Document:

exv10w9

 

Exhibit 10.9

PHOTOWATT TECHNOLOGIES INC.

STOCK OPTION PLAN

As
amended on November 8, 2006, December 5, 2006 and
February 13, 2007 with effect as of September 12, 2006

1. PURPOSE OF THE PLAN

1.1 This Stock Option Plan has been established by the Company to provide long-term incentives to
attract, motivate and retain certain key employees, directors and
officers of, and service providers
providing services to, the Company.

2. DEFINITIONS

2.1 In this Plan, the following terms have the following meanings:

“Affiliate” has the meaning ascribed to that term in the Securities Act (Ontario);

“Associate” has the meaning ascribed to that term in the Securities Act (Ontario);

“Applicable Law” means any applicable provision of law, domestic or foreign, including, without
limitation, applicable securities legislation, together with all regulations, rules, policy
statements, rulings, notices, orders or other instruments promulgated thereunder and Stock Exchange
Rules;

“ATS” means ATS Automation Tooling Systems Inc.;

“Board” means the board of directors of the Company;

“Business Day” means any day other than a Saturday, a Sunday or a statutory holiday observed in the
Province of Ontario;

“Code”
means the United States Internal Revenue Code of 1986, as amended;

“Committee” means a committee, if any, created by the Board to exercise authority under the Plan
pursuant to the provisions contained herein;

“Company” means Photowatt Technologies Inc.
and includes any successor corporation thereof, and any reference in the Plan to action by the Company means action by or under the
authority of the Board or the Committee or any person that has been designated for that purpose by
the Board or Committee in accordance with Section 11.4;

“Continuous Service” means that the provision of services to the Company
or an Affiliate of the Company in any capacity of
employee, director, officer or Service Provider is not interrupted or terminated, whether by resignation,
removal, discharge, termination of engagement or otherwise. In the case of an employee whose
employment is terminated by the Company or an Affiliate of the
Company, Continuous Service shall be terminated on the date of
notice of termination is given to the employee. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers between locations of
the Company or an Affiliate of the
Company or among the Company and any of its Affiliates, in any capacity of
employee, director, officer or Service Provider, or (iii) any change in status as long as the individual
remains in the service of the Company or an Affiliate of the Company in any capacity of employee, director,
officer or Service Provider (except as otherwise provided in a written agreement between the Company and
the Participant). An approved leave of
absence shall include sick leave, military leave, or any other authorized personal leave. For
purposes of an ISO, no

 

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 such leave may exceed 90 days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract;

“Corporate Transaction” means a Sale Transaction resulting in a Change of Control (as defined
below). A “Change of Control” shall occur in the
event of either (A) an acquisition of voting
securities of the Company to which are attached in excess of 50% of the votes attaching to all
outstanding voting securities of the Company or (B) if the Company is not the surviving corporation
following completion of a Corporate Transaction, a transaction whereby the shareholders of the
Company immediately before the transaction hold less than 50% of the shares of the surviving
corporate entity or purchaser;

“Date of Grant” of an Option means the date the Option is granted to a Participant under the Plan;

“Designated Number” has the meaning ascribed to it in Subsection 3.2(a) hereof;

“Effective Date” means the 12th day of September, 2006, when this Plan was approved by
the Board;

“Eligible
Person” means:

	(i)	 	any director, officer or employee of the Company or any
Affiliate of the Company, or any other Service Provider (an
“Eligible Individual”); or

	(ii)	 	a corporation controlled by an Eligible Individual, the
issued and outstanding voting shares of which are, and will continue
to be, beneficially owned, directly or indirectly, by such Eligible Individual
and/or the spouse, children and/or grandchildren of such Eligible
Individual (an “Employee Corporation”);

“Exercise Notice” has the meaning ascribed to it in Section 3.6 hereof;

“Exercise Notice Deadline” means the earlier of (i) 5:00 p.m. (Toronto time) on the date which is
the 180th day following the date of the death of the Participant and
(ii) the Expiry Time;

“Exercise Price” has the meaning ascribed to it in Subsection 3.2(b) hereof;

“Expiry Date” means, in respect of an Option, the latest date on which the Option may be exercised,
provided that if at any time the date should be determined to occur either during a period in which
the Optionee is restricted from trading in securities of the Company under the insider
trading policy or other policy of the Company or within ten Business Days following such a period,
such date shall be deemed to be the date that is the tenth Business Day following the date of
expiry of such period;

“Expiry Time” means, in relation to an Option, 5:00 p.m. (Toronto time) on the Expiry Date;

“Fair Market Value” with respect to the Shares as at any date means the closing price for the
Shares on the day immediately prior to such date on the stock exchange on which the highest
aggregate volume of Shares have traded on such date. In the event that the Shares are not listed
and posted for trading on any stock exchange, the Fair Market Value shall be the fair market value
of the Shares as determined by the Board in its sole discretion, acting reasonably and in good
faith;

“French Option Plan” has the meaning ascribed to it in Section 9.1 hereof;

“Insider” means:

	(i)	 	an insider as defined in the Securities Act (Ontario), other than a person who falls within
that definition solely by virtue of being a director or senior officer of a subsidiary of the
Company; and

(ii) an Associate of any person who is an insider by virtue of (i), above;

“ISO” has the meaning ascribed to it in Section 8.1 hereof;

“Liquid Securities” means securities of an issuer that are listed for trading on one or more of the
TSX, the Nasdaq Global Market, the New York Stock Exchange or a stock
exchange or quotation system of similar stature,
that have a market

 

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capitalization of at least $200 million, and that are not subject to any
restriction on sale, pursuant to Applicable Law or otherwise;

“Non-Executive Director” means any director of the Company who is not an employee or officer of the
Company or an Affiliate of the Company;

“Option” means a right granted under the Plan to a Participant to purchase Shares in accordance
with the Plan;

“Option Agreement” has the meaning ascribed to it in Section 3.1 hereof;

“Optionee” means an Eligible Person to whom an Option has been granted and who continues to hold
such Option;

“Outstanding Issue” means the aggregate number of Shares that are outstanding immediately prior to
the Share issuance in question, excluding Shares which have been issued pursuant to Share
Compensation Arrangements within the preceding one year period;

“Participant” means an Eligible Person who has agreed to participate in the Plan on such terms as
the Company may specify at the time he or she is designated as an Eligible Person;

“Plan” means this Stock Option Plan, as amended and restated from time to time;

“Qualified IPO” means an underwritten public offering of Shares in which immediately following the
closing, the Shares are listed for trading on one or more of the TSX, the Nasdaq Global Market, the
New York Stock Exchange or a stock exchange or quotation system of similar stature and have a
market capitalization of at least $200 million;

“Sale Transaction” means any merger, amalgamation or plan of arrangement involving the Company,
acquisition or take-over bid for the Shares of the Company, or
similar transaction, or series of transactions, or the sale of
all or substantially all of the assets of the Company excluding any asset sale transaction in
connection with which all holders of Shares are not entitled to receive cash or Liquid Securities
in consideration of their Shares, provided that a Sale Transaction shall exclude: (i) any share
transfer, reorganization, asset transfer, or similar transaction,
undertaken in one or a series of transactions, to which the parties are limited
to the Company and/or any of its present or future Affiliates; (ii) the completion of a treasury
offering of securities of the Company or an Affiliate of the Company; or (iii) the public offering
or the dividend or other distribution by ATS or one of its Affiliates of shares in the capital of
the Company;

“SAR” has the meaning ascribed to it in Section 4.3 hereof;

“Service
Provider” means: (i) an employee or Insider of the Company
or an Affiliate of the Company; or (ii) any other person or company
engaged by the Company or an Affiliate of the Company to provide
services for an initial, renewable or extended period of 12 months or
more;

“Shares” means common shares of the Company, and include any shares of the Company into which such
shares may be converted, reclassified, subdivided, consolidated, exchanged or otherwise changed,
whether pursuant to a reorganization, amalgamation, merger, arrangement or other form of
reorganization;

“Share
Compensation Arrangement” means the Plan, a stock option, stock option plan, stock purchase plan where
the issuer provides financial assistance or matches the whole or a portion of the purchase price of
the securities being purchased, stock appreciation rights involving the issuance of securities from
treasury, or any other compensation or incentive mechanism involving the issuance or potential
issuance of securities to one or more of an employee, Insider or
Service Provider of the Company or any
Affiliate of the Company, including a share purchase from treasury which is financially assisted by the Company by
way of a loan, guaranty or otherwise;

“Stock Exchange Rules” means the applicable rules of any stock exchange or quotation system upon
which shares of the Company are listed or quoted, as applicable;

“Successor Corporation” has the meaning ascribed to it in Section 6.1 hereof;

 

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“TSX” means the Toronto Stock Exchange;

“US Optionee” has the meaning ascribed to it in Section 8.1 hereof; and

“Vesting Rights” refers to the terms on which the Option may be exercised.

2.2 In this Plan, unless the context requires otherwise, references to the male gender include the
female gender, words importing the singular number may be construed to extend to and include the
plural number, and words importing the plural number may be construed to extend to and include the
singular number. All amounts referred to in this Plan are stated in
Canadian dollars unless otherwise indicated.

3. GRANT OF OPTIONS AND TERMS

3.1
Options may be granted by the Board to any Eligible Person. If an Eligible Person executes and delivers to the Company a letter
agreement substantially in the form of Schedule “A” (the “Option Agreement”) and thereby agrees to participate in the Plan
on the terms and conditions specified by the Company, he or she shall become a Participant in the
Plan. The Company shall have no obligation at any time after the delivery of such a letter
agreement to a Participant to notify the Participant of the Expiry Date of any Options granted
under this Plan.

3.2 The Company may, from time to time, grant an Option to a Participant to acquire Shares in
accordance with the Plan. In granting such Option, subject to the provisions hereof, the Company
shall designate,

	 	(a)	 	the maximum number (the “Designated Number”) of Shares which the Participant
may purchase under the Option;
	 
	 	(b)	 	the price (the “Exercise Price”) per Share at which the Participant may
purchase his or her Shares under the Option, which price shall be determined by the
Company in accordance with Section 3.3 hereof;
	 
	 	(c)	 	the conditions to be met to establish Vesting Rights attaching to the Option,
which may include performance conditions relating to the market price of the Shares;
the return on investment to holders of Shares, with or without reference to other
comparable companies; the financial performance or results of the Company or business
unit thereof; other performance criteria relating to the Company or business unit
thereof; ownership of Shares by a Participant; and any other terms and conditions the
Company may in its discretion determine with respect to vesting;
	 
	 	(d)	 	the Expiry Date of the Option, which shall be no later than the date that is
seven years after the Date of Grant; and
	 
	 	(e)	 	with respect to Options granted pursuant to Section 8 hereof, whether the
Option is intended to constitute an ISO.

3.3 The Exercise Price in respect of an Option shall be determined by the Company, but shall be not
less than the Fair Market Value of the Shares on the Date of Grant of the Option.

3.4 Except as otherwise set out in any written agreement between a Participant and the Company in
respect of an Option, and notwithstanding any other provision of this Plan, in the
event of a Corporate Transaction, each Option will be deemed terminated immediately prior to the
specified effective date of the Corporate Transaction, unless either the Option is assumed by the
successor corporation or parent thereof in connection with the Corporate Transaction or the Board
determines otherwise. Upon Board approval of a Sale

 

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Transaction, the Company may give notice to
each Participant which will set forth requirements in respect of outstanding Options or any Shares
acquired through the exercise of Options following the date of such notice that must be complied
with as a condition to each Participant’s participation in the Sale Transaction.

3.5 The Board or the Committee, as the case may be, may, in its sole discretion and subject to such
conditions as the Board or Committee considers appropriate, at any time after the Date of Grant of
an Option, determine the acceleration, if any, of the vesting provisions for any Option and permit
an Optionee to exercise any or all of the unvested Options then outstanding and granted to the
Optionee under this Plan, in which event all such unvested Options then outstanding and granted to
the Optionee shall be deemed to be immediately exercisable during such period of time as may be
specified by the Board or the Committee.

3.6 If a Participant should die and the circumstances specified in Section 3.7 had not occurred in
relation to such Participant and such Participant, at the time of his or her death, held an
Option(s) in respect of which the Expiry Time had not then occurred, then in the case of each
Option so held by the deceased Participant which had vested and was exercisable with respect to
some or all of the Shares forming the subject matter thereof as at the date of the death of the
deceased Participant, the legal representatives of the deceased Participant shall be entitled to
send a notice in writing (an “Exercise Notice”) to the Company advising that they wish to exercise
such Option which notice, to be effective, must be actually received by the Company by no later
than the Exercise Notice Deadline and must specify the number of Shares in respect of which such
Option is wished to be exercised (provided that such exercise can only be in respect of up to that
number of Shares that the deceased Participant could have exercised such Option as at the date of
his or her death), accompanied by a certified cheque or other means of cash payment satisfactory to
the Company in the amount of the aggregate Exercise Price for such number of Shares. In the event
that:

	 	(a)	 	an effective Exercise Notice is actually received by the
Company by no later than the Exercise Notice Deadline, then the Company shall
issue to the estate of the deceased Participant that number of Shares as were
specified in the Exercise Notice (provided that the maximum number of Shares
which can be issued shall not exceed that number of Shares for which the
deceased Participant could have exercised such Option as at the date of his or
her death), which issuance shall occur as soon as practicable thereafter. If
the Exercise Notice so received is in respect of less than the maximum number
of Shares for which the deceased Participant could have exercised such Option
as at the date of his or her death, such Option shall in all respects terminate
and be of no further force or effect as to such of the Shares in respect of
which such Option has not been exercised pursuant to the Exercise Notice; and
	 
	 	(b)	 	an effective Exercise Notice is not actually received by the
Company by the Exercise Notice Deadline, such Option shall in all respects
terminate and be of no further force or effect.
	 
	3.7	(a)	 	 Except as otherwise provided in Section 3.6 or Subsection 3.7(b) or in a written
agreement with the Company and approved by the Board, if a Participant’s Continuous Service
shall terminate then (A) any Option granted to such Participant under the Plan that has not
vested shall in all respects terminate and be of no further force or effect immediately after
such termination of Continuous Service (and without the requirement for any further act or
formality including, without limitation, the giving of any notices) and (B) immediately after
the earlier of 5:00 p.m. (Toronto time) on the 30th day following the date of the occurrence
of any such resignation, discharge, removal or termination other than by reason of death as
contemplated in Section 3.6 (and without the requirement for any further act or formality
including, without limitation, the giving of any notices) and the Expiry Time, each and every
Option granted to such Participant

 

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	 	 	 	under the Plan that has not been exercised by said time
shall in all respects immediately terminate and be of no further force or effect.
	 
	 	(b)	 	Except as otherwise provided in a written agreement with the Company, and
approved by the Board, if a Participant:

	 	(i)	 	is discharged or terminated as an employee or officer of the
Company or an Affiliate of the Company for cause; or
	 
	 	(ii)	 	is removed as a director of the Company by action of the Board
or the shareholders of the Company; or
	 
	 	(iii)	 	is removed as a director of an Affiliate of the Company by
action of the board of directors of the Affiliate or the shareholders
of the Affiliate; or
	 
	 	(iv)	 	was engaged as a Service Provider and is not an employee or director
or officer of the Company or an Affiliate of the Company, and the
engagement is terminated by the Company or an Affiliate of the
Company for
cause or breach of duty,

	 	 	 	immediately upon the occurrence of any such discharge, removal or termination other
than by reason of death as contemplated in Section 3.6 (and without the requirement
of any further act or formality including, without limitation, the giving of any
notices), each and every Option granted to such Participant under the Plan that had
not been exercised prior to such occurrence shall in all respects immediately
terminate and be of no further force or effect as to Shares in respect of such
Options, regardless of whether or not such Option had vested with respect to such
Shares.

For greater certainty, the Company shall in its sole and absolute discretion determine whether
“cause” or a “breach of duty” exists with respect to a discharge or termination.

3.8 If the
Participant is an Employee Corporation, the references to the
Participant in Sections 3.6 and 3.7 shall be deemed to refer to the
Eligible Individual associated with the Employee Corporation.

3.9 Participation in the Plan shall be entirely voluntary and any decision not to participate shall
not affect the employment or engagement of any Eligible Person with
the Company or an Affiliate of the Company.

3.10 The Company shall in its sole discretion, subject only to the terms of this Plan, determine the
terms of all Options.

3.11 An Option is personal to the Optionee and non-assignable (whether by operation of law or
otherwise), except as provided for herein. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of an Option contrary to the provisions of the Plan, or upon the
levy of any attachment or similar process upon an Option, the Option shall, at the election of the
Company, cease and terminate and be of no further force or effect whatsoever.

3.12
Notwithstanding Sections 3.11 and 11.5, Options may be transferred or
assigned between an Eligible Individual and the related Employee
Corporation provided the assignor delivers notice to the Company
prior to the assignment and the Board or the Committee approves such
assignment.

4. EXERCISE OF PARTICIPANTS’ OPTIONS

4.1 Subject to earlier termination as provided for in Sections 3.6 and 3.7, a Participant’s Option
shall terminate and may not be exercised after the Expiry Date.

4.2 Other than as provided for in Sections 3.4, 3.6, and 3.7, the exercise of an Option under the
Plan shall be made by submitting to the Company a notice substantially similar to that attached as
Schedule “B”, specifying and subscribing for the number of Shares in respect of which the Option is
being exercised at that time and accompanied by a certified cheque or other means of cash payment
satisfactory to the Company in the amount of the aggregate Exercise Price for such number of
Shares.

4.3 At the discretion of the Company, an Option granted under the Plan may have connected
therewith, at or after the time of grant, a number of stock appreciation rights (a “SAR” or “SARs”)
equal to the Designated Number of Shares in respect of the Option. Each such SAR in respect of a
Share shall entitle the

 

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Participant to surrender to the Company, unexercised, the right to
subscribe for such Share pursuant to the related Option and to receive from the Company cash in an
amount equal to the excess of the Fair Market Value at the time of exercise of the SAR over the
Exercise Price of the related Option. Upon exercise of a SAR in respect of a Share covered by a
related Option, that Option in respect of such Share shall immediately cease and terminate and be
of no further force or effect. Unexercised SARs shall terminate when the related Option is
exercised or the Option terminates.

4.4 Upon the exercise of any Option, the Company shall have the right to require the Participant to
remit to the Company, in addition to the Exercise Price, an amount sufficient to satisfy all
federal, provincial, state and local withholding tax requirements, if any, prior to the issuance of
the Shares. The Company shall also have the right in its discretion to satisfy any such
withholding tax liability by retaining any Shares which would otherwise be issued to a Participant
hereunder.

4.5 Upon the disposition of any Shares acquired through the exercise of an Option, the Company
shall have the right to require the Participant to remit to the Company an amount sufficient to
satisfy all federal, provincial, state and local withholding tax requirements, if any, as a
condition to the registration of the transfer of such Shares on its books.

4.6 A term of grant of each Option shall be that if the holder is requested in writing by the
Company and the lead underwriters for a proposed public offering of securities of the Company, the
holder shall not (as evidenced by such form as may be reasonably requested) sell or otherwise
dispose of or enter into a transaction providing the economic consequences of a sale in respect of
any Shares acquired or that may be acquired pursuant to the exercise of the Option without the
prior written consent of such underwriters, for a period not to exceed 180 days following the
closing of such public offering.

5. MAXIMUM NUMBER OF SHARES TO BE ISSUED UNDER THE PLAN

5.1 The maximum number of Shares that may be issued by the Company to Participants pursuant to
Options granted and outstanding under this Plan and other Share Compensation Arrangements is, prior
to a Qualified IPO, 1,363,600, and after a Qualified IPO, a number equal to 10% of the number of
the Outstanding Issue immediately following completion of the Qualified IPO.

5.2 Following completion of a Qualified IPO, no Options shall be granted to any Optionee if the
total number of Shares issuable to such Optionee under this Plan, together with any Shares reserved
for issuance to such
Optionee under options for services or any other stock option plans, would exceed 5% of the issued
and outstanding Shares.

5.3 Notwithstanding any of the other provisions of this Plan, following completion of a Qualified
IPO, no Options shall be granted to any Optionee if such grant could result, at any time, in:

	 	(a)	 	the aggregate number of Shares issuable to Insiders at any time and issued to Insiders
within the one-year period prior to such time pursuant to Options or other Share
Compensation Arrangements exceeding 10% of the issued and outstanding Shares;
	 
	 	(b)	 	the aggregate number of Shares reserved for issuance pursuant to Options granted under
this Plan or any other stock option plan to Non-Executive Directors exceeding 0.5% of the
issued and outstanding Shares; and

 

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	 	(c)	 	the issuance to any one Insider and such Insider’s Associates, within a one-year
period, pursuant to Options or other Share Compensation Arrangements of an aggregate number
of Shares exceeding 5% of the issued and outstanding Shares.

5.4 If any Option is terminated, cancelled or has expired without being fully exercised, any
unissued Shares which have been reserved to be issued upon the exercise of the Option shall become
available to be issued upon the exercise of Options subsequently granted under the Plan, provided
that any such termination or cancellation of Options shall be conducted in accordance with the
applicable rules of any stock exchange upon which the Shares of the Company are listed.

6. ANTI-DILUTION

6.1 In the event that the Shares are at any time changed or affected as a result of the declaration
of a stock dividend or other distribution thereon or their subdivision or consolidation, the number
of Shares reserved for issuance under this Plan shall be adjusted accordingly by the Board or the
Committee to such extent as they deem proper in their discretion. In such event, the number of,
and the price payable for, any Shares that are then subject to Option may also be adjusted by the
Board or the Committee to such extent, if any, as they deem proper in their discretion.

          Subject to Section 3.4, if at any time after the grant of an Option and prior to the
expiration of the term of such Option, the Shares shall be reclassified, reorganized or otherwise
changed, otherwise than as specified in the preceding paragraph, or the Company shall merge,
combine, enter into a plan of arrangement or amalgamate with or into another corporation (the
corporation resulting or continuing from such merger, combination, plan of arrangement or
amalgamation being herein called the “Successor Corporation”), the Optionee shall be entitled to
receive upon the subsequent exercise of his or her Option in accordance with the terms hereof and
shall accept in lieu of the number of Shares to which he or she was theretofore entitled upon such
exercise but for the same aggregate consideration payable therefor, the aggregate number of shares
of the appropriate class and/or other securities of the Company or the Successor Corporation (as
the case may be) and/or other consideration from the Company or the Successor Corporation (as the
case may be) that the Optionee would have been entitled to receive as a result of such
reclassification, reorganization or other change or, of such merger, combination, arrangement or
amalgamation, if on the record date or effective date (as the case may be) of such
reclassification, reorganization or other change or such merger, combination, plan of arrangement
or amalgamation (as the case may be) he or she had been the registered holder of the number of
Shares to which he or she was theretofore entitled upon such exercise.

6.2 The Company shall not be required to issue fractional shares in satisfaction of its obligations
hereunder. Any fractional interest in a Share that would, except for the provisions of this
Section 6.2, be deliverable upon the exercise of any Option shall be cancelled and not be
deliverable by the Company.

7. ACCOUNTS AND STATEMENTS

7.1 The Company shall maintain records of the details of each Option granted to each Participant
under the Plan, including the Date of Grant, the Designated Number, the Exercise Price of each
Option, the Vesting Rights, the Expiry Date, the number of Shares in respect of which the Option
has been exercised and the maximum number of Shares which the Participant may still purchase under
the Option, which records shall, absent manifest error, be considered conclusively determinative of
all information contained therein. Upon request therefor from a Participant and at such other
times as the Company shall determine, the Company shall furnish the Participant with a statement
setting forth the details of his Options. Subject to the first sentence of this Section 7.1, such
statement shall be deemed to have been accepted by the Participant as correct unless written notice
to the contrary is provided to the Company within 30 days after such statement is given to the
Participant. For greater certainty, in the event of any discrepancy
between the records of the Company and any statement provided to a
Participant pursuant to this section 7.1, the records of the Company
shall govern and the rights and obligations of the Company and the
Participant shall be determined on the basis of such records.

 

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8. OPTIONS GRANTED TO US RESIDENTS OR CITIZENS

8.1 Any Option granted under this Plan to a Participant who is a citizen or resident of the United
States (including its territories, possessions and all areas subject to the jurisdiction) (a “U.S.
Optionee”) may be an incentive stock option (an “ISO”) within the meaning of Section 422 of the
Code, but only if so
designated by the Company in the agreement evidencing such Option. No provision of this Plan, as it
may be applied to a US Optionee, shall be construed so as to be inconsistent with any provision of
Section 422 of the Code. Grants of Options to US Optionees which are not ISO’s may be granted
pursuant to Section 3 hereof. Notwithstanding anything in this Plan contained to the contrary, the
following provisions shall apply to ISO’s granted to each US Optionee:

	 	(a)	 	ISO’s shall only be granted to US Optionees who are employees at the time of
grant;
	 
	 	(b)	 	the aggregate Fair Market Value (determined as of the time an ISO is granted)
of the Shares subject to ISO’s exercisable for the first time by a US Optionee during
any calendar year under this Plan and all other equity plans, within the meaning of
Section 422 of the Code, of the Company shall not exceed One Hundred Thousand Dollars
in US funds (US $100,000); provided that options for Shares which exceed such aggregate
Fair Market Value shall not be void, but shall instead be options which are granted
under Section 3 hereof and are not ISOs;
	 
	 	(c)	 	the Exercise Price for Shares under each ISO granted to a US Optionee pursuant
to this Plan shall be not less than the Fair Market Value of such Shares at the time
the Option is granted;
	 
	 	(d)	 	if any US Optionee to whom an ISO is to be granted under the Plan at the time
of the grant of such ISO is the owner of shares possessing more than ten percent (10%)
of the total combined voting power of all classes of shares of the Company, then the
following special provisions shall be applicable to the ISO granted to such individual:

	 	(i)	 	the Exercise Price (per Share) subject to such ISO shall not be
less than one hundred ten percent (110%) of the Fair Market Value of one Share
at the time of grant; and
	 
	 	(ii)	 	for the purposes of this Section 8.1 only, the option exercise
period shall not exceed five (5) years from the Date of Grant; and

	 	(e)	 	no Option may be granted hereunder to a US Optionee following the expiration of
ten (10) years after the date on which this Plan is adopted by the Company or the date
on which the Plan is approved by the shareholders of the Company, whichever is earlier.

8.2 The
maximum number of ISOs that may be issued under this Plan is 68,180, subject to adjustment
in accordance with Section 6.1, mutatis mutandis.

9. OPTIONS GRANTED TO PARTICIPANTS SUBJECT TO FRENCH TAXATION

9.1 Attached as Schedule “C” to this Plan is the subplan for France (the Plan as modified by the
subplan for France, the “French Option Plan”). Any Option granted under this Plan to a Participant
who is or may become subject to French taxation (i.e. income tax and/or social security
contributions) as a result of an Option granted under this Plan, and who qualifies under Section 2
of the subplan for France attached to this Plan as Schedule “C”, will be subject to the French
Option Plan. For greater clarity, a grant of Options shall be subject to the terms of the French
Option Plan if the Option Agreement evidencing such grant refers to the French Option Plan.

10. NOTICES

10.1 Any payment, notice, statement, certificate or other instrument required or permitted to be
given to a Participant or any person claiming or deriving any rights through him or her shall be
given by:

	 	(a)	 	delivering it personally to the Participant or to the person claiming or
deriving rights through him or her, as the case may be; or

 

- 10 -

	 	(b)	 	mailing it postage paid (provided that the postal service is then in operation)
or delivering it to the address which is maintained for the Participant in the
Company’s records.

10.2 Any
payment, notice, statement, certificate or other instrument required or permitted to be given to
the Company shall be given by mailing it postage prepaid (provided that the postal service is then
in operation) or delivering it to the Company at the following address:

Photowatt Technologies Inc.

25 Reuter Drive

Cambridge, Ontario N3E 1A9

Attention: President and Chief Executive Officer

Fax No.: (519) 650-6535

10.3 Any
payment, notice, statement, certificate or other instrument referred
to in Section 10.1 or
Section 10.2 hereof, if delivered, shall be deemed to have been given or delivered on the date on
which it was delivered or, if mailed (provided that the postal service is then in operation), shall
be deemed to have been given or delivered on the second Business Day following the date on which it
was mailed.

11. GENERAL

11.1 The Company shall have the power to, at any time and from time to time either prospectively or
retrospectively, amend, suspend or terminate the Plan or any Option granted under the Plan;
provided, however, that:

	 	(a)	 	any such amendment, suspension or termination is subject to any approvals
required under Applicable Law;
	 
	 	(b)	 	no such amendment, suspension or termination shall be made at any time to the
extent such action would materially adversely affect the existing rights of a
Participant with respect to any then outstanding Option, as determined by the Board
acting in good faith, without his or her consent in writing, except to the extent
required by Applicable Law; and
	 
	 	(c)	 	following completion of a Qualified IPO, any such amendment in respect of the
following shall become effective only upon shareholder approval thereof:

	 	(i)	 	any amendment to the maximum number of Shares specified in
Sections 5.1 and 8.2 in respect of which Options may be granted under this
Plan (other than pursuant to Article 6);
	 
	 	(ii)	 	any amendment that would reduce the Exercise Price at which
Options may be granted below the price provided for in Section 3.3 (other
than pursuant to Article 6);
	 
	 	(iii)	 	any amendment that would increase any of the percentage
limits in Sections 5.2 and 5.3;
	 
	 	(iv)	 	any amendment to Subsection 3.2(d) having the effect of
extending the maximum term of an Option beyond the date that is seven years
after the Date of Grant;
	 
	 	(v)	 	any amendment that would extend the term of any outstanding
Option granted to an Insider to a date beyond the Expiry Date;

 

- 11 -

	 	(vi)	 	any amendment that would reduce the Exercise Price of an
outstanding Option (other than pursuant to Article 6);
	 
	 	(vii)	 	any amendment that would permit assignments to persons not
currently permitted under the Plan; and
	 
	 	(viii)	 	any amendment to the definition of “Eligible Persons” or any defined term
used therein that would expand the scope of the term “Eligible Persons”.

11.2 The Company shall have the power to make such rules and regulations for the administration of
this Plan, and to interpret the provisions hereof and of such rules and regulations, as it shall in
its sole discretion determine to be appropriate.

11.3 The determination by the Company of any question which may arise as to the interpretation or
implementation of the Plan or any of the Options granted hereunder shall be final and binding on
all Participants and other persons claiming or deriving rights through any of them.

11.4 The Board or Committee may from time to time delegate all or any of its powers under the Plan
to one or more directors or officers of the Company who shall thereupon exercise such of the powers
herein given to the Board or the Committee as may be delegated by it in accordance with any express
directions of the Board or Committee from time to time.

11.5 The Plan shall enure to the benefit of and be binding upon the Company, its successors and
assigns. Except as provided for herein, the interest of any Participant under the Plan or in any Option shall not be transferable
or alienable by him or her either by pledge, assignment or in any other manner whatsoever and,
during his lifetime, shall be vested
only in him or her, but shall thereafter enure to the benefit of and be binding upon the legal
personal representatives of the Participant in accordance with the terms hereof.

11.6 The Company’s obligation to issue Shares in accordance with the terms of this Plan and the
grant or right of exercise of any Option hereunder are subject to compliance with all Applicable
Laws and to receipt of any applicable approval under Applicable Laws in respect of the grant or
right of exercise or any securities filing that discloses the grant or right of exercise. As a
condition of participating in the Plan, each Participant agrees (for such period as the Participant
holds any Option, including any period subsequent to termination of Continuous Service of the
Participant), in connection with the exercise of all Options held and the sale of any Shares
acquired upon the exercise of such Options, to comply with all Applicable Laws as well as the
restrictions respecting disclosure of information or trading in securities of the Company
established in the Company’s insider trading policy or such other policies as are established from
time to time, and to furnish to the Company all information, representations and undertakings as
may be necessary to demonstrate compliance with Applicable Laws by the Company, as determined by
the Company, acting reasonably.

11.7 Each Participant is subject to all applicable tax laws in connection with the ownership and
exercise of Options and the acquisition and disposition of Shares underlying any Options, and no
representation or warranty is made by the Company respecting any tax deduction, credit or other
favourable tax treatment in connection therewith.

11.8 No Participant shall have any rights as a shareholder in respect of Shares subject to an
Option until such Shares have been paid for in full and issued.

11.9 No Participant or other person shall have any claim or right to be granted Options under the
Plan. Neither the Plan nor any action taken thereunder shall interfere with the right of the
employer of a Participant to terminate that Participant’s employment at any time. Neither any
period of notice nor any payment in lieu thereof

 

- 12 -

upon termination of employment shall be considered
as extending the period of employment for the purposes of the Plan.

11.10 The Board or Committee shall be entitled to make such rules, regulations and determinations
as it deems appropriate under the Plan in respect of any leave of absence or disability of any
Participant.

11.11 This Plan and any Options granted hereunder shall be governed by and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

11.12 This Plan is hereby instituted and in effect as of the Effective Date.

* * *

 

 

SCHEDULE “A”

[LETTERHEAD OF PHOTOWATT TECHNOLOGIES INC.]

TO: [Name of Eligible Person]

          You have been designated as an Eligible Person under the Stock Option Plan of Photowatt
Technologies Inc. (the “Plan”), and assuming that you become a Participant in the Plan by signing
this letter, the details of the non-assignable Option which has been granted to you under the Plan
are as follows:

	 	 	 	 	 	 	 
	(a)

	 	Date of Grant:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	(b)

	 	Designated Number (maximum
number of Shares which you

may purchase under this Option):	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	(c)

	 	Exercise Price (price per Share):	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	(d)

	 	Expiry Date:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	(e)

	 	Grant is subject to the terms of
the French Option Plan	 	o Yes	 	o No

          Subject to the terms of the Stock Option Plan, the conditions to be met to establish Vesting
Rights attaching to the Option are as follows:

 

          If you agree to participate in the Plan and comply with its terms and conditions, please sign
one copy of this letter and return it to
         by
         20,        .

	 	 	 	 	 
	 	PHOTOWATT TECHNOLOGIES INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

          I have read the Photowatt Technologies Inc. Stock Option Plan and agree to comply with, and
agree that my participation is subject in all respects to, its terms and conditions:

                                                            

(Signature)

                                                            

(Date)

 

SCHEDULE “B”

PHOTOWATT TECHNOLOGIES INC.

STOCK OPTION PLAN

NOTICE OF INTENT TO EXERCISE OPTION

I,
                    , hereby exercise my option to purchase ___ Common Shares of Photowatt
Technologies Inc. (the “Company”) at a purchase price of $                     per Common Share.

This Notice is delivered in respect of the option to purchase
___ Common Shares of the
Company which was granted to me on the ___ day of                     , 20___.

In connection with the foregoing, I enclose a certified cheque or other means of cash payment
payable to the Company in the amount of $                     in full payment for the Common Shares to be
received by me following receipt by the Company of this Notice and such payment.

	 	 	 
	 

	 	 
	Date

	 	Signature

 

 

SCHEDULE “C”

PHOTOWATT TECHNOLOGIES INC.

STOCK OPTION PLAN

SUBPLAN FOR OPTIONS GRANTED TO EMPLOYEES

OF FRENCH SUBSIDIARIES

This subplan will apply to Participants in the Photowatt Technologies Inc. Stock Option Plan
approved by the company (the “Plan”) who are or may become subject to French taxation (i.e. income
tax and/or social security contributions) as a result of Options granted under the Plan.

The terms of the Plan, as modified by this subplan for France, constitute the “French Option Plan”,
so as to comply with the provisions of Articles L. 225-177 to L. 225-185 of the French Commercial
Code and French employment law. This subplan shall be construed and operated with that intention.

This subplan should be read in conjunction with the Plan and is subject to the terms and conditions
of the Plan except to the extent that the terms and conditions of the Plan differ from or conflict
with the terms set out in this subplan, in which event, the terms set out in this subplan shall
prevail.

Initially capitalized terms used herein and not defined in this subplan shall have the meanings
ascribed to such terms in the Plan.

A grant of Options shall be subject to the terms of the French Option Plan if the Option Agreement
evidencing such grant refers to the French Option Plan.

The terms of this subplan are the terms set out in the rules of the Plan, modified as follows.

1. Definition

1.1. Employee

The term “Employee” shall mean a current salaried employee, as defined by French labor law.

1.2. Corporate officer

The term “Corporate Officer” shall only mean a corporate officer (“mandataire social”) as defined
in Article L.225-185 of the French Commercial Code.

 

 

2. Participants

Notwithstanding any other provision of the Plan, only an Employee, as defined in Section 1.1.
and/or a Corporate Officer, as defined in Section 1.2., of the Company or of a subsidiary having a
capital ownership as defined in Article L. 225-180 of the French Commercial Code —  shall be
granted an Option pursuant to this subplan.

Notwithstanding any other provision of the Plan, Options granted to any Participant who is
holding shares representing 10% or more of the Company’s capital at the date of grant shall not be
deemed to have been granted pursuant to this subplan.

3. Minimum Option price

Notwithstanding any other provision of the Plan:

	 	a)	 	In the case of shares to be subscribed, if the Exercise Price
(as
determined under the Plan) of an Option granted under this subplan is less than 80% of the average of the market value of the
underlying share during the 20 trading days preceding the date of grant such Option shall
be deemed to have an exercise price equal to 80% of the average of
the market value of the underlying share during the 20 trading
days preceding the date of grant.
	 
	 	b)	 	In addition to the condition mentioned in Section 3 a)
above, in the case of existing shares, if the Exercise Price (as
determined under the Plan) of an Option granted under this subplan is less than 80% of
the average purchase price of these shares such Option shall not be
deemed to have been granted under this subplan.

4. Adjustment of the exercise price and number of options

Notwithstanding any other provision of the Plan, the option price and the number of options shall
be fixed as soon as the option is granted. It is unchangeable and has to be adjusted upon the
occurrence of the events1 specified under Article L. 225-181 of the French Commercial
Code.

5. Origin of option granted

Notwithstanding any provision of the Plan, the origin of granted shares must be an increase of
capital or the repurchase of shares by the offering company.

6. Number of shares offered in the Plan

Notwithstanding
any provision of the Plan, but subject to any lesser limit in the
Plan, the number of options granted under this subplan cannot
exceed one third of Photowatt Technologies Inc.’s capital.

7. Closed periods during which Options can not be granted

Notwithstanding any other provision of the Plan:

	 	a)	 	No Options can be granted under this subplan during the 20 trading days following the
payment of a dividend or an increase of capital reserved to the shareholders.

 

			
	1	 	The events specified under Article L. 225-181 of the French Commercial Code are as follows: capital
reduction, change of profits’ distribution, grant of free shares, capital
increase with distribution of shares following capitalisation of retained
earnings, profits or premiums, distribution of retained earnings, issuance
(reserved to shareholders) of shares or of securities giving a right to
acquisition of shares.

 

 

	 	b)	 	No Options can be granted under this subplan during the period of ten Stock Exchange
trading sessions preceding and following the date on which the consolidated financial
statements, or failing that, the annual accounts, are published.
	 
	 	c)	 	No Options can be granted under this subplan during the period between the date on
which the corporate management of the Company becomes aware of information, which, if
published, might have a significant effect on the price of the company’s shares, and the
latest date of the ten Stock Exchange trading sessions following the date on which this
information is published.

8. Non-transferability of the Options

Notwithstanding any other provision of the Plan, Options may not be transferred or otherwise
disposed of.

9. Delay to exercise the option

Notwithstanding any other provision of the Plan, for French beneficiaries, a minimum 4 years
vesting period is required between the date of grant and the date of exercise, except in case of
death of the employee where article 11 is applicable. Upon the decision of the Board of Directors
or the Committee at the time of granting, and subject to all employees receiving options on the
same date having the same regime, either 100% of the options will become exercisable on the fourth
anniversary following the date of grant or 80% of the options will become exercisable on the fourth
anniversary following the date of grant and the remaining 20% will become exercisable on the fifth
anniversary following the date of grant.

10. Transferability of the shares

Notwithstanding any other provision of the Plan, Shares can be transferred as soon as a vested
option is exercised unless the Board of Directors or the Committee has decided, upon granting, and
subject to all employees receiving options on the same date having the same regime, to set up an
holding period during which shares will not be able to be transferred. In compliance with French
regulations, this holding period would be of three years maximum..

11. Transfer to heirs

Notwithstanding any other provision of the Plan, in the event of death of an option holder, his/her
heirs can exercise the Options granted to the deceased option holder within a period of six months
following the date of the option holder’s death.

12. Changes to the Plan

The Committee or the Board may not change the Plan in any way that affects this subplan, the
Options granted, if the change is inconsistent with French law and, in particular, French
legislation regarding stock options, as defined in Articles L. 225-177 to L. 225-185 of the French
Commercial Code and French labor law.

13. Severability

The terms and conditions provided in the French Option Plan are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable under French law, in whole or in
part, the remaining provisions shall nevertheless be binding and enforceable.exv10w18

 

EXHIBIT 10.18

LEASE OF INDUSTRIAL SPACE

SINGLE TENANT INDUSTRIAL BUILDING

     THIS LEASE made as of the · day of · , 2007.

BETWEEN:

	 	 	 
	Name:
	 	ATS AUTOMATION TOOLING SYSTEMS INC.

	 	 	 

	Address:
	 	250 Royal Oak Road, Cambridge, Ontario, N3H 4R6

	 	 	 

	Facsimile:
	 	519-650-6520

(the “Landlord”)

- a n d -

	 	 	 
	Name:
	 	PHOTOWATT TECHNOLOGIES INC.

	 	 	 

	Address:
	 	25 Reuter Drive, Cambridge, Ontario, N3E 1A9

	 	 	 

	Facsimile:
	 	519-650-6519

(the “Tenant”)

     IN CONSIDERATION of the mutual covenants contained herein, the Landlord and the Tenant hereby
agree as follows:

ARTICLE 1

DEFINITIONS

	1.1	 	Definitions. In this Lease the following terms shall have the following meanings:

	

	 	(a)	 	“Authorities” means all applicable federal, provincial, municipal and other
governmental authorities (including suppliers of public utilities), departments, boards
and agencies having jurisdiction, and “Authority” shall have a corresponding meaning;
	 
	 	(b)	 	“Automatic Renewal Period” has the meaning set out in Section 3.3(c);
	 
	 	(c)	 	“Building” means the buildings, structures and improvements from time to time
during the Term erected in, upon or under the Leased Premises and all alterations

 

-2-

	 	 	 	and additions thereto and replacements thereof, including the building with an
office area comprising a Rentable Area of approximately 26,000 square feet and a
plant area comprising a Rentable Area of approximately 167,000 square feet;
	 
	 	(d)	 	“Capital Tax” means the applicable amount of any tax or taxes payable under the
legislation of a province or to any political subdivision within a province by the
Landlord or by each of any entity constituting the Landlord (each such entity or the
Landlord severally referred to as the “taxpayer”), based upon or computed by reference
to the paid-up capital or place of business of the taxpayer, as determined for the
purposes of such tax or taxes; provided that for purposes hereof, the “applicable
amount” of such tax or taxes shall mean the amount thereof that would be payable if the
Leased Premises were the only establishment of the taxpayer in that province or any
other establishment of the taxpayer therein were located outside that province;
provided further that if the tax or taxes payable by the taxpayer are for a fiscal year
of the taxpayer not coinciding with the Fiscal Year, the amount of such tax or taxes of
such taxpayer payable by the Tenant hereunder shall be that amount payable by such
taxpayer in respect of any fiscal year of the taxpayer ending during the Fiscal Year;
	 
	 	(e)	 	“Claims” means claims, losses, damages, suits, judgments, causes of action,
legal proceedings, executions, demands, penalties or other sanctions of every nature
and kind whatsoever, and any and all costs arising in connection therewith, including
reasonable legal fees and disbursements on a substantial indemnity basis (including all
such reasonable legal fees and disbursements in connection with any and all appeals);
	 
	 	(f)	 	“Commencement Date” means • , 2007;
	 
	 	(g)	 	“Compliance Audit” means a systematic and documented assessment, conducted by
an Environmental Consultant, of the compliance of the business and other operations of
the Tenant relating to the Leased Premises with all Environmental Laws;
	 
	 	(h)	 	“Environmental Claim” means all claims, losses, costs, expenses, fines,
penalties, payments and/or damages (including, without limitation, all solicitors’ fees
on a substantial indemnity basis) relating to, arising out of, resulting from or in any
way connected with the Release in, on, over, upon or from the Leased Premises of any
Hazardous Substance including, without limitation, all costs and expenses of any
remediation or restoration of the Leased Premises and/or any property adjoining or in
the vicinity of the Leased Premises;
	 
	 	(i)	 	“Environmental Consultant” means a licensed environmental engineer or other
environmental professional selected by the Tenant and the Landlord, each acting
reasonably, to perform a Compliance Audit or Phase I Environmental Audit;

 

-3-

	 	(j)	 	“Environmental Laws” means any law, by-law, order, ordinance, ruling,
regulation, certificate, approval, consent or directive of any applicable federal,
provincial or municipal government, governmental department, agency or regulatory
authority or any court of competent jurisdiction, relating to environmental matters
and/or regulating the import, storage, distribution, labelling, sale, use, handling,
transport or disposal of Hazardous Substance;
	 
	 	(k)	 	“First Renewal Period” has the meaning set out in Section 3.3(a);
	 
	 	(l)	 	“First Renewal Right” has the meaning set out in Section 3.3(a);
	 
	 	(m)	 	“Fiscal Year” means a 12-month period, all or part of which falls within the
Term, from time to time determined by the Landlord, at the end of which the Landlord’s
accounts in respect of the Leased Premises are balanced for auditing or bookkeeping
purposes;
	 
	 	(n)	 	“Hazardous Substance” means any contaminant, pollutant, dangerous substance,
noxious substance, toxic substance, hazardous waste, flammable or explosive material,
radio-active material, urea formaldehyde foam insulation, asbestos, polychlorinated
biphenyls, polychlorinated biphenal waste, polychlorinated biphenal related waste, and
any other substance or material now or hereafter declared, defined or deemed to be
regulated or controlled in or pursuant to the Environmental Laws;
	 
	 	(o)	 	“Land” means those lands legally described in Schedule “A” and municipally
identified as 25 Reuter Drive, Cambridge, Ontario, N3E 1A9, which consist of
approximately 41.23 acres and are identified on the plan attached hereto as Schedule
“B”;
	 
	 	(p)	 	“Lease” means this lease and all Schedules attached hereto which are referred
to in this lease, and every properly executed instrument which by its terms amends,
modifies or supplements this lease;
	 
	 	(q)	 	“Leased Premises” means the portion of the Land which consists of approximately
13.5 acres and is identified on the plan attached hereto as Schedule “B”, and the
Building;
	 
	 	(r)	 	“Market Rent” means the annual amount of Minimum Rent which an arm’s length
third party would pay as Minimum Rent (without any tenant inducements) for premises of
comparable size, age and location to the Leased Premises located in the Guelph,
Cambridge and Kitchener-Waterloo area (but excluding any adjustment for any value or
cost attributable to the Leased Premises on account of the Tenant’s Specialized
Equipment and any leasehold improvements installed by or on behalf of the Tenant
whether before or after the Commencement Date or the cost of removal thereof) in their
condition as of the time in question taking into consideration all of the terms of this
Lease such that the amount of Rent payable

 

-4-

	 	 	 	pursuant to this Lease at the point in time in question would total the amount of
rent which an arm’s length third party would then pay;
	 
	 	(s)	 	“Minimum Rent” means the amount set out in Section 4.1(a) payable in respect of
each year of the Term;
	 
	 	(t)	 	“Other Taxes” means any and all taxes, levies, duties and assessments imposed
on the Landlord with respect to any or all of Rent, this Lease or goods or services
supplied by the Landlord or which the Landlord is responsible to provide in accordance
with the terms of this Lease, whether characterized as a goods and services tax, sales
tax, multi-stage sales tax, value-added tax, consumption tax or any other similar tax
calculated:

	 	(i)	 	as if the Landlord owned no property other than
the Leased Premises;
	 
	 	(ii)	 	as if there is no sale or other dealing with
the Leased Premises by the Landlord either before, during or following
the Term; and
	 
	 	(iii)	 	as if the Landlord is not entitled to any
input tax credits, set-offs, exceptions, exemptions or deductions from
such taxes or in the calculation of such taxes;

	 	(u)	 	“Person” means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a government or any department or agency thereof and the
heirs, executors, administrators or other legal representatives of an individual;
	 
	 	(v)	 	“Phase I Environmental Audit” means a report prepared by an Environmental
Consultant in accordance with the requirements of standard Z768-01, “Phase I
Environmental Site Assessment”, published by the Canadian Standards Association, as
amended, at the date of the Phase I Environmental Audit;
	 
	 	(w)	 	“Photowatt Technologies Group” means Photowatt Technologies Inc. and each
Person that Photowatt Technologies Inc. directly or indirectly controls, within the
meaning of the Securities Act (Ontario);
	 
	 	(x)	 	“Prime Rate” means the rate of interest per annum established from time to time
by Bank of Nova Scotia at its head office in Toronto, Ontario as the reference rate of
interest to determine interest rates it will charge on Canadian dollar loans to its
Canadian customers and which it refers to as its “prime rate”;
	 
	 	(y)	 	“Realty Taxes” means all taxes, rates, levies, duties and assessments
whatsoever whether municipal, school, provincial, parliamentary or otherwise levied,
imposed or assessed against the Land or any part thereof or upon the Landlord in
respect thereof or from time to time levied, imposed or assessed in the future in lieu

 

-5-

	 	 	 	thereof, including those levied, imposed or assessed for education, school and local
improvements, or other similar taxes imposed upon the Landlord or the Tenant, and
including all business taxes, if any, from time to time payable by the Landlord or
levied against the Landlord on account of its ownership or operation of the Land,
and including all costs and expenses (including legal fees on a substantial
indemnity basis and other professional fees and interest and penalties on deferred
payments) incurred by the Landlord in good faith in contesting, resisting or
appealing any such taxes, rates, levies, duties or assessments but excluding income
or profits taxes upon the income of the Landlord;
	 
	 	(z)	 	“Release” means any release, spill, emission, leakage, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration;
	 
	 	(aa)	 	“Rent” means the aggregate of all amounts payable by the Tenant to the Landlord
under this Lease;
	 
	 	(bb)	 	“Rentable Area” means an area determined in accordance with Section 4.10;
	 
	 	(cc)	 	“Sales Tax” has the meaning set out in Section 4.8(o);
	 
	 	(dd)	 	“Second Renewal Period” has the meaning set out in Section 3.3(b);
	 
	 	(ee)	 	“Second Renewal Right” has the meaning set out in Section 3.3(b);
	 
	 	(ff)	 	“Spheral Solar” means light weight, flexible crystalline solar products based
on a technology which incorporates thousands of silicon spheres, bonded between thin,
flexible aluminum foil substrates to form solar cells;
	 
	 	(gg)	 	“Tenant’s Employees” means the Tenant’s directors, officers, employees,
servants, agents, contractors, and those for whom the Tenant is responsible at law;
	 
	 	(hh)	 	“Tenant’s Specialized Equipment” means any equipment including, without
limitation, cabling, ducting, piping, supplementary HVAC, water treatment equipment and
specialized leasehold improvements installed by or on behalf of the Tenant prior to or
during the Term on the roof of, or elsewhere in, the Building;
	 
	 	(ii)	 	“Term” means the initial term of this Lease specified in Section 3.1 unless
sooner terminated, and as this Lease may be renewed pursuant to Section 3.3(a), 3.3(b)
or 3.3(c); and
	 
	 	(jj)	 	“Unleased Premises” means that part of the Land that is not part of the Leased
Premises.

 

-6-

	1.2	 	Consultants. Any reference in this Lease to the Landlord’s accountant, auditor, architect,
engineer, surveyor or other consultant shall be deemed to be such duly qualified consultant
appointed by the Landlord, acting reasonably.

ARTICLE 2

GRANT OF LEASE AND GENERAL COVENANTS

	2.1	 	Grant. The Landlord hereby:

	 	(a)	 	leases to the Tenant and the Tenant hereby leases from the Landlord the Leased
Premises, to have and to hold during the Term, subject to the terms and conditions of
this Lease.
	 
	 	(b)	 	reserves from the grant in Section 2.1(a) an easement in common with the Tenant
and others over that portion of the Leased Premises as shown on the attached Schedule
“B” (the “Easement”) for the purposes of: (i) vehicular and pedestrian access by the
Landlord and Persons authorized by the Landlord to and from the Unleased Premises
including, without limitation, construction vehicles and equipment in the construction
or development of the Unleased Premises by the Landlord; and (ii) use of and access to
subsurface telephone lines, drains, storm and sanitary sewers, pipes and other
subsurface structures by the Landlord and Persons authorized by the Landlord.
	 
	 	 	 	The Tenant acknowledges that the Landlord intends to construct a building or
buildings and other improvements on the Unleased Premises in the approximate
locations identified on the attached Schedule “B” as “Future Building” and “Proposed
Building” and the Tenant agrees that it will not object to said construction or
development by the Landlord. Notwithstanding the reservation of the Easement and for
greater clarity, the Tenant shall remain fully responsible for maintaining and
repairing, at its expense, the portion of the Leased Premises that is subject to the
Easement including, without limitation, lighting, and clearing snow and ice as
seasonally required, all in accordance with Section 7.6 hereof.

	2.2	 	Landlord’s General Covenants. The Landlord covenants with the Tenant:

	 	(a)	 	for quiet enjoyment of the Leased Premises; and
	 
	 	(b)	 	to observe and perform all the covenants and obligations of the Landlord
herein.

	2.3	 	Tenant’s General Covenants. The Tenant covenants with the Landlord:

	 	(a)	 	to pay Rent; and
	 
	 	(b)	 	to observe and perform all the covenants and obligations of the Tenant herein.

 

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ARTICLE 3

TERM AND POSSESSION

	3.1	 	Term. The Term of this Lease is two (2) years and shall begin on the Commencement Date and end
on • , 2009 unless terminated earlier as provided in this Lease.
	 
	3.2	 	Condition of Leased Premises. The Tenant agrees to accept the Leased Premises in the condition
which exists on the Commencement Date.
	 
	3.3	 	Rights to Renew.

	 	(a)	 	First Renewal — The Tenant shall have the right to renew this Lease for
a further term of five (5) years (the “First Renewal Right”) commencing on • 2009 and
expiring on •, 2014 (the “First Renewal Period”), subject to the following terms and
conditions:

	 	(i)	 	the Tenant shall not be entitled to the First
Renewal Right if, at the time of the giving of the notice of exercise
thereof: (A) the Tenant has received written notice from the Landlord
that it is in default under this Lease and all applicable notice and
cure periods have expired; or (B) the Tenant is no longer using,
occupying and operating in the Leased Premises for the purposes of the
development and manufacturing of Spheral Solar and ancillary purposes
or for the solar business as it is currently being conducted by the
Photowatt Technologies Group;
	 
	 	(ii)	 	the First Renewal Right shall be exercisable by
notice by the Tenant to the Landlord by no later than six (6) months
prior to the expiry of the initial term of this Lease;
	 
	 	(iii)	 	provided the Tenant has properly exercised the
First Renewal Right, this Lease shall be renewed for the First Renewal
Period on the same terms and conditions as are contained in this Lease,
except that the Minimum Rent during the First Renewal Period will be as
stipulated in subsection (iv) and there shall be no further right to
renew (other than the Second Renewal Right set out below in Section
3.3(b));
	 
	 	(iv)	 	the annual Minimum Rent during the First
Renewal Period shall be the Market Rent for the Leased Premises based
on the Rentable Area of the Building as of the commencement date of the
First Renewal Period and, based on this, shall be negotiated in good
faith by the Landlord and the Tenant and, failing agreement by three
(3) months before the commencement date of the First Renewal Period,
shall be determined by a single arbitrator in

 

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	 	 	 	accordance with the provisions of the attached Schedule “C” and the
Arbitration Act, 1991 (Ontario); and
	 
	 	(v)	 	as soon as reasonably possible after the
Landlord receives notice from the Tenant pursuant to Section
3.3(a)(ii), the Landlord’s architect, whose decision shall be final and
binding on the Landlord and the Tenant, shall measure the Rentable Area
of the Building in accordance with the provisions of Section 4.10 of
this Lease, and the Landlord and the Tenant shall sign an
acknowledgment as to the Rentable Area of the Building.

	 	(b)	 	Second Renewal — The Tenant shall have the right to renew this Lease
for a second further term of five (5) years (the “Second Renewal Right”) commencing on
•, 2014 and expiring on •, 2019 (the “Second Renewal Period”), subject to the following
terms and conditions:

	 	(i)	 	the Tenant shall not be entitled to the Second
Renewal Right if, at the time of the giving of the notice of exercise
thereof: (A) the Tenant has received written notice from the Landlord
that it is in default under this Lease and all applicable notice and
cure periods have expired; or (B) the Tenant is no longer using,
occupying and operating in the Leased Premises for the purposes of the
development and manufacturing of Spheral Solar and ancillary purposes
or for the solar business as it is currently being conducted by the
Photowatt Technologies Group;
	 
	 	(ii)	 	the Second Renewal Right shall be exercisable
by notice by the Tenant to the Landlord by no later than six (6) months
prior to the expiry of the First Renewal Period;
	 
	 	(iii)	 	provided the Tenant has properly exercised the
Second Renewal Right, this Lease shall be renewed for the Second
Renewal Period on the same terms and conditions as are contained in
this Lease, except that the Minimum Rent during the Second Renewal
Period will be as stipulated in subsection (iv) and there shall be no
further right to renew; and
	 
	 	(iv)	 	the annual Minimum Rent during the Second
Renewal Period shall be the Market Rent for the Leased Premises based
on the Rentable Area of the Building as of the commencement date of the
Second Renewal Period and, based on this, shall be negotiated in good
faith by the Landlord and the Tenant and, failing agreement by three
(3) months before the commencement date of the Second Renewal Period,
shall be determined by a single arbitrator in accordance with the
provisions of the attached Schedule “C” and the Arbitration Act, 1991
(Ontario).

 

-9-

	

	 	(c)	 	Automatic Renewal — If the Tenant does not exercise the First Renewal
Right or the Second Renewal Right as provided for in Section 3.3(a) or 3.3(b) at the
end of the initial term of this Lease specified in Section 3.1 or the First Renewal
Period (as the case may be), then, unless the Tenant delivers to the Landlord written
notice to the contrary at least six (6) months before the expiry of the initial term of
this Lease specified in Section 3.1 or the First Renewal Period, as the case may be,
the Term shall be automatically renewed for a period (the “Automatic Renewal Period”)
equal to the lesser of (A) six (6) months, and (B) the period required by the Tenant to
perform its obligations under Sections 14.1 and 14.2. During such renewal, all of the
terms and conditions of this Lease shall continue to apply except that:
	

	

	 	(i)	 	the rights to renew set out in Section 3.3 and
the provisions of Section 14.3 shall not apply; and
	 
	 	(ii)	 	the monthly instalment of the Minimum Rent
payable by the Tenant during the Automatic Renewal Period shall be
Ninety Six Thousand Five Hundred Dollars ($96,500.00) (in respect of
the Automatic Renewal Period commencing at the end of the initial term
of this Lease) or the monthly instalment of the annual Minimum Rent
payable by the Tenant during the First Renewal Period (in respect of
the Automatic Renewal Period commencing at the end of the First Renewal
Period).
	

ARTICLE 4

RENT

	4.1	 	Rent. The Tenant shall pay, without notice or demand, to the Landlord as Rent for the Leased
Premises the aggregate of:

	 	(a)	 	Minimum Rent in respect of: (i) the initial term of this Lease, payable in
advance on the Commencement Date; and (ii) the First Renewal Period and the Second
Renewal Period, if applicable, payable in advance in monthly instalments on the first
day of each calendar month, as follows:

	 	 	 
	Period
	 	Per Annum

	 	 	 

	Years 1 and 2
	 	$1.00 (which amount the Landlord acknowledges has been paid)

	 	 	 

	First Renewal Period
	 	Market Rent (as provided for in Section 3.3(a)(iv))

	 	 	 

	Second Renewal Period     
	 	Market Rent (as provided for in Section 3.3(b)(iv))

 

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	 	 	 	and (iii) the Automatic Renewal Period, if applicable, payable in advance in monthly
instalments on the first day of each calendar month, in the amount as provided for
in Section 3.3(c);
	 
	 	(b)	 	all Realty Taxes and Other Taxes at the times and in the manner provided in
Sections 4.6 and 4.7, respectively; and
	 
	 	(c)	 	all amounts (other than payments under provisions (a) and (b) above) payable by
the Tenant to the Landlord under this Lease, at the times and in the manner provided in
this Lease or, if not so provided, as reasonably required by the Landlord.

4.2                  Minimum Rent. With respect to the Minimum Rent set out in Section 4.1(a), the Tenant and the
Landlord hereby acknowledge and agree that the Minimum Rent payable in respect of the initial term
of this Lease is a nominal rate in consideration of, among other things, (i) the Tenant’s covenant
to use its best efforts to use, occupy and operate in the Leased Premises for the purposes of the
development and manufacturing of Spheral Solar and ancillary purposes or for the solar business as
it is currently being conducted by the Photowatt Technologies Group; (ii) the Tenant’s acceptance
of the Leased Premises in an “as is, where is” condition, as set out in Section 6.4; (iii) the
Tenant’s clean-up or remediation obligations set out in Section 5.7, and the Tenant’s environmental
indemnity set out in Section 5.7(n); and (iv) the Tenant’s restoration obligations upon the
expiration or other termination of the Term set out in Section 14.1.

4.3                  Intent. It is the stated purpose and intent of the Landlord and the Tenant that this Lease
shall be fully net and carefree to the Landlord.

4.4                  Payment of Rent. All amounts payable by the Tenant to the Landlord pursuant to this Lease
shall be deemed to be Rent and shall be payable and recoverable as Rent in the manner herein
provided and the Landlord shall have all rights against the Tenant for default in any such payment
as in the case of arrears of Rent. Rent shall be paid to the Landlord in lawful money of Canada,
without deduction or set-off, at the address of the Landlord set out on page 1 of this Lease or to
such other Person or such other address as the Landlord may from time to time designate in writing.
The Tenant’s obligation to pay Rent shall survive the expiration or earlier termination of this
Lease. Any Rent or other sum received by the Landlord from or for the account of the Tenant while
the Tenant is in default under this Lease may be applied at the Landlord’s option to the
satisfaction in whole or in part of any of the obligations of the Tenant then due under this Lease
in such manner as the Landlord sees fit regardless of any designation or instruction of the Tenant
to the contrary.

4.5                  Partial Months Rent. If the Commencement Date is a day other than the first day of a calendar
month, the instalment of Rent payable on the Commencement Date shall be that proportion of Rent
which the number of days from the Commencement Date to the last day of the month in which the
Commencement Date falls is of 365. If the Term ends on a day other than the last day of a calendar
month, the instalment of Rent payable on the first day of the calendar month in which the last day
of the Term falls shall be that proportion of Rent which the

 

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number of days from the first day of such last calendar month to the last day of the Term is of
365.

	4.6	 	Payment of Realty Taxes.

	

	 	(a)	 	In this section, “separate assessment” means the provision of information by
the assessor which ascribes separate assessed market values to the Leased Premises and
the Unleased Premises, whether or not under separate roll numbers and whether on the
notice of assessment or on supplementary information provided by the assessor.
	 
	 	(b)	 	Payment — The Tenant shall pay Realty Taxes to the Landlord at the
times and in the manner as directed by the Landlord, acting reasonably, but in any
event prior to the dates upon which the payment of such taxes in instalments are due.
If the Landlord so directs the Tenant in writing, the Tenant shall pay Realty Taxes
directly to the taxing authority on or before their due date and shall provide proof of
payment to the Landlord immediately thereafter. Realty Taxes in respect of the first
and last years of the Term shall be adjusted between the Landlord and the Tenant within
one (1) year after the end of the year in question.
	 
	 	(c)	 	Separate Assessment — The Tenant acknowledges that there is at the date
of the making of this Lease no separate assessment for Realty Taxes with respect to the
Leased Premises. If the Leased Premises and the Unleased Premises are separately
assessed, the Tenant shall be responsible to pay the Realty Taxes attributable to the
assessment of the Leased Premises and the Landlord shall be responsible to pay the
Realty Taxes attributable to the assessment of the Unleased Premises;
	 
	 	(d)	 	Tenant’s Proportionate Share of Realty Taxes — Unless and until there
is a separate assessment of the Leased Premises, the Tenant and the Landlord shall be
responsible to pay those shares of the Realty Taxes which are determined by the
following principles:
	

	 	(i)	 	The Tenant shall pay, as additional rent, all
of that portion of the Realty Taxes attributable to the value of the
improvements on the Leased Premises from time to time;
	 
	 	(ii)	 	The Landlord shall be responsible for all of
that portion of the Realty Taxes attributable to the value of the
improvements on the Unleased Premises from time to time;
	 
	 	(iii)	 	As long as the Leased Premises and the
Unleased Premises are assessed in the same property tax classification:

	 	(A)	 	the Tenant shall pay, as
additional rent, the percentage of the Realty Taxes
attributable to the land value (less any

 

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	 	 	 	value of improvements) that the area of the Leased Premises
bears to the area of the Land;
	 
	 	(B)	 	the Landlord shall be
responsible for the percentage of the Realty Taxes
attributable to the land value (less any value of
improvements) that the area of the Unleased Premises bears to
the area of the Land;

	 	(iv)	 	The Landlord shall use reasonable commercial
efforts to obtain the working and other papers of the taxing or
assessment authority and shall provide copies of such papers to the
Tenant; and
	 
	 	(v)	 	The Tenant acknowledges that the Unleased
Premises may be eligible for a vacancy rebate and any such rebate in
any year will in any event be for the sole benefit of the Landlord.

	

	 	(e)	 	Increase — If the Leased Premises are at any time during the Term
assessed for the support of separate schools (as a result of any action taken by the
Tenant) or if the Realty Taxes are increased by reason of any installations made in or
upon or any alterations made in or to the Leased Premises by the Tenant or by the
Landlord on behalf of the Tenant, or as a result of the issuance of any omitted or
corrected assessment, the Tenant shall pay the amount of such increase forthwith to the
Landlord upon receipt of notice thereof.
	 
	 	(f)	 	Decrease — If the Realty Taxes attributable to the Leased Premises are
refunded to the Landlord as a result of any successful appeal or request for
reconsideration or other change to the assessment or tax rate, the Landlord shall
promptly pay such refund to the Tenant.
	

4.7                  Payment of Other Taxes. The Tenant shall pay to the Landlord the amount of all Other Taxes
within five days of receipt of notice from the Landlord specifying the amount of such Other Taxes.
The Landlord may, at its option, estimate the amount of Other Taxes allocable to each month and
require that the Tenant pay such estimated amount monthly on the first day of each calendar month
during the Term. Any necessary adjustment shall be paid by the Tenant or credited by the Landlord,
as the case may be, whenever required after determination of Other Taxes.

4.8                  Occupancy Costs. The Tenant shall be responsible for all costs and expenses incurred during
the Term whether incurred by the Tenant directly or by or on behalf of the Landlord or any manager
or agent of the Landlord in or with respect to the occupancy, complete decoration, repair,
administration, maintenance, improvement, replacement and operation of the Leased Premises
calculated in accordance with generally accepted accounting principles and including, without
limiting the generality of the foregoing, but without duplication and without profit:

 

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	 	(a)	 	all charges for the cost of heating, cooling and ventilating the Building, hot
and cold water and all charges for electricity, gas and all other similar services and
utilities provided to the Leased Premises;
	 
	 	(b)	 	the cost of providing, maintaining and replacing as necessary landscaping and
gardening and the cost of snow and refuse removal, if requested by the Tenant;
	 
	 	(c)	 	the cost of cleaning services to the Leased Premises, including the cost of
window cleaning, if requested by the Tenant;
	 
	 	(d)	 	the cost of all repairs and replacements (save and except structural repairs or
replacements) to or with respect to the Leased Premises as well as the cost of any
improvement or repair which is required to be made to the Leased Premises by any change
in the laws, rules, regulations or orders of any governmental authority having
jurisdiction;
	 
	 	(e)	 	the cost of all insurance maintained by the Landlord pursuant to Section 9.1;
and
	 
	 	(f)	 	the annual amortization including interest at the Prime Rate on the unamortized
amount (on a straight-line basis over the useful life or such other period as
reasonably determined by the Landlord in accordance with generally accepted accounting
principles) of the cost of any modifications, replacements or additions of a capital
nature to the Leased Premises and/or the machinery and equipment (but not including the
machinery and equipment used in the operation of the solar business) therein and
thereon, where in the reasonable opinion of the Landlord such modifications,
replacements or additions are intended to have the effect of reducing occupancy costs
or resulting in energy savings or resulting in increased security, or any additional
equipment or improvements required by legal requirements not in effect at the
Commencement Date of the Lease and not to remedy any construction inadequacy or
non-compliance with legal requirements in effect at the Commencement Date, or which in
the Landlord’s reasonable opinion are for the benefit or safety of users of the Land.

Notwithstanding the foregoing, occupancy costs shall exclude the following, except if specifically
included above:

	 	(g)	 	interest and principal payments on financing of the Landlord, and any other
debt costs or ground lease rent of the Landlord;
	 
	 	(h)	 	costs or expenses incurred with respect to the acquisition, development and
construction and landscaping of the Leased Premises and any expansion thereof;
	 
	 	(i)	 	depreciation;
	 
	 	(j)	 	costs and expenses relating to structural repairs or replacements of the Leased
Premises;

 

-14-

	 	(k)	 	costs or expenses resulting from any inadequacy in the design or construction
of the Leased Premises or with respect to poor workmanship or materials in connection
with such construction;
	 
	 	(l)	 	any administrative, management and overhead costs of the Landlord;
	 
	 	(m)	 	all costs incurred in connection with the rectification of any work done by the
Landlord in the Leased Premises which did not comply with and conform to every
applicable statute, law, by-law, and regulation as of the Commencement Date;
	 
	 	(n)	 	income taxes and other taxes personal to the Landlord;
	 
	 	(o)	 	the amount of any sales tax, goods and services tax, value added tax or any
similar tax (“Sales Tax”) paid or payable by the Landlord on the purchase of goods and
services included in occupancy costs which is available to the Landlord as a credit in
determining the Landlord’s net tax liability or refund on account of Sales Tax, but
only to the extent that Sales Tax is included in occupancy costs;
	 
	 	(p)	 	the cost of any insurance premiums relating to risks or amounts which are not
normally insured against by reasonably prudent owners of similar buildings;
	 
	 	(q)	 	Capital Tax;
	 
	 	(r)	 	any cost which would otherwise be included in occupancy costs, but consists of
an amount paid to a corporate affiliate, parent or subsidiary of the Landlord, to the
extent that such amount is in excess of the fair market value of the said item or
service were the expense incurred in an arm’s-length transaction; and
	 
	 	(s)	 	any costs which are above market costs.

4.9                  Estimates of Expenses and Resolution of Disputes. Any expense payable by the Tenant hereunder
may be estimated by the Landlord on whatever reasonable basis the Landlord may select if and to the
extent that the Landlord cannot ascertain the actual amount of the expense. The Tenant shall pay
the amount of such expense to the Landlord forthwith after receipt of notice specifying such
amount. If there is any disagreement as to the amount or propriety of any amount so notified, a
certificate of the auditor of the Landlord, acting reasonably, shall be conclusive as to the amount
of such expense for any period to which the certificate relates.

4.10                  Rentable Area. The Rentable Area of the Building shall be determined by measuring from and
to the inside finish of permanent outer Building walls or from the glass line, whichever extends
further and no deduction shall be made for columns, projections, stairs, elevator shafts, stacks,
pipe shafts, vertical ducts, washrooms, air conditioning rooms, fan rooms or any other service
facilities within the Building. For clarity, Rentable Area shall include basement or other below
grade areas or mezzanine areas.

 

-15-

4.11                  Area Determination. The Landlord may from time to time as it deems necessary cause the
Rentable Area of the Building or any part thereof to be recalculated or remeasured and the cost
thereof shall be payable by the Tenant to the Landlord forthwith upon demand. If any calculation
or determination by the Landlord of the Rentable Area of the Building is disputed or called in
question, it shall be calculated or determined by the Landlord’s architect or surveyor from time to
time appointed for that purpose, whose certificate shall be conclusive and binding upon the parties
hereto. If the Tenant disputes the Landlord’s calculation, the Tenant shall pay the full cost of
such calculation or determination forthwith upon demand.

ARTICLE 5

USE AND OCCUPATION

5.1                  Use of Leased Premises. The Tenant covenants to use its best efforts to use, occupy and
operate in the Leased Premises for the purposes of the development and manufacturing of Spheral
Solar and ancillary purposes during the initial term of this Lease, and for such other purposes as
may be permitted by applicable laws and approved by the Landlord, which approval may not be
unreasonably withheld. The Landlord hereby acknowledges and confirms that the Tenant may use,
occupy and operate the Leased Premises for the solar business as it is currently being conducted by
the Photowatt Technologies Group.

5.2                  Compliance with Laws. The Tenant shall comply at its expense with all present and future laws,
regulations and orders (including, without limitation, zoning bylaws) relating to the occupation or
use of the Leased Premises, the installation and condition of the leasehold improvements, trade
fixtures, furniture, machinery and equipment installed by the Tenant therein, the making by the
Tenant of any repairs, changes or improvements therein and the conduct of any business in the
Leased Premises. If alterations or improvements are necessary to comply with any of the foregoing
or with the requirements of insurance carriers, the Tenant shall forthwith complete such work to
the extent that it can be done within the Leased Premises and in any event shall pay the entire
cost of any alterations or improvements so required.

5.3                  Prohibited Uses. The Tenant shall not commit, cause or permit any nuisance or any waste or
injury to the Leased Premises or any of the leasehold improvements or fixtures therein or any
overloading of the floors of the Leased Premises. Without limiting the generality of the
foregoing, the Tenant shall not use or permit the use of any portion of the Leased Premises for any
dangerous, illegal, noxious, odorous or offensive trade, business or occurrence. The Tenant shall
keep the Leased Premises free of debris or anything of a dangerous, noxious, odorous or offensive
nature or which could create a fire hazard (through undue load on electrical circuits or otherwise)
or undue vibration, heat or noise. The Tenant shall not use equipment or machinery in the Leased
Premises in a manner that results in it being seen or heard outside the Leased Premises. The
Landlord acknowledges and agrees that the Tenant’s use of the Leased Premises as carried on at the
time of the Commencement Date does not contravene any of the foregoing.

5.4                  Hazardous Use. The Tenant shall not do, omit to do or permit to be done anything which will
cause or shall have the effect of causing the cost of the Landlord’s insurance

 

-16-

in respect of the Leased Premises or any part thereof to be increased at any time during the Term
or any policy of insurance on or relating to the Leased Premises to be subject to cancellation.
Without waiving the foregoing prohibition, the Landlord may demand and the Tenant shall pay to the
Landlord upon demand, the amount of any increase in the cost of insurance caused by anything so
done or omitted to be done. The Tenant shall forthwith upon the Landlord’s request comply with the
reasonable requirements of the Landlord’s insurers, cease any activity complained of and make good
any circumstance which has caused any increase in insurance premiums or the cancellation of any
insurance policy. The Landlord shall use commercially reasonable efforts to obtain a schedule or
statement from the Person who computes the insurance rates for the Landlord showing the components
of the insurance rate and in determining the amount of increased premiums for which the Tenant is
responsible, such schedule or statement shall be conclusive evidence of the items that make up the
rate. If any policy of insurance in respect of the Leased Premises or any part thereof is
cancelled or becomes subject to cancellation by reason of anything so done or omitted to be done,
the Landlord may without prior notice terminate this Lease and re-enter the Leased Premises.

5.5                  Permitted Signs. The Tenant shall use only such identification signs as are permitted by the
Landlord, acting reasonably, from time to time and as comply with all applicable by-laws,
regulations and codes as to size, location, arrangement, type of lettering, colour, appearance and
design. Such signs shall contain only the name under which the Tenant carries on business from
time to time.

5.6                  Prohibited Signs. Except with the prior written consent of the Landlord, which consent may be
arbitrarily withheld or rescinded in the Landlord’s sole discretion, or as provided in Section 5.5,
the Tenant shall not paint, display, inscribe, place or affix any sign, symbol, notice,
advertisement, display or direction of any kind anywhere outside the Leased Premises or on the
interior of any glass windows or doors or elsewhere within the Leased Premises so as to be visible
from the outside of the Leased Premises.

5.7                  Tenant’s Environmental Covenants and Indemnity. The Tenant covenants and agrees that during
the Term or as otherwise specified herein:

	 	(a)	 	the Tenant and the Tenant’s Employees (which includes for the sake of clarity,
its invitees who enter into the Leased Premises) shall not bring into the Leased
Premises or the Land, any Hazardous Substances, except in accordance with all
applicable Environmental Laws. If the Tenant or any Tenant’s Employee shall bring or
create upon the Leased Premises or the Land any Hazardous Substances, then such
Hazardous Substances shall be and remain the sole property of the Tenant and the Tenant
shall remove the same at its sole cost at the expiration of the Term or sooner to the
extent such removal is directed by any Authority or such removal is required to effect
compliance with any Environmental Laws;
	 
	 	(b)	 	comply in all respects with all Environmental Laws relating to the Leased
Premises or the use of the Leased Premises by the Tenant or the Tenant’s Employees;

 

-17-

	 	(c)	 	neither the Leased Premises nor the Land shall be used for the purpose of a
waste site by the Tenant or the Tenant’s Employees other than waste from production
which shall be stored and disposed of pursuant to all applicable Environmental Laws;
	 
	 	(d)	 	no Hazardous Substance will be located or stored on the Leased Premises or the
Land by the Tenant or the Tenant’s Employees, except in accordance with all
Environmental Laws relating thereto, and the Tenant and the Tenant’s Employees shall
comply with all Environmental Laws, including, but not limited to, matters relating to
air pollution, noise control, on-site or off-site waste, Hazardous Substance handling,
discharge, disposal or recovery, whether products or waste;
	 
	 	(e)	 	the Tenant and the Tenant’s Employees shall comply in full with the regulations
of the Environmental Laws applicable to any releases into the environment (including,
without limitation, into the Leased Premises) of any Hazardous Substance (a “Spill”)
during the Term and caused by the Tenant or the Tenant’s Employees with respect to the
notification of the Ministry of Environment and shall be responsible for Claims for
costs of any clean-up or remediation as such clean-up or remediation is required by the
applicable Authority and Environmental Laws, or for compensation for damage or injury
suffered as a result of any such Spills;
	 
	 	(f)	 	all containers containing Hazardous Substance waste products which the Tenant
or the Tenant’s Employees have introduced onto the Leased Premises shall be removed
from the Leased Premises by means of delivery to a carrier licensed under the laws of
the Province of Ontario and disposed of to a waste disposal site licensed under the
applicable laws of the Province of Ontario (the Tenant hereby acknowledging and
confirming that it has knowledge of the Hazardous Substance waste products which have
been brought or introduced onto the Leased Premises up to and including the
Commencement Date);
	 
	 	(g)	 	the processing, storage and handling of chemicals or chemical wastes by the
Tenant or the Tenant’s Employees on the Leased Premises shall be conducted in
accordance with all Environmental Laws;
	 
	 	(h)	 	if, pursuant to Environmental Laws, any Authority shall require the clean-up or
remediation of any Hazardous Substance:

	 	(i)	 	held in, released from, abandoned and placed
upon the Leased Premises or the Land by the Tenant or the Tenant’s
Employees; or
	 
	 	(ii)	 	released or disposed of by the Tenant or the
Tenant’s Employees,

	 	 	 	then the Tenant shall at its own expense carry out all such required work of such
applicable Authority and within the time required by such Authority, including
preparing all necessary studies, plans and approvals and providing all bonds and

 

-18-

	 	 	 	other security required by such Authority, and shall provide all written reports
prepared by environmental engineers with respect to all such work to the Landlord;
	 	(i)	 	promptly notify the Landlord in writing of any written notice received by the
Tenant by any Authority alleging a possible violation of or with respect to any matter
involving any Environmental Laws relating to operations in the Leased Premises relating
to any Person for whom it is in law responsible or any written notice from any other
party concerning any Release or alleged Release of any Hazardous Substance by the
Tenant or the Tenant’s Employees on the Leased Premises;
	 
	 	(j)	 	promptly notify the Landlord of the existence of any Hazardous Substance in or
on the Leased Premises which the Tenant or the Tenant’s Employees have introduced onto
the Leased Premises and such existence is in violation of Environmental Laws and
provide to the Landlord a copy of any environmental site assessment of the Leased
Premises conducted by or for the Tenant at any time during the Term within thirty (30)
days of the Tenant receiving same;
	 
	 	(k)	 	permit the Landlord upon reasonable notice during normal business hours at its
own sole cost and expense and its own risk accompanied by a representative of the
Tenant provided Landlord’s entry does not materially interfere with the Tenant’s use of
the Leased Premises to:

	 	(i)	 	enter to inspect the Leased Premises and
operations conducted therein for the purpose of conducting
environmental tests, assessments and appraisals;
	 
	 	(ii)	 	conduct environmental tests and environmental
assessments or appraisals for which the Tenant may be present and may
take its own samples;
	 
	 	(iii)	 	remove samples from the Leased Premises for
which the Tenant may be present and may take its own samples; and
	 
	 	(iv)	 	examine and make copies of any documents or
records required to be maintained by the Tenant pursuant to
Environmental Laws,

	 	 	 	and the Landlord shall promptly repair any damage caused by such entry at its own
expense;
	 
	 	(l)	 	the Landlord may from time to time during the Term, during normal business
hours and upon reasonable notice to the Tenant at its own sole cost and expense and its
own risk accompanied by a representative of the Tenant:

 

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	 	(i)	 	enter the Leased Premises for the purpose of
causing an environmental audit of the Leased Premises to be carried
out, the scope and extent of such audit to be determined by the
Landlord in its sole discretion. The Tenant may be present at such
audit and take its own samples, provided that in any event Landlord’s
entry shall not materially interfere with the Tenant’s reasonable use
of the Leased Premises and Landlord shall promptly repair any damage
caused by such audit at its own expense; and
	 
	 	(ii)	 	if any such audit, or in the case of any such
audit done in the last year of the Term or at the expiry, repudiation
or earlier termination of the Lease (which audit shall be carried out
by the Tenant at its own sole cost and expense and its own risk) and
any and all of which shall be performed by a licensed environmental
engineer selected by the Landlord and the Tenant, each acting
reasonably: (a) concludes that an environmental condition in violation
of Environmental Laws exists, howsoever caused, and such environmental
condition existed at any time from and after August 1, 2003; and (b)
such licensed environmental engineer recommends a clean-up or
remediation or such clean-up or remediation is required to meet
standards for industrial lands as set out in Environmental Laws, then
the Tenant shall have liability for the clean-up or remediation and the
Tenant, at its own sole cost and expense, shall immediately take such
steps as are necessary so as to perform the clean-up or remediation;

	 	(m)	 	notwithstanding the provisions of Section 5.7(l), the Tenant shall, at its own
sole cost and expense and its own risk:

	 	(i)	 	conduct a Phase I Environmental Audit and any
subsequent work (including, without limitation, a Phase II
environmental site assessment) recommended by the Phase I Environmental
Audit, and a Compliance Audit of the Leased Premises at each of the
following times:

	 	(I)	 	if the Tenant does not exercise
the First Renewal Right, on or as soon as reasonably possible
after the expiry or earlier termination of the Automatic Renewal
Period occurring at the end of the initial term of this Lease;
and
	 
	 	(II)	 	if the Tenant exercises the First
Renewal Right, on or as soon as reasonably possible prior to or
after the expiry of the initial term of this Lease; and
	 
	 	(III)	 	if the Tenant exercises the
First Renewal Right, but does not exercise the Second Renewal
Right, prior to or on or as

 

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	 	 	 	soon as reasonably possible after the expiry or earlier
termination of the Automatic Renewal Period occurring at the
end of the First Renewal Period; and
	 	(IV)	 	if the Tenant exercises the First
Renewal Right and exercises the Second Renewal Right, prior to
or on or as soon as reasonably possible after the expiry:

	 	A.	 	of the First
Renewal Period; and
	 
	 	B.	 	or earlier
termination of the Second Renewal Period.

	 	 	 	All such audits shall be conducted by an Environmental Consultant;
	 
	 	(ii)	 	the Landlord and the Tenant shall be promptly
provided with copies of all interim and final correspondence, test
results, reports and assessments issued by such Environmental
Consultant in connection with the audits;
	 
	 	(iii)	 	if any such audit:

	 	(I)	 	concludes that an environmental
condition in violation of Environmental Laws exists, or
Hazardous Substances are in, on, under or emanating from the
property in exceedance of standards published pursuant to
Environmental Laws, howsoever caused, and such environmental
condition existed at any time from and after August 1, 2003; and
	 
	 	(II)	 	such Environmental Consultant
recommends a clean-up or remediation or clean-up or remediation
is required pursuant to applicable Environmental Laws or in
order to meet standards published pursuant to Environmental
Laws,

	 	 	 	then the Tenant shall have liability for the clean-up or remediation
and the Tenant, at its own sole cost and expense, shall immediately
take such steps as are necessary so as to perform the clean-up or
remediation; and

	 	(n)	 	any breach of any of the foregoing covenants and undertakings shall constitute
a breach of this Lease by the Tenant, entitling the Landlord to pursue its rights and
remedies hereunder subject to the applicable cure period set forth in Section 11.4. In
addition, the Tenant shall indemnify and save the Landlord and its directors, officers,
employees, servants, agents, contractors, successors and assigns harmless from and
against any and all Claims, as a result of any breach of the obligations of

 

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	 	 	 	the Tenant set out above in Sections 5.7(a) to 5.7(m), including without limitation,
any Environmental Claim, which indemnity shall survive the expiration or termination
of this Lease.

ARTICLE 6

OBLIGATIONS OF THE LANDLORD

6.1                  The Leased Premises. The Landlord shall make the Leased Premises available to the Tenant on
the Commencement Date, it being understood that the Landlord shall not be responsible for providing
any improvements to the Leased Premises during the Term or for providing any services which are
stated in this Lease to be the responsibility of the Tenant.

6.2                  Systems. The operation of all systems within the Leased Premises shall be the sole
responsibility of the Tenant and the Landlord shall have no responsibility for any inadequacy of
performance of any systems within the Leased Premises or for the interruption or disturbance of any
utility or other service normally available to the Leased Premises.

6.3                  Access by Landlord. The Tenant shall permit the Landlord to enter the Leased Premises at any
time outside normal business hours in case of an emergency and otherwise during normal business
hours accompanied by a representative of the Tenant where such will not unreasonably disturb or
interfere with the Tenant’s use of the Leased Premises or operation of its business, to examine,
inspect and show the Leased Premises for purposes of leasing, sale or financing, to provide
services or make repairs, replacements, changes or alterations as provided for in this Lease and to
take such steps as the Landlord may deem necessary for the safety, improvement or preservation of
the Leased Premises. The Landlord shall give reasonable notice to the Tenant prior to entry but no
such entry shall constitute an eviction or a breach of the Landlord’s covenant for quiet enjoyment
or entitle the Tenant to any abatement of Rent.

6.4                  Condition of Leased Premises. The Tenant agrees that it has entered into this Lease on the
express understanding that all improvements to the Leased Premises shall be performed at the sole
expense of the Tenant in accordance with the terms of this Lease. The Tenant shall accept the
Leased Premises “as is, where is” in their state and condition existing at the Commencement Date
including, without limitation, any environmental contamination of the Land or the Leased Premises.

ARTICLE 7

SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY THE TENANT

7.1                  Utilities. The Tenant shall be solely responsible for the cost of all utilities supplied to or
for the Leased Premises including, without limitation, the cost of all electricity, gas, hot and
cold water, telephone and all other utilities, services and facilities. The cost of all such
utilities shall be paid to the utility supplier by the Tenant on or before their due date.

7.2                  Lights, Etc. The Tenant shall be solely responsible for replacing at its expense all
fluorescent tubes, light bulbs and ballasts and for the cleaning, maintaining and servicing of
same, all in accordance with the standards required by the Landlord from time to time.

 

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7.3                  Heating, Ventilation and Air-Conditioning. The Tenant shall be solely responsible for the cost
of all heating, ventilation and air-conditioning required in the Leased Premises or any part
thereof and shall maintain therein conditions of reasonable temperature and comfort so as to
prevent damage to the Leased Premises caused by the elements or otherwise.

7.4                  Alterations by Tenant. The Tenant may from time to time at its own expense make changes,
additions and improvements to the Leased Premises to better adapt the same to its business,
provided that any change, addition or improvement shall:

	 	(a)	 	comply with the requirements of any governmental authority having jurisdiction;
	 
	 	(b)	 	be made only after detailed plans and specifications therefor have been
submitted to the Landlord and received the prior written consent of the Landlord,
acting reasonably, all at the expense of the Tenant, including the reasonable cost of
the Landlord’s consultants, if any; and
	 
	 	(c)	 	be carried out in a good and workmanlike manner and only by Persons selected by
the Tenant and approved in writing by the Landlord, acting reasonably, who shall if
required by the Landlord deliver to the Landlord before commencement of the work,
performance and payment bonds as well as proof of workers’ compensation and public
liability and property damage insurance coverage, with the Landlord named as an
additional insured, in amounts, with companies and in form reasonably satisfactory to
the Landlord, which shall remain in effect during the entire period in which the work
will be carried out,

provided that if any such changes, additions or improvements require modification to the heating,
ventilation or air-conditioning systems in the Building, the Tenant shall be solely responsible for
the cost of such modifications.

7.5                  Tenant’s Work. The Tenant may install in the Leased Premises its usual fixtures and personal
property in a proper manner; provided that no installation or repair shall interfere with or damage
the mechanical or electrical systems or the structure of the Building. If the Tenant is not then
in default hereunder, the fixtures and personal property installed in the Leased Premises by or on
behalf of the Tenant may be removed by the Tenant from time to time in the ordinary course of the
Tenant’s business or in the course of reconstruction, renovation or alteration of the Leased
Premises by the Tenant, provided that the Tenant promptly repairs at its own expense any damage to
the Leased Premises and the Building resulting from the installation and removal and provided
further that in the event of removal of fixtures, the Tenant shall promptly replace such fixtures
with fixtures of equal or greater quality and value.

7.6                  Condition of Premises. The Tenant shall, at its expense, maintain the Leased Premises and all
improvements therein in the same repair, order and condition as existing on the Commencement Date,
subject to reasonable wear and tear, including, without limitation:

	 	(a)	 	cleaning and removal of debris and garbage;

 

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	 	(b)	 	repainting the Leased Premises and cleaning windows and floor coverings at
reasonable intervals as reasonably required by the Landlord;
	 
	 	(c)	 	making repairs and replacements as needed to the Leased Premises and all
systems located therein including, without limitation, to heating, air-conditioning and
ventilation equipment, glass, doors, hardware, partitions, walls, fixtures, lighting
and plumbing fixtures, wiring, piping, ceilings, floors and thresholds;
	 
	 	(d)	 	providing and maintaining landscaping, gardening and snow removal;
	 
	 	(e)	 	making repairs and replacements, but, for greater certainty, the Tenant shall
not be required to make structural repairs or replacements to the Building and Leased
Premises; and
	 
	 	(f)	 	keeping the Leased Premises in a condition so as to comply with the
requirements of any governmental authority having jurisdiction,

all to such standards and condition as would a careful and prudent owner of a property similar to
the Leased Premises in the area in which the Leased Premises are located. Notwithstanding the
foregoing, and for greater certainty, the Landlord acknowledges and agrees that repainting of the
Leased Premises shall not be required during the initial term of this Lease.

7.7                  Failure to Maintain. If the Tenant fails to perform any obligation under this Article 7, then
on not less than fifteen (15) days’ notice to the Tenant, the Landlord may enter the Leased
Premises and perform the obligation without liability to the Tenant for any loss or damage to the
Tenant thereby incurred. The Tenant shall, promptly after receiving the Landlord’s invoice
therefor, reimburse the Landlord for all costs incurred by the Landlord in performing the
obligation.

7.8                  Liens. The Tenant shall pay promptly when due all costs for work done or caused to be done by
the Tenant in the Leased Premises which could result in any lien or encumbrance on the Landlord’s
interest in the Leased Premises or any part thereof, shall keep the title to the Leased Premises
and every part thereof free and clear of any lien or encumbrance in respect of the work and shall
indemnify and hold harmless the Landlord against any claim, loss, cost, demand and legal or other
expense, whether in respect of any lien or otherwise, arising out of the supply of materials,
services or labour for the work. The Tenant shall immediately notify the Landlord of the lien,
claim of lien or other action of which it has or reasonably should have knowledge and which affects
the title to the Land, the Building or the Leased Premises or any part thereof and shall cause the
same to be removed within fifteen (15) days (or such additional time as the Landlord may consent to
in writing), failing which the Landlord may take such action as the Landlord deems necessary to
remove same and the entire cost thereof shall immediately become due and payable by the Tenant to
the Landlord.

 

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ARTICLE 8

TAXES

8.1                  Landlord’s Taxes. The Landlord shall pay promptly when due (but subject to contribution by the
Tenant as required hereunder) any tax, rate, levy, assessment, fee and other charge (except for
taxes payable by the Tenant under this Lease) which is imposed, levied, assessed or charged by a
taxing or other authority having jurisdiction and which is payable in respect of the Term or any
part thereof upon or on account of the Leased Premises.

8.2                  Tenant’s Taxes. In addition to taxes payable by the Tenant under Sections 4.6 and 4.7, the
Tenant shall pay promptly when due every tax, rate, levy, assessment, fee and other charge which is
imposed, levied, assessed or charged to or for the account of the Tenant or the Leased Premises by
a taxing authority having jurisdiction and which is payable upon or on account of:

	 	(a)	 	operations at, occupancy of, or conduct of business in and from the Leased
Premises by or with permission of the Tenant; and
	 
	 	(b)	 	fixtures, improvements or personal property in the Leased Premises which do not
belong to the Landlord;

provided that if the Landlord so elects by notice to the Tenant, the Tenant shall pay any such
taxes payable by it under this Lease in monthly instalments to the Landlord and the Landlord shall
remit the amounts to the appropriate authorities. The Tenant agrees that if, at any time and from
time to time throughout the Term, any additional tax, rate, levy, assessment, fee, charge, cost,
expense, penalty, fine or interest is imposed, levied, assessed or charged to or for the account of
the Landlord by a taxing authority having jurisdiction and which is payable upon or on account of
the Minimum Rent in respect of the initial term of this Lease, the Tenant shall forthwith pay fifty
percent (50%) of such additional tax, rate, levy, assessment, fee, charge, cost, expense, penalty,
fine or interest to the Landlord.

8.3                  Right to Contest. Each of the Landlord and the Tenant (provided the Tenant is legally entitled
to do so) shall have the right to contest in good faith the validity or amount of any tax, rate,
levy, assessment, fee or other charge which it is responsible to pay under this Article 8 and to
defer payment of such taxes to the extent permitted by law; provided that no contest by the Tenant
shall involve the possibility of forfeiture, sale or disturbance of the Landlord’s interest in the
Leased Premises and that, upon the final determination of any contest by the Tenant, the Tenant
shall immediately pay and satisfy the amount found to be due, together with any costs, penalties
and interest. If as a result of any contest by the Tenant, any tax, rate, levy, assessment, fee or
other charge is increased, the Tenant shall be responsible for the full amount of such increase in
respect of the period to which the contest relates and to any subsequent tax periods which commence
during the Term.

8.4                  Notice of Taxes. The Tenant shall promptly give to the Landlord all assessment notices, tax
bills and any other notices relating in any way to the Leased Premises forthwith after receipt
thereof by the Tenant.

 

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ARTICLE 9

INSURANCE & LIABILITY

9.1                  Landlord’s Insurance. During the Term, the Landlord shall place insurance coverage on the
Leased Premises, which coverage shall include the following:

	 	(a)	 	all risks insurance for the full reconstruction value of the Building
(including the value of the foundations) as determined by the Landlord, acting
reasonably;
	 
	 	(b)	 	as an extension to the insurance maintained pursuant to Section 9.1(a),
insurance on the rental income derived by the Landlord from the Leased Premises on a
gross rental income form with a period of indemnity of not less than the period as
estimated by the Landlord from time to time which would be required to rebuild the
Leased Premises in the event of complete destruction thereof;
	 
	 	(c)	 	comprehensive boiler and unfired pressure vessels insurance, including repair
or replacement and rental income coverages;
	 
	 	(d)	 	comprehensive general bodily injury and property damage liability insurance;
and
	 
	 	(e)	 	such other insurance which is or may become customary or reasonable for owners
of buildings similar to the Building to carry in respect of loss of or damage to the
Building or liability arising therefrom.

The insurance referred to in this Section 9.1 shall be carried in amounts determined by the
Landlord and shall be obtained from a company or companies and be of a type and form satisfactory
to the Landlord, acting reasonably. The insurance shall be written in the name of the Landlord
with loss payable to the Landlord and to any mortgagee (including any trustee under a deed of trust
and mortgage) of the Leased Premises from time to time if required by the Landlord. The policies
of insurance referred to in Sections 9.1(a), (b) and (c) shall contain a waiver of the insurer’s
right of subrogation as against the Tenant. The Landlord hereby waives its right of recovery
against the Tenant, its employees and those for whom the Tenant is in law responsible with respect
to occurrences required to be insured against by the Landlord hereunder, but only to the extent
that the Landlord receives proceeds of insurance from its insurer or insurers with respect to same
after making reasonable efforts to collect. All insurance required to be placed by the Landlord
under the terms of this Lease shall be at the expense of the Tenant and the Tenant shall pay to the
Landlord the reasonable cost of all such insurance forthwith upon demand therefor. The cost of
insurance shall be adjusted between the Landlord and the Tenant on the Commencement Date and at the
expiry of the Term. Notwithstanding any contribution by the Tenant to insurance premiums as
provided for in this Lease, no insurable interest is conferred upon the Tenant under policies
carried by the Landlord. Except as specifically provided in this Lease, the Landlord shall in no
way be accountable to the Tenant regarding the use of the insurance proceeds arising from any
claim. Nothing contained in this Lease shall require the Landlord to insure any of the Tenant’s
equipment, machinery, stock, leasehold improvements, fixtures or any other property owned or
brought onto or into the Leased Premises by the Tenant whether affixed to the Building or not.

 

-26-

9.2                  Tenant’s Insurance. At its expense, the Tenant shall take out and thereafter maintain in force
at all times during the Term insurance policies as follows:

	 	(a)	 	all risks insurance on all property of every description, nature and kind owned
by the Tenant or for which the Tenant is legally liable, or installed in the Leased
Premises by or on behalf of the Tenant or which is located or situate within the Leased
Premises including, without limitation, all leasehold improvements and Tenant’s
fixtures in an amount not less than the full replacement cost thereof without deduction
for depreciation. Such insurance shall be subject to replacement cost endorsement and
shall include a stated amount co-insurance clause;
	 
	 	(b)	 	comprehensive broad form boiler, machinery and equipment insurance for the full
replacement cost value of all boilers, pressure vessels, air-conditioning and other
equipment located on the Leased Premises;
	 
	 	(c)	 	business interruption insurance in such amounts as will reimburse the Tenant
for direct or indirect loss of earnings attributed to all perils commonly insured
against by prudent tenants or attributable to prevention of access to the Leased
Premises or to the Building as a result of such perils;
	 
	 	(d)	 	comprehensive general bodily injury and property damage liability insurance and
tenant’s legal liability insurance in the minimum amount of Ten Million Dollars
($10,000,000.00) and in a form satisfactory to the Landlord, acting reasonably, and
including owners and contractors protective, products and completed operations,
personal injury, intentional acts, employer’s liability, occurrence property damage
(broad form), blanket contractual and non-owned automobile liability extensions. Such
insurance shall include a cross liability and severability of interest clause; and
	 
	 	(e)	 	any other form or forms of insurance as the Tenant or the Landlord or the
mortgagees of the Landlord reasonably require from time to time in form, in amounts and
for insurance risks against which a prudent tenant would protect itself, provided such
form of insurance and amounts of coverage are generally available on terms which the
Tenant, acting reasonably, considers to be reasonable commercial terms,

but subject to such higher limits as the Tenant, the Landlord, acting reasonably, or any mortgagee
of the Landlord’s interest in the Leased Premises may require from time to time and against such
additional risks as a prudent tenant would insure. The insurance policies referred to in this
Section 9.2 shall contain a waiver of the insurer’s right of subrogation as against the Landlord,
the Landlord’s directors, officers, employees, servants, agents, contractors, successors and
assigns and any Person for whom the Landlord may in law or by agreement be responsible or for whom
the Landlord may have agreed to obtain such a waiver. Any and all deductibles shall be at the
expense of the Tenant. The Tenant shall provide to the Landlord at the

 

-27-

commencement of the Term, 30 days prior to the renewal of all insurance referred to in this Section
9.2 and promptly at any time upon request, a certificate of insurance evidencing the insurance
coverages maintained by the Tenant in accordance with this Section 9.2, such certificates to be in
a form acceptable to the Landlord, acting reasonably. The delivery to the Landlord of a
certificate of insurance or a certified copy of an insurance policy or any review thereof by or on
behalf of the Landlord shall not limit the obligation of the Tenant to provide and maintain
insurance pursuant to this Section 9.2 or derogate from the Landlord’s rights if the Tenant shall
fail to fully insure. All policies of insurance placed under this Section 9.2 shall be placed with
a company or companies reasonably satisfactory to the Landlord. All policies shall provide that
the insurance shall not be cancelled or changed to the prejudice of the Landlord without at least
30 days’ prior written notice given by the insurer to the Landlord.

9.3                  Placement of Tenant’s Insurance by Landlord. If the Tenant fails to place or maintain all or
any of the insurance coverages referred to in Section 9.2, the Landlord may, at its option, place
all or any part of such insurance in the name of or on behalf of the Tenant and the Tenant shall
pay to the Landlord upon demand all costs incurred by the Landlord in so doing, including the
premium or premiums for such insurance.

9.4                  Cancellation of Insurance. The Tenant covenants that nothing will be done or omitted to be
done whereby any policy of insurance obtained by the Landlord pursuant to Section 9.1 shall be
cancelled or the Leased Premises rendered uninsurable.

9.5                  Limitation of Landlord’s Liability. The Landlord and its directors, officers, employees,
servants, agents, contractors, successors and assigns shall not be liable even if grossly negligent
for any damage to the Leased Premises or any property located therein caused by any latent defect
or by steam, water, rain or snow which may leak into, issue or flow from any part of the Leased
Premises or from the water, steam, sprinkler or drainage pipes or plumbing works of the same or
from any other place or from any damage caused by or attributable to the condition or arrangement
of any electrical or other wiring or for damage caused by interruption or failure of any service or
utility or for damage however caused to books, records, files, money, securities, negotiable
instruments, papers or other valuables.

9.6                  Indemnity. The Tenant shall indemnify and save harmless the Landlord and its directors,
officers, employees, servants, agents, contractors, successors and assigns from any and all
liabilities, damages, costs, claims, suits or actions growing or arising out of:

	 	(a)	 	any breach, violation or non-performance of any covenant, condition or
agreement in this Lease set forth and contained on the part of the Tenant to be
fulfilled, kept, observed and performed;
	 
	 	(b)	 	any damage to property while the property is in or about the Leased Premises;
and
	 
	 	(c)	 	any injury to person or persons including death resulting at any time therefrom
occurring in or about the Leased Premises.

 

-28-

9.7                  Survival of Obligations and Indemnities. All obligations of the Tenant which arise during the
Term pursuant to this Lease and which have not been satisfied and the indemnities and other
obligations of the Tenant contained in this Lease shall survive the expiration or other termination
of this Lease.

ARTICLE 10

DAMAGE AND DESTRUCTION

10.1                  Limited Damage to Leased Premises. If during the Term, the Leased Premises or any part
thereof shall be destroyed or damaged by any hazard against which the Landlord is obligated to
insure or has insured hereunder, the Landlord, if permitted by law so to do, shall proceed with
reasonable diligence to rebuild and restore or repair the Leased Premises or comparable premises in
conformance with current laws but only to the extent of insurance proceeds received. The covenants
of the Tenant to repair shall not include any repairs of damage required to be made by the Landlord
under this Section 10.1. Rent payable by the Tenant from the date of such damage or destruction
until the Leased Premises are restored, shall abate to the extent of all amounts which the Landlord
may receive from loss of rental insurance. If less than all of the Leased Premises is destroyed or
damaged as contemplated in this Section 10.1, Minimum Rent payable by the Tenant shall abate from
the date of such damage or destruction until the Leased Premises are restored, in the same
proportion as the Rentable Area of the Leased Premises so damaged or destroyed is of the total
Rentable Area of the Leased Premises.

10.2                  Major Damage to Leased Premises. Notwithstanding anything in this Lease contained, if in the
opinion of the Landlord’s architect or engineer given within 30 business days of the happening of
damage or destruction, the Leased Premises shall be damaged or destroyed by any hazard against
which the Landlord is obligated to insure or has insured as provided for hereunder to the extent
that the Leased Premises shall be incapable of being rebuilt or repaired or restored with
reasonable diligence within six months after the occurrence of such damage or destruction, then,
either the Landlord or the Tenant may, at its option, terminate this Lease by notice in writing to
the other given within 15 days after the giving of the opinion by the Landlord’s architect or
engineer. If notice is given by the Landlord or the Tenant under this Section 10.2, then this
Lease shall terminate from the date of such damage or destruction and the Tenant shall immediately
surrender the Leased Premises and all interest therein to the Landlord and the Rent shall be
apportioned and shall be payable by the Tenant only to the date of such damage or destruction and
the Landlord may thereafter re-enter and repossess the Leased Premises.

10.3                  No Abatement. Except as specifically provided in this Article 10, there shall be no
reduction of Rent and the Landlord shall have no liability to the Tenant by reason of any injury to
or interference with the Tenant’s business or property arising from fire or other casualty,
howsoever caused, or from the making of any repairs resulting therefrom or to any portion of the
Building or the Leased Premises.

10.4                  Notify. The Tenant shall immediately notify the Landlord of any accident or defect in the
Leased Premises or any systems thereof, and as well of any matter or condition which may cause
injury or damage to the Building or any person or property located therein.

 

-29-

ARTICLE 11

DEFAULT

11.1                  Interest. The Tenant shall pay monthly to the Landlord interest at a rate equal to the lesser
of the Prime Rate plus five per cent per annum and the maximum rate permitted by applicable law,
upon all Rent required to be paid hereunder from the due date for payment thereof until the same is
fully paid and satisfied.

11.2                  Costs of Enforcement. The Tenant shall indemnify the Landlord against all costs and charges
(including legal fees on a substantial indemnity basis) reasonably incurred in enforcing payment of
Rent hereunder and in obtaining possession of the Leased Premises after default of the Tenant or
upon expiration or earlier termination of this Lease or in enforcing any covenant, proviso or
agreement of the Tenant herein contained. All such costs and charges shall be paid by the Tenant
to the Landlord forthwith upon demand.

11.3                  Performance of Tenant’s Obligations. All covenants and agreements to be performed by the
Tenant under any of the terms of this Lease shall be performed by the Tenant, at the Tenant’s sole
cost and expense, and without any abatement of Rent. If the Tenant fails to perform any act to be
performed by it hereunder, and the failure continues for ten (10) days following notice thereof,
the Landlord may (but shall not be obligated to) perform the act without waiving or releasing the
Tenant from any of its obligations relative thereto. All sums paid and costs incurred by the
Landlord in so performing the act, together with interest thereon at the rate set out in Section
11.1 from the date payment was made or such cost incurred by the Landlord, shall be payable by the
Tenant to the Landlord on demand.

11.4                  Events of Default. If and whenever:

	 	(a)	 	all or any part of the Rent hereby reserved is not paid when due and default
continues for five (5) days after written notice thereof; or
	 
	 	(b)	 	the Term or any goods, chattels or equipment of the Tenant is seized or is
taken or exigible in execution or in attachment or if a writ of execution is issued
against the Tenant or if a creditor takes possession thereof; or
	 
	 	(c)	 	the Tenant or any person or corporation bound to perform the obligations of the
Tenant hereunder either as guarantor or indemnifier or as one of the parties
constituting the Tenant takes any steps or suffers any order to be made for its
winding-up or other termination of its corporate existence or becomes insolvent or
commits an act of bankruptcy or becomes bankrupt or takes the benefit of any statute
that may be in force for bankrupt or insolvent debtors or becomes involved in voluntary
or involuntary winding-up proceedings or if a receiver or receiver/manager shall be
appointed for the business, property, affairs or revenues of the Tenant or such person
or corporation; or
	 
	 	(d)	 	the Tenant makes a bulk sale of its goods or moves or commences, attempts or
threatens to move its goods, chattels and equipment out of the Leased Premises

 

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	 	 	 	(other than in the normal course of its business) or ceases to conduct business from
the Leased Premises; or
	 
	 	(e)	 	the Tenant vacates or abandons the Leased Premises in whole or in part or fails
to actively carry on business therein; or
	 
	 	(f)	 	the Tenant fails to observe, perform and keep each and every of the covenants,
agreements, provisions, stipulations and conditions herein contained to be observed,
performed and kept by the Tenant (other than payment of Rent) and persists in the
failure after fifteen (15) days’ written notice by the Landlord requiring the Tenant to
remedy, correct, desist or comply (or if any breach would reasonably require more than
fifteen (15) days to rectify, unless the Tenant commences rectification within the
fifteen (15) day notice period and thereafter promptly and effectively and continuously
proceeds with the rectification of the breach),

then the Landlord shall be entitled to any or all of those remedies set out in Section 11.5.

11.5                  Remedies on Default. The Landlord may, at its option, in any of the cases set out in Section
11.4 and in addition to and without prejudice to all rights and remedies of the Landlord available
to it either by any other provision of this Lease or by statute or the general law:

	 	(a)	 	be entitled to the full amount of the current month’s and the next ensuing
three months’ instalments of Rent which shall immediately become due and payable and
the Landlord may immediately distrain for the same, together with any arrears then
unpaid;
	 
	 	(b)	 	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
re-let the Leased Premises or any part thereof on behalf of the Tenant or otherwise as
the Landlord sees fit and remove and sell the Tenant’s goods, chattels and trade
fixtures therefrom, any rule of law or equity to the contrary notwithstanding;
	 
	 	(c)	 	seize and sell such goods, chattels and equipment of the Tenant as are in the
Leased Premises and may apply the proceeds thereof to all Rent to which the Landlord is
then entitled under this Lease. Any such sale may be effected by public auction or
otherwise, and either in bulk or by individual item, or partly by one means and partly
by another, all as the Landlord in its sole discretion may decide;
	 
	 	(d)	 	terminate this Lease by leaving upon the Leased Premises notice in writing of
the termination, and termination shall be without prejudice to the Landlord’s right to
damages; it being agreed that the Tenant shall pay to the Landlord on demand as

 

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	 	 	 	damages the loss of income of the Landlord to be derived from the Leased Premises
for the unexpired portion of the Term had it not been terminated; or
	 
	 	(e)	 	re-enter into and upon the Leased Premises or any part thereof in the name of
the whole and repossess and enjoy the same as of the Landlord’s former estate, anything
herein contained to the contrary notwithstanding,

and the Tenant shall pay to the Landlord forthwith upon demand all expenses of the Landlord in
re-entering, terminating, re-letting, collecting sums due or payable by the Tenant or realizing
upon assets seized including tenant inducements, leasing commissions, legal fees on a substantial
indemnity basis and all disbursements and the expense of keeping the Leased Premises in good order,
repairing the same and preparing them for re-letting.

11.6                  Availability of Remedies. The Landlord may from time to time resort to any or all of the
rights and remedies available to it in the event of any default by the Tenant, either by any
provision of this Lease or by statute or the general law, all of which rights and remedies are
intended to be cumulative and not alternative, and the express provisions hereunder as to certain
rights and remedies are not to be interpreted as excluding any other or additional rights or
remedies available to the Landlord by statute or the general law.

11.7                  Waiver. If the Landlord shall overlook, excuse, condone or suffer any default, breach or
non-observance by the Tenant of any obligation hereunder, this shall not operate as a waiver of the
obligation in respect of any continuing or subsequent default, breach or non-observance and no such
waiver shall be implied but shall only be effective if expressed in writing.

11.8                  Waiver of Exemption and Redemption. Notwithstanding anything contained in any statute now or
hereafter in force limiting or abrogating the right of distress, none of the Tenant’s goods,
chattels or trade fixtures on the Leased Premises at any time during the Term shall be exempt from
levy by distress for Rent in arrears, and upon any claim being made for exemption by the Tenant or
on distress being made by the Landlord, this agreement may be pleaded as an estoppel against the
Tenant in any action brought to test the right to the levying upon of any such goods as are named
as exempted in any such statute, the Tenant hereby waiving all and every benefit that could or
might have accrued to the Tenant under and by virtue of any such statute but for this Lease. The
Tenant hereby expressly waives any and all rights of redemption and relief from forfeiture granted
by or under any present or future laws in the event of the Tenant being evicted or dispossessed for
any cause, or in the event of the Landlord obtaining possession of the Leased Premises, by reason
of the violation by the Tenant of any of the terms or conditions of this Lease or otherwise.

ARTICLE 12

ASSIGNMENT AND SUBLETTING

12.1                  Assignment. Provided no default under this Lease is then outstanding, the Tenant may assign
this Lease:

 

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	 	(a)	 	to an assignee who is a purchaser of all or substantially all of the business
of the parent company of the Tenant, an affiliate (as defined in the Business
Corporations Act (Ontario)) of the Tenant, a corporation which results from the
reconstruction, consolidation, amalgamation or merger of the Tenant, or a trust or
partnership in which the Tenant has a substantial interest, with the Landlord’s prior
written consent, which consent shall not be unreasonably withheld; or
	 
	 	(b)	 	to any other assignee who, in the Landlord’s sole opinion, will not be an
undesirable tenant, with the Landlord’s prior written consent, which consent may be
unreasonably withheld.

12.2                  Subleasing. With the Landlord’s prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned, the Tenant may, provided no default under this Lease
is then outstanding, sublet all or any part of the Leased Premises. Notwithstanding anything else
to the contrary provided in this Lease and/or any act or rule of law or regulation now or hereafter
in force to the contrary, the Landlord may, in its sole and absolute discretion, refuse to give its
consent to any transfer or subletting by the Tenant of less than the whole of the Leased Premises
resulting in more than three (3) separate premises therein. It is expressly understood and agreed
by the Tenant that except as permitted above in this Section, no further sub-subletting or parting
with possession of all or any part of the Leased Premises in any way, or use or occupation of all
or any part of the Leased Premises by any other Person, is permitted.

12.3 Request for Consent. Any request for the consent of the Landlord to any assignment, transfer,
pledge or subletting shall be in writing and accompanied by full particulars of the terms of the
proposed assignment, transfer, pledge or subletting, as the case may be, and shall contain detailed
information as to the identity, business and financial status of the proposed assignee, transferee,
pledgee or subtenant. The Landlord shall be deemed to be acting reasonably in withholding its
consent to any proposed assignment or sublease if the Landlord determines, without limitation,
that:

	 	(a)	 	the Landlord would be unable to secure the consent of any mortgagee or other
Person who may have the right to approve the assignment or sublease, on terms
satisfactory to the Landlord, acting reasonably;
	 
	 	(b)	 	the business experience, financial background or creditworthiness of the
proposed assignee or subtenant or its principals is insufficient or unsatisfactory;
	 
	 	(c)	 	the Landlord, acting reasonably, did not receive sufficient information,
material, books or records from the Tenant or the proposed assignee or subtenant,
including its principals, to enable the Landlord to make a determination concerning any
of the matters set out above.

If the Tenant is of the opinion that any consent has been wrongfully withheld, its remedies in
respect thereof shall not include any loss, injury or damage arising therefrom or termination of
this Lease. All reasonable costs associated with considering or the giving of such consents and
the preparation of necessary documentation as provided herein, including the Landlord’s

 

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reasonable legal fees on a substantial indemnity basis, shall be payable by the Tenant to the
Landlord forthwith upon demand.

Provided, however, and it is made a condition to any assignment, transfer, subletting or use or
occupation of the Leased Premises by any other Person that:

	 	(d)	 	the proposed assignee, transferee, subtenant or user or occupant of the Leased
Premises, jointly and severally with the Tenant, shall agree in writing with the
Landlord to assume and perform all of the obligations, terms, covenants, conditions and
agreements by this Lease imposed upon the Tenant herein in a form to be approved by the
solicitor for the Landlord, acting reasonably, and shall obtain occupancy approval from
the local building and fire departments, if necessary, and provide evidence thereof to
the Landlord prior to taking occupancy of the Leased Premises;
	 
	 	(e)	 	the assignee, transferee, subtenant or user or occupant of the Leased Premises
shall also waive any rights which it may have at common law in respect of relief from
forfeiture and any rights it may have pursuant to Sections 21 and 39(2) of the
Commercial Tenancies Act (Ontario), as amended from time to time;
	 
	 	(f)	 	the acceptance by the Landlord of Rent from an assignee, transferee, subtenant
or user or occupant of the Leased Premises without the Landlord’s consent shall not
constitute a waiver of the requirement of such consent nor shall it constitute an
acceptance of such party as the Tenant;
	 
	 	(g)	 	the Landlord may, at its option, cancel the First Renewal Right and the Second
Renewal Right;
	 
	 	(h)	 	the Leased Premises, at the time of the assignment, transfer, subletting or use
or occupation of the Leased Premises by such other Person shall comply in all respects
with the standard of repair and maintenance required of the Tenant pursuant to this
Lease;
	 
	 	(i)	 	with respect to a sublease having a term expiring in the last twelve (12)
months of the Term, the Landlord shall have received from the Tenant or the assignee,
transferee, subtenant or user or occupant of the Leased Premises a cash deposit equal
to the last three (3) months’ Minimum Rent hereunder (pro-rated in the case of a
request relating to a portion only of the Leased Premises), as security for the
performance of the repair and maintenance obligations of the Tenant and the assignee,
transferee, subtenant or user or occupant of the Leased Premises, to be held by the
Landlord pending delivery up of the Leased Premises (or the portion thereof which is
subject to the assignment, transfer, subletting or use or occupation of the Leased
Premises by such other Person) by the assignee, transferee, subtenant or user or
occupant of the Leased Premises in the condition and to the standard required
hereunder;

 

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	 	(j)	 	if the assignment, transfer, subletting or use or occupation of the Leased
Premises by such other Person does not take place within sixty (60) days of the giving
of consent by the Landlord, the consent shall, at the Landlord’s option, expire and
become null and void; and
	 
	 	(k)	 	if the Lease is disaffirmed, disclaimed or terminated by any trustee in
bankruptcy of an assignee, transferee, subtenant or user or occupant of the Leased
Premises, the original Tenant named in this Lease will be deemed on notice from the
Landlord given within sixty (60) days from the date of such disaffirmation, disclaimer
or termination to have entered into a lease with the Landlord containing the same terms
and conditions as in this Lease.

12.4                  Excess Rent. In the event that the Minimum Rent payable under any assignment, transfer,
subletting or use or occupation of the Leased Premises by any other Person during any renewal
period is in excess of the Minimum Rent reserved hereunder or is in excess of the proportionate
Minimum Rent reserved in the event of a sublease of part of the Leased Premises, whether the excess
be in the form of cash, goods or services from the assignee, transferee, subtenant or user or
occupant of the Leased Premises or anyone acting on its behalf, the Tenant shall pay all of such
excess to the Landlord immediately upon receipt thereof; in the event that such excess is
represented by goods or services rendered to the Tenant, the value of those goods or services shall
be determined by the Landlord and the Tenant and that value shall be paid in cash to the Landlord
immediately upon such determination. For greater certainty, this Section shall not apply during the
initial term of this Lease specified in Section 3.1, but shall only apply during any renewal
period.

12.5                  Limitation. Except as specifically provided in this Article 12, the Tenant shall not assign,
sublet, pledge or transfer this Lease or any interest therein or in any way part with possession of
all or any part of the Leased Premises, or permit all or any part of the Leased Premises to be used
or occupied by any other Person. Any transfer or other dealing with any of the shares of the
Tenant having the effect of altering the identity of the shareholder or shareholders having the
right to exercise a majority of the votes in an election of directors or otherwise changing
control, directly or indirectly, of the Tenant, shall be deemed to be an assignment of this Lease
which requires the prior approval of the Landlord as set out herein. The provisions of this
Section 12.5 shall not apply where the Tenant’s shares are listed on a North American Stock
Exchange. Any assignment, transfer or subletting or purported assignment, transfer or subletting
except as specifically provided herein shall be null and void and of no force and effect. The
rights and interests of the Tenant under this Lease shall not be assignable by operation of law
without the Landlord’s prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned.

12.6                  Documentation. No assignment, transfer, subletting or use or occupation of the Leased
Premises by any other Person which is permitted under this Article 12 shall release or relieve the
Tenant of its obligations under this Lease including, without limitation, the obligation to pay
Rent, unless the release or relief is specifically granted by the Landlord to the Tenant in
writing.

 

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12.7                  Subsequent Assignments. The Landlord’s consent to an assignment, transfer, subletting or use
or occupation of the Leased Premises by any Person other than the Tenant shall not be deemed to be
a consent to any subsequent assignment, transfer, subletting or use or occupation.

12.8                  Advertising Leased Premises. The Tenant shall not advertise or allow the Leased Premises or a
portion thereof to be advertised as being available for assignment, sublease or otherwise without
the prior written approval of the Landlord as to the form, size, content and location of such
advertisement, which approval shall not be unreasonably withheld, provided that no such advertising
shall contain any reference to the Rent for the Leased Premises.

ARTICLE 13

TRANSFERS BY LANDLORD

13.1                  Sale, Conveyance and Assignment. Nothing in this Lease shall restrict the right of the
Landlord to sell, convey, assign, pledge or otherwise deal with the Leased Premises subject only to
the rights of the Tenant under this Lease.

13.2                  Effect of Transfer. A sale, conveyance or assignment of the Leased Premises by the Landlord
shall operate to release the Landlord from liability from and after the effective date thereof in
respect of all of the covenants, terms and conditions of this Lease, express or implied, except as
they may relate to the period prior to the effective date, and the Tenant shall thereafter look
solely to the Landlord’s successor in interest and to this Lease.

13.3                  Subordination. Subject to Section 13.4, this Lease is and shall be subject and subordinate in
all respects to any and all mortgages (including deeds of trust and mortgage) now or hereafter
placed on the Building or the Land and all advances thereunder, past, present and future, and to
all renewals, modifications, consolidations, replacements and extensions thereof; provided that the
Landlord obtains from such mortgagees an agreement not to disturb the Tenant’s possession so long
as the Tenant is not in default under this Lease beyond the period of time permitted for
rectification of default. The Landlord agrees to use its reasonable commercial efforts to obtain
any such non-disturbance agreement from such existing mortgagees. The Tenant agrees to execute
promptly and in any event within ten (10) days after request therefor an instrument of
subordination as may be requested in a form satisfactory to it, acting reasonably.

13.4                  Attornment. The Tenant agrees, whenever requested by any mortgagee (herein called the
“Purchaser”) by reason of foreclosure or other proceedings for enforcement of any mortgage or deed
of trust, or by delivery of a deed in lieu of such foreclosure or other proceedings, to attorn to
such Purchaser as a tenant under all of the terms of this Lease. The Tenant agrees to execute
promptly and in any event within ten (10) days after a request by any Purchaser an instrument of
attornment as may be required of it.

13.5                  Effect of Attornment. Upon attornment pursuant to Section 13.4, this Lease shall continue in
full force and effect as a direct lease between the Purchaser and the Tenant, upon all of the same
terms, conditions and covenants as are set forth in this Lease except that, after attornment, the
Purchaser and its successors in title shall not be:

 

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	 	(a)	 	liable for any act or omission of the Landlord, or
	 
	 	(b)	 	subject to any offsets or defenses which the Tenant might have against the
Landlord, or
	 
	 	(c)	 	bound by any prepayment by the Tenant of more than one month’s instalment of
Rent or by any previous modification of this Lease, unless the prepayment or
modification shall have been approved in writing by the Purchaser or any predecessor of
the Purchaser’s former interest as mortgagee in the Leased Premises.

ARTICLE 14

SURRENDER AND EXPROPRIATION

14.1                  Possession. Upon the expiration or other termination of the Term, the Tenant shall
immediately quit and surrender possession of the Leased Premises and all leasehold improvements in
substantially the condition in which the Tenant is required to maintain the Leased Premises
excepting only reasonable wear and tear and damage covered by Landlord’s insurance under Section
9.1; provided that, notwithstanding the foregoing, the Landlord shall have the right, at its sole
option upon the expiration or other termination of the Term, to require that the Tenant:

	 	(a)	 	remove, dismantle or cause to be removed or dismantled at the Tenant’s cost all
leasehold improvements in the Leased Premises, including without limitation, the
Tenant’s Specialized Equipment, whether or not installed by or on behalf of the Tenant;
	 
	 	(b)	 	restore the Leased Premises to base Building standard, as more particularly set
out in Schedule “D” hereto; and
	 
	 	(c)	 	decommission the Leased Premises.

Upon surrender, all right, title and interest of the Tenant in the Leased Premises shall cease.

14.2                  Tenant’s Trade Fixtures and Personal Property. At the expiration or other termination of the
Term, if the Tenant is not in default hereunder, it may remove, at its expense, all of its trade
fixtures, personal property and improvements, provided that the Tenant shall forthwith repair any
damage to the Leased Premises resulting from such removal. After the expiration or other
termination of the Term, all of the Tenant’s trade fixtures, personal property and improvements
remaining in the Leased Premises shall be deemed conclusively to have been abandoned by the Tenant
and may be appropriated, sold, destroyed or otherwise disposed of by the Landlord without notice or
obligation to compensate the Tenant or to account therefor, and the Tenant shall pay to the
Landlord upon written demand all of the costs incurred by the Landlord in connection therewith.

 

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14.3                  Overholding. If the Tenant continues to occupy the Leased Premises after the expiration or
other termination of the Term without any further written agreement, the Tenant shall be a monthly
tenant at an annual basic rent equal to one and a half times the Minimum Rent but subject to all
other provisions in this Lease to the extent that the same are applicable to a month-to-month
tenancy, and a tenancy from year to year shall not be created by implication of law. Nothing
contained in this Section shall preclude the Landlord from exercising all of its rights set out in
this Lease including, without limitation, the taking of any action for recovery of possession of
the Leased Premises. For greater certainty, this Section shall not apply during the Automatic
Renewal Period, if any, pursuant to Section 3.3(c).

14.4                  Expropriation.

	 	(a)	 	Taking of Leased Premises — If during the Term, all or a substantial
part of the Leased Premises are taken for any public or any quasi-public use under any
statute or by right of expropriation, or purchased under threat of such taking, this
Lease shall, at the option of the Landlord, automatically terminate on the date on
which the condemning authority takes possession of the Leased Premises (the “date of
taking”).
	 
	 	(b)	 	Surrender — On any date of termination under Section 14.4(a), the
Tenant shall immediately surrender to the Landlord the Leased Premises and all interest
therein under this Lease. The Landlord may re-enter and take possession of the Leased
Premises and remove the Tenant and the Rent shall abate on the date of taking. After
such termination and on notice from the Landlord stating the Rent then owing, the
Tenant shall pay the Landlord such Rent.
	 
	 	(c)	 	Partial Taking of Leased Premises — If any portion of the Leased
Premises (but less than the whole) is so taken and no rights of termination herein
conferred are exercised, the Term of this Lease shall expire with respect to the
portion so taken on the date of taking. In such event, the Rent payable hereunder with
respect to the portion taken shall abate on the date of taking and the Rent thereafter
payable with respect to the remainder shall be adjusted pro rata by the Landlord to
account for the resulting reduction in the Rentable Area of the Leased Premises.
	 
	 	(d)	 	Awards — None of the provisions of this Section 14.4 shall have the
effect of derogating from the rights of the Landlord or the Tenant to claim any award
with respect to any taking or purchase. Upon any taking or purchase, the Landlord
shall be entitled to receive and retain the entire award or consideration for the
affected part of the Leased Premises and the Tenant shall not have or advance any claim
against the Landlord for the value of its property or its estate or the unexpired Term
of the Lease or for costs of removal or relocation or business interruption expense or
any other damages arising out of the taking or purchase. Nothing herein shall give the
Landlord any interest in or preclude the Tenant from seeking and recovering on its own
account from the condemning authority any award or compensation attributable to the
taking or purchase of the Tenant’s improvements, chattels or trade fixtures or the
removal or relocation of its

 

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	 	 	 	business and effects or the interruption of its business. If any award made or
compensation paid to either party specifically includes an award on account of the
other, the party first receiving the award shall promptly account therefor to the
other party.

ARTICLE 15

GENERAL

15.1                  Certificates. The Tenant shall, whenever requested by the Landlord, a prospective purchaser
or any mortgagee (including any trustee under a deed of trust and mortgage) promptly and in any
event within ten (10) days after request, execute and deliver to the Landlord or to any party
designated by the Landlord a certificate in writing as to the then status of this Lease, including
as to whether it is in full force and effect, is modified or unmodified, confirming the Rent
payable hereunder and the then state of the accounts between the Landlord and the Tenant, the
existence or non-existence of defaults, and any other matters pertaining to this Lease in respect
of which the Landlord shall request a certificate, and provide such other information as may
reasonably be required, including a copy of the Tenant’s most recent audited financial statements.

15.2                  Entire Agreement. There is no promise, representation or undertaking by or binding upon the
Landlord except such as are expressly set forth in this Lease, and this Lease including the
Schedules forming part hereof contains the entire agreement between the parties hereto.

15.3                  Registration. The Tenant acknowledges the confidential nature of this Lease and agrees with
the Landlord not to register this Lease. If the Tenant wishes to register a caveat or notice of
this Lease, the Landlord agrees to execute, at the expense of the Tenant, an acknowledgment or
short form of lease sufficient for such purpose in such form as the Landlord shall have approved
and which shall preserve the confidentiality of the Rent and other financial terms of this Lease;
provided that, if there is a conflict between the provisions of such notice or short form of lease
and this Lease, the provisions of this Lease shall govern. The Tenant shall, on or before the
expiration or earlier termination of the Term, discharge at its cost any registration made against
the Building or the Land providing notice of its interest under this Lease.

15.4                  “For Lease” and “For Sale” Signs.

	 	(a)	 	At any time upon: (i) the termination of the Lease by either party; (ii) the
failure of the Tenant to deliver notice to the Landlord pursuant to Section
3.3(a)(ii)or Section 3.3(b)(ii); (iii) the delivery by the Tenant of notice to the
Landlord indicating that the Term will not be renewed; or (iv) in the case of the
Second Renewal Period, during the last six (6) months thereof, the Landlord shall have
the right to place upon the Leased Premises a notice of reasonable dimension 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.

 

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	 	(b)	 	At any time and from time to time throughout the Term, the Landlord shall have
the right to place upon the Leased Premises a notice of reasonable dimension stating
that the Land is “for sale” and the Tenant shall not obscure or remove such notice or
permit the same to be obscured or removed.

15.5                  Unavoidable Delays. If the Landlord or the Tenant shall be delayed, hindered or prevented
from the performance of any of its covenants under this Lease by any cause not within its control
(excluding lack of finances), the performance of the covenant shall be excused for the period
during which 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
of its obligations under this Lease.

15.6                  Notice. Any notice required or contemplated by any provision of this Lease shall be given in
writing and shall be sufficiently given if delivered or if sent by telecopy or similar form of
immediate transmission and if to the Landlord, delivered to an executive officer of the Landlord at
the Landlord’s head office as specified on page 1 of this Lease and if to the Tenant, either
delivered to the Tenant personally (or to a partner or officer of the Tenant if the Tenant is a
firm or corporation) or left at the Leased Premises (whether or not the Tenant has departed from,
vacated or abandoned the same) or delivered or sent to the address specified on page 1 of this
Lease. Any notice shall be deemed to have been received on the day following the date of delivery
or sending. The Landlord or the Tenant may from time to time by notice in writing to the other
designate another address or addresses in Canada as the address to which notices are to be sent.

15.7                  Planning Act. It is an express condition of this Lease that the provisions of Section 50 of
the Planning Act, R.S.O. 1990, c. P.13, and any amendments thereto or any successor statutory
provisions thereof, be complied with if applicable in law. Until any necessary consent to this
Lease is obtained, the Term and the Tenant’s rights and entitlement granted by this Lease shall be
deemed to extend for a period only of 21 years less one day from the Commencement Date. The Tenant
shall apply diligently to prosecute such application for such consent, and the Tenant shall be
responsible for all costs, expenses, taxes and levies imposed, charged or levied as a result of
such application and in order to obtain such consent. The Tenant shall at all times keep the
Landlord informed of its progress in obtaining such consent and the Landlord shall co-operate with
the Tenant with respect to such application. Notwithstanding the foregoing provisions of this
Section 15.7, the Landlord reserves the right at any time, at the Tenant’s expense, to apply for
such consent in lieu of the Tenant and the Tenant’s application is hereby expressly made subject to
any application which the Landlord intends to make.

15.8                  Relationship of Parties. Nothing contained in this Lease shall create any relationship
between the parties hereto other than that of landlord and tenant.

15.9                  Governing Law. This Lease shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the laws of the Province of Ontario.

 

-40-

15.10                  Amendment. No amendment, modification or supplement to this Lease shall be valid or binding
unless set out in writing and executed by the Landlord and the Tenant with the same degree of
formality as the execution of this Lease.

15.11                  Legal Costs. The Tenant shall indemnify the Landlord against all legal fees (on a
substantial indemnity basis) and disbursements incurred by the Landlord or by its agents in
connection with the negotiation, preparation and execution of this Lease, and any renewal,
amendment, assignment, approval or consent in connection with this Lease. All such costs and
charges shall be paid by the Tenant to the Landlord forthwith upon demand.

15.12                  Construction. All of the provisions of this Lease are to be construed as covenants and
agreements. If any provision of this Lease is illegal or unenforceable, it shall be considered
separate and severable from the remaining provisions of this Lease, which shall remain in force and
be binding as though the provision had never been included.

15.13                  Captions and Headings. The captions and headings contained in this Lease are for convenience
of reference only and are not intended to limit, enlarge or otherwise affect the interpretation of
the Articles, Sections or parts thereof to which they apply.

15.14                  Interpretation. Wherever necessary or appropriate in this Lease, the plural shall be
interpreted as singular, the masculine gender as feminine or neuter and vice versa and when there
are two or more parties bound by the Tenant’s covenants herein contained, their obligations shall
be joint and several.

15.15                  Time of the Essence. Time shall be of the essence hereof.

15.16                  Successors and Assigns. Subject to specific provisions contained in this Lease to the
contrary, this Lease shall enure to the benefit of and be binding upon the successors and assigns
of the Landlord and the permitted successors and assigns of the Tenant.

15.17                  Counterparts. This Lease may be executed in counterparts and the counterparts together shall
constitute an original.

15.18                  Facsimile Execution. The parties agree that this Lease may be executed by either party and
forwarded to the other by facsimile transmission and receipt by facsimile transmission of a copy of
this Lease executed by a party shall bind the party so sending the facsimile transmission. Each of
the parties agrees that forthwith after execution and forwarding by facsimile, it will forward an
executed copy of this Lease by delivery to the other party.

     IN WITNESS WHEREOF the Landlord and the Tenant have executed this Lease as of the date first
set forth above.

	 	 	 	 	 
	 	ATS AUTOMATION TOOLING SYSTEMS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	

I/We have authority to bind the Corporation. 	 
	 
	 	PHOTOWATT TECHNOLOGIES INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	

I/We have authority to bind the Corporation. 	 
	 

Schedules

“A” — Land

“B” — Plan

“C” — Arbitration

“D” — Base Building Standard

 

 

SCHEDULE “A”

LAND

Firstly: Part Lot 22, 27 Concession Beasley’s Broken Front, Township of Waterloo,
designated as Parts 2, 4, 5, 6, 7 and 8 on Plan 58R-8875, save and except Parts 1 and 2 on Plan
58R-13705; subject to Instrument No. 1579993; Cambridge

Being PIN 03768-0264 (LT); and

Secondly: Part Lot 23, 26 Concession Beasley’s Broken Front, Township of Waterloo,
designated as Part 1 WDR 60, except Part 1 on Plan 67R-2561, Part 4 on Plan 67R-880 and Part 1 on
Plan 58R-13862; subject to Instrument No. 1579993; Cambridge

Being PIN 03768-0516 (LT).

 

 

SCHEDULE “B”

PLAN

Please see the attached plan

 

 

SCHEDULE “C”

ARBITRATION

	1.	 	Appointment of Arbitrator: Either the Landlord or the Tenant may have the Market
Rent of the Leased Premises submitted to arbitration pursuant to Section 3.3 of the Lease by
giving written notice to the other. The notice shall state the name of a proposed arbitrator.
Within 10 days after delivery of such notice, the recipient shall respond either by agreeing
to the proposed arbitrator or by proposing an alternative one. If the recipient fails to
respond within such period then the arbitrator shall be the one proposed in the notice. If
the parties do not agree on the arbitrator, then either the Landlord or the Tenant may apply
to the court under the Arbitration Act, 1991 (Ontario), after giving five (5) days’ notice to
the other of its intention to make such an application. The provisions of the Arbitration
Act, 1991 (Ontario) shall apply to any such selection. The arbitrator appointed pursuant to
this Schedule is referred to as the “arbitrator”.

	2.	 	Qualification of Arbitrator: The arbitrator shall be an experienced and accredited
appraiser qualified by experience, education and training to determine the Market Rent in the
locality of the Leased Premises.

	3.	 	Hearing: The arbitrator shall proceed immediately to determine the Market Rent.
Each party shall have the right to make representations to the arbitrator concerning the
Market Rent. The decision and reasons for it of the arbitrator shall be made within 30 days
after the appointment of the arbitrator, subject to any reasonable delay due to unforeseen
circumstances. Despite the foregoing, if the arbitrator fails to make a decision within 45
days after his or her appointment, either the Landlord or the Tenant may proceed anew with
arbitration as if none had previously been proceeded with.

	4.	 	Decision and Reasons: The decision and reasons for it of the arbitrator shall be in
writing and signed by the arbitrator and shall be delivered to each of the parties and shall
be final and binding upon the parties on the question of the Market Rent and the parties shall
be bound by such decision.

	5.	 	Costs: Unless otherwise determined by the arbitrator at the request of either of the
parties, the compensation and expenses of the arbitrator shall be
shared and paid in equal shares by the Landlord and the Tenant.

	6.	 	Arbitration Act, 1991: Except as otherwise expressly provided in this Lease
(including this Schedule), the arbitration shall be governed by the Arbitration Act, 1991
(Ontario).

 

 

SCHEDULE “D”

BASE BUILDING STANDARD

Upon the expiration or other termination of the Term and the surrender of possession of the
Leased Premises by the Tenant, the Tenant shall, at its own sole cost and expense, remove or
cause to be removed the following items from the Building and perform or cause to be performed
the following work:

	•	 	all retention pits in the basement shall be brought up to basement floor level and
finished as per standard floor with coating

	•	 	all chemical carrying and drain pipes shall be removed from the entire Building main
level and basement

	•	 	all chemicals shall be disposed of off-site in an acceptable method approved by
governmental authorities

	•	 	all exhaust ducting shall be removed from the Building along with exterior drive system
and vertical stacks with platforms

	•	 	exterior Nitrogen tanks, generators and associated equipments shall be removed

	•	 	the fire sprinkler system shall be put back to original coverage after removal of
equipment

	•	 	all emergency shower units shall be removed along with floor curbing and entire chemical
alarm system

	•	 	the roof shall be repaired after all penetrations are removed, c/w deck, insulation,
EPDM and ballasting

	•	 	after all penetrations are removed, the exterior walls shall be repaired and refinished,
c/w insulation, and the interior wall surfaces shall be repaired, smooth sanded and prime
painted

	•	 	the floors shall be repaired and patched flush with the floor surface, and otherwise
refinished after all penetrations are removed

 

 

ATS AUTOMATION TOOLING SYSTEMS INC.

- and -

PHOTOWATT TECHNOLOGIES INC.

 

LEASE OF INDUSTRIAL SPACE

SINGLE TENANT INDUSTRIAL BUILDING

 

Blake, Cassels & Graydon LLP

Box 25, Commerce Court West

Toronto, Ontario

M5L 1A9

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE 1	 	DEFINITIONS
	 	 	1	 
	 	1.1	 	 	Definitions.
	 	 	1	 
	 	1.2	 	 	Consultants.
	 	 	6	 
	ARTICLE 2	 	GRANT OF LEASE AND GENERAL COVENANTS
	 	 	6	 
	 	2.1	 	 	Grant.
	 	 	6	 
	 	2.2	 	 	Landlord’s General Covenants.
	 	 	6	 
	 	2.3	 	 	Tenant’s General Covenants.
	 	 	6	 
	ARTICLE 3	 	TERM AND POSSESSION
	 	 	7	 
	 	3.1	 	 	Term.
	 	 	7	 
	 	3.2	 	 	Condition of
Leased Premises.
	 	 	7	 
	 	3.3	 	 	Rights to
Renew.
	 	 	7	 
	ARTICLE 4	 	RENT
	 	 	9	 
	 	4.1	 	 	Rent.
	 	 	9	 
	 	4.2	 	 	Minimum Rent.
	 	 	10	 
	 	4.3	 	 	Intent.
	 	 	10	 
	 	4.4	 	 	Payment of
Rent.
	 	 	10	 
	 	4.5	 	 	Partial
Months Rent.
	 	 	10	 
	 	4.6	 	 	Payment of
Realty Taxes.
	 	 	11	 
	 	4.7	 	 	Payment of
Other Taxes.
	 	 	12	 
	 	4.8	 	 	Occupancy
Costs.
	 	 	12	 
	 	4.9	 	 	Estimates of
Expenses and Resolution of Disputes.
	 	 	14	 
	 	4.10	 	 	Rentable
Area.
	 	 	14	 
	 	4.11	 	 	Area
Determination.
	 	 	15	 
	ARTICLE 5	 	USE AND OCCUPATION
	 	 	15	 
	 	5.1	 	 	Use of
Leased Premises.
	 	 	15	 
	 	5.2	 	 	Compliance
with Laws.
	 	 	15	 
	 	5.3	 	 	Prohibited
Uses.
	 	 	15	 
	 	5.4	 	 	Hazardous
Use.
	 	 	15	 
	 	5.5	 	 	Permitted
Signs.
	 	 	16	 
	 	5.6	 	 	Prohibited
Signs.
	 	 	16	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	5.7	 	 	Tenant’s Environmental Covenants and Indemnity.
	 	 	16	 
	ARTICLE 6	 	OBLIGATIONS OF THE LANDLORD
	 	 	21	 
	 	6.1	 	 	The Leased
Premises.
	 	 	21	 
	 	6.2	 	 	Systems.
	 	 	21	 
	 	6.3	 	 	Access by
Landlord.
	 	 	21	 
	 	6.4	 	 	Condition of
Leased Premises.
	 	 	21	 
	ARTICLE 7	 	SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY THE
TENANT
	 	 	21	 
	 	7.1	 	 	Utilities.
	 	 	21	 
	 	7.2	 	 	Lights, Etc.
	 	 	21	 
	 	7.3	 	 	Heating,
Ventilation and Air-Conditioning.
	 	 	22	 
	 	7.4	 	 	Alterations
by Tenant.
	 	 	22	 
	 	7.5	 	 	Tenant’s Work.
	 	 	22	 
	 	7.6	 	 	Condition of
Premises.
	 	 	22	 
	 	7.7	 	 	Failure to
Maintain.
	 	 	23	 
	 	7.8	 	 	Liens.
	 	 	23	 
	ARTICLE 8	 	TAXES
	 	 	24	 
	 	8.1	 	 	Landlord’s Taxes.
	 	 	24	 
	 	8.2	 	 	Tenant’s Taxes.
	 	 	24	 
	 	8.3	 	 	Right to
Contest.
	 	 	24	 
	 	8.4	 	 	Notice of
Taxes.
	 	 	24	 
	ARTICLE 9	 	INSURANCE & LIABILITY
	 	 	25	 
	 	9.1	 	 	Landlord’s Insurance.
	 	 	25	 
	 	9.2	 	 	Tenant’s Insurance.
	 	 	26	 
	 	9.3	 	 	Placement of
Tenant’s Insurance by Landlord.
	 	 	27	 
	 	9.4	 	 	Cancellation
of Insurance.
	 	 	27	 
	 	9.5	 	 	Limitation
of Landlord’s Liability.
	 	 	27	 
	 	9.6	 	 	Indemnity.
	 	 	27	 
	 	9.7	 	 	Survival of
Obligations and Indemnities.
	 	 	28	 
	ARTICLE 10	 	DAMAGE AND DESTRUCTION
	 	 	28	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	10.1	 	 	Limited
Damage to Leased Premises.
	 	 	28	 
	 	10.2	 	 	Major Damage
to Leased Premises.
	 	 	28	 
	 	10.3	 	 	No Abatement.
	 	 	28	 
	 	10.4	 	 	Notify.
	 	 	28	 
	ARTICLE 11	 	DEFAULT
	 	 	29	 
	 	11.1	 	 	Interest.
	 	 	29	 
	 	11.2	 	 	Costs of
Enforcement.
	 	 	29	 
	 	11.3	 	 	Performance
of Tenant’s Obligations.
	 	 	29	 
	 	11.4	 	 	Events of
Default.
	 	 	29	 
	 	11.5	 	 	Remedies on
Default.
	 	 	30	 
	 	11.6	 	 	Availability
of Remedies.
	 	 	31	 
	 	11.7	 	 	Waiver.
	 	 	31	 
	 	11.8	 	 	Waiver of
Exemption and Redemption.
	 	 	31	 
	ARTICLE 12	 	ASSIGNMENT AND SUBLETTING
	 	 	31	 
	 	12.1	 	 	Assignment.
	 	 	31	 
	 	12.2	 	 	Subleasing.
	 	 	32	 
	 	12.3	 	 	Request for
Consent.
	 	 	32	 
	 	12.4	 	 	Excess Rent.
	 	 	34	 
	 	12.5	 	 	Limitation.
	 	 	34	 
	 	12.6	 	 	Documentation.
	 	 	34	 
	 	12.7	 	 	Subsequent
Assignments.
	 	 	35	 
	 	12.8	 	 	Advertising
Leased Premises.
	 	 	35	 
	ARTICLE 13	 	TRANSFERS BY LANDLORD
	 	 	35	 
	 	13.1	 	 	Sale,
Conveyance and Assignment.
	 	 	35	 
	 	13.2	 	 	Effect of
Transfer.
	 	 	35	 
	 	13.3	 	 	Subordination.
	 	 	35	 
	 	13.4	 	 	Attornment.
	 	 	35	 
	 	13.5	 	 	Effect of
Attornment.
	 	 	35	 
	ARTICLE 14	 	SURRENDER AND EXPROPRIATION
	 	 	36	 
	 	14.1	 	 	Possession.
	 	 	36	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	14.2	 	 	Tenant’s Trade Fixtures and Personal Property.
	 	 	36	 
	 	14.3	 	 	Overholding.
	 	 	37	 
	 	14.4	 	 	Expropriation.
	 	 	37	 
	ARTICLE 15	 	GENERAL
	 	 	38	 
	 	15.1	 	 	Certificates.
	 	 	38	 
	 	15.2	 	 	Entire
Agreement.
	 	 	38	 
	 	15.3	 	 	Registration.
	 	 	38	 
	 	15.4	 	 	“For
Lease” and “For Sale” Signs.
	 	 	38	 
	 	15.5	 	 	Unavoidable
Delays.
	 	 	39	 
	 	15.6	 	 	Notice.
	 	 	39	 
	 	15.7	 	 	Planning Act.
	 	 	39	 
	 	15.8	 	 	Relationship
of Parties.
	 	 	39	 
	 	15.9	 	 	Governing
Law.
	 	 	39	 
	 	15.10	 	 	Amendment.
	 	 	40	 
	 	15.11	 	 	Legal Costs.
	 	 	40	 
	 	15.12	 	 	Construction.
	 	 	40	 
	 	15.13	 	 	Captions and
Headings.
	 	 	40	 
	 	15.14	 	 	Interpretation.
	 	 	40	 
	 	15.15	 	 	Time of the
Essence.
	 	 	40	 
	 	15.16	 	 	Successors
and Assigns.
	 	 	40	 
	 	15.17	 	 	Counterparts.
	 	 	40	 
	 	15.18	 	 	Facsimile
Execution.
	 	 	40

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