EXHIBIT 10.2
INDUSTRIAL/COMMERCIAL LEASE
PAULS PROPERTIES CORPORATION
(Landlord)
AND
CERTICOM CORP.
(Tenant)
Building: 1980 Matheson Blvd. East, Mississauga
Rentable Area: 126,962 Square Feet
Term: Ten (10) years
MILLER THOMSON LLP
Barristers and Solicitors
Suite 2500, 20 Queen Street West
Toronto, Ontario
M5H 3S1
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TABLE OF CONTENTS
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ARTICLE I - BASIC LEASE TERMS
Section 1.01 Variable Defined Terms
Section 1.02 Standard Definitions
ARTICLE II - LEASED PREMISES - TERM - RENT
Section 2.01 Leased Premises and Term
Section 2.02 Use of Additional Areas - Intentionally Deleted
Section 2.03 Construction of the Leased Premises
Section 2.04 Adjustment of Areas
Section 2.05 Agreement to Pay
Section 2.06 Basic Rent
Section 2.07 Late Payment Charge
Section 2.08 Net Lease
Section 2.09 Acknowledgement of Commencement Date
ARTICLE III - TAXES AND OPERATING COSTS
Section 3.01 Taxes Payable by Landlord
Section 3.02 Tenant's Share of Taxes
Section 3.03 Tenant's Share of Operating Cost
Section 3.04 Management Fee
Section 3.05 Tenant's Taxes
Section 3.06 Tenant's Responsibility
Section 3.07 Payment of Estimated Taxes, Operating Costs and
Management Fee
ARTICLE IV - LEASED PREMISES - CONTROL AND SERVICES
Section 4.01 Control of the Leased Premises by the Landlord
Section 4.02 Substitution of Management by Tenant
Section 4.03 Tenant's Unrestricted Access
ARTICLE V - UTILITIES AND ADDITIONAL SERVICES
Section 5.01 Charges for Utilities
Section 5.02 Additional Services of the Landlord
Section 5.03 Third Party Services
ARTICLE VI - USE OF LEASED PREMISES
Section 6.01 Use of the Leased Premises
Section 6.02 Observance of Law
Section 6.03 Energy Conservation
Section 6.04 Odours, Dust or Noise
Section 6.05 Obstructions
Section 6.06 Outside Areas
Section 6.07 Environmental Law
ARTICLE VII - INSURANCE AND INDEMNITY
Section 7.01 Tenant's Insurance
Section 7.02 Increase in Insurance Premiums
Section 7.03 Cancellation of Insurance
Section 7.04 Loss or Damage
Section 7.05 Landlord's Insurance
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Section 7.06 Indemnification of the Landlord
Section 7.07 Limitations of Liability
ARTICLE VIII - MAINTENANCE, REPAIRS AND ALTERATIONS
Section 8.01 Maintenance and Repairs by the Tenant
Section 8.02 Landlord's Approval of the Tenant's Repairs and
Alterations
Section 8.03 Maintenance and Repairs by the Landlord
Section 8.04 Surrender of the Leased Premises
Section 8.05 Repair Where the Tenant is at Fault
Section 8.06 Tenant No to Overload Facilities
Section 8.07 Tenant No to Overload Floors
Section 8.08 Removal and Restoration by Tenant
Section 8.09 Notice by the Tenant
Section 8.10 Tenant to Discharge All Liens
Section 8.11 Signs and Advertising
ARTICLE IX - DAMAGE AND DESTRUCTION
Section 9.01 Destruction of the Leased Premises
Section 9.02 Abrogation - Intentionally Deleted
ARTICLE X - TRANSFER AND SALE
Section 10.01 Assigning and Subletting
Section 10.02 Landlord's Right to Terminate
Section 10.03 Conditions of Transfer
Section 10.04 No Advertising of the Leased Premises
Section 10.05 Assignment by the Landlord
ARTICLE XI - ACCESS AND ALTERATIONS
Section 11.01 Right of Entry
Section 11.02 Right to Show Leased Premises
Section 11.03 Entry Not Forfeiture
Section 11.04 Landlord's Covenant For Quiet Enjoyment
Section 11.05 Inspection
ARTICLE XII - STATUS STATEMENT, ATTORNMENT AND SUBORDINATION
Section 12.01 Status Statement
Section 12.02 Subordination and Attornment
Section 12.03 Attorney
Section 12.04 Financial information
Section 12.05 Acknowledgment of Title
ARTICLE XIII - DEFAULT
Section 13.01 Right to Re-Enter
Section 13.02 Right to Re-Let
Section 13.03 Termination
Section 13.04 Accelerated Rent
Section 13.05 Expenses
Section 13.06 Waiver of Exemption from Distress
Section 13.07 Landlord May Cure Tenant's Default or Perform Tenant's
Covenants
Section 13.08 Additional Rent
Section 13.09 Remedies Generally
Section 13.10 Holding Over
Section 13.11 No Waiver
ARTICLE XIV - MISCELLANEOUS
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Section 14.01 Rules and Regulations
Section 14.02 Security Deposit
Section 14.03 Pest Control
Section 14.04 Obligations as Covenants
Section 14.05 Amendments and Supplementary Lease Provisions (if any)
Section 14.06 Certificates
Section 14.07 Time
Section 14.08 Successors and Assigns
Section 14.09 Governing Law
Section 14.10 Headings
Section 14.11 Entire Agreement
Section 14.12 Severability
Section 14.13 No Option
Section 14.14 Occupancy Permit
Section 14.15 Place for Payments
Section 14.16 Extended Meanings
Section 14.17 No Partnership or Agency
Section 14.18 Unavoidable Delay
Section 14.19 Consent and Approvals
Section 14.20 Registration
Section 14.21 Joint and Several Liability
Section 14.22 Name of Building
Section 14.23 Changes in the Leased Premises
Section 14.24 Compliance with the Planning Act
ARTICLE XV - INDEMNITY AGREEMENT
Section 15.01 Indemnity - Intentionally Deleted
Section 15.02 Further Assurances
SCHEDULES
Schedule "A" - Draft Site Plan of Building and Lands
Schedule "Al" - Building Elevation
Schedule "B1" - Legal Description of Lands
Schedule "B2" - Lega1 Description of Expansion Lands
Schedule "B3" - Plan Showing the Lands and the Expansion Land
Schedule "C" - Plan/Sketch of Expansion Land
Schedule "D" - Acknowledgment of Commencement Date
Schedule "E" - Rules and Regulations
Schedule "F" - Supplementary or Additional Lease Terms
Schedule "G" - Incorporated Excerpts from Agreement to Lease
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ARTICLE 1
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BASIC LEASE TERMS
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SECTION 1.01 - VARIABLE DEFINED TERMS
In this Lease the following terms will have the following meanings:
(1) "Agreement to Lease" means the written agreement to lease between
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the Landlord and the Tenant with respect to the Leased Premises dated
the 6/th/ day of October, 2000.
(2) "Basic Rent" - means:
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(i) In years 1 and 2 of the Term $10.85
(ii) In years 3-5 of the Term $11.75
(iii) In years 6-10 of the Term $13.05
in each case per square foot of the Rentable Area of the Building,
per annum, payable pursuant to Section 2.06 hereof.
(3) "Building" means the entire one story building and all other improvements
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located on the Lands, and known municipally as 1980 Matheson Boulevard East,
Mississauga, and includes all additions, modifications and alterations thereto
and replacements thereof, as may be from time to time constructed in
accordance with the provisions of the Lease.
(4) "Commencement Date" means that day which is one hundred and twenty (120)
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days next following the date of completion of the Landlord's Work, as defined
in Section 8.1 of the Agreement to Lease, as such date made be adjusted in
accordance with the provisions of Section 2.03 of this Lease and confirmed or
acknowledged by the Landlord and the Tenant in accordance with the provisions
of Section 2.09 hereof.
(5) "Expansion Lands" means those adjacent, vacant lands located to the south
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of the Lands and comprising approximately 6.3 acres, all as described in
Schedule "B2" attached hereto and shown outlined on Schedule "C" attached
hereto.
(6) "Fiscal Period" means a calendar year or any other twelve (12) month period
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designated by the Landlord from time to time as the Landlord's fiscal period
for accounting purposes and as the period in respect of which Operating Costs
for the Leased Premises are to be estimated, allocated and adjusted in
accordance with Section 3.07 hereof.
(7) "Indemnifier" - Intentionally Deleted.
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(8) "Indemnifier's Address" - Intentionally Deleted.
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(9) "Landlord" PAULS PROPERTIES CORPORATION. and its successors and assigns.
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(10) "Landlord's Address" - 2355 Skymark Avenue, Suite 300, Mississauga,
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Ontario L4W 4Y6 or such other address as is designated by the Landlord.
(11) "Lease" means this lease dated the 12th day of October, 2000, and includes
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the Schedules, as from time to time amended in writing.
(12) "Leased Premises"- means those premises leased to the Tenant pursuant to
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Section 2.01 hereof, comprising the Lands and the Building.
(13) "Rentable Area of the Building" - means the Rentable Area of the Building,
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being approximately 126,962 square feet of area determined in accordance with
Section 1.02(18) hereof, and subject to adjustment in accordance with Section
2.04 hereof.
(14) "Schedules" means the Schedules attached to and forming part of this Lease,
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being the following:
Schedule "A" - Draft Site Plan of Building and Lands
Schedule "A1" - Building Elevation
Schedule "B1" - Legal Description of Lands
Schedule "B2" - Legal Description of Expansion Lands
Schedule "B3" - Plan Showing the Lands and the Expansion Land
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Schedule "C" - Plan/Sketch of Expansion Land
Schedule "D" - Acknowledgment of Commencement Date
Schedule "E" - Rules and Regulations
Schedule "F" - Supplementary or Additional Lease Terms
Schedule "G" - Incorporated Excerpts from Agreement to Lease
(15) "Security Deposit" means the sum of THREE HUNDRED THOUSAND
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CANADIAN DOLLARS (CDN$300,000.00) or such portion or balance
thereof as may from time to time remain in the Landlord's hands
applied in accordance with Section 14.02.
(16) "Tenant" - Certicom Corp. and its successors and permitted
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assigns.
(17) "Tenant's Address" - Prior to the Commencement Date, Certicom
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Corp., 5520 Explorer Drive, 4/th/ Floor, Mississauga, Ontario,
L4W 5L1, Attention: Robert L. Williams, Senior Vice-President
(with a copy to: Certicom Corp., 25801 Industrial Blvd., Hayward
CA 94545, USA, Attention: Richard Brounstein, Senior-Vice
President, Finance) or such other address as is designated by the
Tenant and from and after the Commencement Date, the Leased
Premises.
(18) "Term" - means the term of ten (10) years, commencing on the
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Commencement Date, together with any renewal or extension thereof
permitted hereunder.
(19) "Type of Business of the Tenant" means that the Leased
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Premises shall only be used for any use which complies with all
applicable laws, by-laws, regulations or other governmental
ordinances from time to time in existence, including, without
limitation, warehouse, ancillary storage, light assembly and
office uses.
SECTION 1.02 - STANDARD DEFINITIONS
(1) "Additional Rent" means all sums of money, other than Basic Rent,
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which are required to be paid by the Tenant pursuant to any
provision of this Lease.
(2) "Additional Service" means any service which is requested or
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required by or for the Tenant in addition to those supplied by
the Landlord as part of the normal services provided to or in the
Leased Premises, and which the Landlord is prepared or elects to
supply at an additional cost to the Tenant and includes, without
limitation, janitor and cleaning services, the provision of
labour and supervision in connection with deliveries, supervision
in connection with the moving of any furniture or equipment of
the Tenant, the making of any repairs or alterations by the
Tenant and the cost of replacing building standard electric light
fixtures, ballasts, tubes, starters, lamps and light bulbs.
(3) "Additional Service Cost" means the additional cost payable by
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the Tenant to the Landlord for any Additional Service in
accordance with Section 5.02 hereof.
(4) "Architect" means the architect, professional engineer or
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surveyor named by the Landlord from time to time.
(5) "Bank Rate" means the interest rate per annum as announced by the
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chartered bank of the Landlord at the principal office of such
bank in Toronto and reported by it to the Bank of Canada as its
prime rate.
(6) "Capital Tax" means the aggregate of:
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(a) an amount of the tax or excise imposed by the Province of Ontario
upon the Landlord or the owners of the Leased
Premises which is measured by or based in whole or
in part upon the capital, surplus, reserves or
indebtedness of such Landlord or owners, and which
is at present based upon the application of the
prescribed rate of 0.3% to the amount of such
Landlord's or owner's "taxable paid-up capital" as
defined in the Corporations Tax Act (Ontario); the
amount of the tax or excise for the purposes
hereof shall be calculated in any year as if the
Building was the only establishment in the
Province of Ontario owned by such Landlord or
owners in the year and such Landlord or owners had
no establishment other than in the Province of
Ontario; and
(b) an amount of the tax or excise imposed by the Government of
Canada upon the Landlord or the owners of the
Leased Premises which is measured by or based in
whole or in part upon the capital, surplus,
reserves or indebtedness of the Landlord or the
owners, and which tax is at present based upon the
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application of the prescribed rate of 0.2% to the
amount by which the "taxable capital employed in
Canada" by such Landlord or owners as defined in
the Income Tax Act (Canada) exceeds its capital
deduction for the year; the amount of the tax or
excise for the purposes hereof shall be calculated
in any year as if the Leased Premises was the only
asset owned by such Landlord or owners in the year
and the capital deduction of such Landlord or
owners for the year was nil;
Provided that for the purpose of computing Capital Tax as otherwise defined in
this Subsection 1.02(6), the Landlord agrees to allocate such Capital Tax
equitably among any corporations within Canada which are related to or
affiliated with the Landlord, if any (and for the propose of this Subsection
"affiliate" shall have the meaning set out in the Ontario Business Corporations
Act) and provided that if the Landlord owns other permanent establishments in
Canada, the Landlord agrees that Capital Taxes shall be calculated without
duplication and shall be reduced by an amount equal to the taxable paid up
capital employed by the Landlord in such other permanent establishments that are
located in Canada but outside of the Province of Ontario.
(7) "Insurance Cost" means, for any fiscal period, the total cost to
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the Landlord calculated in accordance with generally, accepted
accounting principles, for insuring the Leased Premises.
(8) "Insured Damage" means that part of any damage occurring to the
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Leased Premises, of which the entire cost of repair (except as to
any deductible amount provided for in the applicable policy or
policies of insurance) is actually recovered by the Landlord
under a policy or policies of insurance from time to time
effected by the Landlord or which ought to have been effected by
the: Landlord pursuant hereto.
(9) "Lands" means the lands described in Schedule "B1" attached
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hereto comprising approximately 7.3 acres in area.
(10) "Law" means:
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(i) all federal, provincial, regional, municipal or local laws,
statutes regulations, orders or ordinances;
and
(ii) all policies, guidelines, decisions, notices or directives
issued by any federal, provincial, regional,
municipal or local government or authority or
other political subdivision thereof and any
entity or person exercising executive,
legislative, judicial, regulatory or
administrative functions of, or pertaining
to, government which may be relevant to this
Lease and in particular to the construction,
operation, maintenance and replacement of the
Building and/or to the conduct by the Tenant
of its business therefrom.
(11) "Leasehold Improvements" means all items generally considered as
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leasehold improvements, including, without limitation, all
fixtures, equipment, improvements, installations, alterations and
additions from time to time made, erected or installed by or on
behalf of the Tenant, or any previous occupant of the Leased
Premises in the Leased Premises, including all partitions,
however affixed and whether or not movable, and all wall-to-wall
carpeting other than carpeting laid over finished floors and
affixed so as to be readily removable without damage; but
excluding trade fixtures, unattached furniture or free-standing
partitions and equipment not of the nature of fixtures.
(12) "Management Fee" means a reasonable fee for the administration
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and management of the Leased Premises which fee shall be
comparable to fees charged by management companies for managing
and administering developments similar to the Leased Premises,
which fees shall in no event exceed the amount of sixty cents (60
cents) per square foot of Rentable Area of the Building per
annum, in respect of the first five (5) years of the Term
commencing on the Commencement Date, and seventy-five cents (75
cents) per square foot of Rentable Area of the Building per annum
in respect of the next five (5) years of the Term, commencing on
the fifth anniversary of the Commencement Date.
(13) "Mortgage" means any mortgage, instrument of hypothec, deed of
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trust, document or security interest (resulting from any method
of financing or refinancing) or blanket
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mortgage, pledge or charge (affecting the Lands as well as other
property) now or hereafter secured upon the Lands or any part
thereof, and includes all renewals, modifications, consolidations,
replacements and extensions thereof.
(14) "Mortgagee" means the mortgagee, hypothecary or other creditor or
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trustee for bondholders or others named in any Mortgage.
(15) "Notice" means any notice, statement, consent, approval, demand or
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request herein required or permitted to be given by any party to
another pursuant to this Lease and shall be in writing and, if to the
Landlord, addressed to the Landlord at the Landlord's Address, if to
the Tenant, addressed to the Tenant at the Tenant's Address, and if
to any Indemnifier, addressed to the Indemnifier at the Indemnifier's
Address. All Notices shall be hand-delivered and the effective date
of such Notices shall be the date of delivery.
(16) "Operating Costs" means the total of all expenses, costs, fees,
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rentals, disbursements and outlays of every kind paid, payable or
incurred by or on behalf of the Landlord in the complete maintenance,
repair, operation, supervision, replacement and administration of the
Leased Premises. Without limiting the generality of the foregoing,
Operating Costs shall include, without duplication the following
costs in respect of the Leased Premises:
(A) (i) the Insurance Cost;
(ii) the cost of providing security, supervision, life safety
systems, traffic control, landscaping, exterior
cleaning and snow removal services;
(iii) the cost of water, electric light and power, telephone, steam,
gas, sewage disposal and other utilities and
services;
(iv) the cost of maintaining and replacing any general
sign or directory board;
(v) accounting costs incurred in connection with the maintenance,
repair, replacement, operation, administration or
management of the Leased Premises, including
computations required for the imposition of
charges to Tenant, the cost of preparing
statements and opinions for tenants and banking
fees and expenses and audit fees;
(vi) subject to Subsection 1.02(16)A(xii) hereof, the cost of performing
the Landlord's repair obligations under Section
8.03;
(vii) all other indirect expenses to the extent reasonably
allocable to the maintenance, repair,
replacement, operation, administration or
management of the Leased Premises;
(viii) all costs and expenses (including legal and other
professional fees and interest and penalties on
deferred payments) incurred by the Landlord in
contesting, resisting or appealing any Taxes in
good faith;
(ix) subject to the provisions of Subsection 1.01(16)A(xii)
hereof, amounts paid to independent contractors
for any services in connection with the
maintenance, repair, replacement, operation,
administration or management of the Leased
Premises or any part of it;
(x) fees and expenses of architects, engineers, quantity surveyors
and other consultants retained by the Landlord;
(xi) subject to the provisions of Subsection 1.02(16)A(xii) hereof, the
costs of supplies, tools, equipment and materials
used in connection with the maintenance, repair,
replacement, operation, administration, management
or caretaking of the Leased Premises;
(xii) amortization (over the useful life of any item in accordance with
generally accepted accounting principles) of costs
properly regarded as capital in nature, including,
without limitation, the costs incurred to make
alterations, replacements or additions to the
Leased Premises intended to reduce the cost of
other items included in Operating Costs, improve
the operation of the Leased Premises or maintain
its operation as a quality industrial complex,
costs being amortized will include, without
limitation, costs incurred in respect of
alterations, replacements or additions to the roof
and
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other structural elements of the Building or
Building systems, and property installed in or
used in connection with the Leased Premises
(except to the extent that the costs are charged
fully to income account in the accounting period
in which they are incurred) and interest on the
unamortized portion of the original cost of such
items being amortized, payable monthly, from or
after the date on which the relevant cost was
incurred at an annual rate of interest that is one
percentage (1%) point above the Bank Rate in
effect from time to time; the amortization costs
and interest charged under this clause shall be
calculated by the Landlord, acting reasonably, in
accordance with sound and generally accepted
accounting principles, but no amortization or
interest will be charged in respect of any such
items installed in conjunction with the original
construction of the Leased Premises;
(xiii) goods and services taxes, business transfer taxes, value-added
taxes, multi-stage sales taxes, sales, use or
consumption taxes and any like taxes on property
and services provided by or on behalf of the
Landlord except to the extent recoverable by the
Landlord;
(xiv) Capital Tax in respect of the Leased Premises, any Ontario
commercial concentration tax and any business or
similar taxes or licence fees in respect of the
business of the Landlord which pertains to the
management, operation and maintenance of the
Complex;
(xv) subject to the provisions of Subsection 1.02(16)A(xii) hereof,
all other direct and indirect costs and expenses
of every kind, to the extent incurred in or
allocable to the maintenance, repair, replacement,
operation, supervision or administration of all or
any part of the Leased Premises, or any of its
appurtenances including expenses incurred or
contributions made by the Landlord in respect of
off-site facilities which are utilized by or
benefit the Leased Premises;
(B) notwithstanding the provisions of Part (A) of this definition,
Operating Costs shall exclude or shall have deducted therefrom:
(i) Taxes and Management Fee;
(ii) debt service in respect of financing secured by or related
to the Leased Premises and interest on debt save
for interest payable if and when costs and
expenses in respect of Operating Costs and Taxes
and goods and services taxes temporarily exceed
recoveries from time to time in respect thereof;
(iii) depreciation of the initial cost of the Leased
Premises;
(iv) an amount equal to the net proceeds of insurance actually
recovered by the Landlord for damage to the
Building to the extent that the cost to repair
such damage is included in Operating Costs;
(v) an amount equal to recoveries by the Landlord in respect of
warranties or guarantees relating to repairs or
alterations to the Leased Premises or any part of
it, including, without limitation, construction
warranties to the extent that the repair or
alteration costs in respect of the work covered by
warranty or guarantee is included in Operating
Costs;
(vi) an amount equal to the contribution made by any owners or occupants
of adjacent buildings who are, by agreement,
entitled to use any facilities of and for the
Leased Premises;
(vii) all income tax or similar taxes, corporation taxes, profits taxes,
excess profits taxes, place of business taxes,
gift taxes, estate taxes, succession taxes,
inheritance taxes, franchise taxes, land transfer
taxes and non-
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resident sales taxes, business taxes (other than those business
taxes specifically payable by the Tenant pursuant to the lease)
and other taxes personal to the Landlord;
(viii) ground rent (if any), amortization and interest on and capita1
retirement of debt, affecting all or any of the Lands and
Building;
(ix) any loss or damage to all or any part of the Building or any persona1
injury for which the Landlord is insured under the terms of the
Lease including any deductible, but only to the extent of
recoveries under such insurance;
(x) any cost or expense which is normally treated in accordance with
generally accepted accounting principles as being of a capita1
nature, which cost or expense will instead be amortized over
useful life of the item and charged to the Tenant in accordance
with generally accepted accounting principles, all in accordance
with Subsection 1.02(16)A(xii) hereof;
(xi) commissions, advertising costs, the costs of any market research,
traffic consumer attitude study or legal expenses in connection
with leasing the Building or legal remedies against tenants
(other than the Tenant) or any part thereof;
(xii) all penalties or carrying charges relating to late payment of taxes
or other expenses and any capital, interest or other carrying
charges on any mortgages or equipment head or land lease or
equipment lease payments or other financing with respect to the
Lands and/or Building or any part thereof;
(xiii) all fines, suits, claims, demands, actions, costs, charges and
expenses of any kind or nature for which the Landlord is or may
become liable by reason of any negligent or willful acts or
omissions to act on the part of the Landlord or those for whom it
is in law responsible or by reason of any breach or violation or
non-performance by the Landlord of any covenant, term or
provision contained in the leases and other agreements entered
into by the Landlord in respect of the Building or the Lands;
(xiv) except as expressly provided herein to the contrary, the expenses
incurred by the Landlord in respect of installation or removal of
any of the Tenant's improvements or the Allowance (as defined in
Section 84 of the Agreement to Lease);
(xv) all work to the Leased Premises or the Building or any part thereof
made necessary by the Landlord's non-compliance with Laws;
(xvi) the cost of initial construction of the Building and construction
resulting from insured perils;
(xvii) all salaries, whether direct or indirect, relating to the
administration and management of the Building;
(xviii) subject to the provisions of Section 6.07 hereof, remedial
environmental costs for existing conditions in the soil, ground
water or buildings; and
(xix) fines and penalties assessed by a court or governmental agencies not
caused by actions or omissions of the Tenant.
(C) any costs that are not directly incurred by the Landlord but are
chargeable as Operating Costs may be estimated by the Landlord on a
reasonable basis to the extent that the Landlord cannot ascertain the
exact amount; and
(D) the taxes enumerated in Section 1.02(16)(A)(xiii) above are included
amongst Operating Costs upon the understanding that the Landlord will
look first for reimbursement of such taxes to its input tax credits in
the case of the goods and services tax in force at the date hereof, and
to corresponding credits, if any, in the case of subsequent taxes from
time to time in force, the intent being that so long as such credits
are available to the Landlord the taxes referred to in Section
1.02(16)(A)(xiii) will not be included in Operating Costs.
(17) "Rent" means Basic Rent and Additional Rent.
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(18) "Rentable Area" means the floor area expressed in square feet of all
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floor space (including the floor space of mezzanines, if any) measured
from the exterior face of all exterior walls (and across the extension
of the planes thereof over the openings for doors and windows)
comprising the boundaries of such premises and, in the case of walls
separating any rentable premises from adjoining rentable premises,
measured from the centre line of such walls but ignoring the finished
treatment thereof; any such area shall be adjusted from time to time to
reflect any addition, reduction, rearrangement or relocation of space.
(19) "Taxes" means all taxes, rates, duties, levies, fees, charges, sewer
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levies, local improvement rates, and assessments whatsoever imposed,
assessed, levied or charged, now or in the future, by any school,
municipal, regional, provincial, federal, parliamentary or other
governmental body, corporate authority, agency or commission
(including, without limitation, school boards and utility commissions),
against the Leased Premises or any part thereof, and/or the Landlord
and/or the owners of the Leased Premises in connection therewith,
calculated on the basis of the Leased Premises being assessed as a
fully leased and operational building, but excluding (unless
specifically referred to above):
(a) income or profit taxes upon the income of the Landlord to the extent
such taxes are not levied in substitution or in lieu of any
of the foregoing;
(b) business or similar taxes or licence fees in respect of the business
of the Landlord which pertains to the management, operation
and maintenance of the Leased Premises (and which are
included in Operating Costs);
(c) goods and services taxes or similar taxes (and which are payable
pursuant to other provisions of this Lease);
(d) business or similar taxes or licence fees in respect of any business
carried on by, and imposed upon, tenants and occupants
(including the Tenant) of the Leased Premises; and
(e) Capital Tax in respect of the Leased Premises and any Ontario
commercial concentration tax (and which are included in
Operating Costs).
Provided that in the event that the Leased Premises is not the subject of a
separate assessment, but is assessed together with other Lands owned by
the Landlord, including, without limitation, the Expansion Lands,
Taxes, otherwise defined above, shall mean that portion of all such
taxes, rates, duties, levies, fees, charges, sewer levies, local
improvement rates and assessments imposed, assessed, levied or charged
against or in respect of such larger parcel of lands as are allocated
to the Leased Premises from time to time by the Landlord acting
reasonably and on an equitable basis having regard, amongst other
things, to general principles of assessment and the value of the Leased
Premises relative to all other lands and buildings, if any, comprising
the larger parcel of lands to which the assessment relates.
(20) "Tenant's Taxes" means al1 taxes, rates, duties, levies or license
--------------
fees imposed upon the Tenant which are attributable to the business,
income or occupancy of the Tenant or any other occupant of the Leased
Premises, including any taxes, rates, duties, levies or license fees
which are imposed in lieu of or in addition to any such Tenant's Taxes;
and if any such Tenant's Taxes are levied against the Landlord or any
owner on account of its ownership in the Leased Premises or its
interest therein, they shall be included in Taxes.
(21) "Transfer" means an assignment of this Lease, a sublease of all or
--------
any part of the Leased Premises, any transaction whereby the rights of
the Tenant under this Lease to the Leased Premises are transferred to
another, any transaction by which any right of use or occupancy of all
or any part of the Leased Premises is conferred upon anyone, any
mortgage, charge or encumbrance of this Lease or the Leased Premises or
any part thereof, or other arrangement under which either this Lease or
the Leased Premises becomes security for any indebtedness or other
obligations, and includes any transaction or occurrence whatsoever
which has changed or might change the identity of the person or persons
having lawful use or occupancy of any part of the Leased Premises but,
for greater certainty, where the Tenant is a corporation, does not
include any amalgamation,
8
reorganization, or change in the effective voting control of the
shares of the Tenant.
(22) "Unavoidable Delay" means any delay by a party in the performance
-----------------
of its obligation under this Lease caused in whole or in part by
any acts of God, strikes, lockouts or other industrial
disturbances, acts of public enemies, sabotage, war, blockades,
insurrections, riots, epidemics, washouts, nuclear and radiation
activity or fallout, arrests, civil disturbances, explosions,
breakage of or accident to machinery, any legislative,
administrative or judicial action which has been resisted in good
faith by all reasonable legal means, any act, omission or event,
whether of the kind herein enumerated or otherwise, not within
the control of such party, and which, by the exercise of control
of such party, could not have been prevented, but lack of funds
on the part of such party shall not constitute an Unavoidable
Delay.
ARTICLE II
----------
LEASED PREMISES - TERM - RENT
-----------------------------
SECTION 2.01- LEASED PREMISES AND TERM
In consideration of the rents, covenants and agreements herein contained on
the part of the Tenant to be paid, observed and performed, the Landlord leases
to the Tenant, and the Tenant leases from the Landlord, the Leased Premises for
the Term.
SECTION 2.02 - USE OF ADDITIONAL AREAS
[Intentionally Deleted]
SECTION 2.03 - CONSTRUCTION OF THE LEASED PREMISES
The provisions of Sections 8 (Landlord's and Tenant's Work), 16 (Landlord's
Covenants, Representations and Warranties), 21 (Expansion Land) and of Schedule
"F" (Tenant's Work) of the Agreement to Lease relating to the initial
construction of the Leased Premises and delay in availability of the Leased
Premises for occupancy by the Tenant (all of which are hereby incorporated
herein and with the exception of Section 21 are set out in Schedule "G" hereto)
shall remain in effect and shall not merge upon the execution of this Lease.
Subject to the above-noted provisions of the Agreement to Lease, the Landlord
shall deliver vacant and exclusive possession of the Leased Premises to the
Tenant on or before January 15, 2001, (the "Possession Date"). The Tenant
acknowledges and agrees, however, that certain work external to the Building,
including, without limitation, the landscaping and asphalting (as well as any
skylights in the Building in the event the Tenant has failed to provide drawings
in that regard to the Landlord on or before November 15, 2000) may not be
completed by the Possession Date. If the Landlord has not delivered vacant and
exclusive possession of the Leased Premises to the Tenant with Landlord's Work
complete on or before the Possession Date as a result of force majeure, then the
Possession Date, the Commencement Date and all other applicable dates will be
extended on the basis of one day for each day of delay. The Commencement Date
will not, however, be extended as a result of any delays caused by the Tenant
in selecting materials or requesting changes to the base building beyond the
dates set out herein (it being acknowledged that any material changes to
Landlord's Work must be both requested in writing by the Tenant and approved by
the Landlord). If the Possession Date is delayed beyond January 15, 2001, due to
circumstances within the Landlord's control, the Possession Date, the
Commencement Date, and all other applicable dates will be extended on the basis
of two days for each day of delay. Notwithstanding the foregoing or any other
provision of the Agreement to Lease or this Lease, if the Landlord has not
delivered vacant and exclusive possession of the Leased Premises, with the
Landlord's Work complete, to the Tenant by April 15 2001, for any reason
whatsoever, including force majeure, but excluding delays caused by the Tenant
in selecting materials or requesting changes to the base building beyond the
dates set forth herein, then upon ten (10) days' written notice, the Tenant
shall have the option to terminate this Lease and the Security Deposit shall be
returned to the Tenant, with interest as provided for herein and without
deduction. The Landlord shall permit the Tenant to occupy and possess the
Leased Premises from and after the Possession Date to the Commencement Date
completely free of all Basic Rent and Additional Rent obligations and the
Tenant shall be permitted to construct its Leasehold Improvements in the Leased
Premises during such period and to conduct its business thereafter. During any
such period of occupancy or possession prior to the Commencement Date, the
Tenant shall be nevertheless responsible to pay for all utilities supplied to
the Leased Premises and for snow plowing those parking areas selected by the
Tenant in its discretion for use by its contractors, suppliers, employees and
invitees. The Tenant shall abide by the provisions of Section 8.02 in respect
of the construction of Leasehold Improvements and fixtures in the Leased
Premises following the commencement of the Term.
SECTION 2.04 - ADJUSTMENT OF AREAS
9
The Landlord shall, upon completion of the Landlord's Work as defined
in Section 8.1 of the Agreement to Lease and prior to the Commencement Date, re-
measure or re-calculate the Rentable Area of the Building in accordance with
current B.O.M.A. standards and shall deliver to the Tenant a certificate of the
Architect confirming such area and the Basic Rent and the amount of Additional
Rent shall be adjusted accordingly.
SECTION 2.05 - AGREEMENT TO PAY
(a) The Tenant shall pay Basic Rent and Additional Rent as herein
provided in lawful money of Canada, without any prior demand
therefor and without any deduction, abatement, set-off or
compensation whatsoever save as provided in Section 9.01. The
Tenant agrees to pay to the Landlord in addition to Basic Rent
and Additional Rent, any goods and services tax, business
transfer tax, value-added tax, multi-stage sales tax, sales, use
or consumption tax, or any like tax imposed by any governmental
authority in respect of this Lease, or in respect of any property
or services provided hereunder, including, without limitation,
such taxes calculated on or in respect of any Rent (whether
Basic Rent or Additional Rent) payable under this Lease; any such
tax shall be deemed not to be Rent, but the Landlord shall have
the same remedies for and rights of recovery of such amount as it
has for recovery of Rent under this Lease. The obligation to pay
Additional Rent (and adjustments thereto) shall survive the
expiration or sooner termination of this Lease. All amounts
payable under this Lease, unless otherwise provided, become due
with the next installment of Basic Rent. The Landlord may, at its
option, upon Notice to the Tenant direct that the Tenant pay any
or all Rent by way of pre-authorized bank debit and/or to any
other party specified by the Landlord.
(b) Notwithstanding the provisions of Subsection 2.05(a) above, and
notwithstanding that the Tenant may have been granted occupancy
and possession of the entire Leased Premises from and after the
Possession Date, as defined in Section 2.03 hereof, or the
Commencement Date, the Tenant shall be required to pay Basic Rent
and Additional Rent as and from the Commencement Date in respect
only of the northern portion of the Building, containing not less
than eighty thousand (80,000) square feet, (Phase 1). The
Tenant's obligation to pay Basic Rent and Additional Rent in
respect of the balance of the Leased Premises, containing
approximately forty-six thousand nine hundred and sixty-two
(46,962) square feet (Phase 2) shall commence on the earlier of
December 1/st/, 2001, and the date on which the Tenant commences
business operations within a substantial portion of Phase 2
(which "business operations" shall, for greater certainty,
exclude the construction by or on behalf of the Tenant of
Leasehold Improvements therein) provided that in respect of each
Phase, the Tenant shall nevertheless, as and from the Possession
Date pay, as Additional Rent, the cost of all utilities supplied
to the Leased Premises and for snow plowing, as provided for in
Section 2.03 hereof.
SECTION 2.06 - BASIC RENT
Subject to the provisions of Subsection 2.05(b) hereof, the Tenant shall
pay from and after the Commencement Date to the Landlord the Basic Rent, such
Basic Rent to be computed in accordance with Section 1.01(2) hereof and payable
in equal monthly installments in advance on the first day of each and every
month. As soon as reasonably possible after completion of construction of the
Leased Premises, as provided for in Section 2.04 hereof, the Landlord shall
measure the Rentable Area of the Leased Premises and only at such time shall any
necessary adjustments in the Basic Rent and Additional Rent be made.
If the Commencement Date is not the first day of a calendar month, then the
Basic Rent for the first and last months of the Term shall be appropriately
adjusted, on a per diem basis, based upon a period of three hundred and sixty-
five (365) days and the Tenant shall pay upon the Commencement Date, the portion
of the Basic Rent so adjusted from the Commencement Date to the end of the month
in which the Commencement Date occurs.
SECTION 2.07 - LATE PAYMENT CHARGE
10
The Tenant hereby acknowledges that late payment by the Tenant to the
Landlord of Basic Rent or Additional Rent due hereunder will cause the Landlord
to incur costs not contemplated by this Lease, the exact amount of which will be
difficult or impracticable to ascertain. Such costs include, but are not
limited to, processing and accounting charges and late charges which may be
imposed on the Landlord by the terms of any Mortgage. Accordingly, if any Basic
Rent or Additional Rent shall not be received by the Landlord or the Landlord's
designee within five (5) days after such amount shall be due, the Tenant shall
pay to the Landlord interest on such overdue amounts, calculated from the due
date to the date of payment at the rate of one percent (1%) per annum in excess
of the Bank Rate. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs the Landlord will incur by reason of
late payment by the Tenant. Acceptance of such late charge by the Landlord shall
in no event constitute a waiver of the Tenant's default with respect to such
overdue amount, nor prevent the Landlord from exercising any of the other rights
and remedies granted hereunder. The foregoing shall be without prejudice to any
other right or remedy available to the Landlord under or pursuant to this Lease
by reason of a monetary default by the Tenant. The Tenant agrees that if any of
the Tenant's cheques are returned for lack of sufficient funds the Tenant shall
pay to the Landlord upon demand a minimum administrative fee of not less than
twenty-five dollars ($25.00).
SECTION 2.08 - NET LEASE
The Basic Rent payable under this Lease is intended to be an absolutely net
return to the Landlord, except as expressly herein set out to the contrary. The
Landlord is not responsible for any expenses or outlays of any nature arising
from or relating to the Leased Premises, or the use or occupancy thereof, or the
contents thereof or the business carried on therein, except as expressly herein
set out to the contrary. The Tenant shall pay all charges, impositions and
outlays of every nature and kind relating to the Leased Premises except as
expressly herein set out to the contrary.
SECTION 2.09 - ACKNOWLEDGMENT OF COMMENCEMENT DATE
The Tenant agrees to execute and return to the Landlord, within fifteen
(15) days of written demand from the Landlord, an acknowledgment of the
Commencement Date in the form set forth in Schedule "D" annexed hereto, subject
to such variations as the facts require.
ARTICLE III
-----------
TAXES, OPERATING COSTS AND MANAGEMENT FEE
-----------------------------------------
SECTION 3.01 - TAXES PAYABLE BY LANDLORD
The Landlord shall pay directly to the appropriate and lawful taxing
authorities all Taxes subject to Sections 3.02 and 3.05 hereof. The Landlord
may, in good faith, contest any Taxes and appeal any assessments with respect
thereto; withdraw any such contest or appeal; and agree with the taxing
authorities on any settlement or compromise with respect to Taxes.
SECTION 3.02 - TENANT'S SHARE OF TAXES
The Tenant shall pay to the Landlord as Additional Rent all Taxes assessed
against the Leased Premises.
If the Tenant elects to be assessed as a separate school supporter, the
Tenant will pay to the Landlord, in addition to any other amounts owing pursuant
to this Section 3.02, the excess, if any, of the separate school taxes over
public school taxes resulting from such election.
SECTION 3.03 - TENANT'S SHARE OF OPERATING COSTS
The Tenant shall pay to the Landlord as Additional Rent in accordance with
Section 3.07 all Operating Costs.
SECTION 3.04 - MANAGEMENT FEE
The Tenant shall pay to the Landlord as Additional Rent in accordance with
Section 3.07 the Management Fee.
SECTION 3.05 - TENANT'S TAXES
11
The Tenant shall pay to the appropriate and lawful taxing authorities,
or to the Landlord, as appropriate, and shall discharge when the same become due
and payable, all Tenant's Taxes.
SECTION 3.06 - TENANT'S RESPONSIBILITY
The Tenant shall promptly deliver to the Landlord copies of assessment
notices, tax bills and other documents received by the Tenant relating to Taxes
and Tenant's Taxes and receipts for payment of Taxes and Tenant's Taxes. The
Tenant shall not contest any Taxes or Tenant's Taxes or appeal any assessments
relating thereto without the Landlord's prior written approval. If the Tenant
obtains such approval, the Tenant shall deliver to the Landlord such security
for the payment of such Taxes or Tenant's Taxes as the Landlord deems advisable
and the Tenant shall diligently prosecute any such appeal or contestation to a
speedy resolution and shall keep the Landlord informed of its progress in that
regard from time to time.
SECTION 3.07 - PAYMENT OF ESTIMATED TAXES, OPERATING COSTS AND MANAGEMENT FEE
(a) The amounts payable by the Tenant pursuant to Sections 3.02,
3.03, 3.04 and 3.05 hereof may be estimated by the Landlord
for each Fiscal Period and the Tenant agrees to pay to the
Landlord the amounts so estimated in monthly installments in
advance during such period as Additional Rent.
Notwithstanding the foregoing, as soon as bills for all or
any portion of the said amounts so estimated are received,
the Landlord may bill the Tenant therefore and the Tenant
shall pay the Landlord such amounts so billed (less all
amounts previously paid on account by the Tenant on the
basis of the Landlord's estimate as aforesaid) as Additional
Rent within thirty (30) days of demand therefore or, at the
Landlord's option, such amounts shall be paid in regular
monthly instalments as an adjustment to Additional Rent,
amortized or pro rated over the balance of the current
Fiscal Period.
(b) Within a reasonable period of time after the end of the period
for which such estimated payments have been made (and in any
event within one hundred and twenty (120) days after the end
of each Fiscal Period), the Landlord shall deliver to the
Tenant a statement from the Landlord of the Operating Costs,
Taxes and Management Fee together with a calculation of the
Tenant's share of the costs and expenses payable to the
Landlord pursuant to Sections 3.02, 3.03, 3.04 and 3.05 and,
if necessary, an adjustment shall be made between the
parties in the following manner. If the Tenant has paid in
excess of the amounts due, the excess shall be refunded by
the Landlord within a reasonable period of time after the
delivery of the said statement, or, at the option of the
Landlord, the excess shall be credited to amounts payable to
the Landlord pursuant to Sections 3.02, 3.03, 3.04 and 3.05.
If the amount the Tenant has paid is less than the amounts
due, the Tenant agrees to pay such additional amounts due
forthwith upon demand. If the Term commences or ends on a
date which does not coincide with the beginning or end of a
Fiscal Period, the Tenant's share of the Additional Rent
payable to the Landlord in respect of such Fiscal Period
pursuant to Sections 3.02, 3.03, 3.04 and 3.05 hereof, shall
be subject to a per diem, pro rata adjustment based on a
period of three hundred and sixty-five (365) days. The
obligations set out herein shall survive the expiration of
the Term or earlier termination of this Lease. Failure of
the Landlord to render any statement of Taxes, Operating
Costs and Management Fee shall not prejudice the Landlord's
right to render such statement thereafter or with respect to
any other period. The rendering of any such statement shall
also not affect the Landlord's right to subsequently render
an amended or corrected statement. The Landlord shall
maintain at the Landlord's Address, available for inspection
by the Tenant on no less than five (5) days' Notice to the
Landlord, such of the Landlord's expense and other records
relating to each Fiscal Period as are relevant to, or relied
upon by the Landlord in preparing any Landlord's statement
delivered to the Tenant pursuant to this subsection in
respect of that Fiscal Period.
(c) The Landlord warrants and represents that Operating Costs for
the Fiscal Period commencing January 1, 2001, shall not
exceed ninety cents (90 cents) per square foot of Rentable
12
Area of the Building, excluding Taxes and the
Management Fee.
ARTICLE IV
----------
LEASED PREMISES - CONTROL AND SERVICES
--------------------------------------
SECTION 4.01 - CONTROL OF THE LEASED PREMISES BY THE LANDLORD
The Landlord shall operate and maintain the Leased Premises in a first
class condition as would a careful and prudent owner of a similar commercial
building. To the extent that the Landlord retains independent contractors for
any services in connection with the maintenance, repair, replacement, operation,
administration or management of the Leased Premises, it shall do so at prices
or rates reasonably competitive in the industry, provided that the Tenant shall
have the right from time to time, in its sole discretion and on reasonable prior
Notice to the Landlord to specify a contractor or contractors of the Tenant's
choice.
The Leased Premises is at all times subject to the exclusive control,
management and operation of the Landlord. Without limiting the generality of the
preceding sentence, the Landlord has the right, in its control, management and
operation of the Leased Premises and by the establishment of Rules and
Regulations and general policies with respect to the operation of the Leased
Premises or any part thereof at all times during the period when the Tenant is
given possession of the Leased Premises and throughout the Term, and with the
Tenant's prior written consent, which consent shall not be unreasonably
withheld or delayed, to:
(a) construct improvements in or to the Building and make
alterations and additions thereto, subtractions
therefrom, rearrangements thereof (including parking
areas and all entrances and exits thereto), build
additional storeys on the Building and construct
additional facilities adjoining or proximate to the
Building;
(b) relocate or re-arrange the various facilities and improvements
comprising the Building or erected on the Lands from
those existing at the Commencement Date;
(c) do and perform such other acts in and to the Leased Premises as
in the use of good business judgment the Landlord
determines to be advisable for the more efficient and
proper operations of the Leased Premises.
Notwithstanding anything contained in this Lease, it is understood and
agreed that if as a result of the exercise by the Landlord of its rights set out
in this Section 4.01, the facilities in or improvements to the Leased Premises
are diminished or altered in any manner whatsoever, the Landlord is not subject
to any liability, nor is the Tenant entitled to any compensation, nor shall any
such diminution or alteration of the facilities or improvements in or to the
Leased Premises be deemed constructive or actual eviction, or a breach of any
covenant for quiet enjoyment contained in this Lease or implied by law provided
that the Landlord shall not reduce the Rentable Area of the Building or
materially impede access to the Leased Premises except when necessary during
the completion of any such work and provided further that the Landlord shall
complete all such work diligently and with due speed. Notwithstanding the
foregoing, if as a result of the exercise by the Landlord of its rights set out
in this Section 4.01, the Tenant is restricted from using, or is unable to use,
all or any portion of the Building for any period, Rent shall abate in the same
proportion as the unuscable portion of the Building bears to the Rentable Area
of the Building, for the duration of such period.
SECTION 4.02 - SUBSTITUTION OF MANAGEMENT BY TENANT
Notwithstanding the other provisions of this Lease, and in particular
the provisions of Section 4.01 hereof, the Landlord and Tenant agree that in
the event that the Landlord has, on at least two (2) or more occasions in any
twenty-four (24) month period of the Term, been in default of any of its
material obligations under this Lease, in each case beyond such period as is
reasonably required in the circumstances for the remedy or curing of such
default (such period in no event to be less than thirty (30) days following
delivery by the Tenant to the Landlord of Notice of such default), then in such
circumstances, the Tenant, at its option exercisable on no less than ten (10)
days' Notice to the Landlord may assume responsibility for management, operation
and maintenance of the entire Leased Premises in the same manner and to the same
standards as are otherwise imposed upon the Landlord pursuant to the provisions
of this Lease. In such event, in respect of the period following the effective
date set out in such second Notice, the Tenant shall be responsible to operate
and maintain the Leased Premises at its cost and the Landlord shall, as and from
such date, no longer operate and maintain the Leased Premises or be entitled to
payment of any Management Fee and the Tenant shall be responsible for payment
to the Landlord only of those items otherwise included in Operating Costs as are
actually incurred by the Landlord from time to time thereafter in accordance
with the provisions of this Lease; provided that
13
nothing contained in this Section shall otherwise affect the rights and
obligations of the Landlord and Tenant under this Lease, and in particular,
without limitation, under Articles VII, VIII and XIII hereof.
SECTION 4.03 - TENANT'S UNRESTRICTED ACCESS
The Landlord covenants and agrees that provided the Tenant is not in
material default beyond any period permitted under Article XIII hereof for the
remedying or curing of such default and subject to any period during which
access to the Leased Premises may be unavailable owing to the occurrence of
damage or destruction as contemplated in Article IX hereof, the Tenant shall
have unrestricted access to the Leased Premises, twenty-four (24) hours per
day, seven (7) days per week, throughout the Term at no additional charge to the
Tenant.
ARTICLE V
UTILITIES AND ADDITIONAL SERVICES
SECTION 5.01 - CHARGES FOR UTILITIES
The Tenant shall be solely responsible for and shall promptly pay for
the cost of electricity, water, steam, fuel, power, telephone, sewer and other
utilities supplied applicable to the Leased Premises on the basis of separate
meters installed by the Landlord at its cost. The Tenant further covenants to
heat the Leased Premises to a sufficient temperature to prevent at all times,
any damage to the Leased Premises and/or building containing the Leased Premises
and without limiting the generality of the foregoing, to heat the Leased
Premises so as to comply with any law, order, requirement and/or regulations
which from time to time govern the heating thereof.
SECTION 5.02 - ADDITIONAL SERVICES OF THE LANDLORD
Subject to Article 4 hereof, and excluding services supplied by the
Landlord and charged to the Tenant as Operating Costs, one hundred and ten per
cent (110%) of the actual cost to the Landlord of all Additional Services
provided by the Landlord or its agent to the Tenant shall be payable forthwith
by the Tenant, upon demand by the Landlord, as an Additional Service Cost. Such
services shall include any services performed at the Tenant's request including,
without limitation, maintenance, repair, janitorial or cleaning services,
construction of additional Leasehold Improvements and replacement of bulbs
(including non-standard bulbs), tubes and ballasts. Additional Services
provided by the Landlord or its agent on behalf of the Tenant in respect of any
of the Tenant's obligations set out in the Lease which the Tenant fails to
perform shall be paid by the Tenant to the Landlord as Additional Rent
forthwith following written demand therefor at the rate of one hundred and
fifteen per cent (115%) of the cost to the Landlord.
SECTION 5.03 - THIRD PARTY SERVICES
Excluding services supplied by the Landlord and charged to the Tenant
as Operating Costs or as an Additional Service Cost, the Tenant shall be solely
responsible for, and promptly pay to the appropriate third party, all charges
for services used or consumed in or provided to the Leased Premises, including,
without limitation, rug shampooing, telecommunications services, janitorial
services, pest control and other services not available through the Landlord. In
no event will the Landlord be liable to the Tenant in damages or otherwise for
any failure to supply any third-party services to the Leased Premises.
ARTICLE VI
----------
USE OF LEASED PREMISES
----------------------
SECTION 6.01 - USE OF THE LEASED PREMISES
The Leased Premises shall be used for general purposes for the Type
of Business of the Tenant specified in Section 1.01(19), provided such purposes
comply with the terms, covenants and conditions of
14
this Lease and all applicable Laws from time to time in existence. The Leased
Premises may not be used for any other purposes.
SECTION 6.02 - OBSERVANCE OF LAW
The Tenant shall at its sole cost and expense, and in particular, and
without limitation, where applicable in compliance with Sections 8.01 and 8.02
hereof, promptly observe and comply with all Laws or requirements of all
governmental authorities, including fire insurance underwriters, now or
hereafter in force which pertain to or affect the Leased Premises, the Tenant's
use of the Leased Premises or the conduct of any business in the Leased
Premises, or the making by the Tenant of any repairs, replacements, alterations,
additions, changes, substitutions or improvements of or to the Leased Premises.
The Tenant shall carry out all modifications, alterations or changes of or to
the Leased Premises and the Tenant's conduct of business in or use of the Leased
Premises which are required by any such authorities, provided that the Tenant
shall not be responsible for the making of any repairs or alterations to the
Leased Premises made necessary by the failure of the Landlord to comply with any
Laws.
SECTION 6.03 - ENERGY CONSERVATION
Consistent with its obligations to keep the Leased Premises in good
repair, order and condition hereunder, the Tenant will at its cost comply with
all Laws relating to the conservation of energy affecting the Leased Premises
and the conduct of business therein, including compliance with all reasonable
requests and demands of the Landlord intended to achieve the conservation of
energy.
SECTION 6.04 - ODOURS, DUST OR NOISE
The Tenant warrants that no noxious odours, dust or unreasonable noise
will emanate from the Leased Premises as a result of the operations conducted by
the Tenant therein and the Tenant further covenants that it will not cause or
maintain any nuisance in, at or on the Leased Premises and/or the Lands.
Accordingly, the Tenant agrees that should such noxious odour, dust or noise
conditions exist, the Tenant will, at its own expense, take such steps as may be
necessary to rectify the same, provided further that if the Tenant shall fail to
commence to do so within forty-eight (48) hours and complete the same within a
reasonable time after Notice is received by the Tenant from the Landlord, then
the Landlord may, at its option and without prejudice to its other rights or
recourses:
(a) notify Tenant by Notice that it must shut down all its operations
in the Leased Premises; and
(b) the Landlord may proceed forthwith to take reasonable measures to
correct the situation and the Landlord shall be entitled to
cover the cost thereof from the Tenant forthwith upon demand
as an Additional Service Cost.
SECTION 6.05 - OBSTRUCTIONS
The sidewalks, driveways and entries shall not be obstructed by the
Tenant, its officers, agents, servants, employees or customers or used for any
other purposes than for ingress and egress to or from the Leased Premises, and
the Tenant shall save the Landlord harmless from damages to persons or property
because of any nuisance or other act of the Tenant which shall obstruct the free
movements of persons to, in and from the Building and Lands.
SECTION 6.06 - OUTSIDE AREAS
The Tenant shall not use any part of the exterior parking and loading
areas or any other areas outside the Building for any purpose other than
parking, shipping or receiving in the areas designated by the Landlord from time
to time for same. The Tenant shall not allow any type of storage and/or
transportation trailer belonging to or being used by or on behalf of the Tenant
to remain in such parking, shipping or receiving areas for any period of time
longer than shall be necessary for the Tenant's purposes and if any such vehicle
has remained in any parking, shipping or receiving areas for a period in excess
of that required for the Tenant's purposes, as determined by the Landlord acting
reasonably, the Landlord shall be entitled to have such trailer removed at the
Tenant's sole cost as an Additional Service. In addition, any damage caused to
such parking, shipping or receiving areas as a result of the presence of such
trailer shall be forthwith repaired by the Tenant, at the Tenant's sole cost
or, at the Landlord's option, shall be repaired by the Landlord and the costs
thereof shall be payable forthwith by the Tenant, upon demand by the Landlord,
as an Additional Service Cost.
15
For the purposes of this Lease:
(a) "Environmental Law" means any law, by-law, order, ordinance, ruling,
regulation, certificate, approval, consent or directive of
any applicable federal, provincial or municipal government,
governmental department, agency or regulatory authority or
any court of competent jurisdiction, relating to
environmental matters and/or regulating the import, storage,
distribution, labeling, sale, use, handling, transport or
disposal of Hazardous Substances, including but not limited
to, the Environmental Protection Act (Ontario), as amended
from time to time;
(b) "Hazardous Substance" means any contaminant, pollutant, dangerous
substance, noxious substance, toxic substance, hazardous
waste, flammable or explosive material, radioactive
material, urea formaldehyde foam insulation, asbestos,
polychlorinated biphenyl's, polychlorinated biphenyl waste,
polychlorinated biphenyl related waste, and any other
substance or material now or hereafter declared, defined or
deemed to be regulated or controlled in or pursuant to the
Environmental Law; and
(c) "Release" means any release, spill, emission, leakage, pumping,
injection, deposit, disposal, discharge, dispersal, leaching
or migration.
During the Term of this Lease, the Tenant shall:
(i) comply with all requirements of the Environmental Law (provided
that the Tenant shall have no responsibility to
remedy any breach of Environmental Law which existed
as at the Commencement Date and which did not arise
from any act or omission of the Tenant prior to such
date, whether in the construction of its Leasehold
Improvements or otherwise);
(ii) conduct its business operation in the Leased Premises in such a
manner as to prevent the Release of any Hazardous
Substance in, on, under, over or at the Leased
Premises.
If the Tenant creates or brings to the Leased Premises any Hazardous
Substances or if the conduct of the Tenant's business shall cause there to be
any Hazardous Substance at the Leased Premises then, notwithstanding any rule of
law to the contrary, such Hazardous Substance shall be and remain the sole and
exclusive property of the Tenant and shall not become the property of the
Landlord notwithstanding the degree of affixation to the Leased Premises of the
Hazardous Substance, and notwithstanding the expiry or earlier termination of
this Lease.
During the Term, and at the expiration of the Term of this Lease, the
Tenant shall, at the Tenant's sole cost and expense in accordance with all
requirements of Environmental Law, remove any Hazardous Substance brought or
permitted to be brought onto the Leased Premises by the Tenant or those for
whom the Tenant is at law responsible.
ARTICLE VII
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INSURANCE AND INDEMNITY
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SECTION 7.01 - TENANT'S INSURANCE
(a) The Tenant shall throughout the period that the Tenant is given
possession of the Leased Premises and during the entire
Term, at its sole cost and expense, take out and keep in
full force and effect, the following insurance:
(i) all-risk property insurance (including but not limited to sprinkler
leakage, flood, earthquake and collapse coverage) in an
amount equal to the full replacement cost thereof upon
property of every description and kind owned by the
Tenant or for which the Tenant is liable, or installed
by or on behalf of the Tenant and which is located
within the Leased Premises including, without
limitation, Leasehold Improvements, tenant's fixtures,
the Tenant's stock-in-trade, furniture and personal property
provided that if there is a dispute as to the amount which
comprises full replacement cost, the decision of the
Landlord shall be conclusive;
(ii) business interruption insurance in such amount as will reimburse the
Tenant for direct or indirect loss of earnings attributable
to all perils insured against in Section 7.01(a)(i) and
other perils commonly insured against by prudent tenants or
attributable to prevention of access to the Leased Premises
as a result of such perils;
(iii) comprehensive general and legal liability insurance, including
bodily injury, property damage and personal injury
liability, tenant's legal liability, contractual liability
and owners' and contractors' protective insurance coverage
with respect to the Leased Premises and the Tenant's use of
the Leased Premises, coverage to include the activities and
operations conducted by the Tenant and any other person for
whom the Tenant is in law responsible. Such policies shall
be written on a comprehensive basis with inclusive limits
of not less than five million dollars ($5,000,000) for
bodily injury to any one or more persons or property damage,
and such higher limits as the Landlord, acting reasonably,
or the Mortgagee requires from time to time, and shall
contain a severability of interests clause and a cross-
liability clause;
(iv) if appropriate, broad form comprehensive boiler and machinery
insurance on a blanket repair and replacement basis with
limits for each accident in an amount not less than the full
replacement cost of all Leasehold Improvements and of all
boilers, pressure vessels, air-conditioning equipment and
miscellaneous electrical apparatus owned or operated by the
Tenant or by others (other than the Landlord) on behalf of
the Tenant in or serving the Leased Premises;
(v) insurance required by reason of the introduction by or on behalf of
the Tenant or any occupant of the Leased Premises, or any
part thereof, of any radioactive material or substance, into
or on or about the Leased Premises or on the Lands, or for
any other reason requiring special coverage; and
(vi) any other form of insurance which the Landlord, acting reasonably,
requires from time to time in form, in amounts and for risks
against which a prudent tenant would insure.
(b) All policies shall:
(i) be taken out with insurers acceptable to the Landlord;
(ii) be in a form satisfactory from time to time to the Landlord which
form may include a reasonable deductible, the amount of
which will be subject to the Landlord's approval, which
approval may not be unreasonably withheld;
(iii) be non-contributing with and shall apply only as primary and not as
excess to any other insurance available to the Landlord or
the Mortgagee;
(iv) not be invalidated as respects the interests of the Landlord and of the
Mortgagee by reason of any breach of violation of any
warranties, representations or conditions contained in the
policies;
(v) contain an undertaking by the insurers to notify the Landlord and
the Mortgagee in writing not less than thirty (30) days
prior to any material change, cancellation or termination
thereof;
(vi) name the Landlord and the Mortgagee as insured parties and, in
respect of property damage insurance, incorporate the
Mortgagee's standard mortgage clause; and
(vii) contain a waiver of subrogation by the insurer in respect of any claims to
which it might otherwise be entitled against the Landlord or
those for whom it is at law responsible.
(c) Certificates of insurance or, if required by the Landlord or the
Mortgagee, certified copies of each such insurance policy
will be delivered to the Landlord as soon as practicable
after the placing of the required insurance and in any event
such certificates of insurance shall be delivered at least
ten (10) days-prior to the effective date of coverage.
Provided that no review or approval of any such
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insurance certificate by the Landlord shall derogate from or
diminish the Landlord's rights or the Tenant's obligations
contained in this Article.
(d) If the Tenant fails to take out or keep in force any insurance
referred to in this Section 7.01, or should any such
insurance not be approved by either the Landlord or the
Mortgagee and should the Tenant not commence to diligently
rectify (and thereafter proceed to diligently rectify) the
situation within twenty-four (24) hours after written notice
by the Landlord to the Tenant (stating, if the Landlord or
the Mortgage does not approve of such insurance, the
reasons therefor), the Landlord has the right without
assuming any obligation in connection therewith to effect
such insurance at the sole cost of the Tenant and all
outlays by the Landlord shall be paid by the Tenant to the
Landlord on demand as Additional Rent without prejudice to
any other rights and remedies of the Landlord under this
Lease.
(e) The Tenant agrees that in the event of damage or destruction to the
Leasehold Improvements in the Leased Premises covered by
insurance pursuant to Section 7.0l(a)(i), the Tenant shall
use the proceeds of such insurance for the purpose of
repairing or restoring such Leasehold Improvements, it being
acknowledged and agreed that the Tenant shall endeavour, in
good faith, to replicate the Leasehold Improvements as at
the Commencement Date but shall not be obligated in such
repairing or restoring to adhere strictly to the same plans
and specifications which were employed in the original
construction of such Leasehold Improvements. If the event of
damage to or destruction of the Building entitling the
Landlord or the Tenant to terminate the Lease pursuant to
Section 9.01(b) and the Lease is terminated, the Tenant
shall forthwith pay to the Landlord all of its insurance
proceeds relating to the Leasehold Improvements in or on
the Leased Premises and the Tenant shall upon demand deliver
to the Landlord in accordance with the provisions of this
Lease the Leasehold Improvements and the Leased Premises.
SECTION 7.02 - INCREASE IN INSURANCE PREMIUMS
The Tenant shall not keep, use, sell or offer to sell in or upon the
Leased Premises any article which may be prohibited by any fire insurance policy
in force from time to time covering the Leased Premises. In addition, if:
(a) the occupation of the Leased Premises by the Tenant;
(b) the conduct of business in the Leased Premises by the Tenant;
or
(c) any act or omission of the Tenant in the Leased Premises or any
part thereof;
causes or results in any increase in premiums for the insurance carried from
time to time by the Landlord with respect to the Leased Premises, the Tenant
shall pay any such increase in premiums as Additional Rent forthwith upon demand
by the Landlord. In determining whether increased premiums are caused by or
result from the use or occupancy of the Leased Premises by the Tenant or those
for whom the Tenant is at law responsible, a schedule issued by the organization
computing the insurance rate on the Leased Premises showing the various
components of such rate shall be conclusive evidence of the several items and
charges which make up such rate. The Tenant shall comply promptly with all
requirements of any insurer now or hereafter in effect pertaining to or
affecting the Leased Premises.
SECTION 7.03 - CANCELLATION OF INSURANCE
If any insurance policy upon the Leased Premises or any part thereof
shall be cancelled or shall be threatened by the insurer to be cancelled or the
coverage thereunder reduced in any way by the insurer by reason of the use or
occupation of the Leased Premises or any part thereof by the Tenant or by any
assigns or sub-tenant of the Tenant, or by anyone permitted by the Tenant to be
upon the Leased Premises, the Tenant shall remedy the condition giving rise to
cancellation, threatened cancellation or reduction of coverage within twenty-
four (24) hours after Notice thereof by the Landlord.
SECTION 7.04 - LOSS OR DAMAGE
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The Landlord shall not be liable for any death or injury arising from or
out of any occurrence in, upon, at or relating to the Leased Premises, or damage
to property of the Tenant or of others located on or in the Leased Premises, nor
shall it be responsible for any loss of or damage to any property of the Tenant
or others from any cause whatsoever, except for any such death, injury, loss or
damage which results from the negligence of the Landlord, its agents, servants
or employees or other persons for whom it may in law be responsible and provided
that in no event shall the Landlord be responsible for any loss, injury or
damage contemplated by Section 7.07(b), or for any indirect or consequential
damages sustained by the Tenant or others. Without limiting the generality of
the foregoing but subject to the exceptions to the limitation of the liability
of the Landlord set out herein, the Landlord shall not be liable for any injury
or damage to persons or property resulting from fire, explosion, dampness,
falling plaster, falling ceiling tile, falling ceiling fixtures (including part
or all of the ceiling T grid system) and diffuser coverings, or from steam, gas,
electricity, water, rain, flood, snow or leaks from any rentable premises or
from the pipes, sprinklers, appliances, plumbing works, roof, windows or
subsurface of any floor or ceiling of the Leased Premises or from the street or
any other place or by any other cause whatsoever. The Landlord shall not be
liable for any such damage caused by other persons on the Leased Premises or by
occupants of adjacent property thereto (save to the extent such other persons or
occupants are persons for whom the Landlord is otherwise at law responsible) or
the public, or caused by construction by persons other than the Landlord or
those for whom it is at law responsible or by any public or quasi-public work.
Subject to the foregoing, all property of the Tenant kept or stored on the
Leased Premises shall be so kept or stored at the risk of the Tenant only and
the Tenant shall indemnify the Landlord and save it harmless from any claims
arising out of any damage to the same including, without limitation, any
subrogation claims by the Tenant's insurers.
SECTION 7.05 - LANDLORD'S INSURANCE
The Landlord shall at all times throughout the Term carry:
(a) insurance on the Building (excluding the foundations and
excavations) and the machinery, boilers and equipment
contained therein or servicing the Building and owned by the
Landlord (specifically excluding any property with respect to
which the Tenant is obliged to insure pursuant to Section
7.01) against damage by fire and extended perils or all-
risks coverage;
(b) public liability and property damage insurance with respect to the
Landlord's operations, if any, on the Leased Premises;
(c) loss of rental income insurance, or loss of insurable gross profits
commonly insured against by prudent landlords, including loss
of all rentals receivable from the Tenant in accordance with
the provisions of this Lease, including Basic Rent and
Additional Rent; and
(d) such other form or forms of insurance as the Landlord or the
Mortgagee reasonably considers advisable and which a prudent
owner of a similar building would maintain.
Such insurance shall be in such reasonable amounts and with such reasonable
deductibles as would be carried by a prudent owner of reasonably similar
industrial building, having regard to size, age and location. Notwithstanding
the Landlord's covenant contained in this Section 7.05, and notwithstanding any
contribution by the Tenant to the cost of insurance premiums provided herein,
the Tenant acknowledges and agrees that no insurable interest is conferred upon
the Tenant under any policies of insurance carried by the Land1ord, and the
Tenant has no right to receive any proceeds of any such insurance policies
carried by the Landlord. The Landlord shall obtain in each of its policies of
insurance a waiver of any rights of subrogation to which the Landlord's insurer
might otherwise be entitled against the Tenant or those for whom the Tenant is
at law responsible.
SECTION 7.06 - INDEMNIFICATION OF THE LANDLORD
Except as provided in Section 7.07(a) but notwithstanding any other
provision of this Lease, the Tenant agrees to protect, indemnify and save each
of the Landlord and its officers, employees and agents completely harmless from
and against:
(i) any loss (including loss of Basic Rent and Additional Rent),
claims, actions, damages, liability and expenses in
connection with loss of life, personal injury, damage to
property or any other loss or injury whatsoever arising out
of any occurrence in, upon or at the Leased Premises, and
related to the occupancy or use thereof by the Tenant of the
Leased Premises or any part thereof, or occasioned wholly or
in part by any act or omission of the Tenant and/or any other
person for whom the Tenant is at law responsible; and
(ii) any Environmental Claim as hereinafter defined, directly or
indirectly incurred, sustained or suffered by or asserted
against the Landlord and/or its officers, employees and
agents caused by or attributable to, either directly or
indirectly, any act or omission of the Tenant and/or any
other person for which the Tenant is in law responsible
prior to or during the Term of this Lease.
For the purposes of this Lease, "Environmental Claim" means any
claims, losses, costs, expenses, fines, penalties, payments and/or damages
(including without limitation, all reasonable solicitors' fees on a solicitor
and his own client basis) relating to, arising out of, resulting from or in any
way connected with the Release (as such term is defined in Section 6.07 of this
Lease) in, on, over, upon or from the Leased Premises of any Hazardous Substance
(as such term is defined in Section 6.07 of this Lease) including, without
limitation, all costs and expenses of any remediation or restoration of the
Leased Premises and/or the Lands required or mandated by the Environmental Law
(as such term is defined in Section 6.07 of this Lease).
If the Landlord shall, without fault on its part, be made a party of
any litigation commenced by or against the Tenant, then the Tenant shall
protect, indemnify and hold the Landlord harmless and shall pay all costs,
expenses and reasonable legal fees incurred or paid by the Landlord in
connection with such litigation. The Tenant shall also pay all reasonable costs,
expenses and legal fees that may be incurred or paid by the Landlord in
reasonably enforcing the terms, covenants and conditions in this Lease unless a
court of law having jurisdiction shall decide otherwise.
SECTION 7.07 - LIMITATIONS OF LIABILITY
(a) The Tenant shall not be liable to the Landlord in respect of
any loss, injury or damage insured or required to be
insured by the Landlord under Sections 7.05(a) and (c) to
the extent of any recovery by the Landlord under such
insurance or to the extent the Landlord would have
recovered had it placed such coverage as is required of
it pursuant to Section 7.05 hereof and diligently
pursued any available claim thereunder; and
(b) The Landlord shall not be liable to the Tenant in respect of any
loss, injury or damage to property insured or required to
be insured by the Tenant under Sections 7.01(a)(i), (ii)
and (iv) to the extent of any recovery by the Tenant
under such insurance or to the extent the Tenant would
have recovered had it placed such coverage as is
required of it pursuant to Subsection 7.01(a) hereof and
diligently pursued any available claim thereunder.
ARTICLE VIII
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MAINTENANCE, REPAIRS AND ALTERATIONS
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SECTION 8.01 - MAINTENANCE AND REPAIRS BY THE TENANT
(a) Subject to Sections 8.03 and 9.01 hereof, the Tenant shall
at all times at its sole cost, keep and maintain the
Leased Premises and every part thereof, including all
facilities, equipment and services, both inside and
outside, in a clean and tidy condition and will not
permit waste paper, garbage, ashes, waste, debris or
other objectionable material to accumulate thereon or
therein and the Tenant will not use any outside garbage
or other containers (other than those approved or
designated by the Landlord) and the Tenant shall arrange
for removal and disposal of waste and garbage at its sole
expense. Subject to sections 8.03 and 9.01 hereof, the
Tenant, at its sole cost and expense, shall renew,
rebuild, replace, operate, maintain, paint and keep the
Leased Premises and every part thereof, both exterior
and interior, all equipment, fixtures, appurtenances used
in or about the Leased Premises,
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including plumbing, electrical, heating, cooling, and
other facilities and systems during the Term of this
Lease, in good repair and condition, as a careful and
prudent tenant would do (such reasonable wear and tear as
would not be repaired by a careful and prudent tenant,
damage by insured perils, and repairs to the structural
elements of the Building and base building, mechanical,
electrical and plumbing systems only excepted, unless and
to the extent caused by the negligent act or omission of
the Tenant or those for whom the Tenant is in law
responsible).
(b) The Tenant shall examine the Leased Premises before taking
possession thereof and unless the Tenant furnishes the
Landlord with a notice in writing specifying any defect
in the construction of the Leased Premises within
fifteen (15) days after such taking of possession, the
Tenant shall conclusively be deemed to have examined the
Leased Premises, to have agreed that they are in order,
and such taking of possession without the giving of such
notice as aforesaid within such fifteen (15) day period
is conclusive evidence against the Tenant that at the
time thereof the Leased Premises were in good order and
satisfactory condition, subject to latent defects, if
any. The Tenant agrees that there is no promise,
representation or undertaking by or binding upon the
Landlord with respect to the use of the Leased Premises
or any alteration, remodeling or redecorating of or
installation of equipment or fixtures in the Leased
Premises, except such, if any, as are expressly set forth
in this Lease or the Agreement to Lease.
(c) The Tenant acknowledges that it will not enter, nor permit or
suffer any person to enter upon the roof of the building
containing the Leased Premises or make any opening in the
roof or roof membrane without the prior written consent
of the Landlord.
(d) In addition to the specific obligations elsewhere in this Lease
reserved and contained on the part of the Tenant to be
observed and performed and without in any way limiting
the generality thereof (but subject always to the
Landlord's obligations in this Lease contained), the
condition, maintenance, operation and management of the
Leased Premises, and other improvements thereon or
therein from time to time, including without limitation
all machinery, equipment and other facilities therein or
thereon, shall be the sole responsibility of the Tenant,
throughout the Term hereof and the Tenant shall make all
payments, foreseen, unforeseen, ordinary and/or
extraordinary, required to be made not only with respect
to the observance and performance of such specific
obligations but also with respect to the general
obligation in this clause contained.
SECTION 8.02 - LANDLORD'S APPROVAL OF THE TENANT'S REPAIRS OR ALTERATIONS
(a) During the Term of this Lease or any renewal or extension
hereof, the Tenant shall not make any repairs,
replacements or, Leasehold Improvements in any part of
the Leased Premises without first obtaining the
Landlord's written approval, such approval not to be
unreasonably withheld, and in connection therewith the
Tenant shall, prior to commencing any such work, submit
to the Landlord:
(i) for its prior approval details of the proposed work, including
drawings and specifications prepared by qualified
architects or engineers and conforming to good
engineering practice;
(ii) such reasonable indemnification against liens, costs, damages
and expenses (including its costs and expenses incurred,
or which may be incurred, in reviewing the proposed work
and supervising its completion) and such insurance
coverage as the Landlord reasonably requires; and
(iii) evidence satisfactory to the Landlord that the Tenant has
obtained at its expense all necessary consents, permits,
licences and inspections from all governmental and
regulatory authorities having jurisdiction.
(b) All such repairs, replacements or, Leasehold Improvements made
or installed by the Tenant in the Leased Premises and
approved by the Landlord shall be performed:
(i) with quality materials owned by the Tenant at the sole cost of
the Tenant;
(ii) by competent workmen whose labour union affiliations are
compatible with others employed by the Landlord and its
contractors;
(iii) in a good and workmanlike manner;
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(iv) in accordance with the drawings and specifications approved by the
Landlord; and
(v) subject to the reasonable regulations, supervision, controls and
inspection of the Landlord.
(c) If any such repairs, replacements, Leasehold Improvements would affect the
structure of the Building, or any of the electrical, mechanical or other base
building systems or their warranties, such work shall, at the option of the
Landlord, be performed by the Landlord as an Additional Service at competitive
prices. If such work would affect such warranties, the Landlord may reasonably
refuse to allow such work to be done. Upon completion thereof, and thereafter,
to the extent requiring ongoing maintenance, repair or replacement, the Tenant
shall pay to the Landlord the Additional Service Cost in respect thereof.
(d) In respect of repairs, alterations or replacements of or to the Leased
Premises during the Term, the Tenant shall pay to the Landlord, as Additional
Rent, the Landlord's reasonable costs and fees incurred in respect of the
supervising, coordinating, monitoring, reviewing, inspecting and approving of
the construction of the Leasehold Improvements, including professional fees
incurred by the Landlord, such costs not to exceed in the aggregate for
construction of the Tenant's initial Leasehold Improvements twenty-five cents
($0.25) per square foot and not to exceed, in the aggregate, for other
construction of Leasehold Improvements during the Term, ten cents ($0.10) per
square foot and, if the Landlord's architects and engineers responsible for the
Leased Premises are not retained by the Tenant to complete any improvements in
the Leased Premises affecting the structure thereof or any of the electrical,
mechanical or other base building systems or their warranties, any cost or
expense of the Landlord's architects and engineers in respect of approval of
plans, and supervision and/or inspection of such work, will each be payable by
the Tenant as Additional Rent upon being invoiced by the Landlord.
(e) The Landlord and Tenant acknowledge that the provisions of this Section
8.02 are intended to apply during the Term, that is as and from the Commencement
Date only, and are not intended to apply to the initial construction of the
Leasehold Improvements, which shall be governed by Section 2.03 hereof.
SECTION 8.03 - MAINTENANCE AND REPAIRS BY THE LANDLORD
(a) The Landlord agrees with the Tenant to keep in good and first class
condition and repair as a careful and prudent owner would do:
(i) the exterior portions of the Building and other structures from time to
time forming part of the Leased Premises and affecting its general appearance
including, without limitation, the exterior weather walls and the asphalt
parking lot and lighting and landscaped areas of the Leased Premises, including
all landscaping, snow plowing, trash removal and general building and grounds
maintenance functions; and
(iii) the structural members or elements of the Leased Premises, including its
foundations, floor structures, roof and water proof membrane and structural
portions of exterior walls, bearing walls, structural columns and beams and base
building mechanical, electrical and HVAC components and plumbing systems and
drains, gas, electrical and other utility services to the Building located in,
on or under the Lands, except for repairs caused by the negligent act or
omission of the Tenant or those for whom the Tenant is in law responsible.
(b) Subject to Section 9.01 the Landlord agrees with the Tenant to repair
Insured Damage.
(c) The Tenant acknowledges and agrees that the Landlord is not liable for any
damages, direct, indirect or consequential, or for damages for personal
discomfort, illness
22
or inconvenience of the Tenant or the Tenant's
servants, clerks, employees, invitees or other persons
by reason of failure of any equipment, facilities or
systems servicing the Leased Premises or of reasonable
delays in the performance of any repairs, replacements
and maintenance for which the Landlord is responsible
pursuant to this Lease and no such delay shall entitle
the Tenant to any compensation or abatement whatsoever.
(d) If the Tenant refuses or neglects to carry out any repairs
properly required to be carried out by it under this
Lease and to the reasonable satisfaction of the
Landlord, the Landlord may, but shall not be obliged
to, make such repairs without being liable for any loss
or damage that may result to the Tenant's merchandise,
fixtures or other property or to the Tenant's business
by reason thereof and upon completion thereof, the
Tenant shall pay to the Landlord the Additional
Service Cost in respect thereof.
SECTION 8.04 - SURRENDER OF THE LEASED PREMISES
At the expiration of the Term or earlier termination of this Lease,
the Tenant shall peaceably surrender and yield up the Leased Premises to the
Landlord in as good condition and repair as the Tenant is required to maintain
the Leased Premises throughout the Term and the Tenant shall surrender all keys
for the Leased Premises to the Landlord at the place then fixed for the payment
of Rent and shall inform the Landlord of all combinations of locks, safes and
vaults, if any, in the Leased Premises. Notwithstanding any other provision of
this Lease to the contrary, the Tenant shall not be required to remove its
Leasehold Improvements at the expiration or earlier termination of the Term. The
Tenant may, however, and shall, if requested by the Landlord as provided in
Section 8.08 hereof, remove all of its trade fixtures before surrendering the
Leased Premises as aforesaid. The Tenant's obligation under this covenant shall
survive the expiration of the Term or earlier termination of this Lease.
SECTION 8.05 - REPAIR WHERE THE TENANT IS AT FAULT
Save for the limitation of liability contained in Section 7.07(a) but
notwithstanding any other provision of this Lease, if the Leased Premises or
any part thereof, or any equipment, machinery, facilities or improvements
contained therein or made thereto, or the roof or outside walls of the
Building or any other structural portions thereof require repair or replacement
or become damaged or destroyed by reason of any act, omission to act, neglect or
default of the Tenant or those for whom the Tenant is in law responsible or
through any of them in any way stopping up or damaging the climate control,
heating apparatus, water pipes, drainage pipes or other equipment or facilities
or parts of the Leased Premises, the cost of the resulting repairs, replacements
or alterations shall be an Additional Service Cost to the Tenant.
SECTION 8.06 - TENANT NOT TO OVERLOAD FACILITIES
The Tenant shall not install any equipment which will alter, exceed
or overload the capacity of any utility, electrical or mechanical facilities in
the Leased Premises, and the Tenant will not bring into the Leased Premises or
install any utility, electrical or mechanical facility or service which the
Landlord does not approve, such approval not to be unreasonably withheld. The
Tenant agrees that if any changes proposed or used by the Tenant requires
additional utility, electrical or mechanical facilities, the Landlord may, in
its sole discretion, if they are available, elect to install them in accordance
with plans and specifications to be approved in advance in writing by the
Landlord and the reasonable and competitive cost thereof shall be an Additional
Service Cost to the Tenant.
SECTION 8.07 - TENANT NOT TO OVERLOAD FLOORS
The Tenant shall not bring into the Building or any part thereof any
machinery, equipment, article or thing that by reason of its weight, size or
use might in the opinion of the Landlord damage the Building or the Leased
Premises and shall not at any time overload the floors of the Building.
SECTION 8.08 - REMOVAL AND RESTORATION BY TENANT
(a) All Leasehold Improvements shall immediately become the
property of the Landlord upon affixation or
installation without compensation therefor to the
Tenant, but the Landlord is under no obligation to
repair, maintain or insure any Leasehold Improvements.
Leasehold Improvements and trade fixtures shall not be
removed from the Leased Premises either during or at
the expiration or earlier termination of the Term
except that:
(i) the Tenant may during the Term in the usual or normal course of
its business and without the prior written consent
of the Landlord remove its trade fixtures,
23
provided that such trade fixtures have become excess
for the Tenant's purposes or the Tenant is substituting
new and similar trade fixtures therefor, and provided
that the Tenant is not in default under this Lease;
(ii) the Tenant shall, immediately prior to the expiration of the Term
and at its own cost, remove all trade fixtures
requested by the Landlord to be removed and repair any
damage to the Leased Premises caused by their
installation and removal, failing which such may be
completed by the Landlord as an Additional Service to
the Tenant; and
(iii) the Tenant may, with the prior written consent of the Landlord, but
shall not be obligated, to remove at its own cost from
the Leased Premises immediately prior to the expiration
of the Term, any of the Tenant's Leasehold Improvements
and shall repair any damage to the Leased Premises
caused by their installation and removal, failing which
such repair may be completed by the Landlord as an
Additional Service to the Tenant.
(b) If the Tenant does not remove its trade fixtures requested by
the Landlord to be removed at the expiration or earlier
termination of the Term, the trade fixtures shall, at the
option of the Landlord, become the property of the Landlord
and, as an Additional Service to the Tenant, may be removed
from the Leased Premises and sold or disposed of by the
Landlord in such manner as it deems advisable.
All property of the Tenant remaining on the Leased Premises after the
termination of the tenancy shall be deemed to have been abandoned by the Tenant
in favour of the Landlord and may be disposed of by the Landlord at its
discretion without prejudice to the rights of the Landlord to claim damages
from the Tenant for failure to remove the same.
SECTION 8.09 - NOTICE BY THE TENANT
The Tenant shall when it becomes aware of same notify the Landlord by
Notice of any damage to or deficiency or defect in any part of the Leased
Premises, any equipment or utility systems or any installations located therein
notwithstanding the fact that the Landlord may have no obligations with
respect to same.
SECTION 8.10 - TENANT TO DISCHARGE ALL LIENS
The Tenant shall at all times during the period that the Tenant is
engaged in the construction or installation of its improvements or has been
given possession of the Leased Premises and throughout the Term promptly pay all
its architects, engineers, contractors, materialmen, suppliers and workmen and
all charges incurred by or on behalf of the Tenant for any work, materials or
services which may be done, supplied or performed at any time in respect of the
Leased Premises and the Tenant shall do any and all things necessary so as to
ensure that no lien is registered against the Leased Premises or any part
thereof or against the Landlord's interest in the Leased Premises in connection
with work performed in respect of, or materials supplied to, the Leased Premises
at the request of the Tenant (including, without limitation, obtaining a
waiver of lien from its contractors and subcontractors) and if any lien is made,
filed or registered as a result thereof, the Tenant shall discharge it or cause
it to be discharged forthwith at the Tenant's expense.
If the Tenant fails to discharge or cause any such lien to be
discharged as aforesaid within seven (7) days of receipt of notice of same, then
in addition to any other right or remedy of the Landlord, the Landlord may but
it shall not be obligated to discharge the same by paying the amount claimed to
be due into Court or directly to any such lien claimant and the amount so paid
by the Landlord and all costs and expenses, including reasonable legal fees (on
a solicitor and his client basis) incurred as a result of the registration of
any such lien shall be immediately due and payable by the Tenant to the
Landlord as Additional Rent on demand.
SECTION 8.11 - SIGNS AND ADVERTISING
The Tenant shall be permitted, at its sole cost, to install signage on
the Building fascia overlooking Matheson Boulevard, and on the Building standard
podium sign (which podium sign will be provided by the Landlord at its cost) to
be located at the driveway entrance to the Leased Premises. In
24
addition, the Tenant shall be permitted to install signage on the north side of
the lands facing Highway 401, provided that such sign exceeds the height of the
Building. The Tenant shall throughout the Term be responsible for the cost of
repair and replacement of all such signs. The installation, repair and removal
of any signs permitted under this Section 8.11 shall be subject to compliance by
the Tenant with all Laws and to the Tenant obtaining the approval of the
Landlord, acting reasonably, with respect to size, location, design and method
of affixation of any such signs. The Tenant acknowledges that any sign affixed
to the Building may require structural re-enforcement, and that the costs
associated with such re-enforcement shall be paid by the Tenant to the Landlord
on demand as Additional Rent. At the expiration of the Term or earlier
termination of this Lease, the Tenant shall remove any such sign, picture,
advertisement, notice, lettering or decoration from the Leased Premises at the
Tenant's expense and shall promptly repair all damage caused by any such
installation and removal failing which such may be performed by the Landlord as
an Additional Service to the Tenant. The Tenant's obligation to observe and
perform this covenant shall survive the expiration of the Term or earlier
termination of this Lease.
ARTICLE IX
----------
DAMAGE AND DESTRUCTION
----------------------
SECTION 9.01 - DESTRUCTION OF THE LEASED PREMISES
(a) If the Leased Premises are at any time destroyed or damaged
(including, without limitation, smoke and water damage) as a
result of fire, the elements, accident or other casualty
required to be insured against by the Landlord pursuant to
Section 7.05 hereof or otherwise insured against by the
Landlord, and if as a result of such occurrence:
(i) the Leased Premises are rendered untenantable in whole or in part,
this Lease shall continue in full force and effect and
the Landlord shall, subject to Section 9.01(b) hereof,
commence diligently to reconstruct, rebuild or repair the
Leased Premises to the extent only of its obligations in
respect of the Landlord's Work, as defined in Section 8
of the Agreement to Lease, and if the damage is such
that the portion of the Leased Premises rendered
untenantable is not reasonably capable of use and
occupancy by the Tenant for the purposes of its business
for any period of time in excess of three (3) days, Rent
shall abate proportionately to the portion of the Leased
Premises rendered untenantable from and after the date of
such damage or destruction until that date which is one
hundred and twenty (120) days after the Landlord's
repairs have been completed and the Architect has
certified the Building, or the damaged portion thereof,
to be reasonably capable of use and occupancy by the
Tenant for the purposes of its business. The Landlord
shall in any event endeavour to replicate the Landlord's
Work as at the Commencement Date, but shall not be
obligated in the course of such reconstruction,
rebuilding or repairs to adhere strictly to the original
plans and specifications for the Landlord's Work, and
provided that in no event shall the Rentable Area of the
Building be less than that existing as at the
Commencement Date;
(ii) the Leased Premises are not rendered untenantable in whole or in part,
this Lease shall continue in full force and effect, the
Rent and other amounts payable by the Tenant shall not
terminate, be reduced or abate and the Landlord shall,
subject to Section 9.01(b) hereof, commence diligently
to reconstruct, rebuild or repair the Leased Premises to
the extent only of its obligations in respect of the
Landlord's Work as defined in Section 8 of the Agreement
to Lease. The Landlord shall in any event endeavour to
replicate the Landlord's Work as at the Commencement
Date, but shall not be obligated in the course of such
reconstruction, rebuilding or repairs to adhere strictly
to the original plans and specifications for the
Landlord's Work, and provided that in no event shall the
Rentable Area of the Building be less than that existing
as at the Commencement Date;
(b) Notwithstanding anything contained in Section 9.01(a), if more
than fifty percent (50%) of the Rentable Area of the Building
is damaged or destroyed by any cause whatsoever and such damage
or destruction occurs in the last two (2) years of the Term or
any renewal term, then the Tenant, instead of reconstructing,
rebuilding or repairing the Leasehold Improvements in
accordance with Sections 7.01(e) and 9.01(c), may at its option
elect to terminate this Lease by giving to the Landlord Notice
of termination within forty-five (45) days after such damage or
destruction, and thereupon Rent and other payments for which
the Tenant is liable under this Lease shall be apportioned and
paid to the date of such damage
25
or destruction, and the Tenant shall immediately deliver up
vacant possession of the Leased Premises to the Landlord in
accordance with the terms of this Lease and in such event all
proceeds of insurance receivable by the Tenant in respect of
Leasehold Improvements shall be directed or as signed to the
Landlord.
(c) Subject to the provisions of Subsection 9.01(b), upon the Tenant
being given Notice by the Landlord that the Landlord's
reconstruction, rebuilding or repairs have been substantially
completed, the Tenant shall forthwith complete all repairs to
the Leased Premises which are the Tenant's responsibility
under Section 7.01(e) and all other work required to fully
restore the Leased Premises for business in every case at the
Tenant's cost and without any contribution to such cost by
the Landlord, whether or not the Landlord has at any time
made any contribution to the cost of supply, installation or
construction of Leasehold Improvements in the Leased
Premises. The Tenant shall diligently complete the Tenant's
repairs and if the Leased Premises have been closed for
business, commence carrying on business within one hundred
and twenty (120) days after notice that the Landlord's
reconstructing, rebuilding or repairs have been substantially
completed.
(d) The written opinion or certificate of the Architect as to the
date of completion of any Landlord's repairs required to be
undertaken under the provisions of this Section 9.01, or as
to the portion of the Leased Premises which are untenable, or
as to when the Leased Premises or any portion thereof are
reasonably capable of use and occupancy by the Tenant
following any damage or destruction and repairs, or as to
whether fifty percent (50%) or more of the Rentable Area of
the Building has been damaged or destroyed, shall be
determinative of the issue.
SECTION 9.03 - ABROGATION
(Intentionally Deleted]
26
ARTICLE X
---------
TRANSFER AND SALE
-----------------
SECTION 10.01 - ASSIGNING AND SUBLETTING
The Tenant will not enter into, consent to or permit a Transfer without the
prior written consent of the Landlord in each instance, which consent shall not
be unreasonably withheld, but shall be subject to the Landlord's rights under
Section 10.02. Notwithstanding any statutory provision to the contrary, it shall
not be considered unreasonable for the Landlord to take into account the
following factors in deciding whether to grant or withhold its consent:
(a) whether any such Transfer is in violation or breach of any covenants
or restrictions granted by the Landlord to its Mortgagee;
(b) whether in the Landlord's opinion the financial background, business
history and capability of the proposed transferee is
satisfactory; or
(c) whether the proposed person or entity to whom the Transfer is being
made is an existing tenant of the Landlord.
The consent by the Landlord to any Transfer, if granted, shall not
constitute a waiver of the necessity for such consent to any subsequent
Transfer, whether by the Tenant or any sublessee of the Tenant. This prohibition
against a Transfer is construed so as to include a prohibition against any
Transfer by operation of law and no Transfer shall take place or be deemed to
have been consented to or approved by reason of a failure by the Landlord to
give notice to the Tenant within thirty (30) days as required by Section 10.02.
Notwithstanding the foregoing, the Landlord hereby acknowledges that the
Tenant shall be entitled from time to time throughout the Term, and any
renewals thereof without the Landlord's consent, but upon not less than ten (10)
days' written Notice to the Landlord, to assign this Lease or to sublease a
portion of the Leased Premises to:
(i) any of the Tenant's parent, subsidiary or affiliated
corporations (within the meaning of the Ontario Business
Corporations Act as amended or replaced from time to
time);
(ii) an affiliate or subsidiary of the Tenant's parent; or
(iii) any corporation in respect of which the Tenant, or a parent
of the Tenant holds no less than five percent (5%) of the
issued common shares, provided that the aggregate area
sublet to all such corporations does not exceed in the
aggregate ten thousand (10,000) square feet of Rentable
Area and that no such sublease shall be for a term,
inclusive of renewals, exceeding three (3) years, and
further provided that any disposition by the Tenant or its
parent of any of the common shares of any such corporation,
or the issuance of any additional shares of such
corporation, which would result in the holding of the
Tenant or the Tenant's parent being reduced or diluted to
less than five percent (5%) of the total issued common
shares at any time during which such corporation continues
to occupy a portion of the Leased Premises, shall
constitute a Transfer to which the provisions of this
Article X shall apply.
In addition to, and notwithstanding the foregoing, the Tenant shall be
entitled from time to time throughout the Term, without the Landlord's consent
but upon not less than ten (10) days' written Notice to the Landlord, to
sublease any portion of the Leased Premises from time to time so long as the
aggregate Rentable Area which is the subject to all such subleases (excluding
subleases permitted under the preceding paragraph) does not exceed fifteen
percent (15%) of the Rentable Area of the Building and provided that the term of
any such sublease inclusive of all renewals, shall not exceed four (4) years.
SECTION 10.02 - LANDLORD'S RIGHT TO GIVE OR WITHHOLD CONSENT
Save as provided for in Section 10.01, above, the Tenant shall not effect a
Transfer unless:
(a) it shall have received or procured a bona fide written offer to effect
a Transfer which is not inconsistent with, and the acceptance of
which would not breach any provision of this Lease if this
Section 10.02 is complied with and which the Tenant has accepted
subject only to compliance with this Section 10.02, and
(b) it shall have first requested and obtained the consent in writing of
the Landlord thereto.
27
Any request for such consent shall be in writing and accompanied by a true
copy of such offer, and the Tenant shall furnish to the Landlord all information
available to the Tenant and requested by the Landlord as to the responsibility,
reputation, financial standing and business of the proposed person or entity to
whom the Transfer is being made. The Landlord shall within thirty (30) days
after having received such notice and all such necessary information, notify
the Tenant in writing either that it consents or does not consent to the
Transfer in accordance with the provisions and qualifications in this Article X.
SECTION 10.03 - CONDITIONS OF TRANSFER
(a) If there is a permitted Transfer, the Landlord may collect rent from
the transferee and apply the amount collected to the Rent
required to be paid pursuant to this Lease, but no acceptance by
the Landlord of any payments by the transferee shall be deemed a
waiver of the provisions of Article X hereof or the acceptance of
the transferee as tenant or a release of the Tenant from the
further performance by the Tenant of the covenants or obligations
on the part of the Tenant herein contained. Where the Landlord's
consent to a Transfer is required under Section 10.01, any such
consent by the Landlord shall be subject to the Tenant executing
and causing any such transferee to promptly execute an agreement
directly with the Landlord agreeing to be bound by all of the
terms, covenants and conditions contained in this Lease (in
respect of the Leased Premises, or such portion thereof as was
the subject of the Transfer) as if such transferee had originally
executed this Lease as tenant.
(b) Notwithstanding any such Transfer permitted or consented to by the
Landlord, the Tenant and transferee shall be jointly and
severally liable for the performance of all of the Tenant's
obligations under this Lease in respect of the Leased Premises,
or such portion thereof as was the subject of such Transfer, and
the Tenant shall not be released from performing any of the
terms, covenants and conditions of this Lease.
(c) The Tenant agrees that if this Lease is ever disclaimed or terminated
in a bankruptcy proceeding relating to a transferee, or if the
Landlord terminates this Lease as a result of any act or default
of any transferee, the Tenant shall, at the Landlord's option
exercised by Notice to the Tenant, enter into a new lease of the
Leased Premises on terms identical to this Lease for a term
commencing on the date which the Landlord exercises its right to
require the Tenant to enter into such new lease and expiring upon
the date of expiry of this Lease; in such event, the Tenant
will accept the Leased Premises in an "as is" condition.
(d) There shall be no prohibition on the rent that may be charged by the
Tenant to any transferee, but the Tenant agrees that in respect
of any Transfer permitted hereunder, any rent or other
consideration received by the Tenant which is in excess of the
Rent payable by the Tenant hereunder (after deduction of the
Tenant's reasonable costs of the Transfer, including, without
limitation, direct leasing costs, tenant allowances or free rent,
real estate commissions, legal fees and undepreciated capital
costs, based upon a ten (10) year amortization period, for
original construction costs incurred by the Tenant) shall be
shared equally between the Tenant and the Landlord and the
Landlord's equal share of such excess shall be payable to the
Landlord as Additional Rent on demand.
(e) Any document or consent evidencing any Transfer permitted by the
Landlord or setting out any terms applicable to such Transfer or
the rights and obligations of the Tenant or the transferee
thereunder, shall be prepared by the Landlord or its solicitors,
and all reasonable legal and other costs with respect thereto
shall be paid by the Tenant to the Landlord or its solicitors
forthwith upon demand as Additional Rent, together with an
administrative fee payable to the Landlord in the amount of three
hundred dollars ($300).
SECTION 10.04 - NO ADVERTISING OF THE LEASED PREMISES
28
The Tenant shall not print, publish, post, display or broadcast any notice
or advertisement or otherwise advertise the whole or any part of the Leased
Premises for the purpose of any Transfer and it shall not permit any broker or
other person to do any of the foregoing, unless the complete text and format of
any such notice or advertisement is first approved in writing by the Landlord,
which approval shall not be unreasonably withheld. Without in any way
restricting or limiting the Landlord's right to refuse any text or format on
other grounds, any text or format proposed by the Tenant shall not contain any
reference to the Rent of and for the Leased Premises
SECTION 10.05 - ASSIGNMENT BY THE LANDLORD
The Landlord, at any time and from time to time, may sell, transfer, lease
assign or otherwise dispose of the whole or any part of its interest in the
Leased Premises, and at any time and from time to time may enter into any
Mortgage of the whole or any part of its interest in the Leased Premises. If the
party acquiring such interest shall have agreed, so long as it holds such
interest, to assume and to perform each of the covenants, obligations and
agreements of the Landlord under this Lease in the same manner and to the same
extent as if originally named as the Landlord in this Lease, the Landlord shall
thereupon be released from all of its covenants and obligations under this
Lease.
ARTICLE XI
----------
ACCESS AND ALTERATIONS
----------------------
SECTION 11.01 - RIGHT OF ENTRY
The Landlord and its agents have the right on prior reasonable Notice to
enter the Leased Premises at all times to examine the same and to make such
repairs, alterations, changes, checks, adjustments, calibrations, improvements
or additions to the Leased Premises or the Building or any part thereof or
systems therein. The Tenant shall not obstruct any pipes, conduits, ducts,
mechanical shafts or electrical equipment so as to prevent reasonable access
thereto.
SECTION 11.02 - RIGHT TO SHOW LEASED PREMISES
The Landlord and its agents have the right to enter the Leased Premises at
all times during business hours and on prior reasonable Notice to show them to
prospective purchasers, lessees or Mortgagees and during the nine (9) months
prior to the expiration of the Term, or any renewal term, the Landlord may place
upon the Leased Premises the usual "For Rent" notices which the Tenant shall
permit to remain thereon without molestation or complaint.
SECTION 11.03 - ENTRY NOT FORFEITURE
No entry into the Leased Premises or anything done therein by the Landlord
pursuant to a right granted by this Lease shall constitute a breach of any
covenant for quiet enjoyment, or (except where expressed by the Landlord in
writing) shall constitute a re-entry or forfeiture, or any actual or
constructive eviction. The Tenant shall have no claim for injury, damages or
loss suffered as a result of any such entry or thing done by the Landlord. The
Rent required to be paid pursuant to this Lease shall not abate or be reduced
due to loss or interruption of business of the Tenant or otherwise while any
repairs, alterations, changes, adjustments, improvements or additions permitted
by this Lease are being made by the Landlord.
SECTION 11.04 - LANDLORD'S COVENANT FOR QUIET ENJOYMENT
The Landlord hereby agrees to perform or cause to be performed all of the
obligations of the Landlord under this Lease, and further agrees that if the
Tenant pays the Basic Rent and Additional Rent and continuously performs all its
obligations under this Lease, the Tenant shall, subject to the terms and
conditions of this Lease, peaceably possess and enjoy the Leased Premises
throughout the Term and any renewal thereof without any interruption or
disturbance from the Landlord or any other person or persons lawfully claiming
by, through or under the Landlord.
SECTION 11.05 - INSPECTION
The Landlord and its agents have the right on prior reasonable Notice to
the Tenant to enter the Leased Premises at all times to inspect the condition
thereof and where an inspection reveals repairs are necessary that are the
obligation of the Tenant under this Lease, the Landlord may give the Tenant
Notice
29
and thereupon the Tenant will, at the Tenant's sole expense and within twenty
(20) days of the giving of such Notice, complete the necessary repairs and
replacements, in a good and workmanlike manner to the satisfaction of the
Landlord, acting reasonably. Provided always that if the Tenant shall not within
the five (5) days after the giving of such Notice, be proceeding diligently with
the execution of the repairs and replacements mentioned in such Notice, it shall
be lawful for the Landlord to enter upon the Leased Premises and execute such
repairs and replacements and the cost thereof shall immediately be due and be
paid by the Tenant to the Landlord as an Additional Service Cost.
Notwithstanding what is hereinbefore set out, should such inspection reveal
repairs which are the obligation of the Tenant and which in the reasonable
exercise of the Landlord's judgment result in an emergency then the Landlord, at
its option, shall immediately and without Notice have the right to enter on and
into the Leased Premises and the Tenant shall pay the reasonable costs involved
immediately upon demand as an Additional Service Cost.
ARTICLE XII
-----------
STATUS STATEMENT, ATTORNMENT AND SUBORDINATION
----------------------------------------------
SECTION 12.01 - STATUS STATEMENT
Within ten (10) days after request by Notice therefor by the Landlord, the
Tenant shall deliver, in a form supplied by the Landlord, a status statement or
a certificate to the Landlord, or to the Mortgagee, or to any proposed Mortgagee
or purchaser, or as the Landlord may otherwise direct stating (if such is the
case):
(a) that this Lease is unmodified and in full force and effect (or if there
have been modifications, that this Lease is in full force and
effect as modified and identifying the modification agreements);
(b) the Commencement Date;
(c) the date to which Basic Rent and Additional Rent have been paid under
this Lease;
(d) whether there is any other existing or alleged default by either party
under this Lease with respect to which a notice of default has
been served and if there is any such default, specifying the
nature and extent thereof; and
(e) whether there are any defences or counterclaims against enforcement of
the obligations to be performed by the Tenant under this Lease.
SECTION 12.02 - SUBORDINATION AND ATTORNMENT
It is a condition of this Lease and the Tenant's rights granted hereunder
that this Lease and all of the rights hereunder are and shall at all times be
subject and subordinate to any and all Mortgages from time to time in existence
against the Lands. Upon request, the Tenant shall subordinate the Lease and all
of its rights hereunder in such form as the Landlord reasonably requires to any
and all Mortgages, and to all advances made or hereafter to be made upon the
security thereof and, if requested, the Tenant shall attorn to the holder
thereof. Any subordination will provide that the rights of the Tenant under this
Lease shall not be interfered with so long as the Tenant is not in default
hereunder and shall be conditional upon the delivery to the Tenant of the non-
disturbance covenant. The form of such subordination shall be as required by the
Landlord or any Mortgagee. Notwithstanding the foregoing, the Landlord shall
obtain, at no cost to the Tenant, from each Mortgagee affecting the Lands
and/or the Expansion Lands from time to time, a covenant of non-disturbance in
which the Mortgagee agrees not to disturb the Tenant's possession of the Leased
Premises and to be bound by the terms of this Lease, as landlord, in the event
that such Mortgagee becomes a mortgagee in possession, exercises its power of
sale remedies or forecloses, provided that the Tenant maintains this Lease in
good standing.
SECTION 12.03 - ATTORNEY
30
The Tenant irrevocably constitutes the Landlord, its agent and attorney for
the purpose of executing any agreement, certificate, attornment or subordination
required by this Lease if the Tenant fails to execute and deliver such documents
within ten (10) days after request by the Landlord.
SECTION 12.04 - FINANCIAL INFORMATION
The Tenant shall, upon request, provide the Landlord with such information
as to the Tenant's or any Indemnifier's financial standing and corporate
organization as the Landlord or the Mortgagee requires. Failure by the Tenant to
comply with the Landlord's request herein shall constitute a default under the
terms of this Lease and the Landlord shall be entitled to exercise all of its
rights and remedies provided for in this Lease.
SECTION 12.05 - ACKNOWLEDGMENT OF TITLE
The Tenant acknowledges that its interest under this Lease is subject to:
(a) such covenants, restrictions, easements, agreements and reservations
of record, and any easements, licences, rights-of-way and cost
sharing arrangements and agreements respecting the same which are
disclosed on the Parcel Register for the Lands or which are
hereafter made in connection with the provision of access or
services to the Leased Premises and which may affect the
Landlord's title;
(b) all Laws of the City of Mississauga, Province of Ontario and
Government of Canada, and of all statutory commissions, boards
and bodies having jurisdiction over the Leased Premises;
(c) the condition of the Landlord's title existing at the date hereof; and
(d) municipal realty taxes, local improvement rates, duties, assessments,
water and sewer rates and other impositions accrued but not yet
due.
ARTICLE XIII
------------
DEFAULT
-------
SECTION 13.01- RIGHT TO RE-ENTER
If and whenever:
(a) the Tenant fails to pay any Basic Rent or Additional Rent or other sums
due hereunder on the day or dates appointed for the payment
thereof (providing the Landlord first gives five (5) days' Notice
to the Tenant of any such failure); or
(b) the Tenant fails to observe or perform any other of the terms,
covenants or conditions of this Lease to be observed or performed
by the Tenant (other than the terms, covenants or conditions
set out below in subparagraphs (c) to (h), (k) and (1) inclusive,
for which no Notice shall be required), provided the Landlord
first gives the Tenant ten (10) days' (or such longer period of
time as is reasonably required in the circumstances) Notice of
any such failure to perform and the Tenant within such period of
ten (10) days (or such longer period) fails to cure any such
failure to perform, or (where such failure to perform is not
curable within such period) fails to commence diligently within
such period and to thereafter proceed diligently to cure any such
failure; or
(c) the Tenant or any agent of the Tenant falsifies any report or statement
required to be furnished to the Landlord pursuant to this Lease;
or
(d) the Tenant becomes bankrupt or insolvent or takes the benefit of any
act now or hereafter in force for bankrupt or insolvent debtors
or files any proposal or makes any assignment for the benefit of
creditors or any arrangement or compromise; or
(e) a receiver or a receiver and manager is appointed for all or a
portion of the property of the Tenant; or
(f) any steps are taken or any action or proceedings are instituted by the
Tenant or by any other party including, without limitation, any
court or governmental body of competent jurisdiction for the
dissolution, winding-up or liquidation of the Tenant or its
assets; or
31
(g) the Tenant makes a sale in bulk of any of its assets wherever
situate (other than a bulk sale made pursuant to a permitted
Transfer hereunder and pursuant to the Bulk Sales Act of
Ontario); or
(h) the Tenant abandons or attempts to abandon the Leased Premises or
sells or disposes of a substantial part of the trade
fixtures, or goods and chattels of the Tenant or removes
them from the Leased Premises except in accordance with this
Lease; or
(i) the Leased Premises, without prior Notice from the Tenant to the
Landlord, become and remain vacant for a period of fifteen
(15) consecutive days or are used by any persons other than
such as are entitled to use them hereunder; or
(j) the Tenant purports to make a Transfer, except in a manner
permitted by this Lease; or
(k) this Lease or any of the Tenant's assets located at the Leased
Premises are taken under any writ of execution; or
(l) re-entry is permitted under any other terms of this Lease
then and in every such case, the Landlord, in addition to any other rights or
remedies it has pursuant to this Lease or by Laws, has the immediate right of
re-entry upon the Leased Premises and it may repossess the Leased Premises and
enjoy them as of its former estate and may expel all persons and remove all
property from the Leased Premises and such property may be removed and sold or
disposed of by the Landlord as it deems advisable or may be stored in a public
warehouse or elsewhere at the cost and for the account of the Tenant, all
without service of notice or resort to legal process and without the Landlord
being considered guilty of trespass or becoming liable for any loss or damage
which may be occasioned thereby.
SECTION 13.02 - RIGHT TO RE-LET
If the Landlord elects to re-enter the Leased Premises as herein
provided or it takes possession pursuant to legal proceedings or pursuant to any
notice provided for by law, it may either terminate this Lease or it may from
time to time without terminating this Lease, make such alterations and repairs
as are necessary to re-let the Leased Premises or any part thereof for such term
or terms (which may be for a term extending beyond the Term) and at such rent
and upon such other terms, covenants and conditions as the Landlord in its sole
discretion, acting reasonably, considers advisable. Upon each such reletting,
all rent received by the Landlord from such re-letting shall be applied, first,
to the payment of any indebtedness other than Basic Rent or Additional Rent due
hereunder from the Tenant to the Landlord; second, to the payment of any
brokerage fees and legal fees and of costs of such alterations, repairs and re-
letting (including tenant inducements); third, to the payment of Basic Rent and
Additional Rent due and unpaid hereunder; and the residue, if any, to the extent
applicable to any period of time within the Term, shall be held by the Landlord
and applied in payment of future rent as the same becomes due and payable
hereunder. If such rent to be received from such re-letting during any month is
less than that to be paid during that month by the Tenant hereunder, the Tenant
shall pay any such deficiency which shall be calculated and paid monthly in
advance on or before the first day of each and every month. No such re-entry or
taking possession of the Leased Premises by the Landlord shall be construed as
an election on its part to terminate this Lease unless a Notice of such
intention is given to the Tenant. Notwithstanding any such re-letting without
termination, the Landlord may at any time thereafter elect to terminate this
Lease for such previous breach.
SECTION 13.03 - TERMINATION
If the Landlord at any time terminates this Lease for any breach, in
addition to any other remedies it may have, it may recover from the Tenant all
damages it incurs by reason of such breach, including the cost of recovering the
Leased Premises, legal fees (on a solicitor and his client basis) and including
the worth at the time of such termination of the excess, if any, of the amount
of Basic Rent, Additional Rent and charges equivalent to the Basic Rent,
Additional Rent and other charges required to be paid pursuant to this Lease for
the remainder of the stated Term over the then reasonable rental value of the
Leased Premises for the remainder of the stated Term, all of which amounts shall
be immediately due and payable by the Tenant to the Landlord.
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SECTION 13.04 - ACCELERATED RENT
In any of the events referred to in Section 13.01, in addition to any
and all other rights available to the Landlord, the full amount of the current
month's installment of Basic Rent and of all Additional Rent for the current
month, together with the next three (3) months' installments of Basic Rent and
of all Additional Rent for the next three (3) months, all of which shall be
deemed to be accruing due on a day-to-day basis, shall immediately become due
and payable as accelerated rent, and the Landlord may immediately distrain for
the same, together with any arrears then unpaid.
SECTION 13.05 - EXPENSES
If legal action is brought for recovery of possession of the Leased
Premises, for the recovery of Basic Rent or Additional Rent or any other amount
due under this Lease, or because of the breach of any other terms, covenants or
conditions herein contained on the part of the Tenant to be kept or performed,
and such breach is established, the Tenant shall pay to the Landlord all
expenses incurred therefor, including legal fees (on a solicitor and client
basis).
SECTION 13.06 - WAIVER OF EXEMPTION FROM DISTRESS
The Tenant hereby agrees with the Landlord that notwithstanding
anything contained in Section 30 of R.S.O. 1990, c.L.7 or any Statute
subsequently passed to take the place of or amend the said Act, none of the
goods and chattels of the Tenant at any time during the continuance of the Term
on the Leased Premises shall be exempt from levy by distress for Basic Rent or
Additional Rent in arrears and the Tenant waives any such exemption. If any
claim is made for such exemption by the Tenant or if a distress is made by the
Landlord, this provision may be pleaded as an estoppel against the Tenant in any
action brought to test the right of the Landlord to levy such distress.
SECTION 13.07 - LANDLORD MAY CURE TENANT'S DEFAULT OR
PERFORM TENANTS COVENANTS
If the Tenant fails to pay when due any amounts or charges required to
be paid pursuant to this Lease (other than the late payment of Basic Rent which
shall be governed by Section 2.07 hereof), the Landlord after giving five (5)
days' Notice to the Tenant may, but shall not be obligated to, pay all or any
part of the same. If the Tenant is in default in the performance of any of its
covenants or obligations hereunder (other than the payment of Basic Rent,
Additional Rent or other sums required to be paid pursuant to this Lease), the
Landlord may, after giving ten (10) days' Notice to the Tenant, but shall not be
obligated to, from time to time (or without notice in the case of an emergency),
perform or cause to be performed any of such covenants or obligations, or any
part thereof, and for such purpose may do such things as may be required,
including, without limitation, entering upon the Leased Premises and doing such
things upon or in respect of the Leased Premises or any part thereof as the
Landlord reasonably considers requisite or necessary. All expenses incurred and
expenditures made pursuant to this Section 13.07 including the Landlord's
overhead in connection therewith plus a sum equal to twenty-five per cent (25%)
thereof shall be paid by the Tenant as Additional Rent forthwith upon demand.
SECTION 13.08 - ADDITIONAL RENT
If the Tenant is in default in the payment of any amounts or charges
required to be paid pursuant to this Lease, they shall, if not paid when due, be
collectible as Additional Rent forthwith on demand, but nothing herein contained
is deemed to suspend or delay the payment of any amount of money at the time it
becomes due and payable hereunder, or limit any other remedy of the Landlord.
The Tenant agrees that the Landlord may, at its option, apply or allocate any
sums received from or due to the Tenant against any amounts due and payable
hereunder in such manner as the Landlord sees fit. All such monies payable to
the Landlord hereunder shall bear interest at a rate per annum which is five (5)
percentage points in excess of the Bank Rate calculated on a daily basis from
the time such sums become due until paid by the Tenant.
SECTION 13.09 - REMEDIES GENERALLY
Mention in this Lease of any particular remedy of the Landlord in
respect of the default by the Tenant does not preclude the Landlord from any
other remedy in respect thereof, whether available at law or in equity or by
statute or expressly provided in this Lease. No remedy shall be exclusive or
dependant upon any other remedy, but the Landlord may from time to time exercise
any one or more of such remedies generally or in combination, such remedies
being cumulative and not alternative. In the event of a breach or threatened
breach by the Tenant of any of the covenants, provisions or terms hereof, the
Landlord shall have the right to invoke any remedy allowed at law or in equity
(including injunction) as if
33
re-entry and other remedies were not provided for herein.
SECTION 13.10 - HOLDING OVER
If the Tenant shall hold over after the original Term or any extended
term hereof with the consent of the Landlord, such holding over shall be
construed to be a tenancy from month to month only and shall have no greater
effect, any custom, statute, law or ordinance to the contrary notwithstanding.
Such month-to-month tenancy shall be governed by the terms and conditions
hereof, notwithstanding any statutory provision or rule of law to the contrary.
During any such period of holding over, whether with the consent of the Landlord
or not, the Tenant shall be required to pay the monthly Basic Rent payable
during the month immediately preceding the expiration or termination of this
Lease times two (2), plus all Additional Rent payable hereunder. The rights of
the Landlord under this section shall be in addition to all other remedies
available to the Landlord under this Lease or otherwise at law or in equity
arising as a result of such holding over.
SECTION 13.11- NO WAIVER
The failure of the Landlord or the Tenant to insist upon a strict
performance of any of the covenants and provisions herein contained on the part
of the other party shall not be deemed a waiver of any rights or remedies that
the Landlord (or the Tenant, as the case may be) may have and shall not be
deemed a waiver of any subsequent breach or default in the covenants and
provisos herein contained.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
SECTION 14.01- RULES AND REGULATIONS
The Landlord shall have the right at its discretion to make reasonable
rules and regulations (the "Rules and Regulations"), including without
limitation, those set out in Schedule "F" attached not contrary to the spirit
and intent of this Least which may from time to time be needful for the safety,
care, cleanliness and proper administration of the Leased Premises, and for the
preservation of good order therein. The Rules and Regulations are hereby made a
part of this Lease as if they were embodied herein, and the Tenant, its agents,
invitees, servant, employees and licensees shall comply with and observe the
same. Failure by the Tenant to keep and observe any of the Rules and Regulations
now or from time to time in force constitutes a default under this Lease in such
manner as if the same were contained herein as covenants. The Landlord reserves
the right, from time to time to amend or supplement the Rules and Regulations
and Notice of the Rules and Regulations and amendments and supplements, if any,
shall he given to the Tenant and the Tenant shall thereupon comply with and
observe all such Rules and Regulations, provided that no Rule or Regulation
shall contradict any terms, covenants and conditions of this Lease.
SECTION 14.02 - SECURITY DEPOSIT
The Landlord acknowledges receipt from the Tenant of the Security
Deposit which shall be applied by the Landlord, in part, to the first month's
Basic Rent due hereunder in respect of Phase 1 of the Building, as defined in
Section 2.05 hereof, and the balance of which shall be held by the Landlord for
the performance of the Tenant's obligations under this Lease. If at any time
during the Term, the Basic Rent or Additional Rent or any other sums payable by
the Tenant to the Landlord under this Lease are overdue and unpaid beyond any
notice period provided for herein, or if the Tenant fails to keep and perform
any of the terms, covenants and conditions of this Lease to be kept, observed
and performed by the Tenant and does not remedy such failure within any notice
period as is provided for herein, then the Landlord at its option may, in
addition to any and all other rights and remedies provided for in this Lease or
by law, appropriate and apply the Security Deposit, or so much thereof as is
necessary to reimburse and make good the actual damage of the Landlord. If the
Security Deposit, or any portion thereof is appropriated and applied by the
Landlord for the payment of overdue Basic Rent, Additional Rent or other sums
due and payable to the Landlord by the Tenant hereunder, then the Tenant shall
upon Notice from the Landlord, forthwith remit to the Landlord a sufficient
amount in cash to restore the Security Deposit to the amount held by the
Landlord immediately prior to such appropriation and the Tenant's
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34
failure to do so within ten (10) business days after receipt of such demand
constitutes a breach of this Lease. If the Tenant complies with all of the
terms, covenants and conditions and promptly pays all the Basic Rent, Additional
Rent and other sums herein provided and payable by the Tenant to the Landlord,
the Security Deposit shall be returned in full (and with interest as provided
for herein) to the Tenant following a favourable move-out inspection by the
Landlord and the Tenant (less any costs for repair of damage) and within ninety
(90) days after the end of the Term. Without limiting the generality of the
foregoing, the Landlord and Tenant agree that the Security Deposit shall earn
interest from and after the Commencement Date at the rate established by the
Royal Bank of Canada for thirty day certificates of deposit (or such other rate
for longer term deposits as is requested by the Tenant, so long as the funds can
be obtained by the Landlord on demand) from time to time, which interest shall
be paid to the Tenant annually upon delivery by the Landlord of the annual
statement reconciling Additional Rent as provided for in Subsection 3.07(b)
hereof. At any time throughout the Term or any renewal, the Tenant shall be
permitted to replace the Security Deposit with an irrevocable, stand-by letter
of credit from a chartered Canadian bank and in a form acceptable to the
Landlord, acting reasonably.
SECTION 14.03 - PEST CONTROL
In accordance with Section 5.03, the Tenant shall enter into a service
contract for the control and extermination of pests and vermin providing for
regular inspections and spraying of the Leased Premises in order to control
pests and vermin in accordance with all applicable laws, by-laws, ordinances and
regulations of any governmental or other authority having jurisdiction. All
amounts incurred under such service contract shall be for the Tenant's some
cost.
SECTION 14.04 - OBLIGATIONS AS COVENANTS
Each obligation or agreement of the Landlord or the Tenant expressed
in this Lease, even though not expressed as a covenant, is considered to be a
covenant for all purposes.
SECTION 14.05 - AMENDMENTS AND SUPPLEMENTARY LEASE PROVISIONS
This Lease shall not be modified or amended except by an instrument in
writing of equal formality herewith and signed by the parties hereto or by their
permitted successors or assigns. Each of the Landlord and Tenant agrees that, if
a Schedule "F" and/or a Schedule "G" is annexed to this Lease, the terms and
provisions thereof shall be binding upon the parties hereto as part of the
Lease.
SECTION 14.06 - CERTIFICATES
The following certificates shall be conclusive and binding upon the
parties to this Lease in respect of any question of fact or opinion in dispute
with respect to the matters stipulated:
(a) a certificate procured by the Landlord from an architect,
professional engineer, quantity surveyor or other qualified
individual but who may not be an employee of the Landlord as
to the Rentable Area of the Building, any question of fact
concerning the completion of any construction or other work
either by the Landlord or the Tenant, the extent to which
the completion of any such work has been delayed by
Unavoidable Delay, the time necessary to complete repairs,
the allocation of insurance proceeds, the allocation of
Taxes to the Leased Premises, the aggregate of the cost of
the Building and the costs of additional improvements of a
capital nature, the cause of any destruction or damage, the
extent to which the Building is incapable of being used for
its intended purposes by reason of any destruction or
damage; and
(b) a certificate procured by the Landlord from a licensed public
accountant, who may be the Landlord's auditor but who may
not be an employee of the Landlord as to any question of
fact or opinion concerning the computation of Taxes and
Operating Costs and the proper amount of any payment to the
Landlord or the Tenant under this Lease, provided that
certificate shall not be deemed to restrict the Tenant or
the Tenant's auditor from challenging any error or
miscalculation in any statement delivered by the Landlord
pursuant to Section 3.07 hereof or in any related expense or
other records reviewed by the Tenant.
Any certificate procured by the Landlord shall be prepared using
generally accepted practices and procedures appropriate to such certificate.
SECTION 14.07 - TIME
35
Time shall in all respects be of the essence of this Lease.
SECTION 14.08 - SUCCESSORS AND ASSIGNS
This Lease and everything contained shall extend to and bind and enure
to the benefit of the Landlord and its successors and assigns and the Tenant and
the Indemnifier, if any, and their respective heirs, executors, administrators
and permitted successors and assigns. No rights shall enure to the benefit of
any transferee unless the provisions of Article X hereof are complied with.
SECTION 14.09 - GOVERNING LAW
This Lease shall be construed and governed by the laws of the
Province of Ontario.
SECTION 14.10 - HEADINGS
The Section numbers, article numbers, headings and table of contents
appearing in this Lease are inserted only as a matter of convenience and in no
way define, limit, construe or describe the scope or intent of such paragraphs
or articles of this Lease nor in any way affect this Lease.
SECTION 14.11- ENTIRE AGREEMENT
This Lease and the schedules attached hereto and forming a part hereof,
the Agreement to Lease together with a letter dated October 13, 2000, from Mr.
J. Marotta of the Landlord to the Tenant confirming certain construction details
(the "Confirmation Letter") set forth all the covenants, promises, agreements,
conditions and understandings between the Landlord and the Tenant concerning the
Leased Premises and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between them, other than as are herein
and therein set forth; for greater certainty, the Tenant acknowledges that it
has not entered into the Agreement to Lease or this Lease on the basis of any
information contained in the promotional material published by the Landlord. In
the event of a conflict between the provisions of this Lease and the provisions
of the Agreement to Lease, the provisions of this Lease shall prevail (save in
respect of any matters touched upon by those provisions of the Agreement to
Lease expressly incorporated into this Lease by reference in Section 2.03
hereof, and as set out in Schedule "G" hereto, in which case the provisions of
the Agreement to Lease shall prevail to the extent of such conflict, and save in
respect of any matters touched upon in the Confirmation Letter in which case the
provisions of the Construction Letter shall prevail over those of both the Lease
and the Agreement to Lease to the extent of any conflict).
SECTION 14.12 - SEVERABILITY
If any term, covenant or condition of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of such
term, covenant or condition to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby and each
term, covenant or condition of this Lease shall be valid and enforced to the
fullest extent permitted by law.
SECTION 14.13 - NO OPTION
The submission of this Lease for examination does not
constitute a reservation of or option for the Leased Premises and this Lease
becomes effective as a lease only upon execution and delivery thereof by
Landlord and Tenant.
SECTION 14.14 - OCCUPANCY PERMIT
Provided further that notwithstanding the Possession Date
or the Commencement Date of the Lease as hereinbefore set out, the Tenant shall
not be permitted to enter into possession of the Leased Premises until the
Tenant has obtained, at its sole expense, any required occupancy permit from the
proper governmental authority. The Landlord in its sole discretion may waive
this provision, provided further the Tenant agrees to use its best efforts to
obtain same prior to occupancy.
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36
SECTION 14.15 - PLACE FOR PAYMENTS
All payments required to be made by the Tenant herein shall be
made to the Landlord at the Landlord's Address or to such agent or agents of the
Landlord or at such other place as the Landlord shall hereafter from time to
time direct by Notice.
SECTION 14.16 - EXTENDED MEANINGS
The words "hereof", "herein", "hereunder" and similar
expressions used in any section or subsection of this Lease relate to the whole
of this Lease and not to that section or subsection only, unless otherwise
expressly provided. The use of the neuter singular pronoun to refer to the
Landlord or the Tenant is deemed a proper reference, even though the Landlord or
the Tenant is an individual, a partnership, a corporation or a group of two or
more individuals, partnerships or corporations. The necessary grammatical
changes required to make the provisions of this Lease apply in the plural sense
where there is more than one Landlord or Tenant and to either corporations,
associations, partnerships or individuals, males or females, shall in all
instances be assumed as though in each case fully expressed.
SECTION 14.17 - NO PARTNERSHIP OR AGENCY
The Landlord does not in any way or for any purpose become a
partner of the Tenant in the conduct of its business or otherwise or a joint
venture or a member of a joint enterprise with the Tenant, nor is the
relationship of principal and agent created.
SECTION 14.18 - UNAVOIDABLE DELAY
Notwithstanding anything to the contrary contained in this
Lease, but subject to the provisions of Section 2.03 hereof, if either party
hereto is bona fide delayed, or hindered in or prevented from the performance
of, any term, covenant or act required hereunder by reason of Unavoidable Delay,
then performance of such term, covenant or act is excused for the period of the
delay and the party so delayed, hindered or prevented shall be entitled to
perform such term, covenant or act within the appropriate time period after the
expiration of the period of such delay. However, the provisions of this Section
do not operate to excuse the Tenant from the prompt payment of Basic Rent,
Additional Rent or any other payments required by this Lease.
SECTION 14.19 - CONSENTS AND APPROVALS
Except as may be expressly set out to the contrary in this
Lease, wherever any provision of this Lease provides for any consent, approval,
permission or other decision of the Landlord or of the Tenant, or their
respective architects, engineers, auditors or similar agents, such provision
shall be deemed to provide that such consent, approval, permission or other
decision shall not be unreasonably withheld or unduly delayed.
SECTION 14.20 - REGISTRATION
(a) The Tenant hereby covenants and agrees that neither the
Tenant nor anyone on the Tenant's behalf or claiming under
the Tenant shall register this Lease or any assignment or
sublease of this Lease or any document evidencing any
interest of the Tenant in the Lease or the Leased Premises.
If the covenant contained in this Section 14.19(a) is
breached, this Lease and the Term shall, at the option of
the Landlord upon ten (10) days' Notice to the Tenant,
forthwith become forfeited and terminated and the Landlord
may thereupon re-enter and repossess the Leased Premises if
the Tenant fails to remove or release any such prohibited
registration. The Tenant acknowledges that any breach of
such covenant may occasion substantial costs to the
Landlord. The Tenant shall indemnify the Landlord and save
it harmless from and against any loss, claim, action,
damages, liability and expenses arising in connection with
any breach by the Tenant of such covenant.
(b) Notwithstanding Section 14.19(a), if either party intends to
register a document for the purpose only of giving notice
of this Lease or of any permitted Transfer, then upon
request of such party the Landlord shall cause to be
executed a short form
37
of this Lease ("Short Form"), and the Tenant shall join
therein, solely for the purpose of supporting an
application for registration of notice of this Lease or of
any permitted Transfers. The form of the Short Form and of
the application to register notice of this Lease or of any
permitted Transfer shall:
(i) be prepared by the Landlord or its solicitors at the Tenant's
expense; and
(ii) only describe the registered owner of the Lands, the Tenant, the
Leased Premises, the Commencement Date and the
expiration of the Term.
(c) The Short Form shall contain a provision whereby the Tenant
constitutes and appoints the Landlord or its nominee as
the agent and attorney of the Tenant for the purpose of
executing any documents in writing required from the
Tenant to give effect to the provisions of Section 12.01 of
the Lease, including the right to make application at any
time and from time to time to register postponements of
this Lease or the Short Form in favour of any Mortgage
pursuant to Section 12.02. All costs, expenses and taxes
necessary to register or file the application to register
notice of this Lease or of any permitted Transfer shall be
the sole responsibility of the Tenant, and the Tenant will
complete any necessary affidavits required for registration
purposes, including affidavits necessary to register the
power of attorney from time to time as may be required to
give effect to this Section
(d) Notwithstanding that the Short Form may be executed and
delivered after the execution and delivery of this Lease,
none of the terms of this Lease shall be considered to have
been superseded thereby or no longer in effect, but rather
this Lease shall continue in full force and effect and
continue to enure to the benefit of and be binding upon the
parties to this Lease. To the extent that the terms of the
Short Form are inconsistent with the terms of this Lease,
the terms of this Lease shall govern
SECTION 14.21 - JOINT AND SEVERAL LIABILITY
The liability to pay Rent and perform all other obligations under this
Lease of each individual, corporation, group, partnership or business
association signing this Lease or otherwise agreeing to be bound by the terms
hereof and of each partner or member of any such group, partnership or business
association, the partners or members of which are by law subject to personal
liability, shall be deemed to be joint and several (including, in any event, any
person who ceases to be a partner or member or any person who becomes a partner
or member, in each case following the execution of this Lease).
SECTION 14.22 - NAME OF BUILDING
The Landlord may designate, change, alter or remove the name of the
Building or of any development of which the Leased Premises from a part at any
time without requiring the Tenant's consent thereto or incurring any liability
to the Tenant thereby.
Any trade name or mark adopted by the Landlord for the Building or any
such development shall be used by the Tenant only in association with its
business conducted in or from the Leased Premises and subject to such
limitations, regulations and restrictions as the Landlord may from time to time
impose on its use. The Tenant will not acquire any rights to or interest in any
such trade name or mark and shall cease all use thereof upon ceasing to be a
permitted occupant of the Leased Premises.
SECTION 14.23 - CHANGES IN THE LEASED PREMISES
[Intentionally Deleted]
SECTION 14.24 - COMPLIANCE WITH THE PLANNING ACT
38
It is an expressed condition of this Lease and the Landlord and the
Tenant so agree and declare that the provisions of Section 50(3), R.S.O. 1990,
c.P.13 and amendments thereto, be complied with if applicable in law. Until any
necessary consent to the Lease is obtained, the term of this Lease and the
Tenant's rights and entitlement granted by this Lease are deemed to extend for a
period not exceeding twenty-one (21) years less one (1) day. The Tenant shall
apply diligently to prosecute such application for such consent forthwith upon
the execution of the Lease by both the Landlord and the Tenant and the Tenant
shall be responsible for all costs, expenses, taxes and levies imposed, charged
or levied as a result of such application and in order to obtain such consent.
The Tenant shall keep the Landlord informed, from time to time, of its progress
in obtaining such consent and the Landlord shall co-operate with the Tenant in
regard to such application. Notwithstanding the foregoing provisions of this
Section 14.23, the Landlord reserves the right at any time, to apply for such
consent in lieu of the Tenant (on behalf and at the expense of the Tenant) and
the Tenant's application is hereby expressly made subject to any application
which the Landlord intends to make.
ARTICLE XV
----------
INDEMNITY AGREEMENT
-------------------
SECTION 15.01 - INDEMNITY
[Intentionally Deleted]
SECTION 15.02 - FURTHER ASSURANCES
[Intentionally Deleted]
IN WITNESS WHEREOF the Landlord and the Tenant have executed this
Lease as of the day of October, 2000.
LANDLORD: PAULS PROPERTIES CORPORATION
_________________________c/s
Name:
Authorized signatory
____________________________
Name:
Authorized signatory
I/We have authority to bind the corporation
TENANT: CERTICOM CORP.
/s/ Robert Williams
-------------------------c/s
Name: ROBERT WILLIAMS
Authorized signatory
____________________________
Name:
Authorized signatory
I/We have authority to bind the corporation
39
SCHEDULE "A"
PROPOSED NEW MULTITENANT FACILITY
FOR
THE PAULS CORPORATION
MISSISSAUGA, ONTARIO
[AREA PLAN]
40
[BUILDING ELEVATION WITH SECOND STOREY GLAZING]
41
SCHEDULE "B 1"
(Legal description of Lands)
That portion of Parts 3,4,7,15,16 and 17 of Registered Plan 43R-23593 as
outlined approximately in red on Schedule "B3". Part of Lot 2 concession 4 east
of Hurontario Street, City of Mississauga.
(Explanation: Being approximately 7.3 acres comprising 1980 Matheson Blvd. East,
Mississauga and approximately 5.3 acres comprised of approximately 2-3 acres of
woodlot and a land parcel of approximately 2-3 acres which is zoned M2 on the
northeast corner of Matheson Blvd. East and Creekbank Road. The entire parcel
being 1980 Matheson, the woodlot and the corner lot are all registered as one
site at this time.)
42
SCHEDULE "B 2"
(Legal description of Expansion Land)
That portion of Parts 3,4,7,15,16 and 17 of Registered Plan 43R-23593 as
outlined approximately in yellow on Schedule "B3" . Part of Lot 2 concession 4
east of Hurontario Street, City of Mississauga.
(Explanation: Being approximately 7.3 acres comprising 1980 Matheson Blvd. East,
Mississauga and approximately 5.3 acres comprised of approximately 2-3 acres of
woodlot and a land parcel of approximately 2-3 acres which is zoned M2 on the
northeast corner of Matheson Blvd. East and Creekbank Road. The entire parcel
being 1980 Matheson, the woodlot and the corner lot are all registered as one
site at this time.)
43
SCHEDULE "B3"
[GRAPHIC APPEARS HERE]
44
SCHEDULE "C"
[GRAPHIC APPEARS HERE]
45
SCHEDULE "D"
ACKNOWLEDGEMENT OF COMMENCEMENT DATE
------------------------------------
TO: PAULS PROPERTIES CORPORATION
(the "Landlord")
The undersigned Tenant under a certain lease between the
undersigned and the Landlord dated XX, 2000 (the "Lease"), hereby acknowledges
and certifies to you that:
1. The Commencement Date of the Lease was the XX day of XX, 2000.
2. We have accepted possession of the Leased Premises pursuant to the
terms of the Lease and are now in possession thereof.
3. The Leased Premises have been erected and delivered in accordance with
the terms of the Lease.
4. The Leased Premises have been fixtured and our normal business
operations are being conducted therein.
5. There has been no violation of any of the terms of the Lease, there
is no set-off of Rent or any other payment under the Lease, and none
of the Rent reserved under the Lease has been prepaid.
6. There is no violation of any of the terms of the Lease either on the
part of the Landlord or the Tenant.
7. The Lease is now in full force and effect in accordance with the terms,
and there are no oral or written modifications, violations or
alterations thereof.
8. We have no knowledge of any assignment of the Lease.
DATED at XXXX this XX day of XX, 2000.
TENANT
____________________________________
Authorized signatory
c/s
____________________________________
Authorized signatory
46
SCHEDULE "E"
RULES AND REGULATIONS
---------------------
1. The sidewalks, driveways, parking areas, entry passages, fire escapes and
stairways, if any, shall not be obstructed by any of the tenants, or used by
them for any purpose other than ingress and egress to and from their
respective premises. The Tenant shall not place or allow to be placed in the
Leased Premises any waste paper, dust, garbage, refuse or anything whatever
that would tend to make them unclean or untidy.
2. The water closets or other water apparatus shall not be used for any purpose
other than those for which they were constructed, and no sweepings, rubbish,
rags, ashes or other substances shall be thrown therein. Any damage
resulting from misuse shall be borne by the Tenant by whom or by whose
agents, servants or employees the same is caused. The Tenant shall not let
the water run unless it is in actual use, nor shall they deface any part of
the Leased Premises.
3. The Tenant shall do or permit anything to be done in their respective
premises or bring or keep anything therein which will in any way increase
the risk of fire or obstruct or interfere with the rights of other tenants
or violate or act at variance with the laws relating to fires or with the
regulations of any fire department or any board of health.
4. The Tenant, its clerks or servants shall not interfere with other tenants or
those having business with them.
5. Nothing shall be thrown by the Tenant, its clerks or servants out of the
windows or doors.
6. No birds or animals shall be kept in or about the Leased Premises nor shall
the Tenant operate or permit to be operated any musical or sound producing
instrument or device inside or outside their respective premises which may
be heard outside their premises, or which may be deemed to be a nuisance to
other tenants of the Leased Premises.
7. No one shall use the Building or any part thereof for sleeping apartments or
residential purposes or for the storage of personal effects or articles
other than those required for business purposes,
8. The Tenant must observe strict care not to allow its windows or doors to
remain open so as to admit rain or snow or so as to interfere with the
heating of the Building. Any injury or damage caused to the Building or its
appointments, furnishings, heating and other appliances or to any other
tenant by reason of windows or doors being left open so as to admit rain or
snow or by interference with or neglect of the heating appliances or by
reason of the Tenant or other person or servant subject to it shall be made
good by the Tenant.
9. It shall be the duty of the Tenant to assist and co-operate with the
Landlord in preventing injury to the Leased Premises.
10. No inflammable oils or other inflammable, dangerous or explosive materials
shall be kept or permitted to be kept in the Leased Premises. Nothing shall
be placed on the outside of window sills or projections.
11. No bicycles or other vehicles shall be brought within the Building except in
the parking garage, if any.
12. The parking of cars, shall be subject to the reasonable regulations of the
Landlord, but no fee may be charged therefor.
13. The Tenant shall not mark, paint, drill into or in any way deface the walls,
ceilings, partitions, floors or other parts of the Building except with the
prior written consent of the Landlord as it may direct.
14. The Tenant agrees to surrender to the Landlord on the termination of the
Lease all keys to the said Building.
15. If the Tenant desires telegraph or telephone, it shall be the Tenant's
responsibility to call Bell or other private signal connectors and the
Landlord reserves the right to direct the electricians or other workmen as
to where and how the wires are to be introduced, and without such
directions no boring or cutting for wires shall take place. No other wires
of any kind shall be introduced without the written consent of the Landlord.
16. Nothing shall be placed on the outside of windows or projections of the
Leased Premises. No air-conditioning equipment shall be placed at the
windows of the Leased Premises without the prior written consent of the
Landlord.
17. All glass, locks and trimmings in or upon the doors or windows of the Leased
Premises shall be
47
kept whole and whenever any part thereof shall become broken, the same shall
be immediately replaced or repaired under the direction and to the
satisfaction of the Landlord, and such replacements and repairs shall be
paid for by the Tenant.
18. No heavy equipment of any kind shall be moved within the Building without
skids being placed under the same, and without the consent of the Landlord
in writing.
19. Any person entering upon the roof of the Building does so at his own risk.
20. The Tenant shall not be permitted to do cooking or to operate cooking
apparatus except in a portion of the Building leased or designed for that
purpose.
21. The Tenant shall leave the Leased Premises in a condition suitable for the
performance by the Landlord or its janitorial services, if any.
22. The Landlord shall have the right to make such other and further reasonable
rules and regulations as in its judgement may from time to time be needful
for the safety, care, cleanliness and appearance of the Leased Premises, and
for the preservation of good order therein and the same shall be kept and
observed by the Tenant, its clerks and servants.
48
SCHEDULE "F"
SUPPLEMENTARY LEASE PROVISIONS
------------------------------
With reference to the Lease dated October 12th, 2000, made between
PAULS PROPERTIES CORPORATION, as Landlord, and CERTICOM CORP., as Tenant, in
respect of the Leased Premises known municipally as 1980 Matheson Boulevard
East, Mississauga, the following supplementary provisions shall, for all intents
and purposes, form part of the Lease.
1. PARKING
The Landlord agrees that the Tenant will have exclusive access to and
use of all available parking on the Lands. The Landlord covenants and agrees
that based upon the configuration for the parking lot component of the Leased
Premises as shown on Schedule "A" to the Lease, the Tenant shall have the use of
approximately four hundred and thirteen (413) unreserved parking spaces.
In addition, the Tenant shall be entitled, strictly subject to the
provisions of Section 8.02 of this Lease, and to the provisions of Schedule "F"
of the Agreement to Lease, to construct upon the Lands and thereafter maintain,
repair and replace at its sole expense, a parking garage.
2. OPTION TO RENEW
Provided that the Tenant is Certicom Corp. or a permitted assignee
hereunder and is not in material default under the Lease, the Tenant shall be
entitled to two (2) options to extend the Term of this Lease in respect of the
whole of the Leased Premises, on an "as is" basis, each such option being for an
additional or extended term of five (5) years commencing on the first day
following the expiration of the Term, or the expiration of the first renewal
term, as the case may be. The Tenant's option in each case shall be deemed to
have been exercised automatically unless the Tenant has provided the Landlord
with Notice no later than nine (9) months prior to the expiry of the Term or the
first renewal term, as the case may be, to the effect that the Tenant elects not
to extend the Term hereof. Each extension of the Term shall be on the same terms
and conditions as herein contained, including any personal rights, save that:
(a) there shall be no further options to extend the Term beyond
the second renewal term;
(b) there shall be no Landlord's Work and no Tenant's Work, as
defined in Section 8.1 of the Agreement to Lease;
(c) there shall be no "phases" for purposes of Rent commencement;
(d) there shall be no Allowance as provided for in Section 8.4 of
the Agreement to Lease;
(e) there shall be no Tenant's conditions;
(f) there shall be no purchase option in respect of the Expansion
Lands as contemplated in Section 21 of the Agreement to
Lease;
(g) the Basic Rent for each of the first renewal term and the
second renewal term, shall be agreed upon by the Landlord and
the Tenant prior to the expiration of the Term, or the first
renewal term, as the case may be, and it shall be equal to
the then current Fair Market Minimum Rent as at the
commencement of such renewal term. For the purposes of this
paragraph the phrase "Fair Market Minium Rent" means the net
rental rate payable for comparable space, for a comparable
term, in comparable office buildings in the Airport Corporate
Centre area, without allowance for any value of Leasehold
Improvements or leasehold allowances. The "Airport Corporate
Centre" shall be defined as the area bounded on the north by
Highway 401, on the south by Eglinton Avenue, on the east by
Renforth Avenue and on the west by Creekbank Road. Failing
agreement on the Fair Market Minium Rent in respect of the
first renewal term or the second renewal term, prior to the
expiration of the prior term, the Fair Market Minimum Rent
shall be determined by arbitration pursuant to the provisions
of the Arbitration Act, 1991 (Ontario). Without limiting the
foregoing the annual Fair Market Minimum Rent payable in
respect of the first year of any renewal term shall in no
event be less than the Basic Rent payable under the Lease in
respect of the immediately preceding year of the Term or of
the first renewal term, as the case may be.
3. RIGHT OF FIRST OFFER TO LEASE EXPANSION SPACE
Provided that the Tenant is Certicom Corp. or a permitted assignee
hereunder and is not in material default under the Lease, then if the Landlord
intends to offer for lease space in a building which the Landlord has
constructed, is constructing or plans to construct on the Expansion Land (the
"Expansion Space"), the Tenant shall have a one-time right of first offer (the
"Right of First Offer") to lease all or a
49
portion of the Expansion Space for a term of ten (10) years or such shorter term
as agreed by the Landlord and Tenant. The Landlord shall notify the Tenant in
writing of the Expansion Space and the terms and conditions upon which the
Landlord is prepared to lease such Expansion Space to the Tenant (the
"Expansion Notice"). The Tenant shall have fifteen (15) business days from
receipt of the Expansion Notice to provide an offer to the Landlord for all or a
portion of the Expansion Space and the Tenant and the Landlord shall negotiate
in good faith the terms and conditions of the Tenant's offer for a period of ten
(10) business days. It is agreed and understood that if the Tenant chooses to
lease a portion of the Expansion Space, the unleased portion must be of a size
and in a location that is leaseable to a third party, in the Landlord's
reasonable opinion. In the event the Tenant and Landlord agree on the terms and
conditions for the leasing of the Expansion Space, such terms and conditions
shall be incorporated into a separate lease on the Landlord's standard form
incorporating such revisions as may be reasonably requested by the Tenant or its
solicitors and such lease, shall be executed by the Tenant and the Landlord.
In the event that the Tenant and the Landlord fail to agree on the
terms and conditions for the leasing of the Expansion Space or the Tenant fails
to or chooses not to exercise its Right of First Offer, the Tenant's Right of
First Offer shall be null and void and the Landlord shall be free to lease the
Expansion Space to other tenants with no further obligation to the Tenant.
It is agreed and understood that the lease for the Expansion Space
shall be on the same terms and conditions as the Lease for the Leased Premises
save and except the Basic Rent for the Expansion Space shall be Fair Market
Minimum Rent, as defined in paragraph 2 above; the scope of the Landlord's Work
will be redefined for a typical base building package offer to any third party;
there shall be no further rights of first refusal, no phasing of occupancy, no
allowance, no right of first offer to purchase, no Tenant's conditions and no
concept of Expansion Land; parking provided will be redefined in accordance with
the City of Mississauga by-laws and regulations in effect at that time; and
Landlord's covenants, representations and warranties will be redefined to be
typical for any third party tenant.
4. FIRST RIGHT OF OFFER TO LEASED PREMISES
Provided that the Tenant is Certicom Corp. or a permitted assignee
hereunder and is not in material default under the Lease, the Tenant shall have
a one time right of first offer to purchase the Leased Premises on the following
terms and conditions. Within fifteen (15) business days of the Landlord
determining to sell the Leased Premises, the Landlord shall by Notice to the
Tenant (the "Landlord Notice") indicate such intention and set out the proposed
business terms upon which the Landlord is prepared to sell the Leased Premises.
The Tenant shall have fifteen (15) business days to submit to the Landlord an
offer to purchase the Leased Premises upon such proposed business terms, or upon
such other terms as the Tenant deems advisable and the Tenant and the Landlord
shall negotiate in good faith the terms and conditions for the purchase of the
Leased Premises. If the Landlord and Tenant fail to agree on the terms and
conditions for such purchase within ten (10) business days of delivery of the
Tenant's offer to the Landlord, then the Tenant's first right to purchase the
Leased Premises shall be deemed to have been waived and the Landlord shall be
free to sell the Lease Premises to a third party on such terms and conditions as
may be acceptable to the Landlord. Without limiting the generality of the
foregoing, the Tenant acknowledges that the provisions of this paragraph shall
not apply to the sale by the Landlord of less than an undivided fifty percent
(50%) interest in the Leased Premises. For the purposes of this paragraph 4, the
term "business day", shall mean Monday to Friday, excluding statutory
holidays.
50
SCHEDULE "G"
INCORPORATED EXCERPTS FROM AGREEMENT TO LEASE
---------------------------------------------
With reference to the Lease dated October 12, 2000, made between PAULS
PROPERTIES CORPORATION, as Landlord, and CERT COM CORP., as Tenant, in respect
of the Leased Premises known municipally as 1980 Matheson Boulevard East,
Mississauga, and with respect to the AGREEMENT TO LEASE between the same
parties dated the 6/th/ day of October, 2000, and referred to in the Lease or
such Lease, the following provisions of the Agreement to Lease shall be and are
hereby deemed incorporated into the Lease, as contemplated in Section 2.03
thereof:
8. LANDLORD'S AND TENANT'S WORK
8.1 The Landlord shall, at its own expense, perform and complete the work
and improvements to the Leased Premises shown on the plans and
specifications prepared by Giffels dated January 18, 2000, revised
March 22, 2000, on or before the Possession Date, save and except the
landscaping and top coat of asphalt which will be complete by June 1,
2001 (collectively, the "Landlord's Work"). The Landlord's Work will
be modified as requested by the Tenant at its expense and approved by
the Landlord to accommodate a single user, both parties to act
reasonably. The Tenant intends to perform its own leasehold
improvements to the Leased Premises at the Tenant's sole expense (the
"Tenant's Work") following approval by the Landlord of the Tenant's
plans and specifications, such approval not to be unreasonably
withheld or unduly delayed. Any and all Tenant's Work done prior to
the Commencement Date or during the Term or any renewals shall be done
in accordance with Schedule "F" attached. All work and improvements
by Landlord and Tenant shall be performed in a good and workmanlike
manner in accordance with all applicable building codes and laws using
quality materials which are proper for the purpose. The actual space
plan conforming to the dimensions of the Leased Premises shall be
prepared by the Tenant, however, the Landlord agrees to contribute
Seven Cents ($0.07) per square foot of the Leased Premises for the
preparation of such preliminary plan, such sum payable upon execution
of this Offer by the Landlord and the Tenant and waiver of all
conditions. The Landlord hereby consents to and agrees to co-operate
with the Tenant's contractor with respect to the construction of the
Tenant's Work.
8.2 Without limiting the extent of the Landlord's Work identified by
Giffels, such work will include the following items to be completed by
the Landlord at its sole expense. In the event of a conflict between
the Landlord's Work identified by Giffels and this provision, this
provision shall govern:
(i) 24 foot clear glass and precast single story structure with
bay sizes of approximately 36 ft.X40 ft.. Roof is built-up 4-
ply on metal deck with insulation factor of R20;
(ii) Concrete floors of approximately 4" inches thick (20 MPa at
28 days);
(iii) Ordinary hazard sprinkler system distributed on an open plan
basis;
(iv) Sufficient power including without limitation, 1170 KW
capacity, 1200 amp/600 volt service to a panel, not
distributed;
(v) Domestic water and sanitary line to two (2) locations as
shown on the Tenant's plans;
(vi) Exterior parking and landscaping as per base building
design;
(vii) Intentionally deleted;
(viii) Supply and install base building standard glass along the
second-storey face of the Building fronting on the adjacent
creek, all as shown on Schedule "A1" attached;
(ix) Install at the Tenant's cost additional skylights not part
of the base building, supplied by the Tenant at its cost,
according to the Tenant's plan in compliance with Schedule
"F"; provided that the Tenant delivers plans to the Landlord
showing the exact size, location and design of the skylights
no later than November 15, 2000 and failing this delivery,
the Landlord shall be permitted a delay on completion of
this portion of the Landlord's Work only on the basis of one
day after the Possession Date for each day of delay by the
Tenant, it being understood that if the Tenant does not
provide drawings as required herein, this item will not be
considered to be a delay to the Possession Date;
(x) Reduce the number of truck level doors specified in the
Landlord's Work to the requirement of the Tenant, such
requirement to be defined by the Tenant and approved by the
Landlord no later than November 15, 2000. Space left open by
removal of truck doors to be replaced with building standard
glass and redundant ramps to be levelled and paved for car
parking;
(xi) Relocate (and possibly reduce) the parking lot according to
the Tenant's plan to allow for more "green space" between the
Building and the adjacent creek, all as more particularly
shown on Schedule "A" attached;
(xii) Supply and install a one (1) meter high berm on the norm-
west corner of the property to obscure passing traffic;
(xiii) Supply and install a privacy fence on the south side of
Matheson Boulevard adjacent from the Building, subject to the
prior approval of the City of Mississauga.
8.3 The Landlord warrants the Landlord's Work for a period of one (1) year
from the Commencement Date or such longer period as set forth in the
Summary of Warranties attached
51
hereto as Schedule "E". The Landlord shall promptly repair and correct all
defects upon written notice from the Tenant.
8.4 (a) The Landlord agrees to provide the Tenant with a leasehold allowance
(the "Allowance") equal to One Million Dollars ($l,000,000), to assist
the Tenant with expenses related to completion of the Tenant's Work.
(b) If:
i) all or any part of the Allowance is not paid by the Landlord
within twenty (20) business days of request from the Tenant; and
ii) the Tenant delivers written notice of default to the Landlord and
such default is not cured by the Landlord within fifteen (15)
ordinary days of such notice of default; and
iii) a further notice is sent by the Tenant to the Landlord providing
notice of its intention to set-off the unpaid amount against
Minimum Rent and Additional Rent,
interest shall accrue on such unpaid amounts at the rate of 2% per
month (24% per annum) calculated and payable monthly from the date of
default in subparagraph (b)(i) hereof until such unpaid amounts are
paid in full. Upon issuance of the notice of set-off described in iii)
above, the Tenant shall have the right to set off any and all of the
amounts owing by the Landlord on account of the Allowance, including
interest as set out in this provision, against the Minimum Rent and
Additional Rent owing by the Tenant to the Landlord.
(c) The amount of the Allowance shall be paid in increments of no less
than two hundred fifty thousand dollars ($250,000) to the Tenant by
the Landlord as Tenant's Work progresses as certified by Tenant's
architect and the value of such work is verified by the Landlord,
provided that the final ten percent (10%) of the Allowance shall not
be paid until satisfaction of the following conditions: 1) forty-five
(45) days after substantial completion of the Tenant's Work and
receipt by the Landlord of: (a) an architect's certificate confirming
substantial completion and (b) a statutory declaration from the
Tenant's general contractor confirming that all work is substantially
complete and that no liens have been registered against the Leased
Premises following publication as required by law, 2) the Tenant is in
occupancy of at least Phase 1 of the Leased Premises and 3) the Tenant
is not in material default under the Lease.
8.5 As part of the Tenant's Work and in accordance with Schedule "F" herein,
the Tenant, is permitted to install a mezzanine in the Building, at the
Tenant's expense, subject to the Landlord's reasonable approval of design,
location, configuration and interior fit-up and subject to compliance with
all governmental requirements in respect thereof including, but not
limited to, access and parking requirements. There is no additional
Minimum Rent payable for the mezzanine, however, the Tenant will pay for
applicable development charges (if any) and any increase in operating costs
or realty taxes charged by the municipality as a result of the
construction of the mezzanine. Notwithstanding the provisions of section
14.1 of this Offer, if the Landlord bona fide requires that the mezzanine
be removed at the expiry of the Term or any renewal thereof for purposes
of leasing all or a part of the Building to a new tenant, then the Tenant
and Landlord agree to share equally the actual cost of removal of the
mezzanine, based on the lowest cost estimate obtained by each party. If not
removed, the Tenant agrees to pay the actual cost of work necessary to
upgrade the mezzanine to comply with all applicable governmental
requirements in effect as at the relevant expiry date of the Lease but in
any event, the Tenant's cost of such compliance cannot exceed the amount
that the Tenant would have paid as its fifty percent (50%) share of the
cost of removal of the mezzanine.
16. LANDLORD COVENANTS, REPRESENTATIONS AND WARRANTIES
(a) The Landlord covenants, represents and warrants to the Tenant that
the Building and the Lands (including the Expansion Land (as
hereinafter defined)) are entirely free of any contaminants which are
or may be deemed to be dangerous to the environment or to the health
of persons at levels exceeding those permitted by applicable
legislation. The Tenant warrants that it shall not contaminate the
Building or the Lands in violation of environmental law at any time
throughout the Term and any renewal thereof;
(b) The Landlord is the registered and beneficial owner of the Lands and
the Building;
(c) The Landlord will not proceed with any energy conservation
modifications to the
52
Building which will increase operating costs without first
obtaining the approval of the Tenant, which approval may be
unreasonably or arbitrarily withheld.
Further, the Landlord covenants as at the Commencement Date the following
statements are true:
(I) the Leased Premises are zoned Ml and permit the use of the Leased
Premises as a warehouse, ancillary storage, light assembly and
office;
(II) the Building allows the Tenant to have access and control of
HVAC and lighting seven days per week, 24 hours per day;
(III) the Tenant receives 24 hour access to the electrical panels for the
Leased Premises by means of a key;
(IV) Telephone lines are available within the Leased Premises;
(V) the Building complies with the requirements of all governmental
laws and regulations for the uses stated in (I) above;
(VI) the Leased Premises permit handicapped access;
(VII) the Tenant shall be permitted to install at its expense, at any
time during the Term and any renewal thereof, an emergency
generator so as to permit the computers located in the Leased
Premises to operate indefinitely throughout any power interruption;
and
(VIII) the Landlord will provide lighting in the parking lot to provide
adequate security on the Lands, all in accordance with the
Landlord's Work (as defined in section 8.1 herein).
SCHEDULE "F"
TENANT'S WORK
-------------
Following the Landlord's completion of its work as outlined herein, the Landlord
shall not be obliged to complete any further work in or for the Leased
Premises except as set out in the Offer to Lease and the Lease. The Tenant
may construct and complete leasehold improvements and fixtures (the
"Improvements") in the Leased Premises prior to the Commencement Date
and/or during the Term provided that:
(a) the Tenant shall furnish the Landlord with professionally
prepared plans and specifications therefore for its approval;
whenever any change in or addition to base building work is required
to accord with the Improvements, or is agreed to be made by the
Landlord at the request of the Tenant, the cost or expense of such
change shall be for the account of the Tenant and shall include all
reasonable cost and expense incurred by the Landlord in connection
with the change or addition including labour, materials, fees of
architects, engineers or designers in connection with the change or
addition, direct costs of supervision and inspection and all other
direct costs of the Landlord, subject to the Cap described in
paragraph (h) below;
(b) if any proposed Improvements affect the structure, the
structural walls, the base building systems or the exterior appearance
of the Building, such plans and specifications shall also require
approval, at the election of the Landlord, by its architect and
engineers;
(c) the Tenant shall advise the Landlord of the identity of its
contractors and tradesmen and their respective labour affiliation; in
no event may the Tenant proceed with construction of any Improvements
until it has obtained all necessary governmental permits and other
approvals and has produced evidence of insurance coverage satisfactory
to the Landlord;
(d) the Landlord shall either approve any contractors proposed by the
Tenant to perform any work which may affect the structure, the
structural walls or the base building systems of the Building or
require that any such work be performed by either the Landlord or its
contractors at competitive prices in which case the Tenant shall pay
the Landlord's reasonable costs on account thereof; the Landlord may
refuse to allow the contractors and tradesmen of the Tenant access to
the Building if their labour affiliations may conflict with those of
the Landlord or those employed by it or if they are not competent;
(e) construction of the Improvements shall be performed in accordance
with the plans and specifications submitted .o and approved by the
Landlord and in a good and workmanlike and expeditious manner using
good quality materials;
(f) the Landlord may inspect construction as it proceeds at its
expense;
(g) if the Tenant fails to observe any of the material requirements
of this section the Landlord may require that construction stop until
Tenant complies with such requirements; and
53
(h) the Tenant shall pay the Landlord's reasonable costs and fees
incurred in respect of the supervising, coordinating monitoring,
reviewing and approving of the construction of the Improvements
including all professional fees incurred by the Landlord, such costs
not to exceed in aggregate for initial construction twenty-five cents
($0.25) per square foot and during the Term, ten cents ($0.10) per
square foot (the "Cap").