Exhibit 10.1
This lease made this 9th day of April, 2009.
BETWEEN:
Elk Property Management Limited, as agent for
PBX Properties Ltd. and 350 Palladium Drive Inc. and 856581 Alberta Ltd.
(Hereinafter called the” Landlord”)
OF THE FIRST PART,
AND:
ZixCorp Canada Inc. and Zix Corporation.
(Hereinafter called the “Tenant”)
OF THE SECOND PART,
     Whereas:

A.   This document and all schedules shall hereafter be referred to as the
“Lease” or the “lease.   B.   Lease Year — means the twelve month financial year
of the Landlord commencing on the 1st day of January in each calendar year.   C.
  Proportionate Share means, with respect to the Tenant, a fraction, the
numerator of which is the leasable area of the Premises and the denominator of
which is the leasable area of the Building with such leasable areas to be
determined in accordance with the most recent BOMA standard.   D.   Rent means
either or both of Minimum Rent and Additional Rent.

PREMISES
1. WITNESSETH that in consideration of the Tenant paying the rents and any other
amounts provided for herein and in consideration of the Tenant meeting all its
other obligations as provided for herein, the Landlord does demise herein and
lease unto the Tenant the premises as described herein. These premises shall be
hereinafter called either the “Leased Premises” or the “Premises” and has been
measured to have a rentable area of 6,080 square feet, as shown on the attached
Schedule B, and located on the second floor of the building bearing the civic
address of 350 Palladium Drive in the City of Ottawa, Province of Ontario which
said building and lands are legally described and shown in Schedule “A” hereto
annexed. The building, including the Leased Premises and lands, including all
driveways, parking areas and access and egress points shall be hereafter
referred to as the Building or building. The rentable area of the Leased
Premises, for the purposes of calculating any and all rent as provided for
herein, shall include a share of the common areas of the Building.
TERM
2(a) The Tenant shall lease the Leased Premises for and during the term,
(hereinafter called “the Term”) starting from the 1st day of July 2009 (the
“Commencement Date”) and to be completed and ended on the 31st day of July,
2012.
EARLY OCCUPANCY — (INTENTIONALLY DELETED)
RENTALS PAYABLE
3(a) The Tenant covenants and agrees to pay to the Landlord as rental for the
Leased Premises, without any set-off or deduction whatsoever for the full term
of the lease the following:

  (i)   For the period from July 1st, 2009 to July 31st, 2009 the Tenant shall
not pay any Minimum or Additional Rent.

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  (ii)   From August 1st, 2009 to July 31st, 2012 the Tenant shall pay the
amount of $127,680.00 plus GST in equal monthly installments of $3,546.67 plus
GST based on a rate of $7 per square foot.

All such rental payments shall be made in advance, on the first day of each
calendar month and shall be referred to either as the “Minimum Rental” or
“Minimum Rent”;

  (iii)   In addition to the Minimum Rent described herein and without limiting
the generality of the foregoing, the Tenant shall also pay Additional Rental
representing payment by the Tenant of its proportionate share of all taxes,
insurance, interior cleaning, and operating costs for the Building and other
costs as set forth in subparagraphs 3(j), 3(k) and 3(l) and elsewhere herein, as
applicable. The Landlord hereby estimates such Additional Rental for the 2009
portion of this Lease to be $12.75 per square foot. All such payments of
Additional Rental shall be based on the Landlord’s estimates and shall also be
paid monthly on the first day of each calendar month.

The Tenant agrees that all rental amounts referred to in this paragraph and the
amount shown under paragraph 3(d) entitled Security Deposit may be subject to
small changes to reflect the actual rentable area of the Leased Premises (i.e.
including its share of any common areas), as reasonably determined by the
Landlord in accordance with prevailing BOMA standards.
MINIMUM RENTAL and ADDITIONAL RENTAL
3(b) The Minimum Rental and Additional Rental will be adjusted proportionately
for any Lease Year that is other than twelve (12) calendar months. The initial
lease payment, if applicable, under this Lease shall include also any pro-rated
Minimum Rental and Additional Rental for the period from the date of the
commencement of the Term to the first day of the first full calendar month in
the Term.
RENT ADJUSTMENT FOR INTEREST RATE INCREASE
3(c) deleted intentionally
SECURITY DEPOSIT
3(d) The Tenant, as a requirement of its original terms of occupancy has
provided a deposit of $12,800.41 which will continue to be retained by the
Landlord without interest, as a security deposit, to be released after the
expiry of the term, or any renewal thereof, subject to deductions for any unpaid
rent or other amounts due by the Tenant to the Landlord under this lease and any
remainder of the security deposit to be released only so long as the Tenant has
complied with all its obligations herein including but not limited to the
paragraph entitled Surrender of the Leased Premises.
MANNER AND PLACE OF PAYMENT OF RENT
3(e) (i) All rent shall be paid by the Tenant to the Landlord or to any entity
designated by the Landlord, at par at the principal office of the Landlord or at
such other place as the Landlord may designate in writing from time to time
without any prior demand therefore, and shall be payable in lawful money of
Canada.
     (ii) Any sums received by the Landlord from or for the account of the
Tenant when the Tenant is in default hereunder may be applied at the Landlord’s
option to the satisfaction, in whole or part, of any of the obligations of the
Tenant then due hereunder in such manner as the Landlord sees fit, and
regardless of any designation or instruction of the Tenant to the contrary.

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LEASE YEAR
3(f) Deleted Intentionally
SET-OFF & ABATEMENT
3(g) All Minimum Rent and Additional Rent and other sums payable hereunder by
the Tenant to the Landlord shall be payable without any deduction, set-off or
abatement whatsoever.
INTEREST ON ARREARS
3(h) If the Tenant shall fail to pay, when due, any Minimum Rent, Additional
Rent, or installment on account thereof, or any other amount payable to the
Landlord hereunder, the amount unpaid shall bear interest from the due date
thereof to the date of payment at the rate of four (4%) percent in excess of the
prime rate of interest then chargeable by the Landlord’s bankers to its most
favoured customers on commercial loans in Canadian currency, but this provision
for interest shall not limit any other remedies which the Landlord may have in
respect of such default.
OPERATE ON CONTINUOUS BASIS
3(i) Deleted Intentionally
ADDITIONAL TAXES AND RATES
3(j) In addition to the Minimum Rent, The Tenant shall pay an additional monthly
sum (herein called the “Additional Rental for Taxes”) estimated by the Landlord
as sufficient to reimburse the Landlord for the Tenant’s Proportionate Share of
all municipal, provincial, federal or other governmental taxes or rates or
charges of every nature or description that are attributable to the Building
(hereafter “Taxes”). These Taxes shall include without limiting the generality
of the foregoing, realty taxes, school taxes, general taxes, goods and services
taxes (i.e. GST or any other tax or levy that replaces or is in addition to such
tax or that is charged on any of the rent payable by the Tenant as called for
herein), value added taxes, business transfer taxes, any and all capital taxes
including but not limited to taxes based upon or computed by reference to
capital or paid up capital of the Landlord so long as such capital taxes relate
to this Building, fire protection charges, water rates, sewerage rates, local
improvement rates, general or particular levies or assessments, or charges or
any similar rates, taxes, assessments or charges levied by any municipal,
provincial, federal or other governmental authority against the building to the
extent that the same are attributed, by the Landlord, to the Leased Premises but
excluding any interest or penalty payable as a result of the failure by the
Landlord to make any payment of any such taxes, rates, or charges when due. Upon
the receipt by the Landlord of any demand for payment or statement of account
with respect to any such taxes, rates and charges, it shall notify the Tenant
and the Tenant shall pay for any variation in the monthly amount payable as
Additional Rental for Taxes under this clause; provided, however, that the
Landlord shall be entitled to vary the Additional Rental for Taxes at any time
upon giving notice in writing of such variation to the Tenant and all amounts
payable under this Lease as Additional Rental for Taxes shall be recoverable by
the Landlord from the Tenant in the same manner as rent under the terms hereof.
If at any time during the Term, Taxes payable for the Building are calculated
based, in whole or in part, on the Building being less than fully occupied by
tenants carrying on business, then the Landlord may at

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its option and acting reasonably, adjust the Taxes payable as if the Building
had been fully occupied by tenants carrying on business. The parties acknowledge
that the purpose of this clause is to ensure that the Landlord solely benefits
from any lower rate or assessment levied on vacant space in the Building. It is
the intent of this paragraph that the Tenant pays no more in Taxes than if the
Building were fully occupied and that the Landlord benefit from any reduction in
Taxes related to vacancies in the Building.
INSURANCE
3(k) The Tenant shall, during the term of this tenancy and any renewal thereof,
at the Tenant’s sole cost and expense, obtain and keep in full force and effect
insurance policies to cover fire and property damage, business interruption, and
public liability of not less than two million ($2,000,000) dollars for each
occurrence. Such Tenant’s insurance shall include, but not be limited to
coverage from loss or damage caused by malicious damage, lightning, explosion,
windstorm, hail, sprinkler leakage (if applicable), smoke, impact of vehicles or
aircraft and such other insurable hazards as the Landlord may from time to time
reasonably decide but not in an amount exceeding the replacement value thereof.
Such Tenant’s “all risk” insurance shall also cover property of every kind and
nature owned by the Tenant or for which the Tenant is legally liable, or
installed by or on behalf of the Tenant and which is located within, in or
about, the Leased Premises in an amount not less than the full replacement cost
thereof. The Tenant shall provide the Landlord with copies of all policies of
insurance coverage required to be placed by the Tenant pursuant hereto prior to
the rental commencement date and annually thereafter with renewals thereof at
least thirty (30) days prior to any expiry thereof. In addition if required by a
mortgagee the Tenant shall furnish to the Landlord, within five (5) days after
demand thereof by the Landlord, additional copies of same. In the event the
Tenant fails to obtain any insurance referred to in this section, the Landlord
may place such insurance, and the cost thereof together with interest on such
payment at a rate equal to the stipulated rate of interest (Royal Bank prime
rate plus 4.0%) from the date such payments are made by the Landlord until
reimbursed by the Tenant shall forthwith be payable by the Tenant to the
Landlord. The Tenant hereby agrees and understands that the placing of any of
the above mentioned insurance by the Landlord shall in no way relieve the Tenant
from any obligation assumed under this Lease.
The Tenant covenants that nothing will be done or omitted to be done upon the
Leased Premises or any part thereof and nothing will be brought upon the Leased
Premises or any part thereof which may result in an insurance policy to be
cancelled or the Leased Premises or Building to be rendered uninsurable.
All insurance policies shall be in form and substance and with insurers
satisfactory to the Landlord. The “all risk” insurance required to be maintained
by the Tenant under this clause shall include a waiver of subrogation in favour
of the Landlord and against those for whom the Landlord is in law responsible
and the comprehensive general liability policy shall in addition contain a
provision for cross-liability and severability of interest.
The Landlord and the Building manager shall be entitled to be named as a
co-insured or additional insured, under the Tenant’s public liability policy
required herein, and, in any event, the Tenant will arrange, if possible, for
notice to be given by an insurer to the Landlord of any cancellation of any of
the policies of insurance required by this Lease to be maintained by the Tenant.
The Landlord shall maintain on the building, fire insurance and insurance
against all perils, reasonable in the circumstances, for full replacement cost
with minimum by-law endorsement and broad extended coverage, boiler insurance
coverage, insurance against loss of rental income by reason of fire or related

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perils and third person liability and any other liability insurance protecting
the Landlord against all or any claims for personal injury including death or
property damage in an amount deemed advisable by the Landlord from time to time,
and if and when deemed advisable by the Landlord, insurance against loss of an
“all risk” nature including but not limited to earthquake, and the Tenant shall
reimburse the Landlord by paying a further additional monthly sum (herein called
the “Additional Rental for Insurance”) for its proportionate share of all costs
and charges of any such insurance and all such costs and charges may be
recovered by the Landlord from the Tenant in the same manner as rent under the
terms hereof.
Notwithstanding the foregoing, the Tenant shall not be required to contribute
any part of a premium for terrorism insurance unless such terrorism insurance is
required by a lender or mortgagee to the property or unless such terrorism
insurance becomes customary amongst institutional owners of office buildings.
OPERATING AND MAINTENANCE COSTS
3(l) Unless caused by Tenant misuse or neglect and subject to Tenant’s
obligation to maintain and effect repairs, at the Tenant’s cost, as outlined in
paragraph 4(e) herein entitled Tenant Repairs and Alterations and elsewhere as
called for in the Lease, the Landlord shall maintain and repair the building,
including the repair and replacement of any building components such as the roof
as well as the foundations, structural columns of the building and mechanical,
electrical and other basic systems of the building as well as perimeter fences,
if applicable and the Landlord shall maintain, operate and manage (including the
provisioning of cleaning and janitorial services and refuse collection) to the
standard of a high quality building, all the lands comprising the said building
including the parking areas and landscaped areas and the Tenant shall reimburse
the Landlord its proportionate share for all costs related to the aforementioned
repairs and replacements and for all other operating costs to maintain, operate
and manage the building and lands in such a manner. Such Tenant’s reimbursement
for such costs shall hereinafter be called “Additional Rental for Operating
Costs”. Subject to the Tenant Repairs and Alterations clause herein, the said
operating costs shall include all the aforenoted costs and shall also include,
without duplication, the amounts paid whether by the Landlord or others on
behalf of the Landlord for complete maintenance services for the building such
as are in keeping with maintaining the standard of a high quality building and
shall include all repairs and replacements required for such maintenance,
including but not limited to the following: all grass cutting and removal and
other landscaping costs including litter removal, parking lot maintenance and
snow removal, maintenance of the exterior of the building including roof repairs
and maintenance, the costs of providing water and electricity or any other
utility not otherwise chargeable directly to or payable by tenants, and any
costs related to consumption of utilities (including but not limited to
electricity, gas, water, oil, cable, etc.) or any costs incurred to investigate
or to install any devices, systems or equipment designed to reduce the
consumption of such utilities, service contracts with independent contractors,
all amounts paid for wages, benefits, and other payments to janitors, caretakers
and any other staff, to the extent they are directly involved in the maintenance
and management of the building, managerial fees, supplies used in the
maintenance of the building, the cost of heating, ventilating and/or
air-conditioning the building, including the common areas of the building not
directly chargeable to the Tenant and including repairs and replacements to all
equipment used in the provision of plumbing, electricity, heating, ventilating,
and air conditioning of the building including any meters and all other expenses
paid or payable by the Landlord in connection with the operation of the
building. Such operating costs shall not include interest on debt or capital
retirement of debt, or any amount directly chargeable by the Landlord to any
tenant or tenants as otherwise provided herein, or the proceeds realized by the
Landlord from any insurance claims made by

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the Landlord in connection with repairs done by the Landlord, sums payable by
the Landlord as taxes on income of the Landlord and which are clearly personal
to the Landlord and are not directly related to the Building, the costs of
enforcing other tenants’ obligations under leases, costs and expenses of
leasehold improvements relating to renewed tenancies, and marketing costs, real
estate commissions, tenant inducements or tenants’ work costs incurred by the
Landlord in acquiring new tenants for the Building.
All such costs and charges, except as noted above, may be recoverable by the
Landlord from the Tenant in the same manner as rent under the terms hereof.
Operating costs shall be determined in accordance with generally accepted
accounting principles and without duplication. The management fee that forms
part of the above costs shall not exceed five percent (5%) of gross rentals paid
(i.e. including Minimum Rental and all Additional Rental), excluding such
management fee.
In respect of the replacement of major structural items, including by way of
illustration and not limitation, the roof, foundations, structural columns of
the building, the amount which the Landlord can expense in any one year (and,
commensurately, the Tenant’s proportionate amount of which is permitted to be
included in “Additional Rental for Operating Costs”) shall not exceed the
greater of the cost of such replacement divided by the item’s life expectancy in
years or that amount which would be permitted to be expensed in any one year and
still comply with generally accepted accounting principles and that are applied
in a fashion consistent with the Landlord’s past practice. Such expense shall be
permitted on an annual basis until the cost of such replaced item has been fully
amortized or the Term has expired.
Should part of the Building be vacant any time during the term of the lease,
then, where appropriate, the Landlord may reasonably allocate expenses such that
the Landlord shall benefit from any reduced costs that are reasonably
attributable to the vacancy and such that the Tenant shall pay amounts which it
otherwise would have had to pay if the building were fully occupied. The
expenses to be allocated pursuant to this clause must be real, out of pocket
expenses of the Landlord which are more fairly attributed to occupied space than
to vacant space.
Except for costs which are in any way related to the Tenant’s occupancy which
shall be the Tenant’s responsibility as called for in paragraph 37 herein, the
Tenant shall not be responsible to contribute to costs of clean up or
remediation in connection with any condition of environmental concern in respect
of the Building other than the costs incurred by the Landlord related to any
insurance premiums paid to obtain coverage for such clean up or remediation or
to cost of the deductible paid by the Landlord in the event of a claim related
to such coverage (unless the Landlord has recovered all or a portion of the
deductible, in which case the Tenant shall not be responsible for the cost of
the deductible so recovered). Without effecting or delaying the Tenant’s
obligation to contribute, the Landlord will use reasonable efforts to recover
from third parties any monies payable by them to which the Tenant would
otherwise contribute under this section.
DIRECT CHARGE FOR WATER & SEWERAGE RATES & HYDRO CHARGES
3(m) Deleted Intentionally
PAYMENT OF ADDITIONAL RENT
3(n) During the Term of the Lease, the Tenant shall pay to the Landlord,
Additional Rental for Taxes, Additional Rental for Insurance and Additional
Rental for Operating Costs which shall be collectively be referred to herein as
Additional Rent, Additional Rental or Additional Rentals. Prior to the
commencement of the term of this Lease and of each Lease Year selected by the
Landlord thereafter

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which commences during the term of this Lease, the Landlord shall estimate the
amounts of the said Additional Rentals as herein before set forth for the
ensuing Lease Year or (if applicable) broken portion thereof, as the case may
be, and shall notify the Tenant in writing of such estimate. The amount so
estimated shall be payable in equal monthly installments in advance over the
Lease Year or broken portion thereof in question, on the first day of each and
every month during such Lease Year. The Landlord may from time to time alter the
Lease Year selected in which case the appropriate adjustment in monthly
installments shall be made. From time to time during a Lease Year, the Landlord
may re-estimate the amount of the taxes, insurance, or operating costs or any of
them, in which event the Landlord shall notify the Tenant in writing of such
re-estimate and the Tenant shall pay the amended monthly installments for the
then remaining balance of such Lease Year or broken portion thereof.
Within sixty (60) days after the expiration of each Lease Year, the Landlord
shall make a calculation of such taxes, insurance, and operating costs for such
Lease Year or broken portion thereof and shall notify the Tenant of such
calculation and the Landlord and the Tenant shall make the necessary
readjustment within thirty (30) days of such notification to the Tenant. Neither
the Landlord nor the Tenant may claim a re-adjustment with respect to such
Additional Rentals based upon any error of estimation, determination or
calculation thereof unless claimed in writing within one (1) year after the
Landlord has provided the Tenant with the calculation referred to herein.
EXAMINATION OF RECORDS
3(o) The Tenant and its agents may within thirty (30) days of the receipt by the
Tenant of any notice respecting Additional Rental for Taxes, Insurance or
Operating Costs payable hereunder, at reasonable times, and upon giving
reasonable prior notice in writing of its intention to do so, examine at the
expense of the Tenant (subject to the cost allocation between the parties for
the accountant referred to below in this Section 3(o)), the accounts, records,
books, statements and other documents concerning such Additional Rental all of
which accounts, records, books, statements and other documents will be made
available by the Landlord to the Tenant at reasonable times and at the
Landlord’s place of business. All information obtained by the Tenant as a result
of such examination shall be treated as confidential. Should, as a result of the
Tenant’s examination of records, the Landlord or Tenant feel an adjustment is
warranted and should the Landlord and Tenant fail to agree on such adjustment
then an accountant, agreed upon by both parties, shall be appointed to examine
the Landlord’s records to determine what adjustment if any, is required. The
cost of such accountant shall not be included in operating and maintenance costs
under Section 3(l) of this Lease.
Should the adjustment, if any, be less than 5% of the total annual cost for the
Additional Rent then the Tenant shall pay, on it own, for the cost of such
accountant. Should the cost be more than the 5% figure noted herein and should
such adjustment result, in the Landlord being requested to pay such adjustment
to the Tenant, then the Landlord shall pay the cost for such accountant.
APPEAL OF ASSESSMENT
3(p) The Tenant shall be entitled at any time and from time to time, provided
that it has first obtained the Landlord’s written consent, at the Tenant’s own
cost and expense to appeal any assessment or taxes imposed or levied on the
Leased Premises or the building and may take such appeal in the name of the
Landlord provided that such appeal is prosecuted in good faith, and provided
that if the building or any part thereof or the Landlord shall become liable to
assessment, prosecution, fine or other liability, the

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Tenant shall have given cash security in an amount satisfactory to the Landlord
in respect of such liability and such undertakings as the Landlord may
reasonably require to indemnify the Landlord from any costs of any nature in
connection with such appeal. In no event shall the Tenant’s appeals noted herein
permit the Tenant to delay any payments of rent to the Landlord including but
not limited to payment of Additional Rent for Taxes as called for herein.
TENANT’S COVENANTS

4.   THE TENANT COVENANTS WITH THE LANDLORD AS FOLLOWS:   (a)   To pay, without
setoff, Minimum Rent and Additional Rents as herein set forth;   (b)   To
observe and perform all covenants and obligations of the Tenant herein;   (c)  
To pay the costs of, as and when the same become due, all gas, electrical, water
and sewer rates and charges levied or imposed or any other utility consumption
costs including the cost of installing, repairing or replacing any meter so long
as such cost does not also form part of the cost outlined in paragraph 3(l)
herein entitled Operating and Maintenance Costs charged or assessed against the
Leased Premises as and when the same become due;

BUSINESS TAX, ETC.
4(d) To pay business and other taxes, charges, rates, duties and assessments
levied, rated, charged or assessed against and in respect of the Tenant’s
occupancy of the Leased Premises or in respect of the personal property, trade
fixtures, furniture and facilities of the Tenant or business of the Tenant on
the Leased Premises, as and when the same become due, and to indemnify and keep
indemnified the Landlord from and against all payment of all loss, costs,
charges and expenses occasioned by or arising from any and all such taxes,
rates, duties, assessments, license fees and any and all taxes which may in
future be levied in lieu of such taxes, and also if the Tenant or any person
occupying the Leased Premises or any part thereof shall elect to have the Leased
Premises or any part thereof assessed for separate school taxes, the Tenant
shall pay to the Landlord as soon as the amount of the separate school taxes is
ascertainable, any amount by which the separate school taxes exceed the amount
which would have been payable for school taxes had such election not been made
as aforesaid.
TENANT REPAIRS AND ALTERATIONS
4(e) (i) General Repairs: Subject to the provisions of Section 9 of this Lease,
the Tenant shall, at its own cost and expense, keep and maintain the Premises in
good order, condition and repair, including all replacements, maintenance and
repair, ordinary, extraordinary, foreseen and unforeseen, except for normal wear
and tear and those matters that are clearly indicated herein as the Landlord’s
obligation to repair. Without limiting the generality of the foregoing the
Tenant shall, at all times, at its sole cost, keep and maintain the whole of the
Premises including without limitation, all interior partitions and interior
walls, interior and exterior of all door frames and doors including, where
applicable, loading doors, dock levels, interior of all windows, fixtures,
shelves, equipment and appurtenances thereof and improvements thereto (including
without limitation, electrical, lighting, including ballasts and tubes, wiring,
plumbing fixtures and equipment), and all telephone outlets and conduits within
or serving the Premises in good working order and repair (which shall include
periodic painting and decoration) as reasonably determined by the Landlord, and
the Tenant shall make all needed repairs and replacements with due diligence and
dispatch. The Tenant shall be responsible to replace any glass broken on the
Premises (excluding outside windows and doors of the perimeter of the Premises
and perimeter windows in the exterior walls, but including those that are broken
by Tenant’s employees, agents, or invitees and including those that are broken
due to the acts

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or omissions to act of Tenant’s employees, agents, or invitees) during the Term
and such glass shall be replaced by the Tenant with glass of as good quality and
size as that glass so broken. The Tenant shall effect all repairs referred to
herein according to notice from the Landlord but failure to give notice shall
not relieve the Tenant from its obligation to repair.
4 (e) (ii) Urgent Repairs: Notwithstanding anything herein before contained, the
Landlord may, in any event, enter the Leased Premises and make repairs to the
Leased Premises without notice if such repairs are, in the Landlord’s opinion,
necessary for the protection of the building and the Tenant covenants and agrees
with the Landlord that if the Landlord exercises any such option to repair, the
Tenant will pay to the Landlord together with the next installment of rent which
shall become due after the exercise of such option, all sums which the Landlord
shall have expended in making such repairs (less any insurance proceeds
recovered in connection therewith) and such sums if not so paid within such time
shall be recoverable from the Tenant as rent in arrears. Provided further that
in the event that the Landlord from time to time makes any repairs as herein
before provided, the Tenant shall not be deemed to have been relieved from its
ongoing obligation during the Term, to repair and maintain the Leased Premises
in a good state of repair including leaving the Leased Premises in a good state
of repair and cleanliness after the Tenant leaves.
4 (e) (iii) Additional Repairs: Notwithstanding any other terms, covenants and
conditions contained in this Lease, including without limitation, the Landlord’s
obligations to take out insurance and the Tenant’s obligation to pay the cost of
such insurance, if the building or any part thereof including but not limited to
the Leased Premises, 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 become damaged or
destroyed through the negligence, carelessness or misuse of the Tenant or its
servants, agents, employees or anyone permitted by the Tenant to be in the
building, or through the Tenant in any way blocking or damaging the heating
apparatus, water pipes, drainage pipes or other equipment or facilities or parts
of the building, the cost of the resulting repairs, replacements or alterations
plus a sum equal to fifteen percent (15%) of the cost thereof representing the
Landlord’s administrative overhead and charges, shall be borne by the Tenant who
shall pay the same to the Landlord together with interest (with such interest to
be calculated in accordance with paragraph 3(h) herein), forthwith upon
presentation of an account for such expenses incurred by the Landlord.
4 (e) (iv) Tenant to Notify. The Tenant shall promptly notify the Landlord of
any damage to, malfunction of, or deficiency or defect in any part of the
Premises or any equipment or utility systems or installations therein or serving
the Premises that might cause or result in injury to any person or property
including the Building upon becoming aware of any such condition.
4(e) (v) Alterations. The Tenant shall not make any repairs, alterations,
additions, decorations, improvements nor add fixtures except trade fixtures
(hereafter collectively referred to as the “Alterations”) to any part of the
Premises without first obtaining the Landlord’s written approval. Prior to
commencing any such Alterations, the Tenant shall submit the following, at the
sole cost of the Tenant, to the Landlord, for the Landlord’s approval:

  (a)   If reasonably required by the Landlord, drawings and specifications
prepared by qualified architects or engineers and conforming to good engineering
practice;

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  (b)   Such indemnification as the Landlord reasonably requires; and,     (c)  
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.     (d)   Should
the Landlord’s review and approval require the use of third party consultants
the Tenant shall be responsible to pay the reasonable costs of all said third
party consultants.

And the Landlord shall have 10 business days from having received all the
previous information to indicate, in writing, whether it shall permit such
Alterations.
4 (e) (vi) All Alterations approved by the Landlord shall be performed in the
following manner:

  (a)   At the sole cost of the Tenant.     (b)   By competent workmen approved
by the Landlord whose labour union affiliations, if any are compatible with
others employed by the Landlord and its contractors. In the case of work or
repairs related to the mechanical, electrical or structural systems of the
Building, the Landlord will have the right to insist that the Tenant use the
Landlord’s trades, professionals or contractors provided the amount charged by
any such contractor shall be at market rates.     (c)   In a good and
workmanlike manner;     (d)   In accordance with the drawings and specifications
approved in writing by the Landlord     (e)   subject to the reasonable
regulations, controls, approvals, and inspections of the Landlord or its
professionals with any cost of such supervision or inspection to be at the
Tenant’s expense.     (f)   The Tenant covenants that it will not suffer or
permit during the term hereof any mechanics’ or other liens, for work, labour,
services or materials ordered by it or for the costs of which it may be in any
way obligated, to attach to the Leased Premises or to the building and that
whenever and so often as any such liens shall attach or claims therefore shall
be filed, the Tenant shall, within twenty (20) days after the Tenant has notice
of the claim for lien, procure the discharge thereof by payment or by giving
security or in such other manner as is or may be required or permitted by law.  
  (g)   Except for the Tenant’s trade fixtures, the Tenant accepts that any
repairs, alterations, additions, decorations, improvements, including those
referenced in Section 17, and fixtures (hereafter collectively referred to as
the “Alterations”) shall, when made or installed in the Leased Premises, be and
become the property of the Landlord without any payment or compensation to the
Tenant being made and that unless specifically instructed, in writing, by the
Landlord, the Tenant shall not remove any such Alterations from the Leased
Premises either during or after the term. Notwithstanding this and except for
the demising wall referred to in Section 17, , the Landlord shall be under no
obligation to repair, maintain, or insure the Alterations The Tenant also
accepts that upon the termination of this Lease whether at expiry or otherwise,
the Landlord may, at its option, require the Tenant to remove all or part of
such Alterations except for those referred to in Section 17, and to require the
Tenant to repair any damage caused to the Leased Premises or the Building by
such installation or removal and or the Landlord

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      may require the Tenant to restore all or part of the Leased Premises to
the condition in which they were at the commencement of this Lease, except for
reasonable wear and tear, all being done at the Tenant’s expense. Should the
Tenant fail to perform such repair or restoration work requested by the
Landlord, then the Landlord may do such work at the expense of the Tenant and
collect from the Tenant the cost of same as Additional Rent whether before or
after the expiry of the Lease.

The Tenant’s obligation to observe and perform this covenant shall survive the
expiration or earlier termination of the Term.
4(e) (vii) Landlord’s Right to Perform. At all reasonable times, the Landlord
has the right to enter and view the conditions or state of repair of the Leased
Premises. If the Tenant shall fail to make any of the repairs required by any of
the provisions of sections 4(e)(i) to 4(e)(vii) inclusive hereof, or any other
section of the Lease, or to commence the performance of any of its obligations
thereunder within ten (10) days after notice to the Tenant by the Landlord or
any shorter period of time required by any mortgage affecting the Premises, the
Landlord shall have the right (but not the obligation) to make any such repairs,
replacements or perform maintenance work or any other work required of the
Tenant pursuant to the above noted sections or any other section of this Lease
and charge the actual cost plus 15% of such cost representing the Landlord’s
administrative and overhead charges and such total cost shall be paid by the
Tenant to the Landlord as Additional Rent within 15 days of invoicing by the
Landlord.
ASSIGNING OR SUBLETTING
4(f) (1) The Tenant will not:

  (i)   assign this Lease; nor     (ii)   sublet, share or part with possession
of all or any part of the Leased Premises; nor     (iii)   mortgage or encumber
the Lease or the Leased Premises,

      (collectively, a “Transfer”) by or in favour of any person, corporation or
other entity (a “Transferee”) without the prior written consent of the Landlord.
The Landlord will take into account the following factors in deciding whether to
grant or withhold its consent:

  a.   whether the Transfer is contrary to any covenants or restrictions granted
by the Landlord to any other party including, but not limited to, governmental
authorities or to other existing or prospective tenants or occupants of the
Building; and     b.   whether in the Landlord’s opinion the financial strength
and background, business and credit history and capability of the Transferee is
satisfactory to the Landlord.

  (2)   The Landlord shall have no liability for or in connection with any
claims, actions, damages, liabilities or expenses or any kind or nature
whatsoever of the Tenant as a result of the Landlord withholding its consent to
any Transfer pursuant to and in accordance with this paragraph 4(f). The Tenant
agrees that its only remedy in respect of the Landlord’s withholding of consent
will be to bring an application for a declaration that the Transfer should be
allowed.

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      The consent by the Landlord to any Transfer will not constitute a waiver
of any necessity for consent to any subsequent Transfer. This prohibition
against a Transfer includes:

  (i)   a change in the direct or indirect effective voting control of the
Tenant from the persons or entities holding voting control at the date of this
Lease:     (ii)   an assignment by operation of law; and     (iii)   a change in
the composition or control of the partnership if the Tenant is a partnership or
is controlled by a partnership.

  (3)   If the Tenant intends to effect a Transfer, then the Tenant will give
prior written notice to the Landlord of such intent, specifying the proposed
Transferee and providing additional information, including without limitation:

  (i)   financial and business information relating to the Transferee that the
Landlord may reasonably request, and     (ii)   a copy of the Transfer agreement
entered into between the Tenant and the Transferee.         The Landlord will,
within ten(10) business days after having received notice and all necessary
information, notify the Tenant in writing either that it consents or does not
consent to the Transfer.

  (4)   If there is a Transfer, the Landlord may collect Rent from the
Transferee, and apply the net amount collected to the Rent required to be paid
pursuant to this Lease, but no acceptance by the Landlord of any payments by a
Transferee will be a waiver of this covenant, or the acceptance of the
Transferee as the Tenant, or a release of the Tenant from the further
performance by the Tenant of its covenants or obligations.     (5)   Any
documents evidencing the Transfer will be prepared by the Landlord or its
solicitors, and all legal costs and other reasonable costs incurred by the
Landlord, including but not limited to costs to offset the Landlord’s time and
effort in processing the transfer, shall be paid by the Tenant to the Landlord,
or its agent, as a condition of and prior to the transfer and, if necessary may
be collected as Additional Rent.     (6)   Notwithstanding a Transfer, the
Tenant will remain jointly and severally liable with the Transferee on this
Lease and will not be released from performing any of its obligations and it
shall be a condition of receipt of the Landlord’s consent that the Transferee
enter into a written agreement directly with the Landlord agreeing to be bound
by all of the terms contained in this Lease.     (7)   If the Landlord consents
to the Transfer, notwithstanding the provisions of paragraph 4(f), any rent or
any other consideration received by the Tenant on account of the Transfer of its
interest in all or part of the Leased Premises or this Lease in excess of the
rent payable by the Tenant under this Lease shall be payable to the Landlord.

ASSIGNMENT BY LANDLORD
4(g) If there is a sale, lease or other disposition by the Landlord of the
building, or the assignment by the Landlord of this Lease or any interest of the
Landlord hereunder, the party acquiring the Landlord’s interest in the Building
or this Lease shall be bound by the covenants of the Landlord under this Lease,

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and, in which case, then the Landlord will, thereupon and without further
agreement, be relieved of all further liability with respect to its covenants
and obligations.
At any time it so chooses, the Landlord may designate a management company to
manage the building and upon written notice, from the Landlord, the Tenant will
pay all rent called for herein to such management company.
CHANGE IN CORPORATE CONTROL
4(h) For the purposes of this paragraph, a change in control shall mean a change
whereby one or more related entities control fifty percent (50%) of the then
issued and outstanding voting shares plus one (1) share of the Tenant and such
entity or entities are different from those owning such majority of voting
shares at the time of signing this lease. If at any time during the term any
part of or all of the shares or voting rights of shareholders shall be
transferred by sale, assignment, bequest, inheritance, trust, operation of law
or other disposition, or treasury shares be issued, so as to result in a change
in the control of such corporation, the Tenant must disclose in writing, such
changes to the Landlord Following the giving of such notice from the Tenant,
should the Landlord determine, acting reasonably, that such change in control
results in a material deterioration in the financial strength or
creditworthiness of the Tenant, then the Landlord may terminate, at its sole
option, this Lease by giving the Tenant thirty (30) days prior written notice of
such termination. To be effective, such written notice of termination from the
Landlord shall be given within 30 days of the giving of such notice by the
Tenant. Should the Tenant fail to give such notice, then the Tenant would be in
default of the Lease and the Landlord may, at its option, terminate this Lease,
at any time after such change in control by giving the Tenant thirty (30) days
prior written notice of such termination, which notice must be given within
thirty (30) days of the day the Landlord receives actual written notice of the
change in control in order to be effective. The Tenant shall, at the reasonable
request of the Landlord, make available to the Landlord for inspection or
copying, or both, all books and records of the Tenant which, alone or with other
data, show the applicability or inapplicability of this paragraph. If the
corporation, after the request of the Landlord, fails or refuses to furnish
forthwith to the Landlord such data,, which data, alone or with other data would
show the applicability or inapplicability of this paragraph, the Landlord may,
at its sole option, terminate this Lease by giving the Tenant thirty (30) days
prior written notice of such termination.
RULES AND REGULATIONS
4(i) The Tenant and its employees and all persons visiting or doing business
with it on the Leased Premises or the Building, shall be bound by and shall
observe such reasonable Rules and Regulations as may hereafter be set by the
Landlord of which notice in writing shall be given to the Tenant and upon such
notice being delivered all such Rules and Regulations shall be deemed to be
incorporated into and form part of this Lease. The Rules and Regulations as at
the date of execution of this Lease are those set out in Schedule “C”.
Notwithstanding the foregoing, no changes to the Rules and Regulations attached
hereto shall derogate from the other provisions of this Lease.
USE OF PREMISES
4(j) The Leased Premises shall be used only for general office purposes. It is
the Tenant’s obligation to ensure that such uses or activities conducted by it,
in the building, comply with all applicable zoning and building by-laws and
regulations or any other legislation or rules that govern such matters. Any
failure to comply and any resulting prohibition by any governmental authority of
any or all the Tenant’s

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use, work or activity in the building shall not relieve the Tenant from any of
its rental obligations to the Landlord as described herein.
INCREASE IN INSURANCE PREMIUMS
4(k) The Tenant agrees that it will not keep, use, sell or offer for sale in or
upon the Leased Premises any article which may be prohibited by any insurance
policy in force from time to time covering the building. In the event the
Tenant’s occupancy or conduct of business in, or on the Leased Premises, whether
or not the Landlord has consented to same, results in any increase in premiums
for the insurance carried from time to time by the Landlord with respect to the
building, the Tenant shall pay any such increase in premiums as additional rent
within ten (10) days after bills for such additional premiums shall be rendered
by the Landlord. In determining whether increased premiums are a result of the
Tenant’s use or occupancy of the Leased Premises, a schedule issued by the
organization computing the insurance rate on the building 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 promptly comply with all
reasonable requirements of the insurance authority or of any insurer now or
hereafter in effect relating to the Leased Premises.
CANCELLATION OF INSURANCE
4(l) If any policy of insurance upon the building or any part thereof shall be
canceled by the insurer by reason of the use or occupation of the Leased
Premises or any part thereof by the Tenant or by any assignee or subtenant of
the Tenant or by anyone permitted by the Tenant to be upon the Leased Premises,
and the Tenant is unable to arrange similar insurance coverage, the Landlord
may, at its option, terminate this Lease forthwith by leaving upon the Leased
Premises notice in writing of its intention to do so and thereupon rent and any
other payments for which the Tenant is liable under this Lease shall be
apportioned and paid in full to the date of such termination and the Tenant
shall immediately deliver up possession of the Leased Premises to the Landlord
and the Landlord may re-enter and take possession of same.
OBSERVANCE OF LAW
4(m) The Tenant must comply with all provisions of law including without
limitation, federal and provincial legislative enactment, building by-laws, and
any other governmental or municipal regulations which relate to the
partitioning, equipment, operation and use of the Leased Premises, and to the
making of any repairs, replacements, alterations, additions, changes,
substitutions or improvements of or to the Leased Premises. The Tenant must also
comply with all police, fire and sanitary regulations imposed by any federal,
provincial or municipal authorities or made by fire insurance underwriters, and
to observe and obey all governmental and municipal regulations and other
requirements governing the conduct of any business conducted in the Leased
Premises. Provided that in default of the Tenant so complying, the Landlord may,
at its option, where possible, comply with any such requirement and the cost of
such compliance shall be payable by the Tenant to the Landlord as Additional
Rent and the Landlord may enforce payment thereof as rent in arrears.
WASTE & OVERLOADING OF FLOORS
4(n) The Tenant shall not do or suffer any waste or damage, disfiguration or
injury to the Leased Premises or the fixtures and equipment thereof or permit or
suffer any overloading of the floors thereof; and not to place therein any safe,
heavy business machine or other heavy object without first obtaining

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the consent in writing of the Landlord; and not to use or permit to be used any
part of the Leased Premises for any dangerous, noxious or offensive trade or
business and not to cause or permit any nuisance in, at or on the Leased
Premises; and without the prior consent in writing of the Landlord, the Tenant
will not bring onto or use in the Leased Premises or permit any person subject
to the Tenant to bring onto or use on the Leased Premises any fuel or
combustible material for heating, lighting or cooking nor will it allow onto the
Leased Premises any stove, or burner or appliances for utilizing the same and
the Tenant will not purchase, acquire or use electrical current or gas for
consumption on the Leased Premises except from some supplier thereof as shall
have been approved in writing by the Landlord.
INSPECTION
4(o) To permit the Landlord, its servants or agents to enter upon the Leased
Premises at any time and from time to time for the purpose of inspection and of
making emergency repair alterations or improvements to the Leased Premises or to
the building and the Tenant shall not be entitled to compensation for any
inconvenience, nuisance or discomfort occasioned thereby. The Landlord, its
servants or agents may at any time upon having provided notice to this effect
and from time to time enter upon the Leased Premises to remove any article or
remedy any condition which in the opinion of the Landlord, reasonably arrived
at, would be likely to lead to cancellation of any policy of insurance as
referred to in this Lease or elsewhere herein and such entry by the Landlord
shall not be deemed to be a re-entry.
INDEMNITY BY TENANT
4(p) (i) The Tenant agrees to indemnify and save harmless the Landlord of and
from all liabilities, suits, claims, demands, and actions of any kind or nature,
including the full cost of the Landlord in resisting or defending same, to which
the Landlord shall or may become liable for or suffer by reason of any breach,
violation or non-performance by the Tenant or any covenant, term or provision
hereof or by reason of any occurrence resulting from, occasioned to or suffered
by any person or property by reason of any act, neglect or default on the part
of the Tenant or any of its officers, agents, employees, visitors, customers or
licensees; and the covenant of the Tenant in regard to such indemnification
occurring during the term of the Lease or any renewal or overholding in respect
thereof shall continue in full force and effect notwithstanding the expiration
of the term or the termination of this Lease for any reason whatsoever.
4(p) (ii) The Landlord shall not be liable for any damage howsoever caused to
property of the Tenant or of any person subject to the Tenant which is in or
upon or being brought to or from the Leased Premises or the building or for
personal injury (including death) sustained in any manner by the Tenant or any
person subject to the Tenant while the Tenant or any such person is in or upon
or entering or leaving the Leased Premises or building unless such property
damage or personal injury may have been clearly attributable to fault or neglect
on the part of the Landlord or of any person for whom the Landlord is
responsible, and except where the Landlord is not exempt from liability under
this paragraph, the Tenant will indemnify and save harmless the Landlord from
and against all claims and demands made against the Landlord by any person for
or arising out of any such property damage or personal injury.
NO ABATEMENT OF RENT
4(q) Except as provided in Section 9 of this Lease there shall be no abatement
or reduction of rent whatsoever during the term of the Lease or any extension
thereof.

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EXHIBITING PREMISES
4(r) To permit the Landlord or its agents or servants upon twenty-four
(24) hours notice to enter and show the Leased Premises, during normal business
hours, to prospective purchasers or to existing or prospective lenders of the
building and may, after notice terminating this Lease has been given, or within
the last nine (9) months of the Term, enter and show the Leased Premises to
prospective tenants and erect a sign with reasonable dimensions stating that the
Leased Premises are “For Rent”.
MAINTENANCE
4(s) Deleted Intentionally
SIGNS
4(t) Subject to the provisions of Section 4(u) of this Lease, the Tenant shall
not erect or maintain any identification sign of any type and in any location
unless the Tenant has received the Landlord’s prior written approval for such
sign. In addition, the Tenant shall not erect, install, inscribe, paint or affix
any sign, lettering or advertisement upon or above the exterior of the Leased
Premises or grounds, including the exterior glass surface of the windows or
doors, nor shall the Tenant install, display, inscribe, paint or affix any sign,
lettering or advertisement to or upon the interior doors of the common areas of
the building without first, in each instance, securing the written approval of
the Landlord failing which it shall be removed forthwith by the Tenant upon the
request of the Landlord. Should the Tenant fail to remove any such signage or
markings after written notice to the Tenant, then the Landlord shall have the
right to remove same, at the cost of the Tenant and the cost of same shall be
collectible by the Landlord under the same conditions as if it were considered
to be rent.
At the expiry of the Lease or any renewal thereof, the Tenant, at its own costs,
will be required to remove any signage and to restore any surface on which
signage (including the signage noted in Section 4(u)) was placed by or at the
request of Tenant to the state it was in prior to the installation of the
signage.
SIGNAGE
4(u) So long as the Tenant occupies approximately 6,080sf in the Building and so
long as it submits to the Landlord and obtains the Landlord’s prior written
approval for the design, size, location and colour of the signage it intends to
place, then it shall have the right to place its name or logo on the west
exterior façade, only over the windows on that part of the façade that protrudes
from the balance of the west façade (ie on that part of the façade that contains
the front doors to the building). At the expiry of the Lease or any renewal
thereof, the Tenant, all at its own cost, will be required to remove the signage
and to repair any damage and restore the façade to the state it was in prior to
the installation of the signage. For clarification and subject to the signage
terms and conditions as contain herein, the Tenant’s shall be allowed to keep
its existing Building signage located on the west Building façade.
KEEP TIDY
4(v) At the end of each business day, to leave the Leased Premises in a tidy
condition. No outside storage of raw or processed materials or any other debris
shall be permitted on or around the Building.
GARBAGE REMOVAL
4(w) The Tenant shall, at its own cost, be responsible for the removal and
disposal of all extraordinary

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garbage, whether by volume or type, as reasonably determined by the Landlord, in
and around the Leased Premises, failing which the Landlord shall do so at the
cost of the Tenant.

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DELIVERIES
4(x) The Tenant shall receive, ship, take delivery of and allow and require
suppliers or others to deliver or take delivery of merchandise, supplies,
fixtures, equipment, furnishings, wares or merchandise only through the
facilities provided for that purpose as determined by the Landlord.
NOTICE OF DAMAGE
Deleted Intentionally
CERTIFICATES
4(z) The Tenant agrees that prior to the Commencement Date and at any time and
from time to time upon not less than ten (10) days prior notice execute and
deliver to the Landlord a statement on a form to be provided by the Landlord
certifying, amongst other items on the Landlord’s form, that this Lease is
unmodified and in full force and effect (or, if modified, stating the
modifications and that the same is in full force and effect as modified), the
amount of the annual rental then being paid hereunder, the dates to which the
same, by installments or otherwise, and other charges hereunder have been paid,
and whether or not there is any existing default on the part of the Landlord of
which the Tenant has notice. In addition and upon written notice to the Tenant
by the Landlord whereby the Landlord indicates it requires the following
financial information to facilitate a sale of the property or any financing of
the property including annual reviews by any mortgage holder then the Tenant
shall, within ten (10) days, provide most recent annual financial statements in
addition to year to date financial statements and other financial information
reasonably requested by the Landlord. In all cases, provision of financial
information shall be governed by a confidentiality agreement.
QUIET ENJOYMENT
5. The Landlord covenants with the Tenant for quiet enjoyment.
LANDLORD’S COVENANTS
6. The Landlord covenants with the Tenant that, subject to the Tenant paying
amounts as set forth in Paragraphs 3(a) and 3(j) or elsewhere as called for in
this Lease, it shall pay all taxes and rates, municipal, parliamentary or
otherwise, including without limiting the generality of the foregoing, water
rates with respect to the Leased Premises or assessed against the Landlord in
respect thereof, except such as the Tenant has herein covenanted or is herein
obligated to pay.
PARKING
7. The Tenant and all persons employed by or doing business with the Tenant
shall have the use of the land as designated from time to time by the Landlord
for the purpose of access to and egress from the Building or Leased Premises, as
applicable, and for parking of standard sized motor vehicles, provided that no
such motor vehicle shall be parked on any part of the lands contained in or
around the building which is a loading zone or is not designated by the Landlord
for parking or where signs are in place indicating that parking is prohibited
and the Tenant agrees to reimburse the Landlord on demand for the cost of
removal of any motor vehicles which are parked in breach of this clause and
which belong to or are parked by any person employed by or doing business with
the Tenant, all such costs to be recoverable by the Landlord as rent in arrears
under this Lease. The Landlord shall not materially reduce the number of parking
spaces existing on the Lands but subject to such restriction, it is specifically

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understood and agreed that the Landlord shall have the right to make all
reasonable rules, regulations and by-laws relating to the operation of the
parking area and means of ingress to and egress from the building or any part
thereof, in regard to the parking, traffic control, excessive weights of loads
on ramps or loading docks and all such matters as are required or are normally
incidental to the proper management of the building. The Tenant covenants and
agrees that it will observe, abide by and conform to all such reasonable rules,
regulations and by-laws made or established by the Landlord as aforesaid and as
currently exist as outlined in the schedule attached hereto entitled Rules and
Regulations.
FIRE
9. Provided that if during the continuation of this Lease the building or the
Leased Premises are destroyed or damaged by fire or the elements, then the
following provisions shall apply and in all cases the Landlord shall act
reasonably in applying such provisions:

(a)   If the building or the Leased Premises are totally destroyed or are
partially destroyed so as, in the reasonable opinion of an architect agreed upon
by the Landlord and the Tenant (the “Architect”), to render the Leased Premises
wholly unfit for operation of its business by the Tenant and if they shall be so
badly damaged that they cannot in the opinion of the mutually agreed Architect
be repaired with reasonable diligence within 120 days of the happening of such
damage, then this Lease shall at the option of the Tenant or the option of the
Landlord cease and become null and void from the date of such damage or
destruction and the Tenant shall immediately on reasonable notice to the
Landlord or from the Landlord, as applicable, surrender the Leased Premises and
all interest therein to the Landlord, and the Tenant shall pay rent only to the
time of such damage or destruction, and the Landlord may re-enter or re-possess
the Leased Premises, discharged of this Lease, and remove all parties therefrom.
  (b)   But if the building or the Leased Premises are partially destroyed and
can in the opinion of the mutually agreed Architect be repaired with reasonable
diligence within 120 days from the happening of such damage and if the damage is
such as to render the Leased Premises wholly unfit for operation of its business
by the Tenant , then the rent shall not run or accrue after said damage, while
the process of repairs is going on, and the Landlord shall repair same with all
reasonable speed, and then the rent shall recommence immediately after said
repairs shall be completed.   (c)   But if the building or the Leased Premises
can in the opinion of the mutually agreed Architect be repaired within 120 days
from the happening of such damage, and if the damage is such that the Tenant can
operate its business in the undamaged portion of the Leased Premises, then until
such damage shall have been repaired, the rent shall abate in the proportion
that the portion of the Leased Premises rendered unfit for occupancy bears to
the whole of the Leased Premises, and the Landlord shall repair same with all
reasonable speed.

Provided, that, if, upon the completion by the Landlord of any repairs required
as a result of any such destruction or damage a dispute shall arise between the
Landlord and the Tenant as to whether or not the Leased Premises have been made
fit for the purposes of the Tenant under this Lease, such disputes shall be
determined by the Architect agreed upon by the Landlord and the Tenant and paid
for equally by them which decision shall be final and binding on the Landlord
and the Tenant.

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Provided further that if any such total or partial destruction or damage is
caused in whole or in part by any fault or neglect on the part of the Tenant or
of any person subject to the Tenant nothing herein contained shall release or
discharge the Tenant from liability for any loss or damage thereby sustained by
the Landlord.

(d)   For the purposes of clarifying the obligations of the Landlord and the
Tenant in relation to repair when required pursuant to the provisions of this
Section, the Landlord shall be obliged to repair and rebuild the Building to the
condition as at the Commencement Date of this Lease. The Tenant shall be
required to restore all improvements and any Alterations in the Leased Premises.

DAMAGE OF PROPERTY
10. As the Tenant acknowledges that it is required to carry insurance as called
for in paragraph 3k or elsewhere in this lease, the Landlord shall not be liable
or responsible in any way for any loss of or damage or injury to any property
belonging to the Tenant or to employees of the Tenant or to any other person
while such property is on the Leased Premises or in the building or in or on the
surrounding lands and buildings owned by the Landlord whether or not such
property has been entrusted to employees of the Landlord and without limiting
the generality of the foregoing, the Landlord shall not be liable for any damage
to any such property caused by steam, water, rain or snow which may leak into,
issue or flow from any part of the building or from the water, steam or drainage
pipes or plumbing works of the building or from any other place or quarter or
from any damage caused by or attributable to the condition or arrangement of any
electric or other wiring or for any damage caused by anything done or omitted by
any other tenant.
DELAYS IN PROVISION OF SERVICE
11. Except for willful neglect by the Landlord, it is understood and agreed that
whenever and to the extent that the Landlord shall be unable to fulfill, or
shall be delayed or restricted in the fulfillment of any obligation hereunder in
respect of the supply or provision of any service or utility or the doing of any
work or the making of any repairs by reason of being unable to obtain the
material, goods, equipment, service, utility or labour required to enable it to
fulfill such obligation or by reason of any statute, law or order-in-council or
any regulation or order passed or made pursuant thereto or by reason of the
order or direction of any administrator, controller or board, or any
governmental department or officer of other authority, or by reason of not being
able to obtain any permission or authority required thereby, or by reason of any
other cause beyond its control whether in the foregoing character or not, the
Landlord shall be entitled to extend the time for fulfillment of such obligation
by a time equal to the duration of such delay or restriction, and the Tenant
shall not be entitled to either compensation or rent reduction for any
inconvenience, nuisance or discomfort thereby occasioned.
DEFAULT OF TENANT
12. Provided and it is hereby expressly agreed that if and whenever the rent
hereby reserved or any part thereof shall not be paid on the day appointed for
payment thereof, whether lawfully demanded or not, or in case of breach or
non-observance or non-performance of any of the covenants, agreements, provisos,
conditions or rules and regulations on the part of the Tenant to be kept,
observed or performed, or in case the Leased Premises shall be vacated or remain
unoccupied for fifteen (15) days then and in every such case, it shall be lawful
for the Landlord thereafter to, in addition to and not as replacement for any
remedies or rights it may have in law, enter into and upon the Leased Premises
or any part thereof in the name of the whole and the same to have again,
repossess and enjoy as of its former estate,

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anything in this Lease contained to the contrary notwithstanding other than the
proviso to this Paragraph 12.
Provided that notwithstanding anything to the contrary herein before in this
Paragraph 12 contained, the Landlord shall not at any time have the right to
re-enter and forfeit this Lease by reason of the Tenant’s default in the payment
of the rent or the Tenant’s default in paying any other amounts owing to the
Landlord as called for by this Lease, unless and until the Landlord shall have
given to the Tenant at least two (2) business days, in the case of monetary
defaults, and ten (10) business days, in the case of non-monetary defaults,
written notice of its intention so to do and setting forth the default
complained of and the Tenant shall have the right during such two (2) business
days or ten (10) business days, as applicable, to cure any such default.
BANKRUPTCY, ETC.
13. Provided further that in case without the written consent of the Landlord
the Leased Premises shall be used by any other person than the Tenant or for any
other purpose than that for which the same were let or in case the term or any
of the goods and chattels of the Tenant shall be at any time seized in execution
or attachment by any creditor of the Tenant or the Tenant shall make any
assignment for the benefit of creditors or any bulk sale without the consent of
the Landlord or become bankrupt or insolvent or take the benefit of any Act now
or hereafter in force for bankrupt or insolvent debtors, or, if the Tenant is a
corporation and any order shall be made for the winding up of the Tenant, or
other termination of the corporate existence of the Tenant, then in any such
case and in addition to and not as replacement for any remedies or rights
available to the Landlord under law, this Lease shall, at the option of the
Landlord, cease and terminate and the term shall immediately become forfeited
and void and the then current month’s rent and the next ensuing three (3) months
rent shall immediately become due and be paid and the Landlord may re-enter and
take possession of the Leased Premises as though the Tenant or other occupant or
occupants of the Leased Premises was or were holding over after the expiration
of the Term without any right whatever.
RE-ENTRY BY LANDLORD
14. The Tenant further covenants and agrees that on the Landlord’s becoming
entitled to re-enter upon the Leased Premises under any of the provisions of
this Lease or under any applicable legislation, the Landlord in addition to all
other rights shall have the right to enter the Leased Premises as the agent of
the Tenant either by force or otherwise, without being liable for any
prosecution therefore and to re-let the Leased Premises as the agent of the
Tenant, and to receive the rent therefore and as the agent of the Tenant, to
take possession of any of the Tenant’s furniture or other property on the Leased
Premises and to sell the same at public or private sale without notice and to
apply the proceeds of such sale and any rent derived from re-letting the Leased
Premises upon account of the rent under this Lease, and the Tenant shall be
liable to the Landlord for the deficiency, if any.
RIGHT OF TERMINATION
15. The Tenant further covenants and agrees that upon any default of the Tenant
as provided for in paragraph 12 or elsewhere herein or upon the Landlord
becoming entitled to re-enter upon the Leased Premises under any of the
provisions of this Lease, the Landlord, in addition to all other rights, shall
have the right to terminate forthwith this Lease and the term by leaving upon
the Leased Premises notice in writing of its intention so to do, and thereupon,
rent shall be computed, apportioned and paid in full to the date of such
termination of this Lease and any other payments for which the Tenant is liable
under this

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Lease shall be paid and the Tenant shall immediately deliver up possession of
the Leased Premises to the Landlord, and the Landlord may re-enter and take
possession of same.
DISTRESS
16. The Tenant waives and renounces the benefit of any present or future
legislation or statute which may take away or limit the Landlord’s right of
distress, and covenants and agrees that notwithstanding any such legislation or
statute, none of the goods and chattels of the Tenant on the Leased Premises at
any time during the term shall be exempt from levy by distress for rent in
arrears. In the event that the Tenant shall remove or permit the removal of any
of its goods or chattels from the Leased Premises, the Landlord may within
thirty (30) days thereafter and if the Tenant is in arrears of rent, seize such
goods and chattels wherever the same may be found and may sell or otherwise
dispose of same as if they had actually been distrained upon the Leased Premises
by the Landlord for arrears of rent.
LANDLORD’S WORK
17. The Tenant, under a sub-lease with an expiry of June 30th, 2009, currently
occupies 9,378sf on the 2nd floor of the building. The Tenant has asked to
reduce it premises by 3,298sf (the “relinquished space”) and the Landlord and
Tenant have agreed to enter into this Lease, and the Landlord has agreed, at its
cost to effect the following Alterations:

  •   Erect a demising wall approximately as shown on the attached Schedule B  
  •   Relocate the kitchen sink and dishwasher as shown on the attached
Schedule B     •   Relocate mag locks, if required.

The Landlord, at its option, will not have to undertake any of the above noted
work until such time as the Landlord has leased the relinquished space. However
the Tenant shall be required to vacate the relinquished space at the
commencement of the term. Notwithstanding the Tenant’s requirement to vacate the
relinquished space the Tenant will be permitted to use the kitchen and lounge
area until such time as the Landlord has relocated the Tenant’s sink and
dishwasher and erected the demising wall. Tenant shall not owe any additional
rents under this Lease (above and beyond those specifically provided for in this
Lease) for the use of the kitchen and lounge area.
NON-WAIVER
18. No condoning, excusing or overlooking by the Landlord or the Tenant of any
default, breach or non-observance by the other of them at any time or times in
respect of any covenant, proviso or condition herein contained shall operate as
a waiver of the Landlord’s rights or the Tenant’s rights, as the case may be,
hereunder in respect of any continuing or subsequent default, breach or
non-observance, or so as to defeat or affect in any way the rights of the
Landlord herein in respect of any such continuing or subsequent default or
breach, and no waiver shall be inferred from or implied by anything done or
omitted by the Landlord save only express waiver in writing. All rights and
remedies of the Landlord or the Tenant in this Lease contained shall be
cumulative and not alternative.
SURRENDER OF PREMISES
19. (i) Surrender: At the expiration or earlier termination of the Term, the
Tenant shall surrender to the Landlord the Premises in as good condition and
repair as the Tenant is required to maintain the Premises throughout the Term,
except for reasonable wear and tear. The Tenant shall also surrender at that
time all keys for the 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 Premises. The Tenant shall, however,

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remove all its moveable trade fixtures and, if requested by the Landlord, the
Tenant shall also remove all or part of its Alterations (except for those
described in Section 17), as defined in this Lease, before surrendering the
Premises as detailed later herein.

(ii)   Removal and Restoration by Tenant:

  (a)   As provided for elsewhere in this Lease, the Tenant accepts that, except
for the Tenant’s moveable trade fixtures, any Alterations, as defined in 4(e)(v)
above, shall, when made or installed in the Leased Premises, be and become the
property of the Landlord without any payment or compensation to the Tenant being
made and that unless specifically instructed, in writing, by the Landlord, the
Tenant shall not remove any such Alterations from the Leased Premises either
during or after the term of the Lease. Notwithstanding this, the Landlord shall
be under no obligation to repair, maintain, or insure the Alterations (except
for the exterior portion of the demising wall described in Section 17). The
Tenant also accepts that upon the termination of this Lease whether at expiry or
otherwise, the Landlord may, at its option, require the Tenant to remove all or
part of such Alterations (except for those described in Section 17) and to
require the Tenant to repair any damage caused to the Leased Premises or the
Building by such installation or removal and or the Landlord may require the
Tenant to restore all or part of the Leased Premises (except that Tenant shall
not be required to remove the Alternations described in Section 17) to the
condition in which they were at the commencement of this Lease, except for
reasonable wear and tear, all being done at the Tenant’s expense.         The
Tenant’s obligation to observe and perform this covenant shall survive the
expiration or earlier termination of the Term.         Should the Tenant fail to
perform such repair or restoration work requested by the Landlord, then the
Landlord may do such work at the expense of the Tenant and collect from the
Tenant the cost of same as Additional Rent whether before or after the expiry of
the Lease.         With respect to the Tenant’s trade fixtures, the Tenant may
at the Tenant’s sole cost and expense during the Term in the usual or normal
course of its business remove its moveable trade fixtures, if any ; and,
(ii) the Tenant shall, at the expiration or termination of the Lease, at its own
cost, remove all its trade fixtures , and such of the Alterations (except for
those that are described in Section 17) as the Landlord by notice requires to be
removed.     (b)   If the Tenant does not remove its trade fixtures at the
expiration or earlier termination of the Term, such fixtures shall, at the
option of the Landlord, become the property of the Landlord and may be removed
from the Premises and sold or be disposed of by the Landlord in such manner as
it deems advisable.     (c)   The Tenant shall, in the case of every such
installation or removal of either its trade fixtures or Alterations either
during or at the expiration of the Term effect the same at times designated by
the Landlord.     (d)   For greater certainty, the Tenant’s fixtures shall not
include any

  (i)   heating, ventilating or air conditioning systems, facilities and
equipment in, or serving the Premises;     (ii)   floor covering affixed to the
floor of the Premises;     (iii)   light fixtures; and,     (iv)   any fixtures,
facilities, equipment or installations installed by or at the expense of the
Landlord.

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(iii)   Indemnity. If the Premises is not surrendered at the end of the Term,
then the Tenant shall indemnify the Landlord against any and all loss or
liability resulting from such delay by the Tenant in so surrendering the
Premises, including without limitation, any claims founded on such delay made by
any succeeding occupant of the Premises or any part thereof, and the Tenant
shall be liable to the Landlord for legal fees (on a solicitor and his client
basis), and all other costs and expenses incurred by the Landlord in obtaining
possession of the Premises.   (iv)   No Tacit Renewal. If the Tenant remains in
possession of the Premises after the end of the Term, and without the execution
and delivery of a new lease, or a written renewal or extension of this Lease,
there shall be no tacit or other renewal of this Lease, and the Tenant will be
considered to be occupying the Premises as a tenant from month to month at a
monthly Rent, payable in advance on the first day of each month equal to the sum
of:

  (a)   Double the monthly installment of Minimum Rent payable for the last
month of the Term, and     (b)   One-twelfth of the amount of Additional Rent
and charges paid or payable by the Tenant for the last Lease Year of the Term,
and otherwise upon the terms and conditions set forth in this Lease, so far as
applicable.

RECOVERY OF ADJUSTMENT
20. The Landlord shall have (in addition to any other right or remedy of the
Landlord) the same rights and remedies in the event of default by the Tenant in
payment of any amount payable by the Tenant hereunder, as the Landlord would
have in the case of default in payment of rent.
NOTICE
21. Any notice required or contemplated by any provisions of this Lease shall be
given in writing enclosed in a sealed envelope addressed, in the case of notice
to the Landlord, at 451 Daly Avenue, 2nd Floor, Ottawa, Ontario K1N 6H6 and in
the case of notice to the Tenant, to it at the Leased Premises and mailed,
registered and postage prepaid. The time of giving of such notice shall be
conclusively deemed to be the fourth (4th) business day after the day of such
mailing. Such notice shall be delivered, in the case of notice to the Landlord,
to an executive officer of the Landlord, and in the case of notice to the
Tenant, to it personally, or to the manager operating the Tenant’s business upon
the Leased Premises, or to any executive or senior officer or director of the
Tenant if the Tenant is a corporation. Such notice, if delivered shall be
conclusively deemed to have been given and received at the time of such
delivery. If in this Lease two or more persons are named as Tenant, such notice
shall also be sufficiently given if and when the same shall be delivered
personally to any one of such persons. Provided that either party may, by notice
to the other from time to time designate another address in Canada to which
notices mailed more than ten (10) days thereafter shall be addressed.
SUBORDINATION
22. This Lease is subject and subordinate to all ground or underlying leases and
to all mortgages (including any deed of trust and mortgage securing bonds and
all indentures supplemental thereto) which may now or hereafter affect such
leases, the Leased Premises, the building and/or the property where the building
is situated and to all renewals, modifications, consolidations, replacements and
extensions thereof. The Tenant agrees to execute promptly any certificate in
confirmation of such

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subordination as the Landlord may request and hereby constitutes the Landlord
the agent or attorney of the Tenant for the purpose of executing any such
certificate and of making application at any time and from time to time to
register postponements of this Lease in favour of any such mortgage in order to
give effect to the foregoing provisions of this paragraph. At the written
request of the Tenant, the Landlord shall use its best efforts, but shall not be
obliged, to obtain non-disturbance agreements from any mortgagee or lessor
registered on the Property. The obligation of the Tenant to subordinate this
Lease shall be conditional upon the Tenant receiving from any such mortgagee or
lessor, an agreement that the possession of the Leased Premises of the Tenant
shall not be disturbed by such mortgagee or lessor so long as the Tenant
complies with the provisions of this Lease. The Landlord shall use its best
efforts, but shall not be obliged, to obtain a non-disturbance agreement from
any current mortgagee of the Leased Premises.
LEASE ENTIRE AGREEMENT
23. The Tenant acknowledges that there are no covenants, representations,
warranties, agreements or conditions expressed or implied, collateral or
otherwise forming part of or in any way affecting or relating to this Lease save
as expressly set out in this Lease and that this Lease constitutes the entire
agreement between the Landlord and the Tenant and may not be modified except as
herein explicitly provided or except by subsequent agreement in writing of equal
formality hereto executed by the Landlord and the Tenant.
REGISTRATION
24. The Tenant covenants and agrees with the Landlord that the Tenant will not
register this Lease in this or any other form in the Registry Office or the Land
Titles Office but may register a notice of lease which discloses only the term
and expiry date thereof and the existence of options to renew the term.

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OPTION TO RENEW
25. So long as the Tenant is or has not been in default under the terms of this
Lease, the Tenant will have an option to renew for one 3 year term with the
minimum rent to be $10psf. The Tenant must exercise the option by providing
written notice to the Landlord to this effect no less than 9 months prior to the
end of the initial 37 month term and failing its exercise within the time
provided such option to be null and void.
Any renewal pursuant to this proviso shall otherwise be on the terms and
conditions contained in this Lease including but not limited to the payment of
Additional Rentals.
NET/NET/NET RENT
26. It is expressly agreed between the Landlord and the Tenant that it is
intended that the rent reserved in this Lease shall be an absolutely net/net/net
return to the Landlord during the Term of the Lease without regard to the
condition of the Leased Premises, and, except as otherwise explicitly provided
in this Lease, the Landlord shall be free of any and all costs, expenses, taxes
and charges with respect to the Leased Premises whatsoever, save and except only
taxes which are attributable to the income or profits of the Landlord and any
charges to the Landlord in respect of the amortization or interest under any
mortgage or charge on the building.
PAYMENTS BY TENANT
27. In addition to any other specific provisions herein contained, where the
Tenant is obligated under the terms of this Lease to pay any monies, whether to
the Landlord or any third party, or to do any act involving the payment of
money, and the Tenant shall fail to carry out its obligations, the Landlord may
do such act or pay such monies and charge the cost of doing such act or the
amount of such monies paid against the Tenant and may enforce the payment
thereof by the Tenant in the same manner as if rent had not been paid on a
timely basis under the terms of this Lease, and the Tenant shall pay unto the
Landlord, in respect of any amount so paid in respect of any rent or additional
rent not paid on the due date thereof, interest at the rate computed in
accordance with Paragraph 3(h) hereof.
POST-DATED CHEQUES
28. deleted intentionally.
INTERPRETATION
29(a) In this Indenture “herein”, “hereof”, “hereby”, “hereunder”, “hereto”,
“hereinafter” and similar expressions refer to this lease or indenture and not
to any particular paragraph, section or other portion thereof, unless there is
something in the subject matter or context inconsistent therewith.

  (a)   “business day” means any of the days from Monday to Friday of each week
inclusive unless such day is a holiday.     (b)   “normal business hours” means
the hours from 8:00 a.m. to 6:00 p.m. on business days.

So long as the Tenant pays for associated costs, including but not limited to
incremental heating, lighting, ventilation or cooling costs associated with
operations outside of normal business hours, if any, the Landlord shall ensure
that the Tenant’s employees can comfortably work in the Leased Premises outside
of “normal business hours”.

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SEVERABILITY OF COVENANTS
30. The Landlord and the Tenant agree that all of the provisions of this Lease
are to be construed as covenants and agreements as though the words importing
such covenants and agreements were used in each separate paragraph hereof.
Should any provision or provisions of this Lease be illegal or not enforceable,
it or they shall be considered separate and severable from the Lease and its
remaining provisions shall remain in force and be binding upon the parties
hereto as though the said provision or provisions had never been included.
CAPTIONS
31. The captions appearing in this Lease have been inserted as a matter of
convenience and for reference only, and in no way define, limit or enlarge the
scope or meaning of this Lease or of any provision hereof.
SUCCESSORS & ASSIGNS
32. This indenture and everything herein contained shall ensure to the benefit
of and be binding upon the respective heirs, executors, administrators,
successors and assigns and other legal representatives as the case may be, of
each and every of the parties hereto, and every reference herein to any party
hereto shall include the heirs, executors, administrators, successors and
assigns and other legal representatives of such party, and where there is more
than one tenant, the provisions hereof shall be read with all grammatical
changes thereby rendered necessary, and all covenants shall be deemed joint and
several. The neutral gender shall include both the masculine and feminine
gender.
ADDITIONAL TAXES
33. If any business, transfer tax, value-added tax, multi-stage sales tax, sales
tax, goods and services tax (GST) or any like tax is imposed on the Landlord by
any governmental authority on any rent payable by the Tenant under this Lease or
due in any way to the Tenant’s occupancy, then the Tenant shall reimburse the
Landlord for the amount of such tax forthwith upon demand as additional rent.
CHANGES TO BUILDING
34. The Landlord hereby reserves the right, at any time, to make changes to,
additions to, subtractions from or rearrangements of the Building including,
without limitation, any improvements thereon or any entrances and exits thereto,
or to grant, modify and terminate easements or other agreements pertaining to
the use and maintenance of all or parts of the Building and to make changes and
additions to the pipes, conduits, utilities and other necessary services in the
Building or Leased Premises which serve the Leased Premises or other premises in
the Building, provided that prior to the commencement of such work, if
necessary, the Landlord may alter the Leased Premises, to the extent found
necessary by the Landlord, acting reasonably, to accommodate such changes and in
doing so, the Landlord shall take all reasonable steps so as to minimize the
disruption to the Tenant. Should such changes, as determined in accordance with
the most current BOMA standards, result in the rentable area of the Leased
Premises or Building being different than that originally calculated or than
that area being used at such time, then the Tenant’s proportionate share may be
altered by the Landlord acting reasonably (so long as the adjustments are
applied consistently and proportionately to the other Tenants of the Building)
and the rental rates for Minimum and Additional Rent shall be applied to such
adjusted areas and the Tenant shall pay such rent resulting from such
measurements at such time as such changes are completed.

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GUARANTEE
35. Deleted Intentionally
LANDLORD CONDITION
36. Intentionally Deleted
HAZARDOUS SUBSTANCES
37(a) For the purposes of this section, HAZARDOUS SUBSTANCES means any
substance, or class of substance or mixture of substances which may be
detrimental to the environment, plant or animal life, or human health and
includes, without limitation, flammable, explosives, or radioactive materials,
asbestos, polychlorinated biphenyl’s (PCB’s), chemicals believed to cause cancer
or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances and related materials, petroleum and petroleum products, any
substance that, if added to water, may degrade or alter or form part of a
process of degradation or alteration of the quality or temperature of that water
to the extent that it is detrimental to its use by man or by any animal, fish or
plant, and substances declared to be hazardous or toxic under any law or
regulation now or hereafter enacted or promulgated by any governmental authority
having jurisdiction over the Landlord, the Tenant, the Leased Premises or the
Building (the “Authorities”).
(b) If the Tenant shall cause or permit any Hazardous Substances to be brought
onto, created in, released or discharged from, placed or disposed of, at or near
the Leased Premises, the Tenant shall be responsible at its own expense to
completely remedy the occurrence to the satisfaction of the Landlord.
(c) The Tenant shall not cause or permit to occur any violation of any federal,
provincial, municipal or local law, ordinance, or regulation, now or hereinafter
enacted (the “Laws”), related to environmental conditions on, under, at, near or
about the Leased Premises, or related to the Landlord, the Tenant or the
Building, air, soil or ground water condition, including without limitation, the
generation, storage or disposal of Hazardous Substances.
(d) The Tenant shall:

  (i)   at its own expense comply with the Laws;     (ii)   at its own expense
make all submissions to, provide all information required by, and comply with
all requirements of the Authorities under the Laws; and     (iii)   indemnify,
defend and hold harmless the Landlord, the Landlord’s mortgagees, any manager of
the Building, and their respective officers, directors, beneficiaries,
shareholders, partners, agents and employees, from all fines, suits, procedures,
claims and actions of every kind, and all costs associated therewith (including
legal fees on a solicitor and his own client basis and consultants’ fees)
arising out of or in any way connected with any deposit, spill, discharge, or
other release of Hazardous Substances that occurs during the Term or any renewal
or extension period, at or from the Leased Premises, and caused by the Tenant or
those for whom it is in law responsible, or which arises at any time from the
Tenant’s use or occupancy of the Leased Premises, or from the Tenant’s failure
to provide all information, make all submissions, and take all steps required by
this Section or by the Authorities.     (iv)   pay for any and all remediation
and clean up costs including but not limited to paying all fines,

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      suits, procedures, claims and actions of every kind, and all costs
associated therewith (including legal fees on a solicitor and his own client
basis and consultants’ fees) arising out of or in any way connected with any
deposit, spill, discharge, or other release of Hazardous Substances that occurs
during the Term or any renewal or extension period, at or from the Leased
Premises, or which arises at any time from the Tenants’ use or occupancy of the
Leased Premises, or from the Tenants’ failure to provide all information, make
all submissions, and take all steps required by this Section or by the
Authorities.

(e) Notwithstanding any other provision of this Lease, 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 Substances at or near
the Leased Premises, or discharged or released on, under or about the Leased
Premises, the Building or the lands upon which the Building is constructed, the
air, soil or ground water, then notwithstanding any rule of law to the contrary,
such Hazardous Substances 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 Substances or
the goods containing the Hazardous Substances. This affirmation of the Tenant’s
interest in the Hazardous Substances or the goods containing the Hazardous
Substances shall not however prohibit the Landlord from dealing with such
material as otherwise provided for in this Lease.
(f) All obligations of the Tenant regarding this clause and its dealing with
Hazardous Substances shall survive the expiry or termination of this Lease.
(g) To the best of the Landlord’s knowledge including information provided in
any environmental reports received by the Landlord which predate February 5th,
2004, the Building does not now contain any hazardous substances beyond levels,
amounts or concentrations permitted under the Laws applicable to the Building.
ESCAPE CLAUSE
38. Deleted Intentionally.
TENANT INDUCEMENT Intentionally deleted
39. Deleted Intentionally

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ACT REASONABLY
40. Whenever the consent, approval or permission of the Landlord is required
under this Lease it shall not be unreasonably withheld or delayed.
FIRST RIGHT OF REFUSAL
41. Provided the Tenant has never been in default of its financial obligations
under the Lease and has never had any other material default under the Lease the
Tenant shall have one first right of refusal to lease the relinquished space
under the same terms and conditions as contained herein, except for the minimum
rental. Should the Landlord receive an offer to lease for all or any portion of
the relinquished space the Landlord will, by written notice, provide the Tenant
with the minimum rent it is prepared to lease the relinquished space, or portion
thereof, if applicable, and the Tenant shall have 10 working days to execute a
firm and binding lease for the relinquished space at a minimum rent which will
be equal to the greater of the minimum rent the Landlord is prepared to lease
all or a portion of the relinquished premises or the minimum rent in effect for
the Leased Premises, at the time of the aforenoted Landlord’s written notice to
the Tenant. Failure of the Tenant to sign such lease within the 10 working days
from the Landlord’s written notice shall render the Tenant’s first right of
refusal forever null and void.
IN WITNESS WHEREOF the parties hereto have hereunto set their respective hands
and seals and/or affixed their corporate seals duly attested to by the hands of
their proper signing officer(s) authorized in that behalf.

                          SIGNED, SEALED AND DELIVERED       Elk Property
Management Limited, as agent for PBX
Properties Ltd. and 350 Palladium Drive Inc. and
856581 Alberta Ltd. In the presence of:     )     (LANDLORD)  
 
    )                  
 
    )                         )     Per:   /s/ George Gaty                      
   
 
    )         Name:   George Gaty    
 
    )         Position:   President    
. 
                              )     ZixCorp Canada Inc. and Zix Corporation    
  )     (TENANT)  
 
    )                  
 
    )                         )     Per:   /s/ Ronald A. Woessner              
           
 
    )         Name:   Ronald A. Woessner    
 
    )         Position:   ZixCorp — S.V.P.           )     I HAVE AUTHORITY TO
BIND THE CORPORATION.                            ZixCorp Canada — Secretary

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Schedule “A”
Legal Description — Lands
BEING:
Part of Lot 1 in Concession 2, designated as Parts 1, 2 and 3 on Plan 4R-14540,
Geographic Township of March, City of Ottawa (formerly the city of Kanata),
Regional Municipality of Ottawa-Carleton.

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Schedule “B”
Approximate Floor Plan

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Schedule “C”
Rules and Regulations
The Tenant and its invitees and employees shall observe the following rules and
regulations ( as added to, amended or modified from time to time by the
Landlord).

1.   SECURITY: Landlord may from time to time adopt appropriate systems and
procedures for the security or safety of the Building, any persons occupying
,using or entering the same ,or any equipment finishings or contents thereof,
and Tenant shall comply with Landlord’s reasonable requirements relative
thereto.   2.   LOCKS: Landlord may from time to time install and change locking
mechanisms on the entrances to the Building, common area thereof, and the
Premises, and shall provide to the Tenant a reasonable number of keys and
replacements therefore to meet the bona fide requirements of the Tenant. In
these rules “keys” include any device serving the same purpose. Tenant shall not
add to or change existing locking mechanisms on any door in or to the Leased
Premises without Landlord’s prior written consent and without providing a copy
of the key to the Landlord. If, with Landlord’s consent, Tenant installs
lock(s)incompatible with the Building master locking system:

  (a)   Landlord, without abatement of Rent, shall be relieved of any obligation
under the Lease to provide any service to the affected areas which require
access thereto,     (b)   Tenant shall indemnify Landlord against any expense as
a result of forced entry thereto which may be required in an emergency, and    
(c)   Tenant shall at the end of the Term and at Landlord’s request remove such
lock(s) at Tenant’s expense

3.   RETURN OF KEYS: At the end of the Term, Tenant shall promptly return to
Landlord all keys for the Building and Leased Premises which are in possession
of Tenant.   4.   WINDOWS: Tenant shall observe Landlord’s rules with respect to
maintaining window coverings at all windows in the Leased Premises so that the
Building presents a uniform exterior appearance, and shall not install any
signs, window shades, screens, drapes, covers or any other on or at window in
the Leased Premises without Landlord’s prior written consent.   5.   REPAIR,
MAINTENANCE, ALTERATIONS AND IMPROVEMENTS: Tenant shall carry out Tenant’s
repair, maintenance, alterations and improvements in the Leased Premises only
during times agreed to in advance by Landlord and in a manner in which will not
interfere with the rights of other tenants in the Building.   6.   WATER
FIXTURES: Tenant shall not use water fixtures for any purpose for which they are
not intended, nor shall Tenant tamper in any way with water fixtures so as to
increase water consumption. Tenant shall pay for any cost or damage resulting
from such misuse by Tenant.

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7.   PERSONAL USE OF LEASED PREMISES: The Leased Premises shall not be used or
permitted to be used for residential, lodging or sleeping purposes or for the
storage of personal effects or property not required for business purposes.   8.
  HEAVY ARTICLES: Tenant shall not place in or move about the Leased Premises
without Landlord’s prior written consent any safe or other heavy article, which
in the Landlord’s reasonable opinion may damage the Building and Landlord may
designate the location of any heavy articles in the Leased Premises.   9.  
CARPET PADS: deliberately omitted.   10.   BICYCLES, ANIMALS: Tenant shall not
bring any animals or birds into the Building and shall not permit bicycles or
other vehicles inside or on the sidewalks outside the Building except in areas
designated from time to time by Landlord for such purposes. The Landlord accepts
that the Tenant will use forklifts and other standard warehouse equipment so
long as such forklifts and other equipment are only used in the rear warehouse
area.   11.   DELIVERIES: Tenant shall insure that deliveries of materials and
supplies to the Leased Premises are made through such entrances, elevators and
corridors and at such times as may from time to time be designated by Landlord,
and shall promptly pay or cause to be paid to Landlord the cost of repairing any
damage to the Building caused by any person making such deliveries.   12.  
FURNITURE AND EQUIPMENT: Tenant shall insure that furniture and equipment being
moved into or out of the Leased Premises is moved through such entrances,
elevators and corridors and at such times as may from time to time be designated
by the Landlord, and by movers or a moving company approved by Landlord and
shall promptly pay or cause to be paid to Landlord the cost of repairing any
damage in the Building caused thereby.   13.   SOLICITATIONS: Landlord reserves
the right to restrict or prohibit canvassing, soliciting or peddling in the
Building.   14.   FOOD AND BEVERAGES: Tenant shall be permitted the use of the
equipment on the Leased Premises for the dispensation of soft drinks, cold
confectioneries and the like, for the preparation of coffee, tea and the like,
and for the warming of food already prepared. The Tenant shall not permit on the
premise equipment for the preparation of food. In addition only persons approved
from time to time by the Landlord may prepare, solicit orders for, sell, serve,
or distribute foods or beverages in the Building or use the elevators, corridors
or common areas for such purpose. This however shall not prevent the Tenant from
using catering services from time to time for special occasions as luncheons and
receptions.   15.   REFUSE: Tenant shall place all refuse in proper receptacles
provided by Tenant at its expense in the Leased Premises or in receptacles (if
any) provided by Landlord for the Building and shall keep sidewalks and
driveways outside the Building and lobbies, corridors, stairwells, ducts and
shafts of the Building free of all refuse.

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16.   OBSTRUCTIONS: Tenant shall not obstruct or place anything in or on the
sidewalks or driveways outside the building or in the lobbies, corridors,
stairwells or other common areas of the Building, or use such locations for any
purpose except access to and exit from the Leased Premises without Landlord’s
prior written consent. Landlord may remove at Tenant’s expense any such
obstruction or thing (unauthorized by Landlord) without notice or obligation to
Tenant.   17.   DANGEROUS OR IMMORAL ACTIVITIES: Tenant shall not make any use
of the Leased Premises which involves the danger or injury to any person, nor
shall the same be used for any immoral or illegal purpose.   18.   PROPER
CONDUCT: Tenant shall not conduct itself in any manner which is inconsistent
with the character of the Building as a first quality building or which will
impair the comfort and convenience of other tenants in the building.   19.  
EMPLOYEES, AGENTS AND INVITEES: In these Rules and Regulations, Tenant includes
the employees, agents, invitees and licensees of Tenant and others permitted by
Tenant to use, occupy, or visit the Leased Premises.   20.   PARKING: The
Tenant, its employees, agents and suppliers shall park only in those portions of
the parking area on the Building designated for such purposes by the Landlord.
If required by Landlord to control parking, Tenant will provide the Landlord
with the license numbers of all cars of the Tenant and its employees authorized
to park in the parking area. The parking area shall not be used for anything but
for the temporary parking of passenger vehicules. At no time shall cars or
anything else including but not limited to items of storage be left overnight
anywhere in or around the Building including those areas reserved for parking.
The Tenant agrees that it will not hold the Landlord responsible in any manner
whatsoever for theft or damage of any vehicule or its contents however caused,
including for greater certainty, damage or loss caused by fire, vandalism, or
damage caused by the falling, escaping or dripping of any substance including
but not limited to water, solutions or any falling building material. The
aforesaid parking area shall be solely used for the temporary parking of
passenger automobiles and no such automobiles shall be cleaned or washed or
serviced in any way in the parking area.   21.   WINDOWS AND WINDOW COVERINGS:
The skylights and windows that reflect or admit light into any place in the
Building shall not be covered or obstructed by the Tenant, and no awnings,
curtains or blinds shall be installed without the prior written consent of the
Landlord. Window coverings that are installed shall have lining on the side
facing the interior side of exterior windows. The Tenant shall not and shall not
permit its employees, agents or invitees to throw anything out the windows or
doors of the Building or into the passageways, stairways, lightwells or
elevators shafts of the Building.   22.   SMOKING: Smoking is prohibited in all
common areas of the Building.