Document:

exhibit1097.htm

     

    
      

      

    

    Exhibit
      10.97

    
 

    
      

       Building
        3

      

      

      

      

      

      L
        E A S
        E

      

      

      BETWEEN

      

      

      ALPHA
        EQUITIES LTD

      

      

      AND

      

      

      SMARTIRE
        SYSTEMS INC.

      

      

       

      
        
                

                    
      
      

                    
      
      

            
              	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
              

                                      INITIAL              
            
	              
                      
                                       
                                      
              

                                       
                                      
              

                                               

                                                                                                  /s/
                        IM

                                                                              
                        IM

                                      Landlord              
              

                                       
                                      
            	              

                                       
                                      
              

                                       
                                      
              

                                                     

                                                                                /s/
                        DW

                                                                                DW

                                      Tenant              
              

                                       
                                      
            
	 	 

            
      

                    
      
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      THIS
        LEASE made April _________, 2007.

      

      BETWEEN:

      

      ALPHA
        EQUITIES LTD.,

      having
        an
        office at 112 East 6th Avenue, Vancouver, British Columbia  V5T
        1J5

      

      (the
        "Landlord")

      

       OF
        THE FIRST PART

      

      AND:

      

      SMARTIRE
        SYSTEMS INC.

      having
        an office at #150, 13151 Vanier
        Place, Richmond, British Columbia

      

      (the
        "Tenant")

      

       OF
        THE SECOND PART

      

      

      WHEREAS:

      

      By
a
        letter agreement dated
        April 5th,
        2007, the Landlord and the Tenant have agreed to enter into a lease
        with respect of a portion of the building located at 13151 Vanier Place,
        Richmond, British Columbia.

      

      NOW
        THEREFORE THIS AGREEMENT WITNESSES
        that in consideration of the rents, covenants and agreements hereinafter
        reserved and contained, the parties agree to this Lease of the Leased Premises
        on the terms and conditions set forth herein:

      

      

      1           ARTICLE
        BASIC TERMS

      

      .1   
        AREA
        OF LEASED PREMISES

      

      The
        Area of the Leased Premises is
        approximately 15,364  square feet, subject to
        adjustment upon the actual Net Rentable Area of Leased Premises being determined
        by a certified British Columbia Land Surveyor following completion of the
        Tenant's Work or any subsequent construction by Tenant.

      

      .2   
        ASIC
        RENT

      

      The
        Tenant will pay to the Landlord,
        Basic Rent in lawful money of Canada and without any set-off, deduction,
        payable
        in advance in equal monthly instalments, as follows:

      

      Year
        1 - $13.70/sf per annum of the Area of Leased Premises.

      Year
        2 - $14.20/sf per annum of the Area of Leased Premises.

      Year
        3 - $14.70/sf per annum of the Area of Leased Premises.

      Year
        4 - $15.20/sf per annum of the Area of Leased Premises.

      Year
        5 - $15.70/sf per annum of the Area of Leased Premises.

      Year
        6 - $16.00/sf per annum of the Area of Leased Premises.

      

      If
        the actual Area of Leased Premises
        is adjusted as contemplated by Article 1.1, the Basic Rent will also be
        deemed to be adjusted to that amount per annum equal to the per square foot
        rate
        multiplied by the actual Area of Leased Premises as so adjusted.  Upon
        request by the Landlord, the Tenant will execute such documents as may be
        required by the Landlord in order to confirm the actual Area of Leased Premises
        and Basic Rent.

      

      .3  PERMITTED
        USE

      

      The
        Leased Premises shall be used for
        the purpose of an office facility, manufacturing, research, development and
        warehouse space for the Tenant and for no other purpose.  The Tenant
        shall carry on business in the Leased Premises under the trade name
SmarTire Systems Inc. , and under no other name without the
        written approval of the Landlord.  Throughout the Term, the Tenant
        shall continuously, actively and diligently conduct its business in the whole
        of
        the Leased Premises.

      

      .4  TERM

      

      
        	
                .1  

              	
                Subject
                  to subparagraph 1.4.2, the Term of the Lease shall be for 6
                  years commencing March 1st,
                  2007 and ending February 28th,
                  2013.

              

      

      

      The
        foregoing Basic Terms are agreed to
        by the Landlord and the Tenant and any reference in this Lease to any one
        of the
        same shall include the provisions set forth above with respect thereto and,
        in
        addition, any more specific definition or reference hereinafter
        provided.

      

      

      2           ARTICLE
        DEMISE AND TERM

      

      
        	
                .1  

              	
                DEMISE
                  AND
                  TERM

              

      

      

      The
        Landlord does hereby demise and
        lease unto the Tenant the Leased Premises to have and to hold for and during
        the
        Term unless the Term shall be sooner terminated as provided in this
        Lease.  For so long as the Tenant duly and punctually pays the Rent,
        and performs and observes its covenants herein undertaken, the Tenant shall
        be
        entitled, for the benefit of the Leased Premises, to enjoy, upon the terms
        and
        conditions established or altered pursuant to this Lease, the use in common
        with
        others entitled thereto, of the Common Areas and the Common
        Facilities.

      

      
        	
                .2  

              	
                SURRENDER
                  OF LEASED
                  PREMISES

              

      

      

      Upon
        the expiration or sooner
        termination of this Lease, the Tenant shall vacate and surrender to the Landlord
        the Leased Premises in accordance with the provisions of this
        Lease.  All alterations, decorations, additions and improvements made
        by the Tenant or made by the Landlord on the Tenant's behalf, other than
        the
        Tenant's trade fixtures, shall immediately become the property of the Landlord
        without compensation therefor to the Tenant and shall be considered Leasehold
        Improvements for all purposes under this Lease.  Except to the extent
        as otherwise expressly agreed by the Landlord in writing, no Leasehold
        Improvements, trade fixtures, furniture or equipment shall be removed by
        the
        Tenant from the Leased Premises either during or at the expiration or sooner
        termination of the Term except that the Tenant, at its sole cost:

      

      
        	
                .1  

              	
                may
                  at the end of the Term, if it is not in default hereunder, remove
                  its
                  trade fixtures;

              

      

      

      
        	
                .2  

              	
                shall
                  at the end of the Term remove such Leasehold Improvements, trade
                  fixtures,
                  furniture, equipment and inventory as the Landlord, at its option,
                  shall
                  require to be removed;

              

      

      

      
        	
                .3  

              	
                may,
                  if it is not in default hereunder, remove its trade fixtures, furniture,
                  equipment and inventory at the end of the Term, and also during
                  the Term
                  in the usual and normal course of its business where such trade
                  fixtures,
                  furniture or equipment have become excess for the Tenant's purposes
                  or the
                  Tenant is substituting therefore new trade fixtures, furniture
                  and
                  equipment.

              

      

      

      If
        the Tenant does not remove its trade
        fixtures at the expiration or earlier termination of this Lease, such trade
        fixtures shall become the Landlord's property, at the option of the Landlord,
        and may be removed from the Leased Premises and sold or otherwise disposed
        of by
        the Landlord.  For greater certainty, the Tenant's trade fixtures
        shall not include any Leasehold Improvements or drapes or curtains installed
        in
        the Leased Premises by the Landlord or the Tenant.

      

      In
        the case of every removal either
        during or at the end of the Term, the Tenant shall, in the case of every
        removal
        either during or at the end of the Term, make good any damage caused to the
        Leased Premises and any Leasehold Improvements therein by the installation
        and
        removal.  The Tenant's obligations under this Article 2.2 shall
        survive the expiration or sooner termination of this Lease.

      

      

      4           ARTICLE
        RENT

      

      .1   
        BASIC
        RENT

      

      The
        Tenant shall pay to the Landlord
        for each and every Year of the Term, the Basic Rent specified in Article
        1.2, by
        equal monthly instalments, each in advance on the first day of each and every
        month during the Term, the first of such monthly instalments to be paid on
        the
        Commencement Date.

      .2   
        DEPOSITS

      

      The
        Tenant has prior to execution of
        this Lease delivered to the Landlord a deposit in the amount of
$18,681.30 which is to be held and has already been paid by the
        Landlord and applied towards the Basic Rent for the last month of the
        Term.  Provided, that if at any time the deposits or any part has not
        been so applied by the Landlord and the Tenant fails to comply with its
        obligations under this Lease, the Landlord may, at its option, and without
        prejudice to any other rights and remedies of the Landlord, apply the deposits
        or any part thereof towards curing such default or the Landlord may, at its
        option, retain the deposit it then holds as liquidated damages and not as
        a
        penalty.  Without limiting the generality of the foregoing, the
        application of the deposits by the Landlord towards curing the said default
        or
        its retention by the Landlord as liquidated damages shall in no manner
        whatsoever limit the Landlord's right to sue for and recover actual damages
        suffered or to terminate the Lease or otherwise limit any of the other rights
        and remedies by the Landlord.  The deposits will not bear any interest
        in favour of the Tenant.

      

      .3                
        ADDITIONAL
        RENT

      

      The
        Tenant shall pay to the Landlord
        for each and every Lease Year or portion thereof, the Additional Rent for
        such
        Lease Year or portion thereof.  The amount of Additional Rent which
        the Tenant is to pay in each Lease Year or portion thereof shall be estimated
        by
        the Landlord in advance and the Tenant shall pay to the Landlord such amount
        in
        equal monthly instalments in advance during such Lease Year or portion
        thereof.  The amount of the estimated Additional Rent may be adjusted,
        from time to time, during a Lease Year by the Landlord giving notice to the
        Tenant, in which event the remaining payments to be made by the Tenant as
        aforesaid in such Lease Year may be adjusted accordingly  All remedies
        of the Landlord on nonpayment of Rent shall be applicable to the Additional
        Rent
        and the obligation of the Tenant to pay any monies pursuant to this Lease
        shall
        survive the expiration or sooner termination of this Lease.  From time
        to time, at the request of the Landlord the Tenant shall produce to the Landlord
        satisfactory evidence of due payment by the Tenant of all payments required
        to
        be made by the Tenant, other than to the Landlord, pursuant to this
        Lease.

      

      .4                
        ADJUSTMENT
        OF ADDITIONAL RENT

      

      Within
        six (90) months after the end of
        each Lease Year, the Landlord shall furnish to the Tenant a statement of
        the
        actual amount of Additional Rent payable by the Tenant for such preceding
        Lease
        Year and showing in reasonable detail the information relevant and necessary
        to
        the calculation thereof.  Subject to Article 3.3 the amount payable by
        the Tenant as shown on such statement is more or less than the Additional
        Rent
        paid by the Tenant to the Landlord for such Lease Year pursuant to Article
        3.3,
        the appropriate adjustment as between the Landlord and the Tenant shall be
        made
        within fourteen (14) days of delivery of such statement.  Any payment
        made by the Landlord or made by the Tenant and accepted by the Landlord in
        respect of any adjustment made pursuant to this Article 3.4 shall be without
        prejudice to the right of the Landlord or the Tenant to claim a readjustment,
        provided such claim, if made by the Tenant, is made within ninety (90) days
        after, or if made by the Landlord, is made within one hundred twenty (120)
        days
        after the date of delivery of the statement referred to in this
        Article 3.4.  The Tenant shall have the right, at its sole
        expense, for a period of ninety (90) days following receipt of the aforesaid
        statement to inspect during the Landlord's normal business hours, subject
        to the
        inspection being reasonable in all the circumstances, any record kept or
        held by
        the Landlord of the costs or expenses claimed by the Landlord for such Lease
        Year and the Landlord shall make its said records available
        accordingly.

      

      .5                
        MANNER
        AND PLACE OF PAYMENT

      

      Rent
        and all other sums payable by the
        Tenant to the Landlord hereunder shall be paid to the Landlord at the office
        of
        the Landlord set forth in Article 18.1, or at such other place as the Landlord
        may reasonably direct in writing, from time to time, without notice or demand,
        except as otherwise specifically provided herein and without deduction, set
        off
        or abatement for any reason whatsoever.  The Tenant shall pay to the
        Landlord interest at a rate equal to the lesser of the maximum rate permitted
        by
        law or the rate that is three (3%) percent per annum above the Prime Rate
        on all
        arrears of Rent or other sums payable by the Tenant to the Landlord pursuant
        to
        the terms hereof, from the date of default in payment until payment is received
        by the Landlord, except as otherwise specifically provided herein.

      

      .6                
        IRREGULAR
        CALCULATION OF BASIC RENT

      

      If
        for any reason it is necessary to
        calculate Basic Rent for a period of one or more months, but less than a
        Year of
        the Term, the same shall be calculated on the basis of 1/12 of the Basic
        Rent
        being payable for each month.  If for any reason it becomes necessary
        to calculate Basic Rent for a period of less than one month the same shall
        be
        calculated on the basis of 1/365 of the Basic Rent being payable for each
        day in
        such period.  Without restricting the generality of the foregoing, if
        the Commencement Date occurs other than on the first day of a month, the
        first
        instalment of Basic Rent paid by the Tenant in accordance with Article 3.1
        shall
        be based on the period from the Commencement Date to and including the last
        day
        of the month in which the Commencement Date occurs.

      

      .7                 DISPROPORTIONATE
        ALLOCATION

      

      Notwithstanding
        anything to the
        contrary in this Lease, to the extent that the Landlord, acting reasonably,
        determines that an item included in Additional Rent properly relates to only
        a
        portion of the Development or to a portion of the Building, the Landlord
        may
        allocate such item to such portion of the Development or Building, as the
        case
        may be, in which event the Tenant's Proportionate Share, if the Leased Premises
        are within such portion, shall be calculated in relation to the Gross Leasable
        Area of all leasable premises in such portion.

      

      .8                
        NET
        LEASE INTENT

      

      The
        Tenant covenants that this Lease
        shall be a completely carefree, triple net lease for the Landlord, except
        as
        shall be otherwise the Landlord shall not be responsible during the Term
        for any
        costs, charges, expenses and outlays of any nature whatsoever, arising from
        or
        relating to the Leased Premises or the contents thereof, the Building or
        the
        Development, excepting only the Landlord's income tax in respect of income
        received from leasing the Leased Premises and other premises in the
        Development.  Except as otherwise provided in the specific provisions
        contained in this Lease the Tenant shall pay, in the manner more particularly
        described in this Lease, all charges, impositions and costs of every nature
        and
        kind relating to the Leased Premises, the Building and the Development, whether
        or not stipulated in this Lease and whether of a kind now existing or
        contemplated by the parties or not.

      

      

      6           ARTICLE
        CONSTRUCTION AND FIXTURING OF LEASED PREMISES

      

      .1  LANDLORD'S
        AND TENANT'S
        WORK

      

      The
        parties agree that the
Tenant agrees to accept the Leased Premises on an “as is”
basis.  Any additional work shall be performed by the Tenant
        at the Tenant’s expense.

      

      .2   
        RESERVED

      

      .3   
        PAYMENT
        FOR THE LANDLORD'S WORK

      

      All
        work done at the Tenant's request
        (including the supplying of materials or equipment) by the Landlord or its
        contractors or subcontractors in or relating to the Leased Premises, over
        and
        above the Landlord's Work, shall be paid for by the Tenant forthwith on
        demand.

      

      .4   
        ACCEPTANCE
        OF LEASED PREMISES

      

      The
        taking of possession of the Leased
        Premises by the Tenant to construct the Tenant's Work shall be deemed to
        be
        conclusive proof that, except for latent defects or hidden defects and items
        noted in a list prepared by the Tenant during a joint inspection by the Tenant
        and the Landlord at the time of the taking of such possession, the Leased
        Premises are in the condition called for by this Lease to the extent that
        the
        Landlord is responsible therefor and that the Landlord has performed all
        of the
        Landlord's Work with respect thereto in a good and workmanlike
        manner.  The itemizing of any matter in such list by the Tenant shall
        not preclude the Landlord from disputing the categorization of such matter
        as a
        deficiency.

      

      .5   
        SITE
        PLAN, RELOCATION AND INABILITY TO COMPLETE
        -DELETED

      

      8           ARTICLE
        CONDUCT OF BUSINESS

      

      .1   
        USE
        OF
        LEASED PREMISES

      

      The
        Tenant shall not use or occupy the
        Leased Premises or any part thereof for any purpose other than the Permitted
        Use, without consent of the Landlord first having been obtained.

      

      .2   
        PROHIBITED
        USES

      

      The
        Tenant shall not, at any time,
        carry on nor suffer, permit or allow to be carried on in the Leased Premises
        any
        fire sale, distress sale, bankruptcy sale, going-out-of-business sale, or
        any
        other business sale designed to convey to the public that business operations
        are to be discontinued, an auction, a pawn business, a mail order business,
        any
        business which, because of the merchandise likely to be sold , the merchandising
        or pricing methods likely to be used, in the reasonable opinion of the Landlord,
        would tend to lower the character of the Development,  any criminal,
        quasi-criminal or illegal activity or any other business or occupation which
        shall be deemed by the Landlord to be a nuisance.

      

      .3   
        OPERATIONS
        DURING THE TERM

      

      The
        Tenant acknowledges that its
        continued occupancy of the Leased Premises and the regular conduct of its
        business therein are of the utmost importance to the Landlord in avoiding
        the
        appearance and impression generally created by vacant space in a development,
        in
        facilitating the leasing of vacant space, and in the renewal of other leases,
        and that the Landlord will suffer substantial damage if the Leased Premises
        are
        vacated or left vacant during the Term even if Basic Rent is paid.

      

      The
        Tenant shall on the Commencement
        Date commence and thereafter during the Term, actively and diligently carry
        on
        in the Leased Premises the business specified as the Permitted Use and shall
        without limiting the generality of the foregoing:

      

      
        	
                .1  

              	
                conduct
                  its business in the entire Leased Premises;
                  and

              

      

      

      
        	
                .2  

              	
                remain
                  open for business at least during normal business days and hours
                  for the
                  type of business being conducted from the Leased
                  Premises.

              

      

      

      The
        Tenant will not during the Term
        vacate or abandon the Leased Premises either in full or in part.

      

      .4   
        SIGNS

      

      The
        Tenant shall not paint, display,
        inscribe, place or affix any sign, picture, advertisement, notice, lettering
        or
        direction, or any window blinds or awnings, on any part of the outside of
        the
        Building or visible from the outside of the Building, or in any corridor,
        hallway, entrance or any other public part of the Building, without the prior
        written approval of the Landlord; provided that the Landlord may prescribe
        a
        uniform pattern for identification signs for tenants to be placed on the
        outside
        of the Leased Premises.  At the request of the Tenant and at the
        Tenant's expense, the Landlord shall cause such a sign to be placed in position
        in the form of lettering, style and design and in the size and position as
        authorized by the Landlord in writing.  On the expiration or sooner
        termination of this Lease, the Tenant shall cause any signs as aforesaid
        to be
        removed at its own expense and in a good and workmanlike manner.  The
        Tenant will indemnify and save harmless the Landlord from and against any
        loss,
        suit, action, damage, injury or claim suffered by any person, firm or
        corporation arising out of or by reason of the erection, or presence of any
        such
        sign(s) or awnings, or the removal of same and whether or not the Tenant,
        its
        officers, employees, agents, invitees or servants have been negligent with
        respect to the same.  Without limiting the generality of the
        foregoing, the Tenant will ensure that:

      

      
        	
                               
                  

              	
                (a)

              	
                All
                  signage must be approved in writing by the Landlord prior to
                  installation;

              

      

      

      
        	
                           
                  

              	
                (b)

              	
                Signs
                  may be illuminated with the Landlord's approval but in no case
                  will they
                  be allowed to flash or rotate;

              

      

      

      
        	
                 

              	
                (c)

              	
                The
                  use of any electronic signage or other form of reader board signage
                  shall
                  be approved at a preliminary design stage with the
                  landlord;

              

      

      

      
        	
                 

              	
                (d)

              	
                In
                  the event that the Landlord elects to install a free-standing directory
                  sign to identify a building or tenants, the Tenant shall have an
                  opportunity to display its trade name on the sign on a rental basis
                  to be
                  agreed upon;

              

      

      

      
        	
                 

              	
                (e)

              	
                Signs
                  featuring general advertising shall not be
                  permitted;

              

      

      

      
        	
                 

              	
                (f)

              	
                Signs
                  affixed to fascias shall not protrude above the roof level of a
                  building
                  nor the upper level of fascia to which they are attached.  No
                  external supporting structure shall be
                  visible;

              

      

      

      
        	
                 

              	
                (g)

              	
                Signs
                  may include the registered trademark or symbol of a company if
                  the signage
                  complies with the intent of these guidelines, and is to the Landlord's
                  satisfaction;

              

      

       

      .5    NUISANCE
        AND ANNOYANCE

      The
        Tenant shall not use or occupy the
        Leased Premises or suffer or permit the same to be used or occupied for any
        unlawful purpose, or for any dangerous, noxious or offensive trade or business,
        or for any purpose likely to cause a nuisance or annoyance to the Landlord
        or
        any other tenants of the Development nor undertake any operation likely to
        cause
        the same, nor commit or suffer to be done any waste, damage or disfigurement
        or
        injury to the Development or any part thereof nor permit or suffer the
        overloading of any floors therein.

      

      .6   
        ENVIRONMENT

      

      
        	
                 

              	
                (a)

              	
                The
                  Tenant will store any Hazardous Substances brought onto the Lands
                  in
                  accordance with all applicable laws and any required permits, licences
                  or
                  authorizations.

              

      

      

      
        	
                 

              	
                (b)

              	
                The
                  Tenant will not Release and will not permit the Release of any
                  Hazardous
                  Substances onto or from the Building or the Lands except in accordance
                  with applicable laws and any required permits, licences or
                  authorizations.

              

      

      

      
        	
                 

              	
                (c)

              	
                At
                  its own cost, risk and expense, the Tenant shall comply with all
                  laws and
                  regulations from time to time in force regulating the manufacture,
                  use,
                  storage, transportation, disposal or other dealing with Hazardous
                  Substances by the Tenant.

              

      

      

      
        	
                 

              	
                (d)

              	
                The
                  Tenant will be fully and completely liable for and will and does
                  hereby
                  indemnify and save harmless the Landlord from all cleanup costs
                  and
                  remediation charges, fees, penalties or damages, whether civil
                  or
                  criminal, and any expense with respect thereto, required by any
                  decree,
                  directive or order from any governmental authority relating to
                  the
                  treatment, storage, disposal or transportation of Hazardous Substances
                  on
                  or from the Lands by the Tenant, its employees, agents, contractors
                  or
                  others for whom the Tenant is responsible in
                  law.

              

      

      

      
        	
                               
                  

              	
                (e)

              	
                If
                  any Hazardous Substances are brought onto the Leased Premises or
                  created
                  upon the Leased Premises during the Term, such Hazardous Substances
                  shall
                  be the sole and exclusive property of the Tenant and not of the
                  Landlord,
                  notwithstanding the degree of affixation of the Hazardous Substances
                  or
                  the goods containing the Hazardous Substances to the Leased Premises
                  and
                  notwithstanding the expiry or sooner termination of this
                  Lease.

              

      

      

      
        	
                 

              	
                (f)

              	
                On
                  or before the expiration or sooner termination of this Lease, the
                  Tenant
                  will remove all Hazardous Substances which have been brought onto
                  or
                  created upon the Leased Premises during the Term, whether by the
                  Tenant or
                  any other person other than the Landlord, including any Hazardous
                  Substances which may have been Released or deposited into the
                  soil.

              

      

      

      
        	
                 

              	
                (g)

              	
                The
                  Tenant will advise the Landlord of any Release of any Hazardous
                  Substances
                  on the Leased Premises or the Lands forthwith and will provide
                  the
                  Landlord with all information, notices, reports and other documents
                  it has
                  regarding such Release and the remediation steps being undertaken
                  by the
                  Tenant with respect to the Release or as may reasonably be required
                  by the
                  Landlord of the Tenant.

              

      

      

      .7   
        COIN
        OPERATED MACHINES

      

      The
        Tenant shall not have or permit to
        suffer to be on the Leased Premises any machines selling merchandise or services
        or providing entertainment, whether by coins, credit cards or otherwise,
        unless
        expressly approved by the Landlord in writing, and except for use solely
        by the
        Tenant’s staff.

      

      .8   
        LOUDSPEAKERS
        AND OTHER ADVERTISING APPARATUS

      

      The
        Tenant shall not have or permit any
        public address, music broadcast or other sound system which may be heard
        beyond
        the limits of the Leased Premises.

      

      .9   
        DELIVERY
        OF SUPPLIES AND MATERIALS

      

      The
        delivery and shipping of
        merchandise, supplies, fixtures and other materials or goods of whatsoever
        nature to or from the Leased Premises and all loading, unloading and handling
        thereof shall be done through such entrances as designated by the Landlord
        and
        at such times and by such means as approved by the Landlord.

      

      .10        
          ORDINANCES
        AND REGULATIONS

      

      At
        its sole cost, risk and expense, the
        Tenant shall promptly:

      

      
        	
                .1  

              	
                Observe
                  and comply with all provisions of law including, without limitation,
                  all
                  requirements of all governmental authorities (including federal,
                  provincial and municipal legislative enactments, by-laws and other
                  regulations now or hereafter in force) which pertain to or affect
                  the
                  Leased Premises, the Tenant's use of the Leased Premises or the
                  conduct of
                  any business in the Leased Premises or the making of any repairs,
                  replacements, alterations, additions, changes, substitutions or
                  improvements of or to the Leased
                  Premises.

              

      

      

      
        	
                .2  

              	
                Observe
                  and comply with all police, fire and sanitary regulations and
                  recommendations imposed by any governmental authorities (whether
                  federal,
                  provincial or municipal) or made by fire insurance underwriters
                  or the
                  Insurers Advisory Organization of
                  Canada.

              

      

      

      
        	
                .3  

              	
                Carry
                  out all modifications, alterations or changes of or to the Leased
                  Premises
                  and the Tenant's conduct of business in, or use of, the Leased
                  Premises,
                  which are required by such authorities as a result of the Tenant's
                  occupation and use of the Leased
                  Premises.

              

      

      

      .11           RULES
        AND REGULATIONS

      

      The
        Tenant shall observe the rules and
        regulations (the "Rules and Regulations") attached hereto as Schedule "C"
        (as
        reasonably amended or supplemented from time to time on written notice by
        the
        Landlord) and the Tenant shall ensure that its employees and all persons
        visiting and doing business with the Tenant observe the Rules and
        Regulations.  Failure to keep and observe the Rules and Regulations
        constitutes a default under this lease.

      

      10           ARTICLE
        REPAIRS

      

      .1   
        TENANT'S
        REPAIRS

      

      Subject
        to Article 6.8, the Tenant
        shall at all times during the Term, at its own cost and expense, repair,
        maintain, operate and keep the Leased Premises, all equipment, fixtures and
        mechanical systems (including heating, ventilating and air-conditioning systems)
        within the Leased Premises or elsewhere (if such equipment, fixtures or systems
        are provided for the use or benefit of the Leased Premises) and any Leasehold
        Improvements now or hereafter made to the Leased Premises in good order,
        first-class condition and repair (reasonable wear and tear and repairs which
        are
        the Landlord's responsibility pursuant to Article 6.6 hereof only excepted)
        and
        shall promptly make all needed repairs and replacements thereto, and, without
        limiting the generality of the foregoing, during the Term the Tenant shall
        cause
        such good management and care to be taken of the Leased Premises and various
        parts thereof that no injury to the same shall occur and all water closets,
        sinks, heating and air-conditioning and ventilating apparatus located in
        the
        Leased Premises shall be maintained in a state of a standard acceptable to
        or
        determined by the Landlord and shall maintain such decorating to such standards
        throughout the Term.  The Tenant shall be responsible for all such
        maintenance, repairs, replacements and decorating and shall promptly with
        due
        diligence, at its sole expense, carry out any and all of the
        foregoing.

      

      .2   
        PERIMETER
        WALLS AND GLASS

      

      The
        Tenant shall promptly repair or
        make whole all damaged glass, plate glass, doors and windows in the Leased
        Premises as and whenever the same is required.

      

      .3   
        LANDLORD'S
        EXAMINATION OF LEASED PREMISES

      

      The
        Landlord and any employee, servant,
        agent or contractor of the Landlord shall be entitled, at any time during
        normal
        business hours and at any time in the event of any emergency, to enter and
        examine the state of maintenance, repair, decoration and cleanliness of the
        Leased Premises, all equipment and fixtures within the Leased Premises and
        any
        improvements now or hereafter made to the Leased Premises, and the Landlord
        may
        give notice to the Tenant requiring that the Tenant perform such maintenance
        or
        effect such repairs, replacements or decoration or cleaning as is the
        responsibility of the Tenant as may be found necessary from such
        examination.

      

      .4   
        LANDLORD'S
        RIGHT TO REPAIR

      

      In
        the event that the Tenant fails
        forthwith after the receipt of written notice thereof, or within such reasonable
        time thereafter if for any cause beyond the control of the Tenant it is not
        reasonable in the circumstances (it being agreed that lack of finances on
        the
        part of the Tenant shall not be treated as a cause beyond the Tenant's control),
        to commence and diligently proceed to perform such maintenance or effect
        such
        repairs, replacements, decorations or cleaning as so specified in any notice
        given by the Landlord, the Landlord, its employees, servants, agents or
        contractors may, but shall not be obligated to, enter the Leased Premises
        and at
        the Tenant's expense, perform and carry out the same and the Landlord in
        so
        doing shall not be liable for inconvenience, disturbance, loss of business
        or
        other damage resulting therefrom and in the event the Landlord expends any
        monies pursuant to this Article 6.4, the Tenant shall pay the same to the
        Landlord on demand with a fee of twenty (20%) percent of such amount for
        the
        Landlord's supervisory function and in addition shall pay interest on the
        aggregate of the foregoing at the rate provided in this Lease from the date
        of
        the expenditure of such first mentioned monies by the Landlord.

      

      .5   
        LANDLORD'S
        RIGHT TO ENTER FOR OTHER REPAIRS

      

      The
        Landlord, and any employee,
        servant, agent or contractor of the Landlord shall have the right to enter
        the
        Leased Premises at all times during business hours and at any time in the
        case
        of an emergency to make such alterations or repairs as the Landlord is required
        to make pursuant to the terms of this Lease or shall deem necessary for the
        safety, preservation, proper administration or improvement of the Development
        or
        any portion thereof and the Landlord in so doing, shall not be liable for
        inconvenience, disturbance, loss of business or other damage resulting
        therefrom.

      

      .6   
        LANDLORD'S
        REPAIRS

      

      The
        Landlord shall be responsible only
        for structural repairs to correct inherent defects in the following components
        of the Building:

      

      
        	
                .1  

              	
                the
                  roof deck (excluding the protective system above the deck
                  surface);

              

      

      

      
        	
                .2  

              	
                the
                  bearing walls (excluding perimeter caulking of walls and
                  windows),and

              

      

      

      
        	
                .3  

              	
                the
                  floor and foundation;

              

      

      

      save
        and
        except damage caused by the negligence or misconduct of the Tenant, its
        employees, invitees, licensees, agents, servants or other persons from time
        to
        time on or about the Leased Premises, the Building or the Lands for whom
        the
        Tenant is legally responsible.

      

      From
        time to time, throughout the Term,
        the Landlord shall repair all damage to the Leased Premises which is covered
        by
        any insurance effected by the Landlord in accordance with the provisions
        of
        Article 9.3 hereof to the extent of the proceeds of such insurance applicable
        thereto;

      

      PROVIDED
        HOWEVER that if any such
        repairs are necessitated by the negligence or misconduct of the Tenant, its
        servants, agents, contractors, licensees, employees or others for whom in
        law
        the Tenant is responsible, the Tenant shall pay to the Landlord on demand
        the
        cost of such repairs and a fee of fifteen (15%) percent for the Landlord's
        supervisory function and interest on the aggregate amount of both of the
        foregoing from the date of expenditure of the first mentioned monies by the
        Landlord.

      

      PROVIDED
        FURTHER that in any event the
        Landlord shall not be responsible for any damages, loss or injury sustained
        by
        the Tenant or any person or persons claiming through or under it, by reason
        of
        defects giving rise to the need for such repairs or the consequence thereof,
        including the inconvenience occasioned to the Tenant by the entry of the
        Landlord, its employees, servants, agents, or contractors on the Leased Premises
        to effect such repairs.

      

      .7   
        LANDLORD'S
        OBLIGATIONS TO MAINTAIN

      

      The
        Landlord shall maintain and keep
        the Common Areas and the Common Facilities in a state of repair and cleanliness
        consistent with the standard of a first-class development of a similar
        nature.

      

      .8   
        DAMAGE
        AND DESTRUCTION

      

      In
        the event of damage or destruction
        of the Leased Premises or the Building by fire, lightning, earthquake, tempest
        or other casualty so that:

      

      
        	
                .1  

              	
                the
                  same is damaged or destroyed to the extent that the same cannot
                  with
                  reasonable diligence be rebuilt, repaired or restored within one
                  hundred
                  and twenty (120) days of the date of damage or destruction (as
                  determined
                  in the opinion in writing of the Landlord's Architect, acting reasonably,
                  which written opinion shall be delivered to the Tenant within forty-five
                  (45) days of the occurrence of such damage or destruction) or the
                  estimated cost of rebuilding, repairing or restoring such damage
                  or
                  destruction will exceed by $75,000.00 or more the anticipated proceeds
                  of
                  insurance available to the Landlord for the purpose, then, notwithstanding
                  any other term of or condition of this Lease to the contrary, the
                  Landlord
                  may terminate this Lease by notice in writing to the Tenant given
                  within
                  sixty (60) days of the occurrence of such damage or destruction,
                  such
                  notice to be effective as at the date of the damage or destruction
                  if the
                  Leased Premises are not capable of being utilized by the Tenant,
                  as
                  determined by the Landlord's Architect, and otherwise to be effective
                  at
                  the date specified in such notice of termination, which shall not
                  be less
                  than thirty (30) days following receipt of such notice by the Tenant
                  and
                  in either of such events, the Rent hereby reserved shall be forthwith
                  payable by the Tenant to the effective date of the termination,
                  the Term
                  hereby granted shall terminate as at that date and the Landlord
                  may as at
                  the effective date of termination re-enter and take possession
                  of the
                  Leased Premises and deal with the same as fully and effectively
                  as if
                  these presents had not been entered into.  But if within the
                  said period of sixty (60) days, the Landlord shall not give notice
                  terminating this Lease, then as soon as reasonably practicable
                  thereafter,
                  the Landlord shall undertake or continue the rebuilding, repair
                  or
                  restoration with all reasonable diligence and the Basic Rent hereby
                  reserved, or a proportionate part thereof depending upon the proportion
                  of
                  the Leased Premises that are not fit for use by the Tenant for
                  the
                  intended purpose of this Lease, shall abate from the date of damage
                  or
                  destruction until the Leased Premises have been rebuilt and made
                  fit for
                  the intended purposes of this Lease;
                  or

              

      

      

      
        	
                .2  

              	
                the
                  same is damaged or destroyed to the extent that the same can with
                  reasonable diligence be rebuilt, repaired or restored within one
                  hundred
                  and twenty (120) days of the date of such damage or destruction
                  (as
                  determined in the opinion in writing of the Landlord's Architect,
                  which
                  written opinion shall be delivered to the Tenant within forty-five
                  (45)
                  days of the occurrence of such damage or destruction) and the Landlord
                  is
                  not otherwise entitled to terminate this Lease pursuant to Article
                  6.8.1
                  as soon as reasonably practicable after such determination, the
                  Landlord
                  shall undertake or continue the repair of the same with all reasonable
                  diligence, provided, however, that nothing herein contained shall
                  impose
                  any obligation upon the Landlord to complete such repair within
                  the same
                  period of one hundred and twenty (120) days and the Basic Rent
                  hereby
                  reserved, or a proportionate part thereof depending upon the proportion
                  of
                  the Leased Premises that are not fit for use by the Tenant for
                  the
                  intended purposes of this Lease, shall abate until the Leased Premises
                  have been rebuilt and made fit for the intended purposes of this
                  Lease.

              

      

      

      .9   
        QUALIFICATIONS

      

      
        	
                .1  

              	
                For
                  the purposes of Article 6.8 the terms "Leased Premises" and "Building"
                  shall be deemed not to include the Tenant's trade fixtures, merchandise,
                  stock-in-trade, furniture or any other improvements installed in
                  the
                  Leased Premises by or on behalf of the Tenant, including, without
                  limitation, the Tenant's Work.

              

      

      

      
        	
                .2  

              	
                If
                  the Landlord rebuilds, repairs, or restores the Building or the
                  Leased
                  Premises as contemplated in Article 6.8 it will not be required
                  to
                  reproduce exactly the Leased Premises or the Building or restore
                  the same
                  to the exact condition that existed before the damage or destruction,
                  provided that it reproduces or restores or rebuilds the same to
                  a
                  comparable condition and
                  configuration.

              

      

      

      
        	
                .3  

              	
                The
                  certificate of the Landlord's Architect in charge of the rebuilding,
                  repair or restoration shall bind the Landlord and the Tenant as
                  to the
                  state and proportion of the suitability for occupancy of the Leased
                  Premises and as to the date upon which the work of reconstruction
                  or
                  restoration performed by the Landlord is completed and the Leased
                  Premises
                  is fit for the purposes of the
                  Tenant.

              

      

      

      
        	
                .4  

              	
                Notwithstanding
                  any of the provisions of Article 6.8 to the contrary, in the event
                  the
                  damage or destruction referred to therein is caused by the negligence
                  or
                  misconduct of the Tenant, its servants, agents, employees, contractors,
                  licensees or other persons for whom in law the Tenant is
                  responsible:

              

      

      

      
        	
                (a)  

              	
                and
                  this Lease is not terminated as a result of such damage or destruction,
                  there shall be no abatement of Basic Rent as contemplated in Article
                  6.8;
                  and

              

      

      

      
        	
                (b)  

              	
                the
                  Tenant shall and does hereby indemnify and hold harmless the Landlord
                  from
                  and against any liabilities, damages, costs, claims, suits or actions
                  of
                  any nature whatsoever suffered by or incurred by the Landlord as
                  a result
                  of such damage or destruction and this indemnity and hold harmless
                  covenant shall survive the expiration of the
                  Term.

              

      

      

      .10           CONDITION
        AT EXPIRATION

      

      At
        the expiration or sooner termination
        of the Term, the Tenant shall peaceably surrender and yield up to the Landlord
        the Leased Premises as required by this Lease together with all improvements,
        erections and appurtenances which at any time or times during the Term shall
        be
        made, placed or erected therein or thereon, in good and substantial repair
        and
        condition, reasonable wear and tear and damage by fire, lightning and tempest
        only excepted and the Tenant shall surrender all keys to the Leased Premises
        to
        the Landlord at the place then fixed for the payment of Basic Rent and shall
        inform the Landlord of all combinations of locks, safes and vaults (if any)
        in
        the Leased Premises.

      

      

      12           ARTICLE
        COMMON AREAS AND COMMON FACILITIES

      

      .1   
        TENANT'S
        USE OF PARKING AREAS

      

      The
        Landlord shall provide to the
        Tenant during the Term, at no cost to the Tenant during the Initial Term
        described in paragraph 1.4.1, a maximum of 24 unreserved
parking stalls located in the Lands in locations determined
        by the
        Landlord from time to time.

      

      The
        Tenant, its employees, suppliers
        and other persons not licensees or invitees and having business with the
        Tenant
        shall be prohibited from using for parking of vehicles and loading or unloading
        of any vehicles any part of the customer parking areas as such may be designated
        and changed from time to time by the Landlord.  Tenant and employee
        parking shall be limited to specified times and places, arranged so as to
        cause
        minimal interference to business within the Development.  If requested
        by the Landlord the Tenant shall supply its employees' automobile license
        numbers to the Landlord.

      

      .2   
        LANDLORD'S
        RIGHT TO REMOVE VEHICLES

      

      Should
        the Tenant, its employees,
        suppliers or other persons not licensees or invitees of the Tenant park vehicles
        in areas not allocated for that purpose, the Landlord shall have the right
        to
        remove the said trespassing vehicles and the Tenant hereby indemnifies and
        saves
        harmless the Landlord from any and all damages arising therefrom and the
        Tenant
        will pay the costs of such removal.

      

      .3   
        VISITOR
        PARKING

      

      The
        Landlord shall at all times during
        the Term maintain for the benefit of the licensees and invitees of the Tenant
        parking facilities.

      

      .4   
        CONTROL
        OF COMMON AREAS AND COMMON FACILITIES

      

      The
        Landlord shall at all times have
        exclusive control and management of the Common Areas and the Common
        Facilities.  Such control applies to signs, use of shop windows, and
        the Tenant's publicity visible from the Common Areas, as well as to the use
        made
        by the Tenant and/or the public of the Common Areas.  The Landlord
        shall have the right to alter, vary, designate and redesignate the Common
        Areas
        and the Common Facilities from time to time and to interfere with the use
        of the
        Common Areas and the Common Facilities to the extent necessary to make such
        alterations or variations or any other repairs required or permitted to be
        made
        by the Landlord under this Lease.  The Tenant shall have the right, in
        common with others entitled thereto, to the use of the Common Areas and Common
        Facilities designated from time to time by the Landlord for use by tenants
        of
        the Development, subject to the provisions of this Lease and to all rules
        and
        regulations made by the Landlord with respect thereto from time to
        time.

      

      .5   
        MERCHANDISE
        ON COMMON AREAS

      

      In
        particular, but without in any way
        limiting the generality of the provisions of Article 7.4, the Tenant shall
        not
        keep, display, or sell any merchandise on or otherwise obstruct or use any
        part
        of the Common Areas or the Common Facilities, except as permitted by the
        Landlord and except for displays included in Development promotions when
        recognized and permitted by the Landlord.

      

      

      14           ARTICLE
        ASSIGNMENT AND SUBLETTING

      

      .1   
        PROHIBITIONS

      

      Except
        to a subsidiary or another
        entity controlled by controlling or under common control with Tenant, the
        Tenant
        will not assign this lease in whole or in part nor sublet, part with or share
        possession of all or any part of the Leased Premises, nor mortgage nor encumber
        this lease or the Tenant's interest in the Leased Premises or any part thereof,
        nor suffer nor permit the occupation of all or any part thereof by others
        (all
        of the foregoing being collectively referred to as the "Transfer") without
        the
        prior written consent of the Landlord in each instance, which consent shall
        not
        be unreasonably withheld but which shall in every case be subject to the
        provisions of sections 8.1 to 8.6.  The consent by the Landlord to any
        assignment or subletting shall not constitute a waiver of the necessity for
        such
        consent to any subsequent Transfer.  This prohibition against
        assigning or subletting shall be construed to include a prohibition against
        any
        Transfer by operation of law.  If this Lease shall be assigned, or if
        the Leased Premises or any part thereof shall be sublet or occupied by anybody
        other than the Tenant, the Landlord may collect rent from the assignee,
        sub_tenant or occupant, and apply the net amount collected to the Basic Rent
        and
        Additional Rent herein reserved, but no such assignment, subletting, occupancy
        or collection shall be deemed to be a waiver of this covenant or the acceptance
        of the assignee, sub_tenant or occupant as tenant, or a release of the Tenant
        from the further performance by the Tenant of the covenants on the part of
        the
        Tenant herein contained.  Notwithstanding any assignment or
        subletting, the Tenant shall remain jointly and severally liable on this
        lease
        and shall not be relieved from performing any of the terms, covenants and
        conditions of this lease.  Any assignment of the lease, if consented
        to by the Landlord, shall be prepared by the Landlord or its solicitors in
        such
        form as may be acceptable to the Landlord and its solicitors, and any and
        all
        legal costs, together with an administration cost of not less than $500.00
        with
        respect thereto shall be borne by the Tenant.

      

      .2   
        INFORMATION
        REGARDING TRANSFEREE AND LANDLORD’S RIGHT TO TERMINATE

      

      

      
        	
                .1  

              	
                In
                  the event the Tenant desires to effect a Transfer of all or any
                  part of
                  the Leased Premises or this lease or any estate or interest hereunder,
                  then (and so often as such event shall occur) the Tenant shall
                  give prior
                  written notice to the Landlord of such desire, specifying therein
                  the name
                  of the proposed assignee, transferee, sub_tenant or occupant (collectively
                  the "Transferee"), and such other information as the Landlord may
                  require
                  and the Landlord shall within thirty (30) days thereafter notify
                  the
                  Tenant in writing either that:

              

      

      
        	
                .1  

              	 

      

      

      
        	
                (a)  

              	
                it
                  consents or does not consent,
                  as aforesaid, to the Transfer, or

              

      

      
        	
                (a)  

              	 

      

      

      
        	
                (b)  

              	
                it
                  elects to cancel this lease
                  in preference to the giving of such
                  consent.

              

      

      
        	
                (a)  

              	 

      

      

      
        	
                .2  

              	
                In
                  the event that the Landlord elects to cancel this lease pursuant
                  to
                  section 8.2.1(b) then the Tenant shall notify the Landlord in writing
                  within fifteen (15) days thereafter of the Tenant's intention either
                  to
                  refrain from such Transfer or to accept the cancellation of the
                  lease.  Should the Tenant fail to deliver such notice within
                  such period of fifteen (15) days, the Tenant shall be deemed to
                  have
                  accepted the cancellation of this
                  lease.

              

      

      
        	
                .1  

              	 

      

      

      .3   
        STANDARDS
        FOR CONSENT

      

      Without
        limiting the other instances in
        which it may be reasonable for the Landlord to withhold its consent to a
        Transfer, and without derogating from the Landlord's right to terminate this
        Lease, as provided in paragraph 8.2.1(b), it will be fair and reasonable
        for the
        Landlord to withhold its consent or impose conditions to its consent in any
        of
        the following instances:

      

      

      
        	
                (a)  

              	
                if
                  the Landlord determines that the financial condition of the Transferee
                  or
                  any indemnifier of a Transferee is or may become insufficient to
                  support
                  all of the financial and other obligations of the Tenant under
                  this
                  Lease;

              

      

      
        	
                (a)  

              	 

      

      

      

      
        	
                (b)  

              	
                if
                  the use to which the Leased Premises will be put by the proposed
                  Transferee is inconsistent with the terms of this Lease or conflicts
                  with
                  any exclusive rights or covenants not to compete in favour of any
                  other
                  tenant or proposed tenant of the Development, or otherwise will
                  materially
                  or adversely affect any legitimate interest of the
                  Landlord;

              

      

      
        	
                (a)  

              	 

      

      

      

      
        	
                (c)  

              	
                if
                  the business reputation or character of the proposed Transferee
                  or any of
                  its affiliates is not reasonably acceptable to the
                  Landlord;

              

      

      
        	
                (a)  

              	 

      

      

      

      (d)  if
        the Landlord determines that the
        proposed Transferee is not likely to conduct on the Leased Premises a business
        that is:

      (a)  

      

      (i)  of
        a quality substantially equal to
        that conducted by the Tenant, or

      

      
        	
                (ii)  

              	
                consistent
                  or compatible with the operations of existing tenants within the
                  Development.

              

      

      
        	
                (i)  

              	 

      

      

      (e)  if,
        at the time of the proposed
        Transfer,

      (a)  

      

      
        	
                (i)  

              	
                the
                  Tenant is in default (or would be in default with the giving of
                  notice by
                  the Landlord and the expiration of any applicable cure period)
                  under this
                  Lease, and

              

      

      

      
        	
                (ii)  

              	
                the
                  Landlord has not received assurances acceptable to the Landlord,
                  in its
                  sole discretion, that any past due amounts owing from the Tenant
                  to the
                  Landlord will be paid and any other defaults on the part of the
                  Tenant
                  will be cured prior to the effectiveness of the proposed
                  Transfer;

              

      

      

      (f)  if
        the Transfer will result in a
        division of the Leased Premises;

      (a)  

      

      (g)  if
        the Transfer is not approved by any
        mortgagee having the right to approve such Transfer;

      (a)  

      

      (h)  if
        the proposed Transferee is an
        existing tenant within the Development (which shall include, without limitation,
        any tenant which is an overholding or month_to_month tenant) or a party with
        which the Landlord is bona fide negotiating or attempting to negotiate, or
        has,
        within the twelve months prior to the Tenant’s request for consent, attempted to
        negotiate, a lease or an offer to lease in respect of any premises within
        the
        Development; or

      (a)  

      

      (i)  if
        the Tenant has not received a bona
        fide, written offer to take an assignment or a sublease or has not supplied
        a
        copy of such offer to the Landlord at the time of requesting consent to a
        Transfer; or

      

      
        	
                (j)  

              	
                if
                  the proposed Transferee fails or refuses to execute and deliver
                  to the
                  Landlord an agreement, in form and content required by the Landlord,
                  whereby the Transferee agrees to perform, observe and keep each
                  and every
                  covenant and condition of the Lease on the part of the Tenant to
                  be
                  observed and performed including (except in the case of a subtenancy)
                  the
                  obligation to pay Rent.

              

      

      
        	
                (a)  

              	 

      

      

      .4   
        NO
        ADVERTISING

      

      The
        Tenant will not advertise the whole
        or any part of the Leased Premises for lease nor permit any agent or broker
        to
        do so, unless the prior written approval of the Landlord has been
        received.

      

      

      .5    CHANGE
        OF CONTROL OF TENANT  - DELETED

      

      .6    REMEDY
        OF THE TENANT

      

      The
        Landlord will have no liability in
        connection with any claims of any kind by the Tenant or others as a result
        of
        the Landlord's withholding or delay of consent to any Transfer and the Tenant's
        (or any other person's) only remedy in respect of the Landlord's withholding
        or
        delay of consent will be to bring an application for a declaration that such
        transaction should be allowed.

      

      .7   
        ASSIGNMENT
        BY LANDLORD

      

      The
        Landlord may assign all or a part
        of its interest in this Lease without the Tenant's knowledge or
        consent.

      

      16           ARTICLE
        INSURANCE

      

      .1   
        TENANT
        TO INSURE

      

      At
        its sole cost, risk and expense, the
        Tenant shall take out and keep in force during the Term and any period of
        occupancy of the Leased Premises by the Tenant prior to the Commencement
        Date,
        standard fire and extended coverage, contractual and tenant's legal liability
        coverage, lease agreement contractual coverage, and malicious damage insurance
        on the stock-in-trade, furniture, fixtures, glass improvements and all other
        contents of the Leased Premises to their full replacement value and
        comprehensive general liability insurance in an amount of not less than five
        million dollars ($5,000,000.00) and tenant's fire legal liability insurance
        all
        in amounts and with policies in a form satisfactory to the Landlord with
        insurers acceptable to the Landlord.  Each such policy shall name the
        Landlord as an additional insured as its interest may appear and such
        comprehensive public liability insurance shall contain a provision for cross
        liability as between the Landlord and the Tenant.  Each policy other
        than the public liability policies shall provide that the insurer shall not
        have
        any right of subrogation against the Landlord, its servants, agents or employees
        on account of any loss or damage covered by such insurance or on account
        of
        payments made to discharge claims against or liabilities of the Landlord
        or
        Tenant covered by such insurance.  The cost or premium for each and
        every such policy shall be paid by the Tenant.  The Tenant shall
        obtain from the insurers under such policies, undertakings to notify the
        Landlord in writing at least thirty (30) days prior to any cancellation or
        reduction in coverage thereof.  If the Tenant fails to take out or
        keep in force, or provide to the Landlord proof, as hereafter contemplated,
        of
        such insurance, the Landlord shall have the right to place such insurance
        on
        behalf of the Tenant and to pay the premium therefor and in such event, the
        Tenant shall repay to the Landlord the amount paid therefor, which repayment
        shall be deemed to be Additional Rent payable on the first day of the next
        month
        following the said payment by the Landlord.  The Tenant agrees to
        provide the Landlord with current copies of the insurance policies or
        certificate of insurance as described herein.

      

      .2   
        NOT
        TO
        AFFECT LANDLORD'S INSURANCE

      

      The
        Tenant will not upon the Leased
        Premises do or permit to be done, or omit to do anything which causes or
        has the
        effect of causing the rate of insurance upon the Development or any part
        thereof
        to be increased and if the insurance rate shall be thereby increased by any
        action of the Tenant, the Tenant shall pay to the Landlord on demand as
        Additional Rent the amount by which the insurance premiums shall be so
        increased.  The Tenant will not store or permit to be stored upon or
        in the Leased Premises anything of a dangerous, inflammable or explosive
        nature
        nor anything which would have the effect of increasing the Landlord's insurance
        costs or of leading to the cancellation of such insurance.  It is
        agreed that if any insurance policy upon the Leased Premises shall be cancelled
        by the insurer by reason of the use and occupation of the Leased Premises
        or any
        part thereof by the Tenant or by any assignee, sub-tenant, concessionaire
        or
        licensee of the Tenant, or by anyone permitted by the Tenant to be upon the
        Leased Premises, at its option, the Landlord may, forthwith enter upon the
        Leased Premises and rectify the situation causing such cancellation or rate
        increase, and the Tenant shall forthwith on demand pay to the Landlord the
        costs
        of the Landlord related to such rectification together with a supervisory
        fee of
        twenty (20%) percent of such cost and with interest on the aggregate of the
        foregoing from the date funds were expended by the Landlord.

      

      .3   
        LANDLORD
        TO INSURE

      

      Throughout
        the Term, the Landlord shall
        carry fire insurance with normal coverage endorsements in respect of the
        buildings and improvements forming part of the Development (but excluding
        the
        Tenant's trade fixtures, merchandise, stock-in-trade, furniture or any other
        improvements installed in the Leased Premises by or on behalf of the Tenant,
        including the Tenant's Work) in an amount not less than ninety (90%) percent
        of
        the full replacement cost (excluding the cost of foundations, footings,
        underground utilities and architects and other fees associated with these
        items)
        from time to time, on a stated amount basis, provided that such insurance,
        without further consent or notice to the Tenant, may have a deductible amount,
        provided that such deductible amount shall not exceed three (3%) percent
        of the
        amount insured under such policy or policies.  The Landlord may, but
        shall not be obligated to, carry such other insurance including public liability
        insurance and rental loss insurance relating to the Lands or such risks and
        perils in relation thereto or the Landlord's interest derived therein as
        the
        Landlord may so determine.  All such insurance so obtained by the
        Landlord shall be for the sole benefit of the Landlord and the Tenant shall
        be
        entitled to no interest therein or benefit thereof.

      

      18           ARTICLE
        TENANT ALTERATIONS

      .1   
        PAINTING,
        DECORATING AND ALTERATIONS

      

      Provided
        it first obtains the consent
        of the Landlord, at any time and from time to time and at its expense, the
        Tenant may paint and decorate the interior of the Leased Premises in accordance
        with the manner and standard referred to in Article 6.1, and make such changes,
        alterations, additions and improvements in and to the Leased Premises as
        will in
        the judgement of the Tenant better adapt the Leased Premises for the purposes
        of
        its business; provided, however, that no changes, alterations, additions
        or
        improvements to the structure, any perimeter wall, the sprinkler system,
        the
        heating, ventilating, air-conditioning, plumbing, electrical or mechanical
        equipment or the concrete floor or the roof shall be made without the prior
        written consent of the Landlord.  All changes, alterations, additions
        and improvements, whether structural or otherwise, shall be carried out in
        accordance with the reasonable requirements or rules of the Landlord and
        shall
        comply with all applicable statutes, regulations or bylaws of any municipal,
        provincial or other governmental authority.  As part of the process of
        the Landlord's examination and approval of the Tenant's plans and specifications
        and materials, such plans and specifications and materials, in addition to
        being
        submitted to the Landlord's Architect, may be submitted by the Landlord to
        other
        architects, engineers, and special consultants and progress and completion
        of
        the work may require supervision and/or inspection by the Landlord or any
        of the
        foregoing persons on behalf of the Landlord.  Any fees and costs
        incurred by the Landlord in relation to the foregoing will be paid by the
        Tenant
        to the Landlord within fifteen (15) days of billing.  The Tenant shall
        pay to the Landlord the amount of any increase for any insurance coverage
        of the
        Landlord directly attributable to any action by the Tenant as hereinbefore
        in
        this Article 10.1 provided and the Tenant covenants that such insurance shall
        not thereby be made liable to avoidance or cancellation by the insurer by
        reason
        of such changes, alterations, additions or improvements.

      

      .2   
        LANDLORD'S
        PROPERTY

      

      At
        the expiration of the Term all
        changes, alterations, additions and improvements made to or installed upon
        or in
        the Leased Premises and which in any manner are attached in, to, on or under
        the
        floors, walls or ceilings (other than unattached movable trade fixtures)
        shall
        remain upon and be surrendered to the Landlord with the Leased Premises as
        part
        thereof, without disturbance, molestation or injury and shall be and become
        the
        absolute property of the Landlord without any payment or indemnity by the
        Landlord or any third party to the Tenant or any other
        party.  Notwithstanding the foregoing provisions of this Article 10.2,
        unless the Lease has been terminated pursuant to Article 6.8.1, the Landlord
        may
        by notice in writing require the Tenant to remove the aforesaid changes,
        alterations, additions and improvements in whole or in part, in which event
        the
        Tenant shall remove the same and restore to the extent so requested the Leased
        Premises to the state in which they were prior to the commencement of any
        of the
        Tenant's Work and shall make good any damage or injury caused to the Leased
        Premises resulting from such installation and removal, reasonable wear and
        tear
        and the Landlord's repair obligations only excepted.  The obligations
        of the Tenant under this Article 10.2 shall survive the expiration or sooner
        termination of the Term.

      

      .3   
        PROHIBITIONS

      

      The
        Tenant, its employees, agents and
        representatives, are expressly prohibited from entering upon the roof of
        the
        Building or any Other Buildings for any reason whatsoever.  The Tenant
        shall not make any repairs, openings or additions to any part of the exterior
        of
        the Leased Premises, nor place any attachments, decorations, signs or displays
        in or upon any Common Area or the exterior of the Leased Premises failing
        which
        the Tenant will be held responsible for all ensuing costs and damages whether
        to
        remove such items or to effect repairs needed as a result of such acts and
        shall
        pay the cost thereof to the Landlord forthwith on demand together with a
        supervisory fee to the Landlord of twenty (20%) percent of such cost as well
        as
        interest at the rate specified in Article 3.5 hereof on the aggregate of
        the
        foregoing from the date funds are so expended by the Landlord.

      

      .4   
        NO
        LIENS

      

      The
        Tenant shall not create any
        mortgage, conditional sale agreement, security under the section 178 of the
        Bank
        Act of Canada or under the  Personal Property Act of British
        Columbia or any other encumbrance (individually, an “Encumbrance”) in respect of
        its improvements, trade fixtures, any Leasehold Improvements, goods or
        merchandise or permit any such Encumbrance to attach to the Leased Premises.
        The
        Tenant shall promptly pay all its contractors and suppliers and shall do
        any and
        all things necessary in order to prevent any construction or other liens
        (individually, a “Lien”) or orders for the payment of money to be registered
        against the Leased Premises.  If any Lien or Encumbrance is granted or
        filed, the Tenant shall discharge the same forthwith, after notice thereof
        is
        given to the Tenant, at the Tenant’s expense.  If the Tenant shall
        fail to cause any such Lien or Encumbrance to be discharged, as aforesaid,
        then,
        in addition to any other right or remedy of the Landlord, the Landlord may,
        but
        shall not be so obligated, discharge same by paying the amount claimed to
        be due
        into Court or directly to any such Lien claimant or Encumbrance holder and
        the
        amount so paid by the Landlord and all costs and expenses, including solicitor’s
        fees, on a solicitor client basis, incurred for the discharge of such Lien
        or
        Encumbrance shall be due and payable by the Tenant to the Landlord as Additional
        Rent on demand.

      

      

      20           ARTICLE
        PUBLIC UTILITIES AND TAXES

      

      .1   
        PUBLIC
        UTILITIES, BUSINESS TAX

      

      The
        Tenant shall pay and discharge as
        the same fall due all charges for utilities provided to or consumed on the
        Leased Premises during the Term, including telephone installations, water,
        electrical power, gas and telephone charges metered separately or charged
        separately by the authority providing the same to the Leased Premises as
        well as
        any charges of any such authority based thereon all other charges similar
        in
        nature, and shall also pay and discharge as the same fall due all business
        taxes
        and rates and personal property taxes, licence fees or similar fees which
        may be
        imposed by any municipal, legislative or other authority in respect of the
        use
        or occupancy of the Leased Premises or any personal property situate thereon
        or
        in respect of any fixtures, machinery, equipment or apparatus installed in
        the
        Leased Premises (or elsewhere in the Development by the Tenant).

      

      PROVIDED
        ALWAYS that if any of the
        aforesaid utilities are provided to the Leased Premises through a common
        metering device or on any other shared basis with any other premises or portions
        of the Building or the Development, the Tenant shall pay to the Landlord
        forthwith on demand, from time to time by the Landlord, the Tenant's share
        of
        the cost thereof based on such allocation as the Landlord may reasonably
        determine in relation to the other premises or portions of the Building or
        the
        Development being so served.

      

      .2   
        PAYMENT
        OF REAL PROPERTY TAXES BY LANDLORD

      

      Without
        derogating from any of the
        Tenant's obligations with respect to payment of Additional Rent, the Landlord
        shall pay or cause to be paid all Real Property Taxes when due to the
        municipality or other taxing authorities having jurisdiction, PROVIDED ALWAYS
        that the Landlord may postpone such payment to the extent permitted by law
        if
        pursuing in good faith any appeal against the imposition thereof.

      

      .3   
        INCREASE
        IN REAL PROPERTY TAXES ATTRIBUTABLE TO TENANT

      

      From
        time to time if requested by the
        Landlord, the Tenant shall pay to the Landlord forthwith on demand by the
        Landlord, an amount equal to any increase in the amount of Real Property
        Taxes
        by reason of any installation, alteration, or use made in or to the Leased
        Premises by or for the benefit of the Tenant or any party claiming by or
        through
        the Tenant.

      

      

      22           ARTICLE
        EXCLUSION OF LIABILITY AND INDEMNITY

      

      .1   
        EXCLUSION
        OF LIABILITY

      

      It
        is agreed between the Landlord and
        the Tenant that except for the negligence or misconduct of the Landlord,
        its
        agents, servants or employees:

      

      
        	
                .1  

              	
                the
                  Landlord, its agents, servants and employees shall not be liable
                  for
                  damage or injury to any property of the Tenant which is entrusted
                  to the
                  care or control of the Landlord, its agents, servants or
                  employees;

              

      

      

      
        	
                .2  

              	
                the
                  Landlord, its agents, servants and employees shall not be liable
                  nor
                  responsible in any way for any personal or consequential injury
                  of any
                  nature whatsoever that may be suffered or sustained by the Tenant
                  or any
                  employee, agent, customer, invitee or licensee of the Tenant or
                  any other
                  person who may be upon the Leased Premises or the Development or
                  for any
                  loss of or damage or injury to any property belonging to the Tenant
                  or to
                  its employees or to any other person while such property is on
                  the Leased
                  Premises or the Development and, in particular (without limiting
                  the
                  generality of the foregoing) the Landlord shall not be liable for
                  any
                  damage or damages of any nature whatsoever to any such property
                  caused by
                  the failure, by reason of a breakdown or other cause, to supply
                  adequate
                  drainage, snow or ice removal, or by reason of the interruption
                  of any
                  public utility or service or in the event that steam, water, rain
                  or snow
                  may leak into, issue or flow from any part of the Development or
                  from the
                  water, steam, sprinkler, or drainage pipes or plumbing works, or
                  from
                  another place or quarter or for any damage caused by anything done
                  or
                  omitted by any tenant, but the Landlord shall, after notice of
                  the same
                  and where it is within its obligation so to do, use all reasonable
                  diligence to remedy such condition, failure or interruption of
                  service
                  when not directly or indirectly attributable to the Tenant, and
                  the Tenant
                  shall not be entitled to any abatement of Rent or damages in respect
                  of
                  any such condition, failure or interruption of
                  service;

              

      

      

      
        	
                .3  

              	
                the
                  Landlord, its agents, servants, employees or contractors shall
                  not be
                  liable for any damage suffered to the Leased Premises or the contents
                  thereof by reason of the Landlord, its agents, servants, employees
                  or
                  contractors entering upon the Leased Premises to undertake any
                  examination
                  thereof or any work therein or in the case of an
                  emergency.

              

      

      

      
        	
                .4  

              	
                the
                  Tenant hereby expressly releases the Landlord from any claims,
                  damages,
                  judgments, losses or awards caused by or arising from perils insured
                  against or required to be insured against by the Tenant under this
                  Lease.

              

      

      

      .2   
        INDEMNIFICATION

      

      Notwithstanding
        any other provision of
        this Lease to the contrary, the Tenant shall:

      

      
        	
                .1  

              	
                be
                  liable to the Landlord for; and

              

      

      

      
        	
                .2  

              	
                indemnify
                  and hold harmless the Landlord, its agents, advisors, servants
                  and
                  employees from and against:

              

      

      

      
        	
                 

              	
                any
                  and all liabilities, claims, suits or actions, costs, damages and
                  expenses
                  (and without limiting the generality of the foregoing, any direct
                  losses,
                  costs, damages and expenses of the Landlord including costs on
                  a
                  solicitor-client basis) which may be brought or made against the
                  Landlord,
                  or which the Landlord may pay or incur as a result of or in connection
                  with:

              

      

      

      
        	
                .3  

              	
                any
                  breach, violation or non-performance of any covenant, condition,
                  agreement
                  in this Lease set forth and contained on the part of the Tenant
                  to be
                  fulfilled, kept, observed and
                  performed;

              

      

      

      
        	
                .4  

              	
                any
                  damage to property, including property of the Landlord, occasioned
                  by the
                  operations of the Tenant's business on, or the Tenant's occupation
                  of, the
                  Leased Premises; or

              

      

      

      
        	
                .5  

              	
                any
                  injury to person or persons, including death resulting at any time
                  therefrom, occasioned by the operation of the Tenant's business
                  on, or the
                  Tenant's occupation of, the Leased
                  Premises;

              

      

      

      such
        indemnity and hold harmless to survive the expiration of the Term.  In
        case the Landlord shall, without fault on its part, be made a party to any
        litigation commenced by or against the Tenant, then the Tenant shall protect
        and
        hold the Landlord harmless and shall pay all costs, expenses and reasonable
        legal fees incurred or paid by the Landlord in connection with such
        litigation.  The Tenant shall also pay costs, expenses and reasonable
        legal fees that are incurred or paid by the Landlord in enforcing the covenants
        and agreements contained in this lease, unless a Court shall otherwise
        decide.

      

      

      24           ARTICLE
        LANDLORD'S RIGHTS AND REMEDIES

      

      .1   
        DEFAULT

      

      If
        and whenever:

      

      
        	
                .1  

              	
                the
                  Rent hereby reserved, or any part thereof, be not paid when due,
                  or within
                  5 business days of written demand for payment of same or there
                  is
                  non-payment of any other sum which the Tenant is obligated to pay
                  under
                  any provisions hereof;

              

      

      

      
        	
                .2  

              	
                the
                  Term or a substantial portion of any goods, chattels, equipment
                  or other
                  personal property of the Tenant, shall be taken or be exigible
                  in
                  execution or attachment, or if a writ of execution shall issue
                  against the
                  Tenant;

              

      

      
        	
                .3  

              	
                the
                  Tenant shall become insolvent
                  or commit any act of bankruptcy or become bankrupt or take the
                  benefit of
                  any Act that may be in force for bankrupt or insolvent debtors,
                  or become
                  involved in a winding-up proceedings, voluntary or otherwise, or
                  if a
                  receiver shall be appointed for the business, property, affairs
                  or
                  revenues of the Tenant, or if any governmental authority should
                  take
                  possession of the business or property of the
                  Tenant;

              

      

      

      
        	
                .4  

              	
                the
                  Tenant shall fail to commence business actively and diligently
                  from and on
                  the Leased Premises within thirty (30) days after the Commencement
                  Date;

              

      

      

      
        	
                .5  

              	
                the
                  Tenant shall make a bulk sale of its goods or move or commence,
                  attempt or
                  threaten to move its goods, chattels and equipment out of the Leased
                  Premises (other than in the routine course of its business) or
                  shall, for
                  a period of ten (10) consecutive days (without the prior written
                  consent
                  of the Landlord), fail to conduct business from the Leased
                  Premises;

              

      

      

      
        	
                .6  

              	
                the
                  Tenant shall vacate or abandon the Leased Premises in whole or
                  in
                  part;

              

      

      

      
        	
                .7  

              	
                the
                  Tenant shall Transfer or purport to Transfer any portion or all
                  of the
                  Term of the Leased Premises without the written consent of the
                  Landlord or
                  control of the Tenant if a corporation is changed without the prior
                  written consent of the Landlord, in either case as required pursuant
                  to
                  Article 8;

              

      

      

      
        	
                .8  

              	
                the
                  Tenant shall fail to remedy any condition giving rise to cancellation,
                  threatened cancellation, reduction or threatened reduction of any
                  insurance policy on the Development or any part thereof within
                  twenty-four
                  (24) hours after notice thereof by the Landlord;
                  or

              

      

      

      
        	
                .9  

              	
                           the
                  Tenant shall not observe, perform and keep any other of the covenants,
                  agreements, provisions, stipulations and conditions herein to be
                  observed,
                  performed and kept by the Tenant (other than the payment of Basic
                  Rent or
                  Additional Rent) and shall persist in such failure for ten (10)
                  days after
                  notice by the Landlord requiring that the Tenant remedy, correct,
                  desist
                  or comply (or in the case of any such breach which reasonably would
                  require more than ten (10) days to rectify unless the Tenant shall
                  commence rectification within the said ten (10) day period and
                  thereafter
                  promptly and diligently and continuously proceed with the rectification
                  of
                  the breach);

              

      

      

      
        	
                .10  

              	
                the
                  Tenant fails to discharge a security interest granted in respect
                  of the
                  Leasehold improvements or to discharge a notice filed in respect
                  of the
                  Leased Premises under section 49 of the Personal Property Security
                  Act of British Columbia after demand by the
                  Landlord;

              

      

      

      then
        and
        in any of such cases,  at the option of the Landlord, the full amount
        of the current month's and the next ensuing three (3) month's Rent shall
        immediately become due and payable as Additional Rent and the Landlord may
        immediately distrain for the same, together with any arrears then unpaid,;
        and
        the Landlord may without notice or any form of legal process forthwith re-enter
        upon and take possession of the Leased Premises or any part thereof in the
        name
        of the whole and remove and sell the Tenant's goods, chattels, equipment
        and any
        other property therefrom, any rule of law or equity to the contrary
        notwithstanding; and the Landlord may seize and sell such goods, chattels,
        equipment and other property of the Tenant as are in the Leased Premises
        or at
        any place to which the Tenant or any other person may have removed them in
        the
        same manner as if they had remained and had been distrained upon the Leased
        Premises; and such sale may be effected in the discretion of the Landlord
        either
        by public auction or by private treaty, and either in bulk or by individual
        item, or partly by one means and partly by another, all as the Landlord in
        its
        entire discretion may decide, and the Tenant waives  and renounces the
        benefit of any present or future statute or amendments thereto taking away
        or
        limiting the Landlord's right of distress.

      

      .2   
        CONSEQUENCES
        OF DEFAULT

      

      If
        and whenever the Landlord is
        entitled to re-enter the Leased Premises, the Landlord may terminate this
        Lease
        and the Term by giving written notice of termination to the Tenant or by
        posting
        notice of termination in the Leased Premises, and in such event the Tenant
        will
        forthwith vacate and surrender the Leased Premises.  Alternatively,
        the Landlord may from time to time without terminating the Tenant's obligations
        under this Lease, make alterations and repairs considered by the Landlord
        necessary to facilitate a subletting and sublet the Leased Premises or any
        part
        thereof as agent of the Tenant for such term or terms and at such rent or
        rents
        and upon such other terms and conditions as the Landlord in its sole discretion
        considers advisable.  Upon each subletting all rent and other monies
        received by the Landlord from the subletting shall be applied, first to the
        payment of indebtedness other than Rent due hereunder from the Tenant to
        the
        Landlord, second to the payment of costs and expenses of the subletting
        including brokerage fees and solicitors fees and the cost of alterations
        and
        repairs, and third to the payment of Rent due and unpaid
        hereunder.  The residue, if any, shall be held by the Landlord and
        applied in payment of future Rent as it becomes due and payable.  If
        the Rent received from the subletting during a month and any surplus then
        held
        by the Landlord to the credit of the Tenant is less than the Rent to be paid
        during that month by the Tenant, the Tenant will pay the deficiency to the
        Landlord.  The deficiency will be calculated and paid
        monthly.  No re-entry by the Landlord will be construed as an election
        on its part to terminate this Lease unless a written notice of that termination
        is given to the Tenant or posted as aforesaid.  Despite a subletting
        without termination, the Landlord may elect at any time to terminate this
        Lease
        for a previous breach.  If the Landlord so terminates this Lease, the
        Tenant shall pay to the Landlord on demand therefor:

      

      
        	
                .1  

              	
                Basic
                  Rent and Additional Rent accrued due up to the time of re-entry
                  or
                  termination, whichever is later, plus the next three (3) months
                  Rent
                  payable as Additional Rent as provided in Article
                  13.1;

              

      

      

      
        	
                .2  

              	
                all
                  costs payable by the Tenant pursuant to the provisions of this
                  Lease up
                  until the date of re-entry or termination, whichever is
                  later;

              

      

      

      
        	
                .3  

              	
                such
                  expenses as the Landlord may incur or has incurred in connection
                  with
                  re-entering or terminating and re-letting, or collecting sums due
                  or
                  payable by the Tenant or realizing upon assets seized, including,
                  without
                  limitation, brokerage expenses, legal fees and disbursements determined
                  on
                  a full indemnity basis, and including the expense of keeping the
                  Leased
                  Premises in good order and repairing or maintaining the same or
                  preparing
                  the Leased Premises for re-letting;
                  and

              

      

      

      
        	
                .4  

              	
                as
                  liquidated damages for the loss of Rent and other income of the
                  Landlord
                  expected to be derived from this Lease during the period which
                  would have
                  constituted the unexpired portion of the Term had the Lease not
                  been so
                  terminated, the amount, if any, by which the rental value of the
                  Leased
                  Premises for such period established by reference to the terms
                  and
                  provisions of this Lease exceeds the rental value of the Leased
                  Premises
                  for such period established by reference to the terms and provisions
                  upon
                  which the Landlord re-lets them, if such re-letting is accomplished
                  within
                  a reasonable time after termination of this Lease, and otherwise
                  with
                  reference to all market and other relevant
                  circumstances.  Rental value is to be computed in each case by
                  reducing to present worth at an assumed interest rate of ten percent
                  (10%)
                  per annum all Rent and other amounts to become payable for such
                  period and
                  where the ascertainment of amounts to become payable requires the
                  same
                  computation, the Landlord may make estimates and assumptions of
                  fact which
                  will govern unless shown to be unreasonable or
                  erroneous;

              

      

      

      and
        all
        such obligations of the Tenant shall survive the expiration of the
        Term.

      

      .3   
        NONWAIVER

      

      The
        failure of the Landlord to insist
        in any one or more cases upon the strict performance of any of the covenants
        of
        this Lease or to exercise any option herein contained shall not be construed
        as
        a waiver or a relinquishment for the future of such covenant or option and
        the
        acceptance of Rent by the Landlord with knowledge of the breach by the Tenant
        of
        any covenants or conditions of this Lease shall not be deemed to be a waiver
        of
        such breach and no waiver by the Landlord of any provisions of this Lease
        shall
        be deemed to have been made unless expressed in writing by the
        Landlord.

      

      .4   
        RIGHT
        OF LANDLORD TO PERFORM TENANT'S COVENANTS

      

      If
        at any time and so often as the same
        shall happen, the Tenant shall make default in the observance or performance
        of
        any of the Tenant's covenants herein contained, then the Landlord may, but
        shall
        not be obligated to, without waiving or releasing the Tenant from its
        obligations under the terms of this Lease, itself observe and perform the
        covenant or covenants in respect of which the Tenant is in default, and in
        that
        connection may pay such monies as may be required or as the Landlord may
        reasonably deem expedient, and the Landlord may thereupon charge all monies
        so
        paid and expended by it to the Tenant together with interest thereon from
        the
        date upon which the Landlord shall have paid out the same; provided, however,
        that if the Landlord commences and completes either the performance of any
        such
        covenant or covenants or any part thereof, the Landlord shall not be obliged
        to
        complete such performance or be later obliged to act in like
        fashion.

      

      .5   
        TIME
        FOR PAYMENT AND LEGAL COSTS

      

      Unless
        otherwise expressly provided in
        the Lease, all sums and costs paid by the Landlord, including, without
        limitation, costs paid between solicitor and client, on account of any default
        by the Tenant under this Lease, shall be payable to the Landlord by the Tenant
        forthwith, with interest thereon at the rate stipulated in Article 3.4 from
        date on payment of such sums or costs by the Landlord, collectible as
        Rent.

      

      Unless
        otherwise expressly provided in
        the Lease, all amounts (other than Rent) required to be paid by the Tenant
        to
        the Landlord pursuant to this Lease shall be payable on demand at the place
        designated by the Landlord for payment of Rent and if not so paid within
        ten
        (10) days of such demand shall be treated and collectible as Rent in arrears
        and
        the Landlord may, in addition to any other remedy it may have for the recovery
        of the same, distrain for the amount thereof as Rent in arrears.

      

      .6   
        BANKRUPTCY
        AND INSOLVENCY 

      

      The
        Tenant hereby agrees that unless
        the Landlord expressly consents to the Tenant repudiating this Lease, the
        Tenant
        hereby waives its right to repudiate the Lease if it files a proposal or
        notice
        of  intent to file a
        proposal  under  the    Bankruptcy
        and Insolvency Act of Canada, as amended or replaced from time to time or
        any similar provision of any other enactment.

      

      
        	
                 

              	
                13.6.1

              	
                The
                  Tenant covenants and agrees to provide written notice to the Landlord
                  of
                  any notice (the "Insolvency Notice") received by the Tenant from
                  any of
                  its creditors under  Section
                  244  of  the   Bankruptcy and
                  Insolvency Act of Canada, as amended or replaced from time to time,
                  such notice to be delivered to the Landlord within two business
                  days of
                  receipt of such notice by the Tenant.  Delivery of any
                  Insolvency Notice by any creditor to the Tenant shall constitute
                  an event
                  of default hereunder.

              

      

      

      

      .7   
        REMEDIES
        CUMULATIVE

      

      All
        rights and remedies of the Landlord
        in this Lease contained shall be cumulative and not alternative and are not
        dependent the one on the other and mention of any particular remedy or remedies
        of the Landlord in respect of any default by the Tenant shall not preclude
        the
        Landlord from any other remedy in respect thereof, whether available at law
        or
        in equity or as expressly provided for herein.

      

      

      26           ARTICLE
        MORTGAGES AND ASSIGNMENT BY LANDLORD

      

      .1   
        SALE
        OR FINANCING OF DEVELOPMENT

      

      The
        Landlord may sell, transfer, lease,
        mortgage, encumber or otherwise dispose of the Development or any portion
        thereof or any interest of the Landlord therein, in every case without the
        consent of the Tenant, and the rights of the Landlord under this Lease may
        be
        mortgaged, charged, transferred or assigned in conjunction
        therewith.  The Tenant acknowledges that in the event of the sale or
        lease by the Landlord of the Lands or a portion thereof containing the Leased
        Premises or the assignment by the Landlord of this Lease or of any interest
        of
        the Landlord hereunder, to the extent that any such purchaser, lessee or
        assignee has assumed the covenants and obligations of the Landlord hereunder,
        the Landlord shall, without further written agreement, be freed and relieved
        of
        liability upon such covenants and obligations.

      

      .2   
        SUBORDINATION
        AND ACKNOWLEDGEMENT

      

      This
        Lease and all of the rights of the
        Tenant hereunder are, and shall at all times be, subject and subordinate
        to any
        and all mortgages, trust deeds or the charge or lien resulting from any other
        method of financing or refinancing or any renewals, extensions, modifications,
        consolidations and replacements thereof, now or hereafter in force against
        the
        Lands and Building whether in whole or in part and whether or not affecting
        only
        the Leased Premises or whether same be a blanket mortgage or mortgages and/or
        deeds of trust affecting other property as well and, upon the request of
        the
        Landlord, the Tenant will subordinate this lease and all of its rights
        hereunder, in such form or forms as the Landlord may require, to any such
        mortgage or mortgages, trust deeds or the charge or lien resulting from any
        other method of financing or refinancing and to all advances made or hereafter
        to be made upon the security thereof, and will, if requested, attorn to the
        holder thereof.  The Tenant shall execute such postponements of any
        documents which the Tenant may have registered pursuant to Section , and
        such other documents as the Landlord may request in confirmation of such
        subordination.  No subordination by the Tenant shall have the effect
        of permitting the holder of any mortgage or charge or other security to disturb
        the occupation and possession by the Tenant of the Leased Premises, so long
        as
        the Tenant shall perform all of the terms, covenants, conditions, agreements
        and
        provisos contained in this Lease and so long as the Tenant contemporaneously
        executes, a document or attornment required by such mortgagee or other
        encumbrancer.

      

      .3   
        OFFSET
        STATEMENT

      

      Within
        ten (10)  days
        following request therefor by the Landlord, from time to time, the Tenant
        shall
        execute and deliver to the Landlord, to any mortgagee, assignee, or transferee
        of the Lease or the Development, a certificate in writing as to the then
        status
        of this Lease, including whether it is in full force and effect, as modified
        or
        unmodified, confirming the Rent payable hereunder, the state of accounts
        between
        the Landlord and the Tenant and the existence or nonexistence of defaults
        and
        any other matters pertaining to the Lease which the Landlord shall request
        be
        included in such certificate.

      

      .4   
        REGISTRATION

      

      The
        parties agree that this Lease need
        not be provided by the Landlord in registerable form.  The Tenant
        shall not register this Lease against title to the Lands.  The Tenant
        may, at the cost and expense of the Tenant, cause notice of this Lease to
        be
        registered in the appropriate Land Title Office in the Province of British
        Columbia provided the notice is in a form satisfactory to the Landlord’s
        solicitor.  In the event that the Landlord requires this Lease to be
        registered in priority to any mortgage, trust deed or trust indenture which
        may
        now or at any time hereafter affect in whole or in part the Leased Premises
        or
        the Development, the Tenant shall execute promptly any certificate or other
        instrument which may be required by the Landlord to give effect to such
        registration.

      

      28           ARTICLE
        OVERHOLDING TENANT

      

      .1   
        NO
        TACIT RENEWAL

      

      In
        the event the Tenant remains in
        possession of the Leased Premises after the end of the Term and without the
        execution and delivery of a new lease, there shall be no tacit renewal of
        this
        Lease and the Term hereby granted and the Tenant shall be deemed to be occupying
        the Leased Premises as a Tenant from month to month on the terms and conditions
        contained herein, except that the Basic Rent shall be one hundred and fifty
        percent (150%) of the monthly instalment of Basic Rent required to be paid
        pursuant to this Lease in the immediately preceding Year of the Term, but
        otherwise on the terms and conditions of this Lease which shall be read with
        such changes as are appropriate to a monthly tenancy; provided, however,
        that
        this provision shall not authorize the Tenant to so overhold where the Landlord
        has objected to such overholding or has required the Tenant to vacate the
        Leased
        Premises.

      

      

      30           ARTICLE
        QUIET POSSESSION

      

      .1   
        QUIET
        POSSESSION

      

      Upon
        the Tenant paying the Rent hereby
        reserved and all other charges herein provided and observing, performing
        and
        keeping the covenants and agreements contained in this Lease, the Tenant
        shall
        and may peaceably possess and enjoy the Leased Premises for the Term granted
        without any interruption or disturbance from the Landlord or any person or
        persons lawfully claiming by, from or under it.

      

      32           ARTICLE
        LEGAL RELATIONSHIPS

      

      .1   
        NO
        PARTNERSHIP

      

      Nothing
        contained in this Lease nor in
        any acts of the Landlord and Tenant pursuant to this Lease shall be deemed
        to
        create any relationship between the parties hereto other than the relationship
        of Landlord and Tenant, it being expressly provided that there is no intention
        to create a relationship of partners or a joint venture.

      

      .2   
        JOINT
        AND SEVERAL LIABILITY

      

      Should
        the Tenant comprise two (2) or
        more persons, each of them, and not one for the other or others, shall be
        jointly and severally bound with the other or others for the due performance
        of
        the obligations of the Tenant hereunder.  Where required by the
        context hereof the singular shall include the plural and the masculine gender
        shall include either the feminine or neuter genders, as the case may be and
        vice
        versa.

      

      .3   
        SUCCESSORS
        AND ASSIGNS

      

      This
        Lease and everything herein
        contained shall enure to the benefit of and be binding upon the parties hereto,
        the successors and assigns of the Landlord and the approved heirs, executors,
        administrators, successors and assigns of the Tenant.

      

      

      34           ARTICLE
        NOTICES

      

      .1   
        NOTICES

      

      Any
        notices herein provided or
        permitted to be given by the Tenant to the Landlord shall, except in the
        event
        of actual or threatened mail strike during which time all notices must be
        delivered by hand or by registered courier, be sufficiently given if delivered
        or sent by registered mail, postage prepaid, posted within British Columbia
        addressed to the Landlord at:

      

      Alpha
        Equities Ltd.

      112
        E. 6th Avenue

      Vancouver,
        British
        Columbia   V5T 1J5

      Attention:  Ian
        Moodie

      

      or
        to
        such other address as might be designated in writing by the Landlord from
        time
        to time, and any notice herein provided or permitted to be given by the Landlord
        to the Tenant shall, except in the event of actual or threatened mail strike
        during which time all notices must be delivered by hand or by registered
        courier, be sufficiently given if delivered or sent by registered mail, postage
        prepaid and posted within British Columbia, addressed to the Tenant at the
        Leased Premises.

      

      Notice
        given as aforesaid, posted in
        British Columbia, shall be conclusively deemed to have been given on the
        third
        business day following the day on which such notice was mailed, or if delivered,
        on the date of delivery.  The Landlord or the Tenant may at any time
        give notice in writing to the other of a change of address for the Landlord
        and
        from and after the giving of such notice the address therein specified shall
        be
        deemed to be the address of the party giving such notice for the giving of
        notice hereunder.  The word "notice" in this Article 18.1 shall
        be deemed to include any request, statement, demand, 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.

      

      

      36           ARTICLE
        GENERAL

      

      .1   
        COLLATERAL
        REPRESENTATIONS AND AGREEMENTS

      

      The
        Tenant acknowledges that the Leased
        Premises are taken without representation of any kind on the part of the
        Landlord or its agent other than as set forth herein, that the plans attached
        as
        Schedule "A" set forth the general layout of the Building and shall not be
        deemed to be a representation or agreement of the Landlord that the Building
        will be exactly as indicated on such plans, and that nothing contained in
        the
        Lease shall be construed so as to prevent the Landlord from varying or altering
        the location or size of parking areas, driveways, sidewalks or from erecting
        additional buildings or extending buildings after the Commencement Date and
        without limiting the foregoing, the Landlord shall have the unrestricted
        right
        to add additional lands to the Development which upon such addition shall
        be
        included within the definition of the Lands and Development, to construct
        additional buildings from time to time on the Lands, add or change any building,
        or alter the ingress and egress to the Development and to change the loading
        or
        unloading facilities and service entrances from time to time without in any
        way
        being responsible to the Tenant, provided only that the Landlord shall at
        all
        times provide reasonable access to the Leased Premises across the Lands for
        the
        Tenant, its employees, suppliers, agents, licensees and
        invitees.  Subject to the foregoing and to the obligations of the
        Landlord to maintain at all times adequate parking facilities, the Landlord
        may
        transfer or dispose of portions of the Lands to the owners of abutting property,
        or dedicate or transfer to the municipal authorities portions of the Lands
        for
        road-widening and other purposes, and when and so often as the Landlord shall
        dispose or transfer or dedicate any portion of the Lands, then the reference
        herein to the Lands shall mean and refer to the portion of the Lands remaining
        after any such transfer, disposition or dedication together with any adjacent
        land which may be acquired by the Landlord on any such transfer, disposition
        or
        dedication.  The Tenant further agrees that no representative of or
        agent of the Landlord is or shall be authorized or permitted to make any
        representation with reference to this Lease or to vary or modify this Lease
        in
        any way and that this Lease contains all the agreements and conditions made
        between the Landlord and the Tenant hereto respecting the Leased
        Premises.  Any addition to or alteration of or change in this Lease or
        other agreements hereinafter made or conditions created, to be binding, must
        be
        made in writing and signed by the Landlord and the Tenant.

      

      .2   
        NO
        OFFER

      

      The
        Landlord shall not be deemed to
        have made an offer to the Tenant by furnishing to the Tenant with a copy
        of this
        Lease with particulars inserted and, notwithstanding that the first or any
        other
        instalment of Basic Rent may be received by the Landlord when this Lease
        is
        received by it for signature, no contractual or other rights shall exist
        or be
        created between the Landlord and the Tenant as a result of this Lease until
        such
        time as all parties to this Lease have executed and delivered the
        same.

      

      .3   
        MANAGEMENT
        OF DEVELOPMENT

      

      The
        Tenant acknowledges to the Landlord
        that the Development may be managed by such party or parties as the Landlord
        may
        in writing designate and to all intents and purposes, the designated manager
        of
        the Development shall be the party at the Development authorized to deal
        with
        the Tenant on behalf of the Landlord.

      

      .4   
        TIME
        OF THE ESSENCE

      

      Time
        shall be of the essence of this
        Lease.

      

      .5   
        UNAVOIDABLE
        DELAYS

      

      In
        the event that the Landlord shall be
        delayed, hindered or prevented from the performance of any covenant hereunder
        by
        Force Majeure, the performance of such covenant shall be excused for the
        period
        during which such performance is rendered impossible and the time for
        performance thereof shall be extended accordingly, but this shall not excuse
        the
        Tenant from the prompt payment of Rent or any other amount required to be
        paid
        by the Tenant under the provisions of this Lease.

      

      .6   
        ACCORD
        AND SATISFACTION

      

      No
        payment by the Tenant hereunder or
        receipt by the Landlord of a lesser amount than the payment of Basic Rent
        or
        Additional Rent or any other payments herein stipulated shall be deemed to
        be
        other than on account of the stipulated sum, nor shall any endorsement or
        statement on any cheque or any letter accompanying any cheque or payment
        be
        deemed an accord and satisfaction, and the Landlord may accept such cheque
        or
        payment without prejudice to the Landlord's right to recover the balance
        due or
        pursue any other remedy provided in this Lease.

      

      .7   
        COMPETITION
        ACT

      
 

      No
        provision of this Lease is intended
        to apply or to be enforceable to the extent that it might give rise to any
        offence under the Competition Act, RSC 1985, Chapter C-34 or any statute
        that may be substituted therefor, as from time to time amended.

      

      .8   
        COVENANTS

      

      Each
        of the terms and conditions of
        this Lease to be performed and observed by the Tenant or by the Landlord,
        as the
        case may be, is and shall be construed as a covenant of the party so required
        to
        perform and observe the same.

      

      .9   
        CONSENT
        OR APPROVAL OF LANDLORD

      

      Wherever
        and whenever the consent,
        approval or permission of the Landlord is required by the Tenant pursuant
        to the
        terms of this Lease and unless otherwise specifically provided, the Landlord
        shall have the right to withhold or grant such consent, approval or permission
        in its sole and arbitrary discretion.  Such consent, approval or
        permission must be in writing to be effective, and such consent, approval
        or
        permission must be obtained prior to the taking of the action to which the
        same
        refers.

      

      .10           FOR
        LEASE SIGNS

      The
        Landlord shall have the right
        during the last six (6) months of the Term to place upon the Leased Premises
        a
        notice of reasonable dimensions stating that the Leased Premises are for
        lease
        and the Tenant shall not obscure or remove such notice or permit the same
        to be
        obscured or removed.

      

      .11          
        THE
        COMMERCIAL TENANCY ACT

      

      Each
        of the Landlord and the Tenant
        waives any and all provisions of the Commercial Tenancy Act (British
        Columbia) or any statute that may be substituted therefor, as from time to
        time
        amended, to the extent that the same are inconsistent with or conflict with
        the
        terms and conditions of this Lease.

      

      .12          
        NO
        EXCLUSIVITY

      

      This
        Lease shall not in any way be
        construed as giving to or conferring upon the Tenant any rights to carry
        on any
        business or undertaking in or from the Leased Premises to the exclusion of
        third
        parties in the Development.

      

      .13          
        SCHEDULES

      

      Any
        and all schedules attached hereto
        are deemed to be incorporated into and form part hereof.

      

      .14          
        APPLICABLE
        LAW

      

      This
        Lease shall be governed by and
        construed in accordance with the laws in force in the Province of British
        Columbia.

      

      .15          
        HEADINGS

      

      The
        table of contents and headings in
        this Lease are inserted for convenience of reference only and shall not affect
        the construction of this Lease or any provision hereof.

      

      .16          
        TENANT'S
        ACCEPTANCE

      

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

      

      .17          
        SEVERABILITY

      

      Should
        any provision of this Lease be
        unenforceable it shall be considered separate and severable from the remaining
        provision of this Lease, which shall remain in force and be binding as though
        the said provision had not been included.

      

      

      38           ARTICLE
        DEFINITIONS

      

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

      

      .1   
        ADDITIONAL
        RENT

      

      "Additional
        Rent" for a Lease Year or
        portion thereof means, in addition to the Basic Rent, all other amounts which
        shall become due and payable hereunder by the Tenant, whether to the Landlord
        or
        otherwise, and includes, without limitation, the amount which is the aggregate
        of:

      

      
        	
                (a)  

              	
                the
                  Tenant's Proportionate Share of the HVAC
                  Costs,

              

      

      

      
        	
                (b)  

              	
                the
                  Tenant's Proportionate Share of the Building Operation and Maintenance
                  Costs,

              

      

      

      
        	
                (c)  

              	
                the
                  Tenant's Proportionate Share of the Development Operation and Maintenance
                  Costs,

              

      

      

      
        	
                (d)  

              	
                the
                  Tenant's Proportionate Share of the Tax Cost,
                  and

              

      

      

      
        	
                (e)  

              	
                management
                  and administrative charges of the Landlord equal to seven percent
                  (7%) of
                  the aggregate of Basic Rent.

              

      

      

      In
        each
        case the items comprising or being deducted from the aforesaid costs or cost
        are
        to be allocated to such Lease Year by the Landlord in accordance with generally
        accepted accounting practice, provided that if the Term commences other than
        at
        the beginning of a Lease Year or ends other than at the conclusion of a Lease
        Year, a pro rata adjustment of the aforesaid costs for such Lease Year
        shall be made, based on the length of the Term falling within such Lease
        Year,
        provided further that, unless otherwise specifically stated in the enabling
        legislation giving rise thereto, the Tax Cost shall be deemed to accrue equally
        from day to day in the calendar year to which the same related and shall,
        if
        adjustment is required as aforesaid, be adjusted on that basis and not on
        a
        straight pro rata basis.

      

      .2   
        AREA
        OF LEASED PREMISES

      

      "Area
        of Leased Premises" means the
        area of the Leased Premises (expressed in square meters or square feet) equal
        to
        the Net Rentable Area of the Leased Premises plus an amount equal to the
        product
        of a fraction having as its numerator the Net Rentable Area of the Leased
        Premises and as its denominator the sum of the Net Rentable Area of all premises
        (whether leased or not) within the Building, multiplied by the total area
        of the
        Service Areas.  The Area of the Leased Premises shall be determined by
        the Landlord's Architect following completion of the Tenant's Work or any
        subsequent construction by the Tenant and such determination shall, in the
        absence of manifest error, be final and conclusive as to the Area of the
        Leased
        Premises.

      

      .3   
        BASIC
        RENT

      

      "Basic
        Rent" means the annual rent
        payable by the Tenant to the Landlord in accordance with Article 3.1 for
        each Year of the Term, being the amount set forth in
        Article 1.2.

      

      .4   
        BASIC
        TERMS

      

      "Basic
        Terms" means each of those terms
        defined as such in Article 1 of this Lease.

      

      .5   
        BUILDING

      

      "Building"
        means the building in which
        the Leased Premises are located as shown on Schedule "A1" hereto, as the
        Building may be altered, reconstructed or expanded from time to time, together
        with all improvements (including Leasehold Improvements), equipment and
        facilities contained therein from time to time.

      

      .6   
        BUILDING
        OPERATION AND MAINTENANCE COSTS

      

      "Building
        Operation and Maintenance
        Costs" means all of the Landlord's costs, charges and expenses for operating,
        maintaining, managing, repairing, rebuilding, replacing, restoring, inspecting,
        insuring, securing, supervising, owning and administering the Building including
        the Common Areas and Common Facilities of the Building, if any, and includes
        without limiting the generality of the foregoing:

      

      
        	
                (a)  

              	
                the
                  cost of lighting, heating, ventilating, air-conditioning and supplying
                  water and other utilities to the Common Facilities and Common Areas,
                  as
                  aforesaid; cleaning and janitorial services relating to the Building;
                  repairs and replacements to the Building other than structural
                  repairs
                  required to be carried out by the Landlord pursuant to Article
                  6.6 but
                  including any non-structural changes made to the Building, required
                  by any
                  governmental or other agencies which regulate the opertion of the
                  Development; insurance premiums for any insurance required or permitted
                  to
                  be carried by the Landlord pursuant to the terms of this Lease
                  and related
                  only to the Building; the cost of window cleaning, painting, the
                  cost of
                  service contracts and independent contractors,
                  and

              

      

      

      
        	
                (b)  

              	
                deleted;

              

      

      

      and
        there
        shall be excluded from such costs the following:

      

      
        	
                (i)  

              	
                payments
                  of principal and interest under any mortgage or mortgages on the
                  Development; and

              

      

      

      
        	
                (ii)  

              	
                income
                  taxes assessed upon the income of the
                  Landlord;

              

      

      and
        there
        shall be deducted from such costs the amount of proceeds actually recovered
        by
        the Landlord from insurance and relating to damage, the cost of repair of
        which
        was included in Building Operation and Maintenance Costs.

      

      .7   
        COMMENCEMENT
        DATE

      

      "Commencement
        Date" means the date
        referred to in Article 1.4.1.

      

      .8   
        COMMON
        AREAS

      

      "Common
        Areas" means those areas
        located either in the Building or on the Lands but not in any Other Building,
        that are not intended for lease and designated (which designation may be
        changed
        from time to time) by the Landlord as Common Areas set aside by the Landlord
        for
        the common or joint use and benefit of the Tenant, its employees, customers
        and
        other entities in common with others entitled to the use and benefit of such
        areas in the manner and for the purposes established or altered pursuant
        to the
        terms of this Lease.

      

      .9   
        COMMON
        FACILITIES

      

      "Common
        Facilities" means the
        electrical, heating, ventilating, air conditioning, plumbing and drainage
        equipment, any music and public address systems, installations and any
        enclosures constructed therefor, fountains, service rooms, customer and service
        stairways, escalators, signs, lamps, standards, public washroom facilities
        and
        all other facilities improvements, equipment and installations which are
        provided and designated (and which designation may be changed from time to
        time)
        by the Landlord for the common or joint use and benefit of the occupants
        of the
        Development.

      

      .10           DEVELOPMENT

      

      "Development"
        means the Development
        Lands, Building, Other Buildings and all buildings and improvements existing
        on
        the Development Lands from time to time.

      

      .11          
        DEVELOPMENT
        LANDS

      

      "Development
        Lands" means those lands
        located in the City of Richmond legally described as:

      

      
        	
                (a)  

              	
                Parcel
                  Identifier No: 015-241-416, Lot B, Section 32, Block 5 North, Range
                  5
                  West, New Westminster District, Plan
                  83035;

              

      

      

      
        	
                (b)  

              	
                Parcel
                  Identifier No: 015-241-432, Lot C, Section 32, Block 5 North, Range
                  5
                  West, New Westminster District, Plan
                  83035;

              

      

      

      
        	
                (c)  

              	
                Parcel
                  Identifier No: 017-845-181, Lot 3, Section 32, Block 5 North, Range
                  5
                  West, New Westminster District, Plan
                  LMP5334;

              

      

      

      
        	
                (d)  

              	
                Parcel
                  Identifier No: 017-845-190, Lot 4, Section 32, Block 5 North, Range
                  5
                  West, New Westminster District, Plan
                  LMP5334;

              

      

      

      
        	
                (e)  

              	
                Parcel
                  Identifier No: 017-845-203, Lot 5, Section 32, Block 5 North, Range
                  5
                  West, New Westminster District, Plan
                  LMP5334;

              

      

      

      
        	
                (f)  

              	
                Parcel
                  Identifier No: 017-845-211, Lot 6, Section 32, Block 5 North, Range
                  5
                  West, New Westminster District, Plan
                  LMP5334.

              

      

      

      .12           DEVELOPMENT
        OPERATION AND MAINTENANCE COSTS

      

      "Development
        Operation and Maintenance
        Costs" means all of the Landlord's costs, charges and expenses of operating,
        maintaining, managing, repairing, rebuilding, replacing, restoring, inspecting,
        insuring, securing, supervising, owning and administering the Development,
        other
        than the Building or any Other Building, including the Common Areas and the
        Common Facilities and include, without limiting the generality of the
        foregoing:

      

      
        	
                (a)  

              	
                the
                  cost of lighting, heating, ventilating, air-conditioning and supplying
                  water and other utilities to the Common Areas and Common Facilities;
                  cleaning, janitorial services, snow and ice removal, striping,
                  sweeping,
                  cleaning and repairing parking areas; supervising, policing and
                  security;
                  painting, planting or landscaping; operating and maintaining the
                  garbage
                  compaction equipment, if any; the cost of maintaining, operating,
                  repairing, replacing or leasing the pylon signs and public address,
                  intercom, music and alarm systems; repairs, maintenance and replacements
                  to the Development, business taxes, place of business taxes and
                  other
                  taxes levied in respect thereof or fairly attributable to the Common
                  Areas
                  or the Common Facilities; insurance premiums for any insurance
                  required or
                  permitted to be carried by the Landlord pursuant to the terms of
                  this
                  Lease other than for the Building or any Other Building; supplies,
                  personnel wages, payroll expenses, the cost of service contracts
                  and
                  independent contractors, and

              

      

      

      
        	
                (b)  

              	
                deleted;

              

      

      

      and
        there
        shall be excluded from such costs the following:

      

      
        	
                (i)  

              	
                payments
                  of principal and interest under any mortgage or mortgages on the
                  Development;

              

      

      

      
        	
                (ii)  

              	
                income
                  taxes assessed upon the income of the Landlord;
                  and

              

      

      

      
        	
                (iii)  

              	
                Building
                  Operating and Maintenance Costs;

              

      

      

      and
        there
        shall be deducted from such costs the amount of proceeds actually recovered
        by
        the Landlord from insurance relating to damage, the cost of repair of which
        was
        included in Development Operation and Maintenance Costs.

      

      .13          
        FORCE
        MAJEURE

      

      "Force
        Majeure" means any cause beyond
        the control of the Landlord delaying, hindering or preventing the Landlord
        from
        performing any term, covenant or act required hereunder and, without limiting
        the generality of the foregoing, includes lockouts (including lockouts decreed
        or recommended for its members by a recognized contractors' association of
        which
        the Landlord is a member or to which the Landlord is otherwise bound), strikes,
        labour disputes, inability to procure materials or services, restrictive
        governmental laws or regulations, fire, act of God, riots, insurrection,
        sabotage, rebellion and war.

      

      .14              
        GROSS
        LEASABLE AREA

      

      "Gross
        Leasable Area" means the
        aggregate floor area (expressed in square meters or square feet), from time
        to
        time, which may be leased, whether leased or not, calculated in the manner
        set
        out in the definition of Area of Leased Premises.

      

      .15          
        HAZARDOUS
        SUBSTANCE

      

      "Hazardous
        Substances" means any
        substance which is dangerous or detrimental to persons or other living things
        or
        property and includes, without limitation, any contaminants, pollutants,
        dangerous substances, liquid wastes, industrial wastes, toxic substances,
        hazardous waste materials or substances defined in any legislation, regulation
        or order relating to the environment, occupational safety, transportation
        or
        health including "polluting substances" which constitute "special waste"
        as
        those terms are defined in the Waste Management Act (British Columbia)
        and regulations thereunder, "toxic substances" in Schedule 1 of the Canadian
        Environmental Protection Act (Canada) or "deleterious substances" as
        defined in the Fisheries Act (Canada) and regulations thereunder and any
        other substances which are now or hereafter regulated as hazardous or toxic
        substances or substances which are detrimental in legislation protecting
        the
        environment and human health.

      

      .16          
        HVAC
        COSTS

      

      "HVAC
        Costs" means all of the
        Landlord's costs, charges and expenses of operating, maintaining, managing,
        replacing, repairing and supervising the apparatus for heating, ventilating
        and
        air conditioning installed in the Building, from time to time, (the "HVAC
        System") other than those parts of such apparatus installed by or on behalf
        of
        the Tenant or any other tenant.  HVAC costs shall also include the
        depreciation, at the rates determined by the Landlord, but not to exceed
        the
        maximum permitted to the Landlord from time to time under the provisions
        of the
        Income Tax Act (Canada), or any legislation substituted therefor, on al of
        the
        apparatus for heating, ventilating and air conditioning installed in the
        Building, from time to time.

      

      .17          
        LANDLORD'S
        ARCHITECT OR SURVEYOR

      

      "Landlord's
        Architect" or "Landlord's
        Surveyor" means an architect or engineer or surveyor from time to time selected
        by the Landlord for the purpose of making any certificate or determination
        in
        accordance with the terms of this Lease.

      

      .18          
        LANDLORD'S
        WORK

      

      "Landlord's
        Work" means the work
        specified in Schedule "B" hereto.

      

      .19          
        LANDS

      

      "Lands"
        means those lands located in
        the District of Richmond, in the Province of British Columbia legally described
        as:

      

      Lot
        "3", Parcel Identifier No:
        017-845-181

      Section
        32, Block 5 North, Range 5
        West,

      New
        Westminster District, Plan LMP
        5334.

      

      .20          
        LEASE

      

      "Lease"
        means this agreement, including
        any and all schedules attached hereto as the same may be amended from time
        to
        time.

      

      .21          
        LEASE
        YEAR

      

      "Lease
        Year" means each calendar year
        in which a portion of the Term falls, provided that if it deems the same
        convenient or necessary for its accounting purposes, the Landlord may, from
        time
        to time, by notice to the Tenant alter the Lease Year to any other twelve
        (12)
        month period in which a portion of the Term falls by specifying an annual
        date,
        being the first day of a calendar month, upon which a subsequent Lease Year
        is
        to commence and in such event the current Lease Year shall terminate on the
        day
        preceding the specified date.

      

      .22          
        LEASED
        PREMISES

      

      "Leased
        Premises" means that portion of
        the Building outlined in red on Schedule "A2" hereto, subject to such minor
        variations as may occur in the course of construction of the Building or
        the
        Leased Premises by the Landlord.

      

      .23           LEASEHOLD
        IMPROVEMENTS

      

      "Leasehold
        Improvements" means all
        fixtures (other than the Tenant's trade fixtures), equipment and alterations
        from time to time made to or installed in the Leased Premises, including,
        without limitation, heating, ventilating and air-conditioning equipment,
        hot
        water tanks, interior doors, light fixtures, ceilings, wall to wall carpeting
        or
        similar affixed floor coverings, control equipment, non-structural walls,
        and
        air filtering devices.

      

      

      .24          
        NET
        RENTABLE AREA

      

      "Net
        Rentable Area" means the area,
        expressed in square meters or square feet, measured from the exterior face
        of
        any exterior walls (without deduction for any indentations for recessed doors,
        windows, loading bays or vestibules) to the centre line of any walls or
        partitions separating the Leased Premises from any adjoining premises and
        to the
        finished surface of the office side of corridor walls or other permanent
        partitions, without deduction for columns and projections necessary to the
        Building.

      

      .25          
        OTHER
        BUILDINGS

      

      "Other
        Buildings" means any building or
        buildings existing on the Lands or the Development Lands from time to time
        containing premises that are leased or intended to be leased to tenants,
        but
        excluding the Building, as the Other Buildings may be altered, reconstructed
        or
        expanded from time to time, together with all improvements (including Leasehold
        Improvements), equipment and facilities contained therein from time to
        time.

      

      .26          
        PERMITTED
        USE

      "Permitted
        Use" means the use set forth
        in Article 1.3.

      

      .27          
        PRIME
        RATE

      

      "Prime
        Rate" means the rate of interest
        expressed as an annual rate, at the relevant time or times, determined by
        the
        Bank of Nova Scotia at its main branch in Vancouver, British Columbia, as
        a
        reference rate for commercial demand loans to its major commercial borrowers
        determined in Canadian dollars and made by such bank in Canada and adjusted
        from
        time to time.

      

      .28          
        REAL
        PROPERTY TAXES

      

      "Real
        Property Taxes" means all
        general, special, local improvement, school and other taxes, levies, rates
        and
        charges of every kind and nature whatsoever, whether ordinary or extraordinary,
        foreseen or unforeseen, which are levied, assessed or imposed against the
        Development or any part thereof and all business taxes, assessments, rates
        and
        levies, including without limitation, any corporation capital tax, levied,
        assessed or imposed on the Landlord in respect of the ownership or management
        of
        the Development by municipal, provincial, federal or other governmental
        authority having jurisdiction, whether of a nature now or hereafter levied,
        assessed or imposed, together with the cost to the Landlord of contesting,
        appealing or negotiating the same in good faith but excluding those taxes
        and
        fees of the Tenant or other tenants referred to in Article 11.1 hereof and
        federal or provincial sales taxes.

      

      .29          
        RELEASE

      

      "Release"
        includes releasing, spilling,
        leaking, pumping, pouring, emitting, discharging, ejecting, escaping, leaching,
        disposing or dumping.

      

      .30          
        RENT

      

      "Rent"
        means all "Additional Rent" and all "Basic Rent".

      

      .31          
        SERVICE
        AREAS

      

      "Service
        Areas" means those portions of
        the public and/or service areas of Building including without limitation
        all
        washrooms, air-conditioning rooms, equipment rooms, fan rooms, penthouses,
        janitors' closets, electrical closets, lobbies, elevator lobbies, corridors,
        refuge areas,  stairs and loading bays measured to the exterior faces
        of their enclosing walls and doors.

      

      .32          
        TAX
        COST

      

      "Tax
        Cost" means the cost of Real
        Property Taxes.

      

      .33          
        TENANT'S
        PROPORTIONATE SHARE

      

      "Tenant's
        Proportionate Share"
        means:

      

      
        	
                (a)  

              	
                in
                  relation to each of the Building Operating and Maintenance Costs
                  and HVAC
                  Costs, the proportion that the Area of the Leased Premises is of
                  the Gross
                  Leasable Area of the Building; and

              

      

      

      
        	
                (b)  

              	
                in
                  relation to Development Operation and Maintenance Costs and Tax
                  Cost, the
                  proportion that the Area of the Leased Premises is of the Gross
                  Leasable
                  Area of the Development.

              

      

      

      .34           TENANT'S
        WORK

      

      "Tenant's
        Work" has the meaning set out
        in Article 4.1 hereof.

      

      .35          
        TERM

      

      "Term"
        means the term of the Lease, as
        set out in Article 1.4, including any renewal.

      

      

      .36          
        YEAR
        OF THE TERM

      

      "Year
        of the Term" means each
        successive twelve (12) month period of the Term, the first of which commences
        on
        the Commencement Date.

      

      40           ARTICLE
        SALES TAX

      

      .1            
        SALES
        TAX

      

      Notwithstanding
        any other provisions of
        this Lease, the Tenant shall pay to the Landlord an amount equal to any and
        all
        taxes imposed on the Landlord with respect to Basic Rent, Additional Rent
        or any
        other amounts payable by the Tenant to the Landlord under this Lease, whether
        characterized as a goods and services tax, sales tax, value added tax or
        otherwise (except income taxes under the Income Tax Act [Canada]) (herein
        called "Sales Tax"), it being the intention of the parties that the Landlord
        shall be fully reimbursed by the Tenant with respect to any and all Sales
        Tax.  The amount of such Sales Taxes shall be calculated by the
        Landlord on the basis that the Development is the only property owned by
        the
        Landlord and that the only credits, setoffs, exceptions, exemptions or
        deductions available to the Landlord are those to which the Landlord is entitled
        to by virtue of the purchase of goods and services for the Development (but
        not
        by virtue of the purchase of the Development itself), which shall be prorated
        by
        the Landlord over the Gross Leasable Area of the Development.  The
        amount of Sales Tax payable by the Tenant shall be calculated by the Landlord
        and shall be paid to the Landlord at the same time as the amounts to which
        the
        Sales Taxes apply are payable to the Landlord under the terms of this Lease,
        and
        the Landlord may make any estimates necessary for the purpose of such
        calculations in the same manner as provided in this Lease for payment of
        Additional Rent.  Notwithstanding any other provision in this Lease to
        the contrary, the amounts payable by the Tenant under this clause shall be
        deemed not to be Basic Rent or Additional Rent, but the Landlord shall have
        all
        of the same remedies for and rights of recovery of such amounts as it has
        for
        recovery of Rent under this Lease or at law.

      

      

      42           ARTICLE
        MISCELLANEOUS TERMS AND CONDITIONS

      

      .1   
        OFFER
        TO LEASE

      

      Notwithstanding
        anything contained in
        the Offer to Lease made between the Landlord and the Tenant referred to in
        Recital A of this Lease, in the event that there is any conflict of
        inconsistency between the provisions of this Lease and the said Offer to
        Lease,
        the provisions of this Lease shall govern.

      

      .2   
        INDEMNIFIER  -
        DELETED

      

      .3   
        FINANCIAL
        INFORMATION

      

      The
        Tenant and the Indemnifier shall,
        from time to time, provide the Landlord with such financial or other similar
        information, including information as to the Tenant's and the Indemnifier's
        corporate and/or personal standing and organization, if applicable, as may
        be
        required by the Landlord or the Landlord's mortgagees.

      

      .4  RELOCATION  -
        DELETED

      

      
        	
                22.5

              	
                RENEWAL

              

      

      

      The
        Landlord covenants and agrees with
        the Tenant that if the Tenant duly and punctually pays the Rent and observes
        and
        performs the covenants, provisos and agreements contained in this Lease on
        its
        part to be paid, observed and performed, then the Tenant shall have the option,
        to be exercised by giving to the Landlord written notice (herein called the
        "Renewal Notice") not more than two hundred and seventy (270) days and not
        less
        than one hundred and eighty (180) days prior to the expiry date of the Term
        (the
        "Expiry Date"), to renew this Lease for a further term of five years (herein
        called the "Renewal Term") on the terms and conditions of this Lease, except
        for
        this Article 22.4 and excluding any provisions for free rent, bonuses,
        Leasehold Improvements, or inducements and except that the amount of the
        Basic
        Rent for the Leased Premises during the Renewal Term is to be the current
        market
        rent on that date being ninety (90) days prior to the Expiry Date which would
        be
        paid as between the Landlord and a willing tenant dealing at arm's length
        for
        improved premises in the Municipality of Richmond reasonably comparable to
        the
        Leased Premises; provided, however, the amount of the Basic Rent for the
        Leased
        Premises during the Renewal Term shall not be less than the amount of the
        Basic
        Rent for the Leased Premises payable during the last Lease Year of the
        Term.  The Landlord shall prepare and complete a renewal lease, and
        the Tenant shall, within fifteen (15) days after receipt thereof, duly execute
        and deliver to the Landlord the renewal lease as prepared and completed by
        the
        Landlord.  In the event that the Landlord and the Tenant are unable to
        agree on the amount of the Basic Rent payable during the Renewal Term within
        ninety (90) days of the date on which the Landlord receives the Renewal Notice,
        the determination of such Basic Rent shall be made by arbitration as set
        out in
        Article 22.6.

      

      
        	
                22.5

              	
                ARBITRATION

              

      

      

      If
        under the provisions of this Lease
        the Landlord and the Tenant have failed to agree as to the amount of the
        Basic
        Rent payable for the Leased Premises with respect to the Renewal Term by
        the
        date required hereunder, the determination of the Basic Rent shall be referred
        to a single arbitrator to be agreed upon by the Landlord and the Tenant and
        failing agreement as to such arbitrator within ten (10) days after either
        party
        shall have demanded the appointment of such arbitrator, then upon the
        application of either the Landlord or the Tenant, the arbitrator shall be
        appointed by a Judge of the Supreme Court of British Columbia.  The
        determination by the arbitrator shall be final and binding upon the Landlord
        and
        the Tenant and their respective successors and assigns.  In making the
        determination of the amount of the Basic Rent for the Renewal Term the
        arbitrator shall follow the basis for determination set forth in Article
        22.4
        hereof.  The fees and expenses of the arbitrator shall be borne by the
        Tenant.  The provisions of this paragraph shall be deemed to be a
        submission to arbitration within the provisions of the Commercial Arbitration
        Act, and any statutory modifications or re-enactment thereof, provided that
        any limitations on the remuneration of the arbitrator imposed by such
        legislation shall not be applicable.  The arbitration shall be held in
        the City of Vancouver, British Columbia, unless otherwise agreed in writing
        by
        the Landlord and the Tenant.  It is understood and agreed by the
        Landlord and the Tenant that until the amount of the Basic Rent for the Renewal
        Term is determined by the arbitrator, the Tenant shall pay to the Landlord
        monthly instalments on account of the Basic Rent equal to the monthly instalment
        of Basic Rent payable for the month preceding the Renewal Term.  Once
        the arbitrator has determined the amount of the Basic Rent for the Renewal
        Term
        then the Basic Rent paid as aforesaid shall be adjusted to reflect the Basic
        Rent as determined for the Renewal Term and the Tenant shall, forthwith upon
        request by the Landlord, pay to the Landlord interest at the rate set forth
        in
        Article 3.5 of this Lease on the amount by which the monthly instalments of
        the Basic Rent for the Renewal Term as finally determined exceed the monthly
        instalments paid by the Tenant on account of the Basic Rent during the Renewal
        Term, such interest to be computed and to accrue from the date of commencement
        of the Renewal Term until the Landlord receives payment in full of the shortfall
        in the Basic Rent.

      

      

      IN
        WITNESS WHEREOF the parties hereto
        have executed this agreement by their respective duly authorized officers
        in
        that behalf, as of the day and year first above written.

      

      

      ALPHA
        EQUITIES LTD.

      

      

      
        	
                 

              	
                _____________________________Per: 
                  /s/ Ian Moodie

              

      

      
        	
                 

              	
                Witness

              	
                Authorized
                  Signatory                                     
                  Ian Moodie

              

      

      

      

      
        	
                 

              	
                _____________________________Per:
                  _____________________________

              

      

      
        	
                 

              	
                Witness

              	
                Authorized
                  Signatory

              

      

      

      

      SMARTIRE
        SYSTEMS INC.

      

      

      
        	
                 

              	
                _____________________________Per: 
                  /s/ Dave Warkentin

              

      

      
        	
                 

              	
                Witness

              	
                Authorized
                  Signatory                                      Dave
                  Warkentin

              

      

      

      

      
        	
                 

              	
                _____________________________Per:
                  _____________________________

              

      

      
        	
                 

              	
                Witness

              	
                Authorized
                  Signatory

              

      

      

      

      
        
                

                    
      
      

                    
      
      

            
              	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
              

                                      INITIAL              
            
	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      

                                                                             
                        /s/IM

                                                                              IM

                                      Landlord              
              

                                       
                                      
            	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      

                                                                                                  
                         /s/
                        DW           
                        

                                                                                DW

                                      Tenant              
              

                                       
                                      
            
	 	 

            
      

                    
      
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        "A1"

      Site
        Plan (the "Building" shown in heavy outline)

      

      

      
        
                

                              
                            
      

                    
      
      

                    
      
      

            
              	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
              

                                      INITIAL              
            
	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
                                                        /s/IM
                                                                              IM

                                      Landlord              
              

                                       
                                      
            	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
                                                                  
                           /s/
                      DW           

                                                                                DW

                                      Tenant              
              

                                       
                                      
            
	 	 

            
      

                              ST_new_lease_041707_2_Word6              
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
        "A2"

      Sketch
        plan of Leased Premises (shown in heavy outline)

      

      

      
        
                

                              
                            
      

                    
      
      

                    
      
      

            
              	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
              

                                      INITIAL              
            
	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
                                                        /s/IM
                                                                              IM

                                      Landlord              
              

                                       
                                      
            	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
                                                                       
                       /s/
                      DW           

                                                                                DW

                                      Tenant              
              

                                       
                                      
            
	 	 

            
      

                              ST_new_lease_041707_2_Word6              
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      SCHEDULE
        "B"

      LANDLORD'S
        AND TENANT'S WORK

      

      

      1  .0           Landlord's
        Work

      

      
        	
                .1  

              	
                The
                  Tenant agrees to accept the Leased Premises on an "as is"
                  basis.

              

      

      

      
        	
                1.2

              	
                Deleted

              

      

      

      
        	
                1.3

              	
                Deleted.

              

      

      

      2  .0           Tenant's
        Work

      

      
        	
                .1  

              	
                Fascia
                  Signs:

              

      

      The
        Tenant shall within sixty (60) days of occupancy provide a fascia sign in
        accordance with the Landlord's sign policy.

      

      
        	
                .2  

              	
                Approval:

              

      

      The
        Tenant acknowledges that any work undertaken by the Tenant shall be done
        only
        with the written approval of the Landlord.  Work done without such
        approval may, in the discretion of the Landlord, be removed from the Leased
        Premises, or the Leased Premises be restored to the original condition, in
        either case, at the expense of the Tenant.

      

      If
        the
        Tenant undertakes to construct or otherwise install modular walls, racking
        systems, mezzanines and/or warehouse office space of any kind, without
        Landlord's approval, then Landlord may remove such installations at Tenant's
        expense or, in its discretion, may determine that the installations constitute
        additional square footage of the Leased Premises and subject this extra area
        to
        Basic Rent and Additional Rent according to Paragraphs 1.1, 1.2, 3.1 and
        3.3 of
        this Lease.

      

      
        	
                .3  

              	
                Fixtures
                  & Equipment -
Deleted

              

      

      

      
        	
                .4  

              	
                Additional
                  Work:

              

      

      Any
        additional requirements of the Tenant over those specified in this Schedule
        "B"
        shall be the responsibility of the Tenant.  Completion of such
        additional requirements shall not delay the Tenant's acceptance of the Leased
        Premises.

      

      
        	
                .5  

              	
                Fire
                  Protection Equipment:

              

      

      Where
        occupancy includes cooking or hazardous process areas, the Tenant shall install
        a chemical or C02 automatic fire protection system approved by the appropriate
        government body and notify the Landlord of any interruption to or flaw or
        defect
        in the system coming to the attention of the Tenant.  The Tenant
        further agrees to provide for regular inspection and maintenance of the
        equipment as recommended by the manufacturer or authorized
        representative.

      

      
        	
                .6  

              	
                Additional
                  Work Performed by Landlord -
                  Deleted

              

      

      

      
        	
                .7  

              	
                Additional
                  Costs:

              

      

      If,
        as a
        result of any work undertaken by or on behalf of the Tenant, including the
        Tenant's Work, the Landlord's project manager determines in its discretion
        that
        the Landlord has incurred any additional costs or expense due to work required
        to be undertaken by the Landlord or its contractors which deviates from the
        Landlord's plan and specifications for the Landlord's Work or for the Landlord's
        construction of other portions of the Development, then the Tenant will,
        immediately upon invoicing, reimburse the Landlord (or at the Landlord's
        option,
        the Landlord's contractor) for such additional costs and expenses plus a
        twenty
        percent (20%) coordination fee.

      

      
        	
                .8  

              	
                Roof:

              

      

      Tenant
        and its agents, employees and representatives shall not at any time be permitted
        on the roof.

      

      
        	
                .9  

              	
                Examination
                  of Leased Premises -
Deleted

              

      

      

      3  .0           Approval
        of Plans and Design Changes - Deleted

      

      

      
        
                

                              
                            
      

                    
      
      

                    
      
      

            
              	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
              

                                      INITIAL              
            
	              

                                       
                                      
              

                                       
                                      
              

                                                                              /s/IM
                                                                                IM              
                          

                      

                                      Landlord              
              

                                       
                                      
            	              

                                       
                                      
              

                                       
                                      
              

                                                                                       
                         /s/
                        DW           

                                                                                  DW              
                          

                      

                                      Tenant              
              

                                       
                                      
            
	 	 

            
      

                              ST_new_lease_041707_2_Word6              
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
        "C"

      RULES
        AND REGULATIONS

      

      

      1.  The
        Tenant shall in connection with its
        advertising in relation to the business carried on in the Premises use and
        promote the name of the Building or such other name as the Landlord may from
        time to time designate and in using such name in any advertisement, sign,
        poster, printing or other writing the Tenant will print, write or designate
        the
        same in a manner to be determined from time to time by the Landlord and in
        no
        other manner.  The Tenant shall not use such name in regard to any
        business other than its business upon the Premises.  The Tenant agrees
        that it will not carry on or permit to be carried on any business in the
        Premises under a name or style other than its own name or call or permit
        the
        Premises or any business carried on therein to be called any name other than
        its
        own name, without the prior written consent of the Landlord.

      

      2.  The
        Tenant shall not bring upon the
        Premises any equipment, motor or other thing which might damage the
        Building.

      

      3.  No
        merchandise, supplies, materials,
        garbage, refuse or other chattels shall be allowed to remain on any loading
        dock
        or in the Common Areas.

      

      4.  The
        Tenant will not burn trash or
        garbage in or about the Premises or Lands.  The Tenant will keep the
        Premises free of rubbish and debris, will provide sufficient receptacles
        for
        waste and, if applicable, will leave desks, counter tops and like furniture
        clear for janitorial service.  All garbage, refuse, cartons, packing
        material and debris will be placed in the type of container and will be left
        in
        a place for collection, specified by the Landlord.

      

      5.  Plumbing
        fixtures and facilities will
        not be used for any purpose other than that for which they were constructed
        and
        no foreign substances of any kind will be thrown therein.

      

      6.  The
        Tenant will use, at Tenant's cost,
        such pest, rodent, bug and vermin exterminator as the Landlord may direct
        and at
        such intervals as the Landlord may require.  The Tenant will notify
        the Landlord immediately of any such pest, rodent or vermin
        problem.

      

      7.  The
        Tenant will not permit any
        objectionable odours to be produced upon or emanate from the
        Premises.

      

      8.           The
        Tenant will not place additional locks or bolts on any doors or windows in
        the
        Premises and will not change existing locks or mechanisms thereof, without
        the
        prior written consent of the Landlord.  At the end of the Term, the
        Tenant will return to the Landlord all keys relating to the Premises and
        if any
        keys have been lost, the Tenant will pay to the Landlord the cost
        thereof.

      

      9.           The
        Tenant will not mark, paint, drill into or in any way deface the Premises
        or the
        building of which they form a part, without the prior written consent of
        the
        Landlord.  The Tenant will not lay linoleum or similar floor covering
        without an interlining of builder's deadening felt first being affixed to
        the
        floor by paste or other water soluble material.

      

      10.           The
        Tenant will not conduct business in the Premises under a name or style other
        than the name of the Tenant without the prior written consent of the Landlord,
        such consent not to be unreasonably withheld.

      

      11.           The
        Tenant will keep display windows well-lighted during each business
        day.

      

      12.           All
        entrance doors in the Premises will be left locked by the Tenant when the
        Premises are not in use.

      

      13.           The
        Tenant will not permit the installation or use in the Premises of any machine
        dispensing goods for sale or permit delivery of any food or beverage to the
        Premises or permit cooking in the Premises without the approval of the Landlord,
        except vending machines used solely for the Tenant’s staff.

      

      14           Any
        hand trucks, carryalls or similar appliances used for delivery or receipt
        of
        merchandise or equipment will be equipped with rubber tires, side guards
        and
        such other safeguards as the Landlord requires.

      

      

      15           The
        Landlord will have the right to refuse admission to the Building outside
        of
        normal business hours to any person not producing an identification pass
        authorized by the Landlord, and, may require all persons admitted to or leaving
        the Building outside of normal business hours to register.

      

      (a)  16.           Canvassing,
        soliciting and peddling in the Building is prohibited and the Tenant will
        co_operate to prevent same.

      

      17           The
        Tenant, at the Landlord's request, will appoint Premises wardens who will
        be
        responsible for liaison with Building management in all emergency matters
        and
        who will be responsible for instructing employees of the Tenant in emergency
        matters.

      
        
                

                              
                            
      

                    
      
      

                    
      
      

            
              	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
              

                                      INITIAL              
            
	              

                                       
                                      
              

                                       
                                      
              

                                                                           
                          /s/IM
                                                                                IM              
                          

                      

                                      Landlord              
              

                                       
                                      
            	              

                                       
                                      
              

                                       
                                      
              

                                       
                                      
                                                                       
                      /s/
                      DW           

                                                                                DW

                                      Tenant              
              

                                       
                                      
            
	 	 

            
      

                              ST_new_lease_041707_2_Word6exhibit1098.htm

    
      

    

    
      

    

    Exhibit 10.98     

     

    
       

      SmarTire
        Systems Inc.

      Suite
        150, 13151 Vanier Place

      Richmond,
        British Columbia

      Canada,
        V6V 2J1

       

      T:
        604.276.9884

      F:
        604.276.2350

      www.smartire.com

      SMTR:
        OTCBB

      

       

      May
        7,
        2007

       

      Robert
        Rudman

      500
        Australian Avenue

      Suite
        700

      West
        Palm
        Beach, FL

      33401

      

       

      Dear
        Robert:

       

      Re:           Resignation
        as Director and Termination of Consulting Contract

       

      We
        accept
        your resignation as a Director and Chairman of SmarTire Systems Inc. and
        as
        Director of its subsidiaries, SmarTire USA Inc. and SmarTire Europe Limited.
        As
        discussed, we agree to a full and final settlement with you as
        follows:

       

      
        	
                1.  

              	
                Termination
                  of Renewal and Amendment of Consulting Agreement entered into August
                  9,
                  2006 between the Company and yourself effective February 28,
                  2007.

              

      

       

      
        	
                2.  

              	
                All
                  stock options previously granted to you will expire thirty days
                  after the
                  date of this letter except for 5,840,000 stock options granted
                  to you on
                  December 20, 2004 which will remain exercisable into common shares
                  of the
                  Company at $0.03 per share until the option expiry date of December
                  19,
                  2009.

              

      

       

      
        	
                3.  

              	
                Director
                  fees of US$72,525 owed to you will be paid in 3,679,604 free trading
                  shares of the Company.

              

      

       

      
        	
                4.  

              	
                You
                  agree to sell shares in accordance with the terms of the lock-up
                  agreements entered into in certain financings by the
                  Company.

              

      

       

      This
        letter agreement is intended to be a binding agreement between the parties
        subject to the terms and conditions hereof. You hereby release and forever
        discharge remise, release and forever discharge SmarTire Systems Inc., its
        successors and assigns of and from any and all actions, causes of action,
        claims
        and demands which you had or now has, or which your successors and assigns
        hereafter can, shall or may have, and, without limiting the generality of
        the
        foregoing, any actions, causes of action, claims and demands, whether known
        or
        unknown, suspected or unsuspected, whatsoever and wheresoever, whether at
        law or
        in equity, which have resulted from or may in any way arise out of this
        engagement by SmarTire Systems Inc.

       

      This
        letter agreement may be executed in several counterparts, each of which will
        be
        deemed to be an original and all of which will together constitute one and
        the
        same instrument.  Delivery of a copy by facsimile or other electronic
        means will be deemed to be delivery of an original.

       

      This
        letter agreement shall be construed and enforced in accordance with the laws
        of
        the Province of British Columbia.

       

      Please
        indicate your agreement with the terms of this letter by signing one copy
        of the
        letter below and returning it to me.

       

      Sincerely,

       

      SmarTire
        Systems Inc.

       

      

      /s/
        Dave
        Warkentin

      Dave
        Warkentin

       

      President
        and Chief Executive Officer

       

      

       

      

       

      I
        understand and agree to the above terms:

       

      /s/
        Robert
        Rudman                                                                                                                

      Robert
        Rudman                                                                                                Date: 
May 7, 2007

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