Document:

xene-ex104_122.htm

 

Exhibit 10.4

SHARE OPTION AGREEMENT

THIS AGREEMENT made on [________]

AMONG:

Xenon Pharmaceuticals Inc., a company incorporated under the laws of Canada

(the “Company”)

AND:

[First Name, Last Name, Title]
(the “Optionee”)

WHEREAS:

A.The Optionee is a director, officer, employee or Consultant of the Company or of a subsidiary of the Company or of an Affiliate of the Company or a person otherwise approved by the Board of Directors as “Eligible Persons”; and

B.The Company considers that the grant to the Optionee of an option to purchase Common Shares in the capital of the Company will promote the interests of the Company by furnishing the Optionee with greater incentive to further develop and promote the business and financial success of the Company and by furthering the identity of interest of the Optionee with the shareholders of the Company generally through share ownership in the Company;

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual premises and respective covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

INTERPRETATION

	
1.1
	
Definitions

In this Agreement unless there is something in the subject matter or context inconsistent therewith, words and terms used herein will have the meanings set forth.  To the extent a capitalized term is used herein and not otherwise defined, it shall have the meaning prescribed under the Plan:

	
 
	
(1)
	
“Affiliate” has the meaning ascribed thereto under the Canada Business Corporations Act in effect on the date hereof;

	
 
	
(2)
	
“Board of Directors” means the board of directors of the Company for the time being;

	
 
	
(3)
	
“Business Day” means a day other than Saturday, Sunday and any other day which is a legal holiday in British Columbia;

	
 
	
(4)
	
“Common Shares” means common shares without par value in the capital of the Company;

	
 
	
(5)
	
“Expiry Date” means the close of business on ● or such later date as may be extended pursuant to the terms of the Plan;

	
 
	
(6)
	
“Option” means the option to purchase Common Shares granted by this Agreement;

	
 
	
(7)
	
“Option Exercise Form” has the meaning under Section 2.4 of this Agreement;

Page 1 of 12

 

 

	
 
		

	
 
	
(8)
	
“Plan” means the Amended and Restated 2014 Equity Incentive Plan of the Company adopted by the Board of Directors on April 16, 2020, as the same may from time to time be supplemented or amended and in effect;

	
 
	
(9)
	
“Retirement” means retirement as an employee and/or officer of the Company, and if there is any question on whether a cessation of employment is by way of a retirement or not, the determination by the Chief Executive Officer (or in his absence or in the case of a situation involving the cessation of employment of an executive officer of the Company, the Compensation Committee of the Board of Directors or the independent members of the Board of Directors) shall be conclusive and binding on the Optionee;

	
 
	
(10)
	
“Separate Agreement” has the meaning under Section 2.2 of this Agreement;

	
 
	
(11)
	
“subsidiary” has the meaning ascribed thereto under the Securities Act (British Columbia) as the same may from time to time be amended or re enacted.

	
1.2
	
Interpretation

For the purposes of this Agreement, except as otherwise provided:

	
 
	
(1)
	
“this Agreement” means this Share Option Agreement as it may from time to time be supplemented or amended and in effect, and which is deemed to be an Award Agreement in accordance with the Plan;

	
 
	
(2)
	
all references in this Agreement to “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement;

	
 
	
(3)
	
the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;

	
 
	
(4)
	
the headings are for convenience only and do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof;

	
 
	
(5)
	
the singular of any term includes the plural, and vice versa, the use of any term is equally applicable to any gender and, where applicable, a body corporate, the word “or” is not exclusive and the word “including” is not limiting whether or not non‐limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto;

	
 
	
(6)
	
where the time for doing an act falls or expires on a day other than a Business Day, the time for doing such act is extended to the next day which is a Business Day;

	
 
	
(7)
	
any reference to a statute is a reference to the applicable statute and to any regulations made pursuant thereto and includes all amendments made thereto and in force from time to time and any statute or regulation that has the effect of supplementing or superseding such statute or regulation; and

	
 
	
(8)
	
any other capitalized terms not defined herein but defined in the Plan shall have the meaning as set out in the Plan.

ARTICLE II

THE OPTION

	
2.1
	
Grant

Subject to the provisions of this Agreement and all the terms of the Plan, the Company hereby grants to the Optionee an option to purchase ● Common Shares at an exercise price of $ ● per share.

Page 2 of 12

 

 

	
2.2
	
Expiry of Option

Subject to the terms of the Plan (including but not limited to section 7.1(e)(v) of the Plan), the provisions of this Agreement below, and/or any employment or service agreement, offer letter, change in control severance agreement, or any other agreement that, prior to the date of this Agreement, has been entered into between the Optionee and the Company or any subsidiary of the Company or any Affiliate of the Company (such agreement, a “Separate Agreement”), the Option will expire upon the earliest to occur of the following:

	
 
	
1.
	
the Expiry Date;

	
 
	
2.
	
the date which is 90 days after the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company or any of its subsidiaries or any of its Affiliates without Cause or due to voluntary termination of employment by the Optionee (other than Retirement);

	
 
	
3.
	
the date which is 180 days from the date Optionee ceases to be an “Eligible Person” due to Retirement; and

	
 
	
4.
	
the date on which the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company or any of its subsidiaries or any of its Affiliates for Cause or material breach of the Eligible Person’s duty to the Company or any of its subsidiaries or any of its Affiliates;

	
 
	
5.
	
the date which is 365 days from the date Optionee ceases to be an “Eligible Person” due to disability; and

	
 
	
6.
	
the date which is 365 days from the date Optionee ceases to be an “Eligible Person” due to death; 

however, in the event of the death of the Optionee occurring during the time period specified in subsections 2.2(2) and 2.2(4) above, subject to earlier expiry on the Expiry Date, the Option will expire on the date which is 365 days after the date the Optionee ceased to be an “Eligible Person”.

For greater certainty for the purpose of this Agreement and the Plan, the date on which the employment of an Optionee is terminated without Cause or pursuant to voluntary resignation shall be deemed to be the last day the Optionee actively works in the business of the Company, any of its subsidiaries or any of its Affiliates (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and not during or as of the end of any period following such date during which the Optionee is in receipt of, or entitled to receive, statutory, contractual or common law notice of termination or any compensation in lieu of such notice.  

Further, and notwithstanding the above, and for greater certainty for the purposes of this Agreement and the Plan, if the Optionee’s employment is terminated by the Company, any of its subsidiaries or any of its Affiliates and prior thereto, concurrently therewith or immediately thereafter the Optionee commences employment with the Company, any of its subsidiaries or any of its Affiliates, as the case may be, the Optionee will not cease to be an “Eligible Person” and the determination of the expiry date of the Option pursuant to subsection 2.2(2) will not apply to such event.  

	
2.3
	
Nontransferability of Option

The Option is not transferable or assignable and is exercisable only by the Optionee or, in the event of the death of the Optionee or the appointment of a committee or duly appointed attorney of the Optionee or of the estate of the Optionee on the grounds that the Optionee is incapable, by reason of physical or mental infirmity, of managing his affairs, the Optionee's legal representative or such committee or attorney, as the case may be (the “Legal Representative”).

Page 3 of 12

 

 

	
2.4
	
Manner of Exercise

Subject to the terms of the Plan, the Option may be exercised by (i) delivering to the Company, prior to the expiry of the Option, an option exercise form duly executed by the Optionee or its Legal Representative (the “Option Exercise Form”) substantially in the form of Schedule “A”  completed and executed in a manner acceptable to the Company, acting reasonably, or (ii) in a manner and pursuant to such procedures as the Board of Directors may determine, which will state the election to exercise the Option (with appropriate proof of completion of such exercise procedure) (the “Alternative Exercise Procedure”). The Option Exercise Form or the completion of the Alternative Exercise Procedure (as applicable) must be accompanied by payment in full for the number of Common Shares in respect of which the Option is being exercised, in cash, bank draft, certified cheque or other form of payment acceptable to the Company, made payable to the Company at its principal place of business at the time of the exercise of the Option.

Payment of the aggregate exercise price will be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) cheque; (c) consideration received by the Company under a formal cashless exercise (which, for clarity, may include net exercise) program adopted by the Company in connection with the Plan; or (d) surrender of other Common Shares which have a Fair Market Value Price on the date of surrender equal to the aggregate exercise price of the exercised Common Shares, provided that accepting such Common Shares, in the sole discretion of the Board of Directors, will not result in any adverse accounting consequences to the Company.

At the time the Optionee exercises the Option, in whole or in part, and at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll and any other amounts payable to the Optionee by the Company, any of its subsidiaries or any of its Affiliates and otherwise agree to make adequate provision for any sums required to satisfy the U.S. and Canadian federal, provincial, state, local and foreign tax withholding obligations of the Company, its subsidiaries or its Affiliates, if any, which arise in connection with the exercise of the Option.

The Optionee may not exercise the Option unless the tax withholding obligations of the Company, any of its subsidiaries and/or any of its Affiliate are satisfied. Accordingly, the Optionee may not be able to exercise the Option when desired even though the Option is vested, and the Company will have no obligation to issue a certificate for such Common Shares, unless such obligations are satisfied.

	
2.5
	
Issuance of Shares

The Company will have no obligation to issue Common Shares upon the exercise of the Option unless the Board of Directors is satisfied that the issuance of such Common Shares to the Optionee will be exempt from all registration or qualification requirements of applicable securities laws and will be permitted under the applicable rules and regulations of all regulatory authorities to which the Company is subject, including any stock exchange or other organized market on which the Common Shares may from time to time be listed or posted for trading.  In particular, if required by any regulatory authority to which the Company is subject, including any stock exchange or other organized market on which the Common Shares may from time to time be listed or traded, shareholder approval to the grant of this Option must be obtained prior to the exercise of the Option or to the amendment of this Agreement.

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2.6
	
Compliance with Laws

The Board of Directors may from time to time take such steps and require such documentation from the Optionee which in its opinion is necessary or desirable to ensure compliance with all applicable laws.  The Optionee acknowledges that the Company may share any such documentation and/or any other information of the Optionee with third parties, including without limitation the Company’s transfer agent, the Company’s equity administrator, the Canadian Revenue Agency (CRA) and the Internal Revenue Service (IRS) to the extent required to grant, manage, exercise or cancel the options or as required by law. The Board of Directors may also from time to time take such steps which in its opinion are necessary or desirable to restrict the transferability of any Common Shares acquired on the exercise of any Option in order to ensure such compliance, including the endorsement of a legend on any certificate representing Common Shares acquired on the exercise of the Option to the effect that such Common Shares may not be offered, sold or delivered except in compliance with the applicable securities laws and regulations of Canada or the United States.

	
2.7
	
Delivery of Share Certificates

Subject to Sections 2.5 and 2.6, the Company will as soon as practicable after receipt of the Option Exercise Form or the confirmation of the completion of the Alternative Exercise Procedure and the payment referred to in Section 2.4 issue and deliver a certificate or certificates representing the Common Shares so purchased.

	
2.8
	
Vesting

Unless otherwise specified by the Board in the terms of grant and subject to the terms of the Plan and any Separate Agreement (if applicable), the Common Shares subject to the Options granted under this Agreement will vest and be available to the Optionee to purchase (prior to expiry of the Options as provided for in Section 2.2 above) as follows:

	
 
	
(1)
	
1⁄4 (one quarter) on first anniversary [NTD: if new employee on 1st Anniversary, if Annual Grant on specific date (Jan 1)] of the grant of the Option; and

	
 
	
(2)
	
1/48 (one forty-eighth) on a monthly basis over the three (3) years following the [first anniversary] [or specific date] of the grant of the Option, in equal amounts, on the last day of each month;

provided that: 

	
 
	
(3)
	
if the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company or any of its subsidiaries or any of its Affiliates without Cause or alleged constructive dismissal or due to voluntary termination by the Optionee (other than Retirement), all Common Shares subject to Options granted under this Agreement which are not yet available for purchase as provided for above (the “Unvested Options”) will immediately be cancelled on the effective date of such termination, which shall be deemed to be the last day the Optionee actively works in the business of the Company, any of its subsidiaries or any of its Affiliates (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and no statutory, contractual or common law notice entitlement or any entitlement to compensation in lieu of such notice shall operate to extend the vesting of Options past said deemed termination date;

	
 
	
(4)
	
if the Optionee ceases to be an “Eligible Person” due to voluntary termination of employment by the Optionee (other than Retirement), all Unvested Options will immediately be cancelled on the effective date of such termination;

	
 
	
(5)
	
if the Optionee ceases to be an “Eligible Person” due to termination by the Company, any of its subsidiaries or any of its Affiliates of the Optionee’s employment for Cause, all Unvested Options will immediately be cancelled on the date when the Company, its subsidiary or its Affiliate, as the case may be, notifies the Optionee of such termination;

Page 5 of 12

 

 

	
 
	
(6)
	
if the Optionee ceases to be an “Eligible Person” due to Retirement, all Unvested Options will immediately be cancelled on the date of Retirement unless the Board of Directors has expressly granted continued vesting after Retirement in accordance with the schedule provided for in Subsections 2.8(1), (2) and (3) or such other schedule at the Board of Directors’ discretion;

	
 
	
(7)
	
if the Optionee ceases to be an “Eligible Person” due to disability or before the expiry of the period for exercise as provided for in Subsections 2.2(2) and 2.2(4) above, all Unvested Options will be immediately be cancelled on the date the Optionee ceases to be an Eligible Person; and

	
 
	
(8)
	
if the Optionee dies before ceasing to be an “Eligible Person” or before the expiry of the period for exercise as provided for in Subsections 2.2(2) and 2.2(4) above, all Unvested Options will be immediately cancelled on the date of death.

Notwithstanding the above, the vesting of the Common Shares subject to the Options shall be subject to any vesting acceleration provisions applicable to this Option contained in the Plan and/or any Separate Agreement.

Further, and notwithstanding the above, and for greater certainty for the purposes of this Agreement and the Plan, if the Optionee’s employment is terminated by the Company, any of its subsidiaries or any of its Affiliates and prior thereto, concurrently therewith or immediately thereafter the Optionee commences employment with the Company, any of its subsidiaries or any of its Affiliates, as the case may be, the Optionee will not cease to be an “Eligible Person” and the vesting of the Option will not change as a result of such event.

Further, and notwithstanding the above, the Board of Directors may at its discretion accelerate the period of time in which any Unvested Options may become exercisable, provided that the Board of Directors determines that such acceleration is appropriate and in the best interest of the Company in the circumstances and it is agreed and acknowledged that there is no obligation on the Board of Directors to exercise such discretion nor shall the Board of Directors be required to provide reasons for exercise or non-exercise of such discretion.

ARTICLE III

ADJUSTMENTS

	
3.1
	
Adjustments

This Agreement will be amended by the Company unilaterally (without the need of consent or notice to the Optionee) upon the occurrence of the events referred to in Section 10.3(a) of the Plan so that the rights of the Optionee hereunder, including the number of Common Shares that may be purchased on the exercise of the Option and the Exercise Price at which such Common Shares may be purchased, will be adjusted in accordance with the provisions set forth in the Plan.  Successive adjustments will be made in the case of the occurrence of more than one such event as provided for therein, but, in the case of each such event, only from and after the occurrence of such event.  Until the occurrence of such event, the rights of the Optionee hereunder, including the number of Common Shares that may be purchased on the exercise of the Option and the Exercise Price at which such Common Shares may be purchased, will remain unamended as set out herein.

ARTICLE IV

COVENANTS AND REPRESENTATIONS

	
4.1
	
Representations and Covenants of the Company

	
 
	
(1)
	
The Company hereby covenants that it will reserve or cause to be reserved for allotment sufficient Common Shares for issue to the Optionee of all Common Shares which are issuable from time to time under the Option.

Page 6 of 12

 

 

	
 
	
(2)
	
The Company represents that the Optionee is a bona fide employee of the Company or of a subsidiary of the Company or of an Affiliate of the Company or an individual employed by a person which is providing management services to the Company (other than investor relations) or of a subsidiary of the Company or of an Affiliate of the Company or a person who is approved as an “Eligible Person” by the Board of Directors.

	
4.2
	
Representations and Covenants of the Optionee

The Optionee hereby represents and covenants that:

	
 
	
(1)
	
the Optionee is a director, officer, employee or Consultant of the Company or of a subsidiary of the Company or of an Affiliate of the Company or a person who is approved as an “Eligible Person” by the Board of Directors on the date of grant;

	
 
	
(2)
	
the Optionee’s participation in the Plan is voluntary and the Optionee has not been induced to enter into this Agreement by the expectation of employment or continued employment with the Company or any subsidiary of the Company or any Affiliate of the Company or any person providing management services to the Company or any subsidiary of the Company or any Affiliate of the Company;

	
 
	
(3)
	
the Optionee is aware that the grant of the Option and the issuance by the Company of Common Shares thereunder are exempt from the obligation under applicable securities laws to file a prospectus or other registration document (other than a registration statement on Form S-8 with the United States Securities and Exchange Commission) qualifying the distribution of the Options or the Common Shares to be distributed thereunder under any applicable securities laws and if such exemption for any reason becomes unavailable, the obligation of the Company to grant any Options or issue any Common Shares upon the exercise of an Option will cease; 

	
 
	
(4)
	
if the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company, any of its subsidiaries or any of its Affiliates without cause or alleged constructive dismissal or due to voluntary termination by the Optionee (other than Retirement), the Optionee will not make any claims for continued vesting of Unvested Options past the effective date of such termination, which shall be deemed to be the last day the Optionee actively works in the business of the Company, any of its subsidiaries or any of its Affiliates (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and will not make any claims for compensation in lieu of statutory, contractual or common law notice or damages relating thereto;

	
 
	
(5)
	
if the Optionee or the Legal Representative of the Optionee exercises the Option, the Optionee or the Legal Representative, as the case may be, will prior to and upon any sale or disposition of any Common Shares purchased upon the exercise of the Option, comply with all applicable securities laws and all applicable rules and regulations of all regulatory authorities to which the Company is subject, including any stock exchange or other organized market on which the Common Shares may be listed or posted for trading, and will not offer, sell or deliver any of such Common Shares, directly or indirectly, in the United States or to any citizen or resident of, or any company, partnership or other entity created or organized in or under the laws of, the United States, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, except in compliance with the securities laws of the United States; and

	
 
	
(6)
	
the Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities and the Optionee will not make any claim against the Company, any of its subsidiaries, any of its Affiliates or any of their respective officers, directors or employees related to tax liabilities arising from the Options or any of the Optionee’s other compensation.

Page 7 of 12

 

 

	
 
		

ARTICLE V

MISCELLANEOUS

	
5.1
	
Special Provisions for Incentive Share Options

	
 
	
(1)
	
For U.S. taxpayers, if the Option is designated in this Agreement as an Incentive Share Option, this Option is intended to qualify as an Incentive Share Option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  However, if this Option is intended to be an Incentive Share Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it will be treated as a Nonqualified Share Option. Further, if for any reason this Option (or portion thereof) will not qualify as an Incentive Share Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified Share Option granted under the Plan.  In no event will the Board of Directors, the Company, any of its subsidiaries, any of its Affiliates, any parent or any of their respective employees or directors have any liability to the Optionee (or any other person) due to the failure of the Option to qualify for any reason as an Incentive Share Option.

	
 
	
(2)
	
Further, if the Option granted to the Optionee herein is an Incentive Share Option, and if the Optionee sells or otherwise disposes of any of the Common Shares acquired pursuant to the Incentive Share Option on or before the later of (i) the date two (2) years after the grant date, or (ii) the date one (1) year after the date of exercise, the Optionee will immediately notify the Company in writing of such disposition. The Optionee agrees that the Optionee may be subject to U.S. and Canadian federal, provincial, state, local and foreign income tax withholding by the Company on the compensation income recognized by the Optionee.

	
5.2
	
Section 409A

Under Code Section 409A, an option that vests after December 31, 2004 (or that vested on or prior to such date but which was materially modified after October 3, 2004) that was granted with a per share exercise price that is determined by the U.S. Internal Revenue Service (the “IRS”) to be less than the fair market value of a share on the date of grant (a “Discount Option”) may be considered “deferred compensation.”  A Discount Option may result in (i) income recognition by the Optionee prior to the exercise of the option, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges.  The Discount Option may also result in additional state income, penalty and interest charges to the Optionee. The Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the Exercise Price per Common Share of this Option equals or exceeds the fair market value of a Common Share on the grant date in a later examination.  The Optionee agrees that if the IRS determines that the Option was granted with an Exercise Price per Common Share that was less than the Fair Market Value of a Common Share on the grant date, the Optionee will be solely responsible for the Optionee’s costs related to such a determination.

	
5.3
	
Notices

Any notice or other communication required or permitted to be delivered under this Agreement will be considered delivered only if in writing and when it is actually delivered (which delivery may be by telex, telecopy or other telecommunications device) to the attention of the party to whom it is intended at the principal business address of the Company, if addressed to the Company, or to the address specified above, if to the Optionee, or to such other address as such party may designate to the other party by notice in writing delivered in accordance with this Section.

	
5.4
	
Interpretation

Any question arising as to the interpretation of this Agreement will be determined by the Board of Directors and, absent manifest error, such determination will be conclusive and binding on the Company and the Optionee.

Page 8 of 12

 

 

	
5.5
	
Further Assurances

Each of the parties hereto will, on demand by the other party hereto, execute and deliver all such further documents and instruments and do all such further acts and things as the party may either before or after the execution and delivery of this Agreement reasonably request to evidence, carry out and give full effect to the terms, conditions, intent and meaning of this Agreement.

	
5.6
	
Severability

If any provision of this Agreement is determined to be void, illegal or unenforceable, such provision will be construed to be separate and severable from this Agreement and will not impair the validity, legality or enforceability of any other provision of this Agreement and the remainder of this Agreement will continue to be binding on the parties hereto as if such provision had been deleted.

	
5.7
	
No Assignment

Neither this Agreement nor the Option may be assigned, transferred or charged in whole or in part by the Optionee, and any purported assignment, transfer or charge shall cause this Agreement and the Option to lapse forthwith and be null and void after that time.

	
5.8
	
Amendment

No amendment shall be made to this Agreement unless all applicable rules and regulations of all regulatory authorities to which the Company is subject have been complied with.

	
5.9
	
Burden and Benefit

This Agreement will be binding upon and will enure to the benefit of the Company and its successors and assigns and the Optionee and, if applicable, his Legal Representative.

	
5.10
	
Time

Time will be of the essence in this Agreement.

	
5.11
	
Governing Law and Jurisdiction

This Agreement and all matters arising hereunder will be governed by and construed in accordance with the laws of the Province of British Columbia.  Subject to any written agreement between the parties, the parties will submit all their disputes arising out of or in connection with this Agreement to the exclusive jurisdiction of the courts of British Columbia.

	
5.12
	
Electronic Delivery and Acceptance

The Company may, in its sole discretion, decide to deliver any documents related to Options awarded under the Plan or future options that may be awarded under the Plan by electronic means or request the Optionee’s consent to participate in the Plan by electronic means, including, without limitation, by posting them on a website maintained by the Company or a third party under contract with the Company or through such methods indicated in this Agreement.  The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

If the Company posts such documents on a website, it shall notify Participant by e-mail or such other reasonable manner as then determined by the Company.

Page 9 of 12

 

 

	
5.13
	
Incorporation of the terms of the Plan

This Agreement shall be deemed to have incorporated all the terms of the Plan and the Options granted hereunder shall be subject to the terms of the Plan.  In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall govern.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

		
	
XENON PHARMACEUTICALS INC.

	
 

	
By:
	
 

	
 
	
Title: Corporate Secretary

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
[First Name Last Name]

Page 10 of 12

 

 

 

SCHEDULE “A”

 

OPTION EXERCISE FORM
FOR OPTIONS UNDER THE AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

(For options granted post November 2014)

		
	
TO:
	
Xenon Pharmaceuticals Inc.
200-3650 Gilmore Way

Burnaby, BC, V5G 4W8

 

 

The undersigned hereby irrevocably gives notice, pursuant to the Amended and Restated 2014 Equity Incentive Plan of Xenon Pharmaceuticals Inc. (the “Company”), as the same may, from time to time, be supplemented or amended and in effect (the “Plan”) and the share option agreement(s) between the Company and the undersigned as listed on Exhibit A hereto (the “Share Option Agreement(s)”), of the exercise of the option(s) (the “Option(s)”) granted to the undersigned pursuant to the Plan and the Share Option Agreement(s) and hereby irrevocably agrees to purchase common shares as listed in Exhibit A by way of:

		
	
[Choose (check off) one of the following]
	
□  Net exercise OR

	
 
	
□  Cash exercise

 

		
	
[Complete the following, as applicable]
	
 

	
Total exercise price enclosed herewith: $____________ 

	
Total taxes $____________
	
□  Enclosed herewith OR

	
 
	
□  Deducted from next paycheque

	
 
	
□  If permitted by the Company, withholding from proceeds of a sale of common shares acquired upon the exercise of the Option arranged by the Company (on the undersigned’s behalf pursuant to this authorization without further consent)

The undersigned tenders to the Company herewith an amount equal to the total exercise price for the common shares being purchased plus any amounts necessary to satisfy the tax withholding obligations in connection with such purchase. 

The undersigned directs the Company to issue the Direct Registration Statement evidencing the common shares in the name of the undersigned to be sent electronically to the undersigned to the following e-mail address:  

	
	
 

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Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the common shares, no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the common shares subject to the Option(s), notwithstanding the exercise of the Option(s).  The common shares so acquired will be issued in the name so designated above as soon as practicable after exercise of the Option(s).  No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 10.3(a) of the Plan.

The undersigned understands that the undersigned may suffer adverse tax consequences as a result of the purchase or disposition of the common shares.  The undersigned represents that the undersigned has consulted with any tax consultants the undersigned deems advisable in connection with the purchase or disposition of the common shares and that the undersigned is not relying on the Company for any tax advice.

This notice and all matters arising hereunder will be governed by and construed in accordance with the laws of the Province of British Columbia.  Subject to any written agreement between the parties, the parties will submit all their disputes arising out of or in connection with this notice to the exclusive jurisdiction of the courts of British Columbia.

DATED the ______ day of ____________, ______

			
	
 
	
 
	
 

	
Signature of Witness
	
 
	
Signature of Participant

	
 

 
	
 
	
 

	
Name of Witness (please print)
	
 
	
Name of Participant (please print)

 

Return the Option Exercise Form, along with (as applicable) your certified cheque, bank draft or money order to:

Xenon Pharmaceuticals Inc.

200 - 3650 Gilmore Way, Burnaby, B.C. 

Canada  V5G 4W8

Page 12 of 12xene-ex1033_6.htm

Exhibit 10.33

LEASE EXTENSION AND MODIFICATION AGREEMENT

 

THIS AGREEMENT MADE EFFECTIVE AS OF OCTOBER 5, 2020

BETWEEN

REDSTONE ENTERPRISES LTD.

(“Landlord”)

AND

XENON PHARMACEUTICALS INC.

(“Tenant”)

 

 

WHEREAS:

	
A.
	
By a Lease dated in 2001 (the “Original Lease”) between Discovery Parks Incorporated  (the “Original Landlord”) and Xenon Genetics Inc. (the “Original Tenant”), the Original Landlord demised unto the Original Tenant, for and during a period of Ten (10) years expiring on April 14, 2011 (the “Original Term”), certain space located at 3650 Gilmore Way, Burnaby, British Columbia (the “Original Premises”), comprising approximately 56,776 square feet of rentable area; more or less, as more particularly described in the Original Lease;

	
B.
	
Concert Real Estate Corporation (the “Second Landlord”) was the immediate successor in interest to the Original Landlord;

	
C.
	
The Tenant is the successor in interest to the Original Tenant;

	
D.
	
By a Lease Extension and Modification Agreement dated November 8, 2010 (the “First Modification”) between the Second Landlord and Tenant, the parties agreed to extend the Original Term of the Lease by Four (4) months and Sixteen (16) days, expiring August 31, 2011 (the “First Extended Term”), as more particularly described in the First Modification;

	
E.
	
By a Lease Extension and Modification Agreement dated February 7, 2011 (the “Second Modification”) between the Second Landlord and Tenant, the parties agreed to extend the First Extended Term of the Original Lease by an additional Four (4) months, expiring December 31, 2011 (the “Second Extended Term”), as more particularly described in the Second Modification;

	
F.
	
By a Lease Extension and Modification Agreement dated June 1, 2011 (the “Third Modification”) between the Second Landlord and the Tenant, the parties agreed to extend the Second Extended Term of the Original Lease by an additional Three (3) months, expiring March 31, 2012 (the “Third Extended Term”), as more particularly described in the Third Modification;

	
G.
	
By a letter dated September 30, 2011 (the “Surrender Letter”) the Tenant notified the Second Landlord that the Tenant had exercised its right to surrender a portion of the Original Premises, as more particularly described in the Surrender Letter;

 

 

	
H.
	
By a Lease Extension and Modification Agreement dated October 27, 2011 (the “Fourth Modification”) between the Second Landlord and the Tenant, the parties agreed to modify the rentable area of the Original Premises to approximately 34,000 square feet, modify the building to include common area for multitenancy, and to extend the Third Extended Term of the Original Lease by Ten (10) years (the “Fourth Extended Term”) expiring on March 31, 2022, as more particularly described in the Fourth Modification;

	
I.
	
By a Lease Modification Agreement dated July 18, 2013 (the “Fifth Modification”) between the Second Landlord and the Tenant, the parties agreed to amend the rentable area of the lease to 30,600 square feet, as more particularly described in the Fifth Modification; 

	
J.
	
The Landlord is the successor in interest to the Second Landlord; 

	
K.
	
By a Lease Modification Agreement dated July 18, 2014 (the “Sixth Modification”) between the Landlord and the Tenant, the parties agreed to expand the Original Premises to include approximately 3,000 square feet of rentable area designated as Unit 310A, and amend the total rentable area of the lease to 33,600 square feet, as more particularly described in the Sixth Modification;

	
L.
	
By a Lease Modification Agreement dated June 26, 2015 (the “Seventh Modification”) between the Landlord and the Tenant, the parties agreed to expand the Original Premises to include approximately 2,737 square feet of rentable area designated as Unit 310B, and amend the total rentable area of the lease to 36,337 square feet, as more particularly described in the Seventh Modification;

	
M.
	
By a Lease Modification Agreement dated December 14, 2015 (the “Eighth Modification”) between the Landlord and the Tenant, the parties agreed to expand the Original Premises to include approximately 4,995 square feet of rentable area designated as Unit 310C, and amend the total rentable area of the lease to 41,332 square feet, as more particularly described in the Eighth Modification;

	
N.
	
The Original Lease, the Surrender Letter and the First Modification through Eighth Modification, collectively will be referred to herein, as the Lease; and

	
O.
	
The Landlord and the Tenant have agreed to expand the Original Premises and extend the Fourth Extended Term of the Lease in the manner set out herein (the “Agreement”).

THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties hereto, the parties agree as follows:

	
1.
	
For the purposes of this Agreement and unless there is a definition specifically herein contained, any words, terms or phrases that are defined in the Lease shall have the same meaning herein.

	
2.
	
Unit 310C Term: The Landlord and Tenant hereby agree to extend the term of the Lease for Unit 310C, commencing April 1, 2021 and expiring coterminously with the remaining Fourth Extended Term, being March 31, 2022 (the “Unit 310C Extended Term”), on and subject to the terms of the Lease, except as amended herein. The Basic Rent for the Unit 310C Extended Term shall be in accordance with the Basic Rent outlined in the last year of the term of the Eighth Modification, being $16.50 per square foot of rentable area per annum. The First Extended Term, the Second Extended Term, the Third Extended Term, the Fourth Extended Term and the Unit 310C Extended Term, collectively will be referred to herein, as the “Term”. For greater certainty, the Term for the Original Premises, consisting of approximately 41,332 square feet of rentable area, shall expire coterminously on March 31, 2022.

 

 

	
3.
	
Expansion Premises: The Landlord and Tenant hereby agree to expand the Original Premises of the Lease to include approximately  3,888 square feet of rentable area, designated as Unit 110 (the “Unit 110 Premises”) commencing December 1, 2020 and expiring coterminously with the Fourth Extended Term, being March 31, 2022 (the “Unit 110 Premises Term”), and approximately 6,184 square feet of rentable area, designated as Unit 330  (the “Unit 330 Premises”) commencing January 1, 2021 and expiring coterminously with the Fourth Extended Term, being March 31, 2022 (the “Unit 330 Premises Term”), together approximately 10,072 square feet of rentable area, as shown on the attached Schedule “A”,  on and subject to the terms of the Lease, except as amended herein.

	
4.
	
Basic Rent: For the remainder of the Term, the Basic Rent payable for the Unit 110 Premises and the Unit 330 Premises will be as follows on the first day of each and every calendar month: 

				
	
Unit 110 Premises Term 
(3,888 square feet)
	
Per Sq. Ft.
	
Per Annum
	
Monthly Installments

	
From December 1, 2020 up to and including March 31, 2022
	
$ 18.50
	
$ 71,928.00
	
$ 5,994.00

	
 
	
 
	
 
	
 

	
Unit 330 Premises Term
(6,184 square feet)
	
Per Sq. Ft.
	
Per Annum
	
Monthly Installments

	
From January 1, 2021 up to and including March 31, 2022
	
$ 18.50
	
$ 114,404.00
	
$ 9,533.67

	
 
	
a.
	
For greater certainty, the Tenant shall also pay all Additional Rent and any and all other amounts due as required, in accordance with the Lease, throughout the Term for the Unit 110 Premises and the Unit 330 Premises.

 

	
5.
	
Fifth Extended Term: The Landlord and Tenant hereby agree to extend the Term of the Lease for the Original Premises, Unit 110 Premises and Unit 330 Premises (collectively, hereinafter referred to as the “Leased Premises” consisting of 51,404 square feet of rentable area) by Three (3) months commencing on April 1, 2022 and ending on June 30, 2022 (the “Fifth Extended Term”) on and subject to the terms of the Lease, except as amended herein.

	
6.
	
Basic Rent: For the Fifth Extended Term, the Basic Rent payable for the Leased Premises will be as follows on the first day of each and every calendar month: 

				
	
Unit 110 Premises Term 
(3,888 square feet)
	
Per Sq. Ft.
	
Per Annum
	
Monthly Installments

	
From April 1, 2022 up to and including June 30, 2022
	
$ 18.50
	
$ 71,928.00
	
$ 5,994.00

	
 
	
 
	
 
	
 

	
Unit 330 Premises Term
(6,184 square feet)
	
Per Sq. Ft.
	
Per Annum
	
Monthly Installments

	
From April 1, 2022 up to and including June 30, 2022
	
$ 18.50
	
$ 114,404.00
	
$ 9,533.67

	
 
	
 
	
 
	
 

	
Original Premises
(41,332 square feet)
	
Per Sq. Ft.
	
Per Annum
	
Monthly Installments

	
From April 1, 2022 up to and including June 30, 2022
	
$ 21.00
	
$ 867,972.00
	
$ 72,331.00

 

 

 

	
 
	
a.
	
For greater certainty, the Tenant shall also pay all Additional Rent and any and all other amounts due as required, in accordance with the Lease, throughout the Fifth Extended Term for the Leased Premises.

 

	
7.
	
Condition of Premises: Save and except for any of the Landlord's obligations to maintain and repair the Original Premises, as set out in the Lease, the Tenant acknowledges that the Landlord is leasing the Unit 110 Premises and the Unit 330 Premises to the Tenant on an “as is, where is” basis, that the Landlord has no obligation to make or carry out any improvements, alterations or other work to prepare the Unit 110 Premises or the Unit 330 Premises for occupancy by the Tenant and that the Landlord has no obligation to provide any tenant improvement allowance, free rent or other inducement to the Tenant or otherwise with respect to the Term, or Fifth Extended Term, of the Lease provided for in this Agreement, save for those items outlined in Schedule “B” (“Special Provisions”). 

	
8.
	
Tenant Rights: Section (2)(t), 33, 34 and 35 of the Fourth Modification, outlining new articles of the Lease being Article 33 (First Opportunity to Lease), 34 (Option to Renew) and 35 (Option To Terminate), along with Section 6 of the Eighth Modification, outlining Article 35 of the Lease (Rights of Termination) are hereby deleted in their entirety and of no further force and effect. The Landlord and Tenant hereby confirm the Tenant has no claim, option, right of termination or other surrender right(s) within the Lease, save for those outlined in Special Provisions on the attached Schedule “B”.

	
9.
	
For clarity, the Landlord and the Tenant confirm and agree that the Allowance referenced in clause 5 of the Fourth Modification, clause 10 of the Fifth Modification and clause 7 of the Sixth Modification is applicable to any Tenant’s Leasehold Improvements that the Tenant may make to any portion of the Leased Premises, including Units 110 and 330, throughout the current Term, the Fifth Extended Term and any renewals per Section 3 of Schedule B attached herein, subject to the terms and conditions of the Lease. 

	
10.
	
Parking: The Landlord and Tenant agree, subsequent to the parking allotment outlined in Article 36 of the Lease, as modified by Section 2(t) of the Fourth Modification, and further modified under Section 7 of the Fifth Modification for the Original Premises, the Tenant shall be provided ten (10) additional parking stalls effective upon November 1, 2020 for the Unit 110 Premises, and fifteen (15) additional stalls effective upon January 1, 2021 for the Unit 330 Premises, both free of charge for the remainder of the Fourth Extended Term. 

Effective on the commencement of the Fifth Extended Term, being April 1, 2022, the Landlord and Tenant agree Article 36 of the Lease, as modified by Section 2(t) of the Fourth Modification, and further modified under Section 7 of the Fifth Modification shall be deleted and replaced with the following:

“36.0 Parking

36.1 The Tenant shall be provided ninety-five (95) parking stalls free of charge for the balance of the Term, expiring on June 30, 2022. The Tenant may designate underground parking spaces allocated to the Tenant for the use of storage areas or other uses and may fence these off or construct demising walls, subject to the Landlord’s approval (such approval not to be unreasonably withheld), compliance with building codes, and subject to not impeding access to the balance of the parking stalls. The Tenant covenants that all fencing or demised walls for such storage areas shall be removed at the Tenant’s sole cost and expense prior to the Lease expiry and all damages caused by such removal shall be repaired by the Tenant at its sole cost and expense.”

	
11.
	
The parties confirm and ratify the terms and conditions contained in the Lease as amended by this Agreement.

	
12.
	
This Agreement will, from the date of this Agreement, be read and construed together with the Lease, and this Agreement, as amended hereby, shall continue in full force and effect for the remainder of the Term of the Lease in accordance with the terms thereof and hereof.

 

 

	
13.
	
This Agreement will enure to the benefit of and be binding upon the heirs, executors, administrators, successors and permitted assigns of the parties.

	
14.
	
This Agreement may be executed and delivered (including by facsimile or electronic transmission) in any number of counterparts, each of which when delivered shall be deemed to be an original and all of which together shall constitute one and the same document. 

	
15.
	
The Landlord acknowledges that it is holding a Security Deposit in the amount of $89,964.00, in accordance with the Lease.

	
16.
	
Time is of the essence in this Agreement.

This Agreement shall be open for acceptance until 5:00 p.m. PST on Friday, October 9, 2020 after which time, if not accepted, it will be terminated.  This Agreement may be accepted by signing and returning the duplicate copies hereof by email to [OMITTED]

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

REDSTONE ENTERPRISES LTD.
(Landlord)

		
	
By:
	
/s/ Ali Nanji

	
 
	
 

	
Name:
	
Ali Nanji

	
 
	
 

	
Title:
	
President

 

		
	
By:
	
/s/ Brodie Cain

	
 
	
 

	
Name:
	
Brodie Cain

	
 
	
 

	
Title:
	
Director of Leasing

 

 

XENON PHARMACEUTICALS INC. 

(Tenant)

 

		
	
By:
	
/s/ Emmanuelle Vallee

	
 
	
Authorised Signatory for and on behalf of 

XENON PHARMACEUTICALS INC.

 

	
Name:
	
Emmanuelle Vallee

	
 
	
 

	
Title:
	
VP, Legal Affairs

 

		
	
By:
	
/s/ Ian Mortimer

	
 
	
Authorised Signatory for and on behalf of 

XENON PHARMACEUTICALS INC.

 

	
Name:
	
Ian Mortimer

	
 
	
 

	
Title:
	
President & CFO

 

 

 

Schedule “A”

 

Unit 110 Premises & Unit 330 Premises

 

 

 

 

Schedule “B”

Special Provisions

	
 
	
1.
	
Landlord’s Work.  The Unit 110 Premises, and Unit 330 Premises will be delivered in an as-is where-is condition save for the following which shall be done by the Landlord at the Landlord’s sole cost and expense, using reasonable commercial efforts and subject to city timeline and permitting process prior to the commencement of the Unit 110 Premises, and Unit 330 Premises, respectively, and completed to all applicable building codes. 

Notwithstanding anything contained herein, delays caused by the Tenant shall be to the Tenant’s account and shall not require the Landlord to adjust any dates as they relate to the Fixturing Period, or commencement of the Unit 110 Premises Term, and Unit 330 Premises Term, unless the delay has resulted in the Landlord not being able to complete the Turnkey Improvements on time:

	
 
	
a)
	
Ensure all mechanical, HVAC, life safety and electrical systems are functional and in good working condition;

	
 
	
b)
	
Replace any damaged or stained ceiling tiles with new or like new ceiling tiles; and

	
 
	
c)
	
Repair any damage caused by Landlord’s Work.

 

	
 
	
2.
	
Tenant Improvement Allowance

If and so long as the Conditions of Advance set out below are satisfied, the Landlord shall provide, as an inducement to enter into this Agreement, a tenant improvement allowance (the "Tenant Improvement Allowance"), in the following amount and upon the following terms and conditions: 

		
	
Amount:
	
$7,500 plus applicable taxes, to be fully utilised by no later than October 31, 2021.

	
Payment Date:
	
Within Thirty (30) business days after the date that all of the Conditions of Advance have been completed or satisfied.

	
Payment Method:
	
Direct payment to the Tenant or as it further directs.

Conditions of Advance:

	
 
	
1.
	
This Agreement has been executed and delivered by the Tenant in form acceptable to the Landlord, and the Tenant is not in default thereof.

	
 
	
2.
	
The Term has commenced and the Tenant has taken occupancy of the Premises in accordance with the Lease.

	
 
	
3.
	
All necessary permits and approvals for all aspects of the Tenant’s Work have been obtained.

	
 
	
4.
	
The occupancy permit has been obtained from the Authority having jurisdiction.

	
 
	
5.
	
The Tenant has provided the Landlord with an invoice for the Tenant Improvement Allowance which includes its current and valid tax registration number(s) and all necessary breakdowns and backup information as required by the Landlord.

	
 
	
6.
	
The Tenant has completed all the Tenant’s Work in strict accordance with the requirements of the Lease and the plans and specifications approved by the Landlord.

	
 
	
7.
	
There are no liens, claims or charges outstanding with respect to the Tenant's Work and sufficient evidence thereof is provided to the Landlord.

	
 
	
8.
	
The Tenant has executed and delivered a statutory declaration of a senior officer as to the actual cost of The Tenant's Work and confirming the payment thereof in full.

 

 

 

The Tenant Improvement Allowance shall be subject to deduction of any amounts then owing by the Tenant to the Landlord. The Landlord shall be entitled to withhold a portion of the amount to be advanced by it in order to comply with the provisions of the Construction Lien Act of the Province in which the Building is situated, or similar legislation or any worker's compensation or occupational health and safety legislation and shall advance such withheld portion to the Tenant when evidence of payment and compliance are presented to the Landlord or at the expiration of the lien period so long as it has received no notice of a claim for lien. If notice of a claim for lien has been received by the Landlord referable to the Tenant's Work prior to payment of the amounts to be paid to the Tenant, the Landlord shall be entitled to withhold payment until such claim for lien has been completely vacated. 

The Tenant acknowledges that payment of the Tenant Improvement Allowance is granted pursuant to the Landlord's interest in having a reliable non-defaulting tenant for the whole of the Term. Accordingly, if at any time during the Term an event of default under the Lease shall have occurred and the Landlord exercises any rights or remedies related thereto, or the Tenant repudiates the Lease or vacates or abandons the Premises, the Tenant Improvement Allowance shall be deemed to have been wrongfully obtained by the Tenant and shall be revoked with effect from the commencement date and the full amount of the Tenant Improvement Allowance shall become immediately due and payable as a debt due to the Landlord on the day immediately preceding the occurrence of the event of default or the day immediately preceding the expiration of any cure period and such amounts shall be collectible in the same manner as Rent due under the Lease. For greater certainty, a portion of or whole thereof, of the Tenant Improvement Allowance, cannot be utilised for Tenant’s furniture, fixtures, appliances, cabling and equipment associated with its business, or applied to Rent owing by the Tenant to the Landlord. 

3.Unit 110 Fixturing Period.  Provided that the Tenant is not in default under the Lease and has provided to the Landlord a certificate of insurance as required per the Lease, the Tenant shall be entitled to a fixturing period (the “Fixturing Period”) to install its equipment and furnishings and/or to occupy the Unit 110 Premises commencing on October 1, 2020. During the Fixturing Period, no Basic Rent or Additional Rent shall be charged to the Tenant.  Upon completion of the Tenant’s fixturing, the Tenant shall be permitted to occupy the Premises and commence business operations and shall not be responsible for payment of any Basic Rent or Additional Rent, save for utilities, janitorial and garbage removal, until the commencement of the Unit 110 Premises Term, provided the Tenant complies with all the terms and conditions of the Lease.

	
 
	
4.
	
Option to Extend

So long as:

	
 
	
a)
	
the Tenant is not and has not been in default under the Lease;

	
 
	
b)
	
the Lease has not previously been terminated;

	
 
	
c)
	
no Transfer affecting the Tenant, the Leased Premises or the Lease has occurred; and

	
 
	
d)
	
the Tenant gives to the Landlord written notice of its intention to extend the Fifth Extended Term of the Lease not less than six (6) months prior to the expiry of the Fifth Extended Term,

The Tenant shall have two (2) options to extend the Fifth Extended Term of the Lease for a five (5) year period (the “Option Term”) exercisable by Tenant on either:

	
 
	
(i)
	
The entire Lease Premises, consisting of approximately 51,404 square feet of rentable area;

	
 
	
(ii)
	
The entire first (1st) and entire second (2nd) floor premises, and the IT Room and Unit 200, consisting of approximately 34,488 square feet of rentable area; OR

	
 
	
(iii)
	
The entire first (1st) floor premises, the entire second (2nd) floor premises, and the then available portion of the third (3rd) floor premises. consisting of not less than 37,225 square feet of total rentable area. Any demising of the third (3rd) floor shall be subject to Landlord’s prior approval, acting reasonably.

 

 

The Option Term shall be upon the same terms and conditions as contained in the Lease except as otherwise expressly provided herein and except that there shall be no further right of extension, no rent concessions, no Landlord's work required, no fixturing period and no tenant allowance or any other amount payable by Landlord to Tenant, the rates for any storage space and/or parking spaces used by Tenant shall be the Landlord's then applicable rates and annual Basic Rent shall be equal to the greater of:

	
 
	
a)
	
the annual Basic Rent payable during the last prior year of the Fifth Extended Term; or

	
 
	
b)
	
the fair market annual Basic Rent for the Premises as agreed upon by the parties having regard to the finished condition of the Premises at the time of extension and having regard to then applicable basic rental levels for similar premises for a similar term in the Building. The parties shall make all reasonable efforts to reach agreement as to the fair market annual Basic Rent for the extension term not less than three (3) months prior to the commencement of the Fifth Extended Term, and failing such agreement, fair market annual Basic Rent for the Fifth Extended Term shall be determined by a single arbitrator in accordance with the Commercial Arbitration Act (British Columbia).

If the Landlord so elects, the Tenant shall execute the Landlord's then current form of lease amending agreement or lease, as determined by the landlord, to give effect to such extension of the Fifth Extended Term.

	
 
	
5.
	
Right of First Refusal.

Provided that:

	
 
	
a)
	
the Tenant is not and has not been in default under the Lease;

	
 
	
b)
	
the Lease has not previously been terminated;

	
 
	
c)
	
no Transfer affecting the Tenant, the Leased Premises or the Lease has occurred.

Then the Landlord hereby grants to the Tenant the right, during the remaining Term and Fifth Extended Term or any extension term thereafter, of first refusal (the “Right of First Refusal”) to lease Unit 310 in the Building, consisting of approximately 1,619 square feet of rentable area which is contiguous to the Lease Premises or, with respect to any extension of the Fifth Extended Term, to lease any units on the third (3rd) floor that was not part of a lease extension  (the “Right of First Refusal Space”) that becomes available to be leased to a bona fide third party.

Landlord shall deliver written notice of such to Tenant (the “First Refusal Notice”) describing the space so offered to Tenant and shall set forth Landlord’s proposed material economic terms and conditions applicable to Tenant’s lease of such space (collectively, the “Economic Terms”), including the proposed term of lease and the proposed rent payable for the First Refusal Space. 

If Tenant wishes to exercise its right to lease such space, then within seven (7) days after delivery of the First Refusal Notice to Tenant (the “Election Period”), Tenant shall deliver an unconditional irrevocable notice (the “Election Notice”) to Landlord of Tenant’s exercise of its right with respect to the Right of First Refusal Space, and the Economic Terms shall be as set forth in the First Refusal Notice, whereupon a binding agreement to lease such premises shall exist between Landlord and Tenant. In the event Tenant exercises its rights under this section, then Landlord and Tenant shall enter into Landlord’s then current form of Lease Modification Agreement, as determined by Landlord acting reasonably, to reflect such Agreement.  The Tenant and its solicitors may make reasonable changes to the draft of the Lease Modification Agreement provided by the Landlord, subject to the Landlord’s approval acting reasonably.

If Tenant does not exercise this right to lease the said premises within the time and in the manner provided for above, the said premises may thereafter be leased by Landlord to whom Landlord desires on any terms the Landlord desires and Tenant’s Right of First Refusal shall terminate and this Section 5 of Schedule B shall be null and void and of no further force and effect.

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