Document:

exv10w17

EXHIBIT 10.17

CONDITIONAL GRANT AGREEMENT

THIS AGREEMENT is effective the 17th day of August, 2009 (the “Effective Date”)

BETWEEN:

HER MAJESTY THE QUEEN in Right of the Province of Ontario, as represented by the

Minister of Economic Development and Trade

(hereinafter called “Ontario”)

          -AND-

SIGE SEMICONDUCTOR INC.

a corporation incorporated under the laws of Canada

(hereinafter called the “Recipient”)

RECITALS:

1. The Recipient intends to design and supply a series of advanced WiFi components that will reduce
the size and power consumption of portable consumer electronics by using the Silicon-On-Insulator
technology (described below as the “Project”). The Project will lead to long term benefits to the
Province of Ontario through the investment of the Recipient’s facility in the Province of Ontario,
and through the creation and/or retention of new job opportunities, related to the Project.

2. Ontario has developed the Next Generation of Jobs Fund (“NGOJF”) to assist Ontario businesses to
support job creation and retention, to attract new investments and to support research, development
and commercialization in innovative industries.

3. Ontario has agreed to provide a Grant to the Recipient through NGOJF on the terms more
particularly described in this Agreement in order to assist the Recipient with the financing of the
Project and the delivery of economic benefits to the community.

WITNESS that in consideration of the mutual promises and obligations contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged by the parties, Ontario and the Recipient covenant and agree as follows:

ARTICLE 1 – INTERPRETATION OF AGREEMENT

	1.1	 	Definitions. The following terms shall have the meanings ascribed to them below
unless there is something in the context inconsistent therewith:
	 
	 	 	“Actual Investment” means the aggregate Project Costs attributable to the Project incurred
and paid by the Recipient after the Effective Date and on or before the end of the Term or
the earlier termination of this Agreement.

 

 

	 	 	“Advance Payment” has the meaning set out in Section 5.2 of this Agreement.
	 
	 	 	“Affiliate” means any Person who, directly or indirectly, or through one or more
intermediaries, Controls or is Controlled by or is under common Control with the Recipient.
	 
	 	 	“Agreement” means this agreement, including all of the Schedules hereto, and all amendments
made hereto in accordance with the provisions hereof as the same may be amended, restated
and/or supplemented from time to time.
	 
	 	 	“Applicable Laws” means any law, statute, by-law, ordinance, decree, requirement, directive,
order, judgment, license, permit, code or regulation having the force of law, and any
applicable determination, interpretation, ruling, order or decree, of any governmental
authority or arbitrator, which is legally binding at such time.
	 
	 	 	“Application” means the proposal prepared by the Recipient on August 17, 2009 and supporting
material submitted to Ontario in support of a request for the Grant.
	 
	 	 	“Business Day” shall mean a day other than a Saturday, Sunday or statutory holiday in the
Province of Ontario.
	 
	 	 	“Clawback(s)” means, collectively, or individually the Cumulative Job Target Clawback and
Investment Target Clawback as described in Article 4 of this Agreement;
	 
	 	 	“Closure” means, subject to Force Majeure, a Permanent Cessation.
	 
	 	 	Without limiting the foregoing, Closure will be deemed to have occurred where any one or
more of the following occurs:

	 	(a)	 	The Recipient makes a public announcement regarding the closure of the Project
Facility; or
	 
	 	(b)	 	Notices of termination of employment are given to 80%, or greater, of the
employees of the Project Facility.

	 	 	“Control” has the same meaning as that term is defined in the Business Corporations Act,
(Ontario) R.S.O. 1990, c. B.16.
	 
	 	 	“Cumulative Job Target” means Four Hundred and Nineteen (419) Jobs at the Project Facility
from the Effective Date to the Project Completion Date.
	 
	 	 	“Deemed Abandonment” means the failure to complete the Project by the Project Completion
Date.
	 
	 	 	“Disbursement” means any advance of funds by Ontario to the Recipient on account of the
Grant.

 

 

	 	 	“Drawdown Certificate” means the certificate substantially in the form of Schedule “C” and
any attachments thereto.
	 
	 	 	“Effective Date” means August 17, 2009.
	 
	 	 	“Eligible Costs” means those costs directly attributable to the Project as more particularly
described in Schedule “B” attached hereto that are incurred and paid by the Recipient on or
after the Effective Date.
	 
	 	 	“Event of Default” means the occurrence of any one or more of the events listed in Section
10.1 of this Agreement.
	 
	 	 	“Financial Statements” means the annual financial statements signed by a senior officer
consisting of a statement of income, balance sheet, and statement of cash flow for a Fiscal
Year, together with the notes thereto, all prepared in accordance with Generally Accepted
Accounting Principles consistently applied, together with the auditor’s report thereon.
	 
	 	 	“FIPPA” means the Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c.F.31
as amended.
	 
	 	 	“Fiscal Year” means the fiscal year of the Recipient that currently ends on January 2.
	 
	 	 	“Force Majeure” has the meaning ascribed to it in Section 11.13 of this Agreement.
	 
	 	 	“GAAP” or “Generally Accepted Accounting Principles” means United States generally accepted
accounting principles as promulgated by the United States Accounting Research Board,
Accounting Principles Board and Financial Accounting Standards Board or any successor
bodies, applicable as at the date on which such calculation is made or required to be made.
	 
	 	 	“Governmental Entity” means any applicable: (i) Ontario government, governmental or public
department, commission, board, bureau or agency; (ii) any Ontario agency, commission, board
or authority; or (iii) any Ontario quasi-governmental or private body;
	 
	 	 	“GSM” means global system for mobile communications.
	 
	 	 	“Grant” means a conditional grant from the NGOJF in the maximum aggregate principal amount
of Seven Million Thirty Five Thousand and Ninety Two ($7,035,092) to be disbursed by and
repaid to Ontario to the extent and in the manner provided in this Agreement.
	 
	 	 	“Guarantee” means the Guarantee and Postponement of Claim attached to this Agreement as
Schedule “F”.
	 
	 	 	“Guarantor” means SiGe Semiconductor, Inc.

 

 

	 	 	“Hazardous Substance” means any pollutant, contaminant or substance that when released to
the natural environment is likely to cause, at some immediate or future time, material harm
or degradation to the natural environment or a material risk to human health and without
restricting the generality of the foregoing, Hazardous Substance includes any pollutant,
contaminant, waste, hazardous waste or dangerous good as defined by Applicable Laws for the
protection of the natural environment or human health.
	 
	 	 	“Indemnified Party” has the meaning set out in Section 8.10 of this Agreement.
	 
	 	 	“Intellectual Property” means any intellectual, industrial or other proprietary right of any
type in any form protected or protectable under the laws of Canada, any foreign country, or
any political subdivision of any country, including, without limitation, any intellectual,
industrial or proprietary rights protected or protectable by legislation, by common law or
at equity.
	 
	 	 	“Investment” means the sum of actual Project Expenditures paid on or before the Project
Completion Date.
	 
	 	 	“Job” has the following meaning:
	 
	 	 	Hourly Employees: A “Job” for an hourly paid employee means in respect of any

				
	         calendar year, x, where x =	 	     a     
  2000	;

	 	 	where a = the total number of hours worked during each calendar year by employees
employed by the Recipient, including hours taken as paid vacation, sick leave, and for other
similar reasons, and hours for which pay is provided in lieu of notice, at the Project
Facility.
	 
	 	 	Salaried Employees: A “Job” for a salaried employee means a full time job of a salaried
employee of the Recipient during one entire calendar year at the Project Facility. If a
salaried employee is employed for fewer than 12 months over a calendar year, each full month
that the employee is actually employed shall be considered to be 1/12th of a Job.
	 
	 	 	Notwithstanding anything to the contrary, any jobs that may be outsourced from the Project
Facility shall not be included in the definition and calculation of Jobs.
	 
	 	 	“LTE” means Long-Term-Evolution.
	 
	 	 	“LTE/WLAN” means 4G mobile solutions that are dependant on the potential convergence of LTE
standards of the cellular GSM network in place today and the WLAN standards.
	 
	 	 	“Material Adverse Effect” means a material adverse effect on the business, assets,
operations or financial condition of the Recipient.

 

 

	 	 	“Non-Arm’s Length” and similar phrases have the meaning attributed thereto for the purposes
of the Income Tax Act, Canada and “Arm’s Length” shall have the opposite meaning.
	 
	 	 	“Ontario Support” means the actual aggregate amount advanced by Ontario to the Recipient on
account of the Grant calculated in Canadian dollars.
	 
	 	 	“Permanent Cessation” means any and all cessations of production or research and development
activities which are not Temporary Cessations at the Project Facility.
	 
	 	 	“Person” includes an individual, partnership, whether general, limited or undeclared,
corporation, limited liability company, unlimited liability company, joint stock company,
trust, unincorporated association, joint venture, governmental authority or other entity of
whatever nature.
	 
	 	 	“Project” means the design and supply of a series of advanced WiFi components that will
reduce the size and power consumption of portable consumer electronics by using
Silicon-on-Insulator technology or other comparable advanced technologies (and/or
derivatives, variants or evolutions of such technologies). Through this project, the
Recipient plans to target three market areas – (i) Embedded WLAN (SmartPhones and GPS
devices), (ii) Wireless Infrastructure and Smart Metering, and (iii) 4G mobile solutions
(converged LTE/WLAN) all as more particularly described in the Project description attached
as Schedule “A” to this Agreement. The Recipient expects that 64 Project related Jobs will
be created and/or retained as at the Project Completion Date at the Project Facility.
	 
	 	 	“Project Completion Date” means August 17, 2014.
	 
	 	 	“Project Costs” means the expected aggregate costs directly attributable to the Project in
the minimum amount of Forty Six Million Nine Hundred Thousand and Six Hundred and Thirteen
Dollars ($46,900,613).
	 
	 	 	“Project Expenditures” means the dollar amount of the actual and verifiable expenditures
made by the Recipient on account of the Project Costs incurred and paid, after the Effective
Date and prior to the Project Completion Date.
	 
	 	 	“Project Facility” means the Project Facility located at 1050 Morrison Drive, Suite 100,
Ottawa, ON K2H 8K7; provided that the location of the Project Facility may be moved to
another address or addresses in Ontario provided that Ontario is given notice of the
proposed move or moves by the Recipient and the jobs are transferred to the new location or
locations.
	 
	 	 	“Project Financing” means the financing for the Project as more particularly set out in
Section 2.3 of this Agreement.
	 
	 	 	“Project Investment Commitment” has the meaning, set out in Section 2.2 of this Agreement.

 

 

	 	 	“Project Status Report” means a project status report substantially in the form of Schedule
C-2.
	 
	 	 	“Qualified IPO” means an initial public offering of the securities of the Recipient or the
Guarantor targeting a public raise of not less than thirty million U.S. dollars (USD$30
million) in aggregate gross proceeds pursuant to a registration statement or prospectus
filed under applicable securities laws pursuant to which such securities are listed or
posted for trading on the Toronto Stock Exchange, the New York Stock Exchange or the NASDAQ
Global or Global Select Markets.
	 
	 	 	“Related Parties” includes any shareholder, director, officer or employee of the Recipient
or any individual related by blood, adoption or marriage to any such Person or any
corporation or other Person not dealing at Arm’s Length with any such Person.
	 
	 	 	“Temporary Cessation” means, subject to Force Majeure, a temporary cessation of production
or research and development activities, not exceeding six (6) months or other temporary
cessations resulting from activities consistent with usual and customary practices in the
industry.
	 
	 	 	“Term” means the period commencing on the Effective Date and ending on December 31, 2014.
The Term may be extended or terminated earlier in accordance with the provisions of this
Agreement.
	 
	 	 	“WLAN” means Wireless-Local-Area-Network.
	 
	1.2	 	Any reference to currency is to Canadian currency and any amount disbursed, paid or
calculated is to be disbursed, paid or calculated in Canadian currency.
	 
	1.3	 	The Project Investment Commitment will be adjusted to reflect the exchange rates (US$ to
CAD$) at the Bank of Canada Canadian dollar noon spot exchange rate quoted on the Bank of
Canada website prevailing at noon on January 28, 2010. Under no circumstances shall the
Recipient be deemed to have failed to meet the Project Investment Commitment where it can be
demonstrated to Ontario’s reasonable satisfaction that the amount of the Investment, as
expressed in Canadian dollars, actually made by the Recipient was reduced solely due to a
fluctuation in the exchange rate. The portion of the Investment not paid in Canadian dollars
shall be adjusted to reflect the exchange rate.
	 
	1.4	 	All references to auditors in this Agreement are to independent third-party external licensed
public accountants.
	 
	1.5	 	Any reference to a statute is to such statute and to the regulations made pursuant to such
statute as such statute and regulations may at any time be amended or modified and in effect
and to any statute or regulations that may be passed that have the effect of supplementing or
superseding such statute or regulations.
	 
	1.6	 	All references to Schedules refer to Schedules of this Agreement that are part of and form an
integral part of this Agreement.

 

 

	 	 	The Schedules of this Agreement are:

	 	 	 	 	 

	 

	 	Schedule “A”:
	 	Project Description
	 

	 	Schedule “B”:
	 	Eligible Costs and Project Budget
	 

	 	Schedule “C”:
	 	Drawdown Certificate
	 

	 	Schedule “C-l”
	 	Schedule of Paid Eligible Costs
	 

	 	Schedule “C-2”:
	 	Project Status Report
	 

	 	Schedule “D”:
	 	Annual Certificate
	 

	 	Schedule “E”:
	 	Final Certificate and Report
	 

	 	Schedule “E-1”:
	 	Project Expenditure Certificate
	 

	 	Schedule “E-2”:
	 	Auditor’s Certificate
	 

	 	Schedule “F”:
	 	Guarantee and Postponement of Claim

ARTICLE 2 – PROJECT, INVESTMENT AND JOBS

	2.1	 	Completion of Project. The Recipient shall complete the Project on or before the
Project Completion Date in accordance with the milestones, deliverables, timing and
expenditures more particularly set out in the Project description attached as Schedule “A” and
the Eligible Costs described in Schedule “B” attached hereto.
	 
	2.2	 	Project Investment Commitment. The Recipient agrees to invest Forty Six Million Nine
Hundred Thousand Six Hundred and Thirteen Dollars ($46,900,613) in Project Expenditures (the
“Project Investment Commitment”) between the Effective Date and the Project Completion Date.
	 
	2.3	 	Project Financing. The Recipient agrees that financing for completion of the Project
has been arranged and will be as follows:

	 	 	 	 	 	 	 
	Source	 	Nature of Financing	 	Amount	 
	Ontario
	 	NGOJF Grant	 	$	7,035,092	 
	Ontario
	 	OITC Grant	 	$	1,000,000	 
	 
	 	 	 	 	 	 
	Recipient
	 	Internal Funds	 	$	37,334,848	 
	Canadian federal government
	 	IRAP	 	$	1,500,0000	 
	Yves Landry Foundation
	 	IRAP	 	$	30.673	 
	Total, being the Project Costs
	 	 	 	$	46,900,613	 

	 	 	Any overruns or Project Financing deficiencies are to be the responsibility of Recipient.
The Recipient acknowledges that in the event that the expected federal and provincial
funding, other than the Grant, is not available, the Recipient shall provide the funding
from internal resources.
	 
	2.4	 	Jobs. The Recipient shall achieve the Cumulative Job Target.

ARTICLE 3 – CONDITIONAL GRANT

	3.1	 	Grant. In reliance on the representations and warranties in Article 7 and in
accordance with the terms and conditions of this Agreement, Ontario agrees to reimburse, or
advance

 

 

	 	 	as contemplated by Section 5.2, the Recipient up to the maximum aggregate amount of Seven
Million Thirty Five Thousand and Ninety Two Dollars ($7,035,092) on account of the Eligible
Costs.
	 
	3.2	 	Grant Purpose. All Grant proceeds shall be used by the Recipient exclusively to
finance Eligible Costs.

ARTICLE 4 – MANDATORY REPAYMENT OF GRANT.

	4.1	 	Investment Target Clawback. If the Project Investment Commitment is not achieved on
or before the Project Completion Date, the Recipient shall repay a cash amount to Ontario in
accordance with the following formula:
	 
	 	 	

	 	 	The Investment Target Clawback calculation shall be calculated as at the earlier of (i)
an Event of Default, and (ii) the Project Completion Date. Ontario acknowledges and agrees
that no Investment Target Clawback shall be payable by the Recipient if the Grant is
cancelled pursuant to Section 5.5(e) hereof.
	 
	 	 	The Recipient shall make repayment to Ontario within twenty (20) Business Days of receipt of
notification in writing from Ontario that an Investment Target Clawback is due and payable.
In the event that the Recipient does not deliver (i) the Investment Target Clawback and (ii)
the supporting documentation set out in Section 6.4 of this Agreement, to Ontario within
sixty (60) days after the last day of the Term, then the Investment Target Clawback amount
shall be deemed to be an amount equal to the Ontario Support.
	 
	4.2	 	Cumulative Job Target Clawback.
	 
	 	 	If, by the Project Completion Date, the Cumulative Job Target is not met, the Recipient
shall repay a cash amount to Ontario in accordance with the following formula:
	 
	 	 	

	 	 	The Cumulative Job Target Clawback calculation shall be made as of the earlier of (i)
an Event of Default, and (ii) the Project Completion Date. Ontario acknowledges and agrees
that no Cumulative Job Target Clawback shall be payable by the Recipient if the Grant is
cancelled pursuant to Section 5.5(e) hereof.
	 
	 	 	The Recipient shall make repayment to Ontario within twenty (20) Business Days of receipt of
notification in writing from Ontario that a Cumulative Job Target Clawback is due and
payable. In the event that the Recipient does not deliver (i) the Cumulative Job Target
Clawback, and (ii) the supporting documentation set out in Section 6.5 of this Agreement, to
Ontario within sixty days (60) after the last day of the Term, then the

 

 

	 	 	Cumulative Job Target Clawback amount shall be deemed to be an amount equal to the Ontario
Support.
	 
	4.3	 	Clawbacks Cumulative. Notwithstanding anything contained herein, the Investment
Target Clawback and the Cumulative Job Target Clawback are cumulative and cannot be negative
nor greater than 100% of the Ontario Support. Upon notice to the Recipient, interest shall
accrue on the calculated amount pursuant to Section 10.7 of this Agreement.

ARTICLE 5 – DISBURSEMENT OF GRANT

	5.1	 	Conditions of Disbursement. The obligation of Ontario to make Disbursements is
conditional upon prior compliance with each of the following conditions precedent to the
satisfaction of Ontario, which conditions precedent are for the exclusive benefit of Ontario
and may only be waived by Ontario in writing, and are as follows.
	 
	5.2	 	Conditions of First Disbursement. Advance payment not to exceed One Million Four
Hundred and Seven Thousand and Eighteen Dollars ($1,407,018) (the “Advance Payment”) will be
disbursed to the Recipient upon the execution of this Agreement by both parties and the
satisfaction of the conditions precedent set out in this Section 5.2:

	 	(a)	 	Insurance. The receipt by Ontario of a valid certificate of insurance
evidencing the insurance coverage that the Recipient is required to maintain pursuant
to Section 8.8 of this Agreement.
	 
	 	(b)	 	Opinion of Counsel for the Recipient. Ontario shall have a received
favourable legal opinion from external counsel for the Recipient and the Guarantor, in
a form satisfactory to Ontario, confirming:

	 	(i)	 	the corporate status of the Recipient and the Guarantor and
their power and authority to enter into this Agreement and Guarantee;
	 
	 	(ii)	 	the authorization, delivery, enforceability and binding nature
of this Agreement and Guarantee upon the Recipient and Guarantor; and
	 
	 	(iii)	 	such other matters as Ontario may stipulate acting reasonably.

	 	(c)	 	Guarantee. The Guarantee shall be in full force and effect.
	 
	 	(d)	 	Project Financing. Ontario will have received a board resolution of
the Guarantor confirming that it supports the Project and that the project financing
will be available as and when needed for the completion of the Project.
	 
	 	(e)	 	Drawdown Certificate. The Recipient shall have provided a Drawdown
Certificate requesting the Advance Payment including a certification that the Advance
Payment will be used to pay for Eligible Costs.

 

 

	5.3	 	Conditions to Subsequent Disbursements. On or before each subsequent Disbursement,
the following conditions shall be met or have been complied with to the satisfaction of
Ontario:

	 	(a)	 	Drawdown Certificate. The Recipient shall have provided a Drawdown
Certificate satisfactory to Ontario. The request for the second Disbursement will also
contain a certification that Eligible Costs in the amount of Nine Million Three Hundred
and Eighty Thousand One Hundred and Twenty Dollars ($9,380,120) have been incurred and
paid with respect to the Advance Payment.
	 
	 	(b)	 	Accounting Evidence. The Recipient shall have provided satisfactory
evidence to Ontario that the Recipient has incurred and paid the Eligible Costs listed
in the requested Drawdown Certificate, which evidence shall include the following:

	 	(i)	 	schedule to the Drawdown Certificate setting out in detail all
incurred and paid Eligible Costs in the form of the attached Schedule “C-l”
(Note that for the second Disbursement, the details of the paid Eligible Costs
for the Advance Payment should also be included);
	 
	 	(ii)	 	a Project Status Report;
	 
	 	(iii)	 	in the event that the Recipient submits a request for a
Disbursement in respect of Eligible Costs incurred and paid to Non-Arm’s Length
suppliers, the Recipient shall also provide a certificate of the external
auditor of the Recipient confirming that the transaction was on terms that are
fair and reasonable to the Recipient and that are no less favourable to the
Recipient than those that could be obtained in a comparable transaction from an
Arm’s Length supplier. Provided however, that an auditor’s certificate shall
not be required for Eligible Costs which have been incurred and paid by the
Recipient to Non-Arm’s Length suppliers where invoices can be produced
supporting the transaction at no increased cost; and
	 
	 	(iv)	 	invoices from suppliers may also be required, at Ontario’s
option.

	 	(c)	 	Inspection. Ontario shall have had the opportunity to physically
inspect the Project Facility.
	 
	 	(d)	 	No Event of Default. No Event of Default or an event which would
otherwise be an Event of Default but for the giving of notice and the passage of time
to remedy the Event of Default shall have occurred and be continuing, nor shall the
Disbursement result in the occurrence of any Event of Default.

	5.4	 	Special Disbursement Conditions Relating to the LTE/WLAN technology:

	 	(a)	 	Prior to any Disbursement relating to eligible costs for the LTE/WLAN
technology, the Recipient shall provide to Ontario a technical specification together
with a market justification; satisfactory to Ontario. The start of the

 

 

	 	 	 	development of this technology is expected to begin at the end of August 2011; and
	 
	 	(b)	 	The Drawdown Certificate shall identify any eligible costs relating the
LTE/WLAN technology.

	5.5	 	Disbursement of Grant.

	 	(a)	 	Without restricting the applicability of other remedies or provisions of this
Agreement,

	 	(i)	 	the uncured failure of the Recipient to comply with any of the
provisions of this Agreement, including, but not limited to the reporting
requirements set out in Article 6 hereof;
	 
	 	(ii)	 	in the event that a Material Adverse Effect shall have
occurred; or
	 
	 	(iii)	 	in the event that an Event of Default shall have occurred or,
based on demonstrable evidence, the occurrence of an Event of Default
reasonably appears to be imminent;
	 
	 	 	 	shall entitle Ontario, in its sole and unfettered discretion, to refuse to
make any Disbursements or any further Disbursements.

	 	(b)	 	Save and except for the Advance Payment, the Grant shall be disbursed by
Ontario to the Recipient subject to and conditional upon the satisfactory performance
and attainment, in the opinion of Ontario, acting reasonably, of the milestones and
deliverables as set out in Schedule “A” and after the Recipient has incurred and paid
Eligible Costs. Provided that the provisions of this Agreement are satisfied, each
dollar of Eligible Costs incurred and paid by the Recipient after the Effective Date,
shall entitle it to receive fifteen (15) cents of the Grant. The total Grant received
by the Recipient cannot exceed 15% of total Project Expenditures up to the maximum
amount of the Grant.
	 
	 	(c)	 	At any time, and from time to time, after the execution of this Agreement, the
Recipient may by notice in writing to Ontario request that a Disbursement be made,
provided that a request for a Disbursement shall be made no more frequently than
quarterly. Upon receipt of a request for a Disbursement and subject to the terms of
this Agreement, Ontario shall within 30 Business Days disburse funds to the Recipient
on account of the Grant in the amount of the request. If a request for a Disbursement
is made and rejected by Ontario for a failure to fulfill the conditions set forth in
this Article 5, upon fulfillment of the said conditions, the Recipient may immediately
resubmit the request for a Disbursement.
	 
	 	(d)	 	Ontario reserves the right to cancel:

 

 

	 	(i)	 	the Grant in the event that the Recipient is not entitled to
and has not made a request for the second Disbursement within one calendar year
of the receipt of the Advance Payment, in which case, at the request of
Ontario, the Advance Payment shall be immediately repaid to Ontario.
	 
	 	(ii)	 	any portion of the Grant amount not disbursed in the event that
the Recipient is not entitled to and has not made a request for Disbursement in
each year until the Project Completion Date.
	 
	 	(iii)	 	any portion of the Grant amount not properly claimed by the
Recipient by the Project Completion Date and/or paid by the end of the Term.

	 	(e)	 	Any Disbursement to be made by Ontario pursuant to this Agreement is subject to
there being an appropriation by the Legislative Assembly for the year in which the
Disbursement is to be made, such appropriation to be evidenced by the annual approval
of the Ontario government. Ontario shall advise the Recipient forthwith if Ontario is
not able to perform its obligations hereunder.

ARTICLE 6 – REPORTING

	6.1	 	Annual Certificate and Insurance Confirmation.
	 
	 	 	The Recipient shall provide to Ontario:

	 	(a)	 	a certificate signed on behalf of the Recipient by a senior financial officer,
in the form of Schedule “D” hereto; and
	 
	 	(b)	 	a certificate of its insurer confirming that the insurance required pursuant to
Section 8.8 of this Agreement remains in full force and effect.
	 
	 	within 60 days after the end of each Fiscal Year during the Term.

	6.2	 	[Intentionally deleted.]
	 
	6.3	 	Semi-Annual Project Status Report. The Recipient shall provide to Ontario a
semi-annual Project Status Report, within 60 days after the end of each semi-annual period
until the completion of the Project.
	 
	6.4	 	Financial Reports. The Recipient shall furnish to Ontario:

	 	(a)	 	as soon as practicable and in any event within 60 days after the end of each
semiannual period for each Fiscal Year, a copy of the unaudited financial reports for
the Guarantor containing a statement of income, balance sheet and statement of cash
flow, together with any notes thereto and signed by a senior financial officer of the
Recipient, subject to audit and changes resulting from year-end adjustment; and

 

 

	 	(b)	 	within 180 days after the end of each Fiscal Year, commencing with the Fiscal
Year ending after the date of the Advance Payment unaudited Financial Statements for
the Recipient and audited Financial Statements for the Guarantor for the Fiscal Year
then ended.

	6.5	 	Auditor’s Certificate. The Recipient shall provide to Ontario within 60 days after
the last day of the Term an auditor’s certificate in the form of Schedule “E-2” attached
hereto.
	 
	6.6	 	Final Project Certificate and Report. The Recipient shall furnish to Ontario within
60 days after the last day of the Term a final written report, satisfactory to Ontario acting
reasonably, signed by an officer of the Recipient, in the form of Schedule “E” attached hereto
together with such other information with respect to the Project that may be requested by
Ontario.
	 
	6.7	 	Review. The Recipient will permit persons designated by Ontario to visit and inspect
the Project Facility, at Ontario’s expense, to examine its books and financial records, and to
discuss its affairs, finances and accounts all at such reasonable times as may be requested by
Ontario. Ontario’s right of inspection includes the right to perform a full or partial audit.
Without limiting the generality of the foregoing, the Recipient shall at Ontario’s request
meet with Ontario or its duly authorized agent at least annually to review the progress of the
Project and to review the Recipient’s compliance with the terms and conditions of this
Agreement.
	 
	6.8	 	Notice. The Recipient shall provide prompt notice to Ontario of any Material Adverse
Effect.

ARTICLE 7 – REPRESENTATIONS AND WARRANTIES

The Recipient represents and warrants to and in favour of Ontario as of the date of this Agreement,
as follows:

	7.1	 	Financial Statements. The Recipient has furnished to Ontario copies of the most
recent audited Financial Statements of the Guarantor, and unaudited Financial Statements of
the Recipient and such Financial Statements are correct and complete and fairly present the
financial position of the Recipient as of the date indicated therein and the results of its
operation and the changes in its financial position for the years then ended in accordance
with GAAP. Since the date of its last Financial Statement, there has been no material change
in the financial condition of the Recipient other than changes in the ordinary course of
business and changes arising from the plans of the Recipient to complete the Project. No
change in the financial condition of the Recipient since the date of its last Financial
Statement has impaired the Recipient’s ability to complete the Project and operate the Project
Facility and to perform its obligations under this Agreement. All financial information
relating to the Recipient which has been delivered to Ontario is complete and accurate in all
material respects in light of the circumstances prevailing at the time of delivery.
	 
	7.2	 	Application. With respect to the information and documentation, including forecasts,
submitted to Ontario in support of the Application that:

 

 

	 	(a)	 	the forecasts were based upon the judgment of management of the Recipient, who
considered the most likely set of future conditions in their opinion at that time and
the impact of such conditions upon the Recipient;
	 
	 	(b)	 	the information used in preparing the Application substantially reflects the
plans of the Recipient;
	 
	 	(c)	 	the assumptions relied upon in preparing the forecasts are appropriate in the
opinion of management of the Recipient;
	 
	 	(d)	 	adequate support documentation outlining methods and procedures used in
preparing the forecasts is available from the Recipient; and
	 
	 	(e)	 	all statements and documentation provided to Ontario in support of the
Application are true and correct.

	7.3	 	Due Incorporation. The Recipient is a duly incorporated corporation and is existing
pursuant to the laws of Canada. The Recipient has the requisite power and capacity to carry
on its business, to own its property and assets and to enter into and deliver this Agreement
and to carry out its obligations hereunder. This Agreement constitutes valid and binding
obligations of the Recipient enforceable against it in accordance with its terms.
	 
	7.4	 	Authorization of Documents. The Recipient has taken all necessary corporate action
to authorize, and has duly executed and delivered this Agreement.
	 
	7.5	 	Approvals and Compliance. All orders, licences, approvals, permits, authorizations,
exemptions, filings or registrations of, from or with any governmental authority that are
material to the operation of the business of the Recipient have been obtained, and the
Recipient has not received any notice, nor does it have any knowledge, that the Project
Facility or the use thereof or any of its other operations are not in compliance in all
material respects with all Applicable Laws, the non-compliance with which could reasonably be
expected to have a Material Adverse Effect.
	 
	7.6	 	Insurance. The business of the Recipient and all its properties and assets are
covered by such policies of insurance, issued by licensed insurers, as are appropriate to such
business, property and assets, in such amounts and against such risks as set out in Section
8.8.
	 
	7.7	 	Absence of Litigation. Except as disclosed in writing to Ontario, to the best of the
Recipient’s knowledge and belief and after due inquiry and reasonable investigations, there
are (i) no criminal charges pending against the Recipient, (ii) no actions, suits or
proceedings pending against or affecting the Recipient which might result in a liability in
excess of $1,000,000 against the Recipient, individually or in the aggregate, and (iii) no
occurrence that causes or could reasonably be expected to cause a Material Adverse Effect or
that is or will reasonably result in an Event of Default.

 

 

	7.8	 	Bankruptcy. The Recipient has not proposed a compromise or arrangement to its
creditors generally, had any petition for a receiving order in bankruptcy filed against it,
taken or consented to any proceeding to have itself declared bankrupt or wound-up or to have a
receiver appointed over any of its property, had any encumbrancers take possession of any of
its property, or had any execution or distress become enforceable or levied upon any of its
property.
	 
	7.9	 	Absence of Guarantees. The Recipient has not given or agreed to give any guarantees
and is not contingently responsible for indebtedness or other obligations of any other Persons
except as disclosed in writing to Ontario.
	 
	7.10	 	Absence of Conflicting Agreements; No Consents. The Recipient is not a party to any
agreement which would be contravened by, or under which any obligation would be accelerated or
default or termination would occur, as a result of the consummation of any of the transactions
provided for in this Agreement. No consents or approvals are required from any Persons in
connection with the execution and delivery by and the performance of the obligations of the
Recipient under this Agreement, other than those consents and approvals previously obtained
and delivered to Ontario.
	 
	7.11	 	Material Agreements. Each of the material agreements to which the Recipient is a
party (including leases) is in good standing in all material respects and in full force and
effect, and no breach of such agreements has occurred by the Recipient or, to its knowledge,
any of the other parties to such agreements which could reasonably be expected to have a
Material Adverse Effect.
	 
	7.12	 	Tax Matters. The Recipient is not in default in any material respect in connection
with Canadian federal, provincial, municipal or local taxes, assessments or other imposts or
penalties due and unpaid in respect of its income, business or property or for the payment of
any tax instalment due in respect of its current taxation year. The Recipient has fulfilled
all material requirements under the Income Tax Act, the Canada Pension Plan Act and the
Employment Insurance Act for withholding of amounts from employees and has remitted all
amounts withheld to the appropriate authorities within the prescribed times.
	 
	7.13	 	Construction Liens. The Recipient has not received any notice of any construction
liens currently outstanding in respect of the Project Facility.
	 
	7.14	 	Expropriation and Work Orders. The Recipient has not received any notice that any
part of the Project Facility has been or is in the process of being condemned, taken or
expropriated by any provincial, municipal or any other competent authority and no alteration,
repair, improvement or other work has been ordered or directed to be done to or performed in
respect of the Project Facility by any such authority.
	 
	7.15	 	Utility Arrears. There is nothing owing in respect of the Project Facility to any
municipality or to any corporation or commission owning or operating a public utility for
water, gas, electrical power or energy, steam or hot water or for the use thereof or for the
machines, apparatus, meters or other things leased in respect thereof or for any work or

 

 

	 	 	service performed for any such corporation or commission in connection with such public
utilities, except current charges.
	 
	7.16	 	Environmental. In connection with the Project Facility, the Recipient does not have
any knowledge of having caused or permitted the release of any Hazardous Substance on the
Project Facility except in compliance with Applicable Laws. All Hazardous Substances have, to
the knowledge of the Recipient, been used, disposed of, treated and stored by the Recipient in
compliance with Applicable Laws.
	 
	7.17	 	Project Financing. The Recipient has arranged or reasonably expects to receive
financing for the Project with the parties and in the amounts set forth in Section 2.3 of this
Agreement.
	 
	7.18	 	Material Adverse Event. No event has occurred since the date of the most recent
financial statements of the Recipient provided to Ontario which could reasonably be expected
to have a Material Adverse Effect.
	 
	7.19	 	Events of Default. No Event of Default has occurred and is continuing, nor has any
event occurred which with the giving of notice, the passage of time, or both, will result in
an Event of Default.
	 
	7.20	 	Full Disclosure. There is no fact which the Recipient has not disclosed in writing
to Ontario which has had a Material Adverse Effect or, so far as the Recipient can now
reasonably foresee, will have a Material Adverse Effect as it relates to the Project Facility
or the Project or impairs the ability of the Recipient to perform its obligations under this
Agreement.
	 
	7.21	 	Employees. The Recipient has 45 employees at the Project Facility as determined by
the number of employees on the Recipient’s payroll as at December 31, 2009.
	 
	7.22	 	Intellectual Property. With respect to the Intellectual Property required for the
Recipient to carry out its obligations under the Agreement:

	 	(a)	 	The Recipient has all necessary rights to the Intellectual Property that it
reasonably foresees as required for the completion of the Project;
	 
	 	(b)	 	The Recipient has not received any notice, claim or threat of any claim that it
is infringing the Intellectual Property rights of third parties in respect of the
Project; and
	 
	 	(c)	 	The Recipient has not and will not during the Term dispose of, license or
otherwise encumber the Intellectual Property rights referred to in subparagraph (a) in
such a way that the Recipient knowingly compromises such Intellectual Property rights
required for the completion of the Project.

	7.23	 	Title to Assets. The Recipient is in actual possession of the Project Facility and
has good and marketable title to its properties and assets necessary to carry out the Project.

 

 

ARTICLE 8 – AFFIRMATIVE COVENANTS

	8.1	 	Project Completion.

	 	(a)	 	The Recipient shall use its best efforts to cause the Project to be completed
in accordance with Project timelines, milestones and deliverables set out in Schedule
“A” on or before the Project Completion Date.
	 
	 	(b)	 	The Recipient shall immediately notify Ontario of any material increase in the
Project Costs, for example, if the total cost of the Project is increased so that the
cost of the Project exceeds the total of the Project Financing available to the
Recipient.

	8.2	 	Use of Proceeds. The proceeds of the Grant will be used by the Recipient exclusively
for the purpose described in Section 3.2 of this Agreement.
	 
	8.3	 	Rights of Inspection and Inquiry. The Recipient shall keep and maintain all records,
invoices and other documents relating to the Grant in a manner consistent with GAAP and
clerical practices, and keep them available for review by Ontario and its agents or authorized
representatives, including the Auditor General, during the Term and for a period of seven (7)
years thereafter.
	 
	8.4	 	Compliance with Agreements. The Recipient will perform and satisfy all covenants and
obligations to be performed by it under this Agreement, and under any other agreement or
undertaking now or hereafter made between it and Ontario.
	 
	8.5	 	Existence. The Recipient will preserve and maintain its existence, rights, powers,
licences, privileges, and goodwill, and exercise any rights of renewal or extensions of any
leases, licences, or any other rights which are necessary or material to the conduct of its
business.
	 
	8.6	 	Conduct of Business; Compliance with Laws. The business of the Recipient will be
conducted in a proper and efficient manner so as to protect its property and assets,
including, without limitation, the Project Facility, and the earnings, income, rents and
profits of such business, and in substantial compliance with all Applicable Laws. The
Recipient will perform and discharge its obligations and covenants under all material
agreements to which it is a party and the Recipient will demand and take all reasonable steps
to encourage the discharge and performance by the other parties to such agreements of their
obligations and covenants thereunder in each case where the failure to do so would cause a
Material Adverse Effect.
	 
	8.7	 	Taxes, etc. The Recipient shall file all material tax returns and pay or cause to be
paid as they become due all taxes, assessments, and governmental charges lawfully levied and
imposed upon its property or upon its business, including the Project Facility, unless the
same are being diligently contested in good faith and by appropriate proceedings or as to
which a bona fide dispute may exist.

 

 

	8.8	 	Insurance. The Recipient shall maintain for the term of the Agreement, at its own
cost and expense, with insurers having a secure A.M. Best rating of B+ or greater, or the
equivalent, all the necessary and appropriate insurance that a prudent person carrying out a
project similar to the Project would maintain, including commercial general liability
insurance on an occurrence basis for third party bodily injury, personal injury and property
damage, to an inclusive limit of not less than two million dollars ($2,000,000) per
occurrence. The policy shall include the following:

	 	(a)	 	the Indemnified Parties as additional insureds with respect to liability
arising in the course of performance of the Recipient’s obligations under, or otherwise
in connection with, the Agreement;
	 
	 	(b)	 	a cross-liability clause;
	 
	 	(c)	 	contractual liability coverage; and
	 
	 	(d)	 	a 30 day written notice of cancellation, termination or material change.

	8.9	 	Proof of Insurance. The Recipient shall provide Ontario with certificates of
insurance, or other proof as may be requested by Ontario, that confirms the insurance coverage
as provided for in section 8.8. Upon the request of Ontario, the Recipient shall make
available to Ontario a copy of each insurance policy.
	 
	8.10	 	Indemnity. The Recipient agrees to indemnify and hold harmless Ontario and each of
its employees, advisors, agents and representatives (each, an “Indemnified Party”) from and
against any and all third party actions, proceedings, claims or assessments in respect of
damages, losses, liabilities, expenses and obligations (including without limitation,
reasonable fees and disbursements of counsel) (a “Loss”), of any kind or nature whatsoever
that may be incurred or sustained by, or asserted or awarded against, any Indemnified Party as
a result of, arising out of, or in connection with the Recipient’s actions or omissions in
respect of the Project, the Grant or this Agreement, except to the extent such Losses have
been caused by the willful misconduct or gross negligence of an Indemnified Party.
	 
	8.11	 	Manufacturing Operations in Ontario. The Recipient agrees to use its reasonable
commercial efforts to maintain its research and development activity in Ontario at the Project
Facility.
	 
	8.12	 	Repairs. The Recipient shall at all times repair and keep in good order and
condition all equipment and all buildings and related equipment used in, or in connection
with, its manufacturing operations to a reasonable standard of usage taking into account the
age of such buildings and equipment and the uses to which they are put, and renew and replace
all and any of the same which may become worn out, dilapidated, unserviceable or destroyed,
and which are necessary for the efficient operation of the Project Facility, save in each
case, where the failure to repair, keep in good order or condition, renew and replace would
not cause a Material Adverse Effect.

 

 

	8.13	 	Project Costs. The Recipient will promptly notify Ontario of any material cost
overrun or change orders in the Project as compared with the approved budget set out in
Schedule “A”. Ontario will not be obliged to fund any such overrun of costs and may require
proof of payment prior to any further Disbursements.
	 
	8.14	 	Litigation. The Recipient shall provide prompt notice:

	 	(a)	 	of any criminal charges filed against the Recipient; and
	 
	 	(b)	 	of each action, suit or proceeding which claims damages in excess of $1,000,000
against the Recipient pending, or to the knowledge of the Recipient, threatened before
any court or before any tribunal, governmental department, commission or agency.

	8.15	 	Notice to Ontario. The Recipient shall provide prompt notice of any Material Adverse
Effect or any Closure or proposed Closure.
	 
	8.16	 	Future Programs. The Recipient agrees to establish a process of ongoing dialogue
with Ontario to discuss future programs and investments at its Ontario facilities.
	 
	8.17	 	Ontario to Perform Covenants. If the Recipient fails to perform any material
covenant on its part herein contained after written notification by Ontario and the passage of
a period of 20 Business Days from receipt of such notification to enable Recipient to cure
such non-performance, Ontario may, in its discretion, perform any such covenant capable of
being performed by it and, if any such covenant requires the payment or expenditure of money,
Ontario may make such payment or expenditure with its own funds, or with money borrowed by or
disbursed to it for such purpose, but shall be under no obligation to do so, and all sums so
expended or disbursed shall be at once payable by the Recipient to Ontario upon demand and
shall bear interest at the interest rate specified in Section 10.7 of this Agreement until
paid.
	 
	8.18	 	Location of the Project assets. The Recipient shall, at all times during the Term,
keep and maintain the tangible assets purchased, acquired or received as a result of, arising
out of, or in connection with the Grant at the Project Facility.

ARTICLE 9 – NEGATIVE COVENANTS

	9.1	 	The Recipient covenants and agrees that, during the Term, it shall not, without the prior written
approval of Ontario, such approval not to be unreasonably
withheld:

	 	(a)	 	Corporate Distributions, make any distribution or payment of any amount
to or on behalf of any Related Parties, by way of salary, bonus, directors fees,
management fees, dividends, loans or otherwise, and whether payments are made to such
Persons in their capacities as shareholders, directors, officers, employees or
creditors of the Recipient, or otherwise, or any other direct or indirect payment in
respect of earnings or capital of the Recipient, except for wages and bonuses to
employees of the Recipient in the ordinary course of business and at levels of
compensation paid by comparable businesses.

 

 

	 	(b)	 	No Change of Control, permit or suffer to exist a change in Control of
the Recipient, provided that an Approved Acquisition (as defined in Section 11.5) or a
change in Control resulting from or following a Qualified IPO shall not constitute a
breach of covenant or an Event of Default.
	 
	 	(c)	 	Disposition of Assets, sell, assign, transfer, lease, license, convey
or otherwise dispose any of the Project assets or all or substantially all of the
assets comprising the Project Facility, except: (i) such dispositions as would be
consistent with the disposition of surplus assets in the normal course of business;
(ii) non-exclusive licenses of intellectual property in the normal course of business;
or (iii) pursuant to an Approved Acquisition.
	 
	 	(d)	 	Transactions with Affiliates, sell property or services to, or purchase
property or services from, or otherwise engage in any other transactions with, any
Related Parties, except for (i) transactions in the ordinary course of business at
prices and on terms and conditions not less favourable to the Recipient than could be
obtained on an Arm’s Length basis from unrelated third parties, or (ii) equity, debt or
convertible debt financing of the Recipient’s operations by the Guarantor an d/or
security holders of the Recipient or the Guarantor.
	 
	 	(e)	 	Nature of Business, materially change the nature of its business or
relocate its existing research and development operations outside of Ontario.

ARTICLE 10 – DEFAULT AND ENFORCEMENT

	10.1	 	Events of Default. Each and every one of the following events is an “Event of
Default”:

	 	(a)	 	if default is made in the performance of or compliance with any term, or
covenant or condition contained in this Agreement to be performed or complied with by
the Recipient. Provided however, that the remedy for a breach of Section 2.2 or 2.4,
is limited to the payment of the Clawbacks, as applicable;
	 
	 	(b)	 	if default is made in the payment of either of the Clawbacks required pursuant
to Article 4 of this Agreement;
	 
	 	(c)	 	failure to maintain at least 30 employees at the Project Facility, as
determined by the number of employees on the Recipient’s payroll as at December
31st, during each year of the Term unless the failure is a result of a
Temporary Cessation. The Recipient shall act in good faith in determining its number
of employees as at December 31st in each year which number is intended to be generally
representative of the Recipient’s number of employees. Any attempt, in Ontario’s
reasonably held opinion, by the Recipient to manipulate or artificially inflate the
number of employees by artificial transactions or schemes shall be an Event of Default;
	 
	 	(d)	 	if there is a Deemed Abandonment of the Project;

 

 

	 	(e)	 	if any material representation or warranty made by the Recipient in this
Agreement or any certificate delivered to Ontario pursuant hereto was materially
incorrect at the time such representation or warranty was made;
	 
	 	(f)	 	if the Recipient (i) is dissolved, liquidated or wound up or makes a proposal
in writing to be dissolved; (ii) admits in writing its inability generally to pay its
debts as they become due; (iii) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (iv) institutes a proceeding seeking a
judgment of bankruptcy or a receiving order or an order adjudicating or declaring it to
be bankrupt or insolvent or seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debt under any
law including the Companies Creditors Arrangement Act or the Bankruptcy and Insolvency
Act; (v) has a resolution passed for its winding-up, official management or
liquidation; (vi) seeks or becomes subject to the appointment of an administrator,
liquidator, receiver, receiver-manager, trustee or similar official for it or for all
or substantially all its assets; (vii) has a secured party take possession of a
substantial or material portion of its assets or has a distress, execution, attachment,
sequestration or other legal process levied or enforced on or against a substantial or
material part of its assets; (viii) ceases to carry on business; or (ix) takes any
action in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the foregoing acts or events;
	 
	 	(g)	 	if any bankruptcy, reorganization, arrangement or insolvency proceedings for
relief under any bankruptcy or similar laws for the relief of debtors, including,
without limitation, any of the proceedings or petitions described in subparagraph (f)
above are instituted against the Recipient and are consented to by the Recipient or, if
contested by the Recipient, are not dismissed within thirty (30) days;
	 
	 	(h)	 	if there is a Closure of the Project Facility;
	 
	 	(i)	 	any default of a material obligation of the Recipient, including a default of a
term or condition but for the giving of notice and/or the passage of time to remedy,
under any other material lending, investment or other financial agreement entered into
by the Recipient shall be deemed to be a concurrent Event of Default under this
Agreement upon which Event of Default Ontario shall be entitled to exercise its
remedies under Section 10.3 of this Agreement.
	 
	 	(j)	 	if there is a default of a term or condition in any other agreement between
Province of Ontario and the Recipient including any Affiliate but for the giving of
notice and/or the passage of time to remedy;
	 
	 	(k)	 	if a final non-appealable judgment or decree for the payment of money due is
obtained or entered against the Recipient, except in respect of a judgment which (i)
was the subject of a bona fide dispute, (ii) is not material to the financial
condition, business or operations of the Recipient (and without restricting the
generality of the foregoing, a judgment that results in a Material Adverse Effect), and
(iii) is paid in full within thirty (30) days after judgment;

 

 

	 	(l)	 	if Project Financing, or any part thereof, becomes unavailable to the Recipient
for any reason whatsoever and is not replaced within a reasonable period of time by
other Project Financing provided to the Recipient on similar terms and conditions; or
	 
	 	(m)	 	if a Material Adverse Effect occurs or reasonably appears to be imminent such
that the viability of the Recipient as a going concern is threatened in the opinion of
Ontario, acting reasonably.

	10.2	 	Ontario May Waive. Ontario may, at any time, waive any default or Event of Default
which may have occurred provided that no such waiver shall extend to, or be taken in any
manner whatsoever to affect, any subsequent default or Event of Default or the right to
remedies resulting therefrom, and that no such waiver shall be, or shall be deemed to
constitute, a waiver of such default unless such waiver is explicit and in writing from
Ontario.
	 
	10.3	 	Remedies. Notwithstanding any other rights which Ontario may have under this
Agreement, if any Event of Default shall occur and be continuing, Ontario shall have the
following rights and remedies provided that it has first given written notice of the Event of
Default to the Recipient and the Recipient has failed for whatever reason subject to Force
Majeure to remedy the Event of Default within thirty (30) days of the receipt of such notice
or such longer period of time as Ontario may consent to in writing:

	 	(a)	 	Ontario may, immediately, without further notice to the Recipient, terminate
its commitment/obligation to make the Grant and/or this Agreement;
	 
	 	(b)	 	Ontario shall be relieved of all obligations to make further Disbursements to
the Recipient;
	 
	 	(c)	 	An amount equal to the sum of the Investment Target Clawback and the Cumulative
Job Target Clawback shall become immediately due and payable to Ontario, such repayment
amount to be calculated as of the effective date of such Event of Default upon the
numbers actually achieved as of such date. For greater clarity, actual Jobs achieved
and the Actual Investment as used in the respective Clawback formulae shall be
determined as of the date that the thirty day remedy period expires; provided however,
that in no event shall the Recipient be required to pay to Ontario any amount in excess
of the Ontario Support together with the costs of collection pursuant to Section 10.6
and interest pursuant to Section 10.7; and
	 
	 	(d)	 	Ontario may avail itself of any of its legal remedies that are available to
Ontario at law or in equity and in its sole discretion, exercise any right or recourse
and/or proceed by any action, suit, remedy, or proceeding against the Recipient
authorized or permitted by law for the recovery of any and all amounts payable to
Ontario pursuant to this Agreement, and no such remedy for the enforcement of the
rights of Ontario shall be exclusive of, or dependent on, any other remedy, but any one
or more of such remedies may from time to time be exercised

 

 

	 	 	 	independently or in combination, provided however, that in no event shall the
Recipient be required to pay to Ontario any amount in excess of the Ontario Support
together with the costs of collection pursuant to Section 10.6 and interest pursuant
to Section 10.7.

	10.4	 	Additional Remedies Upon Certain Events of Default. In addition to the remedies
contained in Section 10.3, upon the occurrence of an event specified in Section 10.1(b), (d),
(f), (g) or (h) an amount equal to the Ontario Support shall become immediately due and
payable to Ontario.
	 
	10.5	 	Clawbacks and other Remedies Cumulative. The Clawbacks are cumulative, however, the
aggregate amount of the Clawbacks payable to Ontario shall not exceed the Ontario Support.
	 
	10.6	 	Costs of Collection. All reasonable costs and expenses of collection, including
reasonable legal fees and professional fees associated therewith, of Ontario and its agents of
all amounts owing hereunder shall be for the account of the Recipient and, for the purposes of
Section 10.7, shall be added to the principal amount of the Grant.
	 
	10.7	 	Interest After Default. The Recipient expressly acknowledges that the interest at
the then current rate charged by the Province of Ontario on accounts receivable shall apply,
from the date of the notice to the Recipient, to any and all amounts in the event that that
Ontario exercises any of its remedies pursuant to Sections 10.3 or 10.4 hereof until payment
in full, during the course of any and all proceedings to collect such amounts, and such
interest rate shall apply to and be exigible as additional damages in any award of damages
made by a court of competent jurisdiction pursuant to any such action, all without the
necessity of any further act or agreement or notification to the Recipient.

ARTICLE 11 – MISCELLANEOUS

	11.1	 	Entire Agreement. This Agreement, including all Schedules hereto and all documents
contemplated hereby, constitutes the entire agreement between the parties with respect to the
subject matter and supersedes all prior negotiations, undertakings, representations and
understandings, including, without limitation, the letter of offer accepted by the Recipient
on February 9, 2010. For greater certainty, to the extent that a schedule is inconsistent
with or different from body of the Agreement, the body of the Agreement shall prevail. No
agreement purporting to amend or modify this Agreement or any document or paper relating
thereto or connected herewith is valid and binding unless it is in writing and signed and
accepted in writing by Ontario and the Recipient.
	 
	11.2	 	Publications, Press Releases, Media Events, Communiques. Any public or other
announcements with respect to the Grant, the Project or this Agreement, except as may be
required by law or the rules of any stock exchange or market on which the shares of the
Guarantor or the Recipient are listed or posted for trading, will be made only upon the mutual
agreement of the parties hereto. The Recipient will consult with Ontario at least five (5)
Business Days prior to any communications event.

 

 

	11.3	 	Confidentiality. Except as otherwise provided in this Agreement, subject to FIPPA
and except as it may be legally required to disclose, Ontario shall use its best efforts to
maintain the confidentiality of information received from the Recipient and shall provide the
Recipient with notice of any request from a third party for information received from the
Recipient.
	 
	11.4	 	Credit Information. The Recipient consents to Ontario at any time and from time to
time obtaining from any credit reporting agency, bank or other source such financial and other
credit information regarding the Recipient as Ontario may deem appropriate, and the Recipient
further consents to the disclosure by Ontario of any such information to any such credit
reporting agency, bank or any other Person with whom the Recipient has or proposes to have a
financial relationship.
	 
	11.5	 	Assignment. The Recipient may not assign this Agreement or any of the benefits or
obligations hereunder to any Person, without the prior written consent of Ontario which
consent will not be unreasonably withheld. Ontario will have the right at any time to assign
this Agreement and any of its rights and obligations hereunder to any Governmental Entity.
Notwithstanding the foregoing, a change in Control, disposition of assets or assignment of
this Agreement shall not constitute a breach of covenant or an Event of Default if the
purchaser or assignee is a recognized/reputable business or entity that is approved by
Ontario, acting reasonably, and assumes the Recipient’s obligations under this Agreement and
agrees to any other conditions required by Ontario, acting reasonably (an “Approved
Acquisition”).
	 
	11.6	 	Waiver. The failure or delay by Ontario in exercising any right or privilege with
respect to the non-compliance with any provisions of this Agreement by the Recipient, and any
course of action on the part of Ontario, shall not operate as a waiver of any rights of
Ontario unless made in writing by Ontario. Any waiver by Ontario shall be effective only in
the specific instance and for the purpose for which it is given and shall not constitute a
waiver of any other rights and remedies of Ontario with respect to any other or future
non-compliance.
	 
	11.7	 	Time of Essence. In the performance and observance of the terms and conditions of
this Agreement, time shall be of the essence.
	 
	11.8	 	Effective Period. Unless otherwise agreed in writing, or specifically herein
provided otherwise, this Agreement shall remain in full force and effect during the Term or
until such time as the parties hereto shall have fully performed their obligations to each
other hereunder.
	 
	11.9	 	Severability. Each provision of this Agreement is intended to be severable. If any
provision hereof is illegal or invalid, such illegality or invalidity shall not affect the
validity of the remainder hereof.
	 
	11.10	 	Purchasing: The Recipient shall take commercially reasonable steps to ensure that
all supplies, equipment and services purchased with the Grant are competitively obtained in a
manner that ensures the best value for funds expended.

 

 

	11.11	 	Further Assurances. Each party will at any time and from time to time, upon the
request of the other party, execute and deliver such further documents and do such further
acts and things as the other party may reasonably request in order to evidence, carry out and
give full effect to the terms, conditions, intent and meaning of this Agreement.
	 
	11.12	 	Survival. Article 4 (Mandatory Repayment of Grant), Article 6 (Reporting), Article
7 (Representations and Warranties), Section 8.10 (Indemnity) and Article 10 (Default and
Enforcement) shall survive any termination or cancellation of this Agreement. Without
limiting the foregoing, all representations and warranties of the Recipient contained herein
or in any certificate or other writing delivered in connection herewith will survive the Term
or the early termination of this Agreement for a period not exceeding the applicable
limitations period and are material and have been or will be relied upon by Ontario
notwithstanding any investigation made by or on behalf of Ontario. For the purpose of the
foregoing, all statements contained in any certificate or other writing delivered by or on
behalf of the Recipient pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties of the Recipient contained herein.
	 
	11.13	 	Force Majeure. In this Agreement, “Force Majeure” includes civil commotions, acts
of God, weather, fires, floods, explosions, natural catastrophes, bankruptcy of a supplier of
a major component of the Project, sabotages, accidents, failures of power, riots, invasion,
insurrection or acts of terrorism where there is a material adverse effect on a party’s
ability to perform any of its obligations contemplated herein, and which the parties could not
reasonably have expected to occur. Force Majeure includes any additional peril or occurrence
which, in the opinion of both Ontario and the Recipient, constitutes a Force Majeure. Upon
the occurrence, if any, of an event which is a Force Majeure, the party whose performance is
affected, whether Ontario or the Recipient, shall to the extent reasonably possible, minimize
its adverse impact. Neither Ontario nor the Recipient shall be in breach of this Agreement,
if, upon the occurrence of a Force Majeure and after delay minimization, either Ontario or the
Recipient delays performance of its obligations hereunder for such reasonable period of time
so as to enable the harmed party to overcome the effects of the Force Majeure; provided,
however, neither Ontario nor the Recipient shall delay performance of any obligation of this
Agreement such that, cumulatively, such delays will extend the Term for more than two years.
	 
	11.14	 	Counterparts and Execution by Facsimile. This Agreement may be executed by the
parties in separate counterparts, each of which shall be deemed to constitute an original, all
of which together shall constitute one and the same agreement. This Agreement will be
considered to be fully executed when all parties have executed an identical counterpart,
notwithstanding that all signatures may not appear on the same counterpart and notwithstanding
the date of execution shall be deemed to bear the Effective Date. This Agreement may be
executed and delivered by facsimile or e-mail signatures (PDF or other image format) and shall
be binding on all parties hereto as if executed by original signature and delivered
personally.
	 
	11.15	 	Notices. Any demand, notice or communication to be made or given hereunder shall be
in writing and may be made or given by personal delivery, courier or mailed by first class

 

 

	 	 	registered mail, postage pre paid or by facsimile
transmission, or other verifiable electronic means
of communication addressed to the respective
parties as follows:
	 
	 	 	TO ONTARIO:
	 
	 	 	Ministry of Economic Development and Trade
	 
	 	 	NGoJF Secretariat

3rd Floor, Hearst Block,

900 Bay Street

Toronto, Ontario M7A 2E1
	 
	 	 	Attention: Director of the Secretariat

Facsimile No.: (416)314-1768

Telephone No.: (416) 325-6849

Email: NGoJF@ontario.ca
	 
	 	 	TO RECIPIENT
	 
	 	 	SiGe Semiconductor Inc.

1050 Morrison Drive, Suite 100,

Ottawa, ON K2H 8K7.

	 	 	 	 	 

	 

	 	Attention:
	 	Dr. Stephen J. Kovacic
	 

	 	Facsimile No.:
	 	 613.820.4933 
	 

	 	Telephone No.:
	 	 613.820.9244 (ext. 2728) 
	 

	 	Email:
	 	sjk@sige.com

	 	 	WITH A COPY TO:

SiGe Semiconductor, Inc.

200 Brickstone Square, Unit 203,

Andover, MA 01810

	 	 	 	 	 

	 

	 	Attention:
	 	William H. Burke, Chief Financial Officer
	 

	 	Facsimile No.:
	 	978.327.6850 
	 

	 	Telephone No.:
	 	978.475.0859 
	 

	 	Email:
	 	whb@sige.com

	 	 	or to such other address or facsimile number as any party may from time to time designate in
accordance with this Section. Any communication made by personal delivery or by courier
shall be conclusively deemed to have been given and received on the day of actual delivery
thereof or if such day is not a Business Day, on the first Business Day thereafter. Any
communication made or given by facsimile on a Business Day before 4:00 p.m. shall be
conclusively deemed to have been given and received on such Business Day and otherwise shall
be conclusively deemed to have been given and received on the first Business Day following
the transmittal thereof. Any communication that is mailed shall be conclusively deemed to
have been given and received on the fifth Business Day following the date of mailing but if,
at the time of mailing or within five Business Days thereafter, there is or occurs a labour
dispute or other event that might

 

 

	 	 	reasonably be expected to disrupt delivery of documents by mail, any communication shall be
delivered or transmitted by any other means provided for in this Section.
	 
	11.16	 	Governing Law. This Agreement and the rights of the parties hereto shall be
governed in all respects by and construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein and each party irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario.
	 
	11.17	 	Non-Agent. The Recipient and Ontario agree and declare that nothing in this
Agreement shall be construed as creating a partnership, joint venture, or agency relationship
between the Recipient and Ontario.
	 
	 	 	The parties hereby execute this Agreement as of the Effective Date.

	 	 	 	 	 	 	 

	 	 	SIGE SEMICONDUCTOR INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen J. Kovacic
 

     (authorized signing officer)
	 	 
	 
	 	 	 	 	 	 
	 	 	I have the authority to bind the Recipient.	 	 
	 
	 	 	 	 	 	 
	 	 	Name: Steven J. Kovacic

Title: Director

Date: March 11, 2010	 	 
	 
	 	 	 	 	 	 
	 	 	HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF
ONTARIO as represented by the Minister of Economic
Development and Trade	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Wendy Tilford	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Wendy Tilford

Title: Deputy Minister

Date: March 16, 2010	 	 

 

 

SCHEDULE “A”

PROJECT DESCRIPTION

Recipient Name: SiGe Semiconductor Inc.

Project Name: Radio Frequency Silicon-on-Insulator Front-end Modules and Integrated Circuits

Project Location: 1050 Morrison Drive, Suite 100, Ottawa, ON K2H 8K7.

Project Completion Date: August 17, 2014

Executive Summary:

	 	Ø	 	 With its “Radio Frequency Silicon-on-Insulator Front-End Modules and Integrated
Circuits” project, SiGe is proposing to develop, design, supply and sell a series of
advanced WiFi components that will reduce the size and power consumption of portable
consumer electronics such as SmartPhones (e.g. Blackberry, iPhones, etc.). SiGe
proposes to use the Silicon-on-Insulator technologies, or derivatives, variants or
evolutions of these technologies, to accomplish this goal. Through this project, SiGe
also plans to enter the wireless infrastructure market, particularly in areas of smart
metering. SiGe plans to develop a suite of Radio Frequency Silicon-on-Insulator
integrated circuits for use in the following three market areas:
	 
	 	1.	 	Embedded WLAN – such as those in SmartPhones and GPS devices; SiGe
proposes the development of 4 products in this area.
	 
	 	2.	 	Wireless Infrastructure – including Smart Metering and green
applications; SiGe proposes the development of 4 products in this area.
	 
	 	3.	 	4G mobile solutions – SiGe proposes the development of at least one
product in this area. 4G mobile solutions are dependant on the convergence of
Long-Term-Evolution of the cellular GSM network in place today and the
Wireless-Local-Area-Network standards.

     The proposed project is expected to have the following outcomes/benefits:

	 	•	 	Creation of 21 and retention of 43 jobs for a total job commitment of 64 jobs over
the five-year project;
	 
	 	•	 	Reduced component size and power consumption while preserving the functionality and
performance through the use of Silicon-on-Insulator technology;
	 
	 	•	 	Development and commercialization of next generation products that will build
capacity in new markets;
	 
	 	•	 	Advanced production techniques combined with the integrated application of
information technology, automation and advanced control systems.

Project Management:

The project team consists of the following members:

	 	Ø	 	 Dr. Stephen J. Kovacic – Director, Legal & IP Management

 

 

	 	Ø	 	 Hugues Lafontaine – Modeling Engineer
	 
	 	Ø	 	 Suzanne Kostron – Director, Program Management
	 
	 	Ø	 	 Sanjiv Shah – Director, Marketing, Mobile Wireless
	 
	 	Ø	 	 Vlad Antonov – Senior Manager, Applications Engineering
	 
	 	Ø	 	 John Nisbet – Principle Design Engineer
	 
	 	Ø	 	 Sean Martin – Director, Marketing, Wireless Infrastructure
	 
	 	Ø	 	 Yee-Ning Chan, Director, Quality
	 
	 	Ø	 	 Stefan Fulga – Director, Marketing, GPS and Smart Energy
	 
	 	Ø	 	 Greg Babcock – Manager, Design Engineering

Milestones, Deliverables and Timelines:

	 	Ø	 	 Table of milestones and deliverables (key steps in the Project) with estimated
completion dates

	 	 	 	 	 
	 	 	Milestones and Deliverables	 	Timelines/ Completion Date
	1	 	Finalized SOI Technology Models
	 	08/2009-12/2009, 01/01/2010
	2	 	Qualify for Production 5 SOI products
	 	09/2009-09/2011, 10/01/2011
	3	 	Complete feasibility study (Infrastructure)
	 	06/2010-12/2010, 07/01/2011
	4	 	Qualify 4 SOI products (Infrastructure)
	 	09/2010-09/2012, 10/01/2012
	5	 	Complete feasibility study (WLAN/LTE)
	 	06/2012-12/2012, 01/01/2013
	6	 	Qualify 2 SOI products (WLAN/LTE)
	 	09/2012-09/2014, 10/01/2014
	7	 	Complete feasibility (Software RF FEM)
	 	06/2013-12/2013, 01/01/2014
	 	 	Project Completion
	 	August 17, 2014

 

 

SCHEDULE “B”

ELIGIBLE COSTS AND PROJECT BUDGET

	 	Ø	 	 This schedule contains the list of Eligible Cost categories for the Project.
	 
	 	Ø	 	 Please use these Eligible Cost categories when preparing the Project Investment
Commitment Budget.
	 
	 	Ø	 	 In order to be eligible, the cost must be incurred and paid after the Effective
Date.
	 
	 	Ø	 	 The total amount of provincial, federal and municipal assistance for an Eligible
Cost cannot exceed 50% of the cost.

ELIGIBLE COSTS

The following shall be used, where necessary, to clarify the categories and description of Eligible
Costs set out in the budget sections of “Schedule B”. They do not expand the universe of Eligible
Costs.

“Eligible Costs” are actual costs directly attributable to and necessary for the completion of the
Project and were not wholly or partially for another purpose, subject to the terms and conditions
of the Agreement, and subject to review and approval by Ontario.

Eligible Costs are one-time costs directly attributable to the development and implementation of
the Project. They are to fund a project that would not otherwise be undertaken. Eligible Costs do
not include ongoing costs of production or operations. Labour, materials, overhead, and other
costs for the production of saleable items are not eligible.

Eligible Costs are actual cash outlays that must be documented through invoices, receipts, or
Recipient records acceptable to Ontario and are subject to verification by an independent auditor.
Evidence of payment must be maintained for audit purposes. Acting reasonably, Ontario’s decisions
as to the expenditure eligibility and valuation shall be final and determinative.

Eligible Cost Categories:

Construction/Leasehold Improvements:

	 	Ø	 	 Construction/leasehold improvement costs that are directly attributable to the
Project, e.g., to reinforce an existing floor to accommodate special machinery or to
create a ‘clean lab’. This would include work performed under contracts and
subcontracts with third parties.
	 
	 	Ø	 	 Building retrofits and purpose-specific buildings are eligible.

Equipment and Machinery:

	 	Ø	 	 Equipment and machinery necessary for the successful completion of the Project.

Materials:

	 	Ø	 	 Costs of direct materials necessary for, and specifically identified and measured as
having being used for, the completion of the Project, including:

	 	o	 	Materials used for prototypes.
	 
	 	o	 	Materials used for configuring and testing production processes
and systems.

 

 

	 	o	 	Materials used for training employees.
	 
	 	o	 	Other materials directly related to the Project as approved by Ontario.

	 	Ø	 	 Materials used for the regular production of saleable items are not eligible.

Labour (one time):

	 	Ø	 	 One-time labour costs must be directly attributable to the development and
implementation of the Project. This would include direct salaries, wages and benefits,
paid by the Recipient, for employees of the Recipient working on the Project and in
proportion to the amount of time spent working directly on the Project. Note: Ongoing
operational and production labour costs are ineligible.
	 
	 	Ø	 	 For service industries, labour costs are those directly related to the initial
investment project, but in any event not longer than the Project Completion Date.
	 
	 	Ø	 	 Benefits means employees’ regular entitlements for payroll-related benefits (CPP,
El, employer health tax), medical and dental-related benefits the actual cost of sick
leave, vacation, statutory holidays and pension Any other benefits must be approved in
writing by Ontario.
	 
	 	Ø	 	 The Recipient is required to maintain timesheets or appropriate records for all
employees working directly on the Project to verify time spent on Project work, to
verify expenditures for audit purposes and categorize the types of labour as follows:

	 	o	 	Management
	 
	 	o	 	Design Research and Development (including engineering)
	 
	 	o	 	Technical (including skilled trades)
	 
	 	o	 	Quality Testing
	 
	 	o	 	Other categories as appropriate, e.g., Administration

Research and Development:

	 	Ø	 	 Costs incurred by the Recipient for Research and Development which are directly
attributable to the Project.
	 
	 	Ø	 	 This would include consulting, engineering and design services directly attributable
to the Project conducted by firms at arms length to the Recipient.

Training:

	 	Ø	 	 Training costs directly attributable to the Project.

Overhead:

	 	•	 	Reasonable overhead costs attributable to the Project, at a rate not to exceed the
usual overhead rate for the Project Facility (or, if the Project Facility is a new
facility, not to exceed the rate at the Recipient’s similar facilities).
	 
	 	•	 	May not include Ineligible Costs.
	 
	 	•	 	Include administrative costs that are directly attributable to the Project. Do not
include labour costs (see Labour (one-time) costs below).

Other Eligible Costs:

	 	Ø	 	 Specify other eligible costs that are directly attributable to the Project, as
approved by Ontario.

 

 

Ineligible Cost Categories:

Ongoing Costs of Production or Operations:

	 	Ø	 	 Labour, materials, overhead, and other costs for the production of saleable items.

General Working Capital Requirements:

	 	Ø	 	 Capital requirements not directly attributable to the Project including: debt
service costs, federal or provincial income taxes, surtaxes and special expenses, e.g.
legal fees.
	 
	 	 	 	Working Capital costs for ongoing costs of the Recipient’s regular production or
operations, e.g. materials.

Land or Buildings:

	 	Ø	 	 Purchase of land, buildings or the construction of a building are not eligible.
Note: Eligible construction/leasehold improvement costs are listed under Eligible Cost
Categories.

Labour (ongoing/operational):

	 	Ø	 	 Labour costs that are not directly related to the Project including the ongoing
costs of production or operations. Note: One-time labour costs directly attributable
to the development and implementation of the Project are eligible

Project Case Preparation:

	 	Ø	 	 Costs associated with the preparation of the proposal (successful or not) such as
success fees or third party government relations consulting services.

Vehicles and Off-Site Equipment:

	 	Ø	 	 Costs associated with the purchase/lease or operation of vehicles or off-site
equipment.

Remuneration to Shareholders:

	 	Ø	 	 Dividends or any type of shareholder payments are not eligible.

Transaction Costs

	 	Ø	 	 Legal, accounting, or consulting services.

Costs Not Incurred in Ontario.

Mergers and Acquisitions.

 

 

PROJECT INVESTMENT COMMITMENT BUDGET

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Project Budget
	 	 	($46,900,613CDN)
	 	 	Year 1	 	Year 2	 	Year 3	 	Year 4	 	Year 5	 	 
	 	 	08/17/2009	 	08/17/2010	 	08/17/2011	 	08/17/2012	 	08/17/2013	 	Total Project
	 	 	to	 	to	 	to	 	to	 	to	 	Investment
	 	 	08/16/2010	 	08/16/2011	 	08/16/2012	 	08/16/2013	 	12/31/2014	 	Commitment
	Eligible
Project Costs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Construction/Leasehold
Improvements
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Equipment
and Machinery
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Materials
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Labour (one time)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Research and
Development – labour
	 	 	3,422,433	 	 	 	3,939,650	 	 	 	4,456,866	 	 	 	4,974,083	 	 	 	5,491,299	 	 	$	22,284,331	 
	material
	 	 	3,175,087	 	 	 	3,227,682	 	 	 	3,487,444	 	 	 	3,874,938	 	 	 	4,262,432	 	 	$	18,027,583	 
	equipment
	 	 	215,000	 	 	 	95,750	 	 	 	284,113	 	 	 	177,604	 	 	 	48,745	 	 	$	821,212	 
	Training
	 	 	72,000	 	 	 	54,600	 	 	 	77,330	 	 	 	60,197	 	 	 	83,206	 	 	$	347,333	 
	Overhead (
	 	 	843,135	 	 	 	963,583	 	 	 	1,084,031	 	 	 	1,204,479	 	 	 	1,324,927	 	 	$	5,420,155	 
	Other Eligible Costs:
(list)(subject to
Ministry approval)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Total Eligible
Project Costs
	 	$	7,727,655	 	 	$	8,281,264	 	 	$	9,389,784	 	 	$	10,291,301	 	 	$	11,210,609	 	 	$	46,900,613	 

	NOTE:	 	 The Jobs and Investment Program will provide up to 15% of the total Eligible Costs of a Project (above) which have been incurred and paid after the date that a complete proposal
is received by the Ministry.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year 1	 	Year 2	 	Year 3	 	Year 4	 	Year 5	 	 
	 	 	08/17/2009	 	08/17/2010	 	08/17/2011	 	08/17/2012	 	08/17/2013	 	 
	Ineligible Cost	 	to	 	to	 	to	 	to	 	to	 	Total
	Categories: (list)	 	08/16/2010	 	08/16/2011	 	08/16/2012	 	08/16/2013	 	12/31/2014	 	Ineligible
	Patent Fees
	 	$	105,000	 	 	$	120,750	 	 	$	138,863	 	 	$	159,692	 	 	$	183,646	 	 	$	707,950	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Total Ineligible Costs
	 	$	105,000	 	 	$	120,750	 	 	$	138,863	 	 	$	159,692	 	 	$	183,646	 	 	$	707,950	 

	 	 	Eligible Project costs must be directly related/attributable to the Project and incurred and
paid after the Effective Date.
	 

	**	 	The parties agree that annual expenditures for the Project will be subject to annual review and
the Recipient may, in its sole discretion, change the planned investment for any given year of the
Term, provided that such change is not more than a 10% (+ or -) change from the Project Investment
Budget. Any change greater than 10% requires the consent of
Ontario.

 

 

PROJECT JOB TARGET COMMITMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Year 1	 	Year 2	 	Year 3	 	Year 4	 	Year 5	 	Year 6	 	5-Year
	 	 	 	 	 	 	YR Ending 

2009	 	YR Ending 

2010	 	YR Ending 

2011	 	YR Ending 
2012	 	YR Ending 

2013	 	YR Ending 

2014	 	Cumulative
Job Target
	Current Project
Facility Employment
	 	 	45	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Project Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New Jobs
	 	 	 	 	 	 	2	 	 	 	6	 	 	 	10	 	 	 	14	 	 	 	18	 	 	 	21	 	 	 	71	 
	Retained Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	26	 	 	 	28	 	 	 	32	 	 	 	36	 	 	 	40	 	 	 	43	 	 	 	205	 
	Subtotal Project
Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	28	 	 	 	34	 	 	 	42	 	 	 	50	 	 	 	44	 	 	 	64	 	 	 	276	 
	Other Jobs at
Facility
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	19	 	 	 	21	 	 	 	23	 	 	 	24	 	 	 	27	 	 	 	29	 	 	 	143	 
	Total Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	47	 	 	 	55	 	 	 	65	 	 	 	74	 	 	 	71	 	 	 	93	 	 	 	419	 

 

 

SCHEDULE “C”

DRAWDOWN CERTIFICATE

	 	 	 

	TO:

	 	Ministry of Economic Development and Trade (“Ontario”)
	 

	 	NGOJF Secretariat
	 

	 	3rd Floor, Hearst Block
	 

	 	900 Bay Street

Toronto ON M7A2E1
	 

	 	Attention:      Director of the Secretariat
	 
	 	 
	RE:

	 	Conditional Grant Agreement between the Province of
Ontario and SiGe Semiconductor Inc. (“Recipient”)
dated August 17, 2009, (the “Agreement”)

Except as otherwise defined herein, all capitalized terms shall have the meanings given to them in
the Agreement.

	 	1.	 	I, o, [insert name and title of senior officer] of the Recipient, on behalf of
the Recipient in that capacity and not personally, having made such enquiries as I have
deemed necessary and advisable for this certificate hereby certify that to the best of
my knowledge, information and belief:

	 	(a)	 	On and as of the date hereof, all representations and
warranties contained in Article 7 of the Agreement are true and correct.
	 
	 	(b)	 	On and as of the date hereof, no Event of Default, whether or
not Ontario has been given notice thereof, has occurred and is continuing.
	 
	 	(c)	 	On and as of the date hereof, the Recipient has not incurred a
cost overrun for the Project for which the Recipient has not obtained
additional financing to pay for any such cost.
	 
	 	(d)	 	Attached hereto is a Schedule “C-l” — Schedule of Paid Eligible
Costs which is true and accurate and relates to Eligible Costs on account of
the Project which have been incurred and paid by the Recipient during the
period commencing n and ending n. Schedule “C-l” does not include any Eligible
Costs incurred and paid to Non-Arm’s Length suppliers. [Note: In the event
that there are costs paid to Non-Ann’s Length suppliers include the certificate
or invoices required by Section 5.3(b)(iii) of the Agreement.]
	 
	 	(e)	 	[Include the following for the second disbursement] I certify
that Eligible Costs in the amount of $9,380,120 have been incurred and paid
with respect to the Advance Payment.

	 	2.	 	I certify that the Disbursement will be used in accordance with the Agreement.

 

 

	 	3.	 	I certify that the information provided herein is accurate and is being relied
upon to disburse funds in respect of the Grant.
	 
	 	4.	 	Attached is a Schedule “C-2” — Project Status Report which is true and correct.
	 
	 	5.	 	The Recipient hereby requests a Disbursement in the amount of $n.

IN WITNESS WHEREOF the undersigned has hereunto signed these presents this day of o, 20..

Per:                                          c/s

[Insert name and title of senior officer]

 

 

SCHEDULE
“C-1”

SCHEDULE OF PAID ELIGIBLE COSTS

Recipient Name: SiGe Semiconductor Inc.

Disbursement #: (insert disbursement number)

Disbursement Period: (date) to (date)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Eligible Project
	 	 	 	 	 	 	Expenditures
	Eligible Cost	 	Project Component	 	Claimed This
	Category	 	(list Project components here)	 	Period
	 
	 	[NTD:  insert/delete rows as appropriate/necessary)
	 	 	 	 
	Overhead
	 	 
	 	 	 	 
	 	 	 
	 
	 	Subtotal	 	$	 	 
	 
	Construction /
Leasehold
Improvements
	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	Subtotal	 	$	 	 
	 
	Equipment and Machinery
	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	Subtotal	 	$	 	 
	 
	Materials
	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	Subtotal	 	$	 	 
	 
	Labour (one time)
	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	Subtotal:	 	$	 	 
	 
	Research and Development*
	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	Subtotal:	 	$	 	 
	 
	Other Eligible Costs: (specify)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	 
	 
	 	Subtotal:	 	$	 	 
	 
	Total Eligible Project Expenditures claimed this period:	 	$	 	 
	 

 

			
	*	 	Indicate cost category for each component under R&D expenditures as listed in Schedule “ B “
(e.g., equipment and machinery)

Note: Recipient to retain all records and invoices in support of paid Eligible Costs, subject to
audit by Ontario.

 

 

Total Disbursements to Date

	 	 	 	 	 	 	 	 	 
	Total NGOJF Grant: $7,035,092
	 	 	 	 	 	 	Balance Remaining (NGOJF
	Disbursement Period	 	Disbursement Amount	 	Grant-Disbursements)
	(1) [NTD: Insert Date]
	 	$	 	 	 	$	 	 
	(2)
	 	$	 	 	 	$	 	 
	(3)
	 	$	 	 	 	$	 	 
	 	 	 
	TOTAL
	 	$	 	 	 	$	 	 

 

 

SCHEDULE “C-2”

PROJECT STATUS REPORT

Milestone Status

Provide a status report with respect to the achievement of milestones, deliverables and timelines
for the Project as described in Schedule “A”. Explain any actual or anticipated delays with
respect to milestone completion under ‘Comments’ and provide a revised expected completion date, if
necessary.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Milestones	 	Expected	 	 	Revised Expected	 	 	 	 	 	 	 	 	 	 	Actual	 
	 	 	and	 	Completion	 	 	Completion Date	 	 	%	 	 	 	 	 	 	Completion	 
	 	 	Deliverables	 	Date	 	 	(if necessary)	 	 	Complete	 	 	Comments	 	 	Date	 
	 
	1	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9	 	Project Completion
	 	August 17, 
2014	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

Project Investment Commitment Status

Provide a status report with respect to the Project’s actual expenditures (for reference, see
Project Budget in Schedule “B”). Explain any actual or anticipated variances greater than 10% in
any category of Eligible Costs under ‘Comments’.

PROJECT INVESTMENT COMMITMENT BUDGET

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Project Investment Commitment Budget
	 	 	($CDN)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Project
	 	 	Year 1	 	Year 2	 	Year 3	 	Year 4	 	Year 5	 	Investment
	 	 	(Dates)	 	(Dates)	 	(Dates)	 	(Dates)	 	(Dates)	 	Commitment
	 
	Eligible Costs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Construction/Leasehold
Improvements
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Equipment and Machinery
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Materials
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Labour (one time)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Research and
Development
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Training
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Overhead
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	Other
Eligible Costs: (list)(subject to
Ministry approval)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	 
	Total Eligible Costs
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 

NOTE: The NGOJF will provide up to 15% of the total Eligible Costs of a Project (above) which have been incurred
and paid after the date that a complete proposal is received by the Ministry.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ineligible Cost	 	Year 1	 	Year 2	 	Year 3	 	Year 4	 	Year 5	 	Total
	Categories: (list)	 	(Dates)	 	(Dates)	 	(Dates)	 	(Dates)	 	(Dates)	 	Ineligible
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 
	 
	Total Ineligible Costs
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 

	*	 	Eligible costs must be directly related/attributable to the Project and incurred and paid after
the Effective Date.

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Project Investment Commitment Year to Date
	Total Project	 	 	 	 	 	 	 	 
	Investment	 	Total Actual	 	 	 	 	 	Comments
	Commitment to	 	Expenditures	 	 	 	 	 	(Explain annual variances greater
	Date (Budget)	 	to Date	 	Variance	 	than 10%)
	 
	 	 	$	%	 
	 	 	 	 	 

Cumulative Job Target Status

Provide a status report with respect to the actual number of Jobs at the Project Facility.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year 1	 	 	Year 2	 	 	Year 3	 	 	Year 4	 	 	Year 5	 	 	5-Year Cumulative	 
	SiGe Semiconductor Inc.	 	(Date)	 	 	(Date)	 	 	(Date)	 	 	(Date)	 	 	(Date)	 	 	Job Target	 
	 
	Current Facility Employment
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Project Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New Jobs *
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Retained Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Subtotal Project Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Other Jobs at Facility
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total Jobs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Number of Jobs that exceed
the Average industrial Wage
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	*	 	“New jobs are in addition to the current facility employment in a given year.

“Job” is defined in Section 1.1 of the Agreement.

Provide a status report with respect to the actual number of employees as at December 31, 20XX
at the Project Facility.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year 1	 	 	Year 2	 	 	Year 3	 	 	Year 4	 	 	Year 5	 
	SiGe Semiconductor Inc.	 	(Date)	 	 	(Date)	 	 	(Date)	 	 	(Date)	 	 	(Date)	 
	 
	Current employment at
Ontario Facilities [or
Project Facility] as
determined by the number of
employees on the
Recipient’s payroll as at
December 31st, during each
year of the Term
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

SCHEDULE “D”

ANNUAL CERTIFICATE

	 	 	 

	DATE:
	 	 
	 
	 	 
	TO:

	 	Ministry of Economic Development and Trade (“Ontario”)
	 

	 	NGOJF Secretariat
	 

	 	3rd Floor, Hearst Block
	 

	 	900 Bay Street
	 

	 	Toronto ON 7A 2E1
	 

	 	Attention: Director of the Secretariat
	 
	 	 
	RE:

	 	Conditional Grant Agreement between Ontario and SiGe
Semiconductor Inc. (“Recipient”) dated August 17,2009
(the “Agreement”)

     Except as otherwise defined herein, all capitalized terms shall have the meanings given to
them in the Agreement.

I, o, [Insert name and title of senior officer of Recipient] of the Recipient, on behalf of the
Recipient in that capacity and not personally, do hereby certify as follows:

	 	1.	 	The Recipient has achieved a total [number] of Jobs during the Fiscal Year
ending o at the Project Facility. During the current year, the Recipient has
maintained at least n employees at the Ontario Facilities, as determined by the number
of employees on the Recipient’s payroll as at December 31st.
	 
	 	2.	 	The Recipient has expended during the Fiscal Year ended [date], [$] on account
of the Project Expenditures.
	 
	 	3.	 	The Recipient has expended during the Fiscal Year ended (date), [$] on account
of Eligible Costs.
	 
	 	4.	 	The Recipient has (has not) incurred cost overruns, (which overruns have been
financed by o. [Note: include up to Project Completion Date]
	 
	 	5.	 	Attached hereto is a Project Status Report which is true and accurate.
	 
	 	6.	 	There has been no Closure during the Fiscal Year ended o. [Note: include up to
end of Term]
	 
	 	7.	 	On and as of the date hereof, no Event of Default, whether or not Ontario has
been given notice thereof, has occurred and is continuing.
	 
	 	8.	 	I have reviewed the activities of the Recipient with a view of determining
whether during the Fiscal Year ending
n the Recipient has observed each of the
covenants and conditions in the Agreement. I confirm that to the best of my knowledge
and belief the Recipient has observed each of the covenants and conditions.

 

 

IN WITNESS
WHEREOF the undersigned has hereunto signed these presents this n day of n,
20nn.

Per:          
                   
                   
                   
              c/s

[Insert name and title of senior officer of Recipient]

 

 

SCHEDULE “E”

FINAL CERTIFICATE AND REPORT

	 	 	 

	TO:

	 	Ministry of Economic Development and Trade (“Ontario”) NGoJF
Secretariat 3rd Floor, Hearst Block, 900 Bay Street Toronto ON, M7A2EI
Attention: Director of the Secretariat
	 
	RE:

	 	Conditional Grant Agreement between the Ontario and SiGe Semiconductor
Inc. (“Recipient”) dated August 17,2009 (the “Agreement”)

Except as otherwise defined herein, all capitalized terms shall have the meanings given to them in
the Agreement.

I, + , President of the Recipient, on behalf of the Recipient in that capacity and not personally,
hereby certify as follows:

1. The Recipient has achieved n Jobs during the Term at the Project Facility. Attached hereto is
the detailed calculation and result prepared in accordance with the Cumulative Job Target Clawback
formula set out in Section 4.2 of the Agreement which shows [no repayment OR a mandatory repayment
of the Grant due to Ontario in the amount of $o in respect of the Cumulative Job Target Clawback].
The detailed calculation includes the number of hours paid by the Recipient for hourly employees
and number of months for salaried employees in accordance with the definition of “Job”. [ n
[Insert Number] Jobs exceed the average industrial wage.]

2. The Recipient has incurred and paid a minimum of $n in total Project Costs. Attached hereto is
the Project Expenditure Certificate and Auditor’s Certificate in the form of Schedules E-l and E-2.

3. There has been no Closure during the Term.

4. Attached hereto is a Final Project Report, in the form of Schedule “C-2”, which is true and
accurate.

IN WITNESS WHEREOF the undersigned has hereunto signed these presents, this            day of+,20+ + .

Per:-         
                    
                    
                    
            c/s

[President]

 

 

SCHEDULE “El”

PROJECT EXPENDITURE CERTIFICATE

	 	 	 

	TO:

	 	Ministry of Economic Development and Trade (“Ontario”)
	 

	 	NGOJF Secretariat 3rd Floor, Hearst Block
	 

	 	900 Bay Street
	 

	 	Toronto ON M7A2E1
	 

	 	Attention: Director of the Secretariat
	 
	 	 
	RE:

	 	Conditional Grant Agreement between Ontario and SiGe
Semiconductor Inc. (“Recipient”) dated August
17,2009 (the “Agreement”)

Except as otherwise defined herein, all capitalized terms shall have the meanings given to them in
the Agreement.

I, n, [insert name and title of senior officer] of the Recipient, on behalf of the Recipient in
that capacity and not personally, hereby certify that the Recipient has incurred and paid a minimum
of n Dollars ($n) in total Project Expenditures on or before the Project Completion Date as
described below:

	 	 	 	 	 

	Total Project Expenditures
	 	$	 	 
	Overhead
	 	 	 	 
	Construction/leasehold improvements
	 	 	 	 
	Equipment and machinery
	 	 	 	 
	Materials
	 	 	 	 
	Labour (one time)
	 	 	 	 
	Training
	 	 	 	 
	Research and development
	 	 	 	 
	Other Eligible Cost (specify)
	 	 	 	 
	Total
	 	$	 	 

IN WITNESS WHEREOF the undersigned has hereunto signed these
presents this n day of n, 20n n

Per:           
                    
                    
                    
          c/s

[insert name and title of senior officer]

 

 

SCHEDULE “E- 2”

AUDITOR’S CERTIFICATE

Ministry of Economic Development and Trade (“Ontario”)

NGoJF Secretariat

3rd Floor, Hearst Block

900 Bay Street

Toronto ON M7A2E1

Attention: Director of the Secretariat

	 	 	 

	RE:

	 	Conditional Grant Agreement between Ontario
and SiGe Semiconductor Inc. (“Recipient”)
dated August 17,2009 (the “Agreement”)

Except as otherwise defined herein, all capitalized terms shall have the meanings given to them in
the Agreement.

At the request of the Recipient, we have audited the:

(a) Schedules of Paid Eligible Costs (Schedule “C-l”) attached to the Drawdown Certificates
dated [include all Drawdown Certificates] for the period from n to n prepared pursuant to
Section 5.3(b)(i); and

(b) the Project Expenditure Certificate (Schedule “E-l”) dated n, as required in Section 6.4
of the Agreement, an original of which is attached hereto as Schedule “E-l”

(collectively the Schedules and the Certificate referred to below as the “Certificates”).

The financial information set forth in the Certificates is the responsibility of the management of
the Recipient. Our responsibility is to express an opinion on the Certificates based on our audit.

We conducted our audit in accordance with Generally Accepted Accounting Principles and auditing
standards. Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial information is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the attached
Certificates. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial
information.

In our opinion, the Certificates present fairly, in all material respects:

(a) the paid Eligible Costs for the Project for the period between the Effective Date and
the Project Completion Date.

(b) the total Project Expenditures incurred and paid by the Recipient in order to determine
if a mandatory repayment of the Grant in respect of the Project Investment Commitment should
be made in accordance with Section 4.1 of the Agreement.

 

 

	 	 	 

	DATED:
	 	 
	 

	 	 
	 

	 	Signed
	 

	 	Chartered Accountant

 

 

SCHEDULE “F”

GUARANTEE AND POSTPONEMENT OF CLAIM

	 	 	 

	TO:

	 	Her Majesty the Queen in right of the Province of Ontario
	 

	 	as represented by the Minister of Economic Development and Trade (“Ontario”)

In consideration of Ontario dealing with SiGe Semiconductor Inc. (the “Recipient”) and for other
good and valuable consideration, the receipt and sufficiency of which are acknowledged, the
undersigned agrees as follows:

	1.	 	Guarantee. The undersigned unconditionally guarantees payment and performance to Ontario of
all present and future debts and liabilities, direct or indirect, now or at any time and from
time to time hereafter due or owing to Ontario from or by the Recipient and whether incurred
by the Recipient alone or jointly with any other corporation, person or persons, including,
without limitation, pursuant to a conditional grant agreement dated August 17, 2009 (together
with all amendments, modifications, supplements, restatements or replacements, if any, from
time to time made thereto, (the “Grant Agreement”) between Ontario and the Recipient;
provided, however, that the liability of the undersigned is limited to Seven Million Thirty
Five Thousand and Ninety Two Dollars ($7,035,092), plus any costs and expenses incurred by
Ontario in connection with the administration and enforcement of this guarantee, all with
interest thereon at the rate provided for in the Grant Agreement. The amounts guaranteed
hereunder, as provided above, are hereinafter referred to as the “Obligations”.
	 
	2.	 	Recipient’s Status and Authority. No change in the name, objects, capital stock or
constitution of the Recipient shall in any way affect the liability of the undersigned, either
with respect to transactions occurring before or after any such change, and Ontario shall not
be required to inquire into the powers of the Recipient or any of its directors, officers or
other agents, acting or purporting to act on its behalf. All amounts borrowed or obtained by
the Recipient from Ontario in professed exercise of such powers shall be deemed to form part
of the debts and liabilities hereby guaranteed, notwithstanding that any such borrowing shall
be in excess of the powers of the Recipient or of its directors, officers or other agents, or
be in any way irregular, defective, fraudulent or informal. If the Recipient shall amalgamate
with one or more other corporations, this guarantee shall continue and apply to all debts and
liabilities owing to Ontario by the corporation continuing from the amalgamation.
	 
	3.	 	Dealings with the Recipient, etc. Ontario, without consent of the undersigned and without
exonerating or releasing, in whole or in part, the undersigned, may grant time renewals,
extensions, indulgences, releases and discharges to, may take securities from and give the
same and any or all existing securities up to, may abstain from taking securities from, or
from perfecting securities of, may accept compositions from, and may otherwise change the
terms of any of the debts and liabilities hereby guaranteed and otherwise deal with the
Recipient and all other persons (including the undersigned) and

 

 

	 	 	securities, as Ontario may see fit. All dividends, compositions, and moneys received by
Ontario from the Recipient or from any other persons or estates capable of being applied by
Ontario in reduction of the debts and liabilities hereby guaranteed, shall be regarded for
all purposes as payments in gross, and Ontario shall be entitled to prove against the estate
of the Recipient upon any insolvency or winding-up in respect of the whole of said debts and
liabilities, and the undersigned shall have no right to be subrogated to Ontario in respect
of any such proof until Ontario shall have received from such estate indefeasible payment in
full of its claim with interest.
	 
	4.	 	Continuing Guarantee. This guarantee shall be a continuing guarantee, and shall cover and
secure the Obligations. Ontario shall not be obliged to seek any recourse against the
Recipient or other persons or the securities it may hold before being entitled to payment from
the undersigned of all the Obligations. The undersigned hereby renounces the benefits of
discussion and division and the right to claim against, or set up against, Ontario any right
which the undersigned may have to be subrogated in any of the rights, privileges and other
security held from time to time by Ontario.
	 
	5.	 	Guarantee Absolute. The liability of the undersigned under this guarantee shall be absolute
and unconditional irrespective of, and shall not be released, discharged, limited or otherwise
affected by anything done, suffered or permitted by Ontario in connection with the Recipient,
the Obligations or any security held by or granted to Ontario to secure payment or performance
of the Obligations.
	 
	6.	 	Representations and Warranties of the Guarantor. In order to induce Ontario to make the
conditional grant to the Recipient, the Guarantor represents, warrants and covenants (and
shall be deemed to continuously represent, warrant and covenant during the term of this
Guarantee and Postponement Claim) that:

	 	(a)	 	the Guarantor is a corporation duly incorporated and validly existing, in good
standing, under the laws of Delaware and has the power and authority to own its
property and assets and to transact the business in which it is engaged;
	 
	 	(b)	 	the Guarantor has the power to execute, deliver and perform this Guarantee and
Postponement Claim and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of this Guarantee and Postponement Claim;
	 
	 	(c)	 	the Guarantor has duly executed and delivered this Guarantee and Postponement
Claim, and this Guarantee and Postponement Claim constitutes the legal, valid and
binding obligation of the Guarantor enforceable in accordance with its terms;
	 
	 	(d)	 	neither the execution, delivery or performance by the Guarantor of this
Guarantee and Postponement Claim, nor compliance by it with the terms and provisions
hereof, will (i) contravene any provision of any applicable law, statute, rule or
regulation or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (ii) conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or

 

 

	 	 	 	result in the creation or imposition of (or the obligation to create or impose) any
lien or encumbrance (other than liens and encumbrances in favour of Ontario) upon
any of the property or assets of the Guarantor pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or any other agreement, contract
or instrument to which Guarantor is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) violate any provision of the
organizational documents of the Guarantor;
	 
	 	(e)	 	no order, consent, approval, license, authorization or validation of, or
tiling, recording or registration with (except as have been obtained or made), or
exemption by, any governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required for, (i) the execution, delivery and
performance of this Guarantee and Postponement Claim by the Guarantor or (ii) the
legality, validity, binding effect or enforceability of this Guarantee and Postponement
Claim;
	 
	 	(f)	 	the Guarantor’s obligations hereunder rank at least pari passu in all respects
with all other unsecured and unsubordinated obligations of the Guarantor;
	 
	 	(g)	 	there are no actions, suits or proceedings pending or threatened (i) with
respect to this Guarantee and Postponement Claim or (ii) with respect to the Guarantor
that could reasonably be expected to materially and adversely affect (x) the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Guarantor or (y) the rights or remedies of Ontario hereunder or the
ability of the Guarantor to perform its obligations to Ontario hereunder;
	 
	 	(h)	 	there are no facts or circumstances of any kind or nature whatsoever of which
the Guarantor has knowledge which will impair or prevent the Guarantor from performing
its obligations under this Guarantee and Postponement Claim; and
	 
	 	(i)	 	all of the information supplied by the Guarantor to Ontario in connection
herewith is true, complete and accurate in all material respects and the Guarantor is
not aware of any material facts or circumstances that have not been disclosed to
Ontario and which might render the information supplied to Ontario seriously
misleading.

	7.	 	Termination of Guarantee. The undersigned, its successors or permitted assigns, may
terminate the further liability of the undersigned under this continuing guarantee by ninety
(90) days’ notice in writing to Ontario, and the liability of the undersigned under this
guarantee and of its successor or permitted assigns, shall continue until the expiration of
ninety (90) days after the giving of such notice, notwithstanding the death or incapacity of
the undersigned, and after the expiry of such notice, the undersigned, its successors and
assigns, shall remain liable under the guarantee in respect of any sum or sums of money owing
to Ontario hereunder on the date such notice expired and also in respect of any contingent or
future liabilities incurred to or by Ontario on or before such date maturing thereafter. If
after any such termination any payment from the Recipient must be returned to the Recipient,
or any successor or representative of the Recipient, for

 

 

	 	 	any reason (including the designation of such payment as a mistake or as a preference
following the bankruptcy of the Recipient), then this guarantee shall continue after the
determination as if such payment has not been made.
	 
	8.	 	Enforcement. Ontario shall be entitled to make demand on the undersigned if the Recipient
fails to pay or perform any of the Obligations when due. Any such demand, or any other notice
permitted or required to be given hereunder shall be in writing and shall be made or given by
personal delivery, by courier, by facsimile transmission or sent by registered mail, charges
prepaid, if to the undersigned, to the address of the undersigned listed on the signature page
hereof, and if to Ontario to the Ministry of Economic Development and Trade, NGoJF
Secretariat, 3rd Floor, Hearst Block, 900 Bay Street, Toronto, Ontario M7A 2E1, Attention:
Director of the Secretariat, Facsimile No.: (416) 314-1768, Telephone No.: (416) 325-6849,
Email: NGoJF@ontario.ca. Such demand or other notice shall be deemed to have been
given and received on the date of personal delivery, courier or facsimile transmission, if
made during normal business hours on a Business Day, and otherwise on the next Business Day.
Any such notice or demand that is mailed shall be deemed to have been given and received on
the fifth (5th) Business Day following the day of mailing. For the purposes of
this Guarantee, “Business Day” shall mean a day other than a Saturday, Sunday or statutory
holiday in the Province of Ontario.
	 
	9.	 	Assignment and Postponement. All debts and liabilities, present and future, of the Recipient
to the undersigned are hereby assigned to Ontario and postponed to the Obligations, and all
money received by the undersigned in respect thereof after the occurrence of an Event of
Default (as defined in the Grant Agreement) shall be received in trust for Ontario and
forthwith upon receipt shall be paid over to Ontario, the whole without in any way lessening
or limiting the liability of the undersigned hereunder and this assignment and postponement is
independent of the Guarantee and shall remain in full force and effect until, in the case of
the assignment, the liability of the undersigned under this Guarantee has been discharged and,
in the case of the postponement, until payment in full to Ontario of all Obligations.
Notwithstanding anything to the contrary contained in this paragraph, the provisions of this
paragraph shall not apply to hinder or prevent repayment to the undersigned by the Recipient
from time to time of all debts and liabilities, present and future, of the Recipient to the
undersigned until such time as an Event of Default occurs.
	 
	10.	 	Governing Law; Submission to Jurisdiction; Process Agent. This guarantee shall be governed
by and construed in accordance with the laws of the Province of Ontario and the federal laws
of Canada applicable therein. For purposes of any suit, action or proceeding involving this
guarantee or any judgment entered by a court in respect of such suit, action or proceeding,
the Guarantor expressly submits to the exclusive jurisdiction of the courts of the Province of
Ontario and agrees that any summons, order, process or other paper of such courts may be
served upon the Guarantor within or without such courts’ jurisdiction by mailing a copy to the
Guarantor at its address specified below. The Guarantor irrevocably waives any objection it
may now or hereafter have to the laying of venue of any suit, action or proceeding arising out
of or relating to this guarantee brought in any such court and further irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has been brought in
an

 

 

	 	 	inconvenient forum. Nothing herein shall affect Ontario’s right to serve process upon the
Guarantor in any other manner permitted by the applicable laws or Ontario’s right to bring
any suit, action or proceeding against the Guarantor in the courts of any jurisdiction.
	 
	11.	 	Miscellaneous Provisions. This Guarantee:

	 	(f)	 	may not be assigned by the undersigned without the prior written consent of
Ontario, which consent shall not be unreasonably withheld;
	 
	 	(g)	 	shall enure to the benefit of Ontario and its successors and assigns, and shall
be binding upon the undersigned and the successors and permitted assigns of the
undersigned;
	 
	 	(h)	 	is in addition to, and not in substitution for, any other security now or
hereafter held by Ontario in respect of the Recipient or the Obligations; and
	 
	 	(i)	 	may be executed by facsimile transmission.

	12.	 	Copy of Guarantee. The undersigned acknowledges receipt of an executed copy of this
Guarantee.

This Guarantee has been executed by the undersigned on the       day of                    , 2010

	 	 	 

	 

	 	 
	Witness

	 	SiGe Semiconductor, Inc.
	 
	 	 
	 

	 	 
	 

	 	12009 Orange Street
	 
	 	 
	 

	 	 
	 

	 	Wilmington, County of New Castle, Delaware, 19801
	 
	 	 
	 

	 	 
	 

	 	Fax No. [Please insert]exv10w18

Exhibit 10.18

Version dated 18 May 2009

Dated the 7th day of July 2010

HONG KONG SCIENCE AND TECHNOLOGY

PARKS CORPORATION

as Landlord

and

SIGE SEMICONDUCTOR (HONG KONG) LIMITED

as Tenant

 

LEASE

of

Units 309 and 310 of the 3rd Floor of Lakeside 1,

No. 8 Science Park West Avenue, Phase Two,

Hong Kong Science Park

Pak Shek Kok, Tai Po, New Territories, Hong Kong

(Tai Po Town Lot No. 182)

 

REGISTERED at the Land Registry

by Memorial No.

on

p. Land Registrar

BAKER & McKENZIE

14th Floor, Hutchison House

Hong Kong

RY/TYKL/VWH/mwy

CON:71521

 

 

Version dated 18 May 2009

CONTENTS

	 	 	 	 	 	 	 
	Number	 	Clause Heading	 	Page
	1.

	 	DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	DEMISE
	 	 	4	 
	 
	 	 	 	 	 	 
	3.

	 	TENANT’S AGREEMENTS
	 	 	5	 
	 
	 	 	 	 	 	 
	 

	 	3 1 Rent, Service
Charges and other Payments
	 	 	5	 
	 

	 	3.2 Fitting Out
	 	 	6	 
	 

	 	3.3 Repair
	 	 	7	 
	 

	 	3.4 Yielding Up
	 	 	8	 
	 

	 	3.5 Landlord’s Entry
	 	 	8	 
	 

	 	3.6 Tenant’s Insurance
	 	 	9	 
	 

	 	3.7 Tenant’s
Activities
	 	 	9	 
	 

	 	3.8 Use
	 	 	10	 
	 

	 	3.9 Alterations
	 	 	11	 
	 

	 	3.10 Statutory Notices
	 	 	12	 
	 

	 	3.11 Alienation
	 	 	12	 
	 

	 	3.12 Insurance and Fire
Prevention
	 	 	13	 
	 

	 	3.13 Indemnities
	 	 	13	 
	 

	 	3.14 Exclusion of
Liability
	 	 	13	 
	 

	 	3.15 Regulations
	 	 	14	 
	 

	 	3.16 Costs
	 	 	14	 
	 

	 	3.17 Evidence of
Compliance
	 	 	15	 
	 

	 	3.18 Environmental
Issues
	 	 	15	 
	 
	 	 	 	 	 	 
	4.

	 	LANDLORD’S
AGREEMENTS
	 	 	16	 
	 
	 	 	 	 	 	 
	 

	 	4.1 Quiet Enjoyment
	 	 	16	 
	 

	 	4.2 Property Tax
	 	 	16	 
	 

	 	4.3 Services
	 	 	16	 
	 
	 	 	 	 	 	 
	5.

	 	DEPOSIT
	 	 	16	 
	 
	 	 	 	 	 	 
	 

	 	5.1 Payment
	 	 	16	 
	 

	 	5.2 Deduction
	 	 	16	 
	 

	 	5.3 Further Deposit
	 	 	16	 
	 

	 	5.4 Repayment
	 	 	16	 
	 

	 	5.5 Transfer
	 	 	17	 
	 
	 	 	 	 	 	 
	6.

	 	FURTHER PROVISIONS
	 	 	17	 
	 
	 	 	 	 	 	 
	 

	 	6.1 Re-entry
	 	 	17	 
	 

	 	6.2 Tenant’s Property
	 	 	18	 
	 

	 	6.3 Destruction of
Premises
	 	 	18	 
	 

	 	6.4 Out of Service
Hours Air Conditioning
	 	 	19	 
	 

	 	6.5 Change of Name
	 	 	19	 
	 

	 	6.6 Signs
	 	 	19	 
	 

	 	6.7 Waiver
	 	 	19	 
	 

	 	6.8 Legal Costs,
Stamp Duty and Other Fees
	 	 	19	 
	 

	 	6.9 Notices
	 	 	20	 
	 

	 	6.10 No Warranties
	 	 	20	 
	 

	 	6.11 Illegality or
Unenforceability
	 	 	21	 
	 

	 	6.12 Distraint
	 	 	21	 

i

 

Version dated 18 May 2009

	 	 	 	 	 	 	 
	Number	 	Clause Heading	 	Page
	 

	 	6.13 Release of Obligations
	 	 	21	 
	 

	 	6.14 Disclosure of Information
	 	 	21	 
	 

	 	6.15 Governing Law
	 	 	21	 
	 

	 	6.16 No Premium
	 	 	21	 
	 

	 	6.17 Amendments
	 	 	21	 
	 
	 	 	 	 	 	 
	SCHEDULE 1 Particulars	 	 	22	 
	 
	 	 	 	 	 	 
	SCHEDULE 2 Service Charges	 	 	23	 
	 
	 	 	 	 	 	 
	SCHEDULE 3 Landlord’s Provisions	 	 	24	 
	 
	 	 	 	 	 	 
	Execution	 	 	31	 

ii

 

THIS LEASE is made on the 7th day of July 2010

BETWEEN:

	(1)	 	HONG KONG SCIENCE AND TECHNOLOGY PARKS CORPORATION, a
corporation formed under the Hong Kong Science and Technology Parks Corporation
Ordinance, of 8/F, Bio-Informatics Centre, Hong Kong Science Park, Shatin, New
Territories, Hong Kong (“Landlord”);
	 
	(2)	 	SIGE SEMICONDUCTOR (HONG KONG) LIMITED, a company incorporated in Hong Kong with its
registered office at 11th Floor, One Pacific Place, 88 Queensway, Hong Kong Science
Park, Shatin, New Territories (“Tenant”).

NOW IT IS AGREED as follows:

	1.	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	In this Lease, the following meanings apply unless the context requires otherwise:
	 
	 	 	“Application” means the Application for Admission into the Hong Kong Science Park
submitted by the Tenant dated 13 March 2010 and any variation thereto agreed in writing
by the Landlord and Tenant from time to time;
	 
	 	 	“Building” means the building described in Schedule 1;
	 
	 	 	“Common Parts” means all areas, facilities, plant, machinery, equipment and Service Media
within the Building and/or the Development from time to time designated by the Landlord
for the common use of any of the occupiers of the Building and/or the Development and
those authorised by them including, without limitation, the access roads, pedestrian
ways, common entrances, staircases, lifts, escalators, roads, forecourts, loading bays,
parking areas and landscaped areas;
	 
	 	 	“Deposit” means the sum specified as such in Schedule 1;
	 
	 	 	“Development” means the development constructed or to be constructed at Pak Shek Kok, Tai Po,
New Territories, Hong Kong and known as Hong Kong Science Park (or however it may be named
in the future) and the buildings, structures and erections from time to time thereat;
	 
	 	 	“Fitting Out Guidelines” means the fitting out guidelines for the Building and/or the
Development issued from time to time by the Landlord or the Manager;
	 
	 	 	“Government” means the government of Hong Kong;

 

 

	 	 	“Hong Kong” means the Hong Kong Special Administrative Region of the People’s
Republic of China;
	 
	 	 	“Manager” means the person, firm or company appointed from time to time by the Landlord to manage
the Development;
	 
	 	 	“Permitted Use” means the use specified in Schedule 1;
	 
	 	 	“Premises” means each and every part of the premises described in Schedule 1 including:

	 	(i)	 	all additions and improvements to the Premises;
	 
	 	(ii)	 	all fixtures in the Premises whether or not originally fixed to them except any fixture
installed by the Tenant for the purposes of its business that can be removed from the
Premises without defacing the Premises;
	 
	 	(iii)	 	the finishes applied to the interior of the external walls and to any structural columns
but not any other part of the external walls or structural columns;
	 
	 	(iv)	 	the floor finishes but nothing below them;
	 
	 	(v)	 	the ceiling finishes but nothing above them;
	 
	 	(vi)	 	any non-load-bearing internal walls wholly inside the Premises;
	 
	 	(vii)	 	the inner half of the internal non-load-bearing walls dividing the Premises from other
parts of the Building;
	 
	 	(viii)	 	the doors and windows and door and window frames (but not the curtain wall);
	 
	 	(ix)	 	the Service Media in the Building that solely serve the Premises;
	 
	 	(x)	 	those of the Landlord’s Provisions (set out in Schedule 3) that are within the Premises.

	 	 	“Prescribed Rate” means three per centum per annum above the Prime Rate from time to time quoted
by The Hongkong And Shanghai Banking Corporation Limited;
	 
	 	 	“Rent” means the rent detailed in Schedule 1;
	 
	 	 	“Safety, Health and Environment (SHE)  Handbook” means those rules and regulations in relation to
the safety, health and environmental condition of the Premises, the Building and/or the
Development issued from time to time by the Landlord or the Manager;
	 
	 	 	“Services” means the services referred to in Schedule 2;
	 
	 	 	“Service Charges” means the service charges detailed in Schedule 1 subject to review in accordance
with Schedule 2;
	 
	 	 	“Service Hours” means such hours of service as stated in the Tenant’s Handbook or such other hours
as the Landlord may reasonably prescribe from time to time after giving written notice to Tenant;
	 
	 	 	“Service Media” means the sewers, drains, gutters, pipes, ducts, wires, chimneys, fibre optic
backbone and other conducting, telecommunications and IT media from time to time in the

2

 

	 	 	Building and/or the Development including any fixings, louvres, cowls and other
covers and ancillary apparatus;
	 
	 	 	“Tenant’s Handbook” means those rules and regulations for the occupation or use of the
Building and/or the Development issued from time to time by the Landlord or the Manager;
	 
	 	 	“Term” means the term of years detailed in Schedule 1 and any period of holding over
thereafter;
	 
	 	 	“Utilities” means the transmission of sewage, water, electricity, gas, telecommunications
and information;
	 
	 	 	“Working Day” means any day on which banks in Hong Kong generally are open for
business.
	 
	1.2	 	In this Lease the following shall apply unless the context requires otherwise:

	 	(a)	 	The expression the “Landlord” includes the person for the time being entitled
to the immediate possession of the Premises on expiry of the Term;
	 
	 	(b)	 	The expression the “Tenant” shall not include the executors and administrators
of any such party or where such party is a corporation its successors in title or any
liquidators thereof;
	 
	 	(c)	 	Where the Tenant comprises more than one individual all covenants undertakings
and agreements made by the Tenant herein shall be deemed to be made jointly and
severally by all the persons comprising the Tenant;
	 
	 	(d)	 	Words importing the masculine feminine or neuter gender shall include the
others of them, and words importing persons include firms, companies and corporations
and vice versa;
	 
	 	(e)	 	Words importing the singular number shall include the plural and vice versa;
	 
	 	(f)	 	The index and headings are for reference only and shall be ignored in
construing this Lease;
	 
	 	(g)	 	References to Clauses and Schedules are references to the clauses of and the
schedules to this Lease;
	 
	 	(h)	 	References to “losses” include all liabilities incurred by the Landlord, all
damage or loss suffered by it, all claims, demands, actions and proceedings made or
brought against it and all costs and disbursements incurred by it;
	 
	 	(i)	 	Any consent, approval or authorisation to be given by the Landlord must be in
writing and signed by or on its behalf if it is to be effective under this Lease.
Nothing in this Lease is to be construed as imposing any obligation on the Landlord
not to refuse any consent, permission, approval or authorisation unreasonably save
where expressed in this Lease;
	 
	 	(j)	 	References to the expiry of the Term or to the last year of the Term are to
the end of the Term and the last year of the Term whether it comes to an end by
effluxion of time or in any other way;

3

 

	 	(k)	 	Any agreement by the Tenant not to do any act or thing includes an
obligation not to allow or suffer that act or thing to be done by another person;
	 
	 	(1)	 	Any agreement by the Tenant to do any act or thing includes an obligation
to procure that act or thing to be done by another person;
	 
	 	(m)	 	Any reference to “legislation” includes any statutes, rules, regulations
and orders made by any governmental, statutory, public or competent authority in
Hong Kong;
	 
	 	(n)	 	For the purpose of this Lease, any act, default, neglect or omission of
any contractor, servant, agent, licensee, employee or visitor of the Tenant shall
be deemed to be the act, default, neglect or omission of the Tenant.

	2.	 	DEMISE
	 
	 	 	The Landlord LETS the Premises to the Tenant for the Term:
	 
	2.1	 	SUBJECT TO all rights, privileges, restrictions, covenants, agreements and stipulations of
whatever nature affecting the Premises and the terms and conditions of this Lease;
	 
	2.2	 	TOGETHER WITH (insofar as the Landlord is entitled to grant the same) the right to use, in
common with the Landlord and others having the like right, those Common Parts which are
reasonably necessary for the use and enjoyment of the Premises;
	 
	2.3	 	EXCEPT AND RESERVED unto the Landlord and all persons authorised by it or otherwise entitled:

	 	(a)	 	the right of free and uninterrupted passage and running of Utilities through
such Service Media which serve or are capable of serving the Building and/or the
Development together with the right to enter the Premises to inspect repair or renew
any such Service Media and to construct new Service Media;
	 
	 	(b)	 	the right to restrict the use of any Common Parts insofar as is reasonably
required for the purposes of inspecting, repairing, maintaining, decorating, replacing,
renewing or connecting to them but (except in emergency) not so as to deprive the
Tenant of access to the Premises;
	 
	 	(c)	 	the right to alter in any way whatsoever the Common Parts or vary the parts of
any Building which from time to time form part of the Development and to vary any
building plans relating to the Building and/or the Development from time to time
provided that the Tenant’s use of the Premises is not materially adversely affected
thereby;
	 
	 	(d)	 	the right to continue and complete the construction of the Development and to
carry out all necessary works in relation thereto including (without limitation) the
fitting out of other parts of the Building notwithstanding any noise, disturbance or
interference that the Tenant may suffer;
	 
	 	(e)	 	the right to install in or affix to any part of the Building such Service
Media, aerials, plant, machinery and other apparatus, scaffolding, signs and other
advertising structures (whether illuminated or not) as the Landlord decides and the
right to inspect, repair, remove or replace the same;

4

 

	 	(f)	 	the right upon reasonable notice (except in an emergency when
no notice is needed) to enter the Premises to view the condition of the Building and do
works to the Building;
	 
	 	(g)	 	the right to carry out or consent to the carrying out by any person of any
erection, demolition, rebuilding or alteration of any building forming part of the
Development or in the vicinity notwithstanding any inconvenience or nuisance caused to
the Tenant or interference with access of light or air to the Premises;
	 
	 	(h)	 	the right to enter the Premises in the circumstances in which the agreements
by the Tenant contained in this Lease permit such entry;
	 
	 	(i)	 	the right to subjacent and lateral support from the Premises for the remainder
of the Building;
	 
	 	(j)	 	the right to use the external walls of the Building for whatever purpose the
Landlord decides and to assign or delegate such right;
	 
	 	(k)	 	the right to affix and maintain without interference upon any external part of
the Premises during the three months before the expiry of the Term a notice stating
that the Premises are to be let and such other information as the Landlord reasonably
requires;
	 
	 	(1)	 	all easements, quasi-easements, privileges and rights whatsoever now enjoyed
by any adjoining or neighbouring property affecting the Premises as if such adjoining
and neighbouring property and the Premises had at all times been in separate ownership
and occupation and such matters had been acquired by prescription or formal grant; and
	 
	 	(m)	 	the right to access, enter and pass through the Premises to inspect,
install, repair, maintain, remove and replace (without limitation) the balconies,
planting areas, canopies and flat roofs adjoining or near the Premises (if any);

	 	 	PROVIDED THAT in exercising the rights in sub-clauses 2.3(a), (e), (f) and (k) the
Landlord shall cause as little interference as reasonably practicable to the Tenant and
make good any damage caused to the Premises.
	 
	3.	 	TENANT’S AGREEMENTS
	 
	 	 	The Tenant agrees with the Landlord as follows:
	 
	3.1	 	Rent. Service Charges and other Payments

	 	(a)	 	To pay the Rent and Service Charges in Hong Kong currency in advance without
any deduction, counterclaim or set off on the first day of each calendar month, the
first payment to be made on the signing hereof (being the Advance Payment in Schedule
1) and the last payment to be apportioned appropriately on a daily basis;
	 
	 	(b)	 	To pay all Government rent, taxes, assessments, duties, charges, impositions
and outgoings of a recurring nature imposed or charged from time to time on the
Premises or upon the owner or occupier of the Premises by the Government or other
competent authority other than property tax and expenses of a capital or non-recurring
nature (Provided That if the same are imposed or charged upon the Premises and any
other property, to reimburse to the Landlord a fair proportion thereof properly
attributable

5

 

	 	 	 	to the Premises as decided by the Landlord whose decision shall be
final and binding save in case of manifest error) and to pay or reimburse to the
Landlord on demand any consumption tax, goods and/or services tax, sales tax,
value added tax or any other tax of a similar nature (not including property tax
or profits tax) chargeable in respect to any payment made by the Tenant under or
in connection with this Lease, or paid by the Landlord in respect of a payment
otherwise payable by the Tenant, or as a consequence of any supply or other
dealing made or deemed to be made or other matter or thing done or deemed done
under or in connection with this Lease;

	 	(c)	(i) 	 To pay rates charged on the Premises as assessed by the Government quarterly in advance which shall be or be deemed to be payable and due on
the first day of the months of January, April, July and October provided
that the first payment thereof shall be paid on the signing hereof and the
first and last payments being apportioned appropriately on a daily basis;
	 
	 	 	(ii)	In the event of the Premises not having been separately
assessed to rates by the Government, to pay to the Landlord quarterly in
advance such sum (not exceeding the amount which would be payable under the
Rating Ordinance (Cap. 116)) as shall be required by the Landlord as a deposit
by way of security for the due payment of rates subject to adjustment on
actual rating assessment in respect of the Premises being received from the
Government;

	 	(d)	 	To make the payments due to the Landlord under this Lease by way of the
Autopay Services provided by member banks of The Hong Kong Association of Banks or in
such other manner reasonably required by the Landlord by notice in writing to the
Tenant from time to time;
	 
	 	(e)	 	To pay all deposits and charges for Utilities at the Premises;
	 
	 	(f)	 	(In addition to the Landlord’s other remedies under this Lease) to pay to the
Landlord on demand interest on any sum payable under this Lease at the Prescribed Rate
on any sum:

	 	(i)	 	payable by the Tenant to the Landlord under this Lease from
the due date until payment by the Tenant;
	 
	 	(ii)	 	paid by the Landlord in remedying any breach by the Tenant
of this Lease from the date of payment by the Landlord until payment by the
Tenant; and
	 
	 	(iii)	 	not accepted by the Landlord so as not to waive a breach of
this Lease from the due date until payment is accepted by the Landlord (but
this Sub-clause 3.1(f)(iii) is without prejudice to Clause 6.7(b)).

	3.2	 	Fitting Out

	 	(a)	 	To fit out the Premises at the Tenant’s expense in accordance with plans and
specifications approved by the Landlord (which approval shall not be unreasonably
withheld) in a good and proper workmanlike and diligent manner with good quality
materials and in all respects in a style and manner appropriate to the Building to the
satisfaction of the Landlord (but any approvals given under this Clause 3.2 shall not
impose on the Landlord any liability in respect of any non-compliance of any
legislation or law, inadequacy or deficiency in the drawings, plans, specifications or
works);
	 
	 	(b)	 	Not to commence any fitting out works until the Landlord’s approval has been

6

 

	 	 	 	obtained and all necessary approvals, licences or permits have been
obtained from the relevant competent authorities and all sums (including, without
limitation the fitting out deposit, Landlord’s vetting fees, temporary services
charges and debris removal charges (if any)) required to be paid prior to
commencement of the works in accordance with the Fitting Out Guidelines have been
fully paid;
	 
	 	(c)	 	Not to vary the approved fitting out plans and specifications without the
Landlord’s approval (which approval shall not be unreasonably withheld);
	 
	 	(d)	 	To carry out all fitting out works in compliance with the Landlord’s reasonable
requirements and the Fitting Out Guidelines and with all legislation and all
requirements of the Building’s insurers and of any utilities supplier. Any Landlord’s
approval given hereunder shall not constitute any representation that such legislation
and requirements have been complied with;
	 
	 	(e)	 	In installing, altering or connecting to any Service Media, electrical
installations or fire fighting apparatus and system, to use only a contractor nominated
by the Landlord and for any other works to use only a reputable contractor approved by
the Landlord (which approval shall not be unreasonably withheld) but any such
Landlord’s nomination or approval shall not impose on the Landlord any liability for
anything done or omitted by such contractor;
	 
	 	(f)	 	If the Tenant uses its own security system, to ensure that the Tenant’s
security system within and at the entrance to the Premises is compatible with the
security system for the Building (if any) provided and operated by the Landlord;
	 
	 	(g)	 	To procure that the Tenant’s contractors take out contractors’ all risks
insurance in respect of the Tenant’s fitting out works before they are started and the
provisions of Clause 3.6 shall apply to such insurance mutatis mutandis and to procure
that as soon as reasonably practicable all money received under such policy is applied
in making
good the loss or damage in respect of which it was paid.

	3.3	 	Repair

	 	(a)	 	To keep the Premises in good, clean, substantial and proper repair and
condition appropriate to the Building and properly preserved and painted (fair wear and
tear excepted);
	 
	 	(b)	 	To reimburse to the Landlord the cost of replacing all broken or damaged window
glass in the Premises irrespective of the cause of such breakage or damage (unless the
breakage or damage was caused by the Landlord);
	 
	 	(c)	 	To keep and if necessary replace any Service Media forming part of the Premises
in good clean substantial and proper repair and condition and to comply with the lawful
requirements of any competent authority and in doing such works the Tenant shall use
only a contractor nominated by the Landlord;
	 
	 	(d)	 	To reimburse to the Landlord the cost of making good any damage of any type to
the Building (including, but not limited to, scratches or damage to the curtain wall of
the Building), the Development or any Service Media caused or contributed to by the
act, omission, default or negligence of the Tenant or its contractors, servants,
agents, employees or licensees;
	 
	 	(e)	 	To replace any of the fixtures or fittings in the Premises which become beyond
repair during the Term;

7

 

	 	(f)	 	To take all reasonable precautions to protect the Premises from damage
threatened by an approaching storm or typhoon;
	 
	 	(g)	 	To maintain all toilets and water apparatus located outside the Premises (if
used exclusively or predominantly by the Tenant and its employees or licensees) in
good clean substantial and proper repair and condition to the satisfaction of the
Landlord and in accordance with the lawful requirements of any competent authority;
	 
	 	(h)	 	To be wholly responsible for any damage or injury caused to any person or
property directly or indirectly through the defective or damaged condition of the
Premises or any other area the repair of which is the Tenant’s responsibility under
this Lease;
	 
	 	(i)	 	To employ for the cleaning of the Premises such cleaning contractors as the
Landlord requires from time to time and to cause such cleaning services to be carried
out only between such hours and on such days as shall have been approved by the
Landlord (such approval not to be unreasonably withheld).

	3.4	 	Yielding Up
	 
	 	 	At the expiry of the Term:

	 	(a)	 	to yield up the Premises decorated and repaired in accordance with this Lease
with vacant possession having removed all lettering, signage, or characters showing
the Tenant’s name from the Development and any doors, walls or windows in the Building
(making good any damage caused by such removal to the Landlord’s satisfaction);
	 
	 	(b)	 	if required by the Landlord, to remove at the Tenant’s expense all
alterations, installations and additions and any fixtures, or any part thereof
specified by the Landlord, made or installed by the Tenant (whether or not with the
Landlord’s consent) or by a previous occupier of the Premises and taken over by the
Tenant, making good any damage caused by such removal to the Landlord’s satisfaction
and if so required by the Landlord to reinstate the Premises to bare shell condition
but incorporating the provisions described in Schedule 3, and where such works affect
the Service Media or the electrical installations or fire fighting installations of
the Premises to use only a contractor nominated by the Landlord and in other cases to
use only a reputable contractor approved by the Landlord (such approval not to be
unreasonably withheld); and
	 
	 	(c)	 	to surrender to the Landlord all keys and access cards to the Premises and
supply to the Landlord any access codes to all entrances and a copy of the operating
instructions of any security system for the Premises.

	3.5	 	Landlord’s Entry

	 	(a)	 	To permit the Landlord and persons authorised by it with or without appliances
at all reasonable times after giving reasonable prior notice to enter upon the Premises
to view their condition, to take inventories of the fixtures in them and to show the
Premises to prospective tenants or purchasers;
	 
	 	(b)	 	To make good all defects and wants of repair to the Premises for which the
Tenant is liable within the period of one month from the Tenant’s receipt of written
notice from the Landlord to do such works. If the Tenant fails to do such works to
permit the

8

 

	 	 	 	Landlord and persons authorised by it to enter the Premises and do such works
and the cost shall be a debt due from the Tenant to the Landlord;
	 
	 	(c)	 	To permit the Landlord and persons authorised by it at reasonable times after
giving reasonable prior notice (but at any time and without notice in an emergency) to
enter the Premises (by force if necessary) and do anything the Landlord deems
necessary for the purposes of security, fire fighting and protection of the Building.

	3.6	 	Tenant’s Insurance

	 	(a)	 	To effect and maintain adequate insurance cover with a reputable insurance company
approved by the Landlord (whose approval shall not be unreasonably withheld) in respect
of liability arising from any accident happening at the Premises or losses suffered or
incurred by third parties which might give rise to a claim for indemnity under Clause
3.13, such insurance shall be in an amount (for any one claim or series of claims
arising out of any one event) of not less than HK$15,000,000.00 or such other amount as
the Landlord may from time to time reasonably require;
	 
	 	(b)	 	Any such policy of insurance shall be endorsed to show the interest of the
Landlord and shall contain a clause to the effect that the insurance cover and its
terms and conditions shall not be cancelled, modified or restricted without the
Landlord’s consent (which consent shall not be unreasonably withheld);
	 
	 	(c)	 	To produce to the Landlord when required by the Landlord from time to time the
original policy of insurance together with an original receipt for the last payment of
premium and a certificate from the insurance company that the policy is fully paid up
and is valid and subsisting;
	 
	 	(d)	 	As soon as reasonably practicable to apply all money received under any policy
effected under Clause 3.6(a) in making good the losses in respect of which it was paid;
	 
	 	(e)	 	To notify the Landlord promptly of any damage to the Premises;
	 
	 	(f)	 	Not without the Landlord’s written consent to effect any insurance which may
reduce the insurance money receivable by the Landlord.

	3.7	 	Tenant’s Activities

	 	(a)	 	To carry on in the Premises the activities and make the investments referred to
in the Application;
	 
	 	(b)	 	Not to vary or depart from the activities and investments as set out in the
Application without the Landlord’s prior approval and, in making any application for
such approval, to submit full details of such new or varied activities and/or
investment to the Landlord in writing;
	 
	 	(c)	 	From time to time during the Term the Landlord may carry out a review of the
Tenant’s activities at the Premises to verify the implementation and realisation of the
Tenant’s proposed activities and investment set out in the Application;
	 
	 	(d)	 	The Tenant shall cooperate with such review and provide the Landlord with such
information and access to the Premises as the Landlord shall reasonably require (the
Landlord keeping any information confidential as reasonably required by the Tenant);
	 
	 	(e)	 	If the Landlord reasonably determines that the Tenant has deviated or departed from

9

 

	 	 	 	its proposed activities and/or investment as stated in the Application, to
use reasonable endeavours to immediately prepare a revised plan of investment and
activities to be carried out in the Premises (“Revised Activities”) acceptable to
the Landlord and to implement the approved Revised Activities for the remainder of
the Term;

	 	 	PROVIDED THAT in the event that either the Landlord and Tenant cannot agree on the Revised
Activities or the Tenant is unable, or it appears to the Landlord in its discretion that
the Tenant will be unable for any reason to implement the Revised Activities, the Landlord
(without prejudice to any other rights) shall have the right on giving the Tenant not less
than 3 months written notice to terminate this Lease and at the expiry of such notice
period this Lease shall cease to have further effect but without prejudice to any
antecedent rights or claim of either party and without prejudice also to the Landlord’s
right to demand payment and claim against the Tenant for all the remaining rent and other
payments due and payable by the Tenant under this Lease for the remaining unexpired Term
of this Lease. The Tenant shall upon termination of this Lease, yield up the Premises in
such manner as provided in Clause 3.4 of this Lease.

	3.8	 	Use

	 	(a)	 	Not to use the Premises for any purpose other than the Permitted Use;
	 
	 	(b)	 	Not to commit waste or use the Premises for gambling or any offensive trade or
business or any illegal, immoral or improper purposes or so as to cause nuisance,
damage or danger to the Landlord or the occupiers of neighbouring premises;
	 
	 	(c)	 	Not to use the Premises for the storage of goods other than in small quantities
consistent with the nature of the Tenant’s trade or business;
	 
	 	(d)	 	Not to keep at the Premises any dangerous inflammable or explosive goods or
firearms and ammunition Provided that if it is necessary to keep any dangerous,
inflammable or explosive goods at the Premises in the normal course of the Permitted
Use, the Tenant shall inform the Landlord of the nature of such goods and their method
of storage and shall comply with the requirements of the Landlord and all lawful
authorities in relation thereto, and shall promptly provide the Landlord with all
information relating thereto as the Landlord may reasonably request from time to time;
	 
	 	(e)	 	Not to make any noise (including but not limited to music or sound produced by
broadcasting from television, radio and any equipment capable of producing or
reproducing music or sound) which is audible outside the Premises, or make any
vibration or odour in the Premises which is or may be a nuisance to the occupiers of
nearby premises, or allow any smoke, fumes or gas to escape from the Premises; or do
anything on the Premises which may be a nuisance or cause annoyance, danger, injury or
damage to the Landlord or any neighbouring tenants or occupiers;
	 
	 	(f)	 	Not to place on the Premises anything (including any safe) of a weight in
excess of the floor loading of the Premises prescribed by the Landlord, or on parts of
the Premises containing reinforced flooring, anything of a weight in excess of the
appropriate weightings for which such reinforcements were designed and to comply with
any prescription by the Landlord of the maximum weight and permitted location of safes
and other heavy equipment and any requirements of the Landlord that the same stand on
supports of such dimensions and materials as the Landlord reasonably determines;

10

 

	 	(g)	 	To use the raised flooring and false ceiling (if any) in the Premises with care
and in accordance with the Landlord’s instructions and not to overload, scratch or
place any article which would release water onto the raised flooring or false
ceiling;
	 
	 	(h)	 	To comply with all legislation in relation to the Premises and the conduct of
the Tenant’s business on the Premises and storage of any goods therein and to apply
for any requisite licences or permits from all competent authorities in respect of the
Tenant’s business and activities in the Premises;
	 
	 	(i)	 	Not to do anything which would amount to a breach or non-observance of any
provision of the Government grant under which the Landlord holds the portion of the
Development on which the Building is situated;
	 
	 	(j)	 	To ensure that all refuse is disposed of by arrangement with and in containers
specified by the Landlord and if the Landlord provides a collection service for
refuse, to use such service exclusively at the sole cost of the Tenant;
	 
	 	(k)	 	Not to place or leave anything in the Common Parts nor to tout or solicit
business or distribute anything within the Building or the Development without the
permission of the Landlord;
	 
	 	(l)	 	To take delivery of furniture, equipment, fittings or bulky items in and out
of the Building only during the hours reasonably specified by the Landlord from time
to time and to take such delivery only in the lift and along the route designated for
that purpose by the Landlord;
	 
	 	(m)	 	Not to discharge into any Service Media any substance that may obstruct them
or cause damage or danger or anything likely to pollute;
	 
	 	(n)	 	Not to conduct any auction fire bankruptcy or similar sale at the Premises;
	 
	 	(o)	 	Not to keep any animals birds or pets inside the Premises and to take all
precautions to the reasonable satisfaction of the Landlord to prevent the Premises
from becoming infested by pests including, if the Landlord so requires, the employment
at the Tenant’s cost of such pest extermination contractors and at such intervals as
the Landlord may reasonably determine;
	 
	 	(p)	 	Not to allow any person to use the Premises for residential purposes.

	3.9	 	Alterations

	 	(a)	 	Not to make any alterations or additions to the Premises or to the Service
Media or to install any plant, equipment, apparatus or machinery in the Premises or to
cut or injure any doors, windows, walls, floors, ceilings or other part of the Premises
without the Landlord’s consent (which consent shall not be unreasonably withheld);
	 
	 	(b)	 	Not to install any air-conditioning plant or equipment, machinery or other
mechanical apparatus on the Premises without the Landlord’s consent (which consent
shall not be unreasonably withheld) and to comply with the directions and instructions
of the Landlord regarding installation;
	 
	 	(c)	 	Not to erect install or alter any partitioning in the Premises without the
Landlord’s consent (which consent shall not be unreasonably withheld) and to comply
with the directions and instructions of the Landlord regarding installation (but
Landlord’s

11

 

	 	 	 	consent shall not be required for installation of non-structural,
demountable partitioning which is removable without damage to the Premises);
	 
	 	(d)	 	Not without the Landlord’s consent (which shall not be unreasonably withheld)
to install additional locks bolts or other fittings to the entrance doors of the
Premises;
	 
	 	(e)	 	Not to erect exhibit or display on the Premises or the Building any writing,
sign, aerial, flagpole or other device so as to be visible from outside the Building
without the Landlord’s consent Provided That the Tenant may display its name and
business in the reception of the Premises or on the door thereof in such lettering,
characters and materials as the Landlord shall approve (which approval shall
not be unreasonably withheld);
	 
	 	(f)	 	Not to do anything which alters or affects the external appearance of the
Building or to make alterations or additions to the structure or (except for permitted
works to the Premises) other parts of the Building or, without limitation, the Common
Parts;
	 
	 	(g)	 	In carrying out any permitted works whatsoever to the Premises or anywhere
within the Development to observe and perform the provisions of Clause 3.2 mutatis
mutandis.

	3.10	 	Statutory Notices
	 
	 	 	To notify the Landlord forthwith in writing of the contents of any notice received by the
Tenant from any competent authority concerning the Premises or any of the Utilities.
	 
	3.11	 	Alienation

	 	(a)	 	Not to transfer, assign, underlet, licence, share, hold for the benefit of
another or otherwise part with the possession or occupation of the Premises or any
part of them or the right to use them so that any person not a party to this Lease
obtains the use or possession of the Premises or any part of them and without limiting
the generality of this, the following acts and events shall be deemed to be breaches
of this Clause:

	 	(i)	 	In the case of a tenant which is a partnership, the taking in
of one or more new partners whether on the death or retirement of an existing
partner or otherwise;
	 
	 	(ii)	 	In the case of a tenant who is an individual (including a sole
surviving partner of a partnership tenant) the death, insanity or other
disability of that individual;
	 
	 	(iii)	 	In the case of a tenant which is a corporation, any
take-over, reconstruction, amalgamation, merger, voluntary liquidation or
change in the person who owns a majority of its voting shares or who otherwise
has effective control thereof;
	 
	 	(iv)	 	The giving by the Tenant of a power of attorney or similar
authority whereby the donee of the power obtains the right to use, possess or
occupy the Premises;
	 
	 	(v)	 	The change of the Tenant’s business name without the consent
of the Landlord (which consent shall not be unreasonably withheld).

12

 

	3.12	 	Insurance and Fire Prevention

	 	(a)	 	Not to do anything whereby any policy of insurance on the Premises and/or the
Building and/or the Development against damage by fire and other risks or against
claims by third parties may become void or voidable or whereby the rate of premium for
any such policy may be increased and to repay to the Landlord on demand all sums paid
by the Landlord by way of increased premium or otherwise rendered necessary by a
breach of this Clause;
	 
	 	(b)	 	To comply with all the recommendations of the Landlord’s insurer and the fire
authority;
	 
	 	(c)	 	To keep the Premises supplied with such fire fighting equipment as the
Landlord’s insurer and the fire authority may require and to maintain it in working
order and to the satisfaction of the Landlord’s insurer and the Landlord and at least
once every six months to have any fire fighting equipment inspected by a competent
person;
	 
	 	(d)	 	Not to obstruct the access to any fire equipment or the means of escape from
the Premises;
	 
	 	(e)	 	To carry out any periodic testing of electrical installations at the Premises
required by regulations made under the Electricity Ordinance (Cap. 406).

	3.13	 	Indemnities
	 
	 	 	To indemnify the Landlord against all losses arising directly or indirectly from:

	 	(a)	 	the act, omission, neglect or default (irrespective of whether wilful or not)
of the Tenant or any employee, visitor, licensee, agent or contractor of the Tenant;
	 
	 	(b)	 	any breach by the Tenant of this Lease;
	 
	 	(c)	 	the defective or damaged condition of the Premises or any other area, the
repair of which is the Tenant’s responsibility under this Lease;
	 
	 	(d)	 	the spread of fire or smoke or water or any other substance originating from
the Premises,

	 	 	and this Clause shall survive the expiry of the Term.
	 
	3.14	 	Exclusion of Liability
	 
	 	 	Notwithstanding Clauses 4.1 and 4.3, not to hold the Landlord liable in any way to the
Tenant or to any other person for any losses which may be suffered by the Tenant or by any
other person or any property however caused (unless directly caused by the wilful default
or gross neglect of the Landlord or its employees) and in particular, but without
limitation, caused by or in any way owing to:

	 	(a)	 	any interruption, failure, malfunction, reduction or termination of or defects
in or any other condition of any of the Utilities, Service Media or Common Parts or any
machinery, plant, facility, services, equipment, installations or fixtures in the
Building or the Development;
	 
	 	(b)	 	the act, neglect or default of the tenants and occupiers of any other parts of
the Building or the Development and their employees and licensees;

13

 

	 	(c)	 	any defect in the supply of electricity or from any surge, reduction,
variation, interruption or termination in the supply of electricity;
	 
	 	(d)	 	any typhoon, landslide, subsidence, fire, leakage of water, fumes, smoke or
electricity from the Service Media or any other part of the Building or the
Development including plant, facility, services, machinery, installations, apparatus
and other fixtures therein or dropping or falling of anything from any part of the
Building or the Development or vibrations from any part of the Building or in the
Development or the influx of rain into the Premises, or the activity of rats or other
pests in the Building;
	 
	 	(e)	 	the defective or damaged condition of the Premises, the Building or the Development;
	 
	 	(f)	 	any want of security or safekeeping at the Building or Development;
	 
	 	(g)	 	any non-enforcement of any rules or regulations made by the Landlord; or
	 
	 	(h)	 	any exercise of the Landlord’s rights under this Lease including
(without limitation) the carrying out of any building works;

	 	 	nor shall the Rent or Service Charges or any other sums due from the Tenant under this
Lease abate on account of any such event save as provided in Clause 6.3.
	 
	3.15	 	Regulations
	 
	 	 	To comply with the rules for the Building and/or the Development from time to time made or
adopted by the Landlord (including without limitation the Tenant’s Handbook, the Safety,
Health and Environment (SHE) Handbook and the Fitting Out Guidelines) provided that if there
is a conflict between such rules and this Lease, this Lease shall prevail.
	 
	3.16	 	Costs
	 
	 	 	To pay to the Landlord on an indemnity basis, as rent and within 14 days of demand, all
costs and other expenses properly and reasonably incurred by the Landlord in relation to:

	 	(a)	 	every application made by the Tenant for consent whether it is granted,
refused, offered subject to any qualification or withdrawn;
	 
	 	(b)	 	professional advice obtained by the Landlord following an application by the
Tenant for consent, permission or approval under this Lease;
	 
	 	(c)	 	the preparation and service of a schedule of dilapidations during or after the
expiry of the Term;
	 
	 	(d)	 	the recovery of Rent, Service Charges or other sums due from the Tenant;
	 
	 	(e)	 	the standard fees imposed by the Landlord from time to time in respect of the
vetting of any drawings and specifications for any works proposed to be carried out by
or on behalf of the Tenant;
	 
	 	(f)	 	professional advice obtained by the Landlord in inspecting or monitoring any
works carried out by or on behalf of the Tenant;
	 
	 	(g)	 	affixing, altering or replacing the Tenant’s name on the directory boards
or directional signs in the Building and/or the Development,

14

 

	 
	 
	 
	 
	 
	 
	 
	 	 	and this Clause shall survive the expiry of the Term.       
	 
	3.17	 	Evidence of Compliance
	 
	 	 	To produce to the Landlord such evidence as the Landlord may reasonably require from time to
time to satisfy itself that the provisions of this Lease have been complied with.
	 
	3.18	 	Environmental Issues

	 	(a)	 	Subject to sub-clauses (b) and (c), to ensure that the Premises are free of
Hazardous Substances throughout the Term of the Lease.
	 
	 	(b)	 	To comply with all Environmental Laws in relation
to:

	 	(i)	 	the Premises; and
	 
	 	(ii)	 	the presence, treatment or transportation of Hazardous
Substances in, on or about the Premises.

	 	(c)	 	To ensure that no release, leakage, discharge, spill, disposal or emission of
Hazardous Substances will occur in, on or about the Premises.
	 
	 	(d)	 	“Hazardous Substances” shall mean:

	 	(i)	 	any substance, gas, liquid, waste, chemical, mineral or
other physical or biological matter which:

	 	(1)	 	is or may become toxic, corrosive,
reactive, flammable or inflammable; or
	 
	 	(2)	 	is otherwise harmful to the environment or any
life form or which may cause pollution, contamination or any hazard or
increase in toxicity in the environment or may leak or discharge or
otherwise cause damage to any person, property or the environment
(including, without limitation, asbestos, asbestos
containing materials, polychlorinated biphenyls, petroleum and its
derivatives); or

	 	(ii)	 	a material or compound controlled, prohibited or
regulated from time to time by any Environmental Law.

	 	(e)	 	“Environmental Laws” means any and all applicable laws, rules, regulations,
orders, notices, directions, requirements, permits, codes, judgments, decrees,
treaties, or other measures governing safety, health and/or protection of the
environment.
	 
	 	(f)	 	The Tenant shall indemnify and hold harmless the Landlord from any and all
claims, damages, fines, judgments, penalties, costs, expenses or liabilities
(including, without limitation, any and all sums paid for settlement of claims, legal
fees, consultant and expert fees) arising, during or after the Term from or in
connection with the presence or suspected presence of Hazardous Substances in, on or
about the Premises or from any breach of this Clause 3.18 by the Tenant, except to the
extent that the Hazardous Substances are present as a result of acts of the Landlord.

15

 

	4.	 	LANDLORD’S AGREEMENTS
	 
	 	 	The Landlord agrees with the Tenant (subject to the Tenant duly paying the Rent and
Service Charges and not breaching this Lease) as follows:
	 
	4.1	 	Quiet Enjoyment
	 
	 	 	Subject to Clause 2.3 and Clause 3.1, that the Tenant may have quiet possession and
enjoyment of the Premises during the Term without any interruption by the Landlord or
anyone lawfully claiming under through or in trust for the Landlord provided that any noise
or disturbance suffered by the Tenant arising from the ordinary use of adjoining premises
shall not be a breach of this Clause.
	 
	4.2	 	Property Tax
	 
	 	 	To pay any property tax relating to the Premises.
	 
	4.3	 	Services
	 
	 	 	To use best endeavours to procure that the Manager provides such of the Services at such
times and in such manner as the Landlord shall in its discretion deem necessary or
desirable in the interests of the Development.
	 
	5.	 	DEPOSIT
	 
	5.1	 	Payment
	 
	 	 	On the date of this Lease, the Tenant shall pay to the Landlord the Deposit (in the amount
of six months’ Rent, Service Charges, Government rent and rates) to secure compliance by the
Tenant with this Lease. If there is any increase in the Rent, Service Charges, Government
rent or rates during the Term the Tenant shall immediately pay to the Landlord a further sum
so that the total Deposit equals six months’ Rent, Service Charges, Government rent and
rates as so increased.
	 
	5.2	 	Deduction
	 
	 	 	The Deposit shall be held by the Landlord during the Term without payment of any interest
to the Tenant and the Landlord shall have the right (in addition to any other right or
remedy) to deduct from the Deposit the amount of any Rent, Service Charges and other
charges payable under this Lease and any losses sustained by the Landlord as the direct or
indirect result of any breach by the Tenant of this Lease.
	 
	5.3	 	Further Deposit
	 
	 	 	If any deduction is made by the Landlord from the Deposit during the Term the Tenant shall
immediately following demand by the Landlord make a further deposit equal to the amount
deducted and failure by the Tenant to do so shall entitle the Landlord to re-enter the
Premises and to end this Lease.
	 
	5.4	 	Repayment
	 
	 	 	At the expiry of the Term if there is no outstanding breach of this Lease by the Tenant the
Landlord will repay the Deposit to the Tenant within 30 days after the Tenant has given to
the Landlord vacant possession of the Premises. If, however, there is any breach of this
Lease by

16

 

	 	 	the Tenant, the Landlord may apply the Deposit or an appropriate part of it towards
remedying such breach insofar as this may be possible (in addition to any other right or
remedy it may have) in which event the balance of the Deposit (if any) shall be repaid to
the Tenant within 30 days of the settlement of the last outstanding claim by the Landlord
against the Tenant.
	 
	5.5	 	Transfer
	 
	 	 	If at any time during the Term, the Landlord transfers its interest in the Premises, the
Landlord may transfer to the new owner the Deposit (or the balance of it (if any) if the
Landlord is entitled to exercise its right of deduction under this Lease). Upon such
transfer, the Landlord (which in this context shall exclude its assigns) shall be released
from any liability or obligation under this Lease to refund the Deposit or any balance of
it to the Tenant and the Tenant shall be entitled only to claim a refund of the Deposit or
the balance of it from the new owner.
	 
	6.	 	FURTHER PROVISIONS
	 
	6.1	 	Re-entry

If:

	 	(a)	 	any part of the Rent, Service Charges or any other sum payable under this
Lease is unpaid for 14 days after becoming due (whether formally demanded or not);
	 
	 	(b)	 	the Tenant commits any breach of this Lease; or
	 
	 	(c)	 	the Tenant is insolvent which for the purposes of this Lease means:

	 	(i)	 	the Tenant becomes bankrupt or goes into liquidation or a
receiving order is made against it;
	 
	 	(ii)	 	a receiver is appointed in respect of any of the Tenant’s assets;
	 
	 	(iii)	 	possession of any of the Tenant’s assets is taken by a chargee or
mortgagee;
	 
	 	(iv)	 	any distress or execution is levied on the Premises or on any
of the Tenant’s assets;
	 
	 	(v)	 	the Tenant stops or suspends payment of its debts or is unable
or admits it is unable to pay them;
	 
	 	(vi)	 	the Tenant enters into a scheme of arrangement with its creditors;
	 
	 	(vii)	 	the Tenant stops or suspends the carrying on of its business
or threatens to do so;
	 
	 	(viii)	 	the Tenant fails to satisfy any judgment given in any action against it
unless such judgment has been appealed within the requisite time limit and
that appeal has not yet been disposed of; or
	 
	 	(ix)	 	any other similar event, action or proceeding occurs or is
taken in respect of the Tenant in any jurisdiction;

17

 

	 	 	the Landlord may, without prejudice to the Landlord’s other rights and remedies, at any
time re-enter the Premises or any part of them in the name of the whole whereupon this
Lease shall end but any right of action of the Landlord under this Lease shall remain. The
Landlord may exercise its rights under this Clause 6.1 by serving written notice on the
Tenant without physically entering the Premises notwithstanding any statutory or common law
provision to the contrary.
	 
	6.2	 	Tenant’s Property
	 
	 	 	If, after the Tenant has vacated the Premises at the expiry of the Term, any of its property
remains in the Premises or if at any time the Tenant leaves any property in the Common
Parts, the Tenant shall be deemed to have abandoned such property and the Landlord may
remove and sell or otherwise dispose of that property. The Tenant shall indemnify the
Landlord against any liability incurred by the Landlord to any third party whose property is
sold by it in the mistaken belief, held in good faith, (which is to be presumed unless the
contrary is proved) that the property belongs to the Tenant. All proceeds of sale shall
belong to the Landlord absolutely. The Tenant shall indemnify the Landlord against any
damage occasioned to the Premises and the Common Parts (or either of them) and any losses
caused by or related to the presence of the property in the Premises and the Common Parts
(or either of them).
	 
	6.3	 	Destruction of
Premises

If:

	 	(a)	 	the Premises or any substantial part of them are rendered unfit for the
Permitted Use
or inaccessible by any cause other than as a direct or indirect result of the
Tenant’s or
its contractors’, servants’, visitors’, employees’ or licensees’ act neglect or
default
and if any policy of insurance effected by the Landlord has not been vitiated or
payment of the policy money refused in whole or in part due to any act, neglect or
default of the Tenant or its contractors, servants, agents, visitors, employees or
licensees; or
	 
	 	(b)	 	any order is issued by the Government or any competent authority preventing or
restricting the use of the Premises or any substantial part of them other than due
to
any act, neglect or default of the Tenant or its contractors, servants, agents,
visitors,
employees or licensees,

then

	 	(i)	 	the Rent and Service Charges or a fair proportion of them
according to the nature and extent of the damage sustained or order made (the
Landlord’s determination of which being binding on the Tenant) shall after the
expiration of the current month cease to be payable until the Premises have
been again rendered fit for the Permitted Use and accessible or such order has
been complied with (as the case may be); and
	 
	 	(ii)	 	if the Premises have not been rendered fit for the Permitted
Use and accessible or such order has not been complied with within six months
of the damage or date when such order become operative (as the case may be)
either party may end this Lease by giving not less than one month’s notice in
writing to the other but any right of action which either party may have
against the other under this Lease shall remain.

Provided that the Landlord shall be under no obligation to reinstate the Premises or
comply with such order.

18

 

	6.4	 	Out of Service Hours Air Conditioning
	 
	 	 	Air-conditioning to the Premises outside the Service Hours shall be available if the
Tenant so requests in accordance with the procedure set out in the Tenant’s Handbook,
subject to the Tenant paying the applicable out of hours air conditioning charges
specified by the Landlord from time to time.
	 
	6.5	 	Change of Name
	 
	 	 	The Landlord shall from time to time during the Term be entitled to change the name of the
Building and/or the Development or any part of it and the Landlord shall not be liable for
any costs or expenses incurred by the Tenant as a result of such change.
	 
	6.6	 	Signs
	 
	 	 	The Tenant shall pay the Landlord within 14 days of demand the reasonable cost of affixing
repairing or replacing as necessary the Tenant’s name in lettering on the directory board
at the entrance to the Building and on the directory board on the floor on which the
Premises are situated.
	 
	6.7	 	Waiver

	 	(a)	 	No condoning, excusing or overlooking by the Landlord of any default or
breach on
the part of the Tenant, and no failure or delay by the Landlord in exercising any
right,
power or remedy provided by law or under this Lease, shall operate as a waiver of
such right, power or remedy, nor shall any single or partial exercise preclude any
other or further exercise thereof or the exercise or enforcement of any other right,
power or remedy. The rights, powers and remedies provided in this Lease are
cumulative and not exclusive of any rights, powers and remedies provided by law.
	 
	 	(b)	 	No waiver of any right, power or remedy of the Landlord shall:

	 	(i)	 	be valid unless signed by the Landlord in writing and
containing an express statement that it is a waiver pursuant to this Clause
6.7(b); or
	 
	 	(ii)	 	be inferred from or implied by anything done (including the
acceptance by the Landlord of Rent and/or other amounts payable under this
Lease) or omitted to be done by the Landlord unless expressed in writing and
agreed by it.

	 	(c)	 	Any consent given by the Landlord shall operate as a consent only for the
particular
matter to which it relates and not as a general waiver or release of any of the
provisions of this Lease nor shall it be construed as dispensing with the necessity of
obtaining the specific consent of the Landlord in future, unless expressly so provided.

	6.8	 	Legal Costs. Stamp Duty and Other Fees 
	 
	 	 	The stamp duty payable on this Lease shall be borne by the parties in equal shares but the
land registration fee (if any) shall be paid by the Tenant. The Tenant shall also pay one
half of the Landlord’s solicitor’s costs for the preparation and completion of this Lease
unless:

	 	(a)	 	the Tenant instructs its own solicitor, in which event, each party
shall pay its own solicitors’ costs for the preparation, approval and completion of
this Lease; or

19

 

	 	(b)	 	the Tenant, being legally unrepresented, accepts this Lease prepared by
the Landlord’s solicitors in full without proposing any amendments. For the
avoidance of doubt, the Tenant shall still be responsible to pay one half of
the Landlord’s solicitor’s costs if the Tenant in this case, requests for
amendments to the draft of this Lease but finally agrees to withdraw all of
them and accepts the draft of this Lease in full.

	6.9	 	Notices

	 	(a)	 	Any notice required to be served under this Lease shall be
sufficiently served if
delivered to or despatched by post to or left at the respective addresses of
the parties
set out in this Lease or any other address in Hong Kong notified from time to
time to
the other party in accordance with this Clause, or in the case of the Tenant
at the
Premises.
	 
	 	(b)	 	Any notice, demand or other communication required to be served
under this Lease
shall be in writing delivered personally or by prepaid letter or facsimile
transmission,
and (in the case of a facsimile transmission) confirmed by letter delivered
personally
or sent by prepaid mail within 24 hours of despatch of such facsimile
transmission
provided that no failure to deliver or despatch and no delay or despatching
such
confirmatory letter shall affect the original notice given.
	 
	 	(c)	 	Any notice served pursuant to this Clause 6.9 shall be deemed to
have been served:

	 	(i)	 	if delivered personally, on the first Working Day following the
delivery;
	 
	 	(ii)	 	if sent by prepaid letter, on the first Working Day following the delivery; and
	 
	 	(iii)	 	if sent by facsimile transmission, on the
first Working Day following successful transmission.

	 	(d)	 	In proving service in the case of facsimile transmission, it shall
be sufficient proof that it was properly addressed and successfully transmitted to the correct number.

	6.10	 	 No Warranties 

	 	(a)	 	The Landlord does not represent or warrant that the Premises are
suitable for the
Permitted Use and the Tenant must satisfy itself that they are suitable for
that use.
	 
	 	(b)	 	The Tenant acknowledges that it has duly inspected and is satisfied
with the Premises
and accepts the Premises on an “as is” basis.
	 
	 	(c)	 	This Lease supersedes any and all previous agreements between the
parties and
constitutes the entire agreement between them and there are no other express
terms
(whether oral or in writing) or implied terms agreed between them.
All representations, warranties, statements or agreements, whether made orally or
in
writing, prior to and simultaneously with the grant of this Lease relating to
any of the
matters referred to herein are hereby waived, negated and excluded unless
otherwise
agreed or confirmed by the parties in writing after the date of this Lease.
	 
	 	(d)	 	The Tenant acknowledges that in entering into this Lease, it is not
relying upon any
representation, warranty, statement or agreement, undertaking, promise or
assurance
made or given by the Landlord or any other person, whether or not in writing,
at any
time prior to or simultaneously with the grant of this Lease which is not
expressly set
out in this Lease.

20

 

	 	(e)	 	The Landlord does not warrant that any or adequate insurance against fire or
any
other risks exists in respect of the Building or the property of the Tenant
therein.
	 
	 	(f)	 	So far as the law allows, the Tenant is not entitled to any rights affecting
the Building
or the Development and nothing in this Lease shall confer on the Tenant any right
mentioned or referred to in Section 16(1) of the Conveyancing and Property
Ordinance (Cap.219) other than those expressly set out herein.

	6.11	 	Illegality or Unenforceability 
	 
	 	 	Any provision of this Lease prohibited by or rendered unlawful by or unenforceable under any
applicable law actually applied by any court of competent jurisdiction shall, to the extent
required by such law, be severed from this Lease and rendered ineffective insofar as it is
possible without modifying the remaining provisions of this Lease. Where, however, the
provisions of any such applicable law may be waived, they are hereby waived by the parties
to the full extent permitted by such law to the intent that this Lease shall be valid and
binding and enforceable in accordance with its terms.
	 
	6.12	 	Distraint
	 
	 	 	For the purposes of Part III of the Landlord and Tenant (Consolidation) Ordinance or any
statutory modification or re-enactment thereof, the Rent and Service Charges shall be in
arrears if not paid in accordance with Clause 3.1.
	 
	6.13	 	Release of Obligations
	 
	 	 	Subject to Clause 5.5, the Tenant agrees that in the event that the Landlord disposes of
its interest in the Premises, the Landlord shall be released from all its obligations
liabilities or covenants under this Lease notwithstanding any rule of law to the contrary
and the Tenant agrees not to bring any claim or proceedings against the Landlord in respect
of any of the Landlord’s obligations, liabilities or covenants hereunder.
	 
	6.14	 	Disclosure of Information
	 
	 	 	The Tenant agrees that the Landlord may disclose the information contained in this Lease to
the Manager, an assignee or mortgagee or potential assignee or mortgagee of the Premises or
a Government department or third party reasonably requiring such information.
	 
	6.15	 	Governing Law
	 
	 	 	This Lease shall be governed by and construed according to the law of Hong Kong and the
parties shall submit to the non-exclusive jurisdiction of the courts of Hong Kong.
	 
	6.16	 	No Premium
	 
	 	 	The Tenant acknowledges that no fine, premium, key money or other consideration has been
paid by the Tenant to the Landlord for the grant of this Lease.
	 
	6.17	 	Amendments
	 
	 	 	This Lease may only be varied or modified by a supplemental lease or other document signed
by all the parties hereto. No provision of this Lease may be waived, discharged or
terminated orally, except only by an instrument in writing signed by the parties against
whom enforcement of the waiver, discharge or termination is sought.

EXECUTED on the day first above written.

21

 

SCHEDULE 1

Particulars

	 	 	 	 	 

	BUILDING

	 	:
	 	Lakeside 1, No. 8 Science Park West Avenue at Phase Two
of Hong Kong Science Park, Pak Shek Kok, New Territories, Hong
Kong (Tai Po Town Lot No. 182).
	 
	 	 	 	 
	PREMISES

	 	:
	 	Units 309 and 310 of the 3rd Floor of the Building as
shown for identification purposes only coloured pink on the plan
annexed hereto.
	 
	 	 	 	 
	TERM

	 	:
	 	3 years commencing on 23 August 2010.
	 
	 	 	 	 
	RENT

	 	:
	 	HK$99,139.96 per calendar month.
	 
	 	 	 	 
	SERVICE CHARGES

	 	:
	 	HK$37,610.00 per calendar month which is subject to
increase by the Landlord in accordance with this Lease.
	 
	 	 	 	 
	DEPOSIT

	 	:
	 	HK$868,086.96 i.e. 6 months’ Rent, Service Charges,
rates and Government Rent (the latter two items based on 8% of
the annual rentals) which is subject to increase in accordance
with this Lease and
payable in the manner in accordance with Clause 5 of this
Agreement.
	 
	 	 	 	 
	ADVANCE PAYMENT

	 	:
	 	HK$144,681.16 i.e. one month’s Rent, Service Charges,
rates and Government Rent.
	 
	 	 	 	 
	PERMITTED USE

	 	:
	 	Research and development of products, services and
processes including engineering and advanced manufacturing (but
not mass production) in accordance with the cluster(s) of use as
stated in the Application and related customer support, sales
and marketing services.

22

 

SCHEDULE 2

Service Charges

	1.	 	The “Services” means:

	 	(a)	 	Maintaining cleaning operating lighting repairing replacing renewing
repainting
redecorating or otherwise treating the Building, the Common Parts and common
facilities of the Building and the Service Media, as the Landlord shall consider
appropriate (except where any tenant or occupier of the Building is responsible for
the same) and cooling the Building during the Service Hours.
	 
	 	(b)	 	Maintaining cleaning operating lighting repairing replacing renewing
decorating
landscaping and furnishing the Common Parts, common facilities, Service Media and
other parts of the Development, as the Landlord shall consider appropriate (except
where any tenant or occupier of the Development is responsible for the same) and
providing security, water, sewerage, refuse collection and other services to the
Development.
	 
	 	(c)	 	Cleaning maintaining repairing lighting and operating the roads
within the
Development (where they form part of the Common Parts) and providing and
maintaining street furniture and road signs.
	 
	 	(d)	 	Providing staff and administration and providing replacing and renewing
machinery
and equipment in each case required to provide the Services.
	 
	 	(e)	 	Effecting insurance cover in respect of the Building and such parts of the
Development as the Landlord shall deem appropriate in such amounts and against
such risks as the Landlord deems appropriate from time to time.
	 
	 	(f)	 	Providing any other services or facilities which the Landlord shall
reasonably think
appropriate for the benefit of the Building and the Development and their facilities
and amenities or the tenants and occupiers of the Development or visitors to it.

	2.	 	If at any time the costs of providing the Services have increased the Landlord may on one
month’s notice increase the Service Charges by an appropriate amount to reflect such
increase
in cost and thereafter such increased Service Charges shall then be payable and the
Landlord’s
assessment of the appropriate increase shall be conclusive (save in case of manifest error)
PROVIDED THAT:

	 	(a)	 	if the Tenant is the only tenant of all the lettable unit(s) of the Building it
shall pay all
Service Charges attributable to the Building;
	 
	 	(b)	 	if there are any lettable units in the Building which are unlet the Landlord
shall bear
the Service Charges attributable to those units.

	3.	 	Further increases in the Service Charges may be made in accordance with paragraph 2 of this
Schedule after an earlier notice of increase has become operative.

23

 

SCHEDULE 3 

Landlord’s Provisions

	 	 	 

	1. Building Function

	 	Office and Laboratory Building
	 
	 	 
	2. Total Gross Floor Area (m2)
(4/F Omitted)

	 	25,225 (Common lift core for two buildings)
	 
	 	 
	3. Gross Floor Area per floor (m2)
(4/F omitted)

	 	G/F:     5,766

1/F:     3,310
	 

	 	2/F:     3,189
	 

	 	3/F:     3,418
	 

	 	5/F:     3,368
	 

	 	6/F:     3,409
	 

	 	7/F:     2,765
	 
	 	 
	4. Number of Storeys

	 	1 level of Basement for carparking & E&M services
	 
	 	 
	 

	 	1 level of Retail/restaurant at G/F (parts of G/F of both
Lakeside 1 and 2 along Park Arcade)
	 
	 	 
	 

	 	2 levels of Technical Laboratory + 2 levels of
Interstitial E&M services zone (parts of G/F and 1/F at
West Wing of both Lakeside 1 and 2)
	 
	 	 
	 

	 	4 levels of Office for East Wing of Lakeside 2, 5 levels
for Lakeside 1 or 6 levels for East Wing of Lakeside 1
	 
	 	 
	 

	 	3 levels of business center or club house (East Wing of
Lakeside 2)
	 
	 	 
	 

	 	Roof and upper roof for E&M services
	 
	 	 
	5. Height of Building

	 	46.5 mPD (excluding Roof Top structures)
	 
	 	 
	6. Total Lettable Floor Areas (m2)

	 	Refer to Lettable Floor Areas Calculations
	 
	 	 
	7. Slab to Slab Floor Height for Laboratory
Floors

	 	West Wing of Lakeside 1
	 
	 	 
	 

	 	G/F and 1/F: 7m, 4.1m (under E/M interstitial floor)
	 
	 	 
	Structural Clearance and False Ceiling
Height (m) for Laboratory Floors

	 	- Lab Corridor (G/F)
	 
	 	 
	 

	 	structural clearance between floor slab and underside of
RC soffit of interstitial floor — 3.5m

	 

	 	clear false ceiling height — 2.9m

	 
	 	 
	 

	 	-Laboratory (G/F)
	 

	 	structural clearance between floor slab and underside of
waffle slab above - 6.1m

	 
	 	 
	 

	 	-Lab Corridor (1/F)
	 

	 	structural clearance between floor slab and underside of
RC 

soffit of interstitial floor - 3.5m

	 

	 	clear false ceiling height - 2.9m

	 
	 	 
	 

	 	- Laboratory (1/F)

24

 

	 	 	 

	 

	 	structural clearance between floor slab and
underside of waffle slab above — 6.6m
	 
	 	 
	8. Slab to Slab
Floor Height (m) for
R&D Office Floors,
and Data Centre

	 	West Wing of Lakeside 1 (R&D Offices)
 2/F-7/F: 4.5m
	 

	 	West Wing of Lakeside 1 (Data Centre)
	 

	 	2/F = 4.5m
	 

	 	3/F = 4.5m
	 
	 	 
	 

	 	East Wing of Lakeside 1 (R&D Offices)
	 

	 	Part 1/F: 7.5m
	 

	 	2/F-7/F:4.5m
	 
	 	 
	9. Finish Floor
to Ceiling Height
(m) — R&D Office
Floors and, Data
Centre

	 	West Wing of Lakeside 1 (R&D Offices)

2/F-7/F: 2.7m 

Building 15 Part 1/F: 4.5m
	 

	 	West Wing of Lakeside 1 (Data Centre)
	 

	 	2/F = 3.40m
	 

	 	3/F — 3.40m
	 

	 	(from the top of floating slab to the underside of
the beam)
	 
	 	 
	10. Loading of
Floor Slab at
Lettable Laboratory
Space

	 	15 kPa. (West Wing of Lakeside 1, G/F &1/F only)
	 
	 	 
	 

	 	Superimposed Dead Load:
	 

	 	• Floor finishes: 0.6 kPa
	 

	 	• Ceiling: N/A (G/F); 0.25 kPa (1/F)
	 

	 	• Services: N/A (G/F); 0.5 kPa (1/F)
	 
	 	 
	11. Loading of
Floor Slab at
Lettable R&D Office
Space, Data Centre
and Retail

	 	West Wing of Lakeside 1 (R&D Offices)

2/F-7/F: 

5 kPa
	 
	 	 
	 

	 	Superimposed Dead Load:
	 

	 	• Floor finishes: 0.6 kPa
	 

	 	• Services: 0.25 kPa
	 

	 	• Ceiling: 0.25 kPa
	 
	 	 
	 

	 	West Wing of Lakeside 1 (Data Centre)
	 

	 	Superimposed Dead Load:
	 

	 	• Floor finishes: 0.6 kPa
	 

	 	• Services: 0.5 kPa
	 

	 	• Ceiling : 0.25 kPa
	 
	 	 
	 

	 	Design Live Load 
= 7.5 kPa
	 
	 	 
	12. Loading of
Raised Floor at
Lettable R&D Office
Space and Floating
Floor at Data Centre

	 	West Wing of Lakeside 1 (R&D Offices)

2/F-7/F:

Live Load: 5 kPa 

Self-weight: 1 kPa

25

 

	 	 	 

	 

	 	West Wing of Lakeside 1 (Data Centre)
	 

	 	Live Load: 5 kPa
	 

	 	Self-weight: 1 kPa
	 
	 	 
	 

	 	Vibration resistance “Class B”
Performance for Floating Floor.
	 
	 	 
	 

	 	Floating floor provided for typical
data centre equipment installation,
i.e. Server rack and CRAC units, to
achieve vibration class of building
(Tenants to notify Building
Management for non-typical usage)
	 
	 	 
	13. Number of Dangerous Goods &
Electronics Gases Storages,
UPS room and Parking for
Delivery Vehicle

	 	N/A
	 
	 	 
	14. Facade

	 	Office:
	 

	 	double glazed insulated glass unit
w/ sun shading fins at office
external wall, GMS screen wall at
East Wing of Lakeside 1 & 2 upper
floors facing the auditorium
	 
	 	 
	 

	 	Other locations:
	 

	 	Stone cladding at G/F and 1/F, low-e
glazing, aluminium cladding,
aluminium louvers, aluminium
areofoils at various locations
Auditorium: Aluminium cladding,
low-e glazing
	 
	 	 
	15. Lifts

	 	Passenger lift
	 
	 	 
	 

	 	6 nos 1200kg/ 16p
	 

	 	Door 1100 x 2100 mm (WxH)
	 
	 	 
	 

	 	Service/fireman lift
	 

	 	1 no 2500kg
	 

	 	Door 1800 x 2600 mm (WxH)
	 

	 	1 no. 1800kg
	 

	 	Door 1600 x 2300 mm (WxH)
	 
	 	 
	16. Carparking

	 	Basement Carpark
	 
	 	 
	17. Suspended Ceiling

	 	Proprietary ceiling system for all rentable R&D office spaces
	 
	 	 
	 

	 	(No suspended ceiling provided for
laboratory spaces, Data Centre and
Retails)
	 
	 	 
	18. Raised Access Flooring System

	 	Proprietary type (bare type — no
finish) provided for all rentable
office spaces
	 
	 	 
	 

	 	(No raised floor provided for
laboratory spaces and Retail, 100 mm
thk RC floating slab for Data
Centre)
	 
	 	 
	19. Building core composition

	 	• Lifts and Lift Lobbies
	 

	 	• Common meeting rooms at alternate floors near common lift core areas
	 

	 	• Staircase
	 

	 	• Refuse Chutes
	 

	 	• Toilets/Pantry
	 

	 	• Plant rooms
	 

	 	• IT riser duct/room
	 

	 	• ELV riser duct/room
	 

	 	• Electrical meter room

26

 

	 	 	 

	20. Technical gases / liquids
provisions for the laboratories

	 	R&D Office Space 
N/A
	 
	 	 
	 

	 	Laboratory Space
	 
	 	 
	 

	 	Nitrogen, vacuum, compressed air and D.I. Water
	 
	 	 
	21. Electricity Supply for tenant areas

	 	150VA/sqm for R&D Office
	 

	 	375VA/sqm for Laboratory
	 

	 	Dual busduct / cable risers for resilience provided
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	LVSW SB/14/5 with 3200A ACB
	 

	 	Emergency power backup by 3 nos. Generator 750kVa
	 
	 	 
	22. Small Power Distribution for tenant
areas

	 	150 mm x 75mm cable trunkings provided inside tenant space
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Trunking to be installed by tenant
	 
	 	 
	23. Standby Power for the tenant areas

	 	30W/sqm / 12-hour standby for R&D Office 
60W/sqm / 12-hour standby for laboratory
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
 Lighting
requirement to be determined by tenant
	 
	 	 
	24. Separate earthing system for
electrostatic discharge provided for
tenant areas

	 	Laboratory Space and R&D Office Space

Additional provision of three separate earth pits
with empty ducts for
electrostatic discharge and other uses for each of
Lakeside 1 and 2.
	 
	 	 
	 

	 	Laboratory Space
	 

	 	A separate earth terminal on each floor for
electrostatic discharge.
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Earth terminal (3/F) 
Clean earth terminal (3/F)
	 
	 	 
	25. Lighting in tenant areas

	 	R&D Office Space
	 

	 	Low-glare fluorescent lighting panel. (integrated
with photo sensor in building outer perimeter zone)
	 

	 	Illumination 500 lux (average) at desktop level.
	 
	 	 
	 

	 	Laboratory Space:
 No
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Lighting and E-lighting to be provided by tenant
	 

	 	Existing lighting for OP inspection only, will be
dismantle after tenant move in

27

 

	 	 	 

	26. Air-conditioning

	 	R&D Office Spaces
	 

	 	A/C ducting & diffusers fitted to final
positions, completed with
VAV boxes, control zoned with thermostats.
	 
	 	 
	 

	 	Laboratory Spaces
	 

	 	Basic Air Handling Units (AHUs) provided in AHU
room to achieve general air-conditioning
(equivalent to Class 100,000 clean room
requirement). No air side equipment is provided
in tenant area. (Tenants to install their AHUs in
the AHU room for their specific clean room
requirement.)
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	100 mm CHWP (2/F & 3/F)
	 
	 	 
	 

	 	100mm standby CHWP (2/F & 3/F)
	 
	 	 
	27. Fire Fighting Provisions

	 	Fire hydrant / hose reel system and automatic
sprinkler system. AFA for plant room.
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Upper layer sprinkler only
	 
	 	 
	28. Security System

	 	CCTV cameras in public area.
	 

	 	Smart card access control, burglar alarm and
watchman tour system.
	 

	 	Bio-metrics access control for specific locations.
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Water alarm sensor at 2/F & 3/F
	 
	 	 
	29. Public Address System

	 	Lift lobby, corridor and toilet.
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
 Nil
	 
	 	 
	30. TV/Radio and SMATV
Broadcast Reception

	 	Up to splitter units at each floor ELV riser duct
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Nil
	 
	 	 
	31. Telecommuni-cations

	 	IP Phone for Reception and Building Management
Office.
	 

	 	Wireless network coverage for outdoor and
G/F public area.
	 

	 	Indoor Mobile Services for
Entrance Lobby, Lift car and Lift Lobby on each
floor.
	 

	 	Structured Cabling linking up Telephone outlet,
Fibre Optic outlet and Data / LAN outlet.
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)
	 

	 	Nil
	 
	 	 
	32. Information Technology

	 	Electronic Office Directory, Multimedia Display
and Interactive
Kiosk with network connectivity.
	 

	 	Intranet and Internet access.
	 

	 	Web-based video conference system.
	 

	 	VLAN assignment.
	 

	 	Video streaming system.
	 

	 	On-line reservation system.
	 
	 	 
	 

	 	Data Centre (West Wing of Lakeside 1)

28

 

	 	 	 

	 

	 	Nil
	33. Pantry

	 	Counter with sink, cold water and electric heater
hot water supply and cupboard. Reserved water and
drain connection points for tenants’ addition of
their own pantries (for R&D office except 5/F of
East Wing of Lakeside 1)
	 
	 	 
	34. Toilet

	 	Fully fitted, incorporating paper towel, soap
dispensers, refuse receptacles, hand dryers, cold
water and electric heater for hot water supply,
etc.
	 
	 	 
	 

	 	F & M toilets:
	 

	 	Water closet with concealed cistem, wash basin,
infrared wash basin mixer, wall basin faucet, wall
basin faucet, wall mount urinal with sensor &
partition, soap dispenser, hand dryer/ paper towel
dispenser/ waste receptacle, toilet paper holder,
sanitary napkin & tower receptacle, coat hook,
cold water and electric heater for hot water
supply for both Biotech Centre 1 and 2.
	 
	 	 
	 

	 	Disable toilets
	 

	 	Water closet with cistern, wash basin (with cold
water and electric heater for hot water supply),
basin mixer soap dispenser, toilet roll holder,
handrails & folding grab rail, automatic hand
dryer, waste receptacle, sanitary napkin & tower
receptacle for both Biotech Centre 1 and 2.
	 
	 	 
	35. Chemical Drain

	 	R&D Office Space
 N/A
	 
	 

	 	Laboratory Space
 Pipework only
	 
	 	 
	36. Fume exhaust

	 	R&D Office Space
 N/A
	 
	 	 
	 

	 	Laboratory Space 
Fume exhaust ductwork

29

 

	 	 	 	 	 

	SIGNED by Engnam Anthony TAN,

Chief Executive Officer

for and on behalf of the Landlord

whose signature is verified by:

	 	)

)

)

)

)
	 	

Yiu Chi Wing

Solicitor, Hong Kong SAR

Messrs. Baker & McKenzie

	 	 	 	 	 

	 	 	 	
	SIGNED by George William Haberlin

Director 

for and on behalf of the Tenant 

in the presence of:

	 	)

)

)

)

)
	 
	
	 

Szilvia Kozma

HKID No. R659507(2)

Cost Accountant

30

 

	 	 	 	 	 

	RECEIVED on or before the day and year first above
written of and from the Tenant the Deposit in the total
sum of HONG KONG DOLLARS EIGHT
HUNDRED AND SIXTY EIGHT THOUSAND
EIGHTY SIX AND CENTS NINETY SIX ONLY (of
which the sum of HK$810,570.72 shall be transferred
from the previous Lease entered into between the
Landlord and the Tenant dated 17 October 2007
(“Prior Lease”), which shall, upon the expiry of the
Prior Lease, be transferred to and form part of the
Deposit payable under this Lease, but without
prejudice to the Landlord’s right to deduct or withhold,
prior to or after such transfer, from the said sum of
HK$810,570.72 any amount for any losses, claims or
demands which the Landlord may have against the
Tenant under the Prior Lease and, in any such event,
the Tenant shall pay to the Landlord such amount as is
necessary to make up the total of the Deposit payable
under this Lease).

	 	)

)

)

)

)

)

)

)

)

)

)

)
)

)

)

)

	 	HK$868,086.96

31

 

LETTABLE AREA OF OFFICE UNIT / UNITS

PROPORTIONATE SHARE OF

UNIT NO. OFFICE AREA COMMUNAL TOILETS LIFT LOBBIES, LETTABLE AREA

PASSAGEWAYS, etc ON THE FLOOR

Note 1

The area contained within the enclosing wells of the Unit measured up to the external face
of an external wall or the centre line of a wall separating adjoining units.

Note 2

The proportionate shore of the communal areas include toilets, lift lobbies,
passageways etc. on that floor allocated for the use of the Tenant in
common with other tenants on that floor.

The Lettable Areas being calculated are in accordance with the definition of Lettable Area
as follows:

‘Lettable Area’ means the area contained within the enclosing walls of the Premises measured up to
the exterior lace of an external wall or the centre line of a wall separating adjoining units, as
the case may be. Enclosing walls separating the Premises from a lightwell, a lift shaft or any
similar vertical shaft, or a common area, shall be deemed an external wall and its full thickness
shall be included. All internal partitions and columns within the Premises shall be included. If
the Premises comprise or include a whole floor of the Building the Lettable Area shall include
areas on such floor which are exclusively allocated for the use of the Tenant including (without
limitation) toilets and lift lobbies but shall exclude areas to be used in common with others
including (without limitation) staircases, smoke lobbies, lift shafts and plant rooms. If the
Premises comprise or include one of two or more separately demised units making up a whole floor
of the Building the Lettable Area of the Premises shall include the areas on such floor which are
exclusively allocated for the use of the Tenant plus a proportionate share of the communal
toilets, lifts lobbies and passageways on such floor allocated for the use of the Tenant in
common with other tenants on that floor, such that the aggregate Lettable Areas of all units on
such floor would equal the Lettable Area of the floor if occupied as one single unit.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]