Exhibit 10.4 (b)

 

LANDLORD’S CONSENT TO SUBLEASE

 

THIS AGREEMENT made as of March 31, 2003.

 

B E T W E E N :

 

SMITH & NEPHEW INC.

 

(the “Tenant”)

 

- and -

 

CATALINA LIGHTING CANADA, (1992) INC.

 

(the “Subtenant”)

 

- and -

 

TAG QUATTRO INC.

 

(the “Landlord”)

 

RECITALS:

 

1.   By a lease dated November 6, 1997 (the “Lease”) between the Landlord and
the Tenant, the Landlord leased to the Tenant certain premises (the “Premises”)
comprising approximately 48,534 square feet in the building municipally known as
185 Courtney Park Drive, Mississauga, Ontario, as more particularly described in
the Lease, for a term of 10 years commencing on April 1, 1998 and ending on
March 31, 2008, both dates inclusive, subject to the Tenant observing and
performing all of the terms, covenants, conditions and provisions in the Lease
on the part of the Tenant to be observed and performed (the “Lease Covenants”);

 

2.   The Lease contains a covenant on the part of the Tenant not to assign the
Lease or sublet the whole or any part of the Premises without the Landlord’s
consent;

 

3.   Pursuant to a Sublease made as of March 31, 2003 (the “Sublease”) between
the Tenant and the Subtenant and attached as Schedule “A”, the Tenant has agreed
to sublease to the Subtenant and the Subtenant has agreed to sublease from the
Tenant the entire Premises, subject to obtaining the Landlord’s consent to such
sublease;

 

4.   The Landlord has agreed to grant its consent to the sublease evidenced by
the Sublease subject to and upon the terms and conditions set out in this
Agreement;

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements contained in this Agreement and other good and valuable
consideration (the receipt and

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sufficiency of which is hereby acknowledged by each of the parties), the parties
covenant and agree as follows:

 

1.   Landlord’s Consent

 

The Landlord hereby consents to the Tenant subleasing the Premises to the
Subtenant in accordance with the terms of the Sublease, subject to the following
terms and conditions:

 

  (a)   this consent does not in any way derogate from the rights of the
Landlord under the Lease nor operate to release the Tenant from its obligation
to observe and perform all of the Lease Covenants, and regardless of the
sublease from the Tenant to the Subtenant, the Tenant shall continue to remain
liable for all of the Lease Covenants during the balance of the term of the
Lease, as same may be renewed or extended in accordance with the terms of the
Lease. If the Subtenant is in default of any of the terms, covenants, conditions
and provisions in the Sublease on the part of the Subtenant to be observed and
performed (the “Sublease Covenants”), the Tenant shall exercise such of its
rights contained in the Sublease as are necessary in order to cure, or caused to
be cure, such default;

 

  (b)   any default by the Subtenant of the Sublease Covenants shall constitute
an Event of Default by the Tenant under the Lease entitling the Landlord to
exercise its rights and remedies contained in the Lease;

 

  (c)   this consent does not constitute a waiver of the necessity for obtaining
the Landlord’s consent to any further assignments or sublettings in accordance
with the provisions of the Lease;

 

  (d)   this consent is given upon the express understanding that the Tenant and
the Subtenant shall hereafter be jointly and severally responsible for and shall
indemnify, reimburse and hold harmless the Landlord from and against the
Landlord’s costs in connection with the preparation and negotiation of this
Agreement and any reasonable additional documentation relating to this
Agreement, the Landlord’s costs in investigating the Subtenant’s credit
worthiness, the Landlord’s legal costs in connection with this matter and the
cost to the Landlord of the time spent by its employees in connection with this
matter;

 

  (e)   by giving its consent pursuant to this Agreement, the Landlord does not
acknowledge or approve of any of the terms of the Sublease, except for the
actual sublease of the Premises to the Subtenant, and this consent does not
constitute a ratification of any of the terms of the Sublease, nor is it a
representation or warranty as to any of the matters contained in the Sublease,
and the Landlord is not bound or estopped by any of the provisions of the
Sublease. If any of the provisions contained in the Sublease are in conflict
with any of the provisions contained in the Lease, the applicable provisions of
the Lease shall prevail;

 

  (f)   the Subtenant shall not be entitled to enter into and take possession of
the Premises until it has delivered to the Landlord, in a form reasonably
satisfactory to the Landlord, certificates of insurance which show that the
Subtenant has taken out the policies of insurance which the Lease requires the
Tenant to take out and maintain and that such policies contain all of the
provisions and endorsements which the Lease requires, or, if required by the
Landlord or any mortgagee of the Landlord, certified

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copies of each such insurance policy;

 

  (g)   neither the Tenant nor the Subtenant shall be entitled to make any
Alterations in or to the Premises (even if contemplated by the Sublease) without
complying with the terms of section 9.04 of the Lease; and

 

  (h)   the Tenant and the Subtenant shall, at their expense, promptly execute
such further assurances with respect to the Premises as the Landlord reasonably
requires from time to time.

 

The Tenant and the Subtenant acknowledge and agree with all of the foregoing
terms and conditions.

 

2.   Use

 

Notwithstanding the uses which may be made of the Premises as described in the
“Basic Provisions” of the Lease, the parties agree that the Subtenant shall be
entitled to use the Premises for the supply and distribution of lighting
supplies and other dry consumer goods or any other industrial or commercial uses
as are permitted by all applicable laws..

 

3.   Subtenant’s Lease Covenants

 

(a)   The Subtenant hereby covenants and agrees with the Landlord that:

 

  (i)   it will at all times during the term of the Sublease observe and perform
all of the Lease Covenants (save and except for those contained in sections
10.01 (insofar as it relates to the uses which may be made of the Premises as
described in the “Basic Provisions” of the Lease), 11.01(a)(iii) and
11.01(a)(vi) of the Lease) and all of the terms, covenants, conditions and
provisions in the Sublease on its part to be observed and performed (the
“Sublease Lease Covenants”). The Subtenant shall pay all rent payable under the
Sublease directly to the Landlord and the Tenant hereby directs the Subtenant to
make such payments to the Landlord. The Landlord shall (A) apply all monies so
received from the Subtenant against the Rent payable by the Tenant to the
Landlord under the Lease; and (B) if the Subtenant fails to pay such rent or is
otherwise in default of its obligations under this Agreement, use its reasonable
best efforts to give the Tenant a copy of any default notice which the Landlord
provides to the Subtenant at the same time that it provides such default notice
to the Subtenant;

 

  (ii)   it will indemnify and save harmless the Landlord from all claims,
damages, losses, liabilities, demands, suits, judgments, causes of action, legal
proceedings, penalties or other sanctions and any and all costs and expenses
arising in connection therewith, including, without limitation, legal fees and
disbursements on a solicitor and his own client basis (including, without
limitation, all such legal fees and disbursements in connection with any and all
appeals) for and in respect of any failure to observe and perform the
obligations contained in section 3(a)(i);

 

  (iii)   it has received a copy of the executed Lease and is familiar with and
understands all of the terms of the Lease; and

 

  (iv)  

it hereby grants the Landlord a security interest in all of its Collateral (as
that term is defined in section 20.08 of the Lease) on the same terms and
conditions as contained in section 20.08 of the Lease and as if such provisions
were set out in full in this

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Agreement.

 

(b) The Subtenant hereby waives the benefit of sections 21 and section 39(2) of
the Commercial Tenancies Act and acknowledges and agrees that, subject to
section 3(c), upon the surrender, release, disclaimer or other termination of
the Lease, the Sublease will automatically expire and the Subtenant will have no
further rights in or to the Premises.

 

(c) If the Lease is terminated (unless due or otherwise attributable to a
default by the Subtenant under the Sublease), surrendered or disclaimed and if
there is not an outstanding Event of Default as defined in the lease made as of
March 19, 1998, between the Subtenant, as tenant, and the Landlord pursuant to
which the Subtenant leases other premises in the Building from the Landlord,
then: (i) the Subtenant will rectify all existing defaults under the Lease (to
the extent that the Tenant is responsible for same pursuant to the terms of this
Agreement); and (ii) the Landlord and the Subtenant shall be deemed to have
entered into a new lease for the Premises commencing on the date that the Lease
is terminated, surrendered or disclaimed and continuing for the balance of the
term of the Lease (as if it had not been terminated, surrendered or disclaimed)
and otherwise on the same terms mutatis mutandis as the Lease and which new
lease shall be deemed to contain the Subtenant’s covenant contained in section
3(c)(i). The Landlord may require the Subtenant to enter into such a new lease
with the Landlord and the Subtenant shall do so within 10 business days
following receipt of same from the Landlord, failing which the Subtenant shall
be in default of such deemed new lease.

 

4.   Representations

 

The Tenant and the Subtenant represent and warrant to the Landlord that the
Subtenant is not, directly or indirectly, paying any rent, fee or any other
consideration in any form whatsoever to the Tenant in connection with the
subleasing of the Premises to the Subtenant, except as set out in the Sublease.

 

5.   Extension of Subtenant’s Occupation

 

(a) Notwithstanding the fact that the term of the Sublease will expire on March
30, 2008, the parties agree that the Subtenant shall remain in occupation of the
Premises until and including June 30, 2008, as a direct tenant of the Landlord
on the same terms and conditions as those contained in the Lease (save and
except for the permitted use of the Premises, which shall be as set out in
section 2, and the provisions of sections 11.01(a)(iii) and 11.01(a)(vi) of the
Lease), with appropriate changes to substitute the Subtenant in place of the
Tenant. The Landlord agrees that the Tenant shall not be responsible for
anything relating to the Premises arising following the expiry of the Lease,
but, for greater certainty, this provision shall not relieve the Tenant from its
obligations to observe and perform the Lease Covenants.

 

(b) In light of the provisions of section 5(a), the Tenant agrees that it shall
not exercise its rights to extend the term of the Lease, which rights shall be
deemed to be deleted from the Lease.

 

6.   Right to Extend

 

The Landlord and the Subtenant acknowledge and agree as follows:

 

  (a)   they are parties to a lease made as of March 19, 1998, as amended by a
Lease Amending Agreement made as of March 19, 1998 among the Subtenant, Catalina
Lighting Inc. and the Landlord (collectively, the “Catalina Lease”), pursuant to
which the Subtenant leases the balance of the Building from the Landlord (such
premises being called the “Catalina Premises”);

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  (b)   the Catalina Lease contains an option (the “Extension Option”) allowing
the Subtenant to elect to extend the term of the Catalina Lease for a further
period of 5 years (the “Extended Term”) on the terms contained in the Extension
Option;

 

  (c)   if the Subtenant validly exercises the Extension Option in accordance
with the terms of the Catalina Lease, then:

 

  (i)   in determining the minimum rent payable by the Subtenant during the
Extended Term in accordance with the terms of the Extension Option, the premises
being leased under the Catalina Lease during the Extended Term will be deemed to
comprise the entire Building and such minimum rent shall not be less than $5.74
per square foot of the area of the Building; and

 

  (ii)   the Catalina Lease shall be deemed to be amended effective July 1,
2008, as follows:

 

  (A)   the Catalina Premises shall be deemed to be expanded so as to comprise
the whole of the Building; and

 

  (B)   the Subtenant’s Proportionate Share (as defined in the Catalina Lease)
shall be deemed to be 100%.

 

7.   Tenant’s Termination Right

 

The Tenant agrees that it shall not exercise its right to terminate the Lease as
set out in section 3.04 of the Lease provided that the Subtenant is not in
default of its obligations under the Sublease on or prior to August 31, 2005.

 

8.   General Contract Provisions

 

(a) Recitals—Each of the parties represents and warrants to each of the others
that the recitals set out above are true and correct in substance and fact, as
each such recital relates to each party, and are incorporated as an integral
part of this Agreement.

 

(b) Entire Agreement—This Agreement, and all documents referred to in this
Agreement, constitutes the entire agreement between the parties pertaining to
the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no representations, warranties or other agreements, whether
oral or written, between the parties in connection with the subject matter of
this Agreement except as specifically set out in this Agreement. No amendment,
supplement, modification, waiver or termination of this Agreement shall be
binding on the parties unless same is in writing and signed by all of the
parties.

 

(c) References to Articles—Any reference to a section or Schedule in this
Agreement shall be deemed a reference to the applicable Article, section or
Schedule contained in or attached to this Agreement and to no other agreement or
document unless specific reference is made to such other agreement or document.

 

(d) Applicable Law—This Agreement shall be construed in accordance with the laws
of the Province of Ontario (other than Ontario principles of conflicts of law)
and the laws of Canada applicable in the Province of Ontario and shall be
treated in all respects as an Ontario contract. All disputes arising

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out of or in connection with or in relation to this Agreement shall be submitted
to the jurisdiction of the courts of the province of Ontario which shall have
exclusive jurisdiction over any such dispute. Each of the parties irrevocably
attorns to the jurisdiction of the courts of the Province of Ontario.

 

(e) Notice—Any notice or other communication required or permitted to be given
by this Agreement shall be in writing and shall be effectively given if (i)
delivered personally; (ii) sent by prepaid courier service; (iii) sent by
registered mail; or (iv) sent by prepaid fax, telex or other similar means of
electronic communication, in the case of notice to:

 

  (A)   the Tenant, at: 4707 Levy Street, St. Laurent, Quebec H4R 2P9

 

Attention: Feroz Kassam

Fax No. 514-956-1431

 

  (B)   the Subtenant, at: the Premises

 

Attention: Andre Gougeon

Fax No. 905-795-2977

 

together with a copy to: Catalina Lighting, Inc., 18191 N.W. 68th Avenue, Miami,
Florida 33015

 

Attention: Stephen G. Marble

 

  (C)   the Landlord, at: 3700 Steeles Avenue West, Suite 600, Vaughan, Ontario
L4L 8K8

 

Attention: Aldo Gottardo

Fax No. 905-761-6588

 

or at such other address as the party to whom such notice or other communication
is to be given shall have advised the party giving same in the manner provided
in this section. Any notice or other communication delivered personally or by
prepaid courier service shall be deemed to have been given and received on the
day it is so delivered at such address, provided that if such day is not a
Business Day such notice or other communication shall be deemed to have been
given and received on the next following Business Day. Any notice or other
communication sent by registered mail shall be deemed to have been given and
received on the third Business Day following the date of mailing. Any notice or
other communication transmitted by fax, telex or other similar form of
electronic communication shall be deemed given and received on the day of its
transmission provided that such day is a Business Day and such transmission is
completed before 5:00 p.m. on such day, failing which such notice or other
communication shall be deemed given and received on the first Business Day after
its transmission. Regardless of the foregoing, if there is a mail stoppage or
labour dispute or threatened labour dispute which has affected or could affect
normal mail delivery by Canada Post, then no notice or other communication may
be delivered by registered mail.

 

(f) Counterparts and Execution by Fax—This Agreement may be executed by the
parties in separate counterparts each of which when so executed and delivered to
all of the parties shall be deemed to be and shall be read as a single agreement
among the parties. In addition, execution of this Agreement by any of the
parties may be evidenced by way of a faxed transmission of such party’s
signature (which signature may be by separate counterpart), or a photocopy of
such faxed transmission, and such faxed signature, or photocopy of such faxed
signature, shall be deemed to constitute the original signature of such party to
this Agreement.

 

(g) Binding Effect—This Agreement shall enure to the benefit of and shall be
binding upon the parties and their respective successors and permitted assigns.

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IN WITNESS WHEREOF the parties have executed this Agreement on the date first
set out on the first page of this Agreement.

 

SMITH & NEPHEW INC.

 

CATALINA LIGHTING CANADA, (1992) INC.

Per:_/s/ Teresa Mattarelli

 

Per: /s/ Stephen G. Marble

Name: Teresa Mattarelli

 

Name: Stephen G. Marble

Title: Business Unit Manager

 

Title: V.P.

Per: /s/ Sandra Broccoli

               

Name: Sandra Broccoli

         

Name:

   

Title: Corporate Secretary

         

Title:

               

TAG QUATTRO INC.

           

Per: Illegible

           

Name:

 

Illegible

               

Title:

 

CEO