Exhibit 10.39

 

9500 Glenlyon Parkway

 

Burnaby, British Columbia

 

 

 

LEASE

 

 

 

THE GREAT-WEST LIFE ASSURANCE COMPANY

 

AND

 

LONDON LIFE INSURANCE COMPANY

 

LANDLORD

 

- AND -

 

RITCHIE BROS. AUCTIONEERS (CANADA) LTD.

 

TENANT

 

 

 

 

DATED THE 12th DAY OF AUGUST, 2008

 

 

 

  

ARTICLE 1 BASIC LEASE TERMS AND DEFINITIONS   1.1 Basic Terms 1 1.2 Definitions
2       ARTICLE 2 GENERAL COVENANTS   2.1 Tenant’s Covenants 5 2.2 Landlord’s
Covenants 5 2.3 Deemed Covenants 5       ARTICLE 3 DEMISE AND TERM   3.1 Demise
of Premises 5 3.2 Term 5 3.3 Overholding 5 3.4 Leasehold Improvements 6      
ARTICLE 4 RENT   4.1 Basic Rent 6 4.2 Additional Rent 7 4.3 Payment of
Additional Rent 7 4.4 Method of Payment 8 4.5 Adjustment of Additional Rent 8
4.6 Apportionment of Rent 9 4.7 No Right of Set-off 9 4.8 Additional Rent Deemed
Rent 9 4.9 Interest on Arrears 9 4.10 Net Lease 9 4.11 No Rentable Area
Adjustment or Recalculation 9       ARTICLE 5 TAXES   5.1 Tenant’s Taxes and
Sales Taxes 10 5.2 Tenant’s Contribution to Taxes 10 5.3 Payments 10

 

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ARTICLE 6 SERVICES, COMMON FACILITIES   6.1 Tenant’s Contribution to Operating
Costs 11 6.2 Operations and Maintenance of the Premises 11 6.3 Operation of
Regular HVAC System 11 6.4 Additional HVAC 11 6.5 Utilities and Lighting
Fixtures 12 6.6 Janitorial Services 12 6.7 Security Services 12 6.8 Interruption
in Services 13 6.9 Energy Conservation 13 6.10 Pest Control by Tenant 13      
ARTICLE 7 USE AND OCCUPANCY OF PREMISES   7.1 Use of Premises 13 7.2 Waste and
Nuisance 14 7.3 No Overloading of Services or Common Use Equipment 14 7.4
Observance of Law by Landlord and Tenant 14 7.5 Rules and Regulations 14 7.6
Hazardous Substances 14 7.7 Signs 16       ARTICLE 8 ALTERATIONS   8.1
Alterations by Tenant 17 8.2 Air-Balancing 18 8.3 No Financing by Tenant of
Leasehold Improvements 18 8.4 Liens 18 8.5 Alterations by Landlord 18 8.6
Prohibition Re Certain Materials 19       ARTICLE 9 REPAIRS   9.1 Landlord’s
Repairs 19 9.2 Tenant’s Repairs 19 9.3 Entry by Landlord to View State of Repair
19 9.4 Notice of Defects 19 9.5 Termination or Abatement after Damage 20 9.6 No
Claim by Tenant 21 9.7 Tenant to Leave Premises in Good Repair 21

  

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ARTICLE 10 INSURANCE AND LIABILITY   10.1 Landlord’s Insurance 21 10.2 Tenant’s
Insurance 22 10.3 Form of Tenant’s Insurance 22 10.4 Insurance Cancellation or
Cost Increase 23 10.5 Release of Landlord by Tenant 24 10.6 Release of Tenant by
Landlord 25 10.7 Indemnity of Landlord by Tenant 25 10.8 Indemnity of Tenant by
Landlord 25       ARTICLE 11 ASSIGNMENTS BY TENANT AND TRANSFERS BY LANDLORD  
11.1 Assignment, Subleases, Charges by Tenant 25 11.2 Landlord’s Rights of
Cancellation 28 11.3 Continuing Obligations of Tenant 28 11.4 No Advertising of
the Premises 28 11.5 Dealings by Landlord 29 11.6 Subordination and Attornment
29 11.7 Non-Disturbance Agreement 29       ARTICLE 12 ESTOPPEL CERTIFICATES,
REGISTRATION   12.1 Estoppel Certificates 29 12.2 Registration on Title 30      
ARTICLE 13 UNAVOIDABLE DELAYS   13.1 Unavoidable Delays 30       ARTICLE 14
LANDLORD’S ACCESS TO PREMISES   14.1 Inspection and Repair 30 14.2 Right to
Exhibit Premises 31       ARTICLE 15 DEFAULT   15.1 Events of Default 31 15.2
Remedies of Landlord 32 15.3 Additional Self-Help Remedy of Landlord 33 15.4
Legal Costs - Landlord 33 15.5 Legal Costs - Tenant 33

 

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15.6 Remedies Cumulative 33 15.7 Non-Waiver 34       ARTICLE 16 ARBITRATION  
16.1 Arbitration 34       ARTICLE 17 GENERAL PROVISIONS   17.1 Entire Agreement
36 17.2 Schedules 36 17.3 Survival of Obligations 36 17.4 Severability of
illegal Provisions 37 17.5 Governing Law 37 17.6 No Partnership 37 17.7 Number,
Gender, Joint and Several Liability 37 17.8 Captions 37 17.9 Time of Essence 37
17.10 Landlord’s Agent 37 17.11 Successors and Assigns 37 17.12 Accounting
Principles 38 17.13 Notices and Consents, Etc 38 17.14 Further Assurances 39
17.15 Confidentiality 39

 

v 

 

  

THIS LEASE is dated the 12th day of August, 2008.

 

BETWEEN:

 

THE GREAT WEST-LIFE ASSURANCE COMPANY AND

 

LONDON LIFE INSURANCE COMPANY

 

(hereinafter called the “Landlord”)

 

AND:

 

RITCHIE BROS. AUCTIONEERS (CANADA) LTD.

 

(hereinafter called the “Tenant”)

 

In consideration of the premises and the mutual covenants, agreements and
conditions herein contained, it is hereby covenanted, agreed and declared
between the parties as follows:

 

ARTICLE 1 BASIC LEASE TERMS AND DEFINITIONS

 

1.1           Basic Terms

 

The basic terms (hereinafter called the ‘‘Basic Terms”) of this Lease are as
follows:

 

  (a) (i) Landlord: THE GREAT-WEST LIFE ASSURANCE COMPANY AND THE LONDON LIFE
INSURANCE COMPANY               (ii) Address of Landlord: c/o GWL Realty
Advisors Inc.         Suite 3000 - 650 West Georgia Street         P.O. Box
11505         Vancouver, B.C. V6B 4N7               (iii) Telephone/Fax: (604)
713-6450 / (604) 683-3264             (b) (i) Tenant (legal name): RITCHIE BROS
AUCTIONEERS         (CANADA) LTD.               (ii) Address of Tenant: 6500
RlVER ROAD         RICHMOND, B.C.         V6X 4G5         Attention: Darren Watt
              (iii) Telephone/Fax: (604) 273-7564/ (604) 273-9339            
(c) Premises: 9500 GLENLYON PARKWAY       BURNABY, B.C.           (d) Rentable
Area of Building: 164,580 square feet

 

 

 

 

  (e) Term: Twenty (20) years   (f) Commencement Date: As Per Section 3.2   (g)
Basic Rent:  

 

   Per Square Foot of   Annual Basic   Monthly Basic     Rentable Area of  
Rent   Rent  Period  the Premises                        Year I to Year 5 
$24.50   $4,032,210   $336,017.50  Year 6 to Year 10  $26.95   $4,435,431  
$369,619.25  Year 11 to Year 15  $29.64   $4,878,974   $406,581.17  Year 16 to
Year 20  $32.61   $5,366,872   $447,239.33 

 

  (h) Permitted Use: General office and associated use including daycare
services, fitness centre and cafeteria   (i) Security Deposit: N/A

 

The Basic Terms are agreed to by the parties and each reference in this Lease to
any of the Basic Terms will be construed to include the foregoing provisions and
all of the additional applicable sections of this Lease where such Basic Terms
may be more fully set forth.

 

1.2Definitions

 

The terms defined herein shall have, for all purposes of this Lease and all
instruments supplemental hereto, the following meanings unless the context
expressly or by necessary implication otherwise requires:

 

“Additional Rent” means all sums of money, other than Basic Rent, which are
required to be paid by the Tenant pursuant to any provision of this Lease,
whether or not designated as “Additional Rent”, and which is deemed to be
accruing on a day-to-day basis.

 

“Additional Service” means any service identified as such in this Lease or which
is requested by the Tenant in addition to those supplied by the Landlord as part
of the normal Premises service and which the Landlord is prepared to supply at
an additional cost to the Tenant.

 

“Additional Service Cost’ means the additional amount identified as such in this
Lease or payable by the Tenant to the Landlord for any Additional Service.

 

“Architect” means the independent architect, engineer, surveyor, or other
qualified professional from time to time named by the Landlord. The decision of
the Architect whenever required and any related certificate shall be final and
binding on the parties.

 

“Basic Rent’ means the rent payable by the Tenant pursuant to Section 4.1.

 

“Building” means the building and all other fixed improvements situated at any
time on the Lands, all of which are municipally known as 9500 Glenlyon Parkway,
Burnaby, British Columbia.

 

“Building Standard” and “Building standard” means the building standard
established by the Landlord including matters of design, construction and/or
installation to be observed by the tenants in the Building, including the
Tenant, in connection with Leasehold Improvements, tenant fixtures and chattels,
as amended from time to time by the Landlord, acting reasonably.

 

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“Building Systems” means all mechanical, plumbing, electrical and heating,
ventilation and air conditioning equipment, pipes, ducts, wiring, machinery and
equipment and other integral services, utility connections and the like
providing services to the Building.

 

“Business Hours” means the period from 8:00 a.m. to 6:00 p.m. on any Business
Day and “Business Day” means any day which is not a Saturday or a Sunday or a
statutory holiday.

 

“Business Park” means the business park known as Glenlyon Business Park located
in South Burnaby, British Columbia and comprised of the lands, buildings and
other improvements located thereon from time to time.

 

“Development Agreement” means the development agreement made the 12th Day of
August, 2008 by and between the Landlord and Ritchie Bros. Properties Ltd. in
respect of, amongst other things, the construction of the Building on the Lands.

 

“Gross Income” means, with respect to any Rental Year, the aggregate of all
revenues, including Rent under Article 4 of this Lease, earned by or for the
account of the Landlord from the operation of the Building.

 

“Insured Damage” means that part of any damage occurring to the Premises, of
which the entire cost of repair (except as to any deductible amount provided for
in the applicable policy or policies of insurance) is actually recovered by the
Landlord under a policy or policies of insurance from time to time effected by
the Landlord pursuant hereto or for which the Landlord self-insured.

 

“Lands” means the lands described in Schedule “B” attached hereto, as the
boundaries thereof may be varied from time to time by additions functionally
integrated therewith or by deletions for road widening or other public purposes.

 

“Landlord’s Taxes” means the aggregate of:

 

(a)          Taxes; and

 

(b)          Other Taxes.

 

“Lease” means this Lease including any Schedules, as amended from time to time
pursuant hereto.

 

“Leasehold Improvements” means all items generally considered as leasehold
improvements, including, without limitation, all fixtures, equipment,
improvements, installations, alterations and additions from time to time made,
erected or installed by or on behalf of the Tenant, or any previous occupant of
the Premises, in the Premises including any methane extraction system installed
by the Tenant, all partitions, however affixed and whether or not movable, and
all wall-to-wall carpeting other than carpeting laid over finished floors and
affixed so as to be readily removable without damage; but excluding trade
fixtures, furniture, unattached or free standing partitions and equipment not of
the nature of fixtures.

 

“Operating Costs” means Operating Costs as defined in Schedule “C” attached
hereto.

 

“Premises” means the premises demised to the Tenant under this Lease consisting
of the Building and the Lands.

 

“Present Value” means the value determined by using an annual discount rate
equal to the annual rate of interest, in effect as of the relevant date of
default, announced by Bank of Montreal as its prime rate, being the reference
rate used by it to determine interest for loans in Canadian dollars to Canadian
customers.

 

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“Rate of Interest” means the annual rate of interest equal to the annual rate of
interest announced from time to time by Bank of Montreal as the reference rate
of interest then in effect for loans in Canadian dollars to Canadian customers
of varying degrees of credit-worthiness plus three percent (3%), adjusted from
time to time to reflect changes in such rate.

 

“Rent” means Basic Rent and Additional Rent.

 

“Rental Year” means a period of time, the first Rental Year commencing on the
first day of the Term hereof, and ending on the last day of the month of
December immediately following. Each Rental Year thereafter shall consist of
consecutive periods of twelve (12) calendar months, but the last Rental Year of
the Term, whether or not it is twelve (12) calendar months, shall terminate on
the expiration or earlier termination of this Lease. If, however, the Landlord
considers it necessary or convenient for the Landlord’s purposes, the Landlord
may at any time and from time to time by written notice to the Tenant, specify a
date from which each subsequent Rental Year is to commence, and in such event
the then current Rental Year shall terminate on the day immediately preceding
the commencement of such new Rental Year, and the appropriate adjustments shall
be made between the parties.

 

“Sales Taxes” means all goods and services, business transfer, multi-stage
sales, sales, use, consumption, value-added or other similar taxes imposed by
the Government of Canada or any provincial or local government upon the
Landlord, or the Tenant in respect of this Lease, or the payments made by the
Tenant hereunder or the goods and services provided by the Landlord hereunder
including, without limitation, the rental of the Premises and the provision of
administrative services to the Tenant hereunder.

 

“Taxes” means all taxes, rates, duties, levies, fees, charges, sewer levies,
local improvement rates, and assessments whatsoever, imposed, assessed, levied
or charged now or in the future by any school, municipal, regional, provincial,
federal, parliamentary or other governmental body, corporate authority, agency
or commission (including, without limitation, school boards and utility
commissions), against the Premises and/or the Landlord in connection therewith,
but excluding (unless specifically referred to above):

 

(a)income or profit taxes upon the income of the Landlord to the extent such
taxes are not levied in substitution or in lieu of any of the foregoing;

 

(b)business or similar taxes or licence fees in respect of the business of the
Landlord which pertains to the management, operation and maintenance of the
Premises; and

 

(c)business or similar taxes or licence fees in respect of any business carried
on by tenants and occupants (including the Tenant) of the Premises.

 

“Tenant’s Taxes” means the aggregate of:

 

(a)all taxes imposed upon the Tenant which are attributable to the personal
property, furnishings, fixtures and Leasehold Improvements installed in the
Premises; and

 

(b)all taxes imposed upon the Tenant which are attributable to the business,
income or occupancy of the Tenant or any other occupant of the Premises.

 

“Term” means the term of this Lease as specified in Section 3.2.

 

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ARTICLE 2 GENERAL COVENANTS

 

2.1Tenant’s Covenants

 

The Tenant covenants with the Landlord:

 

(a)to pay Rent; and

 

(b)to observe and perform all the covenants and obligations of the Tenant
herein.

 

2.2Landlord’s Covenants

 

The Landlord covenants with the Tenant:

 

(a)for quiet enjoyment, subject to the provisions of this Lease; and

 

(b)provided the Tenant pays the Rent, and observes and performs all of its
covenants and obligations herein, to observe and perform all the covenants and
obligations of the Landlord herein.

 

2.3Deemed Covenants

 

Each obligation or agreement of the Landlord or the Tenant expressed in this
Lease, even though not expressed as a covenant, is considered to be a covenant
for all purposes.

 

ARTICLE 3 DEMISE AND TERM

 

3.1Demise of Premises

 

The Landlord hereby demises and leases unto the Tenant, and the Tenant hereby
leases from the Landlord, the Premises for the Term and subject to the
provisions of this Lease.

 

3.2Term

 

TO HAVE AND TO HOLD the Premises for and during the Term of twenty (20) years
and zero (0) months (the “Term”), unless sooner terminated pursuant to the
provisions of this Lease, commencing on the date (the “Commencement Date”) which
is the Handover Date (as such term is defined in the Development Agreement) and
ending on the day (the “Expiry Date”) which is twenty (20) years from such
Commencement Date.

 

3.3Overholding

 

The Tenant shall surrender possession of the Premises immediately upon the
expiration or earlier termination of this Lease. If the Tenant remains in
possession of all or any part of the Premises after the expiry of the Term with
the consent of the Landlord and without any further written agreement, or
without the consent of the Landlord, there shall be no tacit renewal or
extension of this Lease and, despite any statutory provision or legal
presumption to the contrary, the Tenant shall be deemed conclusively to be
occupying the Premises as a monthly tenant at will if the Landlord did consent
to the Tenant remaining in possession, or as a tenant at will if the Landlord
did not consent to the Tenant remaining in possession, in either case on the
same terms as set forth in this Lease as far as such terms would be applicable
to a monthly tenancy, and except for any right of renewal, at a monthly basic
rent payable in advance and equal to one and one-halftimes the monthly Basic
Rent payable immediately prior to the overholding plus additional rent
equivalent to Additional Rent hereunder. The Tenant shall promptly indemnify and
hold harmless the Landlord from and against any and all claims incurred by the
Landlord as a result of the Tenant remaining in possession of all or any part of
the Premises after the expiry of the Term. The Tenant shall not make any
counterclaim in any summary or other proceeding based on such overholding by the
Tenant.

 

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3.4Leasehold Improvements

 

(a)All Leasehold Improvements in, on, for, or which serve, the Premises, shall
immediately become the absolute property of the Landlord upon affixation or
installation, without compensation therefor to the Tenant, but the Landlord
shall have no obligation to repair, replace, operate, maintain, insure or be
responsible in any way for them, all of which shall be the Tenant’s
responsibility. Subject to subsections 3.4(b) and 3.4(c), upon the expiration or
other termination of this Lease, all Leasehold Improvements in the Premises,
including all fixed partitions (including floor to ceiling partitions which,
although demountable, involve attachment to any floor, ceiling or permanent wall
such that they cannot be removed without damage to the Premises but excluding
the Tenant’s movable partitions such as free standing partitions or partial
height partitions which can be removed without damage to the Premises and which
shall be deemed to be removable trade fixtures) shall remain upon and be
surrendered with the Premises as a part thereof without disturbance, molestation
or injury and the same and any trade fixtures not removed by the Tenant are the
property of the Landlord absolutely, free of any liens or encumbrances and
without payment therefor to the Tenant.

 

(b)The Landlord may, by notice to the Tenant prior to or promptly after the
expiration or other Termination of this Lease, require: the removal forthwith,
at the expense of the Tenant, of the Tenant’s trade fixtures and those Leasehold
Improvements installed in connection with the Tenant’s communication
infrastructure, kitchen, cafeteria, fitness centre and daycare. If such notice
is given prior to the expiration or other termination of this Lease, such
removal shall be completed by such expiration or termination.

 

(c)Notwithstanding anything herein contained, provided the Tenant has paid the
Rent hereby reserved and performed and observed all the covenants and conditions
herein contained, the Tenant shall have, at the expiration or other termination
of this Lease, the right to remove its trade fixtures, provided that the Tenant
repairs by the expiration or other termination of this Lease, at its own
expense, any damage to the Premises caused by such removal, such work to be done
by or at the direction of the Landlord and at the expense of the Tenant.

 

ARTICLE 4RENT

 

4.1Basic Rent

 

The Tenant shall pay to the Landlord, without any prior demand therefor, yearly
and every year during the Term, without any set-off, compensation or deduction
whatsoever, Basic Rent in Canadian dollars as follows:

 

(a)from the first (1st) to fifth (5th) year of the Term, Four Million Thirty Two
Thousand and Two Hundred and Ten Dollars ($4,032,210) annually payable in
advance in equal consecutive monthly instalments of Three Hundred Thirty Six
Thousand and Seventeen Dollars and Fifty Cents ($336,017.50) on the first day of
each and every calendar month during such period;

 

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(b)from the sixth (6th) to tenth (10th) year of the Term, Four Million Four
Hundred and Thirty Five Thousand Four Hundred and Thirty One Dollars
($4,435,431) annually payable in advance in equal consecutive monthly
instalments of Three Hundred Sixty Nine Thousand Six Hundred and Nineteen
Dollars and Twenty Five Cents ($ 369,619.25) on the first day of each and every
calendar month during such period;

 

(c)from the eleventh (11th) to fifteenth (15th) year of the Term, Four Million
Eight Hundred Seventy Eight Thousand Nine Hundred and Seventy Four Dollars
($4,878,974) annually payable in advance in equal consecutive monthly
instalments of Four Hundred Six Thousand Five Hundred Eighty One Dollars and
Seventeen Cents ($ 406,581.17) on the first day of each and every calendar month
during such period; and

 

(d)from the sixteenth (16th) to twentieth (20th) year of the Term, Five Million
Three Hundred Sixty Six Thousand Eight Hundred and Seventy Two Dollars
($5,366,872) annually payable in advance in equal consecutive monthly
instalments of Four Hundred Forty Seven Thousand Two Hundred and Thirty Nine
Dollars and Thirty Three Cents ($447,239.33) on the first day of each and every
calendar month during such period.

 

The Landlord and the Tenant acknowledge and agree that the Basic Rent set forth
in Section 4.1 and in Subsection 1.1(g) of this Lease is subject to adjustment
in accordance with Section 15.2 of the Agreement of Purchase and Sale dated May
13, 2008 made between the Landlord and Ritchie Bros. Properties Ltd.

 

4.2Additional Rent

 

The Tenant shall pay to the Landlord, during the Term, when due, as Additional
Rent:

 

(a)Taxes payable by the Tenant pursuant to Section 5.2;

 

(b)Operating Costs pursuant to Section 6.1;

 

(c)all Additional Service Costs payable by the Tenant; and

 

(d)all other amounts payable by the Tenant pursuant to this Lease.

 

4.3Payment of Additional Rent

 

The Additional Rent specified in subsections 4.2(b) and 4.2(c) shall be paid and
adjusted with reference to a fiscal period of twelve (12) calendar months, which
shall be the twelve (12) month period ending on December 31st in each year
during the Term unless the Landlord, by notice to the Tenant, shall from time to
time have selected a fiscal period which ends on a different date (but which
shall be a twelve (12) month period except where a shorter broken fiscal period
occurs at the commencement or end of the Term or is necessary to accommodate a
change in the fiscal period made during the Term). From time to time throughout
the Term, the Landlord shall give notice to the Tenant of the Landlord’s
estimate of such Additional Rent to be paid by the Tenant during the next
ensuing fiscal period. Each estimate shall be reasonable. Such Additional Rent
payable by the Tenant shall be paid in equal monthly instalments in advance at
the same time as payment of Basic Rent is due hereunder and shall be based on
the Landlord’s estimate as aforesaid. From time to time the Landlord may
re-estimate, on a reasonable basis, the amount of such Additional Rent for any
fiscal period in which case the Landlord shall give notice to the Tenant of such
re-estimate and fix new equal monthly instalments for the remaining balance of
such fiscal period so that, after giving credit for the instalments paid by the
Tenant on the basis of the previous estimate or estimates, all the Additional
Rent as estimated or re-estimated will have been paid during such fiscal period.

 

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All Additional Service Costs shall be paid by the Tenant within ten (10) days
after receipt by it from time to time of invoices from the Landlord specifying
the amounts thereof.

 

4.4Method of Payment

 

If any cheque in respect of Rent required to be paid by the Tenant under this
Lease is returned due to insufficient funds or should the Tenant default in any
Rent payment, the Landlord may require that the Tenant pay to the Landlord all
monthly instalments of Rent, plus Goods and Services Tax, required to be paid by
the Tenant hereunder, in advance, by way of a pre-authorized bank debit payment
system and on request by the Landlord in the event of each default, the Tenant
will execute and deliver to the Landlord all pre-authorization documentation as
may be necessary in order to enable the Landlord to debit the Tenant’s bank
account on the first day of each and every month throughout the Term and any
renewal or extension thereof and any period of overholding.

 

4.5Adjustment of Additional Rent

 

Within one hundred and twenty (120) days following the end of each fiscal period
referred to in Section 4.3, the Landlord shall deliver to the Tenant a statement
of the Landlord as to the actual Additional Rent payable to the Landlord
pursuant to subsections 4.2(b) and 4.2(c) in respect of such fiscal period and a
calculation of the amount by which such Additional Rent payable by the Tenant
varies from the aggregate instalments paid by the Tenant on account of such
Additional Rent for such fiscal period. Within thirty (30) days after the
receipt of such statement, either the Tenant shall pay to the Landlord any
amount by which the amount found payable by the Tenant with respect to such
fiscal period exceeds the aggregate of the monthly payments made by it on
account thereof or the Landlord shall pay to the Tenant any amount by which the
amount found payable as aforesaid is less than the aggregate of such monthly
payments.

 

The Tenant shall have the right, exercisable by notice to the Landlord given
within thirty (30) days after receipt of any statement of such Additional Rent
submitted by the Landlord as aforesaid, to verify the accuracy of any amount
shown on any statement by inspecting the Landlord’s books and records pertaining
to the Landlord’s determination of such Additional Rent.

 

If, after inspection and examination of such books and records, the Tenant
disputes the amount of such Additional Rent established by the Landlord, the
Tenant may, by written notice to the Landlord, request an independent audit of
such books and records. The independent audit of the books and records will be
conducted forthwith by a firm of independent chartered accountants acceptable to
both parties, acting reasonably. If the audit discloses that the determination
of Additional Rent, was incorrect, and if as a result the amount charged to the
Tenant was incorrect, the appropriate party will pay to the other party the
deficiency or overpayment, as applicable. The results of the audit will be
binding upon the parties hereto. The fees and expenses of the firm of chartered
accountants conducting the audit will be paid by the Tenant unless the audit
shows that the Landlord overstated the amount of Additional Rent thereof for the
applicable period by more than five percent (5%), in which case the Landlord
will pay the cost of the audit.

 

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4.6Apportionment of Rent

 

Rent shall be considered as accruing from day to day hereunder. If it is
necessary to calculate Rent for a period of less than one year or less than one
calendar month, an appropriate apportionment and adjustment on a pro rata daily
basis shall be made. Where the calculation of Additional Rent cannot be made
until after the expiration or earlier termination of this Lease, the obligation
of the Tenant to pay such Additional Rent shall survive the expiration or
earlier termination hereof, and such amount shall be paid by the Tenant to the
Landlord forthwith upon demand. If the Term commences on any day other than the
first day of the month, Rent for such fraction of a month shall be adjusted, as
aforesaid, and paid by the Tenant on the commencement date of the Term.

 

4.7No Right of Set-off

 

The Tenant expressly waives the benefits of any present or future enactment of
Canada or the Province in which the Premises is located permitting the Tenant to
claim a set-off against Rent for any cause whatsoever. Notwithstanding the
aforementioned, the Tenant may claim a set-off under this Lease pursuant to the
provisions of section 13.2(a)(ii) of the Development Agreement.

 

4.8Additional Rent Deemed Rent

 

All Additional Rent shall be deemed to be Rent and the Landlord shall have all
rights against the Tenant for default in payment of Additional Rent as for
default in the payment of Basic Rent.

 

4.9Interest on Arrears

 

If the Tenant fails to pay Rent when due, the Tenant shall pay interest on the
unpaid amount at the Rate of Interest from the date due until the date paid,
without prejudice to and in addition to any other remedy available to the
Landlord under this Lease or at law.

 

4.10Net Lease

 

The Tenant acknowledges and agrees that it is intended that this Lease and the
Rent payable hereunder shall be absolutely net to the Landlord, except as
expressly herein set out, and that the Landlord will not be responsible during
the Term for any costs, charges, expenses and outlays of any nature whatsoever
arising from or relating to the Premises or the use and occupancy thereof and
that, except as expressly herein set out, the Tenant will pay all charges,
impositions, costs and expense of every nature and kind relating to the Premises
whether or not referred to herein and whether or not within the contemplation of
the Landlord and the Tenant.

 

4.11No Rentable Area Adjustment or Recalculation

 

Neither the Landlord nor the Tenant will calculate or recalculate or measure or
re-measure any or all of the Rentable Area of the Building during the Term or
any renewal term. Accordingly, the Landlord and Tenant acknowledge and agree
that Rent for any renewal term will be calculated using the Rentable Area in
Section 1.1(d) of this Lease.

 

 9

 

  

ARTICLE 5TAXES

 

5.1Tenant’s Taxes and Sales Taxes

 

(a)The Tenant shall pay when due to the taxing authority or authorities having
jurisdiction all Tenant’s Taxes.

 

(b)The Tenant shall pay to the Landlord when due all Sales Taxes.

 

5.2Tenant’s Contribution to Taxes

 

(a)The Tenant shall, in respect of each calendar year included in whole or in
part within the Term, pay to the Landlord an amount to cover the Taxes that are
fairly attributable to the Premises for such calendar year, such amount to be
determined by the Landlord acting reasonably. If there are separate assessments
(or, in lieu thereof, calculations made by authorities having jurisdiction from
which separate assessments may, in the Landlord’s opinion, be readily
determined) for the Premises for tax purposes, the Landlord shall have regard
thereto for purposes of determining the amount payable by the Tenant pursuant to
this subsection 5.2(a). The Tenant shall provide the Landlord with a copy of any
separate notices of assessment for the Premises which the Tenant has received.

 

(b)The Tenant shall, in respect of each calendar year included in whole or in
part within the Term, pay to the Landlord an amount to cover the taxes imposed
on the Landlord which are attributable to personal property, furnishings,
fixtures or Leasehold Improvements installed within the Premises.

 

(c)Payment by the Tenant of all amounts on account of Taxes shall be governed by
Sections 4.3 and 4.4.

 

(d)The Tenant may, at its cost, contest any Taxes and appeal any assessments
with respect thereto, withdraw any such contest or appeal, and agree with the
taxing authorities on any settlement or compromise with respect to Taxes. The
Landlord will co-operate with the Tenant in respect of any such contest or
appeal which is, in the Landlord’s opinion reasonable, and will provide the
Tenant with all relevant information, documents and consents required by the
Tenant in connection with any such contest or appeal.

 

5.3Payments

 

(a)The Landlord may postpone any payment of Taxes payable by it, and the Tenant
may postpone any payment payable by it directly to a taxing authority (but not
to the Landlord) pursuant to this Article, in each case to the extent permitted
by law and if prosecuting in good faith any appeal against the imposition
thereof, but provided that in the case of a postponement by the Tenant which
involves any risk of the Premises or any part thereof or the Landlord becoming
liable to assessment, prosecution, fine or other liability, the Tenant shall
have given security in a form and of an amount satisfactory to the Landlord in
respect of such liability and such undertakings as the Landlord may reasonably
require to ensure payment thereof.

 

(b)Whenever requested by the Landlord, the Tenant shall deliver to the Landlord
receipts for payment of all Tenant’s Taxes and furnish such other information in
connection therewith as the Landlord may reasonably require.

 

 10

 

  

(c)The Landlord may, at its option, make any payments due or alleged to be due
by the Tenant to a taxing authority and in such event the Tenant shall pay to
the Landlord, forthwith upon demand, the cost thereof plus interest at the Rate
of Interest accruing as of the date of demand.

 

ARTICLE 6SERVICES, COMMON FACILITIES

 

6.1Tenant’s Contribution to Operating Costs

 

(a)The Tenant shall, throughout the Term, pay to the Landlord the Operating
Costs.

 

(b)Payment by the Tenant of all amounts on account of the Operating Costs shall
be governed by Sections 4.3 and 4.4.

 

6.2Operations and Maintenance of the Premises

 

The Landlord shall provide all reasonable operations and maintenance to the
Premises as recommended in the operations and maintenance manual provided by the
contractor of the Premises, the costs of which are to form a part of Operating
Costs. For certainty, such maintenance shall include inspection and maintenance
of the sprinkler and fire alarm system, cleaning of the exterior windows,
exterior woodwork and cladding (which shall be conducted at least twice a year)
and maintenance of the grounds of the Premises including the parking lot, curbs
and stormceptors.

 

6.3Operation of Regular HVAC System

 

The Landlord shall operate and maintain the heating, ventilating and
air-conditioning equipment and systems serving the Building so as to provide
conditions in the Building that are of a standard generally accepted for A-class
office buildings in Burnaby, during Business Hours except during the making of
repairs, inspections, overhauling or replacement.

 

If such equipment or systems are damaged or destroyed, or, in the opinion of the
Landlord, require repair, inspection, overhauling or replacement, the Landlord
shall carry out such work with all reasonable diligence and minimize any
interruption to such heating, ventilating and air-conditioning equipment and
systems to the extent reasonably possible. The Landlord shall not be responsible
for any loss, damages or costs arising from the failure of such equipment or
systems to perform their function if the number of persons in the Building at
any one time exceeds a reasonable number or if the electrical load from lights
and power in the Building is excessive or if such failure results from any
arrangement of partitioning in the Building or change or alteration thereto or
if the window covering on exterior windows is not kept fully closed while the
windows are exposed to direct sunlight or if any use of mechanical or electrical
equipment installed in the Building generates heat in excess of amounts
specified in the Building Standard. The Landlord shall not be liable for direct,
indirect or consequential damage or damages for personal discomfort or illness
of the Tenant or its employees, invitees or other persons transacting business
with it by reason of the operation or non-operation of such systems and
equipment.

 

6.4Additional HVAC

 

The Tenant may, upon reasonable written notice to the Landlord, request the
Landlord to provide any service mentioned in Section 6.2 to the Building or any
portion or portions thereof during such non-Business Hours as the Tenant
specifies. The Landlord may provide such service and charge the Tenant, as an
Additional Service Cost, the reasonable hourly rate for each hour or part
thereof that such service is provided, such hourly rate to be determined by the
Landlord and to comprise all additional costs incurred in providing such
service. Notwithstanding the foregoing, the Tenant may, at its option, elect to
install additional HVAC equipment and systems in the Building at its sole cost
and expense, subject to first obtaining the Landlord’s approval, which approval
shall not be unreasonably withheld.

 

 11

 

  

6.5Utilities and Lighting Fixtures

 

(a)When requested by the Landlord, the Tenant will provide the Landlord with
proof of payment of electricity and other utilities in respect of the Premises.

 

(b)The Landlord shall replace, as and when required, all electric light bulbs,
fluorescent tubes and ballasts initially supplied in the Building and provide
the necessary maintenance and repair of fluorescent and other standard Building
lighting fixtures located in the Building. The costs of replacement, maintenance
and repair shall, as determined by the Landlord from time to time, either be
charged to the Tenant as an Additional Service Cost or included in Operating
Costs.

 

6.6Janitorial Services

 

(a)The Landlord shall provide to the Building, in consultation with the Tenant,
normal office cleaning services of a standard (both as to extent and frequency)
as a reasonably prudent owner would do having regard to the type and age of the
Building, the cost of which is to form a part of Operating Costs. Such services
shall include, but not be limited to, causing periodically as may be appropriate
or necessary in keeping with such standard the floors of the Building to be
swept, the interior surface of the exterior windows of the Building to be
cleaned, the desks, tables, other furniture and venetian blinds, if any, in the
Building to be dusted and any broadloom in the Building to be vacuumed. Cleaning
in addition to the foregoing standard (such as, for example, the washing of
carpets and the dry-cleaning of drapes) shall be the responsibility of the
Tenant.

 

(b)The Tenant acknowledges that the Landlord will be relieved from its cleaning
obligation as provided in subsection 6.6(a) in respect of any part of the
Building to which access is not granted to the person or persons retained to
perform such work.

 

(c)The Tenant acknowledges that the Landlord shall not be responsible for any
omission or act of commission on the part of the person or persons employed or
retained to perform the cleaning services referred to in this Section or for any
loss thereby sustained by the Tenant, the Tenant’s employees, agents, invitees
or others.

 

(d)Should the Tenant sustain any such loss, and provided the Tenant reasonably
determines that the loss was caused by the person or persons employed or
retained in the performance of the cleaning services, the Landlord will, if
requested by the Tenant, pursue a claim for such loss against such service
provider on behalf of the Tenant.

 

6.7Security Services

 

(a)The Landlord may provide security services for the Building so as to
reasonably ensure that access to the Building during other than Business Hours
shall be restricted to those persons entitled to be allowed entry to the
Building, provided they comply with the requirements established by the
Landlord.

 

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(b)The Tenant acknowledges that the Landlord shall not be responsible for any
act or omission on the part of any person employed or retained to provide
security service pursuant to this Section or for any loss thereby sustained by
the Tenant, the Tenant’s employees, agents, invitees or others.

 

(c)Should the Tenant sustain any such loss, and provided the Tenant reasonably
determines that the loss was caused by the person or persons employed or
retained in the performance of the security services, the Landlord will, if
requested by the Tenant, pursue a claim for such loss against such service
provider on behalf of the Tenant.

 

6.8Interruption in Services

 

The Landlord has the right to stop the use of any facilities and the supply of
any services when necessary by reason of accident or during the making of
repairs, replacements, alterations or improvements, in the reasonable judgment
of the Landlord necessary or desirable to be made, until the repairs,
replacements, alterations or improvements have been completed to the
satisfaction of the Landlord, provided that all reasonable steps shall be taken
to minimize any interference with the Tenant’s use and enjoyment of the
Premises, both as to the extent and duration of such interference. The Landlord
shall have no responsibility or liability for failure to operate any facilities
or supply any services when the use of the facility is stopped as aforesaid or
when the Landlord is prevented from using the facility or supplying the service
by strike, or by orders or regulations of any governmental authority or agency
or by failure of the electric current, gas, steam or water supply necessary to
the operation of any facility or by the failure to obtain such a supply or by
any other cause beyond the Landlord’s reasonable control.

 

6.9Energy Conservation

 

The Tenant shall comply with any measures the Landlord, acting reasonably, or
any legislative authority may from time to time introduce to conserve or to
reduce consumption of energy or to reduce or control other Operating Costs or
pay as Additional Rent the cost, to be estimated by the Landlord acting
reasonably, of the additional energy consumed by reason of any non-compliance.
The Tenant shall also convert to whatever system or units of measurement of
energy consumption the Landlord may from time to time adopt.

 

6.10Pest Control by Tenant

 

The Tenant agrees to institute and carry out and maintain, at its own expense,
such pest control measures in the Premises as the Landlord reasonably requires.

 

ARTICLE 7USE AND OCCUPANCY OF PREMISES

 

7.1Use of Premises

 

The Tenant shall, continuously, throughout the Term, use the Premises solely for
the permitted use set out in subsection 1.1(h). For greater certainty, it is
expressly acknowledged that permitted uses shall include the operation of a
daycare and cafeteria within the Premises. The Tenant shall not use all or any
part of the Premises, nor permit any other person or persons to use all or any
part of the Premises, for any other purposes than that as set out above save in
the event of a permitted assignment or subletting for office use as herein
provided.

 

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7.2Waste and Nuisance

 

The Tenant shall not carry on any business or do or suffer any act or thing
which may constitute or result in a nuisance to the Landlord or do or suffer any
waste or damage to the Premises.

 

7.3No Overloading of Services or Common Use Equipment

 

The Tenant shall not permit or allow any overloading of the floors of the
Building or the bringing into any part of the Building of any articles or
fixtures that by reason of their weight or size might damage or endanger the
structure of the Building. The Tenant shall not permit or allow anything that
might result in any overloading of any of the Building Systems.

 

7.4Observance of Law by Landlord and Tenant

 

(a)The Landlord shall, at its expense (except insofar as the expense is included
in Operating Costs), promptly comply with and conform to the requirements of
every applicable statute, law, by-law, regulation, ordinance and order at any
time or from time to time in force during the Term affecting the Premises other
than as to those matters which are the obligation of the Tenant as provided in
subsection 7.4(b).

 

(b)The Tenant shall, at its expense, observe and promptly comply with and
conform to, (including making such modifications, alterations or changes to the
Premises as may therefore be necessary), the requirements of every applicable
statute, law, by-law, regulation, ordinance, police, security, energy
conservation, fire, health and sanitary directive, requirement and order at any
time or from time to time in force during the Term affecting the Tenant’s use of
the Premises or any part thereof and/or the business carried on therein and/or
the Leasehold Improvements, trade fixtures, furniture, machinery, equipment and
other facilities located in the Premises.

 

7.5Rules and Regulations

 

The Tenant shall observe and perform, and shall cause its employees, agents,
invitees and others over whom the Tenant can reasonably be expected to exercise
control to observe and perform, the Rules and Regulations attached hereto as
Schedule “D” and such other rules and regulations or amendments as may be made
from time to time by the Landlord acting reasonably.

 

The Tenant acknowledges that the Rules and Regulations, as from time to time
amended or replaced may be waived in whole or in part with respect to the
Premises without waiving them as to future application to the Premises, and the
imposition of such Rules and Regulations shall not create or imply any
obligation of the Landlord to enforce them.

 

In the event of any conflict between a provision of this Lease and any of the
Rules and Regulations, the provision of this Lease shall govern.

 

7.6Hazardous Substances

 

(a)The term “Hazardous Substances” as used in this Lease shall include, without
limitation, flammables, explosives, radioactive materials, asbestos, radon,
polychlorinated biphenyls (PCBs), chemicals known to cause cancer or
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances declared to be hazardous or toxic under any law or regulation now or
hereafter enacted or promulgated by any governmental authority.

 

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(b)The Tenant shall not cause or permit to occur:

 

(i)any violation of any federal, provincial, or local law, ordinance or
regulation now or hereafter enacted, related to environmental conditions on,
under, or about the Premises, or arising from the Tenant’s use or occupancy of
the Premises, including, but not limited to, soil and ground water conditions;
or

 

(ii)the use, generation, release, manufacture, refining, production, processing,
storage, or disposal of any Hazardous Substance on, under, or about the
Premises, or the transportation to or from the Premises of any Hazardous
Substance.

 

(c)Environmental Clean-up

 

(i)The Tenant shall, at the Tenant’s own expense, comply with all laws
regulating the use, generation, storage, transportation, or disposal of
Hazardous Substances (the “Laws”).

 

(ii)The Tenant shall, at the Tenant’s own expense, make all submissions to,
provide all information required by, and comply with all requirements of all
governmental authorities (the “Authorities”) under the Laws.

 

(iii)Should any Authority or any third party demand that a clean-up plan be
prepared and that a clean-up be undertaken because of any deposit, spill,
discharge, or other release of Hazardous Substances that occurs during the Term
of this Lease, at or from the Premises, which arises at any time from the
Tenant’s use or occupancy of the Premises, then the Tenant shall, at the
Tenant’s own expense, prepare and submit the required plans and all related
bonds and other financial assurances; and the Tenant shall carry out all such
clean-up plans.

 

(iv)The Tenant shall promptly provide all information regarding the use,
generation, storage, transportation, or disposal of Hazardous Substances that is
requested by the Landlord. If the Tenant fails to fulfill any duty imposed under
this subsection 7.6(c) within a reasonable time, the Landlord may do so; and in
such case, the Tenant shall cooperate with the Landlord in order to prepare all
documents the Landlord deems necessary or appropriate to determine the
applicability of the Laws to the Premises and the Tenant’s use thereof, and for
compliance therewith, and the Tenant shall execute all documents promptly upon
the Landlord’s request. No such action by the Landlord and no attempt made by
the Landlord to mitigate damages under any Law shall constitute a waiver of any
of the Tenant’s obligations under this subsection 7.6(c) hereof.

 

(v)The Tenant’s obligations and liabilities under subsection 7.6(c) hereof shall
survive the expiration or other termination of this Lease.

 

 15

 

  

(d)Tenant’s Indemnity

 

(i)The Tenant shall indemnify, defend, and hold harmless the Landlord, the
manager of the Premises, and their respective officers, directors,
beneficiaries, shareholders, partners, agents, and employees against and from
all fines, suits, proceedings, claims, and actions of every kind, and all costs
associated therewith (including solicitor’s 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 of this Lease, at or from
the Premises and which arises at any time from the Tenant’s use or occupancy of
the Premises, or from the Tenant’s failure to provide all information, make all
submissions, and take all steps required by all Authorities under the Laws and
other environmental laws, and/or arising out of or in any way connected with the
methane extraction system constructed on the Premises.

 

(ii)The Tenant’s obligations and liabilities under this subsection 7.6(d) hereof
shall survive the expiration or other termination of this Lease.

 

(e)Landlord’s Indemnity

 

The Landlord will indemnify the Tenant and its directors, officers,
shareholders, employees, agents, successors and permitted assigns, from any and
all liabilities, actions, damages, claims, remediation cost recovery claims,
losses, costs, orders, fines, penalties and expenses whatsoever (including all
consulting and legal fees and expenses on a solicitor-client basis) arising from
or in connection with: (i) any Hazardous Substances brought into or onto the
Premises by any party other than the Tenant and those for whom the Tenant is
responsible in law; (ii) any Hazardous Substances located in or on the Premises
as at the Commencement Date.

 

7.7           Signs

 

The Tenant shall have the exclusive right to display its signage on the north
east and south west corner of the upper exterior fascia of the Building for the
Term and any extensions thereof. The Tenant shall be responsible for all costs
in connection with the signs except as expressly stated herein, including
electrical power to the sign(s), installation, repair, maintenance, removal and
any repairs to the Building required as a result of the installation,
maintenance or removal of the sign(s).

 

The Tenant shall have the right to display its logo at all entrances to the
Premises, and in the elevator lobbies on each of its floors.

 

All signage or logos installed or displayed by or on behalf of the Tenant which
are visible from the exterior of the Premises shall be subject to the prior
written approval of the Landlord, acting reasonably, and the municipal governing
authority having jurisdiction over such matters. The Landlord shall not
unreasonably oppose or withhold its consent to any application by the Tenant to
such municipal governing authority in respect of its signage or logos.

 

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ARTICLE 8ALTERATIONS

 

8.1Alterations by Tenant

 

(a)The Tenant shall not, without the prior written consent of the Landlord,
make, erect, alter or install any Leasehold Improvements or other alterations or
installations in or to the Building which would constitute a material alteration
of the Building (the “Work”). For the purposes hereof, “material” alteration
means an alteration that would affect the structure, strength or quality of the
Building, or would affect the mechanical, electrical or plumbing systems of the
Building.

 

(b)If the Tenant wishes to do any Work, the Tenant shall apply for the
Landlord’s consent and furnish such plans, specifications and designs as shall
be necessary to fully describe the Work. The Landlord’s consent thereto shall
not be unreasonably withheld or delayed; provided that, without limitation, any
refusal to grant consent based on grounds that such Work is not in compliance
with the Building Standard shall be conclusively deemed not to be an
unreasonable withholding of consent.

 

(c)Subject to the Landlord’s consent having been obtained and the Landlord’s
reasonable requirements (including the posting of reasonable security, if
requested) being met, the Landlord recognizes the right of the Tenant to install
Leasehold Improvements as are necessary or appropriate to its use and occupancy
of the Building.

 

(d)Any Work shall be performed by contractors retained by the Tenant pursuant to
written contracts which have been approved by the Landlord (such approval not to
be unreasonably withheld) and subject to all reasonable conditions which the
Landlord imposes. The Tenant shall obtain the Landlord’s approval for any Work
that may affect the base building construction. The Landlord shall have the
right to inspect such Work and require any Work not being properly done to be
corrected, and to approve on a reasonable basis the contractors, tradesmen or
the Tenant’s own employees (as the case may be) employed by the Tenant in
connection therewith.

 

(e)The Tenant shall pay to the Landlord, within ten (10) days after the receipt
of the Landlord’s invoice, the Landlord’s reasonable out-of-pocket costs
incurred in examining and approving the Tenant’s plans, specifications and
designs and in inspecting the Work and any additional expenses actually incurred
by the Landlord in connection with such Work together with a coordination and
supervision fee equal to fifteen percent (15%) of any amount spent by the
Landlord.

 

(f)The Tenant shall provide to the Landlord a complete set of updated drawings
of the Building including without limitation all electrical, mechanical and
architectural drawings upon the completion of any material alteration to the
Building.

 

(g)If the Tenant’s intended Leasehold Improvements would not constitute a
material alteration of the Building, the Tenant may proceed without Landlord’s
consent provided that such alterations do not affect the base building
construction; however, if the cost of such work would exceed $75,000 (excluding
GST or similar taxes), the Tenant shall give the Landlord thirty (30) days
written notice prior to commencing such work. For greater clarity, the
provisions of this section shall not apply to any Leasehold Improvements forming
part of the initial construction of the Building.

 

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8.2Air-Balancing

 

The Tenant agrees that it will, at the commencement of the Term and periodically
throughout the Term including, without limitation, whenever any alterations
impacting the performance of the Building Systems are made to the Building, and
in keeping with the standard generally accepted for A-class office buildings in
Burnaby, balance the air movement in the Building at the Tenant’s expense and
for this purpose use the air-balancer designated by the Landlord.

 

8.3No Financing by Tenant of Leasehold Improvements

 

The Tenant shall not create any lien, mortgage, charge, conditional sale
agreement or other encumbrance in respect of any Leasehold Improvements or,
without the consent of the Landlord, with respect to its trade fixtures; nor
shall the Tenant take any action as a consequence of which any such prohibited
lien, mortgage, charge, conditional sale agreement or other encumbrance would
attach to the Premises.

 

8.4Liens

 

(a)In connection with the making, erection, installation or alteration of
Leasehold Improvements and trade fixtures and all other work or installations or
alterations made by or for the Tenant in the Premises, the Tenant shall comply
with every applicable statute, law, by-law, regulation, ordinance and order
affecting the same and affecting the Premises as a result of the actions of the
Tenant including, without limitation, the construction lien legislation of the
Province in which the Premises is located, and any other statutes from time to
time applicable thereto (including any provision requiring or enabling the
retention by way of holdback of portions of any sums payable) and, except as to
any such holdback, the Tenant shall promptly pay all accounts relating thereto.

 

(b)Whenever any construction or other lien for work, labour, services or
materials supplied to or for the Tenant or for the cost of which the Tenant may
be in any way liable or claims therefor shall arise or be file d or any
prohibited lien, mortgage, charge, conditional sale agreement or other
encumbrance shall attach, the Tenant shall within five (5) business days after
receipt of notice thereof procure and register the discharge thereof, including
any certificate of action registered in respect of any lien, by payment or in
such other manner as may be required or permitted by law, and failing which the
Landlord may make any payments required to procure and register the discharge of
any such liens or encumbrances, including any certificate of action registered
in respect of any lien, and shall be entitled to be reimbursed by the Tenant as
provided in Section 15.3, and its right to reimbursement shall not be affected
or impaired if the Tenant shall then or subsequently establish or claim that any
lien or encumbrance so discharged was without merit or excessive or subject to
any abatement, set-off or defence.

 

(c)The Landlord and the Tenant agree that any work done in the Premises during
the Term by or on behalf of the Tenant shall not be done and shall be deemed not
to have been done at the request of the Landlord.

 

8.5Alterations by Landlord

 

(a)access and services to or benefiting the Premises shall not be reduced or
interrupted (except to the minimum extent which is temporary, reasonable and
unavoidable during the making of repairs or renovations); and

 

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(b)any alteration shall be such that a reasonably prudent owner of the Premises
would make having regard to the type and age of the Premises.

 

8.6Prohibition Re Certain Materials

 

Notwithstanding any other provision of this Lease, the Tenant agrees that it
will not use or permit the use of any asbestos, polychlorinated biphenyls, radon
or any other deleterious or prohibited substances in any construction of the
Leasehold Improvements in the Building or in any use of the Building.

 

ARTICLE 9REPAIRS

 

9.1Landlord’s Repairs

 

Subject to Section 9.5 and except as provided in Section 9.2, the Landlord shall
repair and maintain and may, if it so chooses, replace:

 

(a)the Building including all the external and structural parts of the Building
including without limitation, the roof, foundation, floors, exterior walls,
interior structural walls, steel reinforcements, glass, siding, metal exterior
panels, concrete settlement, elevators, parking lot and sinkholes;

 

(b)Insured Damage; and

 

(c)the Building Systems.

 

all with reasonable dispatch and in a good and workmanlike manner, and so as to
keep the same in good condition and repair.

 

9.2Tenant’s Repairs

 

Subject to Section 9.5, the Tenant shall, at its expense and throughout the
Term, keep the Building and the Leasehold Improvements therein and all
electrical and telephone outlets and conduits and all mechanical and electrical
equipment within the Building in good condition and repair, Insured Damage and
repairs which the Landlord is otherwise obliged to repair only excepted. The
Tenant shall also make good any damage to the Premises caused by the Tenant or
any person for whom the Tenant is at law responsible and which is not Insured
Damage. All repairs by the Tenant shall be subject to Section 8.1.

 

9.3Entry by Landlord to View State of Repair

 

The Landlord shall be entitled to enter and view the state of repair of the
Premises on reasonable notice to the Tenant. The Tenant will repair, according
to notice, as specified in Section 9.2.

 

9.4Notice of Defects

 

The Tenant shall give to the Landlord prompt notice of any defect in the
plumbing or utility systems and equipment or any damage to the Premises or any
part thereof howsoever caused; provided that nothing herein shall be construed
so as to require repairs to be made by the Landlord except as expressly provided
in this Lease.

 

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9.5Termination or Abatement after Damage

 

(a)If and whenever the Premises are destroyed or damaged by any cause to the
extent that, in the Landlord’s reasonable opinion to be given in writing to the
Tenant within sixty (60) days after the occurrence of such damage or
destruction, they are unable to be repaired or rebuilt within one hundred and
eighty (180) days after such destruction or damage, then either the Landlord or
the Tenant may terminate this Lease by notice to the other, to be given within
thirty (30) days after the giving of the Landlord’s written opinion above
referred to, and the Tenant shall immediately thereupon surrender the Premises
and this Lease to the Landlord and Rent shall be apportioned to the date of such
destruction or damage (subject to the payment of Rent from the date of such
destruction or damage to the date of surrender in the same proportion that the
part of the Usable Area of the Premises fit for occupancy by the Tenant until
such surrender is of the total Usable Area of the Premises).

 

(b)If and whenever all or any portion of the Building is destroyed or damaged by
reason of any cause (whether or not such portion includes all or any part of the
Building) to such extent that:

 

(i)in the Landlord’s reasonable opinion to be given to the Tenant in writing
within sixty (60) days after the occurrence of such damage or destruction, it is
unable to be repaired or rebuilt within one hundred and eighty (180) days after
such destruction or damage; or

 

(ii)the estimated cost (as estimated by the Landlord) of repairing or rebuilding
the Premises exceeds the proceeds of insurance available to the Landlord for
such purpose (or which would have been available if the Landlord had insured in
compliance with Section 10.1),

 

the Landlord may terminate this Lease upon not less than thirty (30) days’ prior
written notice to the Tenant, given within sixty (60) days after the happening
of such destruction or damage, and the Tenant shall immediately thereupon
surrender the Premises and this Lease to the Landlord; and

 

(iii)if and to the extent that such destruction or damage has rendered the
Premises in whole or in part unfit for occupancy by the Tenant, Rent shall abate
from the date of such destruction or damage to the date of surrender in the same
proportion that the part of the Usable Area of the Premises unfit for occupancy
is of the total Usable Area of the Premises; and

 

(iv)otherwise Rent shall be apportioned to the date of surrender.

 

(c)If and whenever the Premises are destroyed or damaged by reason of any cause
and this Lease shall not have been terminated, the Landlord shall, with all
reasonable diligence, make the repairs specified in Section 9.1 and the Tenant
shall, with all reasonable diligence and in compliance with Section 8.1, make
all repairs to the Premises specified in Section 9.2 and complete the Premises
for occupancy for the purpose described in Section 7.1 and in compliance with
subsection 7.4(b). If as a result of any destruction or damage to the Premises
which the Landlord is obligated to repair pursuant to Section 9.1, and which is
not the fault of the Tenant or those for whom it is at law responsible and which
does not consist of merely a temporary interruption of or interference with any
utility, service or access, the Premises are rendered in whole or in part unfit
for occupancy by the Tenant, then during the period commencing on the occurrence
of such destruction or damage and ending upon the date when both the repairs to
the Premises which the Landlord is obligated to make as aforesaid are completed
sufficiently to enable the Tenant to commence its repairs, and the Tenant has
been allowed a reasonable period of time which is sufficient for the completion
by it of the repairs it is obligated to make as aforesaid with due diligence.

 

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Rent shall from time to time abate in the same proportion that the part of the
Usable Area of the Premises from time to time rendered unfit for such occupancy
by reason of such destruction or damage is of the total Usable Area of the
Premises.

 

9.6No Claim by Tenant

 

Except in respect of abatement of Rent as provided for in this Article, no claim
for compensation or damages, direct or indirect, shall be made by the Tenant by
reason of the loss of use, inconvenience or otherwise arising from the necessity
of repairing any portion of the Premises however the necessity may arise so long
as any such repair to be carried out by the Landlord is carried out with
reasonable diligence.

 

9.7Tenant to Leave Premises in Good Repair

 

The Tenant shall leave the Premises and (subject to Section 3.4) the Leasehold
Improvements, at the expiration or other termination of the Term, in the
condition and repair required of the Tenant under Section 9.2, reasonable wear
and tear excepted.

 

ARTICLE 10INSURANCE AND LIABILITY

 

10.1Landlord’s Insurance

 

Subject to its general availability, the Landlord shall effect and maintain
during the Term:

 

(a)“all risks” insurance which shall insure the Premises against loss or damage
by perils now or hereafter from time to time embraced by or defined in a
standard all risks insurance policy;

 

(b)boiler and machinery insurance on objects defined in a standard comprehensive
boiler and machinery policy against accidents as defined therein;

 

(c)loss of rental income insurance in an amount sufficient to replace all Rent
payable under the provisions of this Lease for an indemnity period of a
reasonable period of time;

 

(d)commercial general liability insurance covering claims for personal injury
and property damage arising out of all operations in connection with the
management and administration of the Premises; and

 

(e)such other coverage, or increases in the amount of coverage, as the Landlord
may consider necessary.

 

For greater certainty, the Tenant acknowledges that the Landlord is not
obligated to insure the Leasehold Improvements in the Premises except to the
extent herein specifically required. The insurance to be maintained by the
Landlord shall be that which would be carried by reasonably prudent owners.

 

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10.2Tenant’s Insurance

 

The Tenant shall, at its own expense, take out and keep in force during the
Term:

 

  (a) (i) inclusive limits commercial general liability insurance, which shall
include coverage for personal injury, contractual liability, non-owned
automobile liability insurance and owned automobile insurance covering bodily
injury, death and property damage, all on an occurrence basis with respect to
the business carried on in the Premises and the Tenant’s use and occupancy of
the Premises, with coverage for any one occurrence or claim of not less than
Five Million Dollars ($5,000,000.00) or such other amount as the Landlord and
Tenant may from time to time agree to, acting reasonably, at any time during the
Term;

 

(ii)tenant’s legal liability on an “all risk” format in an amount not less than
the full replacement cost of the Leasehold Improvements.

 

(b)“all risks” insurance including earthquake, flood and sewer backup perils
covering all property owned by the Tenant, or for which the Tenant is legally
liable, located within the Premises, including, but not limited to, Leasehold
Improvements, trade fixtures, and furniture and equipment, and burglary
insurance with respect to the Building for not less than the full replacement
cost thereof, and which insurance shall include a by-law endorsement;

 

(c)when applicable, and if not insured under subsection 10.1(b), comprehensive
boiler and machinery insurance with limits for each accident in an amount not
less than full replacement costs of all Leasehold Improvements and of all
boilers, pressure vessels, heating, ventilating and air-conditioning equipment
and miscellaneous electric apparatus owned or operated by the Tenant or by
others (other than the Landlord) on behalf of the Tenant in the Premises, or
relating to or serving the Premises;

 

(d)“Extra Expense” insurance for a minimum period of twelve (12) months in the
amount which will reimburse Tenant extra expenses attributable to all perils
insured against under subsection 10.2(b) or attributable to prevention of access
to the Premises as a result of any such perils; and

 

(e)insurance against such other perils and in such amounts as the Landlord or
any mortgagee may from time to time reasonably require upon not less than sixty
(60) days’ notice, such requirement to be made on the basis that the required
insurance is customary at the time in the City of Vancouver for tenants of
buildings similar to the Building.

 

10.3Form of Tenant’s Insurance

 

(a)All policies of insurance required to be maintained by the Tenant hereunder:

 

(i)shall be on terms and with insurers to which the Landlord has no reasonable
objection;

 

(ii)shall be primary non-contributing with, and not in excess of, any other
insurance available to the Landlord or its mortgagee;

 

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(iii)with respect to the insurance described in subsections 10.2(a)(ii), (b) and
(c) shall name as additional named insured and loss payee as our interest may
appear the Landlord and anyone else with an interest in the Premises from time
to time designated in writing by the Landlord;

 

(iv)with respect to subsection 10.2(a)(i) shall name as an additional named
insured the Landlord and any other party with an interest in the Premises from
time to time designated in writing by the Landlord, and shall contain provisions
for cross-liability and severability of interest clauses;

 

(v)with respect to subsections 10.2(b), (c) and (d) shall contain a waiver of
any rights of subrogation which the insurer may have against the Landlord and
those for whom the Landlord is at law responsible whether the damage is caused
by the act, omission or negligence of the Landlord or anyone for whom the
Landlord is at law responsible.

 

Each policy shall also contain an undertaking by the insurer that no material
change adverse to the Landlord or the Tenant will be made and the policy will
not lapse or be cancelled or not be renewed, except after not less than thirty
(30) days’ prior written notice to the Landlord of the intended change, lapse,
cancellation or non-renewal.

 

(b)The Tenant shall furnish to the Landlord certificates as to the insurance
from time to time effected by the Tenant and its renewal or continuation in
force on a form acceptable by the Landlord’s insurers evidencing that the
required insurance is in force, together with evidence as to the method of
determination of full replacement cost of the Leasehold Improvements to the
Premises and the Tenant’s trade fixtures, furniture and equipment. If the
Landlord reasonably concludes that the full replacement cost has been
underestimated, the Tenant shall forthwith arrange for any consequent increase
in coverage required under Section 10.2. If the Tenant fails to take out, renew
or keep in force such insurance, or if the certificates submitted to the
Landlord pursuant to the preceding sentence are unacceptable to the Landlord (or
no such certificates are submitted within a reasonable period after request
therefor by the Landlord), the Landlord may give to the Tenant notice requiring
compliance with this Section and specifying the respects in which the Tenant is
not then in compliance with this Section. If the Tenant does not, within
seventy-two (72) hours (or such lesser period as the Landlord may reasonably
require having regard to the urgency of the situation), provide appropriate
evidence of compliance with this Section the Landlord may (but shall not be
obligated to) obtain some or all of the additional coverage or other insurance
which the Tenant shall have failed to obtain, without prejudice to any other
rights of the Landlord under this Lease or otherwise, and the Tenant shall pay
all premiums and other costs incurred by the Landlord forthwith upon demand.

 

10.4Insurance Cancellation or Cost Increase

 

(a)The Tenant will not do or omit to do or permit to be done or omitted to be
done in the Premises anything which would cause any policy of insurance on the
Premises to be subject to cancellation or non-renewal or which would cause an
increase in the cost of any insurance which the Landlord is obligated by this
Lease to maintain or which is otherwise maintained by the Landlord. Upon any act
or omission by the Tenant or any person occupying or transacting business at the
Premises which would result in cancellation or non-renewal or an increased cost
which the Tenant does not pay, the Landlord may, at its option, terminate this
Lease on ten (10) days notice to the Tenant. Without limiting the foregoing, the
Tenant will pay to the Landlord, forthwith upon demand, the amount of any such
increase in cost.

 

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(b)If any insurance policy is cancelled or threatened by the insurer to be
cancelled or the coverage thereunder is altered in any way because of the use or
occupation of the Premises by the Tenant or by any person permitted to be in the
Premises by the Tenant or any other person for whom the Tenant is at law
responsible, and if the Tenant fails to remedy the condition giving rise to the
cancellation, threatened cancellation or alteration in coverage within
forty-eight (48) hours after notice thereof is given to the Tenant (or such
lesser period as the Landlord acting reasonably may determine, having regard to
the urgency of the situation), the Landlord may, but will not be obligated to,
without further notice or any liability to the Tenant or any other occupant of
the Premises, enter the Premises and attempt to remedy such condition or obtain
or attempt to obtain insurance coverage in replacement of the coverage
cancelled, threatened to be cancelled or altered in coverage; and the Tenant
will pay to the Landlord, forthwith upon demand, the cost thereof.

 

10.5Release of Landlord by Tenant

 

The Tenant agrees that, despite any other provision of this Lease, the Landlord
and those for whom the Landlord is at law responsible shall not be liable to any
extent for any personal injury or death of, or loss or damage to any property
belonging to the Tenant or any of its employees, invitees or licensees or any
other person in, on or about the Premises unless resulting from the wilful act
or actual negligence of the Landlord or those for whom the Landlord is at law
responsible (but only to the extent of such actual negligence). Notwithstanding
the immediately preceding sentence, in no event shall the Landlord be liable
for:

 

(a)any damage (other than Insured Damage) which is caused by steam, water, rain
or snow which may leak into, issue or flow from any part of the Premises or from
the pipes or plumbing works, including the sprinkler system, thereof, or from
any other place or quarter, or for any damage caused by or attributable to the
condition or arrangement of any electric or other wiring or of sprinkler heads,
or for any damage caused by anything done or omitted by any other tenant;

 

(b)any act or omission (including theft, malfeasance or negligence) on the part
of any agent, contractor or other person from time to time employed by it to
perform janitorial services, security services, supervision or any other work in
or about the Premises it being understood that should the Tenant sustain any
loss caused by any person or persons employed or retained by the Landlord in the
performance of any supervision or any other work in or about the Premises (as
reasonably determined by the Tenant), the Landlord will, if requested by the
Tenant, pursue a claim for such loss against such person or persons on behalf of
the Tenant, but only if the Tenant is itself unable to pursue such claim
directly due to the Tenants lack of legal standing;

 

(c)loss or damage, however caused, to money, securities, negotiable instruments,
papers or other valuables of the Tenant; or

 

(d)loss or damage for which the Tenant is required to or does carry insurance.

 

 24

 

 

In addition, the Tenant hereby releases the Landlord and those for whom the
Landlord is at law responsible from all claims or liabilities in respect of
damage required to be insured against by the Tenant.

 

10.6Release of Tenant by Landlord

 

The Landlord hereby releases the Tenant and those for whom the Tenant is at law
responsible from all claims or liabilities in respect of any damage which is
Insured Damage to the extent of the insurance proceeds actually received by the
Landlord.

 

10.7Indemnity of Landlord by Tenant

 

Except as provided in Section 10.6, the Tenant shall indemnify and save harmless
the Landlord against and from any and all expenses, costs, damages, suits,
actions, liabilities or claims arising or growing out of any default by the
Tenant hereunder, and from all claims and demands of every kind and nature made
by any person or persons to or against the Landlord and/or its agent, for all
and every manner of costs, damages or expenses incurred by or injury (including
death resulting at any time therefrom) or damage to such person or persons or
his, her or their property, which claims or demands may arise howsoever out of
the use and occupation of the Premises by the Tenant or any subtenant or
occupant authorized by the Tenant or by any assignee or sublessee thereof or any
of their respective servants, agents, assistants, employees, invitees or other
persons entering into the Premises or any part thereof (other than any such
claims, demands or damages resulting from any wilful act or act of negligence of
the Landlord or those for whom the Landlord is responsible at law), and from all
costs, counsel fees, expenses and liabilities incurred in or about any such
claim or any action or proceeding brought thereon.

 

10.8Indemnity of Tenant by Landlord

 

Except as provided in Section 10.5, the Landlord shall indemnify and save
harmless the Tenant against and from any and all expenses, costs, damages,
suits, actions, liabilities or claims arising or growing out of any default by
the Landlord hereunder, and from all claims and demands of every kind and nature
made by any person or persons to or against the Tenant and/or its agent, for all
and every manner of costs, damages or expenses incurred by or injury (including
death resulting at any time therefrom) or damage to such person or persons or
his, her or their property, which claims or demands may arise as a result of the
negligence of the Landlord or those for whom it is responsible at law, and from
all costs, counsel fees, expenses and liabilities incurred in or about any such
claim or any action or proceeding brought thereon.

 

ARTICLE 11ASSIGNMENTS BY TENANT AND TRANSFERS BY LANDLORD

 

11.1Assignment, Subleases, Charges by Tenant

 

(a)In this Lease, “Transfer” means:

 

(i)an assignment, sale, conveyance, sublease, or other disposition of this Lease
or the Premises, or any part of them or any interest in this Lease (whether by
operation of law or otherwise), or in a partnership that is a Tenant under this
Lease;

 

(ii)a mortgage, charge or debenture (floating or otherwise) or other encumbrance
of this Lease or the Premises or any part of them, or of any interest in this
Lease or of a partnership, or partnership interest, where the partnership is a
Tenant under this Lease;

 

 25

 

  

(iii)a parting with or sharing of possession of all or part of the Premises;

 

(iv)a transfer or issue by sale, assignment, bequest, inheritance, operation of
law or other disposition, or by subscription of all or part of the corporate
shares of the Tenant or an “affiliate” (which for the purposes of this Article
11 means “affiliate” as that term is defined on the date of this Lease under the
Canada Business Corporations Act) of the Tenant which results in a change in the
effective voting control of the Tenant; or

 

(v)a merger, amalgamation or other corporate reorganization of the Tenant.

 

“Transferor” and “Transferee” have meanings corresponding to the definition of
“Transfer” set out above, (it being understood that for a Transfer described in
clause (iv) the Transferor is the person that has effective voting control
before the Transfer and the Transferee is the person that has effective voting
control after the Transfer).

 

(b)The Tenant shall not effect or permit a Transfer without the consent of the
Landlord which shall not (except as hereinafter otherwise provided) be
unreasonably withheld. Without limitation, it shall constitute reasonable
grounds for any withholding of consent by the Landlord that, in the Landlord’s
reasonable judgment:

 

(i)the proposed Transferee does not have a satisfactory financial condition
having regard to the obligations which it will assume as Transferee; or

 

(ii)it is intended or likely that it will use any part of the Premises for any
purpose which is not permitted by this Lease or which is not acceptable to the
Landlord, acting reasonably; or

 

(iii)where the return to the Tenant on any proposed Transfer is greater than the
amounts payable by the Tenant hereunder and the proposed transfer occurs after
the tenth year of the Term, for a rentable area in excess of 50,000 square feet,
and the Tenant does not agree to share such excess equally with the Landlord; or

 

(iv)covenants, restrictions, or commitments given by the Landlord to mortgagees,
or other parties regardless of when given, prevent or inhibit the Landlord from
giving its consent to the Transfer.

 

The Landlord shall be entitled to withhold consent arbitrarily where it
exercises its right of termination pursuant to Section 11.2.

 

(c)Without limitation, the Tenant shall for the purposes of this Lease be
considered to have effected or permitted a Transfer in any case where it permits
the Premises or any portion thereof to be occupied by a person or persons other
than the Tenant, its employees and others engaged in carrying on the business of
the Tenant, whether pursuant to assignment, subletting, license or other right,
and shall also include any case where any of the foregoing occurs by operation
of law.

 

(d)The Landlord shall have the right of approval, acting reasonably, of any
marketing of space by the Tenant.

 

 26

 

  

(e)If the Landlord’s consent is given, the Tenant shall complete the Transfer,
but only upon the terms set out in the offer submitted to the Landlord pursuant
to Section 11.2 and not otherwise. Such Transfer shall occur within ninety (90)
days after the Tenant’s request for consent and only upon any Transferee
entering into an agreement directly with the Landlord and in a form satisfactory
to the Landlord acting reasonably to perform, observe and keep each and every
covenant, proviso, condition and agreement in this Lease on the part of the
Tenant to be performed, observed and kept, including payment of Rent.

 

(f)Notwithstanding any other provision of this Lease, the Tenant may:

 

(i)in the first ten (10) years of the Term, without the Landlord’s consent,
sublet up to 50,000 square feet of the Premises to one or more parties from time
to time; or

 

(ii)at any time during the Term (or any renewal term), without the Landlord’s
consent (but with notice in writing to the Landlord), assign or partially assign
this Lease or sublet the Premises (in whole or in part) to:

 

(A)an “affiliate” (as such term is defined in the Canada Business Corporations
Act as at the date of this Lease) of the Tenant; or

 

(B)a mortgagee of the Tenant or a party holding a debenture given by the Tenant,

 

on condition that in the event of an assignment contemplated in section
11.1(f)(ii), the Tenant and the assignee enter into an agreement directly with
the Landlord, in a form satisfactory to the Landlord, in which the assignee
agrees to be bound by the terms and conditions of this Lease, and the Tenant
agrees that it will not be released from its obligations to perform and keep
each and every covenant, proviso, condition and agreement in this Lease.
Notwithstanding anything contained in this Lease to the contrary, the consent of
the Landlord will not be required in connection with:

 

(iii)a public offering of shares in the capital of the Tenant or an “affiliate”
(as defined in the Canada Business Corporations Act as at the date of this
Lease) of the Tenant;

 

(iv)a sale of all or substantially all of the assets or undertaking of the
Tenant or an “affiliate” (as defined in the Canada Business Corporations Act as
at the date of this Lease) of the Tenant;

 

(v)a change in the effective voting control of the Tenant or an “affiliate” (as
defined in the Canada Business Corporations Act as at the date of this Lease) of
the Tenant; or

 

(vi)a share issuance, reorganization, arrangement or amalgamation resulting in a
change in the beneficial ownership of the Tenant or an “affiliate” (as defined
in the Canada Business Corporations Act as at the date of this Lease) of the
Tenant.

 

(g)All reasonable costs of the Landlord incurred with respect to any Transfer by
the Tenant shall be paid by the Tenant forthwith after demand.

 

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11.2Landlord’s Rights of Cancellation

 

Subject to subsection 11.1(f), the Tenant shall not effect or permit a Transfer
unless:

 

(a)it shall have received or procured a bona fide written offer therefor to take
a Transfer which is not inconsistent with, and the acceptance of which would not
breach, any provisions of this Lease if this Article is complied with and which
the Tenant has determined to accept subject to this Article being complied with,
and

 

(b)it shall have requested and obtained the consent in writing of the Landlord
thereto.

 

Any request for such consent shall be in writing and accompanied by a true copy
of such offer, and the Tenant shall furnish to the Landlord all information
available to the Tenant or any additional information requested by the Landlord
acting reasonably, as to the responsibility, reputation, financial standing and
business of the proposed Transferee. Within fifteen (15) days after the receipt
by the Landlord of such request for consent and of all information which the
Landlord shall have requested hereunder (and if no such information has been
requested, within fifteen (15) days after receipt of such request for consent),
the Landlord shall have the right upon notice to the Tenant, if the proposed
Transfer affects the whole of the Premises, to terminate this Lease or, if the
proposed Transfer affects at least twenty five (25) percent of the Premises but
less than the whole, to delete from the Lease such part of the Premises as is
affected by the proposed Transfer, in each case as of the date of the proposed
Transfer. In such event, the Tenant shall surrender the whole or part, as the
case may be, of the Premises in accordance with such notice and Rent shall be
apportioned and paid to the date of surrender and, if only a part of the
Premises is surrendered, Rent shall thereafter abate proportionately. If the
Landlord shall not exercise the foregoing right of cancellation, then the
provisions of Section I 1.1 shall apply.

 

The Landlord’s right to terminate or delete, as the case may be, shall only be
exercisable after the first five (5) years of the Term have elapsed.

 

If the Landlord elects to terminate or delete, as the case may be, the Tenant
may withdraw its request for consent by notice to the Landlord within five (5)
business days after receipt of the Landlord’s notice of election, in which event
the Landlord’s notice of election shall be null and void and the Tenant shall
not proceed with the Transfer for which such consent was requested.

 

11.3Continuing Obligations of Tenant

 

(a)No Transfer shall release or relieve the Tenant from any of its obligations
hereunder unless otherwise agreed by the Landlord.

 

(b)No consent by the Landlord to any Transfer shall be construed to mean that
the Landlord has consented or will consent to any further Transfer which shall
remain subject to the provisions of this Article.

 

11.4No Advertising of the Premises

 

The Tenant shall not print, publish, post, mail, display, broadcast or otherwise
advertise or offer the whole or any part of the Premises for the purposes of a
Transfer, and shall not permit any broker or other party to do any of the
foregoing, unless the complete text and format of any such notice, advertisement
or offer shall first have received the Landlord’s written consent, which shall
not be unreasonably withheld. In no event shall any such notices or
advertisement contain any reference to the Rent payable in respect of the
Premises.

 

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11.5Dealings by Landlord

 

Subject to the Right of First Offer contained in section 2 of Schedule E, the
Landlord may sell, transfer, charge, encumber or otherwise deal with the
Premises or any portion thereof or any interest of the Landlord therein, in
every case without the consent of the Tenant, and without restriction. To the
extent that any purchaser or transferee from the Landlord has become bound by
the covenants and obligations of the Landlord under this Lease, the Landlord
shall, without further written agreement, be freed and relieved of liability
with respect to such covenant and obligations.

 

11.6Subordination and Attornment

 

The Tenant acknowledges that this Lease is, at the option of any mortgagee or
chargee, subject and subordinate to any and all ground leases, mortgages or
charges (including deeds of trust and mortgage securing bonds, all indentures
supplemental thereto or any other instruments of financing, refinancing or
collateral financing) (collectively called an “Encumbrance”) which may now or
hereafter affect the Premises, or any part thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. The Tenant
agrees to execute promptly any certificate or instrument in confirmation of such
subordination and will, if requested, attorn to such encumbrancer, mortgagee or
chargee (each, an “Encumbrancer”).

 

Subject to section 11.7, the Tenant will, if possession is taken under, or any
proceedings are brought for possession under or the foreclosure of, or in the
event of the exercise of the power of sale under, any Encumbrance, attorn to the
Encumbrancer or the purchaser upon any such foreclosure, sale or other
proceeding and recognize the Encumbrancer or the purchaser as the Landlord under
this Lease.

 

11.7Non-Disturbance Agreement

 

The Landlord will obtain from any present or future holder (each a “Holder”) of
any security in respect of the Premises a non-disturbance agreement
(“Non-Disturbance Agreement”) in favour of Tenant (in a form acceptable to
Tenant, acting reasonably) wherein the Holder agrees that, so long as Tenant is
not in material default hereunder beyond any applicable curing period, the
Holder will recognize all Tenant’s rights under this Lease and Tenant will be
permitted to remain in occupation of the Premises, without disturbance, pursuant
to and upon all the terms and conditions contained in this Lease,
notwithstanding that Landlord may be in default under Holder’s security. For
greater certainty, the Holder will agree to perform all Landlord’s covenants
under this Lease as if it was Landlord named herein. The Landlord will use its
best efforts to obtain a Non-Disturbance Agreement from any future Holder within
fourteen (14) days following registration of such Holder’s security.

 

ARTICLE 12ESTOPPEL CERTIFICATES, REGISTRATION

 

12.1Estoppel Certificates

 

Each of the Landlord and the Tenant agrees that it will at any time and from
time to time upon not less than ten (10) days’ notice, execute and deliver to
the other (and, if required, to any prospective purchaser, mortgagee or
Encumbrancer of the Premises) a certificate in writing as to the status at that
time of this Lease, including as to whether this Lease is unmodified and in full
force and effect (or, if modified, stating the modification and that the same is
in full force and effect as modified), the amount of the Rent then being paid
hereunder, the date on which the same, by instalments or otherwise, and other
charges hereunder, have been paid, whether or not there is any existing default
on the part of the other of which it has notice, and any other matters
pertaining to this Lease as to which the other shall request a statement.

 

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12.2Registration on Title

 

The Tenant shall not register this Lease in full on the title to the Premises.
If the Tenant wishes to register a notice or short form of this Lease, the
Tenant shall deliver the notice or short form to the Landlord for its prior
approval. In no circumstances shall the Landlord permit any form of registration
containing financial information.

 

The Tenant agrees that it will, at its sole expense, discharge and withdraw from
title any such registration within thirty (30) days after the expiration or
sooner termination of this Lease. If such registration is not discharged and
withdrawn during the aforesaid time, the Landlord shall have the right and is
hereby appointed by the Tenant as its agent and attorney to prepare, execute and
register such documentation as is required to discharge and withdraw any such
registration.

 

ARTICLE 13UNAVOIDABLE DELAYS

 

13.1Unavoidable Delays

 

Whenever and to the extent that either the Landlord or the Tenant is unable to
fulfill, or is 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, by-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 legislative, administrative, or
judicial body, controller or board, or any governmental department or any
governmental officer or other authority having jurisdiction, or by reason of its
inability to procure any licence or permit required therefor, or by reason of
not being able to obtain any permission or authority required therefor, or by
reason of any strikes, lockouts, slow-downs or other combined action of workmen,
or shortages of material, or any other cause beyond its control, other than any
insolvency, lack of funds or other financial cause of delay, the Landlord or the
Tenant, as the case may be, shall be relieved from the fulfillment of such
obligation so long as such cause continues provided always that (except as may
be expressly provided in this Lease) the Tenant shall not be entitled to any
compensation for any inconvenience or nuisance or discomfort thereby occasioned,
or to cancel or terminate this Lease or to any abatement of Rent.

 

ARTICLE 14LANDLORD’S ACCESS TO PREMISES

 

14.1Inspection and Repair

 

The Landlord and its authorized agents and employees shall have the right at all
reasonable times upon prior written notice to the Tenant, except in the case of
emergencies and in the exercise of its property management obligations pursuant
to the Lease, (provided that the times scheduled in respect of such property
management obligations are generally approved in advance by the Tenant), at any
time and from time to time, to enter the Premises for the purpose of inspection,
providing janitor service, maintenance, making repairs, alterations or
improvements to the Premises or to have access to utilities and services, and
the Tenant shall provide free and unhampered access for such purpose and shall
not be entitled to compensation for any inconvenience, nuisance or discomfort
caused thereby. The Landlord in exercising its rights hereunder shall proceed to
the extent reasonably possible so as to minimize interference with the Tenant’s
use and enjoyment of the Premises.

 

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14.2Right to Exhibit Premises

 

The Landlord and its authorized agents and employees shall have the right to
exhibit the Premises to prospective tenants at all reasonable hours upon prior
written notice to the Tenant, during the last twelve (12) months of the Term.
The Landlord and its authorized agents and employees shall also have the right
to enter upon the Premises at all reasonable hours during the Term upon prior
written notice, for the purpose of exhibiting the Premises to any prospective
purchaser or mortgagee thereof.

 

ARTICLE 15DEFAULT

 

15.1Events of Default

 

Each of the following shall be an event of default of the Tenant:

 

(a)whenever the Tenant defaults in the payment of any Rent and such default
continues for five (5) business days after notice to the Tenant; or

 

(b)whenever the Tenant defaults in the performance of any of its other
obligations hereunder and such default is not remedied within a period next
after notice and which period shall be:

 

(i)if the default could in the reasonable opinion of the Landlord, be remedied
within thirty (30) days after notice and provided the Tenant has commenced to
remedy such failure within ten (10) days after notice and proceeds thereafter
diligently and continuously to remedy it, thirty (30) days; and

 

(ii)if the default could not in the reasonable opinion of the Landlord, be
remedied within thirty (30) days after notice and provided the Tenant has
commenced to remedy such failure not later than ten (10) days after notice and
proceeds thereafter diligently and continuously to remedy it, that number of
days after notice which would in the reasonable opinion of the Landlord, suffice
for the remedying of such default if the Tenant had commenced to remedy such
default within ten (10) days after notice and proceeded thereafter diligently
and continuously to remedy it; and

 

(iii)in any case where the Tenant does not commence to remedy such default
within ten (10) days after notice, ten (10) days; or

 

(c)the Tenant taking any action or commencing any proceeding or any action or
proceeding being taken or commenced by another person or persons against the
Tenant in respect of the liquidation, dissolution or winding-up of the Tenant,
including without limitation, any action or proceeding under the Winding Up and
Restructuring Act, the Business Corporations Act, the Canada Business
Corporations Act or other similar legislation whether now or hereinafter in
effect; or

 

(d)the Tenant taking any action or commencing any proceeding or any action or
proceeding being taken or commenced by another person or persons against the
Tenant relating to the reorganization, readjustment, compromise or settlement of
the debts owed by the Tenant to its creditors, including, without limitation,
the filing of a notice of intention to make a proposal or the filing of a
proposal pursuant to the provisions of the Bankruptcy and Insolvency Act
(Canada), the making of an Order under the Companies’ Creditors Arrangement Act
(Canada) or the commencement of any similar action or proceeding by the Tenant
or such person or persons; or

 

 31

 

  

(e)the Tenant making any bulk sale of its assets, except to a successor in
conjunction with a permitted assignment of this Lease, or the Tenant committing
any act of bankruptcy pursuant to or set out under the provisions of the
Bankruptcy and Insolvency Act (Canada) or the filing of a petition for a
receiving order against the Tenant pursuant to the provisions of the Bankruptcy
and Insolvency Act (Canada) or a receiver, interim receiver and manager, agent,
liquidator or other similar administrator being appointed in respect of any of
the property of the Tenant whether or not located on the Premises, or any part
thereof, or the taking by a secured party, lien claimant, other encumbrancer,
judgment creditor or a person asserting similar rights of possession of such
assets or any part thereof located on the Premises; or

 

(f)if a writ of execution that may materially affect this Lease shall issue
against the Tenant, or if the Term hereby granted or any of the goods, chattels
or equipment of the Tenant shall be taken in execution or attachment, or be
seized by any creditor of the Tenant, whether secured or otherwise; or

 

(g)if the Premises or a substantial part thereof are abandoned or become vacant
or not used or occupied while capable of use and occupancy, and remain so for a
period of thirty (30) days, or if the Premises are used by any other person or
persons other than the Tenant or for any other purpose than that for which the
same were let, in each case without the prior written consent of the Landlord.

 

15.2Remedies of Landlord

 

Upon any event of default of the Tenant, in addition to any remedy which the
Landlord may have by this Lease or at law or in equity, the Landlord may, at its
option:

 

(a)provide, by notice to the Tenant, that the current month’s Rent and Rent for
the next ensuing three (3) months shall thereupon become immediately due and
payable; and/or

 

(b)enter the Premises as agent of the Tenant, either by force or otherwise,
without being liable for any prosecution therefor, and without being deemed to
have terminated this Lease, and relet the Premises or any part thereof as the
agent of the Tenant, and receive the rent therefor to be applied on account of
the Rent; and/or

 

(c)exercise its right of distress; and/or

 

(d)terminate this Lease and re-enter and take possession of the Premises and/or
provide, by notice to the Tenant, for an immediate payment by the Tenant of an
amount equal to the Present Value, as of the date of an event of default by the
Tenant, of Rent due under this Lease from such date to the last day of the
twelfth month following such date of default, provided that if there is less
than twelve months remaining in the current Term (or the current renewal term)
the amount payable will be the Present Value of Rent due under this Lease from
the date of the event of default by the Tenant to the last day of the current
Term or renewal term, as the case may be. After receipt by the Landlord of such
payment and after the Landlord relets the Premises, the Landlord shall remit to
the Tenant, as and when rent is received therefor, an amount equal to (i) the
lesser of (1) the amount received by the Landlord for any period and (2) the
amount that would have been payable by the Tenant under this Lease for the same
period, less (ii) fifteen percent (15%) of such sum in (i) as an administration
fee to the Landlord; and/or

 

 32

 

  

(e)without terminating this Lease, demand immediate payment from the Tenant of
an amount equal to the Present Value, as of the date of an event of default by
the Tenant, of Rent due under this Lease from such date to the last day of the
Term of the Lease. If any part of such Rent cannot be absolutely determined as
of such date, the Landlord shall estimate same on a reasonable basis. Upon
payment of such amount by the Tenant to the Landlord, the Tenant shall be
entitled to occupancy of the Premises for the remainder of the Term in
accordance with this Lease; and/or

 

(f)suspend the supply to the Premises of any benefit, service, utility or
Additional Service furnished by the Landlord until the default is cured.

 

15.3Additional Self-Help Remedy of Landlord

 

In addition to all other remedies the Landlord may have by this Lease, at law or
in equity, if the Tenant does not perform any of its obligations hereunder, the
Landlord may at its option, perform any of such obligations, after five (5)
business days’ notice to the Tenant or in the event of an emergency without
notice, and in such event the cost of performing any of such obligations plus an
administrative charge of fifteen percent (15%) of such cost shall be payable by
the Tenant to the Landlord forthwith on demand together with interest at the
Rate of Interest from the date of the performance of any of such obligations by
the Landlord to the date of payment by the Tenant.

 

15.4Legal Costs - Landlord

 

The Tenant hereby agrees to pay to the Landlord, within five (5) days after
demand, all legal fees, on a solicitor and his own client basis, incurred by the
Landlord for the enforcement of any rights of the Landlord under this Lease or
in the enforcement of any of the provisions of this Lease or in the obtaining of
possession of the Premises or for the collection of any monies from the Tenant
or for any advice with respect to any other matter related to this Lease
provided such legal fees were reasonably incurred and the outcome of the issue
was unfavourable to the Tenant.

 

15.5Legal Costs - Tenant

 

The Landlord hereby agrees to pay to the Tenant, within five (5) days after
demand, all legal fees on a solicitor and his own client basis, incurred by the
Tenant for the enforcement of any of the rights of the Tenant under this Lease,
for the collection of any monies from the Landlord or for any advice with
respect to any other matter related to this Lease, provided that the legal fees
were reasonably incurred and the outcome of the issue was unfavourable to the
Landlord.

 

15.6Remedies Cumulative

 

The Landlord may from time to time resort to any or all of the rights and
remedies available to it in the event of any default hereunder by the Tenant,
either by any provision of this Lease, or by statute, or at law or in equity,
all of which rights and remedies are intended to be cumulative and not
alternative, and the express provisions hereunder as to certain rights and
remedies are not to be interpreted as excluding any other or additional rights
and remedies available to the Landlord at law or in equity.

 

 33

 

  

15.7Non-Waiver

 

Any condoning, excusing or overlooking by either the Landlord or the Tenant of
any default by the other at any time or times in respect of any obligation of
the other herein shall not operate as a waiver of the non-defaulting party’s
rights hereunder in respect of such default or so as to defeat or affect in any
way the rights of the non-defaulting party in respect of any such continuing or
subsequent default by the defaulting party. No waiver shall be implied by
anything done or omitted by a party. Any waiver of a particular default shall
not operate as a waiver of any subsequent or continuing default.

 

ARTICLE 16 ARBITRATION

 

16.1Arbitration

 

Whenever in this Lease it is provided that any matter in dispute between the
Landlord and the Tenant, if not settled or agreed between them, is to be
determined by arbitration, then the following provisions shall apply:

 

(a)Either party may commence arbitration proceedings by giving written notice to
the other party of its desire to arbitrate (but no party shall give such a
notice unless such party has first demonstrated its willingness to negotiate and
act reasonably with a view to resolving the dispute by agreement between the
parties).

 

(b)Forthwith after the giving of such notice, the parties or their designated
representatives shall meet in good faith for the purpose of agreeing, or
attempting to agree, upon an arbitration procedure. If such agreement is arrived
at, the matter in dispute shall be arbitrated and settled in accordance with the
agreed procedure (and which agreed procedure shall be reduced to writing signed
by each of the parties, and shall constitute a submission to arbitration within
the meaning of the commercial arbitration legislation of the Province in which
the Premises is located (the “Arbitrations Act”).

 

(c)The parties recognize that, in many instances of disputes which might arise
under this Lease, the dispute may involve, and depend for its resolution upon,
technical matters or matters which involve expert knowledge and judgment, where
it is in the interests of a prompt and equitable solution of the matter for the
parties to agree upon an independent expert having the appropriate specialized
knowledge as the sole arbitrator. In any such situation the parties shall
negotiate in good faith and act reasonably with a view to reaching agreement
upon an appropriate independent expert as a sole arbitrator. If such a sole
arbitrator is agreed upon by the parties, the dispute shall be arbitrated and
determined in accordance with the following procedure (and which shall
constitute a submission to arbitration within the meaning of the Arbitrations
Act):

 

(i)such sole arbitrator shall proceed to determine the dispute, having regard to
the provisions of this Lease and the terms of the submission to arbitration and
any other agreements the parties may have had respecting the arbitration or the
matter in dispute;

 

(ii)the arbitration shall, subject to any express provision herein or in any
submission to arbitration or other agreement of the parties affecting the same,
be conducted in accordance with the provisions of the laws of the Province in
which the Premises is located applicable thereto and the provisions of the
Arbitrations Act shall apply thereto;

 

 34

 

  

(iii)the costs of the arbitration shall be awarded in the discretion of the sole
arbitrator; and

 

(iv)if such sole arbitrator fails to hear and determine the matter in dispute
and render a decision in writing to the parties within thirty (30) days after
the parties agree upon such sole arbitrator, either party may, by notice to the
other, cancel the appointment of such sole arbitrator, in which case either
party may initiate new arbitration proceedings pursuant to this Section (subject
to the agreement of the other party to the commencement of new arbitration
proceedings) or proceed in the courts to have the dispute determined as if no
agreement for a submission to arbitration existed between the parties.

 

(d)If, within five (5) days after the giving of the notice referred to in
subsection (a) of this Section an arbitration procedure shall not have been
agreed upon between the parties, either party may, at any time thereafter, and
prior to such a procedure being agreed, give written notice to the other
requiring the dispute to be arbitrated and determined in accordance with the
following procedure (and which shall constitute a submission to arbitration
within the meaning of the Arbitrations Act):

 

(i)the party giving the notice referred to above in this subsection shall, in
such notice, give notice of the appointment and the name of the arbitrator
chosen by the party giving such notice;

 

(ii)the party receiving the notice given under paragraph (i) shall, within ten
(10) days after the receipt thereof, give a written notice to the party giving
the first notice of the appointment and the name of the arbitrator chosen by the
party giving the notice under this paragraph (ii);

 

(iii)the two arbitrators so chosen shall jointly appoint a third arbitrator and
give written notice of the appointment and the name of such arbitrator to the
parties;

 

(iv)if a party required to appoint an arbitrator fails to do so and give notice
thereof as required by paragraph (ii) within the period of ten (10) days
provided thereby, or if each party has appointed an arbitrator and the two
arbitrators so chosen fail to agree upon a third arbitrator and give notice
thereof as required by paragraph (iii) within fifteen (15) days after both have
been appointed, then any party not in default may apply to a judge of the
relevant court of competent jurisdiction pursuant to the provisions of the
Arbitrations Act for the appointment of an arbitrator on behalf of the party in
default, or the appointment of the third arbitrator, as the case may be;

 

(v)the three (3) arbitrators appointed pursuant to the preceding provisions
shall proceed to determine the dispute, having regard to the provisions of this
Lease and the terms of the submission to arbitration and any other agreements
the parties may have made respecting the arbitration or the matter in dispute
and the decision of any two (2) of them shall bind the parties;

 

(vi)the arbitration shall, subject to any express provisions herein or in any
submission to arbitration or other agreement of the parties affecting the same,
be conducted in accordance with the provisions of the laws of the Province in
which the Premises is located applicable thereto and the provisions of the
Arbitrations Act shall apply thereto;

 

 35

 

  

(vii)the costs of the arbitration shall be awarded in the discretion of the
arbitrators; and

 

(viii)if the arbitrators appointed under the preceding provisions shall fail to
hear and determine the matter in dispute and render a decision in writing to the
parties within thirty (30) days after the appointment of the third arbitrator,
either party on notice to the other may cancel the appointments of all the
arbitrators previously made, in which case either party may initiate new
arbitration proceedings pursuant to this Section (subject to the agreement of
the other party to the commencement of new arbitration proceedings) or proceed
in the courts to have the dispute determined as if no agreement for a submission
to arbitration existed between the parties.

 

(e)The provisions of this Lease and of this Section requiring the determination
of certain disputes by arbitration shall not operate to prevent recourse to the
courts by any party whenever enforcement of an award by the sole arbitrator or
arbitrators, as the case may be, reasonably requires access to any remedy (such
as mandamus, injunction, specific performance, declaration of right, order for
possession, damages or judicial enforcement) which an arbitrator has no power to
award or enforce. In all other respects an award by the sole arbitrator or
arbitrators, as the case may be, shall be final and binding upon the parties.

 

(f)Notwithstanding that arbitration proceedings may have been commenced or that
a dispute is being negotiated, the Tenant shall continue to pay all Rent,
including without limitation all amounts which are the subject of dispute, based
upon the Landlord’s estimate or re-estimate of same (except where otherwise
provided in this Lease) until the dispute is finally determined.

 

ARTICLE 17GENERAL PROVISIONS

 

17.1Entire Agreement

 

This Lease contains all of the terms and conditions of the agreement between the
Landlord and the Tenant relating to the matters herein provided and supersedes
all previous agreements or representations of any kind, written or verbal, made
by anyone in reference thereto.

 

There shall be no amendment hereto unless in writing and signed by the party to
be bound.

 

17.2Schedules

 

Schedules A, B, C, D and E attached to this Lease form a part of this Lease.

 

17.3Survival of Obligations

 

Any obligation of a party which is unfulfilled on the termination of this Lease
shall survive until fulfilled.

 

 36

 

  

17.4Severability of Illegal Provisions

 

If any provision of this Lease is or becomes illegal or unenforceable, it shall
during such period that it is illegal or unenforceable be considered separate
and severable from the remaining provisions of this Lease which shall remain in
force and be binding as though the said provision had never been included.

 

17.5Governing Law

 

This Lease shall be governed by the laws applicable in the Province in which the
Premises is located.

 

17.6No Partnership

 

Nothing contained herein shall be deemed to create any relationship between the
parties hereto other than the relationship of landlord and tenant.

 

17.7Number, Gender, Joint and Several Liability

 

The word “Tenant”, the word “assignee” and the word “sublessee” and personal
pronouns relating thereto and used in conjunction therewith shall be read and
construed as “Tenant” or “Tenants”, “assignee” or “assignees” and “sublessee” or
“sublessees” respectively and “his”, “her”, “it”, “its” and “their” as the
number and gender of the party or parties referred to in each case require and
the number of the verb agreeing therewith shall be considered as agreeing with
the said word or pronoun so substituted. If at any time there is more than one
Tenant together or in succession, they shall be jointly and severally liable for
all of the obligations of the Tenant hereunder. If the Tenant is a partnership
each person who is a member of the partnership, and each person who becomes a
member of a successor of the partnership, is liable jointly and severally as
Tenant under this Lease.

 

17.8Captions

 

The captions for Articles or Sections of this Lease are for convenience only and
are not to be considered a part of this Lease and do not in any way limit or
amplify the terms and provisions of this Lease.

 

17.9Time of Essence

 

Time shall be of the essence of this Lease.

 

17.10Landlord’s Agent

 

The Landlord may perform any of its obligations or exercise any of its rights
hereunder through such agency as it may from time to time determine and the
Tenant shall, as from time to time directed by the Landlord, pay to any such
agent any monies payable hereunder to the Landlord.

 

17.11Successors and Assigns

 

The word “Landlord” wherever it occurs herein, shall mean and extend to and
include the Landlord, its successors and assigns and the word “Tenant” shall
mean and extend to and include the Tenant, its successors and assigns.

 

 37

 

  

Unless otherwise set out herein, all rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the
respective heirs, executors, administrators, successors and permitted assigns of
the said parties and if there is more than one party constituting the Tenant,
they shall all be bound jointly and severally by the terms, covenants and
agreements herein on the part of the Tenant. If the Tenant is a partnership (the
“Tenant Partnership”) each person who is presently a member of the Tenant
Partnership, and each person who becomes a member of the Tenant Partnership or
any successor Tenant Partnership hereafter, shall be and shall continue to be
subject to the terms, covenants and conditions of this Lease, whether or not
such person ceases to be a member of such Tenant Partnership or successor Tenant
Partnership. Subject to the provisions of Subsection 11.1(f), no rights shall
enure to the benefit of any assignee of the Tenant unless the assignment of such
rights has been first approved by the Landlord.

 

17.12Accounting Principles

 

All calculations referred to herein shall be made in accordance with generally
accepted accounting principles and practices applicable to the real estate
development industry and applied on a consistent basis.

 

17.13Notices and Consents, Etc.

 

Any notice or consent (including any invoice, statement or request or other
communication) herein required or permitted to be given by either party to the
other shall be in writing and shall be sufficiently given if delivered
personally to an officer of either party, sent by registered mail postage
prepaid (except during a postal disruption or threatened postal disruption) to
the applicable address set forth below, or sent by facsimile to the applicable
fax number as set forth below:

 

(a)in the case of the Landlord, to:

 

c/o GWL Realty Advisors Inc.

3000 – 650 West Georgia Street

Vancouver, British Columbia V6B 4N7

 

Facsimile:(604) 683-3264

Telephone:(604) 713-6450

Attention:Asset Manager

 

(b)in the case of the Tenant, if prior to the Commencement Date, to the address
or fax number set forth in subsection 1.1(b) or, if on or after the Commencement
Date, to the Premises or to the fax number set forth in subsection 1.1(b).

 

Any notice personally delivered shall be deemed to have been validly and
effectively given on the day of such delivery. Any notice sent by registered
mail shall be deemed to have been validly and effectively given on the third
Business Day following the date of mailing. Any notice sent by facsimile before
4:00pm PST shall be deemed to have been validly and effectively given on the day
of confirmed transmission, and if sent after 4:00pm PST shall be deemed to have
been validly and effectively given on the next business day following the day of
confirmed transmission.

 

If there is more than one Tenant, any notice required or permitted by this Lease
may be given by or to any one of them and has the same force and effect as if
given by or to all of them.

 

Either party may from time to time by written notice to the other change its
address for service hereunder.

 

 38

 

  

17.14Further Assurances

 

Each party agrees to make such further assurances as may be reasonably required
from time to time by the other to more fully implement the true intent of this
Lease.

 

17.5Confidentiality

 

The Tenant agrees to use its best efforts to keep confidential, and to use best
efforts to ensure that those for whom at law it is responsible, and its
advisors, keep confidential, the provisions of this Lease.

 

IN WITNESS WHEREOF the parties hereto have duly executed this Lease as of the
date first above written.

 

  THE GREAT-WEST LIFE ASSURANCE COMPANY       (Landlord)   Per: /s/ Donald J.
Harrison   Name: Donald J. Harrison   Title: Senior Vice President, Asset
Management       Per: /s/ Jeff Fleming   Name: Jeff Fleming   Title: Vice
President, Investments       We are authorized to bind the Corporation.      
LONDON LIFE INSURANCE COMPANY       (Landlord)   Per: /s/ Donald J. Harrison  
Name: Donald J. Harrison   Title: Senior Vice President, Asset Management      
Per: /s/ Jeff Fleming   Name: Jeff Fleming   Title: Vice President, Investments
      We are authorized to bind the Corporation.       RITCHIE BROS. AUCTIONEERS
(CANADA) LTD.       (Tenant)   Per: /s/ Darren Watt   Name: Darren Watt   Title:
Secretary       I authorized to bind the Corporation.

 

 39

 

 

SCHEDULE “A”

Plan of the Building

 

[tex10-39pg45.jpg] 

 

 A-1 

 

  

SCHEDULE “B”

 

Lands

 

City of Burnaby

 

Parcel Identifier: 027-488-489

 

Lot 1 District Lot 165 Group 1

 

New Westminster District

 

Plan BCP36073

 

 B-1 

 

  

SCHEDULE “C”

 

Definition of Operating Costs

 

1.Inclusions

 

“Operating Costs” means the aggregate of all of the Landlord’s expenses, costs
and charges which are incurred in respect of the operation, maintenance, repair,
administration and supervision of the Premises including the Building Systems.
Such expenses, costs and charges include, without limitation or duplication:

 

(a)the cost of providing the operation, maintenance, repair, administration and
supervision of the Premises, including, without limitation, wages, salaries or
other compensation for employees, agents or contractors of the Landlord
performing services rendered in connection therewith and a building manager and
other supervisory personnel, in each case whether on or off site, elevator
operators, porters, cleaners and other janitorial staff, watchmen and other
security personnel, carpenters, engineers and all other maintenance personnel;

 

(b)the cost of repairs to, and maintenance of, the Premises, and the costs of
supplies and equipment used in connection therewith including structural
maintenance, repairs, improvements and replacements;

 

(c)the annual amortization including interest on the unamortized amount, (on a
straight-line basis over the useful life or such other period as reasonably
determined by the Landlord) of the capital cost of any modifications,
replacements or additions to the Premises and/or the machinery and equipment
therein and thereon, where in the reasonable opinion of the Landlord such
modifications, replacements or additions may reduce Operating Costs or result in
energy savings or result in increased security, or any additional equipment or
improvements required by legal requirements not in effect at the date of
construction of the Premises and not to remedy any construction inadequacy or
non-compliance with legal requirements in effect at the time of construction, or
which in the Landlord’s reasonable opinion are for the benefit or safety of
users of the Premises;

 

(d)straight-line amortization including interest on the unamortized amount,
based on the useful life as determined in accordance with industry accepted
practice of the capital cost of any repairs, modifications, additions and
replacements to any part of the Premises and base building, including without
limitation, the items described in subsection 9.1(a), the Building Systems,
roof, elevators and any other machinery and equipment which is at the end of its
life cycle;

 

(e)premiums and other charges incurred by the Landlord with respect to insurance
on the Premises, including, without limitation, fire and “All Risk” perils
insurance, public liability and property damage insurance, boiler and machinery
insurance, elevator liability insurance, workers’ compensation insurance for the
employees specified in subsection (a) above and other casualties against which
the Landlord may reasonably insure provided that if the Landlord shall self
insure, the Landlord shall include a deemed amount equal to the amount that
would have been included if the Landlord had placed insurance with a third
party;

 

 C-1 

 

  

(f)costs incurred in connection with inspection and servicing of elevators,
escalators and transportation vehicles and equipment, electrical distribution
and mechanical equipment and the costs of supplies and equipment used in
connection therewith;

 

(g)costs incurred for fuel or other energy for heating and air-conditioning the
Premises and operating the heating and air-conditioning systems thereof, for
electricity, steam or other power required in connection with the lighting, use
and operation of the Premises but excluding costs for power for lighting and
office equipment that are Additional Service Costs;

 

(h)water, sewer and service charges, garbage and waste removal costs;

 

(i)unemployment insurance expenses, pension plan and any other payments payable
in connection with the employment of any of the employees specified in
subsection (a) above;

 

(j)sales and excise taxes on goods and services provided by the Landlord to
manage, operate or maintain the Premises and its equipment:

 

(k)fees and expenses of accountants, lawyers and other professionals pertaining
to services performed by them relating to the Premises;

 

(l)all costs and expenses (including legal and other professional fees) incurred
in good faith in verifying the reasonableness of, or in contesting, resisting or
appealing, assessments and levies for Taxes or taxes charged against the
business of the Landlord which pertains to the management, operation and
maintenance of the Premises;

 

(m)costs of telephone, stationery, office supplies, and the fair market rental
value of space occupied by the Landlord for management, supervisory or
administrative purposes relating to the Premises and furnishing and fixtures for
such space and other materials required for routine operation of the Premises;

 

(n)Sales Taxes payable by the Landlord on the purchase of goods and services
included in Operating Costs (excluding any such Sales Taxes as are claimed and
actually received by the Landlord as a credit in determining the Landlord’s net
tax liability on account of Sales Taxes but only to the extent that such Sales
Taxes are included in Operating Costs);

 

(o)the cost of policing, security, supervision and traffic control;

 

(p)such other direct operating costs, charges and expenditures of a like nature
as may be incurred in respect of the property preservation, protection,
maintenance and operation of the Premises;

 

(q)a management fee to be charged by the Landlord for the management and
administration of the Premises equal to 1.5% of Rent (excluding, however, any
amount in respect of this management fee); and

 

(r)the costs charged to the Landlord by any person or entity engaged in the
management of the Business Park, to the extent that such costs represent the
Landlord’s proportionate share of common area operation and maintenance costs of
the Business Park.

 

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2.Exclusions

 

Notwithstanding section 1 above, Operating Costs shall exclude:

 

(a)debt service, capital retirement of debt, depreciation or ground rent;

 

(b)the costs of remedying construction inadequacies, including without
limitation, inherent structural defects;

 

(c)all Landlord’s income taxes or similar taxes, corporation taxes (except for
capital taxes), place of business taxes, land transfer taxes, non-resident sales
taxes, business and any other taxes personal to the Landlord, penalties,
interest or carrying charges relating to the late or non-payment of any taxes,
all capital, interest or other carrying charges, finance or mortgage costs on
equipment or land, land or equipment lease payments, all other costs or charges
associated with any present or future financing of the Building or the Premises
and all costs relating to the original acquisition of the Premises;

 

(d)any fines, suits, actions, claims, demands, judgements, condemnations,
awards, costs, charges and expenses of any kind or nature for which the Landlord
is or may become liable by reason of any negligent or wilful acts or omissions
of the Landlord or those for whom the Landlord is at law responsible, or any
breach, violation or non-performance by the Landlord of any covenant, term or
provision contained in the Lease and agreements in respect of the Building;

 

(e)legal, accounting and other fees, leasing commissions, advertising expenses
and other costs incurred in connection with the development, leasing or
re-letting of the Building;

 

(f)all sales taxes (including PST and GST) paid or payable by the Landlord on
the purchase of any goods and services included in Operating Costs which are
claimed and actually received by the Landlord as a credit or set off,

 

and net recoveries from insurance policies taken out by the Landlord, to the
extent that the proceeds reimburse the Landlord for expenses which have
previously been included or which would otherwise be included in Operating
Costs, will be deducted from Operating Costs.

 

3.Reductions

 

Costs which are recovered from tenants or others, (such as Additional Service
Costs, insurance recoveries and recoveries pursuant to damage or indemnity
claims), otherwise than by a general contribution by tenants of shares of
Operating Costs, shall, to the extent the expenses pertaining thereto are
included in Operating Costs, be applied in reduction of Operating Costs.

 

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SCHEDULE “D”

 

Rules and Regulations

 

1.The sidewalk, entry passages, elevators, fire escapes and stairways shall not
be obstructed by the Tenant. The Tenant will not place or allow to be placed in
the Building corridors or public stairways any waste paper, dust, garbage,
refuse or anything whatever that would tend to make them unclean or untidy.

 

2.The skylights and windows that reflect or admit light into passageways of the
Premises shall not be covered or obstructed by any of the Tenant, and no awnings
shall be put up, without the written consent of the Landlord.

 

3.The water-closets and other water apparatus shall not be used for any purpose
other than those for which they were constructed, and no sweepings, rubbish,
rags, ashes or other substances shall be thrown therein. Any damage resulting by
misuse shall be borne by the tenant by whom or by whose agents, servants or
employees the same is caused (save in respect of Insured Damage). The Tenant
shall not let the water run unless in actual use, nor shall they deface any part
of the Premises.

 

4.The Tenant shall not do or permit anything to be done in the Premises or bring
or keep anything therein which will in any way increase the risk of fire, or
violate or act at variance with the laws relating to fires or with the
regulations of the Fire Department or the Board of Health.

 

5.The Tenant, its clerks or servants, shall not make or commit any improper
noises in the Building or interfere in any way with other occupants of the
Business Park or those having business with them.

 

6.Nothing shall be thrown by the Tenant, its clerks or servants, out of windows
or doors, or down the passages, elevator shafts or skylights of the Building.

 

7.No birds or animals shall be kept in or about the Premises of the Tenant nor
shall the Tenant operate, or permit to be operated, any musical or sound
producing instrument or device inside or outside the Premises which may be heard
outside the Premises which may interfere in any way with the quiet enjoyment of
other occupants of the Business Park.

 

8.Except in connection with the permitted uses including daycare and cafeteria,
no one shall use the Premises for sleeping apartments or residential purposes,
or for the storage of personal effects or articles other than those required for
business purposes.

 

9.The Landlord shall have the right to exclude or expel any pedlar (peddler) or
beggar at any time from the Premises.

 

10.The Tenant shall not cause any injury or damage to the Building or heating
and other appliances, or to any other premises or occupant within the Business
Park.

 

11.It shall be the duty of the Tenant to assist and co-operate with the Landlord
in preventing injury to the Premises.

 

12.No inflammable oils or other inflammable, dangerous or explosive materials
shall be kept on the outside of window sills or projections.

 

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13.Business machines, filing cabinets, heavy merchandise or other articles
liable to overload, injure or destroy any part of the Building shall not be
taken into it without the written consent of the Landlord and the Landlord shall
in all cases retain the right to prescribe the weight and proper position of all
such articles and the ways, means and times and routes for moving them into or
out of the Building; the cost of repairing any damage done to the Building by
such moving or by keeping any such articles on the Premises shall be paid by the
Tenant (save in respect of Insured Damage).

 

14.The Tenant shall not place any additional lock upon any door of the Building
without the written consent of the Landlord (except in the case of vaults or
other security areas which the Tenant may reasonably designate).

 

15.The Tenant shall give the Landlord prompt notice of any accident to or any
defect in the plumbing, heating, air-conditioning, mechanical or electrical
apparatus or any other part of the Building.

 

16.The parking of cars or bicycles in the Parking Facilities shall be subject to
the reasonable regulations of the Landlord or of those operating the same.

 

17.The Landlord shall have the right to make such other and further reasonable
rules and regulations, not inconsistent with the provisions of this Lease, as in
its reasonable judgment may from time to time be necessary for the safety, care,
cleanliness and appearance of the Premises in keeping with the existing
standards in and of the Premises, and for the preservation of good order
therein, and the same shall be kept and observed by the Tenant, its employees
and those for whom it is responsible at law.

 

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SCHEDULE “E”

 

Additional Provisions

 

1.Option to Renew

 

Provided the Tenant is not in default under any provision of this Lease and no
Transfer has occurred, then the Tenant, on giving written notice to the Landlord
not earlier than twelve (12) months, and not later than nine (9) months, prior
to the last day of the Term or renewal term, as applicable, will have the right
to renew this Lease for two (2) renewal terms of five (5) years upon the same
term and conditions as contained in this Lease, except for the annual Basic Rent
and the exercised right(s) of renewal. Such renewal term will commence on the
day immediately succeeding the last day of the Term or renewal term, as
applicable, and will end at midnight on the day immediately preceding the fifth
anniversary of the first day of the applicable renewal term, unless sooner
terminated in accordance with the provisions of this Lease. The annual Basic
Rent during such renewal term will be at the then current market rental rate for
the Premises including all leasehold improvements thereto, provided that the
annual Basic Rent will not be less than the annual Basic Rent payable during the
last completed Lease Year. Failing agreement by the parties on such current
market rental rate within three (3) months of the expiry of the Term or renewal
term, as applicable, such current market rental rate will be determined by the
arbitration, based on the criteria set out above, of one arbitrator under the
Commercial Arbitration Act (British Columbia), and amendments thereto, or any
like statute in effect from time to time, and the decision of such arbitrator
will be final and binding upon the parties. The costs of such arbitration will
be borne equally by the parties. Except as otherwise provided for herein, the
provisions of the said Commercial Arbitration Act will apply. Until the annual
Basic Rent has been determined as herein provided, the Tenant will continue to
pay the monthly instalments of annual Basic Rent payable before the commencement
of the applicable renewal term and upon such determination the Tenant will make
the appropriate adjustment payment, if any, to the Landlord.

 

2.Right of First Offer to Purchase

 

The Tenant shall have a right of first offer (the “ROFO”) with respect to any
proposed sale or transfer of the Lands and any improvements thereon
(collectively, the “Property”) by the Landlord during the Term of the Lease
(including any renewal terms), except that any sale or transfer of the Property
to London Life Insurance Company, Canada Life Assurance Company or The
Great-West Life Assurance Company or to an affiliate or subsidiary (as such
terms are defined in the Canada Business Corporations Act as at the date of this
Lease) of these entities or to any entity which is a client of GWL Realty
Advisors Inc. (“GWLRA”) as at the date of execution of this Lease and for whom
GWLRA acts as fund manager and representative, provided that GWLRA continues to
act as fund manager and representative of such new owner, will not have the
effect of triggering this ROFO. Concurrently with the execution of this Lease,
GWLRA will provide the Tenant with a list of GWLRA clients existing at the date
of execution of this Lease. The ROFO contained herein will be subject to the
following terms:.

 

(a)if at any time during the term of the Lease (or any renewal term), the
Landlord wishes to sell the Property, the Landlord will notify the Tenant in
writing (the “Notice”) that the Landlord proposes to sell or transfer the
Property;

 

(b)upon receipt of the Notice, the Tenant will have the right for twenty (20)
days thereafter (the “Offer Period”) to submit to the Landlord for its
consideration the first offer (the “Offer”) to purchase the Property (which
Offer must be in writing, be on an all cash basis and contemplate closing within
30 days after acceptance of the Offer);

 

 E-1 

 

  

(c)the Landlord will not solicit or accept any other offer to purchase the
Property prior to the expiry of the Offer Period;

 

(d)if the Tenant submits an Offer but the parties fail to reach a written,
binding and unconditional agreement with respect to the purchase and sale of the
Property within forty-five (45) days after receipt by the Landlord of the Offer
(the “Negotiating Period”), the Landlord will be entitled to sell the Property
to any third party for cash consideration that is equal to or greater than the
cash consideration proposed by the Tenant in the Offer. For greater certainty,
the Landlord will not provide incentives or benefits to any third party
purchaser where the provision of such incentives or benefits is not in the usual
course of comparable purchase and sale transactions and which inflates the cash
consideration that such third party is willing to pay for the Property to the
extent that without the provision of such incentives or benefits (and the
corresponding inflation of cash consideration) the third party transaction would
not quality hereunder as a permitted third party transaction; and

 

(e)if the Landlord fails to consummate the sale or transfer of the Property to a
third party within 240 days after the Negotiating Period, the Tenant’s right of
first offer will be deemed to be revived and any subsequent proposal to sell or
transfer the Property will be conducted in accordance with the foregoing
procedure,

 

3.Parking

 

The Landlord and the Tenant acknowledge and agree that the Tenant will be
entitled to park vehicles in any parking spaces, parking facilities or other
designated parking areas on the Lands throughout the Term and any renewal(s)
thereof at no additional cost to the Tenant.

 

4.Roof

 

The Landlord and the Tenant acknowledge and agree that the Tenant will be
entitled to use the roof of the Building during the Term and any renewal(s)
thereof at no additional cost to the Tenant, and, in particular, may install any
telecommunications equipment, cable, conduit, radio, antenna or other equipment
thereon (collectively, the “Equipment”). The size, configuration, and location
of the area or areas where the Equipment will be situated must be first approved
by the Landlord, which approval shall not be unreasonably withheld. The
Equipment may not be installed until detailed plans, specifications and working
drawings have been approved in writing by the Landlord. The Tenant will pay all
costs associated with the installation, operation and use of the Equipment
including, without limitation, the costs of utilities, property taxes, any
reconfiguration or relocation of the Equipment and the Landlord’s standard
administration or management fee.

 

 E-2