Document:

Exhibit 4.4

 

DATED: June 23, 2000

 

BETWEEN:

ORLANDO CORPORATION

- and -

HYDROGENICS CORPORATION

 

 

LEASE

 

regarding 5985 McLaughlin Road, Mississauga, Ontario

 

 

FRASER MILNER CASGRAIN

Barristers and Solicitors

1 First Canadian Place

100 King Street West

Toronto, Ontario

M5X 1B2

 

 

TABLE OF CONTENTS

 

	
   

  	
  Section

  
	
   

  	
   

  
	
  ARTICLE I - DEMISE AND TERM

  
	
   

  	
   

  
	
  Premises

  	
  1.01

  
	
  Term

  	
  1.02

  
	
  Acceptance
  of Premises

  	
  1.03

  
	
  Early
  Access

  	
  1.04

  
	
  Option
  to Renew

  	
  1.05

  
	
  Letter
  of Credit

  	
  1.06

  
	
  Quiet
  Enjoyment

  	
  1.07

  
	
   

  	
   

  
	
  ARTICLE II - RENT

  
	
   

  	
   

  
	
  Intent
  of Lease

  	
  2.01

  
	
  Basic
  Rent

  	
  2.02

  
	
  Calculation
  of Basic Rent

  	
  2.03

  
	
  Additional
  Rent

  	
  2.04

  
	
  Deposit

  	
  2.05

  
	
  Payments
  to Landlord

  	
  2.06

  
	
  Overdue
  Rent

  	
  2.07

  
	
  Set-Off

  	
  2.08

  
	
  Review
  of Tenant’s Financial Statements

  	
  2.09

  
	
   

  	
   

  
	
  ARTICLE III - TAXES

  
	
   

  	
   

  
	
  Taxes
  Payable by Landlord

  	
  3.01

  
	
  Taxes
  Payable by Tenant

  	
  3.02

  
	
  Tenant’s
  Business and Other Taxes

  	
  3.03

  
	
  Payment
  of Taxes

  	
  3.04

  
	
   

  	
   

  
	
  ARTICLE IV - HEATING AND UTILITIES

  
	
   

  	
   

  
	
  Utility
  Charges

  	
  4.01

  
	
  Heating

  	
  4.02

  
	
  Service
  Contracts

  	
  4.03

  
	
   

  	
   

  
	
  ARTICLE V - MAINTENANCE AND REPAIR

  
	
   

  	
   

  
	
  Repairs
  and Replacements

  	
  5.01

  
	
  Maintenance

  	
  5.02

  
	
  View
  and Repair

  	
  5.03

  
	
  Alterations

  	
  5.04

  
	
  Removal
  of Fixtures and Improvements

  	
  5.05

  
	
  Construction
  Liens

  	
  5.06

  
	
  Exterior
  Maintenance

  	
  5.07

  
	
  Landlord’s
  Repairs

  	
  5.08

  
	
  Repairs
  on Termination

  	
  5.09

  
	
   

  	
   

  
	
  ARTICLE VI - ASSIGNING AND SUBLETTING

  
	
   

  	
   

  
	
  Assigning
  or Subletting

  	
  6.01

  
	
  Change
  of Control

  	
  6.02

  
	
  Sublet
  of Part of Premises

  	
  6.03

  
	
  Excess
  Rent

  	
  6.04

  

 

 

	
   

  	
  Section

  
	
   

  	
   

  
	
  Mortgage
  of Leasehold

  	
  6.05

  
	
  Advertising
  Premises

  	
  6.06

  
	
  Disposition
  by Landlord

  	
  6.07

  
	
   

  	
   

  
	
  ARTICLE VII - USE

  
	
   

  	
   

  
	
  Use
  of Leased Premises

  	
  7.01

  
	
  Observance
  of Law

  	
  7.02 

  
	
  Waste
  and Nuisance

  	
  7.03

  
	
  Signs

  	
  7.04

  
	
  Outside
  Storage

  	
  7.05

  
	
  Overloading
  Floors

  	
  7.06

  
	
  Parking

  	
  7.07

  
	
   

  	
   

  
	
  ARTICLE VIII - INSURANCE AND INDEMNITY

  
	
   

  	
   

  
	
  Tenant’s
  Insurance

  	
  8.01

  
	
  Landlord’s
  Insurance

  	
  8.02

  
	
  Limit
  of Landlord’s Liability

  	
  8.03

  
	
  Limit
  of Tenant’s Liability

  	
  8.04

  
	
  Indemnity

  	
  8.05

  
	
   

  	
   

  
	
  ARTICLE IX - DAMAGE AND DESTRUCTION

  
	
   

  	
   

  
	
  Abatement
  of Rent

  	
  9.01

  
	
  Termination

  	
  9.02

  
	
   

  	
   

  
	
  ARTICLE X - DEFAULT

  
	
   

  	
   

  
	
  Events
  of Default

  	
  10.01

  
	
  Right
  of Re-entry

  	
  10.02

  
	
  Reletting

  	
  10.03

  
	
  Distress

  	
  10.04

  
	
  Right
  of Landlord to Cure Defaults

  	
  10.05

  
	
  Remedies
  Not Exclusive

  	
  10.06

  
	
  Non-Waiver

  	
  10.07

  
	
  Recovery
  of Adjustments

  	
  10.08

  
	
   

  	
   

  
	
  ARTICLE XI - SUBORDINATION AND ACKNOWLEDGEMENTS

  
	
   

  	
   

  
	
  Mortgages

  	
  11.01

  
	
  Certificates

  	
  11.02

  
	
   

  	
   

  
	
  ARTICLE XII - ACCESS BY LANDLORD

  
	
   

  	
   

  
	
  Entry
  by Landlord

  	
  12.01

  
	
  Exhibiting
  Leased Premises

  	
  12.02

  
	
   

  	
   

  
	
  ARTICLE XIII - MISCELLANEOUS

  
	
   

  	
   

  
	
  Notice

  	
  13.01

  
	
  Registration

  	
  13.02

  
	
  Planning
  Act

  	
  13.03

  
	
  Obligations
  as Covenants

  	
  13.04

  
	
  Severability

  	
  13.05

  
	
  Overholding

  	
  13.06

  

 

ii

 

	
   

  	
  Section

  
	
   

  	
   

  
	
  Unavoidable
  Delays

  	
  13.07

  
	
  Evidence
  of Payments

  	
  13.08

  
	
  Lien

  	
  13.09

  
	
  Goods
  and Services Tax

  	
  13.10

  
	
  Time
  of Essence

  	
  13.11

  
	
  Law

  	
  13.12

  
	
  Captions/Headings

  	
  13.13

  
	
  Joint
  and Several Liability

  	
  13.14

  
	
  Tenant
  Partnership

  	
  13.15

  
	
  Environmental
  Assessments

  	
  13.16

  
	
  Easements

  	
  13.17

  
	
  Landlord’s
  Warranties

  	
  13.18

  
	
  Expansion
  Premises

  	
  13.19

  
	
  Entire
  Agreement

  	
  13.20

  
	
  Effect
  of Lease

  	
  13.21

  

 

SCHEDULES

 

Schedule
“A” - Description of Lands

Schedule
“B” - Definitions

Schedule
“C” - Exterior Maintenance/Repair Work

Schedule
“D” - Landlord’s Work

Schedule
“E” - Letter of Credit

Schedule
“F” - Site Plan re Complex

Schedule
“G” - Site Plan re Leased Premises

Schedule
“H” - Outside Storage Area

 

iii

 

THIS INDENTURE made as of the 23rd day of June, 2000

 

BETWEEN:

 

ORLANDO CORPORATION

a
corporation incorporated under the

laws
of the Province of Ontario

 

(Hereinafter
called the “Landlord”)

 

OF THE FIRST PART;

 

-
and -

 

HYDROGENICS CORPORATION

a
corporation incorporated under the

federal
laws of Canada

 

(Hereinafter
called the “Tenant”)

 

OF THE SECOND PART;

 

ARTICLE I - DEMISE AND TERM

 

1.01        Premises

 

WITNESSETH
that in consideration of the rents, covenants and agreements hereinafter
reserved and contained on the part of the Tenant to be paid, observed and
performed, the Landlord does demise and lease unto the Tenant and the Tenant
leases from the Landlord, the Leased Premises.

 

1.02        Term

 

To
have and to hold the Leased Premises for and during the term of five (5) years
commencing on the 1st day of September, 2000 (the “Commencement Date”)
and ending on the 31st day of August, 2005.

 

If
the Leased Premises are not ready for occupation by the Tenant on the
Commencement Date by reason of a delay or delays not caused or contributed to
by the Tenant or anyone acting for or on behalf of the Tenant, then Rent shall
abate and shall not accrue or be payable until the Leased Premises are ready
for occupation by the Tenant. Any such abatement of Rent shall be accepted by
the Tenant as full and final settlement of any and all claims which the Tenant
may have by reason of the Leased Premises not being ready for occupancy on the
Commencement Date. A certificate by the Landlord’s Architect certifying that
the Leased Premises are ready for occupation shall be conclusive and binding
upon the Tenant.

 

1.03        Acceptance
of Premises

 

The
Tenant shall examine the Leased Premises before taking possession thereof and
such taking of possession shall be conclusive evidence as against the Tenant
that at the time thereof the Leased Premises were in good order and
satisfactory condition and that all promises, representations and undertakings
by or binding upon the Landlord with respect to any alteration, remodelling or
decorating of or installation of fixtures in the Leased Premises, have been
fully satisfied and performed by the Landlord. The Tenant acknowledges that the
existing leasehold improvements, if any, are acceptable and that the Tenant is
taking possession of the Leased Premises “as is”, save and except only for (i) completion
of the Landlord’s Work, and (ii) such items that the Tenant has notified
the Landlord in writing, prior to the Delivery Date, that are not in good order
and satisfactory condition.

 

 

 

1.04        Early Access

 

If
all of the following conditions are fulfilled:

 

(a)                                  this Lease has
been duly executed by the Tenant and delivered to the Landlord by no later than
August 4, 2000, together with the Letter of Credit and the Deposit Monies;
and

 

(b)                                 the Building is
available for access by the Tenant,

 

then
the Tenant shall have the right to have access to the Building during normal
business hours prior to the Commencement Date for purposes of commencing to set
up its business operations (but without interfering with the completion of the
Landlord’s Work). During such period of access prior to the Commencement Date,
the Tenant shall be bound by and comply with all of its obligations under this
Lease, save and except only for the payment of Basic Rent, Taxes and charges
under Section 5.07 hereof.

 

1.05        Option to
Renew

 

If
(i) the Tenant is not then in default under the Lease and (ii) there
has not been at any time any default by the Tenant under the Lease, then the
Tenant shall have the option (exercisable on one (1) occasion only) to
extend the Term for a further consecutive period of five (5) years
commencing on September 1, 2005 and ending on August 31, 2010 (the “Extended
Period”) on the same terms and conditions contained in the Lease except and
provided that:

 

(a)                                  Sections 1.04,
5.08(b), 13.18, this Section 1.05 and Schedule “D” hereto shall not apply;

 

(b)                                 there shall be
no option to further extend the Term; and

 

(c)                                  the Basic Rent
payable by the Tenant during the Extended Period shall be the fair market base
rent for the Leased Premises during the Extended Period based on similar term,
premises and location as for the Leased Premises. If the Landlord and the
Tenant cannot agree in writing on the Basic Rent for the Extended Period at
least three (3) months prior to the aforesaid commencement date of the
Extended Period, then it shall be determined by arbitration as hereinafter set
out in this paragraph. In the case of dispute between the Landlord and the
Tenant in the determination of the amount of the Basic Rent for the Extended
Period, each of the Landlord and Tenant shall at once agree upon the
appointment of an arbitrator and shall submit such dispute to the arbitrator
for determination in accordance with the provisions of the Arbitration
Act (Ontario), as amended. The decision of the arbitrator so appointed
shall be final and binding upon the Landlord and the Tenant who covenant one
with the other that such dispute shall be decided by arbitration alone and not
by recourse to any court by action at law. If within a reasonable time, the
Landlord and Tenant do not agree upon an arbitrator, the arbitrator may, upon
petition of either the Landlord or the Tenant, be appointed by a judge of the
Ontario Court (General Division). The cost of arbitration shall be apportioned between
the Landlord and the Tenant as the arbitrator may decide.

 

In
order to exercise the aforesaid option to extend the Term, the Tenant shall be
required to give notice thereof in writing to the Landlord at least nine (9) months
(but not more than twelve (12) months) prior to the aforesaid commencement date
of the Extended Period, failing which the Tenant’s option to extend the Term
and the Tenant’s rights under this Section shall automatically become null
and void.

 

1.06        Letter of
Credit

 

In
order to induce the Landlord to enter into this Lease the Tenant agrees with
the Landlord to deliver to the Landlord by no later than August 4, 2000,
an irrevocable clear standby letter of credit from a Canadian Chartered Bank
acceptable to the Landlord, acting reasonably, in the form annexed hereto as
Schedule “E” and drawn in favour of the Landlord in the amount of

 

 

2

 

2.02        Basic Rent

 

Yielding
and paying therefor in lawful money of Canada unto the Landlord as Basic Rent
for the Leased Premises during the Term the following amounts, without any
deduction, set-off or abatement whatsoever:

 

(a)                                  during the
first two (2) years of the Term, being September 1,
2000 to and including August 31, 2002, the sum of $667,038.07 per annum to
be paid in advance in equal consecutive monthly instalments of $55,586.51 on
the first day of each and every month during such period; and

 

(b)                                 during the next
three (3) years of the Term, being September 1, 2002 to and including
August 31, 2005, the sum of $715,026.42 per annum to be paid in advance in
equal consecutive monthly instalments of $59,585.54 on the first day of each
and every month during such period.

 

2.03        Calculation
of Basic Rent

 

The
Basic Rent is calculated on the basis of the area of the Building (95,976.7
square feet) multiplied by:

 

(a)                                  $6.95 per
square foot per annum during the first two (2) years of the Term (being September 1,
2000 to and including August 31, 2002); and

 

(b)                                 $7.45 per
square foot per annum during the next three (3) years of the Term (being September 1,
2002 to and including August 31, 2005).

 

The
certificate of the Landlord’s Architect regarding the measurement of the area
of the Building shall be conclusive and binding upon the Tenant.

 

2.04        Additional
Rent

 

The
Tenant shall pay Additional Rent due and owing to the Landlord within ten (10) days
of written demand therefor or as otherwise hereinafter expressly set out and
all other Additional Rent on the due date thereof.

 

2.05        Deposit

 

The
Tenant shall deliver $106,985.52 to the Landlord, by no later than August 4,
2000, such monies to be held by the Landlord and applied as follows:

 

(a)                                  $55,586.51 to
be held by the Landlord and applied without interest on account of the Basic
Rent for the first month of the Term; and

 

(b)                                 $51,399.01 to
be held by the Landlord as security for the full and faithful performance by
the Tenant of all the agreements, terms, covenants and conditions herein set
forth and applied without interest against expenses or other costs or damages
incurred by the Landlord and to be payable as liquidated damages and not as
penalty, upon forfeiture, default or early termination, without prejudice to
any further claims by the Landlord for damages and/or any remedy for recovery
thereof. If the Tenant duly observes and performs all of the terms, provisions,
conditions and obligations on its part under the Lease, then such monies shall
be applied without interest on account of Basic Rent as full satisfaction
thereof for the last month of the Term.

 

2.06        Payments to
Landlord

 

All
payments to be made by the Tenant to the Landlord under this Lease shall be
made at the address hereinafter designated or, at such other place or places as
the Landlord may designate in writing, or to such agent of the Landlord as the
Landlord may from time to time direct.

 

 

3

 

2.07        Overdue Rent

 

The
Tenant covenants to pay the Basic Rent and all other charges provided for in
this Lease on their respective due dates in full. The Tenant shall pay the
Landlord interest on all overdue Rent, all such interest to be calculated from
the date upon which the amount is first due hereunder until actual payment
thereof and at a rate being the lesser of (i) five percent (5%) per annum
in excess of the minimum lending rate charged to prime commercial borrowers by
the Landlord’s bank from time to time; and (ii) the maximum rate permitted
by law.

 

2.08        Set-Off

 

All
Rent payable by the Tenant to the Landlord shall be paid without any deduction,
set-off or abatement whatsoever except as expressly hereinafter provided.

 

2.09        Review of
Tenant’s Financial Statements

 

If
the Tenant is late in the payment of any Rent (or any part thereof) in any two (2) consecutive
months or more than twice in any twelve (12) month period, then the Tenant
shall, at its own cost and expense, forthwith provide the Landlord upon demand
with audited current financial statements and such other financial records and
books of account of the Tenant as may be required by the Landlord so as to
adequately enable it to determine to its satisfaction the financial status of
the Tenant.

 

ARTICLE III- TAXES

 

3.01        Taxes
Payable by Landlord

 

The
Landlord shall pay the Taxes charged on the Complex to the applicable taxing
authority, subject to reimbursement by the Tenant as hereinafter set out. The
Landlord shall have no obligation to contest or litigate the imposition of any
Taxes. The Landlord may defer payment of Taxes to the extent permitted by law
if it diligently pursues or causes to be pursued the contest or appeal of the
Taxes.

 

3.02        Taxes
Payable by Tenant

 

(a)                                  If there is no
separate assessment for Taxes with respect to the Leased Premises, or if there
is a separate assessment, but such separate assessment, together with all other
separate assessments relating to the Complex, do not aggregate the total
assessment for Taxes for the Complex, then until such time as there is a
separate assessment for Taxes with respect to the Leased Premises which,
together with all other such separate assessments, aggregate the total
assessment for Taxes for the Complex, and the Landlord so directs as set out in
paragraph (b) of this Section, the Tenant shall
pay as Additional Rent its Proportionate Share of the Taxes for the Complex,
adjusting the occupied tax rate for the Tenant’s specific use of the Leased
Premises, provided that the Landlord, at its option, may apportion the total
assessment for Taxes for the Complex amongst the leaseable premises of the
Complex, including the Leased Premises, based on generally accepted real estate
appraisal practices and adjusting the assessment based on the use of each
portion of the Complex, as if such premises are actually separately assessed.
If there is no separate assessment for Taxes as herein provided and the Complex
is not fully assessed as a commercial or industrial property for determination
of Taxes in any Year, then the Landlord shall adjust the Taxes to an amount
that would have been determined if the Complex were fully assessed as an
occupied commercial or industrial property. If the Leased Premises are at any
time during the Term assessed for the support of Separate Schools or if the
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, then the Tenant shall pay the amount of such increase
forthwith to the Landlord upon receipt of notice thereof. If any lands or
building in the Complex (other than the Leased Premises) are assessed during
the Term for the support of Separate Schools or if the Taxes are increased by
reason of any alterations made during the

 

 

4

 

Term
to any building (other than the Building) in the Complex, then the amount of
such increase in the Taxes shall be deducted from the Taxes for the Complex for
purposes of determining the Tenant’s Proportionate Share thereof.

 

(b)                                 If there is a
separate assessment of Taxes with respect to the Leased Premises, which
separate assessment shall be deemed to include the valuation of the Leased
Premises as determined, from time to time, by the assessor for realty taxation
purposes of the Complex, as evidenced by such documentation (including, without
limitation, the assessor’s valuation and/or working papers) that may be made
available to the Landlord, from time to time, and if such separate assessment
together with all other separate assessments for the Complex aggregate the
total assessment for Taxes for the Complex, and if the Landlord so directs,
then the Tenant shall pay as Additional Rent the amount calculated by
multiplying the assessment for the Leased Premises by the applicable tax rate
pertaining to the Tenant’s use of the Leased Premises on an occupied basis,
which amount shall, for the purposes of this paragraph only and notwithstanding
anything else herein contained, be the Tenant’s “Proportionate Share” of Taxes
for the Complex.

 

3.03        Tenant’s Business and Other Taxes

 

In
addition to the Taxes payable by the Tenant pursuant to Section 3.02
hereof, the Tenant shall pay to the lawful taxing authorities or to the
Landlord if the Landlord so directs:

 

(a)                                  all taxes,
rates, duties, assessments and other charges that are levied, rated, charged or
assessed against or in respect of all improvements, equipment and facilities of
the Tenant on or in the Leased Premises or the Complex or any part thereof;

 

(b)                                 every tax and
license fee which is levied, rated, charged or assessed against or in respect
of and every business carried on in the Leased Premises or in respect of the
use or occupancy thereof or any part of the Lands or the Building by the Tenant
and every subtenant or licensee of the Tenant or against the Landlord on
account of its interest in the Complex, and whether in any case, any such
taxes, rates, duties, assessments or license fees are rated, charged or
assessed by any federal, provincial, municipal, school or other body during the
Term;

 

(c)                                  Capital Tax;
and

 

(d)                                 the full amount
of any taxes in the nature of a business transfer tax, value added tax, sales
tax or any other tax levied, rated, charged or assessed in respect of the Rent
payable by the Tenant under this Lease or in respect of the rental of space
under this Lease, whether characterized as a goods and services tax, sales tax,
value added tax, business transfer tax or otherwise.

 

3.04        Payment of Taxes

 

(a)                                  The Landlord
shall be entitled at any time or times in any Year, upon at least fifteen (15)
days’ notice to the Tenant to require the Tenant to pay to the Landlord the
Tenant’s Proportionate Share of the Taxes for such Year in equal monthly
installments. Such monthly amount shall be determined by dividing the Tenant’s
Proportionate Share of Taxes by the number of months for the period from January 1st
in each Year of the Term until the due date of the final installment of Taxes
as established by the applicable taxing authority from time to time in each
Year (“Installment Period”) and shall be paid by the Tenant to the Landlord,
monthly as Additional Rent, on the date for payment of monthly rental payments
during the Installment Period. The Landlord shall be entitled subsequently
during such Year, upon at least fifteen (15) days’ notice to the Tenant, to
revise its estimate of the amount of increase of such Taxes and the said
monthly installment shall be revised accordingly. All amounts received under
this provision in any Year on account of the estimated amount of such Taxes
shall be applied in

 

 

5

 

reduction
of the actual amount of such Taxes for such Year. If the amount received is
less than the Tenant’s Proportionate Share of the actual Taxes, the Tenant
shall pay any deficiency to the Landlord as Additional Rent within fifteen (15)
days following receipt by the Tenant of notice of the amount of such deficiency. If
the amount received is greater than the Tenant’s Proportionate Share of the
actual Taxes, the Landlord shall either refund the excess to the Tenant as soon
as possible after the end of the Year in respect of which such payments were
made or, at the Landlord’s option, shall apply such excess against any amounts
owing or becoming due to the Landlord by the Tenant.

 

(b)                                 Taxes payable pursuant to
paragraphs (a) and (b) of Section 3.03 shall be paid by the Tenant
when due if separate tax bills are issued and otherwise shall be paid to the
Landlord within ten (10) days’ written demand therefor.

 

(c)                                  Taxes payable
pursuant to paragraphs (c) and (d) of Section 3.03 shall be paid
to the Landlord within ten (10) days’ written demand therefor or at such
time or times as the Landlord from time to time determines by notice in writing
to the Tenant.

 

(d)                                 If the Term of
this Lease commences or ends on any day other than the first or last day,
respectively, of a Year, the Tenant shall be liable only for the portion of the
Taxes for such Year as falls within the Term, determined on a per diem basis.

 

ARTICLE IV- HEATING AND UTILITIES

 

4.01                        Utility Charges

 

The
Tenant shall pay to the suppliers thereof on the due dates, all charges for
electric current and all other utilities supplied to or used in connection with
the Leased Premises.

 

4.02                        Heating

 

The
Tenant shall maintain the temperature in the Building at a reasonable level to
avoid damage occurring in or to the Building.

 

4.03                        Service Contracts

 

The
Tenant covenants and agrees to take out a standard servicing contract with a
capable and reputable company for the service and maintenance of the heating
units and furnaces and air conditioning equipment serving the Building, such
contract to include the monthly cleaning of exchangers and the replacement of
filters, and to keep such contract in force at its own cost throughout the
Term. The Tenant agrees to provide the Landlord with a copy of such servicing
contract.

 

ARTICLE V - MAINTENANCE AND REPAIR

 

5.01        Repairs and
Replacements

 

Subject
only to Sections 5.07 and 5.08 hereof, the Tenant shall at its own cost repair,
replace, maintain and keep the Leased Premises and every part thereof,
including without limitation the Leasehold Improvements and the heating,
ventilating and air conditioning equipment serving the Building, fixtures and
furnishings (whether or not installed or furnished by the Tenant), in good and
substantial repair and condition as a prudent owner would do, damage by fire
and any other perils against which the Landlord is required under this Lease to
insure, only excepted. The Tenant agrees that the Landlord may enter and view
the state of repair and condition and that the Tenant shall repair in
accordance with notice in writing from the Landlord; provided that if the
Tenant neglects to so maintain or to make such repairs or replacements promptly
after notice, the Landlord may, at its option, do such maintenance or make such
repairs or replacements at the expense of the Tenant, and in any and every such
case the Tenant covenants with the Landlord to pay to the Landlord forthwith as
Additional Rent all sums which the Landlord may have expended in doing such
maintenance and making such repairs and/or replacements; provided

 

 

6

 

further
that the doing of such maintenance or the making of any such repairs or
replacements by the Landlord shall not relieve the Tenant from its obligation
to maintain, repair and replace.

 

5.02        Maintenance

 

The
Tenant shall at all times during the Term at its own expense keep or cause to
be kept, the Leased Premises well maintained, clean and tidy, including without
limiting the generality of the foregoing, keeping the Building properly painted
and decorated and otherwise presentable and of good appearance, the driveways
and parking areas free and clear of snow and ice, and the lawn, trees and
shrubs in good order and condition, all in accordance with all the requirements
of this Lease and the reasonable requirements of the Landlord, its insurers and
governmental authorities having jurisdiction.

 

5.03        View and Repair

 

The
Tenant shall allow the Landlord or its duly appointed agent and work people at
reasonable times on request to enter the Leased Premises and view the state of
repair and the Tenant shall repair as aforesaid according to notice in writing,
provided always that if the Tenant shall not within fifteen (15) days of such
notice, commence and proceed diligently with the execution of the repairs and
works mentioned in such notice, it shall be lawful for the Landlord to enter
upon the Leased Premises and execute such repairs and works and to charge the
cost thereof to the Tenant.

 

5.04        Alterations

 

The
Tenant shall not, without the prior written approval of the Landlord, make any
installations, alterations, additions, partitions, repairs or improvements in
or to the Leased Premises, including, without limitation, doing anything which
might affect the roof or any structural portion or portions of the Building
(the “Structure”) or the electrical, mechanical, lighting, heating,
ventilating, air-conditioning, sprinkler, fire protection or other systems
therein (the “Systems”). The Tenant’s request for approval shall be in writing
and accompanied by an adequate description of the contemplated work, and where
appropriate, working drawings and specifications therefor; the Landlord’s costs
of having its architects, engineers or others examine such drawings and
specifications shall be payable by the Tenant upon demand as Additional Rent.
All such work shall be done at the Tenant’s cost by competent, reputable and
duly licensed contractors/workmen. All such work shall be subject to inspection
by and the reasonable supervision of the Landlord and shall be performed in
accordance with all applicable laws and any reasonable conditions (including
but not limited to a reasonable supervision fee of the Landlord to be paid by
the Tenant) and regulations imposed by the Landlord, and shall be completed in
a good and workmanlike manner and with reasonable diligence in accordance with
the approvals given by the Landlord. The Landlord may require that any work
which might affect the roof or the Structure (or any part thereof) or the
Systems (or any part thereof) be done, at the Landlord’s option, by (i) the
Landlord’s contractors or workmen or (ii) contractors or workmen engaged
by the Tenant but first approved by the Landlord. Any connections of apparatus
to the base electrical, plumbing, heating, ventilating or air-conditioning
systems shall be deemed to be an alteration within the meaning of this Section.
The Tenant shall, at its own cost and before commencement of any work, obtain
all necessary building or other permits and keep same in force.

 

The
Tenant shall not be required by the foregoing provisions of this Section to
obtain the prior written consent of the Landlord for minor, non-structural
alterations and installations (collectively the “Work”) by the Tenant to the
Building if all of the following conditions apply:

 

(a)                                  the Work does
not cost more than $20,000.00 in total to complete;

 

(b)                                 the Work does
not require a building permit, work permit or other permit from any
governmental authority;

 

(c)                                  the Work does
not affect the roof, the Structure or the Systems, or any part thereof; and

 

 

7

 

the
Building, provided that (i) the Tenant enters into and maintains at its
own cost a maintenance service contract approved in advance by the Landlord for
such system during the said period, and (ii) the said system is duly and
properly maintained and repaired at the Tenant’s sole cost throughout the said
period. The Tenant acknowledges that any and all replacements arising from any
failure to properly maintain and repair the said system (or any part thereof)
or from the willful acts or omissions of the Tenant, its employees, agents,
contractors, invitees, representatives or others for whom at law it is
responsible, shall be the responsibility of the Tenant.

 

5.09        Repairs on
Termination

 

At
the expiration or sooner termination of the Term the Tenant shall, at its own
expense:

 

(a)                                  deliver up
possession of the Leased Premises to the Landlord in the same condition in
which the Tenant is required under this Lease to repair and maintain the Leased
Premises, together with all Leasehold Improvements which the Tenant is required
or permitted to leave therein or thereon free and clear of all encumbrances and
in a clean and tidy condition and free of all rubbish and to deliver to the
Landlord all keys and security devices;

 

(b)                                 remove from the
Leased Premises, at the option of and to the satisfaction of the Landlord, all
machine bases, cabling (electrical or otherwise), piping (pneumatic, water or
otherwise) and wiring (electrical, computer or otherwise) installed by or on
behalf of the Tenant;

 

(c)                                  remove any and
all materials which may be deemed by any applicable legislation as contaminated
or hazardous (and which have been brought onto the Leased Premises by or on
behalf of the Tenant or which are a result of the Tenant’s use or occupation of
the Leased Premises), and clean up any and all resultant contamination in
compliance with all applicable laws and regulations; and

 

(d)                                 remove from the
Leased Premises at the option of the Landlord, in compliance with all
applicable laws and regulations, any and all storage and/or holding tanks
(whether above or below ground) installed by or on behalf of the Tenant and all
pits and trenches created by or on behalf of the Tenant.

 

The
covenants contained in this Section shall survive the expiry or other termination
of the Term.

 

ARTICLE VI - ASSIGNING AND SUBLETTING

 

6.01        Assigning or
Subletting

 

(a)                                  The Tenant
shall not assign this Lease or sublet or franchise, license, grant concessions
in, or otherwise part with or share possession of the Leased Premises or any
part thereof (hereinafter referred to as a “Transfer”) without the prior
written consent of the Landlord. If the Tenant is not in default under the
Lease, then the Landlord shall not unreasonably withhold its consent to the
Tenant’s written request to assign the Lease or sublease the Building. At the
time the Tenant requests such consent the Tenant shall deliver to the Landlord
such information in writing as the Landlord may reasonably require, including,
without limitation, a copy of the proposed offer or agreement, if any, to
Transfer and the name, address and nature of business and evidence as to the
financial strength of the proposed assignee or subtenant or other user
(hereinafter referred to as a “Transferee”). Notwithstanding anything else herein
contained, in no event shall any Transfer release or relieve the Tenant in any
regard whatsoever from any of its obligations or liabilities under or in
respect of the Lease.

 

 

8

 

PROVIDED however, and it is made a
condition to any Transfer that:

 

(i)                                     The proposed
Transferee shall agree in writing to assume and perform all of the 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;

 

(ii)                                  The Tenant
shall pay to the Landlord all reasonable legal fees incurred by the Landlord in
connection with the Transfer;

 

(iii)                               The consent of
the Landlord is not a waiver of the requirement upon the Tenant for the
Landlord’s consent for any subsequent Transfer;

 

(iv)                              The acceptance
by the Landlord of Rent from a Transferee without the Landlord’s consent to
such Transfer shall not constitute a waiver of the requirement of such consent
nor shall it constitute an acceptance of such party as the Tenant;

 

(v)                                 The Landlord
may, at its option, cancel (i) any options to renew the Lease or extend
the Term and/or (ii) any rights of first refusal or first opportunity
regarding additional space;

 

(vi)                              If the Transfer
does not take place within sixty (60) days of the giving of consent by the
Landlord, then the Landlord’s consent to such Transfer shall, at the Landlord’s
option, expire and become null and void; and

 

(vii)                           If the Lease is
disaffirmed, disclaimed or terminated by any trustee in bankruptcy of a
Transferee, then 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.

 

(b)                                 If a Transfer
occurs without the consent of the Landlord when required, then the Landlord may
collect Rent from the party in whose favour the Transfer was made and apply the
net amount collected to the Rent herein reserved but no such Transfer will be
considered a waiver of this covenant or the acceptance of the party in whose
favour the Transfer was made as a tenant hereunder.

 

(c)                                  The Landlord
shall not be liable for any claims or actions by or for any damages,
liabilities, losses or expenses of the Tenant arising out of the Landlord
unreasonably withholding its consent to any Transfer and the Tenant’s only
recourse shall be to bring an application for a declaration that the Landlord
shall grant its consent to such Transfer.

 

6.02        Change of
Control

 

If
the Tenant is a private corporation and any part or all of the corporate shares
shall be transferred by sale, assignment, amalgamation, bequest, inheritance,
operation of law or other disposition or dispositions so as to result in a
change in the control of the corporation, such change of control shall be
considered a Transfer and shall be subject to the provisions of Section 6.01
hereof. The Tenant shall make available to the Landlord upon its request for
inspection and copying, all books and records of the Tenant, any assignee or
subtenant and their respective shareholders which, alone or with other data,
may show the applicability or inapplicability of this Section.

 

6.03        Sublet of Part of
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

 

 

9

 

unfettered
discretion refuse to give its consent to any Transfer by the Tenant of less
than the whole of the Building resulting in more than two (2) separate
premises therein.

 

6.04        Excess Rent

 

In
the event that the Basic Rent payable under any Transfer is in excess of the
Basic Rent reserved hereunder or is in excess of the proportionate 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 Transferee 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 or its nominee, the value of those
goods or services shall be determined by the Landlord and Tenant and that value
shall be paid in cash to the Landlord immediately upon such determination.

 

6.05        Mortgage of
Leasehold

 

The
Tenant shall not mortgage, pledge, hypothecate or otherwise encumber all or any
portion of the Tenant’s interest in this Lease or the Leasehold Improvements.

 

6.06        Advertising
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 (i) no such advertising shall contain any
reference to the Rent for the Leased Premises and (ii) any such
advertising shall be on a standard ground-mounted real estate sign.

 

6.07        Disposition
by Landlord

 

If
the Landlord sells or leases the Leased Premises or any part thereof, or
assigns this Lease, and to the extent that the covenants and obligations of the
Landlord under this Lease are assumed by the purchaser, lessee or assignee, the
Landlord, without further written agreement, will be discharged and relieved of
liability under the said covenants and obligations.

 

ARTICLE VII - USE

 

7.01        Use of
Leased Premises

 

(a)                                  Subject to
paragraph (b) of this Section, the Tenant shall not use the Leased
Premises nor allow the Leased Premises to be used for any purpose other than
the manufacture, testing, assembly, warehousing and distribution of fuel cell systems
(and ancillary office) and outside storage as set out in paragraph (b) of Section 7.05
hereof, but only to the extent (i) all in compliance with the provisions
of this Lease and (ii) permitted by all applicable laws, by-laws and other
governmental regulations, directions and orders from time to time in force.

 

(b)                                 The Tenant
covenants to not use or permit the Leased Premises to be used for any retail
sales whatsoever.

 

7.02        Observance
of Law

 

The
Tenant shall comply promptly with and conform to the requirements of all
applicable statutes, by-laws, laws, regulations, ordinances and orders from
time to time or at any time in force during the Term and affecting the
condition, maintenance, repair, use or occupation of the Leased Premises (or
equipment therein) and with every applicable regulation, order and requirement
of the Insurance Advisory Organization or any body having similar functions or
of any liability or fire insurance company by which the Landlord and the Tenant
or either of them may be insured at any time during the Term, and, in the event
of the default of the Tenant under the provisions of this Section, the Landlord
may itself comply with any such requirements as aforesaid and the Tenant will
forthwith pay all costs and expenses incurred by the Landlord in

 

 

10

 

this
regard and the Tenant agrees that all such costs and expenses shall be
recoverable by the Landlord as if the same were Additional Rent reserved and in
arrears under this Lease.

 

7.03        Waste and Nuisance

 

(a)                                  The Tenant
shall not do or suffer any waste, damage, disfiguration or injury to the Leased
Premises or the fixtures and equipment thereof and shall not use or permit to
be used any part of the Leased Premises for any dangerous, noxious or offensive
trade or business nor use the Leased Premises in any manner which, in the
opinion of the Landlord acting reasonably, is detrimental to the Leased
Premises or any part thereof.

 

(b)                                 The Tenant
shall not keep, sell, use, handle or dispose of any goods or things which may
be objectionable nor cause or maintain any nuisance in, at or on the Leased
Premises nor cause any annoyance, nuisance or disturbance to the occupiers or
owners of any adjoining lands and/or premises and shall keep the Leased
Premises free of hazardous waste and contamination.

 

(c)                                  The Tenant
covenants and agrees to utilize the Leased Premises and operate its business in
a manner so that no part of the Leased Premises or surrounding lands are used
to generate, manufacture, refine, treat, transport, store, handle, dispose of,
transfer, produce or process any Hazardous Substances, except in strict
compliance with all applicable federal, provincial and municipal statutes,
by-laws and regulations, including without limitation, environmental, land use
and occupational and health and safety laws, regulations, requirements,
permits, statutes, by-laws and regulations. The Tenant hereby further covenants
and agrees to indemnify and save harmless the Landlord and those for whom the Landlord
is in law responsible from and against any and all losses, costs, claims,
damages, liabilities, expenses or injuries caused or contributed to by any
Hazardous Substances which are at any time located, handled, placed, stored or
incorporated in any part of the Leased Premises. The Tenant hereby agrees that
the Landlord or its authorized representatives shall have the right at the
Tenant’s expense, payable as Additional Rent within fifteen (15) days of
receipt of an invoice therefor, to conduct such environmental site reviews and
investigations as it may deem necessary for the purposes of ensuring the Tenant’s
compliance with the foregoing provisions of this Section. The Tenant’s
obligations pursuant to this Section shall survive the expiration or earlier
termination of the Term.

 

7.04        Signs

 

The
Tenant covenants and agrees not to affix or display or cause to be affixed or
displayed any sign or signs on any part of the exterior of the Building
(including, without limitation, the windows), without the prior written
approval of the Landlord and subject to applicable municipal and other
governmental regulations. The Tenant shall at its own cost remove all such
signage at the expiration of the Term, or other sooner termination thereof, and
forthwith repair all damage which may be caused or occasioned by such affixing
and/or removal and this covenant shall survive the expiry or other termination
of the Term.

 

7.05        Outside Storage

 

(a)                                  Subject only to
paragraph (b) of this Section, the Tenant shall not store any goods or
matter of any kind outside the Building without the express written consent of
the Landlord first had and obtained.

 

(b)                                 Subject to
Sections 7.02 and 7.03 hereof, the Tenant may store outdoor storage tanks in
the Storage Area, provided that:

 

(i)                                     such storage is
approved (as to the manner and configuration of such storage, including but not
limited to any contemplated stacking) in advance by the Landlord in writing;

 

 

11

 

(ii)                                  all items being
stored in the Storage Area are concealed from view at all times in decorative,
protective fencing approved in advance by the Landlord, in its sole and
unfettered discretion, in writing (as to dimensions (including but not limited
to height), design, construction, layout and materials); and

 

(iii)                               such storage is
permitted by and in compliance with all Applicable Laws from time to time in
force.

 

(c)                                  In the event
that there has been any breach of any part of paragraphs (a) or (b) of
this Section and such breach remains unremedied for more than seven (7) days
after notice to the Tenant, then the Landlord may, without prejudice to any of
the Landlord’s other rights and/or remedies under the Lease, remove any or all
items stored on the Lands outside the Building and dispose of such items as the
Landlord, in its sole and unfettered discretion, may deem appropriate under the
circumstances. Any and all costs incurred by the Landlord in respect of such
removal and/or disposal (including but not limited to the Landlord’s legal fees
on a solicitor-and-client basis) shall be payable by the Tenant to the Landlord
forthwith upon demand therefor as Additional Rent.

 

7.06        Overloading
Floors

 

The
Tenant covenants that it will not bring upon the Leased Premises or any part
thereof any machinery, equipment, article or thing that, by reason of its
weight, size, configuration, operation or otherwise, might damage the Leased
Premises and will not at any time overload or damage the floors of the Leased
Premises. The Tenant shall remove any such machinery, equipment (including but
not limited to mobile equipment such as a forklift), article or thing within
five (5) days’ written notice thereof and if any damage is caused to the
Leased Premises by any machinery, equipment, article or thing or by
overloading, the Tenant shall forthwith repair such damage at its own expense
to the satisfaction of the Landlord.

 

7.07        Parking

 

The
Tenant shall not park or permit to be parked any vehicles (cars, trucks,
trailers or otherwise) anywhere on the Lands at any time other than in such
areas so designated by the Landlord. The Tenant may park cars in the area of
the Lands outlined in blue (and trucks in the area of the Lands outlined in
red) on Schedule “G” hereto.

 

ARTICLE VIII - INSURANCE AND INDEMNITY

 

 

8.01        Tenant’s
Insurance

 

The Tenant shall, at its expense, maintain in force during the Term in the
name of the Tenant (with the Landlord and the Landlord’s mortgagee, if any, as
additional insureds) the following insurance:

 

(a)                                  comprehensive
general liability insurance against claims for personal injury, death or
property damage (including but not limited to tenants’ legal liability,
personal injury liability, products liability, property damage and contractual
liability to cover all indemnities) with respect to the business or operations
carried on in and from the Leased Premises, in amounts required by the Landlord
and any mortgagee of the Building or any part thereof from time to time but in
no event less than Five Million Dollars ($5,000,000.00) per occurrence;

 

(b)                                 insurance
covering all contents of the Leased Premises and all other property for which
the Tenant is responsible pursuant to this Lease and/or which has been
installed by or on behalf of the Tenant (including without limitation all
chattels, equipment, machinery, furniture, inventory, fixtures and all
Leasehold Improvements) in an amount equal to the full replacement value
thereof; and

 

 

12

 

(c)                                  such other
forms of insurance as may be reasonably required by the Landlord and its
mortgagee from time to time.

 

Any
policy written pursuant to paragraph (a) of this Section shall
contain a severability of interest clause and a cross liability
clause. All policies shall contain an undertaking by the insurers
to notify the Landlord and its mortgagee, if any, in writing not less than
thirty (30) days prior to any material change, cancellation or termination
thereof and shall be subject only to such deductibles and exclusions as the
Landlord may approve, acting reasonably. The Tenant shall promptly furnish upon
request from the Landlord verification of compliance with the provisions of
this Section.

 

8.02        Landlord’s
Insurance

 

The
Landlord shall, throughout the Term, keep at the sole cost and expense of the
Tenant, the Building and appurtenances thereto, insured to the following
extent:

 

(a)                                  against such
loss or damage as are customarily insured against under a policy of insurance
commonly known as a Multi-Peril or All-Risk policy;

 

(b)                                 blanket broad
boiler and pressure vessel insurance including repair or replacement;

 

(c)                                  loss of rental
income insurance with respect to fire and other usual perils for which such
insurance is customarily issued for a period (as selected by the Landlord) of
not less than six (6) months and not more than twelve (12) months for the
Basic Rent and other sums payable as Additional Rent under this Lease; and

 

(d)                                 other
casualties as are customarily insured against under insurance contracts
normally entered into from time to time during the Term by owners of buildings
in the area of a character similar to the Leased Premises in such amounts as in
the reasonable opinion of the Landlord is necessary to protect the Landlord
against loss or damage.

 

Notwithstanding
anything contained in this Lease, including but not limited to the covenant of
the Landlord to take out the aforesaid insurance or the contribution of the
Tenant to the cost of such insurance, nothing in this Lease shall confer any
insurable interest upon the Tenant in respect of such insurance and the Tenant
acknowledges that it has no right to receive the proceeds or any part thereof
from such insurance policies.

 

8.03        Limit of
Landlord’s Liability

 

The
Landlord shall not be responsible in any way for any injury to any person
(including but not limited to death) or for any loss of or damage to any
property belonging to the Tenant or to other occupants of the Leased Premises
or to their respective employees, agents, invitees, licensees or other persons
from time to time attending at the Leased Premises while such person or
property is in or about the Leased Premises, including without limiting the
foregoing, any loss of or damage to any property caused by theft or breakage,
or by steam, water, rain or snow or for any loss or damage caused by or
attributable to the condition or arrangements of any electrical or other wiring
or for any damage caused by smoke or for any other loss whatsoever with respect
to the Leased Premises, goods placed therein or any business carried on
therein, save and except only to the extent all of the following conditions are
applicable:

 

(i)                                     such loss or
damage is caused by the grossly negligent misconduct of the Landlord at the
Leased Premises during the Term;

 

(ii)                                  the Tenant is
not required by the terms of the Lease to insure against such loss or damage;

 

(iii)                               the Tenant has
not breached its obligations under Section 8.01 hereof; and

 

 

13

 

(iv)                              the Tenant
cannot recover for such loss or damage under its insurance.

 

8.04        Limit of
Tenant’s Liability

 

The
Tenant shall not be liable to the Landlord for any direct injury, loss or
damage required to be insured by the Landlord pursuant to paragraphs (a) or
(b) of Section 8.02 hereof to the extent of the proceeds that are
actually recovered by the Landlord under such policies of insurance or that
would have been recovered if the Landlord had insured as required under
paragraphs (a) and (b) of Section 8.02 hereof.

 

8.05        Indemnity

 

The
Tenant shall promptly indemnify and save the Landlord harmless from any and all
liabilities, damages, costs, expenses, claims, suits or actions arising out of
any breach, violation or non-observance by the Tenant of any of its obligations
under the Lease; from any damage to property while such property shall be in or
about the Leased Premises including but not limited to the systems, furnishings
and amenities thereof, as a result of the willful or negligent act or omission
of the Tenant, its employees, agents, invitees or licensees; and from any
injury to any employee, agent, invitee or licensee, of the Tenant, including
but not limited to death resulting at any time therefrom, occurring on or about
the Leased Premises or any part thereof, save and except only in the case of
such injury where all of the following conditions are applicable:

 

(i)                                     such injury is
caused by the grossly negligent misconduct of the Landlord at the Leased
Premises during the Term;

 

(ii)                                  the Tenant is
not required by the terms of the Lease to insure against such injury;

 

(iii)                               the Tenant has
not breached its obligations under Section 8.01 hereof; and

 

(iv)                              the Tenant
cannot recover for such injury under its insurance.

 

Notwithstanding
anything else herein contained, this indemnity shall survive the expiry or
earlier termination of the Term.

 

ARTICLE IX- DAMAGE AND DESTRUCTION

 

9.01        Abatement of
Rent

 

If
the Building or any portion thereof is damaged or destroyed by fire or by other
casualty against which the Landlord is required to insure under this Lease,
Rent shall abate in proportion to the area of that portion of the Building
which, in the reasonable opinion of the Landlord, is thereby rendered unfit for
the purposes of the Tenant bears to the area of the entire Building (but only
to the extent to which the Landlord actually receives proceeds under its loss
of rental income insurance, provided that the Landlord makes timely and
reasonable efforts to claim such loss of rental income from the insurer) until
the Building is repaired and rebuilt as certified by the Landlord’s Architect
and the Landlord agrees that it will, with reasonable diligence, repair and
rebuild the Building, subject to Section 9.02. The Landlord’s obligation
to rebuild and restore the Building shall not include the obligation to
rebuild, restore, replace or repair any chattel, fixture, Leasehold
Improvements, or any other thing that is the property of the Tenant and/or for
which the Tenant is to maintain insurance under paragraph (b) of Section 8.01
(in this Section collectively called “Tenant’s Improvements”); the
Building shall be deemed repaired and rebuilt when the Landlord’s Architect
certifies that the Building has been substantially repaired and rebuilt to the
state where the Tenant could occupy it for the purpose of rebuilding,
restoring, replacing or repairing the Tenant’s Improvements. The issuance of
the certificate of the Landlord’s Architect shall not relieve the Landlord of
its obligation to complete the repairing and rebuilding as aforesaid, but the
Tenant shall forthwith after issuance of such certificate proceed to rebuild,
restore, replace and repair the Tenant’s Improvements, and the provisions of Section 5.04
shall apply to such work, mutatis mutandis.

 

 

14

 

9.02        Termination

 

(a)                                  Notwithstanding
the provisions of Section 9.01 hereof, if the Building or any portion
thereof is:

 

(i)                                     damaged or
destroyed by an insured peril and cannot in the reasonable opinion of the
Landlord’s Architect be rebuilt or made fit for the purposes of the Tenant as
aforesaid within one hundred and eighty (180) days of the date of such damage
or destruction; or

 

(ii)                                  damaged or
destroyed by an uninsured peril,

 

then
either the Landlord (in either of the cases of subparagraphs (i) or (ii) above)
or the Tenant (in the case of subparagraph (i) above only) may, at its
option, terminate this Lease by giving to the other, within sixty (60) days
after the Landlord’s delivery to the Tenant of the certificate referenced in
paragraph (b) of this Section, notice of termination and thereupon Rent
shall be apportioned and paid to the date of such damage or destruction and the
Tenant shall immediately deliver up possession of the Leased Premises to the
Landlord.

 

(b)                                 The Landlord
shall deliver to the Tenant within forty-five (45) days of the date of damage
or destruction referred to in paragraph (a) of this Section, a certificate
of the Landlord’s Architect setting out whether the Building can be repaired
within one hundred and eighty (180) days from the date of such damage or
destruction and/or whether the Building has been damaged or destroyed by an
uninsured peril.

 

(c)                                  If neither the
Landlord nor the Tenant elects to terminate the Lease pursuant to paragraph (a) of
this Section, as applicable, then the Landlord shall, with reasonable
diligence, repair and rebuild the Building in accordance with the provisions of
Section 9.01 hereof.

 

ARTICLE X- DEFAULT

 

10.01      Events of Default

 

An
“Event of Default” shall occur whenever:

 

(a)                                  the Tenant
fails to pay the Rent hereby reserved or any part thereof on the day appointed
for payment thereof, whether lawfully demanded or not;

 

(b)                                 the Tenant
shall have breached or failed to comply with any of its covenants and
agreements contained in this Lease (save for non-payment of Rent) and shall
have failed to remedy such breach or non-compliance within fifteen (15) days
(or such longer period as the Landlord may reasonably determine, having regard
to the nature of the default) after written notice thereof given by the Landlord
to the Tenant;

 

(c)                                  the Tenant
shall make any assignment for the benefit of creditors or become bankrupt or
insolvent or take the benefit of any Act now or hereinafter in force for
bankrupt or insolvent debtors;

 

(d)                                 the Tenant is a
corporation and any order shall be made for the winding-up of the Tenant or
other termination of the corporate existence of the Tenant;

 

(e)                                  the Tenant
makes or attempts to make a bulk sale of assets not in the ordinary course of
the Tenant’s business;

 

(f)                                    a trustee, receiver,
interim receiver, receiver and manager, custodian or liquidator is appointed
for the business, property, affairs or revenue of the Tenant;

 

 

15

 

(g)                                 this Lease or
any of the Tenant’s assets on the Leased Premises are taken or seized under
writ of execution, an assignment, pledge, charge, debenture or other security
instrument;

 

(h)                                 the Tenant
abandons or attempts to abandon the Leased Premises;

 

(i)                                     the Leased
Premises shall be used by any person other than the Tenant or the Tenant’s
permitted assignees or sublessees or for any purpose other than as set out in Section 7.01;

 

(j)                                     any insurance
policy on the Building or any part thereof shall be cancelled or shall be
threatened by the insurer to be cancelled or the coverage thereunder reduced in
any way by the insurer by reason of the use or occupation of the Leased
Premises or any part thereof by the Tenant and the Tenant shall have failed to
remedy the condition giving rise to such cancellation, threatened cancellation
or reduction of coverage within forty-eight (48) hours’ written notice given by
the Landlord to the Tenant;

 

(k)                                  the Tenant
shall at any time during the Term use the Leased Premises, whether within the
use permitted by Section 7.01 or not, in a manner which imposes upon the
Landlord any obligation to modify, extend, alter or replace any part of the Leased Premises
or any of the machinery, equipment or other facilities used in connection
with the Leased Premises, which obligation is not fulfilled by the Tenant at
its own cost in a timely manner; or

 

(1)                                  the Leased
Premises are vacant for any period in excess of fifteen (15) days other than
during repairs or renovations.

 

Notwithstanding
the Bankruptcy and Insolvency Act (Canada) or otherwise, upon the occurrence of
an Event of Default, the then current month’s Rent and next ensuing three (3) months’
Rent shall immediately become due and be paid by the Tenant to the Landlord as
accelerated Rent and the Landlord may immediately distrain for the same
together with any Rent arrears then unpaid.

 

10.02      Right of
Re-entry

 

(a)                                  Upon the
occurrence of an Event of Default, the Landlord may at any time thereafter,
without notice to the Tenant, re-enter the Leased Premises or any part thereof
in the name of the whole and terminate this Lease and all the rights of the
Tenant thereunder.

 

(b)                                 If and whenever
the Landlord exercises its option to re-enter the Leased Premises and terminate
this Lease pursuant to paragraph (a) of this Section:

 

(i)                                     the Tenant
shall immediately vacate the Leased Premises and the Landlord may remove or
cause to be removed from the Leased Premises the Tenant and/or any other
occupant or occupants thereof and may remove all property therefrom and sell or
dispose of such property as the Landlord considers appropriate without
liability for loss or damage and without prejudice to the rights of the
Landlord to recover arrears of Rent or damages incurred by the Landlord;

 

(ii)                                  the Landlord
shall be immediately entitled to the payment of Rent up to the date of
termination together with all expenses incurred by the Landlord in respect of
such termination and the value of the Rent, calculated at the date of
termination, for the unexpired portion of the Term.

 

10.03      Reletting

 

At
any time when the Landlord is entitled to re-enter the Leased Premises or
terminate this Lease, the Landlord may without notice to the Tenant and without
terminating the Lease enter upon and take custody of the
Leased Premises in the name of and as agent of the Tenant,

 

 

16

 

together
with all of the Tenant’s improvements, fixtures and furnishings, and sublet the
Leased Premises in the name of and as the agent of the Tenant on whatever terms
the Landlord may deem appropriate but no such action by the Landlord shall
waive any of the obligations of the Tenant or limit the subsequent exercise of
any of the Landlord’s remedies for default. If the Landlord shall sublet the
Leased Premises as aforesaid, the Landlord shall be entitled to receive all sublease rent
and apply the same in its discretion to any indebtedness of the Tenant to the
Landlord under this Lease and/or to the payment of any costs and expenses of
reletting, and the Landlord shall be liable to account to the Tenant only for
the excess, if any, of monies actually received by it. If the sublease rent is
less than is necessary to pay and discharge all the then existing and
continuing obligations of the Tenant hereunder, the Tenant shall pay such
deficiency to the Landlord upon demand from time to time. Notwithstanding any
such re-entry and subletting without termination, the Landlord may at any time
thereafter terminate this Lease by reason of the previous or any other default
under the Lease and the provisions of Section 10.02 shall apply.

 

10.04      Distress

 

The
Tenant waives and renounces the benefit of any present or future statute taking
away or limiting the Landlord’s right of distress, and covenants and agrees
that notwithstanding any such statute, none of the goods and/or chattels of the
Tenant on the Leased Premises at any time during the Term shall be exempt from
levy by distress for rent in arrears.

 

10.05      Right of Landlord to Cure Defaults

 

If
the Tenant fails to perform or cause to be performed any of the covenants or
obligations of the Tenant herein, the Landlord shall have the right (but shall
not be so obligated) to perform or cause to be performed and to do or cause to
be done such things as may be necessary or incidental thereto (including
without limiting the foregoing, the right to make repairs, installations,
erections and expend monies), and all payments,
expenses, charges, fees and disbursements incurred or paid by or on behalf of
the Landlord in respect thereof shall be paid by the Tenant to the Landlord
within ten (10) days’ written demand therefor together with all reasonable
legal and administrative costs of the Landlord in respect thereof.

 

10.06      Remedies Not Exclusive

 

Mention
in this Lease of any particular remedy or remedies in respect of any default or
threatened default by the Tenant in the performance of its obligations shall
not preclude the Landlord from exercising, or limit the extent of, any other
remedy in respect thereof, whether at law, in equity or pursuant to any express
provision hereof. No remedy shall be interpreted as exclusive or dependent upon
any other remedy, and the Landlord may from time to time exercise any one or
more of such remedies independently or in combination.

 

10.07      Non-Waiver

 

No
condoning, excusing or overlooking by the Landlord of any default, breach or
non-observance by the Tenant at any time or times in respect of any covenant,
proviso or condition herein contained shall operate as a waiver of the Landlord’s
rights hereunder in respect of any continuing or subsequent default, breach or
non-observance, or so as to defeat or affect in any way the rights of the
Landlord herein in respect of any such continuing or subsequent default or
breach, and no waiver shall be inferred from or implied by anything done or omitted
by the Landlord, save only an express waiver by the Landlord in writing.

 

10.08      Recovery of Adjustments

 

The
Landlord shall have (in addition to any other right or remedy of the Landlord)
the same rights and remedies in the event of default by the Tenant in payment
of any amount payable by the Tenant hereunder as the Landlord would have in the
case of default in payment of Rent.

 

 

17

 

ARTICLE XI - SUBORDINATION AND ACKNOWLEDGEMENTS

 

11.01      Mortgages

 

At
the option of the Landlord, this Lease shall be subject and subordinate to any
and all mortgages, charges and deeds of trust, which may now or at any time
hereafter affect the Leased Premises in whole or in part, or the Lands, or the
Building whether or not any such mortgage, charge or deed of trust affects only
the Leased Premises or the Lands or the Building or affects other premises as
well. On request at any time and from time to time of the Landlord or of the
mortgagee, chargee or trustee under any such mortgage, charge or deed of trust,
the Tenant shall promptly, at no cost to the Landlord or mortgagee, chargee or
trustee:

 

(a)                                  attorn to such
mortgagee, chargee or trustee and become its tenant of the Leased Premises or
the tenant of the Leased Premises of any purchaser from such mortgagee, chargee
or trustee in the event of an exercise of any permitted power of sale contained
in any such mortgage, charge or deed of trust for the then unexpired residue of
the Term on the terms herein contained; and/or

 

(b)                                 postpone and
subordinate this Lease to such mortgage, charge or deed of trust to the intent
that this Lease and all right, title and interest of the Tenant in the Leased
Premises shall be subject to the rights of such mortgagee, chargee or trustee
as fully as if such mortgage, charge or deed of trust had been executed and
registered and the money thereby secured had been advanced before the execution
of this Lease (and notwithstanding any authority or consent of such mortgagee,
or trustee, express or implied, to the making of this Lease), provided that the
applicable mortgagee, chargee or trustee thereunder has agreed in writing with
the Tenant that the Tenant shall have undisturbed possession of the Leased
Premises as long as it is not in default under the Lease.

 

Any
such attornment or postponement and subordination shall extend to all renewals,
modifications, consolidations, replacements and extension of any such mortgage,
charge or deed of trust and every instrument supplemental or ancillary thereto
or in implementation thereof. The Tenant shall forthwith execute any
instruments of attornment or postponement and subordination which may be so
requested to give effect to this Section.

 

11.02      Certificates

 

The
Tenant and the Landlord shall, within not more than ten (10) days’ written
request therefor, execute and return to the other party from time to time and
without cost to the Landlord, a statement in writing certifying that this Lease
is unmodified and in full force and effect (or if modified, stating the
modifications and that the Lease is in full force and effect as modified), the
amount of the annual Basic Rent then being paid hereunder, the dates to which
the same, by instalment or otherwise, and other charges hereunder have been
paid, whether or not there is any existing default on the part of the Landlord
or the Tenant, of which the other party has notice, and any other information
reasonably required.

 

ARTICLE XII - ACCESS BY LANDLORD

 

12.01      Entry by
Landlord

 

The
Tenant shall permit the Landlord and its agents, employees and workmen to enter
upon the Leased Premises at any time and from time to time for the purpose of
inspecting and making repairs, alterations or improvements to the Leased
Premises and the Tenant shall not be entitled to any compensation for any
inconvenience, nuisance or discomfort occasioned thereby.

 

12.02      Exhibiting
Leased Premises

 

The
Tenant shall permit the Landlord or its agents to exhibit the Leased Premises
to prospective tenants during the last six (6) months of the Term during
normal business hours upon at least 24 hours advance notice.

 

 

18

 

ARTICLE XIII - MISCELLANEOUS

 

13.01      Notice

 

(a)                                  Any notice,
request, statement or other writing pursuant to this Lease shall be deemed to
have been given if mailed by registered prepaid post or by facsimile
transmission as follows:

 

In
the case of the Landlord, to:

 

ORLANDO
CORPORATION

6205
Airport Road

5th
Floor

Mississauga,
Ontario

L4V
1E3

 

Attention:
President

 

Facsimile
No.: (905) 677-2824

 

And
in the case of the Tenant, to:

 

HYDROGENICS
CORPORATION

at
the Leased Premises

 

Attention:
Director of Engineering Operations

 

Facsimile
No.: (905) 851-2328

 

and
such notice shall be deemed to have been received by the Landlord or the Tenant
(as applicable) on the third business day after the date on which it shall have
been so mailed (provided that in the event that there is an interruption of
postal service, the aforesaid period shall be extended for a period equivalent
to the period of such interruption) or on the date of the facsimile
transmission.

 

(b)                                 Notice shall
also be sufficiently given if and when the same shall be delivered, in the case
of notice to the Landlord, to an executive officer of the Landlord, and in the
case of notice to the Tenant, to him personally or to an officer or manager of
the Tenant if the Tenant is a corporation. Such notice, if delivered, shall be
conclusively deemed to have been given and received at the time of such
delivery. If in this Lease two or more persons are named as Tenant, such notice
shall also be sufficiently given if and when the same shall be delivered
personally to any one of such persons.

 

Either
the Landlord or the Tenant may from time to time, by notice to the other as
aforesaid, designate another address in Canada and/or facsimile number to which
notices issued more than ten (10) days’ thereafter shall be addressed.

 

13.02      Registration

 

The
Tenant covenants and agrees with the Landlord that the Tenant will not register
or record this Lease or any part thereof against the title to the Lands or any
part thereof except by way of notice which shall be subject to the prior
written approval of the Landlord and which shall only describe the parties, the
Leased Premises and the Term and any options to renew or extend the Term (as
applicable). The Tenant covenants to execute and return to the Landlord such
notice, prepared by the Landlord in registrable form setting out the aforesaid
details, within ten (10) days’ written request therefor.

 

 

19

 

13.03      Planning Act

 

Where
applicable, this Lease shall be subject to the condition that it is effective
only if the Planning Act (Ontario) is
complied with. Pending such compliance, the Term and any extension periods shall
be deemed to be for a total period of one (1) day less than the maximum
lease term permitted by law without such compliance.

 

13.04      Obligations as Covenants

 

Each
obligation or agreement of the Landlord or the Tenant expressed in this Lease,
even though not expressed as a covenant, is considered to be a covenant for all
purposes.

 

13.05      Severability

 

Any
provision of this Lease that is determined to be illegal or unenforceable at
law shall be considered separate and severable from the remaining provisions
which shall remain in force and be binding upon the Landlord and the Tenant.

 

13.06      Overholding

 

If
the Tenant shall continue to occupy all or part of the Leased Premises after
the expiration of the Term with the consent of the Landlord, and without any
further written agreement, the Tenant shall be a monthly tenant at one hundred
and fifty percent (150%) of the monthly Basic Rent payable during the last year
of this Lease and otherwise on the terms and conditions herein set out except
as to length of tenancy.

 

13.07      Unavoidable Delays

 

Whenever
and to the extent the Landlord is unable to fulfil or shall be delayed or
restricted in the fulfilment of any obligation hereunder by reason of being
unable to obtain the material, goods, equipment, service, utility or labour
required to enable it to fulfil such obligation or by reason of any statute,
law, regulation, by-law or order or by reason of any other cause beyond its
reasonable control, whether of the same nature as the foregoing or not, the
Landlord shall be relieved from the fulfilment of such obligation for so long
as such cause continues and the Tenant shall not be entitled to compensation
for any inconvenience, nuisance or discomfort thereby occasioned. There shall
be no deduction from the Rent or other monies payable under this Lease by
reason of any such failure or cause.

 

13.08      Evidence of Payments

 

The
Tenant shall produce to the Landlord upon request, satisfactory evidence of due
payment by the Tenant of all payments required to be made by the Tenant under
this Lease.

 

13.09      Lien

 

As
security for the due payment by the Tenant of the Rent reserved hereunder and
the performance by the Tenant of all covenants, agreements, provisos and
conditions of the Tenant to be performed hereunder, the Tenant hereby grants to
the Landlord a first lien and charge on all goods, chattels, trade fixtures,
furniture, equipment and inventory of the Tenant situate on, in or about the
Leased Premises or elsewhere. Such lien and charge shall constitute a security
agreement within the meaning of the Personal Property Security Act (Ontario) and
on default of the Tenant hereunder the Landlord shall have, in addition to any
other rights and remedies it may be entitled to under this Lease or otherwise,
all the rights and remedies of a secured party under such Act.

 

13.10      Goods and Services Tax

 

Any
amount which is, by the terms of the Lease payable by the Tenant to the
Landlord and which is subject to Goods and Services Tax (“GST”) pursuant to the
Excise Tax Act (Canada) shall
be deemed to be exclusive of GST with the intent that GST shall be calculated
thereon and

 

 

20

 

paid
by the Tenant to the Landlord at the time such amount is payable pursuant to
the terms of the Lease.

 

13.11      Time of
Essence

 

Time
shall be of the essence of this Lease and every part thereof.

 

13.12      Law

 

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

 

13.13      Captions/Headings

 

The
captions appearing in the margin of this Lease and in the headings to the
Articles of this Lease have been inserted as a matter of convenience of
reference only and do not in any way whatsoever define, limit or enlarge the
scope or meaning of this Lease or any part thereof.

 

13.14      Joint and
Several Liability

 

If
the Tenant shall be comprised of more than one (1) party, the liability of
each such party under this Lease shall be joint and several.

 

13.15      Tenant
Partnership

 

If
the Tenant shall be a partnership, each person who shall be a member of such
partnership or successor thereof shall be and continue to be jointly and
severally liable for the performance and observance of all covenants,
obligations and agreements of the Tenant under this Lease even if such person
ceases to be a member of such partnership or successor thereof.

 

13.16      Environmental
Assessments

 

(a)                                  The Landlord or
its agent shall have the right to enter upon the Leased Premises and conduct
environmental assessment audits from time to time during the Term.

 

(b)                                 The Tenant
covenants and agrees to execute, forthwith upon demand therefor, at its own
cost and expense, the complete remediation/clean-up of any and all
contamination of the Leased Premises arising after the date that the Tenant
takes occupancy of the Building or any part thereof. The aforesaid covenant
contained in this paragraph (b) shall survive the expiry or other
termination of the Term.

 

13.17      Easements

 

The
Tenant agrees to postpone the Lease, upon request by the Landlord, to:

 

(i)                                     such easements
in favour of adjoining lands for purposes of ingress and egress as may be
reasonably requested by the Landlord from time to time; and

 

(ii)                                  such easements
regarding utilities and/or other services as may be required from time to time,

 

provided
in each case that any such contemplated easement does not materially interfere
with the Tenant’s use of the Leased Premises.

 

13.18      Landlord’s
Warranties

 

(a)                                  The Landlord
warrants that, to its knowledge and belief (but without having conducted any
enquiry, study or investigation), the Leased Premises comply, as at June 23,
2000, with all applicable municipal requirements or regulations, or recommendations
or orders of the Canadian Fire Underwriters Association or any

 

 

21

 

governmental
body having similar functions, or any liability or fire insurance company by
which the Landlord may be insured.

 

(b)                                 The Landlord
warrants that, to its knowledge and belief (but without having conducted any
enquiry, study or investigation), (i) there is no contamination or any
other environmental hazard or non-compliance at the Lands as at June 23,
2000 above the Ontario Ministry of the Environment clean-up guidelines as at
the said date, and (ii) there are no underground tanks or piping (other
than utility piping) on or under the Lands as at the said date. The Landlord
agrees that any cost in regard to any environmental issues that precede the
Delivery Date and adversely affect the Lands shall not be the Tenant’s
responsibility.

 

(c)                                  The Landlord
warrants that it is not aware of any structural or major repairs required to be
effected to the Building and parking area and that it has not received any
notice of non-compliance in respect of the condition of the Leased Premises,
which has not been remedied.

 

(d)                                 The Landlord
warrants that the heating, ventilation and air-conditioning system serving the
Building and the electrical, mechanical (including dock levellers, overhead
doors, shipping doors), plumbing, roof membrane and sprinkler systems of the
Building will be in good working condition as at the Delivery Date.

 

(e)                                  The Landlord
warrants that the mechanical, heating and air-conditioning system serving the
Building is currently capable of maintaining (i) an indoor air temperature
of 23°C when the outdoor air temperature is -20°C, and (ii) an indoor air
temperature of 24°C in the office area of the Building when the outdoor air
temperature is 30°C.

 

(f)                                    The Landlord warrants that
the Building shall, as at the Commencement Date, have a minimum electrical
service of 600 volts, 1200 amps.

 

13.19      Expansion
Premises

 

(a)                                  Should the
Tenant wish to relocate from the Leased Premises into and lease from the
Landlord larger premises owned by the Landlord having an area measuring at
least approximately 145,000 square feet (the “Replacement Premises”), then the
Term of the Lease shall, subject to paragraphs (b) and (c) of this
Section, end as at the date of the commencement of the term of the Tenant’s
lease from the Landlord regarding the Replacement Premises (the “Replacement
Lease”), provided that all of the following conditions are fulfilled:

 

(i)                                     the Replacement
Lease is a formal written lease in form fully satisfactory to the Landlord, as
determined by the Landlord in its sole and unfettered discretion;

 

(ii)                                  there has not
been any default by the Tenant under the Lease; and

 

(iii)                               at the time of
the Tenant’s negotiation with the Landlord regarding the Replacement Premises
(but in any event, prior to the negotiation
of the base rental rate for the Replacement Premises), the Tenant notifies the
Landlord in writing of the Tenant’s intention that the Term of the Lease end as
at the commencement of the term of the Replacement Lease.

 

(b)                                 The Tenant
acknowledges that upon the occurrence of a default by the Tenant under the
Lease, paragraph (a) of this Section shall automatically become null
and void and of no further force and effect.

 

(c)                                  Upon the
assignment of the Lease by the Tenant, paragraph (a) of this Section shall
automatically become null and void and of no further force and effect.

 

 

22

 

13.20      Entire Agreement

 

The
Tenant acknowledges that there have been no representations made by the
Landlord to the Tenant which are not set out in this Lease and that this Lease
constitutes the entire agreement between the Landlord and Tenant regarding the
Leased Premises. For greater certainty, but without limiting the foregoing
provisions of this Section, the Tenant acknowledges that Offer to Lease dated June 6,
2000 is null and void for all purposes and is of no further force and effect.
The Tenant further acknowledges that the Lease may not be modified except as
herein explicitly provided or by subsequent agreement in writing duly signed by
the Landlord and the Tenant.

 

13.21      Effect of Lease

 

This
Indenture and everything herein contained shall extend to and bind and may be
taken advantage of by the respective heirs, executors, administrators,
successors and assigns, as the case may be, of each of the parties hereto, subject
to the granting of consent by the Landlord asprovided herein to any assignment
or sublease, and where there is more than one tenant or there is a female party
or a corporation, the provisions hereof shall be read with all grammatical
changes thereby rendered necessary and all covenants shall be deemed joint and
several.

 

IN
WITNESS WHEREOF the parties hereto have duly executed this Lease.

 

 

 

	
  LANDLORD:

  	
  ORLANDO
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  Doug Kilner

  
	
   

  	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
  Name:
  DOUG KILNER

  
	
   

  	
  Title:
  PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
  Per:

  	
  /s/
  William O’ Rourke

  
	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
  Name:
  WILLIAM O’ ROURKE

  
	
   

  	
   

  	
  Title:
  VICE PRESIDENT,
  FINANCE

  
	
   

  	
   

  	
   

  
	
   

  	
  We
  have the authority to bind the Corporation

  

 

 

	
  TENANT:

  	
  HYDROGENICS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  Pierre Rivard

  
	
   

  	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
  Name:
  PIERRE RIVARD

  
	
   

  	
   

  	
  Title:
  PRESIDENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  Robert Edwards

  
	
   

  	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
  Name:
  ROBERT EDWARDS

  
	
   

  	
   

  	
  Title:
  VP FINANCE

  
	
   

  	
   

  	
   

  
	
   

  	
  I/We
  have the authority to bind the Corporation

  

 

23

 

SCHEDULE “A”

 

DESCRIPTION OF LANDS

 

Part of
Blocks 1 and 2, Plan 43M-900, in the City of Mississauga, Regional Municipality
of Peel, designated as Parts 1, 2, 3, 4 and 5 on Plan 43R-17625.

 

 

 

SCHEDULE “B”

 

DEFINITIONS

 

For
the purposes of this Lease:

 

(a)                                  “Applicable Laws” means any and all statutes, laws, by-laws,
regulations, ordinances, and requirements of governmental and other public
authorities having jurisdiction over or in respect of the Lands or the
Building, or any portion thereof, at any time and from time to time, and
including but not limited to the Environmental Protection Act, R.S.O.1990, c.E.l9,
as amended, and the Canadian
Environmental Protection Act, R.S.C. 1985, as amended.

 

(b)                                 “Additional Rent” means all amounts payable by the Tenant under
the provisions of this Lease, whether payable to the Landlord or otherwise,
over and above Basic Rent.

 

(c)                                  “Basic Rent” means those amounts set out as Basic Rent in Section 2.02
of this Lease.

 

(d)                                 “Building” means the building erected on the Lands and
municipally known as 5985 McLaughlin Road, in the City of Mississauga, Regional
Municipality of Peel.

 

(e)                                  “Buildings” means the buildings in the City of Mississauga
municipally known as 5985 McLaughlin Road, 5925 McLaughlin Road and 5970
Chedworth Way.

 

(f)                                    “Capital Tax” means the taxes or excises, imposed by any and all
taxing authorities having jurisdiction, upon the Landlord and/or the owners of
the Building based upon or computed by reference to the capital employed or
invested by the Landlord and/or the owners of the Building in the Lands, the
Building and improvements thereto.

 

(g)                                 “Commencement Date” has the meaning ascribed
thereto in Section 1.02 hereof.

 

(h)                                 “Complex” means the lands described as Parts of Blocks 1, 2
and 8, Plan 43M-900, in the City of Mississauga, designated as Parts 1, 2, 3, 4
and 5 on Plan 43R-17625; Parts 1, 2, 3, 4, 8, 9, 10, 11 and 12 on Plan
43R-17840; and Parts 6, 7 and 8 on Plan 43R-19512, together with all buildings
and improvements located thereon, municipally known as 5985 McLaughlin Road,
5925 McLaughlin Road and 5970 Chedworth Way.

 

(i)                                     “Delivery Date” means such date being the earlier to occur of
(i) such date that the Tenant takes occupancy of the Building or any part
thereof; and (ii) the Commencement Date.

 

(j)                                     “Deposit Monies” means the monies referenced in Section 2.05
of this Lease.

 

(k)                                  “Hazardous Substances” means, without limitation,
any and all hazardous substances, hazardous waste, dangerous goods, toxic
waste, toxic substances, contaminants, pollutants or related materials,
including without limitation, heavy oil, pesticides, flammables, explosives,
radioactive materials, asbestoses, urea formaldehyde foam insulation, radon
gas, PCB, any products of waste, or any other contaminants, pollutants,
substances or products declared to be hazardous or toxic under the Applicable
Laws.

 

(l)                                      “Landlord’s Architect” means a qualified architect,
engineer or Ontario Land Surveyor from time to time chosen by the Landlord.

 

(m)                               “Landlord’s Work” has the meaning ascribed thereto in Schedule “D”  hereto.

 

(n)                                 “Lands” means the parcel of land described in Schedule “A”
hereto.

 

(o)                                 “Lease” means this Lease and any schedules attached hereto
and any amendments from time to time made to this Lease in accordance with the
provisions herein set out.

 

 

 

(p)                                 “Leased
Premises” means the Lands and the Building.

 

(q)                                 “Leasehold
Improvements” means all fixtures (save for trade fixtures),
installations, additions, improvements and alterations made, erected or
installed in or on the Leased Premises by or on behalf of the Tenant.

 

(r)                                    “Net
Worth” means the amount of the Tenant’s net shareholders equity (being the
dollar amount of the Tenant’s total assets in excess of the amount of the
Tenant’s total liabilities) less the Tenant’s goodwill and other intangible
assets, as confirmed by the Tenant’s audited financial statements.

 

(s)                                  “Proportionate
Share”  means such share as determined by the Landlord in accordance with Section 3.02
of this Lease.

 

(t)                                    “Rent”  means Basic
Rent and Additional Rent.

 

(u)                                 “Storage
Area”  means such area of the Lands outlined in blue on Schedule “H” hereto
(measuring approximately 1,000 square feet).

 

(v)                                 “Taxes”  means all
taxes, rates, duties, levies and assessments whatsoever (imposed by any and all
taxing authorities having jurisdiction) levied, charged or assessed upon the
Complex or upon any part or parts thereof and all improvements now or
hereafter erected or placed thereon, or charged against the Landlord on account
thereof, including but not limited to local improvement charges (but excluding
profit and excess profit taxes and taxes assessed upon the income of the
Landlord). In addition to the foregoing, Taxes shall include any and all taxes,
charges, levies or assessments which may in the future be levied, charged or
assessed in lieu thereof or in addition thereto. Taxes shall also include all
costs and expenses incurred by the Landlord in obtaining or attempting to
obtain a reduction or prevent an increase in the amount thereof and the cost of
all consultants, solicitors and accountants retained by the Landlord with
respect thereto.

 

(w)                               “Term”  means that
period of time set out in Section 1.02 of this Lease (and any and all
extensions or renewals thereof, as may be applicable).

 

(x)                                   “Transfer”  has the meaning
ascribed thereto in paragraph (a) of Section 6.01 of this Lease.

 

(y)                                 “Transferee”  has the meaning
ascribed thereto in paragraph (a) of Section 6.01 of this Lease.

 

(z)                                   “Year”  means each
calendar year, the whole or part of which is included within the Term.

 

 

2

 

SCHEDULE “C”

 

EXTERIOR MAINTENANCE/REPAIR WORK

 

	
  Building
  Repairs – General:

  	
   

  	
  Minor
  exterior caulking, clean-up and repairs of a general nature.

  
	
   

  	
   

  	
   

  
	
  Roof
  Repairs:

  	
   

  	
  Maintain
  and repair roof as required to keep the roof in a well-maintained condition.

  
	
   

  	
   

  	
   

  
	
  Painting:

  	
   

  	
  Paint
  outside doors and frames, bollards, roof flashing and rooftop units as
  required.

  
	
   

  	
   

  	
   

  
	
  Electrical
  Repairs:

  	
   

  	
  Maintain
  and repair outside lights, replace ballasts and lamps as required.

  
	
   

  	
   

  	
   

  
	
  Paved
  Areas:

  	
   

  	
  Maintain
  and repair all asphalt and paved areas (including but not limited to pavement
  surface, curbs, sidewalks, catchbasins and concrete dolley pads).

  
	
   

  	
   

  	
   

  
	
  Parking
  Lot Sweeping:

  	
   

  	
  Sweep
  entire parking lot.

  
	
   

  	
   

  	
   

  
	
  Parking
  Lot Striping:

  	
   

  	
  Line
  paint parking areas.

  
	
   

  	
   

  	
   

  
	
  Landscaping:

  	
   

  	
  Fertilizing,
  weed spraying, lawn cutting, till and edge all beds and tree pits, pruning
  all shrubs as required, spraying of insects on trees and shrubs. Pruning and
  root feeding all trees and replacing dead plant material as required.

  
	
   

  	
   

  	
   

  
	
  Lawn
  Sprinklers:

  	
   

  	
  Start-up
  and winterize irrigation system, replace sprinkler heads as required and
  maintain system.

  
	
   

  	
   

  	
   

  
	
  Spring
  Clean-Up:

  	
   

  	
  General
  spring clean-up of debris accumulated over the winter months.

  
	
   

  	
   

  	
   

  
	
  Window
  Cleaning:

  	
   

  	
  Clean
  exterior windows six (6) times per year.

  
	
   

  	
   

  	
   

  
	
  Snow
  Removal:

  	
   

  	
  Snow
  ploughing and removal, and salting of parking areas, loading docks and
  driveways.

  

 

 

 

SCHEDULE “D”

 

LANDLORD’S WORK

 

The
Landlord will perform at its own expense the following work to the Leased
Premises (the “Landlord’s Work”) in a good and workmanlike manner:

 

1.                                                               Repair and
repaint all office walls and interior doors (in colour chosen by Tenant from
the Landlord’s samples).

 

2.                                                               Replace all
coloured and/or stained ceiling tiles.

 

3.                                                               Replace all
office floor coverings with either carpet or vinyl composition tiles (in colour
chosen by Tenant from Landlord’s samples).

 

4.                                                               Repair parking
lot and driveways.

 

5.                                                               Ensure that all
window coverings are in good working order.

 

6.                                                               Ensure that all
interior and exterior lights throughout the Building are in good working order,
including the replacement of all burned-out bulbs, tubes and ballasts.

 

7.                                                               Ensure that the
offices, washrooms and warehouse areas of the Building are in a clean and/or
broom-swept condition and that the grounds are clear and free of debris and
garbage.

 

8.                                                               Coat plant
floor with a clear sealer.

 

The
Landlord shall complete the Landlord’s Work within four (4) weeks of the
Tenant’s delivery to the Landlord of the following:

 

(i)              this Lease duly
executed by the Tenant;

 

(ii)             the Deposit
Monies; and

 

(iii)            the Letter of
Credit referenced in Section 1.06 of this Lease.

 

The
Tenant shall not interfere with the Landlord’s completion of the Landlord’s Work.

 

The
certificate of the Landlord’s Architect regarding the completion of the
Landlord’s Work shall be conclusive and binding upon the Tenant.

 

 

 

SCHEDULE “E”

 

IRREVOCABLE STANDBY LETTER OF CREDIT

 

(NAME OF BANK)

 

	
  APPLICANT:

  	
   

  	
  (Name
  and Address of Tenant)

  
	
   

  	
   

  	
   

  
	
  BENEFICIARY:

  	
   

  	
  (Name
  and Address of Beneficiary)

  
	
   

  	
   

  	
  Attention:
  Vice President, Finance

  
	
   

  	
   

  	
   

  
	
  AMOUNT:

  	
   

  	
  $650,000.00

  
	
   

  	
   

  	
   

  
	
  DATE
  OF EXPIRY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PLACE
  OF EXPIRY:

  	
   

  	
  at
  our counters in Toronto

  

 

We hereby authorize you to draw on the                                                 (“Bank”)
for account of the Applicant the sum of $650,000.00 Canadian Dollars which may
be drawn by you at any time upon written demand for payment made upon the Bank
and which demand we shall honour without inquiring whether you have a right as
between yourself and the Applicant to make such demand and without recognizing
any claim of the Applicant.

 

You
shall deliver to the Bank at such time as written demand for payment is made
upon us, a sight draft drawn on the Bank, the original of this Letter of Credit
and a certificate signed by an officer of Orlando Corporation in the form
annexed as Appendix I hereto confirming that monies drawn under this Letter of
Credit are pursuant to an agreement between the Applicant and Orlando
Corporation.

 

This
Letter of Credit is payable notwithstanding any bankruptcy, receivership,
liquidation, winding-up or other form of insolvency proceedings by or against
the Applicant.

 

This
Letter of Credit shall continue up to the close of business on the 31st day of August, 2005, and will expire on that
date and you may call for payment of the full amount outstanding under this
Letter of Credit at any time up to the close of business on that date. It is a
condition of this Letter of Credit that it shall be deemed to be automatically
extended in accordance with Section 1.06 of the Lease from the present or
any future expiration date hereof unless thirty (30) days prior to such date we
shall notify you in writing by registered mail that we elect not to consider
this Letter of Credit renewed for any such additional period. The Beneficiary
may request the Bank to confirm in writing, during the thirty (30) day period
prior to any expiry of this Letter of Credit, that this Letter of Credit has
been renewed for such additional period and the Bank shall so confirm in
writing within five (5) business days from receipt of such request from
the Beneficiary but in any event no later than one (1) business day prior
to the expiry of this Letter of Credit. The Beneficiary may also request the
Bank, at any time, to confirm in writing that this Letter of Credit has not
expired and is in good standing provided such is the case. Thereafter the Bank
will confirm in writing to the Beneficiary within five business days from
receipt of such request from the Landlord, that this Letter of Credit has not
expired and is in good standing provided such is the case. Any failure by the
Bank to so confirm in writing within the applicable period shall be deemed to
be a confirmation that this Letter of Credit has not been so renewed or is
expired and is not then in good standing.

 

This
standby Letter of Credit is subject to the uniform customs and practice for
Documentary Credits as most recently published by the International Chamber of
Commerce and engages us in accordance with the terms thereof.

 

(Signature of an Authorized Signing Officer of the Bank)

 

 

 

APPENDIX I

 

TO:                                 (Name and
Address of Bank)

 

We refer you to your Irrevocable Standby Letter of Credit No.                                   which
accompanies this Certificate and which was issued by you at the request of
(Name of Applicant).

 

We
hereby certify, intending that the same may be relied upon by you without
further inquiry, that we are entitled to draw under the Letter of Credit in
accordance with an agreement between Orlando Corporation and the Applicant and
we hereby request that you honour the accompanying draft in accordance with the
Letter of Credit.

 

 

Yours
very truly

 

ORLANDO
CORPORATION

 

 

	
  Per:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  

 

 

2

 

SCHEDULE “F”

 

SITE PLAN RE COMPLEX

 

 

 

 

 

 

 

DATED:         February 10,
2005

 

 

BETWEEN:

 

 

ORLANDO
CORPORATION

 

 

-and-

 

 

HYDROGENICS
CORPORATION

 

 

LEASE EXTENSION AGREEMENT

 

Regarding 5985 McLaughlin Road

Mississauga, Ontario

 

 

 

THIS AGREEMENT DATED the 10th day of
February, 2005

 

BETWEEN:

 

ORLANDO CORPORATION

 

(Hereinafter called the “Landlord”)

 

OF THE FIRST PART

 

-
and -

 

HYDROGENICS CORPORATION

 

(Hereinafter called the “Tenant”)

 

OF THE SECOND PART

 

WHEREAS by a lease dated the 23rd day of June,
2000 made between the Landlord and the Tenant (the “Lease”), the Landlord
demised and leased unto the Tenant the premises described therein and being
municipally known as 5985 McLaughlin Road, Mississauga, Ontario (the “Leased
Premises”);

 

AND WHEREAS the parties have agreed to extend the Lease as
hereinafter set forth.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the premises and covenants hereinafter contained and other good and valuable
consideration, the parties hereto agree as follows:

 

1.                                       The Lease is
extended for a term of five (5) years to be computed from the 1st day of September, 2005 and fully to be
completed and ended on the 31st day of August, 2010 (the “First
Extended Term”).

 

2.                                       The First
Extended Term shall be upon the same terms and conditions as are contained in
the Lease, save and except for the following:

 

(i)           The following
sections of the Lease are deleted in their entirety:

 

	
  Section 1.04

  	
   

  	
  Early
  Access

  
	
  Section 1.05

  	
   

  	
  Option
  to Renew

  
	
  Section 1.06

  	
   

  	
  Letter
  of Credit

  
	
  Section 5.08
  (b)

  	
   

  	
  Landlord’s
  Repairs

  
	
  Section 13.18

  	
   

  	
  Landlord’s
  Warranties

  
	
  Schedule
  “D”

  	
   

  	
  Landlord’s
  Work

  
	
  Schedule
  “E”

  	
   

  	
  Letter
  of Credit

  

 

(ii)                                  The Basic Rent
payable by the Tenant pursuant to Section 2.02 of the Lease for the First
Extended Term shall be as follows:

 

(a)                                  from and
including the 1st day of September, 2005 to and including the 31st day of August, 2007 (the “First Rental Period”)
the sum of $599,856.25 per annum to be paid in advance, in equal consecutive
monthly installments of $49,988.02 on the first day of each and every month
during the First Rental Period to the Landlord, the first of such payments to
be made on the 1st day of September, 2005; and

 

(b)                                 from and
including the 1st day of September, 2007 to and including the 31st day of August, 2010 (the “Second Rental Period”)
the sum of $633,448.20 per annum to be paid in advance, in equal consecutive
monthly installments of $52,787.35 on the first day of each and every month
during the Second Rental Period to the Landlord, the first of such payments to
be made on the 1st day of September, 2007.

 

(iii)                               The Calculation
of Basic Rent pursuant to Section 2.03 of the Lease for the First Extended
Term shall be 95,977 square feet multiplied by: (a) $6.25 per square foot
per annum during the First Rental Period; and (b) $6.60 per square foot
per annum during the Second Rental Period.

 

 

3.                  It is understood and agreed
that prior to the First Extended Term the Landlord shall supply and install at
its expense one 12’-0” x 14’-0” drive-in electrically operated overhead door in
a location to be mutually agreed upon, complete with ramp. This installation
does not include any mechanical or electrical or special requirements of the
local municipal building or fire departments, all of which shall be the Tenant’s
responsibility.

 

4.                  It is agreed that nothing
contained in this Agreement shall be deemed to alter, vary or change any
provision of the Lease, save as expressly set forth herein, and the parties
hereby confirm that the Lease and this Agreement shall henceforth be read and
construed together and are in full force and effect.

 

5.                  This Agreement shall enure to
the benefit of and be binding upon the parties hereto, their respective
successors and permitted assigns.

 

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

 

	
   

  	
  ORLANDO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Doug Kilner

  
	
  

  	
   

  	
  Authorized signing
  officer

  
	
  Name:

  	
  DOUG KILNER

  
	
  Title:

  	
  CHIEF EXECUTIVE OFFICER

  
	
   

  	
   

  
	
  Per:

  	
  /s/ William O’ Rourke

  
	
   

  	
  Authorized signing
  officer

  
	
  Name:

  	
  WILLIAM O’ ROURKE

  
	
   

  	
  Title:

  	
  SENIOR VICE PRESIDENT,
  FINANCE

  
	
   

  	
   

  	
   

  
	
   

  	
  We Have Authority to
  Bind the Corporation

  

 

 

	
   

  	
   

  	
  HYDROGENICS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/ R. Randall MacEwen

  
	
   

  	
   

  	
   

  	
  Authorized signing
  officer

  
	
   

  	
   

  	
  Name:

  	
  R. Randall MacEwen

  
	
   

  	
   

  	
  Title:

  	
  VP, Corporate
  Development

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized signing
  officer

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  I/We Have Authority to
  Bind the Corporation

  
					

 

2Exhibit 10.1

 

EXECUTION COPY

 

THIS WARRANT HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED OR REGISTERED UNDER
ANY APPLICABLE STATE SECURITIES LAWS. 
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT OR (B) AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

	
  No. W-001

  	
   

  	
  June 30, 2009

  	
   

  

 

KEMET CORPORATION

 

COMMON STOCK PURCHASE
WARRANT

 

This certifies that, for
value received, K Financing, LLC, a Delaware limited liability company
(including any successors and assigns, “Holder”), is entitled, subject
to the terms set forth herein, to purchase from KEMET Corporation, a Delaware
corporation (the “Company”), up to Eighty Million Five Hundred Forty-Four
Thousand Six Hundred Eighty-Five (80,544,685) fully paid and nonassessable
shares of the Company’s common stock, par value $0.01 per share (“Common
Stock”), at a purchase price per share equal to the Per Share Exercise
Price, at any time or from time to time on or after the date hereof and prior
to 5:00 p.m., New York City time, on June 30, 2019 (the “Expiration
Date”).  The number of such shares of
Common Stock issuable upon exercise of this Warrant and the Per Share Exercise
Price are subject to adjustment as provided in this Warrant.

 

1.                                       Definitions.   As used in this Warrant, the
following terms shall have the meanings indicated:

 

“Additional Shares”
has the meaning given to such term in Section 7(a),

 

“Affiliate” means,
with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with the subject Person. 
For purposes of this definition, “control” (including, with correlative
meaning, the terms “controlled by” and “under common control with”), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.

 

“Beneficially Owned”
means with respect to any Person, any securities which such Person or any
Affiliate of such Person has “beneficial ownership” of as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act or any successor provision.

 

 

“Business Day” means
any day other than a Saturday, Sunday or other day on which commercial banks in
the City of New York, New York are authorized or required by law or executive
order to remain closed.

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 

“Common Stock” has
the meaning given to such term in the preamble to this Warrant.

 

“Common Stock Equivalents”
means any warrant, option, subscription or purchase right with respect to
shares of Common Stock, any security convertible into, exchangeable for, or
otherwise entitling the holder thereof to acquire, shares of Common Stock or
any warrant, option, subscription or purchase right with respect to any such
convertible, exchangeable or other security.

 

“Company” has the
meaning given to such term in the preamble to this Warrant.

 

“Convertible Notes”
has the meaning given to such term in the Credit Agreement.

 

“Corporate Transaction”
means (i) any  reclassification
or change of the outstanding shares of Common Stock (other than as a result of
a subdivision or combination thereof), (ii) any  consolidation,
merger, statutory exchange or combination of the Company with another Person as
a result of which holders of Common Stock (or Other Securities) shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock and (iii) any  other transaction or event in connection with which all or
substantially all the Common Stock (or Other Securities) are exchanged for,
converted into, acquired for or constitute the right to receive securities of
any other Person or any other property (including cash), whether by means of a
tender offer, exchange offer, consolidation, merger, share exchange,
combination, reclassification, recapitalization, asset sale or otherwise.

 

“Credit Agreement”
means the Amended and Restated Credit Agreement, dated as of June 7, 2009,
as amended, by and among the Company, as borrower thereunder, the Subsidiary
Guarantors (as defined therein), and K Financing, LLC, as lender thereunder, as
the same may be later amended or supplemented in accordance with its terms.

 

“DTC” has the meaning
given to such term in Section 3(a).

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to time.

 

“Exercise Price”
means, in connection with the exercise of this Warrant at any time, an amount
equal to the product obtained by multiplying (i) the then applicable Per
Share Exercise Price times (ii) the number of shares of Common Stock for
which this Warrant is being exercised at such time.

 

“Expiration Date” has
the meaning given to such term in the preamble to this Warrant.

 

“Holder” has the
meaning given to such term in the preamble to this Warrant.

 

2

 

“Investor Rights
Agreement” means the Investor Rights Agreement entered into as of the date
of this Warrant, by and between the Company and the Holder, as amended from
time to time.

 

“Issuance Date” means
the date of original issuance of this Warrant.

 

“Line of Credit Loan”
has the meaning given to such term in the Credit Agreement.

 

“Maximum Aggregate
Exercise Price” means Forty Million Two Hundred Seventy-Two Thousand Three
Hundred Forty-Three Dollars ($40,272,343).

 

“Maximum Borrowings
Reduction Multiplier” means $0.02000, as such amount may be adjusted from
time to time pursuant to Section 6.

 

“Other Securities”
means any capital stock (other than Common Stock) and other securities of the
Company or any other Person which Holder at any time shall be entitled to
receive, or shall have received, on the exercise of this Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or Section 5.

 

“Per Share Exercise Price”
means, initially, $0.50000.  The Per
Share Exercise Price is subject to adjustment as provided in this Warrant.

 

“Person” means an
individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, unincorporated
organization or any other form of entity not specifically listed herein.

 

“Platinum Equity”
means Platinum Equity Capital Partners II, L.P., Holder or any of their
Affiliates.

 

“Principal Market”
means, at any time, the securities exchange, quotation system or
over-the-counter trading facility on which the Common Stock is then principally
traded or quoted at such time.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Trading Day” means,
at any time, a day on which the Principal Market is open for the general
trading or quotation of securities and the Common Stock is traded or quoted
thereon without suspension or interruption.

 

“Warrant” means this
instrument as originally executed, or if later amended or supplemented in
accordance with its terms, then as so amended or supplemented.

 

“Working Capital Loan”
has the meaning given to such term in the Credit Agreement.

 

3

 

2.                                       Exercise of Warrant.

 

(a)                                  Exercise.  This Warrant
may be exercised by Holder, in whole or in part, in accordance with its terms,
at any time or from time to time on or after the date hereof and ending at 5:00 p.m.,
New York City time, on the Expiration Date. 
In connection with any exercise of this Warrant, Holder shall deliver
this Warrant to the Company together with a subscription form in substantially
the form of Exhibit 1 attached hereto (duly executed by Holder) indicating
whether Holder is electing to exercise this Warrant as provided in Section 2(b) or
as provided in Section 2(c).  This
Warrant shall be deemed exercised for all purposes as of the close of business
on the day on which Holder has delivered this Warrant and the subscription form
to the Company (including by facsimile as provided in Section 2(e)) and,
if applicable, any payment required under Section 2(b), regardless of when
the Company issues the certificates evidencing the shares issuable upon such
exercise.

 

(b)                                 Payment of Exercise Price by Wire
Transfer or by Cancellation of Indebtedness.   Holder may
elect to exercise this Warrant to purchase a specified number of shares by
paying the Exercise Price therefor by wire transfer of immediately available
funds to an account designated in advance the Company or by cancelling
indebtedness owed by the Company to Holder pursuant to the Credit Agreement in
such amount (with application first against any interest then due and payable,
and second to outstanding principal) or by any combination thereof, as
indicated on the subscription form. 
Except with respect to the cancellation of indebtedness under the Credit
Agreement, the Holder’s obligation to pay the Exercise Price upon exercise of
the Warrant in accordance with the terms hereof shall be absolute and
unconditional and not subject to any setoff, counterclaim, recoupment or other
limitation.

 

(c)                                  Net Exercise. 
Holder may also elect to exercise this Warrant at any time or from time
to time, by receiving shares of Common Stock equal to number of shares
determined pursuant to the following formula:

 

	
   

  	
  X

  	
  =

  	
  Y (A - B)

  	
   

  
	
   

  	
   

  	
   

  	
  A

  	
   

  

 

where,

 

	
  X
  =

  	
   

  	
  the
  number of shares of Common Stock to be issued to Holder;

  
	
   

  	
   

  	
   

  
	
  Y
  =

  	
   

  	
  the
  number of shares of Common Stock as to which this Warrant is to be exercised
  (as indicated on the subscription form);

  
	
   

  	
   

  	
   

  
	
  A
  =

  	
   

  	
  the
  closing bid price on the Principal Market of the Common Stock calculated as
  of the Trading Day immediately preceding the date of exercise; and

  
	
   

  	
   

  	
   

  
	
  B =

  	
   

  	
  the Per Share Exercise
  Price.

  

 

(d)                                 Partial Exercise. 
On any partial exercise of this Warrant, the Company shall promptly
issue and deliver to or upon the order of Holder a new Warrant or Warrants of
like tenor, in the name of Holder or as Holder (upon payment by Holder of any
applicable transfer taxes) may request, providing in the aggregate on the face
or faces thereof for the 

 

4

 

purchase of the number of
shares of Common Stock for which such Warrant or Warrants may still be
exercised.

 

(e)                                  Delivery by Facsimile. 
The delivery of this Warrant and the subscription form as contemplated
above upon the exercise hereof may be made by facsimile transmission to such facsimile
number as the Company shall provide upon request of Holder for such
purpose.  If this Warrant and/or the
subscription form is delivered to the Company by facsimile transmission, Holder
shall send the original documents to the Company within three (3) Business
Days after delivery of such documents by facsimile transmission to the Company;
provided, however, that any failure or delay on the part of Holder in
delivering the originals of such documents shall not affect the validity or the
date on which this Warrant and the subscription form were delivered by
facsimile transmission or the effectiveness thereof.

 

(f)                                    Regulatory Filing Compliance. 
If applicable with respect to any exercise of this Warrant (in whole or
in part), prior to such exercise the Holder and the Company will make all
required material government filings, including notification under the
Hart-Scott-Rodino Antitrust improvements Act of 1976, as amended, and the
Holder shall pay all filing and similar fees and related expenses payable in
connection therewith.

 

3.                                       Delivery of Stock Certificates.

 

(a)                                  Delivery of Stock Certificates. 
As soon as practicable after any exercise of this Warrant and in any
event within three (3) Trading Days thereafter, the Company shall, at its
expense (including the payment by it of any applicable issue or stamp taxes),
cause to be issued in the name of and delivered to Holder, or as Holder (upon
payment by Holder of any applicable transfer taxes) may direct, a certificate
or certificates evidencing the number of fully paid and nonassessable shares of
Common Stock (or Other Securities, as applicable) (which number shall be
rounded up to the nearest whole share in the event any fractional share may
otherwise be issuable upon such exercise) to which Holder shall be entitled on
such exercise, in such denominations as may be requested by Holder, which
certificate or certificates shall be free of restrictive and trading legends
(except for any such legends as may be required pursuant to Section 19
hereof).  In lieu of delivering physical
certificates for the shares of Common Stock (or Other Securities) issuable upon
any exercise of this Warrant, provided the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program or a similar program and the
Securities (or Other Securities) are not required to contain a restrictive
legend pursuant to Section 19 hereof, upon request of Holder, the Company
shall use commercially reasonable efforts to cause its transfer agent to
electronically transmit such shares of Common Stock (or Other Securities)
issuable upon exercise of this Warrant to Holder (or its designee), by
crediting the account of Holder’s (or such designee’s) broker with DTC through
its Deposit Withdrawal Agent Commission system (provided that the same time
periods herein as for stock certificates shall apply) as instructed by Holder
(or its designee).  Subject to Section 2(f),
the Company shall pay any taxes and other similar governmental charges that may
be imposed in respect of the issue or delivery of shares of Common Stock (or
Other Securities) upon exercise of this Warrant (other than income taxes
imposed on Holder).  The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of Common
Stock (or Other Securities) issuable upon exercise of this Warrant to any
Person 

 

5

 

other than Holder, and in
case of such transfer the Company shall not be required to deliver any
certificate for shares of Common Stock (or Other Securities) upon such exercise
until such tax or charge has been paid or it has been established to the
Company’s reasonable satisfaction that no such tax or charge is due.  Upon exercise of this Warrant as provided
herein, the Company’s obligation to issue and deliver the certificates for
Common Stock in accordance with the terms of this Warrant shall be absolute and
unconditional and not subject to any setoff, counterclaim, recoupment or other
limitation.

 

(b)                                 Consequences of Failure to Deliver Stock
Certificates.  If the Company fails to issue and deliver or
cause to be delivered the shares of Common Stock (or Other Securities) to
Holder within five (5) Trading Days of a particular exercise of this
Warrant, then, (i) the Company shall pay or reimburse Holder upon demand
(accompanied by a reasonably detailed invoice) for all reasonable out-of-pocket
expenses, including, without limitation, reasonable fees and expenses of legal
counsel, incurred by Holder as a result of such failure or in enforcing Holder’s
rights hereunder, (ii) the Company shall upon demand of Holder reimburse
Holder for any damages or out-of-pocket costs suffered by Holder by reason of
such failure (including any margin interest and the cost of purchasing
securities to cover a sale, whether by Holder or Holder’s securities broker, or
borrowing of shares of Common Stock by Holder for purposes of settling any
trade involving a sale of shares of Common Stock made by Holder during the
period beginning on the date of exercise in accordance herewith and ending on
the date the Company delivers or causes to be delivered to Holder such shares
of Common Stock), and (iii) Holder shall have the right, exercisable by
notice (which may be given in writing as provided in Section 18 or given
by oral notice to a senior officer of the Company and promptly confirmed in
writing), given at any time prior to delivery to Holder of the shares of Common
Stock issuable in connection with such exercise, to rescind such exercise and
the subscription form relating thereto, in which case Holder shall thereafter
be entitled to subsequently exercise that portion of this Warrant as to which
such exercise is so rescinded.  Should
the Company fail to comply with its obligations under clauses (i) - (iii) of
this Section 3(b), the Holder shall be entitled to pursue any rights or
remedies it may have under applicable law.

 

4.                                       Adjustment for Certain Dividends and
Reclassifications.  If, at any time or
from time to time on or after the Issuance Date, all holders of Common Stock
(or Other Securities) shall have received, or (on or after the record date
fixed for the determination of stockholders eligible to receive) shall have
become entitled to receive, without payment therefor, other or additional stock
(other than Common Stock or Other Securities), rights, warrants, other
securities or property (including cash) by way of dividend, spin-off, split-up,
reclassification, recapitalization, combination or similar corporate
rearrangement, then and in each such case Holder, on the exercise hereof as
provided in Section 2, shall be entitled to receive the amount of such
stock, rights, warrants, other securities or property (including cash) that
Holder would have held on the date of such exercise if, on the date of such
dividend, dividend, spin-off, split-up, reclassification, recapitalization,
combination or similar corporate rearrangement (or the record date therefor)
Holder had been the holder of record of the number of shares of Common Stock
called for on the face of this Warrant and had thereafter, during the period
from the date thereof to and including the date of such exercise, retained such
shares and all such other or additional stock, rights, warrants, other
securities and property (including cash) receivable by Holder during such
period, giving effect to all adjustments called for during such period pursuant
to the terms of this Warrant.

 

6

 

5.                                       Corporate Transactions.  If, at any time or from time to time on or
after the Issuance Date, it is anticipated that a Corporate Transaction will be
consummated, the Company or the successor or purchasing Person, as the case may
be, shall, prior to or concurrently with the consummation of such Corporate
Transaction, execute and deliver to Holder a valid and binding written
agreement (i) providing that this Warrant shall thereafter entitle Holder
to purchase the kind and amount of shares of stock, other securities, property
or assets (including cash) receivable in, or in connection with, such Corporate
Transaction by the holder of a number of shares of Common Stock (or Other
Securities) issuable upon exercise of this Warrant immediately prior to such
Corporate Transaction, assuming such holder of Common Stock did not exercise
such holder’s rights of election, if any, as to the kind or amount of
securities, cash or other property receivable in such Corporate Transaction
(provided that, if the kind or amount of securities, cash or other property
receivable upon such Corporate Transaction is not the same for each share of
Common Stock in respect of which such rights of election shall not have been
exercised (“non-electing share”), then, for the purposes of this Section 5,
the kind and amount of securities, cash or other property receivable upon such
Corporate Transaction for each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares), (ii) providing that upon the consummation of such Corporate
Transaction, the successor or purchasing Person shall be jointly and severally
liable with the Company for the performance of all of the Company’s obligations
under this Warrant and (iii) including such other provisions relating to
this Warrant as may be necessary to preserve the intent of the parties
hereunder in light of any changes in the corporate structure or capitalization
of the Company or such successor or purchasing party following the consummation
of such Corporate Transaction.  If, in
the case of any such Corporate Transaction, the stock or other securities or
other property or assets receivable thereupon by a holder of shares of Common
Stock (or Other Securities) includes shares of stock, other securities, other
property or assets of a Person other than the Company or any such successor or
purchasing Person, as the case may be, in such Corporate Transaction, then such
written agreement shall also be executed by such other Person and shall contain
such additional provisions to protect the interests of Holder as the Board of
Directors of the Company shall in good faith reasonably consider necessary by
reason of the foregoing.  For the
avoidance of doubt, the provisions of this Section 5 shall similarly apply
to successive Corporate Transactions.

 

6.                                       Adjustment for Certain Extraordinary
Events.  If on or after the Issuance
Date the Company shall (i) issue additional shares of the Common Stock as
a dividend or other distribution with respect to the outstanding shares of
Common Stock on a pro rata basis to all holders thereof, (ii) subdivide or
reclassify the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then, in each such event, each of the Per Share Exercise Price and the
Maximum Borrowings Reduction Multiplier shall, simultaneously with the
happening of such event, be adjusted by multiplying the Per Share Exercise
Price or the Maximum Borrowings Reduction Amount, as the case may be, in effect
immediately prior to such event by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event, and the product so obtained
shall thereafter be the Per Share Exercise Price or the Maximum Borrowings
Reduction Multiplier then in effect.  The
Per Share Exercise Price and the Maximum Borrowings Reduction Multiplier, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or 

 

7

 

events described herein in this Section 6.  Without double counting under Section 4,
Holder shall thereafter, on the exercise of this Warrant as provided in Section 2,
be entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock which would be issuable on
such exercise immediately prior to such issuance, subdivision or combination,
as the case may be, by a fraction of which the numerator is the Per Share
Exercise Price in effect immediately prior to such issuance and the denominator
is the Per Share Exercise Price, as adjusted, in effect on the date of such
exercise.

 

7.                                       Adjustments for Certain Issuances of
Securities.  If, at any time (or from time to
time) from the Issuance Date through the first date on which no principal
amount of the Convertible Notes remains outstanding (excluding for this purpose
any Convertible Notes Beneficially Owned by Platinum Equity), the Company
issues any shares of Common Stock either to holders of such Convertible Notes
in respect of their Convertible Notes or to any Person (other than Platinum
Equity) the proceeds of which are directly or indirectly used to retire,
repurchase, satisfy, discharge or refinance such Convertible Notes, and in
either case expressly other than any issuance (i) upon the exercise of
this Warrant, (ii) pursuant to a transaction described in Sections 4, 5 or
6 of this Warrant or (iii) pursuant to any issuance described in causes
(i), (ii), (iv) or (v) of Section 3.2(b) of the Investor
Rights Agreement (all of such shares of Common Stock issued to holders of
Convertible Notes or the portion of such shares of Common Stock issued to such
other Persons in respect of proceeds of which are directly or indirectly used
to retire, repurchase, satisfy, discharge or refinance of such Convertible
Notes, in each case after excluding any shares of Common Stock issued to or
Beneficially Owned as a result of such issuance by Platinum Equity, “Additional
Shares”), then immediately following such issuance of Additional Shares (I) the
number of shares of Common Stock issuable upon exercise of this Warrant shall
be automatically increased by a number of shares (rounded to the nearest whole
share) equal to 99.8% of the number of Additional Shares so issued (the “Additional
Warrant Shares”) and (II) the Per
Share Exercise Price shall be automatically reduced to equal the greater of (a) $0.01000
and (b) X, as determined according to the following formula:

 

	
   

  	
  X

  	
  =

  	
  (A - B)

  	
   

  
	
   

  	
   

  	
   

  	
  (Y + Z)

  	
   

  

 

where,

 

	
  A =

  	
   

  	
  the Maximum Aggregate
  Exercise Price;

  
	
   

  	
   

  	
   

  
	
  B =

  	
   

  	
  the aggregate amount
  paid (or deemed to have been paid, in the event of an exercise pursuant to
  the net exercise provisions set forth in Section 2(c)) upon any and all
  prior exercises of this Warrant before such issuance of Additional Shares;

  
	
   

  	
   

  	
   

  
	
  Y =

  	
   

  	
  the number of shares of
  Common Stock issuable upon exercise of this Warrant immediately prior to such
  issuance of Additional Shares; and

  
	
   

  	
   

  	
   

  
	
  Z =

  	
   

  	
  Such number of Additional Warrant Shares.

  

 

8.                                       Adjustment Based on Maximum Aggregate
Line of Credit Loan and Working Capital Loan Borrowings.  If the maximum aggregate amount of borrowings
that was outstanding under all Line of Credit Loans plus all Working Capital
Loans at any time prior to a 

 

8

 

date on which this Warrant is
exercised exceeded $12,500,000, the Per Share Exercise Price in effect on any
such date that this Warrant is exercised shall be automatically reduced for
purposes of such exercise by an amount determined according to the following
formula:

 

	
   

  	
  X

  	
  =

  	
  (Y - $12,500,000)(Z)

  	
   

  
	
   

  	
   

  	
   

  	
  $1,000,000

  	
   

  

 

where,

 

	
  X
  =

  	
   

  	
  the
  amount by which the Per Share Exercise Price shall be reduced;

  
	
   

  	
   

  	
   

  
	
  Y
  =

  	
   

  	
  the
  maximum aggregate amount of borrowings that was outstanding under all Line of
  Credit Loans plus all Working Capital Loans at any time prior to such
  exercise date;  and

  
	
   

  	
   

  	
   

  
	
  Z =

  	
   

  	
  the Maximum Borrowings
  Reduction Multiplier then in effect;

  

 

provided, however, that the maximum
amount by which the Per Share Exercise Price shall be so reduced with respect
to any exercise of this Warrant in accordance with the foregoing shall be
$0.15000 (which maximum amount shall be proportionately adjusted from time to
time concurrently with the adjustment of the Maximum Borrowings Reduction
Multiplier pursuant to Section 6), and if the Per Share Exercise Price as
so reduced would be less than $0.01000, then the Per Share Exercise Price as so
reduced shall be deemed to be $0.01000; and provided, further, that if the
maximum aggregate amount of borrowings that was outstanding under all Line of
Credit Loans plus all Working Capital Loans  at any time prior to a date on which this Warrant is
exercised did not exceed $12,500,000, then no adjustment to the Per Share
Exercise Price pursuant to this Section 8 shall be made with respect to
such exercise on such date.  On the date of
any exercise of this Warrant, Holder shall deliver to the Company a statement
derived from its internal books and records setting forth the maximum aggregate
amount of borrowings that was outstanding under all Line of Credit Loans plus
all Working Capital Loans at any time prior to such exercise date.

 

9.                                       Notice of Adjustments.  Whenever the Per Share Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
is required to be adjusted, as provided herein (other than pursuant to Section 8
hereof), the Company shall promptly, but in no event later than five (5) Trading
Days thereafter, give a written notice to Holder setting forth the Per Share
Exercise Price and number of shares of Common Stock which may be purchased upon
exercise of this Warrant after such adjustment(s) and setting forth a
reasonably detailed statement of the facts requiring such adjustment(s) and
the Company’s computations of such adjustment(s).  Failure to deliver such notice shall not
affect the legality or validity of any such adjustment(s) or the
obligations of the Company with respect thereto.

 

10.                                 Notice to Holder Prior to Certain
Actions; Certain Rights.  If, at any time after
the Issuance Date, (i) the Company declares a dividend or other distribution
on its Common Stock or authorizes the granting to the holders of its Common
Stock of rights or warrants to subscribe for or purchase any share of any class
or any other rights or warrants, (ii) the Board of Directors of the
Company authorizes any reclassification of the Common Stock (other than a
subdivision or combination of its outstanding Common Stock), or any Corporate
Transaction for which approval of any stockholders of the Company is required,
or the sale or transfer of all or substantially all of the assets of the
Company or (iii) there shall be pending the voluntary or

 

9

 

involuntary dissolution,
liquidation or winding-up of the Company, then, in any such case, the Company
shall give Holder, as promptly as practicable but in any event at least ten (10) Trading
Days prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or grant, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or grant are to be determined, or (y) the date on which such
Corporate Transaction, dissolution, liquidation or winding-up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record who shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such Corporate Transaction,
dissolution, liquidation or winding-up, if applicable, shall be
determined.  In the case of any such
action of which the Company gives such notice to Holder or is required to give
such notice to Holder, Holder shall be entitled to give a subscription form to
exercise this Warrant in whole or in part that is contingent on the completion
of such action.

 

11.                                 Further Assurances.   Subject to the terms of this
Warrant, the Company shall take all reasonable action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock (or Other Securities) on the exercise
of all or any portion of this Warrant from time to time outstanding, free from
all taxes, liens and charges with respect to the issuance thereof (other than
any tax arising by reason of a transfer deemed to occur by the issuance of
Common Stock or Other Securities upon exercise of this Warrant to a Person
other than Holder).  Without limiting the
generality of the foregoing, the Company will (and will cause the Company’s
transfer agent and registrar of the Common Stock to) at all times reserve and
keep available out of the Company’s authorized but unissued shares of capital
stock, solely for issuance and delivery on the exercise of this Warrant, a
sufficient number of shares of Common Stock (or Other Securities) to effect the
full exercise of this Warrant and the exercise, conversion or exchange of all
other Common Stock Equivalents from time to time outstanding, and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase
its authorized but unissued shares of Common Stock (or Other Securities) to
such number as shall be sufficient for such purposes (including, without
limitation, seeking stockholder approval to duly amend the Company’s
certificate of incorporation to increase the number of shares of Common Stock
authorized for issuance thereunder).

 

12.                                 Noncircumvention.  The Company shall not, by amendment of its
certificate of incorporation or bylaws, through any Corporate Transaction, by
any issuance or sale of securities, or by any other voluntary action or
omission, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, and will at all times in good faith carry out all of the
provisions of this Warrant and take all action as may be required to protect
and preserve the rights of Holder of this Warrant hereunder.

 

13.                                 Representations and Warranties.  The Company represents and warrants
to Holder that (i) the execution of this Warrant has been duly and validly
authorized in accordance with the Company’s Certificate of Incorporation and
Bylaws, (ii) no further action, approvals or consents are necessary from
any other Person or governmental authority or otherwise to make this Warrant
valid and binding upon the Company, (iii) this Warrant has been duly and
validly authorized, executed and delivered by the Company and constitutes a
legal, valid, binding and 

 

10

 

enforceable agreement of the
Company, enforceable against the Company in accordance with its terms, (iv) the
Company has reserved a sufficient number of shares of Common Stock to permit
this Warrant to be exercised in full as of the date hereof and (v) the
shares of Common Stock issuable upon exercise hereof, when so issued in
accordance with the terms hereof, will be duly authorized, fully paid, and
nonassessable shares of Common Stock.

 

14.                                 Warrant Register; Transfer and Exchange
of Warrant.  The Company shall
maintain, at the principal office of the Company (or such other office as it
may designate by notice to Holder), a warrant register in which the Company
shall record the name and address of Holder, as well as the name and address of
each successive owner of this Warrant or any portion hereof.  The Company shall be entitled to treat the
Person in whose name this Warrant or any portion hereof is so registered as the
sole and absolute owner of thereof for all purposes.  Subject to compliance with Section 19,
this Warrant may be assigned or transferred by Holder and such assignment or
transfer shall be recorded in the warrant register upon surrender of this
Warrant accompanied by appropriate instruments of assignment and transfer in a
form reasonably acceptable to the Company, duly executed by Holder.  This Warrant is exchangeable, upon the
surrender hereof by Holder, at the principal office of the Company (or such
other office as it may designate by notice to Holder) for one or more new
Warrants of like tenor representing in the aggregate the right to subscribe for
and purchase the number of shares of Common Stock (or Other Securities) which
may be purchased hereunder, each of such new Warrants to represent the right to
purchase such portion of the shares which may be purchased hereunder as shall
be designated by Holder at the time of such surrender.  This Warrant shall inure to the benefit of
the successors of Holder and, upon transfer hereof in accordance with the terms
hereof, the assigns of Holder.

 

15.                                 Replacement of Warrant.  On receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant and (i) in the case of loss, theft or destruction, of
indemnity from Holder reasonably satisfactory in form to the Company (and
without the requirement to post any bond or other security), or (ii) in
the case of mutilation to the extent that this Warrant remains identifiable as
this Warrant issued to Holder, upon surrender and cancellation of this Warrant,
the Company will execute and deliver to Holder a new Warrant of like tenor
without charge to Holder.

 

16.                                 Remedies. 
The Company stipulates that the remedies at law of Holder in the event
of any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise without the
requirement to post a bond or other security.

 

17.                                 No Rights or Liabilities as a
Stockholder.  This Warrant shall
not entitle Holder to any rights or liabilities as a stockholder of the
Company.

 

18.                                 Notices, etc.  Except as otherwise specifically
provided herein, any notice herein required or permitted to be given shall be
given in writing, may be personally served and shall be deemed effectively
given (i) upon receipt, if personally served or delivered by courier or by
recognized overnight air carrier, (ii) upon transmission, if sent by
facsimile transmission, or (iii) 

 

11

 

three days after being deposited in
the United States mail, certified, with postage pre-paid and properly
addressed, if sent by United States mail. 
For the purposes hereof, the address and facsimile transmission number
of Holder shall be as furnished by Holder for such purpose and shown on the
records of the Company, the address of the Company shall be the Company’s
principal executive offices in the United States and the facsimile number for
the Company shall be as set forth on the signature page hereof.  Holder or the Company may change its address
or facsimile number for notice by service of written notice to the other as
herein provided.

 

19.                                 Transfer
Restrictions; Legend. 
Neither this Warrant nor the shares of Common Stock issuable upon
exercise of this Warrant have been registered under the Securities Act or
qualified or registered under any applicable state securities laws.  Neither this Warrant nor the shares of Common
Stock issuable upon exercise of this Warrant may be sold, pledged, transferred
or otherwise disposed of in the absence of an effective registration statement
or an available exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act as evidenced by a legal opinion
of counsel reasonably satisfactory to the Company to the effect that such
registration is not required, and otherwise in compliance with any applicable
state securities laws; provided, however, that no such legal opinion shall be
required upon an assignment, transfer or other disposition of this Warrant or
the shares of Common Stock issuable upon exercise of this Warrant by Holder to
any Affiliate thereof (which Affiliate status shall be certified to the Company
by Holder, in writing, prior to such assignment, transfer or other
disposition).  The Company shall cooperate
in good faith, at its sole expense, with any reasonable and customary requests
by Holder for information regarding the Company or other assistance in
connection with the delivery of any legal opinion referenced herein.  Until resold pursuant to an effective
registration statement under the Securities Act, or, in the absence of such
registration, until sales are permitted under Rule 144 of the Securities Act
without volume or manner of sale restriction as evidenced by a legal opinion of
counsel reasonably satisfactory to the Company to such effect, certificates
evidencing the Common Stock issued upon any exercise of this Warrant shall bear
the following legend:

 

THE SECURITIES EVIDENCED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
QUALIFIED OR REGISTERED UNDER ANY APPLICABLE STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

 

20.                                 Amendment; Waiver.  This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by a subsequent written instrument signed
by the Company and Holder.

 

21.                                 Miscellaneous. 
This Warrant shall be governed as to all matters by the internal laws of
the State of Delaware, without regard to the principles of conflict of
laws.  The headings and captions in this
Warrant are for purposes of reference only, and shall not limit or otherwise 

 

12

 

affect any of the terms
hereof.  The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability
of any other provision.  Each party
hereto hereby submits to the exclusive jurisdiction of the state and federal
courts residing in the State of Delaware with respect to the maintenance and
resolution of any claims arising hereunder or related hereto.  All references herein to this Warrant or to
any terms hereof, including all references to the Per Share Exercise Price,
shall refer at all times to this Warrant and such terms as they may be from
time to time be supplemented, amended or adjusted in accordance with the terms
of this Warrant.  Any adjustments to the
Per Share Exercise Price as provided herein shall be calculated and stated to
the fifth (5th) decimal place.

 

22.                                 Attorneys’ Fees.  In any litigation, arbitration or court
proceeding between the Company and Holder relating hereto, the prevailing party
shall be entitled to recover its reasonable attorneys’ fees and expenses and
all costs of such proceeding.

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed and delivered on its behalf
by one of its officers thereunto duly authorized.

 

 

	
  Dated:  June 30, 2009

  	
  KEMET
  CORPORATION 

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William M. Lowe, Jr.

  
	
   

  	
   

  	
  Name:
  William M. Lowe, Jr.

  
	
   

  	
   

  	
  Title:
  

  
	
   

  	
   

  	
  Facsimile
  No. for notices:

  

 

13

 

Exhibit 1

 

FORM OF SUBSCRIPTION

KEMET CORPORATION

(To be signed and delivered only on exercise of
Warrant)

 

	
  TO:

  	
   

  	
  KEMET
  Corporation

  
	
   

  	
   

  	
  2835
  KEMET Way

  
	
   

  	
   

  	
  Simpsonville,
  South Carolina  29681

  
	
   

  	
   

  	
  Attention:  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.:  (864) 228-4161

  
	
   

  	
   

  	
  E-Mail: billlowe@kemet.com

  

 

1.                                       The undersigned
Holder of the attached Warrant hereby elects to exercise its purchase right
under such Warrant to purchase shares of Common Stock of KEMET Corporation, a
Delaware corporation (the “Company”) as follows (check one or more, as
applicable):

 

o                                    to exercise the Warrant to
purchase                     
shares of Common Stock and to pay the Exercise Price therefor by wire transfer
of United States funds to the account of the Company, which transfer has been
made prior to or as of the date of delivery of this Form of Subscription
pursuant to the instructions of the Company;

 

o                                    to exercise the Warrant to
purchase                     
shares of Common Stock and to pay the Exercise Price therefor by cancelling $                                
of outstanding indebtedness owed by the Company to Holder, which cancellation
shall be deemed effective simultaneously with the delivery of this Form of
Subscription by Holder;

 

and/or

 

o                                    to exercise the Warrant with
respect to                         
shares of Common Stock pursuant to the net exercise provisions specified in Section 2(c) of
the Warrant.

 

2.                                       Please issue a
stock certificate or certificates representing the appropriate number of shares
of Common Stock in the name of the undersigned or in such other name(s) as
is specified below:

 

	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SSN
  or TIN:

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  Dated:

  	
   

  
	
  (Signature must
  conform exactly to name of Holder

  as specified on
  the face of the Warrant)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]