exv10w14



 








Exhibit 10.14



MEMORANDUM OF LEASE AGREEMENT made effective the 1st day of July, 2005.



BETWEEN:




THE WESTAIM CORPORATION

(hereinafter referred to as the “Lessor”)




-and-




NUCRYST PHARMACEUTICALS CORP.

(hereinafter referred to as the “Lessee”)




GRANT OF LEASE




     IN CONSIDERATION of the rents, covenants and agreements hereinafter reserved and
contained, the following constitutes a lease between the Parties of the Leased Premises in the
Buildings located on the Lands, on the terms and subject to the covenants and agreements of the
Parties hereinafter set out.



	 	 	 	 	 	 	 
	ARTICLE 1	 	— INTENT OF LEASE
	 
	 	 	 	 	 	 
	1.1	 	It is the intent of this Lease and agreed to by both Parties that all and every cost,
expense, rate, tax or charge in any way related to the Leased Premises and to the
Lessee’s share of Operating Costs (all as hereinafter defined) will be borne by the
Lessee without any variation, set-off, or deduction whatsoever, except as herein
expressly set out to the contrary.
	 
	 	 	 	 	 	 
	ARTICLE 2	 	— BASIC TERMS, SCHEDULES AND DEFINITIONS
	 
	 	 	 	 	 	 
	2.1	 	Basic Terms
	 
	 	 	 	 	 	 
	 

	 	(a)
	 	(i)
	 	Lessor:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	The Westaim Corporation
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Address of Lessor:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	The Westaim Corporation
	 

	 	 	 	 	 	10102-114 Street
	 

	 	 	 	 	 	Fort Saskatchewan, Alberta
	 

	 	 	 	 	 	Canada T8L 3W4












 






Page 2


	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Attention: Legal Services
	 

	 	 	 	 	 	Fax: 780-992-5301
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	The Westaim Corporation
	 

	 	 	 	 	 	1010, 144-4th Avenue S.W.
	 

	 	 	 	 	 	Calgary, Alberta T2P 3N4
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Attention: Chief Financial Officer
	 

	 	 	 	 	 	Fax:403-237-8181
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	(i)
	 	Lessee:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Nucryst Pharmaceuticals Corp.
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Address of Lessee:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Nucryst Pharmaceuticals Corp.
	 

	 	 	 	 	 	10102-114 Street 
	 

	 	 	 	 	 	Fort Saskatchewan, Alberta

Canada T8L 3W4
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Attention: Vice-President Operations
	 

	 	 	 	 	 	Fax: 780-992-5501
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Nucryst Pharmaceuticals Corp.
	 

	 	 	 	 	 	Suite B, 50 Audubon Road
	 

	 	 	 	 	 	Wakefield, Massachusetts 01880
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Attention: President
	 

	 	 	 	 	 	Attention: Vice-President Finance and Administration
	 

	 	 	 	 	 	Fax:781-246-6012
	 
	 	 	 	 	 	 
	 	 	(c)	 	Leased Premises: approximately 62,684 square feet of space in the MMC Building, as shown
cross-hatched in red on Schedules “A-2”, “A-3”, “A-4” and “A- 5” and approximately 7,854
square feet of space in the R&D/AIMS I Building, as shown shaded in green on Schedule “A-1”
	 
	 	 	 	 	 	 
	 	 	(d)	 	Address of Leased Premises:
	 
	 	 	 	 	 	 
	 	 	 	 	10102-114 Street,
	 	 	 	 	Fort Saskatchewan, Alberta
	 	 	 	 	T8L 3W4












 




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	 	(e)
	 	(i)
	 	Term:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	For the Leased Premises located in the MMC Building, the Term shall be ten
(10) years commencing on July 1, 2005 and ending on June 30, 2015, together
with any extensions in accordance with the terms of this Lease.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	For the Leased Premises located in the R&D/AIMS I Building, the Term shall
be five (5) years commencing on July 1, 2005 and ending on June 30, 2010,
together with any extensions in accordance with the terms of this Lease.
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Commencement Date: July 1, 2005
	 
	 	 	 	 	 	 
	 	 	(f)	 	Basic Rent:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	$521,530.88 per annum (calculated based on $8.32 per square
foot of Floor Area of the Leased Premises in the MMC Building per annum), to
be paid in advance in equal monthly installments on the first day of each
month.
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	$39,270.00 per annum (calculated based on $5.00 per square foot
of Floor Area of the Leased Premises in the R&D/AIMS I Building per annum), to
be paid in advance in equal monthly installments on the first day of each
month.
	 
	 	 	 	 	 	 
	 	 	(g)	 	Lands: lands legally described as Lot 3 Plan 912 0267 and Lot 49 Block 1 Plan
042 4648.






     The foregoing Basic Terms are hereby approved by the Parties and each reference in this Lease
to any of the Basic Terms shall be construed to include the provisions set forth above as well as
all of the additional terms and conditions of the applicable sections of this Lease where such
Basic Terms are more fully set forth.




	2.2	 	Schedules





     All schedules to this Lease are incorporated into and form an integral part of this Lease.
The schedules are as follows:



	 	 	 	 	 
	 

	 	Schedules “A-1” through “A-7” -
	 	Diagrams showing the Leased Premises
and Reserved Parking Stalls
	 
	 	 	 	 
	 

	 	Schedule “B-1” through “B-3”
	 	Diagrams showing the MMC Building, the
R&D/AIMS I Building and the Complex
Common Facilities












 




Page 4


	 	 	 	 	 
	 

	 	Schedule “C”
	 	List of tenant’s fixtures and leasehold
improvements which the Lessee can
remove upon termination of the Lease
	 
	 	 	 	 
	 

	 	Schedule “D”
	 	Definitions







	2.3	 	Definitions





     In this Lease, the words, phrases and expressions set forth in Schedule “D” are used with the
meanings defined therein. The definitions contained in Schedule “D” are not exhaustive of the
defined terms or expressions used in this Lease and other terms or expressions may be defined
throughout this Agreement.



ARTICLE 3 — GRANT OF LEASE





	3.1	 	Demise





     The Lessor, being registered and beneficial owner of the Lands as legally described in
Section 2.1(g) and the Building, subject, however, to such mortgages and encumbrances as are
registered against title thereto as of the date hereof, does hereby lease to the Lessee, the
Leased Premises for the Term and upon and subject to the covenants and conditions hereinafter
expressed.



ARTICLE 4 — TERM, COMMENCEMENT AND EXTENSION OF TERM





	4.1	 	Term





     The Term of this Lease shall be for the period set out in Section 2.1(e)(i), beginning on the
Commencement Date set out in Section 2.1(e)(ii), subject to extension as set forth in Section 4.4
of this Lease.




	4.2	 	Overholding





     If the Lessee remains in possession of the Leased Premises after the expiration or termination
of the Term (or any renewal or extension thereof) without objection by the Lessor and without any
written agreement otherwise providing, then the Lessee shall be deemed to be a tenant from month to
month, except that the monthly payments of Basic Rent shall be equal to one hundred and twenty
(120%) percent of the monthly Basic Rent payable immediately prior to expiration or termination,
and subject otherwise to all of the provisions of this Lease which shall be read with such changes
as are appropriate to a monthly tenancy. This provision shall not authorize the Lessee to so
overhold where the Lessor has objected to such overholding or has required the Lessee to vacate the
Leased Premises.









 



Page 5



	4.3	 	Surrender on Termination





     Upon the expiration of the Term or sooner termination of this Lease pursuant to any provision
hereof, the Lessee:




	 	(a)	 	shall vacate and surrender up to the Lessor the Leased Premises in accordance
with all the requirements of this Lease;
	 
	 	(b)	 	may remove all tenant’s fixtures installed on the Leased Premises which are
listed in Schedule C attached hereto and such other tenant’s fixtures or leasehold
improvements installed on the Leased Premises which the Lessor has expressly agreed
in writing may be removed upon termination together with such unattached
equipment, unattached furnishings and unattached contents which are the personal
property of the Lessee (and not otherwise), and shall in any event remove any permitted
identification signs or fixtures and such tenant’s fixtures, equipment, furnishings
and contents and also all leasehold improvements installed by the Lessee if
and to the extent required to do so by the Lessor, and shall pay to the Lessor on
demand the cost of removal of any permitted identification signs or fixtures and all
tenant’s fixtures, furnishings, contents and leasehold improvements which the Lessee
shall have failed to remove in accordance with any requirements of the Lessor or before
the expiration or sooner termination of this Lease, and the Lessee shall make good all
damage to the Leased Premises and to any heating, ventilating, air
conditioning and utility systems serving the Leased Premises caused by the removal
thereof and failing which shall pay to the Lessor all cost and expense incurred by the
Lessor in making good such damage or restoration; and
	 
	 	(c)	 	shall leave the Leased Premises in such a state of repair and condition as
shall comply in all respects with the provisions of this Lease, subject to reasonable
wear and tear.






	4.4	 	Extension of Term






	 	(a)	 	Provided that the Lessee is not in default under this Lease at the time it
gives notice to the Lessor of the Lessee’s intention to extend the initial Term of this
Lease with respect to the MMC Building and/or the R&D/AIMS I Building, the Lessor
shall, at the expiration of the applicable Term, upon request in writing by the Lessee
delivered to the Lessor at least six (6) months but not more than twelve (12) months
prior to the expiration of the applicable Term, grant to the Lessee a right to extend
the initial Term for a further term of five (5) years (the “First Renewal Term”) from
the expiration of the initial Term upon the same terms and conditions as contained in
this Lease except as to the inclusion of this clause 4.4(a) and except as to the amount
of Basic Rent payable during the First Renewal Term which shall be equal to the Fair
Market Value of the Basic Rent, as mutually agreed between the parties or, failing such
agreement, as determined by arbitration, provided always that, in no event shall such
Fair Market Value of the Basic Rent be less than an amount calculated as follows:










 





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	Basic Rent during
Term     x
	 	 
	 	CPI at End of Term
	 

	
	 	 
	 	 
	 

	

	 	 
	 	Alberta CPI at Commencement Date







	 	(b)	 	Provided that the Lessee is not in default under this Lease at the time it
gives notice to the Lessor of the Lessee’s intention to extend the First Renewal Term
with respect to the MMC Building and/or the R&D/AIMS I Building, as the case may be,
the Lessor shall, at the expiration of the applicable First Renewal Term, upon request
in writing by the Lessee delivered to the Lessor at least six (6) months but not more
than twelve (12) months prior to the expiration of the applicable First Renewal Term,
grant to the Lessee a right to extend the applicable First Renewal Term for a further
term of five (5) years (the “Second Renewal Term”) from the expiration of the
applicable First Renewal Term upon the same terms and conditions as contained in this
Lease except as to the inclusion of clauses 4.4 (a) and 4.4 (b) and except as to the
amount of Basic Rent payable during the Second Renewal Term which shall be equal to the
Fair Market Value of the Basic Rent, as mutually agreed between the parties or, failing
such agreement, as determined by arbitration, provided always that, in no event shall
such Fair Market Value of the Basic Rent be less than an amount calculated as follows:





	 	 	 	 	 	 	 
	 

	Basic Rent in First Renewal Term     x
	 	 
	 	CPI at End of Term
	 

	
	 	 
	 	 
	 

	
	 	 
	 	CPI at commencement date of
First Renewal Term







	 	(c)	 	Provided that the Lessee is not in default under this Lease at the time it
gives notice to the Lessor of the Lessee’s intention to extend the Second Renewal Term
with respect to the R&D/AIMS I Building (but not the MMC Building), the Lessor shall,
at the expiration of the Second Renewal Term with respect to the R&D/AIMS I Building,
upon request in writing by the Lessee delivered to the Lessor at least six (6) months
but not more than twelve (12) months prior to the expiration of the Second Renewal Term
for the R&D/AIMS I Building, grant to the Lessee a right to extend the Second Renewal
Term for the R&D/AIMS I Building for a further term of five (5) years (the “Third
Renewal Term”) from the expiration of the Second Renewal Term upon the same terms and
conditions as contained in this Lease except as to the inclusion of this clause 4.4(b)
and except as to the amount of Basic Rent payable during the Third Renewal Term which
shall be equal to the Fair Market Value of the Basic Rent, as mutually agreed between
the parties or, failing such agreement, as determined by arbitration, provided always
that, in no event shall such Fair Market Value of the Basic Rent be less than an amount
calculated as follows:





	 	 	 	 	 	 	 
	 

	Basic Rent in Second Renewal
Term     x
	 	 
	 	CPI at End of Term
	 

	
	 	 
	 	 
	 

	
	 	 
	 	CPI at commencement date of Second Renewal
Term





(d) Notwithstanding anything contained in clause 4.4 (a), (b) or (c) above, the Lessee shall not be
entitled to extend the First Renewal Term or the Second Renewal Term for the R&D/AIMS I Building
unless it concurrently extends the Term for the Leased Premises in the MMC Building so










 



Page 7



that the Term applicable to the Leased Premises in the R&D/AIMS I Building and the Term applicable
to the Leased Premises in the R&D/AIMS I Building expire concurrently.





	4.5	 	Lease Option





     In consideration of the Lessee entering into this Agreement and agreeing to lease the
Leased Premises upon the terms and conditions herein, and in consideration of the sum of ONE
DOLLAR ($1.00) now paid by the Lessee to the Lessor (the receipt and sufficiency of which is
hereby acknowledged by the Lessor), the Lessor hereby grants to the Lessee the sole, exclusive
and irrevocable option to lease additional space in the Building located on the Lands (either en
bloc or as individual, discrete parcels, as the case may be) from time to time upon the terms
and conditions herein.




	 	(a)	 	From time to time, in the event that the Lessor determines to attempt to lease
any unleased space in the Building located on the Lands to a third party (“the Unleased
Space”), the Lessor shall first provide written notice to the Lessee that it intends to
attempt to lease such Unleased Space (the “Lessor’s Notice”). In addition, from time
to time, in the event that the Lessee determines that it wishes to lease any Unleased
Space, it may do so by written election to the Lessor as outlined herein;
	 
	 	(b)	 	Within fifteen (15) days after a Lessor’s Notice, or from time to time as the
Lessee shall determine, the Lessee has the option (the “Lease Option”) to lease the
Unleased Space, or portion or portions thereof (such Unleased Space or portion thereof
being referred to as the “Option Additional Space” once it is the subject of a Lease
Option which has been exercised by the Lessee), from the Lessor upon the following
terms and conditions:






	 	(i)	 	any exercise of the Lease Option shall be unconditional;
	 
	 	(ii)	 	the lease rate for basic rent of space leased to the Lessee
by virtue of the Lease Option shall be equal to the fair market value of the
Basic Rent on a triple net basis, as mutually agreed between the Lessor and
the Lessee or, failing such agreement, as determined by arbitration, provided
always that, in no event shall such fair market value of Basic Rent be less
than the then current Basic Rent for the Leased Premises in the MMC Building
or in the R&D/AIMS I Building, as the case may be, (on a per square foot
basis) plus an additional amount required to be paid to the Lessor to enable
it to fully recover its Capital Improvement Costs over the term for the
Option Additional Space;
	 
	 	(iii)	 	all rent shall be payable monthly, in advance;
	 
	 	(iv)	 	the term for the Option Additional Space shall be the same as
the Term remaining for the Leased Premises at the time of exercise of the
Lease Option. In the event that the time remaining under the Term for the
Option Additional Space is, or will be, shorter than five years from the date
of possession of the said Option Additional Space, then, notwithstanding
anything else contained in this Lease (and in particular










 



Page 8


	 	 	 	the time limits contained in the renewal option provisions in section 4.4
hereof) but subject always to section 4.4(a) hereof, concurrently with its
exercise of the Lease Option, the Lessee shall have the right to exercise
the next renewal option for the MMC Building pursuant to section 4.4
hereof;
	 
	 	(v)	 	the possession date shall be ninety (90) days from the
date of exercise of the Lease Option by the Lessee.






	 	(c)	 	Upon any exercise of the Lease Option as aforesaid, the Lessee shall be bound
to lease the Option Additional Space, or portion thereof, from the Lessee and the
Lessor shall be bound to lease the Option Additional Space, or portion thereof, to the
Lessor at the price and upon the terms mentioned above, and otherwise subject to the
specific terms and provisions, mutatis mutandis, of this Lease.
	 
	 	(d)	 	If, after a Lessor’s Notice, the Lessee does not exercise its Lease Option with
respect to Unleased Space, or portion thereof, as identified in the Lessor’s Notice
within fifteen (15) days from the date of receipt such Lessor’s Notice from the Lessor,
then the Lessee shall be deemed to have declined to exercise its Lease Option with
respect to the Unleased Space and the Lessor shall be shall be free to proceed to lease
the Unleased Space, or portion thereof, to any third party or parties, provided always
that, in the event that the Lessor does not enter into an agreement to lease the
Unleased Space or a portion thereof within 180 days following the earlier of the expiry
of the said fifteen time day period date or the date that the Lessee provides notice
that it will not exercise its Lease Option with respect to the Unleased Space, the
Lessor shall be required to again comply with the provisions of subsections 4.5 (a) to
(c) hereof, inclusive.
	 
	 	(e)	 	Notwithstanding anything else contained herein, the provisions of this Lease
Option shall have no application to any leases, rentals, licenses or other
possessory interests that the Lessor grants or intends to grant to any related or
affiliated party.




The Lease Option shall expire on July 1, 2019.





	4.6	 	Construction Option





     From time to time, provided that the Lessee is not in default under this Lease, the Lessee
may give notice to the Lessor of the Lessee’s requirement that additional space be made available
to the Lessee by construction of an expansion to the Building (such expansion from time to time
being referred to as the “Expansion Additional Space”), whereupon the Lessor and the Lessee shall:




	 	(a)	 	commence, conduct and continue good faith negotiations to attempt to agree upon
the expansion of the Building (the “Building Expansion”) as reasonably required by the
Lessee for permitted use to allow for the construction, fixturing, equipment and
utility installation and finishing of the Expansion Additional Space to meet the
requirements and purposes reasonably required by the Lessee in










 



Page 9


	 	 	 	accordance with standards and specifications reasonably required by the Lessee (the
“Lessee Expansion Requirements”) and the timing of such expansion;
	 
	 	(b)	 	upon agreement between the Lessee and the Lessor respecting the Building
Expansion and the Lessee’s Expansion Requirements, the Lessor shall proceed with the
application for all permits necessary for the construction of the Building Expansion and
the Expansion Additional Space (the “Permits”);
	 
	 	(c)	 	in the event that the applications by the Lessor for the Permits results in any
changes to the Building Expansion or the Expansion Additional Space, then, prior to
proceeding with construction, the Lessor shall obtain the consent of the Lessee to such
changes, which consent shall not be unreasonably withheld;
	 
	 	(d)	 	after issuance of the necessary development and building permits for the
construction of the Building Expansion and the Expansion Additional Space, the Lessor
shall construct the Building Expansion and the Expansion Additional Space and all
fixturing, finishing, equipment and utility installations contemplated by the Lessee
Expansion Requirements, all in accordance with applicable Governmental Requirements;
	 
	 	(e)	 	possession of the Expansion Additional Space shall be granted to the Lessee upon
substantial completion thereof and the Lessee’s obligation to make payment of basic
rent and additional rent for the Expansion Additional Space shall commence upon such
substantial completion;
	 
	 	(f)	 	in the event that there are any conflicts with the Lessee Expansion Requirements
and any applicable Governmental Requirements relating to the Lessee
Expansion Requirements, the said Governmental Requirements shall supersede and govern
and the Lessee Expansion Requirements shall be deemed to be amended accordingly;
	 
	 	(g)	 	upon completion of the Expansion Additional Space, the term for the Expansion
Additional Space shall be the same as the Term remaining for the Leased Premises at the
time of exercise of possession of the Expansion Additional Space being given to the
Lessee. In the event that the time remaining under the Term is, or will be, shorter than
five years from the date of possession of the Expansion Additional Space, then,
notwithstanding anything else contained in this Lease (and in particular the time limits
contained in the renewal option provisions in section 4.4 hereof) but subject always to
section 4.4(d) hereof, concurrently with its exercise of the Construction Option, the
Lessee shall have the right to exercise the next applicable renewal option pursuant to
section 4.4 hereof;
	 
	 	(h)	 	the basic rent for such Expansion Additional Space shall be equal to the fair
market value of basic rent on a triple net basis, as mutually agreed between the parties
or, failing such agreement, as determined by arbitration, provided always that, in no
event shall such fair market value of basic rent be less than an amount required to be
paid to the Lessor to enable it to fully recover its Construction Costs over the
remaining Term (without consideration of any renewals);










 




Page 10


	 	(i)	 	in the event that development and building permits are not issued for the
construction of the Building Expansion and the Expansion Additional Space as both the
Lessor and the Lessee agree, then the Lessee hereby agrees that it does fully and
completely indemnify the Lessor from any and all of its Planning Costs incurred. The
Lessor agrees to make payment to the Lessee of such Planning Costs within ten days
from the date that the Lessor invoices the Lessee for such costs. In default of such
payment, the Lessee agrees to pay interest to the Lessor on the outstanding amount of
such Planning Costs at the rate of 18% per annum until paid.




The Construction Option shall expire on July 1, 2019.





	4.7	 	Amendments to Lease Resulting From Additional Space





     Upon the Lessee being obligated respecting any Additional Space in accordance with the terms
and provisions hereof, all terms and provisions hereof shall be deemed to be automatically amended
as may be required to give full force and effect to the provisions of sections 4.5 and 4.6 hereof.
Without limitation, the Leased Premises shall be deemed to include the Additional Space and the
requirements for payment of Basic Rent and Additional Rent shall be deemed to include the
requirement for payment of the basic rent and additional rent for such Additional Space.



ARTICLE 5  — RENT





	5.1	 	Basic Rent





     The Lessee shall pay to the Lessor yearly and every year during the Term, the total of Basic
Rent in lawful money of Canada in the sum of $560,800.88 payable by equal monthly installments in
the sum of $46,733.41 each, commencing on the Commencement Date and payable on the first day of
each and every month thereafter during the Term herein granted. For certainty and clarification,
the total amount of Basic Rent is the aggregate of Basic Rent for the Leased Premises in the MMC
Building and the Basic Rent for the Leased Premises in the R&D/AIMS I Building and is calculated
as follows: the sum of $521,530.88 per annum ($43,460.91 per month) which is calculated at the
rate of $8.32 per square foot of the Floor Area of 62,684 square feet of the Leased Premises in
the MMC Building and $39,270.00 per annum ($3,272.50 per month) which is calculated at the rate of
$5.00 per square foot of the Floor Area of 7,854 square feet of the Leased Premises in the
R&D/AIMS I Building.




	5.2	 	Additional Rent





     The Lessee shall pay to the Lessor in addition to Basic Rent, all other amounts which shall
become due and payable from time to time under any provision of this Lease (including without
limitation amounts which become due and payable pursuant to Article 13), and each of which amounts
so payable shall be deemed to be rent, recoverable as such, and when in default all remedies of the
Lessor for non-payment of rent shall be applicable thereto. Such amounts are referred to herein as
Additional Rent.









 



Page 11



	5.3	 	Pro Rata Adjustment of Rent





     All rent shall be deemed to accrue from day to day, and if for any reason it shall become
necessary to calculate rent for irregular periods of less than one (1) year or one (1) month, as
the case may be, an appropriate pro rata adjustment shall be made in order to calculate rent for
such irregular period.




	5.4	 	Manner and Place of Payment





     All rents, including Basic Rent and Additional Rent, payable by the Lessee to the Lessor
under this Lease and all other payments of whatsoever nature required or contemplated by this
Lease to be paid by the Lessee to the Lessor shall be:




	 	(a)	 	paid to the Lessor by the Lessee in Canadian dollars;
	 
	 	(b)	 	paid to the Lessor at the address noted in Section 2.1(a)(ii), or such other
places as the Lessor may designate in writing from time to time;
	 
	 	(c)	 	made when due hereunder, without prior demand thereof and without any setoff,
compensation or deduction whatsoever;
	 
	 	(d)	 	applied towards amounts then outstanding hereunder in such manner as the Lessor
may, in its discretion, see fit, and without restricting the generality of the
foregoing, the acceptance by the Lessor of any amount less than the full amount which
is due and owing by the Lessee shall not constitute an accord and satisfaction or
otherwise oblige the Lessor to accept in full settlement, anything less than the full
amount owing and outstanding at any time;
	 
	 	(e)	 	deemed to be rent, in partial consideration for which this Lease has been
entered into, and shall be payable and recoverable as rent, such that the Lessor shall
have all rights and remedies against the Lessee for default in making any such payment
which may not be expressly said to be rent as the Lessor has for default in payment in
rent.






	5.5	 	Interest on Arrears





     Whenever the Lessee shall fail to pay any rent or other amount owing to the Lessor under this
Lease or any installment thereof when due, or shall pay an amount which is thereafter determined,
estimated or found to be less than the amount properly due, the Lessee shall pay interest at a rate
of eighteen (18%) percent per annum, compounded monthly on the unpaid amount of deficiency, from
the date it was properly due until paid.









 



Page 12


ARTICLE 6 — GENERAL COVENANTS





	6.1	 	Covenants of the Lessor





     The Lessor covenants with the Lessee for quiet enjoyment of the Leased Premises and the
rights appurtenant thereto, subject to the provisions of this Lease, and to observe and perform
all the covenants and provisions of this Lease on its part to be observed and performed.




	6.2	 	Covenants of the Lessee





     The Lessee covenants with the Lessor to pay rent, and to observe and perform all the
covenants and provisions of this Lease on its part to be observed and performed.



ARTICLE 7 — USE





	7.1	 	Permitted Uses





     The Lessee shall use the Leased Premises for research and development, manufacturing,
warehouse and general office use, but for no other purpose without the prior written consent of the
Lessor. All uses and activities shall be carried on exclusively in the Building and there shall be
no external uses, activities or impact on the outside of the Building or any of the yards or lands
located in the vicinity thereof.




	7.2	 	Compliance with Laws, Policies and Regulations





     The Lessee shall carry on and conduct its business from the Leased Premises in such manner as
to comply in all material respects with any and all applicable statutes, bylaws, rules and
regulations of any federal, provincial, municipal or other competent authority for the time being
in force and to comply with any and all safety and security policies, rules and regulations as may
affect the Leased Premises from time to time as required by the Lessor, and shall not do anything
upon the Leased Premises in contravention thereof.




	7.3	 	Nuisance





     The Lessee shall not do or permit to be done or omitted anything which could damage the
Building or the Lands other than normal wear and tear or which shall or might result in any
nuisance in or about the Leased Premises, whether to the Lessor or to any other party, the whole as
determined by the Lessor acting reasonably. In any of the foregoing events, the Lessee shall
forthwith remedy the same and if such thing or condition shall not be so remedied, the Lessor may,
after such notice, if any, as the Lessor may deem appropriate in the circumstances, correct such
situation at the expense of the Lessee and the Lessee shall pay such expense to the Lessor as
Additional Rent.









 



Page 13


ARTICLE 8 — COMMON FACILITIES AND PARKING





	8.1	 	Right of Use of Common Facilities





     Subject to all the terms of this Lease, the Lessee shall have, in connection with the Leased
Premises and the business required to be carried on therein, the right and license to use during
business hours for itself and its employees and persons having business with it and in connection
with such business the non-exclusive right to use the Common Facilities in common with all others
entitled thereto for their appropriate and intended purposes in each case.




	8.2	 	Restrictions on Use of Common Facilities





     The Common Facilities and the right to the use thereof extended to the Lessee under Section
8.1 shall be subject to the following:




	 	(a)	 	Such right of use shall not extend to parts of the Common Facilities from time
to time allocated by the Lessor for other use or to other parties, whether temporary or
permanent, such as storage areas or areas containing utility or mechanical systems.
Without limitation, the Lessor may restrict or rescind entirely the Lessee’s right to
use the Complex Common Facilities; provided that the Lessor shall use reasonable
commercial efforts to minimize any interference with the Lessee’s use of the Leased
Premises.
	 
	 	(b)	 	The Common Facilities shall at all times be under the exclusive control and
management of the Lessor.
	 
	 	(c)	 	The Lessor shall have the right to alter or relocate the Common Facilities or
any parts thereof, and to interfere with the use of any portions thereof as may be
necessary and reasonable during the making of alterations, reconstructions or repairs
to any portion of the Building and Lands; provided that the Lessor shall use reasonable
commercial efforts to minimize any interference with the Lessee’s use of the Leased
Premises.
	 
	 	(d)	 	The Lessee shall not park and shall use its reasonable efforts to prevent its
employees from parking any vehicles in the parking areas or facilities except in such
parts as may be allocated from time to time by the Lessor for the use of tenants and
their employees, and shall co-operate with the Lessor as may be required to effectively
control parking.






	8.3	 	Parking





     The Lessor hereby further grants the Lessee, during the Term hereof, for the benefit of the
Lessee its officers, officials and employees (the “Users”), the following permits and licenses
respecting parking:









 



Page 14

Firstly, an exclusive permit and license to use 33 of the motor vehicle parking spaces located on
the Lands (the “Reserved Parking Stalls”) for the exclusive benefit and use of the Lessee and the
Users;



Secondly, a non-exclusive permit and license to use a Ratable Share (as defined below) of the
motor vehicle parking spaces located on the Parking Lands (the “Parking Spaces”) for the
non-exclusive benefit and use of the Lessee and the Users in common with all other persons to whom
the Lessor grants rights of use, licenses, easements or interests in the Parking Lands, together
with the non-exclusive free and uninterrupted right, permit and licence, over the roadways and
walkways located on the Parking Lands for vehicular and pedestrian ingress and egress, in
accordance with their intended use and purpose. For certainty, it is hereby confirmed that the
Parking Spaces are not specifically reserved or identified and no User has any exclusive right to
use any particular Parking Space and that the use of the Parking Spaces is in common with all
other users of the parking spaces located on the Parking Lands and that all use of all parking
spaces located on the lands (including the Parking Spaces) is on a “first come -first serve”
basis. (For the purpose hereof, “Ratable Share” shall mean a fraction, the numerator of which is
the difference between the number of full time employees employed in the business of the Lessee on
the Leased Premises and the number of Reserved Parking Stalls and the denominator of which is the
number of full time employees employed by all of the businesses in the area or vicinity of the
Parking Lands and whose full time employees, from time to time, use the Parking Lands for the
purpose of parking while in attendance at work).



The permits and licenses granted under this section 8.3 are subject to the following additional
provisions:





	 	(a)	 	From time to time, the Lessor may, in its sole and absolute discretion,
determine the number of Parking Spaces that the Lessee is entitled to use under this
Agreement based upon the Lessee’s Ratable Share as defined above, and, in that regard,
if the Lessee’s entitlement to Parking Spaces is to be reduced, then the Lessor shall
be entitled to reduce the number of Parking Spaces that the Lessee is entitled to use
under this Agreement by thirty days written notice to the Lessee.
	 
	 	(b)	 	The Lessee shall comply with all requirements, rules and procedures of the
Lessor governing or affecting the safety and security of the Lands and the Parking
Lands and adjacent areas.
	 
	 	(c)	 	The Lessee acknowledges and agrees that, as the Reserved Parking Stalls have
electrical service available, the Lessee shall make payment of electricity costs for
electrical service for the Reserved Parking Stalls as part of the Operating Costs
hereunder.
	 
	 	(d)	 	The Lessee acknowledges and agrees that, as some of the Parking Spaces have
electrical service available, the Lessee shall make payment of its Ratable Share of
electricity costs for electrical service for the Parking Spaces as part of the
Operating Costs hereunder.










 



Page 15







ARTICLE 9  — REPAIRS, MAINTENANCE AND ALTERATIONS





	9.1	 	Lessor’s Obligation to Repair And Maintain






The Lessor shall at all times during the Term keep or cause to be kept in good repair,
order and condition:




	 	(a)	 	the portions of the Building which are structural in nature, being responsible
only for effecting Structural Repairs to the Building, including, but not limited to,
repairing the foundations, exterior weather walls, structural portions of roofs,
structural portions of bearing walls and structural columns and beams;
	 
	 	(b)	 	all heating, ventilating, air conditioning and utility systems serving the
Leased Premises, excluding all gas and utility systems which exclusively serve the
Lessee or the Leased Premises;
	 
	 	(c)	 	the Common Facilities and all elevators, stairways, and washrooms located
within the Leased Premises;
	 
	 	(d)	 	all security and emergency alarm systems serving the Leased Premises;
	 
	 	(e)	 	subject to Section 9.6, all damage to the Lands and Building which is covered
or required to be covered by any insurance required to be effected by the Lessor; and
	 
	 	(f)	 	the landscaped areas and all driveways, sidewalks, Parking Lands and other
parking areas located on the Lands including, without limitation, removal of snow and
ice as and when reasonably required having regard to weather conditions.






The Lessor shall supply janitorial services for the Leased Premises, consistent with the
standard of high quality premises of similar use and shall maintain the exterior of the
Building including, without limitation, outside window washing.




	9.2	 	Lessee’s Obligations to Repair and Maintain






The Lessee shall at all times during the Term at its own cost and expense:




	 	(a)	 	keep in good repair, order and condition, consistent with the standard of
premises of similar use, the Leased Premises which exclusively serve the Lessee or the
Leased Premises or exclusively support the Lessee’s equipment or use, and all
improvements, fixtures and furnishings therein of every nature or kind and whether or
not furnished or installed by the Lessor or the Lessee, but with the exception only of
reasonable wear and tear and those repairs in and to the Leased Premises which are
expressly the obligation of the Lessor pursuant to Section 9.1;










 



Page 16


	 	(b)	 	immediately before the termination of the Term and subject to the provisions of
Section 4.3(b), clean the Leased Premises and leave the Leased Premises in a broom
clean state and shall not leave upon the Leased Premises any refuse, garbage or waste
materials;
	 
	 	(c)	 	The Lessee, its employees or agents shall not mark, paint, drill or in any way
deface any walls, ceilings, partitions, floors, wood, stone or ironwork without the
written approval of the Lessor.






	9.3	 	Additional Provisions Respecting Repair






The Lessee agrees with the Lessor as follows:




	 	(a)	 	The Lessor and its employees or agents shall be entitled at all reasonable
times during normal business hours and at any times in the case of any real or
apprehended emergency, to enter and examine the state of maintenance and repair of the
Leased Premises and to do such acts or things as may be necessary or advisable to
prevent or abate damage or injury to the Leased Premises;
	 
	 	(b)	 	The Lessee shall give prompt written notice to the Lessor of the existence of
any condition, including any need for repair, within the Leased Premises which might
cause any damage or injury or is a hazard to any portion of the Leased Premises, and
of any need for repair, which is the Lessor’s obligation under Section 9.1;
	 
	 	(c)	 	The Lessee shall be liable for all destruction or damage of property of the
Lessor or others caused by any defect, failure or want of repair of anything for the
condition and repair of which the Lessee is responsible under Section 9.2;
	 
	 	(d)	 	If the Lessee fails to repair promptly as required in this Article, the Lessor
may make such repair on the Lessee’s behalf, and all reasonable expenses incurred by
the Lessor in so doing plus eighteen (18%) percent shall be reimbursed to it by the
Lessee on demand; provided that except in cases of real or apprehended emergency or
where any destruction, damage, risk or material inconvenience affecting any part of the
Leased Premises exists or might ensue failing an immediate repair, the Lessor shall
first give written notice to the Lessee to so repair;
	 
	 	(e)	 	Should the Lessor deem it necessary to supervise any repairs by the Lessee, or
should any damage be caused in the course of such repairs or the Lessor otherwise be
put to any expense in connection with such repairs, the Lessee shall upon demand
reimburse to the Lessor all reasonable expenses incurred by the Lessor in connection
therewith.




In the event that there is any damage or destruction to any of the items which are the Lessor’s
obligation under section 9.1, and such damage or destruction results in any emergency










 



Page 17



condition or imminent danger to life or property, then the Lessee shall be entitled to perform
such remedial repairs as may be reasonably necessary to alleviate the emergency condition or
imminent danger, provided always that the Lessee shall make bona fide efforts to advise the Lessor
of the emergency condition or imminent danger and obtain its consent before the performance of
such remedial repairs. In the event that the Lessee is unable to contact the Lessor to obtain its
consent, it shall be entitled to proceed with such remedial repairs as are reasonable in the
circumstances to rectify the emergency condition or imminent danger, but shall forthwith provide
notice to the Lessor of such emergency condition or imminent danger and such remedial repairs. In
the event that the Lessee has undertaken any such remedial repairs, it shall submit invoices (with
all supporting documentation, including copies of all third party invoices) for all reasonable
costs incurred for such remedial repairs relating to those items which are the Lessor’s
responsibility immediately upon the same being incurred and the Lessor shall make payment of such
costs within thirty days from receipt.





	9.4	 	Lessee’s Alterations





     The Lessee may at any time and from time to time at its own expense make and build such
changes, alterations, renovations, improvements and additions to the Leased Premises for the
purposes of its business, provided however that no change, alterations, renovation, improvement or
addition shall be made without the Lessee first having obtained the Lessor’s prior written approval
which shall not be unreasonably delayed or withheld if the proposed change, alterations,
renovation, improvement or addition is in keeping with the standards of quality and design from
time to time established by the Lessor for the Building. All work performed in the Leased Premises
will accord with all applicable bylaws and other legal requirements. All changes, alterations,
renovations, improvements and additions to the Leased Premises, whether made pursuant to this
Section 9.4 or otherwise, shall be and become the property of the Lessor as provided herein but
subject to the rights and obligations of the Lessee respecting the removal thereof as provided in
Section 4.3. The Lessee will so conduct all changes, alterations and improvements so as to prevent
any lien attaching to the Building or the Lands and in this respect shall comply with all
provisions of this Lease. In the conduct of such work, and except as expressly permitted by the
Lessor, the Lessee shall not interfere with or cut into any structure, exterior walls, structural
floors or ceilings or any heating, ventilating, air conditioning or other utility system.




	9.5	 	Governmental Orders and Regulations and Insurer’s Requirements





     The Lessee shall at all times keep the Leased Premises in accordance with the laws,
directions, rules and regulations and bylaws of every governmental authority having jurisdiction
and in accordance with the requirements of the insurers of the Building or the Lessee’s insurers,
and shall not commit, suffer or permit any act or omission which shall cause any breach thereof. If
any such insurers or any such laws, directions, rules, regulations or bylaws require any changes in
the Leased Premises by reason of the Lessee’s conduct of business in or use of the Leased Premises,
the Lessee shall perform such changes at its own expense but subject to the approval of the Lessor.
The foregoing obligation of the Lessee shall not apply to changes which are the responsibility of
the Lessor under Section 9.1.









 



Page 18



	9.6	 	Termination on Destruction or Damage






	 	(a)	 	If and whenever the Leased Premises shall be destroyed or damaged (including
without limitation, smoke and water damage) by any casualty required to be insured
against by the Lessor or otherwise insured against by the Lessor, and if as a result of
such occurrence:






	 	(i)	 	the Leased Premises are rendered untenantable in part, this
Lease shall continue in full force and effect and the Lessor shall, subject to
Section 9.6(b) hereof, commence diligently to reconstruct, rebuild or repair
the Leased Premises, and if the damage is such that the portion of the Leased
Premises rendered untenantable is not reasonably capable of use and occupancy
by the Tenant for the purposes of its business for any period of time in
excess of ten (10) days, rent shall abate proportionately to the portion of
the Leased Premises rendered untenantable from the date of such damage or
destruction until the Lessor’s repairs have been completed;
	 
	 	(ii)	 	the Leased Premises are rendered wholly untenantable for a
period in excess of ten (10) days, this Lease shall continue in full force and
effect and the Lessor shall, subject to Section 9.6(b) hereof, commence
diligently to repair, restore or rebuild the Leased Premise and rent shall
abate entirely from the date of such damage or destruction and until the
Lessor’s repairs have been completed;
	 
	 	(iii)	 	the Leased Premises are not rendered untenantable in whole of
in part, this Lease shall continue in full force and effect, the rent and
other amounts payable by the Lessee shall not terminate, be reduced or abate
and the Lessor shall, subject to Sections 9.6(b) and 9.7 hereof, commence
diligently to repair, restore, or rebuild the Leased Premises.






	 	(b)	 	Notwithstanding anything contained in Section 9.6(a), if and whenever:






	 	(i)	 	the Leased Premises are damaged or destroyed by any cause to
such an extent that in the Lessor’s reasonable opinion the Leased Premises
shall not be capable, with due diligence, of being repaired, restored or
rebuilt in a period of one hundred and eighty (180) days after the happening
of such destruction or damage; or
	 
	 	(ii)	 	the Building shall be destroyed or damaged by any cause to such
an extent that in the Lessor’s reasonable opinion either it shall not be
capable, with due diligence, of being repaired, restored or rebuilt within a
period of one hundred and eighty (180) days after the happening of such
destruction or damage, or the estimated cost of repairing, restoring or
rebuilding it will exceed the proceeds of insurance available to the Lessor for
the purpose;










 



Page 19


	 	 	 	then the Lessor or the Lessee may at its option terminate this Lease upon thirty (30) days
written notice to the other party, to be given within sixty (60) days after the happening
of such destruction or damage, and in such event the Lessee shall on or before the expiry
of such period of thirty (30) days surrender the Leased Premises and this Lease to the
Lessor and rent and all other amounts due or becoming due hereunder shall be apportioned
and paid to the date of such damage or destruction.





ARTICLE
10 — TAXES





	10.1	 	Property Taxes Payable by Lessor





     The Lessor shall promptly pay or cause to be paid when due to the municipality or other
taxing authorities having jurisdiction all Property Taxes relating to the Leased Premises, subject
to its right of postponement as provided in Section 10.3.




	10.2	 	Business Taxes Payable by Lessee





     The Lessee shall promptly pay when due to the municipality or taxing authorities having
jurisdiction all business taxes imposed in respect of any and every business carried on in the
Leased Premises or in respect of the use or occupancy thereof, including by the Lessee,
subtenants, licensees, concessionaires or other occupants of the Leased Premises.




	10.3	 	Payment of Taxes





     The Lessor may postpone payment of any Property Taxes on the Leased Premises payable by it
pursuant to Section 10.1, and the Lessee may postpone payment of any business taxes payable by it
pursuant to Section 10.2, 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 Lessee which involves any risk of the Leased Premises or any part thereof or the Lessor
becoming liable to assessment, prosecution, fine or other liability, the Lessee shall have given
security in a form and of an amount satisfactory to the Lessor in respect of such liability and
such undertakings as the Lessor may reasonably require to ensure payment thereof.




	10.4	 	Sales Taxes





     Notwithstanding any other provisions of this Lease to the contrary, the Lessee covenants to
pay the Lessor an amount equal to any and all Sales Taxes imposed on or required to be paid or
collected by the Lessor, it being the intention of the Parties that the Lessor shall be fully
reimbursed by the Lessee with respect to any and all Sales Taxes. The amount of such Sales Taxes so
payable by the Lessee shall be calculated by the Lessor in accordance with the applicable
legislation and shall be paid to the Lessor at the same time as the amounts to which such Sales
Taxes apply are payable by the Lessor.









 



Page 20


ARTICLE
11 — SIGNAGE





	11.1	 	Lessee’s Signs





     The Lessee shall be entitled to install on the exterior of the front of the Leased Premises a
sign as is normally installed in connection with its business, provided that the size, design, and
location of such sign is approved by the Lessor, which approval shall not be unreasonably withheld
or delayed. All signage must be in accordance with all applicable bylaws, rules and regulations of
any governmental authority and in keeping with the standards for the Building as established by
the Lessor, acting reasonably. All costs associated with such signage shall be for the sole cost
and expense of the Lessee.



ARTICLE 12  — HEATING, VENTILATING AND AIR CONDITIONING & UTILITIES





	12.1	 	Lessor’s Covenants






The Lessor agrees with the Lessee that:




	 	(a)	 	the Lessor shall supply utilities (including electricity and domestic running
water) to the Leased Premises but only to the extent that such utilities are currently
provided to the Leased Premises and the Common Facilities and are not now, or in the
future, capable of being metered separately;
	 
	 	(b)	 	the Lessor shall operate all the heating, ventilating and air
conditioning equipment of the Leased Premises in such manner and as may be necessary to
maintain comfortable conditions therein to the extent reasonably possible; and
	 
	 	(c)	 	there are appropriate ducts in the Leased Premises for telephone
and telecommunication systems.






	12.2	 	Utilities





     The Lessee agrees to pay all rates, charges, costs and expenses for electricity, gas, water,
telephone charges and other utility services used by the Lessee to the extent separately metered
to the Leased Premises, either now or in the future. The Lessee shall not impose a load upon
electrical or other services greater than a normal prudent user of such services engaged in the
business of the Lessee.



ARTICLE 13 — OPERATING COSTS





	13.1	 	Lessee’s Payment of Operating Cost





     The Lessee shall pay to the Lessor in the manner provided in Section 13.2, for each fiscal
period adopted by the Lessor for the operation of the Building and the Lands any part of which is
within the Term, the Lessee’s Proportionate Share of the Operating Costs attributable











 






Page 21



to such fiscal period. Where the whole of any fiscal period is not included within the Term the
appropriate allocation of Operating Costs for such fiscal period shall be made. Operating Costs
shall mean all of the Lessor’s outlays, costs, charges and expenses associated with the operation,
supervision, maintenance, administration, management and repair of the Building and Lands of
any kind or nature whatsoever and howsoever arising, and shall include, without limitation or
duplication:





	 	(a)	 	such of the following costs and expenses incurred or facilities supplied which
are attributable to the maintenance, repair, supervision, policing, security,
inspection, operation, administration and management of the Building and the Lands:
the cost of lighting, heating, ventilating, air-conditioning and supplying water,
natural gas and other utilities; Environmental Costs; cleaning or janitorial services;
snow and ice removal; striping and repairing parking areas; supervising, policing and
security; painting; planting and landscaping; maintenance, repairs and
replacements to the apparatus for heating, ventilating and air-conditioning installed
in the Building; operating and maintaining the garbage compaction equipment; repairs
and replacements to the Leased Premises, other than Structural Repairs, business
taxes, place of business taxes and any other taxes levied in respect of or fairly
attributable to the Building; Property Taxes; costs of appeals against assessments for
Property Taxes; insurance premiums; supplies; all office expenses and Leased Premises
personnel wages; employee benefits and payroll expenses; and
	 
	 	(b)	 	other reasonable costs and expenses not otherwise expressly
included hereunder attributable to the maintenance, repair, supervision, policing,
security, inspection, operation, administration and management of the Building and the
Lands.





There shall be excluded from Operating Costs without duplication:





	 	(i)	 	periodic depreciation on the capital cost to the Lessor of the Building at the
time that the Building was first constructed;
	 
	 	(ii)	 	payments of principal and interest under any mortgages on the Building;
	 
	 	(iii)	 	capital taxes and corporate income, profits or excess profit taxes assessed upon the
income of the Lessor;
	 
	 	(iv)	 	the costs of repair of damage against which Lessor has insured or is required
to insure hereunder;
	 
	 	(v)	 	the cost for Structural Repairs;
	 
	 	(vi)	 	leasing commissions, general corporate overhead and administrative surcharges
incurred by the Lessor.














 



Page 22










13.2 Payment and Adjustment of Operating Costs





	 	(a)	 	Prior to the Commencement Date and prior to the commencement of each fiscal
period adopted by the Lessor for the operation of the Building and the Lands which
commences thereafter during the Term, or in each case as soon after the commencement of
such fiscal period as possible, the Lessor shall furnish to the Lessee an estimate of
Operating Costs for such fiscal period and the amount thereof payable and contributable
by the Lessee calculated in accordance with Section 13.1.
	 
	 	 	 	The Lessee shall pay to the Lessor on account of its obligations under Section 13.1
the amount so estimated to be payable in equal monthly instalments throughout such
fiscal period on each date for payment of an installment of Basic Rent pursuant to
Section 5.1.
	 
	 	(b)	 	Within one hundred and twenty (120) days after the end of such fiscal period
the Lessor shall furnish to the Lessee a statement of the Lessor’s actual Operating
Costs during such fiscal period (or if applicable broken portion thereof) and the
amount thereof payable by the Lessee pursuant to Section 13.1, and showing in
reasonable detail the information relevant and necessary to the calculation and
determination thereof. If such amount is greater or less than the payments on account
thereof made pursuant to Section 13.2(a), appropriate adjustments will be made between
the Lessor and the Lessee within fifteen (15) days after delivery of such statement.
Neither party may claim a re-adjustment after the expiration of one year from the
delivery of such statement. The Lessor shall maintain full records of all Operating
Costs and will make them available for review and inspection by the Lessee or its
agents upon reasonable prior notice to the Lessor. In the event of any dispute
between the Lessor and the Lessee relating to Operating Costs, the parties shall use
reasonable commercial efforts to resolve the dispute within a reasonable period of
time, failing which the matter shall be settled by arbitration in accordance with the
Arbitration Act.
	 
	 	(c)	 	If any of the Operating Costs (e.g. Property Taxes, insurance premiums) are not
separately metered, assessed or levied in respect of the Building or any other
buildings located in the vicinity of the Lands, then the Lessor may make a reasonable
allocation of such Operating Costs between the Building and such other buildings.





ARTICLE
14 — INSURANCE




14.1
Lessor’s Insurance




     The Lessor shall throughout the Term take out, provide, maintain and keep in force or cause to
be provided and kept in force:












 



Page 23





	 	(a)	 	fire insurance (including standard extended coverage endorsement perils and
leakage from fire protective devices) or alternatively at Lessor’s option, all risk
insurance in respect of the buildings and fixed improvements in the Building in an
amount equal to the full replacement cost thereof without deduction for
depreciation, but excluding tenant’s fixtures and (except to the extent that the Lessor
elects to insure them) leasehold improvements installed or constructed by tenants
including the Lessee;
	 
	 	(b)	 	if any boiler or pressure vessel is operated by parties other than the Lessee
in the Leased Premises, boiler and pressure vessel insurance with respect thereto;
	 
	 	(c)	 	comprehensive general business liability insurance with respect to the
operation of the Building for personal injury or death and damage to property of
others;
	 
	 	(d)	 	loss of rental income insurance;
	 
	 	(e)	 	such other types of insurance as the Lessor, acting reasonably, considers that
it is prudent to carry.




Insurance effected by the Lessor under this Section 14.1 shall be with insurers duly licensed to
transact insurance in Alberta, shall be in such reasonable amounts and on such terms and
conditions as would be carried by a prudent owner on a reasonably similar commercial building,
having regard to size, age, use and location. The Lessor shall provide evidence satisfactory to
the Lessee of all policies of insurance which the Lessor has placed on the Lands and the Building
upon the Lessee’s request.




14.2 Lessee’s Insurance




     The Lessee shall throughout the Term take out, provide, maintain and keep in force:




	 	(a)	 	fire insurance (including standard extended coverage endorsement perils and
leakage from fire protective devices) in respect of the Lessee’s fixtures, furniture,
equipment, inventory and stock in trade, the Lessee’s leasehold improvements to the
extent that the Lessor has not elected to insure them pursuant to Section 14.1, and
such other property in or forming part of the Leased Premises (not being property which
the Lessor is bound to insure pursuant to Section 14.1) as the Lessor may from time to
time require;
	 
	 	(b)	 	if any boiler or pressure vessel is operated by the Lessee in the Leased
Premises, boiler and pressure vessel insurance with respect thereto;
	 
	 	(c)	 	business interruption and business loss insurance;
	 
	 	(d)	 	commercial general liability insurance applying to all operations of the Lessee
and against claims for bodily injury, including death, property damage or loss arising
out of the use or occupation of the Leased Premises, or the Lessee’s business on or
about the Leased Premises.













 



Page 24









Insurance effected by the Lessee under this Section 14.2 shall be with insurers duly licensed to
transact insurance in Alberta, shall be in amounts and on terms and conditions which are
satisfactory to the Lessor, acting reasonably (and in the case of insurance under Section 14.2(a)
and 14.2(b) shall be on a full replacement cost basis and in the case of insurance under Section
14.2(d) shall have limits not less than eight million dollars ($8,000,000.00) in respect of any
one accident or occurrence), and shall be without subrogation against the Lessor and those for
whom it is responsible in law. At the request of the Lessor the Lessee shall file with the Lessor
such copies of current policies or certificates or other proofs as may be required to establish
the Lessee’s insurance coverage in effect from time to time and the payment of premiums thereon,
and if the Lessee fails to insure or pay premiums or to file satisfactory proof thereof as so
required, the Lessor may without notice to the Lessee effect such insurance and recover any
premiums paid therefor from the Lessee on demand.




14.3 Increases in Rates




     The Lessee shall not do or omit or permit to be done or omitted upon the Leased Premises
anything which shall cause any rate of insurance upon the Building or any part thereof to be
increased or cause insurance to the cancelled. If any such rate of insurance shall be increased as
aforesaid, the Lessee shall pay to the Lessor an amount of increase as Additional Rent. If any
insurance policy upon the Building or any part thereof is cancelled or threatened to be cancelled
by reason of the use or occupancy by the Lessee or any act or omission as aforesaid, the Lessee
shall forthwith remedy or rectify such use, occupation, act or omission upon being requested to do
so by the Lessor, and if the Lessee fails to remedy or rectify, the Lessor may at its option
terminate this Lease forthwith and the Lessee shall immediately deliver up possession of the
Leased Premises to the Lessor.



ARTICLE 15  — ASSIGNMENT, SUBLETTING, SALE OR MORTGAGE




15.1
Assignment and Subletting





	 	(a)	 	The Lessee shall not assign this Lease in whole or in part, nor sublet all or
any part of the Leased Premises, nor grant any license or part with possession of the
Leased Premises or transfer any other right or interest under this Lease, without the
prior written consent of the Lessor in each instance, which consent shall not be
unreasonably withheld so long as the proposed assignment or sublease complies with the
provisions of this Article.
	 
	 	(b)	 	Notwithstanding any assignment or sublease, the Lessee shall remain fully
liable on this Lease and shall not be released from performing any of the terms,
covenants and conditions of this Lease.
	 
	 	(c)	 	If the Lease is assigned or if the Leased Premises or any part thereof are
sublet or occupied by anyone other than the Lessee, the Lessor may collect rent
directly from the assignee, subtenant or occupant, and apply the net amount collected,
or the necessary portion thereof, to the rent herein reserved.













 



Page 25





	 	(d)	 	No assignment or sublease shall be made or proposed other than to responsible
persons, firms, partnerships or bodies corporate who are experienced in and agree to
carry on the type of business conducted in the Leased Premises by the Lessee, and who
undertake in favour of the Lessor to perform and observe the obligations of the Lessee
hereunder by entering into an assumption agreement directly with the Lessor.
	 
	 	(e)	 	The consent by the Lessor to any assignment or sublease shall not constitute a
waiver of the necessity of such consent to any subsequent assignment or sublease.





15.2 Bulk Sale




     No bulk sale of the goods and assets of the Lessee may take place without first obtaining the
written consent of the Lessor, which consent shall not be unreasonably withheld so long as the
Lessee and the purchaser are able to provide the Lessor with assurances, in a form satisfactory to
the Lessor, that the Lessee’s obligations hereunder will continue to be performed and respected,
in the manner satisfactory to the Lessor, after completion of the said bulk sale.



15.3 Subordination and Attornment





	 	(a)	 	This Lease and the Lessee’s rights hereunder shall automatically be subordinate
to any mortgage or mortgages, or encumbrance resulting from any other method of
financing or refinancing, now or hereafter in force against the Lands or any part
thereof, as now or hereafter constituted, and to all advances made or hereafter to
be-made upon the security hereof; and, upon the request of the Lessor, the Lessee shall
execute such documentation as may be required by the Lessor in order to confirm and
evidence such subordination; provided that the form of any such subordination will
provide that the rights of the Lessee under this Lease shall not be interfered with so
long as the Tenant is not in default hereunder.
	 
	 	(b)	 	The Lessee shall, in the event any proceedings are brought, whether in
foreclosure or by way of the exercise of the power of sale or otherwise, under any
mortgage or other method of financing or refinancing made by the Lessor in respect of
the Lands, attorn to the encumbrancer upon any such foreclosure or sale and recognize
such encumbrancer as the Lessor under this Lease, should such encumbrancer so elect and
require.
	 
	 	(c)	 	The Lessor shall use reasonable efforts to ensure that no subordination or
attornment as required by this Article shall have the effect of disturbing the Lessee’s
occupation and possession of the Leased Premises, provided that the Lessee is not in
default hereunder and complies with all of the covenants, terms and conditions hereof.













 



Page 26










15.4
Estoppel Certificate, Acknowledgment





	 	(a)	 	Whenever requested by the Lessor, a mortgagee or an encumbrance holder or other
third party having any interest in the Lands, the Lessee shall within ten (10) days of
the request execute and deliver an Estoppel Certificate or other form of certified
acknowledgment as to the Commencement Date, the status and the validity of this Lease,
the state of the rental account hereunder, any incurred defaults on the part of the
Lessor alleged by the Lessee, and such other information as may reasonably be required,
including, if requested, a copy of the Lessee’s most recent audited financial
statements.
	 
	 	(b)	 	Lessee’s failure to deliver such certificate or acknowledgment within the time
provided shall constitute default hereunder and shall be conclusive against the Lessee
that the information set out in the certificate or acknowledgment which the Lessee was
requested to execute is as set out in such certificate or acknowledgment.





15.5 Sale by Lessor




     In the event of a sale by the Lessor of any portion or all its interest in the Lands, the
Lessor shall thereafter be entirely relieved of the performance of all terms, covenants and
obligations thereafter to be performed by the Lessor under this Lease, to the extent of the
interest or portion so sold or transferred and it shall be deemed and construed without further
agreement between the parties that the purchaser or transferee, as the case may be, has assumed
and agreed to carry out any and all covenants of the Lessor hereunder.



15.6 Financial Information




     The Lessee shall, annually, within one hundred twenty days of the end of its fiscal
year, provide the Lessor with audited financial statements of the Lessee or any indemnifier or
guarantor of this Lease, as the Lessor or any Mortgagee of the Lands may require.



15.7 Subordinate Right of First Offer




     The Lessor hereby grants to the Lessee an irrevocable right of first offer to purchase the
Lands (either en bloc or as individual, discrete parcels, as the case may be) upon the terms and
conditions following:




	 	(a)	 	The Lessee hereby expressly acknowledges and agrees that the Lessor has granted
a right of first offer to purchase the lands to Sherritt International Inc. (the
“Sherritt Right of First Offer”) and that the Sherrit Right of First Offer has priority
and precedence in all respects over this right of first offer from time to time;
	 
	 	(b)	 	In the event that the Lessor determines to attempt to sell the Lands, or any
portion thereof, provided that the Lessor has not entered into an agreement to













 



Page 27





	 	 	 	sell the Lands, or portion thereof, pursuant to the Sherritt Right of First Offer,
the Lessor shall provide written notice to the Lessee that it intends to attempt to
sell the Lands, or the portion thereof which the Vendor intends to sell (the
“Lessee’s Right of First Offer”);
	 
	 	(c)	 	Within 21 days after such written notice, the Lessee has the sole and exclusive
right to make an offer to the Lessor to purchase the Lands, or the portion thereof
which is intended to be sold by the Lessor, upon such terms and conditions as the
Lessee shall deem appropriate, provided always that offer must be
unconditional, the purchase price being offered by the Lessee must be cash payable upon
closing, the closing date may not be longer than 60 days from the date of acceptance of
the offer by the Lessor; and the Lands being purchased shall be without any
representations or warranties whatsoever by the Lessor and shall be on an “as is, where
is” basis;
	 
	 	(d)	 	The Lessor must accept or reject the Lessee’s offer to purchase within 30 days
from the date of receipt thereof. Any acceptance shall be by delivery of a written
acceptance to the Lessee. If the offer is so accepted, the Lessor shall be bound to
sell the Lands, or portion thereof, to the Lessee and the Lessee shall be bound to
purchase the Lands, or portion thereof, from the Lessee at the price and upon the terms
contained in the accepted offer;
	 
	 	(e)	 	If the Lessor does not accept the Lessee’s offer within 30 days from the date
of receipt thereof, or if it rejects the Lessee’s offer, then it shall be shall be free
to proceed with a sale of the Lands, or the portion thereof identified in a notice
delivered pursuant to section 15.7(b) hereof, provided always that: it may not sell
such lands at a purchase price which is less than the purchase price which was offered
by the Lessee; and, in the event that the Lessor does not consummate a sale of the
Lands or the portion thereof identified in a notice delivered pursuant to section
15.7(b) within 180 days following the earlier of the expiry of the 30 day period
identified in section 15.7(d) or the date of rejection of the Lessee’s offer, the
Lessor shall be required to again comply with the provisions of sections 15.7(b) to (e)
hereof, inclusive.





ARTICLE 16  — INDEMNITY, LIENS




16.1
Lessee’s Indemnity




     Except as provided in Section 16.5 (a), the Lessee shall at all times during the Term,
indemnify and save harmless the Lessor of and from all loss and damage and all actions, claims,
costs, (including solicitor and his own client costs on a full indemnity basis), demands, expenses,
fines, liabilities and suits of any nature whatsoever for which the Lessor shall or may become
liable, incur or suffer by reason of a breach, violation or non-performance by the Lessee of any
covenant, term or provision hereof or by reason of any builders’ or other liens for any work done
or materials provided or services rendered for alterations, improvements or repairs to the Leased
Premises, made by or on behalf of the Lessee, or by reason of any injury occasioned to or suffered
by any person or damage to any property, by reason of any wrongful












 



Page 28



act or omission, default or negligence on the part of the Lessee or any of its agents,
concessionaires, contractors, customers, employees, invitees or licensees in or about the Lands.




16.2 Personal Injury and Property Damage




     The Lessor shall not be liable or responsible for:




	 	(a)	 	any personal injury or consequential damage of any nature whatsoever, however
caused, that may be suffered or sustained by the Lessee or by any other person who may
be upon the Leased Premises; or
	 
	 	(b)	 	any loss or damage of any nature whatsoever, howsoever caused, to the Leased
Premises, any property belonging to the Lessee or to any other person while such
property is in or about the Leased Premises;






except to the extent any such death, injury, loss or damage results or arises from any
wrongful act or omission, default or negligence on the part of the Lessor or any or its
agents, servants, invitees, contractors, employees or other persons for whom it may in law
be responsible and provided that in no event shall the Lessor be responsible for any loss,
injury or damage to property as contemplated by Section 16.5(b).



16.3 Liens




     The Lessee shall, immediately upon demand by the Lessor, remove or cause to be removed, and
thereafter institute and diligently prosecute any action pertinent thereto, any builders’ or other
lien or claim of lien noted or filed against or otherwise constituting an encumbrance on any title
of the Lessor. Without limiting the foregoing obligations of the Lessee, the Lessor may cause the
same to be removed, in which case the Lessee shall pay to the Lessor as Additional Rent the cost
thereof, including the Lessor’s complete legal costs.



16.4 Lessor’s Indemnity




     Except as provided in Section 16.5 (b), the Lessor shall at all times during the Term,
indemnify and save harmless the Lessee of and from all loss and damage and all actions, claims,
costs (including solicitor and his own client costs on a full indemnity basis), demands, expenses,
fines, liabilities and suits of any nature whatsoever for which the Lessee shall or may become
liable, incur or suffer by reason of a breach, violation or non-performance by the Lessor of any
covenant, term, or provision hereof or by reason of any injury occasioned to or suffered by the
Lessee by reason of any wrongful act or omission, default or negligence on the part of the Lessor
or its agents, servants, invitees, contractors or employees in or about the Lands.



16.5 Limitations of Liability





	 	(a)	 	The Lessee shall not be liable to the Lessor in respect of any loss, injury or
damage against which the Lessor has insured or is required to insure under Section 14.1
(a), (b) or (d); and













 



Page 29





	 	(b)	 	The Lessor shall not be liable to the Lessee in respect of any loss, injury or
damage to property against which the Lessee has insured or is required to insure under
Section 14.2(a), (b) or (c) or in respect of any loss, injury or damage to property
that arises as a result of any act, omission by any tenant or occupant of the Lands or
any adjacent lands and any of their respective agents, servants, invitees, contractors
or employees.





ARTICLE 17 — DEFAULT, REMEDIES, TERMINATION




17.1 Default




     If and whenever:




	 	(a)	 	the Lessee shall be in default in the payment of any money, whether hereby
expressly reserved or deemed as rent, or any part thereof, and such default shall
continue for three (3) days following any specific due date on which the Lessee is to
make such payment or, in the absence of such specific due date, for the three (3) days
following written notice by the Lessor requiring the Lessee to pay the same; or
	 
	 	(b)	 	the Lessee’s leasehold interest hereunder, or any goods, chattels or, equipment
of the Lessee located in the Leased Premises shall be taken or seized in execution or
attachment, or if any writ of execution shall issue against the Lessee and not be
discharged within twenty-one (21) days of its issuance, or the Lessee shall become
insolvent or commit an act of bankruptcy or become bankrupt or take the benefit of any
Act that may be in force for bankrupt or insolvent debtors or become involved
involuntary or involuntary winding up, dissolution or liquidation proceedings,
or if a receiver or receiver and manager shall be appointed for the affairs, business,
property or revenues of the Lessee; or
	 
	 	(c)	 	the Lessee shall fail to commence, diligently pursue and complete the Lessee’s
work to be performed pursuant to any agreement to lease pertaining to the Leased
Premises or other agreement signed by the parties or fail to open for business when
required by the provisions of this Lease, or vacate or abandon the Leased Premises or
fail or cease to operate pursuant to the provisions of this Lease or otherwise cease to
conduct business from the Leased Premises, or use or permit or suffer the use of the
Leased Premises for any purposes other than as allowed pursuant to this Lease, or fail
to remedy or rectify any act or omission hereunder, or if the Lessee should move or
commence, attempt or threaten to move its goods, chattels and equipment out of the
Leased Premises other than in the routine and ordinary course of its business; or
	 
	 	(d)	 	the Lessee or any agent of the Lessee falsifies any report or statement
required to be furnished to the Lessor or anyone else pursuant to this Lease; or
	 
	 	(e)	 	the Lessee makes a sale in bulk of any of its assets, wherever situated (other
than a bulk sale made to an Assignee or Sublessee pursuant to a permitted













 



Page 30





	 	 	 	assignment or subletting hereunder and pursuant to the Bulk Sales Act of Alberta);
or
	 
	 	(f)	 	the Lessee abandons or attempts to abandon the Leased Premises, or sells or
disposes of the trade fixtures, goods or chattels of the Lessee or removes them from
the Leased Premises so that there would not in the event of such sale or disposal be
sufficient trade fixtures, goods or chattels of the Lessee on the Leased Premises
subject to distress to satisfy all rent due or accruing hereunder for a period of at
least three (3) months; or
	 
	 	(g)	 	the Leased Premises become and remain vacant for a period of five (5)
consecutive days or are used by any persons other than such as are entitled to use them
hereunder; or
	 
	 	(h)	 	the Lessee assigns, transfers, encumbers, sublets or permits the occupation or
use or the parting with or sharing possession of all or any part of the Leased
Premises by anyone except in a manner permitted by this Lease; or
	 
	 	(i)	 	re-entry is permitted under any other term of this Lease; or
	 
	 	(j)	 	the Lessee shall not observe, perform and keep each and every of the
covenants, agreements, stipulations, obligations, conditions and other provisions of
this Lease to be observed, performed and kept by the Lessee and shall persist in such
default, in the case of monetary payments, beyond the ten (10) day period stipulated
in paragraph (a) — aforesaid or, in the case of any other default, after ten (10) days
following written notice from the Lessor requiring that the Lessee remedy, correct or
comply or, in the case of any such default which would reasonably require more than
ten(10) days to rectify, unless the Lessee shall commence rectification within the
said ten (10) day notice period and thereafter promptly and diligently and
continuously proceed with the rectification of any such default;






then, and in each of such cases, and at the option of the Lessor and in addition to any
other rights or remedies the Lessor may have pursuant to this Lease or at law, the Lessor
may, immediately re-enter upon the Leased Premises and may expel all occupants thereof and
remove all property from the Leased Premises and such property may be removed and sold or
disposed of by the Lessor in such manner as it deems advisable, including by private sale,
or may be stored in a public warehouse or elsewhere at the cost and for the account of the
Lessee, all without service of notice or resort to legal process and without the Lessor
being considered guilty of trespass or becoming liable for any loss or damage which may be
occasioned thereby. If the Lessor elects to re-enter the Leased Premises as herein provided,
or if it takes possession pursuant to legal proceedings or pursuant to any notice provided
for by law, it may either terminate this Lease or it may from time to time without
terminating this Lease, make such alterations and repairs as are necessary in order to relet
the Leased Premises, or any part thereof, for such term or terms (which may be for a term
extending beyond the Term) and at such rent and upon such other terms, covenants and
conditions as the Lessor in its sole discretion considers advisable.












 



Page31




17.2 Lessor may Perform




     If the Lessee shall fail to observe, perform or keep any of the provisions of this Lease to
be observed, performed and kept by the Lessee, the Lessor may, but shall not be obliged to, at its
discretion and without prejudice to any other right, claim or action it may have, rectify the
default of the Lessee, whether or not performance by the Lessor on behalf of the Lessee is
otherwise expressly referred to in the applicable Section of this Lease. For such purpose the
Lessor may make any payment or do or cause to be done such things as may be required including,
without limiting the generality of the foregoing, entry upon the Leased Premises. Any such
performance by or at the behest of the Lessor shall be at the expense of the Lessee and the Lessee
shall pay to the Lessor as Additional Rent the cost thereof.



17.3 Distress




     If and whenever the Lessee shall be in default in the payment of any money, whether hereby
expressly reserved or deemed as rent, or any part thereof, the Lessor may, without notice or any
form of legal process whatever, enter upon the Leased Premises and seize, remove and sell by
judicial or formal process or by private sale the Lessee’s goods, chattels and equipment therefrom
or seize, remove and sell, by judicial or formal process or by private sale, any goods, chattels
and equipment at any place to which the Lessee or any other person may have removed them, in the
same manner as if they had remained and been distrained upon the Leased Premises, all
notwithstanding any rule of law or equity to the contrary, and the Lessee hereby waives and
renounces the benefit of any present or future statute or law limiting or eliminating the Lessor’s
right of distress or sale.



17.4 Costs and Interest




     All costs, expenses and expenditures of the Lessor, incurred upon any default by the Lessee
hereunder, including, without limitation, the legal costs incurred by the Lessor on an
indemnification basis as between solicitor and his own client shall, forthwith on demand, be paid
by the Lessee to the Lessor as Additional Rent. All rent and other sums due to the Lessor pursuant
to the terms of this Lease shall be paid by the Lessee promptly when due, and if not so paid,
shall bear interest from their respective due dates at the rate of eighteen (18%) per cent per
annum, both before and after default, demand and judgment.



17.5 Vacate Upon Termination. Survival




     At the termination of this Lease, whether by affluxion of time or otherwise, the Lessee shall
vacate and deliver up possession of the Leased Premises in the same state and condition as they
were in upon delivery of possession to the Lessee, subject to the exceptions from the Lessee’s
obligation to repair and subject to the Lessee’s rights and obligations in respect of removal and
the Lessee shall thereupon surrender all keys to the Leased Premises to the Lessor at the place
then fixed for payment of rent and shall inform the Lessor of all combinations on locks, safes and
vaults, if any, in the Leased Premises. The indemnity agreements contained in this Lease shall
survive the termination of this Lease.



17.6 Additional Rights on Re-Entry




     If the Lessor shall re-enter the Leased Premises or terminate this Lease, then:












 



Page 32





	 	(a)	 	notwithstanding any such re-entry, termination, or the Term thereby becoming forfeited and
void, the provisions of this Lease relating to the consequences of termination shall survive;
	 
	 	(b)	 	the Lessor may use such force as it may deem necessary for the purpose of gaining admittance
to and retaking possession of the Leased Premises and the Lessee hereby releases the Lessor
from all actions, proceedings, claims and demands whatsoever for or in respect of any such
forcible entry or any loss or damage in connection therewith or consequential thereupon;
	 
	 	(c)	 	the Lessor may relet the Leased Premises or any part thereof for a term or terms which may be
less or greater than the balance of the Term and may grant reasonable concessions in
connection therewith; and
	 
	 	(d)	 	the Lessee shall pay to the Lessor on demand:






	 	(i)	 	rent and all other amounts payable hereunder up to the time of re-entry or
to termination, whichever shall be the later; and
	 
	 	(ii)	 	such reasonable expenses as the Lessor may incur or has incurred in
connection with the re-entering, terminating, reletting, collecting sums due or
payable by the Lessee, realizing upon assets seized, including without limitation
brokerage, legal fees and disbursements on an indemnification basis as between a
solicitor and his own client, and the expenses of keeping the Leased Premises in good
order, repairing the same and preparing them for reletting; and
	 
	 	(iii)	 	at the Lessor’s option, either of the following:(A)as liquidated damages
for the loss of refit and other income of the Lessor expected to be derived from the
lease during the period which would have constituted the unexpired portion of the
Term had it not been terminated, the greater of:






	 	(1)	 	an amount determined by reducing to present worth at an
assumed interest rate of eighteen (18%) per cent per annum all Basic Rent and
Additional Rent to become payable during the period which would have
constituted the unexpired portion of the Term, such determination to be made
by the Lessor, who may make reasonable estimates of when any such other
amounts would have become payable and may make such other
assumptions of fact as may be reasonable in the circumstances; and
	 
	 	(2)	 	an amount equal to accelerated Basic Rent and Additional Rent
for a period of six (6) months; or






	 	(iv)	 	damages on the footing of a present recovery of damages for loss of benefit
of the Lease over its unexpired Term, without any requirement in law or in equity
imposed upon the Lessor to notify the Lessee prior to, concurrently with, or at any
time following the exercise of the option of the













 



Page 33





	 	 	 	Lessor to terminate this Lease that the Lessor intends to claim such damages
from the Lessee.





17.7 No Waiver




     No provision of this Lease shall be deemed to have been waived by the Lessor unless a written
waiver from the Lessor has first been obtained and, without limiting the generality of the
foregoing, no acceptance of rent subsequent to any default and no condoning, excusing or
overlooking by the Lessor on previous occasions of any default nor any earlier written waiver
shall be taken to operate as a waiver by the Lessor or in any way to defeat or affect the rights
and remedies of the Lessor.



17.8 Remedies Cumulative




     No reference to or exercise of any specific right or remedy by the Lessor shall prejudice or
preclude the Lessor from any other remedy, whether allowed at law or in equity or expressly
provided for herein. No such remedy shall be exclusive or dependent upon any other such remedy,
but the Lessor may from time to time exercise any one (1) or more of such remedies independently
or in combination. Without limiting the generality of the foregoing, the Lessor shall be entitled
to commence and maintain an action against the Lessee to collect any rent not paid when due,
without exercising the option to terminate this Lease.



17.9 Failure to Pay




     Should the Lessee fail to make any payment required by the Lessee pursuant to this Lease, the
Lessor may, without prejudice to any other right or remedy of the Lessor, pay all or part of such
required payment without prior notice to the Lessee and recover such payment from the Lessee as
Additional Rent.



17.10 Lien on Trade Fixtures




     If the Lessee at any time while in possession of the Leased Premises during the Term or
otherwise, is in default under any covenant or obligation contained in this Lease, the Lessor has a
paramount lien and charge on all stock-in-trade, inventory, fixtures, equipment, chattels and
facilities of the Lessee as security against loss or damage resulting from any such default by the
Lessee and the said stock-in-trade, inventory, fixtures, equipment, chattels or facilities shall
not be removed by the Lessee until such default is cured, unless otherwise permitted in writing by
the Lessor and such lien and charge is hereby granted by the Lessee in favour of the Lessor. The
provisions of this Article and the lien and charge hereby conferred shall survive expiration of the
Term or earlier termination of this Lease.



ARTICLE 18 — ENVIRONMENTAL




18.1 Definitions





	 	(a)	 	“Contaminant” includes but is not limited to, any pollutants,
dangerous substances, liquid waste, toxic substances, hazardous wastes,
hazardous













 



Page 34





	 	 	 	materials, hazardous substances and contaminants including any of the
foregoing as defined in any Environmental Law;
	 
	 	(b)	 	“Environment” means the components of the earth and includes:






	 	(i)	 	air, land and water;
	 
	 	(ii)	 	all layers of the atmosphere;
	 
	 	(iii)	 	all organic or inorganic matter and living organisms; and
	 
	 	(iv)	 	the interacting natural systems that include components
referred to in Sections 17.1(b)(i) to I7.1(b)(iii);






	 	(c)	 	“Environmental Activity” means any activities, events or circumstances in
respect of a Contaminant, including, without limitation, its storage, use, holding,
collection, purchase, accumulation, assessment, generation, manufacture,
construction, processing, treatment, stabilization, disposition, handling
or transportation, or its Release into the Environment;
	 
	 	(d)	 	“Environmental Authority” means any international, federal, provincial or
municipal ministry, department or agency which enforces Environmental Laws;
	 
	 	(e)	 	“Environmental Damage” means any direct or indirect damage from any
Environmental Activity which violates any Environmental Law;
	 
	 	(f)	 	“Environmental Law” means any and all current and future
applicable international, federal, provincial or municipal laws, by-laws, statutes,
regulations, orders or judgments, relating to the environment, occupational health and
safety, or any Environmental Activity;
	 
	 	(g)	 	“Order” means any claim, action, investigation, lien, prosecution, notice, work
order, control order, stop order or directive, written or oral, issued, pending or
threatened from any third party, court or Environmental Authority;
	 
	 	(h)	 	“Release” includes, but is not limited to, spill, discharge, dispose of,
spray, inject, inoculate, abandon, deposit, leak, seep, pour, emit, empty, throw,
dump, place and exhaust and any definition of Release in any future applicable
Environmental Law.





18.2  Lessee’s Covenants




     The Lessee covenants and agrees with the Lessor:




	 	(a)	 	To comply with all Environmental Laws existing now or in the future and/or any
environmental permits held by the Lessee relating to its activities in the Leased
Premises during the Term and to report to the Lessor immediately:













 



Page 35











	 	(i)	 	Any material Release of any Contaminant on the Leased
Premises, the Building or the Lands during the Term by the Lessee or as a
result of the Lessee’s use or occupancy of the Leased Premises;
	 
	 	(ii)	 	Any regulatory action or proposed action by an
Environmental Authority in connection with the Leased Premises or any
activity conducted on the Leased Premises during the Term. The Lessee shall
provide the Lessor with copies of any Orders, reports or other
communications received by the Lessee or any agent of the Lessee from any
Environmental Authority with respect to the Leased Premises forthwith upon
receipt. The Lessee shall, concurrently, provide the Lessor with copies of
any communications submitted to any Environmental Authority with respect to
the Leased Premises by or on behalf of the Lessee;
	 
	 	(iii)	 	Any violation of Environmental Law as a result of
activities conducted on the Leased Premises during the Term or any breach of
any of the covenants contained herein;






	 	(b)	 	To immediately take all remedial action required by any Order in the event of a
violation of any Environmental Law as a result of activities conducted on the Leased
Premises or the Release of a Contaminant on the Leased Premises during the Term, and to
forthwith advise the Lessor in writing of such violation and of the remedial action
being taken in respect thereof;
	 
	 	(c)	 	To maintain the Leased Premises and Environmental Activity to at least the
standards required by Environmental Laws relating to the industrial use and nature of
the business conducted on the Leased Premises, as regulated and interpreted by any
relevant Environmental Authority.





18.3 Indemnity




     The Lessee hereby indemnifies and saves harmless the Lessor and its directors, officers,
employees and agents of and from all claims, demands, actions, causes of action, costs, expenses,
losses, judgments, damages, liabilities, assessments, fines, penalties, obligations (including
remediation obligations) and reasonable professional advisor fees on a solicitor and client basis
which the Lessor and its directors, officers, employees and agents shall or may become liable,
incur or suffer by reason of any Environmental Damage to the Leased Premises, the Building or the
Lands or emanating from the Leased Premises, the Building or the Lands arising directly or
indirectly as a consequence of the operations, activities or omissions during the Term of the
Lessee or its employees, contractors, agents, invitees or others for whom the Lessee is responsible
at law.



18.4 Survival of Environmental Covenants




     Notwithstanding the expiration or termination of this Lease, the agreements and covenants
contained in Article 17 shall nonetheless survive the expiration or termination of this Lease and
remain in full force and effect for the benefit of the Lessor.












 



Page 36




18.5 Lessor’s Right to Remedy Default



     If the Lessee shall fail to observe, perform or keep any of the provisions of this Lease with
respect to environmental issues, to be observed, performed and kept by the Lessee, the Lessor may,
but shall not be obliged to, at its discretion and without prejudice to any other right, claim or
action it may have, rectify the default of the Lessee, whether or not performance by the Lessor on
behalf of the Lessee is otherwise expressly referred to in the applicable section of this Lease.
For such purpose the Lessor may make any payment or do or cause to be done such things as may be
required including, without limiting the generality of the foregoing, entry upon the Leased
Premises. Any such performance by or at the behest of the Lessor shall be at the expense of the
Lessee and the Lessee shall pay to the Lessor as Additional Rent the cost thereof.



ARTICLE 19  — INTERPRETATION AND MISCELLANEOUS




19.1  Arbitration



If the parties are unable to agree upon the fair market value of the Basic Rent as contemplated by
section 4.4 (a) or 4.4 (b) hereof, upon the fair market value of the Basic Rent as contemplated by
section 4.5 (b) (ii) hereof, or upon the fair market value of the Basic Rent as contemplated by
section 4.6 (g) hereof, then matters shall be settled by arbitration in accordance with the
Arbitration Act by a single arbitrator. For the purposes of any such arbitration, the arbitrator
shall be bound by the principals and minimum amounts mentioned in the aforesaid sections.




19.2 Further Documents and Assurances




     The parties hereto and each of them do hereby covenant and agree to do such things and
execute such further documents, agreements and assurances as may be necessary or advisable from
time to time in order to carry out the terms and conditions of this Agreement in accordance with
their true intent, including, without limitation, such documents and instruments as the Lessor
deems necessary or advisable to carry out the terms and conditions of Sections 4.5 and 4.6 hereof.



19.3 Collateral Representations and Agreements




     This Lease constitutes the entire agreement between the Lessor and Lessee pertaining to the
Leased Premises, and may be amended only by an agreement in writing signed by the Lessor and the
Lessee. The Lessee acknowledges that there are no collateral agreements or representations,
warranties, promises, or inducements pertaining to the Leased Premises or this Lease not embodied
herein.



19.4 Costs. Expenses and Expenditures




     All costs, expenses and expenditures of the Lessor, incurred upon or as a result (direct or
indirect) of any default by the Lessee hereunder or in exercise or enforcement of any of the
Lessor’s rights or remedies hereunder, including, without limitation, the legal costs incurred by












 



Page 37






the Lessor on a full indemnification basis as between solicitor and his own client shall, forthwith
on demand, be paid by the Lessee to the Lessor as Additional Rent.



19.5 
Time of the Essence




     Time shall be of the essence hereof.



19.6 Notices




     Any written notice provided for in this Lease shall be effectively given to the Lessor by
registered mail addressed to or by delivery to the Lessor at address set out in Section 2.1(a)(ii)
or at such other address as the Lessor may from time to time designate in writing, and given to
the Lessee by registered mail addressed to or by delivery to the Lessee at the address set out in
Section 2.1(b) or at such other address as the Lessee may from time to time designate in writing
or at the Leased Premises, and every such notice shall be deemed to have been given three (3)
business days after the day it was so mailed (unless mail service is then affected or likely to be
affected prior to receipt by labour unrest or strike) or upon the day it was delivered.



19.7 Registration




     The Lessee may register this Lease by filing a caveat provided such caveat does not attach
this Lease to it or incorporate this Lease into it and only recites the Parties to the Lease, the
date of the Lease, the legal description of the Lands, and the Term of the Lease and any renewal
options.



19.8 Legal Relationship




     The provision of this Lease for the payment by the Lessee of Additional Rent is a reservation
of rent only, and neither such provision nor any other provision of this Lease is intended to
create a joint venture or partnership or any other similar relationship between the Lessor and the
Lessee, it being agreed that such relationship is that of lessor and lessee only.



19.9 Accord and Satisfaction




     No payment by the Lessee or receipt by the Lessor of a lesser amount than the payment of
Basic Rent or Additional Rent or other payments herein stipulated shall be deemed to be other than
on account of the earliest stipulated sum due, nor shall any endorsement or statement of any
cheque or any letter accompanying any cheque or payment be deemed an accord and satisfaction, and
the Lessor may accept such cheque or payment without prejudice to the Lessor’s right to recover
the balance due or pursue any other remedy provided in this Lease.



19.10 Net Lease




     The Lessee acknowledges and agrees that this Lease shall be a net lease for the Lessor and
that the Lessor shall not be responsible during the term hereof for any costs, charges, expenses or
outlays of any nature whatever arising from, or relating to, the Leased Premises or












 



Page 38






the Building or the contents thereof or the Lands, excepting only those for which the Lessor has
covenanted hereunder to pay on its own account and the Lessor’s income taxes.




19.11 Interpretation




     This Lease shall be construed and governed by the laws of the Province of Alberta.
Should any provision of this Lease be unenforceable or illegal it shall 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 has not been included. The headings of Articles set out in this Lease
are for convenience of reference only, and shall not affect the interpretation thereof. All
references to the Lessee shall be read with such changes in number and gender as may be
appropriate, according to whether the Lessee is a male or female person or a corporation or
partnership, and if more than one person constitutes the Lessee their covenants shall be deemed to
be joint and several. The words “herein”, “hereunder”, and similar expressions used in any
provision of this Lease relate to the whole of this Lease and not to such provisions only.



19.12 Enurement




     This Lease and everything herein contained shall, except where otherwise provided, be
binding upon and enure to the benefit of the Parties and the successors and assigns of the Lessor,
and the approved successors and permitted assigns of the Lessee.



19.13 Acceptance




     The Lessee hereby accepts this Lease of the Leased Premises, to be held by it as Lessee
subject to the conditions, restrictions and covenants above set forth.



19.14 Counterpart Execution




     This Agreement may be executed in several counterparts each of which when so executed
shall be deemed to be an original, and such counterparts shall constitute one and the same
instrument and notwithstanding their date of execution shall be deemed to bear date as of the date
of this Agreement.



     IN WITNESS WHEREOF the Lessor and the Lessee have properly executed this Lease.




	 	 	 	 	 
	THE WESTAIM CORPORATION

	 	NUCRYST PHARMACEUTICALS CORP.
	 
	 		 
	Per:	 /s/ [ILLEGIBLE]

	 	Per:	 /s/ [ILLEGIBLE]

	 
	 		 
	Per:	 /s/ [ILLEGIBLE]


	 	Per:	 /s/ [ILLEGIBLE]


















 






SCHEDULE
A-1



LEASED PREMISES

R&D/AIMS/ BUILDING









 









 








SCHEDULE
A-2



LEASED PREMISES

MMC BUILDING









 









 








SCHEDULE
A-3



LEASED PREMISES

MMC BUILDING










 









 








SCHEDULE
A-4



LEASED PREMISES

MMC BUILDING









 









 








SCHEDULE
A-5



LEASED PREMISES

MMC BUILDING









 









 








SCHEDULE
A-6



RESERVED PARKING STALLS










 









 








SCHEDULE
A-7


RESERVED PARKING STALLS









 









 








SCHEDULE
B-1



COMPLEX COMMON FACILITIES

R&D/AIMS/BUILDING










 









 








SCHEDULE
B-2



COMPLEX COMMON FACILITIES

MMC BUILDING











 









 














 









 









Page 1



SCHEDULE“C”




TENANT’S  FIXTURES & LEASEHOLD IMPROVEMENTS




1.0 Plant Equipment




Roll Coater One: RC-1





	§	 	Vacuum Vessel
	 
	§	 	Four complete pump trains including:






	 	-	 	E2M275 rotary vacuum pumps
	 
	 	-	 	EH2600 Boosters
	 
	 	-	 	Aerzen blowers c/w 40 HP GE motors
	 
	 	-	 	All valves, piping and instrumentation

	 
	 	-	 	Pump stands






	§	 	Two complete diffusion pump systems
	 
	§	 	One Polycold cryopump
	 
	§	 	PLC cabinet complete with all cables and instruments
	 
	§	 	Web drive cabinet
	 
	§	 	MDX cabinet c/w power supplies and wiring
	 
	§	 	UPS including circuit panel “F”, panel “UPS”, and transformer
	 
	§	 	Magnetron chilled water system including:






	 	-	 	water pump
	 
	 	-	 	heat exchanger
	 
	 	-	 	water tank
	 
	 	-	 	controller & valve
	 
	 	-	 	all instrumentation associated with system






	§	 	Motor control center #7 (RC-1 basement)
	 
	§	 	Air handler AS-11 (RC-1 cooling)
	 
	§	 	One ton budget crane complete
	 
	§	 	Oxygen control panel complete





Roll Coater Two: RC-2 a.k.a. APIC-1





	§	 	Vacuum Vessel
	 
	§	 	One complete pump train including:






	 	-	 	E2M275 rotary vacuum pump
	 
	 	-	 	EH2600 Booster
	 
	 	-	 	Aerzen blowers c/w 40 HP GE motor
	 
	 	-	 	All valves, piping and instrumentation
	 
	 	-	 	Pump stand






	§	 	Motor control center #8 in RC-2 electrical room c/w transformers




 









 











Page 2





	§	 	Control cabinet c/w all cabling and instrumentation
	 
	§	 	Logic/drive cabinet c/w all cabling and instrumentation
	 
	§	 	MDX cabinet c/w all power supplies and wiring





Roll
Coater Three: RC-3





	§	 	Vacuum Vessel
	§	 	Two complete pump trains including:






	 
	 	-	 	E2M275 rotary vacuum pumps
	 
	 	-	 	EH2600 Boosters
	 
	 	-	 	Aerzen blowers c/w 40 HP GE motors
	 
	 	-	 	All valves, piping and instrumentation
	 
	 	-	 	Pump stands






	§	 	One Polycold cryopump
	 
	§	 	PLC cabinet complete with all cables and instruments
	 
	§	 	Control console
	 
	§	 	Gas distribution cabinet
	 
	§	 	MDX cabinet c/w power supplies and wiring
	 
	§	 	Two 250kg overhead cranes
	 
	§	 	Hydraulic pumping system
	 
	§	 	Magnetron chilled water system including:






	 	-	 	water pump
	 
	 	-	 	heat exchanger
	 
	 	-	 	water tank

	 
	 	-	 	controller & valve
	 
	 	-	 	all instrumentation associated with system






	§	 	Motor control center #9 complete with both transformers





Roll Coater Four: RC-4





	§	 	Vacuum Vessel






	§	 	Four complete pump trains including:






	 	-	 	E2M275 rotary vacuum pumps
	 
	 	-	 	EH2600 Boosters
	 
	 	-	 	Aerzen blowers c/w 40 HP GE motors
	 
	 	-	 	All valves, piping and instrumentation
	 
	 	-	 	Pump stands






	§	 	Polycold c/w all instrumentation
	 
	§	 	PLC cabinet complete with all cables and instruments






	§	 	Web drive cabinet
	 
	§	 	MDX cabinet c/w power supplies and wiring
	 
	§	 	UPS
	 
	§	 	Magnetron chilled water system including:






	 	-	 	water pump




 









 











Page 3





	 	-	 	heat exchanger






	 	-	 	water tank


	 
	 	-	 	
 controller & valve
	 
	 	-	 	all instrumentation associated with system






	§	 	Motor control center in RC-4 basement c/w two transformers
	 
	§	 	Air handler (RC-4 cooling)
	 
	§	 	One ton crane complete
	 
	§	 	Three ton crane complete
	 
	§	 	Oxygen control panel complete





Laminator One: LM-1





	§	 	Sonic cabinet
	 
	§	 	Control console
	 
	§	 	Two unwind modules
	 
	§	 	Sonic module
	 
	§	 	Rewind module
	 
	§	 	Crush cutter
	 
	§	 	Trim collection system
	 
	§	 	LM-1 Overhead crane





Laminator Two: LM-2





	§	 	Complete heat lamination unit






	§	 	Power transformer c/w switch gear





Packaging Machine One: PM-1





	§	 	Complete four side seal automated packaging machine






	§	 	Exit conveyor






	§	 	Unwind stands





Packaging Machine Two: PM-2





	§	 	Complete 4SS-400 four side seal automated packaging machine
	 
	§	 	4SS Control cabinet
	 
	§	 	Integrated PD120 dressing manufacturing system
	 
	§	 	Variable speed exit conveyor
	 
	§	 	Power transformer c/w motor control center





Facility Systems




 Four complete central vacuum systems along with all stainless steel vacuum lines.



 









 






Page 4





	§	 	Two Bry-Air dehumidification systems (air dryers) complete with all instrumentation,
	 	 	cooling coils and associated ductwork.
	 
	§	 	Two raw material dryers c/w controllers and air filtration systems
	 
	§	 	Controlled environment ventilating and air conditioning unit (VU-1) c/w all
	 	 	instrumentation and auxiliary equipment
	 
	§	 	Controlled environment ventilating and air conditioning unit (AS-9) c/w all
	 	 	instrumentation and auxiliary equipment
	 
	§	 	All temperature & humidity transmitters and data loggers, excluding all Building
	 	 	specific operating controls
	 
	§	 	All differential pressure monitors connected to Lessee’s equipment





Other Equipment





	§	 	Three Atom hydraulic clicker die cutting presses
	 
	§	 	One hydraulic compactor
	 
	§	 	One complete bead blasting unit
	 
	§	 	One target de-bonding station c/w controller and ventilating equipment





Controlled Environments (cleanrooms)





	§	 	Material and shaft racking
	 
	§	 	PM-2 change part racks
	 
	§	 	HEPA filters and clean room lighting
	 
	§	 	Roll storage spindle racking





2.0 Laboratory Equipment





	§	 	All laboratory equipment including but not limited to:






	 	-	 	Fume hoods c/w roof fans
	 
	 	-	 	Bio-cabinets c/w roof fans
	 
	 	-	 	Environmental chambers c/w water distillers
	 
	 	-	 	Autoclaves
	 
	 	-	 	Centrifuges c/w accessories
	 
	 	-	 	Refrigeration & Freezers
	 
	 	-	 	All analytical equipment c/w all accessories






	§	 	All research equipment including but not limited to:






	 	-	 	Interatom coater c/w all auxiliary equipment
	 
	 	-	 	Argo coater c/w all auxiliary equipment
	 
	 	-	 	MRC coater c/w all auxiliary equipment
	 
	 	-	 	Surface preparation equipment
	 
	 	-	 	Summit laminator
	 
	 	-	 	Bondtex laminator




 









 











Page 1




SCHEDULE“D” 



DEFINITIONS




     In this Lease, the following words, phrases and expressions are used with the meanings
defined as follows:




	 	(a)	 	“Agreement” or “Lease” means this Lease as the same may be amended from
time to time in accordance with the terms hereof and the expressions “herein”,
“hereof, “hereto”, “above”, “below” and similar expressions used in any
paragraph, subparagraph, section or article of this Lease refer and relate to the
whole of this Lease and not to that paragraph, subparagraph, section or article
only, unless otherwise expressly provided.
	 
	 	(b)	 	“Additional Rent” means the Additional Rent payable by the Lessee to the Lessor
pursuant to this Lease as provided for in Section 5.2 hereof.
	 
	 	(c)	 	“Additional Space” means the Expansion Additional Space or the Lease Option
Additional Space, as applicable in the circumstances.
	 
	 	(d)	 	“Alberta CPI” or “CPI” means the All-Items Consumer Price Index for Alberta as
published by Statistics Canada or other department or agency of the Canadian
federal government from time to time.
	 
	 	(e)	 	“Arbitration Act” means the Arbitration Act (Alberta), and amendments thereto,
or
any like statute in effect from time to time.
	 
	 	(f)	 	“Basic Rent” means the rent set out in Section 2.1(f), as may be amended from
time to time by the incorporation of Additional Space into the Leased Premises
pursuant to the terms of this Lease. For greater certainty “Basic Rent” does not
include any goods and services tax (G.S.T.) which is payable by the Lessee in
addition to Basic Rent.
	 
	 	(g)	 	“Building” means the MMC Building or the R&D/AIMS I Building, as applicable in
the circumstances, including the Common Facilities, all as the same may be
expanded or altered in accordance with this Lease from time to time.
	 
	 	(h)	 	“Building Expansion” shall have the meaning given to it in section 4.6(a).
	 
	 	(i)	 	“Capital Improvement Costs” means any and all planning, design, project
management and construction costs associated with improvements to the Unleased Space
and any and all fees and expenses and costs associated with such activities payable to
contractors, subcontractors, consultants and the municipality relating thereto, plus
fifteen (15%) percent on all of such amounts.
	 
	 	(j)	 	“Commencement Date” means the date set out in Section 2.1 (e)(ii).




 









 











Page 2





	 	(k)	 	“Common Facilities” means the Complex Common Facilities and all lands,
improvements, facilities, utilities, installations, and equipment forming part of the
Building and the Lands other than parts of those lands, improvements, facilities,
utilities, installations and equipment designated by the Lessor for leasing to tenants
of the Building or for exclusive use by the Lessor or tenants.
	 
	 	(I)	 	“Complex Common Facilities” means the cafeteria located adjacent to the
R&D/AIMS I Building on the lands legally described as Lot 49, Block 1, Plan 042 4648
and the front lobby, cafeteria and board room of the MMC Building located on the
Lands, all as shown on Schedule “B-1” and “B-2” attached.
	 
	 	(m)	 	“Construction Costs” means any and all costs and expenses means any and all
costs and expenses of planning, design, development, demolition, project management
and construction relating to the Building Expansion and the Expansion Additional Space
in accordance with agreed upon plans and specifications and any and all fees and
expenses and costs associated with such activities payable to contractors,
subcontractors, consultants and the municipality relating thereto, plus fifteen (15%)
percent on all of such amounts.
	 
	 	(n)	 	“CPI at End of Term” means any of the following as applicable in the
circumstances:






	 	(i)	 	For a First Renewal Term, the Alberta CPI on the last day of
the month which is six months prior to the last day of the initial Term;
	 
	 	(ii)	 	For a Second Renewal Term, the Alberta CPI on the last day of
the month which is six months prior to the last day of the First Renewal Term;
	 
	 	(iii)	 	For a Third Renewal Term, the Alberta CPI on the last day of
the month which is six months prior to the last day of the Second Renewal
Term;
	 
	 	(iv)	 	In the event that the Lessee has accelerated the exercise of
its renewal rights pursuant to section 4.5(b)(iv) or section 4.6(g) hereof
(the “accelerated renewal”), a number which is extrapolated to be the CPI at
the expiry date of the then current term of the lease (without considering the
accelerated renewal) on the basis that the rate of change in the Alberta CPI
from the first day of the then current Term or renewal, as applicable, until
the last day of the then current Term or renewal, as applicable, shall be the
same as the rate of change in the Alberta CPI from the first day of the then
current Term or renewal, as applicable, until the date of exercise of the
accelerated renewal.






	 	(o)	 	“Environmental Costs” shall mean any and all costs and expenses incurred by the
Lessor associated with disposal of effluent from the Buildings and adjacent lands.
	 
	 	(p)	 	“Expansion Additional Space” shall have the meaning given to it in section 4.6
hereof.




 









 











Page 3





	 	(q)	 	“Floor Area” means the area, expressed in square feet or such other unit as the
Lessor may determine, of all floors and mezzanines of all storeys in each interior
leasable space in the Building or any specified portion thereof, calculated by
measuring from the exterior surfaces of the exterior walls and of all walls adjoining
Common Facilities, from the centre line of party or demising walls separating two (2)
or more interior leasable premises and from the lease line separating any interior
leasable premises from other areas in the Building (as the case may be) where no wall
exists, all without deduction or exclusion for any space occupied by or used for
columns, stairs, elevators, escalators or other interior construction or equipment or
for any storefront or doorway areas recessed from the lease line, and when used in
respect of the Leased Premises means the area of all floors and mezzanines of all
storeys in the Leased Premises, calculated as aforesaid.
	 
	 	(r)	 	“Governmental Requirements” means any and all applicable laws, rules,
regulations, ordinances or orders of a municipality or other governmental authority.
	 
	 	(s)	 	“Gross Leaseable Area” of the Buildings or any specified portion thereof means
the aggregate, from time to time, of the Floor Areas of all interior leaseable areas
in the Buildings or any specified portion thereof.
	 
	 	(t)	 	“High Volume Air Flow Area” means the portions of the Buildings which are
served by a make-up air unit system.
	 
	 	(u)	 	“Lab Area” means the portion of Floor Area in the Buildings used from time to
time for laboratory purposes.
	 
	 	(v)	 	Lands” means the lands described in Section 2.1 (g).
	 
	 	(w)	 	“Leased Premises” means the portion of the MMC Building comprising
approximately 62,684 square feet of Floor Area as shown cross-hatched in red on
Schedules “A-2”, “A-3”, “A-4” and “A-5” attached hereto and the portion of the
R&D/AIMS I Building comprising approximately 7,854 square feet of Floor Area as shown
shaded in green on Schedule “A-1” attached hereto.
	 
	 	(x)	 	“Lessee” means the Party described in Section 2.1(b) and the successors and
permitted assigns thereof.
	 
	 	(y)	 	“Lessor” means the Party described in Section 2.1 (a) and the successors and
assigns thereof.
	 
	 	(z)	 	“MMC Building” means the building located on the lands legally described as Lot
3 Plan 912 0367.
	 
	 	(aa)	 	“Notice” includes requests, demands, designations, statements or other writings
in this Lease required or permitted to be given by the Lessor to the Lessee or by the
Lessee to the Lessor and all writs, originating notices of motion, affidavits and any
other ancillary documents in support of all legal proceedings.




 









 











Page 4





	 	(bb)	 	“Operating Costs” means those operating costs associated with the Building and
the Lands as described and set forth in Article 13.
	 
	 	(cc)	 	“Option Additional Space” shall have the meaning given to it in section 4.5
hereof.
	 
	 	(dd)	 	“Other Areas” means the portion of the Buildings which are not High Volume Air
Flow Areas.
	 
	 	(ee)	 	“Parking Lands” means the lands legally described as Lot 27, Plan 962 3802.

	 
	 	(ff)	 	
“Parking Spaces” shall have the meaning given to it in section 8.3 hereof.
	 
	 	(gg)	 	“Parties” means the Lessor and Lessee and “Party” means either the Lessor or
the Lessee as the context requires.
	 
	 	(hh)	 	“Planning Costs” means any and all costs and expenses incurred by the Lessor
in planning, budgeting, engineering, consulting, designing and otherwise considering
the Lessee’s requirements for the Expansion Additional Space and all activities
necessarily incidental, plus fifteen (15%) percent.
	 
	 	(ii)	 	“Property Taxes” means all general, special, local improvement, school and
water taxes, levies, rates and charges from time to time imposed against the Building
and the Lands, or any part thereof, by municipal or other governmental authorities
having jurisdiction, together with the costs of contesting or negotiating the same,
but exclusive of income taxes, business taxes, place of business taxes, estate,
inheritance, succession, capital levy or transfer tax. (Should it be found that due to
changes in the method of levying or collection of any tax, levy, rate or charge to be
imposed upon the Building or the Lands, or any part thereof, or should any new tax,
levy, rate or charge be levied or imposed in lieu of or in addition to those
contemplated by the above definition, the Lessor and the Lessee hereby agree to
negotiate an amendment or new provision to this Lease as is necessary to deal with
such tax, levy, rate or charge, in an equitable manner so as to obviate any injustice
or inequity which shall have arisen and should the Lessor and the Lessee fail to agree
on such amendment or new provision the same shall be settled by arbitration in
accordance with the Arbitration Act.
	 
	 	(jj)	 	“Proportionate Share” means:






	 	(i)	 	in the case of Operating Costs (excluding natural gas costs)
relating to the Building, the proportion that the Floor Area of the portion of
the Leased Premises in the Building bears to the Gross Leaseable Area of the
Building;
	 
	 	(ii)	 	in the case of natural gas costs comprised in Operating Costs,
the Lessor’s Proportionate Share thereof shall be calculated separately from
other Operating Costs for the Building on the basis of the general principle
that High Volume Air Flow Areas in the Building consumes 2.5




 









 











Page 5





	 	 	 	times the amount of natural gas as an Other Areas in the Building;
provided that it is acknowledged that the Lessor shall not be entitled to
recover more than 100% of the natural gas costs incurred by it;






	 	(iii)	 	in the case of Section 8.2(d) and Operating Costs relating to
the Complex Common Facilities and the Lands, the sum of five thousand dollars
($5,000.00);
	 
	 	(iv)	 	in the case of Environmental Costs relating to the Building,
the proportion that the Lab Area of Leased Premises bears to the aggregate of
all of the Lab Area in the MMC Building and the R&D/AIMS I Building.






	 	(kk)	 	“Ratable Share” shall have the meaning given to it in section 8.3 hereof.
	 
	 	(II)	 	“R&D/AIMS I Building” means the three storey administrative and laboratory
building known as the “R&D/AIMS I Building” which is located on the Lands as shown on
Schedule “B-3” attached.
	 
	 	(mm)	 	“Reserved Parking Stalls” means the 33 motor vehicle parking spaces located on
the Lands and highlighted in pink on Schedules “A-6” and “A-7”.
	 
	 	(nn)	 	“Sales Tax” means the goods and services tax and any other sales tax,
consumption tax, business transfer tax, value added tax or any similar tax or
replacement tax imposed by the Government of Canada, or any provincial or municipal
government to the extent that such tax is imposed on the Lessor or is required to be
paid by or collected by the Lessor by reason of the supply of any goods or services by
the Lessor to the Lessee, the Lands, the Building or the Leased Premises or any
payments by the Lessee to the Lessor pursuant to any provision of this Lease.
	 
	 	(oo)	 	“Structural Repairs” means repairs to the foundations, the structural
subfloors, columns and beams and the structural portions of bearing walls and roofs of
the Building. For certainty, “Structural Repairs” do include repairs and replacements
of the roof membrane but do not include maintenance of any kind of the foundations,
structural subfloors, columns and beams unless such maintenance is of a capital nature.
	 
	 	(pp)	 	“Users” shall have the meaning given to it in section 8.3 hereof.