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3389 Lease Agreement - A BY-LAW to enter into a lease agreement with Ontario Realty CorporationLll794 I FORM OF LEASE DATED: January !, 2009 TilE CORPORATION OF THE TOWN OF TILLSONBURG -and- HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF ENERGY AND INFRASTRUCTURE I Dundas Street West Suite 2000 Toronto, Ontario M5G 2L5 NET OFFICE LEASE Ontario Realty Corporation One Stone Road West 4th Floor Guelph, Ontario NIG 4Y2 ORC-07/08 ' ' OFFICE LEASE TABLE OF CONTENTS SUMMARY'" .. '".'" .................... '".'" .. '"'"'".'"'"'"'"'" .. '" ........................................................................... 1 DEFINITIONS .............................................................................................................................. 3 ARTICLE 1 PREMISES ............................................................................................................... 7 ARTICLE 2 TERM ........................................................................................................................ 7 ARTICLE 3 NET RENT ................................................................................................................ 8 Section 3.1 8 Section 3.2 8 ARTICLE 4 TENANT'S COVENANTS ...................................................................................... 8 Section 4.1 Net Rent. .............................................................................................................. 8 Section 4.2 Payment of Realty Taxes ..................................................................................... 8 Section 4.3 Payment of Operating Costs ................................................................................ 8 Section 4.4 Compensation for Damage .................................................................................. 8 Section 4.5 Notice of Defect .................................................................................................. 9 Section 4.6 Entry by Landlord ............................................................................................... 9 Section 4.7 Assign or Sublet .................................................................................................. 9 Section 4.8 Use of Premises ................................................................................................... 9 Section 4.9 Not to Affect Insurance ....................................................................................... 9 Section 4.10 Tenant's Compliance with Laws ....................................................................... 10 Section 4.11 Waste ................................................................................................................. 10 Section 4.12 Nuisance ............................................................................................................ 10 Section 4.13 Tenant's Indenmity ........................................................................................... 10 Section 4.14 Insurance ........................................................................................................... 10 Section 4.15 Exhibiting Premises ........................................................................................... 10 Section 4.16 Facilitate Cleaning ............................................................................................. 10 Section 4.17 Construction Lien .............................................................................................. 10 Section 4.18 Premises Repair ................................................................................................. 11 ARTICLE 5 LANDLORD'S COVENANTS ............................................................................... 11 Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 Section 5.10 Section 5.11 Section 5.12 Quiet Enjoyment ............................................................................................... 11 Taxes and Adjustments (of Realty Taxes and Operating Costs) ....................... 11 Services and Facilities ....................................................................................... 11 Access ................................................................................................................ 13 Repair ................................................................................................................ 13 Telephone Installation and Communications Systems ...................................... 14 Tenant Improvements ........................................................................................ 14 Landlord Improvements .................................................................................... 14 Energy Conservation ......................................................................................... l5 Indenmity & Release ......................................................................................... 16 Compliance with Laws ...................................................................................... 16 Insurance ........................................................................................................... 16 Section 5.13 No Environmental Contaminants ...................................................................... 17 Section 5.14 Section 5.15 Section 5.16 Section 5.17 Section 5.18 Section 5.19 Section 5.20 Section 5.21 Section 5.22 Section 5.23 Section 5.24 Section 5.25 Section 5.26 Environmental Contaminants ............................................................................ l8 Notification of Environmental Contaminants ................................................... 19 Warranty ............................................................................................................ l9 Asbestos ............................................................................................................ 20 Environmental Indenmity ···············································································;?~}; Additional Services ·····················································································'",, ... ;!J, Consent and Approval .................................................................................. \~· .. Zc;!, Waste Management and Recycling Program ............................................... :(\-·· 22 : , Parking ......................................................................................................... 5;". 22 ' Landlord's Records and Tenant's Audit Rights .............................................. ::22' ,,, Landlord Transfer ........................ '"'.'" .. '" .. '" .. '".'"'.'"'.'" .. '"'"'.'".'"'.'".'".'".'".'".'".'".''" .. ~2 Landlord to Communicate Directly with Tenant '"'"'"'"'"'"'"''"'"'"'"'"'"'"'"'"'"'"'"'"'"::.23 Conflict of Interest . '" .. '" .. '".'" .. '" .. '"'.'" .. '". '"' .. '" ..... '"'.'" .. '".'" .. '".'".'". '"'.'".'".'".'".'".'" .... 23 P-i ARTICLE 6 PROVISOS ............................................................................................................. 23 Section 6.1 Overholding ....................................................................................................... 23 Section 6.2 Trade Fixtures Furniture .................................................................................... 23 Section 6.3 Signs .................................................................................................................. 24 Section 6.4 Unavoidable Delays .......................................................................................... 24 Section 6.5 Right-of-Way .................................................................................................... 24 Section 6.6 Common Parking ............................................................................................... 24 Section 6.7 Damage and Destruction ................................................................................... 25 Section 6.8 Leasehold Improvements by Landlord at request ofTenant ............................. 26 Section 6.9 Removal of Leasehold Improvements ............................................................... 26 Section 6.10 Re-Entry ............................................................................................................ 26 Section 6.11 Landlord's Default ............................................................................................ 26 Section 6.12 Option to Extend ............................................................................................... 27 Section 6.13 Arbitration ......................................................................................................... 27 Section 6.14 Additional Space ............................................................................................... 28 Section 6.15 Non-Waiver ....................................................................................................... 28 Section 6.16 Non-Disturbance Agreement. ............................................................................ 28 Section 6.17 Notices ............................................................................................................... 28 Section 6.18 Entire Agreement .............................................................................................. 28 Section 6.19 Registration ....................................................................................................... 28 Section 6.20 Severability ........................................................................................................ 29 Section 6.21 Interpretation ..................................................................................................... 29 Section 6.22 Headings and Captions ...................................................................................... 29 Section 6.23 Effect of Lease .................................................................................................. 29 Section 6.24 Survival of Agreement ...................................................................................... 29 Section 6.25 Binding on Tenant ............................................................................................. 29 Section 6.26 Governing Law .................................................................................................. 29 Section 6.27 Time of Essence ................................................................................................ 29 Section 6.28 Freedom of Information .................................................................................... 29 Section 6.29 Certificates ........................................................................................................ 29 Section 6.30 Reasonableness .................................................................................................. 30 SCHEDULE "A" SCHEDULE "B" SCHEDULE "C" SCHEDULE "D" SCHEDULE "E" SCHEDULE "F" SCHEDULE "G" SCHEDULE "H" SCHEDULE "I" SCHEDULE "J" SCHEDULE "K" SCHEDULE "L" SCHEDULE "M" SCHEDULE "M-1'' SCHEDULE "N" SCHEDULE "0" SCHEDULE "P" SCHEDULE "Q" SCHEDULE "R" SCHEDULES LEGAL DESCRIPTION OF THE LANDS FLOOR PLAN FRIABLE MATERIAL OPERATING COSTS REPORT REPORT REALTY TAX ADJUSTMENTS ELECTRICAL REQUIREMENTS HVAC, PLUMBING AND DRAINAGE, FIRE PROTECTION SYSTEMS WASTE MANAGEMENT CONSERVATION OF ENERGY THE TENANT UNDERTAKE TENANT'S IMPROVEMENTS EHQUJ.Q TH~ k*.d'!Q!sQRI) UNQ~R+Af"~ TMiNMIT'E R:iPRQY~M~NTE Intentionally Deleted. RIITI-AI. IsM!QisQRQ'E WQRK Intentionally Deleted. COMMUNICATIONS SYSTEM NON-DISTURBANCE AGREEMENT JANITORIAL SERVICES SPECIFICATIONS ELEVATORS ARCHITECT'S CERTIFICATE P-ii L11794 TillS LEASE made in quadruplicate as of January 17, 2009. BETWEEN: THE CORPORATION OF THE TOWN OF TILLSONBURG (herein called the "Landlord") -and- HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE ~STER OF ENERGY AND INFRASTRUCTURE (herein called the "Tenant") SUMMARY The following is a sununary of certain provisions, which are part of, and are referred to in subsequent provisions of this Lease. Any conflict or inconsistency between these provisions and the provisions contained elsewhere in this Lease will be resolved in favour of the provisions contained elsewhere in this Lease: (a) (b) Address of Premises: Net Rent: 31 Earle Street, Tillsonburg, Ontario Sixty-Two Thousand, Four Hundred and Eighty-Five Dollars ($62,485.00) per annum, which sum includes a consideration for Realty Taxes. Five Thousand, Two Hundred and Seven Dollars and Eight Cents ($5,207.08) payable monthly, based on Five Dollars ($5.00) per square foot per year of the Rentable Area of the Premises, being Twelve Thousand, Four Hundred and Ninety- Seven (12,497) square feet. (c) Term: Five (5) years (d) Extension Options: Three (3) extension terms of Five (5) years each, each exercisable upon Six (6) months' notice to the Landlord (e) Commencement Date: January 17, 2009 (f) Address of Landlord: 200 Broadway, 2nd Floor, Tillsonburg, Ontario N4G 5A7 (g) With rent cheqnes to The Corporation of the Town ofTillsonburg be made payable to: Address of Tenant: c/o Ontario Realty Corporation One Stone Road West 4th Floor Guelph, Ontario NIG 4Y2 Attention: Regional Director of Operations Fax: (519) 826-3330 With a copy to: (h) (i) Occupant: Parking c/o Ontario Realty Corporation I Dundas Street West Suite 2000 Toronto, Ontario M5G 2L5 Attention: Senior Solicitor, Leasing Fax: (416) 327-2760 Ministry of Community Safety and Correctional Services The Tenant, the Occupant (and persons utilizing the services of the Occupant) is entitled to the sole use of approximately Forty (40) parking spaces located in the Parking Areas, the cost of which is included in the Net Rent. -2- ~· DEF1NITIONS In this Lease and in the Schedules to this Lease, the following words or phrases have the following meanings: "Additional Rent" means all charges or sums of money, other than Net Rent, payable by the Tenant under the provisions of this Lease. Additional Rent is due and payable with the next monthly instalment of Net Rent unless otherwise provided herein, but in any event is not payable as part of Net Rent. "Additional Services" means all services supplied by the Landlord in addition to those required to be supplied by the Landlord to the Tenant pursuant to this Lease, except for any services which the Landlord elects to supply to all of the tenants of the Building, the cost of which is included in the Operating Costs for the Building. "Agreement to Lease" is comprised of the Letter of Intent dated November 7, 2008 of the Tenant, which was accepted by the Landlord on December 12, 2008. "Architect" means the independent, arm's length architect, surveyor or professional civil engineer, from time to time named by the Landlord and approved by the Tenant acting reasonably. "Authority" means any governmental authority, quasi-governmental authority, agency, body or department whether fedeml, provincial or municipal, having or claiming jurisdiction over the Premises or the Building, or the use thereof. "Building" means the building having the municipal address of 31 Earle Street, Tillsonburg, Ontario erected on the Lands, from and including the lowest floor or level of the Building to and including the roof of the Building, the Structure, the Common Areas and Facilities, the Parking Areas and the areas and facilities exclusively serving the Building, which areas and facilities may include, without limitation, lobbies, foyers and vestibules, sidewalks, storage and mechanical areas, Mechanical and Electrical Services, janitor rooms, mail rooms, telephone rooms, rooms for the Mechanical and Electrical Services, stairways, escalators, elevators, truck and receiving areas, driveways, loading docks and corridors. Where the context requires, "Building" includes all buildings of the Landlord on the Lands. "Business Day" means any day which is normally considered a regular day of business for most government offices for the Province of Ontario. "Commencement Date" means the date set out in Article 2 of this Lease for the beginning of the Term. "Common Areas and Facilities" means those areas, facilities, utilities, improvements, equipment and installations in the Building which are notleased to tenants of the Building, and which serve or are for the benefit of the Building and are located within the Building or on the Lands, including all areas, facilities, utilities, improvements, equipment and installations which are provided by the Landlord for the use or benefit of all the tenants, their employees, customers and other invitees in common with others entitled to the use and benefit thereof in the manner and for the purposes permitted by this Lease. "Contemplated Use" means for office/administmtive purposes or any other business or purpose permitted by applicable Laws. "Cost Period" means, unless otherwise specified herein, the consecutive period of Twelve (12) calendar months, commencing on the I" day of January and ending on the 31 '1 day of December in each year of the Term. Notwithstanding the foregoing, the period of time for the first Cost Period shall commence on the Commencement Date and end on the 31" day of December, 2009 and the period of time for the last Cost Period shall commence on the 1" day of January in the last year of the Term and end on the expimtion or earlier termination of this Lease, as the case may be. "Environmental Contaminants" means (a) any substance which, when it exists in the Building or the water supplied to or in the Building, or when it is released into the Building or any part thereof, or into the water or the natuml environment, is likely to cause, at any time, -3- material harm or degradation to the Building or any part thereof, or to the natural environmental or material risk to human health, and includes, without limitation, any flammables, explosives, radioactive materials, asbestos, lead paint, PCBs, fungal contaminants (including, without limitation, and by way of example, stachybotrys chartarum and other moulds), mercury and its compounds, dioxans and furans, chlordane (DDT), polychlorinated biphenyls, chlorofluorocarbons (CFCs), hydro-chlorofluorocarbons (HCFCs), volatile organic compounds (VOCs), urea formaldehyde foam insulation, radon gas, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic or noxious substances or related materials, petroleum and petroleum products, or (b) any substance declared to be hazardous or toxic under any Environmental Laws now or hereafter enacted or promulgated by any Authorities, or (c) both (a) and (b). "Environmental Laws" means any federal, provincial or local law, statute, ordinance, regulation, policy, guideline or order and all amendments thereto pertaining to health, industrial hygiene, environmental conditions or Environmental Contaminants, including, without limitation, the Environmental Protection Act, R.S.O. 1990, c.E.I9, the Environmental Assessment Act, R.S.O. 1990, c.E.18, the Ontario Water Resources Act, R.S.O. 1990, c.0.40, the Occupational Health and Safetv Act, R.S.O. 1990, c. 0.1, the Safe Drinking Water Act 2002. S.O. 2002, c.32, and applicable air quality guidelines, as such statutes, regulations and guidelines may be amended from time to time. "Landlord" means the Landlord and its duly authorized representatives. "Landlord Transfer" means any (i) assignment, sale, conveyance or other disposition of this Lease or any interest of the Landlord hereunder, (ii) sale of the Building or any part thereof and (iii) 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 Landlord or an "affiliate" (as that term is defined on the date of this Lease under the Canada Business Comorations Act. R.S., 1980, c. C-44) of the Landlord which results in a change in the effective voting control of the Landlord. "Landlord Transferee" shall have meaning corresponding to the definition of "Landlord Transfer" set out above (it being understood that for a Landlord Transfer described in clause (iv), the Landlord Transferee is the Person that has effective voting control after the Laodlord Transfer). "Landlord's Taxes" means all taxes, rates, duties, levies and assessments whatsoever whether municipal, provincial or federal, charged upon the Building and the Laods, or upon the Landlord on account thereof, including all taxes, rates, duties, levies, impost charges and assessments for local improvements, education and schools and all taxes, grants or assessments which may in future be levied in lieu of "Landlord's Taxes" as hereinbefore defined, and including any local improvement charges or levies directly or indirectly related to the development of the Building. Laodlord's Taxes include, without limitation, Realty Taxes, business taxes of the Landlord, corporation taxes, capital taxes, excise taxes, Sales Taxes, income taxes, Commercial Concentration Tax, or any other taxes or assessments levied against the Landlord, the Building, the Lands, or the Rent. "Landlord's Work" means aoy work described in Schedule "M-1" (Initial Landlord's Work) and, if applicable, Schedule "M" (should the Landlord undertake initial Tenant's Leasehold Improvements), that must be completed by the Landlord to the Tenant's satisfaction before the Premises are delivered to the Tenaot on the Commencement Date. The Landlord's Work shall be completed in accordance with Schedule "M-1" aod (if applicable) Schedule "M". "Lands" means the laods underneath the Building aod those laods owned by the Landlord which are directly adjacent to the Building, all as more particularly described in Schedule "A" attached hereto. The Landlord and Tenaot agree that the open grass land south of the Building does not form part of the Lands and Building in this Lease. "Laws" means any enactments, by-laws, statutes, ordinances, regulations, guidelines, codes, orders aod policies and all amendments thereto aod aoy successor legislation, of any Authority including, but not limited to, the Ontarians With Disabilities Act, 2001, S.O. 2001, c.32 and the Financial Administration Act, R.S.O. 1990, c. F.l2. "Lease" means this agreement and all the terms, covenants and conditions set out herein, as amended from time to time in accordance with Section 6.18 of this Lease. -4- "Leasehold Improvements" means all items generally considered as leasehold improvements including, without limitation, all installations, alterations, and additions from time to time made, erected or installed in the Premises by or on behalf of the Tenant, or any previous occupant of the Premises, including, without limitation, any leasehold improvements installed by the Tenant pursuant to Schedule "L" attached hereto, and any initial Tenant's leasehold improvements installed by the Landlord pursuant to Schedule "M" attached hereto. "Market Rental" means, at any given time, the then current market net rental rate as indicated by market comparables, being leases and offerings, with comparable terms (including, without limitation, the length of the term and the frequency of adjustments in rent, if any) entered into at arm's length with comparable tenants with financial standing comparable to the Tenant, for Unimproved office premises of comparable size, effective age, quality and use in comparable buildings in similarly sized townships or communities in which the Building is located, taking into account the incidence of tenant inducements and allowances or initial rent-free or reduced rent periods then prevailing in the relevant market areas, and making the necessary adjustments for any differences. "Mechanical and Electrical Services" include, but are not limited to, all mechanical, electrical, drainage, lighting, incinerating, ventilation, air-conditioning, humidification, elevating, heating, pumping, sprinkling, alarm, plumbing and other mechanical and electrical systems installed in or used in the operation of the Building and the Lands. "Net Rent" means the rent payable by the Tenant to the Landlord pursuant to Article 3 of this Lease. "Normal Business Hours" means those hours and days considered by the Occupant to be its normal business hours, acting reasonably and in recognition and consideration of the Landlord's normal operating hours for the Building, if any. "Occupant" means the Ministry of Community Safety and Correctional Services. "Operating Costs" has the meaning provided in Schedule "D" attached hereto. "Parking Areas" means the improvements constructed from time to time, in or as part of the Building and the Lands for use as parking facilities for the Tenant and their employees, servants and invitees, and the areas and facilities that are appurtenant solely to those improvements, but excluding the parking areas, driveways, loading areas and other parts of the service area forming part of the Premises and available exclusively to the Tenant. "Person", if the context allows, includes any person, fmn, partnership or corporation, or any group of persons, finns, partnerships or corporations or any combination thereof. "Premises" means the premises containing a Rentable Area, which, as of the Commencement Date, has been calculated to be Twelve Thousand, Four Hundred and Ninety- Seven (12,497) square feet and occupying the entire floor of the Building. If the Premises are entirely self-enclosed, their boundaries extend (a) to the inside finished surface of the permanent outer walls; and (b) from the top surface of the structural subfloor to the bottom surface of the suspended ceiling. If the Premises have no suspended ceiling abutting the demising walls and are open to the ceiling or the bottom surface of the structural ceiling of the Building, the boundaries of the Premises extend from the top surface of the structural subfloor to the height of the demising walls. The location of the Premises is outlined on the plan attached hereto as Schedule "B". "Proportionate Share" means the ratio of the Rentable Area of the Premises to the Rentable Area of the Building which, at the Commencement Date, has been calculated to be One Hundred percent (100%). This percentage is subject to adjustment from time to time, according to any change in the Rentable Area of either of the Premises or the Building. The Landlord shall notifY the Tenant of any change in the Rentable Area of the Building as soon as practicable and provide the Architect's certificate of the Rentable Area of either of the Premises or the Building, as the case may be, within Thirty (30) days thereafter, reflecting such change. "Realty Taxes" has the meaning provided in Schedule "G" attached hereto. "Rent" means the aggregate of Net Rent and Additional Rent -5- "Rentable Area of tbe Building" means the total of the Rentable Area of all premises within the Building, as defined and calculated in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1 -1996) (BOMA), which, as of the Commencement Date, has been calculated to be Twelve Thousand, Four Hundred and Ninety-Seven (12,497) square feet. In the event that the American National Standard Method for Measuring Floor Area in Office Buildings is revised or amended at any time during the Term, the method of calculation referred to above shall continue to be used to define the Rentable Area of the Building for the remainder of the Term. "Rentable Area of the Premises" means the total of the Rentable Area of the Premises within the Building, as defined and calculated in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1 -1996) (BOMA), as of the Commencement Date, to be Twelve Thousand, Four Hundred and Ninety-Seven (12,497) square feet. In the event that the American National Standard Method for Measuring Floor Area in Office Buildings is revised or amended at any time during the Term, the method of calculation referred to above shall continue to be used to define the Rentable Area of the Premises for the remainder of the Term. "Sales Taxes" means all business transfer, multi-usage sales, sales, goods and services, use, consumption, value-added or other similar taxes imposed by the Govermnent of Canada or Ontario upon the Landlord, or the Tenant, or in respect of this Lease, or the payments made by the Tenant hereunder or the goods and services provided by the Landlord hereunder including, without limitation, the rental of the Premises and the provision of administrative services to the Tenant hereunder. "Structure" means (i) the foundations, roof (including roof membrane), exterior wall assemblies and appurtenances thereto (including weather walls), bearing walls, floor structures, subfloors, and structural columns and beams of the Building, (and any part thereof), (ii) all plumbing, drainage, Mechanical and Electrical Services and equipment within, servicing, leading up to, from and under the Building, and (iii) any other portions of the Building normally considered to be part of the structural portion of a building, or where the repairs or replacements thereto are normally considered a major capital expenditure. "Tenant" means, where the context allows, any ministries, agencies, servants, employees, agents, invitees and licensees of Her Majesty the Queen in Right of Ontario and the Ontario Realty Cmporation, or their service providers, and/or any other entity over whom the Tenant may reasonably be expected to exercise control. It is understood and agreed that the Ontario Realty Corporation is the only person entitled to bind the Tenant contractually. "Term" means the initial term of this Lease set out in Article 2 of this Lease and any Extension Term (as defined in Section 6.12 below). "Trade Fixtures" means the personal chattels installed prior to the Commencement Date, at the Commencement Date or during the Term by or on behalf of the Tenant, in, on or which serve, the Premises, for the sole purpose of the Tenant carrying on its trade in the Premises pursuant to Section 4.8 of this Lease and which Trade Fixtures the Tenant is permitted to remove only to the extent permitted by the terms of this Lease, but Trade Fixtures do not include Leasehold Improvements of the Tenant. "Unimproved" means: (i) full completion of exterior and interior finishes on all perimeter walls with standard finishes associated with the Building; (ii) fmished demising walls and entrance doors with locking hardware; (iii) fully balanced distribution of the Mechanical and Electrical Services to base building standards; (iv) level finished concrete floor; and (v) new or "as new" finished T -bar ceiling, but shall exclude the Building security system and equipment related thereto installed by the Tenant or on the Tenant's behalf. "Utilities" means all gas, electricity, water, sewer, steam, fuel oil, power, signal equipment and other utilities used in or for the Building or the Premises, as the case may be. -6- ARTICLE 1 PREMISES ARTICLE2 TERM In consideration of the Rent reserved and the covenants and agreements herein contained to be paid, observed and performed by the Tenant, the Landlord hereby leases to the Tenant the Premises for the Term, together with the non-exclusive right to use the Common Areas and Facilities and any Parking Areas together with all others entitled thereto. The Landlord shall deliver possession of the Premises to the Tenant on the Commencement Date. The Tenant, having inspected the Premises, shall accept the Premises in an "as is, where is" condition subject to the Landlord hereby representing and warranting that: (i) the foundations, roof (including roof membrane), exterior wall assemblies and appurtenances thereto (including weather walls), bearing walls, floor structures, subfloors, and structural columns and beams (and any part thereof); (ii) all plumbing, drainage, mechanical and electrical services and equipment within, servicing, leading up to, from and under the Premises; and (iii) any other portions of the Premises normally considered to be part of the structural portion of a building, or where the repairs or replacements thereto are normally considered a major capital expenditure; are and will be in good working order and condition and satisfactory for carrying on the Tenant's business from the Premises. Unless specifically waived by the Tenant, the Landlord shall deliver to the Tenant an Architect's certificate, in the form attached as Schedule "R" to this Lease, at the Landlord's expense, on or before the Commencement Date, certifying the actual Rentable Area of the Premises and that of the Building and adjustments in the calculation of the Net Rent, the Leasehold Improvement Allowance, if any, the Realty Taxes Adjustment, as provided in Section 4.2 of this Lease, and the Operating Cost Adjustment, as provided in Section 4.3 of this Lease, will be made accordingly, subject to the Tenant's right to dispute such certificate, as provided for in this Article I. Notwithstanding the foregoing, the Net Rent shall not, in any event, be increased by more than Five Percent (5%) of the Net Rent herein provided. 1n the event that the Landlord is an Ontario Land Surveyor, Architect or Professional Engineer, the Landlord may not certify Schedule "R" and must request that an independent Architect or Engineer certify Schedule "R" for the purposes of this provision. The Tenant shall have the right to dispute such certificate of the Architect by having the Rentable Area of each of the Premises and the Building measured by an architect or land surveyor appointed by the Tenant. The Tenant shall then submit the certificate of the Tenant's architect to the Landlord, and if the Landlord does not agree with such certificate of the Tenant's architect, the measurement of the Premises and the Building shall be determined by an independent architect or surveyor mutually chosen by the Landlord and Tenant, whose costs shall be shared equally by both the Landlord and the Tenant and whose calculation shall be final and binding upon both the Landlord and the Tenant. TO HAVE AND TO HOLD the Premises for and during the Term of Five (5) years, commencing on January 17, 2009 and ending on January 16, 2014, unless previously terminated pursuant to the terms of this Lease. -7- ARTICLE3 NET RENT Section 3.1 ARTICLE4 TENANT'S COVENANTS Section 4.1 Net Rent Section 4.2 Payment of Realty Taxes Section 4.3 Payment of Operating Costs Section 4.4 Compensation The Tenant hereby covenants to pay to the Landlord as Net Rent, during the Term, the sum of Sixty-Two Thousand, Four Hundred and Eighty- Five Dollars ($62,485.00) per annum, which sum includes a consideration for Realty Taxes, in equal monthly installments of Five Thousand, Two Hundred and Seven Dollars and Eight Cents ($5,207.08), based upon the annual rate of Five Dollars ($5.00) per square foot of the Rentable Area of the Premises. It is agreed and understood that the Net Rent shall commence to be payable on the Commencement Date. It is agreed and understood that this Lease is completely net and carefree to the Landlord, and except as expressly provided herein, the Landlord is not responsible during the Term for any expenses and obligations of any nature whatsoever arising from, or relating to, the Premises. Net Rent shall be payable to the Landlord in lawful money of Canada, in advance in equal monthly instalments on the first day of each and every month during the Term at such place as the Landlord shall hereafter designate in writing. If the Term commences on any day other than the first day of a month or ends on any day other than the last day of a month, Net Rent for the fractions of a month at the Commencement Date and at the end of the Term shall be prorated on a per diem basis, based upon a period of Three Hundred and Sixty-Five (365) days. Rental payments shall, unless otherwise agreed upon by the parties, be made by the Tenant by direct deposit to the Landlord as further directed by the Landlord. The Landlord covenants to provide the T errant with a minimum of Fifteen (15) days' prior written notice of a change in either the payee of the Rent or the account number of the bank account of the payee to which payments of Rent are being directed. The Tenant hereby certifies that the Premises are leased by the Ontario Realty Corporation for the use of the Crown in Right of Ontario and are therefore not subject to the federal Goods and Services Tax. This provision applies only where ONTARIO REALTY CORPORATION, acting as agent on behalf of HER MAJESTY THE QUEEN in Right of Ontario as represented by the Minister of Energy and Infrastructure, is the Tenant The Tenant covenants with the Landlord as follows: To pay Net Rent in accordance with the provisions of this Lease. The Landlord and Tenant agree that the Net Rent, payable pursuant to Section 3.1 hereof, includes the Tenant's share of Realty Taxes in accordance with Schednle "G" attached hereto. To pay, as Additional Rent, directly to the Landlord, the Tenant's Proportionate share of Operating Costs in accordance with Schedule "D" attached hereto. Subject to Section 5.10(B), to make good or compensate the Landlord for any damage to the Premises (save and except for any loss of profit or consequential1oss that is indirect or not reasonably foreseeable) caused -8- for Damage by negligent, reckless or wilful misconduct of the Tenant's servants, agents, employees, licensees, or any Person for whom the Tenant is at law responsible. Seetion 4.5 To give the Landlord notice, as soon as reasonably possible, of any Notice of Defect accident to or defect in the Mechanical and Electrical Services, or any other system or part of the Premises which the Landlord is obligated to repair. Seetion 4.6 Entry by Landlord Seetion 4.7 Assign or Sublet Seetion 4.8 Use of Premises Section 4.9 Not to Affect Insurance To permit the Landlord to enter the Premises at any reasonable time after delivering Two (2) Business Days' prior written notice to the Tenant's designated representative (except in the case of an emergency when no notice is required), for the purpose of inspecting the Premises and making permitted or required repairs to the Premises. If the Tenant is not present to permit an entry by the Landlord to the Premises at the time that entry is necessary by reason of an emergency, then the Landlord, without any notice to the Tenant, may forcibly enter the Premises to remedy such emergency at the Landlord's sole risk. Not to assign this Lease or sublet the Premises without the prior written consent of the Landlord, such consent not to be unreasonably withheld, delayed or conditioned. Despite the foregoing, the Landlord acknowledges and agrees the Tenant may, without the Landlord's consent, sublet all or any portion(s) of the Premises or assign this Lease to any of the following (each shall be referred to herein as a "Permitted Transfer'' to a "Permitted Transferee") (i) governmental agency, (ii) ministry, (iii) crown corporation, or (iv) department or Person affiliated with the Tenant or its service providers. The Landlord further acknowledges and agrees that the use or occupation of all or part of the Premises by any Permitted Transferee( s) does not constitute an assignment or sublet and does not require the Landlord's consent therefor. The Tenant shall not be released from its obligations hereunder in the event of a transfer to a Permitted Transferee, without the express written permission from the Landlord. If the Landlord's consent is required for an assignment or sublease, then the Landlord's consent shall be deemed to have been given unless the Landlord notifies the Tenant in writing of the reasons for the Landlord's disapproval within Fifteen (15) days of receipt of the request. Notwithstanding anything to the contrary contained in this Lease, the Landlord shall be liable for any loss, damages, costs, and expenses incurred by the Tenant (including solicitors' fees) in respect thereof as a result of the Landlord unreasonably withholding or unduly delaying its consent to an assignment, subletting or other transfer proposed by the Tenant hereunder. With respect to any assignment or sublease requiring the Landlord's consent, the Tenant will prepare and provide to the Landlord an assignment of lease or sublease, as the case may be, on the Tenant's standard form, duly executed by the assignee or subtenant, as the case maybe. To use the Premises for Contemplated Use and all other uses ancillary thereto only, in accordance with all applicable Laws. The Landlord hereby represents and warrants that the Building and the Lands are properly zoned for the Contemplated Use. Not to do or omit or permit to be done or omitted on the Premises anything which shall cause the insurance premiums for the Building to be increased and if the insurance premiums for the Building shall be increased by reason of anything done or omitted or permitted to be done or omitted by the Tenant or anyone permitted by the Tenant to be upon the Premises, the Tenant shall, within Five (5) Business Days after receipt of notice from the Landlord setting out in reasonable detail the -9- Section 4.10 Tenant's Compliance with Laws Section 4.11 Waste Section 4.12 Nuisance Section 4.13 Tenant's Indemnity Section 4.14 Insurance Section 4.15 Exhibiting Premises Section 4.16 Facilitate Cleaning Section 4.17 Construction Lien cause for such increased premiums, pay to the Landlord the amount of such increase. To comply with all applicable Laws which relate to the Tenant's use or occupation of the Premises or to the making of any repairs, replacements, additions, changes, substitutions or improvements that relate to such use or occupation by the Tenant. Not to knowingly do or allow any waste, damage, disfiguration or injury to the Premises or the fixtures and equipment forming a part thereof or permit any overloading of the floors thereof. Not to knowingly use or permit the use of any part of the Premises for any dangerous, noxious or offensive trade or business or cause or permit any nuisance in, at or on the Premises. The Landlord acknowledges and agrees that the Contemplated Use does not contravene this Section. Subject to Section 5.10(B), the Tenant shall defend, protect, indenmify, and hold the Landlord and the Landlord's agents, officers, directors, employees, and contractors harmless against and from any and all injuries, costs, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, and demands of any kind or nature (including reasonable solicitors' fees) arising in connection with any and all third party claims arising out of: (a) injuries occurring within the Premises; (b) any intentional conduct or negligence of the Tenant or any Person for whom it is in law responsible; or (c) any breach or default in the performance of any obligation on the Tenant's part to be performed under this Lease. This indenmity does not include the intentional or negligent acts or omissions of the Landlord or any Person for whom it is in law responsible. This indemnity shall survive termination of this Lease only as to claims arising out of events that occur prior to termination of this Lease. The Landlord acknowledges that the Tenant in respect of damage to the Building and the Premises is self-insured and in respect of third party liability maintains a comprehensive blanket policy of insurance, and therefore shall not require the Tenant to obtain any additional insurance coverage. To permit the Landlord to exhibit the Premises to prospective tenants during Normal Business Hours during the last Six (6) months of the Term upon receipt of Forty-Eight (48) hours' prior notice. To leave the Premises in a reasonably tidy state at the end of each Business Day to facilitate the Landlord's janitorial services. Notwithstanding the foregoing, the Tenant is directly responsible for the payment of the following costs: full janitorial services and supplies, all Utilities, all light bulb replacements, including "Life Safety and Building Security" requirements over and above what the Landlord has in place as of the Commencement Date as set out in Section 5.3(g). Not to suffer or permit during the Term hereof any construction liens or other liens for work, labour, services or materials ordered by it or for the cost of which it may be in any way obligated, to attach to the interest of the Landlord in the Premises or the Lands, and that whenever and so often as any such liens shall attach or claims therefore shall be filed, the Tenant shall, as soon as reasonably possible after the Tenant has notice of the claim or lien, procure the discharge thereof by payment or by giving security or in such other manner as is or may be required or permitted by law and the Tenant further covenants that whenever and so often as a certificate of action is registered relating to any of the liens referred to in the preceding sentence, the Tenant shall, as soon as reasonably possible after the Tenant has notice of the registration of -10- Section 4.18 Premises Repair Section 4.19 Landlord's Rnles and Regulations ARTICLES LANDLORD'S COVENANTS Section 5.1 Quiet Enjoyment such certificate of action, have the same vacated. To maintain and keep, at its sole cost and expense, the interior of the Premises and any part thereof, including all Leasehold Improvements, in good order and condition and to promptly make all needed repairs and replacements thereto, except for: (i) reasonable wear and tear; (ii) any damage to the Premises caused by defects or weaknesses to the Structure; (iii) any repair or improvement necessitated by the negligence or wilful misconduct of the Landlord or any Person for whom the Landlord is at law responsible; (iv) any repair or improvement for which the Landlord is responsible hereunder or caused by the Landlord's failure to perform its obligations hereunder; or (v) any structural or seismic repairs, improvements or alterations to the Premises or the Building. To comply with all applicable reasonable rules and regulations for the Building as may be established by the Landlord from time to time and acceptable to the Tenant, acting reasonably, provided that the Landlord shall first furnish such rules and regulations, in writing, to the Tenant, and provided further that such rules and regulations do not discriminate against nor prohibit the Tenant or Occupant from operating its business in the Premises. The Landlord covenants with the Tenant as follows: For quiet enjoyment. Section 5.2 (A) To pay to the relevant taxing Authority, subject to the provisions of this Lease, all Landlord's Taxes. If the Landlord fails to pay all Landlord's Taxes, the Tenant may, at its option and without prejudice to the other rights and remedies available to the Tenant (including, without limitation, exercising its rights and remedies pursuant to Section 6.11 hereof), pay all or part of the Landlord's Taxes and deduct the costs thereof from the instalments of Net Rent and Additional Rent next falling due. Taxes and Adjustments (of Realty Taxes and Operating Costs) Section 5.3 Services and Facilities (B) The Landlord hereby acknowledges and agrees that the Tenant expects the Landlord to pay the Landlord's Taxes on a timely basis. In this regard, the Landlord acknowledges that on an annual basis (on each anniversary of the Commencement Date), the Landlord will provide the Tenant with a declaration from the Landlord that the Landlord is in full compliance with all tax Laws administered by the Ministry of Finance of Ontario, and that, in particular, all Landlord's Taxes due and payable have been paid or satisfactory arrangements for their payments have been made and maintained. Subject to the provisions of Schedule "D" attached hereto, to provide and operate the following services and facilities serving the Premises as expressed below, at the Landlord's expense, and maintain at the Landlord's expense, such services and facilities in good repair (and, if necessary, replace same) during the Term: (a) Utility Systems All utility systems and facilities including water, fuel and electricity. The Tenant shall pay the charges for the Tenant's consumption of such Utilities directly to the supplier of such Utilities. (b) Electrical Systems/Lenses, Bnlbs and Related Equipment -11- An electrical system which is satisfactory for the Tenant's purposes including fixtures and outlets together with the initial installation and ongoing replacement of bulbs, fluorescent tubes and ballasts during the Term, and all maintenance and parts thereof, as more particularly set out in Schedule "H" attached hereto, provided that the Tenant shall be responsible for the cost and replacement of light bulbs throughout the period of the Tenant's occupancy of the Premises. The Tenant acknowledges that the electrical system in place as of the Commencement Date is acceptable to the Tenant and meets the minimum requirements as set out in Schedule "H'' attached hereto. (c) Thermal Conditions and Air Quality Subject to the provisions of Schedule "D" attached hereto, window mount air-conditioning units, in place as of the Commencement Date, including a heating, ventilation and air- conditioning (including humidification) system, serving only the gymnasium area, which is satisfactory for the Tenant's purposes, as more particularly set out in Schedule "!'' attached hereto. (d) Water System A water system capable of supplying hot and cold water to the Premises and the washrooms serving the Premises. (e) Washrooms Fully equipped washroom facilities for male and female employees of the Tenant in accordance with the requirements established by the Occupational Health and Safetv Act, RS.O. 1990, c.0.1, as amended, and the regulations made thereunder, or any successor act, a handicapped accessible male and female washroom installed in accordance with the requirements of the Building Code Act 1992, S.O. 1992, c. 23, as amended, Ontarians With Disabilities Act. 2001, S.O. 2001, c.32, as amended, and any other applicable Laws and requirements of any relevant Authority, and the provision of all washroom equipment and supplies reasonably necessary, in the opinion of the Tenant, for the use and operation of such washroom facilities, including, without limitation, a sink, vanity, toilet bowl, paper towel dispenser, garbage pail, soap dish and toilet paper dispenser. (f) Exterior, Common Areas Subject to the provisions of Schedule "D" attached hereto, maintenance of the exterior of the Building, the landscaped grounds of the Lands, the Parking Areas and walkways of the Building and the Common Areas and Facilities of the Building in good repair and first-class condition and the prompt removal of debris, snow and ice. (g) Life Safety and Building Security Establishment of a workable emergency evacuation program and a security management plan for the Building in accordance with the Landlord's standard practice, which shall, as a minimum, be similar to that which would be established by a reasonably prudent owner of a similar building, having regard to the size, age and geographical location of the Building. The Tenant shall be permitted to install and/or implement, at its expense, such additional security measures to the Premises as it deems -12- Section 5.4 Access Section 5.5 Repair necessary or advisable, acting reasonably, or may at its option, permit the Landlord to install and/or implement, at the Tenant's expense, such additional security measures to the Premises pursuant to written notice thereof to the Landlord. In addition, the Landlord shall, wherever possible and from time to time, install and/or implement such additional security measures as the Tenant, acting reasonably and in consultation with the Landlord, deems necessary or advisable with respect to the Common Areas and Facilities of the Building, the cost of which shall be included in Operating Costs. Notwithstanding anything contained in this Lease to the contrary, Tenant emergency evacuation shall be the Tenant's sole responsibility except as required by the Landlord according to applicable legislation. (h) Glass Replacement Prompt replacement in case of breakage, of all plate glass and other glazing materials of the Building, including without limitation, that which demises the Premises, with material of the same kind and quality as that which may be damaged or broken, save where such damage or breakage has been occasioned by the Tenant, its servants or agents. (i) Janitorial Services [Intentionally deleted.] (j) Elevator System [Intentionally deleted.] To permit the Tenant, its agents, invitees and those having business with any or all of them, full and uninterrupted access to the Building Seven (7) days per week Twenty-Four (24) hours per day during the Term, including access for disabled persons. The Landlord covenants and agrees to provide all services and facilities required to be provided by it hereunder (including without limitation, light, water, fuel, electricity, plumbing, heating, ventilation and air-conditioning) during Normal Business Hours and to permit the Occupant to make its own arrangements with the Landlord for the provision of such services and facilities outside of Normal Business Hours, including invoicing and payment of the charges therefrom. (A) Subject to: (i) the obligations of the Tenant outlined in Section 4.18 of this Lease; (ii) the provisions of Schedule "D" attached hereto; and (iii) the provisions of Section 6.7 of this Lease, to maintain the Building, the Common Areas and Facilities, and the Structure in good repair and tenantable condition during the Term and make good any defect or want of repair and/or replacement promptly upon discovering the need for such repair and/or replacement or upon notice thereof with a minimum of disruption to the Tenant's business. The Landlord also covenants to repair, at its sole cost and expense, any damage to the Premises, the Leasehold Improvements, or any part thereof, caused by any defects or weaknesses to the Structure. (B) Make all repairs under clause (A) promptly after Landlord learns of the need for such repairs but in any event within Twenty (20) days after Tenant notifies Landlord of the need for such repairs. If Landlord fails to make such repairs within Twenty (20) days after Tenant's notice (except when the repairs require more than Twenty (20) days for performance and Landlord commences the repair within Twenty (20) days and diligently pursues the repair -13- Section 5.6 Telephone Installation and Communications Systems Section 5.7 Tenant Improvements Section 5.8 Landlord Improvements to completion), Tenant may, at its option, undertake such repairs and deduct the cost thereof from the instalments of Rent next falling due. (C) The Landlord further covenants and agrees that any entry into the Premises to make repairs, conduct inspections or tests or perform any work required or permitted hereunder by the Landlord in the Building, shall be done expeditiously and in such manner so as not to unreasonably interfere with the conduct of normal business operations by the Tenant. When entering or performing any repair or other work in the Premises, Landlord, its agents, employees and/or contractors (a) shall identifY themselves to Tenant's personnel immediately upon entering the Premises, and (b) shall not in any way materially or unreasonably affect, interrupt or interfere with Tenant's use, business or operations on the Premises or obstruct the access to the Premises. In the event of any such material or unreasonable interference or obstruction for more than Twenty-Four (24) hours, the Net Rent and Additional Rent shall be equitably abated in proportion to the effect and duration of such interference or obstruction on the Tenant's operations, as determined by the Tenant acting reasonably. If such material or unreasonable interference or obstruction shall continue for longer than Six (6) months, the Tenant shall have the option to terminate this Lease or continue to operate with the foregoing Rent abatement after such interruption has ceased for a time equal to the time period of such interruption. The foregoing abatement and termination rights are in addition to all other rights and remedies available to the Tenant at law or elsewhere in this Lease. To permit the Tenant to effect the installation of telephone and inter- communication apparatus in the Premises. The Building is to have the facilities as set out in Schedule "N" attached hereto. The tenant may tender for and complete, at the Tenant's sole cost and expense, such interior non-structural Leasehold Improvements to the Premises as it may consider necessary from time to time during the Term or any extension thereof, in accordance with Schedule "L" attached hereto without obtaining the Landlord's consent. Despite the foregoing, no Leasehold Improvements shall be made to the exterior of the Building or the Structure uuless the Tenant has obtained written approval from the Landlord therefore, such approval not to be unreasonably withheld or unduly delayed. Notwithstanding anything in this Lease (including Schedule "L") to the contrary, the Landlord hereby acknowledges and agrees that where applicable Laws require the Tenant to construct, alter and/or remove certain Leasehold Improvements in or about the Premises or to the Structure, the Landlord's consent and approval to such construction, alteration and/or removal shall be deemed to have been given. (A) That, unless the Landlord fully complies with the terms and conditions set out below, at no time during the Term shall it commence any further construction or alterations to the Building which will have the effect of: (a) altering any part of the Structure which would materially detrimentally affect the Tenant's access, use and enjoyment of the Premises; -14- Section 5.9 Energy Conservation (b) interfering with the business operations of the Tenant; (c) interfering with ingress to or egress from the Premises; (d) causing noise or other nuisances which might interfere with the Tenant's business operations; or (e) changing the location, shape or dimensions of the Premises; unless the Tenant otherwise consents, the Tenant's consent therefor with respect only to subsections (b), (c) and (d) hereof not to be unreasonably withheld. In the event that the Landlord intends to commence any construction relating to items (a)-(d) inclusive outlined in this Section 5.8, in or around the Building at any time during the Term, such construction shall be subject to the following terms and conditions: (i) the Landlord shall deliver written notice to the Tenant, including complete and detailed plans and specifications of the planned construction, at least Six (6) months prior to the commencement of construction. In the event that the planned construction is intended to occur within the first Six (6) months of the Term, the Landlord shall deliver such notice, including the complete and detailed plans and specifications, to the Tenant as soon as possible; (ii) the Landlord must receive the prior written approval of the Tenant and of any required Authorities; (iii) all construction must be completed promptly and in a good and workmanlike manner, and must not interfere with the use of the Premises or any part thereof by the Tenant and wherever possible, must be completed outside of Normal Business Hours, unless the Tenant agrees otherwise; (iv) all Utilities and other base building systems must continue to be fully operative during any period of construction and the Landlord shall be responsible for any daroages or costs incurred by the Tenant to the extent caused or contributed to by any interruption of such Utilities or systems; and (v) in the event of any interference, the Rent payable hereunder shall be equitably abated (as determined by the Tenant acting reasonably) based on the degree of interference with the Tenant's business operations or with the Tenant's ingress to or egress from the Premises. The Landlord acknowledges the Tenant's mandate to conserve energy and water and agrees, whenever possible, to cooperate fully with the Tenant in achieving its conservation targets. The Landlord covenants and agrees to provide the Tenant, annually, with written evidence demonstrating the implementation of energy efficient systems/plans in place in the Building. The Landlord further covenants and agrees to adhere as closely as possible to the energy conservation procedures set out in Schedule "K" attached hereto. -15- Section 5.10 Indemnity& Release Section 5.11 Compliance with Laws Section 5.12 Insurance (A) The Landlord shall defend, protect, indemnify, and hold the Tenant and the Tenant's agents, officers, directors, employees, and contractors hannless against and from any and all injuries, costs, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, and demands of any kind or nature (including reasonable solicitors' fees) by or on behalf of any person, entity, or governmental authority occasioned by or arising out of (a) injuries occurring in the Common Areas and Facilities or any other portion of the Building outside the Premises; (b) any intentional conduct or negligence of the Landlord or any Person for whom the Landlord is in law responsible; (c) any breach or default in the performance of any obligation on the Landlord's part to be performed under this Lease; or (d) the failure of any representation or warranty made by the Landlord herein to be true when made. This indemnity does not include the intentional or negligent acts or omissions of Tenant or any Person for whom it is in law responsible. This indemnity shall survive termination of this Lease only as to claims arising out of events that occur prior to termination of this Lease. (B) Notwithstanding anything in this Lease to the contrary, the Tenant shall not be liable to the Landlord or to any insurance company (by way of subrogation or otherwise) insuring the Landlord, for: (i) any loss of profit or consequential loss that is indirect or not reasonably foreseeable; or (ii) any loss or damage to the Building, Structure or other tangible property, or any resulting loss of income and benefits, even though such loss or damage might have been occasioned by the negligence of the Tenant or any Person for whom the Tenant is at law responsible, if any such loss or damage is covered by insurance maintained or required to be obtained by the Landlord pursuant to this Lease. Landlord shall require its insurance company to include a waiver of subrogation provision in its policies in order to implement this Section 5.10(B). To comply with all Laws which relate to the Building or to the use or occupation thereof or to the making of any repairs, replacements, additions, changes, substitutions or improvements of or to the Building or any part thereof. The Landlord agrees not to bring or commence any application with the respective Authority that would materially, adversely change the respective use of the Premises and Lands, or the zoning of the Lands, without the Tenant's prior written consent. At all times throughout the Term, the Landlord shall obtain and maintain in full force and effect with respect to the Building and the Lands, against such occurrences and in such amounts, on such terms and with such reasonable deductible(s) as would a reasonably prudent owner of a similar project, insurance, including, without limitation: (a) broad form boiler and machinery insurance on a blanket repair and replacement basis with limits for each accident in an amount of at least the replacement cost of all Leasehold Improvements, contents and of all boilers, pressure vessels, air-conditioning equipment and miscellaneous apparatus owned or operated by the Landlord or by Persons on behalf of the Landlord in the Building and on the Lands; (b) "all risks" insurance (including flood and earthquake) on the Building (including the foundations and excavations and other parts of the Structure) and the equipment contained in or servicing the Building and on the Lands, in an amount at least equal to the full replacement cost thereof, insuring all property of -16- Section 5.13 No Environmental Contaminants the Landlord, property for which the Landlord is legally liable or property installed by or on behalf of the Landlord and the Leasehold Improvements; (c) comprehensive general liability insurance including personal injury, broad form contractual liability, owners' and contractors' protective, employers' liability and voluntary compensation, medical payments, products liability, completed operations, non- owned automobile liability, all coverages with respect to the Building, the Lands and the use of the Common Areas and Facilities. Such policies shall be written on a comprehensive basis with inclusive limits of not less than Ten Million Dollars ($10,000,000.00) per occurrence or such higher limits as the Tenant may reasonably require from time to time; and (d) such other forms of insurance and in such amounts and on such terms as would be carried by a reasonably prudent owner of a similar project. The insurance policies described in subparagraphs (a) and (b) above shall contain a waiver of any subrogation rights which the Landlord's insurer may have against the Tenant and any Person for whom the Tenant is at law responsible, whether the damage is caused or contributed to by their act, omission or negligence. The Landlord's insurance policy described in subparagraph (c) above shall name the Tenant as an additional insured only in respect of the Lands and Building or as its interest may appear, and shall contain cross-liability and severability of interest clauses. None of the policies shall be invalidated as respects the interest of the Tenant, or any Person for whom the Tenant is at law responsible, by reason of any breach or violation of any warranties, representations, declarations or conditions contained in the policies. All of the policies shall contain an undertaking by the insurers to notify the Tenant in writing not less than Thirty (30) days prior to any material change, cancellation or termination. If requested by the Tenant, the Landlord agrees to deliver certificates of insurance of the underwriting insurance company or complete certified copies of policies to the Tenant within Thirty (30) days after the placing of the required insurance. No review or approval of such insurance documentation by the Tenant shall derogate from or diminish the Tenant's rights or the Landlord's obligations as contained in this Lease. (A) To use its continuing effort throughout the Term to ensure that no part of the Building or Lands contains any Environmental Contaminants or is used, without limitation, (either by the Landlord or all other tenants in the Building), to generate, manufacture, refine, treat, transport, store, handle, dispose of, transfer or produce any Envirorunental Contaminants, except in strict compliance with all Environmental Laws. For the purpose of this Article 5, an Envirorunental Contaminant is deemed not to comply with Envirorunental Laws if, in the reasonable opinion of the Tenant's environmental consultant or engineer, such Environmental Contaminant poses a health risk to the Tenant, the Tenant's employees, or any Person in or about the Building, the Lands or the Premises. (B) Whenever requested by the Tenant, to permit the Tenant, at its cost, to test the water quality and air quality in the Premises and the Building to ensure that they meet the standards for water quality and air quality prescribed by applicable Laws and provide the Tenant with copies of such testing or inspections. The cost of such testing shall be at the Tenant's cost and expense, unless the testing reveals that the Building or Lands -17- Section 5.14 Environmental Contaminants contain any Environmental Contaminants which are the Landlord's responsibility under this Lease and such Environmental Contaminants do not strictly comply with all Environmental Laws, in which case such testing shall be at the Landlord's sole cost and expense. (C) Whenever requested by the Tenant, to permit the Tenant, at its cost to have the Building inspected by an independent accredited environmental consulting firm approved by both parties acting reasonably, for evidence of Environmental Contaminants (including, without limitation, mould) or water damage in the Building. The Landlord shall provide the Tenant with a copy of the results of such inspections, together with any reports prepared in conjunction with such inspections. The conditions causing mould (such as water leaks, condensation, infiltration, or flooding) should be corrected promptly to prevent mould from growing in the Building or any part thereof. If any mould or other Environmental Contaminant is detected or discovered during such inspections, the Landlord shall promptly comply with its obligations under Section 5.14 hereof. The cost of such inspections shall be the Tenant's cost and expense, unless they reveal that the Building or Lands contain any Environmental Contaminants which are the Landlord's responsibility under this Lease and which do not strictly comply with all Environmental Laws, in which case such testing shall be at the Landlord's sole cost and expense. To remove, clean up or manage as necessary and advisable, in the reasonable opinion of the Tenant's environmental consultant or engineer, at the Landlord's sole cost and expense, any Environmental Contaminant located on, under or in the Building or the Lands, whether or not known to the Landlord as of the date of execution of this Lease, and whether or not resulting from any act, omission, or negligence of the Landlord or any Person for whom it is in law responsible (save and except for those Environmental Contaminants used, manufactured, stored, released or disposed of by the Tenant or those for whom it in law responsible, which shall remain the Tenant's responsibility and such Environmental Contaminants shall be remediated by the Tenant at its sole cost and expense), in a manner that complies with all Environmental Laws or other applicable Laws, to remediate any damage and eliminate any potential risk to persons, property or the environment as a result of the presence of such Environmental Contaminant. The Landlord shall use its best efforts to minimize direct and indirect impact on the Tenant during all activities related to such remediation. If any such Environmental Contaminant is not removed or managed forthwith by the Landlord (and in any event, within Twenty (20) days after Landlord's discovery or notification of such Environmental Contaminant), the Tenant shall be entitled, but not required, to remove or manage the same on the Landlord's behalf, and the Landlord shall reimburse the Tenant for the cost thereof. If the Landlord fails to reimburse the Tenant for such cost within Ten (10) days, the Tenant shall, without limiting its other rights and remedies, deduct the costs of such remediation from the Rent payable under this Lease. In the event that there shall now or in the future exist any Environmental Contaminant in, on or under the Premises, the Building or the Lands (not caused by the Tenant) that materially and adversely affects the Tenant's use of or operations from the Premises or access to the Premises, the Tenant's construction of its Leasehold Improvements or the Tenant's use of the Common Areas and Facilities (collectively "Interference"), then, (i) in such event, Net Rent and all other charges payable under this Lease shall be equitably abated in proportion to the effect and duration of the Interference on the Tenant's operations, as determined by the -18- Section 5.15 Notification of Environmental Contaminants Section 5.16 Warranty Tenant acting reasonably; (ii) if the Tenant, in its sole discretion, decides to cease operating in the Premises, then all Net Rent and all other charges payable under this Lease shall abate until the date on which the Tenant is reasonably able to operate from the Premises without any Interference; (iii) if such Interference occurs prior to the Commencement Date, then the Commencement Date shall be extended by One (!) day for each day of Interference; (iv) if such Interference continues for more than Ninety (90) consecutive days, the Tenant may terminate this Lease, in which event the Landlord shall pay to the Tenant within Twenty (20) days of the date of the Tenant's vacating the Premises an amount equal to the unamortized portion (based on straight- line amortization over the Initial Term) of the Tenant's construction costs incurred in connection with the Premises. The Tenant's termination of this Lease by reason of the Landlord failing or being unable or unwilling to clean up the Environmental Contaminant as aforesaid within such Ninety (90) day remediation period, shall be without prejudice to the Tenant's right to claim for damages against the Landlord arising out of such inability, failure or refusal as aforesaid. The foregoing right shall survive the termination of this Lease. (A) To notizy the Tenant immediately in the event that the Landlord receives notice of any violation of any Environmental Law or that any order of an administrative tribunal or any Authority is made or is proposed to be made against the Landlord in respect of any Environmental Contaminant in, on or near the Lands or Building, and to notizy the Tenant immediately of any discharge, release or discovery of any Environmental Contaminant which does not comply with Environmental Laws, in or under any part of the Building or Lands. (B) The Landlord represents and warrants that all information in the Landlord's possession or control relating to the existence, use, storage or release of a Environmental Contaminant in, under, on or about the Premises, the Building or the Lands including, without limitation, all sampling data, environmental studies or reports, environmental site assessments and historical use reviews, have been provided to the Tenant. (C) Under the provisions of the "Class Environmental Assessment for Ontario Realty Corporation Activity" as approved December 9, 1992, O.C. 3540/92, the Tenant is obliged to consider the potential for Environmental Contaminants in respect of the Premises. In doing so, the Tenant may require evidence that the Lands and Building do not contain Environmental Contaminants prior to taking possession of the Premises. In such event, the Landlord shall: (i) conduct, at the Tenant's sole cost and expense and on behalf of the Tenant, such tests as would a reasonable and prudent buyer of the Lands and Building having regard to the environmental history of the Lands and Building and the Contemplated Use (the "Tests"); and (ii) provide the Tenant with a copy of the results of the Tests, together with any test reports prepared in conjunction with the Tests. The Tests shall be conducted by an independent accredited environmental consulting firm approved by both parties acting reasonably. If the Tests reveal the existence of any Environmental Contaminant in, under, on or about the Premises, the Building or the Lands, Landlord shall promptly comply with its obligations under Section 5.14. (A) The Landlord: (i) represents and warrants that there has not been and is not now; and (ii) covenants to ensure that there will not be, at any time during the Term, any Environmental Contaminant -19- Section 5.17 Asbestos ex1stmg, located, stored, manufactured, refined, disposed of, produced, processed or incorporated in or on any part of the Building or the Lands, except in accordance with Section 5.13 of this Lease. The Landlord acknowledges and agrees that the Tenant is relying on the representations, warranties and covenants in Sections 5.13, 5.14, 5.15, 5.16, 5.17 and 5.18 hereof in entering into this Lease. (B) The Landlord represents, warrants and covenants that as of the Commencement Date and throughout the Term, all Mechanical and Electrical Services and equipment serving the Premises are and will be in good working order and condition and satisfactory for the carrying on of the Tenant's business in and from the Premises. (C) The Landlord represents and warrants that the Building, including the Premises, the Structure and the Common Areas and Facilities: (i) meet and comply with all federal, provincial and local Laws including, without limitation, all handicapped accessibility standards and other provincial disability guidelines including, without limitation O.Reg. 350/06 of the Building Code Act. 1992, S.O. 1992, c. 23, as amended; and (ii) are in good, sanitary order, condition and repair at delivery of the Premises to Tenant. (D) The Landlord represents and warrants that as of the Commencement Date: (i) there shall not be any by-laws (the "By-Laws"), including, without limitation, any restrictive covenants, development agreements, zoning or other ordinances or regulations of any Authority which will prevent or materially limit the Tenant from conducting its business operations in and from the Premises in accordance with this Lease; (ii) the Landlord shall have complied with all such By-Laws in connection with the construction of the Building and every part of the Premises; and (iii) all such By-Laws shall have permitted the erection and shall permit the continual operation of the Building and every part of the Premises, in accordance with this Lease. (E) The Landlord further represents and warrants that it owns the Building and the Lands or otherwise has an interest therein enabling it to enter into this Lease with the Tenant and no additional signatories or consents are required to make this Lease binding and fully enforceable. The Landlord will provide the Tenant with written verification of its ownership of or other interest in the Premises prior to the Commencement Date. The Landlord shall indemnifY and hold the Tenant harmless if the representations and warranties in this Section 5.16 or elsewhere in this Lease prove to be untrue, without limiting the Tenant's rights and remedies under Section 6.11 or at law. Notwithstanding anything to the contrary contained in this Lease, at all material times, including, but not limited to, any times during which either the Landlord or the Tenant are making any Leasehold Improvements or other improvements, additions or renovations in or about the Premises or the Building, or at any times when any maintenance or repairs of any kind are being carried out in or about the Premises or the Building, the Landlord agrees to take all measures, at the Landlord's sole cost and expense, to promptly remove all asbestos or asbestos containing material in or about the Premises or the Building, in accordance with Environmental Laws. Failing such removal by the Landlord, the Tenant may, at the Tenant's sole option, on Twenty (20) -20- Section 5.18 Environmental Indemnity Section 5.19 Additional Services days' prior written notice to the Landlord, take all reasonable measures, at the Landlord's sole cost and expense, to comply with all such Environmental Laws, to deduct the costs and expenses incurred thereby from the Rent and to recover the balance, if any, after such deduction, from the Landlord. The Landlord shall in no case withhold its consent to the making of any Leasehold Improvements to the Premises by the Tenant because of the cost to it of compliance with this Section pertaining to asbestos related to, or resulting from, such Leasehold Improvements. The Landlord hereby represents and warrants that the Building has no friable material, as indicated in Schedule "C" attached hereto. If any asbestos or other friable material is discovered in the Premises during Tenant's inspection of the Premises or construction by the Landlord or the Tenant of any Leasehold Improvements, then Landlord shall promptly remove the asbestos or other friable material, or cause it to be removed at Landlord's sole cost and expense within Twenty (20) days after such discovery and if the foregoing delays the construction or installation of the Tenant's Leasehold Improvements, then the Commencement Date shall be extended for One (1) day for each day of delay. If the Landlord is unable or fails to comply with the foregoing obligation to remove asbestos or other friable material within Twenty (20) days, without limiting the other rights and remedies available to the Tenant, the Tenant may, without further notice, exercise its remedies set out in Section 5.14. The Landlord shall protect, indemnify and hold harmless the Tenant and its directors, officers, contractors, employees, agents, parents, service providers, subsidiaries, successors and assigns from and against any and all loss, damage, cost, expense, or liability arising out of or attributable to: (a) the existence, use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or the presence of a Environmental Contaminant on, under or about the Premises, the Building or the Lands (or off-site on property owned or operated by the Landlord that affects the Premises), except if such loss, damage, cost, expense or liability is directly related to the use, manufacture, storage, release or disposal of an Enviromnental Contaminant on or about the Premises, the Building or the Lands by the Tenant, its agents, contractors, employees or those for whom the Tenant is in law responsible; or (b) a breach of any representation, warranty, covenant or agreement contained in this Article 5. The foregoing indenmity includes, without limitation, the costs of any required or necessary repairs, cleanup or detoxification of the Premises and the preparation and implementation of any closure, remedial or other required plans. This indemnity shall survive the termination of this Lease. In the event of any governmental or court order concerning Enviromnental Contaminants on or about the Premises, the Building or the Lands (not caused by the Tenant) that precludes the Tenant from reasonable operation of its business on the Premises, or materially interferes with the Tenant's enjoyment of the Premises or the operation of its business on the Premises, and such governmental or court order is not resolved within Three (3) months, the Tenant may, without limiting the other rights and remedies available to the Tenant, terminate this Lease. (a) If the Tenant reasonably requests any Additional Services to be performed in or relating to the Premises, it shall so advise the Landlord in writing. The cost of the Additional Services shall be agreed upon between the Landlord and Tenant prior to the Landlord commencing the provision of the Additional Services and shall be competitive with other suppliers providing similar services to similar buildings. Once the costs have been agreed to, the Landlord shall, as soon as reasonably possible, perform or provide any such Additional Services. However, the Landlord -21- Section 5.20 Consent and Approval Section 5.21 Waste Management and Recycling Program Section 5.22 Parking Section 5.23 Landlord's Records and Tenant's Audit Rights Section 5.24 Landlord shall not be required to provide such Additional Services, if to do so would: (i) seriously interfere with the reasonable enjoyment of the other tenants of their respective premises or the Common Areas and Facilities; (ii) jeopardize or impede the Landlord's financing of the Building and/or Lands; or (iii) cause the Building or its services and Common Areas and Facilities not to be of the Building standard. (b) If the Tenant disputes or contests the calculation of any cost or expense incurred by the Landlord or on the Landlord's behalf in performing or providing such Additional Services as set out in the Landlord's invoice therefor, it shall notifY the Landlord and the Landlord shall, upon receipt of such notice, have its senior financial officer prepare a statement of calculation with respect to such Additional Services which shall be delivered to the Tenant within ten (10) days ofthe Tenant's request therefor. Any further dispute shall be submitted to arbitration in accordance with Section 6.13 ofthis Lease. That the Landlord and each Person acting for or on behalf of the Landlord making a determination, designation, calculation, estimate, conversion or allocation or in giving an approval or consent under this Lease, will act reasonably, promptly and in good faith and each accountant, architect, engineer or surveyor, or other professional Person employed or retained by the Landlord will act in accordance with the applicable principles and standards ofthat Person's profession. To cooperate with the Tenant's waste management and recycling program, pursuant to the provisions set out in Schedule "J" attached hereto. This Section shall not apply in the event that there is not a recycling program within the municipality where the Building is located. To provide and maintain approximately Forty (40) parking spaces (the "Parking Spaces") designated for the exclusive use of the Tenant, the Occupant, its servants or agents, and person utilizing the services of the Occupant, located in the Parking Areas, the cost of which is included in the Net Rent. The Landlord shall maintain all records and documents relating to the Landlord's Work, the Landlord's Taxes, Realty Taxes, Operating Costs and all other costs, charges and expenses payable hereunder by either the Landlord or the Tenant, together with all billing statements, tender calls, quotations, contracts, correspondence, invoices, receipts and vouchers relating thereto, for a period of Six (6) years. The Landlord shall permit and assist the Tenant in conducting audits of such records and documents, including, without limitation, those pertaining to Operating Costs and Realty Taxes. It is understood and agreed that the Tenant shall provide the Landlord with Five (5) Business Days prior notice of its requirement for such audit. The Landlord will allow the Tenant to make copies and take extracts therefrom and at no cost to the Tenant will furnish to the Tenant any information which may reasonably be required from time to time in connection with such records. This right shall survive the expiration or earlier termination of this Lease for Three (3) years. The Landlord will not allow or cause a Landlord Transfer, without giving prior written notice to the Tenant. In addition, if the Tenant leases -22- Transfer Section 5.25 Landlord to Communicate Directly with Tenant Section 5.26 Conflict of Interest ARTICLE6 PROVISOS Section 6.1 Overholding Section 6.2 Trade Fixtnres and/or occupies Seventy-Five Percent (75%) or more of the Rentable Area of the Building, the Landlord will not allow or cause a Landlord Tmnsfer without obtaining the prior written consent of the Tenant, which consent may not be unreasonably withheld or unduly delayed. If the Tenant's consent is required hereunder, within Fifteen (15) days after having received the Landlord's notice and all the information it reasonably requires, the Tenant will notify the Landlord in writing either that the Tenant consents or does not consent to the Landlord Tmnsfer. The Landlord acknowledges that the factors governing the gmnting of the Tenant's consent to any Landlord Tmnsfer may include, without limitation, the financial background, business history and the capability of the proposed Landlord Tmnsferee to perform the obligations of the Landlord under this Lease, and the nature of the business pmctices of the proposed Landlord Tmnsferee. 1n the event of a Landlord Transfer and to the extent that the Landlord Transferee assumes the covenants and obligations of the Landlord hereunder in writing directly with the Tenant, the Landlord shall, thereupon and without further agreement, be freed and relieved of all liability with respect to such covenants and obligations. The Landlord shall direct and require all of its directors, officers, employees, agents and duly authorized representatives to communicate only with Ontario Realty Corpomtion in respect of any matters relating to this Lease and shall not, under any circumstances save and except regarding parking armngements or emergencies requiring immediate access into the Premises, allow or permit its directors, officers, employees, agents and duly authorized representatives to communicate with any Occupant of the Premises in any manner whatsover at any time during the Term. The Landlord and any of its successors, administmtors, permitted assigns, directors, officers, employees, agents, servants, and representatives shall not engage in any activity where such activity creates a conflict of interest, actual or potential, in the sole opinion of the Tenant, with the Lease or the exercise of any of the rights or obligations of the Landlord hereunder. The Landlord shall disclose to the Tenant in writing and without delay any actual or potential situation that may be reasonably interpreted as either a conflict of interest or a potential conflict of interest. For clarification, a "conflict of interest" means, in relation to the performance of its contmctual obligations pursuant to this Lease, the Landlord's other commitments, relationships or financial interests that (i) could or could be seen to exercise an improper influence over the objective, unbiased and impartial exercise of its independent judgement; or (ii) could or could be seen to compromise, impair or be incompatible with the effective performance of its contmctual obligations pursuant to this Lease If the Tenant remains in possession of the Premises after the date fixed for the expiration of the Term (the "Expimtion Date") without any further written agreement, the Tenant shall be deemed to be a tenant for a fixed term of Six (6) months from the Expimtion Date upon the terms and conditions contained in this Lease, except as to the length of the Term and the monthly Net Rent payable during such Six (6) month period which shall be One Hundred and Twenty-Five Percent (125%) of the monthly rental mte payable by the Tenant during the last month of the Term of this Lease, or any extensions thereof, as the case may be. (a) The Tenant may at any time during the Term, on termination, or any extension thereof, remove or replace any Tmde Fixtures installed by or on its behalf in the Premises or install new Trade -23- Furniture Section 6.3 Signs Section 6.4 Unavoidable Delays Section 6.5 Rigbt-of-Way Section 6.6 Common Parking (b) (c) (a) Fixtures therein. The Tenant will promptly repair any damage caused to the Premises by the removal of Trade Fixtures. The Tenant shall have the continuous right during the Term to move in or out of the Premises any of its fuminu-e, personal effects, chattels and any business equipment. The Tenant may erect such signs on the Premises and Lands in accordance with the Building standard and in accordance with municipal laws, in its reasonable opinion, considers necessary for the proper conduct of its business. (b) All such signs may be removed from the Premises at the end of the Term. (c) The Tenant shall promptly repair any damage caused to the Premises or the Building, if applicable, by the removal of signs, save and except that caused by local weather and ambient conditions. (d) The Landlord shall provide adequate space on the directory of the Building and that of each floor of the Premises and on any pylon sign of the Building for the Tenant's signage requirements, which signage may be required to be in both the English and French languages. The Tenant shall provide the Landlord with the specifications of its signage requirements before the Commencement Date, and from time to time, as required by the Tenant. Notwithstanding anything in this Lease, if either party is bona fide delayed or hindered in or prevented from the performance of any term, covenant, or act required hereunder by reason of strikes or labour trouble; inability to procure materials or setvices, power failure, restrictive governmental laws or regulations, riots, insurrection, sabotage, rebellion, war, act of God, or other reason whether of a like nature or not which is not the fault of the party delayed in performing work or doing acts required under the terms of this Lease (but excluding the inability to perform because of financial difficulties or lack of funds), then the performance of that term, covenant or act is excused for the period of the delay and the PartY delayed will be entitled to perform the term, covenant or act within the appropriate time period after the expiration of the period of the delay. If any of the events or problems referred to in this Section 6.4 occur and either party contemplates that it will be bona fide delayed or hindered in or prevented from the performance of any term, covenant or act required hereunder by reason thereof, such party shall forthwith deliver written notice to the other, with full and detailed particulars setting out the nature of such event or problem and the period of the delay contemplated by the party giving notice for the performance of any such term, covenant or act required hereunder. If the Premises are now or hereafter served by any alley, easement or right-of-way, the Tenant, its servants, agents, employees, licensees and invitees shall have full right of ingress and egress over such alley, easement or right-of-way in common with all others entitled thereto Intentionally deleted. -24- Section 6.7 Damage and Destrnction If, at any time during the Term, the Building shall be damaged or destroyed, either in whole or in part, by fire or other peril insured against or required to be insured against by the Landlord under Section 5.12 hereof, then, and in every such event: (a) If the damage or destruction to the Building is such that, in the opinion of the Architect to be given to the Landlord within Twenty (20) days of the date of the occurrence of such damage or destruction (the "Date of Damage"), the Premises are rendered partially unfit for occupancy or impossible or unsafe for use or occupancy, then the Rent shall abate as of the Date of Damage in proportion to the part of the Premises which is rendered unfit for occupancy or impossible or unsafe for use or occupancy, and Rent will not be payable again until such time as the Premises and the Leasehold Improvements have been fully restored by the Landlord to their condition as of the Commencement Date. (b) If the damage or destruction to the Building is such that, in the opinion of the Architect to be given to the Landlord within Twenty (20) days of the Date of Damage, the Premises are rendered wholly unfit for occupancy or impossible or unsafe for use or occupancy, or that reasonable or convenient access is prevented thereto, and if, in either event, the damage, in the opinion of the Architect to be given to the Landlord within Twenty (20) days of the Date of Damage, carmot be repaired with reasonable diligence within One Hundred and Eighty (180) days of the Date of Damage, then either the Landlord or the Tenant may terminate this tenancy within Twenty (20) days following the date of the giving of the Architect's opinion, upon written notice to the other party, in which event this Lease and the Term hereby demised will cease and be at an end as of the Date of Damage and the Rent shall be apportioned and paid in full to the Date of Damage. (c) In the event that neither the Landlord nor the Tenant shall terminate this Lease in accordance with the provisions of Subsection 6.7(b) of this Lease, theii the Landlord shall repair the Premises, the Leasehold Improvements and the Building with all reasonable speed and the Rent hereby reserved shall abate from the Date of Damage until the date that is the later to occur of the following: (i) the Premises and Leasehold Improvements are restored to their condition as of the Commencement Date; and (ii) reasonable and convenient access is restored thereto. (d) If the damage or destruction is such that, in the opinion of the Architect to be given to the Landlord within Twenty (20) days of the Date of Damage, the Premises are rendered wholly unfit for occupancy or if it is impossible or unsafe to use and occupy the Premises, and if, in either event, the damage, in the opinion of the Architect to be given within Twenty (20) days from the Date of Damage, can be repaired with reasonable diligence within One Hundred and Eighty (180) days of the Date of Damage, then the Rent shall abate from the Date of Damage until the date the Premises and Leasehold Improvements are restored to their condition as of the Commencement Date, provided that the Landlord shall repair the Premises and the Leasehold Improvements with all reasonable speed. (e) The decision of the Architect as to the time within which the damage or destruction to the Premises, the Leasehold Improvements or the Building can or carmot be repaired, the extent of the damage, or the state of tenantability of the Premises, as the case may be, shall be final and binding upon the -25- Seetion 6.8 Leasehold Improvements by Landlord at request of Tenant Section 6.9 Removal of Leasehold Improvements Section 6.10 Re-Entry Section 6.11 Landlord's Default parties, unless shown to be in substantial error. (t) Notwithstanding anything contained in this Section 6.7, if the Landlord does not commence to repair or restore the Premises, the Leasehold Improvements or the Building within Fifteen (15) days of the date of delivery of the Architect's opinion, or, having commenced the repair or restoration of the Premises, the Leasehold Improvements or the Building does not continue to complete same with reasonable dispatch (and in any event, within One Hundred and Eighty (180) days of the Date of Damage), the Tenant may terminate this Lease upon Fifteen (15) days' prior notice to the Landlord, in which case, this Lease and the Term hereby demised shall cease and be at an end as of the date of such damage or destruction and the Rent shall be apportioned and paid in full to the date of such damage or destruction. Intentionally deleted. The Tenant may, but shall not be required to, at any time during the Term, on termination or on any extension thereof, at its sole option, remove or replace any Leasehold Improvements or alterations made or installed in the Premises by Tenant. If the Rent hereby reserved, or any part thereof, shall be in arrears or if the Tenant shall default in the observance or performance of any of the Tenant's other covenants or agreements contained in this Lease, and the Tenant fails to pay such arrears within Sixty (60) days of receipt of notice in writing from the Landlord or if the Tenant fails to remedy the non-rental default within Sixty (60) days after receipt of notice from the Landlord (or such longer period as is reasonably required under the circumstances so long as the Tenant commences to remedy within such Sixty (60) day period), the Landlord may, in addition to any other remedies the Landlord may have, either in this Lease or at law, re-enter the Premises and the Term hereby granted shall thereupon be terminated. Notwithstanding the foregoing, and without limiting the remedies of the Landlord, in the event the Tenant fails to remedy a non- rental default within the above-specified notice period, and provided the Tenant is not bona fide disputing the non-rental default, upon the expiration of the above-specified notice period the Landlord, at its option, acting reasonably, may remedy the non-rental default on behalf of the Tenant and charge the costs thereof to the Tenant. With respect to any remedy exercised by the Landlord, the Landlord shall have an affirmative obligation to obtain another tenant for the Premises at a fair market rental and to otherwise mitigate its damages. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by the Landlord: (a) Landlord's failure to do, observe, keep and perform any of the terms, covenants, conditions, agreements or provisions of this Lease required to be done, observed, kept or performed by the Landlord, within Thirty (30) days after written notice by the Tenant to the Landlord of said failure (except when the nature of the Landlord's obligation is such that more than Thirty (30) days are required for its performance, then the Landlord shall not be deemed in default if it commences performance within the Thirty (30) day period and thereafter diligently pursues the cure to completion) or such shorter period of time as is reasonable in the -26- circumstances where a delay may jeopardize the safety of the Building or any tenant, subtenant, occupant or Person therein, or where a delay may result in increased loss or damage to the Premises or the Building or the Tenant's use and enjoyment thereof; (b) the Landlord becomes bankrupt or insolvent or makes application for relief from creditors under the provisions of any statute for bankrupt or insolvent debtors, or makes any proposal, assignment or arrangement with its creditors; (c) a receiver or a receiver and manager is appointed for all or part of the property of the Landlord; (d) steps are taken or proceedings are instituted for the dissolution, winding-up or other termination of the Landlord's existence or for the liquidation of its assets; or (e) the failure of any representation or warranty to be true when deemed given hereunder. In the event of a default by the Landlord, the Tenant, at its option, without further notice or demand, shall have the right to any one or more of the following remedies in addition to all other rights and remedies provided at law or in equity or elsewhere herein: (i) to remedy such default or breach and deduct the costs thereof (including solicitors' fees) from the instalments of Net Rent and Additional Rent next falling due; (ii) to pursue the remedy of specific performance; (iii) to seek money damages for loss arising from the Landlord's failure to discharge its obligations under this Lease; and (iv) to terminate this Lease. Nothing herein contained shall relieve the Landlord from its obligations hereunder, nor shall this Section be construed to obligate the Tenant to perform the Landlord's repair obligations. Section 6-12 (a) The Tenant shall be entitled to extend this Lease for Three (3) further terms of Five (5) years each (each an "Extension Term"). Each extension shall be upon the same terms and conditions of this Lease, as extended or amended, except that there shall be no further right of extension beyond the last Extension Term and except for the Net Rent, which shall for each Extension Term be based upon: (I) the Rentable Area of the Premises; and (2) the Market Rental as of the date which is Six ( 6) months prior to the commencement of the respective extension term. The Net Rent for each Extension Term shall be determined by mutual agreement as of the date which is Six (6) months prior to the expiry of the Term or the previous Extension Term, as the case may be, or failing such agreement, by arbitration in accordance with Section 6.13 of this Lease. Option to Extend Section 6.13 Arbitration (b) The Tenant shall give written notice to the Landlord of its extension of this Lease at least Six ( 6) months prior to the end of the initial Term or the previous Extension Term, as the case may be. 1n the event of any dispute between the Landlord and the Tenant with respect to any matters arising under this Lease which cannot be resolved by the parties acting in good faith, then at either party's option, the dispute may be submitted to arbitration in accordance with the provisions of the Arbitration Act, 1991, S.O. 1991, c.l7, as amended, or any successor act. Each party shall appoint an arbitrator and the appointed arbitrators shall jointly choose a third arbitrator to create a board of Three (3) arbitrators, the majority decision of which shall be binding upon the parties. If either party shall refuse to appoint an arbitrator within Thirty (30) days of being served with written notice of arbitration by the other party, then the arbitrator first appointed shall, at the request of the party appointing him, proceed as if he were a single arbitrator appointed by both parties. 1n such cases the single arbitrator shall receive and consider written or oral submissions from both parties. If two arbitrators are appointed and they fail, within Ten (10) days of the appointment of the second of them, to agree upon the appointment of the third arbitrator, then upon the application of either party the third arbitrator shall be appointed by a Judge of the Ontario Superior Court of -27- Section 6.14 Additional Space Section 6.15 Non-Waiver Section 6.16 Non-Disturbance Agreement Section 6.17 Notices Section 6.18 Entire Agreement Section 6.19 Registration Justice. Each party shall pay the fees and expenses of the arbitrator appointed by it and one half of the fees and expenses of the third arbitrator. If during the Term the Tenant requires additional space, the Landlord covenants and agrees to use commercially reasonable efforts to lease such additional space to the Tenant or, at the Tenant's request, relocate the Tenant to larger premises within the Building, subject to availability and to the parties agreeing upon the terms and conditions of such relocation. For the sake of clarity, the relocation right contained herein is for the Tenant's benefit only and the Landlord shall have no right whatsoever to relocate the Tenant. No condoning, excusing or overlooking by the Landlord or Tenant of any default, breach or non-observance by the Tenant or the Landlord at any time or times in respect of any covenant, proviso or condition herein contained shall operate as a waiver of the Landlord's or the Tenant's rights hereunder in respect of any continuing or subsequent default, breach or non-observance, or so as to defeat or affect in any way the rights of the Landlord or the Tenant herein in respect of any such continuing or subsequent default or breach, and no waiver shall be inferred from or implied by anything done or omitted by the Landlord or the Tenant save only an express waiver in writing. Upon receiving a written request from the Tenant, the Landlord shall obtain, at the Landlord's sole cost and expense, a non-disturbance agreement in the form attached hereto as Schedule "0" from every head landlord, mortgagee or other encumbrancer of the Lands who has, or may in the future have, priority to the Tenant's leasehold interest in the Premises. Any notice required or contemplated by any provision of this Lease shall be given in writing addressed in the case of notice to the Landlord to the address set out in Paragraph (t) of the Summary and in the case of notice to the Tenant to the address set out in Paragraph (g) of the Summary, and delivered personally or by facsimile or mailed by either registered or signature mail and postage prepaid enclosed in a sealed envelope. The time of giving of notice by either registered or signature mail shall be conclusively deemed to be the Fifth (5th) Business Day after the day of such mailing. Such notice, if personally delivered or if delivered by facsimile, shall be conclusively deemed to have been given and received at the time of such delivery. The parties hereto acknowledge and agree that notwithstanding anything to the contrary in the Electronic Commerce Act, 2000. S.O. 2000, c.17, as amended from time to time, any notice, statement, demand, request or other instrument which may be or is required to be given under this Lease or at law may not be validly delivered by way of electronic communication. The Tenant and the Landlord acknowledge that there are no covenants, representations, warranties, agreements or conditions, expressed or implied, collateral or otherwise, forming part of or in any way affecting or relating to this Lease save as expressly set out in this Lease and that this Lease and the Schedules hereto constitute the entire agreement between the Landlord and the Tenant and may not be modified except by subsequent agreement in writing of equal formality hereto executed by the Landlord and the Tenant. Schedules "A", "B", "C", "D", "E", "F", "G", "H", "1", "J", "K", "L", "M", "M-1", "N", "0", "P" "Q" and "R", which are attached to this Lease, form part of this Lease. The Tenant may, at its option, register a Notice of this Lease in the applicable Land Registry or Land Titles Office and the Landlord will cooperate with the Tenant to facilitate the registration and execute all -28- Section 6.20 Severability Section 6.21 Interpretation Section 6.22 Headings and Captions Section 6.23 Effect of Lease Section 6.24 Snrvival of Agreement Section 6.25 Binding on Tenant Section 6.26 Governing Law Section 6.27 Time of Essence Section 6.28 Freedom of Information Section 6.29 Certificates documentation required for such purpose. The Landlord and the Tenant agree that all of the provisions of this Lease are to be construed as covenants and agreements as though the words importing such covenants and agreements were used in each separate paragraph hereof. Should any provision or provisions of this Lease be illegal or not enforceable, it or they shall be considered separate and severable from this Lease and its remaining provisions shall remain in force and be binding upon the parties hereto as though the said provision or provisions had never been included. The words "herein", "hereof', "hereby", "hereunder", "hereto11, "hereinafter", and similar expressions refer to this Lease and not to any particular paragraphs section or other portion thereof, unless there is something in the subject matter or context inconsistent therewith. The headings in this Lease have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge the scope of meaning of this Lease nor any of the provisions hereof. This Lease and everything herein contained shall operate to the benefit of any and be binding upon the respective successors, assigns and other legal representatives, as the case may be, of each of the parties hereto subject to the granting of consent by the Landlord as provided herein to any assignment or sublease, and subject to the provisions of Section 6.24 ofthis Lease, every reference herein to any party hereto shall include the successors, assigns and other legal representatives of such party. Neither the execution of this Lease nor the occupancy of the Premises by the Tenant waives the obligations of the Landlord or the Tenant to comply fully with and to perform the terms, covenants and conditions of the Agreement to Lease. The provisions of the Agreement to Lease shall survive until waived expressly, are performed, or are otherwise satisfied. Any waiver by either the Landlord or Tenant of a condition or the performance of any obligation of either of them under the Agreement to Lease shall be effective only if in writing. In the event of a conflict between the provisions of the Agreement to Lease and those of this Lease, such provisions of this Lease shall prevail. This Lease shall not be binding upon the Tenant until it has been executed by the Ontatio Realty Corporation. This Lease shall be governed by and construed in accordance with the Laws of Ontatio. Time shall be of the essence hereof. The Landlord acknowledges that this Lease and any information contained herein, may be required to be released pursuant to the provisions of the Freedom of Information and Protection ofPrivacv Act, R.S.O. 1990, c. F.31, as amended. Whenever requested by the Landlord or the Landlord's lender, the Tenant shall promptly execute and deliver to such party an estoppel certificate or other form of certified acknowledgement as to the then status and validity or otherwise of this Lease, and the state of the rental account hereunder, on the Tenant's then standard form or such other -29- fonn as is acceptable to the Tenant, acting reasonably. Whenever requested by the Tenant or any party authorized in writing by it, the Landlord shall deliver a similar certificate to the Tenant or such other party. Section 6.30 Notwithstanding anything contained in this Lease to the contrary, (a) Reasonableness any allocation of any cost, charge or expense shall be done on a reasonable and equitable basis; (b) wherever in this Lease consent, pennission or approval is required by either the Landlord or the Tenant, unless specified to the contrary elsewhere in this Lease, such consent, pennission or approval shall not be unreasonably withheld or delayed; and (c) in exercising any of its rights or remedies under this Lease, the Landlord and the Tenant shall each act in a reasonable and prudent manner. Section 6.31 Right to Terminate The Tenant shall have the right to tenninate this Lease at any time on or after January I, 2011 by providing the Landlord with not less than Six ( 6) months' prior written notice. IN WITNESS WHEREOF the parties hereto have executed this Lease. SIGNED, SEALED & DELIVERED Dated the"Z..I day ofNOtrmher 2009 Dated the .l' day of lol ov ~ bcr 2009 TOWN OF Per: Name: li.J ·, Title: Qe_r/< .. Authorized Signing Officer cis ONTARIO REALTY CORPORATION, acting as agent on behalf of HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER ENERGY AND INFRASTRUCTURE Per: Name: Richard Schveighardt Title: Regional Director of Operations Southwest Region Authorized Signing Officer -30- SCHEDULE "A" LEGAL DESCRIPTION OF THE LANDS Lot 25 & 26, Plan 966. -31 - ~ i ~ s: 1§ ~ FLOOR PLAN 1-!otro~ FLOOR RENTABLE AREA= J2481G.G7 50. fT. 0 PK Construction Inc. .. :.:~Ph::,::,~.~":: .• ~):: .. ::,~ .• ::,7,:::~,: .. ~,~ •• :.~).~.,..:-:-.:,.:--• ~7 TiiiiQn Stre~ Tilhonburg. Onta!W N4C oRJ f>'•""'<lJ>o• Floor Plan Floor Rentable Area Boma Cert1f1cat1on Ell1ot Fa~rbawn Centre 3 I Earle Street, Tillsonbur'j. OntaM ""·=~ P0083 ·5;;;-···-~.i;;.·23:-2m-.. .. ' . ""-_,_ Not to Scale ·---5P<o; 3 "' "' RE: SCHEDULE "C" NOTIFICATION OF THE PRESENCE OF FRIABLE MATERIAL CONTAINING ASBESTOS IN BUILDINGS CONTAINING PREMISES LEASED BY THE ONT ARlO REALTY CORPORATION . •' REGULATION RESPECTING ASBESTOS ON CONSTRUCTION PROJECTS AND IN BUILDING AND REPAIR OPERATIONS MADE UNDER THE OCCUPATIONAL HEALTH AND SAFETY ACT, ONTARIO REGULATION 278/05, as amended or replaced from time to time LOCATION: 31 Earle Street, Tillsonburg, Ontario LEASE NO: [ 1 [ l [ 1 [ X 1 L11794 There is friable material in the Building. "Friable material" means material that when dry can be crumbled, pulverized or powdered by hand pressure and includes such material that is crumbled, pulverized or powdered. The friable material contains asbestos. The friable material does not contain asbestos. There is no friable material in the Building. Location(s) of Asbestos within the Building: Types of Asbestos Date: -33- I. In this Schedule: SCHEDULE "D" OPERATING COSTS (YEAREND) (a) "Operating Costs" means: (i) subject to the provisions contained in the remainder of this Lease, the reasonable and actual costs incurred by the Landlord, without duplication or profit, for operating, maintaining, repairing and insuring the Building and Lands, including the following: (A) [Intentionally Deleted]; (B) the cost of collection and removal of garbage and waste; (C) landscaping and maintenance of all outside or enclosed areas, including snow and ice removal; (D) the cost of light fixtures maintenance and fluorescent tube, light bulb and ballast replacement, save and except the replacement of such ballasts that have been affected by the presence of PCBs, and in such instance or instances, the cost of such replacement (including labour and installation) shall be at the Landlord's sole expense, and shall not be included in the calculation of Operating Costs; (E) [Intentionally Deleted]; (F) operation, maintenance and repairs in respect of any elevators, escalators and motorized equipment within the Building; (G) communications, sound and visual systems; (H) [Intentionally Deleted]; (!) all insurance which the Landlord is obliged to obtain under the Lease, including insurance premiums required by the Landlord for the Land and Premises; (J) consultants' fees directly related to the reduction or control of increases in Operating Costs of the Building and accountants' fees incurred in compliance with the provisions of the Lease; (K) rental of cleaning equipment, snow removal equipment, trucks, maintenance equipment and tools; (L) reasonable salary ofthe on-site manager where his/her entire duties relate to the management of the Building (or are proportionally based on the time spent there), plus the cost of other on-site support staff working only on the business of managing the Building (excluding officers, secretarial, clerical and accounting staff of the Landlord); (M) an administration fee not to exceed Twelve percent (12%) of the costs referred to in subparagraphs {A) to (L) inclusive hereof afler deducting those costs set forth in Paragraph l(a)(ii) of this Schedule "D" and excluding those costs set forth in Paragraph l{a)(iii) of this Schedule "D", as well as those amounts received by the Landlord for Sales Taxes in respect of the costs referred to in subparagraphs {A) to (L) inclusive hereof, Additional Services, and -34- ' any administration, management and supervision fee charged to tenants in respect of construction or work on their respective premises in the Building. It is intended that the foregoing Twelve percent (12%) administration fee is in recognition of the management and administrative functions performed by or on behalf of the Landlord as well as a reasonable allocation to the Landlord's overhead. Accordingly, such administration fee shall not be duplicated by any outside contracted management costs or fees which are attributable to management or supervisory functions performed by the Landlord or by any other entity or person; (N) any costs relating to the operation, maintenance, repair, replacements of or to the Mechanical and Electrical Services, with heating, ventilation and air-conditioning (including humidification) system costs limited only to the gymnasium area and also including plumbing systems, which are not of a major or capital nature; (0) any costs relating to the operation, maintenance, repair, replacements of or to the window mount air-conditioning units in place as of the Commencement Date; (P) any costs relating to the operation, maintenance, repair, inspections, replacements of or to the fire and security alarm systems and fire extinguishers, in place as of the Commencement Date; and (Q) any costs relating to the repair and replacement to the Building. (ii) Operating Costs shall be reduced by the following to the extent otherwise included in Operating Costs and to the extent actually received by the Landlord: (A) proceeds of insurance and damages paid by third parties or the amount that would have been received had the Landlord maintained all insurance policies required to be maintained by it pursuant to the terms and conditions of this Lease; (B) repairs or replacements to the extent that the cost of the same is recovered by the Landlord pursuant to original construction and/or equipment warranties; (C) amounts recovered from tenants on account of any Additional Services provided to them by the Landlord in addition to those generally available to all tenants ofthe Building; and (D) any cost savings due to more efficient use of energy within the Building. (iii) Notwithstanding anything in this Lease or Schedule "D" to the contrary, Operating Costs shall exclude the following: (A) wages, salaries and payroll costs of anyone not doing work associated with maintaining, repairiog and cleaning the Building and the Lands; (B) any cost of original planting of trees, flowers and foliage, or grass, or preparation of feature areas; (C) any cost of major resurfacing (as opposed to sealing and patching) of any part of the Parking Areas; -35- (I) any costs of additional curbing to the original Parking Areas, or the cost of improving the original quality of the Parking Area materials; and (2) any costs of new Parking Areas, signing or traffic control equipment; (D) any costs of repairs to any part of the Building or the Parking Areas caused by defect or weakness in the Structure or poor original construction; (E) (I) any capital costs of the equipment for the Building; (2) any major replacement of parts which materially extend the life of the elevators or Mechanical and Electrical Services, including the boiler; (F) costs for any maintenance, repair and/or replacements to the Structure (and any part thereof) which are major or of a capital nature; (G) any costs properly chargeable to a capital account using generally accepted accounting principles and the original costs of constructing or acquiring the Building; (H) market research and legal fees; (I) depreciation of office furniture and equipment; (J) Landlord's Taxes and any penalties relating to the late payment of Landlord's Taxes; (K) all fines, suits, claims, demands, actions, costs, charges and expenses of any kind or nature for which the Landlord is or may become liable by reason of any neglect or wilful act or omission on the part of the Landlord or any Person for whom it is in law responsible, or by reason of any breach, violation, non-payment or non-performance by the Landlord of any of the covenants, terms or provisions contained in the Lease; (L) costs or expenses incurred in rebuilding or replacing the Structure of the Building or the Premises or in constructing, improving or renovating any part of the Building, unless such request emanates from the Tenant; (M) costs or expenses incurred in the repair of defects in the construction of any part of the Building; (N) costs or expenses arising from the negligence of any Person; (0) costs or expenses incurred to satisfy the requirements of any other tenant; (P) costs or expenses to the extent that such costs or expenses are attributable to any other leasable premises or to any area, facility, utility, improvement, equipment or installation forming a part of the Building but not generally and usually enjoyed by the Tenant, its employees and invitees; (Q) costs or expenses with respect to which proceeds of any insurance maintained by the Landlord are paid or payable to the Landlord or any mortgagee, or debenture or bondholder; -36- (R) costs or expenses incurred with respect to any matter for which the Landlord has agreed to indemnify and save the Tenant harmless; (S) original acquisition and construction costs or expenses; (T) ground rent; (U) depreciation on replacement, repairs and maintenance of the Building, Leasehold Improvements and Lands; (V) amortization and interest on and capital retirement on debt or other financing with respect to the Building and the Lands; (W) any costs or expenses incurred by the Landlord as a result of any default of other tenants in the Building; (X) any costs or expenses incurred to satisfy the renewal or extension requirements of the Tenant undertaken by the Landlord; and (Y) any costs or expenses relating to the existence or to the cleanup and/or decommission of the Lands and the Building from the presence of any Environmental Contaminant, or as a result of any spill of any Enviromnental Contaminant on or in any part of the Building or Lands. 2. Operating Costs are to be determined in accordance with generally accepted accounting principles in accordance with industry standards applied consistently by prudent owners or landlords of similar buildings of comparable size, effective age, quality, use and geographic area, unless otherwise noted within the definition of Operating Costs. 3. The Tenant shall pay its Proportionate Share of Operating Costs in equal monthly instalments, on the first day of each calendar month during each Cost Period. 4. Within Ninety (90) days after the end of each Cost Period, commencing at the end of the first Cost Period, the Landlord shall deliver to the Tenant a customized audited statement in the form set out in Schedule "F" attached to the Lease (the "Statement"), together with the Tenant's Proportionate Share of the total costs set out in the Statement, which shall be reported on by a public accountant. Such report of the accountant shall be in the form as set out in Schedule "E" attached to the Lease. Upon Thirty (30) days notice in writing, the Tenant may change its reporting requirements including, without limitation, the form and content of the aforesaid statements to be delivered by the Landlord. In the event that the Landlord fails to deliver the Statement to the Tenant within One Hundred and Eighty (180) days from the end of a Cost Period, the Tenant shall not be responsible for the payment of any amount under Paragraph 7 for that Cost Period 5. Pursuant to Section 5.2(B) hereof, the Tenant shall have the right to audit the Landlord's records and documents relating to Operating Costs. In addition to such audit rights, the Tenant shall have the right to dispute the Statement, reports and Operating Costs referred to therein. 6. If the Tenant has paid more than the Statement specifies for a Cost Period, the Landlord shall pay to the Tenant, within Sixty (60) days after receipt of the Statement in respect of the Cost Period, or upon conclusion of any arbitration of a dispute with respect to Operating Costs, the amount of the overpayment. If the Tenant does not receive such sum as aforesaid, the Tenant shall have the right to offset such sum as against the Rent. 7. If the Tenant has paid less for Operating Costs than the Statement specifies for a Cost Period, the Tenant shall pay to the Landlord, within Sixty (60) days after receipt of the Statement for the Cost Period or upon conclusion of any arbitration of a dispute with respect to Operating Costs, the amount of the underpayment. -37- 8. In the event of any dispute with respect to the nature or amount of Operating Costs or the Tenant's Proportionate Share thereof, the matter in dispute will be referred to and determined by arbitration, in which case, the payment by the Tenant to the Landlord of any disputed amount will be made following the conclusion of arbitration proceedings. The arbitration of any dispute referred to in this Schedule "D" shall be conducted in accordance with Section 6.13 of this Lease. 9. If the Landlord shall be found to have overcharged Operating Costs payable hereunder the Landlord shall refund the Tenant in respect of such overcharge within ten (10) Business Days after such overcharge is discovered, and failing such payment the Tenant shall have the right, to deduct the amount owing, together with interest at Three percent (3%) above the prime rate set by the Tenant's bank from time to time, from the next payments of Rent becoming due hereunder, without being in default of the provisions of this Lease. If such overcharge exceeds Twelve (12) months' worth of Net Rent payable hereunder or there is less than Twelve (12) months remaining in the Term of the Lease, then the Tenant shall have the right to terminate this Lease upon not less than Five (5) days' written notice to the Landlord. The Landlord's obligation herein to refund any overcharge in respect of Operating Costs shall survive the expiration or sooner termination of this Lease, unless the full amount of such overcharge has been deducted as aforesaid. I 0. Notwithstanding any provtston of this Lease to the contrary, the Tenant's annual Additional Rent through the end of the first full Cost Period shall not exceed One Dollar ($1.00) per square foot of Rentable Area of the Premises. Notwithstanding anything contained herein to the contrary, the portion of the Tenant's annual Additional Rent attributable to Operating Costs for the second and any subsequent Cost Period shall not exceed One Hundred Five percent (I 05%) or the percentage increase in CPI, whichever is less, on a non-cumulative basis, of the portion of the Tenant's annual Additional Rent attributable to Operating Costs, payable for the immediately preceding Cost Period. ["CPI" means the Consumer Price Index (All Items for Regional Cities) for the city in which the Building is located, or if there is no Consumer Price Index for that city, the index most nearly corresponding thereto and with appropriate conversions being made where the basis of comparison or calculation has changed.] -38- SCHEDULE "E" AUDITOR'S REPORT ON STATEMENT OF OPERATING COSTS In accordance with the terms and conditions of the Lease dated January 17, 2009 between The Corporation of the Town of Tillsonburg (Landlord) and Ontario Realty Corporation, acting as agent on behalf of Her Majesty the Queen in Right of Ontario as represented by the Minister of Energy and Infrastructure (Tenant) for the leasing of the Premises described in the Lease Lll794, the Landlord has prepared a Statement of Operating Costs for the year ending [INSERT MONTHIDA Y), 20[INSERT YEAR], which contains the following summary and calculations: (a) the Operating Costs incurred during the year; (b) the Tenant's Proportionate Share of Operating Costs; and (c) the amount, if any, payable by the Tenant to the Landlord or from the Landlord to the Tenant, as the case may be, under Paragraphs 6 and 7 of Schedule "D" attached to the Lease. This Statement of Operating Costs has been prepared in all material respects, in accordance with generally accepted accounting principles and with the terms and conditions of the Lease. I have audited the Landlord's Statement of Operating Costs for the year ending [INSERT MONTH/DAY], 20 [INSERT YEAR], with the criteria established by the Lease. Compliance with criteria established by the provisions of the Lease is the responsibility of the Landlord. My responsibility is to express an opinion on this compliance based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the Landlord complied with the criteria established by the provisions of the Lease referred to above. Such an audit includes examining, on a test basis, evidence supporting compliance, evaluating the overall compliance with the Lease, and where applicable, assessing the accounting principles used and significant estimates made by the Landlord. In my opinion, as at [INSERT DATE], the Landlord is in compliance, in all material respects, with the criteria established by the Lease. Signature of a Public Accountant City and Date -39- " . SCHEDULE "F" STATEMENT OF OPERATING COSTS OPERATING EXPENSES for the year ending (INSERT DATE) Landlord's Name: The Cmporation ofthe Town ofTillsonburg 31 Earle Street, Tillsonburg, Ontario Lll794 Building Location: MBS Lease No.: A. Cleaning Expenses Payroll, Benefits Contract Services Supplies and Materials Trash Removal Other Total Cleaning B. Repairs/Maintenance Payroll, Benefits Elevator Contracts/Materials Electrical Contracts/Materials Mechanical Contracts/Materials Plumbing Fire and Life Safety Other Total Repairs/Maintenance c. Utilities Electricity Gas Fuel Oil Water Sewer Total Utilities D. Roads/Grounds/Security RIG Payroll, Benefits RIG Contract Services -40- $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Other $0.00 Security Payroll, Taxes, Benefits $0.00 Security Contract Services $0.00 Other $0.00 Total Roads/Grounds/Security $0.00 E. Administrative Payroll, Benefits $0.00 ~anagernentFees $0.00 Professional Fees $0.00 General Office Expense $0.00 Other $0.00 Total Administrative $0.00 F. Parking Operations (If no separate agreement has been entered into between the Landlord and the Tenant for Parking) Cleaning $0.00 Maintenance $0.00 Total Parking Operations $0.00 TOTAL (A-F INCLUSIVE) G. Building Insurance $0.00 Total Building Insurance $0.00 TOTAL (A-G INCLUSIVE) $0.00 -41 - ' ' SCHEDULE "G" REALTY TAX ADJUSTMENT (YEAREND) 1. In this schedule: (a) "Realty Taxes" means all taxes, rates, duties, charges, levies and assessments whatsoever in the nature of realty taxes, whether municipal, provincial or federal charged or levied upon the Building and the Lands Appurtenant Thereto, or upon the Landlord on account thereof, including all taxes, rates, duties, levies and assessments for local improvements, education and schools and all taxes, grants or assessments which may in the future be levied in lieu of Realty Taxes, but shall exclude any tax paid by the tenants which was attracted by the tenants' improvements, any tax such as personal and corporate income taxes, business taxes, capital tax, profits or excess profits taxes assessed upon the income of the Landlord, excise tax, value-added tax, sales tax, goods and services tax, business transfer tax, any and all impost charges or any other tax or assessment which is personal to the Landlord, any interest or penalties for late payment of Realty Taxes, and any other charges included in the tax bill that are not Realty Taxes. Should the Landlord undertake any improvements which result in an increase in Realty Taxes, the Tenant shall not be liable to pay any portion of any increase in Realty Taxes levied as a result of such improvements; and (b) "Building and the Lands Appurtenant Thereto" means the total area of the Building and a reasonable portion of the Lands. The portion of the Lands included in this description should be reasonable in relation to the Building and, in any case, should not exceed One Hundred and Ten percent (110%) of the amount of land required for the building coverage under the applicable zoning regulations. Any portion of the Lands which can be severed shall not be included as part of this Lease. The Landlord will make the necessary adjustment to reflect a reasonable area of the Lands. 2. The Landlord and Tenant agree that the Net Rent, payable pursuant to Section 3.1 hereof, includes the Tenant's share of Realty Taxes. Accordingly, the Landlord shall be responsible to pay all Realty Taxes to any relevant taxing Authority directly and the Tenant shall have no responsibility for the payment of Realty Taxes other than as set out in Section 3.1 and this Schedule "G". -42- SCHEDULE"H" ELECTRICAL REQUIREMENTS Electrical requirements shall be provided to meet standards outlined in Section 5.3 of the Lease and as follows: I. Electrical Power 1.1 Distribution system must be 600 amp, 3 pbase, 4 wire or 208/120 volts, 3 phase, 4 wire and available within the Building for mechanical equipment. 1.2 Emergency power including supply for exit lighting, stairwell lighting, fire alarm and other systems to be in accordance with all relevant legislation, codes and regulations. 1.3 Circuiting at a rate of I x 120 volt circuit per occupant plus 20 per cent spare capacity using 42 circuit panelboard, each ready for feeds on each floor with the ability to provide 120 volt dedicated circuits. 1.4 Landlord to supply, in addition to the lighting system, 44 watts of power per rentable square metre at the panel boards for the Tenant's use. Each transformer supplying a panel board to which desktop computers are to be connected, shall be derated to 50% of its nameplate rating exclusive of any allowance for future loads, to allow for harmonic currents. Alternatively, harmonic mitigating transformers can be supplied, in lieu of standard transformers. Harmonic mitigating transformers may be loaded to 80% of their nameplate ratings. The neutral conductors of the feeders from the transformer to the panel boards shall have twice the current rating of the phase conductors. 1.5 Landlord is to ensure that the supply of power to lighting, receptacles and mechanical systems are via separate and distinct power sources. 1.6 Special grounding for computer or other electronic equipment is not required unless specifically described elsewhere in the Lease. I. 7 All existing wiring within the Premises shall be removed back to the panel boards. 1.8 Each floor or part floor of the Premises shall be equipped with local switches for lighting control. 2. Levels of lllumination The levels of illumination shall be in accordance with IES recommendations and the listed levels below shall represent the minimum average maintained conditions and in the case of office and working space shall be: Area Office space without VDT (Visual Data Terminals) use, reading tasks Office space with VDT use* (provide local task lighting to provide minimum 500 lux where reading tasks performed) Lobbies, storage, washrooms Circulation areas, stairs Covered parking Exterior parking Level (in Lux) 500 (at desktop) 300 (at desktop) 200 (at floor) I 00 (at floor) 50 (at pavement) 100 (at entrance) 10 (at pavement) * Provide VDT area lighting in accordance with IES RPI-1993 recommendations as to ceiling brightness as well as lighting level. -43- SCHEDULE "I" HVAC, PLUMBING & DRAINAGE AND FIRE PROTECTION SYSTEMS I. HV AC SYSTEM The Landlord shall keep all parts of the Premises heated with artificial heat to a proper and reasonable temperature and provide air-conditioning, ventilation, and humidification (only in the gymnasium area) in accordance with the following design standards: 1.1 Outside design conditions shall be as indicated in the "Ontario Building Code 1997, Section 2.5.1 Climatic and Seismic Values" and the associated ''Table 2.5.1.1 Design Data For Selected Locations in Ontario". For Summer use the 2-112% July dry bulb and wet bulb temperatures. For Winter use the I% January design temperature. 1.2 The heating system shall maintain an indoor temperature of 22 degrees Celsius plus/minus I degree Celsius temperature of 22 dry bulb with the winter outside design conditions noted above. 1.3 The air-conditioning system shall maintain an indoor temperature of not more than 24 degrees Celsius dry bulb with a 2 degrees Celsius with the summer outside design conditions noted above. 1.4 The ventilation system shall supply a minimum of 10.0 litres per second of outside air per 10.0 square metres of net floor area at the specified outside design conditions. (Based on 10 square meters floor area per person and 10 Us per person fresh air for office spaces as per ASHRAE standard 62 -1989). 1.5 The humidification system shall maintain a minimum of 20% relative humidity at outside conditions below minus 5 degrees Celsius, and a minimum of 25% relative humidity at outside conditions above minus 5 degrees Celsius. The Building envelope must contain a suitable vapour barrier to maintain the specified humidity levels and minimize moisture transfer by diffusion into the envelope assemblies. 1.6 The carbon dioxide concentration in the Premises shall not exceed 800 PPM at any location. I. 7 The Landlord shall ensure that all control settings are checked prior to the beginning of each Business Day and after any temporary office closure periods such as weekends or statutory holidays, to ensure that proper enviromnental conditions are met. 1.8 The Landlord shall ensure that the safety and integrity of air distribution systems serving the Building are maintained at all times including, without limitation, regularly, and in any event, at least annually, testing for spores, moulds and other Enviromnental Contaminants. 1.9 In accordance with the Ontario Building Code, the building heating, ventilating and air conditioning systems shall be designed and operated to conform to good engineering practice. As such, systems shall be energy efficient and comply with ASHRAE 90.1- 1989"Energy Efficient Design ofNew Buildings except Low-rise Residential Buildings" and the "Model National Energy Code For Buildings 1997". 1.10 The air conditioning system capacity shall allow for the occupant load at one person per 10 square metres, the solar and transmission heat gains and an allowance of 16 watts per square metre for lighting and 16 watts per square metre for office equipment heat gains. 1.11 The air handling systems shall have air filtration with efficiencies per ASHRAE Standard 52.1-1992 including pre filters at 30% efficiency and final filters at 85% efficiency. 1.12 All mechanical equipment shall be isolated and silenced to maintain noise levels in the occupied space at a noise criteria (NC) of 35 or less. Space must be free from any annoying, recognizable noise characteristics such as rumble, hiss, tones and variable noise patterns. -44- 1.13 Thermostatic controls: Individual control zones shall be provided for each perimeter comer condition, every 50 square metres of perimeter space and for every 100 square metres of interior space. Within a control zone, heating and cooling shall be controlled in sequence. 1.14 Outside air intakes for the building shall be located sufficiently far from building exhausts, loading docks and external sources of pollution to prevent ingestion of contaminants. 2. PLUMBING AND DRAINAGE SYSTEM 2.1 The Landlord shall supply at each side of the core of each floor of the Premises capped plumbing and drainage services to serve the tenant's plumbing installations. Minimum services shall include a 25mm valved and capped domestic cold water connection, 50mm vent, 100 mm sanitary drain (at the level below). 3. FIRE PROTECTION SYSTEMS 3 .I All sprinkler systems, fire standpipe systems and portable fire extinguishers shall be designed and installed in accordance with the Ontario Building Code, National Fire Code and NFP A requirements. -45- ' ' SCHEDULE "J" WASTE MANAGEMENT AND RECYCLING PROGRAM The Government of Ontario Recycling Program is as follows: I. Waste in premises leased by the Tenant will be separated by employees of the Occupant into Five (5) categories (herein referred to as "Source Separated Recyclable Materials"): 1.1 Fine Paper 1.2 Newspaper 1.3 Glass and metal, and food and beverage containers 1.4 Disposable Waste 1.5 Cardboard Note: The number of categories may be increased or materials within categories changed. 2. The Tenant will provide the following equipment to assist the Landlord in the collection of Source Separated Recyclable Materials: 2.1 Desk-top collection containers to be placed on each individual's desk, and to be emptied by the Tenant. 2.2 Metal floor bins for the central collection of newspapers and fine papers. 2.3 Reusable burlap bags to line the metal floor bins. 2.4 Blue boxes for the collection of glass and metal food and beverage containers. 3. Source separation will be carried out by employees of the Occupant in the following manner: 3.1 Collecting of fine paper in desktop containers. 3.2 Depositing fine paper in strategically located floor containers marked "The Paper Saver". 3.3 Depositing newspapers in strategically located floor containers marked "The Newspaper Saver". 3.4 Depositing glass, and metal, food and beverage containers into strategically located "Blue Box" containers. 3.5 Depositing all other waste into existing waste bins at each work station. 4. All Five (5) categories listed in Section 1 hereof will be collected in accordance with existing janitorial and maintenance routines (i.e. containers dumped daily by cleaning stafl). The Five (5) categories will be kept separate and distinct in the Landlord's holding area for pickup of recyclables. The Landlord agrees to collect, store and remove all Source Separated Recyclable Materials from the Premises on a regular basis, and as required for the plllposes of recycling. 5. The remaining waste, as described in Category 1.4 of Section 1, will be handled in the usual manner for the Premises and Building. -46- SCHEDULE "K" CONSERVATION OF ENERGY AND WATER In view of the Tenant's policy of conservation of energy and water, the Landlord covenants to adhere under the Lease, wherever possible, to the following procedures; 1. Lighting The energy efficiency of all indoor fluorescent lamps shall be T8 or better and shall employ high efficiency electronic ballasts. Individual four-foot fluorescent lamps shall consume no more than 30 watts each. The choice of lamps and ballasts shall not compromise the required nominal levels of illumination as set forth in Schedule "II" to this Lease. Existing indoor incandescent bulbs, except those required for architectural decor, such as chandeliers, shall be replaced, where possible without fixture modification, by suitable compact fluorescent bulbs. The use oflighting equipment that promotes energy efficiency, such as, by way of example: (i) lighting control systems with updated schedules (ii) occupancy sensors (iii)photocells shall be employed, wherever possible, in the lighting system of the Building. 2. Heating and Cooling Energy consumed for heating and cooling shall be reduced: 2.1 The heating, ventilating and air conditioning systems shall be audited annually for control compliance to ensure efficient operation. Controls shall be in place to prevent simultaneous heating and cooling of a given space and/or its air supply. Suitable indoor ventilation control shall be in place to prevent over or under ventilation of space by use of C02 censors. Levels shall be prescribed by ASHRAE standard 62-2001 recommended C02 levels for indoor office space. The use of heating, ventilating and air conditioning equipment that promotes energy efficiency, such as, by way of example: (i) variable frequency drives on fans and pumps (ii) DDC Building Automation System with updated schedules (iii)Cooling towers fitted with heat exchangers to allow free cooling during the winter (iv)high efficiency motors on fans and pumps shall be employed, wherever possible, in the heating and cooling systems of the Building. During the heating season, temperature control devices for general office space shall be to maintain 70-72 degrees Fahrenheit (21-22 degrees Celsius) during working hours and set back to 65 degrees Fahrenheit (18 degrees Celsius) during non-working hours. Temperatures in warehouses and similar space shall be adjusted lower than the 65-68 degrees Fahrenheit (18-20 degrees Celsius) depending on the type of occupancy and activity in the space. 2.2 During the cooling season, temperature control devices for general office space shall be set to maintain 76-78 degrees Fahrenheit (24-26 degrees Celsius) during working hours and set up to 86 degrees Fahrenheit (30 degrees Celsius) during non-working hours. -47- 3. Water 3.1 Landscape Architectural Considerations: 3.1.1 Use drought-tolerant plants when designing the landscape. 3.1.2 Consider sub-surface drip irrigation systems. 3 .1.3 Where feasible, store rain water in settling ponds to be used for irrigation. 3.1.4 Avoid, where feasible, creating large paved areas around buildings. 3.2 Mechanical Considerations: 3.2.1 Use reduced flow rate type plumbing fixtures conforming to the Ontario Building Code, section 7.6.4 Water Efficiency (Max 9.5 Llmin. (2.5 US-GPM) per shower head). 3 .2.2 Consider utilizing metering type valves, to limit duration of water flow in fixtures. 3.2.3 Use low flow water closets with not more than 6.0 litres per flush and urinals with not more than 3.8 litres per flush. Where allowed by the local water utility agency and in cases where the facility operates a water based cooling tower, the Landlord shall apply annually for a sewer rebate and any recoveries shall be used by the Landlord to increase the energy efficiency in the Building. The Landlord shall be responsible, wherever possible, for installing suitable water meters on the tower's make-up and blow-down lines and shall be responsible to ensure these meters are properly read for purposes of reporting to the local water utility agency. Proof of energy efficiency measures through operational changes shall be provided by the Landlord to the Tenant, in writing annually. 4. Cleaning (where cleaning is carried out under direction of the Landlord) Not applicable. 5. Additional Procedures As an agency of the Government of Ontario, it is the Tenant's goal to support government initiatives to conserve energy, encourage alternative fuels and support clean energy production. As such, the Tenant shall have the right to impose such other and further energy conservation procedures and policies as in its sole judgement may from time to time be necessary or reasonable, upon giving the Landlord at least Thirty (30) days notice in writing. -48- SCHEDULE "L" LEASEHOLD IMPROVEMENTS BY TENANT The Landlord does hereby grant permission to the Tenant to undertake and to complete, at the Tenant's sole cost and expense, any Leasehold Improvements to be effected within the Premises, both prior to the Commencement Date and during the Term, provided that such Leasehold Improvements do not affect the Structure and that where such Leasehold Improvements may affect the Mechanical and Electrical Services, the Tenant agrees to allow the Landlord's professional engineers, to review the Tenant's Leasehold Improvements drawings for Mechanical, Electrical and Structural. The Tenant will give the Landlord written notice of its intention to undertake any Leasehold Improvements and, upon request, shall supply the Landlord with plans of the proposed Leasehold Improvements. The Tenant will obtain the prior written approval of the Landlord for any Leasehold Improvements that affect the Structure or the Mechanical and Electrical Services, which approval will not be unreasonably withheld or unduly delayed. The Landlord will co-operate with the Tenant's contractors and if required, provide the Tenant with existing professionally prepared plans of the Structure and Mechanical and Electrical Services. Once the Tenant submits its plans and specifications (the "Plans") for its Leasehold Improvements to the Landlord for the Landlord's review and approval, if such approval is required hereunder, the Landlord shall have a period of Ten (10) days (the "Review Period") to review the Plans. The Landlord shall be deemed to have approved the Plans as presented unless, on or before the last day of the Review Period, the Landlord has delivered to the Tenant a written description of the specific structural items in the Plans that are not acceptable to the Landlord, acting reasonably, and a description of the specific changes that must be made to the Plans to secure the Landlord's approval. The Tenant may require the Landlord to use its mechanical, electrical and structural engineers to design the Tenant's Leasehold Improvements at the cost of the Tenant. The amount payable for such services will be negotiated between the Tenant and the Landlord on a square foot basis. Upon approval (or deemed approval) of the Plans by the Landlord, the Landlord shall deliver to the Tenant, within Twenty (20) days of the date of approval (or deemed approval) of the Plans, Three (3) copies of the mechanical and electrical design drawings for any initial tenant's Leasehold Improvements (the "Mechanical and Electrical Drawings") prepared at the Landlord's sole cost and expense, which the Tenant shall approve or provide the Landlord with its reasonable requests for revisions, within Ten (10) days thereof. Upon approval by the Tenant of the Mechanical and Electrical Drawings, the Tenant may proceed with the installation of any initial tenant's Leasehold Improvements and the Landlord shall proceed with the installation, at the Tenant's sole cost and expense and subject to Subclause 1(r) in Schedule "M-1" of this Lease, of all Mechanical and Electrical Services required for the completion of the initial Tenant's Leasehold Improvements. In respect of the installation of any initial tenant's Leasehold Improvements, the Tenant shall be allowed to cut perimeter convection cabinets, where necessary, without disturbing the operation of Mechanical and Electrical Services, to ensure acoustical privacy between offices, meeting rooms and other rooms as required. There will be no requirement, on the part of the Tenant, with respect to union or non-union affiliations of the employees of the Tenant's chosen contractor. It is understood and agreed that the Tenant may, within its sole discretion, determine (i) the process used by the Tenant for obtaining its contractor(s) and (ii) the contractors invited to participate in the chosen selection process. Notwithstanding anything in this Lease (including this Schedule "L") to the contrary, the Landlord hereby acknowledges and agrees that where applicable Laws require the Tenant to construct, alter and/or remove certain Leasehold Improvements in or about the Premises, the Landlord's consent and approval to such construction, alteration and/or removal shall be deemed to have been given. -49- SCHEDULE "M" LEASEHOLD~PROVEMENTSBYLANDLORD INTENTIONALLY DELETED. -50- ' . SCHEDULE "M-1" INITIAL LANDLORD'S WORK INTENTIONALLY DELETED -51 - SCHEDULE "N" COMMUNICATIONS SYSTEMS I. The Building shall have in place an adequate telephone conduit riser and space for the installation of a telephone system similar to PABX or SL-5, requiring a minimum of2 X 2" conduits. 2. The Landlord shall provide a communications room on each floor, complete with 19.2 mm thick plywood backboard and one duplex receptacle on a dedicated circuit. Provide I x I 00 mm sleeve per floor with a connection, via I 00 mm conduits, to the main communications room. -52- SCHEDULE "0" NON-DISTURBANCE AND ATTORNMENT AGREEMENT FILE #Lll794 TillS AGREEMENT made as of the • (INSERT DAY) day of • (INSERT MONTH), 20e(INSERT YEAR). BETWEEN: WHEREAS: • (INSERT NAME OF MORTGAGEE) (the "Mortgagee") OF THE FIRST PART -and- HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF ENERGY AND INFRASTRUCTURE (the "Tenant") OF THE SECOND PART A. The Corporation of the Town of Tillsonburg, (the "Landlord") is the owner of certain lands and premises situate in the Town of Tillsonburg, more particularly described in Schedule "A" attached hereto (the "Lands") and has granted a Charge/Mortgage of Land thereon to the Mortgagee (the "Mortgage") which was registered on the • (INSERT DAY) day of • (INSERT MONTH), 20• (INSERT YEAR) in the Land Registry Office for the Land Division of as Instrument Number •. B. The Tenant is the tenant under a letter of intent submitted by the Tenant, as tenant, on November 7, 2008 and accepted by the Landlord, as landlord, on December 12, 2008 (the "Agreement to Lease"), pursuant to which the Landlord leased to the Tenant certain premises in the building (the "Building") located on the Lands being floor thereof more particularly described and shown in the Agreement to Lease (the "Premises") for a term (the "Term") and on and subject to the conditions set forth therein, a copy of which has been delivered to the Mortgagee. C. The Agreement to Lease provides that the Landlord and the Tenant, as tenant, shall enter into a lease in the form attached to the Agreement to Lease (the "Lease"). D. The Mortgagee and the Tenant desire to confirm their agreement with respect to the Mortgage, the Agreement to Lease and the Lease. NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and intending to be legally bound, the Mortgagee and the Tenant hereby agree and covenant as follows: I. The Mortgagee represents and warraots to the Tenant that the Mortgage is unamended, in full force and effect and in good standing as at the date of this Agreement and there is no default thereunder. 2. The Tenant represents and warrants to the Mortgagee that the Agreement to Lease is unamended, in full force and effect and in good standing as at the date of this Agreement and that the Landlord and the Tenant are not in default thereunder. -53- 3. The Tenant hereby agrees that the Agreement to Lease and the Lease are now, and shall at all times continue to be, subject and subordinate in every respect to the Mortgage and to all renewals, modifications, consolidations, replacements and extensions thereof and agrees that if, and for so long as the Mortgagee becomes a mortgagee in possession or realizes on its security by entering into ownership, possession or control of the Building and the Lands (together the "Project"), the Tenant shall attorn to the Mortgagee as a tenant upon the terms of the Agreement to Lease and the Lease. The Mortgagee hereby agrees with the Tenant that for so long as the Tenant is not in default under either of the Agreement to Lease or the Lease beyond the period of time thereunder permitted for rectification of the default: (a) the Tenant's possession of the Premises and the Tenant's rights and privileges under the Agreement to Lease and the Lease, or any extensions or renewals thereof which may be effected in accordance with any option therefore in the Agreement to Lease and the Lease, shall not be diminished or interfered with by the Mortgagee other than in the lawful exercise of the Landlord's covenants and rights contained in the Agreement to Lease and the Lease; and (b) all of the Tenant's rights and privileges under the Agreement to Lease and the Lease, including, without limitation, its rights of possession of the Premises and any rights of extension or renewal of the Agreement to Lease and the Lease and all of the covenants and obligations of the Landlord under the Agreement to Lease and the Lease, shall be binding upon the Mortgagee if, and only for so long as, it becomes a mortgagee in possession or realizes on its security by entering into ownership, possession or control of the Project notwithstanding any default under the Mortgage. 4. This Agreement shall not prevent or inhibit dealings between the Tenant and the Landlord concerning the Agreement to Lease and the Lease, including any amendments, waivers, assigrunents, sublets or agreements affecting the Agreement to Lease and the Lease. 5. This Agreement may not be modified orally or in any other manner than by an agreement in writing signed by the parties hereto or their respective successors in interest. 6. This Agreement shall enure to the benefit of and be binding upon the parties hereto, their respective successors and assigns. 7. Any notice or communication to be given hereunder shall be deemed to have been sufficiently and effectively given if sent by either personal service or pre-paid registered mail to the party for which it is intended as follows: (a) To the Mortgagee: • (INSERT ADDRESS OF MORTGAGEE) (b) To the Tenant: c/o Ontario Realty Corporation One Stone Road West 4th Floor Guelph, Ontario Nl G 4Y2 Attention: Regional Director of Operations Fax: (519) 826-3330 With a copy to: c/o Ontario Realty Corporation I Dundas Street West Suite 2000 Toronto, Ontario M5G2L5 Attention: Senior Solicitor, Leasing Fax: (416) 327-2760 -54- '. ' ' The date of receipt of any such notice shall be the date of delivery of such notice of service if service is made personally or the third (3rd) business day after sending by pre- paid registered maiL Any party may from time to time notifY the other of a change in address which thereafter, until changed by like notice, shall be the address of such party for all purposes of this Agreement. The Tenant agrees to deliver to the Mortgagee, simultaneously with delivery to the Landlord, a copy of any notice delivered by the Tenant to the Landlord to the effect that the Landlord has breached either of the Agreement to Lease or the Lease in a material way. 8. The parties hereto agree that they will from time to time at the reasonable request of the other party execute and deliver such instruments, conveyances and assignments and take such further action as may be required pursuant to the terms hereof to accomplish the purposes of this Agreement. 9. The parties acknowledge that the recitals set forth above are true and accumte in all respects. IN WITNESS WHEREOF the parties hereto have executed this Agreement. SIGNED, SEALED & DELIVERED (INSERT NAME OF MORTGAGEE) Per: --;-;------------cis Name: Title: Authorized Signing Officer ONTARIO REALTY CORPORATION, acting as agent on behalf of HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF ENERGY AND INFRASTRUCTURE Per: Authorized Signing Officer -55- SCHEDULE "P" JANITORIAL SERVICES SPECIFICATIONS [Intentionally deleted.] -56- SCHEDULE "Q" ELEVATORS [Intentionally deleted.] -57- Ontario Realty Corporation One Stone Road West 4th Floor Guelph, Ontario NlG 4Y2 SCHEDULE "R" ARCIDTECT'S CERTIF1CATE •(INSERT DATE) Attention: Regional Director of Operations, (Property Management) Dear Sirs: Re: Ontario Realty Corporation, acting as agent on behalf of Her Majesty the Queen in Right of Ontario as represented by the Minister of Energy and Infrastructure ("Tenant") lease ("Lease") from The Corporation of the Town of Tillsonburg ("Landlord") of premises within the building ("Building") located at Lease File Number: Lll794 The undersigned, an (Ontario Land Surveyor/Architect/Professional Civil Engineer) licensed to practise in the Province of Ontario, hereby certifies to the Tenant that the Premises and Building have been measured on site according to the provisions of the Lease (which provisions are reproduced in Appendix (i) hereto), and that: Total area of the floor within perimeter walls: Less: Major Vertical Penetrations (outside of enclosing walls) Elevator Shaft sq. ft. Stairwell sq. ft. Other (Ducts, etc ... ) sq. ft. Rentable Area of the Floor Usable Area of the Premises Add: Usable Area of all other leased premises on the floor Usable Area of the Floor Rentable/Usable Conversion Factor for the floor: Rentable Area of the Premises Total Rentable Area Breakdown for Building Rentable Area of Ground floor Rentable Area of 2nd Floor Rentable Area of3rd Floor (continue list as required) Rentable Area of the Building Proportionate Share -58- sq. ft sq. ft sq. ft sq. ft sq. ft. sq. ft ___ %Ratio sq. ft sq. ft sq. ft sq. ft sq. ft ___ % (Ontario Land/ Surveyor/ Architect/ Professional Engineer (affix seal) APPENDIX (i) I. "Building" means the building erected on the Lands, from and including the lowest floor or level of the Building to and including the roof of the Building, the Common Areas and Facilities, the Parking Areas, and the areas and facilities exclusively serving the Building, which areas and facilities may include, without limitation, lobbies, foyers and vestibules, sidewalks, storage and mechanical areas, Mechanical and Electrical Systems, janitor rooms, mail rooms, telephone, rooms for the Mechanical and Electrical Systems, stairways, escalators, elevators, truck and receiving areas, driveways, loading docks and corridors. 2. "Rentable Area of the Building" means the total of the Rentable Area of all premises within the Building, as defined and calculated in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1 -1996) (BOMA), which, as of the Commencement Date, has been measured to be Twelve Thousand, Four Hundred and Ninety-Seven (12,497) square feet. In the event that the American National Standard Method for Measuring Floor Area in Office Buildings is revised or amended at any time during the Term, the method of calculation referred to above shall continue to be used to define the Rentable Area of the Building for the remainder ofthe Term. 3. "Rentable Area of the Premises" has been defined and calculated in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1 -1996) (BOMA), as of the Commencement Date, to be Twelve Thousand, Four Hundred and Ninety-Seven (12,497) square feet. In the event that the American National Standard Method for Measuring Floor Area in Office Buildings is revised or amended at any time during the Term, the method of calculation referred to above shall continue to be used to define the Rentable Area of the Premises for the remainder of the Term. 4. "Usable Area of the Building" means the total of the Usable Area of all premises within the Building, as defined and calculated in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1 -1996) (BOMA). In the event that the American National Standard Method for Measuring Floor Area in Office Buildings is revised or amended at any time during the Term, the method of calculation referred to above shall continue to be used to define the Usable Area of the Building for the remainder of the Term. 5. "Usable Area of the Premises" shall be defined and calculated in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1 -1996) (BOMA). In the event that the American National Standard Method for Measuring Floor Area in Office Buildings is revised or amended at any time during the Term, the method of calculation referred to above shall continue to be used to define the Usable Area of the Premises for the remainder of the Term. 6. "Premises" means the premises containing a Rentable Area, which, as of the Commencement Date, has been calculated to be Twelve Thousand, Four Hundred and Ninety-Seven (12,497) square feet and occupying floor of the Building. If the Premises are entirely self-enclosed, their boundaries extend (a) to the inside finished surface of the permanent outer walls; and (b) from the top surface of the structural subfloor to the bottom surface of the suspended ceiling. If the Premises have no suspended ceiling abutting the demising walls and are open to the ceiling or the bottom surface of the structural ceiling of the Building, the boundaries of the Premises extend from the top surface of the structural subfloor to the height of the demising walls. The location of the Premises is outlined on the plan attached to the Lease as Schedule "B". -59-