Document:

Exhibit 10.5

FORM OF 8% DEMAND NOTE MADE TO EACH OF WORLD ASSET MANAGEMENT, INC. AND
MICHEL G. LAPORTE

PROMISSORY NOTE

Dated: 

          FOR
VALUE RECEIVED, the undersigned, Methes Energies Canada Inc., a corporation
organized under the laws of Ontario (“Borrower”), hereby promises to pay to the
order of _________ (“Lender”), the principal sum of ____________ Dollars US
($_______), (the “Note”) which Lender has funded to Borrower (the “Loan”) from
the date hereof until payment in full at the rates and in the manner described
herein. Payments shall be made in immediately available United States dollar
funds on the day of payment.

This Note
along with its interest shall be due and payable on demand (the “Maturity
Date”). On the Maturity Date, the principal of this Note and all accrued and
unpaid interest thereon shall be paid to the Lender. 

          1.
The Note shall bear interest at the rate of 8 % per annum “Interest Rate” and
shall commence accruing on the first day after the date hereof on the principal
amount of the Loan and thereafter until full payment.

          2.
All notices, demands, approvals and other communications provided for herein
shall be in writing and may be delivered by personal delivery, by prepaid
overnight courier service or by facsimile, addressed to the intended recipient
at the address specified below, or at such other address as my be specified in
a written notice delivered by registered mail or courier. Any notice shall be
deemed delivered upon actual receipt by the party to whom it is address after
personal delivery or by registered mail or courier on the date on which a
signed delivery receipt is given.

	
  

 	
  

 
	
  

 	
 To the
 Borrower:

 
	
  

 	
  

 
	
  

 	
 Methes
 Energies Canada Inc.

 
	
  

 	
 4170
 Sladeview Crescent (Unit 5)

 
	
  

 	
 Mississauga,
 Ontario L5L 0A1

 
	
  

 	
 FAX: (866)
 276-9589

 
	
  

 	
  

 
	
  

 	
 To the
 Lender:

 
	
  

 	
  

 
	
  

 	
 [                              ]

 

          3.
Borrower hereby waives presentment and demand for payment, notice of dishonor,
protest and notice of protest of this Note and agrees to perform and comply
with each of the terms, covenants and provisions contained in this Note on the
part of Borrower to be observed or performed. No release of any security for
the principal sum due under this Note or extension of time for payment of this
Note, or any installment hereof, shall release, discharge, modify, change or
affect the liability of Borrower under this Note.

          4.
The terms of this Note shall be governed and construed under the laws of the
Province of Ontario. Borrower hereby agrees that, in the event Borrower
breaches its obligations hereunder, any court located in the Province of
Ontario shall have jurisdiction to hear any suit, action or proceeding brought
by Lender arising out of or in connection with such breach. Borrower hereby
acknowledges and irrevocably consents and submits to the jurisdiction of such
courts in any such suit, action or proceeding.

          5.
Time is of the essence with respect to every provision hereof. This Note shall
inure to the benefit of Lender, its successors, heirs, and representatives and
shall binding on Borrower and its successors, heirs, and representatives. 

          6.
This Note may not be modified or terminated orally but only by an agreement in
writing signed by the party against whom enforcement of such change or
termination is sought until paid in full.

          IN
WITNESS WHEREOF, this Note has been duly executed by the Borrower as of the
____ day of _____.

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Methes
 Energies Canada Inc.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 
	
  

 	
 Witness

 	
  

 	
  

 
	
  

 	
 Name:Exhibit 10.6 

[LOGO OMITTED]

Dated this 5th day of November, 2007

THE ERIN MILLS DEVELOPMENT CORPORATION 

- and - 

METHES ENERGIES CANADA INC.

	
  

 
	

 

 
	

 

 
	
  

 
	
 LEASE

 
	
  

 
	

 

 
	

 

 

TABLE OF CONTENTS

	
  

 	
  

 	
  

 
	
 1.

 	
 DEMISE

 	
 3

 
	
  

 	
  

 	
  

 
	
 2.

 	
 TERM

 	
 3

 
	
  

 	
  

 	
  

 
	
 3.

 	
 RENT

 	
 3

 
	
  

 	
  

 	
  

 
	
 4.

 	
 TENANT’S
 COVENANTS

 	
 4

 
	
  

 	
  

 	
  

 
	
 5.

 	
 INSURANCE

 	
 9

 
	
  

 	
  

 	
  

 
	
 6

 	
 INDEMNITY

 	
 13

 
	
  

 	
  

 	
  

 
	
 7.

 	
 SUBORDINATION
 AND ATTORNMENT

 	
 13

 
	
  

 	
  

 	
  

 
	
 8.

 	
 CONDITION OF
 DEMISED PREMISES

 	
 14

 
	
  

 	
  

 	
  

 
	
 9.

 	
 DEFAULT

 	
 14

 
	
  

 	
  

 	
  

 
	
 10.

 	
 RE-ENTRY BY
 LANDLORD

 	
 15

 
	
  

 	
  

 	
  

 
	
 11.

 	
 WAIVER OF
 EXEMPTION FROM DISTRESS

 	
 16

 
	
  

 	
  

 	
  

 
	
 12.

 	
 REMOVAL OF
 CHATTELS

 	
 16

 
	
  

 	
  

 	
  

 
	
 13.

 	
 OVERHOLDING

 	
 16

 
	
  

 	
  

 	
  

 
	
 14.

 	
 LANDLORD’S
 COVENANTS

 	
 16

 
	
  

 	
  

 	
  

 
	
 15.

 	
 DAMAGE AND
 DESTRUCTION

 	
 17

 
	
  

 	
  

 	
  

 
	
 16.

 	
 EXPROPRIATION

 	
 18

 
	
  

 	
  

 	
  

 
	
 17.

 	
 CONDONING

 	
 18

 
	
  

 	
  

 	
  

 
	
 18.

 	
 RENT PAST
 DUE

 	
 19

 
	
  

 	
  

 	
  

 
	
 19.

 	
 ADDITIONAL
 RENT

 	
 19

 
	
  

 	
  

 	
  

 
	
 20.

 	
 RULES AND
 REGULATIONS

 	
 19

 
	
  

 	
  

 	
  

 
	
 21.

 	
 REPAIRS BY
 LANDLORD

 	
 19

 
	
  

 	
  

 	
  

 
	
 22.

 	
 NOTICE

 	
 19

 
	
  

 	
  

 	
  

 
	
 23.

 	
 ENVIRONMENTAL
 AUDIT

 	
 20

 
	
  

 	
  

 	
  

 
	
 24.

 	
 SECURITY
 DEPOSIT

 	
 21

 
	
  

 	
  

 	
  

 
	
 25.

 	
 REGISTRATION

 	
 21

 
	
  

 	
  

 	
  

 
	
 26.

 	
 UNAVOIDABLE
 DELAY

 	
 22

 
	
  

 	
  

 	
  

 
	
 27.

 	
 PROPORTIONATE
 SHARE

 	
 22

 
	
  

 	
  

 	
  

 
	
 28.

 	
 ENTIRE
 AGREEMENT

 	
 22

 
	
  

 	
  

 	
  

 
	
 29.

 	
 OPTION TO
 RENEW

 	
 22

 
	
  

 	
  

 	
  

 
	
 30.

 	
 LIENS

 	
 23

 
	
  

 	
  

 	
  

 
	
 31.

 	
 INTENT AND
 INTERPRETATION

 	
 23

 
	
  

 	
  

 	
  

 
	
  

 	
 SCHEDULE “A” — Legal Description 

 SCHEDULE “B” — Site Plan 

 SCHEDULE “C” — Rules and Regulations 

 SCHEDULE “D” - Special Conditions

 	
  

 

2

THIS INDENTURE
made as of the 5th day of November 2007. 

BETWEEN: 

	
  

 	
  

 
	
  

 	
 THE ERIN MILLS
 DEVELOPMENT CORPORATION, a Corporation incorporated under the laws of the
 Province of Ontario hereinafter called the “Landlord” 

 
	
  

 	
  

 
	
  

 	
 OF THE FIRST PART

 
	
  

 	
 - and -

 
	
  

 	
  

 
	
  

 	
 METHES
 ENERGIES CANADA INC., a Corporation incorporated under the laws of the
 Province of Ontario hereinafter called the “Tenant”

 
	
  

 	
  

 
	
  

 	
 OF THE SECOND PART

 

	
  

 	
  

 
	
 1.

 	
 DEMISE 

 

          In
consideration of the rents, covenants and agreements reserved and contained on
the part of the Tenant to be paid, observed and performed, the Landlord by these
presents does demise and lease unto the Tenant that certain real property
situated at 4170 Sladeview Crescent, Unit 5, lying and being in the City of
Mississauga in the Regional Municipality of Peel and being the premises (the
“Demised Premises”) outlined in red on the sketch hereto annexed of the
building (the “Building”) located on the lands (the “lands”) referred to in
Schedule “A” hereto. The parties acknowledge and agree that, for the purposes
of all financial calculations herein, the gross floor area of the Demised
Premises shall be conclusively deemed to be six thousand, three hundred and
nineteen (6,319) square feet. 

	
  

 	
  

 
	
 2.

 	
 TERM 

 

          TO
HAVE AND TO HOLD the Demised Premises for and during the term (the “Term”) of
five (5) years commencing on the 1st day of January, 2008 (the “Commencement
Date”) and from thenceforth next ensuing and fully to be completed and ended on
the 31st day of December, 2012. 

	
  

 	
  

 
	
 3.

 	
 RENT 

 

          The
Tenant shall pay from and after the Commencement Date and throughout the Term
to the Landlord at the office of the Landlord, or at such other place
designated by the Landlord, in lawful money of Canada, without any prior demand
therefor and without any deduction, abatement, set-off or compensation
whatsoever, as Minimum Rent, the annual amounts based upon annual rates per
square foot of the gross floor area of the Demised Premises all as set out in
the following table. Minimum Rent is payable in advance in equal consecutive
instalments on the first day of each calendar month of each year of the Term,
in the monthly amounts set out in the following table and will be prorated on a
daily basis for any fractional portion of a month at the beginning or end of
the Term. The table is as follows: 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Period of
 Time

 	
  

 	
 Annual

 Minimum Rent

 	
  

 	
 Monthly

 Minimum Rent

 	
  

 	
 Annual Rate

 Per Square Foot

 	
  

 
	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 
	
  

 
	
 Year 1

 	
  

 	
 $

 	
 54,975.36

 	
  

 	
 $

 	
 4,581.28

 	
  

 	
 $

 	
 8.70

 	
  

 
	
 Year 2

 	
  

 	
 $

 	
 55,291.20

 	
  

 	
 $

 	
 4,607.60

 	
  

 	
 $

 	
 8.75

 	
  

 
	
 Year 3

 	
  

 	
 $

 	
 55,607.16

 	
  

 	
 $

 	
 4,633.93

 	
  

 	
 $

 	
 8.80

 	
  

 
	
 Year 4

 	
  

 	
 $

 	
 55,923.12

 	
  

 	
 $

 	
 4,660.26

 	
  

 	
 $

 	
 8.85

 	
  

 
	
 Year 5

 	
  

 	
 $

 	
 56,239.08

 	
  

 	
 $

 	
 4,686.59

 	
  

 	
 $

 	
 8.90

 	
  

 

3

The Tenant
shall receive the month of January, 2008 Minimum Rent free only, however during
such period the Tenant hereby acknowledges and agrees that it shall remain
responsible for the payment of taxes, maintenance, insurance andutilities in
accordance with the Lease and shall remain bound by all of the terms,
conditions and covenants contained in the Lease. 

	
  

 	
  

 	
  

 
	
 4.

 	
 TENANT’S
 COVENANTS 

 
	
  

 	
  

 
	
  

 	
 The Tenant
 covenants and agrees with the Landlord as follows:

 
	
  

 	
  

 
	
  

 	
 (b)

 	
 (i) From the
 Commencement Date until December 31st following, to pay as additional rental
 on the 1st day of each and every month the amount that is required to be paid
 to satisfy the Tenant’s responsibility for Taxes during such period.
 Commencing on the 1st day of January next following the Commencement Date and
 yearly thereafter, to pay as additional rental on the 1st day of each and
 every month for the twelve months of the calendar year one-twelfth of the
 yearly amount of Taxes attributable to the Demised Premises.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii) If the
 Demised Premises are assessed separately from the remainder of the Building,
 the Tenant’s shall pay the amount of Taxes assessed against the Demised
 Premises. If the Demised Premises are not assessed separately from the
 remainder of the Building, the Tenant shall pay its Proportionate Share of
 Taxes.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii) For
 the purposes of this Lease, “Taxes” means all taxes, licenses, fees, real
 property taxes, rates, duties and assessments (including local improvement
 and commercial concentration taxes), impost charges or levies, whether
 general or special, that are levied, rated, charged or assessed against the
 lands and Building and/or the Demised Premises from time to time by any
 lawful taxing authority, whether federal, provincial, municipal, school or
 otherwise, but not including taxes on the income of the Landlord or capital
 gains taxes, and including any taxes or other amounts which are imposed in
 lieu of or in addition to any Taxes, whether of the foregoing character or
 not and whether in existence at the Commencement Date or not.

 

          (c)
If the Tenant or any person, firm or corporation occupying the Demised Premises
or any part thereof shall elect to have the Demised Premises or any part
thereof assessed for separate school taxes, the Tenant shall pay as additional
rent the amount by which the separate school taxes exceed the amount which
would be payable by the Landlord for Taxes had such election not been made. 

          (d)
The Tenant shall also pay as additional rent to the Landlord on demand the
amount, if any, by which the actual Taxes exceed any estimated amount. If,
before any sum or sums paid by the Tenant to the Landlord on account of Taxes
shall have been paid towards Taxes, there shall be default by the Tenant in respect
to any payment of rent herein provided, the Landlord may at its option apply
such sum or sums in or towards payment of rent in default. If the Tenant
desires to take advantage of any discounts or incurs any penalties in
connection with the payment of Taxes, it shall pay the Landlord such additional
amounts as are required for that purpose. The Tenant further covenants and
agrees to transmit to the Landlord the assessment notices, tax bills and other
notices affecting the imposition of Taxes forthwith after the receipt of same
by the Tenant. 

          (e)
To pay to the Landlord as additional rent from time to time as and when they
become due its Proportionate Share of all Taxes now or at any time during the
Term rated, charged, levied or assessed upon or in respect of the common areas
and facilities 

4

(as
hereinafter defined) and including, but without limiting the generality of the
foregoing, its Proportionate Share of all business taxes, if any, from time to
time payable by the Landlord in respect of the said common areas and facilities
or any part thereof. Common Areas and Facilities shall, for the purpose of this
Lease, mean all of the lands not for the time being demised by the Landlord and
not covered by any building (other than any service building for the general
benefit of all tenants of the said Lands) and those portions of the Building
that do not constitute rentable premises and shall include any improvements
thereon and thereto. 

          (f)
In addition to the Taxes hereinbefore set out, the Tenant shall pay as
additional rent to the Landlord, at the same time or times as the Tenant shall
make payment of either or both of Minimum Rent and/or additional rent, all
Goods and Services Tax payable with respect to such Minimum Rent and/or additional
rent pursuant to the Excise Tax Act (Canada). 

          (g)
In each and every year during the term hereof to pay, satisfy and discharge
directly or to the Landlord, as the case may be, all charges in connection with
water, electric current, gas, rental charges for the hot water heater and other
public or private utilities and services supplied at any time to the Demised
Premises. 

          (h)
To indemnify and keep indemnified the Landlord in respect of all losses, costs,
charges, penalties and expenses occasioned by or arising from the non-payment
of any and every tax, rate, assessment, charge, expense or fee, including any
business or similar tax assessed against the Tenant or any other persons
occupying or using the Demised Premises or any part thereof, and provided that
the same shall not be of a kind personal to the Landlord such as taxes on the
income of the Landlord, and corporation taxes of the Landlord. It is hereby
agreed that when and so often as the Tenant neglects or omits to pay any of the
charges contemplated by the preceding sub-paragraphs hereof and by this clause,
then the Landlord may pay them and the Tenant shall forthwith pay to the
Landlord the full amount so paid by the Landlord together with an
administrative and supervisory fee equal to 15% of the amount so paid. 

          (i)
At its own expense, to promptly carry out all repairs, maintenance and
replacement and painting of the Demised Premises and of all machinery and
equipment including heating ventilating and air-conditioning equipment situated
therein and thereon (both inside and outside) and whether with or without
written notice from the Landlord, and to repair the Demised Premises or any
part thereof, reasonable wear and tear not inconsistent with the maintenance of
the Building or the Demised Premises suitable as a first class industrial
building, and damage by fire and all other insured risks only excepted.
Provided that, in the event of the default of the Tenant under the provisions
hereof, the Landlord may itself comply with any such requirements and the
Tenant shall forthwith upon demand pay all costs incurred by the Landlord in
this regard plus an administrative and supervisory fee equal to 15% thereof as
additional rent. 

          (j)
At its own expense, to keep entrance ways and all steps and platforms leading
to the Demised Premises clear of all snow, ice and debris. 

          (k)
To promptly comply with and conform to the requirements of all applicable
statutes, laws, by-laws, regulations, ordinances and orders from time to time
or at any time in force during the Term, whether the same affect the condition,
equipment, maintenance, use or occupation of the Demised Premises or otherwise
and to promptly comply with and conform to every applicable regulation, order
and requirement of the Insurance Advisory Organization or anybody having
similar function or of any liability or fire insurance company by which the
Landlord and Tenant or either of them may be insured at any time during the
Term. In the event of the default of the Tenant under the provisions hereof,
the Landlord may itself comply with any such requirements and the Tenant will
forthwith pay as additional rent all costs and expenses incurred by the
Landlord together with an administration and supervisory fee of 15% of the cost
thereof as additional rent in this regard. 

5

          (l)
To notify the Landlord, in writing, of any structural defects or weaknesses in
or about the Demised Premises of which it has or receives notice, and in the
event of any substantial damage to the Demised Premises by any cause, to give
notice in writing to the Landlord of such damage forthwith upon the same
becoming known to the Tenant, it being understood and agreed that the giving of
such notice shall not place any onus on the Landlord to make repairs unless the
Landlord is obligated to make such repairs pursuant to the terms of this Lease.

          (m)
To permit the Landlord and its agents, at all reasonable times to enter upon
and view the state of repair of the Demised Premises and to comply with all
reasonable requirements of the Landlord herein in writing with regard to the
care, maintenance and repair thereof, reasonable wear and tear not inconsistent
with the maintenance of the Building as a first-class industrial building and
damage by fire, lightning and tempest and all other insured risks and
structural defects only excepted. 

          (n)
That it is the absolute owner of all fixtures, goods and chattels that are to
be brought upon the Demised Premises. Tenant hereby covenants not to encumber
such fixtures, goods or chattels without the written consent of the Landlord
being first obtained. No fixtures, goods or chattels of any kind will except in
the ordinary course of business, be removed from the Demised Premises during the
Term without the prior written consent of the Landlord until all Minimum Rent
and additional rent to become due during the remainder of the Term shall have
been fully paid or the payment thereof secured to the satisfaction of the
Landlord. 

          (o)
That upon the expiration of the Term, the Tenant will peaceably quit and
deliver up the Demised Premises to the Landlord and that it will leave the
Demised Premises in good repair, reasonable wear and tear not inconsistent with
the maintenance of the Building as a first class industrial building and damage
by fire, lightning and tempest, and all other insured risks and structural
defects only excepted. 

          (p)
That it will not carry on or permit to be carried on in the Demised Premises or
thereon any business or activity which shall be deemed upon reasonable grounds
to be a nuisance and the Demised Premises shall be used only for operating
biodiesel production showcase and ancillary administration offices and for no
other purpose. 

          (q)
The Tenant shall not use or permit to be used all or any part of the Demised
Premises for any dangerous, noxious or offensive trade or business. The Tenant
shall not carry on any auction, fire or bankruptcy sales, going-out-of-business
sales, or sales of used, distress or out-dated merchandise upon the Demised
Premises without the prior written consent of the Landlord. 

          (r)
During the Term, any stranger who is a prospective purchaser or tenant may
inspect the Demised Premises or any part thereof at reasonable times on
producing an order to that effect signed by the Landlord; provided that such
inspections shall not impinge on the classified nature of the business of the
Tenant, if any, and provided that the Tenant may elect to cause its employees or
agents to be present at the time of such inspections. 

          (s)
To assume the sole responsibility for the condition (structural defects
excepted), operation, maintenance and management of the Demised Premises and to
heat the same with the heating equipment supplied by the Landlord. The Landlord
shall be under no liability for damage to the property of the Tenant or of any
other person at or in the Demised Premises which is or may at any time be on
the Demised Premises, on any account or for any reason whatsoever. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  (t)

 	
 (i) The
 Tenant, provided it is not in default hereunder may, with the consent of the
 Landlord in writing first had and obtained, which consent will not to be
 unreasonably withheld, assign or sublet the Demised Premises. In the event the
 Tenant intends to assign, sublet or part with the possession of all or 

 	 

6

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 any part of
 the Demised Premises (hereinafter collectively called the “Transfer”), the
 Tenant shall deliver to the Landlord notice in writing of such intention and
 the Landlord shall have sixty (60) days from the date of the receipt of such
 notice within which to advise the Tenant that it consents or does not consent
 to such Transfer. It is a condition of the giving of any such consent by the
 Landlord that: (A) such consent shall not release the Tenant from any of its
 obligations under this Lease, which obligations shall be joint and several
 with such assignee or sub-lessee (“Transferee); (B) any such consent shall
 not deprive the Landlord of any of its rights hereunder with respect to any
 further Transfer; (C) the Transferee shall execute the Landlord’s standard
 form assumption of lease agreement agreeing to be bound by all of the terms
 of this Lease and to assume all of the terms, covenants, conditions, and
 agreements by this Lease imposed upon the Tenant; (D) the Tenant shall pay to
 the Landlord its administrative costs, in an amount of not less than three
 hundred dollars ($300.00), and legal fees whether or not such consent is
 granted; and (E) the Landlord may in its sole and uncontrolled discretion
 refuse to give its consent to any Transfer by the Tenant of less than the
 whole of the Demised Premises notwithstanding any statutory authority to the
 contrary.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii) If the
 Tenant is a corporation or if the Landlord has consented to a Transfer to a
 corporation, any transfer or issue by sale, assignment, operation of law or
 other disposition (other than by bequest or inheritance) or by subscription
 from time to time of all or any part of the corporate shares of the Tenant or
 of any parent or subsidiary corporation of the Tenant or any corporation
 which is an associate or an affiliate of the Tenant (as those terms are
 defined by the Business Corporations Act, 1990, of Ontario and any amendments
 thereto) which results in any change in the present voting control at the
 date of execution of this Lease (or at the date a Transfer to a corporation
 is permitted) and which does not receive the prior written consent of the
 Landlord as aforesaid shall be deemed to be a Transfer and shall be subject
 to what is hereinbefore in this sub-clause set forth. The Tenant shall give
 the Landlord access to its corporate books and records and those of its
 associated and affiliated corporations at all reasonable times and from time
 to time in order that the Landlord may review the same and determine whether
 there has in fact been a change of corporate control. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)
 Provided, however, that sub-section 4(t) (ii) shall not apply to the Tenant
 if and so long as: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (A) the
 Tenant is a public corporation whose shares are traded and listed on any
 recognized stock exchange in Canada or the United States; or

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 (B) the
 Tenant is a private corporation but is controlled by a public corporation
 defined as aforesaid;

 	 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 so long as
 in either of cases (A) and (B), prior to or as soon as reasonably possible
 after any such change of control of the Tenant, the Landlord receives
 assurances satisfactory to the Landlord that there will be a continuity of
 the existing management of the Tenant of its business practices and policies
 (including those affecting the advertising and promotion of the

 

7

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 business in
 the Demised Premises), notwithstanding any such change of control.

 

          (u)
Not to place anything on the roof, whether signs or otherwise or in any way
make any openings in the roof for stacks or other purposes whatsoever without
the written consent of the Landlord. 

          (v)
Not to use any outside garbage or other containers or allow any ashes, refuse,
garbage or other loose or objectionable material to accumulate in or about the
Demised Premises and will at all times keep the Demised Premises in a clean and
wholesome condition. Further the Tenant will not store or cause to be stored
outside of the Demised Premises any of its inventory of stock in trade or raw
materials. 

          (w)
All loading and unloading of merchandise, supplies, materials, garbage, refuse
and other chattels shall be made only through or by means of such doorways or
corridors as the Landlord shall designate in writing from time to time. Garbage
and refuse shall be contained in containers of a type approved by the Landlord
in writing. 

          (x)
To keep well painted at all times the interior of the Demised Premises in
accordance with the reasonable requests of the Landlord, provided that, except
as is otherwise herein provided for the making of repairs and general
maintenance of the premises, the Landlord shall not require the Tenant to
repaint the inside of the Demised Premises more often than once every five (5)
years of the Term or any renewal thereof. 

          (y)
The Tenant acknowledges that the Demised Premises may form part of a larger
project and that a part or the whole of the project may be served by one
sprinkler system and in the event that repairs are necessary to the sprinklers
in any portion of the entire project, save by reason of the neglect of the
Landlord or the Tenant or Tenants occupying other portions of the entire
project, their servants or agents and save by reason of structural defects,
then the Tenant covenants to pay as additional rent to the Landlord on demand
that portion of the total cost of such repairs which the floor area of the
Demised Premises bears to the floor area of all rentable premises in the
project. The Tenant shall provide reasonable access to the Demised Premises to
the workmen making the repairs herein contemplated. 

          (z)
The Tenant acknowledges and agrees that walls of the Demised Premises may be
party walls to be used by the occupants of premises adjoining the same or by
the Landlord and the Tenant covenants and agrees that as to any repair required
to any party wall, it will bear one-half of the cost of such repair, payable as
additional rent on demand, unless such repair is made necessary wholly by reason
of the neglect or wilful conduct of the Tenant or any person in the Demised
Premises with the consent of the Tenant, in which case the Tenant shall be
responsible for the entire cost of such repair. In the event that such repairs
are made necessary wholly by reason of the neglect or willful conduct of the
Landlord or the occupant of the adjoining premises, then no part of the cost of
the repair shall be borne by the Tenant. 

          (aa)
To pay to the Landlord, as additional rent, the costs incurred by the Landlord
in carrying out regular inspections of and preventive maintenance for the
heating, ventilating and air conditioning systems serving the Demised Premises.

          (bb)
(i) To pay to the Landlord by monthly installments (fixed from time to time by
the Landlord) as additional rent, its Proportionate Share of the cost of
cleaning, lighting, snow removing, supervising, policing, insuring and
maintaining and administering, including such repairs and replacements of
paving, curbs, walkways, landscaping and drainage as may be from time to time
necessary, and other costs which may be reasonably incurred with respect to the
common areas and facilities, structural defects excepted; 

	
  

 	
  

 	
  

 
	
  

 	
 (ii) The
 manner in which the said common areas and facilities shall be maintained and
 the expenditures therefore shall be at the sole discretion of the Landlord. 

 	 

8

	
  

 	
  

 	
  

 
	
  

 	
 (iii) The
 Tenant agrees that in the event the Landlord for any reason whatsoever
 performs any function resulting in the improvement, maintenance or repair of
 the Building or the Demised Premises, then in addition to the cost of such
 improvement, maintenance or repair, the Landlord shall be entitled to its
 usual management and supervisory fee with respect thereto. 

 	 
	
  

 	
  

 	 
	
  

 	
  (iv) Each twelve month period ending on
 December 31st, shall be deemed to be an accounting year for adjusting the
 said costs respecting the said common areas and facilities and within thirty
 days after the end of each such accounting year, the Landlord shall compute
 the said costs for such accounting year and the Tenant’s Proportionate Share
 thereof and shall submit to the Tenant a statement showing such Proportionate
 Share and, in reasonable detail, the basis of the costs and the Proportionate
 Share of the Tenant. To the extent that the Tenant’s Proportionate Share of
 such cost for an accounting year shall be greater or less than the total
 amount actually paid by the Tenant by said monthly payments in respect of
 such year, the difference shall be paid by the Tenant to the Landlord or by the
 Landlord to the Tenant, as the case may be, within 10 days after the receipt
 of such statement by the Tenant. The said accounting period may be modified
 at the commencement or termination of the Lease, or by agreement. 

 	 

          (cc)
Upon the commencement of this Lease, the Tenant shall pro rata, adjust,
apportion and allow between itself and the Landlord, as may be necessary, upon
the said date, water rates, hydro charges, gas charges, Taxes, business taxes,
insurance premiums and other charges payable by the Tenant hereunder and upon
the termination of this Lease, the parties shall again pro rata, adjust,
apportion and allow between themselves as of the said date of such termination
all of the said items and any part of the Taxes and other charges which the
Tenant is herein required to pay, to the intent that the burden thereof shall
be borne by the Landlord until the commencement of this Lease and by the Tenant
thereafter until it shall deliver up possession of the said Demised Premises in
accordance with the provisions hereof at the end of the Term or any holding
over thereafter. 

          (dd)
Notwithstanding anything provided for in this Lease, if the Landlord elects to
itself purchase any Utility (as defined in this Lease) for the Building and then
sell same to the tenants of the Building, or if the Landlord appoints a
particular supplier or suppliers as exclusive supplier or suppliers of a
Utility to the Building, the Tenant shall satisfy all of its needs for such
Utility through the Landlord or its appointed supplier or suppliers, as the
case may be, provided that, in no event shall the Tenant be required to pay
more for any such Utility than it would otherwise be required to pay if it
obtained same as a single consumer, and in no event shall the Landlord be
accountable to the Tenant for any profit, rebate or other form of compensation
realized by the Landlord from any such arrangement. 

          (ee)
Notwithstanding any other provision contained in this Lease, in the event that,
in the opinion of the Landlord, any realty taxes or other tax, cost, charge or
expense is/are directly attributable to a unit or a tenant’s use and occupation
of the said unit, the Landlord may allocate such cost and expense solely to
that unit. 

	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
 INSURANCE 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 The Landlord
 shall obtain and maintain at the sole expense and cost of the Tenant, the
 following insurance: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 “All Risks”
 Insurance on the Demised Premises (including 

 

9

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 the
 foundations and excavations) and the machinery, boilers and equipment
 contained therein or servicing the Leased Premises and owned by the Landlord
 (excluding any property with respect to which the Tenant is obliged to
 insure);

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (ii)

 	
 Flood, sewer
 backup, earthquake and water damage insurance; 

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (iii)

 	
 Replacement
 cost cover, stated amount co-insurance, and increased costs due to by-laws;

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (iv)

 	
 Rental
 income insurance;

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (v)

 	
 Broad form
 boiler and machinery insurance on a repair and replacement basis, including
 increased costs due to by-laws;

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (vi)

 	
 Such other
 forms of insurance as the Landlord or its mortgagee reasonably considers
 advisable.

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 Such
 insurance shall be in such reasonable amounts and with such reasonable
 deductions as would be carried by a prudent owner of a reasonably similar
 building, having regard to size, age and location. Notwithstanding any
 contribution by the Tenant to the cost of the insurance premiums provided
 herein, the Tenant acknowledges and agrees that: (I) no insurable interest is
 conferred upon the Tenant under any policies of insurance carried by the
 Landlord: and (ii) the Tenant has no right to receive any proceeds of any
 such insurance policies carried by the Landlord.

 

          (b)
The Tenant shall throughout the entire Term at its sole cost and expense, take
out and keep in full force and effect the following insurance in the name of
the Tenant, and the Landlord and any mortgagee of the Lands as additional
insured, as their respective interests may appear:

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 i.

 	
 Property
 Insurance -All risks property insurance including flood, earthquake and
 collapse, on: 

 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 1.

 	
 Tenant’s
 improvements: Property of every description owned by the Tenant, or for which
 the Tenant is legally liable or which is installed by or on behalf of the
 Tenant and which is located within the Building including, without
 limitation, fittings, installations, alterations, additions, partitions,
 fixtures and anything in the nature of a leasehold improvement (but
 specifically including the Tenant’s stock-in-trade, furniture and moveable
 equipment), in an amount of not less than ninety percent (90%) of the full
 replacement cost thereof.

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 2.

 	
 Tenant’s
 Stock-in-Trade, Furniture and Moveable Equipment: The Tenant’s
 stock-in-trade, furniture and moveable equipment in an amount not less than
 ninety percent (90%) of the full replacement cost thereof. If there is a
 dispute as to the amount which comprises full replacement cost, the decision
 of the Landlord shall be conclusive.

 	 
	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 3.

 	
 Business
 interruption: Business interruption insurance 

 	 

10

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 in such form
 and in such amount as will reimburse the Tenant for direct loss of earnings
 and for extra expenses necessarily incurred to continue the Tenant’s business
 or attributable to prevention of access to the Demised Premises or the
 Building as a result of an insured peril.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 4.

 	
 Boiler and
 Machinery: Broad form Boiler and Machinery insurance on a blanket repair and
 replacement basis with limits for each accident in an amount not less than
 the replacement cost of all leasehold improvements, boilers, pressure
 vessels, air-conditioning equipment, process equipment and miscellaneous
 electrical apparatus owned by the Tenant, or for which the Tenant may be
 liable or operated by the Tenant or by others (other than the Landlord) on
 behalf of the Tenant in the Demised Premises, or relating to or serving the
 Demised Premises.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Business
 interruption insurance as described in subclause 3 above with respect to
 perils insured in the Boiler and Machinery policy.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 5.

 	
 Plate Glass:
 Plate glass insurance insuring all exterior glass in the Demised Premises.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ii.

 	
 Casualty
 Insurance 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 1.

 	
 Commercial
 General Liability: Commercial General liability insurance insuring the
 Tenant’s occupancy and use of the Demised Premises including all activities
 and operations of the Tenant or others performing work or providing services
 on behalf of the Tenant at or away from the Demised Premises or for whom the
 Tenant is in law responsible, the use of the common facilities by the Tenant
 or others on behalf of the Tenant. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 This
 insurance shall contain at least the following coverages:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 a)

 	
 bodily
 injury and property damage, including loss of use of property; 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 b)

 	
 personal
 injury; 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 c)

 	
 blanket
 contractual liability; 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 d)

 	
 employer’s
 liability including contingent employer’s liability; 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 e)

 	
 products and
 completed operations; 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 f)

 	
 owner’s and
 contractor’s protective liability; and 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 g)

 	
 non-owned
 automobile insurance including blanket contractual liability (SEF #96) and
 liability for damage to hired vehicles. 

 	 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
  

 	
 The limits
 of insurance shall be $5,000,000 each occurrence bodily injury and property
 damage combined,

 

11

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 $5,000,000
 each occurrence personal injury and $5,000,000 each accident non-owned
 automobile or such higher limits as the Landlord, acting reasonably, requires
 from time to time. The general liability policy shall contain a severability
 of interests clause and a cross-liability clause.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 2.

 	
 Tenant’s
 Legal Liability: All risks tenant’s legal liability insurance for the
 replacement cost value of the Demised Premises including loss of use thereof.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 3.

 	
 Owned
 Automobile Insurance: Automobile liability insurance on the standard owner’s
 form providing limits of $2,000,000 each accident inclusive bodily injury and
 property damage, statutory accident benefits insurance, direct compensation
 insurance, uninsured automobile insurance and physical damage insurance on
 all vehicles not more than 10 years old, covering all licensed vehicles owned
 or operated by or on behalf of the Tenant.

 
	
  

 	
  

 	
  

 
	
  

 	
 iii.

 	
 Other
 Insurance

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Any other
 form of insurance as the Tenant, the Landlord or any mortgagee of the
 Building or lands, acting reasonably, requires from time to time in form, in
 amounts and for risks against which a prudent tenant would insure.

 

          (c)
All policies required to be written on behalf of the Tenant pursuant to
sections (b) i. 1, 2, 3 and 4 hereof shall contain the mortgagee’s standard
mortgage clause and all property policies shall contain a waiver of any
subrogation rights which the Tenant’s insurers may have against all and any of
the Landlord and those for whom the Landlord is in law responsible. 

          (d)
All policies shall be taken out with insurers acceptable to the Landlord,
acting reasonably, shall be in a form satisfactory from time to time to the
Landlord, shall be non-contributing with and shall apply only as primary
insurance and not excess to any other insurance available to the Landlord or
any mortgagee of the Building or lands and shall not be invalidated as respects
the interest of the Landlord or any such mortgagee, by reason of any breach or
validation by the Tenant or those for whom he is in law responsible of any warranties,
representations, declarations or conditions contained in the policies. 

          (e)
All policies shall contain an endorsement by the insurers to notify the
Landlord and any mortgagee of the Building or lands in writing not less than
thirty (30) days prior to any material change, suspension of insurance,
cancellation or termination thereof. 

          (f)
The Tenant agrees that certificates of insurance on the Landlord’s standard
form or, if required by the Landlord or any mortgagee of the Building or lands,
certified copies of each insurance policy, will be delivered to the Landlord as
soon as practicable after the placing of the required insurance. 

          (g)
The Landlord shall be added as additional insured with respect to General
liability policies but only with respect to liability arising out of the
Tenant’s use and operation at the Demised Premises. 

          (h)
The Tenant agrees that if the Tenant fails to take out or keep in force any
such insurance referred to in this section 5 or should any such insurance not
be approved by the Landlord, acting reasonably, and should the Tenant not
commence to diligently rectify (and thereafter proceed diligently to rectify)
the situation within 

12

forty-eight
(48) hours after written notice by the Landlord to the Tenant (stating if the
Landlord does not approve of such insurance, the reasons therefor) the Landlord
has the right, without assuming any obligation in connection therewith, to
effect such insurance at the sole cost of the Tenant and all outlays by the
Landlord shall be immediately paid by the Tenant to the Landlord as additional
rent on the first day of the next month following said payment by the Landlord,
without prejudice to any other rights and remedies of the Landlord under this
Lease. 

          (i)
The Tenant shall not keep, use, sell or offer for sale in or upon the Demised
Premises any article which may be prohibited by any fire insurance policy in
force from time to time covering the Demised Premises or the Building. If: 

	
  

 	
  

 	
  

 
	
  

 	
 (i) the
 occupancy of the Demised Premises; 

 	 
	
  

 	
  

 	 
	
  

 	
 (ii) the
 conduct of business in the Demised Premises; 

 	 
	
  

 	
  

 	 
	
  

 	
 (iii) the
 sale of any merchandise from or on the Demised Premises (whether or not the
 Landlord has consented to the sale of such merchandise) or in any other
 portion of the Building where permitted by the Landlord; or 

 	 
	
  

 	
  

 	 
	
  

 	
 (iv) any
 acts or omissions of the Tenant in the Building or any part thereof; 

 	 

causes or
results in any increase in premiums for the insurance carried from time to time
by the Landlord with respect to the Building, the Tenant shall pay any such
increase in premiums as additional rent forthwith after invoices for such
additional premiums are rendered by the Landlord. In determining whether
increased premiums are caused by or result from the use or occupancy of the
Demised Premises, or the sale of any article therein or therefrom, a schedule
issued by the organization computing the insurance rate on the Building showing
the various components of such rate shall be conclusive evidence of the several
items and charges which make up such rate. 

	
  

 	
  

 
	
 6.

 	
 INDEMNITY 

 

The Tenant
hereby covenants and agrees with the Landlord to indemnify, protect and save
harmless the Landlord, its directors, officers, employees and shareholders,
from any and all liability, costs, claims, demands or actions for damages,
injury, sickness, disease or death or property damage including loss of use
thereof or loss, suffered or sustained, or alleged to have been suffered or
sustained, by any person, persons or organization in or about the Demised
Premises or any part thereof or arising out of the activities or operations of
the Tenant, its directors, officers, employees of shareholders or of others
acting on the Tenant’s behalf whether on or off the Demised Premises occasioned
by the Tenant, its customers, directors, officers, employees, shareholders,
servants or agents, or by their neglect, default, error or omission or
misconduct. 

	
  

 	
  

 
	
 7.

 	
 SUBORDINATION
 AND ATTORNMENT 

 

          This
Lease and everything herein contained shall be deemed to be subordinate to any
mortgage or charge from time to time created by the Landlord with respect to
the Building or lands. The Tenant covenants and agrees that it will promptly,
at any time and from time to time as required by the Landlord, during the Term
execute all documents and give all further assurances as may be required to
effectuate the postponement of its rights and privileges hereunder to the
holder or holders of any such mortgage or charge. The Tenant covenants that it
will if and whenever reasonably required by the Landlord, and at the Landlord’s
expense, if necessary, consent to and become a party to any reasonable
instrument relating to this Lease, including the delivery of statements as to
the status of this Lease, which may be required by or on behalf of any
purchaser, mortgagee or insurer or other person, firm or corporation which may
have an interest in the Demised Premises. 

13

	
  

 	
  

 
	
 8.

 	
 CONDITION OF
 DEMISED PREMISES 

 

          The
Tenant acknowledges and agrees that it accepts the Demised Premises in their
present state and without any representation or warranty by the Landlord as to
their condition or as to the use which may be made thereof. Provided that if
the Tenant is not then in default hereunder, the Tenant shall remove its
fixtures at the end of the Term. Further, the Tenant shall, at the end of the
Term, remove all alterations, decorations, additions or improvements in or on
the Demised Premises as the Landlord shall, at its option, require to be
removed. The Tenant shall repair any damage occasioned by such removal and
shall remove any garbage or other trash and shall leave the Demised Premises in
a broom-swept clean condition. 

	
  

 	
  

 	
  

 	
  

 
	
 9.

 	
 DEFAULT 

 
	
  

 	
  

 	
  

 	 
	
  

 	
 (a)

 	
 Provided
 that if during the Term or any renewal thereof:

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (i) any of
 the goods and chattels of the Tenant shall be at any time seized or taken in
 execution or in attachment by any creditor of the Tenant; or

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (ii) if a
 writ of execution shall issue against the goods or chattels of the Tenant; or

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (iii) if the
 Tenant shall execute any chattel mortgage with respect to any of its goods or
 chattels other than in the ordinary course of its business; or

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (iv) if the
 Tenant shall make an assignment for the benefit of creditors or commit any
 other act of bankruptcy as defined in The Bankruptcy Act of Canada or any
 amendment thereto or, becoming bankrupt or insolvent, shall take the benefit
 of any Act that may be in force for bankrupt or insolvent debtors; or

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (v) shall
 abandon or attempt to abandon the Demised Premises; or

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (vi) to sell
 or dispose of its goods or chattels so that there would not in the event of
 such sale or disposal be, in the opinion of the Landlord, a sufficient
 distress on the Demised Premises for the next accruing three (3) month’s rent
 and moneys accruing hereunder as rent;

 	 

then the
current month’s rent, together with the Minimum Rent and additional rent for
the three (3) months next ensuing shall immediately become due and payable and
the Term shall, at the option of the Landlord, forthwith become forfeited and
determined, in which event the Landlord may re-enter and take possession of the
Demised Premises as though the Tenant or any occupant or occupants of the
Demised Premises was or were holding over after the expiration of the Term,
without any right whatsoever. 

          (b)
Provided and it is hereby agreed that any obligation for payment to which the
Tenant is liable under the terms of this Lease and including, but without
limiting the generality of the foregoing, the Tenant’s Proportionate Share of
the costs of maintaining the common areas and facilities, insurance premiums,
Taxes, business taxes, rates and other charges as herein provided, shall be
treated as rent whether or not, the same are designated as “additional rent”
payable by the Tenant to the Landlord and for all purposes of this paragraph if
such charges shall then be in arrears, the same shall be deemed to be rent
owing under the terms of this Lease and the same may be recovered by the
Landlord in the same manner as rent as in this paragraph provided. 

          (c)
Provided that in the event the Landlord does not exercise its option to
terminate the Lease, it may nevertheless, at its option, make a re-entry in
order to minimize its damages and such re-entry shall be deemed to be on behalf
of the Tenant and 

14

notwithstanding
the same, the within Lease shall continue in full force and effect and such
re-entry or other action taken by the Landlord shall not relieve the Tenant of
any of its obligations hereunder. The options hereinbefore set out shall be
deemed to be properly exercised by the Landlord upon the Landlord sending by
prepaid registered mail addressed to the Tenant at the Demised Premises or left
upon the Demised Premises a notice stating which of the options the Landlord is
exercising and such notice may be sent either before or after the re-entry by
the Landlord. 

	
  

 	
  

 
	
 10.

 	
 RE-ENTRY BY
 LANDLORD 

 

          (a)
Provided, and it is hereby expressly agreed, that if and whenever the rent
hereby reserved or any part thereof, shall be unpaid on the date upon which the
same ought to have been paid, although no formal demand shall have been made
therefor, then it shall be lawful for the Landlord at any time thereafter, to
re-enter into and upon the Demised Premises or part thereof in the name of the
whole and to have, repossess and enjoy the same again, as of its former estate.

          (b)
In the event that the Tenant shall be in default of any of its covenants
hereunder, other than its covenant to pay rent, in addition to any other right
which the Landlord may have hereunder, the Landlord may give to the Tenant
notice in writing stating the said default with reasonably sufficient
particularity and requiring the said default to be remedied. If such default is
not remedied by the Tenant within fifteen (15) days after the receipt of such
notice or such longer period as may be reasonably necessary in view of the
nature of default, the Landlord may, at its option, either: 

	
  

 	
  

 	
  

 
	
  

 	
 (i) enter
 into and upon the Demised Premises or any part thereof in the name of the
 whole and have again, repossess and enjoy the same as of its former estate
 and this Lease shall thereupon terminate; or 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii) the
 Landlord may itself take such steps and do or cause to be done such things as
 may be necessary to remedy and correct such defaults and may thereupon charge
 as additional rent its total costs and expenses incurred in respect thereof,
 plus an administrative and supervisory fee equivalent to 15% thereof, to the
 Tenant who hereby covenants and agrees to pay the same upon demand. 

 	
  

 

          (c)
Provided further that in addition to all other rights hereby reserved to it,
the Landlord shall have the right to re-enter the Demised Premises as the agent
of the Tenant either by force or otherwise, without being liable for any
prosecution therefor. Upon such re-entry the Landlord may re-let the whole or
any portion of the Demised Premises for any period equal to or greater or less
than the remainder of the Term and to receive the rent therefor, which rent may
be any sum which the Landlord may deem reasonable, to any Tenant which it may
deem suitable and satisfactory, and for any use and purpose which it may deem
appropriate. In connection with any such lease, the Landlord may make such changes
in the character of the improvements of the Demised Premises as the Landlord
may determine to be appropriate or helpful in effecting such lease. In no event
shall the Landlord be under any obligation to re-let the Demised Premises in
whole or in part for any purpose which the Landlord may regard as injurious to
the Demised Premises, or to any Tenant which the Landlord, in the exercise of
reasonable discretion, shall deem to be objectionable and to apply any rent
derived from so re-letting the Demised Premises upon account of the rent due
hereunder. The Tenant shall remain liable to the Landlord for the deficiency,
if any, it being the intention of the parties hereto that nothing herein
contained and no entry made by the Landlord hereunder shall in any way release
the Tenant from the payment of the rent hereby reserved during the Term hereof
beyond such sum as may be realized by the Landlord by such re-letting or by the
proceeds of any distress made by the Landlord against the Tenant. The Landlord
shall not in any event be required to pay to the Tenant any surplus of any sums
received by the Landlord on a re-letting of the Demised Premises in excess of
the rent reserved hereunder. 

15

          (d)
Provided further that in the event that the Landlord shall be entitled to and
shall elect to make a re-entry as hereinbefore provided, any re-entry or other
action so taken shall not be deemed to relieve the Tenant of its obligation to
pay rent and other moneys payable as rent or otherwise in accordance with the
provisions hereof, but the same shall continue to accrue and be payable until
such time as the Landlord is able to re-let the Demised Premises or otherwise
deal with the same in such manner that it would not sustain any loss should the
Tenant thereafter fail to pay the rent and additional rent. 

	
  

 	
  

 
	
 11.

 	
 WAIVER OF
 EXEMPTION FROM DISTRESS 

 

          The
Tenant hereby covenants and agrees with the Landlord that, in consideration of
the premises and of the leasing and letting by the Landlord to the Tenant the
Demised Premises for the Term (and it is upon that express understanding that
these presents are entered into) that, notwithstanding anything contained in
any present or future statute which may hereafter be passed , none of the goods
or chattels of the Tenant at any time during the continuance of the Term shall
be exempt from levy by distress for rent in arrears by the Landlord, and that
upon any claim being made for such exemption by the Tenant or on distress made
by the Landlord, this covenant and agreement may be pleaded as an estoppel
against the Tenant in any action brought to test the right to the levying upon
any such goods or chattels; the Tenant waiving as it hereby does all and every
benefit that could or might have accrued to it by any present or future
statute, but for the above covenant. 

	
  

 	
  

 
	
 12.

 	
 REMOVAL OF
 CHATTELS 

 

          Provided
that in case of removal by the Tenant of its goods and chattels from the
Demised Premises, the Landlord may follow the same for thirty (30) days in the
same manner as is provided for in the Landlord and Tenant Act with respect to
the fraudulent removal of goods. 

	
  

 	
  

 
	
 13.

 	
 OVERHOLDING 

 

          Provided
that should the Tenant remain in possession of the Demised Premises after the
end of the Term, without other special agreement, it shall be as a monthly
tenant at a rental of two hundred per cent (200%) of the Minimum Rent payable
during the last month of the Term, payable monthly, in advance, on the 1st day
of each and every month and subject in all other respects to the terms of this
Lease. 

	
  

 	
  

 
	
 14.

 	
 LANDLORD’S
 COVENANTS 

 

          The
Landlord covenants with the Tenant: 

          (a)
That so long as the Tenant is paying the rent hereby reserved and performing
the covenants hereinbefore on its part contained, the Tenant may peaceably
possess and enjoy the Demised Premises for the Term hereby granted, without any
interruption or disturbance from the Landlord, or any other person or persons
lawfully claiming by, from or under the Landlord; 

          (b)
The Tenant shall have the right, upon first obtaining the written consent of
the Landlord, from time to time to make alterations and changes in the interior
of the Demised Premises as it may find necessary for its purposes and at its
own expense, including but without limiting the generality of the foregoing,
the erection of partitions and installation of lighting fixtures, and provided
that such alterations do not cause irreparable damage to the Demised Premises
and provided that the same shall be done and made in a good and workmanlike
manner. In the event that such alterations shall affect the structural
integrity of the Demised Premises, then plans for such alterations or changes
shall be delivered to the Landlord and the prior consent of the Landlord in
writing shall be obtained, which consent may be unreasonably or arbitrarily
withheld notwithstanding any statutory or other authority to the contrary. All
such partitions and 

16

lighting
fixtures and other alterations shall be Tenant’s fixtures and shall be removed
by the Tenant unless the Landlord otherwise directs. On such removal, the
Tenant shall restore the interior of the Demised Premises to their former
condition immediately prior to the installation of such alterations or changes,
including the restoration of such standard fixtures as may have been installed
by the Landlord; 

          (c)
The Tenant shall have the right at its own expense to attach, paint or display
such signs, signboards, posters, flags or other advertisements or decorations
in or about the Demised Premises provided that the Tenant shall have first
obtained the consent in writing of the Landlord thereto, such consent not to be
unreasonably or arbitrarily withheld, and provided that the same shall be
removed by the Tenant at the expiration of the Term and the Tenant shall
thereupon restore the Demised Premises to their former condition. The parties
acknowledge and agree that the Landlord is interested in a greater amount of
real property than the Demised Premises and, accordingly, reserves the right to
regulate all signs, signboards, posters, flags, advertisements or other
decorations in its sole and entire discretion in order to maintain a uniformity
in the area and to protect the aesthetics thereof for the benefit of its own
interest and those of the Tenant and other interested persons, and that the
aforesaid covenant by the Landlord not to unreasonably or arbitrarily withhold
its consent shall be construed accordingly. The Landlord shall have the right
at any time and from time to time during the Term to place upon the Demised
Premises a notice stating that the Demised Premises are for sale and at any
time during the last six months of the Term that the Demised Premises are for
rent and the Tenant shall not remove such sign or notices or permit the same to
beremoved. 

	
  

 	
  

 
	
 15.

 	
 DAMAGE AND
 DESTRUCTION 

 

          Provided
that if during the continuation of this Lease: 

          (a)
The Building or the Demised Premises are totally destroyed by fire or the
elements or are partially destroyed so that they cannot be repaired with
reasonable diligence within 180 days of the commencement of reconstruction,
then this Lease shall, at the option of the Landlord, cease and become null and
void from the date of such damage or destruction and the Tenant shall immediately
surrender the Demised Premises and all interest therein to the Landlord and the
Tenant shall pay rent only to the time of such surrender and in the case of
destruction or partial destruction above mentioned, the Landlord may re-enter
or repossess the Demised Premises discharged of this Lease and may remove all
parties therefrom; 

          (b)
If the Building or Demised Premises are partially destroyed by fire or the
elements and can be repaired with reasonable diligence within 180days of the commencement
of reconstruction, and if the damage is such as to render the Demised Premises
wholly unfit for occupancy, then the rent shall not run or accrue after the
said injury or while the process of repairs is going on and the Landlord shall
repair the same to the extent of the insurance proceeds actually received, with
all reasonable speed and then the rent shall recommence immediately after the
said repairs have been completed; 

          (c)
If the Building or the Demised Premises are partially destroyed by fire or the
elements and can be repaired with reasonable diligence within 180 days of the
commencement of reconstruction and if the damage is such that the Demised
Premises can be partially used, then until such damage shall have been
repaired, the rent shall abate in the proportion that the part of the Demised
Premises rendered unfit for occupancy bears to the whole of the Demised
Premises; 

          (d)
The Landlord shall not be liable to the Tenant for any loss or damage
whatsoever caused by any of the perils or casualties enumerated in standard
Fire, Extended Coverage, Boiler and Machinery, Multi-Peril, All-Risk or
Physical Damage policies and recovered by the insured party from its insurers,
even if such fire or other casualty or peril results from the negligence of the
Landlord; and to the extent of such recovery, the Tenant releases and waives
all rights and claims against the Landlord. 

17

          (e)
Where the Tenant desires indemnity for furniture, fixtures, equipment or
improvements installed, or other property of the Tenant located in the Demised
Premises or used by the Tenant under the terms of this Lease, the Tenant shall
be responsible to insure the same and may not look to the Landlord for recovery
or reimbursement therefor in the event of loss or damage from any cause. 

	
  

 	
  

 
	
 16.

 	
 EXPROPRIATION
 

 

          (a)
If at any time during the Term, any public body or paramount authority shall
take or expropriate a portion of the common areas and facilities not covered by
buildings or structures or any portion of the Demised Premises or shall take or
expropriate an easement or right or licence in the nature of an easement over,
upon or under a portion of the lands and: 

                    (i)
in the event that such taking or expropriation does not materially affect the
Tenant’s use or enjoyment of the Demised Premises, then the whole of the
compensation awarded or settlement for the land so taken or expropriated,
whether fixed by agreement or otherwise, shall be paid to or received by the
Landlord and the Tenant releases any right, title and interest thereto, and
this Lease shall thereafter continue in effect with respect to the Demised
Premises without any abatement of rent; 

                    (ii)
In the event that the taking or expropriation does materially affect the
Tenant’s use or enjoyment of the Demised Premises, the whole of the
compensation awarded or settlement, where fixed by agreement or otherwise, for
the said lands so taken or expropriated, shall nevertheless be paid to the
Landlord, but the rent thereafter payable by the Tenant shall abate accordingly
and, in addition thereto, after payment of the amount to which the Landlord is
entitled as aforesaid, the Tenant shall be entitled to that portion of the
award or compensation granted by the expropriating body relating or
attributable to the Tenant’s leasehold improvements so taken or expropriated. 

          (b)
If the Landlord on the one hand and the Tenant and others (if any) claiming
under the Tenant, on the other hand, shall be unable to agree within thirty
(30) days after the amount of compensation award or settlement as aforesaid has
been fixed as to whether such taking or expropriation materially affects the
Tenant’s use or enjoyment of the Demised Premises or as to the extent to which
the rent shall abate, then the same shall be determined by arbitrators to be
selected as hereinafter provided, the determination of a majority of such
arbitrators to be final and binding upon the parties thereto. The Landlord
shall choose one of such arbitrators; the Tenant another; and the two so chosen
shall together choose a third. Any such arbitration shall be carried out under
the provisions of The Arbitrations Act of Ontario. 

          (c)
In the event that such taking or expropriation so affects the Demised Premises
as not to terminate this Lease but as to require the reconstruction or
replacement of some portion of the Demised Premises, such reconstruction or
replacement shall be carried out at the Landlord’s expense in a good and
workmanlike manner and as expeditiously as reasonably practicable, provided the
cost thereof does not exceed the amount of the compensation awarded or fixed by
agreement or otherwise. 

	
  

 	
  

 
	
 17.

 	
 CONDONING 

 

          Provided
that any condoning, excusing or overlooking by the Landlord of any default,
breach or non-performance by the Tenant at any time with respect to any
covenant, proviso or condition herein contained shall not operate as a waiver
of the Landlord’s rights hereunder in respect of any subsequent default, breach
or non-observance so as to defeat or in any way affect the rights of the
Landlord hereunder in respect of any such subsequent default, breach or
non-observance, and all rights and remedies herein contained of the Landlord or
any rights or remedies available to the Landlord by law, shall be deemed to be
cumulative and not alternative. 

18

	
  

 	
  

 
	
 18.

 	
 RENT PAST
 DUE 

 

          In
the event of the Tenant making default in payment of any sum required to be
paid by it under this Lease, whether or not the same is payable to the Landlord
or otherwise, the Landlord shall have the right to pay any sums so in default
and such sums plus interest thereon at the rate of five (5) percentage points
above the rate per annum charged to the Landlord by its bank or financial
institution shall be recoverable as additional rent. 

	
  

 	
  

 
	
 19.

 	
 ADDITIONAL
 RENT 

 

          The
Tenant covenants and agrees with the Landlord that subject as hereinbefore
provided, in the event of the Tenant making default in payment of any sum
required to be paid by it under the provisions of this Lease, the Landlord
shall have the right to pay any sums so in default and such sums shall be
recoverable by the Landlord in the same manner as if such sums were rent in
arrears under this Lease and the Landlord shall be entitled to take any action
for the recovery thereof which it may be entitled to take with respect to rent
in arrears under this Lease. 

	
  

 	
  

 
	
 20.

 	
 RULES AND
 REGULATIONS 

 

          The
Tenant acknowledges and agrees that the Landlord shall have the right to
promulgate rules and regulations to regulate the use of the common areas and
facilities and to regulate parking thereon and the Tenant shall upon written
notice from the Landlord within five days furnish to the Landlord the current
provincial licence number of any vehicles owned or used by employees or persons
connected with the Tenant. The Tenant agrees that for the benefit and welfare
of the Tenant and Tenants occupying other premises in the project, such
reasonable rules and regulations shall form part of this Lease and shall be
binding upon the Tenant. 

	
  

 	
  

 
	
 21.

 	
 REPAIRS BY
 LANDLORD 

 

          The
Landlord and any persons authorized by the Landlord shall have the right to
install, maintain and/or repair pipes, wires, ducts or other installations in,
under or through the Demised Premises, or in, under or through the common areas
and facilities about the Demised Premises for or in connection with the supply
of any services to the Demised Premises or other premises in the project, but
nothing herein contained shall oblige the Landlord to make such installation or
to do such maintenance or effect such repairs, and in the event that the
Landlord shall elect to do so, then it shall not be liable for anyconsequential
damages occasioned thereby, unless such maintenance or repairs are for the
benefit of any part of the Landlord’s premises other than the Demised Premises.

	
  

 	
  

 
	
 22.

 	
 NOTICE 

 

          Any
notice herein provided or permitted to be given by the Tenant to theLandlord or
by the Landlord to the Tenant shall be sufficiently given if mailed in
Metropolitan Toronto or those regional municipalities immediately adjacent
thereto, Ontario, postage prepaid, registered, or delivered to the other party
addressed to it at the address noted below for such party. Any such notice
given as aforesaid shall be conclusively deemed to have been given on the day
on which such notice is delivered or on the fifth business day following the
day on which such notice is mailed, as the case may be. Either party may at any
time give notice in writing to the other of any change of address of the party
giving such notice and from and after the giving of such notice, the address
therein specified shall be deemed to be the address of such party for the
giving of notices hereunder. The word “notice” in this paragraph shall be
deemed to include any request, statement or other writing in this Lease
provided or permitted to be given by the Landlord to the Tenant or by the
Tenant to the Landlord. 

	
  

 	
  

 	
  

 
	
  

 	
 Landlord:

 	
 Tenant:

 
	
  

 	
 7501 Keele
 Street

 	
 4170
 Sladeview Cres.

 

19

	
  

 	
  

 	
  

 
	
  

 	
 Suite 500

 	
 Unit 5

 
	
  

 	
 Concord,
 Ontario

 	
 Mississauga,
 ON

 
	
  

 	
 L4K 1Y2

 	
 L5L 0A1

 
	
  

 	
  

 	
  

 
	
 23.

 	
 ENVIRONMENTAL
 AUDIT

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 In this
 lease: 

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (i)
 “Environmental Audit” shall mean a complete review of the Demised Premises
 and the environmental practices of the Tenant thereon by the Landlord, its
 employees or agents and shall include such visual inspections, interviews
 with the Tenant, its employees, servants, or agents, and such soil, air, or
 other tests as the Landlord shall, in its sole discretion, deem to be
 necessary; 

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (ii)
 “Hazardous Substance” shall mean any substance that requires special
 precautions in its storage, collection, transportation, treatment or disposal
 to prevent damage to persons or property and includes explosive, flammable,
 volatile, radioactive, toxic and pathological waste; and 

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
  

 	
 (iii)
 “Property of the Landlord” shall include any real property owned by the
 Landlord or any associate of the Landlord, as that term is defined in the
 Business Corporations Act, 1990 (S.O. 1990, c. 4). 

 	 

          (b)
The Landlord shall have the right to conduct an Environmental Audit of the
Demised Premises at any time and from time to time throughout the Term. 

          (c)
In the event that the Environmental Audit reveals that the Tenant is storing,
handling, transporting, manufacturing, processing or otherwise dealing with
(hereinafter collectively “handling”) any Hazardous Substance in a manner which
does not comply with all governmental regulations in accordance with first
class environmental protection practices the Landlord shall give the Tenant
ninety (90) days within which to amend its manner of handling such Hazardous
Substances to comply with government regulations. The Tenant shall further
forthwith carry out such procedures as are, in the sole opinion of the
Landlord, necessary to correct any damage which may have been done to any
Property of the Landlord or to forestall any damage to any Property of the
Landlord which in the opinion of the Landlord may be created by the
unsatisfactory handling with such Hazardous Substances. 

          (d)
In the event that the Tenant shall be in default of the provisions hereof and
shall fail to amend its practices or take such corrective measures as are
required pursuant to subparagraph (c) hereof within the aforesaid ninety (90)
day period the Landlord shall have the right to enter upon the Demised Premises
and carry out such procedures as are, in the sole opinion of the Landlord,
necessary to correct any damage which may have been done to any Property of the
Landlord, or to forestall any damage to any Property of the Landlord which in
the opinion of the Landlord may be created by the unsatisfactory handling such
Hazardous Substances and the Tenant shall pay to the Landlord on demand, as
additional rent, all costs and expenses of carrying out such procedures.
Further, in addition to and without limiting any other remedies available to
the Landlord, the Landlord may, on seven (7) days notice, terminate the Lease. 

          (e)
The Tenant shall pay to the Landlord as additional rent, forthwith upon demand,
the cost of any Environmental Audit conducted by the Landlord together with the
costs, if any, to carry out such procedures required to correct any damage, or
forestall any potential damage to the Property of the Landlord due to the
unsatisfactory handling of such Hazardous Substances by the Tenant. 

20

          (f)
The Tenant promptly comply with and conform to the requirements of all
applicable statutes, laws, by-laws, regulations, ordinances and orders of any
governmental or quasi governmental body having jurisdiction thereover with
respect to the production or odours or other emissions into the air in or
surrounding the Demised Premises, the Building, or any part thereof. 

          (g)
In the event that the Landlord, acting reasonably, shall deem any odour or
emission to be an obnoxious odour (the “Obnoxious Odour”) and shall so notify
the Tenant, the Tenant shall forthwith take all necessary actions to eliminate
the Obnoxious Odours or to reduce the level thereof to a level acceptable to
the Landlord. If the Tenant shall fail to so eliminate the Obnoxious Odours or
to reduce the level thereof as aforesaid, then, in addition to and without
limiting any other rights or remedies of the Landlord hereunder, the Landlord
may upon two (2) days notice to the Tenant the Landlord may itself take such
actions as it deems necessary to eliminate the Obnoxious Odours or to reduce
the level thereof. If the Landlord shall have taken such actions the Tenant
shall forthwith pay to the Landlord, as additional rent, upon demand all costs
incurred by the Landlord together with an amount equal to fifteen percent (15%)
thereof as an administrative and supervisory fee. 

          (h)
In the event that any of the actions required to eliminate the Obnoxious Odours
or to reduce level thereof shall require alterations to the Demised Premises
the provisions of subsections 14(b) and (c) hereof shall apply. 

	
  

 	
  

 
	
 24.

 	
 SECURITY
 DEPOSIT 

 

          (a)
The Tenant has deposited with the Landlord the sum of seven thousand, four
hundred and forty-five ...47/100 Dollars ($7,445.47) (the “Security Deposit”),
receipt of which is hereby acknowledged by the Landlord. The Security Deposit
will be held by the Landlord throughout the Term and any renewal or renewals
thereof, without liability for interest, as security for the faithful and
complete performance by the Tenant of all of the terms, covenants and
obligations under this Lease by the Tenant to be kept, observed and performed. 

          (b)
If at any time during the Term or any renewal thereof, the Rent or other sums
payable by the Tenant to the Landlord hereunder are overdue and unpaid, or if
the Tenant fails to keep or perform any of the terms, covenants and conditions of
this Lease to be kept, observed and performed by the Tenant, then, the
Landlord, at its option, may, in addition to any and all other rights and
remedies provided for in this Lease or by law, appropriate and apply the entire
Security Deposit, or so much thereof as is necessary to compensate the Landlord
for loss or damage sustained or suffered by the Landlord due to such breach. If
the entire Security Deposit, or any portion of it, is appropriated and applied
by the Landlord for the payment of overdue Rent or other sums due and payable
to the Landlord by the Tenant hereunder, then, the Tenant shall, upon demand of
the Landlord, forthwith remit to the Landlord a sufficient amount in cash to
restore the Security Deposit to the original sum deposited, and the Tenant’s
failure to do so within five (5) days after receipt of such demand constitutes
a breach of this Lease. If the Tenant complies with all of the terms, covenants
and conditions and promptly pays all of the Rent and other sums herein provided
payable by the Tenant to the Landlord, the Security Deposit shall be returned
in full to the Tenant without interest within sixty (60) days after the end of
the Term or within sixty (60) days after the end of the Term or any renewal or
renewals thereof. 

          (c)
The Landlord shall deliver or assign the Security Deposit to anypurchaser of
the interest of the Landlord or the owner or owners of the land in the Demised
Premises or the lands or any part thereof, if such interest is sold, and thereupon
the Landlord is discharged from any further liability with respect to the
Security Deposit. 

	
  

 	
  

 
	
 25.

 	
 REGISTRATION
 

 

          The
Tenant shall not register this Lease without the written consent of the
Landlord. Upon the request of the Tenant, the other party shall join in the
execution of 

21

a memorandum
or so-called “short form” of this Lease for the purposes of registration. Said
memorandum or short form of this Lease shall only describe the parties, the
Demised Premises and the Term of this Lease, and shall be prepared by the
Landlord’s solicitors at the expense of the Tenant. If required by the
Landlord, the Landlord is hereby appointed the agent of the Tenant to complete
any Land Transfer Tax Affidavit on behalf of the Tenant for the purposes of
registering the short form or notice of this Lease. 

	
  

 	
  

 
	
 26.

 	
 UNAVOIDABLE
 DELAY 

 

          It
is understood and agreed that whenever and to the extent that the Landlord
shall be unable to fulfil or shall be delayed or restricted in the fulfilment
of any obligation hereunder in respect of the supply or provision of any
service or utility or the doing of any work or the making of any repairs by
reason of being unable to obtain the material, goods, equipment, service or
labour required to enable it to fulfil such obligation, or by reason of any
statute, Law or Order in Council, or any regulation or order passed or made
pursuant thereto, or by reason of the order or direction of any administrator,
comptroller, board, governmental department or officer, or other authority, required
thereby, or by reason of any other cause beyond its control, whether of the
foregoing character or not, the Landlord shall be relieved from the fulfilment
of such obligation and the Tenant shall not be entitled to compensation for any
inconvenience, nuisance or discomfort thereby occasioned. 

	
  

 	
  

 
	
 27.

 	
 PROPORTIONATE
 SHARE 

 

          Whenever
used in this lease “Proportionate Share” shall mean a fraction which has as its
numerator the gross floor area of the Demised Premises and as its denominator
the gross floor area of the Building. 

	
  

 	
  

 
	
 28.

 	
 ENTIRE
 AGREEMENT 

 

          This
Lease and the schedules and riders annexed, if any, together with the rules and
regulations promulgated by the Landlord from time to time, set forth all of the
covenants, promises, agreements, conditions and understandings between the
Landlord and the Tenant concerning the Demised Premises. If any term, covenant
or condition of this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder
of this Lease or the application of such term, covenant or condition to persons
or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby and each term, covenant or
conditionof this Lease shall be valid and enforced to the fullest extent
permitted by law. 

	
  

 	
  

 
	
 29.

 	
 OPTION TO
 EXTEND 

 

          The
Tenant shall have the right to renew the within Lease for oneextended term of
five (5) years, subject to the following terms and conditions: 

          (a)
The Tenant has not been in default under the terms of the within Lease; 

          (b)
The Tenant has given the Landlord at least six (6) months and not more than
twelve (12) months prior written notice of its intention to exercise the option
in this paragraph contained; 

          (c)
The tenancy of the Tenant in the Demised Premises shall be on the same terms
and conditions as are contained in the within Lease, except that there shall be
no further option to extend and except that the Minimum Rent will be as
provided in this paragraph; 

          (d)
The Minimum Rent during the aforesaid extended term shall be negotiated and
agreed to by the Landlord and the Tenant no later than three (3) months prior
to the commencement of the extended term. The Minimum Rent during the extended
term shall be the fair market rate for premises similar to the Demised
Premises, used for a purpose similar 

22

to that of the
Demised Premises, in properties similar to the Demised Premises, in the
immediate vicinity of the building, provided, however, that in no event will
such Minimum Rent be less than the Minimum Rent payable in the last year of the
term immediately proceeding the said extended term. 

          (e)
If the Minimum Rent which shall be applicable during the renewal term has not
been mutually agreed upon by the Landlord and the Tenant at least 3 months
prior to the expiry of the Term the Minimum Rent applicable during the renewal
term shall be determined by arbitration by a single arbitrator chosen by the
Landlord and the Tenant, and if they cannot agree upon the arbitrator within 5
days after written request for arbitration by either party to the other, either
party may apply to a judge for the appointment of an arbitrator in accordance
with the provisions of the Arbitrations Act (Ontario). The provisions of the
Arbitrations Act shall govern the arbitration and the decision of the
arbitrator shall be final and binding upon the parties. The arbitrator shall be
instructed to render its decision no later than 15 days prior to the expiry of
the Term. If, however, the arbitrator has not rendered its decision by the end
of the Term, the Tenant shall continue to pay the Minimum Rent it was paying
during the last month of the Term until such time as the arbitrator renders its
decision, whereupon the appropriate adjustments shall be made between the
parties. The rent payable for the renewal term shall be the fair market value
rent as determined by the arbitrator, but in no event will such minimum rent be
less than the minimum rent payable in the last year of the term immediately
preceding the said renewal term. All documents and proceedings with respect to
the arbitration are to be kept confidential by each of the parties, such cost
of arbitration shall be shared equally between the Landlord and Tenant. 

	
  

 	
  

 
	
 30.

 	
 LIENS 

 

          If
any construction or other liens or order for the payment of money shall be
filed against the Lands or the Lease Premises by reason, or arising out of any
labour or material, work or service furnished to the Tenant or to anyone
claiming through the Tenant, the Tenant shall, within fifteen (15) days after
notice to the Tenant of the filing thereof, cause the same to be discharged.
The Tenant shall defend all suits to enforce such lien or Order whether against
the Tenant or the Landlord at the Tenant’s own expense. The Tenant hereby
indemnifies the Landlord against any expense or damage as a result of such lien
or Order. If the same are not discharged within such time, the Landlord shall have
the right to pay any sums necessary to discharge the same and such sums
thereupon shall be recovered by the Landlord in the same manner as if such were
rental in arrears under this Lease and the Landlord shall be entitled to take
any action therefor which it may be entitled to take with respect to rental in
arrears under this Lease. 

	
  

 	
  

 
	
 31.

 	
 INTENT AND
 INTERPRETATION 

 

          This
Indenture and everything herein contained shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns, subject to the consent of the Landlord
being obtained as herein provided to an assignment or sub-lease by the Tenant.
Time shall in all respects be of the essence hereof. All covenants herein
contained shall be deemed joint and several and all rights and powers reserved
to the Landlord may be exercised either by the Landlord or by its agents or
representatives from time to time. The provisions hereof shall in all respects
be construed according to and governed by the laws of the Province of Ontario. 

23

          IN
WITNESS WHEREOF the parties hereto have hereunto executed these presents as of
the date first above written. 

	
  

 	
  

 	
  

 	
  

 
	
 SIGNED, SEALED AND DELIVERED

 	
 )

 	
 THE ERIN
 MILLS

 
	
 in the presence of:

 	
 )

 	
 DEVELOPMENT
 CORPORATION

 
	
  

 	
 )

 	
  

 
	
  

 	
 )

 	
 (Landlord)

 
	
  

 	
 )

 	
  

 	
  

 
	
  

 	
 )

 	
 Per: 

 	
 /s/ Larry
 Robbins

 
	
  

 	
 )

 	
  

 	

 

 
	
  

 	
 )

 	
 I have
 authority to bind the Corporation Larry Robbins

 
	
  

 	
 )

 
	
  

 	
 )

 	
  

 	
  

 
	
  

 	
 )

 	
 METHES
 ENERGIES CANADA INC.

 
	
  

 	
 )

 	
  

 	
 (Tenant)

 
	
  

 	
 )

 	
 Per:

 	
 /s/ John
 Loewen

 
	
  

 	
 )

 	
  

 	

 

 
	
  

 	
 )

 	
 I have
 authority to bind the Corporation John Loewen

 

24

SCHEDULE “A”

LEGAL DESCRIPTION

The Demised
Premises are situate in the City of Mississauga in the Regional Municipality of
Peel and Province of Ontario, and comprise 6,319 square feet more or less of
the Building situate upon part of Lot No.
17,18,19,20,21,22,23,24,25,30,31,32,33 according to Registered Plan 43R-24548in
the said City of Mississauga and being known as Unit No.5 at 4170 Sladeview
Crescent. 

	
  

 	
  

 
	
 ADDRESSES
 FOR NOTICE:

 	
  

 
	
  

 	
  

 
	
 ADDRESS OF
 LANDLORD:

 	
 ADDRESS OF
 TENANT:

 
	
  

 	
  

 
	
 7501 Keele
 Street

 	
 4170
 Sladeview Crescent

 
	
 Suite 500

 	
 Unit 5

 
	
 Concord,
 Ontario

 	
 Mississauga,
 Ontario

 
	
 L4K 1Y2

 	
 L5L 0A1

 

SCHEDULE “B”

SITE PLAN

[IMAGE OMITTED]

4170 SLADEVIEW CRES.

SCHEDULE “C” 

RULES AND REGULATIONS

	
  

 	
  

 
	
 1.

 	
 The
 sidewalks and roadways, except as otherwise agreed by both parties shall not
 be obstructed by any of the tenants or used by them for any purpose other
 than for the ingress or egress to and from their respective Demised Premises.
 Tenants will not place or allow to be placed in the public areas of the
 property, any waste paper, dust, garbage, refuse or anything whatever that
 would tend to make them unclean or untidy. 

 
	
  

 	
  

 
	
 2.

 	
 The water
 closets and other water apparatus shall not be used for any purpose other
 than those for which they were constructed, and no sweepings, rubbish, rags,
 ashes, or other substances shall be thrown therein. Any damage resulting by
 misuse shall be borne by the Tenant by whom or by those agents, servants or
 employees the same is caused. Tenants shall not let the water run unless it
 is in actual use, nor shall they deface any part of the Demised Premises. 

 
	
  

 	
  

 
	
 3.

 	
 No tenant
 shall do or permit anything to be done in the Demised Premises or bring or
 keep anything therein which will increase the risk of fire or obstruct or
 interfere with the rights of other tenants or violate or act at variance with
 the laws relating to fires or with the regulations of the Fire Department, or
 the Board of Health. 

 
	
  

 	
  

 
	
 4.

 	
 Tenants and
 their employees shall not interfere with other tenants or those having
 business with them. 

 
	
  

 	
  

 
	
 5.

 	
 No live
 birds or other live animals except fish shall be kept in or about the Demised
 Premises nor shall the tenants operate or permit to be operated any musical
 or sound producing instrument or device inside or outside the Leased Premises
 which may be heard outside the Demised Premises. 

 
	
  

 	
  

 
	
 6.

 	
 No one shall
 use the Demised Premises for sleeping apartments or residential purposes, or
 for the storage of personal effects or articles other than those required for
 business purposes. 

 
	
  

 	
  

 
	
 7.

 	
 All tenants
 must observe strict care not to allow their windows or doors to remain open
 so as to admit rain or snow or so as to interfere with the heating of the
 Demised Premises. Any injury or damage caused to the Demised Premises or its
 appointments, furnishings, heating and other appliances or to any other
 tenant by reason of windows or doors being left open so as to admit rain or
 snow or by interferences with or neglect of the heating appliances or by
 reason of the tenant or any other person or servant, subject to it, shall be
 made good by the tenant in whose premises the neglect, interference or
 misconduct occurred. 

 
	
  

 	
  

 
	
 8.

 	
 It shall be
 the duty of the respective tenants to assist and cooperate with the Landlord
 in preventing injury to the Demised Premises demised to them respectively. 

 
	
  

 	
  

 
	
 9.

 	
 No
 inflammable oils or other inflammable, dangerous or explosive materials shall
 be kept or permitted to be kept in the Demised Premises. 

 
	
  

 	
  

 
	
 10.

 	
 No storage
 of any kind is permitted outside the Demised Premises. 

 
	
  

 	
  

 
	
 11.

 	
 The Tenant
 has read and acknowledges Clause 14.00 of the Lease with 

 

	
  

 	
  

 
	
  

 	
 respect to
 signs and advertising, which provides that all signs must be approved by the
 Landlord.

 
	
  

 	
  

 
	
 12.

 	
 Tenants
 shall not place any additional lock upon any door of the Demised Premises
 without the written consent of the Landlord. 

 
	
  

 	
  

 
	
 13.

 	
 Tenants
 shall give Landlord prompt notice of any accident to or any defect in the
 plumbing, mechanical or electrical apparatus or any other part of the Demised
 Premises. 

 
	
  

 	
  

 
	
 14.

 	
 The parking
 of cars in the parking areas shall be subject to the reasonable regulations
 of the Landlord. No overnight parking of any vehicles on the property is
 permitted. 

 
	
  

 	
  

 
	
 15.

 	
 Tenants will
 not do or omit to do or permit to be done or omitted anything upon or in
 respect of the Demised Premises the doing or omission of which (as the case
 may be) shall be or result in a nuisance. 

 
	
  

 	
  

 
	
 16.

 	
 Landlord
 shall have the right to make such other and further reasonable rules and regulations
 as in its judgement may from time to time be needful for the safety, care,
 cleanliness and appearance of the Demised Premises and for the preservation
 of good order therein, and the same shall be kept and observed by the
 tenants, their clerks and servants provided said rules apply uniformly to all
 tenants of the Demisable Premises. 

 

SCHEDULE “D”

SPECIAL CONDITIONS

	
  

 	
  

 
	
 1.

 	
 The Landlord
 agrees to change one overhead door to a 12’ x 14’ opening. 

 
	
  

 	
  

 
	
 2.

 	
 The Landlord
 agrees to install epoxy flooring in the warehouse area only. 

 
	
  

 	
  

 
	
 3.

 	
 The Tenant
 shall pay for the cost of additional office finishing, over and above the
 Landlord’s twenty percent (20%) finish, as follows: 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Total area
 of office finish

 	
 =

 	
 2,494 square
 feet

 
	
  

 	
 Less
 Landlord’s 20%

 	
 =

 	
 1,264 square
 feet

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
 Balance

 	
 =

 	
 1,230 square
 feet

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 The Tenant
 agrees to pay for the additional construction as follows:

 
	
  

 	
  

 
	
  

 	
 Cost of
 additional office finishing 1,230 sq. ft. X $40.00 per sq. ft. = $49,200.00

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Total cost

 	
 =

 	
 $ 49,200.00

 
	
  

 	
 Less 25%
 deposit

 	
 =

 	
 $ 12,300.00
 plus GST

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
 Balance

 	
 =

 	
 $ 36,900.00

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Balance of
 $36,900.00 to be amortized over the 5 year term of the lease, at an interest
 rate of 10% payable semi-annually, with payments as follows:

 
	
  

 	
  

 
	
  

 	
 $784.02 per
 month or $9,408.19 per annum plus GST.

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