AGREEMENT OF LEASE



 



EXHIBIT 10.14



 






 





AGREEMENT OF LEASE




	 	 	 
	BETWEEN:	 	
STORAGE LEASEHOLDS INC. a body politic and corporate, duly
incorporated, having its principal place of business in the Province of
Quebec at 300 Canal Bank Road, Ville St-Pierre, herein acting and
represented by Mr. Milan Bratin, duly authorized as he so declares;
	 	 	 
	 	 	
(hereinafter referred to as the “LESSOR”)
	 	 	 
	 	 	PARTY OF THE FIRST PART
	 	 	 
	AND:	 	
GRAND TOYS LTD./JOUETS GRAND LTEE., a corporation duly incorporated,
having its head office at 1710-1750 South Service Road, Trans Canada
Highway, Dorval, Quebec, herein acting and represented by Stephen Altro
its President, duly authorized for the purposes hereof in virtue of a
resolution of its Board of Directors enacted on the 2nd day of the month
of October 1998, a certified copy of which is attached hereto;
	 	 	 
	 	 	
(hereinafter referred to as the “LESSEE”)
	 	 	 
	 	 	
PARTY OF THE SECOND PART




	1.	 	DEFINITIONS



        In this lease, the following expressions shall have the meaning ascribed
to them in this section:



			
	 	(i)	“Building” means that certain emplacement fronting on the
service road of the Trans Canada Highway and situated in the City
of Dorval, Province of Quebec and composed of part of lot numbers
ninety and ninety-two (Pt. 90 and 92) on the Official Plan and
Book of Reference of the Parish of Point Claire, measuring four
hundred feet and thirteen hundredths of a foot (400.13’) in width
by nine hundred and two feet and two tenth of a foot (902.2) in
its northeast line and nine hundred and four feet and fifteen
hundredths of a foot (904.15’) in its southwest line. The said
emplacement is bounded in front to the northwest by the south
service road of the Trans Canada Highway, in rear to the southeast
by lot number 88 of said cadastre and on both sides by other parts
of said lots numbers 90 and 92. The southwest sideline thereof is
parallel to and at a distance of four hundred and ninety-four feet
and five tenths of a foot (494.5’) from the northeast line of
André Street.




	 	 	 	With the industrial building thereon erected bearing civic
number 1710-1750 South Service Road, Trans Canada Highway,
Dorval, Quebec.




			
	 	(ii)	The Lessee takes cognizance of a servitude of right of
passage affecting the premises described in sub-paragraph (a)
hereinabove, the whole as









 





		
	 	constituted and created in a Deed of
Sale registered at Montreal under the number 2470211, as amended
pursuant to a Deed of Amendment of Servitude registered at
Montreal under the number 2743817, copies of said documents being
annexed hereto as Schedule “A”.




			
	 	(iii)	“GRA” means 104,216 square feet, being the agreed total
square footage of the Building, which area includes mezzanine,
truckwell, railwell and offices, if any;




			
	 	(iv)	“Land” shall mean the land described in Schedule “B”
attached hereto;




			
	 	(v)	“Lease” or “Lease Agreement” shall mean this agreement of lease;




			
	 	(vi)	“Lessee” shall mean Grand Toys Ltd;




			
	 	(vii)	“Lessor” shall mean Storage Leaseholds Inc.;




			
	 	(viii)	“Premises” means, collectively, the Building and the Land,
together with the right to use the railroad spur line adjoining
the Building;




			
	 	(ix)	“Proportionate Share” means one hundred percent (100%).




	2.	 	TERM AND LEASE OF PREMISES




	 	 	 	Lessor hereby leases to Lessee the Premises for a period of ten (10)
years commencing on December 1, 1998 (hereinafter referred to as the
“Commencement Date” and terminating on November 30, 2008 (such period
being herein referred to as the “Term”).




	3.	 	BASE RENTAL



        The Lessee shall pay throughout the Term to the Lessor, as more fully set
out herein, without deduction, diminution, compensation or set-off the
following annual basic minimum sum (hereinafter referred to as the
“Base Rent”), the Lessee acknowledging that the rental set forth below is entirely
“net” to the Lessor.


        From December 1, 1998 to November 30, 2003, an annual Base Rent of Three
Hundred and Eighty Thousand Dollars Three Hundred and Eighty-Eight Dollars and
Forty Cents ($380,388.40), calculated on the basis of Three Dollars and
Sixty-Five Cents ($3.65) net per square foot of Rentable Area per annum and
payable in equal and consecutive monthly instalments of Thirty-One Thousand Six
Hundred and Ninety-Nine Dollars and Three Cents ($31,699.03) each, payable in
advance on the first day of each and every calendar month.


        From December 1, 2003 to November 30, 2008, an annual Base Rent of Four
Hundred and Six Thousand Four Hundred and Forty-Two Dollars and Forty Cents
($406,442.40), calculated on the basis of Three Dollars and Ninety Cents
($3.90) net per square foot of Rentable Area per annum and payable in equal and
consecutive monthly instalments of Thirty-Three Thousand Eight Hundred and
Seventy Dollars and Twenty Cents ($33,870.20) each, payable in advance on the
first day of each and every calendar month.


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	4.	 	NET-NET RENTAL



        Subject to stipulations to the contrary contained herein, the Lease shall
be absolutely net-net to Lessor; however, as long as they are not damaged by
Lessee’s fault or negligence, Lessor shall make, at its sole expense (i) all
roof repairs and replacements; (ii) structural repairs and replacements;
subject to the fact that damages to roof and structure caused by forcible entry
by third parties (whether the said third parties be known or unknown and
whether or not such entry constitutes a criminal act) shall be the
responsibility of Lessee.


        Should Lessor fail to accomplish the repairs, replacements, maintenance
and expenditures mentioned above, Lessee, after giving written notice of at
least fifteen (15) days to Lessor (or if the nature of the default is such that
it takes more than fifteen (15) days to correct, such longer delay as is
necessary to diligently and continuously proceed to correct such default until
fully regularized, on the condition that Lessor does in fact start such
remedial work within fifteen (15) days and thereafter diligently and
continuously carry on such remedial work until fully regularized) shall have
the right to effect such repairs, replacements, maintenance and expenditures,
and all reasonable costs so incurred by Lessee shall be payable by Lessor to
Lessee upon receipt by Lessor of all pertinent documentation evidencing such
costs.


        Unless otherwise specifically excluded or stipulated to the contrary
herein, Lessee shall pay, without duplication, its Proportionate Share of all
municipal, provincial and federal taxes concerning the Premises, including the
water tax (but excluding income and capital tax of Lessor, which shall be the
responsibility of Lessor). In this regard, the Lessor shall present all such
tax assessments to Lessee upon receipt thereof, and Lessee shall pay to Lessor,
by or before the 20th day preceding the due date indicated by the taxing
authority, the amount of such tax assessment or instalment thereof, as the case
may be.


        Furthermore, and unless specifically excluded or stipulated to the
contrary herein, Lessee shall pay, without duplication, its Proportionate Share
of all maintenance costs of the Premises (subject to what is the responsibility
of Lessor provided for in this Lease) and its Proportionate Share of all the
costs of the insurance taken in accordance with Section 10 below.


        Unless otherwise specifically excluded or stipulated to the contrary
herein, Lessee shall pay for all electricity and gas used in the Building.


        Lessee may contest, directly with the taxing authorities, the obligation
of Lessor or of Lessee to pay real estate taxes, or any assessment or
evaluation related thereto so long as Lessee prosecutes such contestation
diligently and in good faith, and advises Lessor of such contestation at least
ten (10) business days before undertaking such
contestation. In this regard, should both Lessor and Lessee wish to make
such contestation, Lessor and Lessee agree to cooperate in good faith, to
coordinate their recourses and reasonably attempt to obtain the most
advantageous result for both of them.


        Lessee shall promptly notify the insurers (with copy to Lessor) of any
damages to the Premises that need reporting under the insurance policies taken
by Lessee as mentioned in Section 10 below.


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	5.	 	PREMISES “AS IS”



        The Lessor will deliver the Premises on an “as is” basis, on the condition
and understanding that the Lessee is and has occupied the land and Building and
knows the condition of same.



	6.	 	LESSOR’S WORK



        The Lessor shall perform at its sole cost and expense the improvements set
out in Schedule B hereto and shall complete such work before December 1, 1998.


        The Lessor shall provide, at its own expense, improvements and work in
accordance with detailed drawings and specifications prepared by the Lessor.
The Lessor shall use its best efforts to employ Murray Frankel Consultants in
connection therewith, which improvements must be approved by the Lessee, acting
reasonably, (the “Leasehold Improvements”). The Lessor will not charge any
administration or supervision fees whatsover relating to the build out of the
Leasehold Improvements.


           The Lessor will submit to the Lessee detailed drawings and specifications
of the layout of the Premises no later than September 30, 1998. Lessee must
provide its final comments, in writing, regarding the plans for the Leasehold
Improvements no later than October 14, 1998.


        The Lessee shall be permitted to abandon all office Leasehold Improvements
(and original warehouse improvements), installations, alterations, partitions
and fixtures installed by the Lessee and/or by the Lessor on behalf of the
Lessee, without being obliged to remove same at the end of the Term, or any
renewals thereof.


        The Lessor will pay for costs relating to preleasing plans.



	7.	 	LESSEE’S WORK



        The Lessee shall perform the work set out in Schedule “C” hereof. Lessor
shall contribute up to a maximum of One Hundred and Twenty-Five Thousand
Dollars ($125,000) towards said work, to be disbursed to the Lessee upon
presentation of relevant receipts; any expense incurred over and above One
Hundred and Twenty-Five Thousand Dollars ($125,000) shall be assumed solely by
the Lessee.



	8.	 	OCCUPANCY



        Lessee shall be entitled to occupy the Premises on December 1, 1998.



	9.	 	REGISTRATION



        Lessee agrees that this Lease shall not be registered at length but only
by short form of lease similar to the model joined hereto as Schedule “D”, at
the cost of Lessee. Lessor undertakes to execute such short form of lease upon
request from Lessee, failing which Lessee shall be entitled to register these
presents by deposit or by summary.


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	10.	 	WAIVER OF RESPONSIBILITY — INSURANCE



        Neither Lessee nor Lessor shall be liable for delays in the performance of
any of their obligations hereunder nor be responsible for any damages resulting
from such delays if they originate from fire or other casualties, war,
disaster, riots, strikes, lock-outs, labour dispute, material or labour
shortage, acts of God or other causes beyond its reasonable control.


        Lessee shall protect, save and keep harmless and indemnify Lessor against
any penalty or damage or charge imposed for any violation of laws or ordinances
occasioned by Lessee or those connected with Lessee, and shall protect,
indemnify, save and keep harmless Lessor against any and all damage or expense
arising out of any accident or other occurrence on or about the Building
causing injury to any person or property (except to the extent Lessor may be
otherwise liable therefor because of its fault or negligence), and against
any and all damage or expense arising out of any failure of Lessee in any
respect to comply with and perform all the requirements and provisions of this
Lease.


        Unless otherwise specifically excluded or stipulated to the contrary
herein, Lessee shall pay, at all times during the Term or any renewal thereof,
its Proportionate Share of the cost necessary for Lessor to maintain or cause
to be maintained (i) a standard boiler insurance and (ii) a policy or policies
of insurance insuring the Building against loss or damage by fire, explosion,
earthquakes or other hazards or contingencies normally insured against by
owners of similar buildings in the same location on a full replacement basis
(including loss of rental income for a period of one year), naming Lessor and
Lessee as beneficiaries, as their respective interests may appear. Since a
loss of rental income insurance is being taken, Lessee shall not have to pay
rental during the period when the Premises cannot be occupied (or, if partially
destroyed, to the extent of such destruction). Lessor must approve the insurer
and the limits of liability, which approval shall not be unreasonably withheld
or delayed.


        Copy of the policies (and any renewal thereof) or of the certificates of
insurance related thereto shall be furnished to Lessor by Lessee.


        Lessee shall, at all times during the Term or any renewal thereof,
maintain or cause to be maintained a policy or policies of comprehensive
general liability insurance in relation to the Premises, such insurance to
afford minimum protection of Two Million Dollars ($2,000,000) in respect of
personal injury or death in respect of any occurrence and of One Million
Dollars ($1,000,000) for property damage in any one occurrence, such amounts to
be reviewed every five (5) years as reasonably agreed between Lessor and
Lessee. Lessor and Lessee shall be named insured of this policy, as their
respective interests may appear.


        Lessee shall promptly notify Lessor of any damages to the Premises that
need reporting under the insurance policies as mentioned above.



	11.	 	LESSOR’S DEFAULT



        Any default by Lessor under an obligation which Lessor is bound to
perform, which is detrimental to Lessee and which is not remedied by Lessor,
shall be considered a default of Lessor within the ambit of Article 1863 of the
Quebec Civil Code.


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	12.	 	SIGNS



        Lessee shall have the right to erect signs on the exterior of the
Building, denoting its tenancy therein, provided such signs conform with all
municipal by-laws and regulations.



	13.	 	ALTERATIONS BY LESSEE



        Lessee shall have the right to make alterations and installations to the
Building at its own expense from time to time during the Term or any renewal
thereof; Lessee agrees to inform Lessor of such alterations and installations.
For any alterations and installations in an amount greater than $50,000, as
determined by an independent architect chosen by the Lessor, Lessee must have
Lessor’s prior written consent, which is not to be unreasonably withheld and
which is to be given within five (5) banking days of Lessor receiving such
notice; no consent shall be required for alterations or installations under
$50,000, as determined by an independent architect chosen by the Lessor.


        Such $50,000 shall be increased at the rate of 4.0% per annum on each
anniversary date of the beginning of the Term.


        In the event that Lessee under this Lease chooses to remove any
alterations or installations made by Lessee or on its behalf, Lessee agrees to
restore the Building in the condition in which it was before such removed
alterations and installations were made, normal wear and tear excepted.



	14.	 	SUB-LEASE OR ASSIGNMENT BY LESSEE



        (a)  Subject to the provisions hereinafter set forth, the Lessee shall not
have the right to sublet the Leased Premises or assign its rights in the
present Lease without the prior written consent of the Lessor, such consent not
to be unreasonably or arbitrarily withheld or delayed.


        (b)  Any transfer, pledge, mortgaging, hypothecating, assignment,
subleasing or otherwise shall be subject to all of the terms and conditions of
this Lease, and, notwithstanding the provisions of Article 1873 of the Civil
Code of Quebec, the Lessee shall remain solidarily liable with the transferee,
mortgagee, assignee or sublessee for any and all claims or actions, of
whatsoever nature, inclusive of damages, for which the transferee, mortgagee,
assignee or sublessee may be liable, and arising out of this Lease, whether
prior or subsequent to the date of termination hereof, the whole without
benefit of division or discussion, and whether such solidary responsibility be
mentioned or not in any consent to such transfer, pledge, mortgaging,
hypothecating, assignment or subleasing.


        (c)  If the Lessee wishes to so transfer, assign or sublet the Leased
Premises it must first submit to the Lessor a copy of the offer to transfer,
assign or sublet, together with a request for consent of the Lessor, and the
Lessor shall have fifteen (15) days to inform the Lessee in writing of its
consent or refusal, which refusal shall only be for a serious reason. In the
event that the Lessor fails to inform the Lessee within twenty-one (21) days of
its consent or refusal, the Lessor shall be deemed to have consented.


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        (d)  Notwithstanding the provisions of Article 1876 of the Civil Code of
Quebec, a transferee, mortgagee, assignee or sublessee shall have no recourse
against the Lessor in the event of the failure on the part of the Lessor to
perform any of its obligations contained in this Lease.


        (e)  In the event of an assignment or sublease pursuant to the terms and
conditions of this paragraph, the Lessor shall have the right to terminate the
sublease in the event of the non-performance of any of the assignee’s or
sublessee’s obligations which causes serious damage to the Leased Premises, the
Building, the Lessor or any other lessee of the Building.


        (f)  Should the net monthly rental per square foot to be paid by a
transferee, assignee or sublessee, whether in cash, goods, services or other
consideration, exceed the net monthly rental per square foot payable hereunder,
then the Lessee shall pay to the Lessor, monthly, the amount of, or an amount
equivalent to, such excess.


        (g)  Nothing in this Lease shall be construed so as to, in any way, limit
or prevent the Lessor from selling, transferring, pledging, mortgaging,
hypothecating, assigning or otherwise dealing with the Building, the Land, this
Lease or the Leased Premises, the whole subject, nevertheless, to the Lessee’s
right both with respect to the Leased Premises and the undertaking herein of
the Lessor.


        (h)  If at any time during the Term the Lessee is a corporation, and if,
then by the sale or other disposition of its securities the control of such
corporation is changed, notice of which the Lessee shall be bound to give to
the Lessor at least fifteen (15) days prior to such sale or other disposition.
The giving of such notice by the Lessee to the Lessor shall be the equivalent
to the Lessee requesting the right to sub-let the Leased Premises and the
consent of the Lessor, as in any other request to sub-lease, shall be required,
the whole subject to the terms and conditions set forth in this Section 14.



	15.	 	NOTICES



        Any notice to be given by one party to the other hereunder shall be given
(i) either by prepaid registered mail addressed to such other party at its
address given below, in which case such notice shall be deemed conclusively to
be given upon the fifth business day following the day on which it was mailed,
or (ii) by personal delivery, in which case such notice shall be deemed
conclusively to be given on the date of delivery:



			
	 	(a)	in the case of Lessor to:




	 	Storage Leaseholds Inc.

300 Canal Bank Road

Suite 316

Ville St. Pierre, Quebec

H8R 1H3




	 	Attention: the President



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	 	with a copy to:




	 	Kaufman Laramée

800 René Lévesque Blvd. West

Suite 2200

Montreal, Quebec

H3B 1X9




	 	Attention: Me Norman A. Adler




			
	 	(b)	in the case of Lessee to:




	 	Grand Toys Ltd.

1710-1750 South Service Road

Trans Canada Highway

Dorval, Quebec

H9P 1H7




	 	Attention: the President




	 	with a copy to:




	 	Adessky Poulin

Place Canada Trust

999 Maisonneuve West

18th Floor

Montreal, Quebec

H3A 3L4




	 	Attention: Me Grace Strusberg



provided, however, that any party may by written notice to the other party,
specify a new address to which thereafter any notice to such party shall be
addressed.



	16.	 	BUSINESS TAXES



        Lessee shall pay, as and when due, all business taxes, or other similar
rates and taxes which may be levied or imposed upon the business carried on
therein by the Lessee or which may be payable by Lessee as tenant or occupant
thereof.



	17.	 	ACCESS BY LESSOR



        Except in the event of an emergency, Lessor or its representatives shall
not be entitled to have access to the Premises during the Term or any renewal
thereof, without giving to the Lessee twenty-four (24) hour prior written
notice. During the last eight (8) months of the Lease, except, if the Lease
be renewed by the Lessee in accordance with the provisions of Article 27
hereof, the Lessor will have the right to bring into the Premises potential
tenants, upon giving the notice as herein required. The Lessee shall not
withhold unreasonably access to the Premises during the Term or, as the case
may be, the renewal thereof.


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	18.	 	USE OF PROPERTY



        The Premises shall be used for manufacturing and distribution operations
as well as offices, showrooms, warehousing, shipping and all necessary
functions in order to conduct business, and any other use that may in the
future form part of Lessee’s business, provided Lessee shall advise Lessor in
writing of the nature of such other use, the whole provided Lessee assumes the
cost that may have to be incurred to render the Premises in conformity with the
laws and regulations that will govern any such new uses and provided such other
new uses do not affect the structure of the Building.



	19.	 	OPERATING EXPENSES AND REAL ESTATE TAXES



        Notwithstanding anything contained herein to the contrary, Lessee shall
not pay for, and operating expenses and real estate taxes shall not include,
the following:



			
	 	(i)	any payments made pursuant to any financing arrangement
entered into by Lessor and for which the Premises or any part
thereof has been hypothecated or otherwise given as security;
	 
	 	(ii)	any item concerning which Lessor has a claim against a
third party and for which Lessor has been indemnified (it is
understood that Lessor undertakes to institute all necessary legal
proceedings in order to obtain such indemnity);
	 
	 	(iii)	any claim for which Lessor has received compensation
from its insurers; and
	 
	 	(iv)	depreciation of the Building.



        Furthermore, there shall be no duplication of costs or expenses as
described above and those costs and expenses shall be effectively incurred.



	20.	 	G.S.T. AND Q.S.T.



        Lessee shall pay to Lessor, in accordance with applicable laws and
regulations, the net amount of any and all goods and services taxes and sales
taxes, imposed or assessed against Lessor’s rent payable by Lessee under this
Lease, or in respect of the rental of space under this Lease.



	21.	 	EXPIRATION OF LEASE



        Notwithstanding anything herein to the contrary, Lessee shall at the
expiration or sooner termination of the Term or of any renewal thereof, remove
all of its movable effects and all other leasehold improvements made by Lessee
that may be removed by Lessee without damaging the Premises, excluding however
improvements made by Lessor in accordance with Section 6 (Lessor’s Work) and by
Lessee in accordance with Section 7 (Lessee’s Work) hereof. In the event that
the Lessee, in the process of removing any of the leasehold improvements,
damages the Premises, then in such event the Lessee shall be obliged to repair
any such damages.


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	22.	 	EXCLUSIONS



        Article 1862 of the Quebec Civil Code shall not apply to this Lease.


        Notwithstanding the provisions of Article 1863 of the Quebec Civil Code,
Lessee renounces its rights to any recourses it may have against Lessor as a
result of Lessor’s failure to perform any of its obligations contained in this
Lease.


        Notwithstanding the provisions of Article 1864 of the Quebec Civil Code,
Lessee acknowledges that the only repairs which Lessor is required to make are
those repairs stipulated in this lease to be the responsibility of Lessor.


        Notwithstanding the provisions of Article 1854 of the Quebec Civil Code,
Lessee acknowledges that Lessor is not warrantying that the Leased Premises may
be used for the purposes for which they were leased.


        Notwithstanding the provisions of Articles 1867, 1868 and 1869 of the
Quebec Civil Code, Lessee renounces its rights to any recourses it may have
against Lessor as a result of Lessor’s failure to carry out any repairs or
improvements which are Lessor’s responsibility.


        Notwithstanding the provisions of Articles 1878 and 1879 of the Quebec
Civil Code, in the event that Lessee continues to occupy the Premises for more
than ten (10) days after the expiry of the Term without opposition from Lessor,
there shall be no tacit renewal of this Lease.



	23.	 	DEFAULT



        The following shall be considered events of default under this Lease:



			
	 	(a)	In the event that Lessee shall be in default under any
provision of this Lease providing for the payment of base rental,
additional rental or of any other amounts required to be paid by
Lessee to Lessor under this Lease and such default continues for
five (5) days after written notice to Lessee;
	 
	 	(b)	In the event that Lessee shall be in default in observing
any covenant herein contained and/or performing any of its
obligations contained in this Lease (other than a default in (a)
above) and such default continues for fifteen (15) days after
written notice specifying such default shall have been given by
Lessor to
Lessee, unless Lessee shall commence to cure the default with
reasonable diligence, in which case Lessee shall upon written
request to Lessor be entitled to such reasonable extension of
time to enable such default to be remedied.




			
	 	(c)	In the event that Lessee is declared a bankrupt or makes
a general assignment for the benefit of its creditors, or takes
the benefit of any insolvency or bankruptcy legislation or if a
receiver or trustee is appointed for the property of Lessee.



        In the event of a default under the terms of this Lease on the part of
Lessee, Lessor shall have the right to terminate this Lease, the whole without
prejudice to and


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under reserve of all other rights and recourses of Lessor to
claim any and all losses and damages sustained by Lessor by reason of , or
arising from, any default of Lessee.



	24.	 	CANCELLATION



        The Lessee shall have the right to cancel the Lease at the end of the
fifth (5th) year anniversary of the Term, provided that it gives to the Lessor
eight (8) months written notice of its intention to so terminate the Lease, and
that furthermore the Lessee pays to the Lessor a penalty in the amount of One
Hundred and Seventy-Five Thousand Dollars ($175,000); the penalty will become
due and payable at the expiry of the eight (8) month notice period, but must be
paid prior to the Lessee vacating the Premises.



	25.	 	DAMAGE AND DESTRUCTION



        In the event that the Premises shall be destroyed or damaged by fire,
lightning, tempest, or any similar event or peril, then:



			
	 	(i)	If the damage or destruction is such that the damage, in
the opinion of Lessor’s architect, which shall be given to Lessee
within thirty (30) days of the happening of such damage or
destruction, cannot be repaired with reasonable diligence within
one hundred and twenty (120) days from the happening of such
damage or destruction, then either Lessor or Lessee may terminate
this Lease by giving to the other party a notice in writing of
such termination within thirty (30) days of receipt by Lessee of
Lessor’s architect’s opinion, in which event this Lease shall
cease and be at an end as of the date of such destruction or
damage and the rent shall be apportioned and paid in full to the
date of such destruction or damage.
	 
	 	(ii)	If neither Lessor nor Lessee terminate this Lease as
aforesaid and if, in the opinion of Lessor’s architect, to be
given to Lessee within thirty (30) days of the happening of such
damage or destruction, the damage or destruction is such that the
Premises have become wholly untenable, then, all amounts payable
by Lessee hereunder shall be suspended from the date of such
destruction or damage until the date on which the Premises shall
be substantially repaired so as to permit their use.
	 
	 	(iii)	If neither Lessor nor Lessee terminate this Lease as
aforesaid and if, in the opinion of Lessor’s architect, to be
given to Lessee within thirty (30) days of the happening of such
damage or destruction, the damage or destruction is such that the
Premises are capable of being partially used, then, from the date
of the happening of the damage or destruction until the date on
which the Premises shall have been substantially repaired, the
Base and Additional Rent shall be reduced proportionately to that
portion of the Premises which are not capable of being used.
	 
	 	(iv)	Where the Lease is not terminated as aforesaid, Lessor
shall proceed with all due dispatch to the reconstruction of the
Premises in substantially the same condition that they were in
before the occurrence of the damage and shall furnish to Lessee a
certificate of an independent licensed architect attesting to such
substantial completion.



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	26.	 	SECURED CREDITORS



        Lessee undertakes to execute and deliver any document or certificate which
may be reasonably required by any creditor of Lessor holding securities on the
Land or other third parties having an interest on the Land to ascertain the
validity of this Lease and the absence of default thereunder, provided however
that such document or certificate shall not affect the rights of Lessee in any
manner whatsoever and any reasonable costs incurred by Lessee in association
with the foregoing shall be borne by the Lessor.



	27.	 	OPTION



        Provided that the Lessee is not in default of any of the terms and
conditions hereof, the Lessor hereby grants to Lessee one (1) option to renew
the Lease for a further period of five (5) years, commencing
December 1st, 2008
and terminating November 31st, 2013. The Lessee shall provide written notice,
by registered mail, to Lessor of its intention to exercise the option at least
eight (8) months prior to the end of the Term hereof, failing which this option
shall be deemed nul and void and of no effect. All of the terms and conditions
hereof shall apply for the duration of the renewal period save and except that
for the base rental rate which will be equal to the sum of three dollars ninety
cents ($3.90) per square foot of GRA increased by a percentage equal to eighty
percent (80%) of the increase in the Consumer Price Index — all items- for the
Greater Montreal Area as compiled by Statistics Canada over the five year
period prior to the renewal.



	28.	 	RELOCATION



        During the Term and any renewal thereof, Lessor shall not have the right
to unilaterally relocate Lessee to any other building of Lessor.



	29.	 	BROKERAGE



        The Lessor and the Lessee represent to each other that the only estate broker
mandated to act in this matter is J.J. Barnicke Ltée and that Lessor shall pay
the commission resulting from the renting of the Premises by the Lessee.



	30.	 	SUCCESSORS AND ASSIGNS



        This Lease binds and benefits the parties and their respective heirs,
executives, administrators, successors and assigns.


        Lessor and Lessee represent and warrant that there are no consents or
other approvals which are required from any persons or parties in order to
consummate the transaction contemplated herein.



	31.	 	DESCRIPTIVE HEADINGS



        The descriptive headings of this Lease are inserted for convenience and
shall not be used to interpret this Lease.


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	32.	 	INTERPRETATION



        This Lease shall be construed and governed by the laws of the Province of
Quebec. Should any of the provisions of this Lease and/or its conditions be
illegal or not enforceable under the laws of the Province of Quebec, it or they
shall be considered severable and the lease and its other conditions shall
remain in force and be binding upon the parties as though the said provisions
or conditions had never been included.



	33.	 	ENTIRE AGREEMENT



        Lessor and Lessee acknowledge and agree that this Lease shall contain the
entire agreement between the parties and that there are no promises,
representations, agreements, conditions or understandings (oral or written,
express or implied) between the parties other than as expressly stipulated
herein. No alteration, amendment, change or addition hereto will be binding
upon Lessor or Lessee unless made in writing.



	34.	 	SCHEDULES



        The Schedules annexed hereto form an integral part of this Lease as if
recited herein at length.



	35.	 	HYPOTHEC



        As security for the full and final payment of rent and for the performance
by Lessee of all its obligations pursuant to the Lease, Lessee hereby grants to
Lessor a movable hypothec for an amount of Five Hundred Thousand Dollars
($500,000), on all of Lessee’s present and future machinery, equipment,
inventory, furniture and fixtures located in the Premises. Lessor accepts that
such hypothec shall be second ranking behind that held by Lessee’s principal
financial institution from time to time.


        If the Lessee’s principal financing is obtained from a group of financial
institutions that rank para passu as between themselves, then the hypothec
herein referred to shall rank second behind such financing.


        Lessee hereby irrevocably authorizes Lessor to do all that is necessary to
ensure that this hypothec remains effective and at all times opposable to third
parties, including, without limitation, the right to sign and execute any
necessary documents or statements
that must be registered in the appropriate registers to reflect the
granting of the present hypothec



	36.	 	ACKNOWLEDGEMENT BY LESSEE



        Lessee acknowledges having negotiated the present Lease and to having had
the effects of all provisions hereof fully explained to it by legal counsel of
its choice and hereby confirms having understood such explanation(s).



	37.	 	LANGUAGE



        Lessor and Lessee hereby confirm that they have requested the present
document be drafted in the English language; le locateur et le locataire
certifient qu’ils ont requis que les présentes soient rédigées en langue
anglaise.


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     IN WITNESS WHEREOF, LESSOR HAS SIGNED THE FOREGOING AGREEMENT OF LEASE AT
MONTREAL, PROVINCE OF QUEBEC ON THIS 19TH DAY OF OCTOBER, 1998.



	 	 	 
	 	 	STORAGE LEASEHOLDS INC
	 
	 	Per:	/S/ Milan Bratin

MILAN BRATIN



/S/ Witness


WITNESS

/S/ Witness


WITNESS

     IN WITNESS WHEREOF, LESSEE HAS SIGNED THE FOREGOING AGREEMENT OF LEASE AT
MONTREAL, PROVINCE OF QUEBEC ON THIS 2ND DAY OF OCTOBER, 1998.



	 	 	 
	 	 	GRAND TOYS LTD.
	 
	 	Per:	/S/ Stephen Altro

STEPHEN ALTRO



/S/ Witness


WITNESS

/S/ Witness


WITNESS

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