Document:

<PAGE>
                                                                   Exhibit 10.39

             ADDENDUM TO LEASE DATED AUGUST 8, 1991 AND MODIFIED BY
            SUBSEQUENT ADDENDUM DATED APRIL 4, 1996 BETWEEN MONTBELL
        ASSOCIATES now known as MONTBELL ASSOCIATES, L.L.C., AS LANDLORD,
                          AND H-POWER CORP., AS TENANT

IT IS AGREED by and between the parties hereto that:

So long as the Tenant is not in default under any of the terms and conditions of
the above mentioned lease and subsequent addendum, the Landlord and Tenant agree
to modify the terms and conditions of said agreements as set forth in Schedule
"A" below:

All other terms and conditions of the Lease except as expressly provided for
herein shall remain unchanged and in full force and effect.

                                  SCHEDULE "A"
                                 RENTAL SCHEDULE

DATE                       ANNUAL                MONTHLY

08/01/99 TO 07/31/00       $58,250.00            $4,687.50
08/01/00 TO 07/31/01       $58,250.00            $4,687.50

The Tenant shall have the right to renew this addendum for a one (1) year period
for the rentals set forth in Schedule "B" below. Tenant must notify the Landlord
in writing, via certified mail, return receipt requested during the month of
February 2001:

                                  SCHEDULE "B"
                                 RENTAL SCHEDULE

DATE                       ANNUAL                MONTHLY

08/01/01 TO 07/31/02       $61,745.00            $5,145.42

<PAGE>

The Tenant shall have the right to renew this addendum for a second (2nd) one
(1) year period for the rentals set forth in Schedule "C" below. Tenant must
notify the Landlord in writing, via certified mail, return receipt requested
during the month of February 2002:

                                  SCHEDULE "C"
                                 RENTAL SCHEDULE

DATE                         ANNUAL                MONTHLY

08/01/02 TO 07/31/03       $65,449.70            $5,454.14

      IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands and
seals or caused these presents to be signed by their proper corporate officers.

Dated March 29, 1999

Witness:

                                          /s/ Robert H. Koch
-----------------------------             ------------------------------
As To Landlord                            MONTBELL ASSOCIATES, L.L.C.
                                          LANDLORD

                                          /s/ H. Frank Gibbard
-----------------------------             ------------------------------
As to Tenant                              H-POWER INC.
                                          TENANT

                                      -2-<PAGE>
                                                                   Exhibit 10.40

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                               AGREEMENT OF LEASE

BETWEEN

                               SITQ INC.

For:                 SITQ INDUSTRIEL INC.,
                     ABRIM 14 INC.,
                     149855 CANADA INC.,
                     149856 CANADA INC.,

                               The Lessor

AND

                     H. POWER ENTERPRISES OF CANADA INC.

                               The Lessee

--------------------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS

TITLES                                                                   PAGES

DEFINITIONS, INTENT AND INTERPRETATION.......................................1

LEASE AND DELIVERY OF LEASED PREMISES........................................6

RENT.........................................................................7

OPERATING EXPENSES AND REAL ESTATE TAXES.....................................7

TAXES........................................................................8

HEATING, VENTILATION AND AIR CONDITIONING....................................8

USE, MAINTENANCE AND REPAIR OF THE LEASED PREMISES AND OF THE
           COMMON AREAS......................................................8

LEASEHOLD IMPROVEMENTS......................................................10

INSURANCE...................................................................11

DAMAGE AND DESTRUCTION......................................................12

DAMAGES AND SANCTION........................................................13

EXPROPRIATION...............................................................13

SIGNS AND ADVERTISING.......................................................13

COMPLIANCE WITH LAWS AND INDEMNIFICATION....................................14

ASSIGNMENT AND SUBLEASE.....................................................14

SUBORDINATION AND ATTORNMENT................................................15

DEFAULT AND RECOURSE........................................................16

NOTICE......................................................................18

TERMINATION OF LEASE........................................................18

UNAVOIDABLE DELAY...........................................................18

MISCELLANEOUS PROVISIONS....................................................18

REGULATIONS.................................................................20

ENVIRONMENTAL MATTERS.......................................................20

LANGUAGE....................................................................22

SPECIAL PROVISIONS..........................................................22

SCHEDULES:

            SCHEDULE "A"      ENVIRONMENTAL QUESTIONNAIRE

                                       20
<PAGE>

            SCHEDULE "B"      PLAN OF LEASED PREMISES

            SCHEDULE "C"      DESCRIPTION OF LAND ON WHICH THE IMMOVABLE IS
                              ERECTED

            SCHEDULE "D"      REGULATIONS

            SCHEDULE "E"      STANDARD RESOLUTION

<PAGE>

                               AGREEMENT OF LEASE
                           SAINT-LAURENT / INDUSTRIAL

BETWEEN:    SITQ INDUSTRIEL INC., ABRIM 14 INC., 149855 CANADA INC., 149856
            CANADA INC., duly represented by their mandatary, SITQ INC., a duly
            constituted company, represented by Mr. Andre Girard, Vice President
            and Mr. Denis Perreault, Leasing Director, Industrial Division, duly
            authorized for the purposes hereof as they so declare;

            (hereinafter called the Lessor)

AND:        H. POWER ENTERPRISES OF CANADA INC., a duly constituted company,
            represented by Frank Gibbard, duly authorized for the purposes
            hereof as he so declares and pursuant to the resolution annexed
            hereto in Schedule "E";

            (hereinafter called the Lessee)

                  THE PARTIES HEREBY MUTUALLY AGREE AS FOLLOWS:

                                    ARTICLE 1
                     DEFINITIONS, INTENT AND INTERPRETATION

1.1         Definitions - When used in the Lease, the following expressions and
            words shall have the meanings hereinafter set forth, unless the
            context indicates otherwise:

            1.1.1       Additional Rent: means all financial obligations of the
                        Lessee other than the Minimum Rent.

            1.1.2       Commencement of the Lease: October 1st 1997.

            1.1.3       Common Areas: means all those interior or exterior areas
                        and parts of the Immovable which, are not intended for
                        the exclusive use of a lessee.

                                       1
<PAGE>

            1.1.4       Contaminants and Hazardous Materials: have the meaning
                        attributed thereto in the Environmental Legislation and
                        include any material which, because of its properties,
                        presents a real or potential hazard to the environment
                        or the health of users of the Immovable or of the Leased
                        Premises.

            1.1.5       Environmental Legislation: means all federal, provincial
                        or municipal legislative and regulatory environmental
                        provisions, including, in all cases, any judgments,
                        orders, notices, notices of offence, decrees, codes,
                        rules, instructions, policies, guidelines and guides,
                        authorizations, certificates of authorization,
                        approvals, permits and licences issued by any authority
                        having jurisdiction, the whole as amended from time to
                        time ;

                                       2
<PAGE>

            1.1.6       Fiscal Period: means the calendar year or any other
                        period which the Lessor may determine.

            1.1.7       Immovable: means the constructions erected on the
                        land described in Schedule "C".

            1.1.8       Land: means all lots or parts of lots described in
                        Schedule "C" of this Lease.

            1.1.9       Leasable Area of the Immovable: means the total area
                        of all of the premises leased or intended for lease
                        in the immovable.

            1.1.10      Lease: means this agreement and all its schedules as
                        well as any modifications thereto.

            1.1.11      Leased Premises: means those premises leased by the
                        Leasee and outlined in red on Schedule "B", having an
                        approximate area of nine thousand (9,000) square
                        feet, situated at 1069 Begin in the City of St.
                        Laurent, Quebea.

            1.1.12      Lessee: means the Lessee or its successor.

            1.1.13      Lessor: means the owner of the immovable or its
                        mandatary.

            1.1.14      Minimum Rent: means, during the Term, the annual
                        Minimum Rent equal to SIXTY-NINE THOUSAND, THREE
                        HUNDRED AND NINETY DOLLARS ($69,390.00) payable in
                        equal, monthly and consecutive instalments of FIVE
                        THOUSAND, SEVEN HUNDRED AND EIGHTY-TWO DOLLARS AND
                        FIFTY CENTS ($5,782.50), in advance on the first day
                        of each month representing SEVEN DOLLARS AND
                        SEVENTY-ONE CENTS ($7.71) per square foot net net per
                        annum.

            1.1.15      Operating Expenses: means all of the Lessor's
                        expenses incurred (2) in the operation,
                        administration, maintenance, repair, supervision and
                        management of the immovable, including without
                        limiting the following:

                        1.1.15.1    salaries, wages and costs related to
                                    fringe benefits and pension plan benefits
                                    of the employees of the Lessor engaged in
                                    the operation, administration,
                                    maintenance, repair, supervision and
                                    management of the immovable;

                        1.1.15.2    the reasonable rental value of the space
                                    occupied by the employees of the Lessor
                                    engaged in the operation, administration,
                                    maintenance, repair, supervision and
                                    management of the immovable, as well as
                                    of any space utilized or required in the
                                    immovable for the purposes of security,
                                    protection or other similar services;

----------

(1)   Provided that no change in the Fiscal Period result in the Lessee
      paying any amount in excess of the amount which it would have paid had
      the Fiscal Period not have been changed.

(2)   without duplication or profit to the Lessor or any affiliates (as that
      term is defined in the Canada Business Corporation Act)

                                       3
<PAGE>

                        1.1.15.3    the cost of all goods and services
                                    furnished, employed or utilized in the
                                    operation, administration, maintenance,
                                    repair, supervision and management of the
                                    Immovable and of the Common Areas;

                        1.1.15.4    the cost of works, replacements or of
                                    repairs made to the Common Areas or to the
                                    Immovable, except those relating to the
                                    structure of the Immovable which shall be
                                    paid by the Lessor, subject to article 7.3.
                                    The term "structure" means the
                                    foundations,(1) and the frame of the
                                    Immovable;

                        1.1.15.5    the Cost Of(2) modifications, improvements
                                    and additions to the Immovable and to the
                                    equipment thereof as well as the specialized
                                    equipment or services necessary for the
                                    establishment, in the Immovable, of energy
                                    conservation measures, when, in the opinion
                                    of the Lessor, these costs are likely to
                                    reduce the Operating Expenses of the
                                    Immovable, improve the welfare or the
                                    security of the lessees of the Immovable or
                                    are required by law;

                        1.1.15.6    the capital cost, calculated according to a
                                    method of depreciation determined by the
                                    Lessor, of work or of equipment required for
                                    the operation, administration, maintenance,
                                    repair, supervision, management,
                                    modification or improvement of the Immovable
                                    or the Common Areas or of energy
                                    conservation measures as well as interest,
                                    at the Prime Rate, on the undepreciated
                                    capital cost of all such items;

                        1.1.15.7    expenses incurred to redo, improve, modify
                                    or increase the insulation of the Immovable
                                    when, in the opinion of an expert in such
                                    matters, such expenses may reduce the cost
                                    of the electricity or gas consumed in the
                                    Leased Premises;

                        1.1.15.8    the cost of insurance premiums subscribed
                                    for by the Lessor in respect of the
                                    Immovable;

                        1.1.15.9    annual administrative fees of fifteen
                                    percent (15%) calculated on the total of the
                                    Operating Expenses.(3)

            1.1.16      Prime Rate: means the prime rate of the National Bank of
                        Canada, plus(4).

                                  RIDER PAGE 3A

            1.1.15      Operating Expenses chargeable to the Lessee shall not
                        include :

                        1)          salaries and bonuses of officers and
                                    executives of the Lessor;

                        2)          the costs of any work or service performed
                                    on an extra cost basis for any tenant of the
                                    Immovable to a materially greater extent or
                                    in a materially more

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(1)         the sub-floors, outer walls, structural columns and beams, common
            walls, floors (except floor coverings)

(2)         non-structural

(3)         See Rider Page 3A

(4)         two percentage points (2%)

                                       4
<PAGE>

                                    favourable manner that furnished generally
                                    to the tenants or other occupants of the
                                    Immovable (including the Lessee);

                        3)          the cost of any work or services performed
                                    for any facility other than the Immovable;

                        4)          the cost and other Operating Expenses
                                    related to any additions to the Immovable
                                    after the original construction;

                        5)          interest on debt or principal amortization
                                    payments or any other payments on any
                                    hypothec and rental or any other payments
                                    under any emphyteutic lease or other
                                    underlying lease;

                        6)          any fees or costs incurred in procuring or
                                    attempting to procure other tenants
                                    including, but not necessarily limited to,
                                    finders' fees, attorneys' fees and expenses,
                                    entertainment costs and travel expenses;

                        7)          any costs included in Operating Expenses
                                    representing an amount paid to a person,
                                    firm, corporation or other entity related
                                    (as defined in the Income Tax Act (Canada)
                                    to the Lessor which is in excess of the
                                    amount which would have been paid on an
                                    arm's-length basis in the absence of such
                                    relationship;

                        8)          the costs of initial cleaning of, and
                                    rubbish removal from, the Immovable to be
                                    performed prior to final completion of any
                                    tenant's space;

                        9)          attorney fees, costs and other expenditures
                                    incurred in connection with leasing disputes
                                    with other tenants or occupants of the
                                    Immovable or with other third persons and/or
                                    claims by such other tenants or occupants or
                                    third persons;

                        10)         the cost of advertising or promoting for the
                                    Immovable;

                        11)         taxes and insurance on tenant improvements
                                    in locations other than the Leased Premises;

                        12)         the cost of curing any violation of any law,
                                    ordinance, or regulation applicable to the
                                    Immovable or remedying any environmental
                                    problem, unless such condition was caused by
                                    the Lessee.

            1.1.17      Proportionate Share: means the ratio of the area of the
                        Leased Premises to the Leasable Area of the Immovable,
                        which the parties have set as being NINETEEN PER CENT
                        AND TWENTY-THREE HUNDREDTHS ( 19.23 % ); this percentage
                        may vary in the event of a change of the area of the
                        Leased Premises or of the Leasable Area of the
                        Immovable.

            1.1.18      Real Estate Taxes: means all taxes or surtaxes that a
                        local municipality or a school board imposes on an
                        immovable or in respect of the immovable if the tax or
                        surtax is imposed regardless of use, including interest
                        on deferred payments and annual administration fees of
                        fifteen percent (15%) calculated on the total of the
                        Real Estate Taxes, but excluding tax on the income or on
                        the capital of the Lessor and excluding any tax on real
                        estate transfers.

            1.1.19      Rent: means the Minimum Rent and the Additional Rent.

            1.1.20      Taxes: means all governmental levies of whatever nature
                        normally paid by lessees (for example, business and
                        water taxes, G.S.T., Q.S.T.), whether they relate to the
                        Leased Premises, to the contents thereof or to the
                        business carried on therein.

                                       5
<PAGE>

            1.1.21      Taxing Authority: means any governmental authority
                        authorized to impose taxes.

            1.1.22      Term: means the period commencing at the Commencement of
                        the Lease and terminating at the Termination of the
                        Lease.

            1.1.23      Termination of the Lease: September 30th 2000.

            1.1.24      Unavoidable delay: means a delay caused by circumstances
                        (other than the financial situation of either of the
                        parties) which are beyond the control of the Lessor or
                        of the Lessee.

            1.1.25      Use of the Leased Premises: OFFICE, WAREHOUSE AND
                        MANUFACTURE OF FUEL CELLS AND FUEL CELL COMPONENTS and
                        for no other purposes.

1.2         Intent - It is the intention of the parties that the Lessor collect
            an entirely net rent. The Lessor shall not be liable for any costs
            of any nature whatsoever relating to the Leased Premises, which
            costs shall be entirely borne by the Lessee, except as expressly
            otherwise provided herein.

                                    ARTICLE 2
                      LEASE AND DELIVERY OF LEASED PREMISES

2.1        Inspection and Delivery of Leased Premises - The Lessee acknowledges
           having carefully inspected the Leased Premises and acknowledges to be
           entirely satisfied therewith. If such inspection has not been made,
           the Lessee undertakes to do so at the time of the delivery of the
           Leased Premises and to notify the Lessor, within(1) days of the said
           delivery, of any defects in the Leased Premises failing which, the
           Lessee shall be deemed to have taken delivery of the Leased Premises
           in a good state and to be satisfied therewith and shall acknowledge
           that the Lessor has discharged all of its obligations with respect to
           the preparation and delivery of the Leased Premises.(2)

2.2        Delay in the Leasehold Improvements of the Lessee - The Term shall in
           no way be affected, if the Lessor agrees that the Lessee undertake
           leasehold improvements for the Leased Premises and that same have not
           been completed prior to the Commencement of the Lease.

2.3        Delay in the Leasehold Improvements of the Lessor - The Term shall in
           no way be affected, if the Lessor agrees to undertake leasehold
           improvements for the Leased Premises and that same have not been
           completed prior to the Commencement of the Lease due to a reason
           attributable to the Lessee. If the delay is attributable to the
           Lessor, the Lessee may not claim any damages but the Commencement of
           the Lease shall be delayed by the number of days equal to the number
           of days for which the delay has occurred.(3)

2.4        Minor Deficiencies - The Leased Premises shall be deemed ready for
           delivery and consequently there shall be Commencement of the Lease
           notwithstanding uncompleted work, insofar as they do not
           significantly interfere with the use of the Leased Premises.

----------

(1)         thirty (30)

(2)         Exceptions to the foregoing relate to latent or structural defects,
            as well as defects which cannot be determined within said thirty
            (30) day period as a result of the time of year when delivery of the
            Leased Premises is given to the Lessee (e.g. the heating system).

(3)         Should the Lessor be unable to have completed the Initial Leasehold
            Improvements prior to the Commencement of the Lease, the Lessor
            covenants that the lease signed between the parties shall be
            entitled, therefore the Lessee shall be entitled to continue to
            occupy the temporary office space it presently occupies at 3300
            Cote-Vertu, suite 204 until such time as the Lessor will have
            completed the Initial Leasehold Improvements.

                                       6
<PAGE>

                                    ARTICLE 3
                                      RENT

3.1        The Rent shall be paid on the first day of each month, without
           compensation nor reduction and remitted at the office designated by
           the Lessor. Any adjustments for parts of months shall be made on a
           per diem basis.

                                    ARTICLE 4
                    OPERATING EXPENSES AND REAL ESTATE TAXES

4.1        Upon the Commencement of the Lease and thereafter prior to or at the
           beginning of each Fiscal Period, the Lessor shall estimate the amount
           of the Operating Expenses which will be incurred for the upcoming
           year. The Lessee shall pay the Lessor, on a monthly basis, an
           Additional Rent equal to one-twelfth (1/12th) of its Proportionate
           Share of such Operating Expenses. The Lessor has estimated the
           Operating Expenses for 1997 to be EIGHTY-SIX CENTS per square foot
           ($0.86/sq. ft.) per annum of the area of the Leased Premises.

4.2        At the end of each Fiscal Period, the Lessor shall remit to the
           Lessee a statement audited by an independent firm of chartered
           accountants indicating the actual Operating Expenses incurred for the
           said Fiscal Period. This statement shall bind the parties. If it is
           determined that the payments made by the Lessee are incorrect, the
           parties shall make the necessary adjustments.

4.3        Should the Fiscal Period be modified or should a part only of a
           Fiscal Period be comprised in the Term, the parties shall immediately
           make the necessary adjustments.

4.4        The Lessor may, during the course of the Fiscal Period, reevaluate
           its estimate of the Operating Expenses and, in such a case, the
           Additional Rent shall be adjusted accordingly.

4.5        During the course of each Fiscal Period, the Lessee shall pay its
           Proportionate Share of the Real Estate Taxes at such time indicated
           by the Lessor(1) and following the remittance of an invoice. The
           Lessor has estimated the Real Estate Taxes for 1997 to be ONE DOLLAR
           AND SIXTY-EIGHT CENTS per square foot ($1.68/ sq. ft.) per annum of
           the area of the Leased Premises.

4.6        Only the Lessor may contest the property evaluation of the Immovable
           as well as the collection or imposition of Real Estate Taxes. All
           costs associated with such contestation shall be included in the
           Operating Expenses and any reimbursement of Real Estate Taxes shall
           be credited to the Lessee.

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(1)         in two (2) instalments

                                       7
<PAGE>

4.7         If, during the Term, the system of real estate taxation is modified
            or if in addition to or instead of the Real Estate Taxes a new tax
            or levy is imposed with respect to the Immovable, the words "Real
            Estate Taxes" shall include such new tax or levy.

                                    ARTICLE 5
                                      TAXES

5.1         The Lessee shall pay all Taxes when due. If the method of collecting
            such Taxes is altered so as to make the Lessor liable for payment
            thereof, the Lessee shall reimburse the Lessor on demand.

                                    ARTICLE 6
                    HEATING, VENTILATION AND AIR CONDITIONING

6.1         Heating - The Lessee shall ensure that the Leased Premises are
            adequately heated.

6.2         Services - The Lessee shall pay to the public utilities all costs
            relating to heating, gas, electricity, lighting and as well as all
            other services used by it in the Leased Premises.

6.3         Maintenance and Repair of Equipment - The Lessee shall retain at its
            expense the services of experts in order to repair, maintain or
            replace equipment and accessories necessary for the heating,
            ventilation and air conditioning, if any, of the Leased Premises.
            The Lessee shall provide the Lessor with a duly executed copy of the
            service contract with respect to the foregoing within thirty (30)
            days from the date of the signature of the Lease. The Lessor may, at
            its sole discretion, provide the repair and maintenance service for
            the equipment, and in such a case, the related expenses shall be
            included in the Operating Expenses.

                                    ARTICLE 7
                       USE, MAINTENANCE AND REPAIR OF THE
                     LEASED PREMISES AND OF THE COMMON AREAS

7.1         Use of the Leased Premises - The Lessee undertakes to use the Leased
            Premises with prudence and diligence. The Lessee undertakes not to
            disturb the peaceful enjoyment of the other lessees failing which
            the Lessee will be liable towards the Lessor and the other lessees
            for any damage that may result, whether such damage is caused by the
            Lessee's own fault, acts or omissions or by the fault, acts or
            omissions of persons it allows to use or to have access to the
            Leased Premises.

7.2         (1)

7.3         [Maintenance and Repair of the Leased Premises] - The Lessor shall
            not effect any work, replacement, repairs or maintenance in the
            Leased Premises, unless as expressly otherwise provided herein.
            Notwithstanding any law to the contrary, the Lessee shall undertake,
            without delay and at its expense, all such works, replacements,
            repairs, and maintenance of any nature whatsoever in order to keep
            the Leased Premises in a good state. The present provision includes
            the Lessee's obligations to pay for the works, replacements, repairs
            and maintenance relating to the structure of the Immovable when such
            are attributable to an act or omission of the Lessee or of any
            person the Lessee allows to use or to have access to the Leased
            Premises.

----------
(1)         The Lessee shall have the right to leave the Leased Premises vacant
            but shall respect all of its monetary obligations under the Lease
            until the Termination of the Lease.

                                       8
<PAGE>

            The Lessee shall not effect in the Leased Premises, in the Immovable
            or in the Common Areas, such works, replacements, repairs and
            maintenance for which the Lessor is liable pursuant to the Lease or
            by law.

7.4         Inspection and Repairs - The Lessor may enter the Leased Premises at
            all times to examine their condition.(1) If the Lessee neglects to
            undertake the works, replacements, repairs and maintenance to which
            it is bound, the Lessor may, after having given five (5) days prior
            written notice, enter the Leased Premises and carry them out in the
            place and at the expense of the Lessee. The cost thereof, plus an
            administration fee equal to fifteen percent (15%), shall be paid by
            the Lessee as Additional Rent, subject to the rights and recourses
            of the Lessor pursuant to the Lease.

7.5         Notice of Defects - The Lessee(2) shall notify the Lessor within a
            reasonable delay of any defect or deterioration which is susceptible
            of damaging the Leased Premises, the Immovable or the Common Areas.

7.6         Use of the Common Areas - The Lessee may use the Common Areas with
            all others who are also entitled to use them

            The Lessor may at all times, (3) court authorization (4), change the
            form and the destination of the Immovable and of its Common Areas
            and carry out all works, replacements, repairs and maintenance which
            it deems necessary to ensure the conservation and the enjoyment of
            the Immovable and the Leased Premises. If the Lessor proceeds with
            such works, it shall ensure that the enjoyment of the Leased
            Premises is not materially diminished. If necessitated by the nature
            of the work, replacements, repairs or maintenance, the Lessor may,
            without court authorization, require the Lessee to vacate or be
            temporarily dispossessed of the Leased Premises; and in such a case,
            the Lessor shall compensate the Lessee.

7.7         Right of Access - If the Lessor deems it necessary to install in the
            Leased Premises some portions of the systems serving the Immovable,
            the Lessee shall authorize the Lessor to carry out such work without
            being compensated, provided that the enjoyment of the Leased
            Premises is not diminished(5).

(6)

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(1)         Such entry shall be preceded by at least twenty-four (24) hour
            notice, save in the event of an emergency, when no prior notice is
            necessary.

(2)         upon becoming aware of same,

(3)         with

(4)         and prior written notice

(5)         and the Lessor compensated the Lessee for any damage caused to the
            Leased Premises or any property therein

(6)         7.8         The Lessor shall throughout the Term, subject to the
                        provisions of Section 7.3, Article 11 and Article 20
                        hereof, be responsible to effect in a timely and proper
                        manner all repairs which are the responsibility of the
                        Lessor as provided for in this Lease, and all repairs
                        which are the consequence of the negligent act or
                        omissions of the Lessor or those for whom the Lessor is
                        responsible in law or things under the Lessor's custody.

                                       9
<PAGE>

                                    ARTICLE 8
                             LEASEHOLD IMPROVEMENTS

8.1         All of the leasehold improvements carried out in the Leased Premises
            shall be subject to the prior approval of the Lessor and to the
            following conditions:

            8.1.1       If the leasehold improvements are effected by the
                        Lessor, the Lessee must pay all costs thereof on demand
                        and an additional amount equal to fifteen percent (15%)
                        as a coordination and supervision fee.

            8.1.2       If such leasehold improvements are effected by the
                        Lessee, it shall, at its expense, under pain of
                        suspension of the work, execute such work by contractors
                        approved by the Lessor. Such contractors shall:

                        (a)         furnish to the Lessor the plans and
                                    specifications of the proposed leasehold
                                    improvements; if the plans and
                                    specifications are approved, such leasehold
                                    improvements must be made in accordance with
                                    same(1);

                        (b)         obtain all required permits and
                                    authorizations;

                        (c)         effect the leasehold improvements pursuant
                                    to instructions from the Lessor; and

                        (d)         subscribe for liability insurance covering
                                    their activities in the Immovable for a
                                    minimum amount of three million dollars
                                    ($3,000,000).

            8.1.3       Should the Lessee carry out the leasehold improvements,
                        it recognizes that it is not the mandatary of the Lessor
                        and the Lessee also acknowledges that such leasehold
                        improvements have been requested and carried out by it
                        for its own benefit.

            8.1.4       Should the Lessee carry out the leasehold improvements,
                        it shall pay to the Lessor a sum equal to five percent
                        (5%) of the cost of such work to compensate the Lessor
                        for the review and approval of the plans and
                        specifications.

8.2         Any leasehold improvements, whether they have been effected by the
            Lessee or by the Lessor, prior to or during the Term, shall, upon
            their completion, become a part of the Leased Premises and shall be
            surrendered with the Leased Premises at the Termination of the
            Lease, without any compensation being due by the Lessor to the
            Lessee. Alternatively, the Lessor may require the Lessee to remove
            at Lessee's cost any(2), in such a case, the Lessee shall restore
            the Leased Premises to their original condition including repairs
            resulting from the normal aging of the Leased Premises.

            The Lessee may, at the Termination of the Lease, remove all movable
            property found on the Leased Premises, subject to the fulfilment of
            all of its obligations pursuant to the Lease. All movable property
            found on the Leased Premises after the Termination of the Lease(3),
            shall be deemed to have been abandoned and the Lessor may dispose of
            same at its sole discretion without compensation.

            (4)

----------

(1)         in all material respects

(2)         trade fixtures

(3)         , which is not removed within ten (10) days following receipt of
            written notice to this effect

(4)         At the expiration or earlier termination of the Term, the Lessee
            will have no obligation to restore the Leased Premises to any
            previous or base-building condition. For greater certainty, the
            Lessee shall have no obligation to remove the Initial Leasehold
            Improvements and, should the Lessor desire to remove any of same,
            all costs relating thereto shall be borne solely by the Lessor.
            Notwithstanding the foregoing, the Lessee shall be permitted to
            remove any of the Initial Leasehold Improvements, provided that the
            Lessee shall repair any damage caused by such removal.

                                       10
<PAGE>

                                    ARTICLE 9
                                    INSURANCE

9.1         The Lessee shall, at its own expense and throughout the Term, keep
            in force:

                        (a)         insurance coverage for public liability of
                                    business, covering the Leased Premises and
                                    the movable property located therein, for an
                                    amount equal to a minimum of THREE MILLION
                                    DOLLARS 03,000,000) for each occurrence or
                                    for any greater amount which the Lessor may
                                    reasonably request from time to time, which
                                    insurance must contain such guarantees as
                                    required by the Lessor;

                        (b)         a broad form insurance coverage for all of
                                    the movable property located in the Leased
                                    Premises, and namely the leasehold
                                    improvements, for an amount equal to their
                                    replacement cost, without any deductions for
                                    depreciation, which insurance shall, in
                                    addition, have the following endorsements:
                                    replacement value and any other endorsements
                                    required by the Lessor;

                        (c)         business interruption insurance "broad form"
                                    providing standard coverage of a minimum
                                    period of TWELVE (12) months, in such amount
                                    to compensate the Lessee for all loss of
                                    earnings and for additional expenses
                                    attributable namely to the perils to be
                                    insured against pursuant to sub-paragraphs
                                    (a), (b) and (c) mentioned above, which
                                    insurance shall also include such
                                    endorsements as required by the Lessor;

                        (d)         all other insurance which the Lessor may
                                    reasonably require from time to time.

9.2         All insurance policies shall satisfy the following conditions:

                        (a)         they shall be subscribed with insurers
                                    acceptable to the Lessor; and

                        (b)         they shall provide that they will not be
                                    permitted to lapse or be modified unless the
                                    insurer gives the Lessor a prior written
                                    notice of at least thirty (30) days to that
                                    effect.

9.3         Increase in Risk - The Lessee shall:

                        (a)         not do anything which increases the risk of
                                    fire and the insurance premium rates for the
                                    Immovable;

                        (b)         comply with the requirements of the Lessor's
                                    insurers or of any associations of insurers
                                    having jurisdiction in such matters; and

                        (c)         not keep dangerous materials in the Leased
                                    Premises unless same are required for its
                                    business and, in such case, in such
                                    quantities as are permitted by the Lessor's
                                    insurance policies, failing which the Lessee
                                    shall pay to the Lessor any resulting
                                    increase of the insurance premiums.

9.4         Certificates - The Lessee shall furnish the Lessor with certificates
            of insurance at least ten (10) days prior to taking possession of
            the Leased Premises and thereafter, within ten (10) days of the
            renewal thereof. If the Lessee fails to subscribe for the insurance
            for which it is

----------

            permitted to remove any of the Initial Leasehold Improvements,
            provided that the Lessee shall repair any damage caused by such
            removal.

                                       11
<PAGE>

            bound, the Lessor(1) may do so in the name of the Lessee and in
            such event, all premiums paid by the Lessor shall be reimbursed by
            the Lessee.

9.5         Notwithstanding the fact that the Lessee pays its Proportionate
            Share of the Lessor's insurance premiums, the Lessee acknowledges
            that it shall not be a co-insured, that it shall not have any
            insurable interest in the policies and that it shall remain liable
            for any damage that might be caused by its fault, acts or omissions
            or those of the persons the Lessee allows to use or to have access
            to the Leased Premises. The Lessor or its insurers shall not waive
            their right to claim from the Lessee any damage that the Lessee is
            responsible for under the Lease or the law.

9.6         Lessor shall, at all times throughout the Term, carry all-risks
            property insurance on the Immovable and comprehensive boiler and
            machinery insurance on the equipment contained therein and owned by
            the Lessor, in such reasonable amounts and with such reasonable
            deductions as would be carried by the prudent owner of a reasonably
            similar building having regard to size, age and geographical
            location.

                                   ARTICLE 10
                             DAMAGE AND DESTRUCTION

10.1        Destruction of Leased Premises - Should the Leased Premises(2) be
            damaged by a loss covered by the Lessor's insurance,(3) the Lessor
            shall notify the Lessee, by way of written notice transmitted within
            thirty (30) days of such loss, that the Leased Premises are:

            10.1.1      wholly uninhabitable or that their utilization is
                        dangerous and cannot be reasonably repaired within one
                        hundred and eighty (180) days following the loss, as the
                        case may be, either party may resiliate the Lease with
                        retroactive effect to the date of the loss(4);

            10.1.2      wholly uninhabitable or that their utilization is
                        dangerous but are reasonably reparable within one
                        hundred and eighty (180) days following the loss, then,
                        in such a case(5), the payment of Rent shall abate from
                        the date of the loss until such time that the Leased
                        Premises are repaired and ready to be occupied by the
                        Lessee;

            10.1.3      reasonably reparable within one hundred and eighty (180)
                        days following the loss and are partly usable in the
                        interim; then, in such a case, payment of Rent shall
                        abate, with respect to the unusable area, from the date
                        of the loss until such time that the damages have been
                        substantially repaired.

(6)

10.2        No Obligation to Rebuild - The Lessor shall not have the obligation
            to repair or rebuild the Immovable, the Leased Premises or their
            contents(7).

----------

(1)         , subject to Section 17.1 (a) (iii),

(2)         or access thereto or egress therefrom,

(3)         to the extent that the Lessee shall no longer be able to carry on
            its business.

(4)         by written notice given to the other party within twenty (20) days
            of receipt of the aforesaid notice. If neither party reiliates the
            Lease within such period, Lessor shall be obliged to repair, replace
            or reconstruct the Leased Premisis in an expeditious and diligent
            manner

(5)         the Lessor shall repair, replace or reconstruct the Leased Premises
            in an expeditious and diligent manner

(6)         For the purpose of this Section 10.1, the term "uninhabitable" shall
            include the situation where access to or egress from the Leased
            Premises are materially adversely affected, whether or not the
            Leased Premises itself are damaged or destroyed.

(7)         , unless the loss can reasonably be repaired within one hundred and
            eighty (180) days following the loss

                                       12
<PAGE>

                                   ARTICLE 11
                              DAMAGES AND SANCTION

11.1        Liability of the Lessee - The Lessee shall be liable for damages
            caused by its fault,(2) acts or omissions or of those of such
            persons for whom(3). The Lessee shall hold the Lessor harmless from
            any claim made by any person following such damages.

11.2        Non Liability of the Lessor - The Lessor shall not be liable for
            damages occurring inside or outside the Leased Premises resulting
            from any cause whatsoever, unless such damages are to the fault(4)
            of the Lessor(5). The Lessor shall not be liable for damages
            suffered by the Lessee resulting from the fault, acts or omissions
            attributable to a lessee or a third party even if such lessee or
            third party is a person whom the Lessee or another lessee of the
            Immovable allows to use or to have access to the Leased Premises.

11.3        Limited Liability - Even if the damages are directly attributable to
            the fault of the Lessor, its liability shall extend only to the
            movable property and to the ordinary fixtures of the Lessee located
            in the Leased Premises and shall not extend to documents and
            securities.

11.4        Sanction - Unless otherwise stipulated in the Lease, the Lessee
            shall not in any case have the right to a reduction of Rent or to
            the resiliation of the Lease, even if the damage suffered by the
            Lessee is attributable to the fault, an act or an omission of the
            Lessor or of the other lessees or occupants of the Immovable.
            Nevertheless, the Lessee may, where a court grants it, obtain from
            the Lessor compensation resulting from damages directly attributable
            to the fault of the Lessor.

                                   ARTICLE 12
                                  EXPROPRIATION

12.1        Resiliation of the Lease - In the case of an expropriation or of a
            taking of possession ("Expropriation") which, according to the
            Lessor, renders the Immovable or the Leased Premises unusable,(6)
            may terminate the Lease from the date of the Expropriation by way of
            a written notice to the(7) Lessee. The Lessee may claim any damages
            from the expropriating party and not from the Lessor. The Lessor is
            not obligated to contest the Expropriation.

                                   ARTICLE 13
                              SIGNS AND ADVERTISING

13.1       Consent of the Lessor - Any sign or notice visible from the exterior
           of the Leased Premises shall be approved by the Lessor. The Lessee
           shall repair at its expense any damage which may be caused by their
           installation or removal.

--------

1)          In any event, should the Leased Premises not have been substantially
            completed, repaired or rebuilt within two hundred and forty (240)
            days of the damage or destruction, the Lessee shall have the right
            to terminate the Lease on thirty (30) day notice sent to the Lessor.

(2)         negligent

(3)         it is responsible in law

(4)         negligent act or omission

(5)         , or those for whom the Lessor is responsible in law. Subject to the
            foregoing,

(6)         either party

(7)         other party

                                       13
<PAGE>

                                   ARTICLE 14
                    COMPLIANCE WITH LAWS AND INDEMNIFICATION

14.1        Compliance with Laws and Regulations - The Lessee shall comply with
            all laws and regulations governing the business conducted in the
            Leased Premises. The Lessee shall carry out any changes to the
            Leased Premises or to the business conducted therein which may be
            legally required by the competent authorities, failing which, the
            Lessor, after having given written notice to the Lessee, may make
            such changes in its place and at its expense. The Lessee shall
            indemnify the Lessor against any penalty payable by the Lessor
            resulting from the Lessee's breach to comply with the present
            article, including all related expenses and legal fees incurred by
            the Lessor.

                                   ARTICLE 15
                             ASSIGNMENT AND SUBLEASE

15.1        Mandatory Consent of the Lessor - The Lessee shall not assign the
            Lease or sublet the Leased Premises in whole or in part, nor suffer
            a portion or all of the Leased Premises to be utilized by another
            person without the written consent of the Lessor, which consent may
            not be withheld without a serious reason.

15.3        Information to be provided - If the Lessee wishes to sublet the
            Leased Premises or assign the Lease, it shall provide the Lessor
            with the following information:

            15.3.1      the name, address and telephone number of the proposed
                        sublessee or assignee or in the case of a change in the
                        effective control of a corporation, a company, a general
                        partnership, a limited partnership or an undeclared
                        partnership the names, addresses and telephone numbers
                        of the senior executives of a corporation, a company, a
                        general partnership, a limited partnership or an
                        undeclared partnership acquiring the control thereof;

            15.3.2      references from banks and other credit organizations,
                        financial statements (if available) and any other
                        information relating to commercial experience which the
                        Lessor may reasonably require for the purposes of its
                        evaluation;

            15.3.3      if the sublessee or the assignee is a corporation, a
                        company, a general partnership, a limited partnership or
                        an undeclared partnership, the constituting documents or
                        declarations thereof, as the case may be; and

            15.3.4      the agreement of sublease or assignment.

15.4        Justified Refusal - The Lessor may refuse the sublet or the
            assignment, for any serious reason, including the following:

            15.4.1      failure to provide the required information pursuant to
                        section 15.3;

            15.4.2      ;

            15.4.3      the poor reputation or precarious financial situation of
                        the sublessee or the assignee;

            15.4.4      should the Lessor be of the view that the sublessee or
                        the assignee has the intention to modify the use of the
                        Leased Premises or may carry out activities which may
                        cause injury to the Lessor.

                                       14
<PAGE>

15.5        Answer of Lessor - Within thirty (30) days from the receipt of the
            information and documents requested, the Lessor shall notify the
            Lessee whether it has accepted or refused the sublease or the
            assignment and shall stipulate the reasons therefor or may choose
            to:

            (i)         resiliate the Lease from the fifteenth (15") day of the
                        date of the Lessor's notice, in which case the Lessee
                        may desist from its request to sublet or to assign the
                        Lease within such fifteen (15) day delay; or

            (ii)        require that the sublessee or the assignee execute a new
                        lease to which the Lessee shall intervene as guarantor
                        of all of the obligations of the lessee pursuant to such
                        new lease.

15.6        Solidarity - Where the Lease is assigned, the Lessee's liability
            shall remain solidary with the assignee for all of the Lessee's
            obligations pursuant to the Lease so that the Lessor may compel the
            Lessee to observe all of the obligations of the Lease as if no
            assignment had occurred.

15.7        Default of the Lessor - Should the Lessor fail to perform its
            obligations for which it is bound to the Lessee, the sublessee may
            not exercise the rights and remedies of the Lessee against the
            Lessor.

15.8        Default of the Sublessee - Should the sublessee fail to perform its
            obligations and therefore causes damage to the Lessor or to the
            other lessees or occupants of the Immovable, the Lessor may apply
            for the resiliation of the sublease.

15.9        Expenses of the Sublease or the Assignment - If the sublease or the
            assignment is accepted, the Lessee shall reimburse the Lessor for
            the related administrative expenses in the amount of [three hundred
            and fifty dollars ($350)] which shall be payable by certified cheque
            and shall be remitted at the time of signature of the agreement of
            sublease or of assignment.

15.10       Approval of Signs - The Lessee shall not place any signs or notices
            announcing that it wishes to assign the Lease or sublet the Leased
            Premises if same is visible from the exterior thereof(1).

                                   ARTICLE 16
                          SUBORDINATION AND ATTORNMENT

16.1        Assignment by the Lessor - In the event of the sale of the Immovable
            or the assignment by the Lessor of the Lease in favor of a third
            party (the "Assignee"), the Lessor shall be released of all of
            its(2) obligations towards the Lessee, subject to the condition that
            such obligations be assumed by the Assignee.

16.2        Subordination - All of the Lessee's rights under this Lease shall be
            subordinate to those of any creditor holding a charge against the
            Immovable or of any other Assignee of the Lessor's rights under this
            Lease. The Lessor shall ensure that the Lessee's rights pursuant to
            this Lease are not thereby affected.

16.3        Signature of Documents - The Lessee shall sign any document and
            shall do all things required by the Lessor in order to subordinate
            the Lease to any charge to which the Immovable is or may be subject.

----------

(1)         without first having obtained the prior consent of the Lessor.

(2)         future

                                       15
<PAGE>

                                   ARTICLE 17
                              DEFAULT AND RECOURSE

17.1        A default shall occur in the following cases:xxx

                        (a)         if the Lessee does not fulfil any of its
                                    obligations pursuant to the Lease and if
                                    this default continues:

                        (i)         in the case of a pecuniary obligation, for
                                    more than five (5) days following the
                                    receipt by the Lessee of a written notice
                                    from the Lessor;

                        (ii)        in all other cases, for more than fifteen
                                    (15) days following the receipt of a written
                                    notice from the Lessor (unless the default
                                    cannot be remedied within said delay, in
                                    which case the Lessee shall have commenced
                                    to remedy the default within the prescribed
                                    delay and to continue to do so with
                                    diligence) or within a shorter delay
                                    stipulated in the Lease (the latter delay
                                    taking precedence);

                        (b)         if the Lessee is party to bankruptcy or
                                    dissolution proceedings or loses control of
                                    the property located in the Leased Premises;

                        (c)         if the Lessee makes a sale of an
                                    enterprise(1)I or if the property located in
                                    the Leased Premises is seized and that a
                                    release thereof is not obtained within
                                    fifteen (15) days.

            The sole lapse of time with respect to the delays mentioned above or
            with respect to any other delay referred to in the Lease shall have
            the effect of putting the Lessee in default.

            In the event of a default, the Lessor may, notwithstanding any law
            to the contrary and subject to its other rights and remedies
            provided by the Lease or by law:

----------

(1)         (other than pursuant to an assignment or sublet permitted hereunder)

                                       16
<PAGE>

                        (d)         enter into the Leased Premises and remedy
                                    the default on behalf of and at the expense
                                    of the Lessee and recover from the Lessee
                                    all damages suffered by the Lessor,
                                    including all expenses incurred by it,
                                    whether such expenses result directly from
                                    the default;

                        (e)         resiliate the Lease without legal
                                    proceedings.

17.2        Consequences of the Resillation - If the Lessor resiliates the Lease
            pursuant to the present article then:

                        (a)         the Lessee shall immediately leave the
                                    Leased Premises, failing which the Lessor
                                    may: enter the Leased Premises, as mandatary
                                    of the Lessee, re-let them for the duration
                                    of the Term and on conditions which the
                                    Lessor may determine at its discretion,
                                    collect the Rent, take possession, as
                                    mandatary of the Lessee, of all movable
                                    property located in the Leased Premises and,
                                    in such a case, store the movable property
                                    at the cost and risk of the Lessee or sell
                                    or assign it in such manner as the Lessor
                                    deems appropriate without notice to the
                                    Lessee; make modifications to the Leased
                                    Premises in order to facilitate their
                                    re-letting; apply the proceeds of any sale
                                    or re-letting to the payment of all expenses
                                    incurred by the Lessor in connection with
                                    such re letting or of such sale and of any
                                    other debt of the Lessee towards the Lessor
                                    and, lastly, to the payment of Rent in
                                    arrears or of Rent to become due. The Lessee
                                    shall remain liable to the Lessor for any
                                    deficiency;

                        (b)         the Lessor shall have the right to recover
                                    from the Lessee all damages suffered by the
                                    Lessor and all expenses incurred by same
                                    including the Rent to be due until the
                                    Termination of the Lease as liquidated
                                    damages;

                        (c)         should the resiliation of the Lease result
                                    from the Lessee's bankruptcy or insolvency,
                                    the Lessor may recover arrears of Rent for a
                                    period of three (3) months preceding the
                                    bankruptcy and of three (3) months' Rent in
                                    advance following the bankruptcy.

17.3        Waiver - Should the Lessor have served a notice of resiliation of
            the Lease, the Lessee may not avoid such resiliation by curing the
            default, notwithstanding any law or custom to the contrary.

17.4        Indemnity - Should the Lessor retain the services of legal counsel
            in connection with the nonperformance of the Lessee's obligations
            under this Lease, the Lessee shall pay to the Lessor the judicial
            fees.

17.5        Guarantee of Performance - The Lessee hereby deposits with the
            Lessor the sum of SIXTEEN THOUSAND, FOUR HUNDRED AND FORTY-SEVEN
            DOLLARS AND EIGHTY CENTS ($16 447.80), EIGHT THOUSAND, SEVEN HUNDRED
            AND SIXTY DOLLARS AND THIRTY CENTS ($8,760.30) of which as a prepaid
            Rent payment for the first month of the Term, including G.S.T. and
            Q.S.T., and SEVEN THOUSAND, SIX HUNDRED AND EIGHTY-SEVEN DOLLARS AND
            FIFTY CENTS ($7,687.50) of which as a security deposit to guarantee
            the fulfillment of the Lessee's obligations contained in the Lease.
            This security deposit may be used by the Lessor(1) in order to
            cure any of the Lessee's defaults and in such a case, the Lessee
            shall be bound to furnish the Lessor with a new security deposit, by
            remitting without delay an amount equal to the sum used. If at the
            Termination of the Lease the Lessee is not in default pursuant to
            the Lease and if the Lessor has not used the security deposit to
            cure a default, this security deposit or any part thereof shall be
            reimbursed to the Lessee. This security deposit is not deemed to be
            a prepayment of Rent. The Lessee, by signing these presents,
            expressly

----------

(1)         , following the expiration of all delays provided for in Section
            17.1,

                                       17
<PAGE>

            acknowledges that no declaration guaranteeing the reimbursement of
            this security deposit has been made other than in accordance with
            the provisions of this article.

                                   ARTICLE 18
                                     NOTICE

18.1        Any notice under this Lease shall be sent by registered mail or by
            telecopier transmission or delivered in person at the addresses
            indicated below. The Lessor reserves the right to change its
            address.

            Notices sent by registered mail and delivered in person shall be
            deemed to have been received the day of its reception and those sent
            by telecopier transmission to have been received(1) its
            transmission. The Lessee elects domicile in the Leased Premises for
            all purposes relating hereto.

            Lessor's address                Lessee's address

            SITQ INC.                       H. POWER ENTERPRISES OF CANADA INC.
            3300 Cote Vertu                 1069 Begin
            Suite 400                       St-Laurent, Quebec
            St-Laurent, Quebec              H4R 1V8
            H4R 2137
            Telecopier: (514) 333-1313      Telecopier : (514) _________________
                                            (2)

                                   ARTICLE 19
                              TERMINATION OF LEASE

19.1        Unless an option to renew the Lease has been granted to the Lessee,
            the occupation of the Leased Premises by the Lessee after the
            Termination of the Lease shall not have the effect of extending or
            of expressly or tacitly renewing the Lease. If the Lessee continues
            to occupy the Leased Premises after the Termination of the Lease,
            the Lessor may require the eviction of the Lessee or may permit the
            Lessee to continue to occupy the Leased Premises pursuant to a
            monthly lease in consideration of a monthly Minimum Rent which is(3)
            greater than the last monthly Minimum Rent of the Term, the other
            terms and conditions of the Lease remaining the same.

                                   ARTICLE 20
                                UNAVOIDABLE DELAY

20.1        Except for the payment of an amount of money, the parties shall not
            be deemed to be in default of the performance of any obligation
            under this Lease if they are prevented from so doing by Unavoidable
            Delay; any period of time for the performance of such obligation
            shall be extended accordingly. The parties shall respectively notify
            each other of the cause, the probable duration and the effect of any
            Unavoidable Delay.

                                   ARTICLE 21
                            MISCELLANEOUS PROVISIONS

21.1        Modification of Lease - Any modification of the Lease shall be valid
            only if expressly agreed to in writing by the Lessor and the Lessee.

----------

(1)         upon confirmation of receipt of

(2)         copies of default notices to be forwarded to head office:
            H. POWER ENTERPRISES INC.
            60 Montgomery Street
            Belleville, New Jersey  07109

(3)         twenty-five percent (25%)

                                       18
<PAGE>

21.2        Performance by Third Party - A third party may not acquire any
            rights under this Lease by the performance of any obligation to
            which the Lessee is bound.

21.3        Declaration of Intent - In this Lease, it is intended to give to
            words or expressions their wider meaning, unless the context
            dictates otherwise.

21.4        Absence of Waiver - The fact that one or the other party has not
            exercised any of its rights hereunder shall not constitute a waiver
            thereof.

21.5        Cancellation of Previous Agreements - This Lease represents the
            entire agreement between the parties in connection with the Leased
            Premises. It replaces all previous documents and discussions between
            the parties.

21.6        Successors and Assigns - The Lease shall bind the successors and
            assignees of the parties.

21.7        Brokerage Commission - Any brokerage commission with respect to this
            Lease shall be borne exclusively by the Lessee who shall indemnify
            the Lessor against any claim with respect thereto, unless the Lessor
            has bound itself in writing to pay a commission.

21.8        Access to the Leased Premises - During the last(1) months of the
            Term, the Lessor may exhibit the Leased Premises during business
            hours to persons interested in leasing the Leased Premises. During
            the Term, the Lessee may exhibit the Leased Premises at any time
            during business hours to any broker, purchaser or evaluator. The
            Lessor shall exercise its right in a reasonable manner.

21.9        Cumulative Rights - The rights of the Lessor(2) are cumulative and
            not exclusive.

21.10       Undertaking to Cooperate - The parties undertake to sign all
            documents and to take all necessary or desirable steps to give
            effect to these presents.

21.11       Publication of Rights - The Lessee may register the Lease by summary
            only, to the extent that such summary does not refer to any
            financial terms and conditions and that the prior approval of the
            Lessor has been obtained. The Lessee shall pay the cost of
            registration and shall provide the Lessor with one (1) registered
            copy of the summary. The Lessee will, at the Termination of the
            Lease, cause the registration of the summary to be canceled at its
            expense, failing which the Lessor(3) may do so at the Lessee's
            expense.

21.13       Partial Invalidity - All of the parts of this Lease are divisible.
            If for any reason whatsoever a provision thereof is judged to be
            illegal or unenforceable, the other provisions of the Lease shall
            remain in effect mutatis mutandis.

21.14       Interpretation - In this Lease, unless the context dictates
            otherwise, the masculine includes the feminine and the singular
            includes the plural and the words "herein above" and "these
            presents" as well as similar words or expressions shall refer to the
            Lease in its entirety.

----------

(1)         six (6)

(2)         and the Lessee

(3)         , following the expiration of five (5) days notice to Lessee

                                       19
<PAGE>

21.15       Laws - The Lease shall be governed by the laws of the province of
            Quebec(1) and the parties shall take all proceedings in the court of
            jurisdiction for the judicial district of Montreal.

21.16       Late Payments - The acceptance by the Lessor of any ante-dated
            cheque or of any late payment shall be considered as a means of
            collection only, subject to the rights of the Lessor pursuant to
            these presents. Any sums unpaid by the Lessee(2), shall bear
            interest at the Prime Rate.

21.17       Partial payment of Rent - The payment by the Lessee of an amount
            inferior to the Rent, shall not be deemed to be an acknowledgment of
            total payment of the Rent and the Lessor shall be deemed to have
            accepted such payment as partial payment without prejudices to or
            under reserve of the Lessor's rights and recourses in order to
            recover the balance due.

21.18       Solidary Liability - Should the Lease be signed by several persons
            their liability shall be solidary so that each of them shall be
            liable for all of the obligations of the Lessee under this Lease.

21.19       Titles - The titles and the numbering of the articles have been
            inserted as a matter of convenience and shall not be used to
            interpret the text thereof.

21.20       Protection of Information - The Lessee specifically authorizes the
            Lessor to collect (and to establish a file, if the Lessor so wishes)
            all information on the Lessee , including the solvency of the Lessee
            which may be relevant or necessary for the execution of the Lease.
            To this end, any person, including personal information agents
            (credit bureaus), banks, sub-contractors and suppliers, having such
            information are, by these presents, authorized to give such
            information to the Lessor during the Term and subsequently thereto
            if necessary.

21.21       Understanding of the Lease - Notwithstanding that the Lease was
            drawn up and submitted by the Lessor, the Lessee acknowledges that
            it has negotiated the Lease, that it understands all of its
            provisions and that the Lessor has given the Lessee adequate
            explanations as to the nature and extent of the Lease.

                                   ARTICLE 22
                                   REGULATIONS

22.1        The Lessee shall observe the regulations respecting the use of the
            Immovable and of the Common Areas, which are annexed hereto as
            Schedule "C", as such regulations may be modified by the Lessor, to
            the extent that they are not in contradiction with the Lease. The
            regulations may differ depending on the type of business located in
            the Immovable but may not be discriminatory.

                                   ARTICLE 23
                              ENVIRONMENTAL MATTERS

23.1        During the Term, the Lessee agrees to respect the Environmental
            Legislation and comply therewith promptly at its expense and to
            immediately notify the Lessor of any release and discharge and
            presence inside or outside the Leased Premises of any Contaminants
            and Hazardous Materials which are in breach of the Environmental
            Legislation.

----------

(1)         and the laws of Canada applicable therein

(2)         or the Lessor, as the case may be,

                                       20
<PAGE>

            The Lessee is liable for any damage whatsoever caused in or to the
            Immovable or the Leased Premises as a result of non-compliance with
            the Environmental Legislation, which damage may also entail the
            termination of the Lease.

            Notwithstanding anything to the contrary, the Lessee undertakes to
            save and hold harmless the Lessor, its representatives, agents or
            employees from any claims, losses, costs, fees, expenses, damages
            for bodily injury, moral damages, property damages, actions, suits
            or proceedings arising from or attributable to Lessee's act,
            refusal, negligence or omission to comply with the Environmental
            Legislation. (1)

----------

(1)         The foregoing provisions of this Section 23.1 shall apply, "mutatis
            mutandis," to the Lessor's obligations to respect the Environmental
            Legislation.

                                       21
<PAGE>

                                   ARTICLE 24
                                    LANGUAGE

24.1        The Parties specifically declare that they have requested the
            present lease and all documents relating thereto to be drawn up in
            the English Language. Les Parties declarent qu'elles ont demande que
            le present Bail et tout document s'y relatant soient rediges en
            anglais.

                                   ARTICLE 25
                               SPECIAL PROVISIONS

25.1        LEASEHOLD IMPROVEMENTS

            The Lessor declares that at the commencement of the Lease, all
            utilities and services such as heating, air conditioning, if any,
            electricity and doors shall be properly functional(1).

            The Lessee declares that it has examined the Leased Premises and
            that it is satisfied and content therewith. The Lessee agrees and
            covenants to take the Leased Premises "AS IS", in their present
            state and condition, save and except for leasehold improvements
            (hereinafter referred to as "Initial Leasehold Improvements") which
            shall be performed by the Lessor, at its cost, in accordance with
            final plans to be prepared by the Lessor and approved by both
            parties(2). The cost of the Leasehold Improvements, including the
            cost for all base building items, the cost incurred by the Lessor to
            have the final plans prepared, the administration, supervision,
            design and professional fees are estimated at ONE HUNDRED AND SIXTY
            THOUSAND DOLLARS ( $ 160,000.00) excluding G.S.T. and G.S.T.

            Notwithstanding anything contained in this article, the Lessor's
            liability for the cost of the Initial Leasehold Improvements shall
            not exceed ONE HUNDRED THOUSAND DOLLARS ( $ 100,000.00 ) excluding
            G.S.T. and Q.S.T., any sum in excess thereof being the
            responsibility of the Lessee.

25.2        OPTIONS TO RENEW

            First Option

            Provided the Lessee is not or has not at any time been in default
            pursuant to the Lease, the Lessor shall grant to the Lessee a first
            option to renew the Lease. ((hereinafter called "First Option") for
            an additional period of ONE (1) year, commencing on the date of the
            Termination of the Lease and ending ONE (1) year later, provided the
            Lessee notifies the Lessor of such intention in writing by
            registered or certified mail at least SIX (6) months prior to the
            Termination of the Lease, failing which, the First Option shall
            become null and void and of no legal effect whatsoever. In the event
            of the Lessee exercising the First Option, all terms and conditions
            of the Lease shall remain in effect for the renewal period, save
            that:

            (i)         The Minimum Rent shall be at a rate equal to the then
                        current market value for comparable space in the
                        Building in which the Leased Premises are located;

            (ii)        The Lessor shall not be obliged to execute any leasehold
                        improvements in the Leased Premises.

            Second Option

----------

(1)         Should same not be the case, all costs relating to the remedying of
            this situation shall be borne solely by the Lessor.

(2)         , and save for any latent or structural defects, which shall be
            remedied by Lessor at its sole cost

                                       22
<PAGE>

            Provided the Lessee has exercised the First Option and provided it
            shall not at any time be in default pursuant to the Lease, the
            Lessor shall grant to the Lessee a second option to renew the Lease
            (hereinafter called "Second Option") for an additional period of ONE
            (1) year, commencing on the date of the expiration of the First
            Option and ending ONE (1) year later, provided the Lessee notifies
            the Lessor of such intention in writing by registered or certified
            mail at least SIX (6) months prior to the expiration of the First
            Option, failing which, the Second Option shall become null and void
            and of no legal effect whatsoever. In the event of the Lessee
            exercising the Second Option, all terms and conditions of the Lease
            shall remain in effect for the second renewal period, save that:

            (i)         The Minimum Rent shall be at a rate equal to the then
                        current market value for comparable space in the
                        Building in which the Leased Premises are located;

            (ii)        The Lessor shall not be obliged to execute any leasehold
                        improvements in the Leased Premises.

            Third Option

            Provided the Lessee has exercised the Second Option and provided it
            shall not at any time be in default pursuant to the Lease, the
            Lessor shall grant to the Lessee a third option to renew the Lease
            (hereinafter called "Third Option") for an additional period of ONE
            (1) year, commencing on the date of the expiration of the Second
            Option and ending ONE (1) year later, provided the Lessee notifies
            the Lessor of such intention in writing by registered or certified
            mail at least SIX (6) months prior to the expiration of the Second
            Option, failing which, the Third Option shall become null and void
            and of no legal effect whatsoever. In the event of the Lessee
            exercising the Third Option, all terms and conditions of the Lease
            shall remain in effect for the third renewal period, save that:

            (i)         The Minimum Rent shall be at a rate equal to the then
                        current market value for comparable space in the
                        Building in which the Leased Premises are located;

            (ii)        The Lessor shall not be obliged to execute any leasehold
                        improvements in the Leased Premises.

            Fourth Option

            Provided the Lessee has exercised the Third Option and provided it
            shall not at any time be in default pursuant to the Lease, the
            Lessor shall grant to the Lessee a fourth option to renew the Lease
            (hereinafter called "Fourth Option") for an additional period of ONE
            (1) year, commencing on the date of the expiration of the Third
            Option and ending ONE (1) year later, provided the Lessee notifies
            the Lessor of such intention in writing by registered or certified
            mail at least SIX (6) months prior to the expiration of the Third
            Option, failing which, the Fourth Option shall become null and void
            and of no legal effect whatsoever. In the event of the Lessee
            exercising the Fourth Option, all terms and conditions of the Lease
            shall remain in effect for the fourth renewal period, save that:

            (i)         The Minimum Rent shall be at a rate equal to the then
                        current market value for comparable space in the
                        Building in which the Leased Premises are located;

            (ii)        The Lessor shall not be obliged to execute any leasehold
                        improvements in the Leased Premises;

            (iii)       The present option shall cease to remain in force.

25.3        LESSOR'S ENTRY

            In all instances in this Lease where the entry by the Lessor into
            the Leased Premises is provided, the Lessor, its agents or
            representatives shall provide the Lessee with not less than
            twenty-four (24) hour advance written notice (unless longer notice
            is provided for elsewhere

                                       23
<PAGE>

            in the Lease) in each instance prior to its entry upon the Leased
            Premises, except in the cases of emergency or routine janitorial
            service. In cases of emergency, the Lessor shall use its best
            efforts to notify the Lessee prior to entering upon the Leased
            Premises.

25.4        LESSEE'S ACCESS TO LEASED PREMISES

            The Lessee shall be allowed full access to the Leased Premises and
            the use of all services in respect thereof at all times, seven (7)
            days per week, twenty-four (24) hours per day, the whole at no
            additional cost to the Lessee.

                                       24
<PAGE>

25.5        LESSOR'S OBLIGATIONS TO OPERATE

            The Lessor covenants and aggress throughout the Term of the Lease,
            it will operate the Immovable in a first class manner and will
            maintain and keep in good order and repair, the Common Areas,
            including, without limitation, the parking area, and will keep it
            properly drained and free of ice and snow and in suitable condition
            for the purposes of the Lessee and other tenants of the Immovable
            and their employees, customers and suppliers at all times as may be
            required for the purposes of business operations of the Immovable.

25.6        LESSOR'S OBLIGATION TO PERFORM WORK

            Notwithstanding anything contained in the Lease, and subject to the
            Lessee's obligations contained in article 7.3, in the event that any
            statute, by-law, law, ordinance, regulation, order or requirement of
            law or any insurance advisory body requires work of a structural
            nature to be made to the Leased Premises, same shall be performed by
            the Lessor at its sole cost and expense.

                                       25
<PAGE>

Signed in the City of Saint-Laurent,

This 23rd day of September 1997.

                                            SITQ  INC.
                                    for:
                                            SITQ INDUSTRIEL INC.,
                                            ABRIM 14 INC.,
                                            149855 CANADA INC.,
                                            149856 CANADA INC.,

                                            By: /s/ Andre Girard
---------------------------                     --------------------------------
Witness                                         Andre Girard

                                            By: /s/ Denis Perrault
---------------------------                     --------------------------------
Witness                                         Denis Perreault

Signed in the City of New Jersey

This 15th day of September 1997.

                                            H. POWER ENTERPRISES OF CANADA INC.

                                            By: /s/ Frank Gibbard
---------------------------                     --------------------------------
Witness                                         Frank Gibbard

                                            By:
---------------------------                     --------------------------------
Witness

                                       26
<PAGE>

                                  SCHEDULE "A"

                           ENVIRONMENTAL QUESTIONNAIRE

(The following questionnaire must be completed and signed by the Lessee)

           COMPANY NAME:                     H. POWER ENTERPRISES OF CANADA INC.
           TENANT NUMBER:                    2350-50-1069-11

Person responsible for environmental risks:         Dr. Alan Attia

Telephone No.:  Office:     973-450-4400           Residence: 973-473-4090
                            Ext. 449

GENERAL INFORMATION

A)          Describe the business activities carried on in the Leased Premises.

            Research and Development Activities in the area of fuel cell
            technology development in support of anticipated future
            manufacturing requirements.

B)          Will the business activities to be carried on in the Leased Premises
            entail the use of Contaminants and Hazardous Materials? If so,
            describe them.

            Materials to be used in the above described activities are not
            considered to be hazardous or contaminants. Lab quantities of
            Hydrogen and other gasses will be present in approved storage
            containers.

C)          Indicate the approximate amounts of Contaminants and Hazardous
            Materials which will be generated, monthly or annually, in the
            Leased Premises.

            Storage cylinders of Hydrogen up to 10 will be in the facility under
            approved storage methods.

D)          How do you intend to store the Contaminants and Hazardous Materials
            described in C)?

            Material storage will have the required isolation of material and
            proper securing of storage tanks,.

E)          How will you dispose of the Contaminants and Hazardous Materials
            generated in the Leased Premises by your business and who will be
            the carrier?

            The Hydrogen will be consumed in the fuel cell process. No
            contaminants are generated in the process.

<PAGE>

Cont'd / Questionnaire / Page ii

F)          Will the business activities to be carried on in the Leased Premises
            require that you obtain any certificate of authorization, permit or
            environmental approval? If so, give details and attach your
            certificate.

            It is not anticipated that any environmental permitting will be
            required at this time. Should the nature of the activity change in
            the future the appropriate permits will be obtained at that time.

G)          Will the business activities to be carried on in the Leased Premises
            entail the discharge of Contaminants and Hazardous Material in the
            water system or in the air?

            --------------------------------------------------------------------

            --------------------------------------------------------------------

            --------------------------------------------------------------------

H)          Will pollution control equipment be required in the Leased Premises
            to ensure that the discharge of Contaminants or Hazardous Materials
            in the water system or in the air will comply with the Environmental
            Legislation? If so, give details and list the standards to be met
            Not at this time. If the nature of the operation changes this will
            be addressed at that time.

I)          Will the business activities to be carried on in the Leased Premises
            necessitate the installation of an underground or surface storage
            tank in the Leased Premises ? If so, describe in detail the tank to
            be installed and material to be stored.

            No.

J)          Do you intend to have a prevention training or emergency plan in
            place to prevent an environmental incident? If so, give details and
            attach a copy of the plan and training procedure.

            As a part of good business operation all HPEC employees will receive
            training in the appropriate areas. Since there are no materials of
            concern a specific environmental training plan is not required.

DATE:                                      SIGNATURE:
     -------------------                             ----------------------

<PAGE>

                                   SCHEDULE"B"

                             PLAN OF LEASED PREMISES

                                [Insert Picture]

<PAGE>

                                [Insert Picture]

<PAGE>

                                   SCHEDULE"C"

                               DESCRIPTION OF LAND
                        ON WHICH THE IMMOVABLE IS ERECTED

            That certain emplacement fronting on Begin Street, known and
            designated as lot number TWELVE of original lot number TWO HUNDRED
            AND FIVE (205-12) on the said Official Plan and Book of Reference of
            the Parish of Saint-Laurent.

            With the one storey industrial building thereon erected bearing
            civic numbers 1055 to 1083 Begin Street.

<PAGE>

                                   SCHEDULE"D"

                                   REGULATIONS

The Lessee shall observe the following provisions regulating the use and
occupation of the Leased Premises and of the Common Areas:

1.          keep the windows of the Leased Premises clean;

2.          promptly replace, at its expense, any cracked or broken windows by
            windows of the same nature and quality;

3.          keep, at its expense, the Leased Premises clean and in a good state
            and ensure the absence of insects, rodents or other vermin;

4.          keep all refuse, waste or rubbish in such containers which the
            Lessor deems acceptable and in a location it determines;

5.          not to place or keep any article or merchandise in the Common Areas;

6.          not to permit any undue accumulation of rubbish, waste or refuse in
            the Leased Premises and in the Common Areas;

7.          not to permit the parking of delivery vehicles in such a manner as
            to hinder the use of the exterior Common Areas;

8.          not to use the plumbing installations for purposes other than for
            which they were destined and not to discard any toxic substance
            whatsoever therein;

9.          not to use, make or keep in the Leased Premises any product,
            substance or contaminant which risks the Lessor of being exposed to
            any claim whatsoever;

10.         in order to facilitate snow removal, not to park any vehicle
            overnight on the parking lot from the first (1st) day of November to
            the first (1st) day of April. Any vehicles left on the parking lot
            overnight shall be removed, unless prior written authorization has
            been given by the Lessor;

11.         provide to the Lessor a list of emergency telephone numbers so that
            the Lessee may be contacted seven (7) days a week;

12.         not to obstruct or disrupt the operation of the heating, ventilation
            and air conditioning systems serving the Leased Premises.

<PAGE>

                                  SCHEDULE "E"

                                   RESOLUTION

EXCERPT OF THE MINUTES OF A MEETING OF THE DIRECTORS OF H. POWER ENTERPRISES OF
CANADA INC., (THE "COMPANY") HELD THIS 17th DAY OF SEPTEMBER 1997.

IT IS RESOLVED THAT:

The Company enter into a Lease (the "Lease") with SITQ INDUSTRIAL INC., ABRIM 14
INC., 149855 CANADA INC., 149856 CANADA INC., represented by their mandatary,
SITQ INC., for the premises located in 1069 Begin, St-Laurent (Quebec), the
whole in accordance with a Lease which has been submitted to the meeting and
that Frank Gibbard be authorized to sign the Lease on behalf of the Company and
to make all modifications which he deems at his sole discretion, to be
appropriate.

I, THE UNDERSIGNED, CERTIFY that the foregoing is a true copy of a resolution
adopted at a meeting of the directors of H POWER ENTERPRISES OF CANADA INC.,
duly called and held this 17th day of September 1997.

This 17th day of September 1997.

Secretary

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