice to the Landlord) those
works or installations within or on the Building (but outside the
Premises) for which consent has been given pursuant to the Agreement for
Initial Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to free access for the tenants of the nineteenth and
twenty-first floors unless such tenants have agreed to forego the right
of access subject to the Tenant being responsible for all elements of
Service Cost relating to such toilets should any other tenant of
accommodation in the Building object to meeting any proportion of
Service Cost in relation to such facilities (on the basis of such
exclusive use)
SCHEDULE 3
(Exceptions and reservations)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of
them to the Premises and the lights windows and openings thereof may be
affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the
Premises as often as may be necessary for the purpose of complying with
the covenants of the Head Lease for all the purposes for which the
Tenant covenants in this lease to permit entry and for all purposes in
connection with the carrying out of the Services and for the purposes of
complying with any statutory requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the
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Premises at any time during the Term for the benefit of any other part of
the Building or any adjacent or neighbouring land
4. The right to erect and maintain scaffolding on or against any part of the
Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the
purpose of repairing that other part of the Building making good any
damage so caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved
by this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably
be expected to be payable following the expiry of any period at
the beginning of the term which might be negotiated in the open
market for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated
in the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free
or concessionary rent period or capital sum or fitting out
contribution and has used the same fully to fit out the Premises
for the Permitted Use to the lessee's
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particular requirements) if the Premises had been let in the open market
by a willing lessor to a willing lessee with vacant possession on the
relevant Review Date without fine or premium for a term of ten years
computed from the relevant Review Date taking into account the lessee's
right at the expiration of the term to be granted a new tenancy under
Part II Landlord and Tenant Act 1954 and otherwise upon the provisions
(save as to the amount of the rent first reserved by this lease but
including the provisions for rent review at five-yearly intervals)
contained in this lease and on the assumption if not a fact that the
said provisions have been fully complied with and on the further
assumptions that:-
(a) the Permitted Use and the Premises comply with Planning Law and
every other Enactment free from any onerous condition restriction
and limitation and that the lessee may lawfully implement and
carry on the Permitted Use
(b) no work has been carried out to the Premises which has diminished
their rental value
(c) in case the Building or any part of it has been destroyed or
damaged it has been fully restored
(d) the Premises have been fitted out to no less standard than that
set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other permitted
occupier or their respective predecessors in title has been or is
in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying on in them
of the business of the Tenant or any underlessee or their
respective predecessors in title or other permitted occupier
(iii) (without prejudice to paragraphs 1(2)(b) and 1(2)(c) of this
schedule) any works carried out to the Premises during the Term by
the Tenant or any permitted underlessee in either case at its own
expense in pursuance of a licence granted by the Landlord where
required and otherwise than in pursuance of any obligation to the
Landlord
(iv) the works carried out to the Premises by the Tenant or carried out
by the Landlord at the expense of the Tenant pursuant to the
Agreement for Initial Alterations
(3) "Review Surveyor" means an independent chartered surveyor appointed
pursuant to paragraph 3(1) of this schedule and if to be nominated by or
on behalf of the President for the time being of the Royal Institution
of Chartered Surveyors the said President to be requested to nominate an
independent chartered surveyor having not less than ten years practice
in the City of London next before the date of his appointment and recent
substantial experience in the letting and valuation of office premises
of a similar character and quality to
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those of the Premises and who is a partner or director of a
leading firm or company of surveyors having specialist market and
valuation knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
(1) the Current Rent (ignoring for this purpose any rent cesser
pursuant to clause 7(5)) and
(2) the Review Rent
3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant
to assess the Review Rent or (in the absence of agreement at any
time about his appointment) be nominated to assess the Review Rent
by or on behalf of the President for the time being of The Royal
Institution of Chartered Surveyors on the application of the
Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review Surveyor)
he shall act as an arbitrator and the arbitration shall be
conducted in accordance with the Arbitration Acts 1950 and 1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting
each of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired
by the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the determination
in accordance with his own judgment (including any determination
concerning any party's liability for the costs of the reference to
him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4. If the Review Rent has not been agreed or assessed by the relevant Review
Date the Tenant shall:-
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(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or
assessment of the Review Rent the amount (if any) by which the
Review Rent for the period commencing on the relevant Review Date
and ending on the quarter day following the date of payment
exceeds the Current Rent paid on account for the same period plus
interest at three per cent below the Interest Rate for each
installment of rent due on and after the relevant Review Date on
the difference between what would have been paid on that rent day
had the Review Rent been fixed and the amount paid on account (the
interest being payable from the date on which the installment was
due up to the date of payment of the shortfall)
5. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is released
the Landlord may at any time within six months after the date of release
give to the Tenant not less than one month's notice requiring an
additional rent review as at the next following quarter day which shall
for the purposes of this lease be a Review Date
SCHEDULE S
(THE SERVICE CHARGE)
1. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 31st December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the
Building (whether or not pursuant to the terms of this Underlease) the
Management Company or the Tenant shall be entitled if reasonable to
require that the same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge
for each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting
Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the
provisions of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service
Cost and Service Charge for each Accounting Period served pursuant to
paragraph 5 of this schedule and prepared by the Management Company's
surveyor or auditor
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"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company in
any Accounting Period in carrying out or procuring the carrying out
of the Services and providing each item of the Services including
(without prejudice to the generality of the foregoing) the costs
and expenses set out in Part II of schedule 6 (insofar as the same
are reasonable and properly incurred) and any other reasonable
costs and expenses properly incurred by the Management Company or
with the Management Company's authority in connection with the
Services but excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the
Services outside Normal Business Hours at the specific
request of the Tenant (which shall be charged direct to the
Tenant) or of any other tenant or tenants of the Building
and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and
which is recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage
caused by any of the Insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items
of plant machinery equipment and other capital items is calculated
on such life expectancy of the said items as the Management Company
may from time to time reasonably determine to the intent that a
fund be accumulated sufficient to cover the cost of replacement of
the said items by the end of their anticipated life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting Period
shall be a fair proportion of the Service Cost attributable to the
Premises from time to time as properly determined by the Management
Company (and so in proportion for any Accounting Period not falling
wholly within the Term the
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Service Cost in any such case being deemed to accrue on a day to
day basis for the purpose of apportionment)
(B) If at any time and from time to time during the Term the method or
basis of calculating or ascertaining the cost of any item of the
Services shall alter or the basis of calculating or ascertaining
the Service Cost in relation to any item of the Services shall
change and as a result it is reasonable that there be an alteration
or variation of the calculation of the Service Charge in order to
achieve a fairer and better apportionment of the Service Cost
amongst the tenants of the Building then and in every such case
the Management Company shall vary and amend the Service Charge
and make appropriate adjustments thereto provided always that
in the event of any dispute between the Management Company and the
Tenant and the other tenants of the Building or any of them the
same shall be referred to the Expert for determination (the Expert
to act as an expert and not as an arbitrator) whose decision shall
save in the case of manifest error be binding on the parties
(including his decisions as to the responsibility for his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the Building let or occupied or designed
contracted or adapted for letting or occupation (other than
management accommodation) is fully let on terms which include
service charge provisions consistent with the service charge
provisions contained in this lease (save where otherwise specified
herein) and such proportion shall not be increased or altered by
reason of the fact that at any time any part of such accommodation
may be vacant or that any tenant or other occupier of any other
part of the Building may default in payment of its due proportion
of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance with
a programme of non equal expenditure in which event the Management
Company shall serve notice to such effect upon the Tenant and shall
thereupon be entitled to require amounts of the Interim Sum to be
paid by advance quarterly instalments of unequal amounts reasonably
stipulated by the Management Company
(B) The Management Company shall be entitled to require as part
of the Interim Sum payments in advance on account of the cost of
the consumption of and supply charges in respect of electricity
consumed within the Premises (save for any amounts which are
invoiced directly by London Electricity plc to the Tenant) such
sums not to exceed a fair and proper estimate of amounts reasonably
anticipated by the Management Company as falling due within the
next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company
shall be entitled in addition to require the Tenant to pay along
with payments of the Interim Sum a fair and
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proper estimate of amounts likely to be payable by the Tenant in
the next quarter on account of such Services in accordance with
the terms of this lease
(D) The Interim Sum for the Accounting Period ending 31st December 1996
shall be pounds sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or cause
to be served on the Tenant written notice of the Interim Sum for
the relevant Accounting Period Provided that without prejudice to
the provisions of paragraphs 6 and 7 of this schedule if the
written notice aforesaid shall be served after the first occurring
quarter day in the relevant Accounting Period the Tenant shall
until service of the written notice aforesaid make payments on
account of the Interim Sum for the relevant Accounting Period on
the days and in the manner provided by sub-paragraph (A) of this
paragraph of this schedule at an annual rate equal to the Interim
Sum for the immediately preceding Accounting Period
5. (A) As soon as practicable after the expiry of every Accounting Period
(and in any event within 4 months after such expiry) the Management
Company shall serve or cause to be served a Service Charge
Certificate on the Tenant for the relevant Accounting Period
(B) A Service Charge Certificate shall contain a summary of the Service
Cost in respect of the Accounting Period to which it relates and
the relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of
the expenditure under any particular item or items shown in a
Service Charge Certificate by giving notice thereof in writing to
the Management Company within three months of the date of service
on the Tenant of the relevant Service Charge Certificate and upon
receipt of such a notice the Management Company shall furnish to
the Tenant all such relevant details in its possession or control
or which can reasonably be obtained by it as relate to the
expenditure under the item or items in question at the cost of the
Tenant (include all books of account receipts demands and invoices)
PROVIDED ALWAYS that notwithstanding the giving of any such notice
the Tenant shall nevertheless pay all Interim Sums and Service
Charges as and when they fall due or as may be underpaid from
time to time (but without prejudice to any challenge claim or
dispute that the Tenant may have made or may make in the future in
respect of its Service Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay to
the Management Company or as it shall direct a sum equal to the amount by
which the Service Charge exceeds the Interim Sum provided that and the
Tenant hereby acknowledges that if there shall be any such excess in
respect of the Accounting Period the amount of such excess shall be a
debt due from the Tenant to the Management Company and in the event that
such excess is not received in cleared funds by the Management Company
within 14 days of the due date
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for payment it shall attract interest at the Interest Rate calculated
for the period commencing on the due dates for payment and ending on the
date the sum is subsequently received by the Management Company
notwithstanding that the Term may have expired or been determined before
the service by or on behalf of the Management Company of the relevant
Service Charge Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it shall
attract interest at the Interest Rate for the period commencing as the
due date for payment and ending on the date that the sum due is received
in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph 9
of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly adhered
to) Provided that the Tenant gives notice with full particulars of its
ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve the
relevant issue but if they cannot do so the issue in dispute shall
be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest error
be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the dispute
shall be paid as soon as reasonably practicable after such
resolution and any sum due to or payable by the Management Company
shall then be paid or allowed (as the case may be) immediately
together with interest at three per cent below the Interest Rate on
such sum during the period which it has been underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
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11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited to)
the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of
schedule 6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of such
Services is greater) than would normally apply in the context of the
general management of the Building in accordance with this lease as a
result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof
determined by the Management Company) within 10 working days
following a demand by the Management Company
SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant parts
of it described in paragraphs (ii) and (iii) of schedule 1
2. Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the
Common Parts and the car park shall be operational 24 hours a day 7 days
a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout
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Normal Business Hours and at the request of the Tenant outside those
hours subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule 1 and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists
are not present) and the car park within the Building including where
reasonably appropriate in the Management Company's judgment closed
circuit television and/or other plant and equipment for the purpose of
surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and
(and where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
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16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in the
Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided by
the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the Premises
or
(2) reasonably calculated to be for the benefit of the Tenant and other
tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference to
the particular matters or things shall be deemed to be and in each
case shall be without prejudice to the generality of the wording
preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the provision
of or add to or procure the addition to any item of Services matter
or thing specified in this schedule if the Management Company shall
having regard to the principles of good estate management reasonably
deem it desirable or expedient so to do but before so doing the
Management Company shall notify all the tenants in the Building but
in the event of any failure of any of the Services shall use all
reasonable endeavours to restore the said Service
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due to
circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company employed
or retained by or on behalf of the Management Company or its agents
(including without limitation managing agents fees) for or in connection
with:-
(1) any surveying or accounting functions for the Building and
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(2) the performance of the Services or any of them and any other duties
in or about the Building or any part of it relating to the general
management administration security maintenance protection and
cleanliness of the Building
2 The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and not
by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice to
the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in kind
and other emoluments and National Insurance and other statutory
contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided rent
free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part of
this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
52
<PAGE>
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the same
is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in unforeseen
or emergency circumstances to finance the provision of the Services and
the costs referred to in this Part of this schedule or any of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any other
amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the Management
Company pursuant to sections 24 25 and 26 Value Added Tax Act 1994 or any
regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable Life
Assurance Society (3)
SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
PART I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of, input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
53
<PAGE>
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1994 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part MV of the Value Added Tax Regulations 1995.
"VAT Year Certificate" means the certificate to be provided by the
Tenant following the end of the Tenant's VAT Year in the form set out in
Part II of this Schedule.
2. Payment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to
the rent first reserved without any adjustment of rent first reserved
under this schedule.
3. Adjustment of rent first reserved and payment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on the due date for payment of the next installment of the
rent first reserved (and on the due date for subsequent instalments),
subject however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served a
VAT Year Certificate specifying in paragraph 1 thereof the same
estimated proportion as stated in the previous VAT Year Certificate
served, or if no previous VAT Year Certificate has been served by the
Tenant at any time prior to the due date for any VAT Year Certificate an
estimated proportion of nil per cent. If the Tenant fails to serve a VAT
Year Certificate on more than one consecutive occasion the Tenant shall
be deemed, on the second failure and any
54
<PAGE>
subsequent failure, until service of the next VAT Year Certificate, to
have served a VAT Year Certificate specifying in paragraph 1 thereof an
estimated proportion of nil per cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at that
time) be adjusted on the basis of the last VAT Year Certificate. The
adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an amount
to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form set
out in the VAT Year Certificate. The Tenant's Auditor's certificate shall
be provided at least eight days prior to the date of payment of the rent
first reserved to which such certificate relates, together with the
Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant shall
pay in accordance with paragraph 4.1 above the amount stipulated in
accordance with paragraph 3 of such VAT Year Certificate (as revised, if
required) on the date for payment of the rent first reserved.
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or will
obtain a Tax Credit differing from the proportion previously taken into
account in calculation any payment, any such difference shall be taken
into account (after having determined the amount of rent first reserved
payable in respect of the next quarter in accordance with paragraph 3
above) in calculating the next actual payment of rent first reserved
(either by increase or decrease), the amount of which shall be set out in
paragraph 3 of the VAT Year Certificate.
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the
55
<PAGE>
amount which should have been paid, from such due date until the date of
payment of the adjusted amount pursuant to paragraph 4.3. Where the
actual amount paid (the "Initial Payment") on the due date for payment
of any sum was subsequently adjusted on payment of any later installment
of the rent first reserved ("the Adjusted Payment") in accordance with
paragraph 4.6 of Part I of this Schedule 8 and paragraph 3(b) of the VAT
Year Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions of
this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or
accepting a method of attribution designed or maximise its Tax Credit
and covenants not to enter any arrangement which has the specific
purpose of increasing the amount by which the rent first reserved is
decreased by virtue of this schedule 8.
56
<PAGE>
PART II
VAT YEAR CERTIFICATE
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ]
made between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises
on [ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant
to that paragraph:
1. Our VAT Year which included the following quarter days [ ],
ended on [ ], ended on [ ].
(a) The part of the VAT charged on the rent first reserved paid in the
VAT Year for or in respect of which we estimate/have determined (in
accordance, where relevant, with the return made, or to be made, for
the prescribed accounting period next following the end of the VAT
Year) we will be unable to obtain credit or repayment is a
proportion of [ ] per cent of the total VAT charged.
(b) The following Table sets out the part of the VAT charged which was
expected to be irrevocable during the VAT Year where it has been
determined on the basis of paragraph 2(a) above that that differs
from the amount of VAT for or in respect of which we actually
obtained, or will be able to obtain, credit or repayment.
Dates Rent first reserved Estimate Adjustment Determination
* ** ***
* estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out initially in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set
out in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now
estimated/determined we shall be unable to obtain credit or
repayment, in accordance with Sections 24-26 of the Value Added Tax
Act 1994 and the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved so as to ensure that the amount of rent first reserved payable
in the VAT Year to which this VAT Year Certificate relates is as provided
in paragraph 3 of Part I of Schedule 8 to the Lease in accordance with
the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and the VAT
thereon shall be pounds sterling [ ], and that the interest
57
<PAGE>
payable by the Tenant to the Landlord/Landlord to the Tenant, in
accordance with paragraph 4.7 of Part I schedule 8 to the Lease shall be
pounds sterling [ ].
4. We hereby declare that:
(a) we have complied with the covenant imposed upon us by paragraph 6.2
of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declaration are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
Tenant's Auditors
58
<PAGE>
THE COMMON SEAL of 99 BISHOPSGATE )
LIMITED was hereunto affixed in the presence of:- )
Director /s/
[SEAL HERE]
Director /s/
THE COMMON SEAL of 99 BISHOPSGATE )
MANAGEMENT LIMITED was hereunto )
affixed in the presence of:- )
Director /s/
[SEAL HERE]
Director /s/
THE COMMON SEAL of HAMMERSON U.K. )
PROPERTIES plc was hereunto affixed in the )
presence of:- )
Director /s/
[SEAL HERE]
Director /s/
59
<PAGE>
DATED 24th October 1996
------------------------------------------------------------
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES plc
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
and
DONALDSON, LUFKIN & JENRETTE, INC.
------------------------------------------------------------
UNDERLEASE
of
Eighteenth Floor 99 Bishopsgate London EC2
------------------------------------------------------------
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P17/30433514
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions
Building
Common Parts
Development
Electricity Cost
Enactment
Head Lease/Superior Lease
Insurance Cost
Insurance Rent
Insured Risks
Interest Rate
Lettable Unit
Net Internal Area
Normal Business Hours
Permitted Part
Permitted Use
Planning Law
Plans
Premises
Public Authority
Services
Service Media
Tenant
Term
VAT
2. Interpretation
3. Demise and Rents
4. Tenant's Covenants
(1) Rent
(2) VAT
(3) Outgoings
(4) Compliance with Enactments
(5) Notices
(6) Repair
(7) Decoration and general condition and servicing
(8) Refuse
(9) To permit entry
(10) Compliance with notices relating to repair or condition
(11) Encroachments
(12) Alterations and reinstatement
(13) Use
(14) Signs
<PAGE>
CLAUSE HEADING PAGE
(15) Alienation
(16) Registration
(17) Payment of cost of notices consents etc.
(18) Machinery
(19) Obstruction/overloading
(20) Parking/goods delivery
(21) Planning Law and compensation
(22) Indemnity
(23) Defective Premises
(24) Insurance and fire fighting equipment
(25) Dangerous and contaminative materials
(26) Yield up
(27) Regulations and covenants
(28) Security and access
(29) Head Lease
(30) Service Charge
5. Landlord's Covenants
(1) Quiet Enjoyment
(2) Insurance
(3) Head Lease
(4) Electricity Provision
(5) Management Company access
(6) VAT indemnity
6. Provision of Services
7. Provisos
(1) Forfeiture and re-entry
(2) Letting Scheme use and easements
(3) Common Parts and Service Media
(4) Service of notices
(5) Rent cesser
(6) Landlord's liability
(7) Arbitration fees
(8) Rent review memorandum
(9) No warranty as to use
(10) Disputes
(11) Compensation
(12) Rateable value appeals
(13) No warranty as to security
(14) Jurisdiction
(15) Overriding lease
(16)
8. Landlord's Guarantor
9. Tenant's option to determine
<PAGE>
CLAUSE HEADING PAGE
10. Guarantee and Guarantor's Indemnity
11. Stamp Duty Certificate
Schedule 1 Premises
Schedule 2 Easements and rights granted
Schedule 3 Exceptions and reservations
Schedule 4 The first reserved rent and the review thereof
Schedule 5 Service Charge
Schedule 6 Services
Schedule 7 Deeds and documents to which the demise is subject
<PAGE>
LEASE PARTICULARS
- ------------------------------------------------------------------------------
1. DATE 24TH OCTOBER 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE FIRST
ABOVE WRITTEN
- ------------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin & Jenrette
International Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
(e) TENANT'S GUARANTOR : Donaldson, Lufkin & Jenrette, Inc.
- ------------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the
EIGHTEENTH floor of the Building
shown for identification only
edged red on Plan 1
- ------------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- ------------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 23rd October 2011
AND EXPIRY DATES
- ------------------------------------------------------------------------------
6. INITIAL RENT : (pounds sterling) 483,165
- ------------------------------------------------------------------------------
7. RENT COMMENCEMENT DATE : 25th March1998
- ------------------------------------------------------------------------------
8. TENANT'S BREAK RIGHT : 24th October 2008
<PAGE>
THIS UNDERLEASE made the 24th day of October
nine hundred and ninety six
BETWEEN: -
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under Section
21A to the Companies Act 1985 under company number FC018588 and branch
number BR002962) whose principal place of business is at 100 Park Lane
London W1Y 4AR (the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) HAMMERSON U.K. PROPERTIES PLC whose registered office is at 100 Park Lane
London W1Y 4AR (Co. Regn. No. 298351) (the "LANDLORD'S GUARANTOR")
(4) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered office
is at Moorgate Hall 155 Moorgate London EC2M 6XB (Co. Regn. No. 2475089)
(the "TENANT") and
(5) DONALDSON, LUFKIN & JENRETTE, INC. a corporation incorporated in the State
of Delaware United States of America whose address for the purposes of this
lease is 277 Park Avenue New York New York 10172 (the "GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by clause
2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person
acting on behalf of or in connection with any organisation (or on
his own behalf) which carries out activities directed towards
overthrowing or influencing by force or violence Her Majesty's
Government in the United Kingdom or any other government de jure
or de facto
(2) "AGREEMENT FOR INITIAL ALTERATIONS" means the agreement of even
date herewith and made between the Landlord and the Tenant
governing the initial fitting out of the Premises
(3) "BUILDING" means the land (of which the Premises form part)
having a frontage to the west side of Bishopsgate and a return
frontage to the south side of Wormwood Street and all buildings
fixtures and other structures whatsoever from time to time
thereon and the appurtenances thereof which land (together with
the building now erected thereon) is known as 99 Bishopsgate
London EC2 and is for the purpose of identification shown verged
by a blue line on the Building Plan together with any adjoining
areas designated by the Landlord or the Management Company
(4) "COMMON PARTS" means all parts of the Building which are from
time to time intended for the common use and enjoyment of the
tenants and occupiers of the Building and persons claiming
through or under them (whether or not other
<PAGE>
parties are also entitled to use and enjoy the same) and reasonably
designated as such by the Landlord and including without prejudice to
the generality of the foregoing the pedestrian ways circulation areas
lobby entrance halls lifts lift shafts fire escapes landings staircases
passages forecourts car park landscaped areas plant rooms management
suites and any other areas which are from time to time during the Term
reasonably provided by the Landlord for common use by or benefit of the
tenants and occupiers of the Building But excluding (for the avoidance
of doubt) any premises intended to be let to any party or for occupation
by the Landlord or the Management Company other than for the provision
of the Services
(5) "DEVELOPMENT" has the meaning ascribed to that expression by Planning Law
(6) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the Tenant
in accordance with its covenant contained at clause 5(4) being a fair
and reasonable proportion as determined by the Landlord of the total
cost of the provision of electricity to the Building as a whole
(including the provision of any security for the supply of electricity
to the Building which may from time to time be required by the relevant
undertaker responsible for the supply of electricity chosen by the
Landlord) which proportion shall so far as practicable (save where the
same are not in working order) be calculated using readings taken in
such manner and at such times as the Landlord shall from time to time
determine of the check meters relating to the Premises from time to time
installed but otherwise shall be determined in such manner as the
Landlord shall in its discretion consider to be fair and reasonable in
all the circumstances
(7) "ENACTMENT" means every Act of Parliament directive and regulation now
or hereafter to be enacted or made and all subordinate legislation
whatsoever deriving validity therefrom
(8) "HEAD LEASE" means the lease under which the Landlord holds the Premises
dated 29th September 1975 made between The Prudential Assurance Company
Limited (1) and Bishopsgate Developments Limited (2) and "Superior
Landlord" means the person for the time being entitled to the reversion
immediately expectant on the term granted by the Head Lease and every
other person having an interest in reversion to that term
(9) "GROUP COMPANY" means a company which is either the holding company of
the Tenant or a wholly owned subsidiary of the Tenant or the Tenant's
holding company (as both expressions are defined in Section 736
Companies Act 1985)
(10) "INSURANCE COST" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of the amount
which the Landlord may reasonably expend:-
(a) in effecting and maintaining insurance against the occurrence of
the Insured Risks in relation to the Building in such sum as
represents its then full current replacement cost with such
allowance as the Landlord from time to time considers appropriate
in respect of related liabilities and expenses (including without
limitation liability to pay any fees or charges on the submission
of an application for planning permission and costs which might
be incurred in complying with any Enactment in carrying out
<PAGE>
any replacement work and sums in respect of architects' engineers'
and quantity surveyors' and other professional fees and incidental
expenses incurred in relation to any works of debris removal and
of replacement and all VAT) and
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of the
Landlord in relation to the Building and anything done therein
and
(c) in professional fees relating to insurance including fees for
insurance valuations carried out at reasonable intervals by an
independent insurance valuer (but no more than once in any year)
and all reasonable fees and expenses payable to advisers in
connection with effecting and maintaining insurance policies and
claims and
(d) equivalent to the total of all reasonable excess sums (being for
the avoidance of doubt the first part of any insurance claim)
which the insurers are not liable to pay out on any insurance
claim in respect of the Building and which the Landlord or the
Management Company may have expended in replacing the damaged
or destroyed parts of the Building
(11) "INSURANCE RENT" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises of
the Insurance Cost for the relevant period
(b) the reasonable amount which the Landlord may expend in effecting
and maintaining insurance against up to six years' loss of the
rents first and secondly hereinafter reserved and Service Charge
having regard to potential increases of rent in accordance with
schedule 4 and with any addition to the amount insured as the
Landlord may decide in respect of VAT and
(c) (without prejudice to all other provisions of this lease relating
to the use of the Premises and the vitiation of any policy of
insurance) any reasonable amount which the Landlord may expend in
paying all additional premiums and loadings on any policy or
policies of insurance required to be paid as a result of anything
done or omitted (in breach of the terms of this lease) by the
Tenant and
(d) any tax charged on any premium for any such insurance
(12) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot civil
commotion strikes labour and political disturbances and malicious damage
aircraft and aerial devices (other than hostile aircraft and devices)
and articles accidentally dropped from them storm tempest flood bursting
or overflowing of water tanks and pipes impact earthquake and accidental
damage to underground water oil and gas pipes or electricity wires and
cables subsidence ground slip and heave and such other usual commercial
risks or perils against the occurrence of which the Landlord may from
time to time in its reasonable discretion deem it desirable to insure
subject to such exclusions and limitations as are from time to time
commonly
<PAGE>
imposed by insurers and subject also to the exclusion of such of the
risks specifically hereinbefore mentioned as the Landlord may in its
reasonable discretion decide where insurance cover in respect of the risk
in question is not for the time being available in the London insurance
market on reasonable terms
(13) "INTEREST RATE" means a yearly rate three per cent above either the base
rate of Barclays Bank plc or such other bank (being for the time being
generally recognised as a clearing bank in the London market) as the
Landlord may from time to time use for general banking purposes or if
the base rate cannot be ascertained then above such other rate as the
Landlord may reasonably specify (and so that whenever there is reference
in this lease to the payment of interest at the Interest Rate such
interest shall be calculated on a daily basis and compounded with
quarterly rests on the usual quarter days)
(14) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the Building
from time to time (whether or not within the Premises or other premises
let or intended to be let by the Landlord) comprising or used in
connection with the following systems (to the extent specified in the
following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building (including
sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but excluding
portable fire extinguishers installed by the Tenant or other
tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the
building security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply into
the Building so far as (and including) the electrical riser
busbars connecting to the distribution boards at each level in
the Building which is let or intended to be let by the Landlord
(vii) the whole of the air handling system and the electricity supply
and control systems for the same
(viii) the standby generators and associated cabling wiring and duct work
but excluding in each case any "stand alone" systems installed by the
Tenant or any other tenant or occupier of the Building
(15) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to be
for separate occupation
(16) "NET INTERNAL AREA" has the meaning ascribed to that expression by the
Code of Measuring Practice - Fourth Edition (RICS/ISVA 1993) (or if
there shall be no such edition or no such expression for the time being
the nearest equivalent thereto)
<PAGE>
[GRAPHICS OMITTED]
99 BISHOPSGATE EC2
EIGHTEENTH FLOOR TOWER
<PAGE>
[GRAPHICS OMITTED]
99 BISHOPSGATE LONDON, EC2
BUILDING PLAN
<PAGE>
(17) "NORMAL BUSINESS HOURS" means 7.30 am. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to expansion of
such hours at the reasonable discretion of the Landlord provided
that such hours will automatically expand if any other tenant in
the Building is granted the benefit of any expanded hours
(18) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the
actual cost to the Management Company of carrying out or providing
any of the Services at the request of the Tenant outside Normal
Business Hours other than any services which are stated to be
provided 24 hours a day (including without prejudice to the
generality of the foregoing costs and expenses in the nature of
those set out in Part II of schedule 6) or in the event of any of
the Services being carried out or provided outside Normal Business
Hours to the Tenant and any other tenant or tenants of the
Building a fair proportion thereof (on a fair and reasonable basis
between the Tenant and any other tenant or occupier making use of
such Services) as reasonably determined by the Landlord. PROVIDED
THAT during the first year of the Term the cost of providing air
conditioning outside Normal Business Hours shall not exceed pound
sterling 88 per hour (in respect of the Premises being the only
user of air conditioning at the relevant time) or pounds sterling
48 per hour per floor on the basis that any five of floors 18, 20
and 22 to 26 of the Building are simultaneously using such air
conditioning over the whole of such floors
(19) "PERMITTED PART" means any part or parts of the Premises capable
of separate occupation
(20) "PERMITTED USE" means use as high class offices for any purpose
within Class B1(a) (but not for any other purpose within that Use
Class) of the schedule to the Town and Country Planning (Use
Classes) Order 1987 and for the avoidance of doubt use of the
Premises for data processing investor services business trading
operators and investment banking complies with this provision
(21) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and
buildings and every planning permission statutory consent and
agreement made under any Enactment relating to the Building
(22) "PLANS" means the plans annexed hereto and "Building Plan" means
that one of them so marked
(23) "PREMISES" means the premises described in schedule 1 and all
permitted additions alterations and improvements made to them
(24) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their
use and occupation and any court of law and the companies or
authorities responsible for the supply of water gas and
electricity or any of them and any of their duly authorised
officers
(25) "REINSTATEMENT SPECIFICATION" means the specification annexed
hereto or in the event that materials listed in the specification
are not available from time to time or appropriate for use (in the
Landlord's reasonable opinion) then reference to such materials
will be substituted by reference to materials of not materially
less quality which perform a similar function PROVIDED THAT save
to the extent
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that items of plant and equipment have been altered during the
Term the Tenant shall not be required to replace existing items
of plant and equipment for new items subject to the existing
items being in good working order
(25) "REVIEW DATE" means each of:-
(a) the 24th October in the years Two thousand and one and every
fifth anniversary of that date during the Term (and the last
day of the Term)
(b) any date so stipulated by virtue of paragraph 5 of
schedule 4
(26) "SERVICES" means the services and other matters specified in
clause 6 and Part I of schedule 6
(27) "SERVICE MEDIA" means those parts of the Building comprising gas
water drainage electricity telephone telex signal and
telecommunications heating cooling ventilation air conditioning
fire alarm and other pipes drains sewers mains cables wires supply
lines ducts conduits flues and all other common conducting media
plant appliances and apparatus for the provision supply control
and monitoring of services to or from the Building and other
common equipment
(28) "TERM" means a term of years commencing on the date hereof and
expiring on 23rd October, 2011 and includes any period of holding
over or extension whether by any Enactment or common law
(29) "TERMINATION NOTICE" means not less than 12 months and 1 day's
prior written notice unless either:
(a) any Enactment or decision not capable of appeal on a point
of law confirming that the Tenant is not entitled to a new
tenancy on the expiration of such notice is in force or
upheld as at 22nd October 2007 (in which case not less
than 6 months prior written notice need be given); or
(b) any other tenant enters into a lease prior to September 1998
of premises comprising at least a floor of the building
within the security of tenure protections of the Landlord
and Tenant Act 1954 for a term of not less than 10 years
(without break rights) and is granted right to determine
such lease on less than such 12 months' and 1 day's prior
written notice (in which case the notice period hereunder
shall be reduced to such notice period as is granted to such
tenant in such circumstances)
(30) "VAT" means Value Added Tax as referred to in the Value Added Tax
Act 1994 (or any tax of a similar nature which may be substituted
for or levied instead of it by statutes)
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa and
words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" "Management Company" and
"Guarantor" wherever the context so admits include their
respective successors in title and
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where a party comprises more than one person covenants and obligations
of that party take effect as joint and several covenants and obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit
or suffer it to be done (or omitted) and to prevent (or as the
case may be to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference
to the relevant clause sub-clause schedule or paragraph of
this lease and clause and schedule headings shall not affect
the construction of this lease
(b) any right of (or covenant to permit) the Landlord or the
Management Company to enter the Premises shall also be
construed (subject always to the proviso to clause 4(9)) as
entitling the Landlord to remain on the Premises with or
without equipment and permitting such right to be exercised
by all persons authorised by the Landlord for as short a
period as reasonably practicable and making good all damage
caused and causing as little inconvenience as reasonably
possible save where the right of entry is exercised to
remedy any breach hereunder where the Landlord only
undertakes to make good damage caused
(c) any consent licence or approval of the Landlord or words to
similar effect mean a consent licence or other approval in
writing signed by or on behalf of the Landlord and given
before the act requiring consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the
Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it
for the time being in force except in relation to the Town
and Country Planning (Use Classes) Order 1987 which shall be
interpreted exclusively by reference to the original
provisions of Statutory Instrument 1987 No 764 whether or
not the same may at any time have been revoked or modified
(f) the last year of the Term includes the final year of the
Term if it shall determine otherwise than by effluxion of
time and references to the expiry of the Term include such
other determination
(5) (a) Where the context permits rents or other sums being due from
the Tenant to the Landlord or the Management Company mean
that they are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is
required under this lease the relevant provision shall be
construed as also requiring (and any consent licence or
approval given by the Landlord shall be deemed subject to
the need for) the consent licence or approval of the
Superior Landlord (for which the Landlord shall apply at the
Tenant's reasonable cost) where the same is required
under the Head Lease except that nothing in this lease or in
any consent licence or approval by the
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Landlord shall imply that the Superior Landlord's consent
licence or approval will not be unreasonably withheld or
delayed
(c) references to any right of (or covenant to permit) the
Landlord to enter the Premises shall extend to the
Superior Landlord and to all persons authorised by it and
shall be construed in the manner required by clause
2(4)(b) but in relation to the Superior Landlord and those
with its authority
(d) the rights excepted and reserved in schedule 3 are also
excepted and reserved for the benefit of the Superior
Landlord
3. DEMISE AND RENTS
The Landlord at the request of the Guarantor DEMISES unto the Tenant ALL
THAT the Premises TOGETHER WITH the easements and rights specified in
schedule 2 exercisable in common with the Landlord and all others with
its authority or otherwise from time to time entitled thereto EXCEPT and
RESERVED unto the Landlord and all other persons authorised by it from
time to time during the Term or otherwise from time to time entitled
thereto (including the Management Company in relation to the provision
of the Services) the easements and rights specified in schedule 3
TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the Term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT
to the provisions of the deeds and documents mentioned in schedule 7
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year until 24th March
1998 a peppercorn (if demanded) and thereafter until the first Review
Date (and thereafter as determined pursuant to schedule 4) the yearly
rent of Four hundred and eighty three thousand one hundred and sixty
five Pounds (pound sterling 483,165) exclusive of VAT (subject to clause
5(6)) payable by equal quarterly payments to be made in advance on the
usual quarter days in every year the first such payment to be made on
25th March 1998
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice
to the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as
rent or otherwise which is not:-
(a) received in cleared funds by the Landlord within 10 days
following the due date (or in the case of money due only on
demand within fourteen days after the date of demand) calculated
for the period commencing on the due date for payment and ending
on the date the sum and the interest is received in cleared
funds by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to
demand or accept any payment having regard to a breach of any of
the Tenant's obligations under this lease of which the Tenant
has received notice calculated for the period commencing on the
due date for payment and ending on the date the sum (and the
interest) is subsequently received by the Landlord
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FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant
body to whom account has for the time being to be made) on the supply by
the Landlord to the Tenant under or in connection with the provisions of
this lease or the interest created by it and of any other supplies
whether of goods or services such rent fourthly reserved to be due for
payment contemporaneously with the other rents or sums to which it
relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable
on demand (either annually or by instalments) as the Landlord shall
determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause
4(30) also with the Management Company) throughout the Term subject to
clause 4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the
manner set out in clause 3 without deduction or set off and
(unless for the time being the Landlord shall have required in
writing to the contrary) to pay the rent first reserved (together
with any sum in respect of the rent fourthly reserved as may be
applicable thereto) by banker's standing order to such bank as the
Landlord may from time to time nominate
VAT
(2) Subject to clause 5(6) wherever the Tenant is required to pay any
amount to the Landlord hereunder by way of reimbursement or
indemnity to pay on the production of a valid VAT invoice to the
Landlord (as applicable) in addition an amount equivalent to any
VAT incurred by the Landlord save to the extent that the Landlord
obtains credit for such VAT incurred by the Landlord pursuant to
sections 24 25 and 26 Value Added Tax Act 1994 or any regulations
made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now
or hereafter assessed charged or imposed upon the Premises or upon
their owner or occupier (and a proper proportion determined by the
Landlord attributable to the Premises of any rates taxes charges
and other outgoings now or hereafter assessed charged or imposed
upon the Premises in common with other premises or upon the owners
or occupiers thereof) and (to the extent the Tenant does not pay
it directly to the relevant supplier) the total cost (including
meter rents) of all water (including chilled water) electricity
and gas separately metered and/or exclusively supplied to the
Premises during the Term as reasonably determined by the Landlord
excluding (without prejudice to the rent fourthly reserved and
clause 4(2)) any tax payable by the Landlord as a direct result of
any actual or implied dealing with the reversion of this lease or
of the Landlord's receipt of income
COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every
Public Authority (including the due and proper execution of any
works) in respect of the Premises their use occupation
employment of personnel in them and any work being
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carried out to them (whether the requirements are imposed upon the
owner lessee or occupier) and not to do or omit anything by which
the Landlord may become liable to make any payment or do anything
under any Enactment or requirement of a Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5
working days of receipt of the same to give to the Landlord notice
of (and a certified copy of) any notice permission direction
requisition order or proposal made by any Public Authority and
without delay to comply in all respects at the Tenant's cost with
the provisions thereof save that the Tenant shall if so required
by and at the cost of the Landlord make or join in making such
objections or representations in respect of any of them as the
Landlord may reasonably require
REPAIR
(6) To put and keep the Premises (and any works or installations made
pursuant to paragraphs 4 and 5 of Schedule 2) in good and
substantial repair and condition (damage by any of the Insured
Risks excepted to the extent that the insurance money shall not
have been rendered irrecoverable subject to clause 5(2)(b) or
insufficient because of some act or default of the Tenant or of
any person deriving title under or through it or their respective
servants or agents or invitees) and to replace whenever necessary
during the Term and on expiry of the Term the landlord's fixtures
and fittings (including any fitted carpets) in the Premises which
may have become beyond economic repair with items of the same type
and quality
DECORATION AND GENERAL CONDITION AND SERVICING
(7) (a) To keep the Premises maintained to a high standard of
decorative order and finish and properly cleansed and tidy
and (without prejudice to the foregoing) as often as the
same shall be necessary (and not less frequently than once
in every fifth year of the Term but not more than once in
any 18 month period) and also in the last year of the Term
to clean paint polish or otherwise treat as the case may
be all inside surfaces of wood and metal work of the
Premises usually or requiring to be painted polished or
otherwise treated with two coats at least of high quality
paint or polish vinyl wall coverings (where applicable) or
other appropriate materials in a good and workmanlike
manner (and during the last year of the Term in the colour
scheme specified and otherwise in accordance with the
Reinstatement Specification) PROVIDED ALWAYS THAT the
Tenant shall not be obliged to carry out any such
decorative treatment if the need for it is caused by
damage by any of the Insured Risks to the extent (subject
to clause 5(2)(b)) that the insurance money shall not have
been rendered irrecoverable or insufficient because of
some act or default of the Tenant or of any person
deriving title under or through it or their respective
servants agents or invitees
(b) To clean the inside of all external window glazing in the
Premises at least once in every month using reputable
contractors
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(c) To enter into and maintain contracts for the regular inspection
maintenance and servicing of all fixed plant and equipment
comprised in the Premises which has or is likely to have any
impact on the Landlord's Services Equipment by reputable
contractors approved by the Landlord (such approval not to be
unreasonably withheld) and to obtain satisfactory test
certificates as may be reasonably required by the insurers
and whenever reasonably required to produce copies of such
contracts and certificates
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in
areas designated for such purpose from time to time by the
Landlord and to comply with all requirements of any Public
Authority and any reasonable regulations made by the Landlord
pursuant to clause 4(27) in relation to control over and disposal
of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times in compliance with the Tenant's reasonable
security requirements on reasonable prior written notice (except
in an emergency) to enter the Premises in order to:-
(a) examine their state of repair
(b) ascertain that the covenants and conditions of this lease
have been observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and
make connections to any part of the Building including the
Service Media (PROVIDED that the Landlord will procure that
such entry takes place outside Normal Business Hours where
practicable)
(e) during the last six months of the Term (or at any time in
the case of a disposal of the Landlord's interest) to show
the Premises to prospective purchasers or tenants and their
agents
(f) exercise the rights described in schedule 3
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy any
breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with
any such notice to permit the Landlord and any authorised
person to enter the Premises to remedy the breach as the
Tenant's agent and at the Tenant's proper cost the Landlord
making good any damage caused
(c) To pay to the Landlord on demand all the proper costs and
expenses incurred by the Landlord under the provisions of
this sub-clause
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ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements belonging
to the Premises and not knowingly to give any acknowledgment
that they are enjoyed by consent
(b) Not knowingly to do or omit anything which might subject the
Premises to the creation of any new easement and to give
notice to the Landlord forthwith of any encroachment which
might have that effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from
the demise of the Premises) any works affecting any
structural parts of the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in
respect of areas not included in the Premises not to install
or erect any exterior lighting shade or awning or place any
structure or other thing outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this
sub-clause and subject to the provisos to this paragraph (c)
not to make any other alteration or addition to the Premises
(including all electrical and other plant and equipment and
the installation and removal of demountable partitioning)
except:-
(i) in accordance with plans and specifications
(adequately describing the work in question and the
manner in which the work will be carried out)
previously submitted at the Tenant's expense in
triplicate to and approved by the Landlord (such
approval not to be unreasonably withheld or delayed
PROVIDED THAT the Landlord shall respond to the
Tenant's submission within 10 working days in the case
of minor alterations (excluding any alterations which
affect any of the Landlord's Services Equipment) and
if the Landlord fails to respond within 10 working
days as aforesaid it shall be deemed to have accepted
such minor alterations AND PROVIDED FURTHER that the
initial fitting out of the Premises following the date
hereof shall be governed by the Agreement for Initial
Alterations
(ii) in a manner which shall not materially and adversely
affect the Landlord's Services Equipment any Service
Media or the provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public
Authority (and in particular in relation to any
electrical installation in accordance with the terms
and conditions laid down by the Institution of
Electrical Engineers and the Regulations of the
Electricity Supply Authority) and the insurance
company with whom the Premises are for the time being
insured and
(iv) in a good and workmanlike manner
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PROVIDED ALWAYS THAT subject to clause 4(12)(c)(i):-
(I) no such alterations or additions shall be carried out
until the Landlord has issued its consent in writing
to which the Tenant shall if required join as a party
(II) once any such alterations or additions have been
carried out the Tenant shall supply to the Landlord
as-built plans in triplicate (together with a computer
aided design disk and 35 mm slides) showing the works
as carried out
(d) At the expiry of the Term to remove:-
(i) all alterations and additions made to the Premises by
the Tenant
(ii) all work done in connection with the original fitting
out by the Tenant in pursuance of the Agreement for
Initial Alterations
and to restore and make good the Premises in accordance with
the Reinstatement Specification in a proper and workmanlike
manner to the condition and design which existed before the
alterations or additions were made with all services
properly sealed off
USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the
Premises) which may be or become or cause a nuisance
obstruction or damage to any person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal or immoral trade business or
activity or for residential purposes and not to use the
Common Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this
sub-clause) except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the
Building save for the right granted pursuant to paragraph
3 of schedule 2
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or
advertisement except the approved signs referred to in
paragraph 3 of schedule 2
ALIENATION
(15) (a) If the Tenant at any time desires to assign the whole of the
Premises the Tenant shall first by an irrevocable
unconditional written notice ("the Tenant's Notice") served
upon the Landlord offer to surrender or assign
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this lease upon such financial terms and conditions as the
Tenant may desire
(b) If the Landlord wishes to accept such surrender or
assignment it shall within twenty-one days of receipt of the
Tenant's Notice serve a counter-notice ("the
Counter-Notice") upon the Tenant stating as much
(c) If the Landlord serves a Counter-Notice on the Tenant then
the Tenant shall surrender or assign (at the Landlord's
option) the Premises to the Landlord (or as the Landlord may
direct) within six months of receipt of the Counter-Notice
either with vacant possession or subject only to a permitted
underletting and the Tenant's liability hereunder shall
cease in respect of any matters arising following the date
of such assignment or surrender but without prejudice to any
antecedent breaches of covenant
(d) If the Landlord does not serve a Counter-Notice then the
Tenant must (if it wishes to assign) complete its assignment
on terms greater than 95 per cent in value of the terms and
conditions stipulated in the Tenant's Notice within six
months from the date of the Tenant's Notice and if the
Tenant shall fail to complete within such period if it still
wishes to assign the whole of the Premises it must reinstate
the procedure set out in this clause 4(15)
(e) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign mortgage charge or underlet or in any other
manner part with possession of any part (being less than the
whole) of the Premises or agree to do so except that the
Tenant may underlet the whole of (but not more or less than)
any Permitted Part or Permitted Parts in accordance with
paragraphs (h) and (i) of this sub-clause
(f) Subject to the foregoing provisions of this sub-clause 4(15)
not to assign underlet or otherwise part with possession of
or the whole of the Premises or agree to do so except that
the Tenant may assign or underlet the whole of the Premises
in accordance with paragraph (g) or (h) respectively of this
sub-clause
(ASSIGNMENT)
(g) (i) Not to assign the whole of the Premises without first
obtaining the Landlord's consent issued within 2 months
before completion of the assignment which consent shall
not be unreasonably withheld or delayed but which may be
granted subject to any one or more of the conditions
referred to in paragraph (g)(ii) and which may be
withheld if any one or more of the circumstances
referred to in paragraph (g) (iii) exist
(ii) The conditions referred to in paragraph (g)(i) (which
are specified for the purposes of section 19(1 A)
Landlord and Tenant Act 1927) are:
AUTHORISED GUARANTEE
(a) that the Tenant shall enter into an authorised guarantee
agreement (as defined in section 16 Landlord and Tenant
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(Covenants) Act 1995) with the Landlord in a form which
the Landlord reasonably requires
THIRD PARTY GUARANTEE/RENT DEPOSIT
(b) that if so reasonably required by the Landlord the proposed
assignee shall have procured covenants with the Landlord by
a guarantor or guarantors (not being the Tenant or any
guarantor) reasonably acceptable to the Landlord in a form
acceptable to the Landlord (acting reasonably);
INTRA GROUP DEALINGS
(c) if the proposed assignee is a Group Company the Tenant shall
have procured either:
(A) if the Tenant's obligations under this lease are
guaranteed by another Group Company that such Group
Company covenants with the Landlord on the same terms
(mutatis mutandis) as those contained in clause 10; or
(B) if there is no guarantor of the Tenant's obligations
under this lease and if the assignee is not at the
date of the application for consent to the proposed
assignment in the reasonable opinion of the Landlord
of financial standing equivalent to or greater than
the Tenant at the date of this lease that the proposed
assignee procures covenants by a Group Company which
is not the Tenant or the proposed assignee and which
is in the reasonable opinion of the Landlord of
financial standing equivalent to or greater than the
Tenant in the same terms (mutatis mutandis) as those
contained in clause 10; and
(iii) The circumstances referred to in paragraph (g)(i) (which are
specified for the purposes of section 19(1 A) Landlord and Tenant
Act 1927) are:-
(a) where the Tenant's solicitors have not given an undertaking
to the Landlord's solicitors to pay all reasonable legal
surveyor's and management costs disbursements and VAT
arising on the application for consent to such assignment
whether or not consent is granted unless the Landlord
unreasonably withholds consent in circumstances where it is
required to be reasonable; and/or
(b) where any of the rents and Interim Sum due from the Tenant
to the Landlord or the Management Company
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respectively under this lease remain unpaid at the date of
the application for consent to the proposed assignment
(UNDERLETTING)
(h) Not to underlet the whole of the Premises or any Permitted
Part (each being referred to in this paragraph as the
premises) except:-
(i) to a person who before the underletting shall have
covenanted with the Landlord to observe and perform
the Tenant's obligations under this lease during the
sub-term to the extent they relate to the premises
demised by the underletting (other than the payment of
rents) and a covenant not to assign the whole of the
premises without the Landlord's consent (which shall
not be unreasonably withheld or delayed) and an
unqualified covenant not to assign part of the
premises or to underlet or otherwise part with
possession or share the occupation of the premises or
any part of them
(ii) by reserving as a yearly rent without payment of a
fine or premium (in addition to the service and
insurance and other rents payable under this lease
except the rent first hereby reserved or (in the case
of underletting of a Permitted Part) a pro rata
proportion of them) an amount equal to:-
(a) (in the case of an underletting of the Premises)
the then open market rack rental value of the
Premises
(b) (in the case of an underletting of a Permitted
Part) a pro rata proportion of the then open
market rack rental value of the Premises
the proportion in each case being calculated by
reference to the Net Internal Area of the Permitted
Part in relation to the Net Internal Area of the
Premises, in all cases such rent to be payable by
equal quarterly instalments in advance on the usual
quarter days and to be approved by the Landlord prior
to the underletting (such approval not to be
unreasonably withheld or delayed) but the amount of
such rent and the approval of the Landlord thereto may
not be used as evidence by the Tenant for the purpose
of any rent review pursuant to this lease
(iii) by a form of underlease:-
(a) by which the principal rent reserved by the
underlease is reviewed upwards only at not
greater than five year intervals during the
sub-term in accordance with the same principles
(mutatis mutandis) and at the times as apply to
the rent first reserved by this lease
(b) requiring the underlessee to observe and perform
all the covenants and other provisions binding
on the Tenant under this lease (other than the
covenant by the Tenant to
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pay rents) to the extent they relate to the
premises and containing:-
(A) a condition for re-entry by the underlessor on
breach of any covenant by the underlessee
(B) a qualified covenant not to assign the whole of
the premises and an absolute covenant not to
assign part of the premises or to underlet or
otherwise part with possession or share the
occupation of the premises or any part of them
(iv) with the Landlord's consent issued within three months
before completion of the underletting which consent
(subject to compliance with the foregoing conditions
precedent) shall not be unreasonably withheld or
delayed
(i) In relation to an underlease of a Permitted Part:-
(i) not to include in the sub-demise any part of the entrance to
or the reception area of the Premises
(ii) to except from the underlease all necessary circulation
areas and plant and equipment which will serve the Premises
in common and to reserve a separate service charge rent in
respect of their maintenance repair and renewal
(iii) not as a result of the grant to create or permit the
creation of more than four separate occupations affecting
the whole of the Premises (occupations in right of this
lease counting as one occupation)
(iv) not to grant or agree to grant the underlease without
providing for the exclusion of sections 24 to 28 inclusive
of the Landlord and Tenant Act 1954 in relation to the
underlease in pursuance of an Order duly made under section
38(4) of that Act before the date of grant
(j) To enforce the observance and performance by every such
underlessee and its successors in title of the provisions of the
underlease and not expressly or impliedly to waive any breach of
them nor vary the terms of any underlease
(k) Not to agree any reviewed rent payable under an underlease without
the Landlord's consent and if the rent review under any underlease
is to be determined by an independent person not to agree his
appointment without the Landlord's consent (PROVIDED ALWAYS THAT
the Landlord shall not unreasonably withhold or delay any consent
required under this sub-paragraph) and to procure that any
representations which the Landlord may wish to make in relation to
the rent review are duly submitted to the independent person and
to provide to the Landlord promptly on the same becoming available
copies of any representations made by or on behalf of the Tenant
or the underlessee in relation to such rent review
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(SHARING OCCUPATION)
(l) Not to part with or share the occupation of the Premises or any
part of them except that the Tenant may share occupation with a
company which is (but only for so long as it remains) either the
holding company of the Tenant or a majority-owned subsidiary of
the Tenant or of the Tenant's holding company (as those
expressions are defined in section 736 Companies Act 1985) so long
as the Tenant does not grant the person sharing occupation
exclusive possession (so that such company occupies as licensee
only without creating any relationship of landlord and tenant) nor
otherwise transfer or create a legal estate and the Tenant shall
notify the Landlord of the identity of each company in occupation
REGISTRATION
(16) (a) Within twenty-one days after any disposition or devolution of
this lease or of any estate or interest in or derived out of
it to give notice in duplicate of the relevant transaction to
the Landlord for registration with a certified copy of the
relevant instrument and to pay to the Landlord a fair and
reasonable fee for each such registration of not less than
twenty five pounds
(b) To register with the Landlord particulars of the
determination of every rent review under any underlease of
the Premises within fourteen days after the date of
determination
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(17) To pay on demand all reasonable expenses (including counsels'
solicitors' surveyors, and bailiffs' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146
Law of Property Act 1925 or in contemplation of any
proceedings under section 146 or 147 of that Act
notwithstanding that forfeiture is avoided otherwise than by
relief granted by the court and
(b) every reasonable step taken during or after the expiry of
the Term in connection with the enforcement of the Tenant's
obligations under this lease including the service or
proposed service of all notices and schedules of
dilapidations and
(c) every application for consent licence or approval under this
lease but not if the application is unreasonably refused or
delayed or granted subject to unreasonable conditions (where
such consent is not to be unreasonably withheld or delayed)
MACHINERY
(18) Not to install in the Premises any plant or machinery other than
usual office equipment without the Landlord's consent which shall
not be unreasonably withheld PROVIDED ALWAYS THAT no plant or
machinery shall be installed or operated in the Premises and
nothing shall be done or omitted in them which may cause:-
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(a) the efficiency of the heating ventilation air conditioning
and cooling system installed in the building to be
diminished or impaired in any way
(b) noise dust fumes smell vibration or electrical interference
affecting or having any other intrusive effect on any other
part of the Building or other adjoining property or persons
outside the Premises
OBSTRUCTION/OVERLOADING
(19) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the
rights granted by this lease in a way which causes nuisance
or damage
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises
and (to the extent they lie within the Premises) to
keep them clear and functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the
Premises
nor to overload or cause undue strain to the Service Media or any
other part of the Building and in particular not to suspend any
undue weight from the ceilings or walls of the Premises and not to
exceed the following floor loadings:-
floor finishings: : 4 kN/m2 (80 lbs per sq. ft)
live load : IkN/m2 (20 lbs per sq. ft)
(e) any requisite notice erected on the Premises including any
erected by the Landlord in accordance with its powers under
this lease
PARKING/GOODS DELIVERY
(20) To ensure that all loading unloading deliveries and despatch of
goods is carried out only by using the service accesses and goods
lifts designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(21) Without prejudice to clause 4(4) at all times during the Term to
comply with the provisions and requirements of Planning Law
relating to or affecting
(a) (i) the Premises
(ii) any operations works acts or things carried out
executed done or omitted on the Premises
(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any
other rights hereunder in respect of) any other parts
of the building
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(b) Subject to the provisions of paragraph (c) of this
sub-clause as often as occasion requires during the Term at
the Tenant's expense to obtain and if appropriate renew all
planning permissions (and serve all notices) required under
Planning Law in respect of the Premises whether for the
carrying out by the Tenant of any operations or the
institution or continuance by the Tenant of any use of the
Premises or any part thereof or otherwise
(c) Not without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) to apply for any planning
permission relating to the Premises (and not to apply for
any such planning permission relating to any other part of
the Building) but so that subject to compliance with
paragraph (e) of this sub-clause the Landlord's consent
shall not be unreasonably withheld or delayed to the making
of a planning application in respect of the Premises
relating to any operations or use or other thing (if any)
which assuming it to be implemented in accordance with
Planning Law would otherwise not be in breach of the
provisions of this lease
(d) If the Landlord so requires in connection with any relevant
proposal by the Tenant to apply for a determination under
section 191 or 192 Town and Country Planning Act 1990
(e) If the Landlord consents in principle to any application by
the Tenant (which it hereby agrees to consider and determine
with all due expedition) for planning permission to submit a
draft of the application to the Landlord for its approval
and to give effect to its reasonable requirements in respect
thereof and if and to the extent the Landlord so requires to
lodge the application with the relevant authority in the
joint names of the Landlord and the Tenant and in duplicate
(f) Not to implement any planning permission before the Landlord
has acknowledged that its terms are acceptable nor before
the Landlord has received any cash or other security which
it reasonably requires for compliance with any conditions
imposed by the planning permission
(g) If the Landlord at the Landlord's cost reasonably requires
or the Tenant desires to lodge and progress diligently an
appeal against any refusal of an application for planning
permission lodged in respect of the Premises by the Tenant
or by any person claiming under or through the Tenant
(whether or not lodged in its name alone) the Landlord
undertakes to co-operate fully with the Tenant in respect
of any such appeal unless such appeal would be likely to
have a material and adverse effect on the Landlord's
interests in the Building
(h) Unless the Landlord otherwise directs to complete before the
expiry of the Term all works on the Premises required as a
condition of any planning permission implemented by the
Tenant or by any person claiming under or through it
(i) If the Tenant receives or is entitled to receive
any statutory compensation under any Enactment in relation to
its interest in the Premises the Tenant shall on any
determination of its interest prior to the expiry of this
lease
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by effluxion of time forthwith make such provision as is
just and equitable for the Landlord to receive its due
benefit from such compensation
INDEMNITY
(22) To indemnify the Landlord against all expenses proceedings costs
claims damages demands and any other liability or consequence
arising out or in respect of any breach of any of the Tenant's
obligations under this lease (including all costs reasonably
incurred by the Landlord in an attempt to mitigate any such
breach) or of any act omission or negligence of the Tenant or any
person at the Premises with the Tenant's authority
DEFECTIVE PREMISES
(23) On becoming aware of the same (or when the Tenant ought reasonably
to have become aware of the same) to give notice forthwith to the
Landlord of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing
anything in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed
by the Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the
Landlord may from time to time reasonably require to be displayed
at the Premises in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(24) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the
Tenant) relating to the Building or any part of it becomes
void or voidable or by which the rate of premium on such
policy may be increased
(b) To comply with all proper requirements of the insurers and
to provide and maintain unobstructed appropriate operational
fire fighting equipment and fire notices on the Premises
(c) To notify the Landlord forthwith of:-
(i) any incidence of any Insured Risk on the Premises and
of any other event which ought reasonably to be
brought to the attention of insurers and of which the
Tenant ought reasonably to be aware
(ii) the insurable value of any fixture installed in the
Premises by the Tenant or any person claiming under or
through the Tenant
(d) That if at any time the Tenant or any person claiming under
or through it shall be entitled to the benefit of any
insurance of the Premises to cause all money paid under such
insurance to be applied in making good the loss or damage in
respect of which it was paid
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(e) Subject to clause 5(2)(b) if the whole or any part of the
Building is damaged or destroyed by any of the Insured Risks
at any time during the Term and the insurance money under
any insurance policy effected by the Landlord is rendered
wholly or partially irrecoverable because of some act or
default of the Tenant or any person deriving title under or
through the Tenant or their respective servants agents or
invitees forthwith to pay the Landlord the whole amount of
the insurance money so irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(25) Not to keep place store or use or permit or suffer to be kept
placed stored or used in or upon or about the Premises any
materials substance or other thing of a dangerous inflammable
combustible explosive corrosive or offensive nature or any
materials substance or other thing which may in any way cause
pollution injury or harm by percolation corrosion contamination
migration release or otherwise on beneath or in the vicinity of
the Premises
YIELD UP
(26) (a) At the expiry of the Term to remove all chattels and tenant's
fixtures and quietly to yield up the Premises reinstated in
accordance with the Reinstatement Specification and restored
and made good to the extent required under clause 4(12)(d)
and in the state of repair condition decorative order and
layout otherwise required by this lease and any licences or
consents issued in pursuance of it and to make good any
damage so caused in a proper and workmanlike manner
(b) The Tenant irrevocably authorises the Landlord to remove and
dispose of any chattels which may be left in the Premises
within 28 days after the Tenant has quit them (without being
obliged to obtain any consideration for the disposal) and
the Tenant irrevocably declares that any such chattels will
stand abandoned by it
REGULATIONS AND COVENANTS
(27) To comply with:-
(i) all reasonable regulations reasonably made by the
Landlord from time to time and notified to the Tenant
in writing for the good management of the Building
PROVIDED ALWAYS THAT no such regulations shall purport
to amend the terms expressed in this lease and if
there is any inconsistency between the terms of this
lease and the regulations the terms of this lease
shall prevail
(ii) all covenants stipulations and other matters affecting
the Premises and not to interfere with any rights
easements or other matters affecting the Premises
SECURITY AND ACCESS
(28) To use all reasonable endeavours to ensure that the Tenant's
visitors to the Premises observe such security regulations which
may apply to them
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HEAD LEASE
(29) (a) To observe and perform the covenants and conditions on the
part of the lessee contained in the Head Lease so far as they
relate to the Premises except the covenant for the payment
of rent and except also so far as the obligations relating to
insurance fall to be observed and performed by the Landlord
pursuant to clause 5(2)
(b) Not to do or omit any act or thing which would or might
cause the Landlord to be in breach of the Head Lease
SERVICE CHARGE
(30) To pay the Service Charge (and VAT thereon) to the Management
Company at the times and in the manner provided for in clause 6
and schedule 5 without deduction or set off and to pay the Outside
Normal Business Hours Charge within 10 days of demand (either
annually or by monthly instalments) as the Management Company
shall reasonably determine PROVIDED THAT for the period from the
date hereof until the earlier of 25th June 1997 and the date on
which the Tenant commences full beneficial occupation of the
Premises following the works contemplated by the Agreement for
Initial Alterations the Service Charge payable by the Tenant in
any Accounting Period shall not exceed pounds sterling 32,211
inclusive of VAT and PROVIDED FURTHER that the Service Charge
payable in respect of the twelve month period from the earlier of
25th June 1997 and the date on which the Tenant commences full
beneficial occupation of the Premises following the works
contemplated by the Agreement for Initial Alterations shall be
pounds sterling 74,622.15 exclusive of VAT
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained
in this lease the Tenant may peaceably hold and enjoy the Premises
without any lawful interruption by the Landlord or any person
rightfully claiming through under or in trust for it
INSURANCE
(2) (a) To keep the Building (except all tenants' plant and equipment
and trade fixtures) insured against the Insured Risks in the
full current replacement cost
(b) to use reasonable endeavours to procure that the interest of
the Tenant is noted on the insurance policy and to use
reasonable endeavours to further procure that the insurers
waive any rights of subrogation against the Tenant (or any
lawful subtenant occupier or invitee) and the Landlord will
notify the Tenant if it is unable so to procure and will
duly consider the representations of the Tenant regarding
alternative insurers who may be prepared to procure that the
insurers waive any subrogation rights and/or note the
interest of the Tenant and will also permit the Tenant to
make
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representations to the insurers regarding the noting of the
Tenant's interest and/or waiver of rights of subrogation
(c) On request to supply the Tenant (but not more frequently
than once in any period of twelve months) with evidence of
such insurance
(d) If and whenever during the Term the Building (except as
aforesaid) is damaged or destroyed by an Insured Risk and to
the extent that payment of the insurance monies is not
refused because of any act neglect default or omission of
the Tenant or of any person deriving title under or through
the Tenant or their respective servants agents and invitees
subject to clause 5(2)(b) above the Landlord will with all
convenient speed take the necessary steps to obtain any
requisite planning permissions and consents and if they are
obtained to lay out the money received from the insurance of
the Building (except sums in respect of public liability and
employer's liability and loss of rent) towards replacing
(but not necessarily in facsimile reinstatement) the damaged
or destroyed parts (except as aforesaid) and in the case of
the Premises to the Reinstatement Specification as soon as
reasonably practicable (and the Landlord shall keep the
Tenant informed of progress of any such insurance claims and
the Landlord's proposals for compliance with this provision)
PROVIDED ALWAYS THAT the Tenant shall have no claim against
the Landlord under this clause 5(2)(c) in respect of the
manner of replacement of the interior of any Lettable Unit
other than the Premises or any alteration to the Common
Parts and PROVIDED FURTHER THAT the Landlord shall not be
liable to carry out the replacement if it is unable (having
used all reasonable endeavours) to obtain every planning
permission and consent necessary to execute the relevant
work in which event the Landlord shall be entitled to retain
all the insurance money received by it and if the Landlord
so retains the insurance money the Tenant shall be entitled
to determine this lease on not less than one month's prior
written notice
(e) In the event that the Premises have not been reinstated to
the Reinstatement Specification or essential means of access
thereto within the Building is not available in the
circumstances contemplated in sub clause 5(2)(d) by the
date five years and eleven months following the date of such
damage or destruction by an Insured Risk the Tenant may
determine this lease on not less than one month's prior
written notice such notice to be served (if at all) within
one month after expiry of such five years and eleven months
period
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform so
far as the Tenant is not liable for such performance under
the terms of this lease but so far only as to preserve the
existence of this lease the covenants and conditions on the
part of the lessee contained in the Head Lease
(b) On the request and at the reasonable expense of the Tenant
to take all reasonable steps to enforce the covenants on
the part of the Superior Landlord contained in the Head
Lease
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(c) To take all reasonable steps at the Tenant's reasonable
expense (to the extent possible under the Head Lease) to
obtain the consent of the Superior Landlord wherever the
Tenant makes application for any consent required under this
lease where the consent of both the Landlord and the
Superior Landlord is needed by virtue of this lease and the
Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide
or procure the provision of electricity to the Premises to the
extent necessary to meet the requirements of the Tenant having
regard to the overall electricity services design standards for
the Building as a whole and to all relevant statutory provisions
from time to time regulating the supply and utilisation of
electricity and the terms and conditions relative thereto from
time to time imposed by the electricity provider chosen by the
Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as
it requires from time to time for the due and proper provision of
the Services
VAT INDEMNITY
(6) The provisions of schedule 8 shall apply in relation to VAT
liability on the rent first reserved and:-
(a) Whenever VAT is properly chargeable in respect of any supply
made hereunder by the Landlord to the Tenant the Landlord
shall no later than thirty days after the due date for
payment in respect of such supply issue a valid VAT invoice
or audit note (as the case may be to the Tenant)
(b) Subject to (6)(c) below all consideration payable by the
Landlord to the Tenant shall be exclusive of VAT which the
Landlord shall pay in addition on production of a valid VAT
invoice
(c) The capital sum referred to in clause 3 above shall be
inclusive of VAT save that if the Landlord is at any stage
able to recover such VAT the Landlord shall pay to the
Tenant a further amount equal to VAT on the capital sum
NAMING RIGHTS
(7) The Landlord shall only name the Building in accordance with its
postal address from time to time
NOTIFICATION OF NOTICES
(8) The Landlord will inform the Tenant as soon as reasonably
practicable but in any event within 5 working days of receipt of
the same of any notice served by the Superior Landlord alleging a
breach of the Head Lease which would threaten the existence of
this lease
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
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(1) Well and substantially to repair and properly clean and decorate
the structure of the Building (including the structure of the
roofs foundations external and internal walls and columns and
structural slabs of the ceilings and floors) the external surfaces
of the Building (including the whole of the glazing within the
external walls of the Building) and the Common Parts and (where
consistent with an obligation to repair) to replace the same
(2) To keep the Service Media designed for common or general use and
the Landlord's Services Equipment in good and substantial repair
and in clean condition and at all times in good and safe working
order
(3) To keep the lifts in the Building clean and in good and
substantial repair and condition and at all times in good and safe
working order
(4) Provide heat and air conditioning and chilled water to the
Premises (subject to the Tenant paying Outside Normal Business
Hours Charge in relation to the provision of such services outside
Normal Business Hours) such heat being sufficient to maintain an
air temperature in the Premises measured at the main trunk
connections to the floor as follows:
Air Conditioning and Heating
Design Parameters:
External Conditions:
Summer 29 degrees C DB 20 degrees C WB
Winter -40 degrees DB 100% relative humidity
Internal Conditions Office Accommodation -
Summer 22 degrees C DB + 1 degree C
Winter 20 degrees C DB minimum
Humidity Office Accommodation -
Summer 50% +/- 10%
Winter 50% +/- 10%
(5) To ensure that the Common Parts are at all times kept clean tidy
and unobstructed
(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part
thereof designed to receive the same to the extent necessary to
meet the reasonable requirements of the Tenant and other lawful
occupiers of the Premises
(7) To comply with the requirements of any statute (already or in the
future to be passed) or any government department local authority
other public or competent authority or court of competent
jurisdiction relating to the Building or any part for which any
tenant or occupier of the Building is not directly or exclusively
liable
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(8) To ensure that at all times (meaning for the avoidance of doubt 24
hours a day during the Term) there are both such security officers
at and patrolling the Building as is reasonably appropriate for
premises of the same size and nature as the Building and that the
main reception to the Building is properly and adequately manned
(9) To provide or procure the provision of:-
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate
to provide to a high class office building in the City of
London outside Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the
Tenant shall previously request (but subject to the Tenant
being responsible for the Outside Normal Business Hours
Charge)
having regard in all cases to and in accordance with the overall
design standards for the Building as a whole and subject to the
limitations contained in Clause 7(6)) in an efficient and
economic manner and in accordance with good estate management
provided that the Management Company shall be entitled to employ
such managing agents professional advisers contractors and other
persons as it shall from time to time reasonably think fit for the
purpose of the performance of the Services
PROVIDED THAT the Management Company shall not be liable for:-
(without prejudice to the provisions of clause 7(3)) any closure of any
of the Common Parts or interruption in the provision of the Services or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or the Common
Parts or temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance or
replacement thereof or any part thereof or any plant machinery equipment
installations or apparatus used in connection therewith or damage
thereto or destruction thereof by any risk (whether or not an Insured
Risk) or by reason of electrical mechanical or other defect or breakdown
or frost or other inclement conditions or shortage of fuel materials
supplies or labour or whole or partial failure or stoppage of any mains
supply due to any circumstances beyond the control of the Management
Company PROVIDED ALWAYS that the Management Company shall use all
reasonable endeavours to minimise the adverse effects of any such
circumstances and to remedy any such interruption closure or diversion
as soon as reasonably practicable PROVIDED FURTHER that in the event of
the Landlord or the Management Company being unable to provide air
conditioning or electricity to the Premises in such circumstances the
Tenant shall be entitled to carry out (the Landlord and Management
Company affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED THAT:
(a) the Tenant shall carry Out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable
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(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach of
the Landlord's or Management Company's covenants hereunder
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:-
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in
this lease or otherwise available to the Landlord if
(a) the whole or part of the rents shall be unpaid for
twenty-one days after becoming payable (whether or not
formally demanded) or
(b) any of the Tenant's covenants in this lease are not
performed or observed in the manner and at the times herein
specified or
(c) the guarantee granted by the Guarantor or any other
guarantor of the Tenant's obligations is or becomes
unenforceable (in whole or in part) for any reason
whatsoever and no suitable alternative security is provided
to the Landlord within a period of one month or
if the Tenant (or if more than one person any one of them):-
(d) being a company enters into liquidation whether voluntarily
(except for reconstruction or amalgamation of a solvent
company) or compulsorily or has a provisional liquidator or
a receiver (including an administrative receiver) appointed
or its directors pass a resolution to petition for an
administration order or one or more of them swears an
affidavit in support of such a petition or is the subject of
an administration order or a petition for one or of a
voluntary arrangement or a proposal for one under Part I
Insolvency Act 1986
(e) being a company incorporated outside the United Kingdom is
the subject of any proceedings or event analogous to those
referred to in clause 7(1)(d) in the country of its
incorporation
(f) being an individual is the subject of a bankruptcy petition
or bankruptcy order or of any application or order or
appointment under section 253 or section 273 or section 286
Insolvency Act 1986 or otherwise becomes bankrupt or
insolvent or dies
the Landlord may at any time thereafter (and notwithstanding the
waiver of any previous right of re-entry) re-enter the Premises
without prejudice to the Tenant's right to relief against
forfeiture whereupon this lease shall absolutely determine but
without prejudice to either partys right of action against the
other in respect of any antecedent breach of the covenants in this
lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in
relation to the Building and (subject only to those easements
expressly granted by this lease) neither the Tenant nor the
Premises shall be entitled to any easement or quasi-easement
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whatsoever and nothing herein contained or implied shall give the
Tenant the benefit of or the right to enforce or to have enforced
or to prevent the release or modification of any right easement
covenant condition or stipulation enjoyed or entered into by any
tenant of the Landlord in respect of property not demised by this
lease or prevent or restrict the development or use of the
remainder of the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant
supply authorities and any other competent authority the Common
Parts and the Service Media are at all times subject to the
exclusive control and management of the Landlord who may from time
to time (if it shall be necessary or reasonable to do so for the
benefit of the Building or otherwise in keeping with the
principles of good estate management) alter divert substitute stop
up or remove any of them (leaving available for use by the Tenant
reasonable and sufficient means of access to and egress from and
servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be
served under this lease shall be validly served if served in
accordance with section 196 Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 or (in the
case of any notice to be served on the Tenant) by sending it
to the Tenant at the Premises PROVIDED THAT whilst the Tenant
hereunder is Donaldson Lufkin & Jenrette International
Limited such notice shall also be served on the offices for
the time being of SJ Berwin & Co (attention: Edward Page) or
such other firm of solicitors notified in writing to the
Landlord and 277 Park Avenue New York New York 10172
(b) If the Tenant or any guarantor comprises more than one
person it shall be sufficient for all purposes if notice is
served on one of them but a notice duly served on the Tenant
will not need to be served on any guarantor
RENT CESSER
(5) If and whenever during the Term:-
(a) the Premises (other than the Tenant's plant and equipment
and tenant's fixtures) or the means of access to the
Premises within the Building are damaged or destroyed by any
of the Insured Risks so that the Premises are incapable of
beneficial occupation and use and
(b) subject to clause 5(2)(b) the insurance of the Building or
the payment of any insurance money has not been vitiated by
the act neglect default or omission of the Tenant or of any
person deriving title under or through the Tenant their
respective servants agents and invitees
the rent first reserved by this lease and the Service Charge or a
fair proportion of them according to the nature and extent of the
damage sustained shall be suspended and cease to be payable from
the date of destruction or damage until whichever is the earlier
of the date on which the Premises are reinstated to the
Reinstatement Specification and if applicable the essential means
of access within
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the Building are available and the date of expiry of the period
for which insurance of loss of rent is effected and any dispute
about such suspension shall be referred to the award of a single
arbitrator to be appointed in default of agreement on the
application of the Landlord or the Tenant to the President for the
time being of The Royal Institution of Chartered Surveyors in
accordance with the Arbitration Acts 1950 and 1979
LANDLORD'S LIABILITY
(6) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts
or stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or
temporary closure or diversion of any of the Common Parts or
Service Media by reason of necessary inspection repair maintenance
or replacement thereof or any part thereof or any plant machinery
equipment installations or apparatus used in connection therewith
or damage thereto or destruction thereof by any risk (whether or
not an Insured Risk) or by reason of electrical mechanical or
other defect or breakdown or frost or other inclement conditions
or shortage of fuel materials supplies or labour or whole or
partial failure or stoppage of any mains supply due to any
circumstances beyond the control of the Landlord PROVIDED ALWAYS
that the Landlord shall use all reasonable endeavours to minimise
the adverse effects of any such circumstances and to remedy any
such interruption closure or diversion as soon as reasonably
practicable PROVIDED FURTHER that in the event of the Landlord or
the Management Company being unable to provide air conditioning or
electricity to the Premises in such circumstances the Tenant shall
be entitled to carry out (the Landlord and Management Company
affording the Tenant reasonable access to do so) all necessary
remedial works to such electricity or air conditioning PROVIDED
THAT:
(a) the Tenant shall carry out such works in a good and workmanlike
manner and make good all damage caused causing as little
inconvenience to the Landlord Management Company and other tenants
as reasonably practicable)
(b) the Landlord or the Management Company shall be responsible for
the costs of the Tenant in carrying out such remedial works when
such works are being carried out as a consequence of any breach of
the Landlords or Management Company's covenants hereunder
ARBITRATION FEES
(7) The fees of any arbitrator incurred in any arbitration proceedings
arising out of this lease may be paid to the arbitrator by the
Landlord or by the Tenant notwithstanding any direction or prior
agreement as to liability for payment and any sums so paid for
which the party who pays them initially is not ultimately liable
shall be repayable on demand by the party who is liable for them
RENT REVIEW MEMORANDUM
(8) Forthwith after every agreement or determination of any increase
in the amount of the rent reserved and made payable by virtue of
schedule 4 a memorandum recording the increase shall be attached
to this lease and to the counterpart and
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such memorandum shall be signed by or on behalf of the Landlord
and the Tenant respectively
NO WARRANTY AS TO USE
(9) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are
authorised under Planning Law to be used or are otherwise fit for
any specific purpose
DISPUTES
(10) (a) Any dispute between the Tenant and any other tenant or
occupier of any part of the Building relating to any easement
or right affecting the Building or any part of it shall
(unless the Landlord shall by notice to the parties concerned
renounce its power to determine it) be referred to the
Landlord whose decision acting reasonably (acting in the
capacity of an expert) shall be binding upon the parties to
the dispute but the Landlord shall give written reasons for
his decision
(b) Where any issue (other than one relating to a rent review)
arising out of or under or relating to the Head Lease which
also affects or relates to the provisions of this lease is
to be determined as provided in the Head Lease the
determination of such issue pursuant to the provisions of
the Head Lease shall be binding on the Tenant as well as the
Landlord for the purposes both of the Head Lease and this
lease
COMPENSATION
(11) Except where any Enactment prohibits the right to compensation
being reduced or excluded by agreement, neither the Tenant nor any
occupier of the Premises shall be entitled on quitting them to
claim from the Landlord any compensation under the Landlord and
Tenant Act 1954
RATEABLE VALUE APPEALS
(12) (a) If the Landlord or the Tenant intends to make a proposal to
alter the entry for the Premises in the local non-domestic
rating list it shall notify the other party of its intention
and shall incorporate in the proposal such proper and
reasonable representations as may be made by or on behalf of
that party
(b) The Tenant shall not agree the level of rates liability
attributable to the Premises following the date hereof
without the Landlord's consent (such consent not to be
unreasonably withheld or delayed) PROVIDED that for the
avoidance of doubt the Landlord shall not be entitled to
refuse its consent to any level of rates which the Tenant
has negotiated with the appropriate rating authority which
is lower than any level of rates negotiated by or on behalf
of the Landlord in respect of the Building on a pro rata
basis
NO WARRANTY AS TO SECURITY
(13) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed
to constitute a warranty by the
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Landlord that the Premises shall be kept secure or that any
security service to the Common Parts shall be effective
JURISDICTION
(14) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the
Landlord the English courts shall have exclusive jurisdiction in
relation to disputes arising under or connected with this lease
and the Tenant agrees that any process may be served on it by
leaving a copy of the relevant document at the Premises provided
however that the Landlord shall retain the right at its sole
election to sue the Tenant elsewhere including in the courts of
the Tenant's domicile
OVERRIDING LEASE
(15) If at any time during the Term the Landlord shall grant a tenancy
of the reversion immediately expectant on the determination of
this lease whether pursuant to Section 19 Landlord and Tenant
(Covenants) Act 1995 or otherwise any covenant on the part of the
Tenant to obtain the consent of the Landlord under this lease to
any dealing shall be deemed to include a further covenant also to
obtain the consent of the lessor under such tenancy to such
dealing
8. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants
and agrees with the Tenant that all of the Landlord's obligations
contained in this lease will be performed and observed in the
manner and at the times herein specified and that if there is
default in performing and observing any of the Landlord's
obligations (notwithstanding any time or indulgence granted by the
Tenant to the Landlord or compromise, neglect or forbearance on
the part of the Tenant in enforcing the observance of the
Landlord's obligations in this lease) the Landlord's Guarantor
will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Landlord
shall be in default
(2) The Landlord's Guarantor at the request of the Management Company
and in consideration of the Tenant agreeing to pay the Service
Charge covenants and agrees with the Tenant that all of the
Management Company's obligations contained in this lease will be
performed and observed in the manner and at the times herein
specified and that if there is default in performing and observing
any of the Management Company's obligations (notwithstanding any
time or indulgence granted by the Tenant to the Management Company
or compromise, neglect or forbearance on the part of the Tenant in
enforcing the observance of the Management Company's obligations
in this lease) the Landlord's Guarantor will observe and perform
(or procure the performance and observance of) the obligations in
respect of which the Management Company shall be in default
9. TENANT'S OPTION TO DETERMINE
(1) The Tenant may (subject to compliance with the provisions of this
clause) determine this lease as at 24th October 2008
(2) If the Tenant wishes so to determine the Tenant shall give to the
Landlord the Termination Notice such notice to expire on
24th October 2008
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(3) If the Tenant duly serves the Termination Notice it shall procure
that vacant possession of the Premises will be available on
24th October 2008 free of occupation by and of any estate or
interest rested in the Tenant or any third party and this lease
shall not determine as a result of any notice served by the Tenant
if the Tenant is in material breach of any of its covenant to pay
the rents and Interim Sum contained in this lease (including those
contained in this sub-clause) as at 24th October 2008 except to the
extent if at all the Landlord in its absolute discretion waives
compliance with any of them
10. GUARANTEE AND GUARANTOR'S INDEMNITY
The Guarantor at the request of the Tenant and in consideration of the
grant of this lease covenants and agrees with the Landlord and during
the Term and any period of holding over continuation or extension
thereof whether by an Enactment common law or otherwise (subject to
clause 4(15)):-
(1) The rents reserved by this lease (whether or not ascertained as to
amount) will be duly paid and that all the Tenant's obligations
contained in it will be performed and observed in the manner and
at the times herein specified and that if there is any default
in paying the rents or in performing and observing the Tenant's
obligations (notwithstanding any time or indulgence granted by the
Landlord to the Tenant or compromise neglect or forbearance on the
part of the Landlord in enforcing the observance and performance
of the Tenant's obligations in this lease or any refusal by the
Landlord to accept rents tendered by or on behalf of the Tenant)
the Guarantor will observe and perform the obligations in respect
of which the Tenant shall be in default and will on demand and on
a full indemnity basis pay to the Landlord an amount equivalent to
the rents or other amounts not paid and/or any loss damage costs
charges expenses or any other liability incurred or suffered by
the Landlord as a result of the default (and in the event of
non-payment shall pay interest at the Interest Rate from the date
of demand to the Guarantor until the date of payment) and will
otherwise indemnify and hold harmless the Landlord against all
actions claims costs damages demands expenses losses and
proceedings arising from or incurred by the Landlord as a result
of such non-performance or non-observance
(2) If any liquidator or other person having power to do so disclaims
this lease or if it shall be forfeited or if the Tenant ceases to
exist and if the Landlord by written notice served within three
months after the date of disclaimer or forfeiture or the Landlord
having actual knowledge of the cesser of existence of the Tenant
(each a "Trigger Event") requires the Guarantor to accept a lease
of the Premises for a term computed from the date of the Trigger
Event to the date on which the Term would have expired by
effluxion of time and at the same rents and subject to the same
covenants stipulations conditions and provisions (except that the
Guarantor shall not be required to procure that any other person
is made party to that lease as guarantor) as are reserved by and
contained in this lease immediately before the Trigger Event and
with coincidental Review Dates (the said new lease and the rights
and liabilities thereunder to take effect as from the date of such
Trigger Event) the Guarantor shall forthwith accept such lease
accordingly and execute and deliver to the Landlord a counterpart
of it and indemnify the Landlord upon demand against the costs
incurred on the grant of the new lease
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(3) The liability of the Guarantor hereunder shall not be released
reduced affected or prejudiced by reason of:-
(a) any variation or waiver of or addition to the terms of this
lease or any of them agreed between the Landlord and the
Tenant or
(b) the surrender by the Tenant of part of the Premises (in
which event the liability of the Guarantor shall continue in
relation to the Tenant's obligations in respect of the part
of the Premises not so surrendered) or
(c) any legal limitation immunity disability incapacity
occurrence of insolvency or the winding-up of the Tenant or
(d) (without limitation to the foregoing) of any other act or
thing act or thing by which (but for this provision) the
Guarantor would have been discharged or released (in each
case in whole or in part) from liability under this
guarantee and indemnity
or any combination of any two or more of such matters
(4) If a Trigger Event occurs and for any reason the Landlord does not
require the Guarantor to accept a new lease of the Premises in
accordance with clause 8(2) the Guarantor shall pay to the
Landlord on demand (in addition to any other loss damage costs
charges expenses or other liability which the Guarantor may be
required to make good hereunder and without prejudice to any other
rights of the Landlord) an amount equal to the rents which would
have been payable hereunder but for such Trigger Event (so far as
such rents do not otherwise continue to be payable) for the period
commencing on the date of such Trigger Event and ending on
whichever is the earlier of the date one year after the date of
such Trigger Event and the date (if any) upon which rent is first
payable in respect of the whole of the Premises on a reletting
thereof
(5) Without prejudice to the rights of the Landlord against the Tenant
the Guarantor shall be a principal obligor in respect of its
obligations under this clause and not merely a surety and
accordingly the Guarantor shall not be discharged nor shall its
liability hereunder be affected by any act or thing or means
whatsoever by which its said liability would not have been
discharged if it had been a primary debtor
(6) The Guarantor shall pay all reasonable charges (including legal
and other costs on a full indemnity basis) incurred by the
Landlord in relation to the Landlord's enforcement of this
guarantee and indemnity against the Guarantor or for enforcing
payment by the Guarantor of amounts indemnified by it hereunder
(7) The Landlord may at its option enforce the terms of this guarantee
and indemnity against the Guarantor without having first enforced
the covenants and terms of this lease against the Tenant and also
without first having recourse to any other rights or security
which the Landlord may have obtained in relation to this lease
(8) The Guarantor shall not be entitled to participate in any security
held by the Landlord in respect of the obligation of the Tenant
under this lease or to any right of subrogation in respect of any
such security until all the obligations owed to the Landlord by the
Tenant and the Guarantor hereunder have been fully and
unconditionally fulfilled and discharged
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(9) The Guarantor shall not claim in any liquidation bankruptcy
composition or scheme of arrangement in respect of the Tenant in
competition with the Landlord and if and to the extent that it
receives the same shall remit to (and until remission shall hold
in trust for) the Landlord all and any monies received from any
liquidator trustee receiver or out of any composition or
arrangement or from any supervisor thereof until all the
obligations of the Tenant and the Guarantor hereunder owed to the
Landlord have been fully and unconditionally fulfilled and
discharged
(10) This guarantee and indemnity shall enure for the benefit of the
Landlord's successors in title under this lease without the
necessity for any assignment thereof
(11) While Donaldson, Lufkin & Jenrette International Limited remains
the Tenant this guarantee and indemnity shall only apply if and
for so long as the total shareholders funds and reserves of
Donaldson, Lufkin & Jenrette International Limited are or fall
below the value of Fifty million pounds (pounds sterling
50,000,000) AND Donaldson, Lufkin & Jenrette International Limited
and Donaldson, Lufkin & Jenrette Inc. shall notify the Landlord
at the beginning of each period in which this guarantee and
indemnity applies and again when it ceases to apply AND for the
avoidance of doubt this guarantee (subject to compliance by the
Tenant with clause 4(15)) shall automatically cease on any lawful
assignment of this lease (but without prejudice to either party's
rights against the other in respect of any antecedent breaches of
this lease) unless in the circumstances contemplated by clause
4(15)(g)(ii)(b) it is reasonable for Donaldson Lufkin & Jenrette
Inc. to remain the guarantor hereunder of the liabilities of
Donaldson, Lufkin & Jenrette International Limited PROVIDED
FURTHER that Donaldson, Lufkin & Jenrette Inc shall in such
circumstances automatically be released on a second assignment of
this lease
11. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which
this lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the eighteenth floor and being part of
the Building which are shown on the Plans and thereon verged red for
identification purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and
all materials lying between the upper surface of the structural floor
slab and the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of
the structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact
on the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the
external windows of the Premises
(ii) electricity check meter
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window
glazing and window frames and other fenestration units constructed in
the external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions
of clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its employees servants and duly authorised agents
invitees and visitors for the purpose only of ingress and egress
to and from the Premises to use the Common Parts and to use all
means of escape but only when needed in an emergency and
(2) to use the Service Media
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2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the
Premises at the date of this lease
3. The right to have displayed the name or trading style of the Tenant and
any authorised sub-tenants or permitted occupiers (subject to a maximum
of four names at any particular time) on the signboard in the entrance
lobby of the Building provided by the Landlord pursuant to paragraph 14
of Part I of schedule 6 and the right to install a sign displaying the
name of the Tenant at the entrance to the Premises the precise location
size and style of such sign to be subject to the approval of the
Landlord (such approval not to be unreasonably withheld or delayed)
4. The right to install a supplementary air conditioning system and UPS
within the 14th floor plant area in the Building in a manner and in a
location to be approved by the Landlord such approval not to be
unreasonably withheld or delayed (in accordance with the provisions of
clause 4(12)) and a right of access to such 14th floor plant area at all
reasonable times on reasonable prior notice (save in the case of
emergency) for repair and maintenance and PROVIDED that on determination
of the Term the Tenant shall remove any such installation and reinstate
the plant room area to the reasonable satisfaction of the Landlord
(making good all damage caused in such removal)
5. The right to use and to have reasonable access for repair and
maintenance (on reasonable prior written notice to the Landlord) those
works or installations within or on the Building (but outside the
Premises) for which consent has been given pursuant to the Agreement for
Initial Alterations
6. The exclusive right to use the lavatories on the same floor as the
Premises subject to free access for the tenants of the seventeenth and
nineteenth floors unless such tenants have agreed to forego the right of
access subject to the Tenant being responsible for all elements of
Service Cost relating to such toilets should any other tenant of
accommodation in the Building object to meeting any proportion of
Service Cost in relation to such facilities (on the basis of such
exclusive use)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of
them to the Premises and the lights windows and openings thereof may be
affected
2. The right at reasonable times on reasonable prior written notice (except
in an emergency where no notice need be given) to enter upon the
Premises as often as may be necessary for the purpose of complying with
the covenants of the Head Lease for all the purposes for which the
Tenant covenants in this lease to permit entry and for all purposes in
connection with the carrying out of the Services and for the purposes of
complying with any statutory requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or
neighbouring land
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4. The right to erect and maintain scaffolding on or against any part of
the Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the
Premises from or over any other part or parts of the Building or any
adjacent or neighbouring land
6. The right of support protection and shelter for the benefit of other
parts of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice
(save in the case of emergency where no notice is required) to enter the
Premises if it shall be considered necessary or desirable so to do in
connection with the security of the Building
8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice
to the Tenant at reasonable times in the daytime and at any time and
without notice in case of emergency to enter the Premises for the
purpose of repairing that other part of the Building making good any
damage so caused to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord or its employees or the persons
authorised by the Landlord exercises any of the rights by carrying out work on
the Premises it shall cause as little inconvenience as possible and as soon as
reasonably practicable make good any damage caused to them unless the right
has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE FIRST RESERVED RENT AND THE REVIEW THEREOF)
1. In this schedule the following expressions have the respective specified
meanings:-
(1) "Current Rent" means the amount of the yearly rent first reserved
by this lease payable immediately before the relevant Review Date
(2) "Review Rent" means the yearly market rent which might reasonably
be expected to be payable following the expiry of any period at
the beginning of the term which might be negotiated in the open
market for the purposes of fitting out during which no rent or a
concessionary rent is payable or following the payment of any
capital sum or fitting out contribution which might be negotiated
in the open market for the purposes of fitting out (and on the
assumption that the lessee has had the benefit of such rent free
or concessionary rent period or capital sum or fitting out
contribution and has used the same fully to fit out the Premises
for the Permitted Use to the lessee's particular requirements) if
the Premises had been let in the open market by a willing lessor
to a willing lessee with vacant possession on the relevant Review
Date without fine or premium for a term often years computed from
the relevant Review Date taking into account the lessee's right at
the expiration of the term to be granted a new tenancy under Part
II Landlord and Tenant Act 1954 and otherwise upon the provisions
(save as to the
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amount of the rent first reserved by this lease but including the
provisions for rent review at five-yearly intervals) contained in
this lease and on the assumption if not a fact that the said
provisions have been fully complied with and on the further
assumptions that:-
(a) the Permitted Use and the Premises comply with Planning Law
and every other Enactment free from any onerous condition
restriction and limitation and that the lessee may lawfully
implement and carry on the Permitted Use
(b) no work has been carried out to the Premises which has
diminished their rental value
(c) in case the Building or any part of it has been destroyed or
damaged it has been fully restored
(d) the Premises have been fitted out to no less standard than
that set out in the Reinstatement Specification
but disregarding any effect on rent of:-
(i) the fact that the Tenant or any underlessee or other
permitted occupier or their respective predecessors in title
has been or is in occupation of the Premises
(ii) any goodwill attached to the Premises by the carrying on in
them of the business of the Tenant or any underlessee or
their respective predecessors in title or other permitted
occupier
(iii) (without prejudice to paragraphs 1(2)(b) and 1(2)(c) of this
schedule) any works carried out to the Premises during the
Term by the Tenant or any permitted underlessee in either
case at its own expense in pursuance of a licence granted by
the Landlord where required and otherwise than in pursuance
of any obligation to the Landlord
(iv) the works carried out to the Premises by the Tenant or
carried out by the Landlord at the expense of the Tenant
pursuant to the Agreement for Initial Alterations
(3) "Review Surveyor" means an independent chartered surveyor
appointed pursuant to paragraph 3(1) of this schedule and if to be
nominated by or on behalf of the President for the time being of
the Royal Institution of Chartered Surveyors the said President to
be requested to nominate an independent chartered surveyor having
not less than ten years practice in the City of London next before
the date of his appointment and recent substantial experience in
the letting and valuation of office premises of a similar
character and quality to those of the Premises and who is a
partner or director of a leading firm or company of surveyors
having specialist market and valuation knowledge of such premises
2. The yearly rent first reserved and payable from each Review Date until
the next following Review Date or (in the case of the period commencing
on the last Review Date during the Term) until the expiry of the Term
shall be the higher of:-
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(1) the Current Rent (ignoring for this purpose any rent cesser
pursuant to clause 7(5)) and
(2) the Review Rent
3. If the Landlord and the Tenant shall not have agreed the Review Rent by
the date three months before the relevant Review Date it shall (without
prejudice to the ability of the Landlord and the Tenant to agree it at
any time) be assessed as follows:-
(1) the Review Surveyor shall (in the case of agreement about his
appointment) be forthwith appointed by the Landlord or the Tenant
to assess the Review Rent or (in the absence of agreement at any
time about his appointment) be nominated to assess the Review Rent
by or on behalf of the President for the time being of The Royal
Institution of Chartered Surveyors on the application of the
Landlord or the Tenant
(2) Unless the Landlord and the Tenant agree that the Review Surveyor
shall act as an expert (which after the appointment has been made
they may not do save with the consent also of the Review Surveyor)
he shall act as an arbitrator and the arbitration shall be
conducted in accordance with the Arbitration Acts 1950 and 1979
(3) If the Review Surveyor is appointed as an expert he shall be
required to give notice to the Landlord and the Tenant inviting
each of them to submit to him within such time limits as he shall
stipulate a proposal for the Review Rent supported (if so desired
by the Landlord or the Tenant) by any or all of:-
(i) a statement of reasons
(ii) a professional rental valuation and (separately and later)
(iii) submissions in respect of each other's statement of reasons
and valuation
but he shall not be bound thereby and shall make the determination
in accordance with his own judgment (including any determination
concerning any party's liability for the costs of the reference to
him) save in respect of points of law
(4) If the Review Surveyor whether appointed as arbitrator or expert
refuses to act or is or becomes incapable of acting or dies the
Landlord or the Tenant may apply to the President for the further
appointment of another Review Surveyor
4 If the Review Rent has not been agreed or assessed by the relevant
Review Date the Tenant shall:-
(1) continue to pay the Current Rent on account and
(2) pay the Landlord within seven days after the agreement or
assessment of the Review Rent the amount (if any) by which the
Review Rent for the period commencing on the relevant Review Date
and ending on the quarter day following the date of payment
exceeds the Current Rent paid on account for the same period plus
interest at three per cent below the Interest Rate for each
installment of rent due on and after the relevant Review Date on
the difference between what would have been paid on that rent day
had the Review Rent been
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fixed and the amount paid on account (the interest being payable
from the date on which the installment was due up to the date of
payment of the shortfall)
5. If any Enactment restricts the right to review rent or to recover an
increase in rent otherwise payable then when the restriction is released
the Landlord may at any time within six months after the date of release
give to the Tenant not less than one month's notice requiring an
additional rent review as at the next following quarter day which shall
for the purposes of this lease be a Review Date
SCHEDULE 5
(THE SERVICE CHARGE)
I. In this schedule:
"ACCOUNTING PERIOD" means the period from and including 1st January to
and including 31 St December in any year or such other period of twelve
months as the Management Company shall reasonably determine from time to
time
"EXPERT" means a chartered surveyor experienced in the administration
and apportionment of service charges for buildings similar to the
Building as agreed upon by the Management Company and the Tenant or on
failure to agree appointed at the request of either party by the
President Provided that where an Expert has previously been agreed or
appointed in relation to any matter in connection with the Service Cost
or the allocation of the Service Cost between the tenants of the
Building (whether or not pursuant to the terms of this Underlease) the
Management Company or the Tenant shall be entitled if reasonable to
require that the same Expert be appointed
"INTERIM SUM" means a fair and reasonable yearly sum assessed by the
Management Company acting reasonably on account of the Service Charge
for each Accounting Period being a fair and reasonable estimate of the
Service Charge payable by the Tenant in respect of that Accounting
Period
"RESERVE" means the total of the amounts received by the Management
Company in respect of the matters referred to in paragraph 2(B) of this
schedule
"SERVICE CHARGE" means the proportion or proportions of the Service Cost
attributable to the Premises determined in accordance with the
provisions of this schedule payable from the date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service
Cost and Service Charge for each Accounting Period served pursuant to
paragraph S of this schedule and prepared by the Management Company's
surveyor or auditor
"SERVICE COST" means the total sum calculated in accordance with
paragraph 2 of this schedule
2. The Service Cost shall be the total of:-
(A) the reasonable cost properly incurred by the Management Company in
any Accounting Period in carrying out or procuring the carrying
out of the Services and providing each item of the Services
including (without prejudice to the generality of the foregoing)
the costs and expenses set out in Part 11 of schedule 6 (insofar
as the same are reasonable and properly incurred) and any other
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reasonable costs and expenses properly incurred by the Management
Company or with the Management Company's authority in connection
with the Services but excluding for the avoidance of doubt
(i) any costs attributable to the provision of any of the
Services outside Normal Business Hours at the specific
request of the Tenant (which shall be charged direct to the
Tenant) or of any other tenant or tenants of the Building
and
(ii) any Value Added Tax which the Management Company may incur
of and incidental to the provision of the Services and which
is recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage
caused by any of the insured Risks
(B) an amount (to be revised annually by the Management Company at its
reasonable discretion) to be charged in any Accounting Period as a
contribution to the establishment and maintenance of a reserve
towards the estimated cost to the Management Company of the
provision of the Services such amount to be ascertained on the
assumption (inter alia) that the cost of replacement of items of
plant machinery equipment and other capital items is calculated on
such life expectancy of the said items as the Management Company
may from time to time reasonably determine to the intent that a
fund be accumulated sufficient to cover the cost of replacement of
the said items by the end of their anticipated life
PROVIDED THAT nothing herein contained shall oblige the Management
Company to maintain the Reserve or a reserve sufficient to cover the
whole of the cost of replacement of any plant machinery equipment or
other capital items and provided further that any expenditure on any
items in respect of which any sums shall have been included in the
Reserve during an Accounting Year shall at the Management Company's
reasonable discretion as to the amount thereof if any be met out of the
Reserve AND PROVIDED THAT in respect of any costs or expenses not
incurred exclusively in connection with the provision or carrying out of
the Services a fair proportion only of such costs and expenses shall be
included in the Service Cost
3. (A) The Service Charge payable by the Tenant for any Accounting Period
shall be a fair proportion of the Service Cost attributable to the
Premises from time to time as properly determined by the
Management Company (and so in proportion for any Accounting Period
not falling wholly within the Term the Service Cost in any such
case being deemed to accrue on a day to day basis for the purpose
of apportionment)
(B) If at any time and from time to time during the Term the method or
basis of calculating or ascertaining the cost of any item of the
Services shall alter or the basis of calculating or ascertaining
the Service Cost in relation to any item of the Services shall
change and as a result it is reasonable that there be an
alteration or variation of the calculation of the Service Charge
in order to achieve a fairer and better apportionment of the
Service Cost amongst the tenants of the Building then and in every
such case the Management Company shall vary and amend the Service
Charge and make appropriate adjustments thereto provided always
that in the event of any dispute between the Management Company
and the Tenant and the other tenants of the Building or any of
them the same shall be referred to the
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Expert for determination (the Expert to act as an expert and not
as an arbitrator) whose decision shall save in the case of
manifest error be binding on the parties (including his decisions
as to the responsibility for his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the Building let or occupied or designed
contracted or adapted for letting or occupation (other than
management accommodation) is fully let on terms which include
service charge provisions consistent with the service charge
provisions contained in this lease (save where otherwise specified
herein) and such proportion shall not be increased or altered by
reason of the fact that at any time any part of such accommodation
may be vacant or that any tenant or other occupier of any other
part of the Building may default in payment of its due proportion
of the Service Cost
4. (A) The Tenant shall pay to the Management Company the Interim Sum
without deduction by equal quarterly instalments in advance on the
usual quarter days unless the Management Company shall reasonably
anticipate that amounts to be incurred during the year immediately
next following are anticipated as being incurred in accordance with
a programme of non equal expenditure in which event the Management
Company shall serve notice to such effect upon the Tenant and shall
thereupon be entitled to require amounts of the Interim Sum to be
paid by advance quarterly instalments of unequal amounts reasonably
stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the
consumption of and supply charges in respect of electricity
consumed within the Premises (save for any amounts which are
invoiced directly by London Electricity plc to the Tenant) such
sums not to exceed a fair and proper estimate of amounts
reasonably anticipated by the Management Company as falling due
within the next quarter
(C) If the Tenant consistently requests the provision of any of the
Services outside Normal Business Hours the Management Company
shall be entitled in addition to require the Tenant to pay along
with payments of the Interim Sum a fair and proper estimate of
amounts likely to be payable by the Tenant in the next quarter on
account of such Services in accordance with the terms of this
lease
(D) The Interim Sum for the Accounting Period ending 31st December
1996 shall be pounds sterling 74,000
(E) Either before or as soon as practicable after the commencement of
every Accounting Period the Management Company shall serve or
cause to be served on the Tenant written notice of the Interim Sum
for the relevant Accounting Period Provided that without prejudice
to the provisions of paragraphs 6 and 7 of this schedule if the
written notice aforesaid shall be served after the first occurring
quarter day in the relevant Accounting Period the Tenant shall
until service of the written notice aforesaid make payments on
account of the Interim Sum for the relevant Accounting Period on
the days and in the manner provided by sub-paragraph (A) of this
paragraph of this schedule at an annual rate equal to the Interim
Sum for the immediately preceding Accounting Period
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5. (A) As soon as practicable after the expiry of every Accounting Period
(and in any event within 4 months after such expiry) the Management
Company shall serve or cause to be served a Service Charge
Certificate on the Tenant for the relevant Accounting Period
(B) A Service Charge Certificate shall contain a summary of the
Service Cost in respect of the Accounting Period to which it
relates and the relevant calculations showing the Service Charge
(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service
Charge Certificate by giving notice thereof in writing to the
Management Company within three months of the date of service on
the Tenant of the relevant Service Charge Certificate and upon
receipt of such a notice the Management Company shall furnish to
the Tenant all such relevant details in its possession or control
or which can reasonably be obtained by it as relate to the
expenditure under the item or items in question at the cost of the
Tenant (include all books of account receipts demands and
invoices) PROVIDED ALWAYS that notwithstanding the giving of any
such notice the Tenant shall nevertheless pay all Interim Sums and
Service Charges as and when they fall due or as may be underpaid
from time to time (but without prejudice to any challenge claim or
dispute that the Tenant may have made or may make in the future in
respect of its Service Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay
to the Management Company or as it shall direct a sum equal to the
amount by which the Service Charge exceeds the Interim Sum provided that
and the Tenant hereby acknowledges that if there shall be any such
excess in respect of the Accounting Period the amount of such excess
shall be a debt due from the Tenant to the Management Company and in the
event that such excess is not received in cleared funds by the
Management Company within 14 days of the due date for payment it shall
attract interest at the Interest Rate calculated for the period
commencing on the due dates for payment and ending on the date the sum
is subsequently received by the Management Company notwithstanding that
the Term may have expired or been determined before the service by or on
behalf of the Management Company of the relevant Service Charge
Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and the event that the
excess is not received by the Tenant on the due date for payment it
shall attract interest at the Interest Rate for the period commencing as
the due date for payment and ending on the date that the sum due is
received in cleared funds by the Tenant
8. Unless challenged by the Tenant pursuant to the provisions of paragraph
9 of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive
and binding upon the parties hereto
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9. The Tenant (acting reasonably) may at any time within six months after
the submission of a Service Charge Certificate challenge it on any
reasonable ground (including without limitation on the ground that the
Service Charge therein stated exceeds the Service Charge which should
have been payable had the provisions of this lease been properly adhered
to) Provided that the Tenant gives notice with full particulars of its
ground of alleged challenge and in any such case:
(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge
Certificate were correct
(B) the Management Company and the Tenant shall endeavour to resolve
the relevant issue but if they cannot do so the issue in dispute
shall be referred to the Expert (acting as an expert and not an
arbitrator) whose decision shall save in the case of manifest
error be binding on the parties (including his decision as to the
responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be
required to be made in consequence of the resolution of the
dispute shall be paid as soon as reasonably practicable after
such resolution and any sum due to or payable by the Management
Company shall then be paid or allowed (as the case may be)
immediately together with interest at three per cent below the
Interest Rate on such sum during the period which it has been
underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of
the Building towards the Service Cost and sums collected in respect of
the Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be
credited (net of tax) to the account
11. The Management Company will account to the Landlord as soon as
practicable following expiry of each Accounting Period for that part of
the Service Charge which relates to costs directly incurred by the
Landlord and not by the Management Company including (but not limited
to) the costs referred to in paragraphs 5 7 8 9 and 12 of Part II of
schedule 6
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of
such Services is greater) than would normally apply in the context of
the general management of the Building in accordance with this lease as
a result either:-
(a) of a specific request by the Tenant (with or without other tenants
or occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to
meet the cost of such provision (or a fair proportion thereof determined
by the Management Company) within 10 working days following a demand by
the Management Company
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SCHEDULE 6
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where consistent
with an obligation to repair) rebuilding and renewing and where
appropriate treating washing down painting and decorating all load
bearing and other structural parts of the Building and the relevant
parts of it described in paragraphs (ii) and (iii) of schedule 1
2 Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate but the
Common Parts and the car park shall be operational 24 hours a day 7 days
a week
5. Providing such mechanical ventilation heating and (if deemed reasonably
desirable by the Management Company) cooling for such parts of the
Building and for such hours and times of the year (subject to clause 6)
as the Management Company shall in its discretion reasonably determine
save that such mechanical ventilation heating and cooling for the lifts
lobby and entrance halls and toilets shall be provided throughout Normal
Business Hours and at the request of the Tenant outside those hours
subject to the Outside Normal Business Hours Charge
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may reasonably deem desirable or
necessary for the maintenance appearance upkeep or cleanliness of the
Building or any part of it or otherwise in connection with the provision
of the Services
8. Cleaning as frequently as the Management Company shall in its reasonable
discretion consider adequate the exterior and interior of all window
glazing and window frames and other fenestration units in the Common
Parts and the outside of the window glazing referred to in paragraph
(iii) of schedule 1 and the maintenance cleansing repair inspection and
(where necessary) renewal or replacement of all window cleaning) cradles
carriageways and runways
9. Providing a security service 24 hours a day to the Common Parts
(including the ground floor entrance hall at times when receptionists
are not present) and the car park within the Building including where
reasonably appropriate in the Management Company's
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judgment closed circuit television and/or other plant and equipment for
the purpose of surveillance and supervision of users of the Building
10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and
(and where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining 24 hours a day 7 days a week an adequate supply of hot and
cold water and supplying washing and toilet requisites in the lavatory
accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists and/or security in the ground floor
entrance hall of the Building 24 hours a day 7 days a week
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable 24 hours a day 7 days a week traffic
flow within the car park in the Building and traffic and parking therein
and for that purpose to provide such working and mechanical systems as
the Management Company considers appropriate including wheel clamping
immobilising and removal of vehicles
16. Providing and maintaining a post room facility for the reception of mail
to the Building
17. Complying with the obligations on the part of the tenant contained in
the Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided
by the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the
Premises or
(2) reasonably calculated to be for the benefit of the Tenant and
other tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the
reference to the particular matters or things shall be deemed to
be and in each case shall be without prejudice to the generality
of the wording preceding it
(ii) The Management Company shall subject to clause 6 when reasonable
have the right to cease or to procure the cessation of the
provision of or add to or procure
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the addition to any item of Services matter or thing specified in
this schedule if the Management Company shall having regard to
the principles of good estate management reasonably deem it
desirable or expedient so to do but before so doing the
Management Company shall notify all the tenants in the Building
but in the event of any failure of any of the Services shall use
all reasonable endeavours to restore the said Service
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due
to circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company
employed or retained by or on behalf of the Management Company or its
agents (including without limitation managing agents fees) for or in
connection with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other
duties in or about the Building or any part of it relating to the
general management administration security maintenance protection
and cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services or
for the functions and duties referred to in paragraph 1 of this Part of
this schedule which shall be undertaken by the Management Company and
not by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice
to the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in
kind and other emoluments and National Insurance and other
statutory contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
(4) a reasonable notional rent for any premises reasonably provided
rent free for every such person's use occupancy or residence
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed on:-
(1) the whole of the Common Parts or any part of them
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(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part
of this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity generating
transforming monitoring metering and distribution plant machinery and
equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to any Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost; of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating
any nuisance in respect of the Building or any part of it insofar as
the same is not the liability of any tenant
10. Any interest and fees incurred in respect of money borrowed in
unforeseen or emergency circumstances to finance the provision of the
Services and the costs referred to in this Part of this schedule or
any of them
11. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any
other amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the
Management Company pursuant to sections 24 25 and 26 Value Added Tax Act
1994 or any regulations made thereunder
12. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the provision of the Services
13. All other reasonable actual costs properly incurred in connection with
the provision of the Services
SCHEDULE 7
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable
Life Assurance Society (3)
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SCHEDULE 8
PROVISIONS FOR VAT INDEMNITY
PART I
1. Additional Definitions:
"TAX CREDIT" means a credit in respect of, or repayment of; input VAT,
arising by virtue of and determined in accordance with sections 24, 25
and 26 Value Added Tax Act 1994 and regulation made thereunder
"TENANT'S AUDITORS" means the auditors for the time being of. the Tenant
provided that they are one of the following firms of accountants -
Deloitte Touche, Coopers and Lybrand, Ernst & Young, KPMG, Price
Waterhouse or Arthur Andersen - or such other reputable firm or
accountants as the Landlord has previously approved for the purpose of
this schedule 8 (such approval not to be unreasonably withheld or
delayed).
"VAT ELECTION" means an election under paragraph 2 of Schedule 10 Value
Added Tax Act 1294 made by the Landlord or any person of whom the
Landlord is a "Relevant Associate" within the meaning of paragraph 3(7)
of Schedule 10 or any other election or voluntary act by the Landlord or
any person connected with the Landlord (as determined under the
provisions of Section 839 of the Income and Corporation Taxes Act 1988)
which results in VAT being payable on the rent first reserved by this
lease
"VAT YEAR" means a tax year for Value Added Tax purposes determined in
accordance with Part XIV of the Value Added Tax Regulations 1995.
"VAT YEAR CERTIFICATE" means the certificate to be provided by the
Tenant following the end of the Tenant's VAT Year in the form set out in
Part II of this Schedule.
2. Pavment of VAT - no VAT Election
In the event that the rent first reserved (or any part thereof)
constitutes consideration for a taxable supply for VAT purposes which
would be a taxable supply whether or not a VAT Election has effect in
respect of the Premises, the Tenant shall pay such VAT in addition to
the rent first reserved without any adjustment of rent first reserved
under this schedule.
3. Adjustment of rent first reserved and payment of VAT - VAT Election made
If and for all periods where the rent first reserved (or any part
thereof) constitutes consideration for a taxable supply for VAT purposes
which would not be a taxable supply but for a VAT Election having effect
in respect of the Premises, the rent first reserved shall be adjusted to
such amount as when aggregated with that part of the VAT chargeable
thereon in respect of which the Tenant does not obtain a Tax Credit,
equals the rent first reserved which would have been paid had no VAT
Election been made.
4. Determination of adjustment of rent first reserved
4.1 At least 28 days prior to (a) 29th September 1998 and (b) every
subsequent anniversary thereof the Tenant shall serve a VAT Year
Certificate on the Landlord. Where the Tenant has served such VAT Year
Certificate (or is deemed to have done so pursuant to paragraph 4.2 of
this Part I below), the Tenant shall pay the amounts (including the VAT)
stipulated (or deemed to be stipulated) in paragraph 3 of such VAT Year
Certificate on
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the due date for payment of the next installment of the rent first
reserved (and on the due date for subsequent instalments), subject
however to paragraph 4.3 of this Part I below.
4.2 If the Tenant fails to serve a VAT Year Certificate at least 28 days
prior to the due date for payment of the sum in respect of which
paragraph 3 above will apply, the Tenant shall be deemed to have served
a VAT Year Certificate specifying in paragraph 1 thereof the same
estimated proportion as stated in the previous VAT Year Certificate
served, or if no previous VAT Year Certificate has been served by the
Tenant at any time prior to the due date for any VAT Year Certificate an
estimated proportion of nil per cent. If the Tenant fails to serve a VAT
Year Certificate on more than one consecutive occasion the Tenant shall
be deemed, on the second failure and any subsequent failure, until
service of the next VAT Year Certificate, to have served a VAT Year
Certificate specifying in paragraph 1 thereof an estimated proportion of
nil per cent.
4.3 The VAT Year Certificate shall be final and binding unless the Landlord
notifies the Tenant within 30 days after the date on which a VAT Year
Certificate has been served that it disputes the VAT Year Certificate on
the grounds of manifest error. Unless such notification is given, no
further adjustments (other than those covered by the VAT Year
Certificate) shall be made in respect of any instalments of rent first
reserved in the VAT Year covered by the aforementioned VAT Year
Certificate. Whether or not the Landlord notifies the Tenant that it
disputes any amount, the Tenant shall pay on the due date for payment of
the next installment of rent first reserved immediately following the
service of the VAT Year Certificate to which the dispute relates, the
amount stipulated in paragraph 3 of the VAT Year Certificate.
4.4 If the Review Rent is not agreed or determined until after a relevant
Review Date, the amount of any increase to be paid pursuant to paragraph
2 of schedule 4 of this lease shall (if paragraph 3 above applies at
that time) be adjusted on the basis of the last VAT Year Certificate.
The adjustment amount shall be paid at the time when the amount of any
unadjusted increase would have been due to be paid and the provisions of
this schedule shall apply as if the amount of the increase were an
amount to which paragraph 3 of Part I of this schedule 8 applied.
4.5 The Landlord may notify the Tenant in writing at any time within five
days of the service of any VAT Year Certificate (or within five days of
the last date on which the Tenant should have served a VAT Year
Certificate and is therefore deemed to have served one) that it requires
the Tenant to obtain a certificate from the Tenant's Auditors at the
Tenant's cost (if adjustments are required following such process) or at
the Landlord's cost (if no such adjustments are required) in the form
set out in the VAT Year Certificate. The Tenant's Auditor's certificate
shall be provided at least eight days prior to the date of payment of
the rent first reserved to which such certificate relates, together with
the Tenant's revised VAT Year Certificate (if required in order for the
Tenant's Auditors to be able to provide a certificate). The Tenant shall
pay in accordance with paragraph 4.1 above the amount stipulated in
accordance with paragraph 3 of such VAT Year Certificate (as revised, if
required) on the date for payment of the rent first reserved.
4.6 If adjustments are required pursuant to any VAT Year Certificate as a
result of the proportion of VAT for which the Tenant has obtained or
will obtain a Tax Credit differing from the proportion previously taken
into account in calculation any payment, any such difference shall be
taken into account (after having determined the amount of rent first
reserved payable in respect of the next quarter in accordance with
paragraph 3 above) in calculating the next actual payment of rent first
reserved (either by increase or
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decrease), the amount of which shall be set out in paragraph 3 of the
VAT Year Certificate
4.7 Interest shall be payable at three per cent below the Interest Rate by
the Landlord and three per cent below the Interest Rate by the Tenant on
the difference between the amount actually paid pursuant to the relevant
VAT Year Certificate on the due date for payment of any sum to which
paragraph 3 of Part I of this schedule 8 applies and the amount which
should have been paid, from such due date until the date of payment of
the adjusted amount pursuant to paragraph 4.3. Where the actual amount
paid (the "Initial Payment") on the due date for payment of any sum was
subsequently adjusted on payment of any later installment of the rent
first reserved ("the Adjusted Payment") in accordance with paragraph 4.6
of Part I of this Schedule 8 and paragraph 3(b) of the VAT Year
Certificate, the interest shall be calculated on the basis of the
difference between the Initial Payment and the amount which should have
been paid pursuant to paragraph 4.1 until the date of the Adjustment
Payment, and then on the difference between the Adjustment Payment and
the amount which should have been paid until payment of that amount
pursuant to paragraphs 4.3.
4.8 Following any assignment of the whole of the Premises, the provisions
of this schedule 8 shall apply to any new Tenant as if it were the first
Tenant, and a VAT Notice served by the new Tenant shall not take into
account any adjustments made, or to be made, in respect of any previous
Tenant.
5. Miscellaneous
The Tenant shall be at liberty to carry on the ordinary course of its
trade as it wishes and shall not be precluded from proposing or
accepting a method of attribution designed or maximise its Tax Credit
and covenants not to enter any arrangement which has the specific
purpose of increasing the amount by which the rent first reserved is
decreased by virtue of this schedule 8.
52
<PAGE>
PART II
VAT YEAR CERTIFICATE
To: The Landlord From: The Tenant
We refer to paragraph 4.3 of Part I of schedule 8 to the Lease dated [ ]
made between 99 Bishopsgate Limited (1) 99 Bishopsgate Management Limited (2)
Hammerson U.K. Properties plc (3) Donaldson Lufkin & Jenrette International
Limited (4) and Donaldson Lufkin & Jenrette Inc. (5) in respect of premises
on [ ] floor of the building known as 99 Bishopsgate London EC2 and pursuant
to that paragraph:
1. Our VAT Year which included the following quarter days [ ], ended
on [ ], ended on [ ].
(a) The part of the VAT charged on the rent first reserved paid in the
VAT Year for or in respect of which we estimate/have determined (in
accordance, where relevant, with the return made, or to be made, for
the prescribed accounting period next following the end of the VAT
Year) we will be unable to obtain credit or repayment is a proportion
of [ ] per cent of the total VAT charged.
(b) The following Table sets out the part of the VAT charged which was
expected to be irrevocable during the VAT Year where it has been
determined on the basis of paragraph 2(a) above that that differs
from the amount of VAT for or in respect of which we actually obtained,
or will be able to obtain, credit or repayment.
Dates Rent first reserved Estimate Adjustment Determination
----- ------------------- -------- ---------- -------------
* ** ***
* estimate of proportion of VAT for or in respect of which we estimated
we would be unable to obtain credit or repayment as set out initially
in VAT Notice.
** adjusted estimate of proportion of VAT for or in respect of which we
estimated we would be unable to obtain credit or repayment as set out
in subsequent VAT Notice.
*** proportion of VAT for or in respect of which we have now estimated/
determined we shall be unable to obtain credit or repayment, in
accordance with Sections 24-26 of the Value Added Tax Act 1994 and
the Value Added Tax Regulations 1995
3. We request that adjustment is made to the next installment of rent first
reserved so as to ensure that the amount of rent first reserved payable
in the VAT Year to which this VAT Year Certificate relates is as provided
in paragraph 3 of Part I of Schedule 8 to the Lease in accordance with
the information given in paragraph 2 above
and we calculate that the next installment of rent first reserved as so
adjusted shall be pounds sterling [ ] exclusive of VAT and the VAT
thereon shall be pounds sterling [ ], and that the interest payable
by the Tenant to the Landlord/Landlord to the Tenant, in accordance with
paragraph 4.7 of Part I schedule 8 to the Lease shall be pounds sterling
[ ].
4. We hereby declare that:
53
<PAGE>
(a) we have complied with the covenant imposed upon us by paragraph 6.2
of Part I of schedule 8 to the Lease;
(b) the information contained in this VAT Notice is to the best of our
knowledge, information and belief complete and accurate;
(c) we have made all due returns to the Commissioners of Customs and
Excise and such returns are complete and accurate in all material
respects and have been made within the time limits provided by
statute.
Signed by
an authorised signatory on behalf of the Tenant
The above declaration are, to the best of our knowledge and belief after due
and careful enquiry, true, accurate and complete.
Signed by
Tenant's Auditors
54
<PAGE>
THE COMMON SEAL of 99 BISHOPSGATE )
LIMITED was hereunto affixed in the presence of:- )
/s/ Director [SEAL]
/s/ Director
THE COMMON SEAL of 99 BISHOPSGATE )
MANAGEMENT LIMITED was hereunto )
affixed in the presence of:- )
/s/ Director [SEAL]
/s/ Director
THE COMMON SEAL of HAMMERSON U.K. )
PROPERTIES plc was hereunto affixed in the )
presence of:- )
/s/ Director [SEAL]
/s/ Director
55
<PAGE>
99 BISHOPSGATE LIMITED
AND
DONALDSON LUFKIN & JENRETTE INTERNATIONAL LIMITED
--------------------------------------------------
PART 12TH FLOOR, 99 BISHOPSGATE
REINSTATEMENT SPECIFICATION
WHICH FORMS PART OF THE
UNDERLEASE DATED 11TH OCTOBER 1996
--------------------------------------------------
<PAGE>
99 BISHOPSGATE--PART 12TH FLOOR
REINSTATEMENT SPECIFICATION
CEILING TILES
CAPL system 335 Tartan Grid System tiles generally 1200 x 450 mm plus 1200 x
300 nominal, face perforated to CAPL pattern D1522 including 10mm plain
borders. Panels finishes polyester powder paint incorporating acoustic
insulation 45 kg/m(3), block tissue faced, Rockwool backed with an inverted
steel tray, 'stitched' to ceiling panel.
The ceiling support system is a fixed element from which the tartan grid,
ceiling tiles, lighting fittings, air handling grilles, sprinklers, smoke
detectors, pa system and plenums are hung.
WIRING HARNESS
A pre-formed flexible wiring system comprising:--
Multi conductor home-run cable
Master distribution box
Extender table
Whip end extender cable by MODULAR WIRING SYSTEMS EUROPE LTD
LIGHT FITTINGS
TYPE A
Moorlite ref SP300/13532/W2/SSL/HFG/2436/AH. 2 X 36 watt TB triphosphate
flourescent colour temp 3500 (degrees) K with Cat 2 semi-specular louvre, high
frequency control gear and air handling facilities to 41 l/s. Finished to RAL
9010 20% gloss.
TYPE AE
As type A but incorporates 3 hour emergency battery invertor packs.
TYPE A2
Moorlite ref SP300/135655/W2/SSL/HFG/2218/AH. 2 x 18 watt TB triphosphate
colour temp 3500 (degrees) K with semi-specular louvre to LG3 cat 2, high
frequency control gear and air handling facilities to 41 l/s. Finished to RAL
9010 20% gloss.
TYPE B
Moorlite ref SP300/13657/W2/SSL/HFG/2224/AH. 2 x 24 watt TCL flourescent
colour temp 3500 (degrees) K with semi-specular louvre to LG3 cat 2 gear and
air handling facilities to 41 l/s. Finished to RAL 9010 20% gloss.
<PAGE>
COMPUTER ADDRESSABLE LIGHTING MANAGEMENT SYSTEM
Lighting Management System which provides independent control and monitoring
of every luminaire, by DELMATIC type ZMC, comprising ZMC floor controllers
and ZMC 8 way output control module.
ACCESSORIES
Wandsworth type gridswitch series 3 with black inserts.
FIRE ALARM AND DETECTION SYSTEM
An intelligent analogue programmable addressable system by ADT type IRC-3
incorporating voice and public address comprising.--
Smoke detectors--Signature Series 4D.
Break glass call point--SIGA--KR1/SR/6S
Speakers--QFIT/SPECIAL/TF
SECURITY SYSTEM
A distributed intelligence structured wide area access control system by ADT
type Janus comprising:--
Magnalocks--DRYAD DS7001
Proximity readers--IDE/004/REA
Passcards--IDE/001/PC
Passive Infraced Detectors 360 (degrees)--P55048
CCTV camera--CD/6252
Door controller--IDC
RAISED FLOOR
Fully accessible raised access floor installed with an average overall depth
of 125mm.
Panel Type: GCS Cornerlock
Panel Grade: Medium
Finish: Tate GCS Standard Finish
<PAGE>
FAN COIL UNITS
The office floor is served by a four pipe fan coil unit air-conditioning
system located within the suspended ceiling void. The units are as
manufactured by Senior Moducel of the Airtech range EVU 235 series. The units
are constructed from heavy gauge prime quality plastisol sheet steel
incorporating a multi-spigoted, acoustically lined discharge plenum. The
forged brass 4 part control valve, as manufactured by Johnson Controls series
VB55, is proportionally controlled in sequence with the motor speed to
achieve maximum efficiency. The fan motor speed controller is manufactured by
SIEBE Ltd. model number 1262/1. The valve actuator is manufactured by Johnson
Controls model number VA7310.
PLENUMS
Conditioned air from the FCU's are distributed via sheet metal ductwork to
acoustically insulated plenum boxes as manufactured by Carrier of the
Moduboot 35BD series. The plenum boxes are complete with fresh air collar
where required.
SUPPLY DIFFUSERS
The plenum box terminates with a linear diffuser to provide uniform air
distribution. The diffusers are manufactured by Carrier of the 35BD series
types AG and AH one-way and two-way directional blow. One number diffuser per
FCU is supplied complete with air sensor as manufactured by Sontay series
TT55, the sensor is completed with 3 metres of LSF cable. These diffusers are
constructed with an aspirator box to accommodate the sensor.
EXTRACT AIR DIFFUSERS
Air is extracted from the space via air handling luminaires (as specified
under the Electrical Services) and linear extract air diffusers. The extract
air diffusers are similar to the supply being manufactured by Carrier series
35BD type AG, 1 way directional blow. However these diffusers do not require
a fitted plenum box.
VOLUME CONTROL DAMPERS
Motorised isolation dampers are installed in the supply and extract ductwork
main branches to achieve quadrant control, via the BMS, to the floor. Volume
control dampers are installed to all the sub-branches to regulate the air
volume. The dampers are manufactured by Volume Control Devises, are stainless
steel, aerofoil multi-blade dampers.
The isolation damper actuators are as manufactured by SIEBE Ltd model no.
MF/6233.
<PAGE>
FIRE DAMPERS
Where fire dampers are installed they are of the fusible link type as
manufactured by Volume Control Devises series FB. The dampers comprise of
interlocking stainless aerofoil blades, stainless steel bearings and
peripheral gasketing, totally enclosed drive mechanism and double skin
galvanised 18 gauge spigot casing.
SPRINKLERS
A sprinkler system is installed throughout to comply with the requirements of
BS 5306, Part 2 1990 and the recommendations of the Loss Prevention Council.
The sprinkler heads as installed are flush mounted as manufactured by
Reliable Ltd.
VALVES
Commissioning Valves and Isolating Valves are installed to the return and
flow, respectively, of the Landlords and Tenants secondary CHW installation
to the floor. They are also installed to the LTHW constant temperature system
to the floor. The valves are as manufactured by Tour and Anderson Limited.
Commissioning Valves are typically as follows:--
Up to 50mm diameter TA Fig MD41. Ametal bronze commissioning set comprising
of MD20 double regulating valve and MDFO on fix plate. Isolation valves are
typically as follows:--
Up to 50mm diameter TA Fig 64. Ametal gate valve. 65mm and above TA Fig 35
lever operated butterfly valve.
PERIMETER HEATING
Perimeter heating is provided to offset heat losses to the glazing. The
finned heating element is manufactured by HCP Ltd, installed in an
Architectural perimeter rail provided by Permasteelisa, the cladding
manufacturers.
VENETIAN BLINDS
Silver fine line aluminium blinds integral with the curtain walling system.
Supplied by Abba srl, Italy.
WALLS, CORE, COLUMN
Finished in emulsion paint.
SKIRTING
Hardwood--American Cherry
<PAGE>
CARPET
Grade 3 Fusion Bonded with PVC based backing with printed overlay and inlays
and borders as required. From Milliken standard range.
FLOOR BOXES
3 compartment box with interchangeable plates. Minimum layout 1 box to 10
m(2).
DOORS
Veneer finish with hardwood lippings--American Cherry.
<PAGE>
PLANS
12th Floor General Arrangement Plan
Reflected Ceiling Plan--12th Floor
Raised Floor Plan--12th Floor
Floor Coordinated HL Services Layout, SE Zone 12th Floor
Floor Coordinated HL Services Layout, NE Zone 12th Floor
Floor Coordinated HL Services Layout, SW Zone 12th Floor
Floor Coordinated HL Services Layout, NW Zone 12th Floor
Electrical Services Lighting and Small Power Layout 17th Floor
08/10/96
<PAGE>
DATED 11TH OCTOBER 1996
99 BISHOPSGATE LIMITED
and
99 BISHOPSGATE MANAGEMENT LIMITED
and
HAMMERSON U.K. PROPERTIES plc
and
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL LIMITED
UNDERLEASE
of
Part 12th Floor 99 Bishopsgate London EC2
HERBERT SMITH
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171-374 8000
Fax: 0171-496 0043
Ref: 129/P17/30433514
<PAGE>
TABLE OF CONTENTS
CLAUSE HEADING PAGE
1. Definitions 1
Acts of Terrorism 1
Building 1
Common Parts 1
Development 2
Electricity Cost 2
Enactment 2
Head Lease 2
Insurance Cost 2
Insurance Rent 3
Insured Risks 3
Interest Rate 3
Landlord's Services Equipment 4
Lettable Unit 4
Normal Business Hours 4
Outside Normal Business Hours Charge 4
Permitted Use 5
Planning Law 5
Plans 5
Premises 5
Public Authority 5
Reinstatement Specification 5
Services 5
Service Media 5
Term 5
VAT 5
2. Interpretation 6
3. Demise and Rents 7
4. Tenant's Covenants 8
(1) Rent 8
(2) VAT 8
(3) Outgoings 8
(4) Compliance with Enactments 9
(5) Notices 9
(6) Repair 9
(7) Decoration and general condition
and servicing 9
(8) Refuse 9
(9) To permit entry 9
(10) Compliance with notices relating
to repair or condition 10
(11) Encroachments 10
(12) Alterations and reinstatement 10
(13) Use 12
<PAGE>
CLAUSE HEADING PAGE
(14) Signs 12
(15) Alienation 12
(16) Payment of cost of notices consents etc. 12
(17) Obstruction/overloading 13
(18) Parking/goods delivery 13
(19) Planning Law and compensation 13
(20) Indemnity 14
(21) Defective Premises 14
(22) Insurance and fire fighting equipment 14
(23) Dangerous and contaminative materials 15
(24) Yield up 15
(25) Regulations and covenants 15
(26) Security and access 16
(27) Service Charge 16
5. Landlord's Covenants 16
(1) Quiet Enjoyment 16
(2) Insurance 16
(3) Head Lease 16
(4) Electricity Provision 17
(5) Management Company access 17
6. Provision of Services 17
7. Provisos 19
(1) Forefeiture and re-entry 19
(2) Letting scheme use and easements 19
(3) Common Parts and Service Media 19
(4) Service of notices 19
(5) Landlord's liability 20
(6) No warranty as to use 20
(7) Rateable value appeals 20
(8) No warranty as to security 20
(9) Jurisdiction 21
(10) Exclusion of Landlord and Tenant Act 1954 21
8. Option to determine 21
9. Landlord's Guarantor 21
10. Stamp Duty Certificate 22
Schedule 1 The Premises 23
Schedule 2 Easements and rights granted 23
Schedule 3 Exceptions and reservations 24
<PAGE>
CLAUSE HEADING PAGE
Schedule 4 The Service Charge 25
Schedule 5 Services 30
Schedule 6 Matters to which the demise is subject 33
<PAGE>
LEASE PARTICULARS
- ----------------------------------------------------------------------------
1. DATE 11TH OCTOBER 1996
THIS LEASE IS AND IS INTENDED TO BE DELIVERED ON THE DATE
FIRST ABOVE WRITTEN
- ----------------------------------------------------------------------------
2. PARTIES
(a) LANDLORD : 99 Bishopsgate Limited
(b) TENANT : Donaldson, Lufkin Jenrette
International Limited
(c) MANAGEMENT COMPANY : 99 Bishopsgate Management Limited
(d) LANDLORD'S GUARANTOR : Hammerson U.K. Properties plc
- ----------------------------------------------------------------------------
3. DEMISED PREMISES : ALL THOSE premises on the part 12th
floor of the Building shown for
identification only edged red on
Plan 1.
- ----------------------------------------------------------------------------
4. BUILDING : 99 Bishopsgate London EC2
- ----------------------------------------------------------------------------
5. CONTRACTUAL TERM AND : Commencing on the date hereof and
TERM COMMENCEMENT expiring on 29th September 1997
AND EXPIRY DATES (subject to earlier determination)
- ----------------------------------------------------------------------------
6. INITIAL RENT : Nil (subject to clause 8)
- ----------------------------------------------------------------------------
<PAGE>
THIS UNDERLEASE made the day of One thousand nine hundred and ninety
six
BETWEEN:-
(1) 99 BISHOPSGATE LIMITED whose registered office is at Lo Lam House Kumul
Highway Port Vila Vanuatu (Co. Regn. No. 10469) (registered under Section
21A to the Companies Act 1985 under company number FC018588 and branch
number BR002962) whose principal place of business is at 100 Park Lane
London W1Y 4AR (the "LANDLORD")
(2) 99 BISHOPSGATE MANAGEMENT LIMITED whose registered office is at 100 Park
Lane London W1Y 4AR (Co. Regn. No. 3071752) (the "MANAGEMENT COMPANY")
(3) DONALDSON, LUFKIN & JENRETTE INTERNATIONAL LIMITED whose registered
office is at Moorgate Hall, 155 Moorgate, London EC2M 6XB (Co. Regn. No.
2475089) (the "TENANT")
(4) HAMMERSON U.K. PROPERTIES PLC whose registered office is at 100 Park Lane
London W1Y 4AR (Co. Regn. No. 298351) (the "LANDLORD'S GUARANTOR")
WITNESSETH as follows:-
1. DEFINITIONS
In this lease the following expressions have the respective specified
meanings (subject to any particular interpretation required by clause 2):-
(1) "ACTS OF TERRORISM" means any act or omission of any person acting on
behalf of or in connection with any organisation or on his own behalf
which carries out activities directed towards overthrowing or
influencing by force or violence Her Majesty's Government in the
United Kingdom or any other government de jure or de facto
(2) "BUILDING" means the land (of which the Premises form part) having a
frontage to the west side of Bishopsgate and a return frontage to the
south side of Wormwood Street and all buildings fixtures and other
structures whatsoever from time to time thereon and the appurtenances
thereof which land (together with the building now erected thereon) is
known as 99 Bishopsgate London EC2 and is for the purpose of
identification shown verged by a blue line on the Building Plan
together with any adjoining areas designated by the Landlord or the
Management Company
(3) "COMMON PARTS" means all parts of the Building which are from time to
time intended for the common use and enjoyment of the tenants and
occupiers of the Building and persons claiming through or under them
(whether or not other parties are also entitled to use and enjoy the
same) and reasonably designated as such by the Landlord and including
without prejudice to the generality of the foregoing the pedestrian
ways circulation areas lobby entrance halls lifts lift shafts fire
escapes landings staircases passages forecourts car park landscaped
areas plant rooms management suites and any other areas which
1
<PAGE>
are from time to time during the Term reasonably provided by the
Landlord for common use by or benefit of the tenants and occupiers of
the Building but excluding (for the avoidance of doubt) any premises
intended to let to any party or for occupation by the Landlord or the
Management Company other than for the provision of the Services
(4) "DEVELOPMENT" has the meaning ascribed to that expression by Planning
Law
(5) "ELECTRICITY COST" means the actual cost to the Landlord of the
provision of electricity to the Premises for consumption by the Tenant
in accordance with its covenant contained at clause 5(4) being a fair
proportion as determined by the Landlord of the total cost of the
provision of electricity to the Building as a whole (including the
provision of any security for the supply of electricity to the
Building which may from time to time be required by the relevant
undertaker responsible for the supply of electricity chosen by the
Landlord) which proportion shall so far as practicable be calculated
using readings taken in such manner and at such times as the Landlord
shall from time to time determine of the check meters relating to the
Premises from time to time installed but otherwise shall be determined
in such manner as the Landlord shall in its discretion consider to be
fair and reasonable in all the circumstances
(6) "ENACTMENT" means every Act of Parliament directive and regulation now
or hereafter to be enacted or made and all subordinate legislation
whatsoever deriving validity therefrom
(7) "HEAD LEASE" means the lease under which the Landlord holds the
Premises dated 29th September 1975 made between The Prudential
Assurance Company Limited (1) and Bishopsgate Developments Limited (2)
and "Superior Landlord" means the person for the time being entitled
to the reversion immediately expectant on the term granted by the Head
Lease and every other person having an interest in reversion to that
term
(8) "INSURANCE COST" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of the amount
which the Landlord may reasonably and properly expend:-
(a) in effecting and maintaining insurance against the occurrence of
the Insured Risks in relation to the Building in such sum as in
the Landlord's reasonable opinion represents its then full current
replacement cost with such allowance as the Landlord from time to
time considers appropriate in respect of related liabilities and
expenses (including without limitation liability to pay any fees
or charges on the submission of an application for planning
permission and costs which might be incurred in complying with any
Enactment in carrying out any replacement work and sums in respect
of architects' engineers' and quantity surveyors' and other
professional fees and incidental expenses incurred in relation to
any works of debris removal and of replacement and all VAT) and
2
<PAGE>
(b) in effecting and maintaining any insurance relating to the
property owners' liability and the employer's liability of the
Landlord in relation to the Building and anything done therein and
(c) equivalent to the total of all reasonable excess sums (being for
the avoidance of doubt the first part of any insurance claim)
which the insurers are not liable to pay out on any insurance
claim in respect of the Building and which the Landlord or the
Management Company may have expended in replacing the damaged or
destroyed parts of the Building
(9) "INSURANCE RENT" means in respect of any period for which the same is
required by the Landlord to be calculated the aggregate of:-
(a) a fair and reasonable proportion attributable to the Premises as
conclusively determined by the Landlord of the Insurance Cost for
the relevant period
(b) the reasonable amount which the Landlord may expend in effecting
and maintaining insurance against up to six years' loss of the
rent secondly hereinafter reserved and Service Charge and with any
addition to the amount insured as the Landlord may decide in
respect of VAT and
(c) (without prejudice to all other provisions of this lease relating
to the use of the Premises and the vitiation of any policy of
insurance) any reasonable amount which the Landlord may expend in
paying all additional premiums and loadings on any policy or
policies of insurance required to be paid as a result of anything
done or omitted by the Tenant and
(d) any tax charged on any premium for any such insurance
(10) "INSURED RISKS" means loss damage or destruction whether total or
partial caused by Acts of Terrorism fire lightning explosion riot
civil commotion strikes labour and political disturbances and
malicious damage aircraft and aerial devices (other than hostile
aircraft and devices) and articles accidentally dropped from them
storm tempest flood bursting or overflowing of water tanks and pipes
impact earthquake and accidental damage to underground water oil and
gas pipes or electricity wires and cables subsidence ground slip and
heave and such other usual commercial risks or perils against the
occurrence of which the Landlord may from time to time in its
reasonable discretion deem it desirable to insure subject to such
exclusions and limitations as are from time to time commonly imposed
by the insurers and subject also to the exclusion of such of the
risks specifically hereinbefore mentioned as the Landlord may in its
reasonable discretion decide where insurance cover in respect of the
risk in question is not for the time being available in the London
insurance market on reasonable terms
(11) "INTEREST RATE" means a yearly rate three per cent above either the
base rate of Barclays Bank plc or such other bank (being for the time
being generally recognised as a clearing bank in the London market)
as the Landlord may from
3
<PAGE>
time to time nominate or if the base rate cannot be ascertained then
above such other rate as the Landlord may reasonably specify (and so
that whenever there is reference in this lease to the payment of
interest at the Interest Rate such interest shall be calculated on a
daily basis and compounded with quarterly rests on the usual quarter
days)
(12) "LANDLORD'S SERVICES EQUIPMENT" means all the plant machinery and
equipment (with associated Service Media) within or serving the
Building from time to time (whether or not with the Premises or other
premises let or intended to be let by the Landlord) comprising or
used in connection with the following systems (to the extent
specified in the following paragraphs of this definition):-
(i) the whole of the sprinkler system within the Building
(including sprinkler heads)
(ii) the whole of the fire detection and fire alarm systems
(iii) the whole of the permanent fire fighting systems (but
excluding portable fire extinguishers installed by the Tenant
or other tenants of the Building)
(iv) the whole of the chilled water system
(v) the whole of the building management system (including the
building security system) installed by the Landlord
(vi) the central electrical supply system from the mains supply
into the Building so far as (and including) the electrical
riser busbars connecting to the distribution boards at each
level in the Building which is let or intended to be let by
the Landlord
(vii) the whole of the air handling system and the electricity
supply and control systems for the same
(viii) the standby generators and associated cabling wiring and duct
work
but excluding in each case any "stand alone" systems installed by the
Tenant or any other tenant or occupier of the Building
(13) "LETTABLE UNIT" means any unit of accommodation forming part of the
Building which is intended by the Landlord at any material time to be
for separate occupation
(14) "NORMAL BUSINESS HOURS" means 7.30 a.m. to 7.30 p.m. on Mondays to
Fridays inclusive (except bank holidays) subject to adjustment at the
discretion of the Landlord from time to time.
(15) "OUTSIDE NORMAL BUSINESS HOURS CHARGE" means the whole of the actual
cost to the Management Company of carrying out or providing any of
the Services at the request of the Tenant outside Normal Business
Hours (including without prejudice to the generality of the foregoing
costs and expenses in the nature of those set out in Part II of
Schedule 5) or in the event
4
<PAGE>
of any of the Services being carried out or provided outside Normal
Business Hours to the Tenant and any other tenant or tenants of the
Building a fair proportion thereof as reasonably determined by the
Landlord.
(16) "PERMITTED USE" means use as high class offices for any purpose
within Class B1(a) (but not for any other purpose within that Use
Class) of the schedule to the Town and Country Planning (Use Classes)
Order 1987
(17) "PLANNING LAW" means every Enactment for the time being in force
relating to the use development and occupation of land and buildings
and every planning permission statutory consent and agreement made
under any Enactment relating to the Building
(18) "PLANS" means the plans annexed hereto and "Building Plan" means that
one of them so marked
(19) "PREMISES" means the premises described in schedule 1 and all
permitted additions alterations and improvements made to them
(20) "PUBLIC AUTHORITY" means any Secretary of State and any government
department public local regulatory fire or any other authority or
institution having functions which extend to the Premises or their
use and occupation and any court of law and the companies or
authorities responsible for the supply of water gas and electricity
or any of them and any of their duly authorised officers
(21) "REINSTATEMENT SPECIFICATION" means the specification annexed hereto
or in the event that materials listed in the specification are not
available from time to time or appropriate for use (in the Landlord's
reasonable opinion) then reference to such materials will be
substituted by reference to materials of not materially less quality
which perform a similar function
(22) "SERVICES" means the services and other matters specified in clause 6
and Part I of schedule 5
(23) "SERVICE MEDIA" means those parts of the Building comprising gas
water drainage electricity telephone telex signal and
telecommunications heating cooling ventilation air conditioning fire
alarm and other pipes drains sewers mains cables wires supply lines
ducts conduits flues and all other common conducting media plant
appliances and apparatus for the provision supply control and
monitoring of services to or from the Building and other common
equipment
(24) "TERM" means a term of years commencing on the date hereof and
expiring on 29th September 1997 (subject to earlier determination in
accordance with clause 8)
(25) "VAT" means Value Added Tax as referred to in the Value Added Tax Act
1994 (or any tax of a similar nature which may be substituted for or
instead of it)
5
<PAGE>
2. INTERPRETATION
(1) Words importing the singular include the plural and vice versa and
words importing one gender include both other genders
(2) The expressions "Landlord" "Tenant" and "Management Company" wherever
the context so admits include their respective successors in title and
where a party comprises more than one person covenants and obligations
of that party take effect as joint and several covenants and
obligations
(3) A covenant by the Tenant not to do (or omit) any act or thing also
operates as a covenant to use reasonable endeavours not to permit or
suffer it to be done (or omitted) and to prevent (or as the case may
be to require) it being done
(4) References in this lease to:-
(a) any clause sub-clause schedule or paragraph is a reference to the
relevant clause sub-clause schedule or paragraph of this lease and
clause and schedule headings shall not affect the construction of
this lease
(b) any right of (or covenant to permit) the Landlord to enter the
Premises shall also be construed (subject always to the proviso to
clause 4(9)) as entitling the Landlord to remain on the Premises
with or without equipment and permitting such right to be
exercised by all persons authorised by the Landlord for as short a
period as reasonably practicable and making good all damage caused
and causing as little inconvenience as reasonably possible save
where the right of entry is exercised to remedy any breach
hereunder (where the Landlord only undertakes to make good damage
caused)
(c) any consent licence or approval of the Landlord or words to
similar effect mean a consent licence or other approval in writing
signed by or on behalf of the Landlord and given before the act
requiring consent licence or approval
(d) the Premises (except in clause 4(15)) shall be construed as
extending where the context permits to any part of the Premises
(e) a specific Enactment includes every statutory modification
consolidation and re-enactment and statutory extension of it for
the time being in force except in relation to the Town and Country
Planning (Use Classes) Order 1987 which shall be interpreted
exclusively by reference to the original provisions of Statutory
Instrument 1987 No 764 whether or not the same may at any time
have been revoked or modified
(f) the last year of the Term includes the final year of the Term if
it shall determine otherwise than by effluxion of time and
references to the expiry of the Term include such other
determination
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[FLOOR PLAN]
GMW
99 BISHOPSGATE EC2
TWELFTH FLOOR TOWER
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[BISHOPSGATE LONDON MAP]
99 BISHOPSGATE LONDON, EC2
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(5) (a) Where the context permits rents or other sums being due from the
Tenant to the Landlord or the Management Company mean that they
are exclusive of any VAT
(b) whenever the consent licence or approval of the Landlord is
required under this lease the relevant provision shall be
construed as also requiring (and any consent licence or approval
given by the Landlord shall be deemed subject to the need for) the
consent licence or approval of the Superior Landlord (for which
the Landlord shall apply at the Tenant's cost) where the same is
required under the Head Lease except that nothing in this lease or
in any consent licence or approval by the Landlord shall imply
that the Superior Landlord's consent licence or approval will not
be unreasonably withheld or delayed
(c) references to any right of (or covenant to permit) the Landlord to
enter the Premises shall extend to the Superior Landlord and to
all persons authorised by it and shall be construed in the manner
required by clause 2(4)(b) but in relation to the Superior
Landlord and those with its authority
(d) the rights excepted and reserved in schedule 3 are also excepted
and reserved for the benefit of the Superior Landlord
3. DEMISE AND RENTS
The Landlord DEMISES unto the Tenant ALL THAT the Premises TOGETHER WITH
the easements and rights specified in schedule 2 exercisable in common
with the Landlord and all others with its authority or otherwise from time
to time entitled thereto EXCEPT and RESERVED unto the Landlord and all
other persons authorised by it from time to time during the term or
otherwise from time to time entitled thereto (including the Management
Company in relation to the provision of the Services) the easements and
rights specified in schedule 3
TO HOLD the Premises unto the Tenant (together with and except and
reserved as aforesaid) for the term SUBJECT to all rights easements
covenants stipulations and other matters affecting the same and SUBJECT to
the provisions of the deeds and documents mentioned in schedule 6
YIELDING AND PAYING therefor:
FIRST yearly and proportionately for any part of a year a peppercorn (if
demanded)
SECONDLY as additional rent from time to time the Insurance Rent payable
on demand
THIRDLY as additional rent on demand (in addition and without prejudice to
the Landlord's right of re-entry and any other right) interest at the
Interest Rate on any sum owed by the Tenant to the Landlord whether as
rent or otherwise which is not:
(a) received in cleared funds by the Landlord within 10 days following the
due date (or in the case of money due only on demand within 14 days
after the date of demand) calculated for the period commencing on the
due date for payment
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and ending on the date the sum and the interest is received in cleared
funds by the Landlord
(b) demanded (or if tendered is for the time being refused) by the
Landlord in circumstances where it is prudent for it not to demand or
accept any payment having regard to a breach of any of the tenant's
obligations under this lease calculated for the period commencing on
the due date for payment and ending on the date the sum (and the
interest) is subsequently received by the Landlord
FOURTHLY as additional rent all VAT for which the Landlord is or may
become liable to account to H.M. Customs & Excise (or other relevant body
to whom account has for the time being to be made) on the supply by the
Landlord to the tenant under or in connection with the provisions of this
lease or the interest created by it and of any other supplies whether of
goods or services such rent fourthly reserved to be due for payment
contemporaneously with the other rents or sums to which it relates
AND FIFTHLY a rent equal to the Electricity Cost such rent to be payable
on demand (either annually or by instalments) as the Landlord shall
determine
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord (and in respect of sub-clause 4(30)
also with the Management Company) throughout the Term and any period of
holding over or extension whether by any Enactment or common law subject
to clause 4(15):
RENT
(1) To pay the rents reserved by this lease on the days and in the
manner set out in clause 3 without deduction or set off
VAT
(2) Wherever the Tenant is required to pay any amount to the Landlord
hereunder by way of reimbursement or indemnity to pay to the Landlord
(as applicable) in addition an amount equivalent to any VAT incurred
by the Landlord save to the extent that the Landlord obtains credit
for such VAT incurred by the Landlord pursuant to sections 24 25 and
26 Value Added Tax Act 1994 or any regulations made thereunder
OUTGOINGS
(3) To pay all rates taxes charges and other outgoings whatsoever now or
hereafter assessed charged or imposed upon the Premises or upon their
owner or occupier (and a proper proportion determined by the Landlord
attributable to the Premises of any rates taxes charges and other
outgoings now or hereafter assessed charged or imposed upon the
Premises in common with other premises or upon the owners or occupiers
thereof) and (to the extent the Tenant does not pay it directly to the
relevant supplier) the total cost (including meter rents) of all water
(including chilled water) electricity and gas separately metered
and/or exclusively supplied to the Premises during the Term as
reasonably determined by the Landlord save in the case of manifest
error excluding (without prejudice to the rent fourthly reserved and
clause 4(2)) any
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tax payable by the Landlord as a direct result of any actual or
implied dealing with the reversion of this lease or of the Landlord's
receipt of income
COMPLIANCE WITH ENACTMENTS
(4) To comply with the requirements of all Enactments and of every Public
Authority (including the due and proper execution of any works) in
respect of the Premises their use occupation employment of personnel
in them and any work being carried out to them (whether the
requirements are imposed upon the owner lessee or occupier) and not to
do or omit anything by which the Landlord may become liable to make
any payment or do anything under any Enactment or requirement of a
Public Authority
NOTICES
(5) As soon as reasonably practicable and in any event within 5 working
days of receipt of the same to give to the Landlord notice of (and a
certified copy of) any notice permission direction requisition order
or proposal made by any Public Authority and without delay to comply
in all respects at the Tenant's cost with the provisions thereof save
that the Tenant shall if so required by and at the cost of the
Landlord make or join in making such objections or representations in
respect of any of them as the Landlord may reasonably require
REPAIR
(6) To keep the Premises in the same state of repair and condition (damage
by any of the Insured Risks excepted to the extent that the insurance
money shall not have been rendered irrecoverable or insufficient
because of some act or default of the tenant or of any person deriving
title under or through it or their respective servants or agents or
invitees) as exists at the date hereof
DECORATION AND GENERAL CONDITION AND SERVICING
(7) To keep the Premises maintained to the same standard of decorative
order and finish and properly cleansed and tidy as exists at the date
hereof
REFUSE
(8) Not to deposit any refuse on any of the Common Parts except in areas
designated for such purpose from time to time by the Landlord and to
comply with all requirements of any Public Authority and any
reasonable regulations made by the Landlord pursuant to clause 4(26)
in relation to control over and disposal of rubbish
TO PERMIT ENTRY
(9) To permit the Landlord (and persons authorised by the Landlord) at
reasonable times on reasonable prior written notice (except in an
emergency) to enter the Premises in order to:-
(a) examine their state of repair
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(b) ascertain that the covenants and conditions of this lease have
been observed
(c) take any measurement or valuation of the Premises
(d) rebuild renew cleanse alter test maintain repair inspect and
make connections to any part of the Building including the
Service Media
(e) during the last ten months of the Term (or at any time in the
case of a disposal of the Landlord's interest) to show the
Premises to prospective purchasers or tenants and their agents
(f) exercise the rights described in schedule 3
PROVIDED ALWAYS THAT the Landlord shall cause as little inconvenience as
reasonably possible for the purposes described in clause 4(9)(d) (save
where in order to comply with any obligation to the Tenant and without
prejudice to any rights of entry for any other purpose) and shall make
good any damage caused
COMPLIANCE WITH NOTICES RELATING TO REPAIR OR CONDITION
(10) (a) To comply with any notice requiring the Tenant to remedy any
breach of its covenants
(b) If the Tenant shall not within a reasonable time comply with
any such notice to permit the Landlord and any authorised
person to enter the Premises to remedy the breach as the
Tenant's agent and at the Tenant's reasonable cost
(c) To pay to the Landlord on demand all the reasonable costs and
expenses properly incurred by the Landlord under the
provisions of this sub-clause
ENCROACHMENTS
(11) (a) To preserve all rights of light and other easements belonging
to the Premises and not to give any acknowledgement that they
are enjoyed by consent
(b) Not to do or omit anything which might subject the Premises to
the creation of any new easement and to give notice to the
Landlord forthwith of any encroachment which might have that
effect
ALTERATIONS AND REINSTATEMENT
(12) (a) Not to carry out any Development of or on the Premises nor
(without prejudice to the exclusion of structural parts from
the demise of the Premises) any works affecting any structural
parts of the Building and not to commit any waste
(b) Without prejudice to any other rights of the Landlord in
respect of areas not included in the Premises not to install
or erect any exterior
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lighting shade or awning or place any structure or other thing
outside the Premises
(c) Without prejudice to paragraphs (a) and (b) of this sub-clause
and subject to the provisos to this paragraph (c) not to make
any other alteration or addition to the Premises (including
all electrical and other plant and equipment and the
installation and removal of demountable partitioning) except:-
(i) in accordance with plans and specifications (adequately
describing the work in question and the manner in which
the work will be carried out) previously submitted at the
Tenant's expense in triplicate to and approved by the
Landlord (such approval not to be unreasonably withheld)
(ii) in a manner which shall not adversely affect the
Landlord's Services Equipment any Service Media or the
provision of any of the Services
(iii) in accordance with any relevant terms conditions
recommendations and regulations of any Public Authority
(and in particular in relation to any electrical
installation in accordance with the terms and conditions
laid down by the Institution of Electrical Engineers and
the Regulations of the Electricity Supply Authority) and
the insurance company with whom the Premises are for the
time being insured and
(iv) in a good and workmanlike manner
PROVIDED ALWAYS THAT:-
(I) no such alterations or additions shall be carried out
until the Landlord has issued its consent in writing to
which the Tenant shall if required join as a party in the
form annexed to this lease with such amendments or
additions as the Landlord may reasonably require (such
consent subject to compliance with the other conditions
of this sub-clause not to be unreasonably withheld or
delayed)
(II) any approved alteration or addition affecting the Service
Media or the provision of any of the Services shall if
the Landlord so requires be carried out by the Landlord
as agent for the Tenant and all costs incurred in so
doing shall be repayable by the Tenant on demand
(III) once any such alterations or additions have been carried
out the Tenant shall supply to the Landlord as-built
plans in triplicate (together with a computer aided
design disk and 35 mm slides) showing the works as
carried out
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USE
(13) Not to use the Premises or any chattels in them:-
(a) for any purpose (and not to do anything in or to the Premises)
which may be or become or cause a nuisance disturbance
annoyance obstruction or damage to any person or property
(b) for a sale by auction or for any public meeting or for any
dangerous noxious noisy illegal offensive or immoral trade
business or activity or for residential purposes and not to
use the Common Parts for the transaction of any business or
(c) (without prejudice to the preceding paragraphs of this
sub-clause) except for the Permitted Use
SIGNS
(14) (a) Not to erect any aerial satellite dish sign signboard pole
antenna wire or other apparatus on the outside of the Building
(b) Not to affix or exhibit so as to be visible from outside the
Premises any placard sign notice fascia board or advertisement
except the approved signs referred to in paragraph 3 of
schedule 2
ALIENATION
(15) (a) Not to assign mortgage charge or underlet or in any other
manner part with possession of the whole or any part of the
Premises save that the Tenant may share the Premises or part
thereof in accordance with sub-clause 4(15)(b) below
(b) Not to part with or share the occupation of the Premises or
any part of them except that the Tenant may share occupation
with a company which is (but only for so long as it remains)
either the holding company of the Tenant or a majority-owned
subsidiary of the Tenant or of the Tenant's holding company
(as those expressions are defined in section 736 Companies Act
1985) so long as the Tenant does not grant the person sharing
occupation exclusive possession (so that such company occupies
as licensee only without creating any relationship of landlord
and tenant) nor otherwise transfer or create a legal estate
and the Tenant shall notify the Landlord of the identity of
each company in occupation
PAYMENT OF COST OF NOTICES CONSENTS ETC.
(16) To pay on demand all reasonable expenses (including counsels'
solicitors' and bailiffs' surveyors' fees) properly incurred by the
Landlord in and incidental to:
(a) the preparation and service of a notice under section 146 Law
of Property Act 1925 or in contemplation of any proceedings
under section 146 or 147 of that Act notwithstanding that
forfeiture is avoided otherwise than by relief granted by the
court and
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(b) every step taken during or after the expiry of the Term in
connection with the enforcement of the Tenant's obligations
under this lease including the service or proposed service of
all notices and schedules of dilapidations and
(c) every application for consent license or approval under this
lease even if the application is withdrawn or properly refused
OBSTRUCTION/OVERLOADING
(17) Not to obstruct:-
(a) or damage any part of the Building or exercise any of the
rights granted by this lease in a way which causes nuisance
damage or annoyance
(b) any means of escape
(c) or discharge any deleterious matter into
(i) any pipe drain or other conduit serving the Premises and
(to the extent they lie within the Premises) to keep them
clear and functioning properly or
(ii) any Service Media
(d) or stop-up or darken the windows and other openings of the
Premises
nor to overload or cause undue strain to the Service Media or any other
part of the Building and in particular not to suspend any undue weight
from the ceilings or walls of the Premises and not to exceed the
following floor loadings:-
floor finishings : 4 kN/m2 (80lbs per sq.ft)
live load : 1kN/m2 (20lbs per sq.ft)
(e) any requisite notice erected on the Premises including any
erected by the Landlord in accordance with its powers under
this lease
PARKING/GOODS DELIVERY
(18) To ensure that all loading unloading deliveries and despatch of
goods is carried out only by using the service accesses and goods
lifts designated by the Landlord for the use of the Premises
PLANNING LAW AND COMPENSATION
(19) Without prejudice to clause 4(4) at all times during the Term to
comply with the provisions and requirements of Planning Law
relating to or affecting
(a) (i) the Premises
(ii) any operations works acts or things carried out executed
done or omitted on the Premises
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(iii) the use of the Premises
(iv) the use by the Tenant of (and the exercise of any other
rights hereunder in respect of) any other parts of the
building
(b) Not to apply for any planning permission relating to the Premises
INDEMNITY
(20) To indemnify the Landlord against all expenses proceedings costs
claims damages demands and any other liability or consequence arising
out or in respect of any breach of any of the Tenant's obligations
under this lease (including all costs reasonably incurred by the
Landlord in an attempt to mitigate any such breach) or of any act
omission or negligence of the Tenant or any person at the Premises
expressly or impliedly with the Tenant's authority
DEFECTIVE PREMISES
(21) Upon becoming aware of the same or when the Tenant ought reasonably to
have become aware of the same to give notice forthwith to the Landlord
of any defect in the Premises which might give rise to:-
(a) an obligation on the Landlord to do or refrain from doing
anything in relation to the Premises or
(b) any duty of care or the need to discharge such duty imposed by
the Defective Premises Act 1972 or otherwise
and at all times to display and maintain all notices which the
Landlord may from time to time reasonably require to be displayed at
the Premises in relation to their state of repair and condition
INSURANCE AND FIRE FIGHTING EQUIPMENT
(22) (a) Not to do or omit anything by which any insurance policy
(relevant extracts of which shall have been provided to the
Tenant) relating to the Building or any part of it becomes void
or voidable or by which the rate of premium on such policy may be
increased
(b) To comply with all requirements and recommendations of the
insurers and to provide and maintain unobstructed appropriate
operational fire fighting equipment and fire notices on the
Premises
(c) to notify the Landlord forthwith of:-
(i) any incidence of any Insured Risk on the Premises and of any
other event which ought reasonably to be brought to the
attention of insurers
(ii) the insurable value of any fixture installed in the Premises
by the Tenant or any person claiming under or through the
Tenant
(d) That it has prior to the execution of this lease disclosed to the
Landlord in writing any matter known to the Tenant which might
affect the
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decision of any insurance underwriter to underwrite any of the
Insured Risks and that it will disclose particulars of any such
matter to the Landlord in writing forthwith on becoming aware of
it
(e) That if at any time the Tenant or any person claiming under or
through it shall be entitled to the benefit of any insurance of
the Premises to cause all money paid under such insurance to be
applied in making good the loss or damage in respect of which it
was paid
(f) If the whole or any part of the Building is damaged or destroyed
by any of the Insured Risks at any time during the Term and the
insurance money under any insurance policy effected by the
Landlord is rendered wholly or partially irrecoverable because of
some act or default of the Tenant or any person deriving title
under or through the Tenant or their respective servants agents
or invitees forthwith to pay the Landlord the whole amount of the
insurance money so irrecoverable
DANGEROUS AND CONTAMINATIVE MATERIALS
(23) Not to keep place store or use or permit or suffer to be kept placed
stored or used in or upon or about the Premises any materials
substance or other thing of a dangerous inflammable combustible
explosive corrosive or offensive nature or any materials substance or
other thing which may in any way cause pollution injury or harm by
percolation corrosion contamination migration release or otherwise on
beneath or in the vicinity of the Premises
YIELD UP
(24) (a) (Subject to Clause 8) at the expiry of the Term to remove all
chattels and (to the extent the Landlord may require) tenant's
fixtures and quietly to yield up the Premises reinstated and in
the state of repair condition decorative order and layout
otherwise required by this lease and any licenses or consents
issued in pursuance of it and to make good any damage so caused
in a proper and workmanlike manner to the Landlord's reasonable
satisfaction
(b) The Tenant irrevocably authorises the Landlord to remove and
dispose of any chattels which may be left in the Premises within
28 days after the Tenant has quit them (without being obliged to
obtain any consideration for the disposal) and the Tenant
irrevocably declares that any such chattels will stand abandoned
by it
REGULATIONS AND COVENANTS
(25) To comply with:-
(i) all regulations reasonably made by the Landlord from time to time
and notified to the Tenant in writing for the good management of
the Building PROVIDED ALWAYS THAT no such regulations shall
purport to amend the terms expressed in this lease and if there
is any inconsistency between the terms of this lease and the
regulations the terms of this lease shall prevail
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(ii) all covenants stipulations and other matters affecting the
Premises and not to interfere with any rights easements or other
matters affecting the Premises
SECURITY AND ACCESS
(26) To use all reasonable endeavours to ensure that the Tenant's visitors
to the Premises observe such security regulations which may apply to
them
SERVICE CHARGE
(27) To pay the Service Charge (and VAT thereon) to the Management Company
at the times and in the manner provided for in clause 6 and schedule 4
and to pay the Outside Normal Business Hours Charge within 10 days of
demand (either annually or monthly by installments) as the Management
Company shall reasonably determine
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant:
QUIET ENJOYMENT
(1) That if the Tenant observes and performs its covenants contained in
this lease the Tenant may peaceably hold and enjoy the Premises
without any lawful interruption by the Landlord or any person
rightfully claiming through under or in trust for it
INSURANCE
(2) (a) To keep the Building (except all tenants' plant and equipment and
trade fixtures) insured against the Insured Risks in such sum as
in the Landlord's opinion represents its then full current
replacement cost (but not necessarily the facsimile reinstatement
cost)
(b) On request to supply the Tenant (but not more frequently than
once in any period of twelve months) with evidence of such
insurance
(c) If and whenever during the Term the Premises (except as
aforesaid) is damaged or destroyed by an Insured Risk either
party may determine this lease on not less than ten working days
prior written notice and on expiry of such notice this lease
shall determine but without prejudice to any antecedent breach of
covenant
HEAD LEASE
(3) (a) To pay the rents reserved by the Head Lease and to perform so far
as the Tenant is not liable for such performance under the terms
of this lease but so far only as to preserve the existence of
this lease the covenants and conditions on the part of the lessee
contained in the Head Lease
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(b) On the request and at the expense of the Tenant to take all
reasonable steps to enforce the covenants on the part of the
Superior Landlord contained in the Head Lease
(c) To take all reasonable steps at the Tenant's expense to obtain
the consent of the Superior Landlord wherever the Tenant makes
application for any consent required under this lease where the
consent of both the Landlord and the Superior Landlord is needed
by virtue of this lease and the Head Lease
ELECTRICITY PROVISION
(4) Subject to clause 7(3) to use all reasonable endeavours to provide or
procure the provision of electricity to the Premises to the extent
necessary to meet the requirements of the Tenant having regard to the
overall electricity services design standards for the Building as a
whole and to all relevant statutory provisions from time to time
regulating the supply and utilisation of electricity and the terms and
conditions relative thereto from time to time imposed by the
electricity provider chosen by the Landlord
MANAGEMENT COMPANY ACCESS
(5) To allow the Management Company such rights over the Building as it
requires from time to time for the due and proper provision of the
Services
6. PROVISION OF SERVICES
The Management Company covenants with the Tenant to use all reasonable
endeavours:-
(1) Well and substantially to repair and properly clean and decorate the
structure of the Building (including the structure of the roofs
foundations external and internal walls and columns and structural
slabs of the ceilings and floors) the external surfaces of the
Building (including the whole of the glazing within the external walls
of the Building) and the Common Parts and (where consistent with an
obligation to repair or otherwise where reasonably necessary) to
replace the same
(2) To keep the Service Media designed for common or general use and the
Landlord's Services Equipment in good and substantial repair and in
clean condition and at all times in good and safe working order
(3) To keep the lifts in the Building clean and in good and substantial
repair and condition and at all times in good and safe working order
(4) To provide heating or cooling (as appropriate) to the Premises for
such hours as the Tenant shall require (subject to the Tenant paying
the Outside Normal Business Hours Charge in relation to provision
outside Normal Business Hours)
(5) To ensure that the Common Parts are at all times kept clean tidy and
unobstructed
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(6) Subject to clause 7(3) and clause 7(6) to provide or procure the
provision of electricity to the Premises and each and every part
thereof designed to receive the same to the extent necessary to meet
the reasonable requirements of the Tenant and other lawful occupiers of
the Premises
(7) To comply with the requirements of any statute (already or in the
future to be passed) or any government department local authority other
public or competent authority or court of competent jurisdiction
relating to the Building or any part for which any tenant or occupier
of the Building is not directly or exclusively liable
(8) To ensure that at all times there are such security officers at and
patrolling the Building as is reasonably appropriate for premises of
the same size and nature as the Building
(9) To provide or procure the provision of: --
(a) the Services during Normal Business Hours; and
(b) such of the Services outside Normal Business Hours as in the
Management Company's reasonable discretion are appropriate to
provide a high class office building in the City of London outside
Normal Business Hours; and
(c) such of the Services outside Normal Business Hours as the Tenant
shall previously request (but subject to the Tenant being
responsible for the Outside Normal Business Hours Charge)
(having regard in all cases to and in accordance with the overall
design standards for the Building as a whole and subject to the
limitations contained in Clause 7(6)) in an efficient and economic
manner and in accordance with good estate management provided that the
Management Company shall be entitled to employ such managing agents
professional advisers contractors and other persons as it shall from
time to time reasonably think fit for the purpose of the performance of
the Services
PROVIDED THAT the Management Company shall not be liable for:--
(without prejudice to the provisions of clause 7(3)) any closure of any of
the Common Parts or interruption in the provision of the Services or
stoppage or severance affecting any of the Service Media or any interruption
to the supply of electricity to the Premises or the Common Parts or
temporary closure or diversion of any of the Common Parts or Service Media
by reason of necessary inspection repair maintenance or replacement thereof
or any part thereof or any plant machinery equipment installations or
apparatus used in connection therewith or damage thereto or destruction
thereof by any risk (whether or not an Insured Risk) or by reason of
electrical mechanical or other defect or breakdown or frost or other
inclement conditions or shortage of fuel materials supplies or labour or
whole or partial failure or stoppage of any mains supply due to any
circumstances beyond the control of the Management Company PROVIDED ALWAYS
that the Management Company shall use all reasonable endeavours to minimise
the adverse effects of any such
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circumstances and to remedy any such interruption closure or diversion as
soon as reasonably practicable
7. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED THAT:--
FORFEITURE AND RE-ENTRY
(1) Without prejudice to any other remedies and powers contained in this
lease or otherwise available to the Landlord if
(a) the whole part of the rents shall be unpaid for twenty-one days
after becoming payable (whether or not formally demanded) or
(b) any of the Tenant's covenants in this lease are not performed or
observed in the manner and at the times herein specified
the Landlord may at any time thereafter (and notwithstanding the waiver
of any previous right of re-entry) re-enter the Premises without
prejudice to the Tenant's right to relief against forfeiture whereupon
this lease shall absolutely determine but without prejudice to either
party's right of action against the other in respect of any antecedent
breach of the covenants in this lease
LETTING SCHEME USE AND EASEMENTS
(2) No letting or building scheme exists or shall be created in relation to
the Building and (subject only to those easements expressly granted by
this lease) neither the Tenant nor the Premises shall be entitled to
any easement or quasi-easement whatsoever and nothing herein contained
or implied shall give the Tenant the benefit of or the right to enforce
or to have enforced or to prevent the release or modification of any
right easement covenant condition or stipulation enjoyed or entered
into by any tenant of the Landlord in respect of property not demised
by this lease or prevent or restrict the development or use of the
remainder of the Building or any other land
COMMON PARTS AND SERVICE MEDIA
(3) Subject always to the rights of the local authority the relevant supply
authorities and any other competent authority the Common Parts and the
Service Media are at all times subject to the exclusive control and
management of the Landlord who may from time to time (if it shall be
necessary or reasonable to do so for the benefit of the Building or
otherwise in keeping with the principles of good estate management)
alter divert substitute stop up or remove any of them (leaving
available for use by the Tenant reasonable and sufficient means of
access to and egress from and servicing for the Premises)
SERVICE OF NOTICES
(4) (a) In addition to any other mode of service any notices to be served
under this lease shall be validly served if served in accordance
with section 196 Law of Property Act 1925 as amended by the
Recorded Delivery
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Service Act 1962 or (in the case of any notice to be served on the
Tenant) by sending it to the Tenant at the Premises
(b) If the Tenant or any guarantor comprises more than one person it
shall be sufficient for all purposes if notice is served on one of
them but a notice duly served on the Tenant will not need to be
served on any guarantor
LANDLORD'S LIABILITY
(5) The Landlord shall not be liable for (without prejudice to the
provisions of clause 7(3)) any closure of any of the Common Parts or
stoppage or severance affecting any of the Service Media or any
interruption to the supply of electricity to the Premises or temporary
closure or diversion of any of the Common Parts or Service Media by
reason of necessary inspection repair maintenance or replacement
thereof of any part thereof or any plant machinery equipment
installations or apparatus used in connection therewith or damage
thereto or destruction thereof by any risk (whether or not an Insured
Risk) or by reason of electrical mechannical or other defect or
breakdown or frost or other inclement conditions or shortage of fuel
materials supplies or labour or whole or partial failure or stoppage of
any mains supply due to any circumstances beyond the control of the
Landlord PROVIDED ALWAYS that the Landlord shall use all reasonable
endeavours to minimise the adverse effects of any such circumstances
and to remedy any such interruption closure or diversion as soon as
reasonably practicable
NO WARRANTY AS TO USE
(6) Nothing contained in this lease shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises are authorised
under Planning Law to be used or are otherwise fit for any specific
purpose
RATEABLE VALUE APPEALS
(7) (a) If the Landlord or the Tenant intends to make a proposal to alter
the entry for the Premises in the local non-domestic rating list it
shall notify the other party of its intention and shall incorporate
in the proposal such proper and reasonable representations as may
be made by or on behalf of that party
(b) Not to agree any assessment of the rates liability attributable to
the Premises without the approval of the Landlord (such approval
not to be unreasonably withheld or delayed)
NO WARRANTY AS TO SECURITY
(8) Nothing contained in this lease (and no exercise of any of the
Landlord's powers under this lease) shall constitute or be deemed to
constitute a warranty by the Landlord that the Premises shall be kept
secure or that any security service to the Common Parts shall be
effective
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JURISDICTION
(9) This lease shall be governed by and construed in all respects in
accordance with the law of England and for the benefit of the Landlord
the English courts shall have exclusive jurisdiction in relation to any
disputes arising under or connected with this lease and the Tenant
agrees that any process may be served on it by leaving a copy of the
relevant document at the Premises provided however that the Landlord
shall retain the right at its sole election to sue the Tenant elsewhere
including in the courts of the Tenant's domicile
EXCLUSION OF LANDLORD AND TENANT ACT 1954
(10) Having been authorised to do so by an Order of the Shoreditch County
Court dated 10th October 1996 the parties agree that the security of
tenure provisions in sections 24 to 28 of the Landlord and Tenant Act
1954 (as amended) shall be excluded in relation to this lease
8. OPTIONS TO DETERMINE
(1) The Landlord may determine this lease on not less than 3 months'
written notice if the Tenant has not entered into a binding commitment
to take leases of the 22nd to 26th floors of the Building by 25th
October 1996;
(2) In the event of the Landlord exercising its option pursuant to clause
8(1) above the following provisions shall apply:
(a) the Tenant shall at its own cost reinstate the Premises by expiry
of the Landlord's notice to the Reinstatement Specification;
(b) for the period from 25th October 1996 until expiry of the
Landlord's notice the Tenant shall pay rent to the Landlord at the
rate of pounds sterling 30 (exclusive of VAT) per square foot of
Net Internal Area of the Premises
(3) The Tenant may determine this lease at any time after 24th June 1997 on
not less than one month's prior written notice to the Landlord such
notice expiring at any time after 24th June 1997
(4) If the Landlord or the Tenant duly serves a notice under this clause
the Tenant shall procure that vacant possession of the Premises will be
available on expiry of the relevant notice free of occupation by and of
any estate or interest vested in the Tenant or any third party
9. LANDLORD'S GUARANTOR
(1) The Landlord's Guarantor at the request of the Landlord and in
consideration of the Tenant agreeing to take this lease covenants and
agrees with the Tenant that all of the Landlord's obligations contained
in this lease will be performed and observed in the manner and at the
times herein specified and that if there is default in performing and
observing any of the Landlord's obligations (notwithstanding any time
or indulgence by the Tenant to the Landlord or compromise, neglect or
forebearance on the part of the Tenant in enforcing the
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observance of the Landlord's obligations in this lease) the Landlord's
Guarantor will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Landlord shall
be in default
(2) The Landlord's Guarantor at the request of the Management Company and
in consideration of the Tenant agreeing to pay the Service Charge
covenants and agrees with the Tenant that all of the Management
Company's obligations contained in this lease will be performed and
observed in the manner and at all times herein specified and that if
there is default in performing and observing any of the Management
Company's obligations (notwithstanding any time or indulgence granted
by the Tenant to the Management Company or compromise, neglect or
forbearance on the part of the Tenant in enforcing the observance of
the Management Company's obligations in this lease) the Landlord's
Guarantor will observe and perform (or procure the performance and
observance of) the obligations in respect of which the Management
Company shall be in default
10. STAMP DUTY CERTIFICATE
It is hereby certified that there is no agreement for lease to which this
lease gives effect
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered on the date first above written
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SCHEDULE 1
(THE PREMISES)
ALL THOSE office premises situate on the part 12th floor and being part of the
Building which are shown on the Plan and thereon verged red for identification
purposes only ALL which premises include:-
(a) the plaster linings and other interior coverings and facing materials of
all walls and of any columns within or bounding the said premises
(b) the screed the raised floor the fixed and unfixed floor coverings and all
materials lying between the upper surface of the structural floor slab and
the raised floor surface
(c) the ceilings including all materials forming part of them lying and the
void space (if any) above such ceilings but below the lower surface of the
structural ceiling slab
(d) all non-load bearing walls lying within the said premises
(e) all plant and other apparatus and conducting media which are designed to
serve the said premises exclusively including any which the Landlord may
permit under clause 4(14) and whose operation does not have any impact on
the central building systems
(f) the following items supplied and fitted by the Landlord:-
(i) venetian horizontal perforated blinds on the inside of the external
windows of the Premises
(ii) electricity check meter
(iii) high quality carpet tiles from Milliken
but exclude:-
(i) all Service Media and Landlord's Services Equipment and
(ii) the load bearing structure of the Building including the load bearing
structure of the roofs foundations external and internal walls and
columns and the structural slabs of the ceilings and floors and
(iii) the external surfaces of the Building and the whole of the window glazing
and window frames and other fenestration units constructed in the
external walls and in the other boundaries of the said premises
SCHEDULE 2
(EASEMENTS AND RIGHTS GRANTED)
1. The right in connection with the Permitted Use subject to the provisions of
clause 7(3) and subject to compliance with all reasonable rules and
regulations in connection with the exercise of such right as may be
prescribed from time to time by the Landlord:-
(1) for the Tenant its servants and duly authorised agents invitees and
visitors for the purpose only of ingress and egress to and from the
Premises to use the
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Common Parts and to use all means of escape but only when needed in an
emergency and
(2) to use the Service Media
(3) to use such lavatories in the Building as the Landlord shall from time
to time designate
2. The right of support shelter and protection for the Premises from any
adjoining or neighbouring parts of the Building as enjoyed by the Premises
at the date of this lease
3. The right to have displayed the name of the Tenant on the signboard in the
entrance lobby of the Building provided by the Landlord pursuant to
paragraph 14 of Part I of schedule 6 and the right to install a sign
displaying the name of the Tenant at the entrance to the Premises the
precise location size and style of such sign to be subject to the approval
of the Landlord (such approval not to be unreasonably withheld)
SCHEDULE 3
(EXCEPTIONS AND RESERVATIONS)
1. The right to build alter or extend (whether vertically or laterally) any
building notwithstanding that the access of light and air or either of them
to the Premises and the lights windows and openings thereof may be affected
2. The right at reasonable times on reasonable prior notice (except in an
emergency where no notice need be given) to enter upon the Premises as often
as may be necessary for the purpose of complying with the covenants of the
Head Lease for all the purposes for which the Tenant covenants in this lease
to permit entry and for all purposes in connection with the carrying out of
the Services and for the purposes of complying with any statutory
requirements
3. The right to use and to construct inspect maintain repair divert and
otherwise alter stop up and relay and to make connections to any Service
Media in on or under the Premises at any time during the Term for the
benefit of any other part of the Building or any adjacent or neighbouring
land
4. The right to erect and maintain scaffolding on or against any part of the
Building so long as reasonable and sufficient means of access to and
egress from and servicing the Premises are maintained
5. All rights of light air and other easements and rights (but without
prejudice to those expressly granted by this lease) enjoyed by the Premises
from or over any other part or parts of the Building or any adjacent or
neighbouring land
6. The right of support protection and shelter for the benefit of other parts
of the Building from the Premises
7. The right for one or more members of any security staff employed by the
Landlord or its agents at any time or times on reasonable prior notice (save
in the case of emergency where no notice is required) to enter the Premises
if it shall be considered necessary or desirable so to do in connecting with
the security of the Building
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8. The right for the tenant or occupier of any other part of the Building
authorised by the Landlord having first given reasonable written notice to
the Tenant at reasonable times in the daytime and at any time and without
notice in case of emergency to enter the Premises for the purpose of
repairing that other part of the Building making good any damage so caused
to the reasonable satisfaction of the Tenant
9. The rights reserved to the Superior Landlord (by covenant or by express
reservation) in the Head Lease
PROVIDED ALWAYS THAT if the Landlord exercises any of the rights by carrying
out work on the Premises it shall cause as little inconvenience as possible as
soon as reasonably practicable make good any damaged caused to them unless the
right has been exercised because of some breach by the Tenant or by any person
claiming through it
SCHEDULE 4
(THE SERVICE CHARGE)
1. In this Schedule:
"ACCOUNTING PERIOD" the period from and including 1st January to and
including 31st December in any year or such other period of twelve months as
the Management Company shall reasonably determine from time to time
"EXPERT" means a chartered surveyor experienced in the administration and
apportionment of service charges for buildings similar to the Building as
agreed upon by the Management Company and the Tenant or on failure to agree
appointed at the request of either party by the President Provided that
where an Expert has previously been agreed or appointed in relation to any
matter in connection with the Service Cost or the allocation of the Service
Cost between the tenants of the Building (whether or not pursuant to the
terms of this Underlease) the Management Company or the Tenant shall be
entitled if reasonable to require that the same Expert be appointed
"INTERIM SUM" means a yearly sum assessed by the Management Company acting
reasonably on account of the Service Charge for each Accounting Period being
a fair and reasonable estimate of the Service Charge payable by the Tenant
in respect of that Accounting Period
"RESERVE" means the total of the amounts received by the Management company
in respect of the matters referred to in paragraph 2(B) of this schedule
"SERVICE CHARGE" means the proportion of the Service Cost attributable to
the Premises determined in accordance with the provisions of this schedule
payable from this date hereof
"SERVICE CHARGE CERTIFICATE" means a certificate showing the Service Cost
and Service Charge for each Accounting Period served pursuant to paragraph 5
of this schedule and prepared by the Management Company's surveyor or
auditor
"SERVICE COSTS" means the total sum calculated in accordance with paragraph
2 of this schedule
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2. The Service Cost shall be the reasonable cost properly incurred by the
Management Company in any Accounting Period in carrying out or procuring the
carrying out of the Services and providing each item of the Services
including (without prejudice to the generality of the foregoing) the costs
and expenses set out in Part II of schedule 5 (insofar as the same are
reasonable and properly incurred) and any other reasonable costs and
expenses properly incurred by the Management Company or with the Management
Company's authority in connection with the Services but excluding for the
avoidance of doubt
(i) any costs attributable to the provision of any of the Services
outside Normal Business Hours at the specific request of the Tenant
(which shall be charged direct to the Tenant) or of any other
tenant or tenants of the Building and
(ii) any Value Added Tax which the Management Company may incur of and
incidental to the provision of the Services and which is
recoverable as input tax by the Management Company
(iii) any cost or expense incurred in making good any damage caused by
any of the Insured Risks
3.(A) The Service Charge payable by the Tenant for any Accounting Period shall
be a fair proportion of the Service Cost attributable to the Premises
from time to time as properly determined by the Management Company (and
so in proportion for any Accounting Period not falling wholly within the
Term the Service Cost in any such case being deemed to accrue on a day to
day basis for the purpose of apportionment)
(B) If at any time and from time to time during the Term the method or basis
of calculating or ascertaining the cost of any item of the Services shall
alter or the basis of calculating or ascertaining the Service Cost in
relation to any item of the Services shall change and as a result it is
reasonable that there be an alteration or variation of the calculation of
the Service Charge in order to achieve a fairer and better apportionment
of the Service Cost amongst the tenants of the Building then and in every
such case the Management Company shall vary and amend the Service Charge
and make appropriate adjustments thereto provided always that in the
event of any dispute between the Management Company and the Tenant and
the other tenants of the Building or any of them the same shall be
referred to the Expert for determination (the Expert to act as an expert
and not as an arbitrator) whose decision shall save in the case of
manifest error be binding on the parties (including his decisions as to
the responsibility for his costs)
(C) The fair proportion to be determined by the Management Company in
paragraph 3(A) above shall be determined on the basis that all
accommodation within the Building let or occupied or designed contracted
or adapted for letting or occupation (other than management accomodation)
is fully let on terms which include service charge provisions consistent
with the service charge provisions contained in this lease (save where
otherwise specified herein) and such proportion shall not be increase or
altered by reason of the fact that at any time any part of such
accommodation may be vacant or that any
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tenant or other occupier of any other part of the Building may default
in payment of its due proportion of the Service Cost
4.(A) The Tenant shall pay to the Management Company the Interim Sum without
deduction by equal quarterly instalments in advance on the usual quarter
days unless the Management Company shall reasonably anticipate that
amounts to be incurred during the year immediately next following are
anticipated as being incurred in accordance with a programme of non equal
expenditure in which event the Management Company shall serve notice to
such effect upon the Tenant and shall thereupon be entitled to require
amounts of the Interim Sum to be paid by advance quarterly instalments of
unequal amounts reasonably stipulated by the Management Company
(B) The Management Company shall be entitled to require as part of the
Interim Sum payments in advance on account of the cost of the consumption
of and supply charges in respect of electricity consumed within the
Premises (save for any amounts which are invoiced directly by London
Electricity plc to the Tenant) such sums not to exceed a fair and proper
estimate of amounts reasonably anticipated by the Management Company as
falling due within the next quarter
(C) If the Tenant consistently requests the provision of any of the Services
outside Normal Business Hours the Management Company shall be entitled in
addition to require the Tenant to pay along with payments of the Interim
Sum a fair and proper estimate of amounts likely to be payable by the
Tenant in the next quarter on account of such Services in accordance with
the terms of this lease
(D) The Interim Sum for the Accounting Period ending 31st December 1996 shall
be pounds sterling 28,963
(E) Either before or as soon as practicable after the commencement of every
Accounting Period the Management Company shall serve or cause to be
served on the Tenant written notice of the Interim Sum for the relevant
Accounting Period Provided that without prejudice to the provisions of
paragraphs 6 and 7 of this schedule if the written notice aforesaid shall
be served after the first occurring quarter day in the relevant
Accounting Period the Tenant shall until service of the written notice
aforesaid make payments on account of the Interim Sum for the relevant
Accounting Period on the days and in the manner provided by sub-paragraph
(A) of this paragraph of this schedule at an annual rate equal to the
Interim Sum for the immediately preceding Accounting Period
5.(A) As soon as practicable after the expiry of every Accounting Period (and
in any event within 4 months after such expiry) the Management Company
shall serve or cause to be served a Service Charge Certificate on the
Tenant for the relevant Accounting Period
(B) A Service Charge Certificate shall contain a summary of the Service Cost
in respect of the Accounting Period to which it relates and the relevant
calculations showing the Service Charge
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(C) The Tenant may request further details of the breakdown of the
expenditure under any particular item or items shown in a Service Charge
Certificate by giving notice thereof in writing to the Management Company
within three months of the date of service on the Tenant of the relevant
Service Charge Certificate and upon receipt of such a notice the
Management Company shall furnish to the Tenant all such relevant details
in its possession or control or which can reasonably be obtained by it as
relate to the expenditure under the item or items in question at the cost
of the Tenant PROVIDED ALWAYS that notwithstanding the giving of any such
notice the Tenant shall nevertheless pay all Interim Sums and Service
Charges as and when they fall due or as may be underpaid from time to
time (but without prejudice to any challenge claim or dispute that the
Tenant may have made or may make in the future in respect of its Service
Charge liability or otherwise)
6. Within fourteen days after the service on the Tenant of a Service Charge
Certificate showing that the Service Charge for any Accounting Period
exceeds the Interim Sum for that Accounting Period the Tenant shall
(without prejudice to any challenge claim or dispute as aforesaid) pay to
the Management Company or as it shall direct a sum equal to the amount by
which the Service Charge exceeds the Interim Sum provided that and the
Tenant hereby acknowledges that if there shall be any such excess in
respect of the Accounting Period the amount of such excess shall be a
debt due from the Tenant to the Management Company and in the event that
such excess is not received in cleared funds by the Management Company
within 14 days of the due date for payment it shall attract interest at
the Interest Rate calculated for the period commencing on the due dates
for payment and ending on the date the sum is subsequently received by
the Management Company notwithstanding that the Term may have expired or
been determined before the service by or on behalf of the Management
Company of the relevant Service Charge Certificate
7. If in any Accounting Period the Service Charge is less than the Interim
Sum for that Accounting Period a sum equal to the amount which the
Interim Sum exceeds the Service Charge shall be accumulated by the
Management Company and shall be applied in or towards the Service Charge
for the next following Accounting Period or Accounting Periods or at or
after the end of the Term repaid to the Tenant within 14 days after
preparation of the Service Charge Certificate and in the event that the
excess is not received by the Tenant on the due date for payment it shall
attract interest at the Interest Rate for the period commencing on this
due date for payment and ending on the date that the sum is due is
received in cleared funds by the Tenant.
8. Unless challenged by the Tenant pursuant to the provisions of paragraph 9
of this schedule every notice certificate calculation determination or
assessment made by or on behalf of the Management Company referred to in
this schedule shall (save where a manifest error appears) be conclusive and
binding upon the parties hereto
9. The Tenant (acting reasonably) may at any time within six months after the
submission of a Service Charge Certificate challenge it on any reasonable
ground (including without limitation on the ground that the Service Charge
therein stated exceeds the Service Charge which should have been payable
had the provisions of this lease been properly adhered to) Provided that
the Tenant gives notice with full particulars of its ground of alleged
challenge and in any such case:
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(A) any sum due to or payable by the Management Company pursuant to
paragraphs 6 and 7 above shall still be paid or allowed pending
resolution of the Tenant's challenge as if the Service Charge Certificate
were correct
(B) the Management Company and the Tenant shall endeavor to resolve the
relevant issue but if they cannot do so the issue in dispute shall be
referred to the Expert (acting as an expert and not an arbitrator) whose
decision shall save in the case of manifest error be binding on the
parties (including his decision as to the responsibility for his costs)
(C) such adjustments to the Service Charge Certificate as may be required to
be made in consequence of the resolution of the dispute shall be paid as
soon as practicable after such resolution and any sum due to or payable
by the Management Company shall then be paid or allowed (as the case may
be) immediately together with interest at the Interest Rate on such sum
during the period which it has been underpaid or overpaid
10. All sums obtained from the Tenant and any other tenants or occupiers of the
Building towards the Service Cost and sums collected in respect of the
Reserve shall each be placed in separate interest bearing designated
deposit accounts to be applied only towards the cost of providing the
Services and all interest accrued on such deposit account shall be credited
(net of tax) to the account
11. The Management Company will account to the Landlord as soon as practicable
following expiry of each Accounting Period for that part of the Service
Charge which relates to costs directly incurred by the Landlord and not by
the Management Company including (but not limited to) the costs referred to
in paragraphs 5 7 8 9 and 12 of Part II of schedule 5
12. If in the Management Company's reasonable discretion any of the Services
have to be provided to a greater extent (or the cost of provision of such
Services is greater) than would normally apply in the context of the
general management of the Building in accordance with this lease as a
result either: -
(a) of a specific request by the Tenant (with or without other tenants or
occupiers of accommodation in the Building); or
(b) where such provision is required in the interests of good estate
management as a result of any acts or omissions of the Tenant in
relation to its use and occupation of the Premises
then the Management Company shall be entitled to require the Tenant to meet
the cost of such provision (or a fair proportion thereof determined by the
Management Company) within 10 working days following a demand by the
Management Company
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SCHEDULE 5
(SERVICES)
PART I
1. Inspecting maintaining repairing amending altering and (where
consistent with an obligation to repair) rebuilding and renewing and
where appropriate treating washing down painting and decorating all
load bearing and other structural parts of the Building and the
relevant parts of it described in paragraphs (ii) and (iii) of schedule
1
2. Inspecting servicing maintaining operating and repairing and (where
consistent with an obligation to repair) renewing amending overhauling
and replacing the Landlord's Services Equipment and all other apparatus
plant machinery and equipment within the Building (if any) from time to
time excluding any "stand alone" systems installed by the Tenant or any
other tenant or occupier of the Building
3. Inspecting servicing maintaining operating repairing cleansing emptying
amending altering and renewing overhauling and replacing all Service
Media
4. Keeping the Common Parts and the car park within the Building properly
cleansed decorated treated maintained and lit to such standard as the
Management Company may from time to time consider adequate
5. Providing such mechanical ventilation heating and (if deemed desirable
by the Management Company) cooling for such parts of the Building and
for such hours and times of the year (subject to clause 6) as the
Management Company shall in its discretion determine
6. Providing and maintaining at the Management Company's discretion any
furniture architectural or ornamental features or murals and any
horticultural displays plants shrubs trees or garden area in the Common
Parts and maintaining the same
7. Supplying whether by purchase or hire and maintaining (and where
consistent with an obligation to repair) renewing replacing repairing
servicing and keeping in good and serviceable order and condition all
fixtures and receptacles appliances materials equipment plant and other
things which the Management Company may deem desirable or necessary for
the maintenance appearance upkeep or cleanliness of the Building or any
part of it or otherwise in connection with the provision of the
Services
8. Cleaning as frequently as the Management Company shall in its
reasonable discretion consider adequate the exterior and interior of
all window glazing and window frames and other fenestration units in
the Common Parts and the outside of the window glazing referred to in
paragraph (iii) of schedule 1 and the maintenance cleansing repair
inspection and (where reasonably necessary) renewal or replacement of
all window cleaning) cradles carriageways and runways
9. Providing a security service to the Common Parts and the car park
within the Building including where reasonably appropriate in the
Management Company's judgment closed circuit television and/or other
plant and equipment for the purpose of surveillance and supervision of
users of the Building
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10. Disposing of refuse from the Building (including collecting and
compacting or otherwise treating or packaging as the Management Company
reasonably thinks fit such refuse and if necessary pest control) and
(where consistent with an obligation to repair) the provision repair
maintenance and renewal of any plant and equipment in connection
therewith
11. Maintaining during Normal Business Hours an adequate supply of hot and
24 hours a day cold water and supplying washing and toilet requisites
in the lavatory accommodation in the Building
12. Such rodent or other pest control in the Building as the Management
Company shall reasonably consider necessary or desirable
13. Providing one or more receptionists in the ground floor entrance hall
of the Building
14. Providing and maintaining a signboard in the entrance lobby of the
building for the display of tenants' names
15. Controlling so far as practicable traffic flow within the car park in
the Building and traffic and parking therein and for that purpose to
provide such working and mechanical systems as the Management Company
considers appropriate including wheel clamping immobilising and removal
of vehicles
16. Providing and maintaining a post room facility for the reception of
mail to the Building
17. Complying with the obligations on the part of the tenant contained in
the Head Lease save for the payment of rent
18. Complying with the obligations set out in clause 6
19. Any other services relating to the Building or any part of it provided
by the Management Company from time to time which shall be:-
(1) reasonably capable of being enjoyed by the occupier of the Premises
or
(2) reasonably calculated to be for the benefit of the Tenant and other
tenants of the Building or
(3) appropriate for the maintenance upkeep or cleanliness of the
Building or
(4) otherwise in keeping with the principles of good estate management
PROVIDED ALWAYS that
(i) Where in this schedule there are references to matters or things
which are then stated to include certain particular matters or
things which are not also stated to be without prejudice to the
generality of the wording preceding it nevertheless the reference
to the particular matters or things shall be deemed to be and in
each case shall be without prejudice to the generality of the
wording preceding it
(ii) The Management Company shall when reasonable have the right to
cease or to procure the cessation of the provision of or add to or
procure the addition to
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any item of Services matter or thing specified in this schedule if
the Management Company shall having regard to the principles of
good estate management reasonably deem it desirable or expedient
so to do but before so doing the Management Company shall notify
all the tenants in the Building
(iv) The Management Company or the managing agents may temporarily
withdraw any item of Services matter or thing specified in this
schedule if in their reasonable opinion such withdrawal is in the
interest of good estate management or if such withdrawal is due to
circumstances beyond the control of the Management Company
PART II
1. All fees and disbursements of any individual or firm or company
employed or retained by or on behalf of the Management Company or its
agents (including without limitation managing agents fees) for or in
connection with:-
(1) any surveying or accounting functions for the Building and
(2) the performance of the Services or any of them and any other duties
in or about the Building or any part of it relating to the general
management administration security maintenance protection and
cleanliness of the Building
2. The reasonable fees of the Management Company for any of the Services
or for the functions and duties referred to in paragraph 1 of this Part
of this schedule which shall be undertaken by the Management Company
and not by a third party
3. The cost (in addition to any fees referred to in paragraph 2 and where
the context permits paragraph 1 of this Part of this schedule) of
employing (whether by the Management Company or any managing agents or
any other individual or firm or company) such staff as the Management
Company may in its reasonable discretion consider appropriate for the
performance of the Services and the functions and duties referred to in
paragraph 1 of this Part of this schedule and all other incidental
expenditure in relation to such employment including without prejudice
to the generality of the foregoing:-
(1) salaries wages pensions and pension contributions benefits in kind
and other emoluments and National Insurance and other statutory
contributions or levies
(2) the provision of uniforms and working clothing
(3) the provision of vehicles tools appliances cleaning and other
material fixtures fittings and other equipment for the proper
performance of their duties and a store for housing the same and
4. The cost of entering into any contracts for the carrying out of all or
any of the Services
5. All rates taxes assessments duties charges impositions and outgoings
which are now or during the Term shall be charged assessed or imposed
on:-
(1) the whole of the Common Parts or any part of them
32
<PAGE>
(2) any residential accommodation provided for caretakers and other
staff employed in connection with the Building and any other
premises provided as referred to in paragraph 3(4) of this Part of
this schedule
excluding any tax (other than VAT) payable by the Landlord as a direct
result of any actual or implied dealing with the reversion of any Lease
or of the Landlord's receipt of income
6. The cost of the supply of water electricity gas oil and other fuel for
the provision of the Services and the cost of any electricity
generating transforming monitoring metering and distribution plant
machinery and equipment in or servicing the Building
7. The cost which the Landlord may be called upon pursuant to an Enactment
to pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing any ways roads pavements or
structures Service Media or anything which may belong to or be used for
the Building or any part of it exclusively or in common with other
neighbouring or adjoining premises
8. The cost of taking all steps deemed desirable or expedient by the
Landlord and/or the Management Company for complying with or making
representations against or otherwise contesting the incidence of the
provisions of any Enactment relating to or alleged to relate to the
Building or any part or it for which any tenant is not directly and
exclusively liable
9. The cost to the Landlord and/or the Management Company of abating any
nuisance in respect of the Building or any part of it insofar as the
same is not the liability of any tenant
10. Any VAT (or any tax of a similar nature which may be substituted for or
levied in addition to it) incurred by the Management Company on any
other amount comprised in the Service Cost save to the extent that the
Management Company obtains credit for such VAT incurred by the
Management Company pursuant to sections 24 25 and 26 Value Added Tax
Act 1994 or any regulations made thereunder
11. A reasonable notional rent for any management accommodation provided
within the Building to facilitate the reasonable provision of the
Services
12. All other costs properly incurred in connection with the provision of
the Services
SCHEDULE 6
(MATTERS TO WHICH THE DEMISE IS SUBJECT)
1. The entries on the registers of Title Number NGL272172 as at the date
hereof
2. Agreement dated 24th November 1995 between The Prudential Assurance
Company Limited (1) 99 Bishopsgate Limited (2) The Scottish Amicable
Life Assurance Society (3)
33
<PAGE>
[SEAL]
(THE COMMON SEAL of
(99 BISHOPSGATE LIMITED was
hereunto (affixed in the
presence of:-)
Director /s/
Secretary /s/
[SEAL]
(THE COMMON SEAL of
(99 BISHOPSGATE MANAGEMENT
(LIMITED was hereunto affixed in
the (presence of:-
Director /s/
Secretary /s/
[SEAL]
(THE COMMON SEAL of HAMMERSON
(U.K. PROPERTIES PLC was hereunto
affixed (in the presence of:-
Director /s/
Secretary /s/
34
<PAGE>
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Acoustic sealant added
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B Detail 2 renamed to Detail 3; Office 3/9/96 MB FSS
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partition Detail 2 added
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GMW Partnership, Chartered Architects & Interior Designers
P.O. Box 1613, 239 Kensington High Street, London W8 6SL
Telephone 0171 937 8020 Fax: 0171 937 5815
GWM
Gollins Melvin Ward
- ----------------------------------------------------------------------------
Project
99 Bishopsgate EC2
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Drawing Title
Tenancy floor - Level 12
Partition details
- ----------------------------------------------------------------------------
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North Scale Drawn by
1:2 MB
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Date Plot Date Checked by
22/08/96 03/09/96 PSS
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Project no. Drawing no. Revision
2512A L12/AA(P)009 B
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<PAGE>
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GMW Partnership, Chartered Architects & Interior Designers
P.O. Box 1613, 239 Kensington High Street, London W8 6SL
Telephone 0171 937 8020 Fax: 0171 937 5815
GWM
Gollins Melvin Ward
also at
Chase Mall Winchester Rd Bishops Waltham Hampshire
Telephone 0469 8955223
- ----------------------------------------------------------------------------
Project
99 Bishopsgate EC2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Drawing Title
Tenancy floor - Level 12
Door elevations and details
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North Scale Drawn by
1:20, 1/2 Full size MB
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Date Plot Date Checked by
21/08/96 17/09/96 PSS
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Project no. Drawing no. Revision
2512A L12/AA(D)008 B
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<PAGE>
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- ----------------------------------------------------------------------------
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GMW Partnership, Chartered Architects & Interior Designers
P.O. Box 1613, 239 Kensington High Street, London W8 6SL
Telephone 0171 937 8020 Fax: 0171 937 5815
GWM
Gollins Melvin Ward
also at
Chase Mall Winchester Rd Bishops Waltham Hampshire
Telephone 0469 8955223
- ----------------------------------------------------------------------------
Project
99 Bishopsgate EC2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Drawing Title
Tenancy floor
Reflected ceiling plan
Level 12
- ----------------------------------------------------------------------------
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North Scale Drawn by
1:100 MB
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Date Plot Date Checked by
15/08/96 03/09/96 PSS
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Project no. Drawing no. Revision
2512A L12/AL(C)005 B
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<PAGE>
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
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GMW Partnership, Chartered Architects & Interior Designers
P.O. Box 1613, 239 Kensington High Street, London W8 6SL
Telephone 0171 937 8020 Fax: 0171 937 5815
GWM
Gollins Melvin Ward
also at
Chase Mall Winchester Rd Bishops Waltham Hampshire
Telephone 0469 8955223
- ----------------------------------------------------------------------------
Project
99 Bishopsgate EC2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Drawing Title
Tenancy floor
Setting-Out partition plan
Level 12
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
North Scale Drawn by
1:100 MB
----------------------------------------------------------------
Date Plot Date Checked by
16/08/96 10/09/96 PSS
- ----------------------------------------------------------------------------
Project no. Drawing no. Revision
2512A L12/AL(P)007 B
- ----------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.89
DONALDSON, LUFKIN & JENRETTE, INC.
1996 STOCK OPTION PLAN
INCENTIVE AND NON-QUALIFIED
STOCK OPTION AGREEMENT
This Agreement dated the 16th day of May, 1996:
WITNESSETH:
1. Pursuant to the provisions of the Donaldson, Lufkin & Jenrette, Inc.
1996 Stock Option Plan (the "Plan") Donaldson, Lufkin & Jenrette, Inc. (the
"Company") on the date set forth above has granted and hereby evidences the
grant to Joe L. Roby (the "Optionee"), subject to the terms and conditions set
forth herein and in the Plan, the Option (the "Option") to purchase from
the Company an aggregate of 250,000 shares of Common Stock, $0.10 par value, of
the Company ("Shares") at the purchase price of $32.50 per share, the Option to
be exercisable as hereinafter provided. The Option attributable to the grant by
the Company to purchase 12,304 Shares is intended to be an Incentive Stock
Option ("ISO") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended. The Option attributable to the grant by the Company to
purchase 237,696 Shares is intended to qualify and is identified hereunder as
a Non-Qualified Stock Option ("NQSO"). Upon exercise at the same time of both
the ISO and the NQSO, in whole or in part, the Company shall cause separate
certificates from Shares to be issued to the Optionee in respect of the ISO
and the NQSO. A copy of the Plan is attached hereto and made a part hereof with
the same effect as if set forth herein. All capitalized terms used herein which
are not otherwise defined herein shall have the meaning specified in the Plan.
2. (a) Subject to the terms and conditions hereof and of the Plan
(including, without limitation, the provisions of the Plan that limit the
Optionee's rights in respect of the Option in the event of his termination of
employment), the Option shall be exercisable as follows:
Exercise Date ISO SHARES NQSO SHARES
- ------------- ---------- -----------
May 16, 1997 3,076 59,424
May 16, 1998 3,076 59,424
May 16, 1999 3,076 59,424
May 16, 2000 3,076 59,424
Any exercise of the Option shall be made by giving the Company written
notice of exercise specifying the number of Shares to be purchased and
specifying whether, and to what extent, the ISO or NQSO is being exercised. The
notice of exercise shall be accompanied by tender to the Company of the full
purchase price of said Shares and the related amount of
<PAGE>
income taxes required to be withheld by the Company, if any. Payment of the
purchase price of the Shares shall be made in cash, check, Shares owned by the
Optionee for at least six months or a combination of the foregoing provided,
however, that the Committee may, in its sole discretion, prohibit or limit the
use of Shares as part or full payment of the purchase price.
(b) In addition to the provisions of Section 6(c) of the Plan dealing with
termination of employment, the Option is subject to the following rules:
(1) If the Optionee's employment is terminated by the Company without
Cause or by the Optionee with the consent of the Committee, the
Option shall be vested on the last day of the month following the
month in which such termination of employment occurs and shall be
exercisable on the dates specified in paragraph 2(a) above.
(2) If the Option is exercisable following the Optionee's termination of
employment, it shall remain exercisable until the date specified in
paragraph 3(a) below subject, however, to the provision of clause
(iii) of the third sentence of Section 6(c) of the Plan.
3. Without limiting the generality of paragraph 1 hereof, it is
understood and agreed that the Option is subject to the following conditions:
(a) the Option shall not in any event be exercisable after the close
of business on May 15, 2006;
(b) the Option shall not be transferred except by will or the laws of
descent and distribution and, during the lifetime of the Optionee, shall
be exercised only by the Optionee or by the Optionee's guardian or legal
representative unless the Committee determines that permiting such an
exercise by a guardian or legal representative will violate any applicable
federal or state law; and
(c) neither the Optionee nor any legal representative, legatee, or
distributee of the Optionee shall be deemed to be a holder of or possess
any shareholder rights with respect to any Shares subject to the Option
prior to the issuance of such Shares to the Optionee upon exercise of the
Option.
4. Neither the execution and delivery hereof nor the granting of the
Option shall constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Company or any of its subsidiaries to
employ or continue the employment of the Optionee for any period.
5. Transfer from the Company to an Affiliate, from an Affiliate to the
Company, or from one Affiliate to another shall not be considered a termination
of employment. Nor shall it be considered a termination of employment if the
Optionee is placed on a military or sick leave or such other leave of absence
which is considered as continuing intact the employment relationship; in
such a case, the employment relationship shall be continued until
2
<PAGE>
the later of the date when the leave equals ninety days or the date when an
Optionee's right to reemployment shall no longer be guaranteed either by law
or by contract.
6. The Optionee may elect at such time and in such manner as may be
prescribed by the Committee to defer distribution of Shares pursuant to the
exercise of the Option.
7. Any notice given hereunder to the Company shall be addressed to
Donaldson, Lufkin & Jenrette, Inc., attention Corporate Secretary, at its
principal executive offices, and any notice given hereunder to the Optionee
shall be addressed to him at his address as shown on the records of the Company.
8. The Optionee agrees to be bound by the terms and conditions hereof and
of the Plan.
9. This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the internal laws of the State of
New York.
10. This Agreement may be signed in counterparts, each of which shall be
an original, with the same effect as if the signature thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have executed this Agreement in duplicate as of the day and year first
above written.
DONALDSON, LUFKIN & JENRETTE, INC.
By /s/
-----------------------------
Secretary
/s/
-----------------------------
Optionee
<PAGE>
EXHIBIT 11.1
DONALDSON, LUFKIN & JENRETTE, INC.
SCHEDULE OF COMPUTATION OF WEIGHTED AVERAGE NUMBER OF
COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING
AND NET EARNINGS AND PRO FORMA NET EARNINGS PER SHARE FOR THE YEARS ENDED
DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C>
Weighted Average Common Shares:
Average Common Shares Outstanding 53,300 50,570
Average Restricted Stock Units Outstanding 5,152 894
Average Common Shares Issuable Under
Employee Benefit Plans 1,466 193
Pro forma weighted average common shares
and common share equivalents used in
calculating earnings per share - - 51,475
-------- ------- -------
Weighted Average Common Shares Outstanding 59,918 51,657
======== =======
Pro forma Weighted Average Common Shares
Outstanding 51,475
=======
Earnings:
Net Income $291,300 $179,100 $123,000
Less: Preferred Stock Dividend Requirement 18,653 19,868 20,970
-------- -------- --------
Earnings Applicable to Common Shares $272,647 $159,232 $102,030
======== ======== ========
Earnings Per Common Share $ 4.55 $ 3.08
======== ========
Pro forma Earnings Per Common Share $ 1.98
=========
</TABLE>
79
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC.
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
For the Years Ended
--------------------------------
1994 1995 1996
---------- ---------- ---------
Earnings:
Income before provision for
income taxes $ 205,000 $ 298,500 $ 473,800
Add: Fixed Charges
Interest(gross) 2,116,655 2,699,769 2,865,800
Interest factor in rents 18,565 22,064 25,515
---------- ---------- ---------
Total fixed charges 2,135,220 2,721,833 2,891,315
Add: Preferred dividends 20,970 19,868 18,653
Combined fixed charges and preferred
dividends 2,156,190 2,741,701 2,909,968
Earnings before fixed charges, preferred
dividends and provision for income taxes $2,340,220 $3,020,333 $3,365,115
========== ========== ==========
Ratio of earnings to fixed charges
and preferred dividends 1.09 1.10 1.16
========== ========== ==========
<PAGE>
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1992 1993 1994 1995 1996
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Earnings:
Income before provision for
income taxes $ 245,000 $ 302,000 $ 205,000 $ 298,500 $ 473,800
Add: Fixed Charges
Interest expense (gross) 1,130,709 1,465,303 2,116,655 2,699,769 2,865,800
Interest factor in rents 13,899 15,432 18,565 22,064 25,515
---------- ---------- ----------- ---------- -----------
Total fixed charges 1,144,608 1,480,735 2,135,220 2,721,833 2,891,315
Earnings before fixed charges,
and provision for income taxes $1,389,608 $1,782,735 $2,340,220 $3,020,333 $3,365,115
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges 1.21 1.20 1.10 1.11 1.16
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Donaldson, Lufkin & Jenrette, Inc.
We consent to incorporation by reference in the registration statements
(No. 33-80771 dated December 22, 1995 and No. 333-07657 dated July 3, 1996)
on Form S-3 and in the registration statement (No. 333-20655 dated January 29,
1997) on Form S-8 of Donaldson, Lufkin & Jenrette, Inc. of our report dated
February 3, 1997 relating to the consolidated statements of financial condition
of Donaldson, Lufkin & Jenrette, Inc. and Subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related schedule, which report appears
in the December 31, 1996 annual report on Form 10-K of Donaldson, Lufkin &
Jenrette, Inc.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
New York, New York
March 27, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<LEGEND>
EXHIBIT 27
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such consolidated financial statements.
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Financial Data Schedule
(In thousands, except per share data)
</LEGEND>
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 995,237
<RECEIVABLES> 7,170,424
<SECURITIES-RESALE> 20,598,738
<SECURITIES-BORROWED> 9,355,483
<INSTRUMENTS-OWNED> 15,932,461
<PP&E> 282,513
<TOTAL-ASSETS> 55,503,672
<SHORT-TERM> 1,162,896
<PAYABLES> 7,243,241
<REPOS-SOLD> 29,378,291
<SECURITIES-LOANED> 2,724,773
<INSTRUMENTS-SOLD> 9,441,670
<LONG-TERM> 1,541,640
200,000
200,000
<COMMON> 5,330
<OTHER-SE> 1,441,909
<TOTAL-LIABILITY-AND-EQUITY> 55,503,672
<TRADING-REVENUE> 435,382
<INTEREST-DIVIDENDS> 1,132,301
<COMMISSIONS> 573,335
<INVESTMENT-BANKING-REVENUES> 680,582
<FEE-REVENUE> 35,109
<INTEREST-EXPENSE> 733,207
<COMPENSATION> 1,538,754
<INCOME-PRETAX> 473,800
<INCOME-PRE-EXTRAORDINARY> 473,800
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291,300
<EPS-PRIMARY> 4.55
<EPS-DILUTED> 4.55
</TABLE>
