Document:

Spartan Stores Exhibit 10.25 to Form 10-K - 05/18/07

EXHIBIT 10.25

AMENDED AND RESTATED

LEASE

OF SPARTAN WAREHOUSE

at 9075 Haggerty Road, Plymouth, Michigan

Between:

PLYMOUTH INVESTORS LIMITED LIABILITY

COMPANY, an Illinois limited liability company

as Lessor

SPARTAN STORES, INC.

as Lessee

AMENDED AND RESTATED

LEASE

          THIS AMENDED AND RESTATED LEASE is made and entered into as of January 26, 2000, by and between:

PLYMOUTH INVESTORS LIMITED LIABILITY COMPANY, an Illinois limited liability company ("LESSOR"),

and

SPARTAN STORES, INC., a Michigan corporation, 1111 - 44th Street, SE, Grand Rapids, Michigan ("LESSEE").

          WHEREAS, Connecticut Mutual Life Insurance Company, a Connecticut corporation ("Original Lessor") and Lessee have entered into a Lease Agreement dated October 14, 1975 and First Amendment thereto dated March 23, 1977 and Second Amendment thereto dated April 30, 1979 (the "Lease") pertaining to certain real estate located in the Township of Plymouth, County of Wayne, State of Michigan and certain buildings, improvements, fixtures, machinery, equipment and personal property located thereon or therein; and

          WHEREAS, Lessor has succeeded to the interest of Original Lessor with respect to the Lease; and

          WHEREAS, Lessor and Lessee desire to amend and restate the Lease as hereinafter provided.

          NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained and for other good and valuable consideration, the receipt whereof is hereby acknowledged, Lessor and Lessee do hereby covenant and agree that the Lease shall be amended and restated as hereinafter set forth.

Article 1 - PROPERTY TO BE LEASED

                    1.1          Lessor hereby leases to Lessee, and Lessee hereby hires from Lessor, the real property described in Exhibit "A" attached hereto and made a part hereof, together with the buildings, improvements, and fixtures now erected thereon (sometimes hereinafter referred to as the "Improvements") including but not limited to the truck repair garage, storage shed, fuel island and asphalt parking areas upon that portion of said premises outlined in red on Exhibit "A-1" attached hereto and made a part hereof and the warehouse facility and asphalt parking area upon that portion of said premises outlined in red on Exhibit "A-2" attached hereto, herein collectively referred to as the "leased premises", and together with easements or other rights which may now exist or may be hereafter created for the benefit of such property, and the machinery, equipment and personal property located on the leased premises listed in Exhibit "B attached hereto and made a part hereof and the machinery, equipment and personal property

1

located in the leased premises listed in Exhibit "B-2" attached hereto and made a part hereof which in combination with the "leased premises" are referred to herein as the "leased property". Wherever reference is made to the "leased property" in this lease, as amended, such reference shall mean the "leased property" as defined herein, subject to the following:

                              1.1.1          The Lessee represents that the leased property, the title thereto, the possession and occupancy thereof, the buildings and improvements thereon, the adjoining sidewalks and structures, any surface and any subsurface thereof, and the present uses thereof, have been examined by it and that it accepts the same in the condition or state in which they now are, without representation, covenant, or warranty, express or implied, in fact or in law, by the Lessor, and without recourse to the Lessor as to the title thereto, possession or occupancy thereto, possession or occupancy thereof, encumbrances thereon, appurtenances, nature, condition, or usability thereof, or uses to which the leased property may be put.

                              1.1.2          Rights, if any, of others relating to streets, water, gas, electric and other utility lines, wires, pipes and conduits and maintenance thereof, easements of record and the agreement between Chesapeake and Ohio Railway Company and Lessee dated September 5, 1967, involving side tracks.

                              1.1.3          Any reciprocal easement agreements involving adjacent lands.

                              1.1.4          Rights of parties in possession and any leases or subleases involving said leased property.

                              1.1.5          If, by law, or in consequence of the action of any authority or by title paramount, the possession or use of any easement or appurtenance to any buildings now or hereafter erected on the leased premises outside the boundaries of the land owned by the Lessor shall be discontinued, such discontinuance shall in no way affect the liability of the Lessee to pay the full rent and perform all of the covenants contained in this Lease.

                              1.1.6          The mortgage from Lessor, as mortgagor to American National Bank and Trust Company of Chicago, or Mortgagee, recorded 5-30-91 as document No. 97121528 LS in the Wayne County Register of Deeds Office (which mortgage is hereinafter referred to as the "First Mortgage"). The term "First Mortgage" shall also mean any first mortgage encumbering Landlord's interest in the leased property together with any assignment of rents and leases given to secure the repayment of the indebtedness secured by any First Mortgage. Further, the term "First Mortgagee" shall mean the owner and holder of any First Mortgage. 

Article 2 - TERM

                    2.1          The term of the Lease shall commence on the date hereof and shall end on October 31, 2005, unless sooner terminated or extended as herein set forth.

2

Article 3 - USE OF LEASED PREMISES.

                    3.1          Lessee shall use and occupy the leased premises as and for a warehouse and office and shall not use the leased premises for any other purpose without the prior written consent of Lessor, which consent shall not be unreasonably withheld.

                    3.2          Lessee shall not use or allow the property or any part thereof to be used or occupied for any unlawful purpose or in violation of any certificate of occupancy or certificate of compliance covering or affecting the use of the leased premises or any part thereof. Lessee shall not suffer any act to be done or any condition to exist on the leased premises or any part thereof which may in law constitute a nuisance, public or private, or which may make void or voidable any insurance with respect thereto. Lessee shall not use, treat, store, or dispose of hazardous or toxic materials in the leased premises except: (a) the storage of inventory; (b) the use and storage of customary quantities of routine cleaning, maintenance, and repair supplies; (c) the use and storage of vehicle fuels, lubricants, and supplies; (d) the use and storage of lift truck batteries and other equipment or supplies used in the ordinary course of Lessee's business; and (e) as otherwise disclosed to Lessor in writing; provided, however, that Lessee shall comply with applicable law with respect to items (a) through (e) above.

                    3.3          Lessee may use and occupy the leased premises incidentally as and for a truck repair garage and automatic truck wash.

Article 4 - RENT

                    4.1          Lessee agrees to pay Lessor as rent for the leased property at such place or places as Lessor may designate from time to time, without notice or demand and without abatement, deduction or setoff, fixed rent of $793,875.00 per annum to November 1, 2000, which sum shall be payable in equal consecutive monthly installments of $66,156.25 each, on or before the first day of each month in advance. Commencing on November 1, 2000, Lessee agrees to pay to Lessor as rent for the leased property at such place or places as Lessor may designate from time to time, without notice or demand and without abatement, deduction or setoff, fixed rent payable in equal, consecutive monthly installments on or before the first day of each month. The annual amount of fixed rent and each monthly installment thereof, commencing on November 1, 2000, shall be as follows:

	

Period
	

Annual Fixed Rent
	

Monthly Installments

	
November 1, 2000 to and

including October 31, 2001
	

$1,451,450.00
	

$120,954.17

	
November 1, 2001 to and

including October 31, 2002
	

$1,480,479.00
	

$123,373.25

3

	
November 1, 2002 to and

including October 31, 2003
	

$1,510,088.58
	

$125,840.72

	
November 1, 2003 to and

including October 31, 2004
	

$1,540,290.35
	

$128,353.53

	
November 1, 2004 to and

including October 31, 2005
	

$1,571,096.16
	

$130,924.68

Lessor and Lessee stipulate and agree that for the purpose of annual fixed rent, the buildings and other improvements contain 414,700 square feet. Should the term of this Lease commence on a day other than the first day of a calendar month or end on a day other than the last day of a calendar month, then the fixed rent for such partial month shall be prorated on a daily basis based upon a thirty (30) day calendar month and shall be payable upon the date hereof or thereof.

                    4.2          It is intended that the rent provided for in this Lease shall be an absolute net return to Lessor for the term of this Lease, free from any loss, expenses or charges with respect to the leased property, including maintenance, repairs, cost of replacement of buildings or improvements, insurance, taxes and assessments now imposed upon or related to the leased property, or with respect to any easements or rights appurtenant thereto, except Lessor's income taxes and except the mortgage payments under any First Mortgage or subordinate mortgage.

                    4.3          All taxes, charges, costs and expenses which the Lessee is required to pay hereunder, together with all interest and penalties that may accrue thereon in the event of the Lessee's failure to pay such amounts, and all damages, costs and expenses which the Lessor may incur by reason of any default of the Lessee or failure on the Lessee's part to comply with the terms of this lease shall be deemed to be "additional rent" and in the event of nonpayment by the Lessee the Lessor shall have all of the rights and remedies with respect thereto as the Lessor has for the nonpayment of the fixed rent. "Fixed rent" and "additional rent" are hereinafter sometimes referred to as "rent".

                    4.4          If Lessee shall fail to pay any rent or other sums or charges payable by Lessee under this Lease when and as the same become due and payable, and such failure shall continue for a period of ten (10) days thereafter, such unpaid amounts shall bear interest at a rate per annum equal to two (2%) percent in excess of the announced base rate of interest of American National Bank and Trust Company of Chicago in effect on the due date of such payment, from the date when the same is payable under the terms of this Lease until the same shall be paid.

Article 5 - TAXES AND ASSESSMENTS

                    5.1          Lessee will pay when due, before any penalties or interest accrue, all taxes, assessments and other charges of any kind levied or assessed prior to or during the continuance of this Lease against the leased property or any part thereof, including any and all taxes imposed by the United States of America, any state or municipality or any political subdivision thereof.

4

Should the State of Michigan or any political subdivision thereof or any governmental authority having any jurisdiction there over impose a tax and/or assessment (other than an income or franchise tax) upon or against the rentals payable hereunder by Lessee to Lessor, either by way of substitution for the taxes and assessments levied or assessed against such land and such buildings, or in addition thereto, such tax and/or assessments shall be deemed to constitute a tax and/or assessment against such land and improvements for the purpose of this Section.

                    5.2          Lessee will pay when due all of Lessee's franchise and other corporate taxes, and within thirty (30) days after request therefor by Lessor, Lessee shall furnish to Lessor official receipts or other satisfactory proof of payment thereof.

                    5.3          Lessee shall have the right upon the prior written approval of the First Mortgagee, at Lessee's own expense, to contest by legal proceedings, or otherwise, the validity of any such tax, assessment or other charge payable by it which it deems to have been unlawfully or excessively levied, and for such purpose shall have the right to institute such contest or proceedings in its own name, or in the name of Lessor, or in both names, as Lessee shall deem necessary, provided however that Lessee must still either make timely payment of such contested taxes and/or assessments and seek a refund thereof, or Lessee, at its election may postpone or defer payment of the same if Lessee, shall deposit with Lessor the amount so contested and unpaid, together with all interest and penalties in connection therewith and all charges that may or might be assessed but become a charge on the leased property or any part thereof, or in lieu thereof, shall have furnished security reasonably satisfactory to Lessor.

                    5.4          If by law any such taxes or assessments may at the option of the taxpayer be paid in installments, Lessee may, provided no event of default shall then exist, exercise the option to pay the same in installments, and in such event shall pay such installments as may become due during the term before any fine, penalty, further interest or cost may be added thereto, so long as Lessee is not in default under this Lease, but if Lessee does default under this Lease, then Lessor shall have the right to thereupon demand that Lessee shall pay in full any or all outstanding taxes and/or assessments. Notwithstanding the aforesaid, Lessee shall be required to pay such taxes and/or assessments in full at least one (1) year before the expiration of the term or in the event of earlier termination hereof Lessee shall pay such taxes and/or assessments in full prior to such termination.

                    5.5          Any taxes or assessments (except those which have been converted into installment payments by Lessee) relating to a fiscal period of a taxing authority, a part of which is included in a period of time after the expiration of the term, shall (whether or not such tax shall be assessed, levied, confirmed, imposed upon or in respect of or become a lien upon the property or shall become due and payable during the term) be pro-rated between Lessor and Lessee as of the expiration of the term, based upon the taxable year. This clause shall not apply in the event of an early termination of this Lease due to default by Lessee.

                    5.6          The Lessee shall furnish to the Lessor official receipts or other satisfactory proof of payment upon receipt thereof by Lessee.

5

                    5.7          In the event of any of the following:

                              5.7.1.          The Lessee defaults under any of the terms of this Lease and fails to cure such default within the period after notice is herein provided; or

                              5.7.2          Lessee defaults under any of the terms of this Lease and as a result thereof the Lessor gives written notice of such defaults to the Lessee twice within any period of twelve (12) consecutive months during the term of this Lease (notwithstanding that such defaults shall have been cured within the period after notice as herein provided); or

                              5.7.3          Lessee fails to pay any taxes or assessments levied against the leased property within thirty (30) days after the due date for payment; or

                              5.7.4          In accordance with the provisions of the First Mortgage, in the event that the First Mortgagee requests that the Lessee make the following payments;

then Lessor shall have the right to thereupon demand that Lessee shall pay in addition to each monthly payment of rent to be paid hereunder, a sum equivalent to one-twelfth of the amount estimated by Lessor to be sufficient to enable Lessor to pay at least thirty (30) days before they become due, all such taxes, assessments and other charges. Such additional payments may be commingled with the general funds of Lessor and no interest shall be payable in respect thereof. Upon demand by Lessor, Lessee will deliver and pay over to Lessor such additional sums as are necessary to make up any deficiency in the amount necessary to enable Lessor to fully pay such taxes, assessments and other charges.

Article 6 - RISK ALLOCATION AND INSURANCE

                    6.1          Allocation of Risks. The parties desire, to the extent permitted by law, to allocate certain risks of personal injury, bodily injury and property damage, and risks of loss of real or personal property by reason of fire, explosion or other casualty, and to provide for the responsibility for insuring those risks. It is the intent of the parties that, to the extent any event is insured for or required herein to be insured for, any loss, cost, damage or expense arising from such event, including, without limitation, the expense of defense against claims or suits, be covered by insurance, without regard to the fault of Lessee, its officers, employees or agents ('Lessee Protected Parties'), and without regard to the fault of Lessor, its respective partners, shareholders, members, agents, directors, officers and employees ('Lessor Protected Parties'). As between Lessor Protected Parties and Lessee Protected Parties, such risks are allocated as follows:

                                        (a)          Lessee shall bear the risk of bodily injury, personal injury or death, or damage to the property, of third persons, occasioned by events occurring on or about the leased premises, regardless of the party at fault. Said risks shall be insured as provided in Section 6.2(a); and

6

                                        (b)          Lessee shall bear the risk of damage to the improvements on the leased premises and to Lessee's contents, trade fixtures, machinery, equipment, furniture and furnishings in the leased premises arising out of loss by the events required to be insured against pursuant to Sections 6.2(b), (d) and (e).

Notwithstanding the foregoing, provided Lessee does not default in its obligation to carry insurance under Section 6.2(a), if and to the extent that any loss occasioned by any event of the type described in Section 6.1(a) exceeds the coverage or the amount of insurance required to be carried under said Section or such greater coverage or amount of insurance as is actually carried, or results from an event not required to be insured against or not actually insured against, the party at fault shall pay the amount not actually covered.

                    6.2          Lessee's Insurance. Lessee shall procure and maintain policies of insurance, at its own cost and expense, insuring:

                                        (a)          The Lessor Protected Parties (as "named insureds"), and the First Mortgagee, and Lessee Protected Parties, from all claims, demands or actions made by or on behalf of any person or persons, firm or corporation and arising from, related to or connected with the leased premises, for bodily injury to or personal injury to or death of any person, or more than one (1) person, or for damage to property in an amount of not less than $2,000,000.00 combined single limit per occurrence/aggregate. Said insurance shall be written on an "occurrence" basis and not on a "claims made" basis. If at any time during the term of this Lease, Lessee owns or rents more than one location, the policy shall provide that the aggregate limit in the policy shall apply separately to each location owned or rented by Lessee. Lessor shall have the right, exercisable by giving written notice thereof to Lessee, to require Lessee to increase such limit if, in Lessor's reasonable judgment, the amount thereof is insufficient to protect the Lessor Protected Parties and Lessee Protected Parties from judgments which might result from such claims, demands or actions;

                                        (b)          The Improvements at any time situated upon the leased premises ("Improvements") against loss or damage by fire, lightning, wind, storm, hail storm, aircraft, vehicles, smoke, explosion, sewer back-up, riot or civil commotion as provided by the Standard Fire and Extended Coverage Policy and all other risks of direct physical loss as insured against under Special Form ('all risk" coverage). Such coverage shall be provided under the blanket policy maintained by Lessee. The insurance coverage shall be for not less than 100% of the full replacement cost of such Improvements and will include building ordinance coverage to include demolition and increased loss of construction, which building ordinance coverage endorsement shall be in an amount as Lessor shall reasonably require, all subject only to such deductibles as Lessor shall reasonably approve in writing. If, in Lessor's reasonable judgment, the amount thereof is insufficient to protect the Improvements, by an agreed amount endorsement covering the Improvements, the full replacement cost of the Improvements shall be designated annually by Lessor, in the good faith exercise of Lessor's judgment. In the event that Lessee does not agree with Lessor's designation, Lessee shall have the right to submit the matter to an insurance appraiser reasonably selected by Lessor and paid for by Lessee. The insurance appraiser shall submit a written report of his appraisal and if said report discloses that the

7

Improvements are not insured as therein required, Lessee shall promptly obtain the insurance required. Lessor shall be named as an additional insured and Lessee shall direct its insurer to pay all proceeds for loss or damage to the Improvements only to Lessor. Said insurance shall contain a policy provision waiving the insurer's right of subrogation against any Lessor Protected Party or any Lessee Protected party, provided that such waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that either party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such waiver in full force and effect);

                                        (c)          Lessor's business income, protecting Lessor from loss of rents and other charges during the period while the leased premises are unleaseable due to fire or other casualty (for a twelve (12) month period);

                                        (d)          Intentionally Omitted;

                                        (e)          All contents and Lessee's trade fixtures, machinery, equipment, furniture and furnishings in the leased premises to the extent of at least ninety percent (90%) of their replacement cost under Standard Fire and Extended Coverage Policy and all other risks of direct physical loss as insured against under Special Form ("all risk" coverage). Said insurance shall contain an endorsement waiving the insurer's right of subrogation against any Lessor Protected Party, provided that such waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that Lessor shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such waiver in full force and effect);

                                        (f)          Lessee Protected Parties from all worker's compensation claims; 

                                        (g)          Intentionally Omitted; and

                                        (h)          Insurance against loss or damage to the Improvements from external explosion of boilers, air conditioning equipment and miscellaneous electrical apparatus, if any, in the leased premises. Lessor shall be named as an additional insured and Lessee shall direct its insurer to pay all proceeds for loss or damage to the Improvements only to Lessor. Said insurance shall contain an endorsement waiving the insurer's right of subrogation against any Lessor Protected Party or any Lessee Protected Party, provided that such waiver or right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that either party shall have the right, within thirty (30) days following written notice, to pay such increased costs, thereby keeping such waiver in full force and effect.

                    6.3          Form of Insurance. All of the aforesaid insurance shall be in responsible companies. The insurer and the form, substance and amount (where not stated above) shall be satisfactory from time to time to Lessor and the First Mortgagee, and shall unconditionally provide that it is not subject to cancellation or non-renewal except after at least thirty (30) days

8

prior written notice to Lessor and the First Mortgagee (except that such period shall be reduced to ten (10) days in the event of cancellation for nonpayment of premiums). The insurance specified in Section 6.2(b) shall contain a mortgage clause satisfactory to the First Mortgagee and the insurance specified in Sections 6.2(c), (d) and (h) shall also insure the First Mortgagee as required by the First Mortgagee. Originals of Lessee's insurance policies (or certificates thereof satisfactory to Lessor), together with satisfactory evidence of payment of the premiums thereon, shall be deposited with Lessor not less than thirty (30) days prior to the end of the term of such coverage.

                    6.4          Fire Protection. Lessee shall conform with all applicable fire codes of any governmental authority, and with the rules and regulations of Lessor's fire underwriters and their fire protection engineers, including, without limitation, the installation of adequate fire extinguishers. In the event that the leased premises are served by a sprinkler system, Lessee will, at all times during the entire Lease term, cause the same to be served by a sprinkler monitoring system connected to the local Fire department or to a qualified monitoring service approved by Lessor; provided, however, that Lessee may self monitor such systems if it certifies to Lessor that its systems meet NFPA 72 Standard for Proprietary Protective Signaling System.

Article 7 - COMPLIANCE WITH LAWS

                    7.1          Lessee will, in its use and occupancy of the leased premises, at its sole cost and expense, comply with, and shall cause all subtenants and other occupants of the leased property to comply with, all Federal, State, county, municipal and other governmental statutes, laws, rules, orders, regulations and ordinances affecting the leased premises or any part thereof or the use thereof. This shall include without limitation obtaining and paying for any and all permits in connection with the use and occupation of the property and shall also pertain to any required structural changes, subject however to Article 10, "Alterations and Additions".

                    7.2          After first having obtained the Lessors' prior written approval, which shall not be unreasonably withheld, and also first having obtained the First Mortgagee's prior written approval, and also having first provided the Lessor with whatever security Lessor may deem necessary under the circumstances, Lessee may thereafter have the right, at its own expense, to contest or review by legal proceedings, or otherwise, any such statutes, laws, rules, orders, regulations, or ordinances, in its own name, or in the name of Lessor or in both names as Lessee shall deem necessary. During the period of any such contest or review, Lessee shall not be deemed in default under this lease for noncompliance with any such statutes, laws, rules, orders, regulations or ordinances.

Article 8 - MECHANIC'S LIENS

                    8.1          Lessee will not create or permit to be created, or to remain, and will promptly discharge, at its sole cost and expense, any lien, encumbrance or charge upon the leased property or any part thereof, or upon Lessee's leasehold interest therein, except such as are created by the Lessor or the First Mortgagee. Provided however that, after first having obtained First Mortgagee's prior written approval, Lessee shall have the right, at its own expense, to

9

contest by legal proceedings or otherwise, any such lien, encumbrance or charge upon the leased premises, or the underlying claim giving rise to any such lien, encumbrance or charge, in its own name, or in the name of Lessor or in both names, as Lessee shall deem necessary. During the period of any such contest or proceedings, Lessee shall not be deemed in default under this Lease solely because of the existence of any such lien, encumbrance or charge upon the leased premises. Nothing in this lease contained shall be construed as constituting the consent or request of Lessor, expressed or implied, to any contractor, subcontractor, laborer, materialman or vendor to or for the performance of any labor or construction, alteration, addition, repair or demolition of or to the leased premises or any part thereof. Notice is hereby given that Lessor will not be liable for any labor, services or materials furnished or to be furnished to Lessee, or to anyone holding the leased premises or any part thereof through or under Lessee, and that no mechanic's or other liens for any such labor or materials shall attach to or affect the interest of Lessor or the First Mortgagee in and to the leased premises. Lessor shall have the right to require Lessee to remove any mechanic's lien, on twenty (20) days notice, by providing a bond at Lessee's expense.

Article 9 - REPAIRS AND MAINTENANCE

                    9.1          Lessee shall keep the leased property, including pipes, heating systems, plumbing systems, sprinkler systems, window glass, fixtures and all other appliances and appurtenances, all equipment and other property located thereon, and all alleyways, passageways, sidewalks, curbs and vaults adjoining the leased property in good and clean order and condition, ordinary wear and tear excepted, shall not make or suffer any waste or damage thereto, and shall make all necessary repairs, replacements and renewals thereof, interior and exterior, structural and non-structural, ordinary and extraordinary and foreseen and unforseen. The Lessee shall also maintain all portions of the leased property and adjoining areas, in a clean and orderly condition, free of dirt, rubbish, snow, ice and unlawful obstructions. The necessity for and adequacy of the maintenance, repairs and replacements to the property made or required to be made pursuant to this Section shall be measured by the standards which are appropriate for first-class buildings of similar construction containing similar facilities and which are necessary to maintain the property at all times as a first-class project in a good state of repair.

Article 10 - ALTERATIONS AND ADDITIONS

                    10.1          Lessee, may, at any time, at its sole cost and expense, make all alterations and additions to existing structures and may make other improvements to the leased property, provided that Lessee is not in default under any of the terms or provisions of this Lease, subject to the further provisions of this Article and to all other applicable provisions of this Lease.

                    10.2          No alteration or addition shall be made without Lessor's prior written consent (which consent shall not be unreasonably withheld) if:

                              10.2.1          The proposed alteration or addition would change the type or character of the Improvements; or

10

                              10.2.2          The proposed alteration or addition would reduce the size of the Improvements or diminish the area thereof; or

                              10.2.3          If, in any single instance, the estimated cost of any proposed alteration or addition is $50,000.00 or more.

                    10.3          In the event the Lessee should at any time intend to make an addition to the Improvements and if the Lessee intends to obtain a loan to finance the same, then the Lessee shall deliver to the Lessor a written notice to that effect including: (i) plans and specifications; (ii) an itemization of all costs involving such construction; (iii) a copy of the construction contract, if any; and (iv) a copy of any bona fide loan commitment which Lessee has received, and/or a copy of any offer of proposed financing which Lessee has received, if any. The Lessor shall have the right and option for a period of sixty (60) days after receipt of such notice and data to elect to finance such construction upon the same terms as were stated in such prior loan commitment, if any, or in such offer of proposed financing (iv above) by written notice by Lessor to Lessee, or upon any other mutually agreeable terms. If Lessor does not elect to exercise such option and if such proposed loan is effected within ninety (90) days after the termination of such option in the manner and upon the terms set forth in said prior loan commitment, or said prior offer or proposed financing, as the case may be, then the said loan may be consummated, provided however the terms of this Section shall have equal application to any new such lender. If the Lessor does not elect to exercise such option and if the proposed loan is not effected within ninety (90) days after the termination of such option, then such construction may not be financed by a party other than Lessor without again giving the notice to Lessor and the Lessor again shall have the option to loan as herein provided.

                    10.4          Except for alterations and additions not requiring Lessor's prior consent, each alteration or addition shall be made under the supervision of an architect or engineer selected by Lessee and approved by Lessor, which approval shall not be unreasonably withheld; and shall be made in accordance with detailed plans and specifications prepared by such architect or engineer. Copies of all such plans and specifications shall be delivered by Lessee to Lessor, and shall be subject to Lessor's prior approval.

                    10.5          No alteration or addition shall be made except in compliance by Lessee with each of the following provisions:

                              10.5.1          All alterations and additions shall be made with reasonable diligence and dispatch (subject to unavoidable delays) in a first-class manner and with first-class workmanship and materials comparable to or better than those existing.

                              10.5.2          Before any changes or alterations are begun, Lessee shall procure, at its expense, all necessary licenses, permits, approvals and authorizations from all governmental authorities and shall upon demand deliver photocopies thereof to Lessor. Upon Lessee's request, Lessor shall join in the application for such license, permits, approvals and authorizations whenever such action is necessary and Lessee covenants that Lessor will not suffer, sustain or incur any cost, expense or liability by reason thereof.

11

                              10.5.3          Promptly after the completion of any change or alteration, Lessee shall procure at Lessee's expense all such approvals by governmental authorities, if any, of the completed change or alteration as may be required by any applicable law or ordinance or any applicable rule or regulation of governmental authorities and all such insurance organizations' approvals, if any, as may be required or customary in connection therewith, and on written demand shall promptly deliver photocopies thereof to Lessor.

                              10.5.4          No alteration or addition shall create any encroachment upon any street or upon any adjacent premises.

                              10.5.5          Unless performed entirely within the enclosure walls of any building then existing on the premises, Lessee shall on written demand promptly deliver to Lessor a copy of a final survey of the premises showing the completed alteration or addition.

                              10.5.6          No alteration or addition shall be made which would render title to the leased premises or any part thereof unmarketable or objectionable to Lessor.

                              10.5.7          No alteration or addition shall be made which would tie-in or connect any building or structure on the premises with any other building or structure located outside of the boundary lines of the premises without the written consent of Lessor, which consent shall not be unreasonably withheld.

                              10.5.8          At all times when any alteration or addition is in progress there shall be maintained, at the Lessee's expense, workmen's compensation insurance in accordance with the law covering all persons employed in connection with the alteration or addition and general liability insurance for the mutual benefit of and insuring the Lessee, Lessor and First Mortgagee, expressly covering the additional hazards due to the addition or alteration, and the Lessee shall provide the Lessor with a copy of such insurance policies upon demand.

                    10.6          The Lessor shall in no event be required to maintain or make any alteration, rebuilding, replacement, change, addition, improvement or repair upon the leased property during the term.

                    10.7          All buildings, alterations, rebuildings, replacements, changes, additions, improvements, equipment and appurtenances on or in the leased property which were placed thereon after December 31, 1975 or which may hereafter be placed thereon shall immediately become the sole and absolute property of the Lessor and shall be deemed to be part of the leased property except that all moveable equipment and trade fixtures installed by the Lessee or others holding under or through the Lessee, shall be and remain the property of the Lessee or such other parties. The Lessor may designate by written notice to Lessee those alterations and additions which shall be removed by Lessee at the expiration or termination of the Lease and Lessee shall promptly remove the same and repair any damage to the leased premises caused by such removal, except as to such alterations and/or additions to which the Lessor (or the Original Lessor) has previously given the Lessee its written consent that the same need not be removed by Lessee at the expiration or termination of this Lease.

12

Article 11 - INDEMNITY

                    11.1          Indemnity. Lessee will protect, indemnify and save harmless Lessor (for the purpose of this Article 11 only, the term "Lessor" shall also include the First Mortgagee and the agents of the First Mortgagee and any purchaser of the leased property) Protected Parties (as defined in Section 6.1) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against the Lessor Protected Parties or any of them of which Lessee is given written notice by reason of (i) any failure on the part of Lessee to perform or comply with any of the terms of this Lease; or (ii) performance of any labor or services or the furnishing of any materials or other property in respect of the leased premises or any part thereof. In case any action, suit or proceeding is brought against the Lessor Protected Parties, of which Lessee is given written notice by reason of any occurrence described in this Section 11.1, Lessee will, at Lessee's expense, by counsel approved by Lessor, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended. The obligations of Lessee under this Section 11.1 shall survive the expiration or earlier termination of this Lease. Lessee warrants, covenants and represents to Lessor that Lessee will perform, in a timely and proper manner, all of Lessee's obligations under the agreement between Buckeye Pipeline Company and Lessee recorded in Liber 16467, page 203 and under the agreement between Chesapeake and Ohio Railway Company and Lessee dated September 5, 1967, involving side tracks.

Article 12 - UTILITIES

                    12.1          Charges for utilities, including without limitation gas, electricity, light, heat, power, water, sewage and telephone or other communication services, shall be paid by Lessee as they are incurred. The Lessee shall furnish to the Lessor receipts or other satisfactory proof of payment of such premiums within a reasonable time after demand by the Lessor.

                    12.2          Lessee shall have the right to use the utility facilities which are presently existing on the leased premises, however, Lessor shall not be required to furnish any service to the leased premises, including, but not limited to, heat, water and power. The Lessor shall not be liable for any failure of water supply or electric current or any service by any utility, for injury to persons (including death) or damage to property resulting from steam, gas, electricity, water, rain or snow which may flow or leak from any part of the leased property or from any pipes, appliances or plumbing works from the street or subsurface or from any other place, or for interference with light or other easements, however caused, except if due to the affirmative negligence of the Lessor.

                    12.3          If the existing facilities are required to be modified or replaced for any reason by any utility company or authorized agency, governmental or otherwise, then Lessee shall comply with the same at its own cost and shall save Lessor harmless therefrom, all subject to Article 10, "Alterations and additions".

13

Article 13 - RESTORATION

                    13.1          In case of any damage to or destruction of the leased property or any part thereof, Lessee shall give immediate notice thereof to Lessor and First Mortgagee, and Lessee shall, at Lessee's expense, repair, restore, or rebuild the leased premises or the part thereof so damaged, as nearly as possible to the value, condition and character the same was in immediately prior to such damage or destruction, with such changes or alterations as may be made at Lessee's election pursuant to and subject to the conditions of Article 10, Alterations and Additions, (such repair, restoration, rebuilding, changes and alterations, together with any temporary repairs and property protecting pending completion of the work being herein called "restoration") all in accordance with plans and specifications therefor first approved by Lessor, unless Lessor shall have waived its right of approval in writing.

                    13.2          If, by reason of any damage or destruction mentioned in Sec. 13.1, any sums are to be paid under any insurance policy mentioned in Article 6 hereof, after receiving First Mortgagee's prior written approval, such sum shall be paid as follows:

                              13.2.1          Such sums, other than rent insurance proceeds paid pursuant to Section 6.2(c), shall be paid as provided in Sec. 13.3 except that if the aggregate insurance proceeds received by reason of any single instance of damage or destruction shall be less than $50,000 Dollars, such insurance proceeds (all of Lessor's right, title and interest to which proceeds are hereby assigned to Lessee) shall be paid over to Lessee, and Lessee shall hold the same as a trust fund to be used first for the payment of the entire cost of restoration before using the same for any other purpose; provided however, that if any event of default by Lessee shall exist hereunder at the time such proceeds are so to be paid over to Lessee, such proceeds shall be held and applied as provided for in Sec. 13.3.

                              13.2.2          Rent insurance proceeds paid pursuant to Section 6.2(c), if payable, shall be applied to the payment of, when and as due and payable, the installments of rent and other payments due under this Lease until restoration has been completed. The balance, if any, of such proceeds shall be paid to Lessee or as Lessee may direct. Furthermore, if Lessee shall have escrowed funds with Lessor to be used for the payment of future taxes (under Sec. 5.6 hereof) and/or to be used for the payment of future insurance premiums (under Sec. 6.5 hereof) such insurance proceeds pertaining to taxes and/or insurance shall belong to the Lessee to the extent of such prepaid escrowed funds.

                    13.3          If the aggregate insurance proceeds (other than rent insurance proceeds paid pursuant to Section 6.2(c)) received by reason of any single instance of damage or destruction shall be $50,000 Dollars or more, such insurance proceeds shall be paid over to the Lessor or the First Mortgagee as a Depositary, which shall hold the same as a trust fund to be used for the payment of the cost of restoration as hereinafter provided. Upon receipt by the Depositary of:

                              13.3.1          A certificate of Lessee dated not more than thirty (30) days prior to the date of such receipt (i) requesting the payment of a specified amount of such money; (ii)

14

describing in reasonable detail the work and materials applied to the restoration since the date of the last certificate of Lessee; (iii) stating that such specified amount does not exceed the cost of such work and material; (iv) stating that such work and materials have not previously been made the basis of any request for any withdrawal of money;

                              13.3.2          A certificate of an independent engineer or independent architect designated by Lessee, who shall be approved by Lessor (which approval shall not be unreasonably withheld) stating (i) that the work and materials described in the accompanying certificate of Lessee were satisfactorily performed and furnished and were necessary, appropriate and desirable to the restoration in accordance with the plans and specifications therefor approved by Lessor, unless Lessor shall have waived its right of approval in writing; (ii) that the amount specified in such certificate of Lessee is not in excess of the cost of such work and materials; (iii) the additional amount, if any, required to complete the restoration;

                              13.3.3          Evidence satisfactory to the First Mortgagee, and Lessor, that the cost of such work and materials have been paid in full or will be paid in full out of such advance; and

                              13.3.4          Either (i) a written opinion of counsel satisfactory to Lessor, or (ii) the certification of a title company satisfactory to Lessor, in either case that as of a date not more than two (2) days prior to the date of payment described below there exists no filed or recorded lien, encumbrance or change prior to or on a parity with the estate, rights and interest of Lessor (except for the First Mortgage and permitted exceptions); that the leased premises are not subject to any filed or recorded mechanic's, laborer's, materialmen's or other similar lien, encumbrance or charge, and that the fixtures and equipment are not subject to any title retention agreement, security agreement, lien or other encumbrance except those permitted herein; and

                              13.3.5          First Mortgagee's prior written consent to make the following payments in the manner and sums as provided for herein;

Then the Depositary shall pay to the Lessee the amount of such insurance monies specified in such certificate of Lessee, provided that the balance of funds then held by the Depositary will be sufficient for the completion of the restoration as determined by the certificate required by Subsection 13.3.2. Any balance of insurance proceeds after the completion of restoration, as evidenced by a certificate of such independent engineer or independent architect shall be paid to Lessee.

                    13.4          Except in the event of a default by Lessee hereunder, upon the completion of the term of this Lease as specified by Sec. 2.1, or sooner termination of this Lease by condemnation, and so long as Lessee is not in default hereunder, after receiving First Mortgagee's prior written approval, any insurance proceeds not theretofore applied to the cost of restoration, but required therefor, shall be paid to Lessor, and any excess insurance proceeds shall be paid to Lessee; provided however, that if such termination occurs pursuant to Article 14, "Condemnation", such insurance proceeds shall be deemed to be part of the condemnation award and shall be disposed of as provided in said Article.

15

                    13.5          Notwithstanding the foregoing provisions of this Article 13, if, within eighteen (18) months prior to the expiration of the term, the Improvements shall be damaged or destroyed to any extent greater than fifty (50%) percent of then full replacement cost thereof (as determined pursuant to Section 6.2(b) hereof), either party shall have the option within sixty (60) days from the date of said damage or destruction to terminate this Lease by giving notice to the other party, which termination shall be effective not less than thirty (30) days after the giving of such notice and thereupon this Lease shall expire and terminate on the date specified in such notice, and Lessee shall thereupon make payment of all net rent and other sums and charges payable by Lessee hereunder as justly apportioned to the date of such termination, except for any then unpaid installments of the assessments which Lessee has elected to pay in installments pursuant to Subsection 5.3 hereof, all of which installments shall forthwith be paid in full by Lessee to Lessor or the taxing authority. In the event of such termination Lessee shall not be required to repair the damage and all insurance monies payable as a result of such damage or destruction shall belong and be paid to Lessor. Notwithstanding the foregoing, Lessee shall not be entitled to exercise its aforesaid "option to terminate" (and any purported exercise thereof shall be void) if at the time:

                              13.5.1          Lessee shall then be in default hereunder; or

                              13.5.2          Any First Mortgage is in effect. In the event all conditions precedent to Lessee's right to exercise its option are satisfied, except the condition in this Subsection 13.5.2, Lessee may exercise its option, provided the hazard insurance proceeds are sufficient to pay off the First Mortgage in full.

                    13.6          Except as otherwise expressly provided in Section 13.5 hereof, no destruction of or damage to the leased premises or any part thereof, whether such damage or destruction be partial or total or otherwise, shall entitle or permit Lessee to surrender or terminate this Lease or shall relieve Lessee from its liability to pay in full the rent and other sums and charges payable by Lessee hereunder or from any of its other obligations under this Lease and Lessee waives any rights now or hereafter conferred upon it by statute or otherwise to surrender this Lease or quit or surrender the leased premises or any part thereof or to receive any suspension, diminution, abatement or reduction of the rent or other sums and charges payable by Lessee hereunder on account of any such destruction or damage except that to the extent to which the Lessor shall have received and retained a sum as proceeds of any rent insurance pursuant to Subsection 13.2.2 hereof, Lessee shall be entitled to a credit therefor against its obligations under this Lease to pay the rent and such other sums and charges.

Article 14 - CONDEMNATION

                    14.1          Taking of Whole. If the whole of the leased premises shall be taken or condemned for a public or quasi public use or purpose by a competent authority, or if such a portion of the leased premises shall be so taken that as a result thereof the balance cannot be used for the same purpose and with substantially the same utility to Lessee as immediately prior to such taking (including a taking of any portion of the parking area such that the remaining land will not reasonably permit a relocation and reconstruction of the parking area which will permit

16

the building located on the leased premises to be used as a warehouse), and Lessee elects to terminate this Lease, which election shall be made by giving written notice thereof to Lessor within thirty (30) days after Lessee receives notice of such taking from Lessor or the condemning authority, then in such event, this Lease shall terminate upon delivery of possession to the condemning authority, and any award, compensation or damages hereinafter sometimes called the "Award") shall be paid to and be the sole property of Lessor whether the Award shall be made as compensation for diminution of the value of the leasehold estate or the fee of the leased premises or otherwise and Lessee hereby assigns to Lessor all of Lessee's right, title and interest in and to any and all of the Award. Notwithstanding the foregoing, Lessee shall be entitled to participate in such proceedings at Lessee's expense, and shall have the right to claim and recover from the condemning authority, but not from Lessor, such compensation as may be separately awarded or recoverable by Lessee in Lessee's own right on account of any and all damage to Lessee's business by reason of the condemnation and for or on account of any cost or loss to which Lessee might be put in removing Lessee's merchandise, furniture, trade fixtures, equipment, and personal property, but in no event shall Lessee be entitled to any claim or payment based upon the value of any expired term of this Lease. Lessee shall continue to pay rent until the Lease is terminated and any impositions under Article 5 (Taxes and Assessments) and insurance premiums prepaid by Lessee or any unpaid impositions or other charges which accrue prior to the termination, shall be adjusted between the parties.

                    14.2          Partial Taking. If only a part of the leased premises shall be so taken or condemned, but the Lease is not terminated pursuant to Section 14.1 hereof, Lessee, at its sole cost and expense (subject to Lessee's right to use the Award for such purpose as described below), shall repair and restore the leased premises and all Improvements thereon. Should the building which forms a part of the leased premises be reduced, then the annual fixed rent to be paid by Lessee to Lessor in accordance with Article 4 of this Lease shall be reduced by an amount equal to 10.875% percent of the "Net Award" actually received by Lessor (after payment of reasonable expenses of collection, including attorneys' fees, and deducting therefrom any other amounts paid by Lessor to Lessee in accordance with this Article and further deducting any amount the First Mortgagee requires to be paid against the mortgage indebtedness), provided, however, that the annual fixed rent shall not be reduced as herein provided unless the "Net Award" as herein defined exceeds the sum of $25,000.00. Lessee shall promptly and diligently proceed to make a complete architectural unit of the remainder of the improvements, complying with the procedure set forth in Article 13 for such purpose, and provided Lessee is not then in default hereunder, the amount of the Award relating to the improvements shall be deposited with the Depositary (as defined in Article 13 hereof) which shall disburse the Award to apply on the cost of said repairing or restoration in accordance with the procedure set forth in Section 13.3. If Lessee does not make a complete architectural unit of the remainder of the improvements within a reasonable period after such taking or condemnation, not to exceed one hundred eighty (180) days, then, in addition to whatever other remedies Lessor may have either under this Lease, at law or in equity, the money received by and then remaining in the custody of the Depositary shall, at Lessor's election be paid to and retained by Lessor, as liquidated damages resulting from failure of Lessee to comply with the provisions of this Section. Any portion of the Award as may not have to be expended for such repairing or restoration shall be paid to Lessor."

17

Article 15 ASSIGNMENT AND SUBLETTING

                    15.1          Consent Required

                                        (a)          Lessee shall not, without Lessor's prior written consent, (i) assign or convey this Lease or any interest under it; (ii) sublet the leased premises or any part thereof; (iii) amend a sublease previously consented to by Lessor; or (iv) permit the use or occupancy of the leased premises or any part thereof by anyone other than Lessee. If Lessee proposes to assign the Lease or enter into any sublease of the leased premises, Lessee shall deliver written notice thereof to Lessor, together with a copy of the proposed assignment or sublease agreement at least thirty (30) days prior to the effective date of the proposed assignment, or the commencement date of the term of the proposed sublease. Any proposed assignment or sublease shall be expressly subject to all of the terms, conditions and covenants of this Lease. Any proposed assignment shall contain an express written assumption by assignee of all of Lessee's obligations under this Lease. Any proposed sublease shall (i) provide that the sublessee shall procure and maintain policies of insurance as required of Lessee under the terms of Section 6.2 hereof, (ii) provide for a copy to Lessor of notice of default by either party, and (iii) otherwise be reasonably acceptable in form to Lessor.

                                        (b)          Lessor's consent to any assignment or subletting shall not unreasonably be withheld. In making its determination as to whether to consent to any proposed assignment or sublease, Lessor may consider, among other things, the creditworthiness and business reputation of the proposed assignee or sublessee, the intended manner of use of the leased premises by the proposed assignee or sublessee, the estimated vehicular traffic on or about the leased premises which would be generated by the proposed assignee or sublessee or by its manner of use of the leased premises, and any other factors which Lessor may reasonably deem relevant. Lessee's remedy, in the event that Lessor shall unreasonably withhold its consent to an assignment or subletting, shall be limited to injunctive relief or declaratory judgment and in no event shall Lessor be liable for damages resulting therefrom. Lessor agrees to promptly stipulate to the facts in any such proceedings for injunctive relief or declaratory judgment. No consent by Lessor to any assignment or subletting shall be deemed to be a consent to any further assignment or subletting or to any sub-subletting.

                                        (c)          In the event that Lessee proposes to assign the Lease or to enter into a sublease of all or substantially all of the leased premises, Lessor shall have the right, so long as the First Mortgagee shall consent in writing thereof, in lieu of consenting thereto, to terminate this Lease, effective as of the effective date of the proposed assignment or the commencement date of the proposed sublease, as the case may be. Lessor may exercise said right by giving Lessee written notice thereof within twenty (20) days after receipt by Lessor of Lessee's notice, given in compliance with Article 20 hereof, of the proposed assignment or sublease. In the event that Lessor exercises such right, Lessee shall surrender the leased premises on the effective date of the termination and this Lease shall thereupon terminate. Lessor may, in the event of such termination, enter into a lease with any proposed assignee or sublessee for the leased premises.

18

                                        (d)          In the event that Lessee subleases only a portion of the leased premises, Lessee shall pay to Lessor monthly, as additional rent hereunder, fifty percent (50%) of the amount calculated by subtracting from the rent and other charges and consideration payable from time to time by the sublessee to Lessee for said space, the amount of rent payable by Lessee to Lessor under this Lease, allocated (based on the relative rentable square foot area of the total leased premises and of that portion of the leased premises so subleased by Lessee) to the subleased portion of the leased premises.

                                        (e)          No permitted assignment shall be effective and no permitted sublease shall commence unless and until any default by Lessee hereunder shall have been cured. No permitted assignment or subletting shall relieve Lessee from Lessee's obligations and agreements hereunder and Lessee shall continue to be liable as a principal and not as a guarantor or surety to the same extent as though no assignment or subletting had been made.

                    15.2          Permitted Assignments. Notwithstanding anything to the contrary contained in this Lease, Lessee may, without Lessor's consent, grant a mortgage or security interest in this Lease, provided that such mortgage or security interest shall apply only to Lessee's leasehold interest in the leased premises. Notwithstanding anything to the contrary contained in this Lease, Lessee may, without Lessor's consent, assign this Lease to any corporation resulting from a merger or consolidation of the Lessee or to any corporation or other entity that acquires all or substantially all of the assets of Lessee upon the following conditions: (a) that the tangible net worth of such assignee after such consolidation or merger shall be equal to or more than that of Lessee immediately prior to such consolidation or merger; (b) that Lessee is not at such time in default hereunder; and (c) that such assignee or successor shall execute an instrument in writing fully assuming all of the obligations and liabilities imposed upon Lessee hereunder and deliver the same to Lessor prior to the effective date of such assignment. Lessor's right to terminate this Lease as provided in Section 15.1(c) above shall not apply to any permitted assignment under this Section 15.2.

                    15.3          Other Transfer of Lease. Lessee shall not allow or permit any transfer of this Lease, or any interest hereunder, by operation of law, or mortgage, pledge, encumber or permit a lien on this Lease or any interest herein.

                    15.4          Lessor's Rights. The Lessor may assign, mortgage, sell or otherwise transfer its right, title and interest in the leased property without Lessee's consent.

                    15.5          Assignment of Rents. Should Lessee sublet all or any portion of the leased premises, the interest of the Lessee in any such subleases and all rents from any such sublessees and all other rents and profits of and from the leased premises are hereby collaterally assigned to Lessor effective upon default by Lessee hereunder and shall be payable under such assignment to Lessor. Each sublease hereinafter executed by Lessee will include provisions and forms satisfactory to Lessor, (a) in which the sublessee acknowledges the superior rights of Lessor under the terms of this Lease and (b) the sublessee, upon request of Lessor, shall agree that in the event of the termination of the leasehold estate created by this Lease, its sublease shall

19

continue in full force and effect and the sublessee shall upon request from Lessor attorn to and acknowledge Lessor, its successors and assigns, as Lessor under the sublease."

Article 16 - CURING OF LESSEE'S DEFAULT

                    16.1          If Lessee shall at any time fail to make any payment or perform any act on its part to be made or performed hereunder, then Lessor, after ten (10) days' notice to Lessee, except when other notice is expressly provided for in this Lease (or upon such shorter or immediate notice as may be reasonable in case of an emergency situation which physically threatens the leased property), and without waiving or releasing Lessee from the obligations of Lessee contained in this Lease, may (but shall be under no obligation to) make such payment or perform such act, and may enter upon the leased premises for any such purpose, and take all such action thereon as may be necessary therefor.

                    16.2          All sums paid by Lessor and all costs and expenses incurred by Lessor in connection with the performance of any such act, together with interest thereon at a rate per annum equal to two (2%) percent in excess of the announced base rate of interest of American National Bank and Trust Company of Chicago in effect on the respective dates of Lessor's making of such payment or incurring of such cost and expense until the same shall be paid, together with any consequential damages Lessor may suffer by reason of the failure of Lessee to make such payment or perform such act, and counsel fees incurred by Lessor in connection therewith or in enforcing its rights hereunder, shall be paid by Lessee to Lessor on demand as addition rent hereunder.

                    16.3          Lessee agrees to hold Lessor harmless from any inconvenience or interference with Lessee's operation of its business as a result of Lessor having to cure a default of Lessee hereunder. 

Article 17 - REMEDIES

                    17.1          Defaults. Lessee agrees that any one or more of the following events shall be considered Events of Default as said term is used herein:

                              (a)          Lessee shall be adjudged an involuntary bankrupt, or a decree or order approving, as properly filed, a petition or answer filed against Lessee asking reorganization of Lessee under the Federal bankruptcy laws as now or hereafter amended, or under the laws of any state, shall be entered, and any such decree or judgment or order shall not have been vacated or set aside within sixty (60) days from the date of the entry or granting thereof; or

                              (b)          Lessee shall file or admit the jurisdiction of the court and the material allegations contained in any petition in bankruptcy or any petition pursuant or purporting to be pursuant to the Federal bankruptcy laws as now or hereafter amended, or Lessee shall institute any proceeding or shall give its consent to the institution of any proceedings for any relief of Lessee under any bankruptcy or insolvency laws or any laws relating to the relief of

20

debtors, readjustment of indebtedness, reorganization, arrangements, composition or extension; or

                              (c)          Lessee shall make any assignment for the benefit of creditors or shall apply for or consent to the appointment of a receiver for Lessee or any of the property of Lessee; or

                              (d)          The leased premises are levied upon by any revenue officer or similar officer; or

                              (e)          A decree or order appointing a receiver of the property of Lessee shall be made and such decree or order shall not have been vacated or set aside within sixty (60) days from the date of entry or granting thereof; or

                              (f)          Lessee shall abandon the leased premises during the term hereof; or

                              (g)          Lessee shall default in any payment of Rent or in any other payment required to be made by Lessee hereunder when due as herein provided (all of which other payments shall be deemed 'additional rent' payable hereunder), or shall default under Section 6.2 hereof, and any such default shall continue for five (5) days after notice thereof in writing to Lessee; or

                              (h)          Lessee shall fail to contest the validity of any lien or claimed lien and give security to Lessor to assure payment thereof, or, having commenced to contest the same and having given such security, shall fail to prosecute such contest with diligence, or shall fail to have the same released and satisfy any judgment rendered thereon, and such default continues for ten (10) days after notice thereof in writing to Lessee; or

                              (i)          Lessee shall default in keeping, observing or performing any of the other covenants or agreements herein contained to be kept, observed and performed by Lessee, and such default shall continue for thirty (30) days after notice thereof in writing to Lessee or shall exist at the expiration of the Lease term; or

                              (j)          Lessee shall default in keeping, observing or performing any covenant or agreement herein contained to be kept, observed and performed by Lessee, which default may result in an imminent risk of damage to property (including without limitation the leased premises or the Improvements thereon) or injury to or death of persons, and such default shall not be cured immediately upon notice thereof to Lessee (which notice may be oral); or

                              (k)          Intentionally Omitted; or

                              (l)          Lessee shall repeatedly be late in the payment of rent or other charges required to be paid hereunder or shall repeatedly default in the keeping, observing, or performing of any other covenants or agreements herein contained to be kept, observed or

21

performed by Lessee (provided notice of such payment or other defaults shall have been given to Lessee, but whether or not Lessee shall have timely cured any such payment or other defaults of which notice was given). For purposes of this subsection, the term "repeatedly" shall mean that a late payment or default occurs at least three (3) times during a twelve (12) month period.

                    17.2          Remedies. Upon the occurrence of any one or more Events of Default, Lessor may at its election terminate this Lease or terminate Lessee's right to possession only, without terminating the Lease. Upon termination of the Lease, or upon any termination of Lessee's right to possession without termination of the Lease, Lessee shall surrender possession and vacate the leased property immediately, and deliver possession thereof to Lessor, and hereby grants to Lessor the full and free right, without demand or notice of any kind to Lessee (except as hereinabove expressly provided for), to enter into and upon the leased property in such event with process of law and to repossess the leased property as Lessor's former estate and to expel or remove Lessee and any others who may be occupying or within the leased property without being deemed in any manner guilty of trespass, eviction, or forcible entry or detainer, without incurring any liability for any damage resulting therefrom and without relinquishing Lessor's rights to rent or any other right given to Lessor hereunder or by operation of law. Upon termination of the Lease, Lessor shall be entitled to recover as damages all rent and other sums due and payable by Lessee on the date of termination, plus (a) an amount equal to the value, on an annual basis, of the excess (discounted to present value at eight percent (8%) annually) of (i) the rent and other sums provided herein to be paid by Lessee for the residue of the stated term hereof over (ii) the fair rental value of the leased property for the residue of the stated term taking into account the time and expenses necessary to obtain a replacement lessee or lessees, including expenses hereinafter described relating to recovery of the leased property, preparation for reletting and for reletting itself), and (b) the cost of performing any other covenants to be performed by Lessee. If Lessor elects to terminate Lessee's right to possession only without terminating the Lease, Lessor may, at Lessor's option, enter on to the leased property, remove Lessee's signs and other evidences of tenancy, and take and hold possession thereof as hereinafter provided, without such entry and possession terminating the Lease or releasing Lessee, in whole or in part, from Lessee's obligations to pay the rent and other sums provided herein to be paid by Lessee for the full term or from any other of its obligations under this Lease. Lessor may relet all or any part of the leased property for such rent and upon such terms as shall be satisfactory to Lessor (including the right to relet the leased property as a part of a larger area the right to change the character or use made of the leased property). For the purpose of such reletting, Lessor may decorate or make any repairs, changes, alterations or additions in or to the leased property that may be necessary or convenient. If Lessor does not relet the leased property, Lessee shall pay to Lessor on demand damages equal to the amount of the rent, and other sums provided herein to be paid by Lessee for the remainder of the Lease term. If the leased property is relet and a sufficient sum shall not be realized from such reletting after paying all of the expenses of such decorations, repairs, changes, alterations, additions, the expenses of such reletting and the collection of the rent accruing therefrom (including, but not by way of limitation, attorneys' fees and brokers' commissions), to satisfy the rent and other sums herein provided to be paid for the remainder of the Lease term, Lessee shall pay to Lessor on demand any deficiency and Lessee agrees that Lessor may file suit to recover any rent or other sums falling due under the terms of this Section from time to time. Lessor shall use reasonable efforts

22

to mitigate defaults; Lessor shall not be deemed to have failed to use such reasonable efforts by reason of the fact that Lessor has sought to relet the leased property at a rental rate higher than that payable by Lessee under this Lease (but not in excess of the then current market rental rate).

                    17.3          Lessee's Opportunity to Cure. If Lessee defaults under Section 19.1(i), and such default cannot with due diligence be cured within a period of thirty (30) days, and if notice thereof in writing shall have been given to Lessee, and if Lessee, prior to the expiration of thirty (30) days from and after the giving of such notice, commences to eliminate the cause of such default and proceeds diligently and with reasonable dispatch to take all steps and do all work required to cure such default and does so cure such default, then an Event of Default shall not be deemed to have occurred; provided, however, that Lessee's right to cure hereunder shall not extend beyond the expiration of the Lease term, and provided further that the curing of any default in such manner shall not be construed to limit or restrict Lessor's remedies for any other default which becomes an Event of Default.

                    17.4          Intentionally Omitted.

                    17.5          Remedies Cumulative. No remedy herein or otherwise conferred upon or reserved to Lessor shall be considered to exclude or suspend any other remedy but the same shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease to Lessor may be exercised from time to time and so often as occasion may arise or as may be deemed expedient.

                    17.6          No Waiver. No delay or omission of Lessor to exercise any right or power arising from any default shall impair any such right or power or be construed to be a waiver of any such default or any acquiescence therein. No waiver of any breach of any of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach, or as a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. The acceptance by Lessor of any payment of Rent after the termination by Lessor of this Lease or of Lessee's right to possession hereunder shall not, in the absence of agreement in writing to the contrary by Lessor, be deemed to restore this Lease or Lessee's right to possession hereunder, as the case may be, but shall be construed as a payment on account, and not in satisfaction of damages due from Lessee to Lessor.

Article 18 - SUBORDINATION OR SUPERIORITY

                    18.1          Subordination or Superiority. If any First Mortgagee shall agree that, if it becomes the owner of the leased premises by foreclosure or deed in lieu of foreclosure, it will recognize the rights and interest of Lessee under the Lease and not disturb Lessee's use and occupancy of the leased premises if and so long as no Event of Default of Lessee has occurred (which agreement may, at such mortgagee's option, require attornment by Lessee), then all or a portion of the rights and interests of Lessee under this Lease shall be subject and subordinate to the First Mortgage and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof. Any First Mortgagee may elect that,

23

instead of making this Lease subject and subordinate to its first mortgage or first trust deed, the rights and interest of Lessee under this Lease shall have priority over the lien of the First Mortgage. Lessee agrees that it will, within ten (10) days after demand in writing, execute and deliver whatever instruments may be reasonably required, either to make this Lease subject and subordinate to the First Mortgage, or to give the Lease priority over the lien of the First Mortgage, whichever alternative may be elected by the First Mortgagee. Should Lessor request that Lessee execute any document in accordance with this Section 18.1 more than one time during a twelve (12) month period, Lessor shall pay the reasonable costs and expenses of Lessee resulting therefrom.

Article 19 - QUIET ENJOYMENT & RIGHT OF ENTRY

                    19.1          Lessee, upon performing the covenants herein on Lessee's part to be performed, shall and may peaceably and quietly have, hold and enjoy the leased premises during the term hereof free of any claim or other action by Lessor or First Mortgagee or anyone claiming by, through, or under Lessor or First Mortgagee. Lessor warrants that Lessor has the full right to lease the leased premises for the term and in the manner herein provided.

                    19.2          Upon twenty-four (24) hour prior written notice to Lessee (or upon such shorter or immediate notice as may be reasonable in case of an emergency situation which physically threatens the leased property), Lessor or its agents shall have the right to enter the leased premises at all reasonable times to examine the same and to show them to prospective purchasers.

Article 20 - NOTICES

                    20.1          All notices and communications by either party to the other shall be in writing. All notices shall be sent by United States registered or certified mail, postage prepaid, addressed to Lessee at the address of the leased premises or at such other place as Lessee may from time-to-time designate in a written notice to Lessor; and addressed to Lessor at c/o Cohen Financial, 2 North LaSalle Street, Suite 800, Chicago, Illinois 60602 Attention: Legal Department, or at such other place that may from time-to-time be designated in a written notice to Lessee. In addition, Lessee shall be required to furnish the First Mortgagee with a copy of any notice to Lessor which specifies a default by Lessor of any of its obligations hereunder, which notice shall be addressed to First Mortgagee at Bank One, 200 S. Wacker Dr., 6th Floor, Mail Code IL-1-0950, Chicago, IL 60606, or at such other place as may from time-to-time be designated in a written notice to Lessee. Notice shall be deemed to be given when deposited in United States mail, with postage fully prepaid.

Article 21 - ESTOPPEL CERTIFICATES

                    21.1          Each party agrees that from time-to-time upon not less than ten (10) days' prior notice from the other to execute, acknowledge and deliver without charge to the other party or to any person designated by the other party a statement (but not more than one in any thirty (30) day period) in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications identifying the same by the date thereof and specifying the

24

nature thereof), that to the knowledge of such party no uncured event of default exists hereunder (or if any such uncured event of default does exist, specifying the same), the dates to which the rent and other sums and charges payable hereunder have been paid, and with respect to Lessee that Lessee to its knowledge has no claims against Lessor hereunder (or if Lessee has any such claims, specifying the same). Should Lessor request that Lessee execute any document in accordance with this Section 21.1 more than one time during a twelve (12) month period, Lessor shall pay the reasonable costs and expenses of Lessee resulting therefrom.

Article 22 - SURRENDER OF THE PROPERTY

                    22.1          Upon the termination of this Lease, Lessee shall quit and surrender the leased premises, broom-clean, to Lessor without delay and in good order, condition and repair, ordinary wear and tear excepted, free and clear of all lettings and occupancies, and free and clear of all liens and encumbrances, except that part of the premises which have been taken through eminent domain, if any, after the delivery hereof, without any payment therefor by Lessor. Upon such termination, title to (1) all the "leased property" as defined in Sec. 1.1 hereof, and (2) title to all buildings, alterations, rebuildings, replacements, changes, additions, improvements, fixtures, equipment and appurtenances which have been erected, installed or fixed on or in the leased property during the term of this Lease (not including moveable equipment and trade fixtures owned by Lessee), shall automatically vest in Lessor without the execution of any further instrument and this instrument shall be a conveyance of Lessee's interest in said properties as of such date of termination. Lessee shall, however, on demand execute, acknowledge and deliver to Lessor any further assurances of title to said improvements and properties as Lessor may request, and Lessee hereby irrevocably constitutes and appoints Lessor as Lessee's attorney-in-fact, coupled with an interest, to execute, acknowledge and deliver any such instrument in the name and on behalf of Lessee in the event Lessee shall for any reason fail to execute, acknowledge and deliver the same promptly after demand is made therefore by Lessor. Any personal property owned by Lessee or other occupant of the property which shall remain on the property after the termination of this Lease, and the removal of Lessee or other occupant from the property, may at the option of Lessor, be deemed to have been abandoned and may be disposed of without accountability, as Lessor may see fit, without prejudice to the rights of any such other occupant as against the Lessee.

          Lessor shall have the right to require Lessee to remove any alterations or additions constructed under Article 10 hereof that were constructed after 1978, subject to the terms of Section 10.7 above. Said rights shall be exercised by Lessor giving written notice to Lessee on or before ninety (90) days' after such termination. If Lessor requires removal of any such alterations or additions, and Lessee does not make such removal in accordance with this section at the time of such termination, or within ten (10) days after such request, whichever is later, Lessor may remove the same (and repair any damage occasioned thereby), and dispose thereof or, at its election, deliver the same to any other place of business of Lessee or warehouse the same. Lessee shall pay the costs of such removal, repair, delivery and warehousing to Lessor on demand. Upon termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon termination of Lessee's right to possession of the leased premises, Lessee shall remove articles of personal property incident to its business; "Trade Fixtures"; provided, however, that

25

Lessee shall repair any injury or damage to the leased premises which may result from such removal. If Lessee does not remove Lessee's Trade Fixtures from the leased premises prior to the expiration or earlier termination of the lease term, Landlord may, at its option, remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Lessee or warehouse the same and Lessee shall pay the cost of such removal, repair, delivery and warehousing to Lessor on demand or Lessor may treat such Trade Fixtures as having been conveyed to Lessor with this Lease being a bill of sale, without further payment or credit by Lessor to Lessee.

                    22.2          Holding Over. Lessee shall have no right to occupy the leased premises or any portion thereof after the expiration of the Lease or after termination of the Lease or of Lessee's right to possession pursuant to Section 17.2 hereof. In the event Lessee or any party claiming by, through or under Lessee holds over, Lessor may exercise any and all remedies available to it at law or in equity to recover possession of the leased premises, and for damages. For each and every month or partial month that Lessee or any party claiming by, through or under Lessee remains in occupancy of all or any portion of the leased premises after the expiration of the Lease or after termination of the Lease or Lessee's right to possession, Lessee shall pay, as minimum damages and not as a penalty, monthly rental at a rate equal to 150% the rate of rent payable by Lessee hereunder immediately prior to the expiration or other termination of the Lease or of Lessee's right to possession. The acceptance by Lessor of any lesser sum shall be construed as a payment on account and not in satisfaction of damages for such holding over. If the holding over occurs at the expiration of the Lease term or by reason of a termination by mutual agreement of the parties, Lessor may, as an alternative remedy, elect that such holding over shall constitute a renewal of this Lease on a month-to-month basis at a rental equal to 150% of the rate of annual fixed rent payable hereunder immediately prior to the expiration of the Lease, and upon all of the other covenants and agreements contained in this Lease.

Article 23 - INTENTIONALLY OMITTED.

Article 24 - ENVIRONMENTAL CONDITIONS

                    24.1          "Environmental Condition" Defined. As used in this Lease, the phrase "Environmental Condition" shall mean: (a) the presence of any substance in soil, groundwater, surface water, or other environmental medium in excess of applicable, legally binding criteria, and includes, without limitation, air, land and water pollution, noise, vibration, and odors, or (b) any condition which affords a basis for a claim of liability under the Comprehensive Environment Response Compensation and Liability Act, as amended ("CERCLA"), or the Resource Conservation and Recovery Act ("RCRA"), or any claim of violation of the Clean Air Act, the Clean Water Act, the Toxic Substance Control Act ("TSCA"), or any claim of liability or of violation under any federal statute hereafter enacted dealing with the protection of the environment or with the health and safety of employees or members of the general public, or under any rule, regulation, or permit under any of the foregoing, or under any law, rule or regulation now or hereafter promulgated by the state in which the leased premises are located, or any political subdivision thereof, relating to such matters (collectively "Environmental Laws").

26

                    24.2          Compliance by Lessee. Lessee shall, at all times during the Lease term, comply with all Environmental Laws applicable to its use of the leased premises and shall not, in the use and occupancy of the leased premises, cause or contribute to any Environmental Condition on or about the leased premises. Without limiting the generality of the foregoing, Lessee shall not, without first notifying Lessor in writing, receive, keep, maintain or use on or about the leased premises any substance in a quantity as to which a filing with a local emergency planning committee, the State Emergency Response Commission or the fire department having jurisdiction over the leased premises is required pursuant to § 311 and/or § 312 of CERCLA, as amended by the Superfund Amendment and Reauthorization Act of 1986 ("SARA") (which latter Act includes the Emergency Planning and Community Right-to-Know Act of 1986).

                    24.3          Environmental Indemnity. Lessee will protect, indemnify and save harmless the Lessor Protected Parties (as defined in Article 6), and all of their respective agents, members, directors, officers and employees, and First Mortgagee, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) of whatever kind or nature, contingent or otherwise, known or unknown, incurred or imposed, based upon Lessee's noncompliance with any Environmental Laws or resulting from any Environmental Condition on or about the leased premises which is caused by Lessee prior to or during the Lease term, or which is contributed to by Lessee prior to or during the Lease term, but only to the extent of such contribution. In case any action, suit or proceeding is brought against any of the parties indemnified herein by reason of Lessee's noncompliance with any Environmental Laws or any Environmental Condition on or about the leased premises which is caused by Lessee prior to or during the Lease term, Lessee will, at Lessee's expense, by counsel approved by Lessor, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended. The obligations of Lessee under this Section 24.3 shall survive the expiration or earlier termination of this Lease.

                    24.4          Testing and Remedial Work. In the event that Lessee experiences a spill or release of any hazardous substance or otherwise causes an Environmental Condition or about the leased premises, Lessee shall promptly notify Lessor of the event or condition and shall promptly and at its sole cost and expense, take any and all steps necessary to remedy the same, complying with all provisions of applicable law.

Article 25 - LAWS OF MICHIGAN TO GOVERN

                    25.1          This Lease shall be interpreted under and governed by the laws of the State of Michigan.

Article 26 - SECTION TITLES

                    26.1          The section titles as to contents as to particular sections herein are inserted for convenience only and are in no way to be construed as part of this Lease or as in limitation on the scope of the particular section to which they refer.

27

Article 27 - WAIVER OF BREACH

                    27.1          No waiver by either party of any breach or default by the other party of any covenant or condition of this Lease shall be effective unless it is in writing and signed by the parties so waiving and any such waiver shall not constitute a waiver as to any future breach of default.

Article 28 - SEVERABILITY AND SAVINGS

                    28.1          Each covenant, term and condition of this Lease shall be severable from the remainder. If any provision shall be held illegal or unenforceable, the remainder shall be enforced according to its terms.

Article 29 - MODIFICATION AND AMENDMENT

                    29.1          This Lease may not be modified or amended except in writing signed by the parties hereto or their respective successors and heirs or assigns.

Article 30 - LESSEE'S STATEMENT

                              Lessee shall furnish to Lessor, within ten (10) days after written request therefore from Lessor, a copy of the then most recent annual report of Lessee. It is mutually agreed that Lessor may deliver a copy of such statement to any mortgagee or prospective mortgagee of Lessor, or any prospective purchaser of the leased premises, but otherwise Lessor shall treat such statements and information contained therein as confidential.

Article 31 - COVENANTS BINDING ON SUCCESSORS

                               All of the covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto, the same as if they were in every case specifically named, and wherever in this Lease reference is made to either of the parties hereto, it shall be held to include and apply to, wherever applicable, the heirs, executors, administrators, successors and assigns of such party. Nothing herein contained shall be construed to grant or confer upon any person or persons, firm, corporation or governmental authority, other than the parties hereto, their heirs, executors, administrators, successors and assigns, any right, claim or privilege by virtue of any covenant, agreement, condition or undertaking in this Lease contained.

Article 32 - LANDLORD MEANS OWNERS

                              The term "Lessor" as used in this Lease, so far as covenants or obligations on the part of the Lessor are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee of the leased premises, and in the event of any transfer or transfers of the title to such fee, Lessor herein named (and in case of any subsequent transfer or conveyances, the then grantor) shall be automatically freed and relieved, from and after the

28

date of such transfer or conveyance, of all liability as respects the performance of any covenants or obligations on the part of Lessor contained in this Lease thereafter to be performed; provided that any funds in the hands of such Lessor or the then grantor at the time of such transfer, in which Lessee has an interest, shall be turned over to the grantee, and any amount then due and payable to Lessee by Lessor or the then grantor under any provisions of this Lease shall be paid to Lessee.

Article 33 - EXCULPATION

                              Any obligation of Lessor under this Lease shall be enforceable against and payable out of Lessor's interest in the leased property, and Lessee hereby agrees that, with respect to any obligation of Lessor under this Lease, neither Lessee nor any other person shall have or may assert any right, recourse or remedy to or against Lessor or any assets of Lessor, except to the extent (if any) of their respective interests in the leased property and no officer, shareholder, director, employee, partner, trustee, beneficiary, member or manager of Lessor assumes or shall have any personal liability of any kind whatsoever hereunder.

Article 34 - OPTION TO EXTEND

                              Provided that no Event of Default shall have occurred which remains uncured and provided that Lessee shall be in possession of the leased property, Lessee shall have the right, exercisable by given written notice ("First Renewal Notice") thereof to Lessor at least nine (9) months but not before twelve (12) months prior to the expiration of the original term of this Lease, to extend the term of this Lease for an additional term of thirty-six (36) calendar months ("First Renewal Period") upon all of the terms, covenants and conditions contained in this Lease, except that the annual fixed rent shall be Market Rent.

                              Market Rent for the First Renewal Period shall be determined as follows:

                                        (i)          After timely receipt by Lessor of the First Renewal Notice, Lessor and Lessee shall have a period which will end sixty (60) days prior to the expiration of the original term of this Lease ("Initial Rent Determination Period") in which to agree on Market Rent for the First Renewal Period. If Lessor and Lessee agree on Market Rent for the First Renewal Period, then they shall immediately execute an amendment to this Lease stating and incorporating such agreed upon Market Rent. 

                                        (ii)          If Lessor and Lessee are unable to agree on Market Rent for the First Renewal Period, subject to the limitation set forth in subsection (iv) below, Lessor and Lessee shall proceed as follows:

                                                  (1)          Not later than ten (10) days after the expiration of the Initial Rent Determination Period, each party shall appoint an appraiser ("Appraiser") and notify the other party of such appointment by identifying the appointee; provided, however, that if either party fails to give notice of its designation of an Appraiser within such ten (10) day period, the appraiser designated by the other party shall act as the sole Appraiser and shall

29

determine Market Rent for the First Renewal Period. For purposes of this Lease, an "Appraiser" means a Michigan licensed MAI appraiser who (i) shall be an independent, disinterested party (i.e. the appraiser shall not be an affiliate of any party and the total fees paid to the appraiser by any party and affiliates of any party during the preceding five (5) years shall not exceed one (1%) percent of the appraiser's gross income for such period), and (ii) shall have not less than five (5) years experience in appraising properties comparable to the leased premises.

                                                  (2)          Not later than twenty (20) days after both Appraisers are appointed, the two appraisers shall determine, in accordance with standard appraisal practices and procedures and the requirement of this Lease, the Market Rent for the First Renewal Period, and their decision shall be final and binding upon the parties.

                                                  (3)          If the two Appraisers are unable to agree on Market Rent for the First Renewal Period within twenty (20) days after appointment, then the Appraisers shall inform the parties. Unless the parties shall both otherwise then direct, the appraisers shall select a third Appraiser, not later than ten (10) days after the expiration of said twenty(20) day period. If no third Appraiser is selected within such ten (10) day period, then either party may request the then president of the board of realtors for the Plymouth, Michigan, area (or any similar organization) to appoint the third appraiser. The third Appraiser shall have the qualifications set forth in subsection (ii) (1) above. Within twenty (20) days after appointment, the third appraiser shall determine Market Rent for the First Renewal Period in accordance with standard appraisal practices and procedures and the requirements of this Lease and the Market Rent shall be the average of the two closest appraisals.

                                                  (4)          Each party shall be responsible for the costs, charges and/or fees of its Appraiser and the parties shall share equally in the costs, charges and/or fees of the third Appraiser. The decision of the Appraiser(s) shall be stated and incorporated into an amendment to this Lease, which shall be executed by both parties.

                                        (iii)          The term "Market Rent" shall mean the annual amount of fixed rent that a willing, comparable, non-equity, non-expansion tenant would pay and a willing, comparable owner of an warehouse facility in Plymouth, Michigan comparable to the leased premises would accept, at arm's length, on a "net lease" basis, giving appropriate consideration to brokerage commissions, if any, length of lease term, size and location of the leased premises, and any other generally applicably terms and conditions for tenancy of industrial facilities similar to the leased premises.

                                        (iv)          The parties agree that the Market Rent for the First Renewal Period shall not be less than $1,571,096.16 per year.

                              Provided that no Event of Default shall have occurred which remains uncured provided that the term hereof has been extended for the First Renewal Period and provided that Lessee shall be in possession of the leased property, Lessee shall have the right, exercisable by given written notice ("Second Renewal Notice") thereof to Lessor at least nine (9) months but not before twelve (12) months prior to the expiration of the First Renewal Period, to

30

extend the term of this Lease for an additional term of twenty-four (24) calendar months ("Second Renewal Period") upon all of the terms, covenants and conditions contained in this Lease, except that the annual fixed rent shall be Market Rent.

                              Market Rent for the Second Renewal Period shall be determined as follows:

                                        (i)          After timely receipt by Lessor of the Second Renewal Notice, Lessor and Lessee shall have a period which will end sixty (60) days prior to the expiration of the First Renewal Period ("Initial Rent Determination Period") in which to agree on Market Rent for the Second Renewal Period. If Lessor and Lessee agree on Market Rent for the Second Renewal Period, then they shall immediately execute an amendment to this Lease stating and incorporating such agreed upon Market Rent. 

                                        (ii)          If Lessor and Lessee are unable to agree on Market Rent for the Second Renewal Period, subject to the limitation set forth in subsection (iv) below, Lessor and Lessee shall proceed as follows:

                                                  (1)          Not later than ten (10) days after the expiration of the Initial Rent Determination Period, each party shall appoint an appraiser ("Appraiser") and notify the other party of such appointment by identifying the appointee; provided, however, that if either party fails to give notice of its designation of an Appraiser within such ten (10) day period, the appraiser designated by the other party shall act as the sole Appraiser and shall determine Market Rent for the Second Renewal Period. For purposes of this Lease, an "Appraiser" means a Michigan licensed MAI appraiser who (i) shall be an independent, disinterested party (i.e. the appraiser shall not be an affiliate of any party and the total fees paid to the appraiser by any party and affiliates of any party during the preceding five (5) years shall not exceed one (1%) percent of the appraiser's gross income for such period), and (ii) shall have not less than five (5) years experience in appraising properties comparable to the leased premises.

                                                  (2)          Not later than twenty (20) days after both Appraisers are appointed, the two appraisers shall determine, in accordance with standard appraisal practices and procedures and the requirement of this Lease, the Market Rent for the Second Renewal Period, and their decision shall be final and binding upon the parties.

                                                  (3)          If the two Appraisers are unable to agree on Market Rent for the Second Renewal Period within twenty (20) days after appointment, then the Appraisers shall inform the parties. Unless the parties shall both otherwise then direct, the appraisers shall select a third Appraiser, not later than ten (10) days after the expiration of said twenty(20) day period. If no third Appraiser is selected within such ten (10) day period, then either party may request the then president of the board of realtors for the Plymouth, Michigan, area (or any similar organization) to appoint the third appraiser. The third Appraiser shall have the qualifications set forth in subsection (ii) (1) above. Within twenty (20) days after appointment, the third appraiser shall determine Market Rent for the Second Renewal Period in

31

accordance with standard appraisal practices and procedures and the requirements of this Lease and the Market Rent shall be the average of the two closest appraisals.

                                                  (4)          Each party shall be responsible for the costs, charges and/or fees of its Appraiser and the parties shall share equally in the costs, charges and/or fees of the third Appraiser. The decision of the Appraiser(s) shall be stated and incorporated into an amendment to this Lease, which shall be executed by both parties.

                                        (iii)          The term "Market Rent" shall mean the annual amount of fixed rent that a willing, comparable, non-equity, non-expansion tenant would pay and a willing, comparable owner of an warehouse facility in Plymouth, Michigan comparable to the leased premises would accept, at arm's length, on a "net lease" basis, giving appropriate consideration to brokerage commissions, if any, length of lease term, size and location of the leased premises, and any other generally applicably terms and conditions for tenancy of industrial facilities similar to the leased premises.

                                        (iv)          The parties agree that the Market Rent for the Second Renewal Period shall not be less than the Market Rent for the First Renewal Period.

	
 
	
PLYMOUTH INVESTORS LIMITED LIABILITY

COMPANY, an Illinois limited liability company

	
 
	
 

	
 
	
By:
	
Haggerty Road Limited Liability Company, an

Illinois limited liability company, its managing

member

	
 
	
 
	
 

	
 
	
 
	
By:

	
 
	
 
	
 

	
/s/ Benjamin B. Cohen

	
 
	
 
	
 
	
Benjamin B. Cohen, as Trustee of the Benjamin B. Cohen Revocable Trust U/A/D 5/8/87

	
 
	
SPARTAN STORES, INC., a Michigan corporation

	
 
	
 

	
 
	
By:
	
/s/ Charles B. Fosnaugh

	
 
	
Its:
	
Vice President - Development

323

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of May
10, 2007, by and among THINKPATH INC., a corporation organized under the laws of
the province of Ontario, Canada (the "Company"), and the Buyers listed on
Schedule I attached hereto (individually, a "Buyer" or collectively "Buyers").

                                   WITNESSETH:

         WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Regulation S ("Regulation S") and the other rules and regulations promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or upon such other exemption from the
registration requirements of the 1933 Act as may be available with respect to
any or all of the investments in securities made hereunder;

         WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase up to Eight Million Dollars
(US$8,000,000) of convertible debentures (the "Convertible Debentures"), in the
form attached hereto as Exhibit A, which shall be convertible into common shares
of the Company with no par value (the "Common Shares") (as converted, the
"Conversion Shares") for an aggregate purchase price of up to US$8,000,000, of
which Four Hundred Thousand Dollars (US$400,000) shall be released from escrow
on the First Closing Date (as defined herein) (the "First Closing"), and the
balance shall be released from escrow on such dates and in such amounts as
mutually agreed by the Company and the Buyer, none of which in any event shall
be for amounts less than $250,000 (the "Subsequent Closings") (each individually
referred to as a "Closing" collectively referred to as the "Closings"), for a
total purchase price of up to Eight Million Dollars (US$8,000,000), (the
"Purchase Price") in the respective amounts set forth opposite each Buyer(s)
name on Schedule I (the "Subscription Amount"), and

         WHEREAS, the proceeds of the sale of the Convertible Debentures for
each Closing contemplated hereby shall be held in escrow pursuant to the terms
of an escrow agreement substantially in the form attached hereto as Exhibit B
(the "Escrow Agreement");

         NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Buyer(s) hereby
agree as follows:

         1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

                  (a) Purchase of Convertible Debentures. Subject to the
satisfaction (or waiver) of the terms and conditions of this Agreement, each
Buyer agrees, severally and not jointly, to purchase at the Closings and the
Company agrees to sell and issue to each Buyer, severally and not jointly, at
the Closings, up to the aggregate amount of Convertible Debentures corresponding
with the Subscription Amount set forth opposite each Buyer's name on Schedule I
hereto. Upon execution hereof by a Buyer, the Buyer shall wire transfer the
Subscription Amount for the

<PAGE>

First Closing in same-day funds or a check payable to "James G. Dodrill II, P.A.
as Escrow Agent for ThinkPath Inc./Trafalgar Capital Investment Fund," which
Subscription Amount shall be held in escrow pursuant to the terms of the Escrow
Agreement (as hereinafter defined) and disbursed in accordance therewith.
Notwithstanding the foregoing, a Buyer may withdraw his Subscription Amount and
terminate this Agreement as to such Buyer at any time after the execution hereof
and prior to Closing (as hereinafter defined) upon the occurrence of an Event of
Default under the terms of the Convertible Debentures.

                  (b) Closing Date. The First Closing of the purchase and sale
of the Convertible Debentures shall take place at 10:00 a.m. Eastern Standard
Time on the date hereof, subject to notification of satisfaction of the
conditions to the First Closing set forth herein and in Sections 6 and 7 below
(or such later date as is mutually agreed to by the Company and the Buyer(s))
(the "First Closing Date"). All other Closings shall take place subject to
notification of satisfaction of the conditions to the other Closings set forth
in Sections 6 and 7 below (or such later dates as are mutually agreed to by the
Company and the Buyer(s)) on the dates and subject to the conditions set forth
in the second recital to this Agreement (the "Subsequent Closing Dates," and
together with the First Closing Date, the "Closing Dates"). The Closings shall
occur on their respective Closing Dates at the offices of James G. Dodrill II,
P.A., 5800 Hamilton Way, Boca Raton, FL 33496 (or such other place as is
mutually agreed to by the Company and the Buyer(s)).

                  (c) Escrow Arrangements; Form of Payment. Upon execution
hereof by Buyer(s) and pending the Closings, the Subscription Amount for the
First Closing shall be deposited in a non-interest bearing escrow account with
James G. Dodrill II, P.A., as escrow agent (the "Escrow Agent"), pursuant to the
terms of the Escrow Agreement. Subject to the satisfaction of the terms and
conditions of this Agreement, on each Closing Date, (i) the Escrow Agent shall
deliver to the Company in accordance with the terms of the Escrow Agreement such
aggregate proceeds for the Convertible Debentures to be issued and sold to such
Buyer(s), minus the fees and expenses as set forth herein which shall be paid
directly from the gross proceeds held in escrow, at each Closing by wire
transfer of immediately available funds, and (ii) the Company shall deliver to
each Buyer, Convertible Debentures which such Buyer(s) is purchasing on such
Closing Date in amounts indicated opposite such Buyer's name on Schedule I, duly
executed on behalf of the Company.

                  (d) "Closing Date Exchange Rate" means, as to each Closing
Date, the Euro to US dollar spot exchange rate as quoted in the London edition
of the Financial Times on such Closing Date.

                  (e) "Repayment Exchange Rate" means in relation to each date
of a Conversion Notice or date of a Redemption Notice, the Euro to US dollar
spot exchange rate as quoted by in the London edition of the Financial Times on
such date.

                  (f) If on the date of any notice of conversion (a "Conversion
Notice") or notice of redemption (a "Redemption Notice"), the Repayment Exchange
Rate is less than the corresponding Closing Date Exchange Rate for such

                                      -2-
<PAGE>

Convertible Debenture, then the number of Conversion Shares to be issued shall
be increased by the same percentage as results from dividing the Closing Date
Exchange Rate by the relevant Repayment Exchange Rate. By way of example, if the
number of Conversion Shares to be issued in respect of a particular Conversion
Notice or Redemption Notice would, but for this Clause 1(f), be 1,000 and if the
Closing Date Exchange Rate is 1.80 and the relevant Repayment Exchange Rate is
1.75, then 1,029 Shares will be issued in relation to that Conversion Notice or
Redemption Notice, as the case may be.

                  (g) If on the date of repayment of principal and accrued
interest (a "Repayment Date") or any date of repayment of interest only (an
"Interest Repayment Date"), the Cash Payment Date Exchange Rate, as defined
below is less than the Closing Date Exchange Rate, then the amount of cash
required to satisfy the amounts due at such time shall be increased by the same
percentage as results from dividing the Closing Date Exchange Rate by the
relevant Cash Payment Date Exchange Rate. "Cash Payment Date Exchange Rate"
means in relation to each Repayment Date or Interest Repayment Date the Euro to
US dollar spot exchange rate as quoted in the London edition of the Financial
Times on such date. By way of example, if the amount of cash required to repay
all amounts due on such date would, but for this Clause 1(g), be US$1,000 and if
the Closing Date Exchange Rate is 1.80 and the relevant Repayment Date Exchange
Rate is 1.75 then the amount of cash from the Cash Payment required to repay all
amounts due on such date will be US$1,028.57.

         2. BUYER'S REPRESENTATIONS AND WARRANTIES.

         Each Buyer represents and warrants, severally and not jointly, that, on
the date hereof and on the each date of purchase of a Convertible Debenture:

                  (a) Investment Purposes. Each Buyer is acquiring the
Convertible Debentures and, upon conversion of Convertible Debentures (as
defined herein), the Buyer will acquire the Conversion Shares, then issuable,
for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act, applicable state
securities laws and applicable Canadian securities laws; provided, however, that
by making the representations herein, such Buyer reserves the right to dispose
of all or any part of the Conversion Shares at any time in accordance with or
pursuant to an effective registration statement covering such Conversion Shares
or an available exemption under the 1933 Act, including, without limitation,
Regulation S promulgated under the 1933 Act ("Regulation S"). Each Buyer further
represents that in consummating the transactions set forth herein: there is no
intent to place the Conversion Shares offshore in an attempt to evade
registration requirements with the result that the incidents of ownership never
leave the domestic market, or that all or a substantial portion of any economic
risk will be returned to the U.S. market during the restricted period under Rule
903 or that there is no reasonable expectation that the securities could be
viewed as actually coming to rest abroad. There is no intent on the part of the
Buyers to enter into the transactions contemplated hereby for the purpose of
"washing off" the resale restrictions through the use of Rule 904. Nothing
contained herein shall be deemed a representation or warranty by such Buyer to
hold the Conversion Shares for any period of time, except that the Buyer agrees
that in connection with the resale of any Conversion Shares under Regulation S
to comply with the offering restrictions set forth in Regulation S, including
Rule 903(b)(2), and to not sell any Conversion Shares during the distribution
compliance period as defined in Rule 903(b)(2) to a U.S. person or for the

                                      -3-
<PAGE>

account or benefit of a U.S. person. Such Buyer is acquiring the Convertible
Debentures and the Conversion Shares hereunder in the ordinary course of its
business. Such Buyer does not have any agreement or understanding, directly or
indirectly, with any person to distribute any of the Convertible Debentures or
the Conversion Shares, in violation of United States federal or state securities
laws or applicable Canadian or provincial securities laws.

                  (b) Outside the United States and Not a U.S. Person. Each
Buyer is located outside the "United States," as such term is defined in
Regulation S, and is not a "U.S. person," as such term is defined in Regulation
S, and is not purchasing the Convertible Debenture by or on behalf a person
inside the United States or a U.S. Person. The purchase of the Convertible
Debenture was conducted in an "offshore transaction," as such term is defined in
Regulation S, such that when the offer to purchase the Convertible Debenture was
made, such Buyer was not a person within the United States, and at the time of
purchase, the Buyer is located outside the United States

                  (c) Reliance on Exemptions. Each Buyer understands that the
Convertible Debentures are being offered and sold to it in reliance on specific
exemptions or exclusions from the registration requirements of United States
federal and state securities laws and applicable Canadian securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.

                  (d) Information. Each Buyer and its advisors (and his or, its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information it deemed
material to making an informed investment decision regarding its purchase of the
Convertible Debentures and the Conversion Shares, which have been requested by
such Buyer. Each Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. Each Buyer understands that its investment in the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon its
economic bargaining power, enabled and enables such Buyer to obtain information
from the Company in order to evaluate the merits and risks of this investment.
Each Buyer has sought such accounting, legal and tax advice, as it has
considered necessary to make an informed investment decision with respect to its
acquisition of such securities.

                  (e) No Governmental Review. Each Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Convertible Debentures and the Conversion Shares or the fairness or suitability
of the investment in such securities, nor have such authorities passed upon or
endorsed the merits of the offering of such securities.

                                      -4-
<PAGE>

                  (f) Transfer or Resale. Each Buyer understands that: (i) the
Convertible Debentures and the Conversion Shares have not been registered under
the 1933 Act or any applicable state securities laws, and may not be offered for
sale, sold, pledged, assigned or otherwise transferred unless (A) subsequently
registered thereunder, or (B) such Buyer shall have delivered to the Company an
opinion of counsel in a form reasonably acceptable to the Company to the effect
that such securities to be sold, assigned, pledged or otherwise transferred may
be sold, assigned or transferred pursuant to an exemption from such registration
requirements. The Company reserves the right to place stop transfer instructions
against the shares and certificates for the Convertible Debentures and the
Conversion Shares.

                  (g) Legends. Each Buyer understands that the certificates or
other instruments representing the Convertible Debentures and the Conversion
Shares and all certificates issued in substitution thereof and in exchange
therefore shall bear restrictive legends in substantially the following forms
(and a stop transfer order may be placed against transfer of such share
certificates), until such time as it is no longer required under applicable
securities laws:

                  THE SECURITIES REPRESENTED HEREBY [AND THE SECURITIES ISSUABLE
                  UPON CONVERSION/EXERCISE HEREOF] HAVE NOT BEEN REGISTERED
                  UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
                  (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE
                  UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
                  PLEDGED OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE
                  REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
                  LAWS OR SUCH SECURITIES ARE OFFERED, SOLD, PLEDGED OR
                  OTHERWISE TRANSFERRED IN A TRANSACTION THAT DOES NOT REQUIRE
                  REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE
                  SECURITIES LAW AND THE COMPANY WILL BE PROVIDED WITH OPINION
                  OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY OR
                  OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
                  THAT SUCH EXEMPTIONS ARE AVAILABLE.

                  WITHOUT COMPLIANCE WITH ALL APPLICABLE CANADIAN SECURITIES
                  LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
                  MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED
                  IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT
                  UNTIL [FOUR MONTHS AND ONE DAY AFTER ISSUANCE].

The legends set forth above shall be removed and the Company within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion Shares upon which it is stamped, if, unless the legend is otherwise
required by state securities laws, (i) in connection with a sale transaction,
provided the Conversion Shares are registered under the 1933 Act and applicable
state securities laws or (ii) in connection with a sale transaction, after such

                                      -5-
<PAGE>

holder provides the Company with an opinion of counsel, which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions and reasonably acceptable to the Company, to the effect that a
public sale, assignment or transfer of the Conversion Shares may be made without
registration under the 1933 Act.

                  (h) Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with its
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.

                  (i) Receipt of Documents. Each Buyer and his or its counsel
has received and read in their entirety: (i) this Agreement and each
representation, warranty and covenant set forth herein, the Escrow Agreement,
the Pledge Agreement and the Irrevocable Transfer Agent Instructions (as defined
herein), (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company's publicly available information on the SEC's website and (iv)
answers to all questions each Buyer submitted to the Company regarding an
investment in the Company; and each Buyer has relied on the information
contained therein and any other publicly available information regarding the
Company and has not been furnished any other documents, literature, memorandum
or prospectus.

                  (j) Due Formation of Corporate and Other Buyers. If the
Buyer(s) is a corporation, trust, partnership or other entity that is not an
individual person, it has been formed and validly exists and has not been
organized for the specific purpose of purchasing the Convertible Debentures and
is not prohibited from doing so.

                  (k) No Legal Advice From the Company. Each Buyer acknowledges,
that it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and investment
and tax advisors. Each Buyer is relying solely on such counsel and advisors and
not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

         3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants as of the date hereof and as of
each date of purchase of a Debenture to each of the Buyers that:

                  (a) Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power to own their properties and to carry on their

                                      -6-
<PAGE>

business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.

                  (b) Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement, the Escrow
Agreement, the Pledge Agreement, the Irrevocable Transfer Agent Instructions and
any related agreements, and to issue the Convertible Debentures and the
Conversion Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Escrow Agreement, the Pledge
Agreement, the Irrevocable Transfer Agent Instructions and any related
agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Convertible Debentures the Conversion Shares and the reservation for
issuance and the issuance of the Conversion Shares issuable upon conversion or
exercise thereof, have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its shareholders, (iii) this Agreement, the Escrow Agreement, the
Pledge Agreement, the Irrevocable Transfer Agent Instructions and any related
agreements have been duly executed and delivered by the Company, (iv) this
Agreement, the Escrow Agreement, the Pledge Agreement, the Irrevocable Transfer
Agent Instructions and any related agreements constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies. The authorized officer of the Company
executing this Agreement, the Escrow Agreement, the Pledge Agreement, the
Irrevocable Transfer Agent Instructions and any related agreements knows of no
reason why the Company cannot perform any of the Company's other obligations
under such documents.

                  (c) Capitalization. The authorized capital stock of the
Company consists of an unlimited number of Common Shares and 1,000,000 preferred
shares of the Company (the "Preferred Shares"). As of the date hereof, the
Company has 8,376,287 Common Shares and 105 Preferred Shares issued and
outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. No Common Shares are subject to preemptive rights
or any other similar rights or, to the knowledge of the Company, any liens or
encumbrances. As of the date of this Agreement and except as set forth on
Schedule 3(c) to this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt

                                      -7-
<PAGE>

securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act and (iv) there are no outstanding
registration statements and there are no outstanding comment letters from the
SEC or any other regulatory agency. There are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Convertible Debentures as described in this Agreement. The
Company has furnished to the Buyer true and correct copies of the Company's
Articles of Incorporation, as amended and as in effect on the date hereof (the
"Articles of Incorporation"), and the Company's By-laws, as in effect on the
date hereof (the "By-laws"), and the terms of all securities convertible into or
exercisable for Common Shares and the material rights of the holders thereof in
respect thereto other than stock options issued to employees and consultants.

                  (d) Issuance of Securities. The Convertible Debentures are
duly authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued, fully paid and nonassessable, are free from all taxes, liens and
charges with respect to the issue thereof. The Conversion Shares issuable upon
conversion of the Convertible Debentures have been duly authorized and reserved
for issuance. Upon conversion of the Convertible Debentures in accordance with
the terms thereof, the Conversion Shares will be duly issued, fully paid and
nonassessable.

                  (e) No Conflicts. The execution, delivery and performance of
this Agreement, the Irrevocable Transfer Agent Instructions, the Pledge
Agreement and the Escrow Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby will not (i) result in a
violation of the Articles of Incorporation or the By-laws or (ii), to the best
knowledge of the Company, conflict with or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations and the rules and regulations of The National
Association of Securities Dealers Inc.'s OTC Bulletin Board on which the Common
Shares are quoted) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected. To the best knowledge of the Company, neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or, any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be conducted
in violation of any material law, ordinance, or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement in accordance with the terms hereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof, except for any required post-Closing notice filings under
applicable United States federal or state securities laws, if any.

                                      -8-
<PAGE>

                  (f) SEC Documents: Financial Statements. Since January 1,
2005, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed
prior to the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Buyers or their representatives,
or made available through the SEC's website at http://www.sec.gov, true and
complete copies of the SEC Documents. As of their respective dates, the
financial statements of the Company disclosed in the SEC Documents (the
"Financial Statements") complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such Financial Statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and, fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents, including, without limitation, information
referred to in this Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

                  (g) [reserved]

                  (h) Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending against or
affecting the Company, the Common Shares or any of the Company's subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a material adverse effect on the business, operations,
properties, financial condition or results of operations of the Company and its
subsidiaries taken as a whole.

                  (i) Acknowledgment Regarding Buyer's Purchase of the
Convertible Debentures. The Company acknowledges and agrees that the Buyer(s) is
acting solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such Buyer's
purchase of the Convertible Debentures or the Conversion Shares. The Company
further represents to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

                                      -9-
<PAGE>

                  (j) Foreign Private Issuer; Directed Selling Efforts. The
Company is a "foreign private issuer," as such term is defined in Rule 405 under
the 1933 Act, with no "substantial U.S. market interest," as such term is
defined in Regulation S, in the Convertible Debentures or the Conversion Shares.
None of the Company, any of its affiliates, any distributor or any person acting
on its or their behalf has engaged in any "directed selling efforts," as such
term is defined in Rule 902 of Regulation S in connection with the transactions
contemplated hereby. The Company, its affiliates and any person acting on its or
their behalf have complied and will comply with the offering restrictions
requirements of Regulation S. The Company has not entered and will not enter
into any contractual arrangement with respect to the distribution of the
Convertible Debentures or the Conversion Shares. In making the sales of
Convertible Notes contemplated hereby, the Company has implemented the offering
restrictions required by Rule 903(b)(2). The Company has offered and sold the
Convertible Notes to persons who are not U.S. persons.

                  (k) Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union relating to his
or her employment by the Company or its subsidiaries as the case may be.

                  (l) Intellectual Property Rights. The Company and its
subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

                  (m) Environmental Laws. The Company and its subsidiaries are
(i) in compliance in all material respects with any applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii), to the best
knowledge of the Company, are in compliance with all terms and conditions of any
such permit, license or approval.

                                      -10-
<PAGE>

                  (n) Title. Any real property and facilities held under lease
by the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made of such property and buildings by the Company and its
subsidiaries.

                  (o) Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.

                  (p) Regulatory Permits. The Company and its subsidiaries
possess all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.

                  (q) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with U.S. generally accepted accounting principles and to maintain
asset accountability, and (iii) the recorded amounts for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

                  (r) No Material Adverse Breaches, etc. Neither the Company nor
any of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is reasonably expected in the future
to have a material adverse effect on the business, properties, operations,
financial condition or results of operations of the Company or its subsidiaries.
Neither the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company's officers, has or is
reasonably expected to have a material adverse effect on the business,
properties, operations, financial condition or results of operations of the
Company or its subsidiaries.

                  (s) Tax Status. The Company and each of its subsidiaries (i)
has made and filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject and
(unless and only to the extent that the Company and each of its subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes), and (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such

                                      -11-
<PAGE>

returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.

                  (t) Certain Transactions. Except as disclosed in the SEC
documents and for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties and other than the grant of stock
options disclosed in the SEC Documents, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

                  (u) Fees and Rights of First Refusal. The Company is not
obligated to offer the securities offered hereunder on a right of first refusal
basis or otherwise to any third parties including, but not limited to, current
or former shareholders of the Company, underwriters, brokers, agents or other
third parties that has not been waived.

                  (v) Exempt Offering. The offer and sale of the Convertible
Debentures and the Conversion Shares and the Conversion in the manner
contemplated by this Agreement will be excluded from the registration
requirements of the Securities Act.

                  (w) Investment Company. The Company is not, and will not be as
a result of the issuance of the Convertible Debentures or the Conversion Shares,
an "investment company," as such term is defined in the United States Investment
Company Act of 1940, as amended.

         4.       COVENANTS.

                  (a) Best Efforts. Each party shall use its best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.

                  (b) Reporting Status. Until the earlier of (i) the date as of
which the Buyer(s) may sell all of the Conversion Shares, without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto),
or (ii) the date on which (A) the Buyer(s) shall have sold all the Conversion
Shares and (B) none of the Convertible Debentures are outstanding (the
"Registration Period"), the Company shall file in a timely manner all reports
required to be filed with the SEC pursuant to the 1934 Act and the regulations
of the SEC thereunder, the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act, even if the 1934 Act or the rules
and regulations thereunder would otherwise permit such termination, and the
Company shall maintain its listing on the Over-The-Counter Bulletin Board (the
"OTCBB") or any other U.S. national securities exchange.

                  (c) Use of Proceeds. The Company will use the proceeds from
the sale of the Convertible Debentures for general corporate and working capital
purposes.

                                      -12-
<PAGE>

                  (d) Reservation of Shares. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for the
purpose of issuance, such number of Common Shares as shall be necessary to
effect the issuance of the Conversion Shares. If at any time the Company does
not have available such Common Shares as shall from time to time be sufficient
to effect the conversion of all of the Conversion Shares of the Company, the
Company shall call and hold a special meeting of the shareholders within thirty
(30) days of such occurrence, for the sole purpose of increasing the number of
shares authorized. The Company's management shall recommend to the shareholders
to vote in favor of increasing the number of Common Shares authorized.
Management shall also vote all of its shares in favor of increasing the number
of authorized Common Shares.

                  (e) Fees and Expenses.

                           (i) Each of the Company and the Buyer(s) shall pay
                  all costs and expenses incurred by such party in connection
                  with the negotiation, investigation, preparation, execution
                  and delivery of this Agreement, the Escrow Agreement, the
                  Pledge Agreement, the Irrevocable Transfer Agent
                  Instructions,. The Company shall pay the Buyer a transaction
                  fee of four percent (4%) of the Purchase Price, which shall be
                  paid directly from the proceeds of and proportionally upon
                  each Closing.

                           (ii) The Company shall pay the Buyer a facility fee
                  of $200,000, which shall be paid as follows: (a) at Closing,
                  the Company will issue to Buyer a certificate equal to 4.99%
                  of the outstanding Common Shares, which shall be credited
                  towards the facility fee at a price of $0.08 per share, (b)
                  ninety days after Closing, the Company shall issue to Buyer an
                  additional certificate equal to 4.99% of the then outstanding
                  Common Shares, which shall be credited towards the facility
                  fee at a price per share equal to the Conversion Price as
                  defined in the Convertible Debentures and (c) upon the
                  Company's receipt of additional (other than the First Closing)
                  $600,000 of gross proceeds, the Company shall issue to Buyer a
                  compensation debenture, in the form attached hereto as Exhibit
                  E, in the amount remaining following the reduction of the
                  facility fee for credit of the shares issued in (a) and (b)
                  above.

                           (iii) The Company has agreed to pay a structuring fee
                  to Buyer of Twenty Thousand Dollars (US$20,000), one-half of
                  which has been paid prior to the execution of this Agreement
                  and one-half of which shall be paid directly from the proceeds
                  of the First Closing.

                   (f) Corporate Existence. So long as any of the Convertible
Debentures remain outstanding, the Company shall not directly or indirectly
consummate any merger, reorganization, restructuring, reverse stock split
consolidation, sale of all or substantially all of the Company's assets or any
similar transaction or related transactions (each such transaction, an
"Organizational Change") unless, prior to the consummation an Organizational
Change, the Company obtains the written consent of each Buyer. In any such case,
the Company will make appropriate provision with respect to such holders' rights
and interests to ensure that the provisions of this Section 4(f) will thereafter
be applicable to the Convertible Debentures.

                                      -13-
<PAGE>

                  (g) Transactions With Affiliates. So long as any Convertible
Debentures are outstanding, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit any
subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement with any of its or any subsidiary's
officers, directors, person who were officers or directors at any time during
the previous two (2) years, shareholders who beneficially own five percent (5%)
or more of the Common Shares, or Affiliates (as defined below) or with any
individual related by blood, marriage, or adoption to any such individual or
with any entity in which any such entity or individual owns a five percent (5%)
or more beneficial interest (each a "Related Party"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b) any
investment in an Affiliate of the Company, (c) any agreement, transaction,
commitment, or arrangement on an arms-length basis on terms no less favorable
than terms which would have been obtainable from a person other than such
Related Party, (d) any agreement transaction, commitment, or arrangement which
is approved by a majority of the disinterested directors of the Company (for
purposes hereof, any director who is also an officer of the Company or any
subsidiary of the Company shall not be a disinterested director with respect to
any such agreement, transaction, commitment, or arrangement). "Affiliate" for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. "Control" or "controls"
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.

                  (h) Transfer Agent. The Company covenants and agrees that, in
the event that the Company's agency relationship with its transfer agent should
be terminated for any reason prior to a date which is two (2) years after the
Closing Date, the Company shall immediately appoint a new transfer agent and
shall require that the new transfer agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions.

                  (i) Restriction on "Short" Position. Neither the Buyer nor any
of its affiliates have an open short position in the Common Shares, and the
Buyer agrees that it shall not, and that it will cause its affiliates not to,
engage in any short sales with respect to the Common Shares as long as any
Convertible Debentures shall remain outstanding.

                  (j) Restriction on Issuance of the Capital Stock. So long as
any Convertible Debentures are outstanding, and other than the transaction
proposed with Surge Capital, the Company shall not, without the prior written
consent of the Buyer(s), (i) issue or sell shares of Common Shares or Preferred
Shares without consideration or for a consideration per share less than the bid
price of the Common Shares determined immediately prior to its issuance, (ii)
issue any Preferred Shares, warrant, option, right, contract, call, or other
security instrument granting the holder thereof, the right to acquire Common
Shares without consideration or for a consideration less than such Common
Shares' bid price value determined immediately prior to it's issuance, (iii)
enter into any security instrument granting the holder a security interest in
any and all assets of the Company, or (iv) file any registration statement on
Form S-8 related to anything other than shares underlying an employee benefit
plan that has been or will be granted or awarded to employees and/or directors
of the Company and its subsidiaries.

                                      -14-
<PAGE>

         5. TRANSFER AGENT INSTRUCTIONS.

The Company shall enter into irrevocable transfer agent instructions in
substantially the form attached hereto as Exhibit D (the "Irrevocable Transfer
Agent Instructions") and shall pay the law offices of James G. Dodrill II, P.A.
a cash fee of One Hundred Dollars ($100) for every occasion they act pursuant to
the Irrevocable Transfer Agent Instructions.

         6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company hereunder to issue and sell the
Convertible Debentures to the Buyer(s) at the Closings is subject to the
satisfaction, at or before the Closing Dates, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:

                  (a) Each Buyer shall have executed this Agreement, the Pledge
Agreement, the Escrow Agreement and the Irrevocable Transfer Agent Instructions
and delivered the same to the Company.

                  (b) The Buyer(s) shall have delivered to the Escrow Agent the
Purchase Price for Convertible Debentures in respective amounts as set forth
next to each Buyer as outlined on Schedule I attached hereto and the Escrow
Agent shall have delivered the net proceeds to the Company by wire transfer of
immediately available U.S. funds pursuant to the wire instructions provided by
the Company.

                  (c) The representations and warranties of the Buyer(s) shall
be true and correct in all material respects as of the date when made and as of
the Closing Dates as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer(s) shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer(s) at or prior to the Closing Dates.

         7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

         The obligation of the Buyer(s) hereunder to purchase the Convertible
Debentures at each Closing is subject to the satisfaction, at or before each
Closing Date, of each of the following conditions:

                  (a) The Company shall have executed this Agreement, the
Convertible Debenture, the Pledge Agreement, the Escrow Agreement and the
Irrevocable Transfer Agent Instructions delivered the same to the Buyer(s).

                  (b) The trading in the Common Shares on the OTCBB shall not
have been suspended for any reason.

                                      -15-
<PAGE>

                  (c) The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Dates as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Dates. If requested
by the Buyer, the Buyer shall have received a certificate, executed by the
President of the Company, dated as of the Closing Dates, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer
including, without limitation, an update as of the Closing Dates regarding the
representation contained in Section 3(c) above.

                  (d) The Company shall have executed and delivered to the
Buyer(s) the Convertible Debentures in the respective amounts set forth opposite
each Buyer(s) name on Schedule I attached hereto.

                  (e) The Buyer(s) shall have received an opinion of counsel
from Jolie Kahn, Esq. counsel to the Company in a form satisfactory to the
Buyer(s) with such counsel opining that the offer and sale of the Convertible
Debentures, and the issuance of the Conversion Shares does not require
registration under the 1933 Act, is exempt from registration pursuant to
Regulation S and that the transaction qualifies as a "Category 2" transaction
pursuant to Rule 903(b)(2) of the Securities Act Rules. Buyers and the Company
expressly agree that such counsel may expressly rely on the representations,
warranties and covenants set forth herein in giving such opinion.

                  (f) The Company shall have provided to the Buyer(s) a
certificate of good standing from the jurisdiction in which the Company is
incorporated.

                  (g) As of the Closing Date, the Company shall have reserved
out of its authorized and unissued Common Shares, solely for the purpose of
effecting the conversion of the Convertible Debentures, shares of Common Shares
to effect the conversion of all of the Convertible Debentures then outstanding.

                  (h) [reserved]

(i) The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Company's transfer agent.

                  (j) The Company shall have provided to the Buyer an
acknowledgement, to the satisfaction of the Buyer, from the Company's
independent certified public accountants as to its ability to provide all
consents required in order to file a registration statement in connection with
this transaction.

                                      -16-
<PAGE>

         8.       INDEMNIFICATION.

                  (a) In consideration of the Buyer's execution and delivery of
this Agreement and acquiring the Convertible Debentures and the Conversion
Shares hereunder, and in addition to all of the Company's other obligations
under this Agreement, the Company shall defend, protect, indemnify and hold
harmless the Buyer(s) and each other holder of the Convertible Debentures and
the Conversion Shares, and all of their officers, directors, employees and
agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Buyer
Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Buyer Indemnitee is a
party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by the Buyer Indemnitees or any of them as a result of,
or arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement, the
Convertible Debentures, the Pledge Agreement, the Escrow Agreement or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement, the Convertible Debentures, the Pledge Agreement, the Escrow
Agreement or any other certificate, instrument or document contemplated hereby,
or (c) any cause of action, suit or claim brought or made against such Buyer
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other instrument, document
or agreement executed pursuant hereto by any of the Buyer Indemnities (other
than a cause of action, suit or claim brought or made against a Buyer Indemnitee
by such Buyer Indemnitee's owners, investors or affiliates), (d) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Convertible Debentures or (e) the status of the
Buyer or holder of the Convertible Debentures or the Conversion Shares, as a
Buyer of Convertible Debentures in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.

                  (b) In consideration of the Company's execution and delivery
of this Agreement, and in addition to all of the Buyer's other obligations under
this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Company Indemnitees") from
and against any and all Indemnified Liabilities incurred by the Indemnitees or
any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Buyer(s) in this Agreement, instrument or document contemplated hereby or
thereby executed by the Buyer(s), (b) any breach of any covenant, agreement or
obligation of the Buyer(s) contained in this Agreement, the Pledge Agreement,
the Escrow Agreement or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer(s), or (c) any cause of
action, suit or claim brought or made against such Company Indemnitee based on
material misrepresentations or due to a material breach and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement, the Pledge Agreement, the Escrow Agreement or any other instrument,

                                      -17-
<PAGE>

document or agreement executed pursuant hereto by any of the Company
Indemnities. To the extent that the foregoing undertaking by each Buyer may be
unenforceable for any reason, each Buyer shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

                  (c) Promptly after receipt by a Buyer Indemnitee or a Company
Indemnitee, as the case may be (the "Indemnified Party"), of notice of the
commencement of any cause of action, suit or claim brought or made against such
Indemnified Party for which such Indemnity Party is entitled to indemnification
under this Section 8, such Indemnified Party shall, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Party. In any such proceeding, any
Indemnified Party may retain its own counsel, but, except as provided in the
following sentence, the fees and expenses of that counsel will be at the expense
of that Indemnified Party, unless (i) the indemnifying party and the Indemnified
Party, as applicable, shall have mutually agreed to the retention of that
counsel, (ii) the indemnifying party does not assume the defense of such
proceeding in a timely manner or (iii) in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel for the
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for not more than one separate legal counsel for the
Buyer(s). The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party which relates to such
action or Claim. The indemnifying party shall keep the Indemnified Party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement or other compromise with respect to any
pending or threatened action or claim in respect of which indemnification or
contribution may be or has been sought hereunder (whether or not the Indemnified
Party is an actual or potential party to such action or claim) which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim. Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party with respect to
all third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Party under this Section 8, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.

                                      -18-
<PAGE>

         9. GOVERNING LAW: MISCELLANEOUS.

                  (a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Florida without regard
to the principles of conflict of laws. The parties further agree that any action
between them shall be heard in Broward County, Florida and expressly consent to
the jurisdiction and venue of the State Court sitting in Broward County, Florida
and the United States District Court for the Southern District of Florida for
the adjudication of any civil action asserted pursuant to this paragraph.

                  (b) Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.

                  (c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

                  (d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

                  (e) Entire Agreement, Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyer(s), the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

                  (f) Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon confirmation of receipt, when sent
by facsimile; (iii) three (3) days after being sent by U.S. certified mail,
return receipt requested, or (iv) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

                                      -19-
<PAGE>

If to the Company, to:                   ThinkPath Inc.
                                         55 University Avenue, Suite 505
                                         Toronto, Ontario Canada M5J 2H7
                                         Attn: Mr. Declan French, CEO
                                         Telephone:
                                         Facsimile:

With a copy to:                          Gersten Savage LLP
                                         600 Lexington Avenue - 9th Floor
                                         New York, NY 10022
                                         Telephone: 212 -752-9700
                                         Facsimile: 212 980-5192

         If to the Buyer(s), to its address and facsimile number on Schedule I,
with copies to the Buyer's counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written notice to the other party of any change in
address or facsimile number.

                  (g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. Neither the Company nor any Buyer shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party hereto.

                  (h) No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.

                  (i) Survival. Unless this Agreement is terminated under
Section 9(m), the representations and warranties of the Company and the Buyer(s)
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive the Closing for a period of two (2) years following the date on
which the Convertible Debentures are converted in full. The Buyer(s) shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.

                  (j) Publicity. The Company and the Buyer(s) shall have the
right to approve, before issuance any press release or any other public
statement with respect to the transactions contemplated hereby made by any
party; provided, however, that the Company shall be entitled, without the prior
approval of the Buyer(s), to issue any press release or other public disclosure
with respect to such transactions required under applicable securities or other
laws or regulations (the Company shall use its best efforts to consult the
Buyer(s) in connection with any such press release or other public disclosure
prior to its release and Buyer(s) shall be provided with a copy thereof upon
release thereof).

                                      -20-
<PAGE>

                  (k) Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  (l) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                      -21-
<PAGE>

         IN WITNESS WHEREOF, the Buyers and the Company and the Buyer have
caused this Securities Purchase Agreement to be duly executed as of the date
first written above.

                                        COMPANY:
                                        THINKPATH INC.

                                        By:
                                        Name:    Declan French
                                        Title:   Chief Executive Officer

                                        BUYER:
                                        TRAFALGAR CAPITAL SPECIALIZED
                                        INVESTMENT FUND, LUXEMBOURG
                                        BY:      TRAFALGAR CAPITAL SARL
                                        ITS:     GENERAL PARTNER

                                        By:
                                        Name:     Andrew Garai
                                        Title:   Chairman of the Board

                                      -22-
<PAGE>

<TABLE>
<CAPTION>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

                                                                            ADDRESS/FACSIMILE         AMOUNT OF
           NAME                              SIGNATURE                       NUMBER OF BUYER         SUBSCRIPTION
------------------------------------------------------------------------------------------------------------------
<S>                                <C>                                   <C>                     <C>
                                                                         8-10 Rue Mathias Hardt       Up to
Trafalgar Capital Specialized     By:      Trafalgar Capital Sarl        BP 3023                 $  8,000,000
Investment Fund, Luxembourg       Its:     General Partner               L-1030 Luxembourg
                                                                         Facsimile:
                                                                         011-44-207-405-0161
                                  By:                                    and
                                     ------------------------
                                  Name:    Andrew Garai                  001-786-323-1651
                                  Its:     Chairman of the Board

-------------------------------------------------------------------------------------------------------------------
Buyer's Counsel:

James G. Dodrill II, P.A.
5800 Hamilton Way
Boca Raton, FL  33496
Telephone: (561) 862-0529
Facsimile: (561) 892-7787
</TABLE>

<PAGE>

                                    EXHIBIT A

                         FORM OF CONVERTIBLE DEBENTURES

<PAGE>

                                    EXHIBIT B

                            FORM OF ESCROW AGREEMENT

<PAGE>

                                    EXHIBIT C

                            FORM OF PLEDGE AGREEMENT

<PAGE>

                                    EXHIBIT D

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

<PAGE>

                                    EXHIBIT E

                         FORM OF COMPENSATION DEBENTURE

<PAGE>

<TABLE>
<CAPTION>

                                                      SCHEDULE I

                                                  SCHEDULE OF BUYERS

                    NAME                    SIGNATURE                  ADDRESS/FACSIMILE         AMOUNT OF
                                                                        NUMBER OF BUYER        SUBSCRIPTION
-----------------------------------------------------------------------------------------------------------------
 <S>                                <C>                                   <C>                     <C>
                                                                                                  Up to
Trafalgar Capital Specialized        By:  Trafalgar Capital Sarl      8-10 Rue Mathias Hardt   US$ 8,000,000
Investment Fund, Luxembourg
                                     Its: General Partner             BP 3023
                                                                      Luxembourg L-1030

                                     By:
                                     Name:
                                     Its: Portfolio Manager

Buyer's Counsel:

James G. Dodrill II, P.A.
5800 Hamilton Way
Boca Raton, FL  33496
Telephone: (561) 862-0529
Facsimile: (561) 892-7787
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]