Office Lease

Exhibit 10.26

 

1508 WEST BROADWAY

 

OFFICE

LEASE

 

Between:

 

BTC PROPERTIES II LTD.

 

as Landlord

 

and-

 

INTERNATIONAL VISION DIRECT LTD.

 

as Tenant

 

1508 West Broadway

Office Lease

 

Table of Contents

 

 

 

 

 

 

THIS LEASE is dated the 1st day of May, 2003 .

 

BETWEEN:

 

BTC PROPERTIES II LTD.

a body corporate, having its head office at

Suite 1800, Four Bentall Centre,

1055 Dunsmuir Street, in the City of Vancouver,

in the Province of British Columbia.

 

(the “Landlord”)

 

OF THE FIRST PART

 

AND:

 

INTERNATIONAL VISION DIRECT LTD.,

a body corporate, having a business office at Suite 410,

1508 West Broadway, Vancouver, British Columbia V6J 1W8

 

(the “Tenant”)

 

OF THE SECOND PART

 

WHEREAS the Landlord has constructed an office and retail complex (the “Project”) upon certain lands and premises (the “Lands”) owned by The Board of School Trustees of School District No. 39 (Vancouver) (the “Head Landlord”) as more particularly described in Schedule “A” pursuant to a ground lease (the “Head Lease”) granted to the Landlord by the Head Landlord;

 

AND WHEREAS the Landlord has agreed to lease to the Tenant, and the Tenant has agreed to lease from the Landlord, certain premises located within the Office Component of the Project (the “Leased Premises”) on the terms and conditions set forth in this Lease;

 

NOW THEREFORE THIS AGREEMENT WITNESSES:

 

ARTICLE I

Special Provisions and Definitions

 

Section 1.00 Special Provisions

 

The following are certain special provisions, which are a 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 shall be resolved in favour of such other provisions:

 

 

 

Definitions:

 

The parties hereto agree that when used in this Lease and in the Schedules and Appendices to this Lease, the following words or expressions have the meaning hereinafter set forth.

 

Section 1.01 “Additional Rental” means any and all sums of money or charges required to be paid by the Tenant under this Lease (except Minimum Rental), whether or not the same are designated “Additional Rental” or whether or not the same are payable to the Landlord or otherwise, and all such sums are payable in lawful money of Canada without, except as otherwise specifically provided in this Lease, any deduction, abatement, set-off or compensation whatsoever. Additional Rental is due and payable with the next monthly instalment of Minimum Rental unless otherwise provided, but in any event is not payable as part of Minimum Rental. Additional Rental may be estimated by the Landlord from time to time and such estimated amount is payable in monthly instalments in advance with annual adjustments and all Additional Rental is deemed to be accruing due on a day-to-day basis, and if for any reason it becomes necessary to calculate Additional Rental for irregular periods of less than one year, an appropriate pro-rata adjustment shall be made on a daily basis in order to compute Additional Rental for such irregular period.

 

Section 1.02 “Building” means all buildings, structures, improvements and facilities from time to time located upon the Lands, and includes the Office Component, the Retail Component and the Parkade.

 

Section 1.03 “Business Days” means Monday to Friday, inclusive, and Saturday from 8:00 am to 1:00 pm, save and except any such days that shall be declared a holiday of general observance in the City of Vancouver.

 

Section 1.04 “Common Areas” means

 

(a)

those areas of the Project which, from time to time, are not designated or intended by the Landlord to be leased to Tenants of the Project; and

 

(b)

those areas which serve or are for the benefit of the Project and which are designated from time to time by the Landlord as part of the Common Areas. Common Areas include, without limitation, all areas which are provided or designated (and which may be changed from time to time) by the Landlord for the use or benefit of the tenants, their employees, customers and other invitees in common with others entitled to the use or benefit thereof in the manner for the purposes permitted by this Lease.

 

Without limiting the generality of the foregoing, Common Areas include the roof, exterior wall assemblies including weather walls, exterior and interior structural elements and bearing walls in the structures and improvements comprising the Project; all vestibules for and entrances and exits to the Parkade and all structural elements thereof, driveways, truckways, delivery passages; package pick-up stations, loading docks and related areas; pedestrian sidewalks, bicycle storage, landscaped and planted areas; all enclosed malls, courts and arcades; lobbies; public seating and service areas; corridors; equipment, furniture, furnishings and fixtures; first aid stations, any auditoria, conference rooms, amenity rooms and areas, nurseries, child care play areas and related kitchen and storage facilities, stairways; tenant common and public washrooms (including showers); mail, storage, service and janitor rooms and galleries, general signs and columns.

 

Section 1.05 “Common Facilities” means those facilities, utilities, improvements, equipment and installations which serve or are for the benefit of the Project and which are provided or designated (and which may be changed from time to time) by the Landlord for the use or benefit of the tenants of the Project, their employees, customers and other invitees in common with others entitled to the use or benefit thereof in the manner and for the purposes permitted by this Lease.

 

Without limiting the generality of the foregoing, Common Facilities include music and public address systems, electrical, plumbing, drainage, mechanical and all other installations, equipment or services located in the Project or related thereto as well as the structures housing the same; the heating, ventilating and air-conditioning equipment, facilities and systems; escalators, ramps, moving sidewalks and elevators (passenger, freight and service) and other transportation equipment and systems; telephone, meter, valve, mechanical, fire prevention, security and communications systems.

 

Section 1.06 “Corporation Capital Tax” shall mean the applicable amount (as described below) of any tax or taxes levied against the Landlord and owners of the Building by any governmental authority having jurisdiction based upon or computed by reference to the paid-up capital or place of business of the Landlord and the owners of the Building as determined for the purposes of such tax or taxes; and for the purpose of this provision the phrase “applicable amount” of such tax or taxes means the amount of tax that would be payable from time to time under any statute of Canada and any statute of the province in which the Building is located which imposes tax in respect of the capital of corporations, calculated as if the Building were the only property of the Landlord and the owners of the Building.

 

Section 1.07 “Engineer” means the engineer from time to time named by the Landlord. The decision of the Engineer whenever required hereunder and any certificate related thereto shall be final and binding on the parties hereto.

 

Section 1.08 “Environmental Laws, Orders and Regulations” means all applicable federal, provincial, municipal or local laws, bylaws, statutes or ordinances, including without limitation the Environmental Protection Act (Canada), the Waste Management Act (British Columbia) and other applicable laws relating to the environment, occupational safety, product liability and transportation from time to time in force, all applicable orders, decisions or the like rendered by any ministry, department or administrative or regulatory agency in respect thereof from time to time in force, and all rules, regulations or the like promulgated under or pursuant thereto from time to time in force.

 

Section 1.09 “Fixturing Period” means the number of days specified in Section 1.00(i) and described in Schedule “C”.

 

Section 1.10 “Hazardous Substance” means any substance that is or is declared to be hazardous, dangerous or toxic under any Environmental Laws, Orders or Regulations now or hereafter enacted or promulgated by any governmental authority having jurisdiction over the Landlord, the Tenant or the Project, including any part thereof.

 

Section 1.11 “Head Landlord” means The Board of School Trustees of School District No. 39 (Vancouver).

 

Section 1.12 “Head Lease” means the ground lease of the Lands described in Schedule “A” registered under BL306001 as the same may from time to time be amended.

 

Section 1.13 “Indemnifier” means the Person who has executed or agreed to execute the Indemnity Agreement which is attached to the Lease as Appendix “A”, if applicable.

 

Section 1.14 “Insurable Hazards” means fire and such other perils for which insurance is reasonably and readily available and which in the opinion of the Landlord should be protected against by insurance.

 

Section 1.15 “Land Surveyor” means the accredited land surveyor from time to time named by the Landlord. The decision of the Land Surveyor whenever required hereunder and any certificate related thereto shall be final and binding on the parties hereto, except to the extent shown to be in material error or not in accordance with the standards of the profession.

 

Section 1.16 “Landlord” means the party of the First Part. Wherever the word “Landlord” is used in this Lease, it is deemed to have the same meaning as “lessor”, and includes the Landlord and its duly authorized representatives.

 

Section 1.17 “Lands” means a leasehold estate in those lands and premises legally described in Schedule “A” hereto.

 

Section 1.18 “Lease” means this lease including all schedules and appendices attached hereto and any amendments made hereto from time to time as herein provided for.

 

Section 1.19 “Lease Year” means a period of twelve (12) consecutive calendar months provided that the first Lease Year shall commence on the Commencement Date of the Term and end on the last day of the month of December next following.

 

After the first Lease Year, each Lease Year shall consist of consecutive periods of twelve (12) calendar months, but the last Lease Year of the Term shall terminate on the expiration or earlier termination of this Lease, as the case may be.

 

Despite the foregoing, if the Landlord considers it necessary or convenient for the Landlord’s purposes, the Landlord may at any time and from time to time, by written notice to the Tenant, specify an annual date from which each subsequent Lease Year is to commence, and in such event, the then current Lease Year shall terminate on the day immediately preceding the commencement of such new Lease Year.

 

Section 1.20 “Leased Premises” means the premises leased to the Tenant as referred to and described in Section 1.00(b) and Section 2.01 hereof. The Landlord may make minor variations in the form or siting of the Leased Premises and such minor variations shall not render this Lease void or voidable, anything herein contained and any rule of law or equity to the contrary notwithstanding.

 

Section 1.21 “Minimum Rental” means the annual rent specified in Section 1.00(e) and payable by the Tenant pursuant to and in the manner set out in Section 3.02 hereof.

 

Section 1.22 “Mortgage” means any mortgagee or hypothecary creditor (including any trustee for bondholders) of the Landlord’s interest in the Head Lease or the Project or any part or parts thereof.

 

Section 1.23 “Municipal Taxes” means the aggregate of all taxes, including all real property taxes, duties and assessments (including local improvement taxes, machinery taxes and water rates but excluding Tenant’s Taxes), impost charges or levies, whether general or special, that are levied, rated, charged or assessed against the Project or any part thereof from time to time (including, without limitation, the Common Areas and Common Facilities) by any lawful taxing authority, whether federal, provincial, municipal, school or otherwise, and any taxes or other amounts which are imposed or payable in lieu of, or in addition to, any such taxes whether of the foregoing character of not or whether in existence at the Commencement Date or not, and any taxes levied or assessed against the Landlord on account of its ownership of the Project or its interest therein, and shall without limitation include any amounts characterized or deemed to be Municipal Taxes pursuant to Section 4.01 hereof and any legal fees, appraisers’ fees or other reasonable costs incurred by the Landlord in respect of the final determination of the Municipal Taxes.

 

Section 1.24 “Office Component” means that portion of the Building designated or intended from time to time to be used and occupied by tenants as business offices and includes that portion of the Common Areas and Common Facilities located therein or expressly serving such tenants.

 

Section 1.25 “Office Hours” means, during Business Days, the hours of 8:00 am to 6:00 pm, Monday through Friday, and the hours of 8:00 am to 1:00 pm Saturdays, together with such other hours as may be determined by the Landlord from time to time acting reasonably.

 

Section 1.26 “Operating Expenses” shall mean and include all expenses actually incurred and ordinarily chargeable against income in connection with the operation, maintenance, administration, management, repair and replacement of the Building and any improvements on the Lands connecting the Building with the public streets or other adjoining connected retail premises, office buildings or other public facilities (whether within the Project or otherwise) and without restricting the generality of the foregoing shall include without duplication:

 

(a)

the total annual net costs and expenses of insuring lands, buildings, improvements and equipment and other property in or forming part of the Project (including without limitation the Building) in such manner and form and with such companies and with such coverage and deductibles and in such amounts as the Landlord may from time to time determine;

 

(b)

water rates, special taxes and licences (other than Municipal Taxes or Tenant’s Taxes as herein defined or taxes on income or profits) from time to time payable by the Landlord with respect to the Project, including without limitation all Corporation Capital Tax;

 

(c)

the Park Costs;

 

(d)

salaries and wages (including employee benefits, worker’s compensation, pension plan contributions, fringe benefits, severance pay, termination payments and similar payments and contributions) paid or payable to all personnel, including supervisory personnel and managers, and all costs of obtaining such personnel, to the extent that such costs or salaries or a proportion thereof relate directly to the operation or maintenance of the Project and further including the cost of building and cleaning supplies, employee uniforms and dry cleaning expenses related to such personnel or employees, together with the costs of independent service contracts incurred in the cleaning, maintenance and operation of the Building including without limitation policing, security, supervision, traffic control, janitorial, window cleaning, waste collection, recycling, snow removal and gardening services;

 

(e)

lighting, electricity, public utilities, loudspeakers, public address and musical broadcasting systems, telephone answering service facilities and systems and information facilities and systems used in or serving the Project or any portions thereof, including the cost of any electricity, fuel, water, telephone, steam, gas, sewage disposal, heating, ventilating, air-conditioning or other utilities and services and the cost of replacing Building standard electric light fixtures, ballasts, tubes, starters, lamps, light bulbs and controls;

 

(f)

the cost and charges of the rental and any contract for the rental of any equipment and signs used by the Landlord in the operation or maintenance of the Project;

 

(g)

all repairs and replacements to and maintenance and operation of the Project and the systems, facilities and equipment serving the Project, save for the cost of repairing or replacing any inherent structural defects or weaknesses;

 

(h)

amortization as determined by the Landlord in accordance with accounting principles generally accepted in the Province of British Columbia of:

 

(i)

the costs and expenses, including repair and replacement, incurred in or attributable to the repairing or replacing of all fixtures, equipment and facilities serving or comprising the Common Areas and Common Facilities unless they are, in accordance with generally accepted accounting principles, charged fully in the year in which they are incurred; and

 

(ii)

in any given period a portion of the capital cost of and installation cost of any machinery, equipment or devices installed in, or utilized in connection with, the Building for the purpose of saving energy or effecting other savings in the Operating Expenses thereafter, whether installed in the Building in the first instance as part of its original design, or thereafter, which portion shall be determined by the Landlord amortizing the costs over the reasonable expected life of the same determined by the Landlord;

 

(i)

interest calculated at two (2) percentage points above the average prime commercial lending rate of the Landlord’s bank (which shall be a Canadian chartered bank) existing at the end of each calendar month and calculated on an annual basis upon the unamortized portion of the costs referred to in (h), above;

 

(j)

accounting and systems costs and audit fees related to the operation and maintenance of the Project;

 

(k)

the fair market rental value (having regard to rent being charged for similar space including Additional Rental as defined herein) of premises used by the Landlord or its property manager, acting reasonably, in respect of the operation, maintenance, administration or management of the Project; and

 

(l)

actual management fees and/or management agent fees, together with the administrative charges of a management company, if any, for the Project or any part of it, provided that if the Landlord chooses to manage the Project itself, the Landlord shall be entitled to charge a management fee in an amount which would be charged by a first-class real estate management company for management of an office/retail complex similar to the Project);

 

provided that Operating Expenses shall not include:

 

(m)

amortization save as expressly set out above;

 

(n)

amounts charged to interest on debt or capital retirement of debt;

 

(o)

initial capital costs of constructing the Building;

 

(p)

debt service costs;

 

(q)

any taxes on the income or profits (other than on rents) of the Landlord to the extent that the same are not imposed in lieu of Municipal Taxes;

 

(r)

costs incurred by the Landlord in leasing the Building, including commissions, legal costs, advertising costs and tenant inducement payments and other related expenses;

 

(s)

cost of any replacement, modification, construction, redevelopment, improvement or addition to the Building’s structure and structural components, including the roof, as well as exterior windows and the utility lines and connections to the Leased Premises, except for regular maintenance;

 

(t)

costs (including permit, license and inspection fees) incurred in renovating or otherwise improving, decorating, painting or altering space for other tenants or other occupants or vacant space in the Project;

 

(u)

repair and replacement resulting from inferior or deficient workmanship, materials, or equipment in the initial construction of the Building or for which the Landlord is reimbursed by insurers;

 

(v)

the cost of any services provided to the Tenant or other occupants of the Building for which the Landlord is entitled to be reimbursed under separate agreement;

 

(w)

any bad debt loss, rent loss, or reserves for bad debt or rent loss of the Landlord in respect of other tenant’s payments;

 

(x)

all cost associated with the formation, operation and maintenance of the business or legal entity which constitutes the Landlord, as the same are distinguished from the costs of Building operations;

 

(y)

salaries of service personnel to the extent that such service personnel perform services not in connection with the management, operation, repair or maintenance of the Building;

 

(z)

penalties, incurred by the Landlord as a result of its failure to pay on a timely basis any amount for which the Landlord is responsible (unless such non-payment by the Landlord results from the default or non-payment by the Tenant hereunder);

 

(aa)

any amounts paid as ground rental by the Landlord;

 

(bb)

capital expenditures to comply with applicable laws including costs arising from the presence of hazardous materials or substances in or about the Building, or the site upon which the Building is situated except to the extent caused by any act or omission of the Tenant;

 

(cc)

costs incurred by the Landlord due to the violation of the Landlord or any other tenants of the terms and conditions of any lease space in the Building or the Project;

 

(dd)

costs of a capital nature as determined in accordance with generally accepted accounting principles unless required under normal repair, replacement or maintenance of the Building as described above;

 

(ee)

all items and services for which the Tenant or any other tenant in the Building reimburses the Landlord for which the Landlord provides selectively to one or more tenants (other than the Tenant) without reimbursement;

 

(ff)

costs arising from the Landlord’s political or charitable contributions;

 

(gg)

costs for which the Landlord has been compensated by management fee, including property manager and property management office and all expenses relating thereto save as expressly set out above; or

 

(hh)

all fines, suits, claims, costs and expenses of any kind or nature for which the Landlord is, or may become liable, by reason of any negligent or willful act or omission or failure to act on the part of the Landlord, or those for whom the Landlord is in law responsible or by reason of any breach or violation or non-performance by the Landlord of any covenant contained is this Lease.

 

and further provided that there shall be credited against Operating Expenses all net proceeds from policies of insurance, warranties or guarantees to the extent (but only to the extent) that such proceeds reimburse the Landlord for costs of repair and replacement which have previously been included in the calculation of Operating Expenses.

 

If any facilities, services, systems or utilities:

 

(1)

for the operation, maintenance, administration, management, repair or replacement of the Project are provided from another building or buildings owned or operated by the Landlord or its agent; or

 

(2)

for the operation, maintenance, administration, management, repair or replacement of another building or buildings owned or operated by the Landlord or its agent are provided from the Project,

 

the costs, charges and expenses therefor shall for the purpose of calculation of Operating Expenses be allocated by the Landlord between the Project and the other building or buildings on a reasonable basis.

 

In computing Operating Expenses for any fiscal period, if less than 100% of the Rentable Area of the Building is occupied by tenants during that period, the amount of Operating Expenses will be deemed to be increased to an amount equal to the like Operating Expenses which normally would be expected by the Landlord to have been incurred had such occupancy been 100% of the Rentable Area of the Building during that period.

 

Section 1.27 “Parkade” means the three level subgrade parking structure situated upon the Lands.

 

Section 1.28 “Park Costs” means those costs and expenses payable by the Landlord to the Head Landlord pursuant to the provisions of the Head Lease related to the maintenance, repair, improvement and keeping clean of the landscaped park area located on Parcel Identifier: 023-804-301, Block 350, Lot 4, District Lot 526, Group 1, New Westminster District, Plan LMP33768.

 

Section 1.29 “Particular Proportionate Share” means a fraction which has as its numerator the Rentable Area of the Leased Premises and as its denominator the Rentable Area of the Office Component.

 

Section 1.30 “Person” if the context allows, includes any person, firm, partnership or corporation, or any group of persons, firms, partnerships or corporations or any combination thereof.

 

Section 1.31 “Project” means the Lands and the Building.

 

Section 1.32 “Proportionate Share” means a fraction which has as its numerator the Rentable Area of the Leased Premises, and as its denominator, the Rentable Area of the Project.

 

Section 1.33 “Rent” means all Minimum Rental and Additional Rental payable pursuant to this Lease.

 

Section 1.34 “Rentable Area” means with respect to the Leased Premises or any other leasable premises within the Building the “Rentable Area” as defined in the Standard Method For Measuring Floor Areas In Office Buildings as approved June 7, 1996 by the American National Standards Institute, Inc. (ANSI/BOMA Z65.1-1996) as the same may be amended or substituted for from time to time, as certified by the Engineer or Land Surveyor. Rentable Area of the Building or any portion or portions thereof (including without limitation the Retail Component and the Office Component) shall be the aggregate of the Rentable Area of all leasable premises within such portion or portions calculated as aforesaid.

 

Section 1.35 “Retail Component” means that portion of the Building designated or intended from time to time to be used and occupied by businesses which sell or lease goods or services to the public, and, in addition to retail stores includes, without limitation, chartered banks, trust companies, finance companies, governmental agencies and public institutions (other than offices of such), launderers, laundromats, drycleaners, restaurants and take-out food

 

establishments and bowling lanes and other recreational sports and health facilities and includes that portion of the Common Areas and Common Facilities located therein or expressly serving such businesses.

 

Section 1.36 “Rules and Regulations” means the rules and regulations adopted and promulgated by the Landlord from time to time, acting reasonably, and in such manner as would a prudent landlord of reasonably similar commercial development. The Rules and Regulations existing at the Commencement Date are those set out in Schedule “D”.

 

Section 1.37 “Tenant” means the party of the Second Part and is deemed to include the word “lessee” and to mean each and every Person mentioned as Tenant in this Lease, whether one or more. If there is more than one Person as Tenant, any notice required or permitted by this Lease may be given by or to any one of them. Any reference to “Tenant” includes, where the context allows the servants, employees, agents, invitees and licensees of the Tenant and all others over whom the Tenant may reasonably be expected to exercise control.

 

Section 1.38 “Tenant’s Taxes” means those amounts payable by the Tenant as set out in Section 4.02 hereof.

 

Section 1.39 “Term” means the period of time referred to in Section 1.00(d) and described in Section 2.03 hereof.

 

ARTICLE II

Grant and Term

 

Section 2.01 Leased Premises

 

In consideration of the rents, covenants and agreements herein contained on the part of the Tenant to be paid, observed and performed, the Landlord leases to the Tenant, and the Tenant leases from the Landlord the Leased Premises, now or hereafter to be erected as part of the Project. The Rentable Area of the Leased Premises shall be measured or calculated by the Land Surveyor or Engineer and shall be certified by him in accordance with Section 1.34. It is acknowledged and agreed that the Common Areas and Common Facilities (including, without limitation, those columns and walls which form part of the Common Areas and Common Facilities) which are within the space enclosed by the boundaries of the Leased Premises do not form part of the Leased Premises notwithstanding the fact that the area occupied thereby will be taken in account for the purpose of determining the Rentable Area of the Leased Premises.

 

Section 2.02 Use of Additional Areas

 

The use and occupation by the Tenant of the Leased Premises includes the non-exclusive and non-transferable right or license to use the Common Areas and Common Facilities in common with others entitled thereto, and for the purposes for which they are intended and during such hours as the Project may be open for business, as determined by the Landlord from time to time, subject in each case to this Lease and to the Rules and Regulations.

 

Section 2.03 Commencement and Ending Date of Term

 

The Tenant shall have and hold the Leased Premises for and during the Term which shall be, unless sooner terminated pursuant to the other provisions of this Lease, the period of time set out in Section 1.00(d), beginning on the Commencement Date set out in Section 1.00(c).

 

If the Leased Premises are not ready for occupancy on the Commencement Date, then the Tenant shall take possession of the Leased Premises as soon as the same are ready for occupancy as determined by the Landlord’s Engineer, and this Lease shall not be void or voidable nor shall the Landlord be liable for any loss or damage resulting from the delay in the Tenant obtaining possession, and in such event the Commencement Date shall be deemed to be the first day of the month next following the month in which the Leased Premises are ready for occupancy subject to the Tenant paying to the Landlord Rent at the rate herein provided for such time as the Tenant may occupy the Leased Premises before the Commencement Date and otherwise subject to the terms of the Lease.

 

Section 2.04 Certificate

 

Where reasonably possible prior to the Commencement Date or within a reasonable period thereafter, the Land Surveyor or Engineer may, unless previously certified, (and shall, if requested by the Tenant), provide a certificate as to the Rentable Area of the Leased Premises measured in accordance with the provisions of Section 1.34 and such certificate shall form part of this Lease.

 

Section 2.05 Relocation

 

At any time after the entering into of this Lease, the Landlord may substitute for the Leased Premises, other premises in the Office Component (the “New Premises”), in which event the New Premises shall be deemed to be the Leased Premises for all purposes under this Lease, provided that the New Premises shall be similar to the Leased Premises in area and configuration and that the substitution shall be made in order to lease the Leased Premises to a tenant of the Office Component who then occupies, or as a result of such substitution will occupy, all or a substantial part of the floor of the Building on which the Leased Premises are located. If the Tenant, or any permitted assignee or sublessee is then occupying the Leased Premises, the Landlord shall pay the actual and reasonable expenses associated with such relocation, including without limitation, the expenses of physically moving the Tenant, its property and equipment to the New Premises. The Landlord shall give the Tenant not less than 30 days’ prior written notice of such substitution, and the Landlord, at its expense, shall improve the New Premises with improvements substantially similar to those in the Leased Premises at the time of such substitution, if the Leased Premises are then improved.

 

ARTICLE III

Rent

 

Section 3.01 Covenant to Pay

 

The Tenant shall pay Minimum Rental and Additional Rental as herein provided.

 

Section 3.02 Minimum Rental

 

The Tenant shall pay from and after the Commencement Date to the Landlord at the office of the Landlord, or at such other place designated by the Landlord, in lawful money of Canada, without prior demand therefor and without any deduction, abatement, set-off, counterclaim or compensation whatsoever, except as otherwise specifically provided in this Lease, the Minimum Rental specified in Section 1.00(e), payable in equal consecutive monthly instalments in the amount set forth in that Section, each in advance on the first day of each calendar month of each Lease Year. When the Rentable Area of the Leased Premises is certified by the Land Surveyor or Engineer, the Minimum Rental shall, if necessary, be adjusted accordingly.

 

If the Commencement Date is on a day other than the first day of a calendar month, then the Tenant shall pay, upon the Commencement Date, a portion of the Minimum Rental pro-rated on a per diem basis from the Commencement Date to the end of the month in which the Commencement Date occurs, based upon a period of three hundred and sixty-five (365) days.

 

The Tenant hereby authorizes the Landlord to withdraw monthly payments of Rent from the Tenant’s account by way of direct withdrawals, as may be arranged from time to time between financial institutions administering the Tenant’s and the Landlord’s accounts. The Tenant further covenants and agrees to execute and deliver to the Landlord any and all further documentation, account information, cancelled cheques or otherwise which may be reasonably requested by the Landlord in order to assist the Landlord in the administration of a pre-authorized payment procedure for monies owing or accruing due as Rent under this Lease. Notwithstanding the foregoing, the Tenant shall, if required by the Landlord, deliver to the Landlord at the beginning of each Lease Year throughout the Term, a series of monthly postdated cheques for such Lease Year for the aggregate of the monthly payments of Minimum Rental and of any payments of Additional Rental estimated by the Landlord in advance and any payments required by this Lease to be paid monthly in advance.

 

Section 3.03 Additional Rental

 

In addition to the Minimum Rental payable as aforesaid, the Tenant shall pay to the Landlord or such other Person as the same may be payable to in the manner and at the times more particularly set out hereinafter in this Lease all other amounts payable hereunder, and, without limitation, the Tenant shall pay to the Landlord the following:

 

(a)

the Tenant’s Proportionate Share of Operating Expenses including without limitation, charges for heating, ventilating and air-conditioning the Common Areas and Common Facilities; and

 

(b)

the Tenant’s Particular Proportionate Share of Municipal Taxes.

 

The items aforesaid in this Section 3.03 are hereinafter sometimes referred to as “Additional Rental”.

 

Section 3.04 Rent Past Due

 

If the Tenant fails to pay, when the same is due and payable, any Minimum Rental, Additional Rental or other amount payable by the Tenant under this Lease, such unpaid amounts shall bear interest at an annual rate which, as determined by the Landlord, will be up to five (5) percentage points above the prime bank commercial interest lending rate charged at such time by the Landlord’s chartered bank pro-rated from the due date thereof to the date of payment, subject to monthly compounding.

 

Section 3.05 Payment for Additional Services

 

The cost of additional services provided to the Tenant whether or not the Landlord is obligated to provide them, shall be paid to the Landlord by the Tenant from time to time promptly upon receipt of invoices therefor from the Landlord. For purposes of this Lease, the term “additional services” includes all services of whatsoever nature or kind supplied by the Landlord to the Tenant in addition to those required by this Lease (other than any such service which the Landlord may elect to supply as included within the standard level of services furnished to tenants generally, the costs of which shall be included in Operating Expenses). The invoices above referred to shall reflect the Landlord’s total cost of provision of the additional service being charged for, including all costs of materials and labour and other direct costs, costs of supervision and other indirect expenses, capable of being allocated on a reasonable basis, plus an amount equal to 1/10th of the aggregate of the cost of labour, materials and other direct expenses, to cover indirect expenses incapable of reasonable allocations. The cost of such additional services shall be Additional Rental hereunder with respect to which the provisions of Section 3.03 and 5.02 shall apply.

 

ARTICLE IV

Taxes

 

Section 4.01 Taxes Payable by the Tenant

 

The Tenant shall, in accordance with Section 5.02, pay as Additional Rental to the Landlord in each Lease Year during the Term its Particular Proportionate Share of all Municipal Taxes that are levied, rated, charged or assessed from time to time against the Office Component and every part thereof whether or not there are separate tax bills or separate assessment notices for the Office Component issued by any lawful taxing authority. If the lawful taxing authorities do not issue separate tax bills or separate real property assessment notices for the Office Component, the Landlord shall allocate and attribute Municipal Taxes to and amongst the various components of the Project on an equitable basis (having regard to, among other things, the various uses of the components, the costs of construction of same, the relationship of the location and area of each of the components and their relative values and any other factors utilized in current assessment practices) and the Tenant shall pay its Particular Proportionate Share of the Municipal Taxes so allocated or attributable to the Office Component by the Landlord and such portion of the other Common Areas and Common Facilities of the Project as the Landlord may reasonably allocate to the Office Component).

 

Notwithstanding the foregoing, if, during the Term, the Project is by the provision of any municipal, parliamentary, legislative or regional enactment exempt from taxation in whole or in part by reason of the Head Landlord’s ownership of the Lands and the same would otherwise have been subject to taxation, and if the Landlord is nonetheless required to pay to the Head Landlord an amount equal to that which, but for such exemption, would have been paid by the Landlord on account of Municipal Taxes, then for the purposes of this Lease the amount so paid by the Landlord pursuant to the provisions of the Head Lease shall be characterized as and deemed to be Municipal Taxes, and the same shall be allocated by the Landlord between the various components of the Project (including the Common Areas and Common Facilities) in accordance with the provisions hereof.

 

Section 4.02 Business Taxes and Other Taxes of the Tenant

 

In addition to the Municipal Taxes payable by the Tenant pursuant to Section 4.01, the Tenant shall pay as Additional Rental to the lawful taxing authorities, or to the Landlord, as the Landlord may direct, and shall discharge in each Lease Year when the same become due and payable:

 

(a)

all taxes (including machinery taxes), rates, duties, assessments and other charges that are levied, charged or assessed against or in respect of all improvements, equipment and facilities of the Tenant on or in the Leased Premises or the Office Component or any part or parts thereof, or the Landlord on account of its ownership thereof or interest therein; and

 

(b)

every tax and license fee which is levied, rated, charged or assessed against or in respect of any and every business carried on in the Leased Premises or in respect of the use or occupancy thereof or any other part of the Office Component by the Tenant and every subtenant and licensee of the Tenant, or against the Landlord on account thereof,

 

all of the foregoing being collectively referred to as “Tenant’s Taxes” and whether in any case, any such taxes, rates, duties, assessments or license fees are rated, charged or assessed by any federal, provincial, municipal, school or other body during the Term. If there are not separate tax bills provided for Tenant’s Taxes, the Landlord is entitled to allocate Tenant’s Taxes to the Tenant on the basis referred to in Section 4.01 hereof.

 

Section 4.03 Tenant’s Responsibility

 

The Tenant shall:

 

(a)

upon request of the Landlord;

 

(i)

promptly deliver to the Landlord for inspection, receipts evidencing the payment of all Municipal Taxes payable by the Tenant directly to the taxing authority if the Tenant is prohibited from paying the Landlord directly pursuant to Section 4.01 and of all Tenant’s Taxes payable by the Tenant pursuant to Section 4.02,

 

(ii)

promptly deliver to the Landlord a copy of any separate tax bills and separate notices of any assessments of any Municipal Taxes or Tenant’s Taxes or other assessments received by the Tenant which relate to the Leased Premises,

 

(iii)

furnish such other information in connection with any such Municipal Taxes and any such Tenant’s Taxes as the Landlord reasonably determines from time to time, and

 

(b)

deliver to the Landlord, at least ten (10) days prior to the last date permitted for filing of an appeal, notice of any appeal or contestation the Tenant intends to institute with respect to any such Municipal Taxes payable pursuant to Section 4.01 or any such Tenant’s Taxes payable pursuant to Section 4.02 and consult with and obtain the prior written approval of the Landlord to any such appeal or contestation. If the Tenant obtains such approval, the Tenant shall deliver to the Landlord such security for the payment of such Municipal Taxes and Tenant’s Taxes as the Landlord deems advisable and the Tenant shall diligently prosecute any such appeal or contestation to a speedy resolution and shall keep the Landlord informed of its progress in that regard, from time to time.

 

The Tenant shall promptly indemnify and keep indemnified the Landlord from and against payment for all loss, costs, charges and expenses occasioned by or arising from all such Municipal Taxes and all such Tenant’s Taxes and any taxes which may in future be levied in lieu of such Municipal Taxes or Tenant’s Taxes or which may be assessed against any rentals payable pursuant to this Lease in lieu of such Municipal Taxes or Tenant’s Taxes, whether against the Landlord or the Tenant, including, without limitation, any increase whensoever occurring in Municipal Taxes or Tenant’s Taxes arising directly or indirectly out of an appeal or contestation by the Tenant of the Municipal Taxes or Tenant’s Taxes relating to the Leased Premises or the Office Component or any part thereof. The Tenant shall deliver to the Landlord such security for any such increase in Municipal Taxes and Tenant’s Taxes as the Landlord deems advisable.

 

Section 4.04 Per Diem Adjustment

 

If any Lease Year during the Term of this Lease is less than twelve (12) calendar months, the Municipal Taxes that the Tenant is required to pay pursuant to Section 4.01 hereof shall be subject to a per diem adjustment on the basis of a period of three hundred and sixty-five (365) days.

 

Section 4.05 Goods and Services Tax

 

Despite any other section or clause of this Lease, the Tenant shall pay to the Landlord upon demand an amount equal to any and all Goods and Services Tax, it being the intention of the parties that the Landlord shall be fully reimbursed by the Tenant with respect to any and all Goods and Services Tax at the full tax rate applicable from time to time in respect of the Rent payable for the lease of the Leased Premises pursuant to this Lease. The amount of the Goods and Services Tax so payable by the Tenant shall be calculated by the Landlord in accordance with the applicable legislation and shall be paid to the Landlord at the same time as the amounts to which such Goods and Services Tax apply and is payable to the Landlord under the terms of this Lease or upon demand at

 

such other time or times as the Landlord from time to time determines. Despite any other section or clause in this Lease, the amount payable by the Tenant under this paragraph shall be deemed not to be Rent, but the Landlord shall have all of the same remedies for and rights of recovery of such amount as it has for recovery of Rent under this Lease. As referred to herein “Goods and Services Tax” means and includes any and all goods and services taxes, sales taxes, value added taxes, business transfer taxes, or any other taxes imposed on the Landlord or the Tenant from time to time in respect of the Rent payable by the Tenant to the Landlord under this Lease or the rental of the Leased Premises or the provision of any goods, services or utilities whatsoever by the Landlord to the Tenant under this Lease, whether characterized as a goods and services tax, sales tax, value added tax, business transfer tax, or otherwise.

 

ARTICLE V

Project - Control and Payment

 

Section 5.01 Control of Project by the Landlord

 

(a)

The landlord shall operate and maintain the Project in such manner as the Landlord determines from time to time, and in a first-class and reputable manner as would a prudent landlord of a similar commercial development having regard to size, age and location subject, however, to normal wear and tear and to damage other than by Insurable Hazards, and in such regard the Landlord covenants with the Tenant:

 

(i)

to supply adequate janitorial service and window washing service, including all necessary supplies therefor with such work to be carried out at the Landlord’s discretion without interference by the Tenant;

 

(ii)

To supply water for normal drinking, washing and sanitary requirements of the Tenant and at the Tenant’s expense to make water available to the Leased Premises for other reasonable uses of the Tenant without in any case being liable for any loss, damage or inconvenience resulting from failure of the water supply to the Office Component or the Project;

 

(iii)

to provide adequate washrooms for the use of the Tenant in common with other tenants and occupants of the Project;

 

(iv)

to provide automatic elevator service at all times to areas above ground level, except those elevators which may be installed by the Tenant;

 

(v)

to provide, maintain and operate during Office Hours on Business Days an efficient heating system and air conditioning system in the Office Component, and during other hours upon reasonable advance notice from the Tenant (provided the cost thereof shall be borne by the Tenant as an additional service as set out in Section 3.05 hereof);

 

(vi)

if and to the extent that the Landlord shall from time to time elect, to provide exclusively (either directly or through agents or contractors designated by it) any janitor or cleaning services in addition to those contemplated by Section 5.01(a)(i) or to supervise the moving of furniture or equipment of the Tenant or to make deliveries or supervise the moving of deliveries to the Leased Premises, all of the foregoing matters referred to in this Section 5.01(a)(vi) to be treated as an additional service as set out in Section 3.05 hereof; and

 

(vii)

provide electric power to the Leased Premises in accordance with the Landlord’s criteria for the Project.

 

(b)

The Project is at all times subject to the exclusive control and management of the Landlord. The Tenant acknowledges that the Landlord may appoint a manager of the Project and upon notice to the Tenant of any such appointment, all administrative matters relating to the Project and this Lease shall be referred by the Tenant to such manager. Without limiting the generality of the foregoing, the Landlord has the right, in its control, management and operation of the Project and by the establishment of Rules and Regulations and general policies with respect to the operation of the Project or any part thereof at all times during the Fixturing Period and throughout the Term, to:

 

(i)

construct other buildings, structures or improvements in the Project and make alterations and additions thereof, subtractions therefrom, or rearrangements thereof, build additional storeys on any improvements and construct additional buildings or facilities adjoining or proximate to the Project;

 

(ii)

relocate or rearrange the various components of the Project from those existing at the Commencement Date or shown on Schedule “B”;

 

(iii)

do and perform such other acts in and to the Project as, in the use of good business judgment, the Landlord determines to be advisable for the more efficient and proper operation of the Project

 

(c)

Notwithstanding anything contained in this Lease, it is understood and agreed that if as a result of the exercise by the Landlord of its rights set out in this Section 5.01, the Common Areas and Common Facilities are varied or diminished in any manner whatsoever, the Landlord is not subject to any liability nor is the Tenant entitled to any compensation of diminution or abatement of Rent, nor is any alteration or diminution of the Common Areas and Common Facilities deemed constructive or actual eviction, or a breach of any covenant for quiet enjoyment contained in this Lease and the Tenant will, at the request and cost of the Landlord, execute such documents as are reasonably required by the Landlord to release any interest the Tenant may have in those parts of the Common Areas and the Common Facilities designated by the Landlord.

 

Section 5.02 Payment of the Tenant’s Proportionate Share and Particular Proportionate Share

 

The amounts payable by the Tenant pursuant to Section 3.03 hereof may be estimated by the Landlord for such period as the Landlord determines from time to time, and the Tenant agrees to pay to the Landlord the Tenant’s Proportionate Share or Particular Proportionate Share, as the case may be, as so estimated, of such amounts in monthly instalments in advance during such period as Additional Rental. Notwithstanding the foregoing, as soon as bills for all or any portion of the said amounts so estimated are received, the Landlord may bill the Tenant for the Tenant’s Proportionate Share and/or Particular Proportionate Share thereof and the Tenant shall pay the Landlord such amounts so billed (less all amounts previously paid by the Tenant on the basis of the Landlord’s estimate as aforesaid) as Additional Rental on demand. The Tenant shall also pay to the Landlord interest on any Taxes paid by the Landlord in excess of amounts collected by the Landlord pursuant to Section 4.01, such interest to be at an annual rate equal to 1% in excess of the prime bank commercial interest lending rate charged at such time by the Landlord’s chartered bank pro-rated from the due date thereof to the date of payment, subject to monthly compounding.

 

Within a reasonable period of time after the end of the period for which such estimated payments have been made, the Landlord shall deliver to the Tenant:

 

(a)

a statement of the total amounts and costs referred to in Section 4.01 together with the calculation of the Tenant’s Proportionate Share and/or Particular Proportionate Share of such amounts and costs pursuant to Section 4.01; and

 

(b)

a statement of the total costs and expenses referred to in Section 1.26 together with a calculation of the Tenant’s Proportionate Share and/or Particular Proportionate Share of such costs and expenses payable pursuant to Section 1.26 and, if necessary, an adjustment shall be made between the parties in the following manner. If the Tenant has paid in excess of the amounts due, the excess shall be credited to the next payment due under Section 3.03. If the amount the Tenant has paid is less than the amounts due, the Tenant agrees to pay such additional amounts due with the next monthly payment of Minimum Rental. If any Lease Year during the Term is greater or less than any such period determined by the Landlord as aforesaid, the Tenant’s Proportionate Share and Particular Proportionate Share pursuant to Section 3.03 shall be subject to a per diem, pro rata adjustment.

 

Section 5.03 Re-Allocation of Operating Expenses and Municipal Taxes

 

Notwithstanding anything to the contrary herein contained, including, without limitation, Section 3.03 hereof, the Landlord shall have the right to re-allocate expenses and taxes relating to the various components of the Project (including the Office Component) on a reasonable basis, having regard to the Project as a whole, and in

 

such case the amount of Operating Expenses and the amount of Municipal Taxes shall be deemed to be the amounts so allocated by the Landlord.

 

Section 5.04 Tenant’s Right to Inspect Landlord’s Records with Respect to Operating Expenses

 

Notwithstanding Section 5.02, the Tenant shall have the right for a period of ninety (90) days following receipt from the Landlord of the annual statement referred to in the second paragraph of Section 5.02 (the “Statement”) to request in writing from the Landlord its audited statement for the Building and the Landlord shall provide same at no cost to the Tenant and if after reviewing such audited statement the Tenant has a concern as to the accuracy of the Statement then the Tenant shall, at its sole cost and expense and subject to payment of the Landlord’s costs as set out below, inspect the records maintained by the Landlord pertaining to the costs or expenses set out in such Statement, such inspection to be during the Landlord’s normal business hours and upon reasonable advance notice not to be less than five (5) working days. If following any such inspection the Tenant is able to reasonably demonstrate that the amount charged to the Tenant’s account as shown on such Statement is in error or not ordinarily chargeable, the appropriate adjustment shall be made between the parties on the next date fixed for payment of Rent pursuant to this Lease. Notwithstanding the foregoing, if following any such inspection the Tenant is unable to reasonably demonstrate that the Statement in question is in error such that the Tenant has been required to pay in excess of 105% of the amount properly chargeable to the Tenant pursuant to the provisions of this Lease, the Tenant shall forthwith reimburse the Landlord for its reasonable costs in facilitating the Tenant’s inspection, in an amount not to be less than $500.00.

 

If the Tenant fails to exercise the foregoing right within ninety (90) days after receipt of the Statement in question, the Tenant shall be conclusively deemed to have accepted such Statement as accurate and shall have no further right to contest or object to the same. The Tenant and or its agents agree to execute a confidentiality agreement whereby those reviewing the records agree to maintain the confidentiality of the same, and to not disclose the same to the Landlord’s competitors nor to use such information in negotiations with other landlords or tenants. The Tenant’s ability to inspect the Landlord’s records will be restricted to not more than once in each calendar year.

 

ARTICLE VI

Utilities and Heating, Ventilating and Air-Conditioning

 

Section 6.01 Charges for Utilities

 

(a)

The Tenant shall be solely responsible for and shall promptly pay to the Landlord, or as it otherwise directs, in the manner hereinafter provided as a charge with respect to the Leased Premises (the “Charge”) the aggregate without duplication of:

 

(i)

the total cost of supplying water, fuel, power, telephone and other utilities (the “Utilities”) used or consumed in or with respect to the Leased Premises;

 

(ii)

the cost of any other charges levied or assessed in lieu of or in addition to such Utilities as determined by the Landlord; and

 

(iii)

all costs incurred by the Landlord in determining or allocating the charge or determining the Utilities including, without limitation, professional, engineering and consulting fees and an administration fee of fifteen percent (15%) of the total costs hereinbefore set out in this Section 6.01 (a).

 

(b)

the following conditions apply to the Charge for Utilities:

 

(i)

If the Landlord elects, for the more efficient and proper operation of the Project, or is required by municipal by-law or the suppliers of the Utilities to supply the Utilities or any of them for the Project, the Tenant shall purchase such Utilities and pay for such Utilities as Additional Rental forthwith on demand to the Landlord at rates not in excess of appropriate rates for such Utilities, if applicable;

 

(ii)

The Tenant shall pay to the Landlord, as Additional Rental, the Charge for Utilities in monthly instalments in advance based on estimates by the Landlord and subject to adjustment by the Landlord within a reasonable time after the end of the Lease Year for which such estimate has been made;

 

(iii)

If required by the Landlord, the Tenant shall install its own separate check meter for the Leased Premises at its own expense and in a location designated by the Landlord;

 

(iv)

In no event is the Landlord liable for, nor has the Landlord any obligation with respect to, an interruption or cessation of, or a failure in the supply of any such Utilities, services or systems in, to or serving the Project or the Leased Premises, whether or not supplied by the Landlord or others.

 

(c)

The Landlord shall determine the Charge applicable to the Leased Premises by allocating the Utilities for the Project amongst the several components and areas of the Project, including the Common Areas and Common Facilities, Retail Component, Office Component and other leasable premises acting on the advice of the Engineer using as a basis without limitation:

 

(i)

such check meters installed in the Common Areas and Common Facilities and individual retail premises and other leasable premises by tenants in accordance with this Section 6.01 and similar sections in other leases for the Project;

 

(ii)

the relevant rates of demand and consumption of Utilities in the Common Areas and Common Facilities and individual retail premises and other leasable premises;

 

(iii)

the connected load of the respective areas comprising the Common Areas and Common Facilities and the individual retail premises and other leasable premises for which there are no check meters.

 

(d)

The Tenant shall pay for the Utilities allocated to;

 

(i)

the Common Areas and Common Facilities pursuant to Section 1.26(e); and

 

(ii)

the Leased Premises pursuant to Section 6.01(a).

 

Section 6.02 Heating, Ventilating and Air-Conditioning

 

The Tenant shall, throughout the Term, operate and regulate those portions of the heating, ventilating and air-conditioning equipment within and serving the Leased Premises in such a manner as to maintain such reasonable conditions of temperature and humidity within the Leased Premises as are determined by the Landlord and its Architect or Engineer so that no direct or indirect appropriation of the heating, ventilating and air-conditioning from the Common Areas and Common Facilities occurs. The Tenant shall comply with such stipulations and with all Rules and Regulations of the Landlord pertaining to the operation and regulation of such equipment. If the Tenant fails to comply with such stipulations and Rules and Regulations, the Landlord shall be entitled to take such steps as it deems advisable to correct such defaults (including, without limitation, entering upon the Leased Premises and assuming control of such equipment) without liability to the Tenant, and the Tenant will pay to the Landlord forthwith upon demand as Additional Rental all costs and expenses incurred by the Landlord in so doing.

 

ARTICLE VII

Use of the Leased Premises

 

Section 7.01 Use of the Ceased Premises

 

The Tenant shall use the Leased Premises solely for the purpose of conducting the permitted use specified in Section 1.00(f) and the Tenant will not use or permit, or suffer the use of, the Leased Premises or any part thereof for any other business or purpose. Without limiting the generality of the foregoing, the Tenant shall not:

 

(a)

use the Leased Premises or any part thereof for any retail use; or

 

(b)

permit the installation or operation of any automatic teller machine or cash dispenser, nor use the Leased Premises or any part thereof for the purpose of a bank, trust company, credit union or any other business which includes the acceptance of money for deposit from the public.

 

Section 7.02 Conduct of Business

 

The Tenant shall take possession of and occupy the Leased Premises and commence to carry on business in all or substantially all of the Leased Premises from and after the Commencement Date and shall thereafter throughout the Term use the Leased Premises for the purpose set out in Section 1.00(f), and in such regard the Tenant shall:

 

(a)

not carry on or perform or suffer or permit to be carried on or performed in the Leased Premises any business practice or act or engage in any activity which may be deemed a nuisance or a menace of which in any way may injure the Project or any part thereof; and

 

(b)

(i) co-operate with the Landlord in the conservation of all forms of energy in the Project including, without limitation, in the Leased Premises,

 

(ii)

comply with all laws, by-laws, regulations and orders relating to the conservation of energy affecting the Leased Premises and the Project or either of them, and

 

(iii)

at its own cost of expense comply with all reasonable requests and demands of the Landlord made with a view to such energy conservation.

 

It is understood and agreed that:

 

(1)

any and all costs and expenses paid or incurred by the Landlord in installing energy conservation equipment and systems, so far as the same apply to or are reasonably apportioned to the Office Component by the Landlord, shall be included in Operating Expenses pursuant to Section 1.26; and

 

(2)

the Landlord shall not be liable to the Tenant in any way for any loss, costs, damages or expenses whether direct or consequential, paid, suffered or incurred by the Tenant due to any reduction in the service provided by the Landlord to the Tenant or to the Project or any part thereof as a result of (he Landlord’s compliance with such laws, by-laws, regulations or orders.

 

Any business, conduct or practice promulgated, carried on or maintained by the Tenant which in the opinion of the Landlord, acting reasonably, may harm or tend to harm the business or reputation of the Landlord or reflect unfavourably on the whole or any part of the Project, the Landlord or other tenants in the Project, or which may tend to confuse, mislead, deceive or be fraudulent to the public, shall be immediately discontinued by the Tenant at the request of the Landlord provided that this provision shall not be interpreted to prevent the Tenant from carrying on, in the Leased Premises, any business permitted pursuant Sections 7.01 and 1.00(f).

 

Section 7.03 Observance of Law

 

The Tenant shall, at its sole cost and expense and subject to Sections 9.01 and 9.02 hereof, promptly:

 

(a)

observe and comply with all provisions of law including, without limitation, all requirements of all governmental authorities, including federal, provincial and municipal legislative enactments, by-laws and other regulations now or hereafter in force which pertain to or affect the Leased Premises, the Tenant’s use of the Leased Premises or the conduct of any business in the Leased Premises, or the making of any repairs, replacements, alterations, additions, changes, substitutions or improvements of or to the Leased Premises;

 

(b)

obtain all necessary permits, licenses and approvals relating to the use of the Leased Premises and the conduct of business therein, including those necessary to comply with all municipal, provincial and federal legislation (including, without limitation, the Investment Canada Act or any similar or successor legislation) applicable thereto;

 

(c)

observe and comply with all requirements of, and pay for all costs and expenses in connection with the controls imposed by governmental authorities for ambient air and environmental standards, and without limiting the generality of the foregoing, the Tenant shall at its own cost and expense comply fully with all Environmental Laws, Orders and Regulations from time to time in force relating to Hazardous Substances in, on or upon the Leased Premises;

 

 

(d)

observe and comply with all police, fire and sanitary regulations imposed by any governmental authorities (whether federal, provincial or municipal), or made by fire insurance underwriters;

 

(e)

carry out all modifications, alterations or changes of or to the Leased Premises and the Tenant’s conduct of business in or use of the Leased Premises which are required by any such authorities, as are set out above.

 

ARTICLE VIII

Insurance and Indemnity

 

Section 8.01 Tenant’s Insurance

 

(a)

The Tenant shall at all times prior to and throughout the entire Term, at its sole cost and expense, take out and keep in full force and effect and in the names of the Tenant, the Landlord and the Head Landlord and Mortgagee as their respective interests may appear, the following insurance:

 

(i)

insurance upon;

 

(1)

property of every description and kind owned by the Tenant, or for which the Tenant is legally liable, or installed by or on behalf of the Tenant, and which is located within the Office Component including, without limitation, fittings, installations, alterations, additions, partitions, fixtures and anything in the nature of a leasehold improvement (but specifically excluding the Tenant’s furniture and movable equipment), in an amount of not less than the full replacement cost thereof, with coverage on an “All Risks” basis covering direct physical damage including the perils of earthquake and flood, and

 

(2)

the Tenant’s furniture and movable equipment in an amount of not less than the full replacement cost thereof with coverage on an “All Risks” basis covering direct physical damage including the perils of earthquake and flood. If there is a dispute as to the amount which comprises full replacement cost, the decision of the Landlord or the Mortgagee, (if applicable), shall be conclusive,

 

(ii)

broad form boiler and machinery insurance on a blanket repair and replacement basis with limits for each accident in an amount not less than the full replacement cost of all leasehold improvements and of all boilers, pressure vessels, air-conditioning equipment and miscellaneous electrical apparatus owned or operated by the Tenant ( or an operator approved by the Tenant and the Landlord ) in the Leased Premises, or relating to or serving the Leased Premises. However, so long as the Tenant in occupation of the whole of the Leased Premises is I NTERNATIONAL V ISION D IRECT L TD . and is not in default under this Lease, the Tenant shall be entitled to self-insure in respect of broad form boiler and machinery insurance, but shall be deemed for the purposes of this Lease to have satisfactorily taken out such insurance and received all proceeds that would have been payable thereunder,

 

(iii)

business interruption insurance in such amount as will reimburse th