Document:

exv10w16

 

EXHIBIT 10.16

L E A S E

               THIS
LEASE, dated July 1, 2003, is made and entered into by the Landlord and Tenant named
herein who, in consideration of the covenants herein contained, agree as follows:

ARTICLE 1 — BASIC TERMS, SCHEDULES, DEFINITIONS

	1.1	 	Basic Terms

	 	 	 	 	 	 	 
	 

	 	(a)
	 	(i)
	 	Landlord: ACHESON PROPERTIES LTD.
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Address of Landlord:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	#2, 53016 - Hwy. 60
	 

	 	 	 	 	 	Acheson Industrial Park
	 

	 	 	 	 	 	Spruce Grove Alberta T7X 3G7
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	(i)
	 	Tenant: NORTH AMERICAN CONSTRUCTION GROUP INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Address of Tenant:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	#2, 53016 - Hwy. 60
	 

	 	 	 	 	 	Acheson Industrial Park
	 

	 	 	 	 	 	Spruce Grove Alberta T7X 3G7
	 
	 	 	 	 	 	 
	 

	 	(c)
	 	 	 	Address of Premises:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	4307 – 55th Street
	 

	 	 	 	 	 	Town of Fort Nelson
	 

	 	 	 	 	 	Fort Nelson, British Columbia

	 	(d)	 	Legal Description: Lot 1, District 2117, Peace River District, Plan PGP46884

	 	(e)	 	(i) Term: 5 years

	 	 	 	(ii) Commencement Date: July 11, 2003

	 	(f)	 	Minimum Rent: $2,400.00 per month

	 	 	 	 	 	 	 	 	 
	Lease Years	 	 	$/Annum	 	 	 	$/Month	 
	5
	 	 	$28,800.00	 	 	 	$2,400.00	 
	 
	 	 	 	 	 	 	per month	 

	 	(g)	 	Permitted Use of Premises: Administration and operation of
construction company, including repair and maintenance of heavy equipment.

 

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          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.

	1.2	 	Schedules 
	 	 	 
	 	 	All schedules to this Lease are incorporated into and form an integral part of this Lease.

	1.3	 	Definitions
	 	 	 
	 	 	In this Lease, the words, phrases and expressions set forth in Schedule “B” are
used with the meanings defined therein.

ARTICLE 2 — GRANT OF LEASE

	2.1	 	Demise

     The Landlord, being registered as owner of the Premises legally described in
Section l.l(d), subject, however, to such mortgages and encumbrances as are registered
against title thereto as of the date hereof, does hereby lease to the Tenant, for the
Term and upon and subject to the covenants and conditions hereinafter expressed, the
Premises indicated on Schedule “A” hereto.

ARTICLE 3 — TERM, COMMENCEMENT, RENEWAL 

	3.1	 	Term

     The Term of this Lease shall be for the period set out in Section l.l(e)(i),
beginning on the Commencement Date.

ARTICLE 4 — RENT

	4.1	 	 Minimum Rent

     The Tenant shall pay to the Landlord in and for each Lease Year, Minimum Rent in
the amount per annum set out in Section l.l(f) for the respective Lease Year, by equal
consecutive monthly instalments in the amount set out in Section 1.1(f) for such Lease
Year.

	4.2	 	Payment of Minimum Rent

     The first monthly instalment of Minimum Rent shall be paid on or before the
Commencement Date and subsequent instalments of Minimum Rent shall be paid strictly in
advance on the 11th day of each and every succeeding month throughout the Term.

	4.3	 	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.

 

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	4.4	 	Payments Generally
	 	 	 
	 	 	     All payments by the Tenant to the Landlord of whatsoever nature required or contemplated by
this Lease shall be:

	 	(a)	 	paid to the Landlord by the Tenant in lawful currency of Canada;
	 
	 	(b)	 	made when due hereunder, without prior demand therefor and without any set-off,
compensation or deduction whatsoever, at the office of the Landlord at the Premises or
such other place as the Landlord may designate from time to time to the Tenant;
	 
	 	(c)	 	applied towards amounts then outstanding hereunder, in such manner as the
Landlord may, in its discretion, see fit, and without restricting the
generality of the
foregoing, no acceptance by the Landlord of any amount less than the full sum which is
due and owing by the Tenant shall constitute an accord and satisfaction or oblige the
Landlord to accept in full settlement, anything less than the full amount owing and
outstanding at any time;
	 
	 	(d)	 	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 Landlord
shall have all rights and remedies against the Tenant for default in making any such
payment which may not be expressly said to be rent as the Landlord has for default in
payment of rent; and
	 
	 	(e)	 	subject to an overdue charge if any such payment is not made when due, which
charge shall be Additional Rent equal to the then existing Bank of Canada Prime Rate
plus five (5%) per cent per annum on the overdue amount both before and after judgment
payable with the next monthly instalment of Minimum Rent, all without prejudice to any
other right or remedy of the Landlord.

	4.5	 	Security Deposit

            The
Tenant shall pay the Security Deposit to the Landlord which shall be retained by the
Landlord without liability for interest thereon, as security for the due performance by the Tenant
of its obligations under this Lease. The Security Deposit may be applied, in the Landlord’s
discretion, to remedy any default by the Tenant hereunder, whether in respect to the payment of
monies or otherwise, and in the absence of such default the Landlord
shall return the Security
Deposit to the Tenant at the expiration of the Term. If any or all of the Security Deposit is
applied by the Landlord to remedy any default, then the Tenant shall forthwith upon written demand
from the Landlord, remit to the Landlord such monies as are sufficient to restore the amount of
money held on deposit by the Landlord to the original balance.

ARTICLE 5 — ADDITIONAL RENT

	5.1	 	Intent of Lease

            It is the intent of the parties and agreed that this Lease shall be absolutely net to the
Landlord such that, without limiting the generality of the foregoing, the Tenant shall pay for its
own account, and without any variation, set-off or deduction, all amounts, charges, costs, duties,
expenses, fees, rates, sums, taxes and increases therein in any way relating to the Premises as
well as the expenses relating to the operation of the Premises as set out in this Lease.

 

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	5.2	 	Additional Rent

          Without limiting the generality of the preceding Section, the Tenant shall pay to
the Landlord as Additional Rent in each Lease Year the aggregate of:

	 	(a)	 	the Property Taxes;
	 
	 	(b)	 	the Operating Costs;
	 
	 	(c)	 	the Sales Tax;
	 
	 	(d)	 	such other amounts, charges, costs, sums or increases therein as
are required to be paid by the Tenant to the Landlord pursuant to this
Lease in addition to Minimum Rent.

	5.3	 	Estimate of Additional Rent

          The Landlord may, in respect of any or all of the items of Additional Rent,
compute bona fide estimates of the amounts which are anticipated to accrue in the next
following Lease Year, calendar year or fiscal year, or portion thereof, as the
Landlord in its discretion may determine is the most appropriate period for each or
all items of Additional Rent, and the Landlord may provide the Tenant with written
notice of the amount of any such estimate.

	5.4	 	Payment of Additional Rent

          With respect to any item of Additional Rent which the Landlord elects to estimate
from time to time, following receipt of the written notice of the estimated amount
thereof, the Tenant shall pay to the Landlord such amount, in equal consecutive
monthly instalments throughout the applicable period with the monthly instalments of
Minimum Rent. With respect to any item of Additional Rent which the Landlord has not
elected to estimate from time to time, the Tenant shall pay to the Landlord the amount
of such item of Additional Rent, determined pursuant to the applicable provisions of
this Lease, forthwith upon receipt of an invoice therefor.

	5.5	 	Adjustment of Additional Rent

          Within ninety (90) days of the end of each Lease Year, calendar year or fiscal
year, or portion thereof, as the case may be, for which the Landlord has estimated any
item of Additional Rent, the Landlord shall compute the actual amount of such item of
Additional Rent, and make available to the Tenant for examination a statement of the
gross amount of such item of Additional Rent, and the calculation of the Tenant’s
share thereof for each year or portion thereof. If the actual amount of such item of
Additional Rent, as set out in any such statement, exceeds the aggregate amount of the
instalments paid by the Tenant in respect of such item, the Tenant shall pay to the
Landlord the amount of the excess within fifteen (15) days of the receipt of such
statement. If the contrary is the case, any such statement shall be accompanied by a
refund to the Tenant of any such overpayment without interest, provided that the ‘
Landlord may first deduct from such refund any rent or other sum which is then owing
by the Tenant or in arrears.

	5.6	 	Review of Additional Rent

          No party hereto may claim a readjustment in respect of any item of Additional
Rent whether paid or payable in instalments or otherwise, if based on any error of
estimation, allocation, calculation or computation thereof, unless claimed in writing
prior to the expiration of one (1) year from the conclusion of the period in respect
of which such item of Additional Rent accrued.

 

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ARTICLE 6 — TAXES

	6.1	 	Tenant’s Taxes

    
          The Tenant shall
pay promptly when due all business, sales, machinery, equipment and all other
taxes, assessments, charges and rates, as well as any permit or license fees, attributable to the
Premises or the property, business, sales or income of the Tenant in respect of the Premises.

	6.2	 	Payment of Property Taxes

    
          The Tenant shall
pay to the Landlord as Additional Rent the Property Taxes.

	6.3	 	Increases in Property Taxes

    
          The Tenant shall pay to
the Landlord as Additional Rent an amount equal to any increase in
the Property Taxes by reason of any installation, alteration or use made in or to the Premises by
or for the benefit of the Tenant or any assignee, concessionaire, licensee or subtenant of the
Tenant.

	6.4	 	Sales Tax

     
         The Tenant shall pay to the
Landlord as Additional Rent, or as otherwise required by law, all
Sales Tax. The Landlord shall determine on a reasonable basis the extent to which the Sales Tax is
imposed by reason of any sum payable by the Tenant to the Landlord pursuant to any provisions of
this Lease and any report of the Landlord’s chartered accountant for such purpose shall be
conclusive as to the amount of any Sales Tax for any period to which such report relates.

ARTICLE 7 — OPERATING COSTS

	7.1	 	Payment of Operating Costs

     
         The Tenant shall pay to the Landlord
as Additional Rent the Operating Costs.

	7.2	 	Increases in Costs

    
          The Tenant shall not
do or omit, or permit to be done or omitted, upon or about the Premises,
anything which shall cause the Operating Costs to be increased. If the Operating Costs shall be so
increased, the Tenant shall pay to the Landlord as Additional Rent the amount of such increase.

ARTICLE 8 — UTILITIES, HVAC COSTS

	8.1	 	Tenant’s Utilities

    
          The Tenant shall pay
all rates, charges, costs and expenses as may be assessed or levied and
at the rates so assessed or levied by all suppliers of utilities directly to the Premises.

 

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ARTICLE 9 — INSURANCE

	9.1	 	Tenant’s Insurance

	 	(a)	 	The Tenant shall, during the whole of the Term and during such other time as
the Tenant occupies the Premises, take out and maintain the following insurance, at the
Tenant’s sole expense, in such form and with such companies as the Landlord may
reasonably approve:

	 	(i)	 	comprehensive general liability insurance applying to all
operations of the Tenant and against claims for bodily injury, including
death, and property damage or loss arising out of the use or occupation of
the Premises, or the Tenant’s business on or about the Premises; such
insurance shall include the Landlord as an additional insured and indemnify
and protect both the Tenant and Landlord and shall contain a “cross
liability” or “severability of interests” clause so that the Landlord and the
Tenant may be insured in the same manner and to the same extent as if
individual policies had been issued to each, and shall be for the amount of
not less than One Million ($1,000,000.00) Dollars combined single limit or
such other amount as may be reasonably required by the Landlord from time to
time; such comprehensive general liability insurance shall, for the Tenant’s
benefit only, include contractual liability and tenant’s legal liability
insurance in a form and of a nature broad enough to insure the obligations
imposed upon the Tenant under the terms of this Lease; and
	 
	 	(ii)	 	“all risks” insurance upon its merchandise,
stock-in-trade, furniture, fixtures and improvements including leasehold
improvements and upon all other property in the Premises owned by the Tenant
or for which the Tenant is legally liable, and insurance upon all glass and
plate glass in the Premises, against breakage and damage from any cause, all
in an amount equal to the full replacement value thereof, which amount in
the event of a dispute shall be determined by the decision of the Landlord.

	 	(b)	 	The policies of insurance referred to above shall contain the following:

	 	(i)	 	provisions that the Landlord is protected notwithstanding
any act, neglect or misrepresentation of the Tenant which might otherwise
result in the avoidance of a claim under such policies and such that such
policies shall not be affected or invalidated by any act, omission or
negligence of any third party which is not within the knowledge or control
of the insured(s);
	 
	 	(ii)	 	provisions that such policies and the coverage evidenced
thereby shall be primary and non-contributing with respect to any policies
carried by the Landlord and that any coverage carried by the Landlord shall
be excess coverage;
	 
	 	(iii)	 	all property insurance referred to above shall provide for
waiver of the insurer’s rights of subrogation as against the Landlord;
	 
	 	(iv)	 	provisions that such policies of insurance shall not be
cancelled without the insurer providing the Landlord with thirty (30) days
written notice stating when such cancellation shall be effective.

 

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	 	(c)	 	Evidence satisfactory to the Landlord of all such policies of insurance shall be
provided to the Landlord upon request.
	 
	 	(d)	 	The Tenant shall further during the whole of the Term maintain such other
insurance in such amounts and in such sums as the Landlord may reasonably determine
from time to time.

ARTICLE 10 — USE AND OCCUPATION

	10.1	 	Quiet Enjoyment

   
           The Landlord
covenants with the Tenant for quiet enjoyment, for so long as the Tenant is not
in default hereunder, and except as provided herein.

	10.2	 	Use

    
          The Premises shall
be used for the purpose set forth in Section l.l(h) and for no other
purpose.

	10.3	 	Covenant to Operate

    
          The Tenant shall
throughout the whole of the Term continuously operate, occupy and utilize
the entire Premises and conduct its business therein complying
strictly with the provisions of this
Lease. The Tenant acknowledges that the Landlord is executing this Lease in reliance upon the
Tenant’s covenant herein contained and that such covenant is a material element inducing the
Landlord to execute this Lease.

	10.4	 	Compliance with Laws

    
          The Tenant shall
carry on and conduct its business from the Premises in such manner as to
comply with any and all statutes, by-laws, rules and regulations of any Federal, Provincial,
Municipal or other competent authority for the time being in force, and shall not do anything upon
the Premises in contravention thereof.

	10.5	 	Nuisance

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

 

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ARTICLE 11 — HAZARDOUS SUBSTANCES ON THE PREMISES

	11.1	 	Hazardous Substances

              The Tenant shall not cause or permit any Hazardous Substance to be brought upon, kept or used
in or about the Premises without the prior written consent of the Landlord, which consent shall not
be unreasonably withheld if the Tenant demonstrates to the Landlord’s reasonable satisfaction that
such Hazardous Substance is reasonably necessary for the Tenant’s permitted use of the Premises and
that it will be used, kept, stored and disposed of in a manner that complies with all Environmental
Laws.

	11.2	 	Compliance with Environmental Laws

	 	(e)	 	The Tenant shall at the Tenant’s own expense comply with all Environmental Laws
and shall make, obtain and deliver all reports and studies as required by any
governmental agency, authority or any Environmental Laws.
	 
	 	(f)	 	The Tenant authorizes the Landlord to make inquiries from time to time of any
governmental agency or authority in order to determine the Tenant’s compliance with the
Environmental Laws. The Tenant covenants and agrees that it will from time to time
provide to the Landlord such written authorization as the Landlord may reasonably
require in order to facilitate the obtaining of such information.
	 
	 	(g)	 	The Tenant shall immediately advise the Landlord of any breach of any part of
this Article or if any governmental agency or authority issues an order, notice,
cancellation, amendment, charge, violation, ticket or other document concerning
the release, investigation, clean up, remediation or abatement of any Hazardous
Substance.

	11.3	 	Clean Up or Removal

              If any government authority shall require the clean up or removal of any Hazardous Substance
held, released, spilled, abandoned or placed upon the Premises or released into the environment by
the Tenant in the course of the Tenant’s business or as a result of the Tenant’s use or occupancy
of the Premises, then the Tenant shall, at its own expense, prepare and submit for approval all
necessary studies, plans and proposals, shall provide all bonds and other security required by
governmental authorities and shall forthwith carry out the work required. The Tenant shall keep
the Landlord fully informed of the progress of the matter and shall provide to the Landlord full
information with respect to proposed plans and comply with the Landlord’s reasonable requirements
with respect to such plans. The Tenant further agrees that if the Landlord determines, in its
discretion, that the Premises, the Landlord or the Landlord’s reputation is placed in any jeopardy
by the requirements for any such work, the Landlord may itself undertake such work or any part
thereof at the cost and expense of the Tenant.

	11.4	 	Indemnity

              The Tenant shall indemnify and hold harmless the Landlord from any and all claims, damages,
fines, judgments, penalties, costs, liabilities or losses arising out of or in any way related to
any contamination of the Premises in any manner for which the Tenant is legally liable including,
without limitation, any personal injury or property damage, a decrease in value of the Premises,
damages caused by loss or restriction of rentable or useable space, or any damages caused by
adverse impact on marketing of the space, any and all sums paid for settlement of claims and any
lawyer’s, consultant’s, agent’s or expert’s fees. The provisions of this Section shall be in
addition to any other obligations and liabilities that the Tenant may have to the Landlord at law
or equity and shall survive the transactions contemplated herein and the termination of this
Lease.

 

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	11.5	 	Ownership of Hazardous Substances

              If
the Tenant creates or brings to the Premises any Hazardous Substances
or if the conduct of the Tenant’s business shall cause there to be any Hazardous Substance at the Premises then,
notwithstanding any rule of law to the contrary, such Hazardous Substance shall be and remain the
sole and exclusive property of the Tenant and shall not become the property of the Landlord
notwithstanding the degree of affixation to the Premises of the Hazardous Substances, and
notwithstanding the expiry or earlier termination of this Lease.

ARTICLE
12 — CLEANING, REPAIR

	12.1	 	Cleaning

	 	(a)	 	The Tenant shall keep the Premises and, without limitation, the inside and
outside of all glass windows and doors of the Premises and all exterior surfaces of the
Premises, in a neat, clean and sanitary condition and shall not allow any refuse,
garbage or other loose or objectionable or waste material to accumulate in or about the
Premises but rather shall dispose of the same.
	 
	 	(b)	 	The Tenant shall pay for its own janitorial services, cleaning of debris,
removal of garbage and such other costs as may be incurred in cleaning in accordance
with this Article.
	 
	 	(c)	 	In the event the Tenant fails to clean in accordance with this Article upon
notice so to do from the Landlord, the Landlord may clean the same and the Tenant shall
pay to the Landlord as Additional Rent the cost thereof.

	12.2	 	Tenant’s Repairs

	 	(a)	 	The Tenant shall repair the Premises, only excepting reasonable wear and tear,
but including any damage to or breakage of glass, plate glass, shop windows, mouldings,
storefronts, signs, doors, hardware, lighting, wiring, plumbing, improvements,
partitions, wall fixtures and all trade fixtures and furnishings of the Tenant or
otherwise in or for the Premises and maintain in good condition the interior of the
Premises, any appurtenances thereto, any improvements now or hereafter erected or
installed therein and any apparatus or equipment of the Tenant therein or therefor.
	 
	 	(b)	 	The Tenant shall maintain all heating, ventilation, air-conditioning and
plumbing facilities within the Premises and all drains therefrom in good repair and
working order.
	 
	 	(c)	 	The Tenant, 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 Landlord.

	12.3	 	View Repairs

              The Landlord may enter the Premises at any reasonable time during business hours and at any
time during any emergency to view the state of repair and the Tenant shall repair according to
notice in writing from the Landlord so to do, subject to the exceptions contained in this Article.

 

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	12.4	 	Landlord may Maintain and Repair

              If the Tenant fails to maintain and repair as required herein and according to notice from the
Landlord within fourteen (14) days of receipt thereof, or such shorter period as may be reasonable
in the circumstances, the Landlord may complete such maintenance and repair without liability to
the Tenant for any loss or damage that may occur to the Tenant’s merchandise, fixtures or other
property or to the Tenant’s business by reason thereof, and upon completion thereof, the
Tenant shall pay as Additional Rent the Landlord’s cost for conducting such repairs or maintenance.

	12.5	 	Taking of Possession

              The taking of possession of the Premises by the Tenant shall be conclusive evidence against
the Tenant, that at the time of taking possession, the Premises were in good and fully
satisfactory order and condition.

ARTICLE 13 — ALTERATIONS, FIXTURES

	13.1	 	Tenant’s Alterations

	 	(a)	 	The Tenant shall not make or cause to be made any alterations, additions or
improvements or erect or cause to be erected any partitions or install or cause to be
installed any trade fixtures, exterior signs, floor covering, interior or exterior
lighting, plumbing fixtures, apparatus for air-conditioning, cooling, heating,
illuminating, refrigerating, or ventilating the Premises, shades, awnings, exterior
decorations or make any changes to the Premises without first obtaining the Landlord’s
written approval thereto.
	 
	 	(b)	 	When seeking the approval of the Landlord as required by this Article, the
Tenant shall present to the Landlord plans and specifications of the proposed work.
	 
	 	(c)	 	The Tenant shall promptly pay all contractors, material suppliers and workmen
so as to minimize the possibility of a lien attaching to the Premises and should any
claim or lien be made or filed the Tenant shall discharge the same.

	13.2	 	Removal of Fixtures

	 	(a)	 	So long as the Tenant is not in default hereunder at the expiration of the
Term, the Tenant shall then have the right to remove its trade fixtures from the
Premises but shall make good any damage caused to the Premises resulting from the
installation or removal thereof; provided that all alterations, additions and
improvements constructed and installed in the Premises and attached in any manner to
the floors, walls or ceiling, including any floor covering and light fixtures, are.
hereby deemed not to be trade fixtures and shall remain upon and be surrendered with
the Premises, except to the extent the Landlord requires removal thereof.
	 
	 	(b)	 	If the Tenant fails to remove its trade fixtures and restore the Premises as
aforesaid, all such trade fixtures shall become the property of the Landlord except
to the extent that the Landlord continues to require removal thereof.
	 
	 	(c)	 	Should the Tenant abandon the Premises or should this Lease be terminated
before the proper expiration of the Term due to a default on the part of the Tenant
then, in such event, as of the moment of default by the Tenant, all trade fixtures and
furnishings of the Tenant (whether or not attached in any manner to the Premises)
shall, except to the extent the

 

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	 	 	 	Landlord requires the removal thereof, become and be deemed to be the property of the
Landlord, without indemnity to the Tenant and as additional liquidated damages
in respect of such default but without prejudice to any other right or remedy
of the Landlord.
	 
	 	(d)	 	Notwithstanding that any trade fixtures, alterations, additions,
improvements or fixtures are or may become the property of the Landlord, the
Tenant shall forthwith remove all or part of the same and shall make good any
damage caused to the Premises resulting from the installation or removal
thereof, all at the Tenant’s expense, should the Landlord so require by notice
to the Tenant.
	 
	 	(e)	 	If the Tenant, after receipt of a notice from the Landlord, fails
to promptly remove any trade fixtures, furnishings, alterations, additions,
improvements and fixtures in accordance with such notice, then the Landlord may
enter into the Premises and remove therefrom all or part of such trade fixtures,
furnishings, alterations, additions, improvements and fixtures without any
liability and at the expense of the Tenant, which expense shall forthwith be
paid by the Tenant to the Landlord.

	13.3	 	Landlord’s Alterations

              The Landlord reserves the right to:

	 	(a)	 	make alterations or additions to the structure and facilities of the
Premises;

which rights may be exercised by the Landlord in its unfettered discretion and without any claim
for damages or indemnification against the Landlord, its employees or agents and without diminution
or abatement of rent except during any period of time during which the Tenant is unable to carry on
business with the public because of the exercise of such rights by the Landlord.

ARTICLE 14 — SUBSTANTIAL DAMAGE AND DESTRUCTION

	14.1	 	No Abatement

              If during the Term the Premises shall be damaged or destroyed by any cause whatsoever
such that the Premises are rendered unfit for occupancy by the Tenant, the rent hereby
reserved shall not abate in whole or part except to the extent that such rent is recovered
by the Landlord under any policies of insurance against rental loss which the Landlord may
have taken out.

	14.2	 	Substantial Damage or Destruction

              In the event of Substantial Damage or Destruction of the Premises, the Landlord may
within sixty (60) days after such damage or destruction and on giving thirty (30) days
written notice to the Tenant declare this Lease terminated forthwith and in such event, the
Term shall be deemed to have expired and the Tenant shall deliver up possession of the
Premises accordingly, rent shall be apportioned and shall be payable up to the date of
termination stated in such notice and the Tenant shall be entitled to be repaid by the
Landlord any rent paid in advance and unearned or an appropriate portion thereof.

ARTICLE 15 — ASSIGNMENT, SUBLETTING, SALE

	15.1	 	Assignment and Subletting

              The Tenant shall not assign this Lease in whole or in part, nor sublet all or any part of the
Premises, nor grant any license or part with possession of the Premises or transfer any
other right or interest

 

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under this Lease, or, if the Tenant is a corporation, cause or permit to occur either directly or
indirectly any change in its ownership or control, all without the prior written consent of the
Landlord in each instance, which consent shall not be unreasonably withheld or delayed provided
the proposed assignment or sublease or change in ownership or control complies with the following
provisions:

	 	(a)	 	notwithstanding any assignment or sublease, the Tenant shall remain fully
liable on this Lease and shall not be released from performing any of the terms,
covenants and conditions of this Lease;
	 
	 	(b)	 	if the Lease is assigned or if the Premises or any part thereof are sublet or
occupied by anyone other than the Tenant, then the Landlord 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;
	 
	 	(c)	 	no assignment or sublease shall be made or proposed other than to substantial
and responsible persons, firms, partnerships or bodies corporate who are experienced in
and agree to carry on the type of business conducted in the Premises by the Tenant, as
set forth in Section 1.l(h), and who undertake in favour of the Landlord to perform and
observe the obligations of the Tenant hereunder by entering into an assumption
agreement directly with the Landlord;
	 
	 	(d)	 	the prohibition against assigning or subletting without the consent required by
this Article shall be construed to include a prohibition against any assignment or
sublease by operation of law;
	 
	 	(e)	 	the consent by the Landlord to any assignment or sublease shall not constitute
a waiver of the necessity of such consent to any subsequent assignment or sublease.

	15.2	 	Sale by Landlord

              In the event of a sale by the Landlord of any portion or all its interest in the
Premises, the Landlord shall thereafter be entirely relieved of the performance of all terms,
covenants and obligations thereafter to be performed by the Landlord 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 Landlord hereunder.

ARTICLE 16 — INDEMNITY, LIENS

	16.1	 	Tenant’s Indemnity

              The
Tenant shall at all times during the Term, indemnify and save
harmless the Landlord of
and from all loss and damage and all actions, claims, costs, demands, expenses, fines, liabilities
and suits of any nature whatsoever for which the Landlord shall or may become liable, incur or
suffer by reason of a breach, violation or non-performance by the Tenant 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 Premises, made by or
on behalf of the Tenant, or by reason of any injury occasioned to or suffered by any person or
damage to any property, by reason of any wrongful act or omission, default or negligence on the
part of the Tenant or any of its agents, concessionaires, contractors, customers, employees,
invitees or licensees in or about the Premises.

 

13

	16.2	 	Personal Injury and Property Damage

              The Landlord 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 Tenant or by any other person who may
be upon the Premises; or
	 
	 	(b)	 	any loss or damage of any nature whatsoever, howsoever caused, to the Premises,
any property belonging to the Tenant or to any other person while such property is in
or about the Premises.

	16.3	 	Liens

              The Tenant shall, immediately upon demand by the Landlord, 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 Landlord. Without limiting the foregoing obligations of the Tenant, the Landlord may cause
the same to be removed, in which case the Tenant shall pay to the
Landlord as Additional Rent the
cost thereof, including the Landlord’s complete legal costs.

	16.4	 	Granting of Security Interest

	 	(a)	 	The Tenant shall not grant a Security Interest in any goods that have become
affixed to the Premises, and the Tenant shall not affix to the Premises any goods
which are subject to a Security Interest.
	 
	 	(b)	 	The Tenant shall not permit any notice claiming a Security Interest in any
fixture to be registered against title to the Premises and shall, immediately upon
demand by the Landlord, remove or cause to be removed any such notice and institute
and diligently prosecute any proceedings pertinent thereto.

ARTICLE 17 — DEFAULT, REMEDIES, TERMINATION

	17.1	 	Default

              If and whenever:

	 	(a)	 	the Tenant 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 ten (10) days following any specific due date on which the Tenant is to
make such payment or, in the absence of such specific due date, for the ten (10) days
following written notice by the Landlord requiring the Tenant to pay the same; or
	 
	 	(b)	 	the Tenant’s leasehold interest hereunder, or any goods, chattels or equipment
of the Tenant located in the Premises shall be taken or seized in execution or
attachment, or if any writ of execution shall issue against the Tenant and not be
discharged within twenty-one (21) days of its issuance, or the Tenant 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 in
voluntary 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 Tenant; or

 

14

	 	(c)	 	the Tenant shall fail to commence, diligently pursue and
complete the Tenant’s
work to be performed pursuant to any agreement to lease pertaining to the 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 Premises or
fail or cease
to operate pursuant to the provisions of this Lease or otherwise cease to conduct
business from the Premises, or use or permit or suffer the use of the 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 Tenant should make a bulk sale of
its goods and assets which has not been consented to by the Landlord, or move or
commence, attempt or threaten to move its goods, chattels and equipment out of the
Premises other than in the routine and ordinary course of its business; or
	 
	 	(d)	 	the Tenant makes a sale in bulk out of the ordinary course of business of any
of its assets, wherever situated (other than a bulk sale made to an assignee or
sublessee pursuant to a permitted assignment or subletting hereunder and pursuant to
the Bulk Sales Act of Alberta); or
	 
	 	(e)	 	the Tenant sells or disposes of the trade fixtures, goods or chattels of the
Tenant or removes them from the Premises so that there would not in the event of such
sale or disposal be sufficient trade fixtures, goods or chattels of the Tenant on the
Premises subject to distress to satisfy all rent due or accruing hereunder for a period
of at least twelve (12) months; or
	 
	 	(f)	 	the 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
	 
	 	(g)	 	the Tenant assigns, transfers, encumbers, sublets or permits the occupation or
use or the parting with or sharing possession of all or any part of the Premises by
anyone except in a manner permitted by this Lease; or
	 
	 	(h)	 	re-entry is permitted under any other term of this Lease; or
	 
	 	(i)	 	the Tenant fails to observe, perform or 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 Tenant and persists 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 written notice
from the Landlord requiring that the Tenant 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 Tenant 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 Landlord and in addition to any other
rights or remedies the Landlord may have pursuant to this Lease or at law, the Landlord may,
immediately re-enter upon the Premises and may expel all occupants thereof and remove all property
from the Premises and such property may be removed and sold or disposed of by the Landlord 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 Tenant, all without service of notice or resort
to legal process and without the Landlord being considered, guilty of trespass or becoming liable
for any loss or damage which may be occasioned thereby. If the Landlord elects to re-enter the
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 Premises, or any part thereof, for such term or terms (which may be for a term extending
beyond

 

15

the Term) and at such rent and upon such other terms, covenants and conditions as the
Landlord in its sole discretion considers advisable.

	17.2	 	Landlord may Perform

              If the Tenant shall fail to observe, perform or keep any of the provisions of this Lease to
be observed, performed and kept by the Tenant, the Landlord 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 Tenant, whether or not performance by the Landlord on behalf of the Tenant is
otherwise expressly referred to in the applicable Section of this Lease. For such purpose the
Landlord 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 Premises. Any such performance by
or at the behest of the Landlord shall be at the expense of the Tenant and the Tenant shall pay to
the Landlord as Additional Rent the cost thereof.

	17.3	 	Distress

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

	17.4	 	Costs and Interest

              All costs, expenses and expenditures of the Landlord, incurred upon any default by the Tenant
hereunder, including, without limitation, the legal costs incurred by the Landlord on an
indemnification basis as between solicitor and his own client shall, forthwith on demand, be paid
by the Tenant to the Landlord as Additional Rent. All rent and other sums due to the Landlord
pursuant to the terms of this Lease shall be paid by the Tenant promptly when due, and if not so
paid, shall bear interest from their respective due dates at the rate of five (5%) per cent per
annum above the then existing Bank of Canada Prime Rate, 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 Tenant shall
vacate and deliver up possession of the Premises in the same state and condition as they where in
upon delivery of possession to the Tenant, subject to the exceptions from the Tenant’s obligation
to repair and subject to the Tenant’s rights and obligations in respect of removal and the Tenant
shall thereupon surrender all keys to the Premises to the Landlord at the place then fixed for
payment of rent and shall inform the Landlord of all combinations on locks, safes and vaults, if
any, in the Premises. The indemnity agreements contained in this Lease shall survive the
termination of this Lease.

	17.6	 	Additional Rights on Re-Entry

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

	 	(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;

 

16

	 	(b)	 	the Landlord may use such force as it may deem necessary for the purpose of
gaining admittance to and retaking possession of the Premises and the Tenant hereby
releases the Landlord 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 Landlord may relet the 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 Tenant shall pay to the Landlord 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 Landlord may incur or has
incurred in connection with the re-entering, terminating, reletting,
collecting sums due or payable by the Tenant, 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 Premises in good order, repairing the same and
preparing them for reletting; and
	 
	 	(iii)	 	at the Landlord’s option, either of the following:

	 	(A)	 	as liquidated damages for the loss of rent and
other income of the Landlord 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:

	 	(i)	 	an amount determined by reducing
to present worth at an assumed interest rate of ten (10%) per
cent per annum all Minimum 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 Landlord, 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
	 
	 	(ii)	 	an amount equal to
accelerated Minimum Rent and Additional Rent for a period of six
(6) months; or

	 	(B)	 	damages on the footing of a present recovery
of damages for loss of the benefit of the Lease over its unexpired
Term, without any requirement in law or in equity imposed upon the
Landlord to notify the Tenant prior to, concurrently with, or at any
time following the exercise of the option of the Landlord to terminate
this Lease that the Landlord intends to claim such damages from the
Tenant.

	17.7	 	No Waiver

              No provision of this Lease shall be deemed to have been waived by the Landlord unless a
written waiver from the Landlord 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

 

17

the
Landlord on previous occasions of any default nor any earlier written waiver shall be taken to
operate as a waiver by the Landlord or in any way to defeat or affect the rights and remedies of
the Landlord.

	17.8	 	Remedies Cumulative

              No reference to or exercise of any specific right or remedy by the Landlord shall prejudice or
preclude the Landlord 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 Landlord 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 Landlord shall be entitled to
commence and maintain an action against the Tenant to collect any rent not paid when due, without
exercising the option to terminate this Lease.

	17.9	 	Holding Over

              If the Tenant continues to occupy the Premises with the written consent of the Landlord after
the expiration or other termination of the Term, then, without any further written agreement, the
Tenant shall be a tenant from month to month at the aggregate of:

	 	(a)	 	a minimum monthly rent equal to one hundred and twenty (120%) per cent of the
monthly Minimum Rent prevailing immediately prior to expiration or termination;
	 
	 	(b)	 	Additional Rent as herein provided;

and subject always to all of the other provisions in this Lease insofar as the same are applicable
to a month to month tenancy and a tenancy from year to year shall not be created by implication of
law; provided that if the Tenant continues to occupy the Premises without the written consent of
the Landlord at the expiration or other termination of the Term, then
the Tenant shall be a tenant
at will and shall pay to the Landlord, as liquidated damages and not as rent, an amount equal to
the aggregate set forth above during the period of such occupancy, accruing from day to day and
adjusted pro rata accordingly and subject always to all of the other provisions of this Lease
insofar as they are applicable to a tenancy at sufferance and a tenancy from month to month or from
year to year shall not be created by implication of law, provided that nothing herein contained
shall preclude the Landlord from taking action for recovery of possession of the Premises.

	17.10	 	Failure to Pay

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

	17.11	 	Charge on Property of Tenant

              As
security for the payment and performance of all debts, dues and obligations of the Tenant
under this Lease the Tenant hereby grants in favour of the Landlord a fixed and paramount mortgage
and charge and grants to the Landlord a Security Interest in all goods, stock-in-trade, inventory,
fixtures, equipment, chattels and facilities of the Tenant and the said goods, stock-in-trade,
inventory, fixtures, equipment, chattels or facilities shall not be removed by the Tenant unless
otherwise permitted in writing by the Landlord. The provisions of this Article and the mortgage
and charge hereby conferred shall survive expiration of the Term or earlier termination of this
Lease.

 

18

ARTICLE 18 — GENERAL PROVISIONS

	18.1	 	Time

              Time shall be of the essence hereof.

	18.2	 	Notices

              Any notice required to be given hereunder by any party shall be deemed to have been well and
sufficiently given if:

	 	(a)	 	personally delivered to the party to whom it is intended or if such party is a
corporation to an officer of that corporation; or
	 
	 	(b)	 	mailed by prepaid registered mail, transmitted by facsimile or delivered, to
the address or facsimile number of the party to whom it is intended as follows:

	 	(i)	 	if to the Landlord, at the address or number set forth in Section
1.1(a)(ii);
	 
	 	(ii)	 	if to the Tenant, to the Premises or to the address or
number set forth in Section 1.1(b)(ii);

or to such other address or number as a party may from time to time direct in
writing.

Any notice delivered before 4:30 p.m. local time on a Business Day shall be deemed to have been
received on the date of delivery and any notice delivered after 4:30 p.m. local time on a Business
Day or delivered on a day other than a Business Day, shall be deemed to have been received on the
next Business Day. Any notice mailed shall be deemed to have been received seventy two (72) hours
after the date it is postmarked. Any notice sent by facsimile before 4:30 p.m. local time on a
Business Day shall be deemed to have been received when the sender receives the answer back
confirming receipt by the recipient; provided, however, that any facsimile received after 4:30
p.m. local time on a Business Day or received on a day other than a Business Day shall be deemed
to have been received on the next Business Day. If normal mail or communications service is
interrupted by strike, slow-down, force majeure or other cause after the notice has been sent the
notice will not be deemed to have been received until actually received. In the event normal mail
service is impaired at the time of sending the notice, then personal delivery or facsimile
transmission only shall be effective.

	18.3	 	Extended Meanings

              “Hereof, “herein”, “hereunder” and similar expressions used anywhere in this Lease relate to
the whole of this Lease and not to any particular section or subsection, unless otherwise expressly
provided. The use of the neuter singular pronoun to refer to the Landlord or the Tenant is deemed a
proper reference even though the Landlord or the Tenant is an individual, partnership, corporation
or a group of two (2) or more individuals, partnerships or corporations. The necessary grammatical
changes required to make the provisions of this Lease apply in the plural sense where there is more
than one (1) landlord or tenant and to either corporations, associations, partnerships or
individuals, males or females, shall in all instances be assumed as
though in each case fully
expressed.

	18.4	 	No Transfer on Bankruptcy

              Neither this Lease nor any interest of the Tenant herein nor any estate hereby created will
pass or enure to the benefit of any trustee in bankruptcy or any receiver or any assignee for the
benefit of creditors of the Tenant or otherwise by operation of law.

 

19

	18.5	 	Successors Bound

              All rights and liabilities herein given to, or imposed upon, the respective parties hereto
shall extend to and bind the several respective heirs, executors, administrators, successors and
assigns of the said parties and if there is more than one
(1) party described in Section 1.1(b),
they shall all be bound jointly and severally by the terms, covenants and agreements herein on the
part of the Tenant. No rights, however shall enure to the benefit of any assignee of the Tenant
unless the assignment to such assignee has been first approved by the Landlord. All covenants,
agreements, stipulations, obligations and other provisions of this Lease to be observed, performed
and kept by the Tenant shall run with the land and therefore be enforceable by all the successors
of the Landlord.

	18.6	 	Headings

              The headings in this Lease have been inserted for reference and as a matter of convenience
only and in no way define, limit or enlarge the scope of meaning of this Lease or any provisions
hereof.

	18.7	 	Tenant’s Acceptance

              The Tenant hereby accepts this Lease of the Premises, to be held by the Tenant, subject
to the conditions, restrictions and covenants set forth herein.

              IN WITNESS WHEREOF the parties hereto have executed this Lease as of the day and year first
above written.

	 	 	 	 	 	 	 
	 	 	NORTH AMERICAN CONSTRUCTION GROUP INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ [ILLEGIBLE]	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ACHESON PROPERTIES LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ [ILLEGIBLE]	 	 
	 

	 	 	 	 	 	 

 

 

SCHEDULE
“A”

	 	 	 	 	 
	 

	 	Legal Description:
	 	Lot 1, District Lot 2117,
	 

	 	 	 	Peace River District
	 

	 	 	 	Plan PGP46884

 

 

SCHEDULE “B”

DEFINITIONS

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

1.
Additional Rent means any sum or sums other than Minimum Rent payable by the Tenant to the
Landlord pursuant to any provision of the Lease, all of which are recoverable by the Landlord as
rent.

2. Business Day means a day that is not a Saturday, Sunday or statutory holiday in Alberta.

3.
Commencement Date means the date set out in
Section 1.1(e)(ii).

4. Common Areas means all lands, improvements, facilities, utilities, installations and equipment
forming part of the Premises (which may be altered, reconstructed, expanded, withdrawn from and
added to from time to time) other than parts of those lands, improvements, facilities, utilities,
installations and equipment designated by the Landlord for leasing to tenants of the Premises and
including, without limiting the generality of the foregoing, exterior walls, floors and roofs; any
mechanical systems or equipment not located in rental premises; the Parking Areas; sidewalks and
landscaped areas; truck courts, loading areas; pylon signs; trash disposal facilities and garbage
compaction equipment, to the extent that any or all of the foregoing
are present.

5.
Environmental Laws mean all international, federal, provincial or municipal laws, by-laws,
statutes, regulations, orders, permits, approvals or judgments having jurisdiction over the
Landlord, the Tenant or the Premises and relating in any way to the environment or health matters
including without limitation matters relating to the use, storage and disposal of Hazardous
Substances or the release of any substance into the environment.

6. Hazardous Substance means any substance, product, material or good which may be detrimental to
the environment, plant or animal life, or human health or which may adversely affect the condition,
use or enjoyment of any real or personal property and includes, but is not limited to any
substance, product, material or good declared to be hazardous or toxic pursuant to any
Environmental Law.

7.
Landlord means the party or parties described in Section 1.1(a) and the heirs, executors,
administrators, successors and assigns thereof.

8. Lease Year means, in the case of the first Lease Year, the period beginning on the Commencement
Date and terminating twelve (12) months from the last day of the calendar month in which the
Commencement Date occurs and, in the case of each subsequent Lease Year, means each twelve (12)
month period after the first Lease Year.

9. Minimum Rent means the rent set out in Section 1.1(f).

6. Operating Costs means all of the Landlord’s outlays, costs, charges and expenses of
operating, supervising and maintaining the Premises (including the Common Areas) and Operating
Costs includes, without limitation or duplication:

 

2

	 	(a)	 	To the extent that the following costs are incurred or facilities supplied, the
cost of servicing and providing utility services to the Premises, the cost of fencing
and supplying gravel to the Premises, the cost of lighting, heating, ventilating, air
conditioning and supplying water and other utilities to the Common Areas; cleaning;
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 Premises; operating and maintaining the garbage compaction equipment;
repairs and replacements to the Premises, other than Structural Repairs but including
any changes required by any governmental or other agency regulating operation of the
Premises; business taxes, place of business taxes and any other taxes levied in respect
of or fairly attributable to the Common Areas; Property Taxes, if not already included
in Additional Rent pursuant to any provision of the Lease; costs of appeals against
assessments for Property Taxes; insurance premiums; supplies; all office expenses and
personnel wages; employee benefits and payroll expenses; all railroad spur track fees,
costs and expenses whatsoever; plus
	 
	 	(b)	 	periodic depreciation of the machinery, equipment and fixtures which by their
nature require periodic or substantial replacement calculated on the basis of the cost
of the said machinery, equipment and fixtures being fully depreciated over the useful
life thereof as determined by the Landlord or a qualified consultant retained by the
Landlord for such purpose; and

There shall be excluded from Operating Costs without duplication:

	 	(c)	 	periodic depreciation on the capital cost to the Landlord of the
Premises at the time that the Premises were first constructed, except as expressly
set out above;
	 
	 	(d)	 	payments of principal and interest under any mortgages on the Premises;
	 
	 	(e)	 	corporate income tax;
	 
	 	(f)	 	the costs of repair of damage, to the extent that insurance proceeds are
actually recovered by the Landlord in respect thereof;
	 
	 	(g)	 	items that are the responsibility of the tenants of the Premises pursuant to
their respective leases with the Landlord.

7.
Parking Areas means the paved portions of the Premises which have been or are to be allocated
for the parking of motor vehicles, as from time to time altered, reconstructed or expanded, and
includes entrances, roads and other means of access thereto and any parking structures or other
parking facilities from time to time constructed.

8.
Premises means the lands set out in Section 1.1(d), more or less and all structures and
improvements from time to time erected thereon and their appurtenances, all as the same may be
expanded or altered in accordance with this Lease from time to time.

9.
Property Taxes means all general, special, local improvement, school and water taxes,
levies, rates and charges from time to time imposed against the Premises, 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 Premises, or any part thereof, or should

 

3

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 Landlord and the Tenant 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 Landlord and the Tenant fail to agree on such amendment or new provision the same
shall be settled by arbitration in accordance with the Arbitration Act of the jurisdiction
governing this Lease, and amendments thereto, or any like statute in effect from time to time).

10.
Sales Tax means any sales, tax, business transfer tax, value added tax or any similar tax
imposed against the Landlord or the Tenant by the Government of Canada, or any provincial or
municipal government, to the extent that such tax is imposed against the Landlord or the Tenant or
is required to be paid or collected by the Landlord by reason of any payment by the Tenant to the
Landlord pursuant to any provision of this Lease.

11. Security Interest means an interest in goods, chattel paper, a security, a document of title,
an instrument, money or an intangible, that secures payment or performance of an obligation as more
specifically defined in the Personal Property Security Act of Alberta, any amendments there or
replacement thereof.

12. Structural Repairs means only repairs to the foundations, the structural subfloors, columns and
beams and the structural portions of bearing walls and roofs of the Premises and specifically
excludes maintenance of every kind.

13. Substantial Damage or Destruction means such damage as, in the opinion of the Landlord’s
architect, requires substantial alteration or reconstruction of the Premises or of such other
portion of the Premises or such damage to the Premises as cannot be repaired within a period of one
hundred and eighty (180) days from the time of such damage to the state wherein the Tenant could
use substantially all of the Premises for its business.

14.
Tenant means the party or parties described in Section 1.1(b) and the heirs, executors,
administrators, successors and permitted assigns thereof.exv10w1

 

Exhibit 10.1(a)

FORM OF LETTER AGREEMENT WITH JACK KANG

June [___], 2006

China Healthcare Acquisition Corp.

1233 Encino Drive

Pasadena, California 91108

Ferris, Baker Watts, Incorporated

120 Light Street, 8th Floor

Baltimore, Maryland 21202

Re: Initial Public Offering

Gentlemen:

     The undersigned officer
and director and stockholder of China Healthcare Acquisition Corp.
(“Company”), in consideration of Ferris, Baker Watts, Incorporated (“FBW”) entering
into a letter of intent (“Letter of Intent”) to underwrite an initial public offering of
the securities of the Company (“IPO”) and embarking on the IPO process, hereby agrees as
follows (certain capitalized terms used herein are defined in paragraph 11 hereof):

     1. If the Company
solicits approval of its stockholders of a Business Combination, the
undersigned will vote all shares of Common Stock of the Company, including the Insider Shares and
IPO Shares, owned by him in accordance with the majority of the votes cast by the holders of the
IPO Shares.

     2. The undersigned
acknowledges that he is purchasing his Insider Shares for investment and
not with a view to the distribution thereof, and acknowledges the certificate representing such
shares shall bear a restrictive legend. The undersigned will escrow his Insider Shares until six
months after the consummation of a Business Combination subject to the terms of a Stock Escrow
Agreement which the Company will enter into with the undersigned and an escrow agent acceptable to
the Company.

     3. In the event that
the Company fails to consummate a Business Combination within 18 months
from the effective date (“Effective Date”) of the registration statement relating to the
IPO (or 24 months under the circumstances described in the prospectus relating to the IPO), the
undersigned will take all reasonable actions within his power to cause the Company to liquidate as
soon as reasonably practicable. The undersigned hereby waives any and all right, title, interest or
claim of any kind (“Claim”) in or to any distribution of the Trust Fund (as defined in the
Letter of Intent) with respect to his Insider Shares and waives any Claim the undersigned may have
in the future as a result of, or arising out of, any contracts or agreements with the Company and
will not seek recourse against the Trust Fund for any reason whatsoever. The undersigned agrees to
indemnify and hold harmless the Company against any and all loss, liability, claims, damage and
expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation, whether pending or
threatened, or any claim whatsoever) which the Company may become subject to as a result of any
claim by any vendor that is owed money by the Company for services rendered or products sold but
only to the extent necessary to ensure that such loss, liability, claim, damage or expenses does
not reduce the amount in the Trust Fund other than amounts
attributable to interest.

     4. In order to minimize
potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees to present to the Company for its consideration, prior to
presentation to any other person or entity, any suitable opportunity to acquire an operating
business, until the earlier of the consummation by the Company of a Business Combination, the
liquidation of the Company or until such time as the undersigned ceases to

 

 

China Healthcare Acquisition Corp.

Ferris, Baker Watts, Incorporated

June ___, 2006

Page 2

be an officer or director of the Company, subject to
 any pre-existing fiduciary obligations
the undersigned might have, including, but not limited to, the undersigned’s obligation to present
business opportunities to _________.

     5. The undersigned
 acknowledges and agrees that the Company will not consummate any Business
Combination which involves a company which is affiliated with any of the Insiders unless the
Company obtains an opinion from an independent investment banking firm reasonably acceptable to FBW
that the business combination is fair to the Company’s stockholders from a financial perspective.

     6. Neither the
undersigned, any member of the family of the undersigned, or any affiliate of
the undersigned will be entitled to receive or accept a finder’s fee or any other compensation in
the event the undersigned, any member of the family of the undersigned or any affiliate of the
undersigned originates a Business Combination.

     7. The undersigned
 agrees to be Chairman of the Board of Directors of the Company until the
earlier of the consummation by the Company of a Business Combination or the liquidation of the
Company. The undersigned’s biographical information furnished to the Company and FBW and attached
hereto as Exhibit A is true and accurate in all respects, does not omit any material
information with respect to the undersigned’s background and contains all of the information
required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the
Securities Act of 1933. The undersigned’s Questionnaire furnished to the Company and FBW and
annexed as Exhibit B hereto is true and accurate in all respects. The undersigned
represents and warrants that:

     (a)
 he is not subject to or a respondent in any legal action for, any injunction
cease-and-desist order or order or stipulation to desist or refrain from any act or practice
relating to the offering of securities in any jurisdiction;

     (b)
 he has never been convicted of or pleaded guilty to any crime (i) involving any
fraud or (ii) relating to any financial transaction or handling of funds of another person,
or (iii) pertaining to any dealings in any securities and he is not currently a defendant in
any such criminal proceeding; and

     (c)
 he has never been suspended or expelled from membership in any securities or
commodities exchange or association or had a securities or commodities license or
registration denied, suspended or revoked.

     8. The undersigned
has full right and power, without violating any agreement by which he is
bound, to enter into this letter agreement and to serve as Chairman of the Board of Directors of
the Company.

     9. Neither the
 undersigned, any member of the family of the undersigned, nor any affiliate of
the undersigned will be entitled to receive and will not accept any compensation for services
rendered to the Company prior to the consummation of the Business Combination; provided that
commencing on the Effective Date, National Capital Investment Limited (“Related Party”),
shall be allowed to charge the Company an allocable share of Related Party’s overhead, $5,000 per
month, to compensate it for certain limited administrative, technology and secretarial services, as
well as the use of certain limited office space, including a conference room, in Pasadena,
California, that it will provide to the Company. Related Party and the undersigned shall also be
entitled to reimbursement from the Company for their out-of-pocket expenses incurred in connection
with seeking and consummating a Business Combination.

     10. The undersigned
authorizes any employer, financial institution, or consumer credit
reporting agency to release to FBW and its legal representatives or agents (including any
investigative search firm retained by FBW) any information they may have about the undersigned’s
background and finances (“Information”), purely for the purposes of the Company’s
IPO (and
shall thereafter hold such information confidential). Neither FBW nor its

 

 

China Healthcare Acquisition Corp.

Ferris, Baker Watts, Incorporated

June ___, 2006

Page 3

agents shall be violating
the undersigned’s right of privacy in any manner in requesting and obtaining the Information and
the undersigned hereby releases them from liability for any damage whatsoever in that connection.

     11. As used herein,
(i) a “Business Combination” shall mean an acquisition by merger, capital
stock exchange, asset or stock acquisition, reorganization or otherwise, of an operating business
selected by the Company; (ii) “Insiders” shall mean all officers, directors and stockholders of the
Company immediately prior to the IPO; (iii) “Insider Shares” shall mean all of the shares of Common
Stock of the Company owned by an Insider prior to the IPO; and (iv) “IPO Shares” shall mean the
shares of Common Stock issued in the Company’s IPO.

     If the foregoing terms
and conditions are acceptable to you, kindly indicate your acceptance
below, whereupon this letter shall be a binding legal agreement among us.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Jack Kang
	 
	 	 	 	 	 	 
	Accepted and agreed as aforesaid:	 	 	 	 
	 
	 	 	 	 	 	 
	CHINA HEALTHCARE ACQUISITION CORP.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Alwin Tan, President & Chief Executive Officer	 	 	 	 

 

 

Exhibit 10.1(b)

FORM OF LETTER AGREEMENT WITH ALWIN TAN

June [___], 2006

China Healthcare Acquisition Corp.

1233 Encino Drive

Pasadena, California 91108

Ferris, Baker Watts, Incorporated

120 Light Street, 8th Floor

Baltimore, Maryland 21202

Re: Initial Public Offering

Gentlemen:

     The undersigned
officer and director and stockholder of China Healthcare Acquisition Corp.
(“Company”), in consideration of Ferris, Baker Watts,
Incorporated (“FBW”) entering
into a letter of intent (“Letter of Intent”) to underwrite an initial public offering of
the securities of the Company (“IPO”) and embarking on the IPO process, hereby agrees as
follows (certain capitalized terms used herein are defined in paragraph 11 hereof):

     1. If the Company
solicits approval of its stockholders of a Business Combination, the
undersigned will vote all shares of Common Stock of the Company, including the Insider Shares and
IPO Shares, owned by him in accordance with the majority of the votes cast by the holders of the
IPO Shares.

     2. The undersigned
acknowledges that he is purchasing his Insider Shares for investment and
not with a view to the distribution thereof, and acknowledges the certificate representing such
shares shall bear a restrictive legend. The undersigned will escrow his Insider Shares until six
months after the consummation of a Business Combination subject to the terms of a Stock Escrow
Agreement which the Company will enter into with the undersigned and an escrow agent acceptable to
the Company.

     3. In the event that
 the Company fails to consummate a Business Combination within 18 months
from the effective date (“Effective Date”) of the registration statement relating to the
IPO (or 24 months under the circumstances described in the prospectus relating to the IPO), the
undersigned will take all reasonable actions within his power to cause the Company to liquidate as
soon as reasonably practicable. The undersigned hereby waives any and all right, title, interest or
claim of any kind (“Claim”) in or to any distribution of the Trust Fund (as defined in the
Letter of Intent) with respect to his Insider Shares and waives any Claim the undersigned may have
in the future as a result of, or arising out of, any contracts or agreements with the Company and
will not seek recourse against the Trust Fund for any reason whatsoever. The undersigned agrees to
indemnify and hold harmless the Company against any and all loss, liability, claims, damage and
expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation, whether pending or
threatened, or any claim whatsoever) which the Company may become subject to as a result of any
claim by any vendor that is owed money by the Company for services rendered or products sold but
only to the extent necessary to ensure that such loss, liability, claim, damage or expenses does
not reduce the amount in the Trust Fund other than amounts
attributable to interest.

     4. In order to minimize
potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees to present to the Company for its consideration, prior to
presentation to any other person or entity, any suitable opportunity to acquire an operating
business, until the earlier of the consummation by the Company of a Business Combination, the
liquidation of the Company or until such time as the undersigned ceases to

 

 

China Healthcare Acquisition Corp.

Ferris, Baker Watts, Incorporated

June ___, 2006

Page 2

be an officer or director of the Company, subject to
 any pre-existing fiduciary obligations
the undersigned might have, including, but not limited to, the undersigned’s obligation to present
business opportunities to ______.

     5. The undersigned
acknowledges and agrees that the Company will not consummate any Business
Combination which involves a company which is affiliated with any of the Insiders unless the
Company obtains an opinion from an independent investment banking firm reasonably acceptable to FBW
that the business combination is fair to the Company’s stockholders from a financial perspective.

     6. Neither the undersigned, any member of the family of the undersigned, or any affiliate of
the undersigned will be entitled to receive or accept a finder’s fee or any other compensation in
the event the undersigned, any member of the family of the undersigned or any affiliate of the
undersigned originates a Business Combination.

     7. The undersigned
agrees to be President and Chief Executive Officer of the Company until the
earlier of the consummation by the Company of a Business Combination or the liquidation of the
Company. The undersigned’s biographical information furnished to the Company and FBW and attached
hereto as Exhibit A is true and accurate in all respects, does not omit any material
information with respect to the undersigned’s background and contains all of the information
required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the
Securities Act of 1933. The undersigned’s Questionnaire furnished to the Company and FBW and
annexed as Exhibit B hereto is true and accurate in all respects. The undersigned
represents and warrants that:

     (a) he
is not subject to or a respondent in any legal action for, any injunction
cease-and-desist order or order or stipulation to desist or refrain from any act or practice
relating to the offering of securities in any jurisdiction;

     (b) he
has never been convicted of or pleaded guilty to any crime (i) involving any
fraud or (ii) relating to any financial transaction or handling of funds of another person,
or (iii) pertaining to any dealings in any securities and he is not currently a defendant in
any such criminal proceeding; and

     (c) he
has never been suspended or expelled from membership in any securities or
commodities exchange or association or had a securities or commodities license or
registration denied, suspended or revoked.

     8. The undersigned
has full right and power, without violating any agreement by which he is
bound, to enter into this letter agreement and to serve as President and Chief Executive Officer of
the Company.

     9. Neither the
 undersigned, any member of the family of the undersigned, nor any affiliate of
the undersigned will be entitled to receive and will not accept any compensation for services
rendered to the Company prior to the consummation of the Business Combination; provided that
commencing on the Effective Date, National Capital Investment Limited (“Related Party”),
shall be allowed to charge the Company an allocable share of Related Party’s overhead, $5,000 per
month, to compensate it for certain limited administrative, technology and secretarial services, as
well as the use of certain limited office space, including a conference room, in Pasadena,
California, that it will provide to the Company. Related Party and the undersigned shall also be
entitled to reimbursement from the Company for their out-of-pocket expenses incurred in connection
with seeking and consummating a Business Combination.

     10. The undersigned
authorizes any employer, financial institution, or consumer credit
reporting agency to release to FBW and its legal representatives or agents (including any
investigative search firm retained by FBW) any information they may have about the undersigned’s
background and finances (“Information”), purely for the purposes of the Company’s IPO
(and
shall thereafter hold such information confidential). Neither FBW nor its

 

 

China Healthcare Acquisition Corp.

Ferris, Baker Watts, Incorporated

June ___, 2006

Page 3

agents shall be violating
the undersigned’s right of privacy in any manner in requesting and obtaining the Information and
the undersigned hereby releases them from liability for any damage whatsoever in that connection.

     11. As used herein,
 (i) a “Business Combination” shall mean an acquisition by merger, capital
stock exchange, asset or stock acquisition, reorganization or otherwise, of an operating business
selected by the Company; (ii) “Insiders” shall mean all officers, directors and stockholders of the
Company immediately prior to the IPO; (iii) “Insider Shares” shall mean all of the shares of Common
Stock of the Company owned by an Insider prior to the IPO; and (iv) “IPO Shares” shall mean the
shares of Common Stock issued in the Company’s IPO.

	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Alwin Tan
	 
	 	 	 	 	 	 
	Accepted and agreed as aforesaid:	 	 	 	 
	 
	 	 	 	 	 	 
	CHINA HEALTHCARE ACQUISITION CORP.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Jack Kang, Chairman of the Board of Directors

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