Document:

Exhibit 4.11 - Filed by EDF Electronic Data Filing Inc. (604) 879.9956

Exhibit 4.11

CORDOVA EQUITIES INC.

Landlord

- and -

SMARTCOOL SYSTEMS INC.

Tenant

LEASE OF OFFICE SPACE

MULTI-TENANT OFFICE PROJECT

LEASED PREMISES: Suite 1280 - 333 Seymour Street Vancouver, British Columbia

MORGUARD February 2005 -Net Office, Multl-Tenant (General Application)

INDEX

SECTION PAGE 

Term Shoot 

1 

ARTICLE 1.00-DEFINITIONS

1.0  Definitions 

3 

ARTICLE 2.00-GRANT OF LEASE AND GENERAL COVENANTS

2.01  Grant 

3

2.02  Landlord's General Covenants 

  3

2.03  Tenant's General Covenants 

3

ARTICLE 3.00-TERM AND POSSESSION

3.01  Term

4

3.02  Early Occupancy

4

3.03  Delayed Possession 

4

3.04  Acceptance of Leased Premises 

4

ARTICLE 4.00 – RENT

4.01  Rent 

4

4.02  Security Deposit

4

4.03  Intent 

5

4,04  Payment of Rent -General 

5

4.05  Partial Month

5

4.06  Payment of Tenant's Occupancy Costs 

5

4.07  Resolution of Disputes

6

4.08  Area Determination

6

4.09  Vacancy 

7

4.10  Method of Payment

7

ARTICLE 5.00-USE AND OCCUPATION

5.01  Use of Leased Premises 

7

5.02  Compliance with Laws 

7

5.03  Prohibited Uses 

8

5.04  Common Elements 

8

5.05   Hazardous Use

8

5.06  Tenant's Security Interest

8

5.07  Rules and Regulations

8

5.08  Permitted Signs 

9

5.09  Prohibited Signs

9

5.10  Window Coverings 

9

5.11  Parking 

9

5.12  Authorization of Enquiries

9

5.13  Records

9

5.14  Overloading 

10

5.15  Telecommunications 

10

ARTICLE 6.00 - SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS

BY LANDLORD

6.01  Operation of Project 

10

6.02  Building Services and Facilities 

10

6.03  Maintenance, Repair and Replacement 

11

6.04  Alterations/ Renovations by Landlord 

11

6.05  Access by Landlord 

12

6,06  Energy Conservation 

12

6.07  Supervision and Extended Services 

12

6.08  Landlord's Work

12

6.09  Control by Landlord

12

MORGUARD February   2005-Net Office, Multi-Tenant (General Office Application)

Index - 1

ARTICLE 7.00 - PAYMENT FOR SERVICES AND MAINTENANCE, REPAIR AND

ALTERATIONS BY TENANT

7.01  Utilities 

13

7.02  Lights 

13

7.03  Heating, Ventilation and Air Conditioning 

13

7.04  Alterations by Tenant 

13

7.05  Tenant's Trade Fixtures and Personal Property 

14

7.06  Maintenance and Repair 

14

7.07  Inspection 

14

7.08  Failure to Maintain 

15

7.09  Liens 

15

7.10  Roof 

15

ARTICLE 8.00 -TAXES

8.01  Taxes Payable by Landlord 

15

8.02  Taxes Payable by Tenant 

15

8.03  Tax Increases Attributable to Tenant 

15

8.04  GST

16

8.05  Landlord's Election 

16

8.06  Right to Contest 

16

ARTICLE 9.00 - INSURANCE, LIABILITY AND ENVIRONMENTAL

9.01  Landlord's Insurance 

16

9.02  Tenant's Insurance 

17

9.03  Placement of Tenant's Insurance by Landlord 

18

9.04  Limitation of Landlord's Liability 

18

9.05  Environmental Issues 

18

ARTICLE 10.00 - DAMAGE AND DESTRUCTION

10.01  Limited Damage to Leased Premises, Access or Services 

19

10.02  Major Damage to Leased Premises 

19

10.03  Damage to Building 

20

10.04  No Abatement 

20

10.05  Notify Landlord 

20

10.06  Expropriation

20

ARTICLE 11.00 - DEFAULT

11.01  Arrears 

20

11.02  Costs of Enforcement 

21

11.03  Performance of Tenant's Obligations 

21

11.04  Remedies on Default

21

11.05  Availability of Remedies 

22

11.06  Waiver 

22

11.07  Waiver of Exemption and Redemption 

22

11.08  Companies' Creditors Arrangement Act

22

ARTICLE 12.00 - ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS

12.01 Request for Consent 

22

12.02 Basis for Consent 

22

12.03 Terms and Conditions Relating to Consents

23

12.04 Subsequent Transfers

23

12.05 Profit Rents upon Transfers 

23

12.06 Advertising 

24

12.07 Grant of Security Interest by Transferee 

24

ARTICLE 13.00 - TRANSFERS BY LANDLORD

13.01  Sale, Conveyance and Assignment 

24

13.02  Effect of Transfer 

24

13.03  Subordination 

24

13.03A Non-Disturbance Agreement 

24

13.04  Attornment

24

13.05  Effect of Attornment

24

ARTICLE 14.00 - SURRENDER

14.01  Possession and Restoration 

25

14.02  Tenant's Trade Fixtures and Personal Property

25

14.03  Overholding

25

2

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

ARTICLE 15.00-GENERAL

15.01  Estoppel Certificates 

26

15.02  Entire Agreement 

26

15.03  No Registration of Lease or Notice 

26

15.04  Project Name and Trademarks

26

15.05  Demolition/ Substantial Renovation 

26

15.06  Relocation 

26

15.07  "For Lease" Signs 

26

15.08  Unavoidable Delays 

26

15.09  Limitation of Recourse 

26

15.10  Notice 

27

15.11  Delegation of Authority 

27

15.12  Relationship of Parties

27

15.13  Governing Law

27

15.14  Amendment or Modification 

27

15.15  Legal and Administration Costs 

27

15.16  Construction 

28

15.17  Captions and Headings 

28

15.18  Interpretation 

28

15.19  Time of the Essence 

28

15.20  Successors and Assigns 

29

15.21  Counterparts 

29

15.22  Further Schedules 

28

15.23  Independent Legal Advice 

28

15.24  No Offer 

28

15.25  Landlord's Security Interest

28

15.26 Survival of Covenants and Indemnities 

29

15.27 Exculpatory Provisions 

29

15.28 Brokerage Commissions 

29

15.29 Covenants to be Performed at Landlord's Option 

29

15.30 Radiation 

29

SCHEDULES 

		
	Schedule  A 

	Plan Showing Leased Premises 

	Schedule  A1 

	Legal Description of Land 

	Schedule  B 

	Definitions 

	Schedule  C 

	Rules and Regulations 

	Schedule  D 

	Landlord's Work 

	Schedule  E 

	Additional Covenants, Agreements and Conditions (if any)  

	Schedule  F

	Form of Indemnity Agreement

	Schedule  G 

	Security Interest – Remedies on Default

	Schedule  H

	Contents of Leased Premises

Please Initial ___/____

3

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

PAGE 1 OF TERM SHEET - FORMING PART OF LEASE OF OFFICE SPACE - MULTI-TENANT

					
	1.

	(a)

	LANDLORD: CORDOVA EQUITIES INC.

ADDRESS:

	 

	 
	c/o Morguard Investments Limited

	TELEPHONE:

	604.681.9474

	 
	Suite 400 - 333 Seymour Street

	FAX NUMBER:

	604.685.0161

	 
	Vancouver, British Columbia

V6B 5A6

	 
	 

	(b)

	LANDLORD'S HEAD OFFICE:

	TELEPHONE:

	905.281.3800

	c/o Morguard Investments Limited

	 
	800-55 City Centre Drive

	FAX NUMBER

	905.281.1800

	(c)

	Mississauga, Ontario L5B 1 M3

Attention: President

Landlord's "Environmental Contact":

	Operations Manager

	 

2.

TENANT (legal name):

SMARTCOOL SYSTEMS INC. 

ADDRESS:

Suite 1280 - 333 Seymour Street 

TELEPHONE: 

Vancouver, British Columbia 

FAX NUMBER 

V6B 5A6

Attention:

George Burnes

3.

PROJECT NAME:

MUNICIPAL ADDRESS OF PROJECT:

333 SEYMOUR

333 Seymour Street Vancouver, 

British Columbia V6B 5A6

4.

LEASED PREMISES:

Attached as Schedule A to this Lease is a plan of the Project showing the Leased Premises by hatching. The Leased Premises are designated as Suite 1280.

5.

RENTABLE AREA OF LEASED PREMISES:

2,700 square feet subject to adjustment in accordance with the definition of Rentable Area and Section 4.08. The Rentable Area of the Leased Premises shall be calculated in accordance with the SOMA ANSI standards ANSI Z65.1-1980, except to the extent modified by the definition of Rentable Area.

6.

(a)

SECURITY DEPOSIT: $8,426.25 (SECTION 4.02)

(b)

OTHER DEPOSIT:

$7,463.25 (SCHEDULE E)

		
	Initials

	Landlord

	Tenant

1

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

PAGE 2 OF TERM SHEET - FORMING PART OF LEASE OF OFFICE SPACE - MULTI-TENANT

			
	7.

TERM:

	 
	10 years

	(a)

	FIRST DAY OF TERM:

	June 1, 2005

	(b)

	LAST DAY OF TERM:

	May 31, 2015

8.

BASIC RENT:

From June 1, 2005 to May 31, 2007, $43,200.00 per annum, $3,600.00 per month calculated at a rate of $16.00 per square foot per annum of the Rentable Area of the Leased Premises;

From June 1, 2007 to May 31, 2009, $45,900.00 per annum, $3,825.00 per month calculated at a rate of $17.00 per square foot per annum of the Rentable Area of the Leased Premises;

From June 1, 2009 to May 31, 2011, $48,600.00 per annum, $4,050.00 per month calculated at a rate of $18.00 per square foot per annum of the Rentable Area of the Leased Premises;

From June 1, 2011 to May 31, 2013, $51,300.00 per annum, $4,275.00 per month calculated at a rate of $19.00 per square foot per annum of the Rentable Area of the Leased Premises;

From June 1, 2013 to May 31, 2015, $54,000.00 per annum, $4,500.00 per month calculated at a rate of $20.00 per square foot per annum of the Rentable Area of the Leased Premises;

9.

USE OF LEASED PREMISES:

The Leased Premises shall be used solely for the purpose of a general office for the business of refrigeration systems software, and for no other purpose. The Leased Premises shall not be used for any use prohibited by Article 5.00 or Section 9.05.

10.

ENVIRONMENTAL ISSUES

				
	 
	LEASE SECTION 9.05:

	□Applies

	□Does not apply

				
	 
	RIDER 1 (SECTION 9.05):

	□Applies

	□Does not apply

11.

INDEMNIFIER: NOT APPLICABLE

Additional Covenants, Agreements and Conditions (if any) listed here are more particularly set out in Schedule E.

1.

Other Deposit

2.

Signage

3.

Parking

4.

Permits and Working Drawings

5.

Special Equipment

6.

Early Access

7,

Tenant Allowance

8.

Letter of Credit

9.

Early Termination by Tenant  

Please Initial ___/____

2

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

LEASE OF OFFICE SPACE

MULTI-TENANT OFFICE BUILDING

THIS LEASE is made as of the 2151 day of March, 2005. 

BETWEEN: CORDOVA EQUITIES INC.,

a company incorporated under the laws of the Province of British Columbia;

(the "Landlord")

AND:

SMARTCOOL SYSTEMS INC.,

a company incorporated under the laws of Canada and registered to do business in the Province of British Columbia;

(the "Tenant")

IN CONSIDERATION of the mutual covenants contained herein, the parties hereby agree as follows:

ARTICLE 1.00 - DEFINITIONS

1.01 Definitions - In this Lease the terms defined in Schedule B shall have the meanings designated therein respectively.

ARTICLE 2.00 - GRANT OF LEASE AND GENERAL COVENANTS

2.01 Grant - The Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord the Leased Premises, to have and to hold during the Term, subject to the terms and conditions of this Lease.

2.02  Landlord's General Covenants - The Landlord covenants with the Tenant:

(a)

subject to the provisions of this Lease, for quiet enjoyment of the Leased Premises so long as the Tenant shall observe and perform all of the covenants and obligations of the Tenant herein; and

(b)

 to observe and perform all the covenants and obligations of the Landlord herein. 

2.03 Tenant's General Covenants - The Tenant covenants with the Landlord:

(a)

to pay Rent without any deduction, abatement or set-off whatsoever; and

(b)

to observe and perform all the covenants and obligations of the Tenant herein.

Please Initial ___/____

3

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

ARTICLE 3.00 - TERM AND POSSESSION

3.01 Term - The Term of this Lease shall begin on the Commencement Date and end on the date set out in Item 7(b) of the Term Sheet unless terminated earlier as provided in this Lease.

3.02 Early Occupancy - The Tenant may, with the Landlord's prior written consent, use and occupy the Leased Premises or portions thereof before the Commencement Date. In the event of early occupancy, the Tenant shall pay to the Landlord on the date of occupancy a rental for the period from the date the Tenant begins to use or occupy the Leased Premises or portions thereof to the Commencement Date, which rental shall be that proportion of the Rent for the first calendar year of the Term which the number of days in such period is of 365, multiplied by that proportion that the part of the Leased Premises used and occupied from time to time by the Tenant prior to the Commencement Date is of the total area of the Leased Premises. Except where clearly inapplicable, all provisions of this Lease shall apply during such period.

3.03 Delayed Possession - If the Landlord is unable to deliver possession of all or any portion of the Leased Premises by the Commencement Dale, this Lease shall remain in full force and effect and the Tenant shall take possession of the Leased Promises on the date when the Landlord delivers possession of all of the Leased Premises, which date shall be conclusively established by notice in writing from the Landlord to the Tenant at least 10 days before such date. The Landlord shall not be liable to the Tenant for any loss, damage or inconvenience resulting from any delay in delivering possession of the Leased Premises but, unless the delay is caused by or attributable to the Tenant, its servants, agents or independent contractors, no Rent shall be payable by the Tenant for the period prior to the date on which the Landlord can deliver possession of all of the Leased Premises, unless the Tenant elects to take possession of a portion of the Leased Premises, in which case Rent shall be payable in respect thereof from the date such possession is so taken. Despite anything contained to the contrary in this Section 3.03, if the Landlord is of the opinion that it is unable to deliver possession of all or any part of the Leased Premises by the expiration of 6 months from the Commencement Date, the Landlord shall have the right to terminate this Lease upon written notice to the Tenant, whereupon neither party shall have any liability to the other and, after the termination date, the Landlord shall return to the Tenant, without interest or deduction, the Security Deposit, if any.

3.04 Acceptance of Leased Premises - Taking possession of all or any portion of the Leased Premises by the Tenant shall be conclusive evidence as against the Tenant that the Leased Premises or such portion thereof and the Common Elements are in satisfactory condition on the date of taking possession, subject only to latent defects and to deficiencies (if any) listed in writing in a notice delivered by the Tenant to the Landlord not more than 10 days after the date of taking possession.

ARTICLE 4.00-RENT

4.01 Rent - The Tenant shall pay to the Landlord as Rent for the Leased Premises the aggregate of:

(a) 

Basic Rent in respect of each year of the Term, payable in advance and without notice or demand in monthly instalments as set out in Item 8 of the Term Sheet commencing on the Commencement Date and on the first day of each calendar month thereafter during the Term;

(b) 

the Tenant's Proportionate Share of Operating Costs and the Tenant's Proportionate Share of Taxes, during the Term, in each case payable in monthly installments at the times and in the manner provided in Section 4.06; and

(c)

all amounts (other than payments under Subsections 4.01 (a) and (b)) payable by the Tenant to the Landlord under this Lease, at the times and in the manner provided in this Lease or, if not so provided, as reasonably required by the Landlord,

4.02 Security Deposit - The Landlord acknowledges receipt on or before the Commencement Date of the amount set out in Item 6(a) of the Term Sheet (the "Security Deposit") to be held by the Landlord, without any liability whatsoever on the part of the Landlord for the payment of interest thereon, as a security deposit for the faithful performance by the Tenant of the terms, covenants and conditions of this Lease during the Term hereof and not to be applied on account of Rent except as otherwise provided in this Section 4.02. The Security Deposit will not be a limitation on the Landlord's damages or other rights and remedies available under this Lease or at law or equity, nor shall the Security Deposit be either a payment of liquidated damages or an advance payment of Rent. The Landlord shall have no fiduciary responsibilities or trust obligations whatsoever with regard to the Security Deposit and shall not assume the duties of a trustee for the Security Deposit. The Security Deposit shall not be mortgaged, assigned or encumbered by the Tenant and the Landlord shall not be bound by any such mortgage, assignment or encumbrance. It is understood and agreed between the parties that any portion of the Security Deposit may, at the Landlord's

4

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

option, be applied toward the payment of overdue or unpaid Rent and may also be applied as compensation to the Landlord for any loss or damage sustained with respect to the breach on the part of the Tenant of any terms, covenants and conditions of this Lease, provided in all cases, however, that the Tenant's liability hereunder is not limited to the amount of the Security Deposit. If during the Term any portion of the Security Deposit is so applied, then the Tenant shall on written demand deliver to the Landlord a sufficient amount by certified cheque to restore the Security Deposit to the original sum deposited. The Landlord shall refund to the Tenant after the expiry date of this Lease any portion of the Security Deposit not used by the Landlord after application by the Landlord to any damage incurred by the Landlord by reason of the default of the Tenant under the terms of this Lease. It is further provided that the Landlord will be discharged from all liability to the Tenant with respect to the Security Deposit to the extent that it is transferred to any purchaser of the Landlord's interest in the Leased Premises.

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

4.04 Payment of Rent - General - All amounts payable by the Tenant to the Landlord pursuant to this Lease shall be deemed to be Rent and shall be payable and recoverable as Rent in the manner herein provided and the Landlord shall have all rights against the Tenant for default in any such payment as in the case of arrears of Rent. Rent shall be paid to the Landlord in lawful money of Canada, without deduction, abatement or set-off, at the local address of the Landlord set out in Item 1 of the Term Sheet or to such other Person or such other address as the Landlord may from time to time designate in writing. The Tenant's obligation to pay Rent shall survive the expiration or earlier termination of this Lease. Any Rent or other sum received or accepted by the Landlord and paid by anyone other than the Tenant, on behalf of the Tenant, shall not release or in any way affect the covenants of the Tenant set out in this Lease and shall not be deemed to constitute or evidence the Landlord's consent to a Transfer under Article 12.00. Any Rent or other sum received by the Landlord from or for the account of the Tenant while the Tenant is in default under this Lease may be applied at the Landlord's option to the satisfaction in whole or in part of any of the obligations of the Tenant then due under this Lease in such manner as the Landlord sees fit regardless of any designation or instruction of the Tenant to the contrary.

4.05 Partial Month - If the Commencement Date is a day other than the first day of a calendar month, or if the Term ends on any day other than the last day of a calendar month, Rent for the fractions of a month at the beginning and at the end of the Term shall be adjusted pro rata on a per diem basis.

4.06 Payment of Tenant's Occupancy Costs (1)

Estimate and Payment

(a) 

The Landlord shall deliver to the Tenant a written estimate or a written revised estimate of: (i) the Tenant's Proportionate Share of Operating Costs for each Fiscal Year; and (ii) the Tenant's Proportionate Share of Taxes for each Fiscal Year. The Tenant shall pay to the Landlord the amount so estimated in equal monthly installments (except as otherwise required in this Section 4.06 with respect to Property Taxes) in advance over that Fiscal Year simultaneously with the Tenant's payments on account of Basic Rent. If the Landlord does not deliver to the Tenant such an estimate, the Tenant shall continue to pay the Tenant's Proportionate Share of Operating Costs and the Tenant's Proportionate Share of Taxes based on the last such estimate delivered by the Landlord until a further estimate is delivered by the Landlord and the next payment on account of the Tenant's Operating Costs or Taxes shall be adjusted to take into account any over or under payment in the preceding installments paid in the Fiscal Year to which the estimate or revised estimate relates. Notwithstanding the foregoing, as soon as bills for all or any portion of amounts included in Operating Costs and Taxes as so estimated are received, the Landlord may bill the Tenant for the Tenant's Proportionate Share thereof and the Tenant shall pay the Landlord such amounts so billed (less all amounts previously paid on account by the Tenant on the basis of the Landlord's estimate as aforesaid) as Rent within 5 days following demand therefor.

(b) 

Within a reasonable time after the date in each calendar year when the final installment of Property Taxes is due in respect of commercial properties generally in the municipality in which the Project is located (the "Final Payment Date"), the Landlord shall deliver a statement (the "Tax Statement") to the Tenant that: (i) specifies the Tenant's Proportionate Share of Taxes for the Property Tax Year; and (ii) sets out the total (the "Prepayment Total") of amounts payable under this Subsection 4.06(1)(b) that have been paid by the Tenant between the Final Payment Date in the previous Property Tax Year and the Final Payment Date of the current Property Tax Year. If the Prepayment Total, less any amounts that were previously credited to the Tenant, and any amounts paid for arrears in respect of previous Property Tax Years, (the "Net Prepayment Total") is less than the Tenant's Proportionate Share of Taxes specified in the Tax Statement, the Tenant shall pay the deficiency with the next monthly payment of Basic Rent. If the Net Prepayment Total exceeds the Tenant's Proportionate Share of Taxes specified in the Tax Statement, the Landlord shall, unless the

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

Tenant is then in default under this Lease, credit the excess to the Tenant on account of the next succeeding payments of the Tenant's Occupancy Costs. The Landlord may estimate Property Taxes for the Property Tax Year following the then current Property Tax Year and the Tenant shall continue after the Final Payment Date to make monthly payments in advance, in amounts determined by the Landlord, for periods determined by the Landlord. The monthly payments paid by the Tenant after the Final Payment Date shall be credited against the Tenant's Proportionate Share of Taxes for the subsequent Property Tax Year.

(c) 

Any portion of the Tenant's Proportionate Share of Taxes accrued with respect to the Term or any part thereof paid by the Landlord prior to the Commencement Date shall be reimbursed by the Tenant to the Landlord on the Commencement Date or on demand thereafter. Subject to Sections 8.03 and 8.D5, the Tenant shall pay the Tenant's Proportionate Share of any Property Taxes or the Landlord's reasonable estimate thereof monthly in advance in the same manner as for payment of the Tenant's Proportionate Share of Operating Costs.

Notwithstanding the foregoing, the Landlord shall always have the right:

(i) to revise the amount of installments on account of Property Taxes payable by the Tenant to an amount that allows the Landlord to collect all Property Taxes payable by the Tenant by the final due date of Property Taxes for the calendar year; and/or

(ii) to schedule and require payment by the Tenant of installments on account of Property Taxes payable by the Tenant such that by the final due date of Property Taxes for any calendar year, the Tenant shall have paid to the Landlord the full amount of Property Taxes payable by the Tenant for such calendar year, which arrangement may include payment of installments by the Tenant in a calendar year on account of Property Taxes payable by the Tenant for the next calendar year.

(2) Annual Statement and Adjustment - The Landlord shall deliver to the Tenant within 120 days after the end of each Fiscal Year or as soon after that date as the same shall be prepared by or for the Landlord, a written statement setting out in reasonable detail the amount of the Tenant's Occupancy Costs for such Fiscal Year. If the total of monthly installments of the Tenant's Occupancy Costs actually paid by the Tenant to the Landlord during that Fiscal Year differs from the amount of the Tenant's Occupancy Costs payable for that Fiscal Year under Subsection 4.01(b), the Tenant shall pay to the Landlord or, if the Tenant is not in default, the Landlord shall credit to the Tenant on account of the next succeeding payments of the Tenant's Operating Costs and Taxes, as the case may be, the difference, without interest, within 30 days after the date of delivery of the statement.

(3) Disputes - If the Tenant disputes the Landlord's statement setting out Operating Costs or the Tax Statement for any Fiscal Year, the Tenant shall provide notice thereof in writing to the Landlord within 60 days of delivery of the applicable statement in respect of that Fiscal Year. Notwithstanding delivery of such notice, the Tenant shall continue to pay Rent in accordance with the terms of this Lease. In the event of a dispute, the determination of the Tenant's Proportionate Share of Operating Costs or the Tenant's Proportionate Share of Taxes as made by the Landlord's auditors shall be conclusive and binding upon both the Landlord and the Tenant. All costs of obtaining such determination shall be included in Operating Costs; provided that if the Landlord's auditors confirm the Landlord's calculations within a variance of 5%, the Tenant shall be solely responsible for the entire cost of such determination and shall pay such costs to the Landlord forthwith upon demand. If the Tenant and any one or more of the other tenants in the Project are responsible to pay such costs, the Tenant shall be jointly and severally liable with such other tenant or tenants.

4.07 Resolution of Disputes - In the event of any disagreement as to the amount or propriety of any amount included in Operating Costs, a certificate of the auditor of the Landlord, acting reasonably, shall be conclusive as to the amount of Operating Costs for any period to which such certificate relates.

4.08 Area Determination - The Landlord may from time to time, as it deems necessary, cause the Rentable Area of the Leased Premises and the Total Rentable Area of the Building or any part thereof to be recalculated or remeasured and the cost thereof shall be included in Operating Costs (except as otherwise provided in this Section 4.08). Upon any such recalculation or remeasurement, Rent (including without limitation Basic Rent) shall be adjusted accordingly. If any calculation or determination by the Landlord of the Rentable Area of any premises (including the Leased Premises) is disputed or called into question, it shall be calculated or determined by the Landlord's architect or surveyor from time to time appointed for that purpose, whose certificate shall be conclusive and binding upon the parties hereto. The cost of such calculation or determination shall be included in Operating Costs; provided that if the Tenant disputes the Landlord's calculation or determination and the calculation or determination by the Landlord's architect or surveyor agrees with the Landlord's calculation or determination within a 2% variance, the Tenant shall pay the full cost of such calculation or determination forthwith upon demand. If the Tenant and any one or more

6

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

of the other tenants in the Project are responsible to pay such costs, the Tenant shall be jointly and severally liable with such other tenant or tenants.

If any error shall be found in the calculation of the Rentable Area of the Leased Premises or in the calculation of the Tenant's Proportionate Share, Rent (including without limitation Basic Rent) shall be adjusted for the Fiscal Year in which the error is discovered and for the Fiscal Year preceding the Fiscal Year in which the error was discovered, if any, and thereafter, but not for any prior period.

4.09 Vacancy - If any part of the Building available for leasing is not occupied, the Landlord shall have the right, in respect of amounts forming part of Operating Costs which vary proportionately with occupancy, to include in Operating Costs a larger amount of costs, which larger amount shall be based on a reasonable estimate of the actual cost which would have been incurred if the unoccupied parts of the Building available for leasing were occupied, it being intended hereby that the Landlord shall obtain, to the extent reasonably possible, full reimbursement of Operating Costs attributable to or in respect of occupied premises, and not that: (i) the Tenant shall subsidize Operating Costs incurred by the Landlord attributable to or in respect of vacant premises; or (ii) the Landlord shall recover more than actual Operating Costs.

4.10 Method of Payment

(1) Unless the Landlord advises otherwise in writing, the Tenant shall provide to the Landlord on or before the Commencement Date and thereafter on or before the beginning of each Fiscal Year during the Term and within 10 days after delivery of the Landlord's estimate of any payment constituting Rent, postdated cheques in the amount of Rent for each month during that Fiscal Year.

(2) At the Landlord's request, the Tenant shall participate in a pre-authorized payment plan whereby the Landlord will be authorized to debit the Tenant's bank account each month or from time to time for Rent payable on a monthly basis, and any amount payable provisionally on an estimated basis. The Tenant hereby undertakes to execute and deliver such documents as may reasonably be required to give full force and effect to this Subsection 4.10(2) within 5 days of such request.

ARTICLE 5.00 - USE AND OCCUPATION

5.01 Use of Leased Premises - The Tenant shall use and occupy only the usable part of the Leased Premises and only for office purposes to carry on the business set out in Item 9 of the Term Sheet and shall not use or permit the Leased Premises or any part thereof to be used or occupied for any other purpose or business except as otherwise expressly permitted under this Lease or by any Person other than the Tenant. The Tenant shall be responsible for obtaining at its expense all necessary approvals, licenses and permits, including but not limited to zoning, development, building, occupancy and business approvals, licenses and permits, for its intended use of the Leased Premises and shall submit all applications for such approvals, licenses and permits to the Landlord for its consent (which consent, if the application pertains to the zoning applicable to the Project or may adversely affect the value or use of the Project or any part thereof, may be arbitrarily withheld by the Landlord) prior to making application. Notwithstanding the Landlord's consent to an application, the Tenant shall indemnify and defend the Landlord and hold it harmless from and against any and all Claims incurred or suffered by the Landlord directly or indirectly arising out of the Tenant's application for such approvals, licenses or permits or the resulting approvals, licenses and permits with respect to the use, intended or otherwise, of the Leased Premises whether such Claims are in respect of the Leased Premises or in respect of the Building or the Project. The Landlord makes no representation whether or not necessary approvals can be obtained for the Tenant's use or intended use. The Landlord makes no representation or warranty, express or implied, that the present or future use of the Leased Premises, if such use is anything other than office use, is legally fit for the intended use, or complies with any law, by-law or regulation governing the use of the Leased Premises.

5.02 Compliance with Laws - The Tenant shall promptly and at its own cost comply with all present and future laws, regulations and orders relating to, and obtain and maintain in force all approvals, permits, licenses and registrations required for, any of the following:

(a)

the occupation or use of and the conduct of any business in or from the Leased Premises;

(b)

the condition of the Leasehold Improvements, fixtures, furniture and equipment installed therein;

(c)

Pollutants and the protection of the environment so far as those laws, regulations and orders or any of them relate to the Project; and

(d)

the making by the Tenant of any repairs, changes or improvements in or to the Project;

and the Tenant shall immediately give written notice to the Landlord of the occurrence of any event in the Leased Premises constituting an offence thereunder or being in breach thereof and if the

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Tenant shall, either alone or with others, cause the happening of any such event, the Tenant shall immediately give the Landlord notice to that effect and thereafter give the Landlord from time to time written notice of the extent and nature of the Tenant's compliance with the foregoing provisions of this Section.

The Tenant agrees that if the Landlord determines in its sole discretion that the Landlord, its property, its reputation or the Leased Premises or any one or more of the foregoing is placed in any jeopardy, as determined by the Landlord, by the requirements for any work required to ensure compliance with the foregoing provisions of this Section 5.02, or the Tenant is unable to fulfill its obligations under this Section, the Landlord may itself undertake such work or any part thereof at the cost and expense of the Tenant.

The Tenant shall, at its own expense, remedy any damage to the Leased Premises caused by such event or work or by the performance of the Tenant's obligations under this Section.

If alterations or improvements to the Leasehold Improvements or to the Leased Premises are necessary to comply with any of the foregoing provisions of this Section or with the requirements of insurance carriers, the Tenant shall forthwith complete such work, complying always with the applicable provisions of this Lease, to the extent that it can be done within the Leased Premises and in any event shall pay the entire cost of alterations and improvements so required.

In the event that structural repairs or upgrading of the Building, including but not limited to seismic upgrading, is required to permit the Tenant's use, the Landlord may, at its sole discretion, terminate this Lease.

5.03 Prohibited Uses - The Tenant shall not commit, cause or permit any nuisance in or about or any damage to the Leased Premises or any part thereof, the Building, the Project or any of the Leasehold Improvements or goods or fixtures therein, any overloading of the floors of the Leased Premises or any use or manner of use causing annoyance to other tenants or occupants of the Project. Without limiting the generality of the foregoing, the Tenant shall not use or permit the use of any portion of the Leased Premises for any dangerous, illegal, noxious, odorous or offensive trade, business or occurrence. The Tenant shall keep the Leased Premises free of debris, Pollutants and anything of a dangerous, noxious, odorous or offensive nature or which could create a fire hazard (through undue load on electrical circuits or otherwise) or vibration, heat, odor or noise detectable outside the Leased Premises in the sole discretion of the Landlord. The Tenant shall not use equipment in the Leased Premises in a manner that results in its being seen or heard outside the Leased Premises.

5.04 Common Elements - The Tenant and its employees and invitees shall be entitled to use, in common with others entitled thereto, for purposes for which they are intended and only during such hours as the Landlord may designate from time to time, the Common Elements. The Tenant and its employees and invitees shall not obstruct the Common Elements or use the Common Elements other than for their intended purposes and then only in accordance with the rules and regulations set by the Landlord from time to time.

5.05 Hazardous Use - The Tenant shall not do, omit to do or permit to be done anything which will cause or may have the effect of causing the cost of the Landlord's insurance in respect of the Project or any part thereof to be increased at any time during the Term or any policy of insurance on or relating to the Project to be subject to cancellation. Without waiving or limiting the foregoing prohibition, the Landlord may demand and the Tenant shall pay to the Landlord upon demand, the amount of any increase in the cost of insurance caused by anything so done or omitted or permitted to be done. The Tenant shall forthwith upon the Landlord's request comply with the requirements of the Landlord's insurers, cease any activity complained of and make good any circumstance which has caused any increase in insurance premiums or the cancellation or threatened cancellation of any insurance policy. In determining the amount of increased premiums for which the Tenant is responsible, a schedule or statement issued by the Person who computes the insurance rates for the Landlord showing the components of the rate shall be conclusive evidence of the items that make up the rate. If any policy of insurance in respect of the Project or any part thereof is cancelled or becomes subject to cancellation by reason of anything so done or omitted or permitted to be done, the Landlord may without prior notice terminate this Lease and re-enter the Leased Premises.

5.06 Tenant's Security Interest - The Tenant shall not, without the Landlord's prior written consent, create a security interest in Leasehold Improvements installed by the Tenant or the Landlord in the Leased Premises.

5.07 Rules and Regulations - The Tenant shall observe and cause its employees, servants, agents, invitees, customers, subtenants, licensees and others over whom the Tenant can reasonably be expected to exercise control to observe the rules and regulations attached as Schedule C hereto and such further and other reasonable rules and regulations and amendments and additions thereto as may be made by the Landlord and notified to the Tenant by mailing a copy thereof to the Tenant or by posting same in a conspicuous place in the Building. All such rules and regulations now or hereafter in force shall be read as forming part of this Lease; provided that if there is a conflict

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between the rules and regulations and this Lease, the terms of this Lease shall prevail. The Landlord shall not be responsible to the Tenant for the non-observance of any rule or regulation or the terms of any lease or agreement to lease by any other tenant of the Project.

5.08 Permitted Signs - The Tenant shall use only such identification signs as are prescribed by the Landlord from time to time and as comply with all applicable by-laws, regulations and codes as to size, location, arrangement, type of lettering, color, appearance and design for uniform use by office tenants in the Building. Such signs shall contain only the name under which the Tenant carries on business.

5.09 Prohibited Signs - Except with the prior written consent of the Landlord, which consent may be arbitrarily withheld or rescinded in the Landlord's sole discretion, or as provided in Section 5.08, the Tenant shall not paint, display, inscribe, place or affix any sign, symbol, notice, advertisement, display or direction of any kind anywhere outside the Leased Premises or on the interior of any glass, windows or doors or elsewhere within the Leased Premises so as to be visible from the outside of the Leased Premises.

5.10 Window Coverings - Without the prior written consent of the Landlord, the Tenant shall not install any blinds, drapes, curtains or any other window coverings in the Leased Premises and shall not remove, add to or change the blinds, drapes, curtains or other window coverings installed by the Landlord from time to time. The Tenant shall keep all window coverings open or closed at various times as the Landlord may from time to time direct by the rules and regulations or otherwise.

5.11 Parking - Any Parking Facilities provided by the Landlord shall at all times be subject to the exclusive control and management of the Landlord or those whom the Landlord may designate from time to time. The Landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to any Parking Facilities and shall have the right from time to time:

(a)

to expand, reduce, or change the area, level, location and arrangement of the Parking Facilities and to construct any Parking Facilities;

(b)

to enforce parking charges with appropriate provisions for free parking ticket validating by tenants of the Building;

(c)

to temporarily close all or any portion of the Parking Facilities to such extent as may, in the Landlord's opinion, be legally sufficient to prevent a dedication thereof or the accrual of rights to any Person or the public;

(d)

to temporarily obstruct or close off all or any part of the Parking Facilities for the purpose of maintenance or repair; and

(e) 

to do and perform such other acts in and to the Parking Facilities as, in the judgment of the Landlord, shall be advisable with a view to the improvement of the convenience of and use of the Building by tenants, their employees and invitees.

The Landlord will operate and maintain the Parking Facilities in such manner as the Landlord in its sole discretion shall determine from time to time. Without limiting the scope of such discretion, the Landlord shall have the sole right to employ all personnel and make all rules and regulations pertaining to and necessary for the proper operation and maintenance of the Parking Facilities. The Tenant shall participate in any free parking or other ticket validation system established by the Landlord and abide by all rules and regulations pertaining thereto and the Tenant shall pay to the Landlord monthly, together with payments on account of Basic Rent, all parking charges attributable to the Tenant as evidenced by parking tickets validated by the Tenant in accordance with any system established by the Landlord.

5.12 Authorization of Enquiries - The Tenant hereby authorizes the Landlord to make enquiries from time to time of any government or municipality or governmental or municipal agency with respect to the Tenant's compliance with any and all laws and regulations pertaining to the Tenant or the business conducted in the Leased Premises including, without limitation, laws and regulations pertaining to Pollutants and the protection of the environment; and the Tenant covenants and agrees that the Tenant shall from time to time provide to the Landlord such written authorization as the Landlord may reasonably require in order to facilitate the obtaining of such information.

5.13 Records - The Tenant shall keep on the Leased Premises or at the Tenant's head office complete records of all goods stored on, or processed, manufactured, packaged or used in any process in the Leased Premises by the Tenant and by any other occupant of the Leased Premises or any part thereof. The Landlord may examine such records and the Tenant shall provide extracts from or copies thereof all as required by the Landlord from time to time. This requirement to maintain such records shall survive the expiry or earlier termination of the Term.

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5.14 Overloading - The Tenant shall not install or permit the installation of equipment or storage of items that, in the opinion of the Landlord's engineer, overloads the capacity of any utility or of any electrical or mechanical facility in the Project or which may exceed the load-bearing capacity of the floors of the Project. If damage is caused to the Leased Premises or to the Project as a result of any installation in contravention of this Section, the Tenant shall repair the damage or, at the Landlord's option, pay to the Landlord on demand the cost of repairing the damage incurred by the Landlord.

5.15 Telecommunications

(1) The Tenant may utilize a telecommunication service provider of its choice with the Landlord's prior written consent, which consent shall not be unreasonably withheld, subject to the provisions of this Lease, including but not limited to the following:

(a) 

prior to commencing any work in the Project, the service provider shall execute and deliver the Landlord's standard form of license agreement, which shall include a provision for the Landlord to receive compensation for the use of the space for the service provider's equipment and materials;

(b) 

the Landlord shall incur no expense or liability whatsoever with respect to any aspect of the provision of telecommunication services, including without limitation, the cost of installation, service, materials, repairs, maintenance, removal, interruption or loss of telecommunication service;

(c)

the Landlord must first reasonably determine that there is sufficient space in the risers of the Building for the installation of the service provider's wiring and cross connect; and

(d) 

the Tenant shall indemnify and hold harmless the Landlord for all losses, claims, demands, expenses and judgments against the Landlord caused by or arising out of, either directly or indirectly, any acts or omissions by the service provider or the Tenant or those for whom either of them is responsible at law.

(2) The Tenant shall be responsible for the costs associated with the supply and installation of telephone, computer and other communication equipment and systems and related wiring within the Leased Premises to the boundary of the Leased Premises for hook up or other integration with telephone and other communication equipment and systems of a telephone or other communication service provider, which equipment and systems of the service provider are located or are to be located in the Building pursuant to the Landlord's standard form of license agreement and, subject to the provisions of Section 14.01, for the removal of same.

(3) The Landlord shall supply space in risers in the Building and space on floor(s) of the Building in which the Leased Premises are located, the location of which shall be designated by the Landlord in its discretion, to telecommunication service providers who have entered into the Landlord's standard form of license agreement for the purpose, without any cost or expense to the Landlord therefor, of permitting installation in such risers and on such floor(s) of telephone and other communication services and systems (including data cable patch panels) to the Leased Premises at a point designated by the Landlord.

(4) The Landlord shall have the right to assume control of wiring, cables and other telecommunication equipment in the Building and may designate them as part of the Common Elements.

ARTICLE 6.00 SERVICES. MAINTENANCE, REPAIR AND ALTERATIONS BY LANDLORD

6.01 Operation of Project - During the Term, and so long as no Event of Default shall exist, and so long as no event shall occur which, with the passage of time or the giving of notice or both, would constitute an Event of Default, the Landlord shall operate and maintain the Project in accordance with applicable laws and regulations and with standards from time to time prevailing for similar projects in the area in which the Project is located and, subject to payment by the Tenant of Rent, shall provide the Services set out in this Article 6.00; provided that the Landlord shall not be responsible for operating, maintaining, repairing or replacing any systems, facilities or equipment to the extent that the operation, maintenance, repair or replacement thereof are specifically stated in this Lease to be the responsibility of the Tenant.

6.02 Building Services and Facilities, - The Landlord shall provide:

(a)

washrooms accessible to the Leased Premises for the use of the Tenant, its employees and invitees in common with other persons entitled thereto;

(b) domestic running water to the building standard washrooms in the Leased Premises, if any, and to washrooms available for the Tenant's use in common with others entitled thereto;

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

(c) 

access to and egress from the Leased Premises for use by the Tenant, its employees and invitees in common with other persons entitled thereto, provided that the Landlord may restrict access for security purposes or require that all persons seeking access produce identification;

(d) 

heating, ventilation and air conditioning to the Building, including the Leased Premises, to a level sufficient to maintain therein conditions of reasonable temperature and comfort provided that, unless otherwise agreed by the parties, a full standard of interior climate control shall only be maintained during those hours and on those days established from time to time by the Landlord as being operating periods for the Building, having reasonable regard to energy conservation;

(e)

lighting and electrical power to the Common Elements as reasonably required;

(f)

electrical power to the Leased Premises for lighting and for standard office equipment capable of operating from the voltage circuits available and then standard for the Building;

(g)

janitorial services to the Leased Premises and Common Elements to a standard consistent from time to time with similar buildings in the area in which the Building is located;

(h) 

a directory board located in the Common Elements providing identification of the tenants in the Building in such manner and containing such information as the Landlord may determine; and

(i)

subject to Section 5.15, appropriate ducts for bringing telephone services to the Leased Premises.

6.03 Maintenance, Repair and Replacement - Subject to the provisions of Article 10.00 and payment by the Tenant of Rent, the Landlord shall operate, maintain, repair and replace the systems, facilities and equipment necessary for the proper operation of the Project and for provision of the Landlord's Services set out in Section 6.02 (except as may be installed by or be the property of the Tenant) and shall maintain and repair the foundations, structure and roof of the Building and repair damage to the Building which the Landlord is obligated to insure against under Article 9.00, provided that:

(a) 

if and so long as all or part of the systems, facilities and equipment in the Project or the supply of utilities to the Project are destroyed, damaged or interrupted, the Landlord shall have a reasonable time within which to complete any necessary repair or replacement and, during that time, shall only be required to maintain such Services as are reasonably possible in the circumstances;

(b)

the Landlord may temporarily discontinue such Services or any of them at such times as may reasonably be necessary; 

(c)

the Landlord shall use reasonable diligence in carrying out its obligations under this Section 6.03, but shall not be liable under any circumstances for any consequential damages, whether direct or indirect, to any Person or property resulting from any failure to do so;

(d)

no reduction or discontinuance of Services under this Section 6.03 shall be construed as a breach of the Landlord's covenant for quiet enjoyment or as an eviction of the Tenant or, except as specifically provided otherwise in this Lease, release the Tenant from any obligation under this Lease;

(e)

the Landlord shall not be liable under any circumstances for any damage caused by interruption or failure of any satellite, telecommunications system, utility, wiring, elevator or escalator;

(f)

the Landlord shall have no responsibility for any inadequacy of performance of any systems within the Leased Premises if the Leased Premises or the use thereof depart from the design criteria for such systems as established by the Landlord for the Building; and

(g)

nothing contained herein shall derogate from the provisions of Article 10.00.

6.04 Alterations / Renovations by Landlord - During the Term or any renewal or extension thereof, it is understood and agreed that, if the Landlord intends to make changes, additions or improvements to or renovate the Project or any part thereof, of which the Leased Premises form a part (the "Renovation Work"), notwithstanding anything contained in this Lease to the contrary, the Landlord, its servants, agents, contractors and representatives may proceed with the Renovation Work without further consent or approval of the Tenant and the Tenant hereby irrevocably grants to the Landlord its consent to the carrying out of the Renovation Work; provided that the Renovation Work shall not materially interfere with or adversely affect the business of the Tenant carried on in the Leased Premises. It is specifically understood and agreed that there shall be no compensation

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

paid to the Tenant nor shall there be any abatement of Rent in connection with the Renovation Work. In exercising its rights pursuant to this Section 6.04, the Landlord shall be entitled to:

(a)

enter the Leased Premises from time to time to make changes or additions to the structure, systems, facilities and equipment in the Leased Premises where necessary to serve the Leased Promises or other parts of the Building;

(b)

limit from time to time as may be necessary by reason of the Renovation Work, ingress to and egress from the Leased Premises and/or the Project;

(c)

change, add to, diminish, demolish, dedicate for public purposes part or parts of, improve or alter any part of the Project not in or forming part of the Leased Premises; and

(c)

change, add to, diminish, improve or alter the location and extent of the Common Elements.

The Landlord agrees to use commercially reasonable efforts to give to the Tenant notice of its intention to proceed with the Renovation Work and the Tenant shall cooperate with the Landlord in order to allow the Renovation Work to be completed as expeditiously as possible. It is specifically agreed by the Landlord and the Tenant that the Landlord shall not, by reason of exercising its rights pursuant to this Section 6.04, be in default or be deemed to be in default of any covenant or proviso contained in this Lease or at law.

6.05 Access by Landlord - The Tenant shall permit the Landlord to enter the Leased Premises at any time in case of an emergency or a health related issue, either real or perceived, and otherwise during normal business hours, upon 24-hours notice to the Tenant, where such entry will not unreasonably disturb or interfere with the Tenant's use of the Leased Premises or operation of its business, to: (i) examine, inspect and show the Leased Premises for purposes of leasing, sale or financing; (ii) provide Services or make repairs, replacements, changes or alterations as provided for in this Lease; or (iii) take such steps as the Landlord may deem necessary for the safety, improvement or preservation of the Leased Premises or the Project. The Tenant shall cooperate with the Landlord in any such showing of the Leased Premises. The Landlord shall, whenever possible, consult with or give reasonable notice to the Tenant prior to entry but no such entry shall constitute an eviction or a breach of the Landlord's covenant for quiet enjoyment or entitle e Tenant to any abatement of Rent.                                      Please Initial ___/____

6.06 Energy Conservation - The Landlord shall be deemed to have observed and performed its obligations under this Lease, including those relating to the provision of utilities and Services, if in so doing it acts in accordance with a directive, policy or request of an authority having jurisdiction in the field of energy conservation, security or environmental matters.

6.07 Supervision and Extended Services - The Landlord, if it shall from time to time so elect, shall have the right to supervise the moving of furniture or equipment of the Tenant and (in addition to supervising the Tenant's work as provided for in this Lease) to supervise the making of repairs conducted within the Leased Premises and the exclusive right to supervise or make deliveries to the Leased Premises. In addition, and by arrangement with the Tenant, the Landlord may provide extended cleaning or other services to the Tenant in addition to those normally supplied and referred to in this Lease. In each case, the Landlord's costs and expenses incurred with respect thereto together with a reasonable administration fee shall be paid to the Landlord by the Tenant from time to time promptly upon receipt of invoices from the Landlord.

6.08 Landlord's Work - The Tenant agrees that it has entered into this Lease on the express understanding that, unless otherwise specifically provided in Schedule D or Schedule E, the Leased Premises are being leased "as Is" and that the Landlord's work in respect of the Leased Premises is limited to the scope delineated as Landlord's work in Schedule D. All other improvements to the Leased Premises shall be performed at the sole expense of the Tenant in accordance with the terms of this Lease including, but not limited to, Section 7.04.

6.09 Control by Landlord, - The Tenant agrees that the Landlord shall have control of the Project and, without limiting the generality of anything contained elsewhere in this Lease, the Landlord may make such use of the Common Elements and permit others to make such use of the Common Elements as the Landlord may from time to time determine subject, in the case of use by others, to such terms and conditions and for such consideration as the Landlord may in its discretion determine, provided that such uses do not materially obstruct access to the Leased Premises and the Landlord may temporarily close all or any part or parts of the Project to such extent as may, in the opinion of the Landlord or any Consultants engaged by the Landlord in that regard, be legally sufficient to prevent a dedication thereof or the accrual of rights therein to any Person or the public.

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ARTICLE 7.00- PAYMENT FOR SERVICES AND MAINTENANCE, REPAIR AND ALTERATIONS

BY TENANT

7.01 Utilities - In addition to the payment of the Tenant's Occupancy Costs and notwithstanding Sections 6.01 and 6.02, the Tenant shall be responsible for the cost of all utilities including electricity supplied to the Leased Premises. The Tenant shall not, without the prior written approval of the Landlord, which may be arbitrarily withheld, install or cause to be installed in the Leased Premises any equipment that will require additional utility usage or any telecommunications lines and/or conduits in excess of that normally required for office premises. If, with the Landlord's approval, such additional equipment is installed, the Tenant shall be solely responsible for such excess utility usage. If utilities are supplied to the Tenant through a meter common to other tenants in the Project (there being no obligation on the Landlord to install separate meters), the Landlord shall pay the cost of the utilities and apportion the cost pro rata among the tenants supplied through the common meter, based on all relevant factors including, but not limited to, the hours of use, number and types of lights and electrical equipment and the proportion of each tenant's Rentable Area to the Rentable Area of all tenants to which the common meter relates. Upon receipt of the Landlord's statement of apportionment, the Tenant shall promptly reimburse the Landlord for all amounts apportioned to the Tenant by the Landlord; provided that the Landlord may elect by notice to the Tenant to estimate the amount which will be apportioned to the Tenant and require the Tenant to pay that amount in monthly installments in advance simultaneously with the Tenant's payments of Basic Rent. Notwithstanding the foregoing, and whether the Leased Premises are separately metered or not, the Landlord may purchase in bulk from the utility supplier the aggregate utility requirements of the Project at the applicable rates determined by a single meter on the Project and may, in billing the Tenant for its share of such utility, apply a scale of rates not greater than the current scale of rates at which the Tenant would from time to time be purchasing the whole of its utilities required and consumed in respect of the Leased Premises if the Tenant were purchasing directly from the utility supplier. The Tenant shall upon the Landlord's request install a separate utility meter or meters in the Leased Premises at the Tenant's expense.

In addition to the payments to the Landlord required by this Article 7.00, the Tenant shall pay all rates, charges, costs and expenses as may be assessed or levied by any supplier of utilities to the Tenant other than those supplied by the Landlord.

7.02 Lights - In addition to the payment of the Tenant's Occupancy Costs and notwithstanding Sections 6.01 and 6.02, except to the extent the same is included in Operating Costs, the Tenant shall pay to the Landlord monthly in advance, with its payments of Basic Rent, a reasonable amount as determined by the Landlord in respect of replacement of building standard fluorescent tubes, light bulbs and ballasts in the Leased Premises on a periodic basis or as required from time to time and the costs of cleaning, maintaining and servicing of the electrical light fixtures in the Leased Premises.

7.03 Heating, Ventilation and Air Conditioning - In addition to the payment of the Tenant's Occupancy Costs and notwithstanding Sections 6.01 and 6.02, the Tenant shall be responsible for the cost of all heating, ventilation and air conditioning required in the Leased Premises or any part thereof in excess of that required to be provided by the Landlord under Section 6.02(d). If at any time during the Term the Landlord shall determine that the cost of the heating, ventilation and air conditioning required in the Leased Premises or any part thereof is in excess of that normally required in other parts of the Building which are used for normal office purposes, the Landlord may deliver to the Tenant a statement in writing setting out the cost of the excess and upon receipt of the statement from time to time the Tenant shall promptly reimburse the Landlord for the amount shown in the statement as attributable to the Leased Premises.

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

(a)

comply with the requirements of the Landlord's insurers and any governmental or municipal authority having jurisdiction;

(b) 

be made only if, prior to preparation of any plans and specifications and prior to commencement of any work in the Leased Premises, including, without limiting the generality of the foregoing, any demolition, construction or alterations, the Tenant has determined through testing at its own cost and expense what Pollutants, if any, are present in the Leased Premises and, if the Tenant fails to do so, the Tenant acknowledges and agrees that it shall indemnify and hold harmless the Landlord from and against any and all Claims growing or arising out of the Tenant's failure to do so;

(c) 

be made only after detailed plans and specifications therefor have been submitted to the Landlord and received the prior written approval of the Landlord, all at the expense of the Tenant, and should the Landlord provide its written approval, such approval shall not be deemed to mean that the proposed changes, additions or improvements comply with any existing or future municipal by-laws or any other applicable laws, by-laws, codes or

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

requirements. All costs incurred with respect to such approval shall be at the expense of the Tenant. Any changes, additions and/or improvements affecting the Building's electrical, mechanical and/or structural components shall only be performed by contractors selected by the Landlord (the "Landlord's Contractors"). A list of the Landlord's Contractors is available upon request;

(d)

equal or exceed the then current standard for the Building;

(e)

be carried out in a good and workmanlike manner and, subject to Subsection 7.04(c), only by Persons selected by the Tenant and approved in writing by the Landlord who shall, if required by the Landlord, deliver to the Landlord before commencement of the work, performance and payment bonds as well as proof of workers' compensation and public liability and property damage insurance coverage, with the Landlord and the Landlord's Agent and nominee (if any) named as additional insureds, in amounts, with companies and in a form reasonably satisfactory to the Landlord, which shall remain in effect during the entire period in which the work will be carried out; and

(f)

be made only after the Tenant has provided to the Landlord evidence of all requisite permits and licenses and any other information reasonably required by the Landlord.

Upon completion of such change, addition or improvement, the Tenant shall provide to the Landlord as-built drawings and/or a CAD disk of same in a format useable by the Landlord, together with evidence satisfactory to the Landlord of a final inspection of such change, addition or improvement (including inspection of mechanical and electrical systems where applicable) by the authority which issued the permit or license for same.

7.05 Tenant's Trade Fixtures and Personal Property - The Tenant may install in the Leased Premises its usual trade fixtures and personal property in a proper manner; provided that no installation or repair shall interfere with or damage the mechanical or electrical systems or the structure of the Building. If the Tenant is not then in default hereunder, the trade fixtures and personal property installed in the Leased Premises by the Tenant may be removed by the Tenant from time to time in the ordinary course of the Tenant's business or in the course of reconstruction, renovation or alteration of the Leased Premises by the Tenant, subject to the provisions of Article 14.00, and provided that the Tenant promptly repairs at its own expense any damage to the Leased Premises and the Building resulting from the installation and removal and provided further that in the event of removal of trade fixtures, except at the expiration of the Term, the Tenant shall promptly replace such trade fixtures with trade fixtures of equal or greater quality and value, subject to the provisions of Section 14.01.

7.06 Maintenance and Repair - Except to the extent that the Landlord is specifically responsible therefor under this Lease, the Tenant, at its cost, shall maintain, repair and replace the Leased Premises, all Leasehold Improvements and all apparatus therein in good order and condition, and in compliance with the requirements of all authorities having jurisdiction, including without limitation:

(a)

keeping the Leased Premises and the immediate surrounding area in a clean and tidy condition and free of debris and garbage;

(b)

repainting and redecorating the Leased Premises and cleaning and maintaining window

coverings and carpets at reasonable intervals as reasonably required by the Landlord;

(c) 

making repairs and replacements as needed to the Leased Premises including, without limitation, to internal and external glass within or on the exterior of the Leased Premises (with the exception of glass comprising the curtain wall), doors, hardware, partitions, walls, fixtures, lighting and plumbing fixtures, wiring, piping, ceilings, floors and thresholds in the Leased Premises; and

(d)

keeping the Leased Premises in such condition as to comply with the requirements of any authority having jurisdiction.

7.07 Inspection - The Landlord and its Consultants may from time to time, upon 24-hours notice to the Tenant, except in case of an emergency, either real or perceived, enter upon the Leased Premises;

Please Initial ___/____

(a)

to inspect the Leased Premises and its condition; and

(b)

to inspect any work being done by the Tenant both during the course of such work and following completion thereof.

If the Landlord or the Landlord's Agent shall determine that the work being done by the Tenant is in breach of this Lease or fails to comply with the requirements of this Lease in any respect, the Tenant shall forthwith remedy such breach or failure to comply and shall desist from continuing the same.

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The Tenant shall, at its own cost, make good any deficiency in such work and remedy any failure to comply with the requirements of this Lease.

7.08 Failure to Maintain - It the Tenant fails to perform any obligation under this Article 7.00, then on not less than 5 days' notice to the Tenant, the Landlord may enter the Leased Premises and perform the obligation without liability to the Tenant for any loss or damage thereby incurred. The Tenant shall promptly after receiving the Landlord's invoice therefor reimburse the Landlord for all costs incurred by the Landlord in performing the obligation plus 20% of the costs for overhead and supervision.

7.09 Liens - The Tenant shall:

(a)

pay promptly when due all costs for work done or caused to be done or goods affixed by the Tenant in the Leased Premises which could result in any lien or encumbrance on the Landlord's interest in the Project or any part thereof, or the filing or registration of any security interest or notice thereof;

(b)

keep the title to the Project, including every part thereof and the Leasehold Improvements, free and clear of any lien, encumbrance or security interest or notice thereof; and

(c)

indemnify and hold harmless the Landlord against any Claims arising out of the supply of goods, materials, services or labor for the work.

The Tenant shall immediately notify the Landlord of any lien, encumbrance, claim of lien, security interest, or notice thereof or other action of which it has, or reasonably should have, knowledge and which affects the title to the Project or any part thereof and, except for those contemplated by Section 15.25, shall cause the same to be removed within 5 Business Days (or such additional time as the Landlord may consent to in writing), failing which the Landlord may take such action as the Landlord deems necessary to remove same and the entire cost thereof shall immediately become due and payable by the Tenant to the Landlord, The Tenant shall not affix or cause to be affixed to the Project any goods acquired under conditional sale or with respect to which any lien, encumbrance or security interest exists. The Landlord may from time to time post such notices in such places on the Leased Premises as the Landlord considers advisable to prevent or limit the creation of any liens upon the Project or any part thereof.

7.10 Roof - The Tenant shall not be entitled to install upon the roof of the Building any equipment except as consented to in writing by the Landlord, which consent may be arbitrarily withheld, but if given shall be subject to whatever conditions the Landlord, in its sole discretion, deems necessary in the circumstances.

ARTICLE 8.00 -TAXES

8.01 Taxes Payable by Landlord - The Landlord covenants and agrees to pay all Taxes assessed against the Landlord or the Project on account of its ownership when due (except for Business Taxes payable directly to the taxing authority by the Tenant under Subsection 8.02(b) and similar taxes levied or assessed separately from Taxes and payable directly to the taxing authority by other tenants or occupants of the Project) and subject to the provisions hereinafter contained in this Article 8.00. Provided however, that the Landlord may defer payment of any such Taxes or defer compliance with any statute, law, by-law, regulation or ordinance in connection with the levy of such Taxes in each case to the fullest extent permitted by law as long as it shall diligently prosecute any contest or appeal of such Taxes.

8.02 Taxes Payable by Tenant - The Tenant shall pay promptly when due all Taxes upon or on account of the following:

(a)

to the Landlord, the Tenant's Proportionate Share of Taxes; and

(b)

to the taxing authority or to the Landlord at the Landlord's direction, any Taxes imposed or assessed against or in respect of the personal property and Leasehold Improvements of the Tenant in the Leased Premises or in respect of any business operations carried on or in respect of the use or occupancy thereof by the Tenant or by any subtenant or licensee, if levied or assessed separately from Taxes upon the remainder of the Land and Building and referred to herein as "Business Taxes".

The Tenant agrees to provide to the Landlord within 3 days of receipt thereof, an original or duplicate copy of any separate bill for Taxes. The Tenant shall deliver promptly, upon request of the Landlord, receipts for all such payments and will furnish such other information as the Landlord may require.

8.03 Tax Increases Attributable to Tenant - If any Taxes in respect of the Leased Premises or Project are greater than they otherwise would have been by reason of the constitution or ownership of the Tenant, the use of the Leased Premises by the Tenant, the school support of the Tenant or

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

any other reason peculiar to the Tenant, the portion of such Taxes in each year attributable to such reason, as determined by the Landlord, shall be paid by the Tenant to the Landlord at least 15 days prior to the due date for payment thereof by the Landlord, and in addition to Property Taxes and other Taxes otherwise payable by the Tenant under this Lease.

8.04 GST - The Tenant shall pay to the Landlord the amount of all GST accruing due with respect to Rent at the time the Rent is due and payable to the Landlord under this Lease. The Tenant's obligation to pay GST under this Section shall not be limited or precluded by any limitation contained in this Lease upon the Landlord's right to recover or receive payment from the Tenant of taxes upon the Landlord's income or profits or otherwise.

8.05 Landlord's Election - Notwithstanding that any Taxes (including without limitation, any of the foregoing payable by the Tenant under Subsection 8.02(a)) may be separately imposed, levied, assessed or charged by the appropriate authority for or in respect of the Leased Premises and other portions of the Project, the Tenant shall nevertheless be obligated to pay the Tenant's Proportionate Share of Taxes as part of the Tenant's Occupancy Costs. Notwithstanding the foregoing, the Tenant's Proportionate Share of Taxes so determined may be adjusted by the Landlord, acting reasonably and equitably to the extent necessary, to ensure that the Tenant's Proportionate Share of Taxes is the same as it would have been following application of any special provision of real property tax related legislation applicable to this Lease.

8.06 Right to Contest - Each of the Landlord and the Tenant (provided the Tenant is legally entitled to do so) shall have the right to contest in good faith the validity or amount of any Taxes which, in the case of the Landlord, the Landlord is responsible to pay under this Article 8.00 and which, in the case of the Tenant, the Tenant is responsible to pay under Subsection 8.02(b) and for which it is separately assessed. Notwithstanding anything to the contrary herein, the Tenant may, upon prior written notice to the Landlord, defer payment of any amount payable by it pursuant to Subsection 8.02(b) for which it is separately assessed, to the extent permitted by law; provided that no contest by the Tenant shall involve the possibility of forfeiture, sale or disturbance of the Landlord's interest in the Leased Premises or the imposition of any penalty or interest, charge or lien and that, upon the final determination of any contest by the Tenant, the Tenant shall immediately pay and satisfy the amount found to be due, together with any costs, penalties and interest. If, as a result of any contest by the Tenant, any tax, rate, levy, assessment, fee or other charge is increased, the Tenant shall be responsible for the full amount of such increase in respect of the period to which the contest relates and to any subsequent tax periods which commence during the Term.

The Tenant shall not contest any amount payable by it under Subsection 8.02(a) but may contest any amount payable by it under Subsection 8.02(b) or appeal any assessment therefor subject to complying with the following:

(a) 

the Tenant shall deliver to the Landlord any notices of appeal or other like instrument and obtain the Landlord's consent thereto, which consent shall not be unreasonably withheld, before filing the same;

(b)

the Tenant shall deliver whatever security the Landlord reasonably requires;

(c)

the Tenant shall promptly and diligently prosecute the contest or appeal at its sole expense; and

(d)

the Tenant shall keep the Landlord fully informed thereof.

ARTICLE 9.00 - INSURANCE, LIABILITY AND ENVIRONMENTAL

9.01 Landlord's Insurance - During the Term, the Landlord shall place insurance coverage on and with respect to the Project excluding the area(s) to be insured by the Tenant as set out in Section 9.02, which coverage shall include the following, if available at reasonable cost in the opinion of the Landlord:

(a)

all risks insurance for the full reconstruction value of the Project, excluding Leasehold Improvements, as determined by the Landlord;

(b) 

as an extension to the insurance maintained pursuant to Subsection 9.01(a), insurance on the rental income derived by the Landlord from the Project on a gross rental Income form with a period of indemnity of not less than the period as estimated by the Landlord from time to time which would be required to rebuild and, if necessary, to re-tenant the Project in the event of the complete destruction thereof;

(c)

boiler and machinery insurance, including repair or replacement and rental income coverage, if applicable;

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

(d)

plate glass insurance (not including plate glass fronting or within the Leased Premises) if deemed appropriate by the Landlord;

(e)

commercial general liability insurance; and

(f)

such other insurance which is or may become customary or reasonable for owners of projects similar to the Project to carry in respect of loss of, or damage to, the Project or liability arising therefrom.

The insurance referred to in this Section shall be carried in amounts determined reasonably by the Landlord. The insurance shall be written in the name of the Landlord with loss payable to the Landlord and to any mortgagee (including any trustee under a deed of trust and mortgage) of the Project from time to time. The policies of insurance referred to in Subsections 9.01(a), (b), (c), (d) and (e) shall contain a waiver of the insurer's right of subrogation as against the Tenant. The Landlord hereby waives its right of recovery against the Tenant, its employees and those for whom the Tenant is in law responsible with respect to all Claims required to be insured against by the Landlord hereunder.

Notwithstanding any contribution by the Tenant to insurance premiums as provided for in this Lease, no insurable interest is conferred upon the Tenant under policies carried by the Landlord. Except as specifically provided in this Lease, the Landlord shall in no way be accountable to the Tenant regarding the use of the insurance proceeds arising from any Claims.

9.02 Tenant's Insurance - At its own expense the Tenant shall take out and thereafter maintain in force at all limes during the Term and at all times when the Tenant is in possession of the Leased Premises insurance policies as follows:

(a)

all risks insurance on Leasehold Improvements and on all other property of every description, nature and kind owned by the Tenant or for which the Tenant is legally liable, which is installed, located or situate within the Leased Premises or elsewhere in the Project, including without limitation, all inventory or stock-in-trade in an amount not less than the full replacement cost thereof without deduction for depreciation; such insurance shall be subject to a replacement cost endorsement and shall include a stated amount co-insurance clause and a breach of conditions clause;

(b)

commercial general liability insurance to respond to any and all incidents occurring in the Leased Premises in the minimum amount of $3,000,000.00 per occurrence including the following extensions: owners and contractors protective; limited pollution coverage endorsement; products and completed operations; personal injury; occurrence basis property damage; blanket contractual and non-owned automobile liability; such insurance shall include the Landlord and the Landlord's Agent and nominee (if any) as named additional insureds, and shall protect and indemnify the Landlord and the Landlord's Agent and nominee (if any) in respect of all Claims, including Claims by the Tenant, as if the Landlord and the Landlord's Agent and nominee (if any) were separately insured; such insurance shall include cross liability and severability of interest clauses;

(c)

boiler and machinery or equipment breakdown insurance, including repair or replacement endorsement, in an amount satisfactory to the Landlord and providing coverage with respect to all objects introduced into the Leased Premises by or on behalf of the Tenant or otherwise constituting Leasehold Improvements;

(d)

plate glass insurance on all internal and external glass within or fronting the Leased Premises; however, notwithstanding the foregoing, the Tenant may elect to self-insure for the insurance described in this Subsection 9.02(d);

(e)

business interruption insurance on the profit form providing all risks coverage with a period of indemnity of not less than 12 months and subject to a stated amount co-insurance clause;

(f)

tenant's legal liability insurance for the full replacement cost of the Leased Premises, including loss of use thereof; and

(g)

any other form of insurance in such amounts and against such risks as the Landlord may from time to time reasonably require.

The Tenant acknowledges and agrees that it shall be solely responsible for insuring the Leasehold Improvements, its equipment and stock and any other property owned or brought into the Leased Premises by the Tenant whether affixed to the Building or not.

The insurance policies referred to in this Section shall be subject to such higher limits as the Tenant, or the Landlord acting reasonably, or any mortgagee of the Landlord's interest in the Project may require from time to time. The policies of insurance referred to in Subsections 9.02(a), (b), (c), (d), (e), (f) and (g) shall contain a waiver of the insurer's right of subrogation as against the Landlord.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

The Tenant hereby waives its right of recovery against the Landlord, its employees and those for whom the Landlord is in law responsible with respect to all Claims required to be insured against by the Tenant hereunder. Any and all deductibles in the Tenant's insurance policies shall be borne solely by the Tenant and shall not be recovered or attempted to be recovered from the Landlord. In addition, all such policies shall be non-contributing with, and will apply only as primary and not excess to, any insurance proceeds available to the Landlord.

The Tenant shall provide to the Landlord at the commencement of the Term and at least 30 days prior to the renewal of all insurance referred to in this Section 9.02, and promptly at any time upon request, a certificate of insurance evidencing the insurance coverage maintained by the Tenant in accordance with this Section 9.02. The delivery to the Landlord of a certificate of insurance or any review thereof by or on behalf of the Landlord shall not limit the obligation of the Tenant to provide and maintain insurance pursuant to this Section 9.02 or derogate from the Landlord's rights if the Tenant shall fail to fully insure.

All policies shall provide that the insurance shall not be cancelled or changed to the prejudice of the Landlord without at least 30 days' prior written notice given by the insurer to the Landlord. All policies of insurance shall be placed with a company licensed to sell commercial insurance in Canada.

The Tenant acknowledges and agrees that, if it fails to obtain and maintain in force any of the insurance policies set out in this Section 9.02, then the Tenant shall indemnify and hold harmless the Landlord in respect of any losses arising therefrom.

9.03 Placement of Tenant's Insurance by Landlord_ - If the Tenant fails to place or maintain all or any of the insurance coverage referred to in Section 9.02, the Landlord may, at its option, place all or any part of such insurance in the name of or on behalf of the Tenant and the Tenant shall pay to the Landlord upon demand all costs incurred by the Landlord in so doing including, without limitation, the premium or premiums for such insurance together with the Landlord's administrative fee of 15% of such premium.

9.04 Limitation of Landlord's Liability - The Landlord, the Landlord's Agent, their employees and any Person for whom any of them are in law responsible shall not be liable under any circumstances for any damage caused by anything done or omitted to be done by any other tenant of the Project or any Person for whom such tenant is in law responsible or any damage resulting from the exercise of the Landlord's control over the Project or any part thereof.

9.05 Environmental Issues

(1)

Landlord's Requirements - The Tenant shall not bring into or allow to be present in the Leased Premises or the Project any Pollutants except such as are disclosed in Schedule H hereto. If the Tenant shall bring, create, discharge or release upon, in or from the Project, including the Leased Premises, any Pollutants, whether or not disclosed in Schedule H and whether during the Term of this Lease or any prior lease by the Tenant, then such Pollutants shall be and remain the sole property of the Tenant and the Tenant shall promptly remove same at its sole cost at the expiration or sooner termination of the Term or sooner it required by the Landlord.

(2) 

Governmental Requirements - If, during the Term or any renewal or extension of this Lease or at any time thereafter, any governmental authority shall require the clean-up of any Pollutants:

(a) 

held in, discharged in or from, released from, abandoned in, or placed upon the Leased Premises or the Project by the Tenant or its employees or those for whom it is in law responsible; or

(b)

released or disposed of by the Tenant or its employees or those for whom it is in law responsible:

whether during the Tenant's occupancy of the Leased Premises or any other premises in the Project pursuant to this Lease or any prior lease by the Tenant of the Leased Promises or any other premises in the Project, then the Tenant shall, at its own expense, carry out all required work, including preparing all necessary studies, plans and approvals and providing all bonds and other security required by any governmental authority or required by the Landlord and shall provide full information with respect to all such work to the Landlord; provided that the Landlord may, at its option, perform any such work at the Tenant's sole cost and expense, payable on demand as additional Rent.

(3)

Environmental Covenants - In addition to and without restricting any other obligations or covenants herein, the Tenant covenants that it will:

(a)

comply in all respects with all Environmental Laws relating to the Leased Premises or the use of the Leased Premises;

(b)

promptly notify the Landlord in writing of any notice by any governmental authority alleging a possible violation of or with respect to any other matter involving any Environmental Laws relating to operations in the Leased Premises or relating to any Person for whom it is in law responsible or any notice from any other party concerning any release or alleged release of any Pollutants; and

(c)

permit the Landlord to:

(i)

enter and inspect the Leased Promises and the operations conducted therein;

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

(ii)

conduct tests and environmental assessments or appraisals;

(iii)

remove samples from the Leased Premises; and

(iv)

examine and make copies of any documents or records relating to the Leased Premises and interview the Tenant's employees as necessary; and

(d)

promptly notify the Landlord of the existence of any Pollutants in the Project.

(4)

Environmental Indemnification - The Tenant shall, during the Term and at all times thereafter, indemnify and hold the Landlord harmless at all times from and against any and all losses, damages, penalties, fines, costs, fees and expenses (including legal fees on a solicitor and client or substantial indemnity basis and Consultants' fees and expenses) resulting from:

(a)

any breach of or non-compliance with the environmental obligations and covenants of the Tenant as set out in this Lease; and

(b)

any legal or administrative action commenced by, or claim made or notice from, any third party, including, without limitation, any governmental authority, to or against the Landlord and pursuant to or under any Environmental Laws or concerning a release or alleged release of Pollutants at the Leased Premises into the environment and related to or as a result of the operations of the Tenant or those acting under its authority or control at the Leased Premises or any other premises in the Project, and any and all costs associated with air quality issues, it any, and whether during the Term of this Lease or any prior lease by the Tenant of the Leased Premises or any other premises in the Project.

[It Rider 1 (Section 9.05) is attached to this Lease this Section will be deleted and initialed and the terms and conditions stated on Rider 1 will govern the relationship between the Landlord and the Tenant with respect to environmental issues.]

ARTICLE 10.00 - DAMAGE AND DESTRUCTION

10.01 Limited Damage to Leased Premises, Access or Services - If during the Term, the Leased Premises or any part thereof, or other portions of the Building providing access or Services essential to the Leased Premises, shall be destroyed or damaged by any hazard against which the Landlord is obligated to insure pursuant to Section 9.01, the Landlord, if permitted by law to do so, shall proceed with reasonable diligence to rebuild and restore or repair the Leased Premises or comparable premises or such access routes or Service systems, as the case may be, in conformance with current laws to the extent of insurance proceeds received. The covenants of the Tenant to repair shall not include any repairs of damage required to be made by the Landlord under this Section 10.01. For greater certainty, it is understood and agreed that, upon substantial completion of the Landlord's work, the Tenant shall repair or restore the Leased Premises as required by Section 7.06. Rent payable by the Tenant shall abate from the date of such damage or destruction to the date of substantial completion of the Landlord's work as determined by the Landlord's architect or engineer or restoration of access or Services, as the case may be. It less than all of the Leased Premises is destroyed or damaged as contemplated in this Section 10.01, Rent payable by the Tenant shall abate from the date of such damage or destruction to the date of substantial completion of the Landlord's work in the same proportion as the Rentable Area of the Leased Premises so damaged or destroyed is of the total Rentable Area of the Leased Premises.

10.02 Major Damage to Leased Premises - Notwithstanding any other right of termination contained herein, if the Leased Premises shall be damaged or destroyed by any hazard against which the Landlord is obligated to insure under this Lease, and if in the opinion of the Landlord's architect or engineer, given within 30 Business Days of the happening of said damage or destruction, said damage or destruction is to the extent that the Leased Premises shall be incapable of being rebuilt or repaired or restored with reasonable diligence within 6 months after the occurrence of such damage or destruction, then the Landlord may, at its option, terminate this Lease by notice in writing to the Tenant. If such notice is given by the Landlord under this Section 10.02, then this Lease shall terminate on the date of such notice and the Tenant shall immediately surrender the Leased Premises and all interest therein to the Landlord and Rent shall be apportioned and shall be payable by the Tenant only to the date of such damage or destruction and the Landlord may thereafter re-enter and repossess the Leased Premises. For greater certainty, it is understood and agreed that: (i) if the Landlord does not elect to terminate this Lease as aforesaid, upon substantial completion of the Landlord's work, the Tenant shall repair or restore the Leased Premises as required by Section 7.06; and (ii) if the Landlord elects to terminate this Lease as aforesaid, the Tenant shall pay to the Landlord forthwith upon demand the cost of repairing or restoring the Leased Premises, as determined by the Landlord's architect or engineer, acting reasonably (but not in any event to exceed the replacement cost of the then existing Leasehold Improvements), by way of insurance proceeds available to the Tenant or otherwise.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

10.03 Damage to Building -- Notwithstanding anything to the contrary contained in this Lease or that the Leased Premises may not be affected, if in the reasonable opinion or determination of the Landlord or the Landlord's architect or engineer, rendered within 30 Business pays of the happening of damage or destruction, the Building shall be damaged or destroyed to the extent that any one or more of the following conditions exist:

(a)

in the reasonable opinion of the Landlord the Building must be totally or partially demolished, whether or not to be reconstructed in whole or in part;

(b)

in the reasonable opinion of the Landlord's architect or engineer the Building shall be incapable of being rebuilt or repaired or restored with reasonable diligence within 6 months after the occurrence of such damage or destruction;

(c)

any tenant of the Building which, in the Landlord's absolute discretion, is a major tenant of the Building becomes entitled to terminate its lease as a result of such damage or destruction;

(d)

more than 35% of the Total Rentable Area of the Building is damaged or destroyed as reasonably determined by the Landlord's architect or engineer; or

(e)

any or all of the heating, ventilating, air conditioning, electrical, mechanical or elevator systems in the Building are damaged or destroyed as reasonably determined by the Landlord's architect or engineer;

then the Landlord may at its sole option terminate this Lease by notice in writing to the Tenant. If notice is given by the Landlord under this Section 10.03, then this Lease shall terminate from the dale of such notice and the Tenant shall immediately surrender the Leased Premises and all interest therein to the Landlord and Rent shall be apportioned and shall be payable by the Tenant only to the date of such notice and the Landlord may thereafter re-enter and repossess the Leased Premises. If the Building is damaged to the extent described in this Section 10.03 and the Landlord does not terminate this Lease, the Landlord will, to the extent of insurance proceeds received, rebuild or repair the Building to base building standards, but the rebuilt or repaired Building may be different in configuration and design from that comprising the Project prior to the damage or destruction.

10.04 No Abatement - Except as specifically provided in this Article 10.00, there shall be no abatement of Rent and the Landlord shall have no liability to the Tenant by reason of any injury to, loss of or interference with the Tenant's business or property arising directly or indirectly from fire or other casualty, howsoever caused, or from the making of any repairs resulting therefrom or to any portion of the Building or the Leased Premises.

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

10.06 Expropriation - In the event of Expropriation of all or part of the Leased Premises and/or the Building, neither the Landlord nor the Tenant shall have a claim against the other for the shortening of the Term, nor the reduction or alteration of the Leased Premises or the Building. The Landlord and the Tenant shall each look only to the Expropriating authority for compensation. The Landlord and the Tenant agree to cooperate with one another so that each is able to obtain the maximum compensation from the Expropriating authority as may be permitted in law in relating to their respective interests in the Leased Premises and the Building. Nothing herein contained shall be deemed or construed to prevent the Landlord or the Tenant from enforcing and prosecuting a claim for the value of their respective interests in any Expropriation proceedings. However, to the extent that a part of the Project other than the Leased Premises is Expropriated, the full proceeds paid or awarded therefor will belong solely to the Landlord and the Tenant will assign to the Landlord any rights it might have or acquire in respect of such proceeds or awards and will execute those documents that the Landlord reasonably requires in order to give effect to this intention.

Where used in this Section 10.06 "Expropriation" means expropriated by a governmental or municipal authority, or transferred, conveyed or dedicated in contemplation of a threatened expropriation and "Expropriated" and "Expropriating" have corresponding meanings.

ARTICLE 11.00 - DEFAULT

11.01 Arrears - The Tenant shall pay monthly to the Landlord interest at a rate per annum equal to the lesser of the Prime Rate plus 5% and the maximum rate permitted by applicable law upon all Rent required to be paid hereunder from the due date for payment thereof until the same is fully paid and satisfied.

In addition to the interest charges, in order to cover the extra expense involved in handling delinquent payments, the Tenant, at the Landlord's sole option, shall pay to the Landlord a charge of $100.00 (the "Late Charge") when any installment of Rent is received by the Landlord after the relevant due date thereof.

In addition, it any cheque presented to the Landlord by the Tenant representing payment of Rent is not honored by the Tenant's bank or such cheque is returned to the Landlord indicating that there are not sufficient funds in the Tenant's account to honor such cheque, the Tenant shall pay to the Landlord a charge of $50.00 for the first such occurrence during the Term, $150.00 for the second such occurrence during the Term and $250.00 for each such subsequent occurrence during the Term (the "NSF Charge"). It is hereby understood and agreed that the Late Charge and the NSF Charge is charged as Rent and not as a penalty or interest, for the purpose of defraying the Landlord's expenses incident to the 

processing of such overdue payments and that such Late Charge or NSF Charge is due and payable on and from the day immediately following the due date of such overdue payment or, if no due date is specified in this Lease, then on the 10' day following demand for same by the Landlord.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

11.02 Costs of Enforcement - The Tenant shall indemnify the Landlord against all costs and charges (including legal fees on a solicitor and client or substantial indemnity basis and the Landlord's reasonable administration charges) reasonably incurred either during or after the Term in enforcing payment of Rent hereunder and in obtaining possession of the Leased Premises after default of the Tenant or upon expiration or earlier termination of this Lease or in enforcing any covenant, proviso or agreement of the Tenant herein contained or in determining the Landlord's rights or the Tenant's obligations under this Lease or both. All such costs and charges shall be paid by the Tenant to the Landlord forthwith upon demand.

11.03 Performance of Tenant's Obligations - All covenants and agreements to be performed by the Tenant under any of the terms of this Lease shall be performed by the Tenant, at the Tenant's sole cost and expense, and without any abatement of Rent. If the Tenant fails to perform any act to be performed by it hereunder then, in the event of an emergency, either real or perceived, or if the failure continues for 10 days following notice thereof, the Landlord may (but shall not be obligated to) perform the act without waiving or releasing the Tenant from any of its obligations relative thereto, but having commenced to do so may cease to do so without completing performance thereof. All sums paid and costs incurred by the Landlord in so performing the act, plus 20% of the cost for overhead and supervision together with interest thereon at the rate set out in Section 11.01 from the date payment was made or such cost was incurred by the Landlord, shall be payable by the Tenant to the Landlord on demand.

11.04 Remedies on Default - Upon the happening of an Event of Default the Landlord may, at its option, and in addition to and without prejudice to all rights and remedies of the Landlord available to it either by any other provision of this Lease or by statute or the general law, exercise any one or more of the following remedies:

(a)

be entitled to the full amount of the current month's and the next ensuing 3 months' installments of Rent which shall immediately become due and payable and the Landlord may immediately distrain for the same, together with any arrears then unpaid;

(b)

without notice or any form of legal process, forthwith re-let or sublet the Leased Premises or any part or parts thereof for whatever term or terms and at whatever rent and upon whatever other terms, covenants and conditions the Landlord considers advisable including, without limitation, the payment or granting of inducements all on behalf of the Tenant; and on each such re-letting or subletting the rent received by the Landlord therefrom will be applied first to reimburse the Landlord for any such inducements and for any expenses, capital or otherwise, incurred by the Landlord in making the Leased Premises ready for re-letting or subletting; and secondly to the payment of any costs and expenses of re-letting or subletting including brokerage fees and legal fees on a solicitor and client or substantial indemnity basis; and third to the payment of Rent; and the residue, ii any, will be held by the Landlord and applied to payment of Rent as it becomes due and payable. If rent received from re­letting or subletting during any month is less than Rent to be paid during that month hereunder, the Tenant will pay the deficiency which will be calculated and paid monthly on or before the first day of every month; and no re-letting or subletting of the Leased Premises by the Landlord or entry by the Landlord or its agents upon the Leased Premises for the purpose of re-letting or subletting or other act of the Landlord relating thereto including, without limitation, changing or permitting a subtenant to change locks, will be construed as an election on its part to terminate this Lease unless a written notice of termination is given to the Tenant; and if the Landlord elects to re-let or sublet the Leased Premises without terminating, it may afterwards elect to terminate this Lease at any time by reason of any Event of Default then existing;

(c)

seize and sell such goods, chattels and equipment of the Tenant as are in the Leased Premises and the Landlord may, but shall not be obligated to, apply the proceeds thereof to all Rent to which the Landlord is then entitled under this Lease. Any such sale may be effected by public auction, private sale or otherwise, and either in bulk or by individual item, or partly by one means and partly by another, all as the Landlord in its sole discretion may decide;

(d)

terminate this Lease by leaving upon the Leased Premises notice in writing of the termination, and such termination shall be without prejudice to the Landlord's right to damages; it being agreed that the Tenant shall pay to the Landlord on demand as damages the loss of income of the Landlord to be derived from this Lease and the Leased Premises for the unexpired portion of the Term had it not been terminated; or

(e)

re-enter into and upon the Leased Premises or any part thereof in the name of the whole and repossess and enjoy the same as of the Landlord's former estate, anything herein contained to the contrary notwithstanding;

and the Tenant shall pay to the Landlord forthwith upon demand all expenses of the Landlord in re­entering, terminating, re-letting, collecting sums due or payable by the Tenant or realizing upon assets seized or otherwise exercising its rights and remedies under this Section 11.04 including tenant inducements, leasing commissions, legal fees on a solicitor and client or substantial indemnity basis and all disbursements and the expense of keeping the Leased Premises in good order, repairing the same and preparing the same for re-letting.

in addition, and without limiting the generality of the foregoing provisions of this Section 11.04, upon the happening of an Event of Default, and whether or not this Lease is terminated in accordance with such provisions: (i) the Landlord shall have no further liability to pay to the Tenant or any third party any amount on account or in respect of a refund of any Security Deposit, prepaid Rent or prepaid Taxes or any tenant inducement, leasehold improvement allowance, lease takeover or lease subsidy or any other concession or inducement otherwise provided to the Tenant under or with respect to this Lease, and any Rent free period otherwise provided to the Tenant hereunder shall be null and void and of no further force or effect and Rent shall be payable in full hereunder without regard to any such Rent free period; and (ii) any cash allowance, inducement payment, and the value of any other benefit paid to or conferred on the Tenant by or on behalf of the Landlord in connection with the Leased Premises or this Lease shall be recoverable in full as additional Rent and shall be payable to the Landlord on demand.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

11.05 Availability of Remedies - The Landlord may from time to time resort to any or all of the rights and remedies available to it upon the occurrence of an Event of Default either by any provision of this Lease or by statute or the general law, all of which rights and remedies are intended to be cumulative and not alternative, and the express provisions herein as to certain rights and remedies are not to be interpreted as excluding any other or additional rights or remedies available to the Landlord by statute or the general law.

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

The Landlord's acceptance of Rent after a default is not a waiver of any preceding default under this Lease even if the Landlord knows of the preceding default at the time of acceptance of the Rent. No term, covenant or condition of this Lease shall be considered to have been waived by the Landlord or the Tenant unless the waiver is in writing. The Tenant waives any statutory or other rights in respect of abatement, set-off or compensation in its favor that may exist or come into existence hereafter with respect to Rent.

11.07 Waiver of Exemption and Redemption - Notwithstanding anything contained in any statute now or hereafter in force limiting the right of distress, none of the Tenant's goods or chattels in the Leased Premises at any time during the Term shall be exempt from levy by distress for Rent in arrears, and this agreement of the Tenant in this Section may be pleaded as an estoppel against the Tenant.

11.08 Companies' Creditors Arrangement Act - By virtue of its interest in this Lease, the importance of the Tenant continuing to carry on business in the Leased Premises in accordance with this Lease, and the Landlord's entitlement to damages where this Lease is terminated by reason of an Event of Default, the Landlord does and will (despite any changes in circumstances of the Tenant or its business) constitute a separate class or category of creditor in any plan of arrangement or other proposal submitted by the required information received from the Tenant or the proposed Transferee is not sufficient in the Landlord's opinion to enable the Landlord to make a determination concerning the matters set out above; or or on behalf of the Tenant under the Companies' Creditors Arrangement Act (Canada) or any similar legislation for bankrupt or insolvent debtors.

ARTICLE 12.00 - ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS

12.01 Request for Consent - The Tenant shall not effect a Transfer of this Lease or of all or part of the Leased Premises without the prior consent in writing of the Landlord, which consent shall not, provided no Event of Default has occurred, be unreasonably withheld. Provided that the Tenant shall, at the time the Tenant shall request the consent of the Landlord, deliver to the Landlord such information in writing (herein called the "required information") as the Landlord may reasonably require respecting the proposed Transferee including, without limitation, the name, address, nature of business, financial responsibility and standing of such proposed Transferee. Provided further that after receiving such request, the Landlord shall have the right, at its option, to terminate this Lease if the request relates to all of the Leased Premises or, if the request relates to a portion of the Leased Premises only, to terminate this Lease with respect to such portion, by giving, within 10 days after receiving the required information, not less than 30 nor more than 60 days' written notice of termination to the Tenant. In the event of such termination, the Rent and other payments required to be made by the Tenant hereunder shall be adjusted to the date of termination and, in the case of a partial termination, Rent shall abate in the proportion that the area of the portion of the Leased Premises for which this Lease is terminated bears to the area of the Leased Premises and this Lease shall be deemed to be amended accordingly.

If the Landlord elects to terminate this Lease as to all or part of the Leased Premises, the Tenant may by written notice (given within 10 days or such longer time as the Landlord may consent to in writing after receipt of the Landlord's notice of termination) notify the Landlord of the Tenant's intention to refrain from the Transfer which gave rise to the Landlord's notice of termination or of the Tenant's intention to accept such notice of termination. If the Tenant gives written notice to the Landlord within such time period that it intends to refrain from such Transfer, then the Landlord's election to terminate this Lease in whole or in part shall become null and void. Otherwise, the Landlord's termination shall take effect on the date stipulated by the Landlord in its notice of termination.

12.02 Basis for Consent - Notwithstanding anything in the Landlord and Tenant Act, the Commercial Tenancies Act or any other statute or law and without limiting the grounds upon which a consent may be refused, the Landlord will not be deemed to be unreasonable in refusing consent when:

(a)

the giving of such consent would place the Landlord in breach of any other tenant's lease in the Project or the proposed use by the Transferee is not substantially the same as that of the Tenant;

(b)

such consent is requested for a mortgage, charge, debenture (secured by floating charge or otherwise) or other encumbrance of, or in respect of, this Lease or the Leased Promises or any part of them;

(c)

The transferee, in the opinion of the Landlord; (i) does not have a history of successful business operation in the business to be conducted in the Leased Premises; (ii) does not have a good credit rating or a substantial net worth; or (iii) there is a history of default under other leases by the Transferee or by companies or partnerships that the Transferee was a principal shareholder of or a partner in at the time of the default;

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

(d)

in the case of a Transfer to a subtenant of less than the entire Leased Premises, if such would result in a configuration which: (i) would require access to be provided through space leased or held for lease to another tenant or improvements to be made outside of the Leased Premises; or (ii) would, in the sole opinion of the Landlord, be unreasonable to attempt to release to a third party; 

(e)

the required information received from the Tenant or the proposed Transferree is not sufficient in the Landlord’s opinion to enable the Landlord to make a determination concerning the matters set out above; or

(f)

the use of the Leased Premises by the proposed Transferee, in the Landlord's opinion arrived at in good faith, could result in excessive use of the systems or Services in the Project, be inconsistent with the image and standards of the Project or expose the occupants 

of the Project to risk of harm, damage or interference with their use and enjoyment thereof, or reduce the value of the Project.

The Landlord shall not be liable for any claims, actions, damages, liabilities, losses or expenses of the Tenant or any proposed Transferee arising out of the Landlord's unreasonably withholding its consent to any Transfer and the Tenant's only recourse will be to bring an application for a declaration that the Landlord must grant its consent to the Transfer.

In no event shall any Transfer to which the Landlord may have consented release or relieve the Tenant or any Indemnifier from its obligations fully to perform all the terms, covenants and conditions of this Lease, the Indemnity Agreement or any renewals or extensions of this Lease or the Term on its part to be performed and, in any event, the Tenant shall be liable for the Landlord's costs incurred in connection with the Tenant's request for consent as set out in Subsection 12.03(g).

12.03 Terms and Conditions Relating to Consents - The following terms and conditions apply in respect of a consent given by the Landlord to a Transfer:

(a)

the consent by the Landlord is not a waiver of the requirement for consent to subsequent Transfers, and no Transfer shall relieve the Tenant of its obligations under this Lease, unless specifically so provided in writing;

(b)

no acceptance by the Landlord of Rent or other payments by a Transferee is: (i) a waiver of the requirement for the Landlord to consent in writing to the Transfer; (ii) the acceptance of the Transferee as tenant or subtenant; or (iii) a release of the Tenant or Indemnifier from its obligations under this Lease or any Indemnity Agreement;

(c)

the Landlord may apply amounts collected from the Transferee to any unpaid Rent;

(d)

the Transferor, unless the Transferee is a subtenant of the Tenant, will retain no rights under this Lease in respect of obligations to be performed by the Landlord or in respect of the use or occupation of the Leased Premises after the Transfer and will execute an Indemnity Agreement on the Landlord's standard form in respect of obligations to be performed after the Transfer by the Transferee;

(e)

the Transferee shall, when required by the Landlord, jointly and severally with the Tenant, enter into an agreement directly with the Landlord agreeing to be bound by this Lease as if the Transferee had originally executed this Lease as the Tenant, and the Tenant will not be released nor relieved from its obligations under this Lease including, without limitation, the obligation to pay Rent;

(f)

in the event that this Lease is disaffirmed, disclaimed or terminated by any trustee in bankruptcy of a Transferee, the original Tenant named in this Lease shall be deemed, upon notice by the Landlord given within 30 days of such disaffirmation, disclaimer or termination to have entered into a lease with the Landlord containing the same terms and conditions as in this Lease, with the exception of the Term of such Lease which shall expire on the date on which this Lease would have ended save for such disaffirmation, disclaimer or termination; and

(g)

any documents relating to a Transfer or the Landlord's consent will be prepared by the Landlord or its solicitors and a reasonable administration charge of at least $250.00 and the greater of: (i) a reasonable document preparation fee of at least $450.00; or (ii) those legal fees on a solicitor and client or substantial indemnity basis incurred by the Landlord will be paid to the Landlord by the Tenant on demand.

12.04 Subsequent Transfers - The Landlord's consent to a Transfer shall not be deemed to be consent to any subsequent Transfer, whether or not so stated.

12.05 Profit Rents upon Transfers - In the event of any Transfer by the Tenant by virtue of which the Tenant receives a rent in the form of cash, goods or services from the Transferee which is greater than the Rent payable hereunder to the Landlord, the Tenant shall pay any such excess to the Landlord in addition to all Rent payable under this Lease, and such excess rent shall be deemed to be further Rent payable hereunder.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

12.06 Advertising - The Tenant shall not advertise the Leased Premises or any part thereof as being available for leasing or this Lease as being available for transfer in any medium and will not cause or permit any such advertisement, unless the Landlord has permitted the Tenant to do so in writing and has given written approval of the wording of such advertisement, which permission and approval may be arbitrarily withheld.

12.07 Grant of Security Interest by Transferee - The Tenant will cause any Transferee and any new Indemnifier of this Lease to grant a mortgage, charge and security interest to the Landlord in form corresponding to the Security Interest granted in Section 15.25 by delivery of a written security agreement in form and substance satisfactory to the Landlord prior to the effective date of the Transfer. The Tenant shall pay all costs associated with the granting and perfection of mortgages, charges and security interests granted pursuant to this Lease upon any Transfer.

ARTICLE 13.00 - TRANSFERS BY LANDLORD

13.01 Sale, Conveyance and Assignment - Nothing in this Lease shall restrict the right of the Landlord to sell, convey, assign, pledge or otherwise deal with the Project, subject (except as provided in Section 13.03) only to the rights of the Tenant under this Lease.

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

13.03 Subordination - Subject to Section 13.04, this Lease, at the option of any mortgagee, trustee or chargee, is and shall be subject and subordinate in all respects to any and all mortgages (including deeds of trust and mortgage) now or hereafter registered against title to the Building or Land and all advances thereunder, past, present and future and to all renewals, modifications, consolidations, replacements and extensions thereof. The Tenant agrees to execute promptly and in any event within 10 days after request therefor by the Landlord or the mortgagee or trustee under any such mortgage or deed of trust and mortgage an instrument of subordination as may be requested.

13.03A Non-Disturbance Agreement - At the request of the Tenant, the Landlord will use commercially reasonable efforts to obtain a non-disturbance agreement from any lender of the Project or subsequent lender on that lender's then current standard form non-disturbance agreement. All costs incurred by the Landlord in seeking to obtain such non-disturbance agreement (including legal costs, administration fees owing to the lender and the Landlord's reasonable administration fee) shall be paid by the Tenant to the Landlord forthwith upon demand.

Please Initial ___/____

For the purposes of this provision, it is understood and agreed that the Landlord will not be obligated to obtain non-disturbance agreements from any financial Institution so long as the financing held by such Institution is in place solely to evidence the respective ownership interests of the entitles comprising the Landlord.

13.04 Attornment - The Tenant agrees, whenever requested by any mortgagee, trustee or charges (in this Section 13.04 and in Section 13.05 called the "Mortgagee") taking title to the Project by reason of foreclosure or other proceedings for enforcement of any mortgage or deed of trust, or by delivery of a deed in lieu of such foreclosure or other proceeding, to attorn to such Mortgagee as a tenant under all of the terms of this Lease. The Tenant agrees to execute promptly and in any event within 10 days after a request by any Mortgagee an instrument of attornment as may be required by it.

13.05 Effect of Attornment - Upon attornment pursuant to Section 13.04, this Lease shall continue in full force and effect as a direct lease between the Mortgagee and the Tenant, upon all of the same terms, conditions and covenants as are set forth in this Lease except that, after attornment, the Mortgagee and its successors in title shall not be:

(a)

liable for any act or omission of the Landlord;

(b)

subject to any offset or defence which the Tenant might have against the Landlord; or

(c)

bound by any prepayment by the Tenant of more than 1 month's installment of Rent unless the prepayment shall have been approved in writing by the Mortgagee or by any predecessor of the Mortgagee's former interest as mortgagee of the Project.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

ARTICLE 14.00 - SURRENDER

14.01 Possession and Restoration

(1)

Upon the expiration or other termination of the Term, the Tenant shall immediately quit and surrender possession of the Leased Premises and all Leasehold Improvements in substantially the condition in which the Tenant is required to maintain the Leased Premises, excepting only reasonable wear and tear and damage covered by the Landlord's insurance under Section 9.01, and the Tenant shall deliver to the Landlord the keys, mechanical or otherwise, and combinations, it any, to the locks in the Leased Premises and entries thereto. Notwithstanding the foregoing, the Landlord may, at its sole option, perform the said removal and restoration work at the Tenant's sole cost and expense. In addition, the Landlord shall have the right, at its sole option upon expiration or other termination of the Term, to require that the Tenant remove or cause to be removed at the Tenant's cost all or any part of any wiring, cables, risers or similar installations appurtenant thereto installed by the Tenant or on the Tenant's behalf in the risers of the Building (the `Wiring") and to restore the risers and other parts of the Project affected by the installation or removal of the Wiring to their condition existing prior to the installation of the Wiring (the `Wire Restoration Work"). Notwithstanding the foregoing, the Landlord may, at its sole option, perform the Wire Restoration Work at the Tenant's sole cost and expense. Upon surrender, all fight, title, and interest of the Tenant in the Leased Premises and all Leasehold Improvements located therein and in all Wiring shall cease.                                                                                                            Please Initial ___/____

(2)

If the Landlord elects to perform the said removal and restoration work and/or the Wire Restoration Work, 90 days (or as soon after such date as is reasonably possible) prior to the expiration of the Term the Landlord may inspect the Leased Premises to determine the extent of the Wire Restoration Work and the work required to restore the Leased Premises and other parts of the Project affected by any installation or removal of Leasehold Improvements to base building standards and upon receipt of the Landlord's estimate of the costs thereof (the "restoration cost") the Tenant shall provide to the Landlord, by certified cheque, the restoration cost.

14.02 Tenant's Trade Fixtures and Personal Property - After the expiration or other termination of the Term or in the event of the abandonment of the Leased Premises by the Tenant, all of the Leasehold Improvements and the Tenant's trade fixtures and personal property remaining in the Leased Premises shall be deemed conclusively to have been abandoned by the Tenant and may be appropriated, sold, destroyed or otherwise disposed of by the Landlord without notice or obligation to compensate the Tenant or to account therefor, and the Tenant shall pay to the Landlord upon written demand all of the costs incurred by the Landlord in connection therewith.

14.03 Overholdinq - If the Tenant remains in the Leased Premises or any part thereof after the expiration or other termination of the Term:

(a)

without the consent of the Landlord, no yearly or other periodic tenancy shall be created and the Tenant shall be deemed, notwithstanding any statutory provision or legal assumption to the contrary, to be occupying the Leased Premises as a tenant at will of the Landlord, which tenancy may be terminated at any time by the Landlord without the necessity of any prior notice to the Tenant, but the Tenant shall be bound by the terms and provisions of this Lease except any options thereby granted to the Tenant and except the Basic Rent which shall be twice the greater of: (i) the rate provided for herein for the final year of the Term; and (ii) the market rate for similar premises as determined by the Landlord at the time of such overholding, plus, in either case, the sum of $200.00 daily, and subject to such additional obligations and conditions as the Landlord may impose by notice to the Tenant; or

(b) 

with the consent of the Landlord and agreement as to the Rent payable, the tenancy shall be month-to-month at the Rent agreed and otherwise on the terms and conditions of this Lease, but without any option to renew or for a new lease.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

The Landlord may recover possession of the Leased Premises during any period with respect to which the Tenant has prepaid the amount payable under Subsection 14.03(a).

The Tenant shall promptly indemnify and hold harmless the Landlord from and against all Claims against the Landlord as a result of the Tenant remaining in possession of all or any part of the Leased Premises after the expiry of the Term without the consent of the Landlord (including, without limitation, any compensation to any new tenant or tenants which the Landlord may elect to pay whether to offset the cost of overtime work or otherwise).

ARTICLE 15.00 - GENERAL

15.01 Estoppel Certificates - The Tenant shall whenever requested by the Landlord, a prospective purchaser or any mortgagee (including any trustee under a deed of trust and mortgage) promptly, and in any event within i0 days after request, execute and deliver to the Landlord or to any party or parties designated by the Landlord a certificate in writing as to the then status of this Lease, including as to whether it is in full force and effect, is modified or unmodified, confirming the Rent payable hereunder and each element hereof and the then state of the accounts between the Landlord and the Tenant, the existence or non-existence of defaults and any other matters pertaining to this Lease in respect of which the Landlord shall request a certificate, and provide such other information as may reasonably be required, including a copy of the Tenant's most recent audited financial statements. The party or parties to whom such certificates are addressed may rely upon them.

15.02 Entire Agreement - There is no promise, warranty, representation, undertaking, covenant or understanding by or binding upon the Landlord except such as are expressly set forth in this Lease and this Lease, including the Term Sheet and schedules hereto, contains the entire agreement between the parties hereto.

15.03 No Registration of Lease or Notice - The Tenant shall not register or apply to register this Lease or any notice of this Lease or any interest under this Lease and waives any statutory obligation upon the Landlord to execute and deliver this Lease in registrable form. The Tenant shall, at its own cost, promptly on request discharge any registration or filing or notice that contravenes this Section. Notwithstanding the foregoing, the Landlord may elect to require that this Lease or notice of this Lease be registered.

15.04 Project Name and Trademarks -The Tenant shall not refer to the Projector Building by any name other than that designated from time to time by the Landlord and the Tenant shall use the name of the Building for the business address of the Tenant, but for no other purpose. Compliance with this Section shall be at the sole cost and expense of the Tenant and the Tenant shall have no claim against the Landlord for any costs or expenses incurred by the Tenant, whether direct or indirect, in complying with this Section.

15.05 Demolition 1 Substantial Renovation - Notwithstanding any other provision of this Lease, the Landlord may terminate this Lease at any time upon giving to the Tenant not less than 12 months' notice of such termination if it is the Landlord's intention to demolish, redevelop or substantially renovate all or part of the Building.

15.06 Relocation, - The Landlord shall have the right, at any time and from time to time before and during the Term and any renewal or extension of the Term of this Lease, to change the location of the Leased Premises from the location described in this Lease to another location of similar size and finishes anywhere else in the Project. Provided that the Landlord shall give the Tenant reasonable notice of such relocation and the Landlord shall reimburse the Tenant for all reasonable costs directly related to such relocation, but not including any indirect costs such as lost profits during the relocation period or damages for inconvenience.

15.07 "For Lease" Signs - The Landlord shall have the right during the last 12 months of the Term to place upon the Leased Premises a notice of reasonable dimensions stating that the Leased Premises are "for lease" and the Tenant shall not obscure or remove such notice or permit the same to be obscured or removed.

15.08 Unavoidable Delays - If the Landlord or the Tenant (the "delayed party") shall be delayed, hindered or prevented in or from the performance of any of its covenants under this Lease by any cause not within the control of the delayed party, as determined by the Landlord acting reasonably (excluding lack of finances of the delayed party), the performance of the covenant shall be excused for the period during which performance is rendered impossible and the time for performance thereof shall be extended accordingly, but this shall not excuse the Tenant from the prompt payment of Rent or from the performance of any of its other obligations under this Lease not related to such cause.

15.09 Limitation of Recourse - The Tenant acknowledges that, notwithstanding any other provision contained in this Lease, the obligations of and rights against the Landlord under this Lease shall be performed, satisfied and paid only out of and enforced against, and recourse hereunder

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

shall be had only after judgment and only against, the right, title and interest of the Landlord from time to time in, and the Landlord's revenue derived from, the Project. No obligation of the Landlord hereunder or in respect hereof is personally binding upon, nor shall any resort or recourse be had, judgment issued or execution or other process levied against, the Landlord (except to the extent necessary for enforcement under the first sentence of this Section 15.09 and only for that purpose), or against any other assets or revenues of the Landlord. The only remedy against the Landlord shall be an action for damages, except that if the Tenant is of the opinion that any consent requested pursuant to Article 12.00 hereof has been wrongfully withheld, its remedies are as set out in Section 12.02.

If the Landlord is, or this Lease is assigned by the Landlord to, a real estate investment trust ("REIT"), the parties acknowledge and agree that the obligations of the REIT hereunder and under all documents delivered pursuant hereto (and all documents to which this document may be pursuant) or which give effect to, or amend or supplement, the terms of this Lease are not personally binding upon any trustee thereof, any registered or beneficial holder of units (a "Unitholder") or any annuitant under a plan of which a Unitholder acts as a trustee or carrier, or any officers, employees or agents of the REIT and resort shall not be had to, nor shall recourse or satisfaction be sought from, any of the foregoing or the private property of any of the foregoing, but the Project only shall be bound by such obligations and recourse or satisfaction may only be sought from the revenue of the Project.

15.10 Notice - Any notice required or contemplated by any provision of this Lease shall be given in writing and delivered either: (i) personally; (ii) by prepaid courier service; (iii) by facsimile with confirmation of transmission; or (iv) by registered mail, postage prepaid, and if to the Landlord at the Landlord's local office as specified in Item 1(a) of the Term Sheet, with a copy to the Landlord's head office address as specified in Item 1(b) of the Term Sheet and it to the Tenant at the Leased Premises (whether or not the Tenant has departed from, vacated or abandoned the same), or, at the Landlord's option, to the Tenant's head office address as specified in Item 2 of the Term Sheet. Notwithstanding the provision of any statute or law relating thereto, service by means of electronic mail of any notice required to be given in writing by either party hereto pursuant to this Lease shall not constitute good and effective service.

Any notice shall be considered to have been given or made: (i) if delivered personally or by prepaid courier, on the day of delivery; (ii) if sent by facsimile and received on or before 4:30 p.m. local time for the recipient, on the day of transmission; (iii) if sent by facsimile and received after 4:30 p.m. local time for the recipient, on the next Business Day following); or (iv) if sent by registered mail, 3 Business Days following the date upon which it was mailed. Either party may from time to time by notice in writing to the other designate another address or addresses in Canada as the address to which notices are to be sent. If the postal service is interrupted or substantially delayed or threatened to be interrupted or delayed, any notice shall only be delivered by one of the alternate methods stated above.

If two or more Persons are named as, or bound to perform the obligations of, the Tenant hereunder, notice given as herein provided to any one of the Persons constituting the Tenant or so bound shall be deemed to be notice simultaneously to all Persons constituting the Tenant and to all Persons so bound. Any notice given to the Indemnifier or the Tenant shall be deemed to have been given simultaneously to the other of them and to all Persons bound by their obligations hereunder.

15.11 Delegation of Authority - The Landlord's Agent may act on behalf of the Landlord in any manner provided for herein. The Tenant acknowledges that, if this Lease has been executed for and on behalf of, in the name of and with the authority of the Landlord by the Landlord's Agent, the covenants and agreements of the Landlord are obligations of the Landlord and its successors and assigns only and are not obligations personal to or enforceable against the Landlord's Agent in its own right.

15.12 Relationship of Parties - Nothing contained in this Lease shall create any relationship between the parties hereto other than that of landlord and tenant and, if applicable, indemnifier,

15.13 Governing Law - This Lease shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the province in which the Project is situated and the laws of Canada applicable therein and shall be subject to the exclusive jurisdiction of the courts of the province in which the Project is situated.

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

15.15 Legal and Administration Costs -The Tenant shall indemnify the Landlord against all legal fees on a solicitor and client or substantial indemnity basis and disbursements incurred by the Landlord or by the Landlord's Agent in connection with the negotiation, preparation and execution of any assignment, cancellation, approval or consent in connection with this

27

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

Lease, including the Landlord's reasonable administration charges. All such costs and charges shall be paid by the Tenant to the Landlord forthwith upon demand.

Please Initial ___/____

15.16 Construction - All of the provisions of this Lease are to be construed as covenants and agreements. If any provision of this Lease is illegal or unenforceable, it shall be considered separate and severable from the remaining provisions of this Lease, which shall remain in force and be binding as though the provision had never been included. Any language or wording in this Lease which has been struck out shall be deemed not to have ever been included herein and shall not be considered in construing or interpreting any other provision of this Lease, nor shall there be any implication that by the deletion of any language or wording, the parties hereto intended to state the opposite of the struck out language or wording.

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

15.18 Interpretation - In this Lease, "herein", "hereof", "hereunder", "hereafter" and similar expressions refer to this Lease and not to any particular Article, Section or other portion thereof unless there is something in the subject matter or context inconsistent therewith. Wherever necessary or appropriate in this Lease, the plural shall be interpreted as singular, the masculine gender as feminine or neuter and vice versa; and when there are two or more parties bound by the Tenant's covenants herein contained, their obligations shall be joint and several. If the Tenant is a partnership, each Person who is presently a member of such partnership and each Person who becomes a member of any successor partnership shall be and continue to be liable jointly and severally for the performance of the obligations of this Lease, whether or not such Person ceases to be a member of such partnership or successor partnership and after the partnership ceases to exist.

15.19 Time of the Essence - Time shall be of the essence hereof and no extension or variation of this Lease shall operate as a waiver of this provision.

15.20 Successors and Assigns - Subject to specific provisions contained in this Lease to the contrary, this Lease shall ensure to the benefit of and be binding upon the successors and assigns of the Landlord and the heirs, executors and administrators and the permitted successors and assigns of the Tenant.

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

15.22 Further Schedules - Any additional covenants, agreements and conditions forming part of this Lease will be attached as Schedule E and the Tenant agrees with the Landlord to comply with the provisions of Schedule E. If an Indemnifier is a party hereto, the form of Indemnity Agreement to be executed by the Indemnifier and the Landlord as a separate agreement will be attached as Schedule F.

15.23 Independent Legal Advice - The Tenant and the Indemnifier each acknowledge that the Landlord hereby advises each of the Tenant and the Indemnifier to obtain advice from independent legal counsel prior to signing this Lease and/or the Indemnity Agreement. The Tenant and the Indemnifier further acknowledge that any information provided by the Landlord is not to be construed as legal, tax or any other expert advice and the Tenant and the Indemnifier are cautioned not to rely on any such information without seeking legal, tax or other expert advice.

The Landlord and the Tenant understand, acknowledge and agree that this Lease has been freely negotiated by both parties and that, in any dispute or contest over the meaning, interpretation, validity or enforceability of this Lease or any of its terms or conditions, there shall be no inference, presumption or conclusion drawn whatsoever against either party by virtue of that party having drafted this Lease or any portion thereof.

15.24 No Offer - The Landlord will not be deemed to have made an offer to the Tenant by furnishing an unexecuted copy of this Lease with particulars inserted. Notwithstanding that a Security Deposit or payment of advance Rent is received by the Landlord when this Lease is received by the Landlord for execution, no contractual or other right will exist between the Landlord and the Tenant with respect to the Leased Premises until the Landlord, the Tenant and the Indemnifier, if any, have executed and delivered this Lease and any required Indemnity Agreement.

15.25 Landlord's Security Interest

(1) As security for the Tenant's performance of its obligations under this Lease, including but not limited to the payment of Rent and GST, the Tenant grants to the Landlord by way of security interest, mortgage, pledge, charge, assignment and hypothec a continuing security interest (the "Security Interest") in the Tenant's present and future undertaking and all of its present and after acquired personal property and assets including without limitation the assets described in Schedule G attached hereto and forming part hereof and all goods (including inventory), trade fixtures and

28

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

other personal property of the Tenant located from time to time on the Leased Premises and any Leasehold Improvements which the Tenant effects on or In respect of the Leased Premises (collectively the "Collateral"). The Tenant may however, prior to the occurrence of an Event of Default, sell or dispose of its inventory to its customers in the ordinary course of business, in accordance with the terms and conditions of this Lease, without the consent of the Landlord. The Tenant will promptly execute additional documents and will provide additional information required by the Landlord from time to time in connection with the Security Interest. The Tenant authorizes the Landlord to file a financing statement and any other form of document required in connection with the Security Interest to perfect, protect or preserve its Security Interest. The Landlord's Security Interest is in addition to and not in lieu of its right of distress.

(2)

The Landlord may enforce its Security Interest upon the occurrence of an Event of Default in the manner outlined in Schedule G attached hereto and forming part hereof or in any other manner available at law or in equity.

(3)

The grant of the Security Interest shall not effect or result In a merger of any rights or interests of any party hereto.

(4)

To the extent permitted by law, the Tenant hereby waives its right to receive a copy of any financing statement, financing change statement or verification statement relating to the Security Interest.

(5)

The Landlord and the Tenant acknowledge that they have not agreed to postpone the time for attachment of the Security Interest with respect to existing Collateral, and that the Security Interest shall attach to after acquired Collateral as soon as the debtor has rights in such Collateral.

15.26 Survival of Covenants and Indemnities - All obligations of the Tenant which arise during the Term pursuant to this Lease and which have not been satisfied at the end of the Term and all indemnities of the Tenant contained in this Lease shall survive the expiration or other termination of this Lease.

15.27 Exculpatory Provisions - In all provisions of this Lease containing a release, indemnity or other exculpatory language in favor of the Landlord, reference to the Landlord includes reference also to the Landlord's Agent and nominee (if any) and any Person for whom any one or more of them is in law responsible and the directors, officers and employees of the Landlord, the Landlord's Agent and nominee (if any) and any Person for whom they are in law responsible (including the agents of any of them) while acting in the ordinary course of their employment (collectively the "Released Persons"), it being understood and agreed that, for the purposes of this Section 15.27, the Landlord is deemed to be acting as the agent or trustee on behalf of and for the benefit of the Released Persons solely to the extent necessary for the Released Persons to take the benefit of this Section 15,27.

15.28 Brokerage Commissions - The Tenant covenants that no act of the Tenant has given rise nor shall give rise to any Claims against the Landlord for any brokerage commission, finder's fee or similar fee in respect of this Lease. The Tenant hereby indemnities and agrees to hold the Landlord harmless from any Claims for such commission or fees with respect to this Lease except any which were directly contracted for by the Landlord.

15.29 Covenants to be Performed at Landlord's Option - Where any provision in this Lease gives the Landlord the option of having the Landlord or the Tenant perform the covenants set out in such provision, the Tenant shall perform such covenants unless the Tenant is otherwise directed by way of written notice from the Landlord.

15.30 Radiation - Only if the Landlord believes on reasonable grounds that radiation is or has been used or created by the Tenant or any Person permitted by the Tenant to be in the Leased Premises shall this Section 15.30 apply to the Tenant.

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

The Tenant agrees, if so requested by the Landlord, to conduct at its own expense a survey by an accredited firm of consultants acceptable to the Landlord to determine the level of radiation in the Leased Premises, and if such levels are in excess of those allowable under Environmental Laws and set by the applicable regulatory authorities governing radiation, the Tenant agrees, at its own cost and expense and on terms and conditions approved by the Landlord, to reduce the level of radiation to a level allowable under Environmental Laws and set by such applicable regulatory authorities.

IN WITNESS WHEREOF the parties hereto have executed this Lease as of the date first set forth above.

		
	Initials

	Landlord

	Tenant

LANDLORD:

CORDOVA EQUITIES INC.,

By its agent MORGUARD INVESTMENTS LIMITED

By: _______________________________________

Name:

Title:

By: _______________________________________

Name:

Title:

We have authority to bind the Corporation

Witness to signature of Tenant:

TENANT:

SMARTCOOL SYSTEMS INC.

Signature: ____________________________             By: _______________________________________

Name:

Print name: ___________________________

Title:

Address:______________________________           By: _______________________________________

Name:

 ______________________________

Title:

Occupation: ___________________________           We have authority to bind the Corporation

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE A

PLAN SHOWING LEASED PREMISES 

Morguard

SCHEDULE Al

LEGAL DESCRIPTION OF LAND

Firstly:

PID: 006-974-848 Lot A 

Block 14 District Lot 

541 Plan 20201

Secondly:

PID: 006-979-530    Lot B 

Block 14 District Lot 541 

Plan 20200                  

Please Initial ______/______i

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE B

DEFINITIONS

"Article", "Item", "Schedule", "Section" and "Subsection" mean the specified article, item, schedule, section or subsection, as the case may be, of this Lease.

"Basic Rent" means the amount set out in Item 8 of the Term Sheet payable by the Tenant to the Landlord in respect of each year of the Term.

"Bio-Medical Waste" shall mean and include the following:

(a)  (i)

surgical waste including ail materials discarded from surgical procedures, including but not limited to, disposable gowns, soiled dressings, sponges, casts, lavage tubes, drainage sets, underpads and surgical gloves;

(ii)

pathological waste including all human tissues and anatomical parts which emanate from surgery, obstetrical procedures, autopsy and laboratory;

(iii)

biological waste including blood and blood products, excretions, exudates, secretions, suctionings and other body fluids including solid/liquid waste from renal dialysis;

(Iv)

isolation waste including all waste emanating from the care or treatment of a patient on any type of isolation or precaution except reverse (protective) isolation;

(v)

cultures and stocks of etiologic agents and associated biologicals including, without limitation, specimen cultures, cultures and stocks of etiologic agents, wastes from production of biologicals and serums, and discarded live and attenuated vaccines;

(vi)

laboratory waste which has come in contact with pathogenic organisms, including but not limited to, culture dishes, devices used to transfer, inoculate and mix cultures, paper and cloth which has come in contact with specimens or cultures;

(vii)

animal carcasses exposed to pathogens in research, their bedding and other waste from such animals;

(viii)

sharps, including any discarded article that may cause punctures or cuts, including but not limited to, needles, IV tubing with needles attached, scalpel blades, glassware, and syringes that have been removed from their original sterile containers; and

(ix)

any other wastes identified as infectious or similar wastes in any other applicable federal, provincial or municipal laws, regulations and guidelines; and

(b)

"Chemotherapy Waste" (also known as antineoplastic or cytotoxic waste) means and includes discarded items, including but not limited to, masks, gloves, gowns, empty IV tubing bags, vials, syringes and other contaminated materials which have been contaminated by chemotherapeutic drugs or antineoplastic agents; and

(c)

any waste defined as bio-medical waste under any applicable law or regulation.

"Building" means the buildings, structures and improvements from time to time during the Term erected in, upon or under the Land municipally identified in Item 3 of the Term Sheet and all alterations and additions thereto and replacements thereof.

"Business Day" means any day which is not a Saturday, Sunday or a statutory holiday observed in the province in which the Project is situated,

"Capital Tax" means the applicable amount of any tax or taxes including but not limited to Large Corporations Tax payable based upon or computed by reference to the paid-up capital or place of business of the Landlord as determined for the purposes of such tax or taxes; provided that for the purposes hereof, the "applicable amount" of such tax or taxes shall mean the amount thereof that would be payable if the Project were the only establishment of the Landlord in the jurisdiction of the taxing authority or if any other establishment of the Landlord therein were located outside that jurisdiction.

"Claims" means claims, losses, actions, suits, proceedings, causes of action, demands, damages (direct, indirect, consequential or otherwise), judgments, executions, liabilities, responsibilities, costs, charges, payments and expenses including, without limitation, any professional, consultant and legal fees on a solicitor and client or substantial indemnity basis and any associated disbursements.

"Collateral" has the meaning ascribed in Section 15.25.

"Commencement Date" means the first day of the Term as specified in Item 7(a) of the Term Sheet.

"Common Elements" means the areas, facilities, utilities, improvements, equipment and installations (collectively, "elements") in the Project that, from time to time, are not intended to be leased to tenants of the Project (including, without limitation, elements within rentable premises that are intended for the benefit of tenants of the Project and their invitees and employees) or are designated from time to time as Common Elements by the Landlord and includes access roads, driveways and parking areas and facilities.

"Consultants" means any reference in this Lease to the Landlord's accountant, auditor, architect, surveyor or other consultant shall be deemed to be such duly qualified consultant appointed by the Landlord in its absolute discretion for the purposes of this Lease or of any provision hereof; and they will act in accordance with this Lease and the principles and standards of their professions. In determining any cost allocation the Landlord may rely on, and the parties shall be bound by, the decision or determination of the Landlord's Consultants.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

"Environmental Laws" shall include any domestic and foreign federal, provincial, municipal or local laws, statutes, regulations, ordinances, guidelines, policies, judge made laws or common laws and any orders of a court or governmental authority, relating in any way to the natural or human environment (including land, surface water, groundwater, and real, personal, moveable and immoveable property), public or occupational health and safety, and the manufacture, importation, handling, use, reuse, recycling, transportation, storage, disposal, elimination and treatment of a substance, hazardous or otherwise.

"Event of Default" means any of the following events:

(a)

all or any part of the Rent hereby reserved is not paid when due;

(b)

the Term or any goods, merchandise, stock in trade, chattels or equipment of the Tenant or any Indemnifier is or are seized or taken or exigible in execution or In attachment or if a creditor takes possession thereof or if a writ of execution is issued against the Tenant or any Indemnifier;

(c)

the Tenant or any Indemnifier or any Person bound to perform the obligations of the Tenant in this Lease either as guarantor or indemnifier or as one of the parties constituting the Tenant takes any steps in furtherance of or suffers any order to be made for its winding-up or other termination of its corporate existence or becomes insolvent or commits an act of bankruptcy or becomes bankrupt or takes the benefit of any statute that may be in force for bankrupt or insolvent debtors or becomes involved in voluntary or involuntary winding-up proceedings or if a receiver or receiver/manager shall be appointed for all or any part of the business, property, affairs or revenues of the Tenant or such Indemnifier or Person;

(d)

the Tenant makes a bulk sale of its goods or moves or commences, attempts or threatens to move its goods, chattels and equipment, or any of them, out of the Leased Premises (other than in the normal course of its business) or ceases to conduct business in the Leased Premises;

(e)

the Tenant fails to move into or take possession of the Leased Premises or vacates or abandons the Leased Premises in whole or in part or fails to actively carry on business therein;

(f)

a report or statement required from the Tenant under this Lease is materially false or misleading except if it results from an innocent clerical error as determined by the Landlord;

(g)

any policy of insurance taken out by either the Landlord or the Tenant with respect to the Project shall be cancelled by reason of any act or omission of the Tenant;

(h)

the Tenant enters into a Transfer except in compliance with the provisions of this Lease; or

(i)

the Tenant or any Indemnifier or any Person bound to perform the obligations of the Tenant pursuant to this Lease either as guarantor or indemnifier or as one of the parties constituting the Tenant fails to observe, perform and keep each and every covenant, agreement, provision, stipulation and condition herein contained to be observed, performed and kept by the Tenant or the Indemnifier, including observance and performance of the rules and regulations, (other than payment of Rent) and persists in the failure after 10 days' written notice by the Landlord requiring the Tenant to remedy, correct, desist or comply (or if any breach would reasonably require more than 10 days to rectify, unless the Tenant commences rectification within the 10 day notice period and thereafter promptly, effectively and continuously proceeds with the rectification of the breach.

"Expropriated", "Expropriating" and "Expropriation" have the meanings ascribed in Section 10.06.

"Fiscal Year" means a period, from time to time determined by the Landlord, all or part of which falls within the Term, at the end of which the Landlord's accounts in respect of the Project are balanced for auditing or bookkeeping purposes. Such period shall be 12 months except when the Landlord designates a new date upon which the fiscal year shall end.

"GST" means goods and services tax, being that tax payable pursuant to Parts Vill and IX of the Excise Tax Act, as amended and re-enacted from time to time, and other like taxes levied from time to time and includes any blended sales tax which combines GST and provincial sales tax.

"Indemnifier" means the Person, if any, so identified in the Term Sheet and who has signed this Lease as Indemnifier,

"Indemnity Agreement" means the agreement attached as Schedule F.

"Land" means those lands legally described in Schedule Al as same may be expanded or contracted from time to time.

"Landlord's Agent" means the Person retained by the Landlord from time to time to operate or manage the Project which, as of the date of this Lease, is Morguard Investments Limited.

"Lease" means this lease, the Term Sheet, and all Schedules attached hereto which are referred to in this lease and every properly executed instrument which by its terms amends, modifies or supplements this lease.

"Leased Premises" means those premises in the Building which are described and identified in Item 4 of the Term Sheet and which are marked in a distinguishing manner on the plan attached as Schedule A.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

"Leasehold Improvements" means:

(a)

all improvements, fixtures, installations, alterations and additions from time to time made, erected or installed to or in the Leased Premises, in addition to, beyond or replacing the base building standards, including all partitions however affixed (including moveable and demountable partitions), millwork and affixed wall units, internal stairways, doors, hardware, light fixtures, carpeting and other applied floor finishes, and heating, ventilating and air conditioning equipment and other building services not forming part of the Landlord's base building equipment and services; and

(b)

alterations, improvements and equipment made or installed for the exclusive benefit of the Tenant elsewhere in the Project;

in either case whether or not installed by or on behalf of the Tenant and whether or not Installed during the Term including, without limitation, all fixtures (except trade fixtures) in the Leased Premises.

"Mortgagee" has the meaning ascribed in Section 13.04,

"Operating Costs" means in respect of any Fiscal Year the total of all costs, expenses and amounts, incurred or accrued in that Fiscal Year for or with respect to ownership, management, operation, maintenance, repair, upkeep, insurance, supervision, decoration, cleaning and upgrading of the Project and the determination and allocation of such costs, expenses and amounts, whether incurred or accrued by or on behalf of the Landlord or by or on behalf of the Landlord's Agent including, without limitation and without duplication:

A.

Inclusions - if provided by the Landlord (subject to certain exclusions and deductions as hereinafter set out):

(a)

the cost of providing and maintaining security, landscaping, gardening and snow and refuse removal;

(b)

the cost of heating, air conditioning and ventilating the Building and investigating and remedying air quality and moisture issues and issues related thereto, if any;

(c)

the cost of providing hot and cold or tempered water, electricity (including lighting) and all other utilities to all parts of the Project not otherwise paid by tenants;

(d)

the cost of providing janitor, window cleaning and general cleaning services including supplies to all parts of the Project Including all premises leased to tenants of the Project;

(e)

the cost of replacement of building standard fluorescent tubes, light bulbs and ballasts in the Leased Premises and the costs of cleaning, maintaining and servicing of the electrical light fixtures in the Leased Premises if not separately invoiced pursuant to Section 7.02; the cost of all insurance taken out and maintained by the Landlord under Article 9.00 and the cost of any deductible amount paid by the Landlord in connection with a claim under its insurance;

(g)

the rental or lease cost of all rented or leased equipment acquired for the operation or maintenance of the Project;

(h)

accounting costs incurred in connection with the Project including computations required for the imposition of charges to tenants and audit fees incurred for the determination of any costs hereunder and the reasonable costs of collecting and enforcing payment of such charges;

(i)

the cost of all equipment acquired for operation or maintenance of the Project if expensed fully in the Fiscal Year in which such equipment is acquired;

(j)

if expensed fully in the Fiscal Year in which the expense is incurred, the cost of any improvement, replacement, repair or alteration whether with respect to buildings, improvements, equipment, fixtures or otherwise and whether on-site or off-site which, in the opinion of the Landlord, is necessary to reduce or limit increases in Operating Costs or is required by the Landlord's insurance carriers or by any changes in the laws, rules, regulations or orders of any governmental authority having jurisdiction, including those necessary to comply with energy conservation, pollution and environmental control standards and the costs of any procedures required with respect thereto;

(k)

the cost of investigating, testing, monitoring, removing, enclosing, encapsulating or abating any Pollutants which are in or about the Project or any part thereof or which have entered the environment from the Project, if the Landlord is required to do so or if, in the Landlord's opinion, it is harmful or hazardous to any Person or to the Project or any part thereof or to the environment;

(l)

the cost of repairs and replacements to or in respect of the Project including those resulting from normal wear and tear and otherwise and including those necessary with respect to the window coverings, decorations, elevators and escalators (if any), roof or any Parking Facilities;

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

(m)

the cost of repairs, replacements and improvements to systems in the Project including, without limitation, the heating, ventilating, air conditioning and energy-saving and security systems and devices;

(n)

at the Landlord's election (such election to be evidenced by the method of calculating Operating Costs for each Fiscal Year), either amortization, in an amount determined by the Landlord's accountant, of the cost (whether incurred before or during the Term and whether or not incurred by the party constituting the Landlord at any time or its predecessor in title or interest) of any repair, replacement, decoration or improvement of the Project not expensed within the Fiscal Year in which the expenditure was incurred and of all equipment required for the operation and maintenance of the Project not included within Operating Costs for the Fiscal Year in which the expenditure occurred in accordance with Subsections (1) and Q} above, or depreciation in an amount determined by the Landlord's accountant based on the cost (whether incurred before or during the Term and whether or not incurred by the party constituting the Landlord at any time or its predecessor in title or interest) of any of those items which the Landlord in its absolute discretion has elected to treat as capital in nature together with, in each case, an amount equal to interest at the Prime Rate plus 1.5% per annum on the undepreciated or unamortized amount thereof;

(o)

the amount of all salaries, wages and fringe benefits paid to or for the benefit of employees and others engaged either full-time or part-time in the operation or maintenance of the Project;

(p)

amounts paid for service contracts with independent contractors;

(q)

the cost of energy audits, conservation studies and other measures taken to conserve energy or reduce costs or liability;

(r)

the cost of renting, operating and maintaining Project signs and providing directional signage;

(s)

all other expenses of every nature incurred in connection with the maintenance and operation of the Project;

(t)

the cost of direct supervision attributable to any of the above;

(u)

the fair rental value of space in the Building occupied by the Landlord, its manager or personnel in connection with the Services; and

(v)

any Capital Tax imposed upon the Landlord; provided that if the Capital Tax payable by the Landlord in this connection is for a period not coinciding with the Fiscal Year, the amount of the Capital Tax included in Operating Costs in each Fiscal Year shall be that amount payable by the Landlord accruing during the Fiscal Year;

plus a management fee equal to that amount paid to the Landlord's Agent in respect of management of the Project or any part thereof or the Landlord's reasonable charges in lieu thereof if the Landlord elects to self manage the Project or any part thereof, which fee shall be in keeping with the industry standard.

B.

Exclusions - Operating Costs shall exclude, without duplication and without limiting the generality of the foregoing, and except to the extent expressly included above:

(a)

debt service;

(b)

major structural repairs;

(c)

costs determined by the Landlord from time to time to be fairly allocable to the correction of initial construction faults or initial maladjustments in operating equipment, but only to the extent that such costs are recovered from the contractor or others responsible;

(d)

any ground rent payable by the Landlord in respect of a lease of the Land or part thereof; and

(e)

tenant improvement allowances, leasing commissions and leasing costs.

C.

Deductions - There shall be deducted from Operating Costs:

(a)

the proceeds of insurance recovered by the Landlord applicable to damage, the cost of repair of which was included in the calculation of Operating Costs paid by the Tenant; and

(b)

amounts recovered as a result of direct charges to the Tenant and other tenants to the extent that the cost thereof was included in the calculation of Operating Costs.

"Parking Facilities" means that part of the Project containing parking facilities with vehicular access thereto including, without limitation, parking spaces, ramps, circulation space, vehicular entrances and exits, the structural elements thereof and services, facilities and systems contained in or servicing such parking facilities.

"Person" means an individual, partnership, firm, corporate entity, trust, government or any department or agency thereof or any combination of them.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

"Pollutants" means any substance which is regulated by or which would be considered a contaminant, pollutant, waste or deleterious or hazardous substance under Environmental Laws, or which is or may be hazardous to persons or property or detrimentally affect property value and includes, without limiting in any way the generality of the foregoing:

(a)

radioactive materials;

(b)

explosives;

(c)

any substance that, if added to any air, land and/or water, would degrade or alter or form part of a process of degradation or alteration of the quality of that air, land and/or water, to the extent that it is detrimental to its use by human beings or by any animal or plant;

(d)

any solid, liquid, gas, microorganism, mould, sound, vibration, ray, heat, radiation, odor or combinations of any of them that is likely to alter the quality of the environment (including air, land and water) in any way or the presence of which in the environment is prohibited by regulation or is likely to affect the life, health, safety, welfare or comfort of human beings or animals or to cause damage to or otherwise impair the quality of soil, vegetation, wildlife or property;

(e)

toxic substances;

(f)

substances declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental or municipal authority having jurisdiction over the Landlord, the Tenant, the Leased Premises or the Project of which the Leased Premises form a part;

(g)

any substance, the use or transportation of which or the release of which into the environment is prohibited, regulated, controlled or licensed under Environmental Laws;

(h)

anything contaminated by any Pollutants; and

(I)

Bio-Medical Waste.

"Prime Rate" means the rate of interest per annum established from time to time by The Bank of Nova Scotia (or such other bank being one of the 5 largest Canadian chartered banks measured by assets as the Landlord may designate from time to time) at its head office in Toronto, Ontario as the reference rate of interest to determine interest rates it will charge on Canadian dollar loans to its Canadian customers and which it refers to as its "prime rate".

,.Project" means the Land and Building and includes, without limitation, all Common Elements.

"Property Tax Year" means the 12 month period set by the municipal taxing authorities as the period for and over which Property Taxes and, where applicable, business taxes are assessed, charged and payable by the owner or occupant of the Project or Leased Premises respectively, whether on a calendar or fiscal year or any other basis.

"Property Taxes" means all taxes, rates, levies, duties and assessments whatsoever whether municipal, school, provincial, parliamentary or otherwise levied, charged, imposed or assessed against the Project or upon the Landlord in respect thereof or from time to time levied, charged, imposed or assessed in the future in lieu thereof or in addition thereto, including, without limitation, those levied, charged, imposed or assessed for education, school and local improvements and all business taxes, if any, from time to time payable by the Landlord or levied against the Landlord on account of its ownership of, or interest in, or the operation of the Project; and all costs and expenses incurred by the Landlord in good faith in contesting, resisting or appealing any such taxes, rates, duties, levies or assessments including, without limitation, legal fees on a solicitor and client or substantial indemnity basis and other professional fees and interest and penalties on deferred payments, but excluding income or profits taxes upon the income of the Landlord. If any portion of the Project is assessed or taxed other than at the prevailing commercial assessment rates and mill rates due to the occupancy of any tenants or the nature of any tenant's operation, then the amount of such taxes, rates, levies, duties or assessments shall be adjusted to be an amount equal to the amount which would have been incurred had such portion of the Project been assessed and taxed at the prevailing commercial assessment rates and mill rates throughout the entire period for which the calculation is being made. Any tax levied on commercial property or other like tax based on the area or use of the Project or the Leased Premises or any tax on rent imposed in lieu of the foregoing taxes are included herein. Property Taxes shall not include any Business Taxes payable by the Tenant pursuant to Section 8.02 and any similar Taxes levied or assessed separately against other rentable premises in the Project.

"Rent" means the aggregate of all amounts payable by the Tenant to the Landlord under this Lease. Provided that any and all amounts so payable which are collectible by the Landlord as agent of a taxing authority and which are Taxes imposed by that authority on the Tenant are included in Rent so as to determine the Landlord's rights and remedies in the case of delay or failure to pay the same notwithstanding that the same do not accrue to the Landlord as rent hereunder,

"Rentable Area" means the area of the Leased Premises, the Building or any part thereof as determined by the Landlord and which may be adjusted from time to time to give effect to any structural or functional change and any change in the leasing pattern in the Building, and which shall be calculated in accordance with the BOMA ANSI standards specified in Item 5 of the Term Sheet (except to the extent altered by this definition) as follows:

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

(a)

in the case of premises occupying the whole of one or more floors, the Rentable Area of such premises shall be determined by measuring to and from the inside finish of permanent outer Building walls or from the glass line, whichever extends further, but shall not include stairs and elevator shafts (except stairs and elevators exclusively serving the Tenant where the Leased Premises consist of more than one floor), flues, stacks, pipe shafts and vertical ducts with their enclosing walls. Washrooms, air conditioning equipment rooms, fan rooms, janitors' closets, electrical closets and other closets serving that floor or floors shall be included in the Rentable Area of such premises. No deductions shall be made for columns and projections necessary to the Building;

(b)

in the case of premises occupying part of a floor, the Rentable Area of such premises shall be determined by measuring from and to whichever of the following form the boundaries of such premises: the inside finish of permanent outer Building walls or from the glass line, whichever extends further; the centre of partitions which separate such premises from adjoining premises or public and/or service areas; and the office side of the corridor walls or

other permanent partitions, without in any case, deduction for columns and projections necessary to the Building, and includes washrooms, air conditioning equipment rooms, fan rooms, janitors' closets, electrical closets and other closets within and serving the Leased Premises exclusively, but does not include stairs and elevator shafts supplied by the Landlord for use in common with other tenants, and flues, stacks, pipe shafts or vertical ducts with their enclosing walls within the Leased Premises; the Rentable Area as so determined shall have added thereto a portion of the area of the public and/or service areas on such floor which, without limitation, shall include corridors, elevator lobbies, washrooms, air conditioning equipment rooms, fan rooms, janitors' closets, electrical closets and other closets serving that floor. The portion of such area of the public and/or service areas so added shall be that portion from time to time which the Rentable Area of such premises bears to the Rentable Area of all promises leased or set aside from time to time for leasing by the Landlord on that floor (including such premises).

"Security Deposit" has the meaning ascribed in Section 4.02. "Security Interest" has the meaning ascribed in Section 15.25.

"Service(s)" means those activities, personnel, facilities, systems and supplies required for the complete decoration, repair, administration, replacement, maintenance, improvement and operation of the Project.

"Taxes" means comprehensively all various classes and types of taxes, rates, levies, fees, duties, charges and assessments from whatever source arising and levied, rated, imposed, assessed, conferred or chargeable against the Project, the Leased Premises or in respect of the occupancy and activity carried on therein or on account of the Landlord's ownership of or interest in the Project or on account of rents payable with respect therefor and includes Property Taxes, business taxes or any like tax or other amount levied or assessed in lieu of, in addition to, or in substitution therefor, whether or not similar to or of the foregoing character and whether or not in existence on the date hereof, together with an administrative charge for allocation of Taxes and all costs and expenses incurred by the Landlord in good faith in contesting, resisting or appealing any such taxes, rates, duties, levies or assessments including, without limitation, legal fees on a solicitor and client or substantial indemnity basis and other professional fees and interest and penalties on deferred payments, but excluding income or profits taxes upon the income of the Landlord.

"Tenant's Occupancy Costs" means for each Fiscal Year the Tenant's Proportionate Share of the Operating Costs and the Tenant's Proportionate Share of Taxes, in each case for that Fiscal Year.

"Tenant's Proportionate Share" means that proportion that the Rentable Area of the Leased Promises bears to the Total Rentable Area of the Building.

"Term" means the period of time set out in Item 7 of the Term Sheet unless sooner terminated.

"Term Sheet" means the pages identified as Term Sheet attached to this Lease; and all information and particulars contained therein shall form part of this Lease.

"Total Rentable Area of the Building" means the total Rentable Area of the Building located at or above grade level.

"Transfer" means:

(a)

an assignment, sublease, licensing or other disposition by the Tenant of this Lease or any interest therein or any interest in the Leased Premises (whether or not by operation of law) or in a partnership that is the Tenant under this Lease, or a mortgage or charge (floating or otherwise) or other encumbrance of or upon this Lease by the Tenant, except a Transfer that occurs on the death of the Transferor;

(b)

a parting with or sharing of possession of all or part of the Leased Premises; and

(c) a transfer or issue by sale, assignment, bequest, inheritance, operation of law or other disposition, or by subscription, of all or part of the corporate shares of the Tenant which results in a change in the effective voting control of the Tenant (unless the Tenant is a corporation whose shares are traded on a stock exchange in Canada or the United States of America or is a subsidiary of such a corporation).

"Transferor" and "Transferee" have meanings corresponding to the definition of "Transfer". In the case of a Transfer described in item (c) of the definition of Transfer, the Transferor is the Person that has or would have effective voting control before the Transfer and the Transferee is the Person that has or would have effective voting control after the Transfer. The singular and plural forms of defined words and phrases shall have corresponding meanings.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE C

RULES AND REGULATIONS

1. 

Definition - In these rules and regulations, "Tenant" includes the employees, servants, agents, invitees, subtenants and licensees of the Tenant and others over whom the Tenant can reasonably be expected to exercise its control.

2. 

Common Elements - The Landlord reserves entire control of the Common Elements and will maintain them in such manner as it deems best for the benefit of the tenants generally. The Landlord reserves the right to restrict and regulate the use of the Common Elements by the Tenant and by persons making deliveries to the Tenant.

3. 

Smoking - Smoking is not permitted in the Common Elements, except as may be otherwise designated. The Landlord shall have the right, in its sole discretion, to determine whether any designated smoking area shall be established, and the size and location of any such area.

4. 

Obstructions - The sidewalks, driveways, entrances, vestibules, passages, corridors, halls, elevators and stairways shall not be encumbered or obstructed by the Tenant or be used by it for any purpose other than for entrance to and exit from the Leased Premises.

5. 

Deliveries - The Tenant shall not permit the parking of delivery vehicles so as to interfere with the use of any driveway, walkway, parking area or other Common Elements. The Tenant shall ensure that deliveries of materials and supplies to the Leased Premises are made through such entrances, elevators and corridors and at such times as may from time to time be designated by the Landlord and shall promptly pay or cause to be paid to the Landlord the cost of repairing any damage in or to the Building caused by any person making such deliveries. The Landlord reserves the right to remove at the expense and risk of the owner any vehicle not using designated "vehicle standing" areas.

6. 

Security - The Landlord may from time to time adopt appropriate systems and procedures for the security and safety of the Building including restricting access during non-business hours and the Tenant shall comply with the Landlord's reasonable requirements relating thereto.

7. 

Locks - No additional locks or bolts of any kind shall be placed by the Tenant upon any of the doors or windows of the Leased Premises, nor shall any changes whatsoever be made to existing locks or the mechanics thereof except by the Landlord at its option. The Tenant shall not permit any duplicate keys to be made, but additional keys as reasonably required shall be supplied by the Landlord when requested by the Tenant in writing and at the Tenant's expense. Upon termination of this Lease, the Tenant shall surrender to the Landlord all keys to the Leased Premises and any other parts of the Building together with any parking passes or other devices permitting entry.

8. 

Antennae - The Tenant shall not mount or place an antenna or aerial of any nature on the exterior of the Leased Premises or Building.

9. 

Garbage - The handling and disposal of garbage shall comply with arrangements prescribed by the Landlord from time to time. No disproportionate or abnormal quantity of waste material shall be allowed to accumulate in the Leased Premises and the cost of removal or clearing of quantities in excess of such normally provided service may be charged to the Tenant.

10.

 Repairs, Alterations and Improvements - The Tenant shall carry out repairs, maintenance, alterations and improvements in the Leased Premises only during times agreed to in advance by the Landlord and in a manner which will not interfere with the rights of other tenants in the Building.

11. 

Maintenance - The Tenant shall provide adequate facilities and means to prevent the soiling of walls, floors and carpets in and abutting the Leased Premises whether by shoes, overshoes, any acts or omissions of the Tenant or otherwise.

12. 

Installations and Wiring - The Tenant shall not mark, paint, drill into or in any way deface the walls, ceilings, partitions, floors or other parts of the Leased Premises and the Building except with the prior written consent of the Landlord and as it may direct. If the Tenant desires electrical or communications connections, the Landlord reserves the right to direct qualified persons as to where and how the wires should be introduced, and without such directions, no boring or cutting for wires will be permitted. No gas pipe or electric wire will be permitted which has not been ordered or authorized in writing by the Landlord.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

13.

Heating, Air Conditioning and Plumbing Systems - The Tenant shall not attempt any repairs, alterations or modifications to the heating, air conditioning or plumbing systems.

14.

Water Fixtures - The Tenant shall not use the plumbing facilities for any other purpose than that for which they are constructed, and no foreign substance of any kind shall be thrown therein, and the Tenant shall pay the cost of any breakage, stoppage or damage resulting from a violation of this provision.

15.

Personal Use of Leased Premises - The Leased Premises shall not be used for residential, lodging or sleeping purposes or for the storage of personal effects or property not required for business purposes as permitted under this Lease.

16.

Solicitations - The Landlord reserves the right to restrict or prohibit canvassing, soliciting or peddling in the Building.

17.

Heavy Articles - The Tenant shall not, in the Leased Premises or the Building, bring in, take out, position, construct, install or move anything liable to injure or destroy any part of the Building including, without limiting the generality of the foregoing, any safe, business machinery or other heavy machinery or equipment without the prior written consent of the Landlord. In giving such consent, the Landlord shall have the right, in its sole discretion, to prescribe the permitted weight and the position thereof, and the use and design of planks, skids or platforms required to distribute the weight thereof. All damage done to the Building by moving or using any such heavy equipment or machinery shall be repaired at the expense of the Tenant, The moving of all heavy equipment or other machinery shall occur only by prior arrangement with the Landlord.

18.

Bicycles, Animals - The Tenant shall not bring any animals, except for guide dogs, into the Building and shall not permit bicycles or other vehicles inside or on the sidewalks outside the Building except in areas designated from time to time by the Landlord for such purposes.

19.

Furniture and Equipment - The Tenant shall ensure that furniture, equipment and fixtures being moved into or out of the Leased Premises are moved through such entrances, elevators and corridors and at such times as may from time to time be designated by the Landlord and shall promptly pay or cause to be paid to the Landlord the cost of repairing any damage in the Building caused thereby.

20.

Heating / Cooling - The Tenant shall not use any means of heating or cooling the Leased Premises other than that provided by or specifically otherwise permitted in writing by the Landlord.

21.

Undue Electrical Loads, Heat, Vibration - No material or equipment which could cause undue loads on electrical circuits or undue vibration, heat or noise shall be brought into the Building or used therein by or on behalf of the Tenant and no machinery or tools of any kind shall be affixed to or used in the Leased Premises without the prior written consent of the Landlord.

22.

Fire Regulations - No Tenant shall do or permit anything to be done in the Leased Premises or bring or keep anything therein which will in any way increase the risk of fire, or obstruct or interfere with the rights of other tenants, or violate or act at variance with the laws relating to fires or with the regulations of the fire department or the board of health. The Tenant shall cooperate in any fire drills and shall participate in all fire prevention or safety programs designated by the Landlord.

23.

Flammable Materials - No flammable oils or other flammable, dangerous or explosive materials shall be kept or permitted to be kept in the Leased Premises.

24.

Food and Beverages - Only persons approved from time to time by the Landlord may prepare, solicit orders for, sell, serve or distribute foods or beverages in the Building or use the elevators, corridors or other Common Elements for any such purpose. The Tenant shall not permit in the Leased Premises the use of equipment for the preparation, serving, sale, distribution or dispensing of food and beverages except with the prior written consent of the Landlord and in accordance with arrangements approved by the Landlord. Notwithstanding the foregoing, so long as the Tenant Is SmartCool Systems Inc., the Tenant may use a portion of the Leased Premises, not to exceed 300 square feet, for a staff lunchroom/lounge In which food for consumption by the Tenant's employees will be prepared and served.

Please Initial ______/______

25.

Notice of Accidents - The Tenant shall give immediate notice to the Landlord in case of fire or accident in the Leased Premises or in the Building, or in case of defects therein or in any fixtures or equipment thereof, notwithstanding the Landlord may have no obligations with respect thereto.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

26.

Janitorial Services - The Tenant shall not use or engage any person or persons other than the janitor or janitorial contractor of the Landlord for the purpose of any cleaning of the Leased Premises, except with the prior written consent of the Landlord.

27.

Dangerous or Immoral Activities - The Tenant shall not make any use of the Leased Premises which could result in risk or injury to any person, nor shall the Leased Premises be used for any immoral or criminal purpose.

28.

Proper Conduct - The Tenant shall not perform any acts or carry on any practice which may damage the Common Elements or be a nuisance to any other tenant in the Project.

29.

Additional Rules and Regulations - The Landlord shall have the right to make such other and further reasonable rules and regulations as in its sole judgment may from time to time be necessary or of benefit for the safety, care, cleanliness and appearance of the Project and for the preservation of good order therein.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE D 

LANDLORD'S WORK

1.

Landlord's Work and Condition of Premises

The Leased Premises shall be delivered by the Landlord to the Tenant on an "as is" basis and the Landlord shall not be required to do any work prior to delivering possession of the Leased Premises to the Tenant, except for the following ("Landlord's Work"), which shall be at the sole cost of the Landlord:

i)

the Landlord shall properly demise the Leased Premises, as shown on Schedule A, in accordance with the Building standard and to meet all applicable building, fire and handicap access codes;

ii)

the demising walls and perimeter interior walls shall be taped, sanded and ready for Tenant finishes;

iii)

the Landlord shall provide an entrance door to the Leased Premises with side light

consistent with Building standard quality and design;

iv)

the Landlord shall provide Building standard window coverings for the perimeter

windows.

In addition, the Landlord warrants and represents that prior to May 1, 2005, all lighting, healing/air­conditioning, electrical and mechanical systems are fully operational and free from patent defect, in addition to being adequately sized and distributed for normal occupancy within the Leased Premises.

The Tenant, at its expense, shall be responsible for all modifications required rousing such phone lines and/or data cables.

Any other changes to the Leased Premises required by the Tenant shall be performed in accordance with the Lease and shall be completed at the Tenant's sole expense.

	
	

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE E

ADDITIONAL COVENANTS, AGREEMENTS AND CONDITIONS (if any) 

1.

Other Deposit

The amount of $7,463.25 shall be held by the Landlord, without interest, as a deposit to be applied on account towards the first month's gross rent including GST coming due under the Lease.

2.

Signage

The Landlord shall install Building standard signage for the Tenant at the sole cost of the Landlord. The Tenant shall be allowed to install suite signage at the entrance to the Leased Premises in accordance to Building standard and with the Landlord's prior written approval, not to be unreasonably withheld.

3.

Parking

The Landlord shall provide and the Tenant shall license 2 reserved parking stalls during the Term of the Lease, in the parking garage in the Building at the prevailing rates established by the Landlord or its parking contractor plus provincial sales lax and GST. The foregoing monthly rate shall be adjusted from time to time to the then current monthly rate charged by the Landlord or its parking contractor for parking space in the garage of the Building. The Tenant shall execute the Landlord's standard Parking Licence Agreement for said parking.

4.

Permits and Working Drawings

The Tenant shall provide working drawings of any Tenant improvement work proposed by the Tenant and shall obtain the Landlord's written consent prior to commencing the improvement work, such consent not to be unreasonably withheld by the Landlord. The Tenant shall be responsible for obtaining all necessary building permits and approvals as required by the relevant regulatory authorities for the Tenant's improvement work. Such permits and approvals must be secured before the Tenant commences its improvement work. All Tenant improvement work shall be done by qualified and licensed contractor(s) and sub-contractor(s) which shall be subject to the reasonable approval of the Landlord. All such Tenant improvement work shall be performed in a first class manner in accordance with the provisions of the Lease. If required by the municipal authorities, the Tenant shall also make application for an occupancy certificate for the Leased Premises upon completion of the Tenant's improvement work.

5.

Special Equipment

The Tenant shall be responsible for the installation, operation and maintenance of any special equipment required by its occupancy, including telephone, computers and communication(s) facilities.

6.

Early Access

Upon the Tenant executing and returning this Lease to the Landlord, the Tenant shall be permitted early access to the Leased Premises, whether exclusively or in common with the Landlord, its contractors, sub-contractors, or employees for the purpose of performing any improvements required by the Tenant. All Tenant's work shall be performed in accordance with the provisions of the Lease. The Tenant agrees that from the date on which the Tenant obtains access to the Leased Premises to perform any Tenant's work, all the provisions of the Lease shall apply to the Tenant. Payment of Basic Rent, Taxes and Operating Costs shall not commence until the Commencement Date, regardless of when occupancy occurs, either for the purpose of fixturing the Leased Premises or the operation of business.

7.

Tenant Allowance

In consideration of the Tenant accepting the Leased Premises on an "as is" basis, the Landlord agrees to pay to the Tenant as a contribution toward the cost of Leasehold Improvements an allowance of $35.00 per square foot of Rentable Area of the Leased Premises, plus GST (the 'Tenant Allowance"). Such allowance shall be paid after the satisfaction of all of the following:

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

i)

the Lease has been fully executed by the Tenant;

ii)

the Tenant opens for business in the Leased Premises;

iii)

the Tenant providing the Landlord with copies of bona fide invoices along with proof that the Tenant has paid such invoices from the Tenant's consultant(s) and/or contractor(s) for the Tenant's work; and

Should the Tenant be in default of the Lease, the Tenant Allowance shall be withheld until such time as the default is cured to the satisfaction of the Landlord. For any contracts subject to the Builders Lien Act of B.C. the final ten percent (10%) of the Tenant Allowance payment shall be made after the time limit for filing a lien has expired and the Landlord is satisfied that no liens have been filed or following receipt by the Landlord of a statutory declaration from the Tenant that there are no liens,

The Tenant shall spend a minimum of $32.00 per rentable square foot within the Leased Premises on Leasehold Improvements and any remaining Tenant Allowance in excess of $32.00 per rentable square fool, can be applied to the payment of Basic Rent first due and payable.

8.

Letter of Credit

The Tenant shall obtain at its cost and deliver to the Landlord on or before the date of execution of the Lease by the Tenant an irrevocable and unconditional standby letter of credit issued by a Schedule 1 Canadian chartered bank in favor of the Landlord (the "Letter of Credit") which shall be held by the Landlord as security for:

(a)

repayment of the cost of any Landlord's work with respect to the Leased Premises and other leasing costs such as commission, rent free periods and other inducements paid or credited to defray the costs of any Tenant's work with respect to the Leased Premises to facilitate this tenancy; and

(b)

indemnification of the Landlord in respect of any losses, costs or damages incurred by the Landlord arising out of the failure by the Tenant to pay Rent or any other amounts payable under this Lease or resulting from any failure by the Tenant to observe or perform any obligations contained in this Lease or any default under this Lease or resulting from any termination, surrender, disclaimer or repudiation of this Lease whether by the Landlord as a result of the default of the Tenant or in connection with any insolvency or bankruptcy of the Tenant or otherwise.

The Letter of Credit shall contain the following terms and conditions:

(c)

shall be for an amount of $100,000.00 for year 1 of the Lease Term, $75,000.00 for year 2 of the Lease Term, $50,000.00 for year 3 of the Lease Term and $25,000.00 for year 4 of the Lease Term;

(d)

shall be for a term of 4 years renewed an an annual basis in the amount outlined in section (c) above, and delivered to the Landlord not less than 30 days prior to the expiry of the then existing Letter of Credit failing which such default will constitute an Event of Default under the Lease which will allow the Landlord to claim upon the full amount of the Letter of Credit remaining at that point of time;

(e)

shall provide that any Event of Default under the Lease or disclaimer or repudiation of the Lease will allow the Landlord to draw upon a portion of or the full amount of the Letter of Credit upon presentation of a demand for payment by the Landlord;

(f)

shall be transferable by the Landlord without the consent of the Tenant upon notice to the issuer of the Letter of Credit and the term "Landlord" shall be deemed to include any such transferee, from time to time;

(g)

shall be payable at a bank in the city in which the Building is located; 

(h)

shall provide for the Landlord to be paid on sight;

(i)

shall provide that it shall continue in full force and effect and shall not be waived, released, discharged, impaired or affected by reason of the release or discharge of the Tenant in any

Please Initial ______/______

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

receivership, bankruptcy, insolvency, winding-up or other creditors' proceedings including, without limitation, any proceedings under the Bankruptcy and Insolvency Act (Canada) or the Companies Creditors' Arrangement Act (Canada) or the surrender, disclaimer, repudiation or termination of this Lease in any such proceedings and shall continue with respect to the periods prior thereto and thereafter as if the Lease had not been surrendered, disclaimed, repudiated or terminated.; and

(j)

shall contain such further provisions required by the Landlord and its solicitors, acting reasonably.

It is understood and agreed between the Landlord and the Tenant that:

(k)

the Landlord shall not be required to commence any Landlord's work provided for in this Lease until the Letter of Credit is received by the Landlord in a form acceptable to it;

(I)

the Tenant shall within 15 days of a demand by the Landlord restore the amount of the Letter of Credit to the full amount highlighted in section (c) above for the then current year in the event that all or a portion of the credit available has been drawn down as outlined In sections (a) and (b) by the Landlord as provided herein; and

(m)

the proceeds of the Letter of Credit shall be applied firstly toward repayment of the cost of any Landlord's work and other costs referred to in section (a) hereof, secondly to compensate the Landlord for damages suffered by it as a result of the Tenant's default and the balance, if any, shall be held by the Landlord as a Security Deposit.

9.

Early Termination by Tenant Provided that, and for so long only as:

(a)

the Tenant pays the rents and performs each and every of the covenants, conditions and agreements in the Lease reserved and contained and on the part of the Tenant to be paid and performed and is not and has not been in default in respect of any of the same and there has been no adverse change of any sort in the Tenant's financial condition or capacity; and

(b)

the Tenant is SmartCool Systems Inc. and. is itself in possession of and occupying and conducting its business in the whole of the Leased Premises and the Lease has not been assigned and no part of the Leased Premises has been subleased by the Tenant,

the Tenant shall have a one-time option to terminate this Lease (the "Termination Option") in accordance with the following terms and conditions:

(i)

If the Tenant desires to exercise the Termination Option, the Tenant shall give the Landlord irrevocable written notice (the "Termination Notice") of the Tenant's exercise of this Termination Option, which Termination Notice must be received by the Landlord no later than the date which is 12 months prior to May 31, 2012 (the "Termination Date"). Time is of the essence with respect to the Landlord's receipt of the Termination Notice and all other deadlines in this clause.

(ii)

If the Tenant gives the Termination Notice and complies with all the provisions in this clause, the Lease shall terminate at 11:59 p.m. on the Termination Date.

(iii) 

In order for such Termination Notice to be effective, it must be accompanied by a termination fee in the amount of the unamortized portion of the total of the Tenant Allowance (excluding Landlord's Work as outlined in Schedule "D" of this Lease) and the leasing commission paid by the Landlord to effect the Lease, amortized at an interest rate of 10% per annum over the initial Lease Term, plus 3 months gross rent then in effect. Such termination fee shall be paid by the Tenant to the Landlord by certified cheque.

(iv) 

The Tenant's obligations to pay Rent and any other costs or charges under the Lease and to perform all other obligations under the Lease for the period up to and including the Termination Date shall survive the termination of the Lease.

(v)

Notwithstanding the foregoing, if at any time during the period between the date of delivery of the Termination Notice and the Termination Date an Event of Default shall occur, the Landlord may, but is not obligated to, cancel and declare null and void the Tenant's exercise of the Termination Option and this Lease shall continue in full force and effect for  the Term. If the Landlord does not cancel the Tenant's exercise of the Termination Option after such Event of Default, the Tenant shall cure such Event of Default within the period of time specified in the Lease and this obligation shall survive the Termination Date.

(vi)

In the event that the Tenant exercises the Termination Option, the Tenant shall, on or before the Termination Date, surrender and vacate the Leased Premises in accordance with the applicable Lease. 

Please Initial ______/______

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MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE F

FORM OF INDEMNITY AGREEMENT (if applicable)

NOT APPLICABLE

	
	

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Please Initial ______/______

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE G

SECURITY INTEREST - REMEDIES ON DEFAULT

TENANT:

ADDRESS OF LEASED PREMISES:

DATE:

1.

If the Security Interest becomes enforceable, the Landlord may, at its option:

(a)

appoint any Person as receiver of all or any part of the Collateral. The word "receiver" as used in this section 1 includes both a receiver and a receiver and manager. The Landlord may, from time to time, remove or replace any appointed receiver, or may institute proceedings in any court of competent jurisdiction for the appointment of a receiver or for the sale of all or any part of the Collateral. Any receiver will have and may exercise all rights and powers conferred upon the Landlord under this Lease together with such other rights and powers which such receiver may have at law or in equity. Any receiver will be considered to be the agent of the Tenant so far as the responsibility for the receiver's acts is concerned and the Landlord will not be responsible for any act or omission on the part of the receiver, whether willful, negligent, imprudent or otherwise;

(b)

take such steps as it considers necessary or desirable to obtain possession of all or any part of the Collateral and the Tenant agrees that the Landlord may, by its servants, agents or receiver, at any time during the day or night and without prior notice, enter the Leased Premises where the Collateral may be found for the purpose of taking possession of or removing or immobilizing the Collateral or any part of it;

(c)

in connection with the realization of the Collateral, carry on all or any part of the business and undertaking of the Tenant and may enter upon, occupy and use all or any part of the property owned or used by the Tenant (including the Collateral) for such time as the Landlord sees fit, free of charge, and neither the Landlord nor any agent or receiver appointed by the Landlord will be liable to the Tenant for any negligent or Imprudent act or omission in so doing or in respect of any rent, charges, depreciation or damages in connection with such actions;

(d)

seize, collect, realize, borrow money on the security of, sell, obtain payment for, give valid receipts and discharges for, release to third parties or otherwise deal with or dispose of the Collateral or any part of it in the manner, upon the terms and conditions and at the time or times as may seem to it advisable, without notice to the Tenant. The mode, terms and conditions of disposition of the Collateral or any part of it will be in the sole discretion of the Landlord and it will be deemed to be commercially reasonable for the Landlord to dispose of the Collateral or any part of it in the ordinary course of its business. Without limiting any other rights the Landlord may have, the Landlord may purchase all or any part of the Collateral at a private sale, auction, tender, public sale or any other mode of disposition;

(e)

charge on its own behalf and pay to others reasonable sums for expenses incurred and for services rendered (including legal fees on a solicitor and client or substantial indemnity basis and fees for receivers, managers, accountants and other professionals) in connection with the Landlord's realizing or preparing to realize on the Collateral (including without limitation obtaining advice in preparation for or otherwise in respect of such realization) or otherwise dealing with the Collateral in accordance with the provisions of this Lease and all such sums will be payable by the Tenant to the Landlord on the earlier of demand and payment of any such sum by the Landlord, and will be secured by the Security Interest; or

(f)

if it deems it necessary for the proper realization of all or any part of the Collateral, pay any claim, lien, security interest or other encumbrance that may exist or be threatened against the Collateral, and the amount paid, together with all costs and expenses of the Landlord incurred in that connection, will be payable by the Tenant to the Landlord on the earlier of demand and payment thereof by the Landlord, and will be secured by the Security Interest.

None of the foregoing remedies shall be exclusive of or dependent on any other remedy, but any one or more of such remedies may be exercised from time to time independently or in combination.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

2.

The Landlord will have the right to postpone indefinitely the sale of the Collateral or any part of it and shall further have the right, pending that sale, to lease the Collateral or any part of it to any person for any period as the Landlord in its absolute discretion deems necessary in order to recover or to attempt to recover any indebtedness secured by the Security Interest.

3.

The Landlord will not be liable or accountable for any failure to realize or otherwise deal with the Collateral or any part of it and will not be bound to institute proceedings for the purpose of effecting any of the foregoing or for the purpose of preserving any rights of the Landlord, the Tenant or any other person in respect of the Collateral.

4.

All monies received or collected by the Landlord in respect of the Collateral may be applied and reapplied as the Landlord deems fit.

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)

SCHEDULE H

CONTENTS OF LEASED PREMISES

The following Schedule H is referred to in Section 9.05, Environmental issues, in this Lease.

All contents and materials, other than standard office furnishings and supplies, stored in the Leased Premises are as follows:

(please include, in detail, all material, Pollutants, including but not limited to, chemicals and related items that are used and/or stored in the Leased Premises)

None.

Please Initial ______/______

Page H-1

MORGUARD February 2005 - Net Office, Multi-Tenant (General Application)Exhibit 4.12 - Filed by EDF Electronic Data Filing Inc. (604) 879.9956

Exhibit 4.12

OFFICE BUILDING LEASE

BETWEEN

STEWART PLAZA, LLC, a

CALIFORNIA LIMITED LIABILITY COMPANY

LANDLORD

AND

SMARTCOOL SYSTEMS USA, INC.

A NEVADA CORPORATION

TENANT

April 1, 2006

Building 5

Floor 2

Suite 219

											
	TABLE OF CONTENTS

	TITLE

PAGE NO.

	1.

	Parties

	1

	2.

	Premises

	1

	3.

	Term

	1

	4.

	Rent

	1

	5. Security Deposit

	1

	6. Services and Utilities 

	7. Delivery of Possession 

	1

	8. Condition of Premises

	1-2

	9. Quiet Enjoyment 

	2

	10. Use 

	2

	11. Repairs 

	2

	12. Alterations and Additions 

	2

	13. Leasehold Improvements; Tenant's Property

  

	2

	 
	14.

	Tenant's Insurance

	2-3

	 
	15.

	Waivers of Subrogation 

	3

	 
	16.

	Indemnification 

	3

	 
	17.

	Destruction or Damage 

	3-4

	 
	18.

	Eminent Domain 

	4

	 
	19.

	Transfer of Landlord's Interest 

 

	4

	 
	20. Interest and Late Charges

4

	 
	21. Taxes on Tenant's Property

4

	 
	22. Compliance with Law

4

	 
	23. Rules and Regulations

4

	 
	24. Sign Control

5

	 
	25. Brokers 

5

	 
	26. Subordination and Attornment

5

	 
	27. Estoppel Certificate 

	5-6

	 
	28. Changes Requested by Lender 

	6

	 
	29. Default

	6

	 
	29.1.

	Tenant's Default 

	6

	 
	29.2.

	Remedies

	6-7

i

SmartCcol Systems USA, Inc. PRF-EX 4!112006

			
	TABLE OF CONTENTS

	TITLE

PAGE NO.

	29.3 Landlord's Default

30. Notices 

31. Miscellaneous- 

	7

7

7

	31.1.

	Accord and Satisfaction; Allocation of

Payments 

7

	31.2.

	Attorney's Fees 

	7

	31.3.

	Choice of Law

	7

	31.4.

	Corporate Authority 

	7

	31.5.

	Counterparts

	7

	31.6.

	Furnishing of Financial Statements; Tenant's

	 

	 
	Representation

	7

	31.7.

	Further Assurances

	7-8

	31.8.

	Name

	8

	31.9.

	No Light, Air or View Easement 

 8

31.10. Prior Agreements; Amendments

  8

31.11. Recording

  8

31.12. Riders 

  8

31.13. Severability

  8

31.14. Successors and Assigns

  8

31.15. Surrender or Cancellation 

  8

31.16. Hazardous Materials 

  8

31.17. Waiver

  8

Signature Page

  9

Exhibits

"A" - Premises, Term and Use

"B" - Rent, Security Deposit

"C" - Rules and Regulations

"D" - Floor Plan

"E" - Professional Suite Tenant Guidelines

Smar€Cool Systems USA, Inc. PRF-EX 41112006

ii

SmaruCool Systems USA. Inc. PRF 400#219 4'1!2006

LEASE AGREEMENT

In consideration of the rents and covenants hereinafter set forth, Landlord hereby leases and devises to Tenant, and Tenant hereby leases and takes from Landlord, the premises hereinafter described on the terms and conditions set forth in this Lease Agreement, hereinafter called the "Lease."

For purposes of reference only, this Lease is dated April 1, 2006.

1. Parties; The parties to this Lease are Stewart Plaza, LLC, a California Limited Liability Company, (hereinafter "Landlord") and SmartCool Systems USA, Inc., a Nevada Corporation (hereinafter "Tenant").

2. Premises: The premises are described in Exhibit "A" of this Lease.

3. Term: The term of this Lease is described in Exhibit "A" of this Lease.

4. Rent: Tenant shall pay to Landlord as rent for the Premises, a monthly payment as set forth on Exhibit "B" of this Lease, Monthly rents are due in advance on the first (1st) of the month and are delinquent if not received by the fifth (5th) of the month, The rent shall be adjusted annually based upon; 1) a standard annual rental adjustment, and 2) Tenant's Percentage of the building operating cost increases. The terms, conditions, and computation of the rental adjustments are set forth on Exhibit "B".

5. Security Deposit: Tenant has deposited with Landlord a Security Deposit as set forth on Exhibit "B" of this Lease. Said sum shall be held by Landlord as security for the faithful performance by Tenant of ail the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term hereof. If Tenant defaults with respect to any provision of this Lease, including but not limited to payment of rent, Landlord may (but shall not be required to) use, apply, or retain all or any part of this security deposit for the payment of any rent or any other sum in default, or for the payment of any amount which Landlord may spend or become obligated to spend by reason of Tenant's default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default. If any portion of said deposit is so used or applied, Tenant shall within five (5) days after written demand therefor deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount and Tenant's failure to do so shall be a material breach of this lease. Landlord shall not be required to keep this security deposit separate from its general funds and Tenant shall not be entitled to interest on such deposit. If Tenant shall fully and faithfully perform every provision of this lease to be performed by it, the security deposit or any balance thereof shall be returned to Tenant (or, at Landlord's option, to the last assignee of Tenant's interest hereunder) at the expiration of the lease term.

6. Services and Utilities: Provided that Tenant is not in default hereunder, Landlord agrees to furnish to the premises during reasonable hours of generally recognized business days, to be determined by Landlord in his sole discretion and subject to the rules and regulations of the complex, electricity for normal lighting and fractional horsepower office machines, heat and air conditioning required in Landlord's judgment for the comfortable use and occupation of the premises, and janitorial service. Landlord shall also maintain and keep lighted the common stairs, common entries, and toilet rooms in the building of which the premises are a part. Landlord shall not be liable for and Tenant shall not be entitled to any reduction of rental by reason of Landlord's failure to furnish any of the foregoing when such failure is caused by accident, breakage, repairs, strikes, lockouts, or other labor disturbances or labor disputes of any character, or by any other cause similar or dissimilar beyond the reasonable control of Landlord. Landlord shall not be liable under any circumstances for a loss of or injury to property, however occurring, through or in connection with, or incidental to failure to furnish any of the foregoing. Wherever heat generating machines or equipment are used in the premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the premises, and the cost thereof including the cost of installation and the cost of operation and maintenance thereof shall be paid by Tenant to Landlord upon demand by Landlord.

Tenant will not without written consent of Landlord use any apparatus or device in the premises including, but without limitation thereto, electronic data processing machines, punch card machines, and machines using in excess of 120 volts which will in any way increase the amount of electricity usually furnished or supplied for the use of the premises as general office space; nor connect with electric current except through existing electrical outlets in the premises any apparatus or device for the purpose of using electric current. If Tenant shall require water or electric current in excess of that usually famished or supplied for the use of the premises as general office space, Tenant shall first procure the written consent of Landlord, which Landlord may refuse, to the use thereof and Landlord may at his option either: (1) cause a water meter or electrical current meter to be installed in the premises so as to measure the amount of water and electric current consumed for any such use; or (b) assess a reasonable charge in a constant amount to cover the maintenance, and repair thereof shall be paid for by Tenant and Tenant agrees to pay to Landlord promptly upon demand therefor by Landlord for all such water and electric current consumed as shown by said meters, at the rates charged for such services by the local public utility furnishing the same plus any additional expense incurred in keeping account of the water and electric current so consumed. If a separate meter is not installed, such excess cost for such water and electric current will be established by an estimate made by a utility company or electrical engineer.

Tenant will permit access to the premises during normal business hours to installers or repairmen of utility services, whether in furtherance of Tenant's services or those of others.

7. Delivery of Possession: If for any reason Landlord does not deliver possession of the Premises to Tenant on the Commencement Date. Landlord shall not be subject to consequential damages or to any other liability for that failure, the validity of this Lease shall not be impaired and this Lease shall remain in effect However, Rent shall be abated, and the Commencement and Expiration Dates changed to correspond to the date on which delivery of possession occurs. "Delivery of Possession" shall occur on the date the Leasehold improvements, defined in Exhibit "A", are substantially completed. If Landlord shall give Tenant permission to enter into possession of the Premises before the Commencement Date, that possession shall be subject to all the provisions of this Lease, including, without limitation, the payment of Rent, except to the extent expressly stated to the contrary by Landlord in writing.

8. Condition of Premises:

a. Landlord shall deliver the Premises to Tenant clean and free of debris on Lease commencement date and Landlord warrants

Page 1

SmaruCool Systems USA. Inc. PRF 400#219 4'1!2006

to Tenant that the plumbing, lighting, air conditioning, heating, and doors in the Premises shall be in good operating condition on the Lease commencement date. In the event that it is determined that this warranty has been violated, then it shall be the obligation of Landlord after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to promptly, at Landlord's sole cost, rectify such violation. Tenant's failure to give such written notice to Landlord within thirty (30) days after the Lease commencement date shall cause the conclusive presumption that Landlord has complied with all of Landlord's obligations hereunder.

b. Except as otherwise provided in this Lease, Tenant hereby accepts the Premises in their condition existing as of the Lease commencement date or the date that Tenant takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that neither Landlord nor Landlord's agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant's business.

9. Quiet Enjoyment: Tenant, upon paying the Rent and performing all of its obligations under this Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of this Lease and to any mortgage, lease or other agreement to which this Lease may be subordinate,

10. Use: The premises shall, be used and occupied only for the purpose set forth on Exhibit "A" of this Lease or any other use which is reasonably comparable and for no other purpose without written consent of the Landlord.

11. Repairs: By entry hereunder, Tenant accepts the Premises as being in good and sanitary order, condition and repair, Tenant shall keep, maintain and preserve the Premises in first class condition and repair, and shall, when and if needed or whenever requested by Landlord to do so, at Tenant's sole cost and expense, make all repairs to the Premises and every part thereof, including all interior windows and doors. Tenant shall, upon the expiration or sooner termination of the term hereof, surrender the Premises to Landlord in the same condition as when received. Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof. The parties hereto affirm that Landlord has made no representations to Tenant respecting the condition of the Premises or the Building except as specifically herein set forth.

Landlord shall repair and maintain the structural portions of the Building, including the basic plumbing, heating, ventilating, air conditioning and electrical systems installed or furnished by Landlord, unless such maintenance and repairs are caused in part or in whole by the act, neglect, fault of or omission of any duty by Tenant, its agents, servants, employees or invitees, in which case Tenant shall pay to Landlord, as additional rent, the reasonable cost of such maintenance and repairs. Landlord shall not be liable for any failure to make any such repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. There shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or in or to fixtures, appurtenances and equipment therein. Tenant waives the right to make repairs at Landlord's expense under California Civil Code Sections 1941 and 1942 and any other law, statute or ordinance now or hereafter in effect,

Landlord shall have the right to enter the premises at any time for repair or maintenance to the Building, including but not limited to the building structure, HVAC, plumbing and electrical systems.

12. Alterations and Additions: Tenant shall make no alterations, additions or improvements to the Premises or any part thereof without obtaining the prior written consent of Landlord.

Landlord may impose as a condition to the aforesaid consent such requirements as Landlord may deem necessary in its sole discretion, including without limitation thereto, the manner in which the work is done, a right of approval of the contractor by whom the work is to be performed, the times during which it is to be accomplished, and the requirement that upon written request of Landlord prior to the Expiration or earlier termination of the Lease, Tenant will remove any and all permanent improvements or additions to the Premises installed at Tenant's expense and all moveable partitions. counters. personal property, equipment, fixtures and furniture. Landlord may also require as a condition to such approval, that Tenant provide Landlord a lien and completion bond in an amount equal to one and one quarter of the amount of improvements to be constructed.

All such alterations, additions or improvements shall at the expiration or earlier termination of the Lease become the property of Landlord and remain upon and be surrendered with the Premises, unless specified pursuant to the preceding paragraph.

13. Leasehold Improvements; Tenant's Property: All fixtures, equipment, improvements and appurtenances attached to or built into the Premises at the commencement of or during the Term, whether or not by or at the expense of Tenant ("Leasehold Improvements") shall be and remain a part of the Premises, shall be the property of Landlord and shall not be removed by Tenant.

All moveable partitions, business and trade fixtures, machinery and equipment, communications equipment, and office equipment, located in the Premises and acquired by or for the account of Tenant, without expense to Landlord, which can be removed without structural damage to the Building, and all furniture, furnishings and other articles of movable personal property owned by Tenant and located in the Premises (collectively "Tenant's Property") shall be and shall remain the property of Tenant and may be removed by Tenant at any time during the Term; provided that if any of Tenant's Property is removed, Tenant shall promptly repair any damage to the Premises or to the Building resulting from that removal.

14. Tenant's Insurance; Tenant shall, during the term hereof and any other period of occupancy, at its sole cost and expense, obtain, maintain and keep in full force and effect the following insurance:

a, Standard form property insurance policy insuring against the perils of fire, extended coverage, vandalism, malicious mischief, special extended coverage ("All-Risk") and sprinkler leakage. This insurance policy shall be upon property of

every description and kind owned by Tenant, for which Tenant is legally liable or that was installed at Tenant's expense, and which is located in the Building including, without limitation, furniture, fittings, installations, fixtures (other than Landlord's

Building Work), and any other personal property, in an amount not less than ninety percent (90%) of the full replacement cost thereof. In the event that there shall be a dispute as to the amount which comprises full replacement cost, the decision

Page 2

SmaruCool Systems USA. Inc. PRF 400#219 4'1!2006

of Landlord or any mortgagees of Landlord shall be conclusive. This insurance policy shall also be upon direct or indirect loss of Tenant's earnings or extra expense attributable to Tenant's inability to use fully or obtain access to the Premises Or

Building in an amount as will properly reimburse Tenant. Such policy shall name Landlord and any mortgagees of Landlord as insured as their respective interests may appear.

b. Comprehensive General Liability Insurance insuring Tenant against any liability arising out of the lease, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be in the amount of 51.000,000

Combined Single Limit for injury to, or death of one or more persons in an occurrence, and for damage to tangible property (including loss of use) in an occurrence. The policy shall insure the hazards of premises and operations, independent

contractors, contractual liability (covering the Indemnity contained in Paragraph 19 hereof) and shall: (1) Name Landlord as an Additional Insured;

(2) Contain a Cross-Liability provision; and

(3) Contain a provision that "the insurance provided the Landlord hereunder shall be primary and non-contributing with any other insurance available to the Landlord."

(4) Policy shall insure performance by Tenant of the indemnity provisions herein. The limits of said insurance shall not, however, limit the liability of Tenant hereunder.

c. Worker's Compensation and Employer's Liability insurance (as required by state law).

d. Any other form or forms of insurance as Tenant or Landlord or any mortgagees of Landlord may reasonably require from time to time in form, in amounts and for insurance risks against which a prudent tenant would protect itself.

All policies shall be written in a form satisfactory to Landlord and shall be taken out with insurance companies holding a General Policyholders Rating of "B+" and a Financial Rating of "X" or better, as set forth in the most current issue of Bests Insurance Guide. Tenant shall deliver to Landlord a Certificate of Insurance evidencing the existence of the amounts and forms of coverage satisfactory to Landlord. No such policy shall be cancelable or reducible in coverage except after thirty (30) days prior written notice to Landlord. Tenant shall, within ten (10) days prior to the expiration of such policies, furnish Landlord with renewals or "binders" thereof, or Landlord may order such insurance and charge the cost thereof to Tenant as Additional Rent. If Landlord obtains any insurance that is the responsibility of Tenant under this section, Landlord shall deliver to Tenant a written statement setting forth the amount of any such insurance cost increase and showing in reasonable detail the manner in which it has been computed.

15. Waivers of Subrogation: Landlord and Tenant hereby waive their rights (and, to the extent permitted by law, the subrogation rights of their respective insurers) against each other and any other tenant of space on the Property (as well as the officers, employees, agents, authorized representatives, and invitees of same) with respect to any claims (including, but not limited to, claims for injury to any person(s), and/or damage to the Premises or any other part of the Property, and/or any fixtures, equipment, personal property, furniture, improvements and/or alterations in or to the Premises or the Property) which are caused by or result from risks insured against under any valid and collectible insurance contract or policy carried by Landlord or Tenant (whichever the case may be) and in force at the time of any such injury and/or damage. However, the above waiver shall apply only to the extent that such claim is covered by such insurance contracts or policies. Tenant shall obtain (for Landlord), from its insurers under each policy required to be obtained under sections hereof (i.e. liability insurance and contents insurance), a waiver of all rights of subrogation which such insurer(s) of Tenant might have against Landlord.

16. Indemnification: Tenant shall indemnify and hold Landlord harmless from and against liability and claims of any kind for loss or damage to the property or business of Tenant or any other person, or for any injury to or death of any person, arising out of (a) Tenant's use and occupancy of the Premises, or any work, activity or other things allowed or suffered by Tenant to be done in, on or about the Premises; (b) any breach or default by Tenant of any of Tenant's obligations under this Lease; or (c) any negligent or otherwise tortious act or omission of Tenant, its agents, employees, invitees or contractors. Tenant shall, at Tenant's expense and by legal counsel satisfactory to Landlord, defend Landlord in any action or proceeding arising from any such claim, and shall indemnify Landlord against all costs, attorneys' fees, expert witness fees and any other expenses incurred in that action or proceeding As a material part of the consideration for Landlord's execution of this Lease, Tenant hereby assumes all risk of damage or injury to any person or property in, on or about the Premises from any cause, but Tenant shall not be liable for any damage or injury caused by the negligence of Landlord unless covered by insurance Tenant is required to provide.

17. Destruction or Damage: If the Premises or the portion of the Building necessary for Tenant's occupancy is damaged by fire, earthquake, act of God, the elements or other casualty, Landlord shall promptly repair the damage, subject to the provisions of this section, if those repairs can, m Landlord's opinion, be made within ninety (90) days. This Lease shall remain in effect and Tenant shall not be entitled to an abatement of Rent except to the extent Landlord receives proceeds from rent insurance which may be carried by Tenant.

If repairs cannot, in Landlord's opinion, be made in ninety (90) days, Landlord may elect, upon notice to Tenant within thirty (30) days after the date of the fire or other casualty, to repair that damage, in which case this Lease shall continue in effect, but Tenant shall be entitled to an abatement of Rent to the extent Tenant's use of the Premises is impaired, commencing with the date of the damage or casualty until completion of the repairs. If Landlord does not elect to make such repairs, this Lease shall terminate as of the date of such fire or other casualty.

A total destruction of the Building shall automatically terminate the Lease.

If the Premises are to be repaired under this section, Landlord shall repair at its cost any injury or damage to the Building itself and Tenant Improvements provided by Landlord. Tenant shall pay the cost of repairing any other improvements in the Premises and shall be responsible for carrying such casualty insurance as it deems appropriate with respect to those improvements.

This Lease shall be considered an express agreement governing any case of damage to or destruction of the Premises, Building or

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SmaruCool Systems USA. Inc. PRF 400#219 4'1!2006

Project by fire or other casualty, and any present or other casualty, and any present or future law which purports to govern the rights of Landlord and Tenant in such circumstances in the absence of express agreement, shall have no application.

18. Eminent Domain: In the case of the whole of the Premises, or such part thereof as shall substantially interfere with Tenant's use and occupancy thereof, shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or sold to prevent such taking, either party shall have the right to terminate this lease effective as of the date possession is required to be surrendered to said authority. Notice of such termination must be given thirty (30) days prior to the date possession is required to be surrendered. Tenant shall not assert any claim against Owner or the taking authority for any compensation because of such taking, and Owner shall be entitled to receive the entire amount of any award without deduction for any estate or interest of Tenant. In the event the amount of property or the type of estate taken shall not substantially interfere with the conduct of Tenant's business, Owner shall be entitled to the entire amount of the award without deduction for any estate or interest of Tenant, and Landlord at his option may terminate this Lease. If Landlord does not so elect, Landlord shall promptly proceed to restore the Premises to substantially their same condition as prior to such partial taking, and a proportionate allowance shall be made to Tenant for the rent corresponding to the time during which, and to the part of the Premises of which, Tenant shall be so deprived on account of such taking and restoration. Nothing contained in this paragraph shall be deemed to give Landlord any interest in any award made to Tenant for the taking of personal property and fixtures belonging to Tenant.

19. Transfer of Landlord's Interest: In the event of any sale or transfer by Landlord of the building or project of which the Premises are a part, assignment of this Lease by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Premises, or the Lease occurring after the consummation of that sale or transfer, provided the purchaser shall expressly assume all of the covenants and obligations of Landlord under this Lease. If any security deposit or prepaid rent has been paid by Tenant, Landlord may transfer the security deposit or prepaid rent to Landlord's successor and upon that transfer, Landlord shall be relieved of liability in connection with those rents and deposits.

20. Interest and Late Charges: If Tenant fails to pay when due any Rent or other amounts or charges which Tenant is obligated to pay under the terms of this Lease, those unpaid amounts shall bear interest at the maximum rate then allowed by law. IN ADDITION TO THAT INTEREST, TENANT ACKNOWLEDGES THAT THE LATE PAYMENT OF ANTY MONTHLY INSTALLMENT OF BASE RENT OR ADJUSTED BASE RENT WILL CAUSE LANDLORD TO LOSE THE USE OF THAT MONEY AND TO INCUR COSTS AND EXPENSES NOT CONTEMPLATED UNDER THIS LEASE, INCLUDING BUT NOT LIMITED TO ADMINISTRATIVE AND COLLECTION COSTS AND PROCESSING AND ACCOUNTING EXPENSES, THE EXACT AMOUNT OF WHICH IS EXTREMELY DIFFICULT TO ASCERTAIN. THEREFORE, IF ANY INSTALLMENT PAYMENT IS NOT RECEIVED BY LANDLORD WITHIN FIVE (5) DAYS FROM THE DATE THE INSTALLMENT IS DUE, TENANT SHALL PAY LANDLORD A LATE CHARGE EQUAL TO TEN PERCENT (10%) OF THAT INSTALLMENT. LANDLORD AND TENANT AGREE THAT THIS LATE CHARGE REPRESENTS A REASONABLE ESTIMATE OF LANDLORD'S COSTS AND EXPENSES AND IS FAIR COMPENSATION TO LANDLORD FOR THE LOSS SUFFERED BY REASON OF THAT NONPAYMENT BY TENANT. In addition, following any two (2) consecutive late payments of Rent and/or of additional payments due under this Lease, Landlord shall have the option (i) to require that Base Rent be paid three (3) months in advance, rather than monthly; or (ii) to require that Tenant increase the amount of the Security Deposit required under Section 30 by one hundred percent (100%) (or if there is no such Security Deposit, to pay Landlord a Security Deposit equal to three (3) months Base Rent), which additional Security Deposit shall be promptly paid to and retained by Landlord, and may be applied by Landlord in the manner provided in hereafter. All payments hereunder shall be made in lawful money of the United States. Furthermore, if any payment due from Tenant under this Lease is made by a check which is returned unpaid from the bank on which it is drawn, Landlord shall have the right at any time thereafter to insist that all future payments due from Tenant under this Lease be made by money order or by certified or cashier's check. All payments requiring proration shall be prorated on the basis of a thirty (30) day month. Acceptance of any interest or late charge shall not constitute a waiver of Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord from exercising any other rights or remedies available to Landlord under this Lease.

21. Taxes on Tenant's Property: Tenant shall be liable for and shall pay at least ten (10) days before delinquency, taxes levied against any personal property or trade fixtures placed by Tenant in or about the Premises. If any such taxes on Tenant's personal property or trade fixtures are levied against Landlord or Landlord's property or if the assessed value of the Premises is increased by the inclusion therein of a value placed upon such personal property or trade fixtures of Tenant then Landlord, after written notice to Tenant, shall have the right to pay the taxes based upon such increased assessments, regardless of the validity thereof, but only under proper protest if requested by Tenant in writing. If Owner shall do so, then Tenant shall, upon demand, repay to Landlord the taxes levied against Landlord, or the proportion of such taxes resulting from such increase in the assessment, In any such event, Tenant, at Tenant's sole cost and expense, shall have the right, in the name of Landlord and with Landlord's full cooperation, to bring suit in any court of competent jurisdiction to recover the amount of any such taxes so paid under protest, any amount so recovered to belong to Tenant.

22. Compliance with Law: Tenant shall, at Tenant's expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record, and requirements in effect during the term or any part of the term hereof, regulating the use by Tenant of the Premises. Tenant shall not use nor permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant in the building containing the Premises, shall tend to disturb such other tenants.

23. Rules and Regulations: Tenant agrees to comply with (and cause its agents, contractors, employees and invitees to comply with) the Parking and Building Rules and Regulations attached hereto as Exhibit "C" and the Professional Suite Tenant Guidelines attached hereto as Exhibit "E" and with such reasonable modifications of them and additions to them as Landlord may from time to time make. Landlord shall not be responsible for any violation of those rules and regulations by other tenants or occupants of the Stewart Plaza.

24. Sign Control: Tenant shall not affix, paint, erect or inscribe any sign, projection, awning signal or advertisement of any kind to any part of the Building, Premises, or Project. including without limitation, the inside or outside of windows or doors, without the written consent of Landlord, Landlord shall have the right to remove any signs or other matter installed without Landlord's permission, without being liable to Tenant by reason of that removal, and to charge the cost of removal to Tenant as additional rent hereunder, payable within ten (10) days of written demand by Landlord. Tenant shall keep any signs in good operating repair and maintenance and if lighted be responsible for related electrical charges.

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25. Brokers: Tenant warrants that it has had no dealings with any real estate broker or agents in connection with this Lease except that which has been disclosed on Exhibit "B" of this Lease.

26. Subordination and Attornment: Upon written request of Landlord, or any first mortgagee, first deed of trust beneficiary or Landlord, or ground lessor of Landlord, Tenant shall, in writing, subordinate its rights hereunder to the lien of any first mortgage, first deed of trust, or the interest of any lease in which Landlord is lessee, and to all advances made or hereafter to be made thereunder. However, before signing any subordination agreement, Tenant shall have the right to obtain from any lender or lessor of Landlord requesting that subordination, an agreement in writing providing that, as long as Tenant is not in default hereunder, this Lease shall remain in effect for the full Term. The holder of any security interest may, upon written notice to Tenant, elect to have this Lease prior to its security interest regardless of the time of the granting or recording of that security interest.

In the event of any foreclosure sale, transfer in lieu of foreclosure or termination of the lease in which Landlord is lessee, Tenant shall attom to the purchaser, transferee or lessor as the case may be, and recognize that party as Landlord under this Lease, provided that party acquires and accepts the Premises subject to this Lease.

27. Subordination and Attornment: Requirements of Landlord's Lender - Tenant acknowledges that the Premises described in Exhibit "A" of this lease are a part of the property known as Stewart Plaza and I) that Landlord has secured a loan from the following Lender, and 2) the loan is secured by Loan Documents including a Deed of Trust, Assignment of Rents, and other security instruments:

Wells Fargo Bank, N.A, as Master Servicer P.O. Box 7042

San Francisco, CA 94501

a. Subordination: Tenant agrees that the Lease and all terms and conditions contained therein and all rights, options, liens and charges created thereby is and shall be subject and subordinate in all respects to the Loan Documents and to all present or future advances under the obligations secured thereby and all renewals, amendments, modifications, consolidations, replacements and extensions of secured obligations and the Loan Documents, to the full extent of all amounts secured by the Loan Documents.

b. Attornment: Tenant agrees that, in the event of a exercise of the power of sale or foreclosure of the Deed of Trust by Lender or the acceptance of a deed in lieu of foreclosure by Lender or any other succession of Lender to ownership of the Premises, Tenant will attorn to and recognize Lender as its landlord under the Lease for the remainder of the term of the Lease (including all extension periods which have been or are hereafter exercised) upon the same terms and conditions as are set forth in the Lease, and Tenant hereby agrees to pay and perform all of the obligations of Tenant pursuant to the Lease.

c. Non Disturbance: Lender agrees that, if Lender exercises any of its rights under the Loan Documents such that it becomes the owner of the Premises, including but not limited to an entry by Lender pursuant to the Deed of Trust, a foreclosure of the Deed of Trust, a power of sale under the Deed of Trust or otherwise: the Lease shall continue in full force and effect as a direct lease between Lender and Tenant, and subject to all the terms, covenants and conditions of the Lease, and Lender shall not disturb Tenant's right of quiet possession of the Premises under the terms of the Lease so long as Tenant is not in default beyond any applicable grace period of any term, covenant or condition of the Lease.

d. Modification: If Tenant's leased Premises exceeds 6,200 rentable square feet, Tenant agrees that without the prior written consent of Lender, it shall not 1) amend, modify, terminate or cancel the Lease or any extensions or renewals thereof 2) tender a surrender of the Lease, 3) make a prepayment of any rent or additional rent more than one (1) month in advance of the due date thereof, or 4) subordinate or permit the subordination of the Lease to any lien subordinate to the Loan Document.

e. Notice of Landlord's Default Tenant shall promptly notify Lender, at the above address, of any default by Landlord under the Lease and of any act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease or to claim a partial or total eviction.

In the event of a default by Landlord under the Lease which would give Tenant the right, immediately or after the lapse of a period of time, to cancel or terminate the Lease or to claim a partial or total eviction, or in the event of any other act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease, Tenant shall not exercise such right 1) until Tenant has given written notice of such default, act or omission to Lender and 2) unless Lender has failed, within sixty (60) days after Lender receives such notice, to cure or remedy the default, act or omission or, if such default, act or omission shall be one which is not reasonable capable of being remedied by Lender within such sixty (60) day period, until a reasonable period for remedying such default, act or omission shall have elapsed following the giving of such notice and following the time when Lender shall have become entitled under the Security Instrument to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under the Lease or otherwise, after similar notice, to effect such remedy), provided that Lender shall with due diligence give Tenant written notice of its intention to and shall commence and continue to, remedy such default, act or omission. If Lender cannot reasonable remedy a default, act or omission of Landlord until after Lender obtains possession of the Premises, Tenant may not terminate or cancel the Lease or claim a partial or Total eviction by reason of such default, act or omission until the expiration of a reasonable period necessary for the remedy after Lender secures possession of the Premises. To the extent Lender incurs any expenses or other costs in curing or remedying such default, act or omission, including, without limitation, attorneys' fees and disbursements, Lender shall be subrogated to Tenant's rights against Landlord.

In the event of any foreclosure sale, transfer in lieu of foreclosure or termination of the lease in which Landlord is lessee, Tenant shall attorn to the purchaser, transferee or lessor as the case may be, and recognize that party as Landlord under this Lease, provided that party acquires and accepts the Premises subject to this Lease.

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28. Changes Requested by Lender: Neither Landlord nor Tenant shall unreasonably withhold its consent to changes or amendments to this Lease requested by Landlord's Lender, so long as those changes do not alter the basic business terms of this lease or otherwise materially diminish any rights or materially increase any obligations of the parties.

29. Default:

29.1. Tenant's Default: The occurrence of anyone or more of the following events shall constitute a default and breach of this Lease by Tenant:

a. If Tenant abandons or vacates the Premises; or

b. If Tenant fails to pay any Rent or any other charges when due and payable by Tenant; or

c. If Tenant fails to promptly and fully perform any other covenant condition or agreement contained in this Lease should such failure continue for thirty (30) days after written notice thereof from Landlord to Tenant; or

d. If Tenant is generally not paying its debts as they become due; or

e. If a writ of attachment or execution is levied on this Lease or on any of Tenant's personal property located within the Premises; or

f. If Tenant shall make a general assignment for the benefit of creditors, or provide for an arrangement, composition, extension or adjustment with its creditors; or

g. If Tenant shall file a voluntary petition for relief or if a petition against Tenant in a proceeding under the Federal Bankruptcy laws or other insolvency laws shall be filed and shall not be withdrawn or dismissed within forty-five (45) days; thereafter, or, if under the provisions of the law providing for reorganization or winding-up of corporations any court of competent jurisdiction shall assume jurisdiction, custody or control of Tenant or of any substantial part of its property and such jurisdiction, custody or control shall remain in force unrelinquished, unstayed or unterminated for a period of forty-five (45) days; or

h. If, in any proceeding or action in which Tenant is a party, a trustee, receiver, agent or custodian is appointed or takes possession with authority to take charge of the Premises or less than substantially all of Tenant's Property for the purposes of enforcing a lien against that property; or

i. If Tenant is a partnership or consists of more than one person or entity, if any partner of the partnership or other person or entity is involved in any of the acts or events described in subparagraphs "d" through "h" above.

29.2. Remedies: In the event of Tenant's default hereunder, in addition to any other rights or remedies Landlord may have under any law, Landlord shall have the right, at Landlord's option, without further notice or demand of any kind to do the following:

a. Terminate this Lease and Tenant's right to possession of the Premises and re-enter the Premises and take possession thereof, and Tenant shall have no further claim to the Premises or under this Lease; or

b. Continue this Lease in effect, re-enter and occupy the Premises for the account of Tenant, and collect any unpaid Rent or other charges which have or may thereafter become due and payable; or

c. Re-enter the Premises under the provisions of subparagraph "b". and thereafter elect to terminate this Lease and Tenant's right to possession of the Premises.

If Landlord re-enters the Premises under the provisions of subparagraph "b" or "c" above, Landlord shall not be deemed to have terminated this Lease or the obligation of Tenant to pay any Rent or other charges thereafter accruing, unless Landlord notifies Tenant in writing of Landlord's election to terminate Lease. In the event of any reentry or retaking of possession by Landlord, Landlord shall have the right, but not the obligation, to remove all or any part of Tenant's Property in the Premises and to place such property in storage at a public warehouse at the expense and risk of Tenant. If Landlord elects to re-lease the Premises for the account of Tenant, the rent received by Landlord from such re-leasing shall be applied as follows: first, to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; second, to the payment of any costs of such re-leasing; third, to the payment of the cost of any alterations or repairs to the Premises; fourth, to the payment of Rent due and unpaid hereunder; and the balance, if any, shall be held by Landlord and applied to payment of future Rent as it becomes due. If that portion of rent received from the re-leasing which is applied against the Rent due hereunder is less than the amount of the Rent due, Tenant shall pay the deficiency to the Landlord promptly upon demand by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as determined, any costs and expenses incurred by Landlord in connection with such re-leasing or in making alterations and repairs to the Premises, which are not covered by the rent received from the re-leasing.

Should Landlord elect to terminate this Lease under the provisions of subparagraph "a" or "c" above, Landlord may recover as damages from Tenant the following:

(1) The worth at the time of the award of any unpaid Rent which has been earned at the time of termination; plus

(2) The worth at the time of the award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of the rental loss that Tenant proves could have been reasonably avoided; plus

(3) The worth at the time of the award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of the rental loss that Tenant proves could be reasonably avoided; plus

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(4) Any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, any costs or expenses (including attorneys' fees), incurred by Landlord in (a) retaking possession of the Premises, (b) maintaining the Premises after Tenant's default, (c) preparing the Premises for re-leasing to a new tenant, including any repairs or alterations, and (d) re-leasing the Premises, including broker's commissions.

"The worth at the time of the award" as used in subparagraphs 1, 2 and 3 above, is to be computed by allowing interest at the rate often percent (10%) per annum. "The worth at the time of the award", as used in subparagraph 3 above, is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank situated nearest to the Premises at the time of the award plus one percent (]%),

The waiver by Landlord of any breach of any term covenant or condition of this Lease shall not be deemed a waiver of such term, covenant or condition or of any subsequent breach of the same or any other term, covenant or condition. Acceptance of Rent by Landlord subsequent to any breach hereof shall not be deemed a waiver of any preceding breach other than the failure to pay the particular Rent so accepted, regardless of Landlord's knowledge of any breach at the time of such acceptance of Rent. Landlord shall not be deemed to have waived any term, covenant or condition unless Landlord gives Tenant written notice of such waiver.

29.3. Landlord's Default: If Landlord fails to perform any covenant, condition, or agreement contained in this Lease within thirty (30) days after receipt of written notice from Tenant specifying such default, or if such default cannot reasonably be cured within thirty (30) days. if Landlord fails to commence to cure within that thirty (30) day period, then Landlord shall be liable to Tenant for any damages sustained by Tenant as a result of Landlord's breach; provided, however, it is expressly understood and agreed that if Tenant obtains a money judgement against Landlord resulting from any default or other claim arising under this Lease, that judgement shall be satisfied only out of the rents, issues, profits, and other income actually received on account of Landlord's right, title and interest in the Premises or in the Building of which the Premises are a part and the underlying real property, and no other real, personal or mixed property of Landlord (or of any of the partners, which comprise Landlord, if any) wherever situated, shall be subject to levy to satisfy any such judgment. If, after notice to Landlord of default, Landlord fails to cure a default as provided herein, then Tenant shall have the right to cure that default at Landlord's expense. Tenant shall not have the right to terminate this Lease or to withhold, reduce or offset any amount against payments of Rent or any other charges due and payable hereunder except as otherwise specifically provided herein.

30. Notices: All notices, approvals and demands permitted or required to be given under this Lease shall be in writing and deemed duly served or given if personally delivered or sent by certified or registered U.S. mail, postage prepaid, and addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and to the Building Manager, and (b) if to Tenant, to Tenant's Mailing Address; provided, however, notices to Tenant shall be deemed duly served or given if delivered or mailed to Tenant at the Premises. Landlord and Tenant may from time to time by notice to the other designate another place for the receipt of future notices.

31. Miscellaneous:

31.1. Accord and Satisfaction; Allocation of Payments: No payment by Tenant or receipt by Landlord of a lesser amount than the Rent shall be deemed to be other than on account of the earliest due Rent, nor shall any endorsement or statement on any check or any letter accompanying any check of payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of the Rent or pursue any other remedy provided in this Lease. In connection with the foregoing, however, Landlord shall have the absolute right, in Landlord's subjective, good faith discretion, to apply any payment received from Tenant to any account or other payment then not current and due or delinquent from Tenant.

31.2, Attorneys' Fees: If any action or proceeding is brought by either party against the other pertaining to or arising out of this Lease, the finally prevailing party shall be entitled to recover all costs and expenses, including reasonable attorneys' fees, incurred on account of such action or proceeding.

31.3. Choice of Law: This Lease shall be construed in accordance with the laws of the State of California.

31.4. Corporate Authority: If Tenant is a corporation, each individual executing this Lease on behalf of that corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of that corporation, and that this Lease is binding on that corporation in accordance with its terms. Tenant shall, at Landlord's request, deliver a certified copy of a resolution of its board of directors authorizing such execution.

31.5. Counterparts: This Lease may be executed in multiple counterparts, all of which constitute one and the same instrument.

31.6. Furnishing of Financial Statements; Tenant's Representations: Upon Landlord's written request, Tenant shall promptly fumish Landlord, from time to time, with financial statements reflecting Tenant's current financial condition. All financial statements, records, and information furnished by Tenant to Landlord in connection with this Lease are true, correct, and complete in all respects, and have been submitted to Landlord to induce Landlord to enter this Lease.

31.7. Further Assurances: The parties agree to promptly sign all documents reasonably required to give effect to the provisions in this Lease. Further, Tenant hereby appoints the general partners of Landlord as Tenant's attorney in fact for the limited purposes of signing all parcel and tract maps, Covenants, Conditions and Restriction, and other documents reasonably required in connection with the development, management or operation of the Project. Any party not signing a document as required hereunder within ten (10) days of a request therefor shall be in material default under this Lease.

31.8. Name: Tenant shall not, without the written consent of Landlord, use the name of the Building or Project for any purpose other than as the address of the business to be conducted by Tenant in the Premises, and in no event shall Tenant acquire any rights in or to such names.

31.9. No Light. Air or View Easement: Any diminution or shutting off of light, air or view by any structure which may be erected

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SmaruCool Systems USA. Inc. PRF 400#219 4'1!2006

on land adjacent to the Building or Project shall in no way affect his Lease or impose any liability on Landlord.

31.10. Prior Agreements; Amendments: This Lease contains all of the agreements of the parties with respect to any matter covered or mentioned in this Lease, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Lease may be amended or added to except by an agreement in writing signed by the parties or their respective successors in interest.

31.11. Recording: Tenant shall not record this Lease without the prior written consent of Landlord. Tenant, upon the request of Landlord, shall execute and acknowledge a "short form' memorandum of the Lease for recording purposes.

31.12. Riders: If any provision contained in a rider or addenda to this Lease is inconsistent with any other provision herein, the provision contained in the rider or addenda shall control, unless otherwise provided in said rider or addenda.

31.13. Severability: A final determination by a court of competent jurisdiction that any provision of this Lease is invalid shall not affect the validity of any other provision, and any provision so determined to be invalid shall, to the extent possible, be construed to accomplish its intended effect.

31.14. Successors, Assigns, and Subletting: This Lease shall apply to and bind the heirs, personal representatives, and permitted successors and assigns of the parties. Tenants shall not assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest therein, and shall not sublet the Premises or any part thereof, without the prior written consent of Owner and any attempt to do so without such consent being first had and obtained shall be wholly void and shall constitute a breach of this Lease.

31.15. Surrender or Cancellation: The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall terminate all or any existing subleases, unless Landlord elects to treat that surrender or cancellation as an assignment to Landlord of any or all of such subleases.

31.16 Hazardous Materials: If any hazardous materials are or become present in the Premises or the building (or the underlying soil or groundwater) and such presence was caused by Tenant, Tenant shall protect, indemnify, defend and hold Landlord harmless from and against any and all claims, liability, loss, costs, damages, causes of actions, proceedings or expenses (including attorneys fees) in connection with such hazardous materials.

31.17. Waiver: No delay or omission in the exercise of any right or remedy of Landlord on any default by Tenant shall impair such a right or remedy or be construed as a waiver. The receipt and acceptance by Landlord of delinquent Rent shall not constitute a waiver of any other default: it shall constitute only a waiver of timely payment for the particular Rent payment involved, No act or conduct of Landlord, including, without limitation, the acceptance of keys to the Premises, shall constitute an acceptance of the surrender of the Premises by Tenant before the expiration of the Term. Only a notice from Landlord to Tenant shall constitute acceptance of the surrender of the Premises and accomplish a termination of the Lease. Landlord's consent to or approval of any act by Tenant requiring Landlord's consent or approval shall not be deemed to waive or render unnecessary Landlord's consent to or approval of any subsequent act by Tenant. Any waiver by Landlord of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of the Lease.

[No Further Text on this Page; Signature Page Follows]

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SmattCool SvSlems USA, Inc. PRF 400219 4!112006

TENANT:

MAILING ADDRESS: (for notices)

MAILING ADDRESS: (for notices)

The parties hereto have executed this Lease on the date first above written.

SmartCool Systems USA, Inc. 400 N. Mountain Ave., Suite 219 Upland, CA 91786

By: ____________________________________          Date: _________________

George Burnes, President

LANDLORD: Stewart Plaza, LLC, a California Limited Liability Company

Stewart Plaza

400 N. Mountain Ave., Suite 200 Upland, CA 91786 Attn: Building Manager

By: W. R. Lee Development, a California Corporation, Manager

By:

  

         

William R. Lee, President

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SmartCool Systems USA, Inc. PRF-EX 41112006

EXHIBIT "A"

Premises, Term and Use

BLDG. NO: 5 PROJECT: STEWART PLAZA, having a total of 7 buildings. 

BLDG. LEGAL DESCRIPTION:

Bldg. 5, Parcel 5 of Tract Map 13042

Mailing Address: 400 N. Mountain Ave., Suite 219 Upland, Ca 91786

SUITE DESCRIPTION (PREMISES): Suite 219 of the above described Building and Project, having an area of 230 rentable square feet, as set forth on the attached plans, (marked Exhibit "D") plus a non­exclusive use of the common areas. Suite size is determined by Landlord's architect utilizing BOMA standards for office/retail building measurements.

TERM: The term of this lease will be *twelve (12) months commencing on April 1, 2006, and expiring on March 31, 2007, subject only to written options or extension provisions signed by the parties to this lease. The commencement and expiration dates may change based upon an earlier or later date of occupancy of the suite. Any change of date will be in letter form from the Landlord.

*Tenant may terminate this lease with thirty (30) days written notice to Landlord.

SUBSTITUTED PREMISES: Landlord reserves the right, upon not less than sixty (60) days prior written notice to Tenant, to substitute for the Premises some other premises within the Stewart Plaza Project having substantially equivalent net rentable area as the Premises, subject to a 15% variation, provided that Landlord shall pay all expenses reasonably incurred in removing Tenant's property to such new location, and upon the expiration of such written notice, such other premises shall be substituted for the Premises for all purposes under this Lease. Landlord shall not be obligated to Tenant for any losses resulting from business interruptions or failures or lost revenues or other losses resulting from the substitution of Premises, and Tenant agrees to hold Landlord harmless against any such losses.

HOLDING OVER: If Tenant remains in possession of the Premises or any portion thereof after the expiration of the term hereof or any extension, with the express written consent of the Landlord, such occupancy shall be a tenancy from month to month at a rental rate equal to one hundred and twenty percent (120%) of the rent payable immediately preceding the expiration of the Lease.

USE: Tenant shall use the Suite for the purpose of general office use.

This Exhibit is made a part of and incorporated in that certain Lease dated April 1, 2006 between the following parties:

LANDLORD: Stewart Plaza, LLC, 

 a California Limited Liability Company

Initial ________ 

TENANT:

SmartCool Systems USA, Inc.

a Nevada Corporation

Initial ________ 

Exhibit "C" 

Page 2 of 3

EXHIBIT "B"

Rent, Security Deposit

BASE RENT: Tenant's base rent for the rentable space described in Exhibit "A" shall be $518.00 per month. Monthly rents are due in advance on the first (1st) of the month and are delinquent if not received by the fifth (5) of the month. The base rent for this suite includes eight (8) hours per month free use of the second floor conference room as referenced in Exhibit "E", Section 9.C to this lease.

SECURITY DEPOSIT: Tenant shall pay a Security Deposit in the amount of $518.00 upon lease execution.

This Exhibit is made a part of and incorporated in that certain Lease dated April 1, 2006 between the following parties:

LANDLORD:   Stewart Plaza, LLC,

a California Limited Liability Company

Initial__________

TENANT:

SmartCool Systems USA, Inc.

Initial__________

a Nevada Corporation

SrrarsCoo! Systems USA. Inc. PRF-EX411/2006

Exhibit "C" 

Page 2 of 3

EXHIBIT "C"

RULES AND REGULATIONS

1. No sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building without the prior written consent of the Landlord. Landlord shall have the right to remove, at Tenant's expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person chosen by Landlord. A directory of the Building will be provided exclusively for the display of the name and location of tenants only, and Landlord reserves the right to exclude any other names therefrom.

2. Non-smoking Buildings: In response to requests by a vast majority of our tenants, and because of the overwhelming research data indicating that smoking or secondary smoke is a serious health hazard, we are designating our buildings as non­smoking. Appropriate signs are placed in areas throughout the buildings and smoking receptacles are conveniently located outside the buildings.

We urge all tenants to take a strong supportive stance on this critical health issue,

3. If Landlord objects in writing to any curtains, blinds. shades, screens or hanging plants or other similar objects attached to or used in connection with any window or door of the Premises, Tenant shall immediately discontinue such use. No awning shall be permitted on any part of the Premises. Tenant shall not place anything against or near glass partitions or doors or windows which may appear unsightly from outside the Premises.

4. Special Events: In the past tenants have requested the use of the courtyard and/or common areas of the plaza for special events. A special event is any temporary use of the building or premises outside a tenants suite. Tenant to contact the Administrative office for the costs and security deposits required for use of the above referenced areas. The following are the procedures for events held at Stewart Plaza.

PROCEDURES:

·

Provide Stewart Plaza with a Special Events Permit from the city of Upland Planning Department, (inquire at 909-982-1352).

·

Provide Stewart Plaza with a "Special Events" liability insurance certificate naming Stewart Plaza Limited Partnership as an additional insured.

·

Take proper measures to assure pedestrian and auto traffic safety during the event.

·

Taking full responsibility for any and all maintenance and repair work caused as a result of the event.

·

The general fire code rule of maximum of one person in occupancy per each 100 square foot of space should be observed unless an exception is granted by the Upland Fire Department.

5. If Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain, and comply with, Landlord's instructions in their installation,

6. Landlord will direct electricians as to where and how telephone, telegraph or other wires are to be introduced. No boring or cutting for wires will be allowed without the consent of Landlord. The location of telephones, call boxes, and other office equipment affixed to the premises shall be subject to the approval of Landlord.

7. Tenant shall not install any radio or television antenna, loudspeaker or other devices on the roof or exterior walls of the Building. Tenant shall not interfere with radio or television broadcasting or reception from or i n the Building or elsewhere.

8. Tenant shall not use any method of heating or air-conditioning other than that supplied by Landlord. Tenant shall not waste electricity, water or air-conditioning and agrees to cooperate fully with Landlord to assure the most effective operation of the Building's heating and air-conditioning and to comply with any governmental energy-saving rules, laws or regulations of which Tenant has actual notice, and shall refrain from attempting to adjust controls. Tenant shall keep corridor doors closed, and shall close window coverings at the end of each business day.

Tenant shall not allow smoking by employees or Tenant's visitors in common areas of the building, including corridors and halls, lunch rooms, restrooms, etc.

9. All cleaning and janitorial services for the Building and the Premises shall be provided exclusively through Landlord, and except with the written consent of Landlord, no person or persons other than those approved by Landlord shall be employed by Tenant or permitted to enter the Building for the purpose of cleaning the same. Tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Premises. Landlord shall not in any way be responsible to any Tenant for any loss of property on the Premises, however occurring, or for any damage to any Tenant's property by the janitor or any other employee or any other person.

10. The requirements of Tenant will be attended to only upon appropriate application to the office of the Building by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord, and no employee of Landlord will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord.

11. Tenant shall store all its trash and garbage within its Premises. Tenant shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Landlord.

12. Canvassing. soliciting and distribution of handbills or any other written material, and peddling in any Building at Stewart Plaza are prohibited, and each tenant shall cooperate to prevent same. Tenant shall not make any room-to-room solicitation of business from other tenants in the Building. Tenant shall not use the Premises for any business or activity other than that specifically provided for in Tenant's Lease.

13. No cooking shall be done or permitted by any tenant on the Premises, except that use by Tenant of Underwriters' Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar beverages shall be permitted, provided that such equipment and use is in accordance with all applicable federal, state, county and city laws, codes, ordinances, rules and regulations. The premises shall not be used for the storage of merchandise, for washing clothes, for lodging, or for any improper, objectionable, or immoral purposes.

14. Tenant shall not install, maintain or operate upon the Premises any vending machine without the written consent of the Landlord,

15. Tenant shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Landlord shall have the right to prescribe the weight, size and position of all equipment, materials, furniture or other property brought in the Building. Heavy objects shall, if considered necessary by Landlord, stand on such platforms as determined by Landlord to be necessary to properly distribute the weight. Business machines and mechanical equipment belonging to Tenant, which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree to be objectionable to the Landlord or to any other tenants in the Building, shall be placed and maintained by Tenant, at Tenant's expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration.

The persons employed to move such equipment in or out of the Building must be acceptable to Landlord. Landlord will not be responsible for loss of, or damage to, any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of Tenant. Tenant shall not use in any space or in the public halls of the Building any hand truck except those equipped with rubber tires and side guards or such other material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles of any kind into the Building.

16. Tenant and Tenant's employees shall not use or keep in the Premises any kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities necessary for the operation or maintenance of office equipment. Tenant shall not use or permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Owner or other occupants of the Building by reason of noise, odors or vibrations, nor shall Tenant bring into or keep in or about the Premises any birds or animals.

17. Tenant shall not park its vehicles in any parking areas designated by Landlord as areas for parking by visitors or customers to the Building. Tenant shall not leave vehicles in parking areas overnight nor park any vehicles in the parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles or four-wheeled trucks.

18. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, or stairways of the Building. Landlord shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation and interest of the Building and its tenants; provided that nothing herein contained shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities, No tenant and no employee or invitee of any tenant shall go upon the roof of the Building.

19. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be home by the Tenant who, or whose employees or invitees, shall have caused it.

20. An elevator shall be available for use by all tenants in the Building, subject to such reasonable scheduling as Landlord in its discretion shall deem appropriate. No equipment, materials, furniture, packages, supplies, merchandise or other property will be received in the Building or carried in the elevator except between such hours as may be designated by Landlord.

21. Landlord reserves the right to exclude from the Building between the hours of 6 p.m. and 7 a.m. the following day, or such other hours as may be established from time to time by Landlord, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the Building and has a pass or is properly identified. Tenant shall not leave any building access doors in an open position, unless properly attended. Tenant shall be responsible for all persons for whom it requests passes or permits access and shall be liable to Landlord for all acts of such persons. Landlord shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. Landlord reserves the right to prevent access to the Building in case of invasion, mob, riot, public excitement or other commotion by closing the doors or by other appropriate action.

Stewart Plaza observes the following holidays: New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the following Friday and Christmas Day.

22. Landlord will furnish Tenant, free of charge, with two keys to each door lock in the Premises. Landlord may make a reasonable charge for any additional keys. Tenant shall not make or have made any additional keys, and Tenant shall not alter any lock or install a new additional lock or bolt on any door of its Premises. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys of all doors which have been famished to Tenant, and in the event of loss of any keys so furnished, shall pay Landlord therefor.

23. Tenant shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus, and electricity, gas or air outlets before tenant and its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this rule. Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

24. Special Rules Relating to "Professional Suite " Tenants: Rules exclusive to professional suite tenants are described in the Professional Suite Tenant Guidelines, marked Exhibit "E", of this Lease, if applicable.

Exhibit "C" Page 3 of 3

a. To have pass keys to the Premises and all doors within the Premises, excluding Tenant's vaults and safes;

b. At any time during the term, and on reasonable prior notice to Tenant to show the Premises to any prospective purchaser or mortgagee of the Project, or to any assignee of any mortgage on the Project, or to others having an interest in the Project or Landlord, and during the last six months of the Term, to show the Premises to prospective tenants thereof; and

c. To enter the Premises for the purpose of making inspections, repairs, alterations, additions or improvements to the Premises of the Building (including, ut limitation, checking, calibrating, adjusting or balancing controls and other parts of the HVAC system), and to take all steps as may be necessary or desirable for the safety, protection, maintenance or preservation of the Premises or the Building or Landlord's interest therein, or as may be necessary or desirable for the operation or improvement of the Building or in order to comply with laws, orders or requirements of governmental or other authority. Landlord agrees to use its best efforts (except in an emergency) to minimize interference with Tenant's business in the Premises in the course of any such entry,

26. Without the written consent of Landlord, Tenant shall not use the name of the Building in connection with or in promoting or advertising the business of Tenant except as Tenant's address. Landlord reserves the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Building.

27. Landlord reserves the right to make such other and reasonable Rules and Regulations as, in its judgment, may from time to time be needed for safety and security, for care and cleanliness of the Building and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations hereinabove stated and any additional rules and regulations which are adopted.

28. Landlord may waive any one or more of these Rules and Regulations for the benefit of Tenant or any other tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of Tenant or any other tenant, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building.

29. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of premises in the Building.

30. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant's employees, agents, clients, customers, invitees and guests.

This Exhibit is made a part of and incorporated in that certain Lease dated April 1, 2006.

LANDLORD: Stewart Plaza, LLC, 

Initial __________

                         California Limited Liability Company

TENANT: SmartCool Systems USA, Inc.,

Initial __________

                   a Nevada Corporation

SrrarsCoo! Systems USA. Inc. PRF-EX411/2006

Exhibit "D"

Floor Plan

      400 N. Mountain Ave., Suite 219

This Exhibit is made a part of and incorporated in that certain Lease dated April 1, 2006 between the following parties:

LANDLORD: Stewart Plaza, LLC,

Initial __________

                         California Limited Liability Company

TENANT: SmartCool Systems USA, Inc.,

Initial __________

                   a Nevada Corporation

SrrarsCoo! Systems USA. Inc. PRF-EX411/2006

Exhibit "E"

Page 1 of 3

EXHIBIT “E”

Professional Suite Tenant Guidelines

Welcome to Stewart Plaza.  We are pleased to have you and your company here.

The following information will assist you in taking full advantage of the services and facilities offered to professional suite tenants of Stewart Plaza.  If you have any questions, please contact:  Administrative Office, 400 N. Mountain Ave., Suite 200, at (909) 982-1803.

1.  KEYS AND LOCKS:

Your door key will open your suite and the photocopy/kitchen.

There is an initial key charge of $25.00 per cylinder, with the issuance of 2 keys per cylinder.  All keys will be stamped “DO NOT DUPLICATE”.  If more keys are needed, tenant will pay the prevailing charge for duplicate keys.

Stewart Plaza is not responsible for changing any lock for any reason, including, but not limited to, the loss or theft of the master key or any other key that opens a tenant’s door.

2.  ENTRANCE DOORS:

The main entrance doors to the building are on timers.  The doors unlock automatically at approximately 6:30 a.m. and lock at approximately 8:30 p.m., Monday through Friday.  On Saturday the building unlocks at 7:30 a.m. and locks at 4:00 p.m. and on Sunday the doors are locked all day.  Use your access card for entry when the doors are locked.  Lock down times are subject to change, please check with the Administration Office if you have any questions.

There is a $15.00 charge for each access card issued.  If your access card is misplaced or stolen or additional cards are issued, a $ 15.00 fee will be charged to issue each replacement or additional card.  For each access card returned $15.00 will be refunded.

3.  FIRE REGULATIONS:

Fire code limits office occupancy to 1 person for each 100 square feet of office space and requires that suite doors be kept closed.

Do not use standard three outlet, thin extension cords.  The Fire Department recommends heavy, multiple outlet cords containing push-to-reset circuit breakers, which prevent overloads.  Fire regulations also prohibit the use of space heaters.  Please contact the office if the temperature in your suite is uncomfortable.

4.  MAINTENANCE/REPAIRS:

Janitorial services are provided Sunday through Thursday evenings.

Please report any repair problems to either the administrative office or maintenance manager.

5.  TELEPHONE INSTALLATION & REPAIRS:

Tenant shall be responsible for its own telephone installation and monthly service charges from the telephone company by reason of Tenant’s lines being connected to the building, whether billed to Landlord or Tenant.  Any telephone expense billed to Tenant (including any telephone company double charge) shall be paid or reimbursed by Tenant to Landlord.  If Tenant desires any other telephone outlet not already provided, Tenant will pay the Building’s relocation charge and any additional conduit and electrical work charges.

If the telephone company does not install Tenant's phone on or before the commencement date of this Lease, the commencement date shall not be extended, nor shall rent be abated.

Landlord acknowledges that Tenant's separate number connected to the building belongs to Tenant. If. upon termination of this Lease, the telephone company requires Landlord's signature to assign said telephone number to Tenant, Tenant may sign Landlord's name to the telephone company form. Call the telephone company direct to order your phone lines, then contact Stewart Plaza's Administration office to arrange for interior installation,

The current telephone provider will bill each tenant directly for monthly service and the installation charges for bringing dial tone to the building. Interior installation charges billed through Stewart Plaza are $75.00 per hour.

6.  KITCHEN/COFFEE SERVICES:

Snack and drink vending machines, microwave and refrigerator are located in the photocopy/kitchen area. Please report any malfunctions to the office. We would appreciate your assistance in keeping the appliances and counter tops in this area clean.

SrrarsCoo! Systems USA. Inc. PRF-EX411/2006

Exhibit "E"

Page 2 of 3

7.  DOOR SIGN AND LOBBY DIRECTORY:

Door signs are required by the Fire Department for every suite. Tenant cost for door/directory signs is $100.00,

Each professional suite sign package includes one 8 x 8 door sign; and three directory signs, as follows: one line on the main lobby directory, one line on the second floor reception directory and one line for the pigeonhole message center. Additional lines, at a cost of $20.00 each, may be ordered for the main lobby directory only with Landlord approval.

The cost to change the lettering of the door sign is $35.00; the cost to change a directory strip is $20.00. 8. 8. 8.  WAITING AREA/MESSAGE CENTER:

A pigeonhole message center is located in the waiting area just off the second floor elevator. Messages, courier packages and other correspondence may be left for pick-up or delivery by tenants or their clients during regular business hours. Each professional suite tenant will have one assigned message slot with a nameplate.

Federal Express and U.P.S attempt delivery to tenant offices first, if tenants are not in, packages can be signed for by the administrative office (with tenant permission) and placed in the tenant message center slot located in the waiting area or held in the administration office for tenant pick-up.

Tenant acknowledges the Landlord is not responsible for the loss or theft of messages, packages or correspondence left at the message center or in the administration office.

No one is admitted into a tenant suite without express permission from the Tenant.

A tenant telephone directory board is located next to the message center. Tenants may be reached by clients from the waiting area phone by dialing the appropriate code number as listed on this directory.

9.  BUILDING SERVICES:

Tenant may use the copying facilities offered by Landlord with the express understanding that Tenant agrees to pay the prevailing rates for this set-vice when rendered. Costs for said service shall be billed once a month and shall become rent due

and owing at the same time rent is due under the Lease. In the event Landlord finds it necessary to commence legal proceedings to recover possession of the subject space, rent or other damages, it is expressly understood and agreed by

Tenant that costs for the copy services shall be recoverable as rent. Tenant recognizes that there may be mechanical failure or personal illnesses, vacancies or other contingencies which may result in a delay or discontinuance of this service and that

Landlord is therefore not responsible for any disruption for Tenant's business. Prices for building services are subject to change without notice.

A. Photocopy Services:

Each tenant is issued a five-digit code that activates the photocopy machine and bills copies to their account at the then current rate per copy. If you have any questions about the machine, the Administrative Office can assist you.

B. Mail Service:

The mailroom with Tenant mailboxes is located on the first floor.

Each tenant will receive one mailbox key, there is a $15.00 charge for this key. If the key is misplaced or stolen, a $15.00 fee will be charged for each additional mailbox key issued. It is advisable to keep your key in a central location preventing its removal from the office when an employee is out. For each mailbox key returned $15.00 will be refunded,

The mail is delivered to the building at approximately 11:30 a.m. each day. Outgoing mail can be placed in anyone of the three outgoing mail slots. The postal carrier places large packages in a parcel box. The key to the parcel box is left in your mailbox. After you've removed your package front the parcel box, the key will stay in the lock.

There are three large mailboxes located near the southwest corner of the building. Mail is picked-up Monday through Friday at 5:00 p,m.

There are Federal Express and U.P.S. drop boxes located in the mailroom on the first floor of the 400 building. Federal Express picks-up daily at approximately 5:00 p.m. and U.P.S. picks-up at approximately 4:00 p.m. Federal Express and U.P.S mailing supplies are provided at the drop boxes.

SrrarsCoo! Systems USA. Inc. PRF-EX411/2006

Exhibit "E"

Page 3 of 3

C. Conference Room:

The conference room, located on the 2nd floor of the 400 building, is available to Professional Suite Tenants free of charge for up to eight (8) hours per month. Any use of the conference room after the first eight (8) free hours in a month will be billed at $25.00 per hour, Tenants may use the conference room on a reservation basis or without reservations if not previously reserved. Tenants may not have standing or permanent reservation of the conference room. Tenant understands the conference room is for meetings, depositions, or other conferences and is not to be used for lunches, or any other purpose which causes loud noise, offensive odors or any other environmental situation which disturbs other tenants. Make all reservations through the Stewart Plaza Administration office. Please straighten up the conference room when you are finished using it.

10. HOLIDAYS:

Stewart Plaza observes the following holidays: New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The building entry doors lock down on the above days with entry by access card.

Tenants will be notified in advance of any changes to the above schedule, 11. 11.  BILLING:

Rent is due on the 1st of the month and late if not paid by the 5th. Checks should be made payable to Stewart Plaza and left in the administration office or mailed to Stewart Plaza, 400 N. Mountain Ave., Suite 200, Upland, CA 91786. Building services will be itemized and included on your monthly invoice.

RECAP OF START-UP CHARGES:

1.

Inside phone installation at approximately $75.00 per hour (optional). 2. Door and directory signs $100.00. 3. Door key charge $25.00 per cylinder 4. Mailbox key charge S 15.00 per key issued. 5. Access card charge $15.00 per card issued. 6. Refundable Deposits:

a)

Suite Deposit (usually equal to one month's rental amount).

RECAP OF MONTHLY BILLABLE CHARGES:

I.

Monthly Rent

2.

Building Services:

a)

Photocopies at the then current rate per copy.

 b)

Changes in phone service - physical moves and changes approximately S75.00/hour for first hour, thereafter billed in 114 hour increments,

c)

Conference room $25.00/hour, after initial eight (8) free hours in a month.

This Exhibit is made a part of and incorporated in that certain Lease dated April 1, 2006.

LANDLORD: Stewart Plaza, LLC,

Initial __________

                         California Limited Liability Company

TENANT: SmartCool Systems USA, Inc.,

Initial __________

                   a Nevada Corporation

SrnartCoof Systems USA, Inc. PRF-EX 411/2006

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