UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|x| Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission File Number 0-27176
Saville Systems PLC
(Exact name of registrant as specified in its charter)
Republic of Ireland
(State or other jurisdiction of incorporation or organization)
Not Applicable
(I.R.S. Employer Identification No.)
IDA Business Park, Dangan, Galway, Ireland
(Address of principal executive offices, including zip code)
011-353-9-152-6611
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |x| Yes |_| No
Number of shares outstanding of the registrant's class of Ordinary Shares as of
April 28, 1999 was 39,181,744.
<PAGE>
SAVILLE SYSTEMS PLC
FORM 10-Q REPORT
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
TABLE OF CONTENTS
Part I - Financial Information PAGE
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1999 3
(unaudited) and December 31, 1998
Consolidated Statements of Income for the three months ended 4
March 31, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows for the three months ended 5
March 31, 1999 and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial Condition 9-16
and Results of Operations
Item 3. Market Risk 17
Part II - Other Information
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
<PAGE>
Saville Systems PLC
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share data amounts)
<TABLE>
March 31 December 31
1999 1998
(unaudited)
- ------------------------------------------------------ ------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $42,614 $40,330
Short-term investments 44,884 47,492
Accounts receivable, less allowance for doubtful
accounts of $2,850 and $1,943, respectively 38,394 43,729
Prepaid expenses and other assets 6,644 4,471
- ------------------------------------------------------ ------------ ------------
Total current assets 132,536 136,022
Property and equipment, net 13,207 12,277
Other assets, net 12,814 13,346
- ------------------------------------------------------ ------------ ------------
Total assets $158,557 $161,645
- ------------------------------------------------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 4,842 5,377
Accrued compensation and related benefits 5,031 7,128
Accrued expenses and other liabilities 5,724 4,644
Income taxes payable 6,915 8,804
Deferred revenue 2,891 947
Current portion of long-term liabilities 1,138 1,116
- ------------------------------------------------------ ------------ ------------
Total current liabilities 26,541 28,016
Long-term liabilities 146 1,178
Minority interest 254 361
- ------------------------------------------------------ ------------ ------------
Total liabilities 26,941 29,555
- ------------------------------------------------------ ------------ ------------
Commitments and Contingencies (note 4)
Shareholders' equity
Ordinary Shares, nominal value $0.0025 per share
Authorized: 75,000,000
Issued and outstanding: 39,084,894 and
38,908,488, respectively 98 97
Deferred Ordinary Shares, nominal value IR(pound)
1.00 per share
Authorized, issued and outstanding: 30,000 48 48
Additional paid-in capital 65,946 63,766
Retained earnings 66,633 69,802
Accumulated other comprehensive income (1,109) (1,623)
- ------------------------------------------------------ ------------ ------------
Total shareholders' equity 131,616 132,090
- ------------------------------------------------------ ------------ ------------
Total liabilities and shareholders' equity $158,557 $161,645
- ------------------------------------------------------ ------------ ------------
</TABLE>
See accompanying notes
<PAGE>
Saville Systems PLC
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(unaudited)
(in thousands of U.S. dollars, except share and per share data)
<TABLE>
Three months ended
March 31 March 31
1999 1998
- -------------------------------------------- --------------- ------------------
<S> <C> <C>
REVENUE
Services $ 26,383 $ 29,939
License fees 3,785 8,083
- -------------------------------------------- --------------- ------------------
Total revenue 30,168 38,022
- -------------------------------------------- --------------- ------------------
EXPENSES
Cost of services 17,957 14,048
Cost of license fees 91 280
Sales and marketing 2,457 1,922
Research and development 6,088 3,931
General and administrative 8,409 6,543
- -------------------------------------------- --------------- ------------------
Total expenses 35,002 26,724
- -------------------------------------------- --------------- ------------------
(Loss) income from operations (4,834) 11,298
Other income, net 719 723
- -------------------------------------------- --------------- ------------------
(Loss) income before income taxes (4,115) 12,021
Income tax (benefit) provision (946) 2,825
- -------------------------------------------- --------------- ------------------
Net (loss) income $ (3,169) $9,196
- -------------------------------------------- --------------- ------------------
Basic (loss) earnings per share $ (0.08) $ 0.24
Diluted (loss) earnings per share $ (0.08) $ 0.23
- -------------------------------------------- --------------- ------------------
(in thousands)
Ordinary shares 39,029 37,822
Ordinary shares assuming dilution 39,029 40,845
- -------------------------------------------- --------------- ------------------
</TABLE>
See accompanying notes
<PAGE>
Saville Systems PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands of U.S. dollars)
<TABLE>
Three months ended
March 31 March 31
1999 1998
- --------------------------------------------------------- ---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (3,169) $9,196
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation of property and equipment 672 477
Amortization of other assets 804 -
Provision for doubtful accounts 1,274 355
Gain on sale of property and equipment - (97)
Compensation related to stock transactions 51 51
Deferred income taxes (792) -
Changes in operating assets and liabilities:
Accounts receivable 4,059 (8,824)
Prepaid expenses and other assets (1,375) (1,240)
Accounts payable (848) (565)
Accrued compensation and related benefits (2,096) 511
Accrued expenses and other liabilities 1,049 1,083
Income taxes payable (1,890) (363)
Deferred revenue 1,944 2,511
- --------------------------------------------------------- ---------- ----------
Net cash (used in) provided by operating activities (317) 3,095
- --------------------------------------------------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,114) (2,644)
Proceeds on sale of property and equipment - 778
Purchase of other assets - (2,425)
Net maturity (purchase) of short-term investments 2,608 (17,852)
- --------------------------------------------------------- ---------- ----------
Net cash provided by (used in) investing activities 1,494 (22,143)
- --------------------------------------------------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations (33) (31)
Repayment of long-term liabilities (981) -
Proceeds from share issuances 2,015 7,955
Share issue costs - (121)
Tax benefit on employee stock transactions 38 204
- --------------------------------------------------------- ---------- ----------
Net cash provided by financing activities 1,039 8,007
- --------------------------------------------------------- ---------- ----------
Effect of exchange rate changes on cash 68 (15)
- --------------------------------------------------------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 2,284 (11,056)
Cash and cash equivalents, beginning of period 40,330 55,785
- --------------------------------------------------------- ---------- ----------
Cash and cash equivalents, end of period $42,614 $44,729
- --------------------------------------------------------- ---------- ----------
Short-term investments 44,884 30,867
- --------------------------------------------------------- ---------- ----------
Cash and short-term investments $87,498 $75,596
- --------------------------------------------------------- ---------- ----------
</TABLE>
See accompanying notes
<PAGE>
Saville Systems PLC
Notes to Consolidated Financial Statements as of March 31, 1999 (unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
by the Company in accordance with U.S. generally accepted accounting principles
for interim financial information and with instructions to Form 10-Q.
Accordingly, certain information and footnote disclosure normally included in
the Company's audited annual consolidated financial statements have been
condensed or omitted in accordance with the rules and regulations of the
Securities and Exchange Commission. The unaudited interim consolidated financial
statements, in the opinion of management, reflect all adjustments (consisting
only of normal and recurring adjustments) necessary for a fair presentation of
the results of the interim periods ended March 31, 1999 and 1998 and the
financial position as of March 31, 1999.
The results of operations for the interim periods are not necessarily indicative
of the results of operations to be expected for the fiscal year. These interim
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements of the Company which are contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
2. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
Three Months Ended
March 31 March 31
1999 1998
- -------------------------------------------------- ---------------- -----------
<S> <C> <C>
Cash Transactions:
Cash paid for interest 59 30
Cash paid for income taxes 2,729 3,000
Non-Cash Transactions:
Technology acquired by long-term liabilities - 2,000
- -------------------------------------------------- ---------------- -----------
</TABLE>
3. LONG-TERM LIABILITIES
Line of credit
During the quarter ended March 31, 1999 the Company received an extension of its
US $15.0 million line of credit until August 31, 2000. This multi-currency line
of credit was obtained in 1997 from a financial institution and was available to
the Company and its subsidiaries for a two year period ending August 31, 1999.
The terms of the line of credit including interest rates, standby fees and
financial covenants remain unchanged from December 31, 1998. The Company was in
compliance with the covenants at March 31, 1999 and December 31, 1998 and no
advances were outstanding on either date, respectively.
Minimum Royalty Payments
During the quarter ended March 31, 1999 the Company made a royalty payment of
$982,000 which was required as part of the purchase of telecommunications
interconnect billing software technology made in 1998. The remaining $1.0
royalty payment (less any royalties paid in 1999) is due in 2000 and is included
in the current portion of long-term liabilities.
4. COMMITMENTS AND CONTINGENCIES
During the three months ended March 31, 1999, the Company entered into new
office leases with commitments totaling $15.7 million through 2010.
On April 19, 1999, the Company received a notice of demand for arbitration filed
by a former customer, Cellular Holdings, Inc. (also known as Cellular South and
Telepak), alleging certain failures to perform under the agreements between the
Company and Cellular Holdings. The customer seeks a refund of approximately $6.6
million paid to Saville under the agreements plus additional expenses and costs.
The Company denies Cellular Holdings' allegations and believes that its claims
are without merit. In addition, Cellular Holdings presently owes the Company
approximately $4.0 million for work performed under these agreements. The
Company intends to assert a counterclaim in arbitration for, and aggressively
pursue, the payment of all such amounts, applicable interest and expenses. There
can be no assurance, however, as to the outcome of this dispute.
5. SHARE CAPITAL
During the three month period ended March 31, 1999 the Company issued 176,406
Ordinary Shares for approximately $2.0 million to officers and employees
pursuant to option exercises and stock purchases under the 1995 Share Option
Plan ("1995 Plan") and the 1996 Employee Share Purchase Plan ("1996 Plan"),
respectively.
Also during the period, the Company granted approximately 2,219,000 options
under the 1995 Plan to employees at weighted average exercise price of $19.92.
6. COMPREHENSIVE (LOSS) INCOME
The Company's comprehensive (loss) income was as follows:
(in thousands of U.S. dollars)
<TABLE>
Three Months Ended
March 31 March 31
1999 1998
- --------------------------------------------------------- ----------- ---------
<S> <C> <C>
Net (loss) income $(3,169) $9,196
Foreign currency translation adjustment, net of NIL tax 514 31
- --------------------------------------------------------- ----------- ---------
Comprehensive (loss) income $(2,655) $9,227
- --------------------------------------------------------- ----------- ---------
</TABLE>
The earnings of the Company's non-Irish foreign subsidiaries, which give rise to
the foreign currency translation adjustments, are reinvested with no plan for
repatriation. Therefore, there is no tax effect on this component of other
comprehensive income.
7. (LOSS) EARNINGS PER SHARE
<TABLE>
Three Months Ended
March 31 March 31
1999 1998
- --------------------------------------------------- ----------- --------------
<S> <C> <C>
Numerator:
Net (loss) income $(3,169) $9,196
Denominator:
Denominator for basic earnings per share -
Weighted average shares outstanding 39,029 37,822
- --------------------------------------------------- ----------- --------------
Effect of dilutive securities:
Stock options - 3,023
- --------------------------------------------------- ----------- --------------
Denominator for diluted earnings per share 39,029 40,845
Basic earnings per share $(0.08) $ 0.24
Diluted earnings per share $(0.08) $ 0.23
- --------------------------------------------------- ----------- --------------
</TABLE>
Options to purchase approximately 7,369,000 shares, outstanding as of March 31,
1999, were not included in the above computation of diluted loss per share for
the three months ended March 31, 1999 because, given the net loss for the
quarter, the effect of such options would be anti-dilutive on an earnings per
share basis.
Options to purchase approximately 15,000 shares, outstanding as of March 31,
1998, were excluded in the above computation for the three months ended March
31, 1998 because the exercise price of such options was greater than the average
market price of the common shares and therefore would be anti-dilutive.
8. SEGMENT INFORMATION
The Company operates in a single business segment which offers similar products
and services. The Company's products are similar in nature, providing customer
care and billing solutions software for service providers in the
telecommunications and energy industries. The Company distributes its products
throughout the world through a direct sales force.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
Saville Systems PLC (together with its subsidiaries, "Saville" or the "Company")
provides innovative convergent customer care and billing solutions to service
providers in the global telecommunications and energy markets. Saville offers
products and services designed to enable telecommunications and energy service
providers to bring new service offerings to market quickly, and to bill
accurately and reliably for multiple services on one convergent invoice. In
order to meet the current and evolving billing requirements of its customers,
the Company continuously refines its sophisticated convergent billing platform
(CBP(R)) software products for both the UNIX/Oracle(R) and DB2/400 platforms.
The customer can either license CBP from Saville or CBP can be provided by a
Company-operated service bureau. Saville has also introduced facilities
management services, which allow customers to license CBP from Saville and have
Saville manage the operation of the software on customer owned hardware.
Additionally, Saville has developed relationships with authorized integrators to
assist it in providing implementation services to purchasers of CBP products.
Saville also offers its interconnect billing platform (IBPTM) software product
which allows telecommunications companies to bill for carrier-to-carrier
transactions. In addition, during the three months ended March 31, 1999, Saville
released its SavilleCareTM product and its SavilleExpressTM GSM product module.
SavilleCare allows telecommunications service providers to integrate the
SavilleCare call center desktop with the providers' billing and other business
support systems. SavilleExpress GSM is a pre-configured module that, through the
SavilleExpress modular billing platform, supports the billing of services using
the Global System for Mobile Communications (GSM) standard for wireless
telecommunications. Each of these three products was developed from technologies
purchased in 1998.
In addition to its product offerings, Saville provides its customers with a full
range of professional services, including assisting a customer in analyzing its
requirements and then designing, developing and implementing a customer care and
billing solution. The Company assists its customers on an ongoing basis by
addressing their changing business needs through future enhancements and
developments to their customer care and billing solutions.
The following information should be read in conjunction with the Unaudited
Consolidated Financial Statements and Notes thereto included in Item 1 of this
Quarterly Report and the Audited Consolidated Financial Statements and Notes
thereto and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
Results of Operations
Revenue. Total revenue decreased 20.7% from $38.0 million in the three
months ended March 31, 1998 to $30.2 million in the three months ended March 31,
1999. Both first quarter license and services revenue were lower due primarily
to fewer new customers being added during the quarter, as well as some delay in
previously initiated projects.
Services revenue decreased 11.9% from $29.9 million in the three months ended
March 31, 1998 to $26.4 million in the three months ended March 31, 1999. This
decrease was primarily due to several existing customers' changing
implementation schedules, additional work required during the quarter to bring
several UNIX/Oracle sites into production and a decline in new services revenue
resulting from the shortfall in new license sales.
License fees revenue decreased 53.2% from $8.1 million in the three months ended
March 31, 1998 to $3.8 million in the three months ended March 31, 1999. The
decrease was due primarily to fewer new license sales and, to a lesser extent,
to a delay in the recognition of license fees from projects that commenced in
late 1998 due to changes in customer implementation schedules. The Company's new
license sales were adversely affected by a lengthening of the sales cycle due,
in part, to uncertainty caused by recent consolidation among the Company's
competition, as well as the marketing issues related to the Company's UNIX
customers going into production later in the quarter than expected.
Cost of Services. Cost of services increased 27.8% from $14.0 million in
the three months ended March 31, 1998 to $18.0 million in the three months ended
March 31, 1999. As a percentage of services revenue, cost of services increased
from 46.9% in the three months ended March 31, 1998 to 68.1% in the three months
ended March 31, 1999. The overall dollar increase in cost of services was due
primarily to an increased level of expenses to support the Company's growth in
1998. Specifically, additional personnel hired during 1998, including personnel
at the Company's Australian subsidiary hired as a result of the acquisition of
the net assets of BHA Pty Ltd. ("BHA") and its majority owned subsidiary BHA
Computer Pty Ltd. ("BHAC") in April 1998, as well as increased costs to retain
qualified personnel contributed to this increase. Additionally, computer system
costs to support headcount growth and the growth of Saville's service bureau
initiative during 1998 also contributed to the increase. The increase in cost of
services as a percentage of services revenue was due primarily to the higher
overall services costs and lower services revenue, each as described above, and,
to a lesser extent, higher costs of services as a percentage of services revenue
at the Company's Australian subsidiary. As the market demands for skilled
employees and contractors increase, the Company expects that the costs to
attract, retain and train personnel will continue to increase. Total costs as a
percentage of revenue are expected to decrease to the extent services revenue
increases throughout the remainder of 1999.
Cost of License Fees. Cost of license fees decreased 67.5% from
$280,000 in the three months ended March 31, 1998 to $91,000 in the three months
ended March 31, 1999. This decrease was due primarily to an overall decrease in
license fees revenue.
Sales and Marketing. Sales and marketing expenses increased 27.8% from $1.9
million in the three months ended March 31, 1998 to $2.5 million in the three
months ended March 31, 1999. As a percentage of total revenue, sales and
marketing expenses increased from 5.1% in the three months ended March 31, 1998
to 8.1% in the three months ended March 31, 1999. The overall dollar increase
was primarily due to the growth of the Company's worldwide sales force and
marketing efforts during 1998, and to a lesser extent, the inclusion of the
sales and marketing costs in Australia as a result of the acquisition of the
assets of BHA and BHAC in April 1998. The increase in costs as a percentage of
total revenue was due primarily to higher overall sales and marketing costs and
lower revenue, each as described above. The Company anticipates that the
continued emphasis on its North American and European marketing efforts will
increase its sales and marketing expenses in absolute dollars throughout the
remainder of 1999 but expects such expenses to decrease as a percentage of total
revenue to the extent total revenue increases in 1999.
Research and Development. Research and development expenses increased
54.9% from $3.9 million in the three months ended March 31, 1998 to $6.1 million
in the three months ended March 31, 1999. As a percentage of total revenue,
research and development expenses increased from 10.3% in the three months ended
March 31, 1998 to 20.2% in the three months ended March 31, 1999. The overall
dollar increase was due to development efforts by the Company on its CBP
products on both the UNIX/Oracle platform and to a lesser extent, the DB2/400
platform, as well as increased development efforts for the product releases of
SavilleCare and SavilleExpress in 1999, and the continued development of Saville
IBP, technologies purchased during 1998. In addition, the increase in research
and development expenses as a percentage of revenue was due primarily to overall
decreases in total revenue and, to a lesser extent, additional development costs
of technologies purchased in 1998. The Company intends to continue to invest
resources to expand and enhance its product offerings in the future and
therefore expects that research and development expenses will remain at similar
or slightly lower levels in absolute dollars during the remainder of 1999.
General and Administrative. General and administrative expenses
increased 28.5% from $6.5 million in the three months ended March 31, 1998 to
$8.4 million in the three months ended March 31, 1999. As a percentage of total
revenue, general and administrative expenses also increased from 17.2% in the
three months ended March 31, 1998 to 27.9% in the three months ended March 31,
1999. The overall increase in total general and administrative expenses was
attributable, in part, to the increased levels of infrastructure costs in 1999
associated with the growth in the Company's employee base and the expansion of
the Company's business throughout 1998, including the BHA acquisition in April
1998. Additional general and administrative expenses in the three months ended
March 31, 1999 were due to increased provisions for doubtful accounts due to
uncertainty regarding the collectibility of certain specific customer accounts,
as well as amortization of goodwill and completed technology arising from the
acquisition of the assets of BHA. In addition to the overall increases in
general and administrative expenses discussed above, the increase in general and
administrative expenses as a percentage of total revenue was also due to the
decrease in total revenue as compared to 1998. Although the Company expects that
general and administrative expenses will remain fairly consistent throughout the
remainder of 1999 to support the Company's operations, the Company will continue
to review outstanding amounts owed by the Company's customers and assess its
provision for doubtful accounts accordingly. However, the Company expects such
expenses to decrease as a percentage of total revenue, to the extent total
revenue increases in 1999.
Other Income, Net. Other income, net, decreased slightly from $723,000
in the three months ended March 31, 1998 to $719,000 in the three months ended
March 31, 1999. Increased interest income on larger cash and short-term
investment balances offset by losses on revaluation of foreign currency
denominated items due to fluctuations of market rates accounted for the overall
small change.
Income Tax (Benefit) Provision. The Company recorded a tax provision of
$2.8 million in the three months ended March 31, 1998 representing an effective
tax rate of 23.5%. Comparatively, a tax benefit of $946,000 was recorded in the
three months ended March 31, 1999. The Company's effective tax rate is largely
dependent on the proportion of the Company's income earned in different tax
jurisdictions. The Company earns a significant portion of its taxable income in
the Republic of Ireland of which its "manufacturing income" qualifies for a
reduced tax rate of 10% which is substantially lower than statutory rates in
Ireland, Canada, the United States, the United Kingdom and Australia. The
Company anticipates that it will continue to benefit from this tax treatment,
although the extent of the benefit could vary from period to period, and there
can be no assurance that the Company's tax situation will not change. The Irish
Minister of Finance announced in December 1998 that the standard Irish tax rate
would be reduced to 28% as of January 1, 1999 and will be reduced gradually to a
tax rate of 12.5% for taxation years ending after 2002 (as compared to 32% in
1998). Under the announced plan, the tax rate on manufacturing income will
remain at 10% until the tax relief program is due to terminate in 2010, at which
time the tax rate would increase to the standard rate of 12.5%. Should the
Company no longer qualify for this lower tax rate or if tax laws were rescinded
or changed, the effect on net income would be materially adversely affected.
Liquidity and Capital Resources
On a combined basis, cash and cash equivalents and short-term investments of
$87.5 million at March 31, 1999 were relatively unchanged from $87.8 million at
December 31,1998. During the first three months of 1999, cash and cash
equivalents increased $2.3 million to $42.6 million at March 31, 1999, while
short-term investments decreased $2.6 million to $44.9 million at March 31,
1999.
Operating Activities. During the three months ended March 31, 1999, net
cash used by operating activities was $317,000. Cash used to fund the Company's
net loss for the period as well as payments of compensation and related benefits
and income tax installments were mostly offset by the non-cash effect of the
provision for doubtful accounts and a decrease in accounts receivable.
Investing Activities. The cash provided by investing activities was due
primarily to the maturity of short-term investments of $2.6 million partially
offset by the purchase of property and equipment of $1.1 million. The Company
expects to continue to make property and equipment investments throughout the
remainder of 1999 to support the growth and expansion of the Company's business
and for further development of its internal software programs.
Financing Activities. During the three months ended March 31, 1999 net
cash provided from financing activities was $1.0 million. This was due to the
issuance of Ordinary Shares to employees pursuant to exercises of options under
the 1995 Share Option Plan and to shares issued under the 1996 Employee Share
Purchase Plan partially offset by the payment of a royalty of approximately $1.0
million during the period pursuant to the Company's purchase of certain
interconnect billing software in 1998.
The Company and its subsidiaries have available a $15.0 million multi-currency
operating line of credit (the "Line of Credit") from a financial institution
that was to expire on August 31, 1999 but was extended during the three months
ended March 31, 1999 to expire on August 31, 2000. The Line of Credit bears
interest at rates varying from 0.25% to 1% above the base rate which depends on
the currency of the funds drawn on the facility and includes the Canadian U.S.
Dollar Base rate, the Canadian Bank Prime rate and LIBOR and DIBOR rates.
At March 31, 1999, the Company had outstanding an irrevocable standby letter of
credit for $493,000 that expires on July 30, 1999, which letter of credit was
issued to a customer to serve as performance bonds associated with the
completion of the Company's contract. Before the customer can draw on this
letter, the Company must be provided with sixty days prior written notice. No
such notice had been received by the Company as of March 31, 1999. During the
three months ended March 31, 1999, a letter of credit was also issued to one of
the Company's lessors for approximately $162,000 which is due to expire
September 30, 2000. Funds available under the Line of Credit are reduced by
amounts under any letters of credit outstanding. No amounts were outstanding
under the Line of Credit at March 31, 1999.
The Company had capital lease obligations in principal amounts of $284,000 as of
March 31, 1999. The current portion of long-term liabilities includes
approximately $1.0 million of royalty payments due in 2000 pursuant to the
Company's purchase agreement relating to certain interconnect billing software
in 1998.
The Company believes that existing cash balances, funds generated by operations
and the availability of the Line of Credit will be sufficient to meet its
anticipated liquidity and working capital requirements for at least the next
twelve months.
Foreign Currency Exposure
The Company's international sales are predominately invoiced and paid in U.S.
currency with the exception of certain customers who are invoiced primarily in
Canadian dollars, Pounds Sterling, Australian dollars, New Zealand dollars and
Swiss Francs. The impact of foreign currency translation has not been material
to the Company's operations.
Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing currencies (legacy
currencies) and one common currency, the Euro. The Euro now trades on currency
exchanges and may be used in business transactions. Beginning in January 2002,
new Euro-denominated bills and coins will be issued and legacy currencies will
be withdrawn from circulation. The Company has begun to identify and ensure that
all Euro conversion compliance issues are addressed during this transition
period ending in 2001. The Company does not expect the effect of the Euro
conversion on its business operations to be significant since the Company's
international sales are predominately invoiced and paid in U.S. currency and the
cost of modification to internal systems is not expected to be significant.
Therefore, based on current information, the Company does not expect that the
Euro conversion will have a material adverse impact on its business or financial
condition.
Recently Issued Accounting Standards
Statement of Position of 98-9 "Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions" ("SOP 98-9") has also been
issued by the AICPA. Effective December 15, 1998, SOP 98-9 amends SOP 98-4,
Deferral of the Effective Date of a Provision of SOP 97-2, and Software Revenue
Recognition, to extend the deferral of the application of certain passages of
SOP 97-2 provided by SOP 98-4 through fiscal years beginning on or before March
15, 1999. All other provisions of SOP 98-9 are effective for transactions
entered into in fiscal years beginning after March 15, 1999. The Company's
current revenue recognition policies are expected to remain largely unaffected.
The Financial Accounting Standards Board has issued Statement of Financial
Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133 will be effective for the Company's fiscal year ending
December 31, 2000. The Company has not determined the impact, if any, of this
pronouncement on its consolidated financial statements.
Year 2000 Readiness Disclosure
The Company is currently reviewing its products and operations to ensure that
they will not be adversely affected by year 2000 software failures, which can
arise in time-sensitive software applications that utilize a field of two digits
to define the applicable year. In such applications, a date using "00" may be
recognized as the year 1900 rather than the year 2000. The Company considers
"Year 2000 Ready" to mean that a product, when used in accordance with its
associated documentation, is capable of correctly processing, providing and/or
receiving date data within and between the twentieth and twenty-first centuries,
provided that all non-Saville products (i.e., hardware, software and firmware)
used with such product properly exchange accurate date data with it.
The Company's internal systems include both its information technology ("IT")
and non-IT systems. The Company has initiated an assessment of its material
internal IT systems including its accounting and software development systems
and its non-IT systems including security systems, building equipment and
utilities. The Company expects to complete this assessment in the first half of
1999. To the extent that the Company is not able to test the technology provided
by third-party vendors, the Company is seeking assurances from such vendors that
their systems are Year 2000 Ready. Although the assessment is still underway,
management currently believes that all material systems which the Company uses
will be Year 2000 Ready when necessary and that the cost to ensure that those
systems are Year 2000 Ready will not be material. It should be noted, however,
that the Company depends on timely and uninterrupted interactions with its
vendors and its customers, through the use of banking systems, commercial
airline travel, telecommunications via long-distance and local service
providers, and local utilities, including power. To the extent that Year 2000
Ready alternatives are not readily available at the time, any interruption
caused by a lack of Year 2000 Readiness on the part of such vendors could have a
material adverse effect on the Company's business, operating results and
financial condition.
The Company has designed, tested and continues to test the most current versions
of its products to ensure that they are Year 2000 Ready. However, a portion of
the Company's currently installed customer base may require upgrade or other
remediation to become Year 2000 Ready. The Company is currently taking inventory
of its existing customers and assessing on a case-by-case basis whether testing,
upgrade or modification for Year 2000 Readiness is required. The Company expects
to complete this assessment in the first half of 1999. The Company's total cost
relating to these activities, and any modifications required thereby, has not
been and is not expected to be material to the Company's financial condition,
results of operations, or cash flows. Any such expenditures to date have been,
and any such expenditures in the future are expected to be, treated as normal
business expenses funded out of operating cash flow. The Company believes that
its exposure to legal liability for any such Year 2000 Readiness failures is
limited and that it will be able to make any necessary modifications on a timely
basis. There can be, however, no assurance that there will not be increased
costs associated with the implementation of any such activities or required
modifications and there can be no assurance that there will not be significant
legal liabilities, either of which could have a material adverse effect on the
Company's business, operating results and financial condition.
Despite testing by the Company and current and potential customers, the
Company's new and installed products and the IT and non-IT systems used by the
Company may contain undetected errors or defects associated with Year 2000 date
functions. Known or unknown errors or defects in the Company's IT systems,
non-IT systems, or products could result in delay or loss of revenue, diversion
of development resources, damage to the Company's reputation, and increased
service and warranty costs, any of which could materially adversely affect the
Company's business, operating results, or financial condition. In addition, the
Company is aware of the potential for claims against it and other companies for
damages arising from products and services provided by it and third party
suppliers that were not Year 2000 Ready. Because of the unprecedented nature of
such litigation, it is uncertain whether or to what extent the Company may be
affected by any such claims.
The Company believes that the most likely worst case scenario related to Year
2000 risks is a material business interruption that leads to client
dissatisfaction and the termination of a project or projects by dissatisfied
clients. Such an interruption in services could occur due to a breakdown in any
number of the Company's IT or non-IT Systems, or the systems of third parties.
The Company currently does not have a contingency plan in the event a particular
system or vendor is not Year 2000 Ready. Such a plan will be developed if it
becomes clear that the Company is not going to achieve its scheduled objectives
in respect of Year 2000 Readiness. There can be no assurance that unexpected
Year 2000 Readiness problems of the Company or its vendors, customers and
service providers will not materially adversely affect the Company's business,
operating results and financial condition. The foregoing assessment represents
management's best estimates at the present time, which could change
significantly in the future.
Certain Factors That May Affect Future Results
This Quarterly Report contains forward-looking statements that involve a number
of risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements,
including statements regarding the Company's expectations regarding future
growth in revenue, the Company's plans to expand its product lines and
international sales presence, the Company's plans to continue its research and
development efforts, the Company's expectation that it will continue to make
property and equipment investments in 1999, the Company's belief that its
existing cash balance and funds generated by operations will be sufficient to
meet its anticipated liquidity and working capital requirements for the next
twelve months, the possible adverse foreign currency exposure involved with
international expansion, the Company's expectation that the result of Euro
conversion will not have a material adverse effect, and the Company's general
expectations of growth. A number of uncertainties exist that could affect the
Company's future operating results, including, without limitation, the Company's
ability to retain existing customers and attract new customers, fluctuations in
the Company's sales cycle, the Company's ability to attract and retain qualified
employees, the Company's continuing ability to develop products that are
responsive to the evolving needs of its customers, increased competition,
changes in operating expenses, foreign currency exchange rates, the Company's
continued ability to take advantage of favorable tax treatment currently
available to the Company and general economic factors.
Historically, the Company has been dependent on long-term customer
relationships. The Company's future success depends in large part on its ability
to maintain its current relationships and develop new customer relationships
with successful telecommunications and energy service providers. There can be no
assurance that the Company will be able to develop and maintain such long-term
relationships, including obtaining references from such existing customers, or
that emerging service providers that are or become customers of the Company will
be successful. In addition, the telecommunications market is presently
experiencing significant merger, consolidation and alliance formation activity
among both established and start-up carriers. A consolidation or alliance
affecting any of the Company's customers could result in such customer shifting
to another billing system, thus decreasing such customer's use of the Company's
products and services as well as the cancellation of any projects underway. A
significant decrease in business from any of its major customers or the failure
of the Company to compete effectively for new customers or projects in the
telecommunications and energy markets, would have a material adverse effect on
the Company's business, financial condition and results of operations.
The Company's quarterly and annual operating results may fluctuate from quarter
to quarter and year to year depending on various factors including new product
development and other expenses, introduction of new products by competitors,
fluctuations in the numbers and types of customer contracts (i.e. service bureau
or license) signed in any given quarter, the hiring of additional staff, pricing
pressures, the effect of acquisitions, the evolving and unpredictable nature of
the markets in which the Company's products and services are sold and general
economic conditions. The sales cycle for the Company's products has lengthened
recently due, in part, to consolidation within the industry. This has made the
timing of revenues difficult to predict. Because of the significant size of
customer projects, a delay in one or more projects during a particular quarter
could have a material adverse impact on the Company's operating results for that
quarter. Most of the Company's expenses, such as employee compensation, computer
costs and rent, are relatively fixed in the short term. Moreover, the Company's
expense levels are based, in part, on the Company's expectations regarding
future revenue levels. As a result, if revenue for a particular quarter is below
the Company's expectations, the Company may not be able to reduce operating
expenses proportionately for that quarter, and, therefore, this revenue
shortfall would have a disproportionately negative effect on the Company's
operating results for that quarter.
The billing and customer care industry is intensely competitive. The Company
competes with both independent providers of systems and services similar to
those offered by the Company and with internal billing departments of existing
telecommunications and energy service providers, many of which have
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition, than the Company. For example,
in February 1999, Lucent Technologies, Inc., a telecommunications equipment
maker with substantially greater resources and name recognition than the Company
and with which the Company had entered into several alliance agreements,
purchased Kenan Systems Corp., a customer care and billing software competitor
of the Company. There can be no assurance that the Company will be able to
compete successfully with its existing competitors or with new competitors.
The market for the Company's products is characterized by rapid technological
change, frequent new product introductions, evolving industry standards and
changing customer needs. The Company currently offers both DB2/400-based and
UNIX-based CBP products and is devoting significant resources to develop, refine
and enhance these CBP products, as well as its other customer care and billing
technology. The Company believes that its future success will depend in large
part on its ability to maintain and enhance its current product and service
offerings and to continually develop and introduce new products and services
that will keep pace with technological advances and satisfy evolving customer
requirements. If the Company is unable to develop and introduce new products and
services in a timely manner, or if the Company's new products, developments and
enhancements do not perform or gain market acceptance, or if there should be a
rapid shift from the telecommunications industry's use of either DB2/400 or UNIX
as a standard platform for billing, the Company's business, financial condition
and results of operations would be materially adversely affected.
The Company's international business is subject to risks such as fluctuations in
exchange rates, difficulties or delays in developing and supporting non-English
language versions of the Company's products, political and economic conditions
in various jurisdictions, unexpected changes in regulatory requirements, tariffs
and other trade barriers, difficulties in staffing and managing foreign
operations and longer accounts receivable payment cycles. Specifically, the
Latin America and Asia Pacific regions have experienced a downturn in economic
conditions, the continuation of which could adversely affect the Company's
ability to expand into this region. Additionally, credit markets for smaller
telecommunications companies in the U.S. have weakened, while competition has
increased, all of which could adversely affect the Company's ongoing projects
for such customers, as well as the Company's ability to attract and maintain
relationships with such companies.
Recently, the Company has expanded its operations rapidly, which has placed
significant demands on the Company's administrative, operational and financial
personnel and systems. Additional expansion by the Company may further strain
the Company's management, financial and other resources. There can be no
assurance that the Company's systems, procedures, controls and existing space
will be adequate to support expansion of the Company's operations. The Company's
future operating results will substantially depend on the ability of its
officers and key employees to manage changing business conditions and to
implement and improve its operational, financial control and reporting systems,
as well as to attract and retain qualified personnel, including highly-sought
UNIX software development personnel. If the Company is unable to respond to and
manage changing business conditions, the quality of the Company's services, its
ability to retain key personnel and its results of operations could be
materially adversely affected.
The Company's strategy includes the acquisition of businesses and technologies
that complement or augment the Company's existing business and products.
Promising acquisitions are difficult to identify and complete for a number of
reasons, including competition among prospective buyers and the need to obtain
regulatory approvals, including antitrust approvals. There can be no assurance
that the Company will be able to complete future acquisitions or that the
Company will be able to successfully integrate any acquired businesses. In order
to finance such acquisitions, it may be necessary for the Company to raise
additional funds through public or private financing. Any equity or debt
financing, if available at all, may be on terms that are not favorable to the
Company, and in the case of equity offerings, may result in dilution to the
Company's shareholders.
Fluctuations in exchange rates may have a material adverse effect on the
Company's results of operations, particularly its operating margins and could
also result in exchange losses. The impact of future exchange rate fluctuations
on the Company's results of operations cannot be accurately predicted. To date,
the Company has not sought to hedge the risks associated with fluctuations in
exchange rates, but may undertake such transactions in the future. There can be
no assurance that any hedging techniques implemented by the Company will be
successful or that the Company's results of operations will not be materially
adversely affected by exchange rate fluctuations.
The Company regards its software products as proprietary and relies primarily on
a combination of statutory and common law copyright, trademark and trade secret
laws, customer licensing agreements, employee and third-party nondisclosure
agreements and other methods to protect its proprietary rights. These laws and
contractual provisions provide only limited protection of the Company's
proprietary rights. Despite the Company's precautions, it may be possible for a
third party to copy or otherwise obtain and use the Company's technology without
authorization. Furthermore, the laws of certain countries in which the Company
sells its products do not protect the Company's software and intellectual
property rights to the same extent, as do the laws of the United States. If
unauthorized copying or misuse of the Company's products was to occur to any
substantial degree, the Company's business, results of operations and financial
condition could be materially adversely affected.
From time to time, the Company may receive threats of or become involved in
litigation in the ordinary course of its business. In April 1999, the Company
received a notice of demand for arbitration filed by a customer alleging certain
failures to perform by the Company. The customer alleges damages of
approximately $6.6 million. The Company denies all such allegations and believes
that they are without merit. There can be no assurance, however, as to the
outcome of this or any other dispute that may arise.
The Company has significant operations and generates a substantial portion of
its taxable income in the Republic of Ireland, and, under an incentive tax
program due to terminate in 2010, is taxed on its "manufacturing income" at a
rate that is substantially lower than U.S. tax rates. If the Company could no
longer qualify for this lower tax rate or if the tax laws were rescinded or
changed, the Company's net income could be materially adversely affected. In
addition, if U.S., Canadian, Australian, United Kingdom or other foreign tax
authorities were to challenge successfully the manner in which profits are
recognized among the Company and its subsidiaries, the Company's effective tax
rate could increase and its cash flow and results of operations could be
materially adversely affected.
<PAGE>
Item 3. Market Risk
The Company is exposed to market risks, which include changes in currency
exchange rates as measured against the U.S. dollar and each other which could
positively or negatively affect results of operations and retained earnings.
As of March 31, 1999, the Company has evaluated its risk and determined that any
exposure to currency exchange is not significant to the Company's overall
consolidated financial results. There can be no assurance that the Company's
exposure will remain at these levels, especially in the event of significant and
sudden fluctuations in the value of local currencies.
<PAGE>
SAVILLE SYSTEMS PLC
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On April 19, 1999, the Company received a notice of demand for
arbitration filed by a former customer, Cellular Holdings, Inc. (also
known as Cellular South and Telepak), alleging certain failures to
perform under the agreements between the Company and Cellular Holdings.
The customer seeks a refund of approximately $6.6 million paid to
Saville under the agreements plus additional expenses and costs. The
Company denies Cellular Holdings' allegations and believes that its
claims are without merit. In addition, Cellular Holdings presently owes
the Company approximately $4.0 million for work performed under these
agreements. The Company intends to assert a counterclaim in arbitration
for, and aggressively pursue, the payment of all such amounts,
applicable interest and expenses. There can be no assurance, however,
as to the outcome of this dispute.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed in the Exhibit Index as part of or included
in this report.
(b) Reports on form 8-K
The Company filed current reports on Form 8-K dated January 27,
1999 and March 11, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAVILLE SYSTEMS PLC
(Registrant)
Date: May 3, 1999 By: /s/Christopher A. Hanson
----------------- ------------------------
Christopher A. Hanson
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
SAVILLE SYSTEMS PLC
FORM 10-Q REPORT
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
INDEX TO EXHIBITS
<TABLE>
Exhibit No. Description
<S> <C>
10.1 Lease agreement between Saville Systems Canada, Ltd. and Monarch
Construction Limited dated January 26, 1999
10.2 Employment Agreement between the Company and Lawrence S. Barker,
dated January 4, 1999
10.3 Employment Agreement between the Company and John J. Kiley,
dated January 4, 1999
27.0 Financial Data Schedule
</TABLE>
EXHIBIT 10.1
L E A S E
COMMERCE VALLEY DRIVE EAST
MARKHAM, ONTARIO
I N D E X
Tenant:
1. Definitions
2. Demise and Term
3. Rent
a) Basic Rent
b) Additional Rent
c) Net Lease
d) INTENTIONALLY DELETED
e) Delay in Occupancy
f) Rental Deposit
4. Calculation and Allocation of Taxes and Operating Expenses
5. Payment of Taxes
6. Tenant's Covenants
a) Rent
b) Use
c) Prohibited Uses of Premises
d) Waste and Nuisance
e) Insurance
f) Insurance Proceeds
g) Use of Premises-- Insurance
h) Use of Premises --Cancellation of Insurance
i) Landlord not Liable
j) Indemnification of Landlord
k) Compliance with Laws
1) Rules and Regulations
m) Alterations
n) Energy Conservation
o) Repair
p) Damage by Tenant
q) Utilities
r) Tenant Not to Overload Facilities
7. Landlord's Covenants
a) Quiet Enjoyment
b) Heating, Ventilating and Air-Conditioning
c) Cleaning
d) Electric and Water Services
e) Elevators
f) Washrooms
g) Maintain Building
h) Repair
i) Snow Removal
j) Insurance
8. Monthly Tenancy
9. Assigning and Subletting
10. Additional Services
11. Damage or Destruction
12. Leasehold Improvements and Trade Fixtures
13. Signs and Directory
14. Access, Inspection, Right to Show Premises
15. Landlord's Remedies
a) Re-Entry
b) Remedies of Landlord i. Termination
ii. Recovery of Expenses
iii.Right to Relet
c) Curing of Default
d) Distress
e) Interest
f) Application of Receipts
16. Bankruptcy, Improper Use, Etc.
17. INTENTIONALLY DELETED
18. INTENTIONALLY DELETED
19. Parking
20. Notices
21. Legal Costs
22. Prior Interests
23. No Waiver of Default
24. INTENTIONALLY DELETED
25. INTENTIONALLY DELETED
26. Ducts
27. Registration
28. Severability
29. Interpretation
30. Successors
31. Joint and Several Liability
32. Schedule "E" and Pace 14A of Schedule "E" is an Integral
Part of this Lease
33. Landlord to Act Reasonably
Schedule "A" - Description of Premises
Schedule "B" - Preliminary Site Plan
Schedule "C" - Landlord's Work
Schedule "D" - Tenant's Existing Lease Obligations at 625 and 675 Cochrane
Drive, Markham,Ontario
Schedule "E" - Offer to Lease and Amendments Thereto
Schedule "F" - Rules and Regulations
Schedule "G" - Non-Disturbance and Attornment Agreement
Appendix "1" - Indemnity Agreement
<PAGE>
L E A S E
COMMERCE VALLEY DRIVE EAST
MARKHAM, ONTARIO
THIS LEASE MADE the 26th day of January, 1999
IN PURSUANCE OF THE SHORT FORMS OF LEASES ACT
BETWEEN:
MONARCH CONSTRUCTION LIMITED
(hereinafter called the "Landlord")
of the First Part
and
SAVILLE SYSTEMS CANADA, LTD.
(hereinafter called the "Tenant")
of the Second Part
and
SAVILLE SYSTEMS PLC
(hereinafter called the "Indemnifier")
of the Third Part
WHEREAS the Landlord has agreed to lease to the Tenant and the Tenant has agreed
to lease from the Landlord the hereinafter described premises forming part of
the building located at Commerce Valley Drive East, in the Town of Markham, in
the Regional Municipality of York, being part of block 4, plan 65M-2620,
designated as part of parts 1 and 2, plan 65R-19184 in the Land Registry Office
for the Land Titles Division of York and as more particularly set out in
Schedule "A" attached hereto (hereinafter referred to as the "Lands").
NOW THEREFORE WITNESSETH that in consideration of the rents, covenants and
agreements hereinafter reserved and contained on the part of the Tenant, the
Landlord hereby demises and leases to the Tenant certain premises forming part
of the Building (as hereinafter defined) located on the entire fifth (5th),
sixth (6th), seventh (7th) and eighth (8th) floors and part of the fourth (4th)
and first (1st) floors having a Rentable Area (as hereinafter defined) of
approximately 110,000 square feet as outlined in red on the floor plan attached
hereto as Schedule "B" (hereinafter called the "Premises").
DEFINITIONS
1. Except where otherwise provided in this Lease, the following terms, when used
throughout this lease, shall have the meanings set out below:
(a) ADDITIONAL RENT shall mean and refer to any and all sums of money or charges
required to be paid by the Tenant under this lease (except Basic Rent) whether
or not the same are designated as Additional Rent or whether or not payable to
the Landlord or otherwise and all such sums are payable in lawful money of
Canada without deduction, abatement, set-off or compensation whatsoever.
(b) ADDITIONAL SERVICES shall mean and refer to the services and supervisions
supplied by the Landlord referred to in clause 10, and to all other services of
any nature or kind supplied by the Landlord to the Tenant in addition to those
required to be supplied by the Landlord to the Tenant pursuant to this lease,
save and except any services which the Landlord elects to supply to tenants
generally, and the costs of which are included in Allocable Operating Expenses.
(c) ALLOCABLE OPERATING EXPENSES shall mean and refer to all expenses, fees,
rentals, costs and disbursements of every kind and nature incurred by the
Landlord in connection with the management, maintenance and operation of the
Building, which are properly chargeable in accordance with generally accepted
accounting principles to such management, maintenance and operation for any
given period, and shall include any such expenses, fees, rentals, costs and
disbursements incurred by or on behalf of tenants with whom the Landlord may
from time to time have agreements whereby such tenants perform any cleaning,
maintenance, or other work or services ordinarily performed by the Landlord, and
which expenses if incurred by the Landlord would be included in Allocable
Operating Expenses. By way of example and without limiting the generality of the
foregoing definition, and without duplication, Allocable Operating Expenses
shall include:
(i) the costs of outside grounds maintenance, including landscaping and
snow removal;
(ii) all costs of repairs;
(iii)the cost of operating, maintaining and repairing the heating,
ventilating and air conditioning system;
(iv) all fuel costs for the Building;
(v) all monies reasonably paid to persons, firms, companies or
corporations, including the cost of all benefits paid to employees of
the Landlord, employed in the operation, maintenance, security and
cleaning of the Building; However, in the event the Landlord elects to
have only on-site employees employed in the operation, maintenance,
security and cleaning of the Building then in such case and said case
alone, said expenses within this subparagraph shall be restricted to
same;
(vi) the cost of water and electricity consumed in the Building not
otherwise payable by tenants;
(vii) elevator operation and maintenance costs;
(viii) the cost of equipment rental;
(ix) the cost of providing hot and cold water;
(x) window cleaning costs;
(xi) the cost of all-risk, fire, extended perils, liability, boiler and
rental insurance;
(xii) telephone and other public utility costs;
(xiii) all audit and accounting costs;
(xiv)costs of capital improvements and other costs determined by the
Landlord's auditor, in accordance with generally accepted accounting
principles, to be properly chargeable to the capital account of the
Landlord to the extent that such capital improvements reduce or avoid
Allocable Operating Expenses;
(xv) depreciation upon maintenance and operation equipment which, by its
nature, requires periodic replacement, such depreciation to be
calculated as may be prescribed by the Landlord's auditors and in
accordance with generally acceptable principles of accounting;
(xvi) INTENTIONALLY DELETED
(xvii) the cost of Major Expenditures covered by this sub-section shall be
limited to those for reduction of current Operating Expenses and will
be amortized over the period of the economic life of the Major
Expenditure as determined by generally accepted accounting principles,
but not to exceed fifteen (15) years. The amortized cost of the Major
Expenditure shall be calculated on the basis of equal monthly
instalments of principal and interest at the rate of one percentage
point above the lowest rate of interest at the date of such Major
Expenditure, quoted by chartered banks to the most credit-worthy
borrowers for prime business loans, as determined and published by the
Bank of Canada, per annum, compounded semi-annually;
(xviii) any fee paid to any property manager or property management firm
who has contracted with the Landlord to provide property management
services for the Building equal to 10% of the Additional Rent. If the
Landlord does not enter into an agreement with a property manager or
property management firm. in computing Allocable Operating Expenses
there shall be specifically included a fee of an amount equal to 10%
of Additional Rent. which amount is hereby agreed to represent the
Landlord's costs of providing property management services to the
Building, and any other costs or expenses paid or payable by the
Landlord in connection with the operation of the Building but
excluding Allocable Taxes, taxes on income, interest on debt or
capital retirement of debt, depreciation except as provided herein.
expenses properly chargeable to the Landlord's capital account except
as mentioned above, proceeds of insurance relating to Insured Damage
and other amounts actually recovered by the Landlord applicable to
damage where the cost of repair was included in Allocable Operating
Expenses and the Cost of Additional Services actually received from
tenants plus all other sums actually received from tenants, (other
than rent, Additional Rent, Allocable Operating Expenses and Allocable
Taxes) to the extent that the amounts so recovered relate to costs
included in Allocable Operating Expenses;
(d) ALLOCABLE TAXES shall mean and refer to all taxes, rates, duties, levies and
assessments whatsoever, whether municipal, parliamentary or otherwise levied,
imposed or assessed against the Building and or the Lands, or from time to time
levied, imposed or assessed in the future in lieu thereof, or for which the
Landlord is liable including those levied, imposed or assessed for education,
schools and local improvements, including goods and services taxes levied
against basic and/or additional rental payments hereunder and including all
costs and expenses including legal and other professional fees and interest and
penalties or deferred payments incurred by the Landlord in good faith in
contesting, resisting or appealing any taxes, or rates, duties, levies or
assessments, but excluding;
(i) taxes and license fees in respect of any business carried on by
tenants and occupants of the Building which taxes are herein sometimes
collectively called Business Taxes and shall include without
limitation the Business Taxes levied or assessed pursuant to the
Assessment Act (Ontario);
(ii) income or profit taxes upon the income of the Landlord, franchise,
corporate, estate, inheritance, succession, or transfer tax or any
other tax or impost of a personal nature charged to or levied upon the
Landlord to the extent that such taxes are not in future levied in
lieu of such taxes, rates, duties, levies and assessments against the
Building or upon the Landlord in respect thereof, which taxes are
herein sometimes collectively called the Landlord's Income Taxes, and
(iii)all taxes, rates, duties, levies and assessments (including Business
Taxes) which are recoverable from tenants under subclause 5 (b) hereof
and similar provisions of leases with other tenants which taxes are
herein sometimes collectively called Tenant's Taxes.
(iv) capital taxes and
(v) large corporation tax
(e) ARCHITECT (S) shall mean and refer to an architect or firm of architects
licensed to practice architecture pursuant to the laws of the province of
Ontario, designated by the Landlord from time to time as architects and approved
by the Tenant, such approval not to be unreasonably withheld. Initial Architect
shall mean Petroff Partnership.
(f) AUDITORS shall mean and refer to a chartered accountant or a firm of
chartered accountants licensed to practice as chartered accountants pursuant to
the laws of the Province of Ontario, designated by the Landlord from time to
time as Auditors.
(g) BUILDING shall mean and refer to the Lands, building, landscaped areas and
carpark facilities constructed by the Landlord upon lands and premises
municipally known as Commerce Valley Drive East, Markham, Ontario.
(h) BUILDING ADMINISTRATION AREAS shall mean and refer to office space in the
Office Premises used by the Landlord or its agents or employees for the
management, maintenance, or operation of the Building, which space would
otherwise be rentable.
(i) BUSINESS DAY shall mean and refer to any of the days from Monday to Friday
inclusive of each week unless such day is a statutory holiday, and such
additional days as may be designated by the Landlord.
(j) COMMENCEMENT DATE shall mean and refer to the first day of the Term. (k)
COST OF ADDITIONAL SERVICES shall mean and refer to the Landlord's total cost of
providing Additional Services to the Tenant and without limiting the generality
of the foregoing and without duplication shall include the cost of all labour
(including salaries, wages and fringe benefits) and material and other direct
expenses incurred, the cost of supervision and other indirect expenses capable
of being allocated thereto (such allocation to be made upon a reasonable basis)
and all other out-of-pocket expenses made in connection therewith including
amounts paid to independent contractors; the Cost of Additional Services shall
also include an amount equal to ten percent (10%) of the aggregate cost of
labour, materials and other direct expenses (representing an agreed pre-estimate
of the expense to the Landlord for management and indirect expenses incapable of
being allocated).
(1) INTENTIONALLY DELETED
(m) INSURED DAMAGE shall mean and refer to that part of any damage occurring to
the Premises of which the entire cost of repair (or the entire cost of repair
other than a deductible amount properly includable in Allocable Operating
Expenses) is actually recoverable by the Landlord under a policy or policies of
insurance from time to time effected by the Landlord pursuant to clause 7 (j) or
if to the extent that the Landlord has not insured and is deemed to be a
co-insurer pursuant to such clause, would have been recoverable if the Landlord
had effected insurance in respect of perils and to amounts and on terms for
which it is by that clause deemed to have insured. Where an applicable policy of
insurance contains an exclusion for damages recoverable from a third party,
claims as to which the exclusion applied shall be considered Insured Damage only
if the Landlord successfully recovers from the third party.
(n) LEASEHOLD IMPROVEMENTS shall mean and refer to all items generally
considered as Leasehold Improvements, including without limitation all fixtures,
improvements, installations, alterations and additions from time to time made,
erected or installed by or on behalf of the Tenant, or any previous occupant of
the Premises or by or on behalf of tenants in other premises in the Building
including all partitions however affixed, and whether or not moveable, and all
wall-to-wall carpeting.
(o) MAJOR EXPENDITURE shall mean and refer to any expenditure incurred by the
Landlord during the term of this Lease for replacement of machinery, equipment,
building elements, systems or facilities used in connection with the Building.
or for modifications or additions to the Building (if one of the principal
purposes of any such modification or addition is to reduce energy consumption,
or to reduce Allocable Operating Expenses, or if such modification or addition
is required by any governmental authority or regulation) and which expenditure
is greater than ten percent (10%) of the total Allocable Operating Expenses for
the previous year.
(p) NORMAL BUSINESS HOURS shall mean and refer to the hours from 8:00 a.m. to
6:00 p.m. and such other hours as may be designated by the Landlord, on Business
Days. Notwithstanding the foregoing, the Tenant and its employees shall have 24
hours a day, 7 days a week access to the Building and Office Premises by way of
a security or access card.
(q) OFFICE PREMISES shall mean and refer to the portion of the Building which is
situated above grade.
(r) PROPORTIONATE SHARE shall mean and refer to the fraction which has as its
numerator the Rentable Area of the Premises and as its denominator the Rentable
Area of the Building.
(s) RENTABLE AREA shall mean according to B. O. M. A. standard method of
measuring floor area in office buildings as certified by the Landlord's
Architect
(t) SPECIAL TENANT OPERATING EXPENSES shall mean and refer to, for any given
period, the excess, as agreed to between the Tenant and the Landlord of any
expenses incurred by the Landlord for such period relating to the Premises,
which expenses would otherwise be Allocable Operating Expenses over what such
expenses would have been but for the distinctive configuration of the Premises,
or the distinctive nature of the operation of the Tenant's business, or the
distinctive nature of any of the Tenant's Leasehold Improvements, including but
not limited to any excess of air-conditioning, heating, lighting, water,
electrical power, and cleaning.
(u) TENANT when used with a capital "T" shall mean and refer to the Tenant, but
where used with a small "t" and where the context so requires shall mean and
refer to any individual, partnership, association, corporation, or entity
occupying any portion of the Building pursuant to a lease with the Landlord, an
agreement to lease with the Landlord, or pursuant to a sublease or agreement to
sublease from any such person.
(v) YEAR shall mean and refer to a period of twelve months commencing on January
1 and ending on the next ensuing December 31 until changed pursuant to subclause
4 (e).
DEMISE AND TERM
2. 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 Premises to have and
to hold for and during the term of fifteen (15) years, to be computed from the
1st day of October, 2000 and from thenceforth next ensuing and fully to be
completed on the 30'thday of September, 2015.
RENT
3. (a) Basic Rent
Subject to the provisions of Schedule "E" the Tenant shall pay to the Landlord
as annual rent for the Premises yearly and every year during the said term the
sum of:
October 1st, 2000 to September 30th, 2005 - $18.50 per square foot of Rentable
Area per annum
October 1st, 2005 to September 30th, 2010 -$21.50 per square foot of Rentable
Area per annum
October 1st, 2010 to September 30th, 2015 - $25.00 per square foot of Rentable
Area per annum
of lawful money of Canada payable in equal monthly instalments, each in advance
on the first day of each and every month during the said term, such payments to
be made by cheque or money order payable to the Landlord, or as it may direct
from time to time, and to be payable at such place in Canada as the Landlord may
direct from time to time, the first of such equal monthly instalments of rent to
become due and payable on the Commencement Date.
PROVIDED that if the term hereof does not commence on the first day of the
calendar month, rent for the broken part of the calendar month at the
commencement of the said term shall be pro-rated at a rate per day equal to one
three hundred and sixty-fifth (1/365th) of the annual rents specified in this
clause.
(b) Additional Rent
Subject to the provisions of paragraph 12 of Schedule "E" attached, the Tenant
shall pay to the Landlord, yearly and every year during the Term in lawful money
of Canada, without deduction, abatement or set-off. Additional Rent for the
Premises equal to the aggregate of the following amounts:
(i) the Tenant's Proportionate Share of Allocable Taxes and Allocable
Operating Expenses in accordance with the provisions of clause 4
hereof.
(ii) any and all Special Tenant Operating Expenses as hereinafter set
forth;
(iii) any and all Additional Services as hereinafter set forth;
(c) Net Lease
Subject to the provisions of paragraph 12 of Schedule "E" attached, the Tenant
acknowledges and agrees that it is intended that this lease shall be a
completely net lease to the Landlord, that the Landlord shall not be responsible
during the Term of the lease for any costs, charges, expenses and outlays of any
nature whatsoever arising from or relating to the Premises, or the use and
occupancy thereof, or the business carried on therein, and the Tenant shall pay
all charges, impositions and costs and expenses of every nature and kind
relating to the Premises, except as expressly herein set out in this Lease,
including all Schedules and the Tenant covenants with the Landlord accordingly.
(d) INTENTIONALLY DELETED
(e) Delay in Occupancy
Please see Schedule "E", Section 4.
(f) Rental Deposit
A cheque or letter of credit in the amount of $250,000.00 as a deposit, payable
to CB Richard Ellis Limited ("Broker") in trust for the Landlord, is due upon
execution of the lease by both parties and is to be credited together with
interest on account of rental payments as they first become due. See paragraph
21 in Schedule "E" annexed to this lease.
CALCULATION AND ALLOCATION OF TAXES AND OPERATING EXPENSES
4. (a) Subject to the provisions of paragraph 13 of Schedule "E". the Landlord
shall determine from time to time in accordance with B.O.M.A. the Rentable Area
of the Premises and of the Building and shall determine from time to time the
Tenant's Proportionate Share. If the Tenant does not dispute the Landlord's
determination of the Rentable Area, or of the Tenant's Proportionate Share
within two years of receipt of notice of such determination, the Tenant shall be
deemed to accept the accuracy of such determination, and the Tenant shall not be
entitled to dispute the amount of its Proportionate Share of Allocable Operating
Expenses or Allocable Taxes on the grounds of any error in accuracy in the
determination of Rentable Area or of the Tenant's Proportionate Share. If the
Tenant disputes the said determination, the Landlord shall request the Architect
to measure and certify the Rentable Area of the Premises and the Rentable Area
of the Building and the determination so made by the Architects shall be binding
upon the Landlord and the Tenant. It is understood and agreed that the
determination of the Tenant's Proportionate Share may be re-calculated by the
Landlord from time to time to reflect changes in the Rentable Area of the
Building, of the Premises, or of other premises.
(b) Subject to the provisions of paragraph 13 of Schedule "E", insofar as the
determination of Tenant's Proportionate Share of Allocable Operating Expenses
and Allocable Taxes is dependent upon calculations other than area measurement,
the same shall be binding upon the Tenant. In the event that the Tenant requests
that an audited statement of the calculations be submitted, the Landlord shall
have prepared such audited statement, the cost of which shall be payable by the
Landlord. Any expenses not directly incurred by the Landlord but which are
included in Allocable Operating Expenses and Allocable Taxes may be estimated by
the Landlord on whatever reasonable basis the Landlord may select.
(c) Prior to the commencement of the term and to the commencement of each Year
thereafter which commences during the term, the Landlord may estimate the
Tenant's Proportionate Share of Allocable Operating Expenses and Allocable Taxes
for the ensuing Year or, if applicable, broken portion thereof, as the case may
be, and shall notify the Tenant in writing of the estimate. The amount so
estimated shall be payable in equal monthly instalments in advance over the Year
or broken portion of the Year in question, each instalment being payable on each
monthly rental payment date provided in subclause 3(a). Not more than twice in
any one Year the Landlord may re-estimate the amount of the Tenant's
Proportionate Share of Allocable Operating Expenses and Allocable Taxes for the
Year or broken portion thereof, in which event the Landlord shall notify the
Tenant in writing of the re-estimate and shall fix monthly instalments for the
then remaining balance of such Year or broken portion thereof in order that,
after giving credit for the estimates, the Tenant's entire estimated
Proportionate Share of Allocable Operating Expenses and Allocable Taxes will
have been paid during such Year or broken portion thereof.
(d) Neither party may claim a re-adjustment in respect of the Tenant's
Proportionate Share of Allocable Operating Expenses or Allocable Taxes based
upon any error of estimation, determination or calculation thereof unless
claimed in writing prior to the expiration of two years after the date on which
the Tenant has been notified of the re-calculation referred to herein, other
than any claim of re-adjustment based upon other matters, including without
limitation the outcome of litigation or negotiation affecting expenses which
constitute component parts of the Allocable Taxes or Allocable Operating
Expenses.
(e) In the event that the Landlord shall change its accounting system or
procedures so that it shall become more convenient for the provisions of
subclauses 4 (c), 4 (d) and 4 (f) to be administered on the basis of some twelve
(12) month period other than one ending on December 31, then the Landlord may
determine upon not less than six (6) months written notice to the Tenant and
other tenants that such provisions of this lease and comparable provisions of
other leases of premises in the Building shall be so administered and after the
expiry of the notice period subclauses 4 (c) and 4 (d) and 4 (f) shall be and be
deemed to be appropriately amended to that end.
(f) Notwithstanding the preceding provisions of this clause, if, during any
period for which a computation of Allocable Operating Costs must be made, the
Building is less than ninety-five per cent (95%) occupied, then the Allocable
Operating Costs for such period shall be adjusted by adding to the actual
Allocable Operating Costs for such period an amount equal to the additional
operating expenses. as the case may be, which would have been incurred if the
Building had been ninety-five per cent (95%) occupied for such period.
PAYMENT OF TAXES
5.(a) The Landlord covenants with the Tenant to pay all Allocable Taxes and to
pay all realty taxes and local improvement rates, municipal, parliamentary, or
otherwise, levied against the Building.
(b) The Tenant covenants with the Landlord to pay promptly when due to the
taxing authority or authorities having jurisdiction, all taxes, rates, duties,
levies and assessments whatsoever, whether municipal, parliamentary or
otherwise, levied, imposed or assessed in respect of any and every business
carried on in the Premises by the Tenant, subtenants, licensees, or other
occupants of the Premises or in respect of the use or occupancy thereof,
including license fees and Business Taxes levied or assessed pursuant to the
Assessment Act R.S.O. 1980 c.31. The Tenant further covenants with the Landlord
to pay to the Landlord promptly on demand by the Landlord, an amount equal to
any of the following taxes the Landlord may determine to recover from the
Tenant, and any amounts so paid by the Tenant to the Landlord (and from all
other tenants under corresponding clauses of other leases) shall be excluded in
the determination of Allocable Taxes:
(i) all taxes charged in respect of all Leasehold Improvements and trade
fixtures and all furniture and equipment made, owned or installed by
or on behalf of the Tenant in the Premises; and
(ii) if by reason of the act, election or religion of the Tenant or any
subtenant, licensee or occupant of the Premises, the Premises, or any
part of them shall be assessed for the support of separate schools,
the amount by which the taxes so payable exceed those which would have
been payable if the Premises had been assessed for the support of
public schools.
(c) The Tenant further covenants with the Landlord to pay to the Landlord
(acting as agent for the taxing authority if applicable) or directly to the
taxing authority (if required by the applicable legislation) in the manner
specified by the Landlord, acting reasonably the full amount of all goods and
services taxes, sales taxes, and any other taxes imposed on the Tenant in
respect of the rent payable by the Tenant under this Lease or in respect of the
rental of space by the Tenant under this Lease (collectively and individually,
"GST"). GST is payable by the Tenant whether characterized as a goods and
services tax, sales tax, or otherwise. GST so payable by the Tenant will: (i) be
calculated by the Landlord in accordance with the applicable legislation; (ii)
be paid by the Tenant at the same time as the amounts to which the GST applies
are 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): and
(iii) despite anything else in this Lease. be considered not to be rent, but the
Landlord shall have all of the same remedies for and rights of recovery with
respect to such amounts as it has for non-payment of rent under this Lease or at
law.
(d) The Landlord may postpone payment of any taxes payable by it and the Tenant
may postpone payment of any taxes, rates, duties, levies, and assessments
payable by it hereunder directly to a taxing authority in each case to the
extent permitted by law and if prosecuting in good faith an appeal against the
imposition thereof, and provided in the case of a postponement by the Tenant
that if the Building or any part thereof or the Landlord shall have become
liable to assessment, prosecution, fine or other liability, the Tenant shall
give security to the Landlord in a form and in an amount reasonably satisfactory
to the Landlord in respect of such liability and such undertakings as the
Landlord may reasonably require to ensure payment thereof.
(e) Where the determination of any taxes depends upon an apportionment of an
assessment which has not been made by the taxing authority or authorities having
jurisdiction, the Landlord may determine the same. Any determination so made by
the Landlord shall be binding upon the Tenant unless shown to be unreasonable or
erroneous in some substantial respect. If the Tenant does not dispute the
Landlord's determination within one year of receipt of notice of such
determination, the Tenant shall be deemed to accept the accuracy of such
determination and shall not be entitled to dispute it thereafter.
(f) Notwithstanding the foregoing, in the absence of any separate assessment of
Leasehold Improvements or trade fixtures (if assessable), furniture or equipment
of the Tenant referred to in item (i) of subclause 5 (b) or of other tenants,
the Landlord may elect not to make a determination thereof and may from time to
time waive payment of amounts which would otherwise be payable by the Tenant
under that item (and by other tenants under comparable provisions of other
leases of premises in the Building), in which event such amounts shall form part
of Allocable Taxes, without prejudice to the right of the Landlord to make any
such determination in the future, either generally or in the case of the Tenant
or any other tenant where the value of such Leasehold improvements, trade
fixtures, furniture or equipment is unusually large, with the intent that the
enforcement or non-enforcement of the said item (and any like provisions in
other leases) shall not operate so as to impose any substantial inequity against
tenants including the Tenant.
(g) Whenever requested by the Landlord, the Tenant will deliver to it receipts
for payment of all taxes, rates, duties, levies and assessments payable by the
Tenant directly to a taxing authority or authorities and furnish such other
information in connection therewith as the Landlord may reasonably require.
(h) The Tenant agrees that it will not conduct any appeal from any governmental
assessment or determination of the value of the Building or any portion thereof
whether or not the assessment or determination affects the amount of tax to be
paid by the Tenant. The Tenant shall instead rely upon the Landlord to conduct
any such appeal in the interest of all occupants of the Building and the
Landlord agrees that it will do so (with the expense to be included in Allocable
Operating Expenses) if the appeal in the opinion of the Landlord would be
reasonably likely to attain a favourable result, but the Landlord shall in no
event be responsible or liable to the Tenant for any act or failure to act
regarding any such appeal unless such act or omission was committed in bad
faith. Notwithstanding the foregoing, if the Landlord does not wish to conduct
any appeal, then the Tenant will be allowed to conduct any appeal and agrees to
indemnify the Landlord from any costs in relation thereto. The Landlord agrees
to provide copies of the assessment to the Tenant but will not provide any
determinations of the value of the Building.
TENANT'S COVENANTS
6. And the Tenant covenants with the Landlord:
(a) Rent
To pay rent, Additional Rent, the cost of Special Tenant Operating Expenses and
for any Additional Services provided for herein.
(b) Use
To use the Premises only for the purpose of an office for the conduct of the
Tenant's business and for any similar other use permitted by municipal by-laws.
(c) Prohibited Uses of Premises
The Premises shall not be used in any manner which obstructs any part of the
Building Administration Areas, or for any purpose except that permitted by
clause 6 (b) hereof. The Tenant shall not use or permit any part of the Premises
to be used in any manner which interferes or intrudes upon the use and enjoyment
of the Building by any other tenant or which in the reasonable opinion of the
Landlord is inconsistent with the general character of the Building.
(d) Waste and Nuisance
Not to commit, or permit, except as herein otherwise provided, any waste or
injury to the Premises including the Leasehold Improvements and any trade
fixtures therein, any loading of the floors thereof in excess of the maximum
degree of loading contemplated by the design criteria referred to in subclause 6
(m) hereof, any nuisance therein or any use or manner of use causing annoyance
to other tenants and occupants of the Building.
(e) Insurance
That the Tenant shall, during the entire term hereof and during any period of
occupation of the Premises prior to the Commencement Date, 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 mortgagees of the Landlord as their respective
interests may appear, the following insurance:
(i) insurance upon property of every description and kind owned by the
Tenant, in the nature of a Leasehold Improvement in an amount not less
than ninety percent (90%) of the full replacement cost thereof, with
coverage against at least the perils of fire and standard extended
coverage including sprinkler leakages (where applicable), earthquake,
flood and collapse.
(ii) business interruption insurance in such amounts as will reimburse the
Tenant for direct or indirect loss of earnings attributable to all
perils commonly insured against by prudent tenants or attributable to
prevention of access to the Premises or to the Building as a result of
such perils;
(iii)public liability and property damage insurance including personal
injury liability, contractual liability and non-owned automobile
liability insurance coverage with respect to the Premises and the
Tenant's use of any part of the Building and which coverage shall
include the activities and operations conducted by the Tenant and any
other person on the Premises. Such policies shall be written on a
comprehensive basis with limits of not less than $5,000,000.00 for
bodily injury to any one or more persons, or property damages, and
such higher limits as the Landlord or the mortgagees of the Landlord
may reasonably require from time to time. and all such policies shall
contain a severability of interest clause and a cross liability
clause. Landlord shall be responsible for damages arising from its
negligence or its invitees;
(iv) Tenant's legal liability insurance for the full replacement cost of
the Premises, such coverage to include the activities and operations
conducted by the Tenant and any other persons on the Premises; and
(v) Any other form or forms of insurance which the Tenant or the Landlord
or the mortgagees of the Landlord reasonably require from time to
time, in form, in amounts, and for insurance risks against which a
prudent tenant would protect itself.
All policies required to be written on behalf of the Tenant pursuant to this
subclause shall contain a waiver of any subrogation rights which the Tenant's
insurers may have against the Landlord and against those for whom the Landlord
is, in law, responsible whether any such damage is caused by the act, omission,
or negligence of the Landlord or by those for whom the Landlord is, in law,
responsible. All policies shall be taken out with insurers acceptable to the
Landlord and in a form satisfactory from time to time to the Landlord. The
Tenant agrees that certificates of insurance will be delivered to the Landlord
as soon as practicable after the placing or the required material change,
cancellation or other termination thereof.
(f) Insurance Proceeds
That in the event of damage or destruction to the Leasehold Improvements in the
Premises covered by insurance required to be taken out by the Tenant pursuant to
subclause 6 (e), the Tenant will use the proceeds of such insurance for the
purpose of repairing or restoring such Leasehold Improvements. In the event of
damage to or destruction of the Building entitling the Landlord to terminate
this lease pursuant to subclause 11 (b) hereof, then if the Premises have also
been damaged, the Tenant will pay to the Landlord its insurance proceeds
relating to the unamortized cost of the Leasehold Improvements in the Premises.
(g) Use of Premises - Insurance
That neither the Tenant nor its officers, directors, agents, servants,
licensees, concessionaires, assignees or subtenants shall bring on to the
Premises, nor do, nor omit, nor permit to be done or omitted upon or about the
Premises anything which shall cause the rate of insurance payable by the
Landlord upon the Premises or the Building or a part thereof or its contents to
be increased. If the said rate of insurance shall be increased by reason of the
use made of the Premises or by reason of anything done or omitted or permitted
to be done or omitted by the Tenant or its officers, directors, agents,
servants, licensees, concessionaires, assignees or subtenants or by anyone
permitted by the Tenant to be upon the Premises, the Tenant shall pay to the
Landlord forthwith upon demand the amount of such increase without prejudice to
the Landlord's rights to terminate this Lease and re-enter the Premises for
breach of this covenant. If the said rate of insurance shall be increased as
aforesaid, the Landlord will use its reasonable efforts to obtain a statement
from its insurer as to the reasons why the rate of insurance shall be increased.
(h) Use of Premises - Cancellation of Insurance
That if any policy of insurance upon the Building or any part thereof or the
contents shall be cancelled or refused to be renewed or granted by an insurer by
reason of the use or occupation of the Premises or any part thereof by the
Tenant or by any of its officers, directors, agents, servants, licensees,
concessionaires, assignees, subtenants, or by anyone permitted by the Tenant to
be upon the Premises, the Tenant shall within a reasonable time remedy or
rectify such use or occupation and if the Tenant shall fail to do so within a
reasonable time the Landlord may at its option terminate this Lease by leaving
upon the Premises notice in writing of such termination and the Tenant shall
within a reasonable time deliver up possession of the Premises to the Landlord
and the Landlord may re-enter and take possession of the Premises and the Tenant
shall thereupon pay all rent and any other payment for which the Tenant is
liable under this lease, apportioned to the date of such termination, together
with all losses, damages or costs of any kind arising out of the Tenant's breach
of this provision and/or the termination of this lease under this subclause.
(i) Landlord Not Liable
That the Landlord shall not be liable for any bodily injury or death of, or loss
or damage to any property belonging to the Tenant or its employees, invitees or
licensees or any other person in, on or about the Building unless resulting from
the negligence of the Landlord, and in no event shall the Landlord be liable:
(i) for any damage (other than Insured Damages) which is caused by steam,
water, rain or snow which may leak into, issue or flow from any part
of the Building or the Premises provided the Landlord acts with all
promptness to remedy such condition or arrangement or such
interruption or breakdown;
(ii) INTENTIONALLY DELETED
(iii)for loss or damage however caused, to money, securities, negotiable
instruments, papers or other valuables of the Tenant.
(j) Indemnification of Landlord
That the Tenant shall indemnify the Landlord and save it harmless from and
against any and all loss (including loss of rentals payable by the Tenant
pursuant to this Lease), costs, claims, actions, damages, liability and expense
in connection with any breach, violation or non-performance of any covenant,
obligation or agreement of the Tenant under this Lease, any loss of life,
personal injury or damage to property arising from any occurrence in, upon or at
the Premises, or the occupancy or use by the Tenant of the Premises or any part
thereof, or occasioned wholly or in part by any act or omission of the Tenant,
its agents, contractors, employees, servants, licensees or concessionaires,
customers, invitees or by anyone permitted to be on the Premises by the Tenant
or any contract, lien, privilege, mortgage, charge or encumbrance on the
Building arising from or occasioned by the act, default or negligence of the
Tenant, its officers, agents, servants, employees, contractors, customers,
invitees, concessionaires or licensees. In case the Landlord shall. without
fault on its part, be made a party to any litigation commenced by or against the
Tenant, then the Tenant shall protect and hold the Landlord harmless and shall
pay all costs, expenses and reasonable legal fees incurred or paid by the
Landlord in connection with such litigation. This indemnification shall survive
the expiry or sooner termination of this lease, anything in this lease to the
contrary notwithstanding.
(k) Compliance with Laws
To comply promptly, at its own expense, with and conform to the requirements of
all applicable statutes, laws, by-laws, regulations, ordinances and orders of
any municipal, federal, provincial, or other governmental authority at any time
in force during the term hereof and affecting the occupation or use of the
Premises, or affecting the condition, equipment, or use of the Leasehold
Improvements, trade fixtures, furniture or equipment installed in the Premises,
or affecting the making by the Tenant of any repairs, changes, or improvements
in the Premises. If the Tenant should default under the provisions of this
subclause, the Landlord may, without prejudice to its rights to terminate this
lease or to re-enter the Premises for breach of covenant contained in this
sub-clause, comply with any such requirements aforesaid and the Tenant shall
forthwith on demand pay all costs and expenses incurred by the Landlord in this
regard, plus an administrative charge of fifteen per cent (15%) of such costs
and expenses, and the Tenant agrees that all such costs and expenses shall be
recoverable by the Landlord as if the same were Additional Rent reserved and in
arrears under this lease.
(1) Rules and Regulations
To observe and perform, and to cause its employees, invitees and others over
whom the Tenant can reasonably be expected to exercise control to observe and
perform, the rules and regulations attached as Schedule "F" hereto, and such
further and other reasonable rules and regulations and amendments and changes
therein as may hereafter be made by the Landlord and notified to the Tenant,
except that no change may be made that is inconsistent with this lease unless
the Tenant consents thereto. The Tenant acknowledges and agrees that the rules
and regulations, as from time to time amended, are not necessarily of uniform
application, but may be waived in whole or in part in respect of other tenants
without affecting their enforceability with respect to the Tenant and the
Premises, and may be waived in whole or in part with respect to the Premises
without waiving them as to future application to the Premises, and the
imposition of such rules and regulations shall not create or imply any
obligation of the Landlord to enforce them or create any liability of the
Landlord for their non -enforcement.
(m) Alterations
That the Tenant shall have the right to make any alteration, installation,
addition or improvement to the Premises or construct or place any Leasehold
Improvements or trade fixtures provided it first submits the plans and
specifications thereof, (including materials to be used) to the Landlord, and
further provided it first obtains the Landlord's approval thereof in writing,
such approval not to be unreasonably withheld. The Tenant shall also obtain the
Landlord's prior written consent to any change or changes in such plans and
specifications submitted as aforesaid, subject to the payment of the cost to the
Landlord of having its Architect approve of such changes, prior to proceeding
with any work based on such drawings or specifications. All reasonable
out-of-pocket expenses incurred by the Landlord in connection with such request
for approval shall be recoverable from the Tenant. Upon receiving the Landlord's
approval in writing the Tenant shall forthwith commence and diligently complete
the installation, alteration or erection of such work. Any such work may be
performed by contractors engaged by the Tenant but in each case only under
written contract approved in writing by the Landlord and subject to all
reasonable conditions which the Landlord may impose, provided nevertheless that
the Tenant shall provide to the Landlord the names of the contractors and any
drawings for its approval for any sprinkler system, mechanical or electrical
work. Without limiting the generality of the foregoing, any work performed by or
for the Tenant shall be performed by competent workmen whose labour union
affiliations are not incompatible with those of any workmen who may be employed
in the Building by the Landlord, its contractors or subcontractors. The Tenant
shall submit to the Landlord's reasonable supervision over construction and
promptly pay to the Landlord's or Tenant's contractors, as the case may be, when
due, the cost of all such work and of all materials, labour and services
involved therein and of all decoration and all changes in the Building, its
equipment or services necessitated thereby. The Tenant shall also pay to the
Landlord a fee equal to ten per cent (10%) of the cost of the Leasehold
Improvements and alterations representing the Landlord's overhead during the
installation by the Tenant of the Leasehold Improvements and alterations other
than the first Leasehold Improvements on the Premises or any expansion premises
or Right of First Refusal premises. The Landlord may from time to time prepare
and distribute to the Tenant design criteria setting forth the Landlord's usual
standards for the obtaining of approval for any such alteration, addition,
improvement, construction or placing by the Tenant, and failure to comply with
any such design criteria shall be considered sufficient reason for the Landlord
refusing its consent hereunder. Nevertheless, such design criteria shall not
prejudice the Landlord's right to refuse consent and shall not relieve the
Tenant from the obligation to obtain the approval of the Landlord for any and
every such activity. In no event shall the Tenant alter or interfere with window
coverings or other light control devices installed by the Landlord on exterior
windows.
In connection with the making, erection, installation or alteration of Leasehold
Improvements and trade fixtures and all other work or installations made by or
for the Tenant in the Premises the Tenant shall comply with all provisions of
the Construction Lien Act and other statutes from time to time applicable
thereto (including any provision requiring or enabling the retention by way of
holdback of portions of any sums payable) and except as to any such holdback
shall promptly pay all accounts relating thereto. The Tenant will not create any
mortgage, conditional sale agreement or other encumbrance in respect of its
Leasehold Improvements or trade fixtures without the consent of the Landlord,
nor shall the Tenant take any action as a consequence of which any such
mortgage, conditional sale agreement or other encumbrance would attach to the
Premises, or to the Building.
If and whenever any construction or other liens for work, labour, services or
materials supplied to or for the Tenant or for the cost of which the Tenant may
be in any way liable or claims therefore shall be registered or any such
mortgage, conditional sale agreement or other encumbrance shall attach, the
Tenant shall within five (5) days after receipt of notice thereof procure the
discharge thereof, including the vacating of any certificate of action
registered in respect of any lien, and failing which the Landlord may in
addition to all other remedies hereunder make any payments required to procure
the discharge of any such hens or encumbrances and any sum so paid by the
Landlord shall be paid by the Tenant to the Landlord forthwith on demand
therefor and shall be recoverable by the Landlord in the same manner as rent.
The Landlord's right to reimbursement shall not be affected or impaired if the
Tenant shall then or subsequently establish or claim that any lien or
encumbrance so discharged was without merit or excessive or subject to any
abatement, set-off or defence.
Any erection, addition or improvement placed upon the Premises shall be subject
to all the provisions of this lease, and if removed as hereinafter provided, the
Tenant shall repair all damage caused by the installation and removal thereof.
(n) Energy Conservation
To comply with reasonable measures introduced by the Landlord or measures
introduced by legislative authority from time to time as they relate to Common
Areas or other tenant areas in the interest of energy conservation and provided
it does not interfere with the Tenant's business on a 7 day a week, 24 hour a
day basis or create any employee security issues and to control Allocable
Operating Expenses whereby the Landlord may by the use of a pulse or other
system turn out or reduce all lighting in the Office Premises except emergency
lighting and lighting which the Tenant may separately control by local switching
for the Premises (the Landlord to communicate from time to time to the Tenant
the schedule for the use of such a system) and reduce energy consumption in the
Office Premises, provided that if the Tenant does not participate in such
approved measures with respect to the Premises, the Tenant may be required to
pay, as Special Tenant Operating Expenses, for the additional energy consumed in
the Premises as a result of its not participating in such measures.
(o) Repair
That the Tenant shall repair, reasonable wear and tear, and damage by fire,
lightning, tempest, standard extended coverage insurance perils, structural
defect and weakness only excepted; but this obligation shall not extend to
structural members, or to exterior glass or to repairs which the Landlord would
be required to make pursuant to subclause 7 (h) but for the exclusion therefrom
of defects not sufficient to impair the Tenant's enjoyment of the Premises while
using them in a manner consistent with this lease; if the Premises occupy the
entire Rentable Area of any floor of the Building the Tenant shall repair as
aforesaid and maintain any washrooms on any such floor. The Landlord or its
agents at all reasonable times during the term may enter the Premises to inspect
the condition thereof; where an inspection reveals repairs are necessary and
required by the lease to be done by the Tenant, the Landlord shall give the
Tenant notice in writing and thereupon the Tenant shall within five (5) days
from the delivery of such notice, make, or commence making and diligently
proceed with, the necessary repairs in a good and workmanlike manner; if the
Tenant fails to repair after receiving notice as aforesaid the Landlord may
commence or complete the necessary repairs and any expenses so incurred by the
Landlord plus an administrative charge of ten per cent (10%) of such expenses
shall be recoverable by the Landlord as if the same were Additional Rent
reserved and in arrears.
(p) Damage by Tenant
That if any part of the Building including exterior glass and the systems for
interior climate control and for the provision of utilities, becomes out of
repair, damaged or destroyed through the negligence of or misuse by the Tenant
or its employees, agents, invitees or others under its control, the expense of
repairs or replacements thereto necessitated thereby shall be reimbursed to the
Landlord by the Tenant promptly upon demand save in respect of Insured Damage.
(q) Utilities
From and after the Commencement Date, the Tenant shall pay to the Landlord
within thirty (30) days of demand therefor:
(i) all rates and charges for water, gas, and electric power services and
all other utilities supplied to or used in connection with the
Premises as determined by the Landlord on a consistent basis for all
tenants of all premises in the Building,
and
(ii) a reasonable amount for the cleaning, maintaining and servicing of the
electric lighting fixtures in the Premises including the replacement
of electric light bulbs, tubes, starters and ballasts. Such cleaning,
maintaining, servicing and replacement shall be within the exclusive
right of the Landlord.
(iii)If there are no separate meters for measuring the consumption of such
utilities, the Tenant shall pay to the Landlord, in advance by monthly
instalments as Additional Rent, such amounts as may be reasonably
estimated by the Landlord from time to time as the cost of such
utilities for the Premises. The Tenant shall advise the Landlord
forthwith of any installations, appliances or business machines used
by the Tenant and consuming or likely to consume large amounts of
electricity or other utilities and further, and the Landlord shall
have the right to require the Tenant to install a separate meter at
the Landlord's expense.
(r) Tenant not to Overload Facilities
The Tenant shall not install any equipment which may exceed or overload the
capacity of any utility, electrical or mechanical facilities in the Premises and
the Tenant will not bring onto the Premises or install any utility, electrical
or mechanical facility or service which the Landlord does not approve. The
Tenant agrees that if any equipment installed by the Tenant requires additional
utility, electrical or mechanical facilities, the Landlord may in its sole
discretion if they are available elect to install them at the Tenant's expense
and in accordance with plans and specifications approved in advance by the
Landlord and as may be required by the Landlord's insurance underwriters or
governmental authorities having jurisdiction.
LANDLORD'S COVENANTS
7. And the Landlord covenants with the Tenant:
(a) Quiet Enjoyment
For quiet enjoyment.
(b) Heating, Ventilating, and Air-Conditioning
To maintain in the Premises conditions of reasonable temperature and comfort
during Normal Business Hours in accordance with standards of interior climate
control generally pertaining at the date of this lease applicable to normal
occupancy of premises for office purposes, such conditions to be maintained by
means of a system for heating and cooling, dehumidifying, filtering and
circulating air and processed air.
The Landlord shall not be responsible for any inadequacy of performance of the
said system if the occupancy of the Premises exceeds one person for every 100
square feet of floor area, or if the electrical power consumed in the Premises
for all purposes exceeds normal use for office purposes, or if the Tenant
installs partitions or other installations in locations which interfere with the
proper operation of the system of interior climate control. If the use of the
Premises does not accord with the aforementioned requirements and changes in the
system are (in the reasonable opinion of the Landlord) desirable to accommodate
such use the Landlord may make such changes and the entire expense of such
changes will be reimbursed by the Tenant to the Landlord on demand, and shall be
recoverable by the Landlord as if the same were Additional Rent reserved and in
arrears. If in the opinion of the Landlord, such changes result in maintenance
costs or operating costs in excess of those which would have occurred had such
changes not been made, the Landlord may estimate the amount of such excess on a
reasonable basis and such amount shall be a Special Tenant Operating Expense.
(c) Cleaning
To provide janitor and cleaning services, including outside window washing, to
the Building including the Premises and common areas of the Building consisting
of the services to be rendered substantially in accordance with the standards of
office buildings of a similar type at the date of this Lease. It is agreed by
the Tenant that any janitor or cleaning services (including outside window
washing) which the Landlord shall provide to the Premises in addition to those
described above, shall be Additional Services.
(d) Electric and Water Services
In accordance with Schedule "C" attached to bring electrical and telephone
service to the floor on which the Premises are situate, and to provide water to
washrooms available for the Tenant's use. The Landlord may from time to time
establish a reasonable procedure (and, in that event, shall notify the Tenant)
to determine whether the use by the Tenant of electricity is in excess (on a per
square foot basis) of the normal office consumption in the Building or outside
Normal Business Hours and, if so, may charge the Tenant for the cost of the
excess as a Special Tenant Operating Expense. If the Tenant is unsatisfied with
such procedure, and desires the installation of a separate electricity
consumption meter, any installation that may be agreed to by the Landlord shall
be at the expense of the Landlord.
(e) Elevators
To furnish, except when repairs are being made, passenger elevator service
during Normal Business Hours; operator-less automatic elevator service, if used,
shall be deemed elevator service within the meaning of this sub-clause, and to
permit the Tenant and the employees of the Tenant to have the free use of such
elevator service in common with others. All deliveries to the Premises shall be
made by the elevator designated by the Landlord during hours prescribed
therefore by the Landlord.
(f) Washrooms
In accordance with Schedule "B" attached to provide washrooms on each floor
occupied by the Tenant, and to give the Tenant and the Tenant's employees and
all other persons authorized by the Tenant in common with others entitled
thereto to use, according to their sex, the washrooms so provided, provided that
where any Tenant is in occupation of an entire floor of the Building, the Tenant
so in occupation may exclude all other tenants and their employees and invitees,
from the use of the washrooms located on any such floor.
(g) Maintain Building
To operate and maintain the Building, so that the Premises shall be suitable for
the purpose for which they are hereby leased, but not to maintain anything which
under the provisions of this lease is the obligation of the Tenant.
(h) Repair
Subject to the provisions of subclause 6 (o) hereof, to keep the Building and
the structural members or elements of the Premises in a good and reasonable
state of repair and to repair defects in construction performed, or installation
made, by the Landlord to the Building if, and to the extent that, such defects
impair the enjoyment of the Premises by the Tenant using them in a manner
consistent with this Lease; provided that the Landlord shall not be required to
repair Leasehold Improvements unless and to the extent that damage to any
Leasehold Improvements is caused by the negligence of the Landlord, Landlord
acknowledges there will be a one year warranty on construction performed, or
installation made, by the Landlord to the Building.
(i) Snow Removal
Whenever reasonably required, to remove ice and snow from the sidewalks
appurtenant to the Building, all walkways, ramps, driveway and parking areas.
(j) Insurance
To insure and keep insured the Building and all improvements and installations
made by the Landlord in the Premises (other than improvements made in the
Premises on behalf of the Tenant or any previous occupant of the Premises)
against loss or damage by fire, lightning, tempest, and such other standard
extended coverage insurance perils as are normally entered into from time to
time during the term by owners of similar buildings for such an amount as in the
opinion of the Landlord is necessary to protect the Landlord against such loss
or damage, and on such terms and with such insurer as the Landlord may in its
absolute discretion determine; provided that and it is agreed, that the Landlord
shall not be required to insure any Leasehold Improvements in the Premises; and
further provided, and it is further agreed, that the Landlord shall not be
liable:
(i) for any damage, (other than Insured Damage) which is caused by steam,
water, rain or snow which may leak into, issue or flow from any part
of the Building, or from the pipes or plumbing works, including the
sprinkler system, or from any other place or quarter or for any damage
caused by or attributable to the condition or arrangement of any
electric or other wiring or of sprinkler heads or for any damage
caused by anything done or omitted by any other tenant;
(ii) for any act or omission (including theft, malfeasance or negligence)
on the part of any agent, contractor, or person from time to time
employed by it to perform janitor services, security services,
supervision or any other work in or about the Premises or the
Building; or
(iii)for loss or damage, however caused, to money, securities, negotiable
instruments, papers or other valuables of the Tenant;
All policies required to be written on behalf of the Landlord pursuant to this
subclause shall contain a waiver of any subrogation rights which the Landlord's
insurers may have against the Tenant and against those for whom the Tenant is,
in law, responsible whether any such damage is caused by the act, omission, or
negligence of the Tenant or by those for whom the Tenant is, in law,
responsible.
The Landlord shall have the right to stop the use of the facilities and the
supply of the services mentioned in this clause 7 when necessary by reason of
accident, or during the making of repairs, alterations, or improvements to any
of the said services or facilities which the Landlord in its absolute discretion
deems necessary or desirable until the said repairs, alterations or
improvements, shall have been completed to the satisfaction of the Landlord,
provided it provides prior notice to the Tenant, it being agreed that such prior
notice is not required in the case of an emergency, but the Landlord shall make
such repairs, alterations or improvements with all reasonable speed, the
Landlord shall not be liable for failure to operate any of the said facilities
or supply any of the said services during any such stoppage as aforesaid, or for
any period of time that the Landlord is prevented from operating any such
facilities or supplying any such services by reason of strike, by order or
regulation of any governmental authority or agency, or failure of electric
current. steam or water supply necessary to the operation of any such facility
or the supply of any such service, or by the failure to obtain any such supply
with the exercise of reasonable diligence or by any other cause beyond the
Landlord's reasonable control.
Indemnification of Tenant
That the Landlord shall indemnify the Tenant and save it harmless from and
against any and all loss, costs, claims, actions, damages, liability and expense
in connection with any breach, violation or nonperformance of any covenant,
obligation or agreement of the Landlord under this Lease.
MONTHLY TENANCY
8. If the Tenant shall continue to occupy the Premises after the expiration of
the term of this lease, with the consent of the Landlord and without any further
written agreement, the Tenant shall be a monthly tenant at a monthly rental
equal to the monthly instalments of rent and additional rent payable hereunder
during the term hereby granted or any renewal thereof, such rental to be payable
in advance on the first day of each and every month and such monthly tenancy to
be upon the terms and conditions and subject to all other charges and amounts
payable as set out herein except as to length of tenancy.
ASSIGNMENT AND SUBLETTING
9. (a) The Tenant will not assign, set over, transfer, sublet or sublease,
hypothecate, encumber or in any way deal with or part with the whole or any part
of the Premises to anyone, for or during the whole or any part of this term,
without written consent first being obtained from the Landlord, provided that
such consent shall not be unreasonably withheld as to any proposed assignee or
sublessee who, in the Landlord's judgment. has a satisfactory financial
condition and a good reputation in the business community, and who agrees to use
the Premises for purposes satisfactory to the Landlord,
And further provided, however, and it is made a condition to the giving of such
consent that:
(i) any proposed assignee or sublessee of this lease shall agree in
writing to assume and perform all of the terms, covenants, conditions
and agreements by this lease imposed upon the Tenant herein in a form
to be approved by the solicitor for the Landlord;
(ii) in the event of an assignment consented to by the Landlord the Tenant
shall nonetheless remain responsible to the Landlord for the
fulfillment of all obligations created by this Lease;
(iii)the total rent to be paid by the assignee or subtenant which exceeds
the Basic Rent and Additional Rent (on a proportionate basis relative
to the space occupied) to be paid by the Tenant to the Landlord under
the terms of the Lease, shall be paid to the Landlord; and
(iv) any fee, payment, charge or other consideration payable by the
assignee or subtenant in respect of the Tenant's assignment of this
Lease or subletting of the Premises shall accrue to the benefit of and
shall be paid to the Landlord.
Without limitation, the Tenant shall for the purpose of this clause 9, be
considered to assign or sublet in any case where it permits the Premises or any
portion thereof to be occupied by persons other than the Tenant, its employees
and others engaged in carrying on the business of the Tenant, whether pursuant
to assignment, subletting, license or other fights, and shall also include any
case where any of the foregoing occurs by operation of law.
(b) The Tenant shall not assign this lease or sublet the whole or any part of
the Premises unless:
(i) The Tenant shall have obtained a bona fide written offer to take an
assignment or to sublet for an intended use permitted under this Lease
which the Tenant has determined to accept subject to compliance with
this clause 9. Such offer shall disclose any and all payments made or
to be made by the proposed assignee or subtenant as consideration for
such assignment or subletting; and
(ii) The Tenant shall have first requested and obtained the consent in
writing of the Landlord thereto.
Any request for consent shall be in writing and accompanied by a true copy of
the offer, and the Tenant shall furnish to the Landlord all information
available to the Tenant and requested by the Landlord as to the responsibility,
reputation, financial standing and business of the proposed assignee or
subtenant. If such consent shall be given the Tenant shall assign or sublet, as
the case may be, only upon the terms set out in the offer submitted to the
Landlord as aforesaid and not otherwise.
ADDITIONAL SERVICES
10. (a) If the Tenant wishes any Additional Services to be performed in or
relating to the Premises it shall so advise the Landlord in writing, and the
Landlord shall have the right, but not the obligation, to perform any such
Additional Services. If the Landlord performs any such Additional Services the
Tenant shall pay the Cost of Additional Services so performed, plus an
administrative charge of ten per cent (10%) of such cost, forthwith on demand
upon receipt of the invoice therefor from the Landlord. If the Landlord does not
wish to exercise its rights to perform any Additional Services, the Tenant shall
not cause any such Additional Services to be performed by any person unless and
until he has obtained the consent of the Landlord in writing to the performance
of such Additional Services by such person, such consent not to be unreasonably
withheld.
DAMAGE OR DESTRUCTION
11. (a) In the event of damage to the Premises or to other portions of the
Building which affect access or services essential to the Premises, and if the
damage is such that the Premises or any substantial part thereof is rendered not
reasonably capable of use and occupancy by the Tenant for the purpose of its
business for any period of time in excess of ten (10) days, then:
(i) unless the damage was caused by the fault or negligence of the Tenant
or its employees, agents, invitees or others under its control, from
and after the expiration of ten (10) days after the occurrence of the
damage and until the Premises are again reasonably capable of use and
occupancy as aforesaid, the rental payable pursuant to clause 3 (but
not the Tenant's Proportionate Share of Allocable Operating Expenses
and Allocable Taxes, or any other payments required to be made by the
Tenant hereunder except to the extent of any direct reduction in such
Allocable Operating Expenses and Allocable Taxes arising as a result
of such damage) shall abate from time to time in proportion to the
part or parts of the Premises not reasonably capable of such use and
occupancy;
(ii) Subject to subclause (b) below, the Landlord and Tenant shall
diligently commence and complete repairs to any such damage in
accordance with their obligations under this lease, but to the extent
that any part of the Premises is not reasonably capable of such use
and occupancy by reason of damage which the Tenant is obligated to
repair hereunder, any abatement of rent to which the Tenant would
otherwise be entitled hereunder shall not extend later than the time
by which, in the reasonable opinion of the Landlord, repairs by the
Tenant ought to be completed with reasonable diligence.
(b) Notwithstanding subclause 11 (a) above, in the event of damage or
destruction to the Premises or to the Building, which in the reasonable opinion
of the Landlord cannot be, using reasonable diligence, repaired or made
reasonably fit for occupancy within one hundred and eighty (180) days from the
date of damage or destruction, then:
(i) if the destruction or damage is to the Building, the Landlord, or:
(ii) if the destruction or damage is to the Premises, either party, may
terminate this lease on written notice given within forty-five (45)
days after the occurrence of such damage or destruction.
In the event of such damage or destruction occurring in the last year of the
term hereof or any renewal thereof, so that the Premises or the Building are
incapable of being rebuilt or made reasonably fit for occupancy within thirty
(30) days from the date of damage or destruction, the Landlord may terminate
this lease on written notice given within twenty (20) days after the occurrence
of such damage or destruction.
In the event that any mortgagee or other person entitled thereto shall not
consent to the payment to the Landlord of the proceeds of any insurance policy
for the purpose of rebuilding or restoring the Building or the Premises, the
Landlord may terminate this lease on written notice.
(c) Upon the termination of this lease, as hereinbefore provided, Rent, or the
proportionate part of Rent abated as aforesaid, and any other sums owing by the
Tenant to the Landlord shall be apportioned and paid to the date of such
termination and the Tenant shall forthwith deliver up possession of the
Premises.
(d) The certificate of the Architect as to the length of time required, using
reasonable diligence, to rebuild or restore the Building or the Premises, or as
to when the Premises or any portion thereof are reasonably fit for occupancy by
the Tenant shall be conclusive and binding upon the Landlord and the Tenant.
LEASEHOLD IMPROVEMENTS AND TRADE FIXTURES
12. Subject to the provisions of Section 28 of Schedule "E" attached all
Leasehold Improvements in or upon the Premises shall immediately upon their
placement be and become the Landlord's property without compensation therefor to
the Tenant. Except to the extent otherwise expressly agreed by the Landlord in
writing, no Leasehold Improvements, trade fixtures, furniture or equipment shall
be removed by the Tenant from the Premises either during or at the expiration or
sooner termination of the term except that:
(i) the Tenant may at the end of the term remove its trade fixtures;
(ii) the Tenant shall at the end of the term remove such trade fixtures in
the Premises as the Landlord shall require to be removed; and
(iii)the Tenant may remove its furniture and equipment at the end of the
term, and also during the term in the usual and normal course of its
business where such furniture or equipment has become excess for the
Tenant's purposes or the Tenant is substituting therefor new furniture
and equipment.
The Tenant shall, in the case of every removal either during or at the end of
the term, make good at the expense of the Tenant any damage caused to the
Premises by the installation and removal.
SIGNS AND DIRECTORY
13. See Schedule "E", Riders Nos.26 and 27.
ACCESS, INSPECTION, RIGHT TO SHOW PREMISES
14.(a) The Landlord shall have the right at any time and from time to time to
enter and to have its authorized agents, employees and contractors enter the
Premises in the event of an emergency or for the purpose of inspection, window
cleaning, maintenance, providing janitor service, making repairs, alterations or
improvements to the Premises or the Building, and to have access to utilities
and services (including underfloor conduits and access panels, which the Tenant
agrees not to obstruct) and the Tenant shall provide free and unhampered access
for the purpose, and shall not be entitled to compensation for any
inconvenience, nuisance or discomfort caused thereby. The Landlord in exercising
this right shall proceed in such a manner so as to minimize interference with
the Tenant's use and enjoyment of the Premises.
(b) The Landlord and its authorized agents and employees shall have the right of
entry to the Premises during the last twelve (12) months of the term or any
extension thereof for the purpose of exhibiting them to prospective tenants.
LANDLORD'S REMEDIES
15.(a) Re-entry
The Landlord may re-enter upon non-payment of rent or non-performance of
covenants subject to the provisions of this lease;
(b) Remedies of Landlord
If the Tenant shall fail to make any payment or part thereof for five (5) days
after the due date therefor, or shall fail to perform or observe any other
covenants, provisos or agreements contained herein which such failure shall
continue for fifteen (15) days after written notice thereof, provided if such
failure cannot be cured within 15 days, the Tenant shall not be deemed to be in
default herein if it has commenced the cure of such failure within such 15 day
period and has diligently pursued its cure thereafter, then, and in each such
case, the Landlord shall have the following remedies:
(i) Termination
The Landlord may by written notice terminate this Lease, without prejudice
to any other rights or remedies it may have, and rent and any other
payments for which the Tenant is liable shall be apportioned and paid in
full to the date of such termination together with the reasonable expenses
of the Landlord attributable to the termination of the lease, including
legal fees on a solicitor/client basis, and the Tenant shall immediately
deliver up possession of the Premises to the Landlord;
(ii) Recovery of Expenses
The Landlord may enter the Premises and perform the obligation on behalf of
the Tenant, and shall not be liable for any loss or damage to the Tenant's
goods, chattels or business caused in so doing. Any reasonable expenses
incurred by the Landlord in so doing (including, without limitation, legal
fees on a solicitor/client basis and compensation for the Landlord's
services) together with interest thereon at the rate of five (5) percentage
points above the lowest rate of interest at the date or dates of the
incurring of such expenses quoted by chartered banks to the most
credit-worthy borrowers for prime business loans, as determined and
published by the Bank of Canada shall be paid by the Tenant to the Landlord
forthwith on demand therefor and shall be recoverable in the same manner as
Rent.
(iii) Right to Relet
The Landlord shall have the right to enter the Premises and to relet the
same as agent for the Tenant for whatever term and on whatever conditions
the Landlord shall, in its sole discretion, deem advisable, and the Tenant
shall pay to the Landlord, in monthly instalments for the balance of the
term of this lease (which shall be deemed for the purposes of this item
(iii) not to have been terminated by any action of the Landlord hereunder,
including the making of alterations to the Premises deemed by the Landlord
to be necessary or advisable for the purpose of reletting them), any
deficiency between the sum of one-twelfth of the Rent and Additional Rent
payable pursuant to clause 3 hereof and the amount, if any, of Rent and
Additional Rent actually received by the Landlord in respect of the
Premises, after deducting therefrom all amounts reasonably attributable to
the reletting of the Premises or any portion thereof:
(c) Curing of Default
In the event of a default by the Tenant such as can be cured only by the
performance of work or the furnishing of materials, and if such work cannot
reasonably be completed or such materials reasonably obtained and/or utilized
within fifteen (15) days, such default shall not be deemed to continue if the
Tenant proceeds promptly with such work as may be necessary to cure the default
and diligently complete the same;
(d) Distress
The Tenant waives and renounces the benefit of any present or future statute
taking away or limiting the Landlord's right of distress and covenants and
agrees that notwithstanding any such statute none of the goods and chattels of
the Tenant on the Premises at any time during the term shall be exempt from levy
by distress for Rent or any other charges. If the Tenant shall leave the
Premises leaving any Rent or other amounts owing under this Lease unpaid, the
Landlord, in addition to any other available remedy, may seize and sell the
goods and chattels of the Tenant at any place to which the Tenant or other
person may have removed them in the same manner as if such goods and chattels
had remained and been distrained upon the Premises.
(e) Interest
All sums, for Rent or otherwise, payable to the Landlord under the terms of this
Lease shall bear interest at a rate five (5) percentage points above the lowest
rate of interest quoted by chartered banks to the most credit-worthy borrowers
for prime business loans, as determined and published by the Bank of Canada from
their respective due dates until the actual dates of payment.
(f) Application of Receipts
The Tenant covenants and agrees that the Landlord may, at its option, apply all
sums received from the Tenant to any Rent or other amounts payable hereunder in
such order as the Landlord sees fit.
BANKRUPTCY, IMPROPER USE, ETC.
16. Subject to any other rights or remedies available to the Landlord, the
Tenant covenants and agrees that if the term hereby granted or any of the goods
and chattels of the Tenant on the Premises shall be at any time during the term
hereof seized or taken in execution or attachment by any creditor of the Tenant
or if the Tenant shall make any assignment for the benefit of creditors, or any
bulk sale, or becoming bankrupt or insolvent shall take the benefit of any Act
now or hereafter in force for bankrupt or insolvent debtors, or if a receiving
order is made against the Tenant, or if any order shall be made for the winding
up of the Tenant, or if the Premises shall without the written consent of the
Landlord become and remain vacant for a period of four (4) days, or be used by
any other persons than such as are entitled to use them under the term of this
Lease, or if the Tenant shall without the written consent of the Landlord
abandon or attempt to abandon the Premises or to sell or dispose of goods or
chattels of the Tenant or to remove them or any of them from the Premises so
that there would not in the event of such abandonment, sale or disposal be
sufficient goods on the Premises, subject to distress to satisfy the rent above
due or accruing due, or if the Premises are used for a purpose other than that
as herein provided, then in every such case, the then current month's Rent and
the next ensuing three months' Rent together with all additional charges payable
by the Tenant hereunder (to be pro-rated if necessary) shall immediately become
due and be payable and the Landlord may re-enter and take possession of the
Premises as though the Tenant or the servants of the Tenant or any other
occupant of the Premises were holding over after the expiration of the term
hereof, and the said term shall, at the option of the Landlord, forthwith become
forfeited and determined, and in every one of the cases above, such accelerated
Rent shall be recoverable by the Landlord in the same manner as the Rent hereby
reserved.
17. INTENTIONALLY DELETED
18. INTENTIONALLY DELETED
19. PARKING
The Landlord shall have the right to establish Rules and Regulations governing
the use of the parking from time to time and the Tenant hereby agrees to observe
and abide by all such Rules and Regulations. See Schedule "E", Section No.20.
Notwithstanding anything contained to the contrary in either the Offer to Lease
accepted November 26th, 1998 between the Landlord and the Tenant or this Lease,
the Tenant acknowledges and agrees that its proportionate share usage of the
carpark facilities is greater than any existing or future tenants and
accordingly, the Landlord's annual estimate of Tenant's Proportionate Share of
Allocable Operating Expenses will take into account the Tenant's greater usage
of the carpark facilities.
NOTICES
20. All notices or other documents required or which may be given under this
lease shall be in writing, duly signed by the party giving such notice and
transmitted by registered or certified mail, facsimile or personally delivered,
addressed as follows:
To the Landlord at:
2025 Sheppard Avenue East, Suite 1201,Willowdale, Ontario, M2J 1V7
To the Tenant at:
Saville Systems Canada, Ltd., 4445 Calgary Trail South, 7th floor, Edmonton,
Alberta, T6H 5R7 Attention: Jane Lewchuk
Any notice or document so given shall be deemed to have been received on the
third business day following the date of mailing, if sent by registered mail or
telegrammed, but shall be deemed to have been received on the next business day
if transmitted by telex. Such notice shall also be sufficiently given if and
when the same shall be delivered, in the case of notice to the Landlord, to an
executive officer of the Landlord, and in the case of notice to the Tenant, to
the Tenant personally or to an executive officer of the Tenant if the Tenant is
a corporation.
Such notice, if delivered, shall be conclusively deemed to have been given and
received at the time of such delivery. If in this lease two or more persons are
named as Tenant, such notice shall also be sufficiently given if and when the
same shall be delivered personally or mailed as provided for herein to any one
of such persons. Any party may from time to time by notice given as provided
above change its address for the purpose of this clause.
LEGAL COSTS
21. If the Landlord shall commence an action for collection of rent or other
sums payable under this lease or if the same shall be collected upon the demand
of a solicitor or if the Landlord shall commence an action to compel performance
of any of the terms, conditions, covenants or provisoes under this lease or for
damages for failure of the Tenant to perform the same or if the same shall be
performed upon the demand of a solicitor then, unless the Landlord shall lose
such action, the Landlord shall collect from the Tenant and the Tenant shall pay
to the Landlord all reasonable solicitor's fees in respect thereof on a
solicitor and client basis.
PRIOR INTERESTS
22.(a) Provided a lender enters into a Non-Disturbance and Attornment Agreement
in a form as set out in as set out in Schedule "G" attached this lease is
subject and subordinate to all mortgages or deeds of trust and all renewals,
modifications, consolidations, replacements and extensions thereof which may now
or at any time hereafter affect the Premises in whole or in part or the Building
in whole or in part and whether or not such mortgages or deeds of trust shall
affect only the Premises or the Building of which the Premises shall form a part
or shall be blanket mortgages or deeds of trust affecting other premises as
well. The Tenant shall at any time on notice from the Landlord attorn to and
become a tenant of a mortgagee or trustee under any such mortgage or deed of
trust upon the same terms and conditions as set forth in this lease and shall
execute promptly on request by the Landlord any certificates, instruments of
postponement or attornment or other instruments from time to time requested to
give full effect to this requirement or to set out the status of this lease and
the state of accounts between the Landlord and the Tenant, and the Tenant hereby
constitutes the Landlord the agent or attorney of the Tenant for the purpose of
executing any such certificates, instruments of postponement or attornment or
other instruments necessary to give full effect to this clause;
NO WAIVER OF DEFAULT
23.(a) No condoning, excusing, overlooking or delay in acting upon by the
Landlord of any default, breach or non-observance by the Tenant at any time or
times in respect of any covenant, proviso or condition in this lease shall
operate as a waiver of the Landlord's rights under this lease in respect of any
such or continuing subsequent default, breach or non-observance and no waiver
shall be inferred from or implied by anything done or omitted by the Landlord
except an express waiver in writing.
(b) All rights and remedies of the Landlord set forth in this lease shall be
cumulative and not alternative;
(c) If the Landlord shall assign this lease to a mortgagee or mortgagees of the
Premises or of the Building or to any other person or persons whatsoever the
Landlord shall nonetheless be entitled to exercise all rights and remedies
reserved under this lease without providing evidence of the approval or consent
of such mortgagee, mortgagees or any other persons whatsoever.
24. INTENTIONALLY DELETED
25. INTENTIONALLY DELETED
DUCTS
26. With the exception of the data cabling rooms located on each floor of the
Premises, the Landlord shall have the right to run utility lines, pipes, roof
drainage pipes, conduit wire, or ductwork where necessary, through above-ceiling
space, column space, the interiors of walls and beneath the floors of the
Premises and to maintain the same in a manner which does not unduly interfere
with the Tenant's use thereof.
REGISTRATION
27. The Tenant shall not register this lease against the title to the Building
in either the Registry or Land Titles Offices. If the Tenant desires to make a
registration for the purpose only of giving notice of this lease then the
parties hereto shall contemporaneously with the execution of this lease execute
a short form thereof acceptable to the Landlord, for the purpose of supporting
an application for registration of notice thereof.
SEVERABILITY
28. If any clause or clauses or part or parts of clauses in this lease be
illegal or unenforceable it or they shall be considered separate and severable
from the lease and the remaining provisions of the lease shall remain in full
force and effect and shall be binding upon the parties hereto as though the said
clause or clauses or part or parts of clauses had never been included.
INTERPRETATION
29.(a) Whenever a word importing the singular number only is used in the lease
such word shall include the plural, and words importing either gender or firms
or corporations shall include the persons of other gender and firms or
corporations where applicable. Any reference to the term of this lease shall.
unless the context otherwise requires, be deemed to include any renewals hereof;
(b) The word "clause" shall refer to each portion of this lease introduced or
headed by an Arabic figure; the word "subclause" shall refer to each portion of
this lease introduced or headed by an English letter, and the word "Item" shall
refer to each portion of this lease introduced by a small roman numeral. The
headings of clauses, subclauses and items appearing 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 or meaning of this lease or of any provision thereof.
SUCCESSORS
30. This lease, together with the Schedules annexed hereto, shall extend to, be
binding upon and enure to the benefit of the parties hereto and their respective
heirs, legal personal representatives, successors and assigns (as limited by the
provisions of this lease) and shall be interpreted in accordance with the laws
of the Province of Ontario and the parties hereto attorn to the jurisdiction of
the Province of Ontario.
JOINT AND SEVERAL LIABILITY
31. The Tenant and the Indemnifier covenant with the Landlord that each of them
is jointly and severally bound for the fulfilment of all obligations of the
Tenant under this lease and that Appendix "1" is an integral part of this lease.
SCHEDULE "E" AND PAGE 14A OF SCHEDULE "E" IS AN INTEGRAL PART OF THIS LEASE
32. The Landlord and Tenant agree that Schedule "E" is an integral part of this
Lease. In the event of any inconsistency or conflict between the provisions of
Schedule "E" and the other provisions of this Lease, the Landlord and the Tenant
agree that the provisions of Schedule "E" shall govern and that the document as
a whole shall be construed to give paramountcy to the provisions and intent of
Schedule "E". The Landlord and Tenant agree that if Schedule "E" does not deal
with a particular matter that is dealt with in the Lease, the provision or
provisions of the Lease shall govern.
LANDLORD TO ACT REASONABLY
33. Despite anything contained in this Lease to the contrary, (a) any allocation
of any cost, charge or expenses which is to be determined by Landlord under this
Lease shall be done on a reasonable and equitable basis, (b) whenever in this
Lease Landlord's consent, permission or approval is required, such consent,
permission or approval shall not be unreasonably withheld or delayed, but if
Landlord does not respond within 15 Business Days to Tenant's request for such
consent, permission or approval, then Landlord's consent, permission or approval
shall be deemed to be given to Tenant's request, and (c) in exercising any of
its rights under this Lease, Landlord shall act reasonably and as a prudent
owner of a similar office building having regard to size, age and location.
IN WITNESS WHEREOF the corporate parties hereto have hereunto affixed their
corporate seals, attested by the hands of their respective duly authorized
officers in that behalf, and any other parties hereto have hereunto set their
respective hands and seals.
MONARCH CONSTRUCTION LIMITED
per: Name: /s/Ian R. Taylor
Title: Vice President
per: Name: /s/David George
Title: Vice President
SAVILLE SYSTEMS CANADA, LTD.
per: Name: /s/John J. Boyle, III
Title: Chairman and CEO
per: Name: /s/Christopher A. Hanson
Title: CFO
<PAGE>
SCHEDULE "A"
DESCRIPTION OF PREMISES
To be read with and form a part of this lease between MONARCH CONSTRUCTION
LIMITED (LANDLORD) and SAVILLE SYSTEMS CANADA LTD. (TENANT)
Part of Block 4. Plan 65M-2620 designated as part of Parts 1 and 2, Plan
65R-19184 and subject to those easements and restrictions set out in Parts 3, 4,
5, 6 and 7, Plan 65R-19184 in the Land Registry Office for the Land Titles
Division of York No.65
Property Identification Number 03030-0031
<PAGE>
SCHEDULE "B"
Map of premises
<PAGE>
SCHEDULE "C"
To be read with and form a part of this Lease between
MONARCH CONSTRUCTION LIMITED (LESSOR) AND SAVILLE SYSTEMS CANADA LTD. (LESSEE)
REQUIREMENTS FOR NEW BUILDING
GENERAL
All building components will be in keeping with a Class "A" type building.
Building should meet energy performance requirements of ASHRAE 90. 1.
Saville Systems to have opportunity to review building design and finishes to
ensure appearance in keeping with Saville Systems' corporate identity.
Responsibility for building performance, management and maintenance remains with
the building owner.
Saville reserves the right to use their own contractor and own consultants for
tenant improvement work.
EXTERIOR SITE DESIGN
Hard surface walkways to be at a minimum either concrete or interlocking pavers.
Planting:
o Minimum 10% of site area.
o Arranged to embellish the main building entrance and main building street
front. Also arranged to shelter the cafeteria or restaurant patio and the
edges of the parking area, as well as principal routes through parking to
the building.
o 1/3 of planting to be coniferous and 2/3 to be mixed deciduous and shrubs.
Smoking Areas:
o Independently ventilated smoking room on ground floor or in below-grade
parking area to accommodate at least 12 people.
o Provision will be made for exterior smoking areas away from main entry
doors.
Parking / Loading:
o Loading requirement as per proposal call with at least one loading bay to
be raised loading dock, with manually operated dock levellers, dock bumpers
and bollards.
Breakout space at loading area to be minimum 250 square feet.
Compactor to be in separate bay.
Dry storage off the loading dock consisting of secure, fire-rated
drywall partitions.
o Parking: In addition to the parking ratio described in paragraph #15 of
Schedule "A", Saville requires a minimum of:
Ten visitor spaces.
Two courier spaces.
EXTERIOR CLADDING:
Appearance to be consistent with Class "A" office buildings:
Energy Performance:
o Thermally broken, aluminum curtain wall system including insulating units
with Low E coating on 3rd surface.
o Spandrel areas of wall to have a minimum aged R-value in keeping with
ASHRAE 90.1.
o Wall to have functioning air barrier.
ENTRANCES
o Arrangement of building entrances will be designed to avoid adverse
microclimatic conditions such as excessive wind.
o Main Entrance:
One revolving door with pivot hinged swing doors on each side. Stainless
steel foot grilles within revolving door enclosures.
Building management will be responsible for adequate matts and rotation of
matts to ensure no tracking of water reaches beyond main lobby.
Security desk designed to be integral to main entrance lobby, 24 hours/7
days per week operation of desk to be at Saville option - cost to be
amortized against any other tenants - costs not to be considered when
calculating CPI ceiling increase in paragraph 12 of Schedule "A" of
Offer to Lease.
Stainless steel directory. Signage to Saville design.
Parkade Building Entrances and Corridors:
o Painted floors / wails, generous lighting, and suspended gypsum board
ceilings.
Typical Office Floors:
o Floors: steel trowel finished concrete with 5/16" in 10' x 10' tolerance
for levelness.
o Walls: gypsum board prime painted including elevator core wails to be faced
with prime painted gypsum.
o Ceilings: mineral acoustic panels in a suspended lay-in grid, placed on
floors for installation by Saville during tenant improvements with the
exception of panels penetrated by sprinkler heads, which will be
pre-installed.
o Elevator lobby/ring corridor to provide security access to washrooms and
stairwell, with central locations for coffee stations and cabling rooms (2
per floor, minimum 10' x 10' each with 6' conduit running between all cable
rooms vertically and horizontally). Hard finishes (drywall/stone/ceramic)
as defined by Saville to be included.
Washrooms to be consistent with Class "A" quality finishings.
o Quantity: assume population of 1 person/100 square feet to establish
fixture count (50% more than code minimum).
Elevators:
o Provide four (4) passenger elevators, one of which shall be a high-top or
service elevator with a group supervisory control system complete with the
following control and operational features:
Software programming micro-processor based control system
Load weighing
Anti-nuisance Terminal floor car call cancellation
Direction reversal in response to hall calls being registered at the
same floor for both directions
Independent service
High call - low call reversal
Advance selection and illumination of main lobby ball lantern of
designated next up car
Hall call delay protection
Dispatch failure protection
Security provision (card access) to restrict access to certain floors
at Saville's option.
o Maximum waiting time and average load factor shall be as follows:
Morning - Waiting time 21-25 seconds
Average load factor 35-60%
Load weighing - Waiting time 27-32 seconds
Average load factor 45-55%
Anti-nuisance - Waiting time 30-35 seconds
Average load factor 60-65%
Security:
o At a minimum, all stairwells, exterior door, doors to parking areas as well
as Saville's typical core areas to have card readers plus any other
location(s) to be determined by Saville.
STRUCTURAL:
Loading capacity:
o A total of 100 p.s.f. on each floor, is required.
o Horizontal variation in finished concrete floor slabs should not exceed
5/16" in 10'-0".
o Optimal bay size is 30'-0" x 30'-0".
o Floor to floor height minimum 12' (typical - 9' ceiling) and 16' for main
floor (14' ceiling).
ELECTRICAL:
Lighting:
o 20" x 60" recessed fluorescent fixtures with one piece faceplates with deep
cell parabolic louvers.
o Plug-in light fixtures rather than hard wired will be installed.
o Lighting control to provide local switching in all individual rooms.
o Maintain office light levels in the 55 to 65 feet candle range at desk
height.
o Lighting levels to be a minimum of 5 feet candles in all stairwells,
parking areas and service areas.
Power:
o Allow 2 watts per square foot for standard building lighting.
o Allow minimum of 3 watts per square foot for receptacles, miscellaneous
loads and general use.
o Bus duct riser to be sized to include additional capacity of 2 watts per
square foot for tenant requirements.
o Duct bank to property line (data/voice/fibre).
o Diesel Generator with space capacity for Saville requirements (i.e. 20%).
Cable Tray:
o Ladder type 16" wide x 4" deep, arranged to allow entire floor to be
serviced with no cable runs to exceed 90 meters. Drawings to be approved by
Saville and/or its consultants prior to installation.
Energy Efficiency:
o An automated lighting control system should be considered with flexibility
to allow it to be disengaged on a floor-to-floor basis if Saville requires
it.
o T-8 lamps with electronic ballast.
MECHANICAL:
Design Conditions:
o Summer Outdoor 90 F db/76 F wb
o Summer Indoor 75 F/50 F RH
o Winter Outdoor - 5 F
o Winter Indoor 72 F / 30 F RH
o Occupancy: based on one person per 100 square feet.
o Meet energy Performance criteria of ASHRAE 90.1
Ventilation and Air-Conditioning:
o Interior HVAC zones: 1,000 square feet maximum, allows for higher level of
temperature control and better air distribution.
o Perimeter HVAC zones: 450 square feet maximum, allows for higher level of
temperature control and better air distribution.
o 1 compartment VAV air handling unit per floor, allowing floor-by-floor
independent control
o Fresh air 20 CFM per person or 0.2 CFM per square foot.
o Minimum air circulation ratio: 0.6 cfm per square foot.
o Supply air: 200 cfm/outlet maximum in offices areas.
o Maximum NC (noise criteria): NC 30-35 in office areas.
o Space cooling per square foot: 2 watts lights + 2.5 watts power + people
load + building skin heat gain (including solar).
o Provide dedicated sanitary exhaust system for washrooms including two 8" x
8" sanitary exhaust capped connections per floor.
o Provide general exhaust riser with two capped connections on each floor for
exhaust of coffee roams, copier rooms, etc.
Cooling:
o Provide electric or gas fired chiller(s), pumps and cooling tower(s) to
provide chilled water to air handling units to meet load cooling
requirement.
o Provide supplementary cooling system on each floor offering 24 hours/day
all year round cooling. Assume a supplementary cooling load of 10 to 20
tons per floor.
Humidification:
o Gas fired steam or air atomizing humidifiers.
Heating:
o Gas fired hot water boilers for hydronic heating. Minimum two boilers and
two heating pumps, each sized for 60% of full load.
o Perimeter hydronic heating using radiant panels, fan powered boxes with
reheat coils, induction units or under window convectors.
o Hot water forced flow heaters at building entrances.
Fire Protection:
o Fully sprinklered building. Concealed sprinkler heads in high profile areas
(e.g.) building entrance, elevator lobbies. Semi-recessed heads everywhere
else.
o Standpipe system with two capped connections on each floor for additional
cabinets. (Additional cabinets may be required after partitions installed
at Lessor's cost.)
Plumbing and Drainage:
o All public washrooms to have wall hung w.c.'s and electronic flush on
urinals and lavatories. All fixtures to be CSA approved and vitreous china.
o Provide the following on each floor for future tenant improvements:
2 - 4" diameter sanitary drain capped connections
2 - 2" diameter sanitary drain vent capped connections
2 - 1" diameter cold water capped connections
Building and Automation System (SAS):
o Provide a DDC (direct digital control) BAS to control and monitor air
handling units, chiller(s), boilers and humidification system. The BAS will
schedule equipment, setback temperatures during unoccupied hours, and reset
supply air temperatures to meet loads and minimize energy use.
o BAS shall be capable of providing lighting control.
o The BAS is required to monitor equipment for early detection and repair of
malfunctioning equipment, and to operate the building in an energy
efficient manner.
Energy Performance Upgrades:
o High efficiency boilers.
o Heat recovery system on any kitchen exhausts.
o Carbon dioxide monitor to control fresh air quantities.
Other:
o Lessee standard window coverings to be provided by landlord as base
building and installed only during or after substantial completion of
tenant improvements.
Lessor's Work
In connection with paragraph #24 of Schedule "A" of this Offer to Lease, the
Lessor shall complete the following work ("Lessor's Work") in proper and
workmanlike manner prior to the fixturing period at its own cost and expense and
in accordance with the building standard.
Suspended T-bar ceiling complete with acoustic ceiling tiles;
Recessed fluorescent light fixtures with parabolic lenses at 1/80 square feet as
per Lessee's space plan;
Level and smooth concrete floor ready to receive Lessee's carpet;
Male and female washrooms in accordance with Ontario Building Code;
Lessee's standard window coverings;
Demising walls taped, sanded, primed, and otherwise ready for Lessee's finishes;
Distribution of the Base Building Variable Air Volume HVAC system through the
ceiling plenum as per Lessee's space plan;
Base Building sprinkler system and sprinkler heads as per Lessee's space plan.
<PAGE>
SCHEDULE "D"
TABLE OF CONTENTS
OFFICE LEASE
1. Premises
2. Definitions
3. Term
4. Basic Rent
5. Taxes
6. Operating Costs
7. Recovery of Adjustments
8. Tenant's Covenants:
(a) Pay Rent
(b) Utility Charges
(c) Maintain and Repair
(d) Repair Where Tenant At Fault
(e) Assigning or Subletting
(f) Rules and Regulations
(g) Use of Premises
(h) Observance of Law
(i) Waste and Nuisance
(j) Entry by Landlord
(k) Indemnity
(1) Exhibiting Premises
(m) Alterations
(n) Interior Walls and Exterior Walls
(o) Signs
(p) Name of Building
(q) Glass
(r) Certificates
(s) Evidence of Payments
(t) Notice of Accidents
(u) Tenant Insurance
(v) Surrender on Termination
(w) Fire and Safety
(x) Energy Conservation
9. Quiet Enjoyment
10. Landlord's Covenants:
(a) Heating & Air Conditioning
(b) Taxes
(c) Elevator
(d) Access
(e) Washrooms
(f) Janitor Services
11. Fixtures
12. Damage or Destruction
13. Expansion, Alteration
14. Injuries, Loss and Damage
15. Impossibility Unavoidable Delays
16. Re-entry
17. Bankruptcy, etc .
18. Distress
19. Entry as Agent
20. Right of Termination
21. Non-waiver
22. Overholding
23. Landlord Performing Tenant's Covenant
24. Payments to Landlord
25. Recovery of Adjustments
26. Registration
27. Mortgages
28. Assignment by Landlord
29. Captions
30. Guarantee
31. Notice
32. Effect of Lease
33. Interpretation of Lease
34. Time of Essence
35. Law
36. Intent of Lease
Rules & Regulations
<PAGE>
This Indenture made the 25th day of April 1996
IN PURSUANCE OF THE SHORT FORMS OF LEASES ACT
BETWEEN: ORFUS INVESTMENTS, a partnership registered under The Partnership
Registration Act of Ontario.
hereinafter called the "Landlord",
OF THE FIRST PART,
and
SAVILLE SYSTEMS CANADA, LTD.
hereinafter called the "Tenant",
OF THE SECOND PART,
Premises
1. WITNESSETH that in consideration of the rents, covenants and agreements
hereinafter reserved and contained on the part of the Tenant to be paid,
observed and performed, the Landlord does demise and lease unto the Tenant the
Premises (the "Premises") on the 5th and 6th floor of Building A on the Lands
described in Schedule A hereto annexed, the Premises being shown as outlined in
red on the floor plan hereto annexed as Schedule B and being exclusive of any
part of the exterior face of the building. The usable area of the Premises is
approximately 42,958 square feet and the Rentable Area of the Premises is
approximately 42,958 square feet, each of 5th and 6th floor - approximately
21,479 square feet of Rentable Area
Definitions
2. For the Purposes of this Lease:
(a) "Additional Rent" means all amounts payable by the Tenant under the terms
of this Lease, whether payable to the Landlord or otherwise, over and above
Basic Rent.
(b) "Basic Rent" means those amounts set out as Basic Rent in section 4 of this
Lease. *Building A means the West Tower of 675 Cochrane Drive, Markham,
Ontario
(c) "Landlord's Architect" means a qualified architect, engineer or Ontario
Land Surveyor from time to time chosen by the Landlord. **Lands means the
lands and premises described in Schedule "A" hereto.
(d) "Lease" means this Lease and any alterations from time to time made to this
Lease in accordance with the provisions herein set out.
(e) "Normal Business Hours" means 7:00 a.m. to 7:00 p.m. Monday through Friday
(but excluding Saturdays, Sundays and holidays), as such hours may be
varied by the Landlord from time to time.
(f) See Page 1A
<PAGE>
Page 1A
2. For the purposes of this Lease:
"Building B" means the East Tower of 675 Cochrane Drive, Markham, Ontario.
"Building C" means any building which may be constructed on the Lands which will
form part of the development municipally known as 675 Cochrane Drive, Markham.
"Capital Tax" means the tax or excise imposed upon the Landlord by the
provincial and/or federal government or other applicable taxing authority which
is measured by or based in whole or in part upon the capital employed by the
Landlord as at the date of the substantial completion of construction of
Building A and Building B and the Shared Common Areas and Facilities until
construction of Building C, imputed as if the amount of such tax were that
amount due if such property were the only real property of the Landlord and
includes the amount of any capital or place of business tax levied by the
provincial and/or federal government or other applicable taxing authority
against the Landlord with respect to such property. Once Building C and any
additional Shared Common Areas and Facilities which are constructed in respect
thereof have been substantially completed, Capital Tax shall be deemed to
include the tax or excise imposed upon the Landlord in respect of the Complex.
"Common Areas and Facilities" means the areas, facilities, utilities,
improvements, equipment and installations in the Complex or serving the Complex
that from time to time are not intended to be leased to tenants of the Complex
and that are provided for the general non-exclusive benefit of the tenants of
Building A only and their employees, customers and other invitees.
"Complex" means Building A, Building B, Building C (once constructed), the
Shared Common Areas and Facilities, the Common Areas and Facilities and all
other common areas and facilities, and includes the parking to be made available
to the Tenant hereunder and access to the Complex, said parking and access
located on the Lands.
"Complex Proportionate Share" means that fraction having as its numerator the
Rentable Area of the Premises, and having as its denominator the Rentable Area
of all premises (excluding storage and parking areas) leased or set aside from
time to time by the Landlord for leasing in the Complex, such areas being as
certified from time to time by the Landlord's Architect. The aggregate of the
fractional Complex proportionate shares shall total one.
"Operating Costs" means the aggregate of all costs, expenses or amounts
incurred, whether by the Landlord or others on behalf of the Landlord, in
connection with the complete maintenance, operation, management and repair of
the Complex and all components thereof and all improvements of the Landlord
thereon or therein including, without limiting the foregoing and without
duplication: the costs of maintaining, operating and repairing any heating,
ventilating and air conditioning or other equipment and fuel, energy and other
costs of providing heat, ventilating and air conditioning; depreciation and
interest expense on capital items which by their nature are intended to reduce
the Operating Costs of Building A or the Complex in accordance with reasonable
return on investment criteria, including without limiting the generality of the
foregoing, all expenditures made by the Landlord in an effort to promote energy
conservation as set out in Section 8(x) of this Lease; the cost of operating and
maintaining elevators; the cost of maintaining, repairing and replacing exterior
glass walls; the cost of providing hot and cold water; interest and depreciation
(in accordance with generally accepted accounting principles from time to time)
of all capital items, security equipment and maintenance equipment which by its
nature requires periodic replacement including all heating, ventilating and air
conditioning equipment, provided that the cost of repairs to the roof membrane
shall be an Operating Cost but if the cost is for replacement only interest and
depreciation charged in accordance with generally accepted accounting principals
shall be included as an Operating Cost: the cost of any capital item (including
without limitation for the roof membrane) under $10,000 in the Year incurred
shall not be depreciated but shall be an Operating Cost in such Year; the cost
of electricity including lighting not otherwise charged to tenants; the cost of
snow, ice and refuse clearance and removal; landscape maintenance and window
cleaning; Capital Tax; the cost of all insurance including "all risks"
(including flood and earthquake), boiler and machinery, liability and other
casualties and loss of rental income insurance; accounting costs incurred in
connection with preparation of statements and opinions for tenants; the cost of
providing security services; the cost of consultants, retained with intent of
saving or reducing costs; the cost of all rental equipment and building supplies
used by the Landlord for all such operations and maintenance or any other
purpose; the cost of providing and operating the management office in Building A
or if there is only one management office for the Complex, such management
office if situate in Building B or Building C; amounts paid on service
contracts; the amount of all salaries, wages and benefits paid to or on behalf
of persons engaged in cleaning, supervision, maintenance, operation, direct
costs of on site management, and repair, any business taxes which may be imposed
on the Landlord by reason of its operation of the Complex or parts thereof; and
management fees or charges of managing agents if the Landlord does not undertake
management itself.
In computing Operating Costs there shall be credited as a deduction the amounts
of proceeds of insurance, relating to insured damage and other damage actually
recovered by the Landlord (or if the Landlord is deemed to self-insure, a
corresponding application of reserves) applicable to the damage.
Any report of the Landlord's auditor or other licensed public accountant,
appointed by the Landlord for the purpose shall be conclusive as to the amount
of Operating Cost for any period to which such report relates.
If less than ninety-seven (97%) percent of Building A is occupied by tenants,
then the amount of such Operating Costs shall be deemed to be increased to an
amount equal to the amount of Operating Costs which would have been incurred had
ninety-seven (97%) per cent of Building A been occupied by tenants throughout
the entire period for which Operating Costs are being calculated.
Operating Costs shall not include interest on Landlord's debt or capital
retirement of debt or amounts directly chargeable to capital account, save as
otherwise herein provided for.
The Tenant shall not be responsible to pay for Operating Costs attributable
solely to (i) Building B and/or (once constructed), Building C and/or (ii) any
common areas and facilities for the exclusive use of the tenants of Buildings B
and/or C.
In calculating Operating Costs the Landlord will act reasonably in determining
the attribution of Operating Costs amongst the components of the Complex.
"Proportionate Share" means that fraction having as its numerator the Rentable
Area of the Premises, and having as its denominator the Rentable Area of
Building A, such areas as being as certified from time to time by the Landlord's
Architect. The aggregate of the fractional proportionate shares with respect to
Rentable Area of Building A shall total one.
"Rentable Area of Building A" means the total of the Rentable Areas of all
premises, leased or set aside from time to time by the Landlord for leasing in
Building A, (excluding storage and parking areas), such premises being measured
in accordance with the provisions of the leases for such premises for Building
A, and for vacant premises, being measured in accordance with BOMA, (excluding
storage and parking areas) being as certified from time to time by the
Landlord's Architect.
"Shared Common Areas and Facilities" means the areas, facilities, utilities,
improvements, equipment, installations, parking facilities and landscaped areas
in the Complex or serving the Complex that from time to time are not intended to
be leased to all tenants of the Complex and that are provided for the general
non-exclusive benefit of all tenants of the Complex and/or their employees,
customers and other invitees in common with others entitled to use them.
Additional areas, facilities, utilities, improvements, equipment and
installations which serve the Complex for the general non-exclusive benefit of
all tenants of the Complex and/or their employees, customers and other invitees
in common with others entitled to use them may be constructed in conjunction
with the construction of Building C.
<PAGE>
(g) omitted
(h) omitted
(i) omitted
(j) "Rentable Area of the Premises" means the area of the Premises expressed in
square feet or square meters in a certificate prepared by the Landlord's
Architect, which certificate shall be conclusive and binding subject as
herein provided and shall be delivered to the Tenant on or after the
commencement of the Term, at which time any adjustment to the area that is
required thereby shall be made.
The Rentable Area of the Premises shall be measured and determined in
accordance with B.O.
(k) "Basic Rent" the basic rent herein set forth was calculated on basis of the
rentable area as defined in paragraph 2(j) (see Page 2A)
(l) "Rules and Regulations" means those Rules and Regulations attached to this
Lease, and any additional Rules and Regulations made from time to time in
accordance with section 8(f) of this Lease.
(m) "Taxes" means all taxes, rates, duties, levies and assessments whatsoever
whether municipal, parliamentary or otherwise, levied, charged or assessed
upon the lands & building or upon any part or parts thereof and all
improvements, now or hereafter erected or placed on the Lands, or charged
against the Landlord on account thereof, including local improvement
charges but excluding: the amount by which separate school taxes (if any
should be payable) exceed the amount which would have been payable for
school taxes if no assessment for separate school taxes had been made but
an assessment for public school taxes had been made and any taxes such as
corporate, income, profit and excess profit taxes assessed upon the income
of the Landlord. In addition to the foregoing, Taxes shall include any and
all taxes, charges, levies or assessment which may in the future be levied,
charged or assessed in lieu thereof or in addition thereto. Taxes shall
also include all costs and expenses incurred by the Landlord in obtaining
or attempting to obtain a reduction or prevent an increase in the amount of
such Taxes. In calculating Taxes, if less than ninety-seven (97%) per cent
of the Building is occupied by tenants then the amount of such taxes shall
be deemed to be increased to an amount equal to the amount of Taxes (which
would have been incurred had ninety-seven (97%) per cent of the Building
been occupied by tenants throughout the entire period for which Taxes are
being calculated).
<PAGE>
Page 2A
The Basic Rent for the Term shall be based upon the gross rentable square
footage of 21,479 sq.ft. from the 1st day of July, 1996 to the 30th day of
November, 1997, and, based upon the gross rentable square footage of 42,958
sq.ft. for the period from the 1st day of December, 1997 to the 30th day of
June, 2005, and the per square foot rate of Basic Rent is set out below for the
respective periods:
July 1, 1996 - June 30, 1998 = $9.60 per sq.ft. Rentable Area per annum
July 1, 1998 - June 30, 2001 = $10.60 per sq.ft. Rentable Area ' per annum
July 1, 2001 - June 30, 2005 = $11.60 per sq.ft. Rentable Area per annum
The above is subject to adjustment in the event that the provisions of
paragraphs 5(g)(iii) or (iv) or 9(b) of Schedule "C" are applicable.
<PAGE>
(n) "Term" means that Term set out in section 3 of this Lease or as such Term
may be altered, extended or reduced in accordance with the provisions of
this Lease.
(o) "Year" means each calendar year (or, at Landlord's option, Landlord's
fiscal year where such reference is related to calculation of Additional
Rent) the whole or part of which is included within the Term.
Term
3. To have and to hold the Premises for and during the Term (see Page 3A)
Basic Rent
4. Yielding and paying therefor yearly and every year during the Term unto the
Landlord as Basic Rent for the Premises without set-offs, deductions or
defalcation whatsoever, the sum of (See Page 3B)
If the term commences on any day other than the first or ends on any day
other than the last day of a month, Basic Rent and Additional Rent for the
fractions of a month at the commencement and at the end of the Term shall
be adjusted pro rata on a per diem basis.
The Landlord acknowledges receipt of $175,251.40 (includes G.S.T.) to be
applied as rent for first and last months Basic and the Tenant is hereby
directed to make all payments to ORFUS INVESTMENTS. Additional Rent
(applied on account)
Taxes
5.
(a) See Page 3C
(b) If the Taxes are increased by reason of any installations made in or upon
or any alterations made in or to the Premises by the Tenant or by the
Landlord on behalf of the Tenant, the Tenant shall pay the amount of such
increase forthwith to the Landlord upon receipt of notice thereof. The
Tenant shall also pay every tax and license fee in respect of any business
carried on upon the Premises.
(c) The Landlord shall be entitled at any time or times in any Year, upon at
least fifteen (15) days' notice to the Tenant to require the Tenant to pay
to the Landlord monthly, on the date for payment of monthly rental
instalments, as Additional Rent, an amount equal to one ninth (1/9) of the
amount estimated by the Landlord to be the amount of the Taxes for such
Year. The Landlord shall be entitled subsequently during such Year, upon at
least fifteen (15) days notice to the Tenant, to revise its estimate of the
amount of Tax Increase and the said monthly instalment shall be revised
accordingly. All amounts received under this provision in any Year on
account of the estimated amount of the Taxes shall be applied in reduction
of the actual amount of the Taxes for such Year. If the amount received is
less than the actual Taxes, the Tenant shall pay any deficiency to the
Landlord as additional rent within fifteen (15) days following receipt by
the Tenant of notice of the amount of such deficiency. If the amount
received is greater than the actual Taxes, the Landlord shall either refund
the excess to the Tenant as soon as possible after the end of the Year in
respect of which such payments were made, or the Landlord's option shall
apply such excess against any amounts owing or becoming due to the Landlord
by the Tenant.
(d) If the Term of this Lease commences or ends on any day other than the first
or last day, respectively, of a Year, the Tenant shall be liable only for
the portion of the Taxes for such Year as falls with the Term, determined
on a per diem basis.
(e) The Taxes and all other payments referred to in subparagraph 5(b) above
will be paid and discharged by the Tenant as soon as they become due and
payable, and the Tenant will, upon the written request of the Landlord,
promptly deliver to the Landlord receipts evidencing such payment where
applicable.
Operating Costs
6. (a) The Tenant covenants to pay the Tenant's Proportionate Share of the
Operating Costs for the Year during each Year of the Term, to the Landlord
as Additional Rent within fifteen (15) days following receipt by the Tenant
of written notice of the amount of such Operating Costs for such Year,
notwithstanding that the Year in question or the Term may have ended. Any
amounts payable pursuant to this subparagraph (a) shall be determined and
certified by the Landlord following the end of the Year for which such
amounts are payable. If only part of a Year is included within the Term,
any such amount payable shall be pro-rated accordingly and shall be paid on
the last day of the Term. Any balance remaining unpaid or any excess paid
shall, notwithstanding such termination, be adjusted between the Landlord
and Tenant within a reasonable period thereafter. (See Page 3C)
(b) The Landlord shall be entitled at any time or times in any Year, upon at
least fifteen (15) days' notice to the Tenant to require the Tenant to pay
to the Landlord monthly, on the date for payment of monthly rental
instalments, as Additional Rent, an amount equal to one-twelfth (1/12) of
the amount estimated by the Landlord to be the amount of the Operating
Costs for such Year. The Landlord shall be entitled subsequently during
such Year, upon at least fifteen (15) days' notice to the Tenant, to revise
its estimate of the amount of the Operating Costs and the said monthly
instalment shall be revised accordingly. All amounts received under this
provision in any Year on account of the estimated amount of Operating Costs
shall be applied in reduction of the actual amount of Operating Costs for
such Year, the Tenant shall pay any deficiency to the Landlord as
Additional Rent within fifteen (15) days following receipt by the Tenant of
notice of the amount of such deficiency. If the amount received is greater
than the actual Operating Costs, the Landlord shall either refund the
excess to the Tenant as soon as possible after the end of the Year in
respect of which such payments were made, or at the Landlord's option,
shall apply such excess against any amounts owing or becoming due to the
Landlord by the Tenant.
<PAGE>
Page 3A
Term
3. TO HAVE AND TO HOLD that part of the Premises consisting of the sixth (6)
floor of Building A for and during the term of nine (9) years commencing on the
1st day of July, 1996 and ending on the 30th day of June, 2005.
TO HAVE AND TO HOLD that part of the Premises constituting the fifth (5) floor
of Building A for and during the term of seven (7) years and seven (7) months
commencing on the 1st day of December, 1997 and ending on the 30th day of June,
2005, subject to the provisions of paragraph 9(b) of Schedule "C".
<PAGE>
Page 3B
4. The following paragraph sets out the Basic Rent for the Premises.
(a) yielding and paying as Basic Rent during the period commencing the 1st day
of July, 1996 to and including the 30th day of November, 1997, the sum of
$206,198.40 per annum, in lawful money of Canada, to be payable in equal
consecutive monthly instalments of $17,183.20 each, each due in advance on the
1st day of each and every month during said period, the first such payment due
on the 1st day of July, 1996;
(b) and yielding and paying as Basic Rent during the period commencing the 1st
day of December, 1997 to and including the 30th day of June, 1998, the sum of
$412,396.80 per annum, in lawful money of Canada, to be payable in equal
consecutive monthly instalments of $34,366.40 each, each due in advance on the
1st day of each and every month during said period;
(c) and yielding and paying as Basic Rent for the period commencing the 1st day
of July 1998 to and including the 30th day of June, 2001 the sum of $455,354.80
per annum, in lawful money of Canada, to be payable in equal consecutive monthly
instalments of $37,946.23 each, each due in advance on the 1st day of each and
every month during said period;
(d) and yielding and. paying as Basic Rent for the period commencing on the 1st
day of July, 2001 to and including the 30th day of June, 2005, the sum of
$498,312.80 per annum, in lawful money of Canada, to be payable in equal
consecutive monthly instalments of $41,526.07 each, each due in advance on the
1st day of each and every month during said period.
The above Basic Rent is subject to adjustment in the event that the provisions
of paragraph 5(g)(iii) or (iv) or 9(b) of Schedule "C" are applicable.
<PAGE>
Page 3C
Add to Section 5 re: Taxes
5. (a) (i) In the event that Taxes are separately assessed to the Tenant, the
Tenant covenants to pay such Taxes as separately assessed together with its
Proportionate Share of the Taxes applicable to the Common Areas and Facilities
and shall also pay its Complex Proportionate Share of the Taxes applicable to
the Shared Common Areas and Facilities, all without duplication, during each
Year of the Term, to the Landlord as Additional Rent as hereinafter provided.
(ii) In the event that the Tenant is not separately assessed for Taxes, then the
Tenant covenants to pay its Proportionate Share of the Taxes applicable to
Building A and to the Common Areas and Facilities and covenants to pay the
Complex Proportionate Share of the Taxes applicable to the Shared Common Areas
and Facilities, during each Year of the Term, to the Landlord as Additional Rent
as hereinafter provided.
Add to Section 5 re: Taxes
(f) In the event that the Tenant is not separately assessed for Taxes and in the
event that different components of Building A are assessed differently, then the
Tenant may not be paying the Proportionate Share of the Taxes applicable to
Building A but, the Landlord, acting reasonably shall equitably apportion the
Taxes assessed with respect to the different components of Building A as they
are assessed differently, to the Tenant, and the payment of the same by the
Tenant shall be governed by the provisions of Section 5, mutatis mutandis.
Add to Section 6 re: Operating Costs
It is understood and agreed that the Tenant will pay the Tenant's Proportionate
Share of the Operating Costs attributable to Building A and the Common Areas and
Facilities and to pay the Tenant's Complex Proportionate Share of the Operating
Costs attributable to the Shared Common Areas and Facilities, or attributable to
Building A together with another component of the Complex, and Section 6 shall
be read accordingly.
Add as Section 6(c) the following:
(c) Subject to paragraph 2(a) of Schedule "C", in the event that the Landlord
does not contract out the management of the Complex or Building A and undertakes
management itself, the Tenant shall pay as Additional Rent to the Landlord
during such Year or part thereof and during each such Year or part thereof
during the Term, a management fee to the Landlord equal to the sum of four per
cent (4%) per annum of all Basic Rent (which includes the commission component
and the Tenant Inducement component), and all Additional Rent during such Year
or part thereof and during each such Year or part thereof during the Term. The
Landlord shall be entitled at any time or times in any Year, upon at least
fifteen (15) days' notice to the Tenant to require the Tenant to pay to the
Landlord monthly, on the date for payment of monthly rental instalments, as
Additional Rent, an amount equal to one-twelfth (1/12th) of the amount estimated
by the Landlord to be the amount payable for the said management fee for such
Year. All amounts received under this provision in any Year on account of the
estimated amount of the said management fee shall be applied in reduction of the
actual amount of the said management fee for such Year, the Tenant shall pay any
deficiency to the Landlord as Additional Rent within fifteen (15) days following
receipt by the Tenant of notice of the amount of such deficiency. If the amount
received is greater than the actual management fee for such Year, the Landlord
shall either refund the excess to the Tenant as soon as possible after the end
of the Year in respect of which such payments were made, or at the Landlord's
option shall apply such excess against any amounts owing or Becoming due to the
Landlord by the Tenant.
<PAGE>
Page 4A
Notwithstanding the foregoing, structural repairs for which the Landlord is
responsible shall not include repair and replacement of the roof membrane which
shall be included in Operating Costs as described in the definition thereof and
shall not include the repair and replacement of glass walls which shall be
included in Operating Costs.
<PAGE>
Recovery of Adjustments
7. The Landlord (in addition to any other right or remedy of the Landlord)
shall have the same rights and remedies in the event of the default by the
Tenant in payment of any amounts payable pursuant to paragraph 5 and 6 as
the Landlord would have in the case of default in payment of rent.
Tenant's Covenants:
8. The Tenant covenants with the Landlord:
(a) to pay Basic Rent and Additional Rent payable by the Tenant to the Landlord
under this lease
Utility Charges Bulbs, etc. & Meters
(b) (i) and to pay all charges for telephone, electric current and all other
utilities supplied to or used in connection with the Premises and the total
cost of any replacement of electric bulbs, tubes, starters and ballasts in
the Premises. If there are no separate meters for measuring the consumption
of such utilities, the Tenant shall pay to the Landlord, in advance by
monthly instalments as Additional Rent, such amount as may be reasonably
estimated by the Landlord from time to time as the cost of such utilities
for the Premises. In the event of any dispute between the Landlord and the
Tenant as to the amount of such utility costs, the opinion of the
Landlord's Architect shall be final and binding on the Landlord and the
Tenant. The Tenant shall advise the Landlord forthwith of any
installations, appliances or business machines used by the Tenant and
consuming or likely to consume large amounts of electricity or other
utilities and further on request shall properly provide the Landlord with a
list of all installations, appliances and business machines used in the
Premises, and the Landlord shall have the right to require the Tenant to
install a separate meter at the Tenant's expense.
(ii) The Tenant covenants to pay for the cost of any metering which may be
requested by the Tenant to be installed by the Landlord in the Building for
the purpose of determining any utility (including electricity and water)
consumed in the Premises or which may be required by the Landlord to
measure excess usage of electricity or water.
(iii)The Landlord shall have the exclusive right to attend to any replacement
of electric light bulbs, tubes and ballasts in the Premises throughout the
Term and any renewal thereof. The Landlord may adopt a system of relamping
and reballasting periodically on a group basis in accordance with good
practice.
Maintain and Repair
(c) to repair, maintain and keep the Premises in good and substantial repair as
a prudent owner would do reasonable wear and tear and damage by fire and
any other peril against which the Landlord is required under this lease to
be insured, and structural repairs only excepted, and that the Landlord may
enter and view state of repair, and that the Tenant will repair in
accordance with notice in writing, reasonable wear and tear and damage by
fire and any other insured peril, and structural repairs only excepted; and
that the Tenant will leave the Premises in good repair, reasonable wear and
tear and damage by fire and any other insured peril, and structural repairs
only excepted; provided that if the Tenant neglects to so maintain or to
make such repairs promptly after notice, the Landlord may, at its option,
do such maintenance or make such repairs at the expense of the Tenant, and
in any and every such case the Tenant covenants with the Landlord to pay to
the Landlord forthwith as Additional Rent all sums which the Landlord may
have expended in doing such maintenance and making such repairs; provided
further that the doing of such maintenance or the making of any repairs by
the Landlord shall not relieve the Tenant from the obligation to maintain
and repair,
(See Page 4A)
Repair Where Tenant at Fault
(d) if the Building, including the Premises, the elevators, boilers, engines,
pipes and other apparatus (or any of them) used for the purposes of
heating, ventilating or air-conditioning the Building or operating the
elevators, or if the water pipes, drainage pipes, electric lighting or
other equipment of the Building or the roof or outside walls of the
Building get out of repair or become damaged or destroyed through the
wilful act, negligence, carelessness or misuse of the Tenant, its servants,
agents, employees, or anyone permitted by the Tenant to be in the Building,
or through it or them in any way stopping up or injuring the heating,
ventilating or air-conditioning apparatus, elevators, water pipes, drainage
pipes, or other equipment or part of the Building, the expense of the
necessary repairs, replacements or alterations, shall be borne by the
Tenant who shall pay the same to the Landlord forthwith upon demand.
Assigning or Sub-Letting
(e) not to assign this Lease or sublet or franchise, license, grant concessions
in, or otherwise part with or share possession of the Premises, or any part
thereof, without the prior written consent of the Landlord; at the time the
Tenant requests such consent the Tenant shall deliver to the Landlord such
information in writing (the "required information") as the Landlord may
reasonably require, including a copy of the proposed offer or agreement, if
any, to assign or sublet or otherwise, the name, address, nature of
business and evidence as to the financial strength of the proposed assignee
or sub-tenant; upon receipt of such request and all required information,
the Landlord shall have the right, exercisable within fourteen (14) days
after such receipt, to terminate this Lease if the request relates to all
of the Premises or, if the request relates to a portion of the Premises
only, the Landlord shall have the right to terminate this Lease with
respect to such portion and the rent payable by the Tenant under this Lease
shall abate in the proportion that the area of the portion of the Premises
for which this Lease is terminated bears to the area of the Premises. If
the Landlord exercises such right, the Tenant shall surrender possession of
the Premises or such portion thereof, as the case may be, not less than
sixty (60) days and not more than ninety (90) days following the Landlord's
notice of exercise of its right hereunder in accordance with all the
provisions of this Lease relating to the surrender. If the Landlord does
not exercise such right, then the Landlord's prior written consent shall
not be unreasonably delayed or withheld. In no event shall any assignment
or subletting to which the Landlord has consented release the Tenant from
its obligations fully to perform all the terms, conditions and covenants of
this Lease. The Tenant shall pay on demand the Landlord's reasonable costs
incurred in connection with the Tenant's request for such consent. The
Landlord's consent may be conditional upon the subtenant or assignee
entering into a covenant with the Landlord in form satisfactory to the
Landlord to observe and perform all tenant's covenants in the Lease. If the
Tenant is a private corporation and any part or all of the corporate shares
shall be transferred by sale, assignment, bequest, inheritance, operation
of law or other dispositions or dispositions so as to result in a change in
the control of the corporation, such change of control shall be considered
an assignment of this Lease and shall be subject to the aforesaid
provisions; the Tenant shall make available to the Landlord upon its
request for inspection and copying, all books and records of the Tenant,
any assignee or subtenant and their respective shareholders which, alone or
with other data, may show the applicability or inapplicability of this
clause.
The foregoing is subject to the provisions of paragraph 4 and 19 of Schedule
"C".
The Tenant shall not advertise or allow the Premises or a portion thereof to be
advertised as being available for assignment, sublease or otherwise without the
prior written approval of the Landlord to the form and content of such
advertisement, which approval shall not be unreasonably withheld, provided that
no such advertising shall contain any reference to the rental or the rental rate
of the Premises;
Rules and Regulations
f) that the Tenant and its employees and all persons visiting or doing
business with them on the Premises shall be bound by and shall observe, and
perform the Rules and Regulations and any further and other reasonable
Rules and Regulations made hereafter by the Landlord of which notice in
writing shall be given to the Tenant and all such Rules and Regulations
shall be deemed to be incorporated into and form part of this Lease;
Subject to paragraph 4 and 19 of Schedule "C"
Use of Premises
g) not to use the premises nor allow the Premises to be used a for any purpose
other than an office; and that if the costs of insurance on the Building
shall be increased by reason of the use made of the Premises or by reason
of anything done or omitted or permitted by the Tenant or by anyone
permitted by the Tenant to be upon the Premises, the Tenant shall pay to
the Landlord on demand as Additional Rent the amount of such increase; and
if any insurance policy upon the Building shall be cancelled or be under
notice of possible cancellation by the insurer by reason of the use or
occupation of the Premises or any part thereof by the Tenant or any
assignee or subtenant or by anyone permitted by the Tenant to be upon the
Premises, the Landlord may at its option terminate this Lease and thereupon
rent and any other payments for which the Tenant is liable under this Lease
shall be apportioned and paid in full to the later of the date of such
termination or the date on which actual possession is given up or taken,
and the Tenant shall immediately deliver up possession of the Premises to
the Landlord and the Landlord may re-enter and take possession of same;
Observance of Law
(h) in its use and occupation of the Premises, not to violate any law or
ordinance or any order, rule, regulation or requirement of any federal,
provincial or municipal government and any appropriate department,
commission, board or officer thereof, and to comply promptly and at the
Tenant's sole cost with all of the foregoing;
Waste and Nuisance
(i) not to do or suffer any waste, damage, disfiguration or injury to the
Premises or the fixtures and equipment thereof or permit or suffer any
overloading of the floors thereof; and not to use or permit to be used any
part of the Premises for any dangerous, noxious or offensive trade or
business and not to cause or maintain any nuisance in, at or on the
Premises or cause any annoyance, nuisance or disturbance to the occupiers
or owners of any adjoining lands and/or premises;
Entry by Landlord
(j) to permit the Landlord and its servants or agents to enter upon the
Premises at any time and from time to time for the purpose of inspecting
and making repairs, alterations or improvements to the Premises or the
Building, and the Tenant shall not be entitled to any compensation for any
inconvenience, nuisance or discomfort occasioned thereby;
Indemnity
(k) to promptly indemnify and save harmless the Landlord from any and all
liabilities, damages, costs, claims, suits or actions arising out of: any
breach, violation or non-observance by the Tenant of any of its covenants
and obligations under the Lease; any damage to property while said property
shall be in or about the Premises including the systems, furnishings and
amenities thereof, as a result of the wilful or negligent act or omission
of the Tenant, its invitees, licensees, agents, servants or employees; and
any injury to any licensee, invitee, agent, servant or employee of the
Tenant, including death resulting at any time therefrom, occurring on or
about the Premises or the Building; and this indemnity shall survive the
expiry or earlier termination of this Lease, in respect of any of the
foregoing circumstances during the Term;
Exhibiting Premises
(l) to permit the Landlord or its agents to exhibit the Premises to prospective
tenants during the last six (6) months of the Term or any renewal thereof;
Alterations
(m) that the Tenant will not, without the prior written consent of the
Landlord, make or erect in or to the Premises any installations,
alterations, additions, partitions, repairs or improvements, or do anything
which might affect the proper operation of the electrical, lighting,
heating, ventilating, air-conditioning, sprinkler, fire protection or other
systems; the Tenant's request for consent shall be in writing and
accompanied by an adequate description of the contemplated work, and where
appropriate, working drawings and specifications therefor; the Landlord's
costs of having its architects, engineers or others examine such drawings
and specifications shall be payable by the Tenant upon demand as Additional
Rent; the Landlord may require that any or all work to be done hereunder be
done by the Landlord's contractors or workmen or by contractors or workmen
engaged by the Tenant but first approved by the Landlord and shall be
performed in subject to inspection by and the reasonable supervision of the
Landlord and shall be performed in accordance with all laws and any
reasonable conditions (including a reasonable supervision fee of the
Landlord to be paid by the Tenant) or regulations imposed by the Landlord
and completed in a good and workmanlike manner and with reasonable
diligence in accordance with the approvals given by the Landlord; any
connections of apparatus to the electrical system, plumbing lines, or
heating, ventilating or air-conditioning systems shall be deemed to be an
alteration within the meaning of this paragraph, the Tenant shall, at its
own cost and before commencement of any work, obtain all necessary building
or other permits and keep same in force and the Tenant shall promptly pay
all charges incurred by it for any work, materials or services and shall
forthwith discharge any liens resulting therefrom; if the Tenant fails to
so discharge any liens, the Landlord may (but shall be under no obligation
to) pay into court the amount required, or otherwise obtain a discharge of
the lien in the name of the Tenant and any amount so paid together with all
costs incurred in respect of such discharge shall be payable by the Tenant
to the Landlord forthwith upon demand plus interest on all such amounts at
the rate hereafter set out in this lease; the Tenant shall not create any
mortgage, conditional sale agreement, or other encumbrance in respect of
its leasehold improvements or trade fixtures nor shall the Tenant lease the
same from any third party, nor permit any such encumbrance to attach to the
Premises or to the Building;
Interior Walls and Exterior Walls
(n) that the Tenant will not deface or mark any part of the Building and will
not permit any hole to be drilled or made or nails, screws, hooks or spikes
to be driven into the exterior or interior walls, doors or floors or stone
or brick work of the Building or any appurtenances thereof without the
prior written consent of the Landlord;
Taxes
(b) subject to any payment referred to in section 5 above required to be made
by the Tenant in respect thereof, to pay or cause to be paid any Taxes, the
payment of which are not the responsibility of the Tenant under this Lease,
Elevator
(c) to furnish, except when repairs are being made, passenger elevator service
during Normal Business Hours and limited elevator service at other times;
operatorless and automatic elevator service if made available shall be
deemed elevator service; and to permit the Tenant and its employees to have
free use of such elevator service in common with others;
Access
(d) to permit the Tenant and its employees and all persons lawfully requiring
communication with them access in common with others of the entrances,
stairways, corridors and halls in the Building leading to the Premises and
to have the use of the same during Normal Business Hours and during Non
Normal Business Hours by the Building Security System;
Washrooms
(e) to permit the Tenant and its employees in common with others entitled
thereto to use the washrooms in the Building which may be designated for
the Premises;
Janitor Services
(f) to cause when reasonably necessary from time to time the floors to be swept
and windows to be cleaned and the desks, tables and other furniture of the
Tenant to be dusted all in keeping with a first-class office building but
with the exception of the obligation to cause such work to be done, the
Landlord shall not be responsible for any act of omission or commission on
the part of the person or persons employed to perform such work; such work
shall be done at the Landlord's direction without interference by the
Tenant, his servants or employees. The Tenant acknowledges that the
Landlord shall be relieved from the foregoing obligations in respect of any
part of the Premises to which access is not granted to the person or
persons employed or retained to do such work.
Fixtures
11. Provided that the Tenant may remove its fixtures and chattels if and only if
all rent and other charges due or to become due are fully paid; provided
further, however, that all leasehold improvements, installations, additions,
partitions and fixtures (other than trade or tenant's fixtures in or upon the
Premises, which terms shall in no case include any heating, ventilating and
air-conditioning equipment or other building services or carpeting) whether
placed there by the Tenant or the Landlord, shall be the Landlord's property
upon the termination of this Lease without compensation therefor to the Tenant
and shall not be removed from the Premises at any time either during or after
the Term. Notwithstanding anything herein contained the Landlord shall be under
no obligation to replace, repair or maintain such leasehold improvements,
installations, additions, partitions and fixtures.
Damage or Destruction
12. (a) If the Premises or any portion thereof are damaged or destroyed by fire
or by other casualty against which the Landlord is required to be insured, rent
shall abate in proportion to the area of that portion of the Premises which, in
the reasonable opinion of the Landlord, is thereby rendered unfit for the
purposes of the Tenant until the Premises are repaired and rebuilt and the
Landlord agrees that it will, with reasonable diligence, repair and rebuild the
Premises. The Landlord's obligation to rebuild and restore the Premises shall
not include the obligation to rebuild, restore, replace or repair any chattel,
fixture, leasehold improvement, installation, addition or partition in respect
of which the Tenant is to maintain insurance under section 8 (u), or any other
thing that is the property of the Tenant ( in this clause collectively called "
Tenant's Improvements"); the Premises shall be deemed restored and rebuilt and
fit for the Tenant's purposes when the Landlord's Architect certifies that they
have been substantially restored and rebuilt to the point where the Tenant could
occupy them for the purpose of rebuilding, restoring, replacing or repairing the
Tenant's Improvements; the issuance of the certificate shall not relieve the
Landlord of its obligation to complete the rebuilding and restoration as
aforesaid, but the Tenant shall forthwith after issuance of the certificate
proceed to rebuild, restore, replace and repair the Tenant's Improvements, and
the provisions of section 8 (m) shall apply to such work, mutatis mutandis; * *
See Page 7A
(b) Notwithstanding section 12 (a), if the Premises or any portion thereof are
damaged or destroyed by any cause whatsoever and cannot in the reasonable
opinion of the Landlord be rebuilt or made fit for the purposes of the
Tenant as aforesaid within ninety (90) days of the damage or destruction,
the Landlord instead of rebuilding or making Premises fit for the Tenant
may, at its option, terminate this lease by giving to the Tenant within
thirty (30) days after such damage or destruction notice of termination and
thereupon rent and any other payments for which the Tenant is liable under
this Lease shall be apportioned and paid to the date of such damage and the
Tenant shall immediately deliver up possession of the Premises to the
Landlord;
(c) Irrespective of whether the Premises or any portion thereof are damaged or
destroyed as aforesaid, in the event that fifty per cent (50%) or more, as
determined by the Landlord, of the Building, is damaged or destroyed by any
cause whatsoever, and if, in the reasonable opinion of the Landlord such
area cannot be rebuilt or made fit for the purpose of the tenants thereof
within one hundred and eighty (180) days of such damage or destruction, the
Landlord may at its option terminate this Lease by giving to the Tenant
within thirty (30) days after such damage notice of termination requiring
vacant possession of the Premises sixty (60) days after delivery of the
notice of termination and thereupon rent and any other payments for which
the Tenant is liable under this Lease shall be apportioned and paid to the
date on which vacant possession is given and the Tenant shall deliver up
possession of the Premises to the Landlord in accordance with such notice
of termination.
Expansion, Alteration
13. The Landlord shall have the right to enter into the Premises and to bring
its workmen and materials thereon to make additions, alterations, improvements,
installations and repairs to the Lands, the Building, and the common areas and
services thereof as such may exist from time to time, including the right to
erect new buildings and facilities. The Landlord may cause such reasonable
obstructions and interference with the use and enjoyment of the Lands, the
Building and the Premises as may be necessary for the purposes aforesaid and may
interrupt or suspend the supply of electricity, water of other utilities or
services when necessary and until the additions, alterations, improvements,
installations or repairs have been completed, and there shall be no abatement in
rent nor shall the Landlord be liable by reason thereof, provided all such work
is done as expeditiously as reasonably possible. The Landlord shall have the
right to use, install, maintain and repair pipes, wires, ducts, shafts or other
installations in, under or through the Premises for or in connection with the
supply of any services to the Premises or any other premises in the Building.
The Landlord further reserves the right to monitor access to any of the parking
areas by means of barriers, control booths or any other method which the
Landlord deems proper. The Landlord reserves the right to change the location,
layout or size of the parking area and to charge for the use of parking spaces,
except as expressly set out in this Lease.
Injuries, Loss and Damage
14. The Landlord shall not be responsible in any way for any injury to any
person (including death) or for any loss of or damage to any property belonging
to the Tenant or to other occupants of the Premises or to their respective
invitees, licensees, agents, servants or other persons from time to time
attending at the Premises while such person or property is in or about the
Lands, the Premises, the Building, or any areaways, parking areas, lawns,
sidewalks, steps, truckways, platforms, corridors, stairways, elevators or
escalators in connection therewith, including without limiting the foregoing,
any loss or damage to any property caused by theft or breakage, or by steam,
water, rain or snow or for any loss or damage caused by or attributable to the
condition or arrangements of any electric or other wiring or for any damage
caused by smoke or anything done or omitted to be done by any other tenant of
premises in the Building or for any other loss whatsoever with respect to the
Premises, goods placed therein or any business carried on therein.
<PAGE>
Page 7A - Add to the end of Section 12(a):
The Tenant shall restore the Premises and reinstate all leasehold improvements
at its own expense; without limiting the generality of the foregoing, the
Landlord shall not be obligated to provide any tenant allowance or tenant
inducement to assist the Tenant in rebuilding, restoring, replacing or repairing
the Tenant's Improvements, regardless of whether or not the Landlord had
originally provided any tenant allowance or tenant inducement in respect
thereof.
<PAGE>
Impossibility Unavoidable Delays
15. Whenever and to the extent the Landlord is unable to fulfil or, shall be
delayed or restricted in the fulfillment of any obligation hereunder by reason
of being unable to obtain the material, goods, equipment, service, utility or
labour required to enable it to fulfil such obligation or by reason of any
statute, law, regulation, by-law or order or by reason of any other cause beyond
its reasonable control, whether of the same nature as the foregoing or not the
Landlord shall be relieved from the fulfilment of such obligation and the Tenant
shall not be entitled to compensation for any inconvenience, nuisance or
discomfort thereby occasioned. There shall be no deduction from the rent or
other moneys payable hereunder by reason of any such failure or cause.
Re-entry
16. PROVISO for re-entry by the said Landlord on non-payment of rent or
non-performance of covenants.
Bankruptcy, etc.
17. Provided further that in case without the written consent of the Landlord,
the Premises shall be used by any other person than the Tenant or for any other
purpose than that for which the same were let or in case the Premises shall be
vacated or remain unoccupied for fifteen (15) days, or in case the Term or any
of the goods and chattels of the Tenant shall be at any time seized in execution
or attachment by any creditor of the Tenant or the Tenant shall make any
assignment for the benefit of the creditors or any bulk sale or become bankrupt
or insolvent or take the benefit of any Act now or hereafter in force for
bankrupt or insolvent debtors, or, if the Tenant is a corporation and any order
shall be made for the winding-up of the Tenant, or other termination of the
corporate existence of the Tenant, then in any such case this Lease shall, at
the option of the Landlord, cease and determine and the Term shall immediately
become forfeited and void and the then current month's rent and the next ensuing
three (3) month's rent (including in both cases all other amounts payable as
Additional Rent) shall immediately become due and be paid and the Landlord
without prejudice to any claim for damages for any antecedent breach of
covenant, may re-enter and take possession of the Premises as though the Tenant
or other occupant or occupants of the Premises was or were holding over after
the expiration of the Term without any right whatever.
Distress
18. The Tenant waives and renounces the benefit of any present or future statute
taking away or limiting the Landlord's right of distress, and covenants and
agrees that notwithstanding any such statute none of the goods and chattels of
the Tenant on the Premises at any time during the Term shall be exempt from levy
by distress for rent in arrears.
Entry as Agent
19. omitted
Right of Termination
20. omitted
Non-waiver
21. No condoning, excusing or overlooking by the Landlord or any default, breach
or non-observance by the Tenant at any time or times in respect of any covenant,
proviso or condition herein contained shall operate as a waiver of the
Landlord's rights hereunder in respect of any continuing or subsequent default,
breach or non-observance, or so as to defeat or affect in any way the rights of
the Landlord herein in respect of any such continuing or subsequent default or
breach, and no waiver shall be inferred from or implied by anything done or
omitted by the Landlord save only express waiver in writing. All rights and
remedies of the Landlord in this Lease contained shall be cumulative and not
alternative.
Overholding
22. If the Tenant shall continue to occupy all or part of the Premises after the
expiration of this Lease with the consent of the Landlord, and without any
further written agreement, the Tenant shall be a monthly tenant at the basic
monthly rental payable during the last year of this Lease and otherwise on the
terms and condition herein set out except as to length of tenancy.
Landlord Performing Tenant's Covenants
23. If the Tenant fails to perform or cause to be performed any of the covenants
or obligations of the Tenant herein, the Landlord shall have the right (but
shall not be obligated) to perform or cause to be performed and to do or cause
or be done such things as may be necessary or incidental thereto (including
without limiting the foregoing, the right to make repairs, installations,
erections and expend moneys) and all payments, expenses, charges, fees and
disbursements incurred or paid by or on behalf of the Landlord in respect
thereof shall be paid by the Tenant to the Landlord forthwith upon demand.
Payments to Landlord
24. All payments to be made by the Tenant under this Lease shall be made, at
such place or places as the Landlord may designate in writing, and to the
Landlord or to such agent of the Landlord as the Landlord shall from time to
time direct. The Tenant shall pay the Landlord interest on all overdue rentals
including Basic Rent and Additional Rent or other amounts, all such interest to
be calculated from the date upon which the amount is first due or demanded until
actual payment thereof and at a rate of five (5%) per cent per annum in excess
of the minimum lending rate to prime commercial borrowers from time to time
current at chartered banks in the municipality in which the building is situate.
Recovery of Adjustments
25. The Landlord shall have (in addition to any other right or remedy of the
Landlord) the same rights and remedies in the event of default by the Tenant in
payment of any amount payable by the Tenant hereunder, as the Landlord would
have in the case of default in payment of rent.
Registration & Planning Act
26. (a) The Tenant covenants and agrees with the Landlord that the Tenant will
not register or record this Lease against the title to the Lands, except by way
of notice.
(b) Where applicable, this Lease shall be subject to the condition that it is
effective only if The Planning Act is complied with. Pending such compliance the
Term, and any renewal periods, shall be deemed to be for a total period of one
(1) day less than the maximum lease term permitted by law without such
compliance.
Mortgages
27. * At the option of the Landlord, this Lease shall be subject and subordinate
to any and all mortgages, charges and deeds of trust, which may now or at any
time hereafter affect the Premises in whole or in part, or the Lands, Building
whether or not any such mortgage, charge or deed of trust affects only the
Premises or the Lands, the building or affects other premises as well. On
request at any time and from time to time of the Landlord or of the mortgagee,
chargee or trustee under any such mortgage, charge or deed of trust, the Tenant
shall promptly, at no cost to the Landlord or mortgagee, chargee or trustee:
*Subject to Section 25 of Schedule "C"
a) attorn to such mortgagee, chargee or trustee and become its tenant of the
Premises or the Tenant of the Premises of any purchaser from such mortgagee,
chargee or trustee in the event of an exercise of any permitted power of sale
contained in any such mortgage, charge or deed of trust for the then unexpired
residue of the Term on the terms herein contained, and/or
b) postpone and subordinate this Lease to such mortgage, charge or deed of trust
to the intent that this Lease and all right, title and interest of the Tenant in
the Premises shall be subject to the rights of such mortgagee, chargee or
trustee as fully as if such mortgage, charge or deed of trust had been executed
and registered and the money thereby secured had been advanced before the
execution of this Lease (and notwithstanding any authority or consent of such
mortgagee, or trustee, express or implied, to the making of this Lease).
Any such attornment or postponement and subordination shall extend to all
renewals, modifications, consolidations, replacements and extension of any such
mortgage, charge or deed of trust and every instrument supplemental or ancillary
thereto or in implementation thereof. The Tenant shall forthwith execute any
instruments or attornment or postponement and subordination which may be so
requested to give effect to this section.
Assignment Landlord
28. If the Landlord sells or leases the Lands, the Building or any part thereof,
or assigns this Lease, and to the extent that the purchaser, lessee or assignee
is responsible for compliance with the covenants and obligations of the Landlord
hereunder, the Landlord without further written agreement will be discharged and
relieved of liability under the said covenants and obligations.
Captions
29. The captions appearing in the margin of 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.
Guarantee (if applicable)
30. omitted
Notice
31. (a) Any notice, request, statement or other writing pursuant to this Lease
shall be deemed to have been given if Notice sent by registered prepaid post as
follows:
TO THE LANDLORD
8 Vinci Crescent
Downsview, Ontario M3H 2Y7
or such other address as the Landlord shall notify the Tenant in writing any
time or from time to time;
TO THE TENANT - at the Premises
and such notice shall be deemed to have been received by the Landlord, Tenant as
the case may be, on the third business day after the date on which it shall have
been so mailed (in the event that there is an interruption of postal service,
the aforesaid period shall be extended for a period equivalent to the period of
interruption).
(b) Notice shall also be sufficiently given if and when the same shall be
delivered, in the case of notice to Landlord, to an executive officer of the
Landlord, and in the case of notice to the Tenant to him personally or to an
executive officer of the Tenant if the Tenant is a corporation. Such notice, if
delivered, shall be conclusively deemed to have been given and received at the
time of such delivery. If in this Lease two or more persons are named as Tenant,
such notice shall also be sufficiently given if and when the same shall be
delivered personally to any one of such persons. Provided that either party may,
by notice to the other, from time to time designate another address in Canada to
which notices mailed more than ten (10) days thereafter shall be addressed.
Effect of Lease
32. This indenture and everything herein contained shall extend to and bind and
may be taken advantage of by the respective heirs, executors, administrators,
successors and assigns, as the case may be, of each and every of the parties
hereto, subject to the granting of consent by the Landlord as provided herein to
any assignment or sublease, and where there is more than one Tenant or there is
a female party or a corporation, the provisions hereof shall be read with all
grammatical changes thereby rendered necessary and all covenants shall be deemed
joint and several
Interpretation of Lease
33. All of the Provisions contained in this Lease are to be construed as
covenants and agreements and if any of Lease provision is illegal or
unenforceable, it shall be considered separate and severable from the remaining
provisions, which shall remain in force and be binding upon the Landlord and the
Tenant.
Time of Essence
34. Time shall be of the essence of this Lease.
Law
35. This Lease shall be governed by and construed in accordance with the laws,
of the Province of Ontario.
Intent of Lease
36. This is a carefree lease and it is the mutual intention of the parties
hereto that the basic rent herein provided to be paid shall be net to the
Landlord and clear of all taxes, costs and charges arising from or relating to
the lands and building in that the Tenant shall bear its proportionate share of
all costs of and be responsible for all matters in relation to the operation,
maintenance and repair of the lands and building (save as otherwise provided
herein) including and without limiting the generality of the foregoing the
Tenant's proportionate share of taxes and operating costs. Charges of a kind
personal to the Landlord such as taxes on the income of the Landlord,
Corporation Tax, estate and inheritance tax and similar taxes, principal and
interest payments to be made by the Landlord in satisfaction of mortgages now or
hereinafter registered against the said lands and building shall not be the
responsibility or obligation of the Tenant.
37. Schedule "A", "B", "C", "D" "E" and "F" and Rules and Regulations attached
form part of this Lease.
38. The Landlord entering into this Lease transaction is conditional upon the
following occurring contemporaneously with the execution of this Lease by the
Tenant.
(a) Saville Systems PLC executing and delivering to the Landlord the Indemnity
in form attached as Schedule "E" hereto, and
(b) Saville Systems PLC delivering four copies of an opinion of its Irish
counsel addressed to the Landlord, its solicitors, Aird & Berlis, 3170497 Canada
Inc. and its solicitors, Gardiner, Roberts, in form attached as Schedule "F".
IN WITNESS WHEREOF the parties hereto have executed this lease.
SIGNED, SEALED AND DELIVERED
in the presence of ORFUS INVESTMENTS
BY: /s/M. Orfus
SAVILLE SYSTEMS CANADA, LTD.
BY: /s/Marc J. Venator
Authorized Signing Officer TENANT CS
<PAGE>
RULES AND REGULATIONS
1. The Tenant shall not place or permit to be placed or left in or upon any part
of the Building outside of the Premises, or in or upon any part of the Building
of which the Premises form a part, any debris or refuse.
2. The Landlord shall permit the Tenant and the Tenant's employees and all
persons lawfully requiring communication with them to have the use during Normal
Business Hours in common with others entitled thereto of the main entrance and
the stairways, corridors, elevators or other mechanical means of access leading
to the Premises. At times other than during Normal Business Hours the Tenant and
the employees of the Tenant and persons lawfully requiring communication with
the Tenant shall have access to the Building and to the Premises
3. The Landlord shall permit the Tenant and the employees of the Tenant in
common with others entitled thereto, to use the washrooms on the floor of the
Building on which the Premises are situated or, in lieu thereof those washrooms
designated by the Landlord, save and except when the general water supply may be
turned off from the public main or at such other times when repair and
maintenance undertaken by the Landlord shall necessitate the non-use of the
facilities.
4. The Tenant shall not permit any cooking in the Premises without the written
consent of the Landlord.
5. The sidewalks, entries, passages, escalators, elevators and staircases shall
not be obstructed or used by the Tenant, its agents, servants, contractors,
invitees or employees for any purpose other than ingress to and egress from the
offices. The Landlord reserves entire control of all parts of the Building
employed for the common benefit of the tenants and without restricting the
generality of the foregoing, the sidewalks, entries, corridors and passages not
within the Premises, washrooms, lavatories, air-conditioning closets, fan rooms,
janitor's closets, electrical closets and other closets, stairs, escalators,
elevator shafts, flues, stacks, pipe shafts and ducts and shall have the right
to place such signs and appliances therein, as it may deem advisable, provided
that ingress to and egress from the Premises is not unduly impaired thereby.
6. The Tenant, its agents, servants, contractors, invitees or employees, shall
not bring in or take out, position, construct, install or move any safe,
business machinery or other heavy machinery or equipment or anything liable to
injure or destroy any part of the Building without first obtaining the consent
in writing of the Landlord. In giving such consent, the Landlord shall have the
right in its sole discretion, to prescribe the weight permitted and the position
thereof, and the use and design of planks, skids, or platforms, to distribute
the weight thereof. All damage done to the Building by moving or using any such
heavy equipment or other office equipment or furniture shall occur only by prior
arrangement with the Landlord. No Tenant shall employ anyone to do its moving in
the Building other than the staff of the Building, unless permission to employ
anyone else is given by the Landlord and the reasonable cost of such moving
shall be paid by the Tenant. Safes and other heavy office equipment and
machinery shall be moved through the halls and corridors only upon steel bearing
plates. No freight or bulky matter of any description will be received into the
Building or carried in the elevators except during hours approved by the
Landlord.
7. The Tenant shall not place or cause to be placed any additional locks upon
any doors of the Premises without the approval of the Landlord and subject to
any conditions imposed by the Landlord. Two keys shall be supplied to the
Landlord for each door to the Leased Premises and all locks shall be standard to
permit access to the Landlord's master key. If additional keys are requested,
they must be paid for by the Tenant. No one, other than the Landlord's staff,
will have keys to the outside entrance doors of the Building.
8. The water closets and other water apparatus shall not be used for any purpose
other than those for which they were constructed, and no sweepings, rubbish,
rags, ashes or other substances shall be thrown therein. Any damage resulting by
misuse shall be borne by the Tenant by whom or by whose agents, servants, or
employees the same is caused. The Tenant shall not let the water run unless it
is in actual use, and shall not deface or mark any part of the Building, or
drive nails, spikes, hooks, or screws into the walls or woodwork of the
Building.
9. The Tenant shall not do or permit anything to be done in the Premises, or
bring or keep anything therein which will in any way increase the risk of fire
or the rate of fire insurance on the said Building or on property kept therein,
or obstruct or interfere with the rights of other tenants or in any way injure
or annoy them or the Landlord, or violate or act at variance with the laws
relating to fires or with the regulations of the Fire Department, or with any
insurance upon said Building or any part thereof, or violate or act in conflict
with any of the rules and ordinances of the Board of Health or with any statute
or municipal by-law.
10. No one shall use the Premises for sleeping apartments or residential
purposes, or for the storage of personal effects or articles other than those
required for business purposes.
11. The Tenant shall permit window cleaners to clean the windows of the Premises
during Normal Business Hours.
12. Canvassing, soliciting and peddling in or about the Building and in the
parking area are prohibited.
13. The Tenant shall not receive or ship articles of any kind except through
facilities, and designated doors and at hours designated by the Landlord and
under the supervision of the Landlord.
14. It shall be the duty of the respective tenants to assist and co-operate with
the Landlord in preventing injury to the premises demised to them respectively.
15. No inflammable oils or other inflammable, dangerous or explosive materials
save those approved in writing by Landlord's insurers shall be kept or permitted
to be kept in the Premises.
16. No bicycles or other vehicles shall be brought within the Building without
the consent of the Landlord.
17. No animals or birds shall be brought into the Building without the consent
of the Landlord.
18. The Tenant shall not install or permit the installation or use of any
machine dispensing goods for sale in the Premises or the Building or permit the
delivery of any food or beverage to the Premises without the approval of the
Landlord or in contravention of any regulations fixed or to be fixed by the
Landlord. Only persons authorized by the Landlord shall be permitted to deliver
or to use the elevators in the Building for the purpose of delivering food or
beverages to the Premises.
19. If the Tenant desires telegraphic or telephonic connections, the Landlord
will direct the electricians as to where and how the wires are to be introduced,
and without such directions no boring or cutting for wires will be permitted. No
gas pipe or electric wire will be permitted which has not been ordered or
authorized by the Landlord. No outside radio or television materials shall be
allowed on the Leased Premises without authorization in writing by the Landlord.
20. The Tenant, shall not cover or obstruct any of the skylights and windows
that reflect or admit light into any part of the Building except for the proper
use of approved blinds and drapes.
21. Any hand trucks, carryalls, or similar appliances used in the Building with
the consent of the Landlord, shall be equipped with rubber tires, slide guards
and such other safeguards as the Landlord shall require.
22. The Tenant shall not permit undue accumulations of garbage, trash, rubbish
or other refuse within or without the Premises or cause or permit objectionable
odours to emanate or be dispelled from the Leased Premises.
23. The Tenant shall not place or maintain any supplies or other articles in any
vestibule or entry of the Premises, on the footwalks adjacent thereto or
elsewhere on the exterior of the Premises or the Building.
24. The Landlord shall have the right to make such other and further reasonable
rules and regulations as in its judgment may from time to time be needful for
the safety, security, care and cleanliness of the Building, and for the
preservation of good order therein, and the same shall be kept and observed by
the Tenants, their clerks and servants.
25. The Tenant agrees to the foregoing Rules and Regulations, which are hereby
made a part of this Lease, and each of them, and agrees that for such persistent
infraction of them, or any of them, be calculated to annoy or disturb the quiet
enjoyment of any other tenant, or for gross misconduct upon the part of the
Tenant, or any one under it, the Landlord may declare a forfeiture and
cancellation of the accompanying Lease and may demand possession of the Premises
upon one (1) week's notice as determined by a competent court having
jurisdiction.
<PAGE>
SCHEDULE"A"
Attached to and forming part of a Lease between ORFUS INVESTMENTS as Landlord,
and SAVILLE SYSTEMS CANADA, LTD. as Tenant
Town of Markham, Regional Municipality of York consisting of Part of Lots 3 and
4 and all of Lot 5, Plan 65M-2326, designated as Parts 5, 6, 8 and 9 on
65R-14021
<PAGE>
SCHEDULE "B"
Maps of 5th and 6th floor, West Tower, 675 Cochrane Drive
<PAGE>
SCHEDULE"C"
To a lease made the 25th day of April, 1996 between Orfus Investments as
Landlord and Saville Systems Canada, Ltd. as Tenant.
1 . TENANT'S INSURANCE
Tenant covenants that, with respect to policies of Tenant's insurance as
required pursuant to Section 8(u) of the Lease, that such policies shall include
provisions showing the Landlord as named insured in the policy and requiring
that the insurer provide at least thirty (30) days' written notice to the
Landlord prior to termination or material amendment to the policy during the
lease term or any renewal or extension thereof. Tenant shall, forthwith upon
demand, deliver to Landlord evidence of such insurance policies by way of a
certificate from the insurer.
Every such policy of insurance shall contain a waiver by the insurer of any
rights of subrogation or indemnity or any other claim over against the Landlord
or the agents or employees of the Landlord. If Tenant shall fail to take out or
keep in force such insurance as is required hereunder, or if the evidence
submitted therefor is unacceptable to the Landlord pursuant to this Lease, then
the Landlord may, but shall not be obliged to, obtain some or all such
insurance, and the Tenant shall pay all premiums or other reasonable expenses
incurred by the Landlord as a result thereof on demand, as rent.
The Tenant shall furnish to the Landlord, upon request, evidence as to the full
replacement cost of the Tenant's fixtures, furniture and equipment, and Tenant
shall ensure that the insurance coverage under Section 8(u)(ii) is adequate to
cover such fixtures, furniture and equipment.
Landlord's right of termination in Section 8(g) shall apply only if Tenant does
not rectify the cause of insurance cancellation (to the effect that the Landlord
is enabled to insure as before) within 72 hours of written notice from Landlord
to do so.
Landlord shall insure Building A against risk of fire and other property damage
and shall maintain liability insurance and such amounts and for such risks as
would a reasonably prudent landlord of a similar property. The costs of such
insurance shall be included in Operating Costs.
2. ADDITIONAL RENT
(a) The Landlord agrees that Operating Costs, Taxes and hydro, plus, if
applicable, management fees provided for in Section 6(c), for the Landlord's
fiscal year ending April 30, 1996 will not exceed Ten Dollars and Twenty-Three
Cents ($10.23) per sq.ft. of the Rentable Area of the Premises. The Landlord
further warrants and represents and agrees that the Operating Costs (which is
for the Landlord's fiscal year ending April 30, 1996, Five Dollars and
Eighty-One Cents ($5.81) per sq.ft. of the Rentable Area of the Premises) which
does not include hydro or Taxes but does include management fees provided for in
Section 6(c), if applicable, plus the cost of replacement of electric bulbs,
tubes, starters and ballasts in the Premises, shall not, during the term of this
Lease, excluding any extension or renewal periods, exceed the lesser of
(i) the actual amount incurred for said costs per square foot of Rentable
Area of the Premises, and
(ii) the following amounts:
(1) Year 1 $6.10 per square foot
(2) Year 2 $6.41 per square foot
(3) Year 3 $6.73 per square foot
(4) Year 4 $7.06 per square foot
(5) Year 5 $7.42 per square foot
(6) Year 6 $7.79 per square foot
(7) Year 7 $8.18 per square foot
(8) Year 8 $8.58 per square foot
(9) Year 9 $9.01 per square foot
Reference to "Year" shall be to the particular Year or portion thereof in the
initial term following the commencement date of the term of that part of the
Premises located on the 6th Floor of Building A.
Hydro and Taxes will not be capped.
(b) HVAC supplied to the Premises during Normal Business Hours shall be included
in Operating Costs, and subject to the limitation on Operating Costs set out
above in subparagraph (a). After Normal Business Hours HVAC shall be available
at all times to Tenant with prior arrangement, at a cost which is now estimated
to be One Dollar and Twenty-Five Cents ($1.25) per heat pump per hour.
(c) Landlord shall provide Tenant annually, an unaudited statement of Additional
Rent within 180 days of the end of each Year. Said statement shall be completed
by a certified accountant or other independent qualified financial person. The
Landlord or the Tenant as the case may be has the right to remedy any
differences between said statements and the Additional Rent paid by the Tenant
to the Landlord in the previous Year, within 30 days of the statement being
delivered.
3. GOODS AND SERVICES TAX ("GST")
The Tenant covenants with the Landlord to pay, to the person or authority to
whom they are payable, on or before the due date thereof, any and all sales or
services taxes on the Tenant's Premises, however designated, which are levied,
imposed or assessed by lawful authority and whether they are levied, imposed or
assessed against the Landlord or the Tenant. The Tenant further covenants to
indemnify and save the Landlord harmless from any and all liability, costs,
expenses or penalties incurred by the Landlord as a result of such sales or
services taxes. The Landlord will comply with all provisions of the Goods and
Services Tax legislation.
In connection with GST, the Tenant covenants to pay the Landlord when due, in
addition to all other amounts payable under this Lease, any goods and services
tax ("GST") which shall be applicable to, or which may be assessed, imposed or
levied against the Basic Rent and/or Additional Rent payable hereunder and all
such GST shall be collectable hereunder in the same manner as rent.
The obligations of the Tenant in this paragraph 3 shall survive the expiration
or the termination of this Lease.
4. USE OF THE PREMISES
Notwithstanding the provisions of paragraph 8(g) of the Lease:
(a) The Tenant shall, subject to what is hereinafter provided, use the Premises
for business offices and as a 24 hour data centre and if applicable, all other
uses permitted by prevailing municipal by-laws, subject however to paragraph
4(b)(ii) below.
(b) The Tenant shall ensure that during the Term and any renewal or extension
thereof, no part of the Premises may be used:
(i) (except by Saville Systems Canada, Ltd.,) by anyone in the primary
business of marketing, financing and/or servicing computers, computer
software, hardware or related material or products, considered a
competitor by Digital Equipment of Canada Limited, ("Digital") named
on a list by Digital from time to time, the most current list being
that set forth in Schedule "D". The Tenant acknowledges that Digital
has the right to provide an updated list annually to the Landlord
setting forth no more than ten (10) entities which Digital considers
to be a competitor and that the Landlord has covenanted with Digital
not to lease directly or indirectly by sublet, assignment or
otherwise, any premises in Building A to tenants considered to be
competitors of Digital as aforesaid. The Tenant acknowledges that the
Landlord shall have no obligation to provide such annual updated list
to the Tenant but shall provide same upon request of the Tenant;
(ii) by any agency or organization providing social services to the public
at large at Building A; and/or
(iii)by anyone which carries on a business at Building A not consistent
with a first class building.
5. LEASEHOLD IMPROVEMENTS
(a) The Landlord agrees that the Tenant shall be entitled to use all leasehold
improvements existing as of the date hereof at the Premises. The Tenant may
demolish any of such existing leasehold improvements as it sees fit (the
"Demolition"), subject to what is hereinafter provided.
(b) (i) The Landlord will pay to the Tenant, once only as a contribution towards
the costs of leasehold improvements and the Demolition, as hereinafter provided,
an amount up to $20.00 per square foot of Rentable Area which shall be $429,580
for that part of the Premises constituting the 6th floor of Building A (the "6th
Floor Premises").
(ii) Provided that the Landlord, acting reasonably, determines that the
financial condition of the Tenant and Saville Systems PLC is no worse
than that existing as of the date hereof, which determination is to be
made no later than the 1st day of September, 1997, and, provided
further that the Tenant has not been in material default of any
financial obligations under this Lease, then the Landlord will pay to
the Tenant, once only as a contribution towards the costs of leasehold
improvements and the Demolition, as hereinafter provided, an amount up
to $20.00 per square foot of Rentable Area which shall be $429,580 for
that part of the Premises constituting the 5th floor of Building A
(the "5th Floor Premises").
The Tenant and Saville Systems PLC shall provide to the Landlord up-to-date
financial information.
(c) All payments made by the Landlord towards the cost of leasehold improvements
and the demolition shall be for the purposes of Demolition aforesaid and
otherwise used solely for leasehold improvements at the Premises and may not be
utilized towards the cost of furniture, equipment or any other cost or expense
which is not a leasehold improvement for the Premises.
(d) Any costs in excess of $20.00 per square foot of Rentable Area of the
Premises shall be payable by the Tenant, it being intended that the leasehold
improvement allowance for that part of the Premises constituting the 6th Floor
Premises is $429,580 and the leasehold improvement allowance for that part of
the Premises constituting the 5th Floor Premises is $429,580 (in each case based
on the assumption that each such part of the Premises is 21,479 square feet of
Rentable Area). If no leasehold improvement allowance is payable by the Landlord
in respect of the 5th Floor Premises all costs for the 5th Floor Premises shall
be payable by the Tenant.
(e) The Landlord agrees to provide two written estimates from reputable
contractors for the leasehold improvements to be installed at the 6th Floor
Premises and at the 5th Floor Premises. The Tenant shall have the right to
select either of the contractors which have given the written estimates.
(f) Provided that the Landlord delivers the letter of credit referred to in
paragraph 6 below, the Tenant shall sign the construction contracts for the
Demolition (if applicable) and the installation of leasehold improvements at the
6th Floor Premises and when applicable, at the 5th Floor Premises.
(g) (i) Upon completion of the construction of leasehold improvements for the
6th Floor Premises, the Tenant shall provide to the Landlord a summary of the
actual costs for the leasehold improvements plus Demolition, if applicable, for
the 6th Floor Premises.
(ii) In the event that the leasehold improvement allowance is payable by the
Landlord in respect of the 5th Floor Premises, upon completion of the
construction of leasehold improvements for the 5th Floor Premises, the
Tenant shall provide to the Landlord a summary of the actual costs for the
leasehold improvements plus Demolition, if applicable, for the 5th Floor
Premises.
(iii)In the event that less than $429,580 is used towards leasehold
improvements and Demolition for the 6th Floor Premises, or, in the event
that less than $429,580 is used towards leasehold improvements and
Demolition for the 5th Floor Premises then the amortized monthly amount of
the difference, if any, over the then remaining balance of the Term
(excluding renewals or extensions) at 11 % per annum shall be applied
towards reduction of the monthly Basic Rent. In each case the said figure
of $429,580 is based on the assumption each such part of the Premises is
21,479 square feet of Rentable Area.
(iv) In the event that the Landlord is not obligated to pay the leasehold
improvement allowance for the 5th Floor Premises as a result of the
provisions of paragraph 5(b)(ii), then the monthly Basic Rent for the 5th
Floor Premises shall be reduced for the balance of the Term (excluding
renewals or extensions) based upon a total reduction of $429,580 amortized
at 11 % per annum.
(h) There shall be no administrative overhead or profit charged by the Landlord
for the improvements or alterations performed at any time by the Tenant.
6. PAYMENT OF LEASEHOLD IMPROVEMENT ALLOWANCE
(a) With respect to the leasehold improvement allowance referred to in paragraph
5 above, in respect of the 6th Floor Premises only, the Landlord agrees to
provide to the Tenant on the date of execution of this Lease by the Landlord and
the Tenant, an irrevocable letter of credit from a Schedule 1 Canadian chartered
bank in an amount equal to $429,580 Canadian dollars (based upon the assumption
that the Rentable Area of the 6th Floor Premises is 21,479 square feet), which
letter of credit shall be in a form and substance satisfactory to the Tenant,
acting reasonably, and shall provide, inter alia, that the issuer bank will
honour demand for payment made thereunder without inquiry as to whether the
Tenant has the right as between itself and the customer on whose behalf the
issuer bank has issued the letter of credit, to make such demand and without
recognizing any claim of said customer; provided, however, that the letter of
credit shall provide for delivery of the certificates hereinafter described in
order for payment to be made thereunder.
The letter of credit shall be in favour of the Tenant and shall allow partial
draw downs (less holdbacks to ensure at all times that applicable holdbacks are
maintained at all times), based upon work in place and upon a certificate of the
Tenant's architect (being a firm satisfactory to the Landlord, acting
reasonably) certifying to the Landlord and to the bank which has issued the
letter of credit:
(i) the amount of the Demolition costs or the work in place at the 6th
Floor Premises of the West Tower (Building A) of 675 Cochrane Drive,
Markham, undertaken by or on behalf of the Tenant, together with
reasonable details thereof;
(ii) the holdbacks applicable under the Construction Lien Act to ensure
that the applicable holdbacks are maintained at all times;
(iii)that in connection with the said work for which a draw down is being
requested under the said letter of credit:
(1) the amount of the draw requested is approved, or, the amount that is
approved, as the case may be;
(2)the work has been installed in accordance with working drawings and
specifications approved by the Landlord;
(3) the work has been performed in accordance with all laws and in a good and
workmanlike manner;
(4) that all necessary building or other permits have been maintained;
(5) that there is no claim for any lien in respect of the improvements being
undertaken at said Premises;
(6) the architect has not received written notice from the Landlord that the
Tenant is in default in its obligation to pay any amounts due under this Lease;
(7) in the case of the final holdback being released, the architect shall
certify the above, together with the certificate that all lien periods have
expired with respect to such improvements and no liens have been registered or
claimed.
In the event that the Landlord sells the building in which the Premises are
located, the Tenant agrees to either accept, in substitution or in lieu of the
letter of credit being issued by the Landlord named herein, either a cash
collateral account in the amount left to be draw under the said letter of
credit, a substitute letter of credit in the principal amount of the undrawn
amount of the said letter of credit, or, evidence that the new landlord has at
least $50,000,000 of shareholders equity. Upon the said cash collateral account
being established, the said substitute letter of credit being issued to the
Tenant, or, the evidence being supplied as to the shareholders equity of the new
landlord as aforesaid, the Tenant shall release to the Landlord named herein,
the letter of credit which the Landlord named herein will have provided to the
Tenant, and requests for payment shall be made to the new Landlord supplying to
the new Landlord the information, material and certificates referred to in
paragraph 6 (a)(i)-(iii) of this Schedule "C".
Once the leasehold improvements at the 6th Floor Premises have been completed,
the Landlord shall have the right to receive the said letter of credit, (the
said cash collateral account or the said substitute letter of credit as the case
may be), returned to it, forthwith, for amounts not drawn thereunder.
(b) In the event that the Landlord is obligated to provide the leasehold
improvement allowance with respect to the 5th Floor Premises, pursuant to
paragraph 5(b)(ii), the Landlord shall be under no obligation to post an
irrevocable letter of credit or any other security, provided however in the
event that the Landlord is in default of its obligations to fund the leasehold
improvement allowance for the 5th Floor Premises in accordance with the
provisions hereof, the Tenant may give fifteen (15) days' written notice of such
default, and failing the remedying of such default within the aforesaid fifteen
(15) day period, the Tenant shall be entitled to remedy such default and to
receive a credit therefor against Basic Rent; such credit shall be equal to 110%
of the aggregate of the amounts paid by or on behalf of the Tenant to cure such
default and shall be applied against Basic Rent as it becomes due. Such right of
set off shall be subject to an accounting being provided by the Tenant to the
Landlord.
(c) The leasehold improvement allowance in respect of the 5th Floor Premises
shall be payable provided the Tenant is not then in default in its obligations
to pay any amount due under this Lease, upon receipt of the certificate of the
Tenant's architect (being a firm satisfactory to the Landlord acting
reasonably), and the following shall apply:
(i) the certificate shall certify the amount of the Demolition costs or
the work in place at the 5th Floor Premises of the West Tower
(Building A) of 675 Cochrane Drive, Markham, undertaken by or on
behalf of the Tenant, together with reasonable details thereof;
(ii) the certificate shall state the holdbacks applicable under the
Construction Lien Act, and, at all times, draw downs against the
leasehold improvement allowance shall be made less holdbacks to ensure
at all times that applicable holdbacks are maintained at all times for
purposes of the Construction Lien Act;
(iii)the certificate shall state that in connection with the said work for
which a draw down is being requested:
(1) the amount of the draw requested is approved, or, the amount that is
approved, as the case may be;
(2) the work has been installed in accordance with working drawings and
specifications approved by the Landlord;
(3) the work has been performed in accordance with all laws and in a good and
workmanlike manner;
(4) that all necessary building or other permits have been maintained;
(5) that there is no claim for any lien in respect of the improvements being
undertaken at said Premises;
(6) in the case of the final holdback being released, the architects shall
certify the above, together with a certificate that all lien periods have
expired with respect to such improvements and no liens have been registered or
claimed.
7. ACCESS TO 6TH FLOOR PREMISES
Forthwith upon execution of this Lease by the Tenant, the Tenant shall be
entitled to enter the 6th Floor Premises for the purposes of undertaking
Demolition to the existing leasehold improvements, if applicable, and,
undertaking any new leasehold improvements which it will be undertaking at the
6th Floor Premises, subject however to the following terms and conditions:
(a) Prior to the Tenant undertaking any work or demolition it desires to
undertake at the 6th Floor Premises, the Tenant shall comply with the provisions
of Section 8(m) of this Lease.
(b) The Tenant shall have provided evidence of appropriate and adequate
insurance both in respect of its obligations pursuant to the provisions of this
Lease and in connection with undertaking Demolition and improvements to the 6th
Floor Premises prior to undertaking its work; and except for the payment of
Basic Rent and Additional Rent all covenants and obligations of the Tenant to be
performed during the term shall apply from and after its taking of possession of
the 6th Floor Premises mutatis mutandis.
(c) The Tenant and its contractors shall be responsible for removing garbage and
debris from Building A, and from any common areas and facilities, each day, and
from the Premises as reasonably required so that there is no undue accumulation
of garbage and debris, and to place same into garbage containers for that
purpose as provided, as it undertakes its work. If the Landlord's forces remove
such garbage, the Tenant shall be responsible to pay for the cost of same.
(d) There shall be no Basic Rent or Additional Rent payable notwithstanding the
permission hereby granted for the Tenant to enter the 6th Floor Premises,
provided that Basic Rent and Additional Rent shall commence to be payable from
and after the 1st day of July, 1996 notwithstanding that the Tenant's leasehold
improvements may not have been finished at such time.
8. SPACE PLAN
The Landlord agrees to provide a space plan with one revision or to pay space
planning fees directly to a planner of the Tenant's choice for the 6th Floor
Premises and, when applicable, for the 5th Floor Premises, at the Landlord's
sole cost and expense, which shall not exceed the cost of .08 cents per square
foot of Rentable Area of the 6th Floor Premises and the 5th Floor Premises,
respectively.
9. INTERIM USE OF 5TH FLOOR PRIOR TO THE TERM IN RESPECT THEREOF COMMENCING
(a) Notwithstanding that the term in respect of the 5th Floor Premises has not
commenced, the Landlord agrees that upon execution of this Lease by the Tenant,
and subject to the terms and conditions herein contained, the Tenant shall be
permitted at its sole option to take possession of the 5th Floor Premises. The
following are the terms and conditions applicable thereto:
(i) prior to being able to take possession of the 5th Floor Premises
aforesaid, the Tenant shall meet with the Landlord's building manager
and execute a letter accepting responsibility for any damage, save and
except reasonable wear and tear, to the 5th Floor Premises;
(ii) such occupancy shall be temporary only and shall only be permitted
until such time as the 6th Floor Premises are ready for occupancy by
the Tenant once the Tenant has undertaken all the work which it
desires to undertake at the 6th Floor Premises; the Tenant shall also
be permitted interim occupancy of the 5th Floor Premises for the
purposes of demolishing existing leasehold improvements and fixturing
the 5th Floor Premises which it shall be permitted to do (subject to
the terms and provisions herein contained) from the 1st day of
October, 1997, provided that it is not then in default pursuant to the
provisions of this Lease;
(iii)during the period of time that the Tenant is occupying the 5th Floor
Premises pursuant to paragraph 9(a)(ii) above, until it vacates same
once the 6th Floor Premises are ready for occupancy, the Tenant shall
pay its Proportionate Share for the 5th Floor Premises of the
Operating Costs attributable to Building A and the Common Areas and
Facilities and its Complex Proportionate Share for the 5th Floor
Premises of the Operating Costs attributable to the Shared Common
Areas and Facilities, plus taxes as referred to in the provisions of
Section 5 of this Lease (as supplemented by the provisions of page 3C
of this Lease) plus the management fee referred to in the provisions
of Section 6(c) of this Lease. Such amount shall be payable monthly on
the first day of each and every month during the period within which
such payments are applicable and the provisions of Sections 5 and 6 of
the Lease shall apply thereto, mutatis mutandis; provided that in the
event that the Tenant has not completed all improvements which it
desires to make to the 6th Floor Premises as at the 1st day of July,
1996 and is accordingly not in a position to occupy the 6th Floor
Premises for the purposes of carrying on business therein as at the
1st day of July, 1996, from and after the 1st day of July, 1996, until
it vacates the 5th Floor Premises once the 6th Floor Premises are
ready for occupancy, the Tenant shall pay for hydro costs only with
respect to the 5th Floor Premises, during such period (which shall be
in addition to the payments required pursuant to paragraph 9(a)(iv)
below);
(iv) the Tenant shall be responsible to pay to the Landlord, whether or not
it is occupying the same, an amount per square foot per annum of the
Rentable Area of the 5th Floor Premises, at the following rates:
(1) from the 1st day of July, 1996, (whether or not the Tenant has
taken occupancy), to and including the 30th day of June, 1997,
the sum of $3.00 per square foot of the Rentable Area of the 5th
Floor Premises per annum;
(2) from the 1st day of July, 1997 to and including the 30th day of
September, 1997, the sum of $6.00 per square foot of Rentable
Area of the 5th Floor Premises per annum;
(3) from the 1st day of October, 1997 to and including the 30th day
of November, 1997, the sum of $9.00 per square foot Rentable Area
of the 5th Floor Premises per annum.
The said amounts shall be payable in equal consecutive monthly instalments each
due in advance on the 1st day of each and every month during the periods
hereinbefore provided;
(v) each time prior to taking occupancy of the 5th Floor Premises, the
Tenant shall have provided evidence of appropriate and adequate
insurance in respect thereof;
(vi) during the occupancy by the Tenant of the 5th Floor Premises prior to
the commencement of the term therefor, the terms and provisions, save
and except for the payment of Basic Rent and Additional Rent, (subject
however to paragraph 9(a)(iii) and (iv) above), and all covenants and
obligations of the Tenant to be performed during the Term under this
Lease, for the 6th Floor Premises, shall apply mutatis mutandis;
(vii)prior to the Tenant undertaking any work which it desires to
undertake at the 5th Floor Premises, the Tenant shall have complied
with the provisions of Section 8(m) of the Lease, shall have provided
evidence of appropriate and adequate insurance in connection with its
undertaking demolition or improvements to the 5th Floor Premises prior
to undertaking such work and all provisions of paragraph 7(a) and (c)
of this Schedule "C" shall apply, mutatis mutandis.
(b) On the earlier of the 1st day of December, 1997 and the date upon which the
Tenant has fixtured the 5th Floor Premises so that the Tenant can carry on
business at any part of the 5th Floor Premises, the commencement of the term for
the 5th Floor Premises shall be deemed to have occurred, with Basic Rent payable
therefor in accordance with the schedule of rental rates set forth on page 2A of
this Lease, and in addition, the Tenant from and after such date shall be
responsible to pay all Additional Rent in respect of the 5th Floor Premises,
instead of the rent payable provided for in the provisions of paragraph 9(a)(ii)
above.
10. CONDITION OF PREMISES
The Tenant shall inspect the 6th Floor Premises prior to undertaking any
demolition or work thereto, and the 5th Floor Premises at the same time as the
inspection for the 6th Floor Premises is being undertaken, as well as prior to
undertaking any demolition or work to the 5th Floor Premises, for the purposes
of satisfying itself that the base building systems servicing them, are in good
condition and repair. The Tenant and the Landlord shall decide on a deficiency
list for such base building systems, if any, each acting reasonably and the
Landlord shall rectify any agreed to deficiencies for such base building systems
for the 6th Floor Premises and for the 5th Floor Premises prior to the Tenant
taking possession December 1, 1997.
11. PARKING
The Tenant shall be entitled to use the underground parking area servicing
Building A free of charge other than the cost of cards and what is otherwise
provided for below, for the term of this Lease including any renewals or
extensions thereof at the rate of three point five (3.5) cars for every one
thousand (1,000) square feet of the Premises. In the event that the Landlord at
any time during the Term or any renewals or extensions changes the current
nature of the entire parking areas servicing Building A, or any other buildings
or improvements constructed on the Lands, being unreserved and free of charge,
to be reserved, the Landlord shall give sufficient notice to the Tenant of its
intent so to do and the Tenant shall have the right to its proportionate share
of reserved parking spaces based on three point five (3.5) cars for every one
thousand (1,000) square feet of the Premises, the location of reserved parking
to be as designated by the Landlord.
The Tenant shall further be entitled to use an additional fifty (50) parking
spaces within the parking areas for the Complex at no charge other than the cost
of cards referred to below on an unreserved basis throughout the term of the
Lease (excluding renewals or extensions).
Parking for all spaces including the aforesaid fifty (50) parking spaces shall
be afforded by access parking cards at a charge of $15.00 per card.
The rights of the Tenant to 3.5 cars for every one thousand (1,000) square feet
of the Premises shall only apply with respect to that part of the Premises
constituting the 5th Floor Premises when the term therefor has commenced.
The provisions of paragraph 13 of the Lease except with respect to charges of
fees, shall apply to the parking arrangement in this paragraph 11 of this
Schedule "C".
12. BUILDING ACCESS
Except in cases of emergency, the Landlord agrees to provide the Tenant with
access to Building A on a 24 hour basis 7 days a week to the main lobbies,
stairs and entrances as well as parking lots and all elevators that have card
access. The Landlord agrees that the existing security (card access) or the
equivalent will be made available to the Tenant throughout the Term of this
Lease and that there will be no access to the Premises other than through card
access in the elevators or stairs.
The Tenant agrees to be mindful of building security when accessing the building
after hours including ensuring that doors are not left open unnecessarily and
that the Tenant will not interfere with maintenance workers or snow clearing
contractors.
13. NO RESTORATION ON EXPIRY
Notwithstanding the provisions requiring same in the Lease, the Tenant shall not
be required upon termination of the term of this Lease herein to restore the
Premises to the original condition in which they were in prior to this Lease,
unless the Tenant has installed improvements or alterations in contravention of
the provisions of paragraph 8(m) of the Lease.
14. RIGHT OF FIRST REFUSAL TO LEASE ON FOURTH FLOOR
Provided that the Tenant is not then in breach of this Lease, and provided that
the Tenant has not exercised its termination right contained in paragraph 15 of
this Schedule "C", the Tenant shall have the right of first refusal for any
offer to lease in respect of any space on the 4th floor of Building A that
becomes available from time to time and at all times during the initial Term of
this Lease, subject to the terms and conditions of this paragraph 14. In the
event that the Landlord receives a bona fide offer to lease any of the space in
the 4th floor of Building A which the Landlord is prepared to accept, the
Landlord shall notify and offer the space to the Tenant on the same terms and
conditions as contained in said offer. The Tenant shall have 48 hours after
notification from the Landlord to exercise its right of first refusal and lease
the space on the same terms and conditions as contained in the offer, failing
which, the Landlord may lease such space to the third party.
It is acknowledged and agreed that the right of the Tenant contained herein
shall not apply in respect of any extension of term or other arrangements made
by the existing tenant of the 4th floor of Building A and the Landlord shall be
free to deal with said existing tenant, free from any obligations pursuant to
the provisions of this paragraph 14 of this Schedule "C".
The parties further agree that notwithstanding the terms and provisions of the
bona fide offer to lease, the lease for any space taken by the Tenant on the 4th
floor of Building A pursuant to this right of first refusal shall contain
provisions similar to those provided for in paragraph 20 of this Schedule "C" as
the same relates to the commission payable to CB Commercial in respect of space
taken on the 4th floor of Building A.
In addition, regardless of the terms of the bona fide offer to lease, the
Landlord agrees that the Tenant shall have the right to use the leasehold
improvements at the space to be rented on the 4th Floor of Building A, subject
to any tenant's rights to remove the same.
In the event that the Tenant exercises its right of first refusal as contained
in the provisions of this paragraph 14 of this Schedule "C", the premises to be
leased by the Tenant pursuant thereto shall be herein called the "Expansion
Premises".
The lease termination rights, the option to extend the Term, parking and any
other provisions referring to the Premises herein, shall not apply to the
Expansion Premises, but subject to the third paragraph of this paragraph 14 in
respect of the increase in the basic rent, the bona fide offer to lease shall
govern all the terms and provisions of the lease between the Landlord and the
Tenant with respect to space on the 4th floor of Building A.
15. LEASE TERMINATION
Notwithstanding anything contained in this Lease to the contrary and provided
Saville Systems Canada, Ltd. is itself carrying on business in the entire 6th
Floor Premises and the 5th Floor Premises, and provided further that it is not
then in default of this Lease, the Tenant shall have the right to terminate this
Lease as of the 31st day of March, 2001, 2002, 2003 or 2004, provided that in
order for the Tenant's right pursuant to this paragraph 15 to terminate this
Lease to be validly exercised and to be effective:
(a) The Tenant must give to the Landlord at least six (6) months prior written
notice of its election to terminate this Lease pursuant to the provisions of
this paragraph 15.
(b) Any time after such notice, the Tenant shall have the right to continue to
occupy the 6th Floor Premises and the 5th Floor Premises under the terms of this
Lease, or the Tenant may vacate the said Premises and pay the Landlord by
certified funds a lump sum equal to the gross rent (Basic Rent and Additional
Rent remaining during said notice period), following which the Landlord shall be
free to lease the space to another party; said payment is separate from and in
addition to the Termination Payment referred to below.
(c) In consideration of the Tenant's right of termination aforesaid, the
Landlord shall receive from the Tenant and the Tenant shall pay to the Landlord
by certified funds at least sixty (60) days prior to the termination date (but
in no event shall the Tenant be entitled to vacate the Premises until it has
made all payments payable pursuant to the provisions of this paragraph 15), a
termination payment as set out below:
Termination Date
March 31, 2001
Termination Payment
12 months Basic Rent at the rate of $11.60 per sq.ft of Rentable Area of the
Premises per annum (subject to reduction if paragraph 5(g)(iii) or (iv) applies)
plus 12 months of Additional Rent that would be payable for the period the 1st
day of April, 2001 to and including the 31st day of March, 2002, as estimated by
the Landlord
Termination Date
March 31, 2002
Termination Payment
10 months Basic Rent at the rate of $11.60 per sq.ft. of Rentable Area of the
Premises (subject to reduction if paragraph 5(g)(iii) or (iv) applies) per annum
plus 10 months of Additional Rent that would be payable for the period the 1st
day of April, 2002 to 31st day of January, 2003, as estimated by the Landlord
Termination Date
March 31, 2003
Termination Payment
8 months Basic Rent at the rate of $11.60 per sq.ft. of Rentable Area of the
Premises per annum (subject to reduction if paragraph 5(g)(iii) or (iv) applies)
plus 8 months of Additional Rent that would be payable for the period the 1st
day of April, 2003 to 30th day of November, 2003, as estimated by the Landlord
Termination Date
March 31, 2004
Termination Payment
6 months Basic Rent at the rate of $11.60 per sq.ft. of Rentable Area of the
Premises per annum plus (subject to reduction if paragraph 5(g)(iii) or (iv)
applies) 6 months of Additional Rent that would be payable for the period the
1st day of April, 2004 to 30th day of September, 2004, as estimated by the
Landlord
The termination rights in this paragraph 15 shall not apply to the Expansion
Premises but only to the 5th Floor Premises and the 6th Floor Premises.
16. OPTION TO EXTEND LEASE TERM
Provided Saville Systems Canada, Ltd. is itself in occupancy of the 6th Floor
Premises and the 5th Floor Premises and is then not in default of this Lease,
the Tenant shall be entitled to extend the term of this Lease for all of the 6th
Floor Premises and the 5th Floor Premises for a further term of five years
immediately following upon the expiration of the initial Lease term which
expires on the 30th day of June, 2005, upon the same terms and conditions as are
set forth in this Lease, except for:
(a) There shall be no further options to extend or renew.
(b) There shall be no leasehold improvement allowance, tenant inducement or
Landlord's work required whatsoever.
(c) There shall be no fixturing periods.
(d) There shall be no Basic Rent free or Additional Rent free periods.
(e) The Premises shall be rentable on an "as is "/" where is" basis with no
obligation of the Landlord to undertake any work thereto or to Building A
or any part thereof.
(f) The right of first refusal in paragraph 14 of this Schedule "C" shall not
apply.
(g) The Basic Rent for the Premises during the Extension Period shall be an
annual rate equivalent to the prevailing fair market rate for tenants for
comparable premises in comparable buildings, such amount to be agreed upon
between the Landlord and the Tenant not less than ninety (90) days prior to
the expiry date of the initial term, failing which, the rate for the Basic
Rent due during the Extension Period shall be determined by arbitration
pursuant to the provisions of the Arbitration Act of Ontario or any
successor legislation. In the event that the rate of Basic Rent has not
been determined prior to commencement of the Extension Period, the rate of
Basic Rent payable in the last month prior to expiry of the initial term
shall be payable monthly until a decision is reached, after which the rent
shall be retroactively adjusted in accordance with the decision of the
arbitration.
(h) The provisions of paragraph 11 of this Schedule "C" that specifically do
not apply to extensions or renewals.
In order to exercise the option to extend, the Tenant shall give written notice
to the Landlord not more than twelve (12) months prior but at least six (6)
months prior to the expiration of the initial term hereof, failing which, the
option to extend as contained herein, shall be null and void.
17. IDENTIFICATION
The Landlord shall provide the Tenant with one identification sign posted on the
ground floor lobby directory board of Building A at the Landlord's cost and on
the building exterior pylon at the Tenant's cost, in a location determined by
the Landlord.
18. OTHER SIGNAGE
Subject to the rights in favour of Digital, its subtenants and its assignees to
have the exclusive right to exterior signage on Building A, the exclusive right
to signage on the mechanical penthouse on the top of Building A, the right to
have one interior sign located in the lobby of Building A near the elevator, and
the right to name Building A, and provided that Saville Systems Canada, Ltd. is
the actual Tenant and is itself occupying at least two full floors of Building A
and/or is the largest tenant in Building A and is itself in possession of and
conducting its business from the whole of the 6th Floor Premises and the 5th
Floor Premises, the Tenant shall have the sole right to install a rooftop
corporate sign (the "Sign") at the Tenant's sole expense, to be located on and
affixed to Building A. Provided, however:
(a) Details as to location, colour, size, style, wording, character,
installation, operation, maintenance and materials (as each relates to the Sign)
shall be provided in writing to the Landlord for the Landlord's prior written
approval thereto.
(b) The Tenant must receive written approval from the Landlord prior to
installation of the Sign. As to the design of the sign, the Landlord will accept
a sign which has nothing displayed on it other than the current corporate logo
of the Tenant.
(c) The Sign shall in all respects be in full compliance with all existing and
any future governmental regulations and/or by-laws.
(d) All signs shall be consistent with a first class office building.
(e) The Tenant shall be responsible to obtain and maintain all necessary
approvals and permits in order to erect and maintain signs.
(f) The Tenant shall assume all related costs of the signage and shall assume
any liability regarding the Sign identification to the complete discharge of the
Landlord.
(g) The Tenant shall pay all costs of removal of signage at termination of this
Lease or immediately upon the Tenant losing its special signage rights as
provided for in this paragraph 18.
(h) The Tenant shall be responsible to maintain and keep in good order and
repair all such signage in keeping with the Complex as a first-class office
complex.
(i) The Tenant shall be responsible for any damage caused by the removal of the
Sign.
(j) The Tenant shall be responsible for all insurance costs for the signage and
shall provide proof to the Landlord forthwith upon request therefor.
The Tenant acknowledges that presently Digital and its subtenants and assignees
have exclusive right to (a) exterior signage on Building A, (b) roof top signage
on the mechanical penthouse on the top of Building A, and, (c) to name Building
A and in addition, Digital and its subtenants and assignees have the right to
have one name on the outside pylon sign applicable to Building A and the right
to special lobby signage.
19. SUBLETS AND ASSIGNMENTS
The parties acknowledge that provided the Tenant is not in default, the Tenant
shall have the right to assign or sublet the Premises subject to the provisions
of Section 8(e) of the Lease and subject to the restrictions with respect to use
of the Premises as set out at paragraph 4(b) of this Schedule "C".
20. LEASING COMMISSION
(a) The Landlord and Tenant agree that the Landlord shall be responsible to pay
a commission relating to the consummation of the tenancy contemplated herein to
CB Commercial ("CB"); which commission payable will be equivalent to $5.40 per
square foot of Rentable Area of the 6th Floor Premises and the sum of $4.50 per
square foot of Rentable Area of the 5th Floor Premises. The Landlord and Tenant
agree that the Tenant shall first occupy the 6th Floor Premises and that the
Tenant shall occupy the 5th Floor Premises at a later date and in no event shall
the Tenant occupy the 5th Floor Premises later than 17 months after the
commencement date of the Lease for the 6th Floor Premises. The commission for
the 6th Floor tenancy shall be due and payable to CB on the latest of:
(i) July 1, 1996;
(ii) execution of the Lease; and
(iii) when the 6th Floor Premises is open for business by the Tenant.
The commission for the 5th Floor tenancy shall be due and payable to CB on the
later of:
(i) December 1, 1997; and
(ii) when the 5th Floor Premises is open for business on a permanent basis
by the Tenant.
(b) In addition to Section 20 (a) above and as a separate agreement to this
Lease which is hereby incorporated into this Lease, the Landlord and Tenant
agree that in consideration of the payment of Ten Dollars ($10.00) by CB to each
of the Landlord and Tenant and for other good and valuable consideration given
by CB to each of the Landlord and the Tenant, the receipt and sufficiency
whereof is acknowledged by each of the Landlord and Tenant, the Landlord and
Tenant agree that in the event the Landlord shall fail to pay CB the commission
due to CB in respect of this Lease as set out in Section 20(a) above, and
provided that there is no valid dispute CB shall be entitled to notify the
Landlord that the commission payable to CB in respect of this Lease has not been
paid in full by the Landlord and specifying the balance of commission still
outstanding and unpaid to CB; and CB shall further be entitled to direct the
Tenant by written direction, that the Tenant shall pay to CB the Basic Rent
payable for each month of the term of the Lease on a continuous basis until the
balance of the commission outstanding and payable to CB by the Landlord has been
paid in full. The Landlord and the Tenant agree to respect this direction and to
co-operate in making the monthly Basic Rental payments to CB until its
commission has been paid in full. This direction is intended to bind the
Landlord and the Tenant and their successors, heirs and assigns. Nothing herein
shall obligate the Tenant to be liable to pay any amounts the effect of which
will require payments in excess of any amounts payable under this Lease. The
Tenant shall provide an accounting to the Landlord as to amounts it has paid to
CB.
21. SET OFFS
Except for the provisions of paragraph 2(c), 6(b) and 20 of this Section "C",
the Tenant shall pay all Basic Rent, Additional Rent and all other amounts due
and payable hereunder, without any right of set off, deductions, or defalcation
whatsoever.
22. LANDLORD'S RIGHT OF ENTRY
Landlord's right of entry and Section 8(j) and 13 of the Lease shall be subject
to reasonable notice, and work done thereunder (except emergency work) shall be
upon reasonable notice, having regard to the circumstances.
23. UNAVOIDABLE DELAY
The relief for unavoidable delay in Section 15 of the Lease shall apply equally
to the Landlord and the Tenant, provided that unavoidable delay shall in no
event relieve the Tenant from its obligation to pay all Basic Rent, Additional
Rent and any other monies payable to the Landlord hereunder.
24. INSTALMENT OF TAXES
For greater clarity the requirement in Section 5(c) of the Lease to pay
instalments of 1/9th of annual taxes shall be limited to nine such instalments
per year.
25. NON-DISTURBANCE AGREEMENT
The Tenant shall not be required to execute any postponement or subordination to
a mortgagee pursuant to Section 27 of the Lease unless and until the Tenant has
received a Non-Disturbance Agreement from such mortgagee or assurances that such
Non-Disturbance Agreement shall be delivered forthwith. In the event that the
Tenant shall be required to postpone or subordinate to a mortgagee pursuant to
Section 27 of the Lease, the Landlord agrees to use best efforts to provide the
Tenant with a Non-Disturbance Agreement from such mortgagee.
26. RIGHT OF RE-ENTRY RE BREACH
The Landlord's right of re-entry for any breach of the Tenant other than
nonpayment of rent shall be preceded by five days written notice to the Tenant
of the default claimed in respect of which the Landlord seeks to use its right
of re-entry.
27. LANDLORD'S RIGHT AND REMEDIES
Upon default of the performance of any of the obligations of the Tenant under
the Lease, the Landlord shall have the following rights and remedies:
(a) Subject to the provisions of paragraph 26 of this Schedule "C", the
immediate right of re-entry upon the Premises to repossess the same and enjoy
them as of its former state and the Tenant hereby consents to the Landlord
expelling all persons and removing all property at the said Premises from the
said Premises and such property may be removed and sold or disposed of by the
Landlord by public auction or otherwise and either in bulk or by individual item
as the Landlord in its sole discretion may decide or may be stored in a public
warehouse or elsewhere at the cost and for the account of the Tenant all without
service of notice or resort to legal process and without the Landlord being
considered guilty of trespass or becoming liable for any loss or damage which
may be occasioned thereby or for any claim for damages. Such re-entry shall not
be deemed to constitute a termination of the Lease unless the Landlord expressly
in writing terminates the Lease;
(b) The Landlord, in addition to all of the rights, shall have the right to
enter the Premises as the agent of the Tenant either by force or otherwise,
without being liable for any prosecution therefor and to relet the said Premises
as the agent of the Tenant and to receive the rent therefor and as the agent of
the Tenant to take possession of any furniture or other property on the said
Premises and to sell the same at a public or a private sale without notice and
to apply the proceeds of such sale and any rent derived from reletting the said
Premises upon account of the rent under the Lease and the Tenant shall be liable
to the Landlord for the deficiency, if any, for the remainder of the term as if
such re-entry had not been made unless the actual amount received by the
Landlord after such re-entry in respect of any reletting applicable to the
remainder of the term. The Tenant shall also reimburse the Landlord for all
reasonable legal and other costs incurred as a result of such re-entry and
reletting. No such re-entry or taking possession of the said Premises by the
Landlord shall be construed as an election on its part to terminate the Lease
unless the written notice of such intention is given to the Tenant by the
Landlord. Notwithstanding any such reletting without termination, the Landlord
may at any time thereafter elect to terminate the Lease as a result of default;
(c) The Landlord, in addition to all other rights, shall have the right to
determine forthwith this Lease and the term by leaving upon the said Premises
notice in writing of its intention so to do and the Tenant shall immediately
deliver up possession of the said Premises to the Landlord, and the Landlord may
re-enter and take possession of the same. If the Landlord at any time terminates
the Lease for any default, in addition to any other remedies it may have, it may
recover from the Tenant all damages it incurs by reason of such breach including
without limitation the cost of recovering the said Premises, solicitor's fees
(on a solicitor and his client basis) and including the worth at the time of
such termination of the excess, if any, of the amount of Basic Rent, Additional
Rent and other charges payable under the Lease required to be paid pursuant
thereto and hereto for the remainder of the term over the then reasonable rental
value of the said Premises for the remainder of the term, all of which amount
shall be immediately due and payable by the Tenant to the Landlord.
28. REMEDIES GENERALLY
Mention in this Lease of any particular remedy of the Landlord in respect of the
default by the Tenant does not exclude the Landlord from any other remedy in
respect thereof whether available at law or at equity or by statute or expressly
provided for in this Lease. No remedy shall be exclusive or dependant upon any
other remedy and the Landlord may from time to time exercise one or more of such
remedies independently or in combination, such remedies being cumulative and not
alternative.
Whenever the Tenant seeks a remedy in order to enforce the observance or
performance of one of the terms, covenants and conditions contained in this
Lease an the part of the Landlord to be observed or performed, the Tenant's only
remedy shall be for such damages as the Tenant shall be able to prove in a court
of competent jurisdiction that it has suffered as a result of a breach (if
established) by the Landlord in the observance or performance of any of the
terms, covenants or conditions contained herein on the part of the Landlord to
be observed and performed, except where the Lease provides the Landlord's
consent or approval is not to be unreasonably withheld, the Tenant's sole remedy
if the Landlord unreasonably withholds consent or approval, shall be an action
for a specific performance and the Landlord shall not be liable for any damages.
29. TENANT'S LETTER OF CREDIT
Prior to the Tenant being permitted access to the 6th Floor Premises for the
purposes of demolition or undertaking leasehold improvements at the 6th Floor
Premises, the Tenant shall provide to the Landlord an irrevocable letter of
credit in favour of the Landlord issued by a Schedule 1 Canadian chartered bank
in the principal amount of $225,000, which letter of credit shall be in form and
substance satisfactory to the Landlord, acting reasonably, provided that the
letter of credit shall contain at least the following provisions:
(a) The letter of credit shall be fully transferable or assignable by the
Landlord without consent of the issuer bank (the Landlord and such assignee
being herein for the purposes of this Section 29 be called the "Landlord").
(b) The issuer bank will honour demand for payment made thereunder without
inquiry as to whether the Landlord has the right as between itself and the
customer on whose behalf the issuer bank has issued the letter of credit, to
make such demand and without recognizing any claim of said customer.
(c) Monies may be payable under the letter of credit upon presentation of a
certificate signed by the Landlord that the Tenant is in default of its
obligations under this Lease which default has continued for a period of five
days after written notice of default from the Landlord to the Tenant;
(d) The letter of credit shall either have a term expiring no earlier than June
30, 1998, or, shall contain an "evergreen" clause which will provide that the
letter of credit will be deemed to be automatically extended and renewed for one
year and thereafter from year to year from the present or any future expiration
date unless thirty days prior to any such expiration date or extended expiration
date, the issuer bank notifies the Landlord in writing that it elects not to
consider the letter of credit renewed for such additional period, in which case,
the letter of credit shall provide that upon receipt by the Landlord of such
notice, the Landlord may draw fully upon the letter of credit by means of a
demand only and without the necessity of the certificate referred to as
aforesaid.
The said letter of credit shall be returned forthwith after the expiry date
thereof.
30. NOTICE
Notice hereunder may also be given by facsimile transmission to such telephone
number or telefacsimile number as the party may have designated in writing for
the purpose of notice and shall be deemed received at the time of confirmed
transmission during normal business hours and on the next ensuing business day
if sent on a Saturday, Sunday or statutory holiday.
31. CONFLICT
To the extent that there is any conflict between the provisions of this Schedule
"C" and the printed lease form, (as the same may be amended), the provisions of
this Schedule "C" shall prevail.
<PAGE>
SCHEDULE "D"
COMPETITOR LIST
IBM
HP
Sun Microsystems
SGI (Silicon Graphics)
AST
Compaq
Patriot
Computer Vision
Intergraph
Bay Networks
<PAGE>
SCHEDULE "D"
This Indenture made the 25th day of November 1994 IN PURSUANCE OF THE SHORT
FORMS OF LEASES ACT
BETWEEN: ORFUS INVESTMENTS, a partnership registered
under The Partnership Registration Act of
Ontario,
hereinafter called the "Landlord",
OF THE FIRST PART,
and
SAVILLE SYSTEMS CANADA LTD.
hereinafter called the "Tenant",
OF THE SECOND PART,
Premises
1. WITNESSETH that in consideration of the rents, covenants and agreements
hereinafter reserved and contained on the part of the Tenant to be paid,
observed and performed, the Landlord does demise and lease unto the Tenant the
Premises (the "Premises") on the 6th floor of the building at 625 Cochrane Drive
Markham, Ontario and is the building erected or being erected (whichever the
case may be) on the lands described in Schedule A hereto annexed, the Premises
being shown as outlined in red on the floor plan hereto annexed as Schedule B
and being exclusive of any part of the exterior face of the building. The usable
area of the Premises is approximately 15,861 square feet and the Rentable Area
of the Premises is approximately 16,675 square feet.
Definitions
2. For the Purposes of this Lease:
(a) "Additional Rent" means all amounts payable by the Tenant under the terms of
this Lease, whether payable to the Landlord or otherwise, over and above Basic
Rent.
(b) "Basic Rent" means those amounts set out as Basic Rent in section 4 of this
Lease.
(c) "Landlord's Architect" means a qualified architect, engineer or Ontario Land
Surveyor from time to time chosen by the Landlord.
(d) "Lease" means this Lease and any alterations from time to time made to this
Lease in accordance with the provisions herein set out.
(e) "Normal Business Hours" means 7:00 a.m. to 7:00 p.m. Monday through
Friday(but excluding Saturdays, Sundays and holidays), as such hours may be
varied by the Landlord from time to time.
(f) "Operating Costs" means the aggregate of all costs, expenses or amounts
incurred, whether by the Landlord or others on behalf of the Landlord, in
connection with the complete maintenance, operation, management and repair of
the lands & building and all components thereof and all improvements of the
Landlord thereon or therein including, without limiting the foregoing and
without duplication: the costs of any heating, ventilating and air conditioning
or other equipment and fuel, energy and other costs of providing heat,
ventilating and air conditioning, all expenditures made by the Landlord in an
effort to promote energy conservation as set out in section 8(x) of this Lease;
the cost of operating and maintaining elevators; the cost of providing hot and
cold water; depreciation (in accordance with generally accepted accounting
principles from time to time) of all capital and maintenance equipment which by
its nature requires periodic replacement including all heating, ventilating and
air conditioning equipment, the cost of electricity including lighting not
otherwise charged to tenants, the cost of snow, ice and refuse clearance and
removal; landscape maintenance and window cleaning; the capital tax as
hereinafter defined, the cost of all insurance including "all risks" (including
flood and earthquake), boiler and machinery, liability and other casualties and
loss of rental income insurance; accounting costs incurred in connection with
preparation of statements and opinions for tenants; the cost of providing
security services, the cost of consultants, retained with intent of saving or
reducing costs, the cost of all rental equipment and building supplies used by
the Landlord for all such operations and maintenance or any other purpose; the
cost of providing and operating the management office in the Building; amounts
paid on service contracts; the amount of all salaries, wages and benefits paid
to or on behalf of persons engaged in cleaning, supervision, maintenance,
operation, management, and repair, any business taxes which may be imposed on
the Landlord by reason of its operation of the building or parts thereof; and
management fees or charges of managing agents or Landlord's reasonable charges
in lieu thereof if the Landlord undertakes management of the Building.
In computing Operating Costs there shall be credited as a deduction the amounts
of proceeds of insurance relating to Insured Damage and other damage actually
recovered by the Landlord (or if the Landlord is deemed to self-insure, a
corresponding application of reserves) applicable to the damage.
Any report of the Landlord's auditor or other licensed public accountant
appointed by the Landlord for the purpose shall be conclusive as to the amount
of Operating Cost for any period to which such report relates.
If less than ninety-seven (97%) percent of the Building is occupied by Tenants,
then the amount of such Operating Costs shall be deemed to be increased to an
amount equal to the amount of Operating Costs which would have been incurred had
ninety-seven (97%) per cent of the Building been occupied by tenants throughout
the entire period for which Operating Costs are being calculated.
Operating Costs shall not include interest on Landlord's debt or capital
retirement of debt or amounts directly chargeable to capital account, save as
otherwise herein provided for.
(g) "Capital Tax" means the tax or excise imposed upon the Landlord which is
measured by or based in whole or in part upon the capital employed by the
Landlord as at the date of the substantial completion of construction of the
Building, imputed as if the amount of such tax were that amount due if the
Building were the only real property of the Landlord and includes the amount of
any capital or place of business tax levied by the provincial government or
other applicable taxing authority against the Landlord with respect to the
Building.
(h) "Proportionate Share" means that fraction having as its numerator the
Rentable Area of the Premises, and having as its denominator the Rentable Area
of the Building.
(i) "Rentable Area of the Building" means the total of the Rentable Areas of all
Premises leased or set aside from time to time by the Landlord for leasing in
the Building, and shall include the areas of all corridors, lobbies and other
areas from time to time set aside by the Landlord for common use on all floors
of the Building, and those common areas at the ground levels of the said
building from time to time set aside by the Landlord for common use by all
tenants of the said building including entrance lobbies, and corridor areas,
such areas being as certified from time to time by the Landlord's Architect.
(j) "Rentable Area of the Premises" means the area of the Premises expressed in
square feet or square meters in a certificate prepared by the Landlord's
Architect, which certificate shall be conclusive and binding subject as herein
provided and shall be delivered to the Tenant on or after the commencement of
the Term, at which time any adjustment to the area that is required thereby
shall be made.
The Rentable Area of the Premises shall be measured and determined as follows:
1. (a) In the case of Premises occupying a whole floor the Rentable Area
of the Premises shall be determined by measuring from the centre of
the office glass line of the outer building walls, but shall not
include stairs, elevator shafts, stacks, pipe shafts and vertical
ducts with their enclosing walls. Washrooms, air conditioning rooms,
fan rooms, janitors' closets and electrical closets within and
exclusively or primarily serving only that floor shall be included in
the Rentable Area of the Premises. No deductions shall be made for
columns and projections necessary to the Building.
(b) In the case of Premises occupying part of a floor the Rentable Area of
the Premises shall be determined by measuring from and to whichever of
the following form the boundaries of the Premises: the centre of the
office glass line of the outer building walls, the centre of
partitions which separate the Premises from adjoining premises or
public and/or service areas; and the office side of corridor walls or
other permanent partitions. There shall be included in the Rentable
Area of the Premises a portion of the public and/or service areas
which without limitation shall include corridors, elevator lobbies,
washrooms, air conditioning equipment rooms, fan rooms, janitors'
closets and electrical closets within and exclusively or primarily
serving only that floor. The portion of the said public and/or service
areas so included shall be that portion which the usable area of the
Premises bears to the usable area of all premises leased or set aside
from time to time for leasing by the Landlord on that floor (including
the Premises). No deductions shall be made for columns and projections
necessary to the Building.
(k) "Basic Rent Adjustment" the basic rent herein set forth was calculated on
basis of the rentable area as defined in paragraph 2(j) being 16,675 sq. ft.
(usable area of the Premises 15,861 sq. ft. plus portion of public and service
areas 814 sq. ft = 16,675 sq. ft.) at the basic rent of $ (See Page 2A )per sq.
ft.
(1) "Rules and Regulations" means those Rules and Regulations attached to this
Lease, and any additional Rules and Regulations made from time to time in
accordance with section 8(f) of this Lease.
(m) "Taxes" means all taxes, rates, duties, levies and assessments whatsoever
whether municipal, parliamentary or otherwise, levied, charged or assessed upon
the lands & building or upon any part or parts thereof and all improvements now
or hereafter erected or placed on the Lands, or charged against the Landlord on
account thereof, including local improvement charges but excluding: the amount
by which separate school taxes (if any should be payable) exceed the amount
which would have been payable for school taxes if no assessment for separate
school taxes had been made but an assessment for public school taxes had been
made and any taxes such as corporate, income, profit and excess profit taxes
assessed upon the income of the Landlord. In addition to the foregoing, Taxes
shall include any and all taxes, charges, levies or assessments which may in the
future be levied, charged or assessed in lieu thereof or in addition thereto.
Taxes shall also include all costs and expenses incurred by the Landlord in
obtaining or attempting to obtain a reduction or prevent an increase in the
amount of such Taxes.
<PAGE>
Page 2A
The basic rent for the Lease shall be based upon the gross rentable square
footage of 16,675 and the per square foot basic rental rates set out below for
the respective periods:
February 1, 1995 - January 31, 1997 $5.00 per sq.ft. per annum
February 1, 1997 - January 31, 1998 $6.00 per sq.ft. per annum
February 1, 1998 - January 31, 2000 $6.50 per sq.ft. per annum
February 1, 2000 - January 31, 2002 $7.00 per sq.ft. per annum
February 1, 2002 - January 31, 2003 $7.50 per sq.ft. per annum
February 1, 2003 - January 31, 2005 $8.00 per sq.ft. per annum
<PAGE>
(n) "Term" means that Term set out in section 3 of this Lease or as such Term
may be altered, extended or reduced in accordance with the provisions of this
Lease.
(o) "Year" means each calendar year or, at Lessor's option, the Lessor's fiscal
year where such reference is related to calculation of Additional Rent, the
whole or part, of which is included within the Term.
Term
3. To have and to hold the Premises for and during the Term of ten (10) years
commencing on the first day of February 1995; and ending on the thirty-first day
of January 2005.
Basic Rent
4. Yielding and paying therefor yearly and every year during the Term unto the
Landlord as Basic Rent for the Premises without set-offs, deductions or
defalcation whatsoever, the sum of (See page 3A) of lawful money of Canada to be
paid in equal monthly instalments of (See page 3A) on the first day of each and
every month during the Term to the Landlord at the address hereinafter
designated or at such other place as the Landlord shall designate, the first of
such payments to be made on the first day of February, 1995. If the term
commences on any day other than the first or ends on any day other than the last
day of a month, Basic Rent and Additional Rent for the fractions of a month at
the commencement and at the end of the Term shall be adjusted pro rata on a per
diem basis.
The Landlord acknowledges receipt of $ 46,148.06 representing first and last
months rent plus GST ($19,329.11) plus estimated additional rent ($26,818.95).
The Tenant is hereby directed to make all payments to ORFUS INVESTMENTS.
Taxes
5. (a) The tenant covenants to pay its taxes if separately assessed or the
Tenants proportionate share of the Taxes, herein called "Taxes", during each
year of the Term, to the Landlord as Additional Rent within (10) days following
receipt by the Tenant of written notice of the amount of such Taxes for such
Year, notwithstanding that the Year in question or the Term may have ended. If
after initial determination by the Landlord of the Taxes for a Year there is a
further Tax Increase with respect to such Year by reason of the issue of
supplemental assessment notices or taxes or both, or a variation in the basis
upon which the Taxes are calculated, or for any other reason, the Landlord
shall, as often as necessary, recalculate the Taxes for that Year, and if the
Taxes for that Year are greater than originally calculated, the Tenant covenants
to pay any excess amount to the Landlord (together with the originally
calculated amount of Taxes for that Year if not already paid) as Additional Rent
in the manner aforesaid.
(b) If the Taxes are increased by reason of any installations made in or upon or
any alterations made in or to the Premises by the Tenant or by the Landlord on
behalf of the Tenant, the Tenant shall pay the amount of such increase forthwith
to the Landlord upon receipt of notice thereof. The Tenant shall also pay every
tax and license fee in respect of any business carried on upon the Premises.
(c) The Landlord shall be entitled at any time or times in any Year, upon at
least fifteen (15) days' notice to the Tenant to require the Tenant to pay to
the Landlord monthly, on the date for payment of monthly rental instalments, as
Additional Rent, an amount equal to one ninth (1/9) of the amount estimated by
the Landlord to be the amount of the Taxes for such Year. The Landlord shall be
entitled subsequently during such Year, upon at least fifteen (15) days notice
to the Tenant, to revise its estimate of the amount of Tax Increase and the said
monthly instalment shall be revised accordingly. All amounts received under this
provision in any Year on account of the estimated amount of the Taxes shall be
applied in reduction of the actual amount of the Taxes for such Year. If the
amount received is less than the actual Taxes, the Tenant shall pay any
deficiency to the Landlord as additional rent within fifteen (15) days following
receipt by the Tenant of notice of the amount of such deficiency. If the amount
received is greater than the actual Taxes, the Landlord shall either refund the
excess to the Tenant as soon as possible after the end of the Year in respect of
which such payments were made, or the Landlord's option shall apply such excess
against any amounts owing or becoming due to the Landlord by the Tenant.
(d) If the Term of this Lease commences or ends on any day other than the first
or last day, respectively, of a Year, the Tenant shall be liable only for the
portion of the Taxes for such Year as falls with the Term, determined on a per
diem basis.
(e) The Taxes and all other payments referred to in subparagraph 5(b) above will
be paid and discharged by the Tenant as soon as they become due and payable, and
the Tenant will, upon the written request of the Landlord, promptly deliver to
the Landlord receipts evidencing such payment where applicable.
Operating Costs
6. (a) The Tenant covenants to pay the Tenant's Proportionate Share of the
Operating Costs for the Year during each Year of the Term, to the Landlord as
Additional Rent within Fifteen (15) days following receipt by the Tenant of
written notice of the amount of such Operating Costs for such Year,
notwithstanding that the Year in question or the Term may have ended. Any
amounts payable pursuant to this subparagraph (a) shall be determined and
certified by the Landlord following the end of the Year for which such amounts
are payable. If only part of a Year is included within the Term, any such amount
payable shall be pro-rated accordingly and shall be paid on the last day of the
Term. Any balance remaining unpaid or any excess paid shall, notwithstanding
such termination, be adjusted between the Landlord and Tenant within a
reasonable period thereafter.
(b) The Landlord shall be entitled at any time or times in any Year, upon at
least fifteen ( 15) days' notice to the Tenant to require the Tenant to pay to
the Landlord monthly, on the date for payment of monthly rental instalments, as
Additional Rent, an amount equal to one-twelfth (1/12) of the amount estimated
by the Landlord to be the amount of the Operating Costs for such Year. The
Landlord shall be entitled subsequently during such Year, upon at least fifteen
(15) days' notice to the Tenant, to revise its estimate of the amount of the
Operating Costs and the said monthly instalment shall be revised accordingly.
All amounts received under this provision in any Year on account of the
estimated amount of Operating Costs shall be applied in reduction of the actual
amount of Operating Costs for such Year, the Tenant shall pay any deficiency to
the Landlord as Additional Rent within fifteen (15) days following receipt by
the Tenant of notice of the amount of such deficiency. If the amount received is
greater than the actual Operating Costs, the Landlord shall either refund the
excess to the Tenant as soon as possible after the end of the Year in respect of
which such payments were made, or at the Landlord's option, shall apply such
excess against any amounts owing or becoming due to the Landlord by the Tenant.
<PAGE>
Page 3A
Paragraph 4.
The following paragraphs set out the rent for the Sixth Floor Space.
(a) Yielding and paying as Basic Rent during the first two years of the Lease
term, commencing on the 1st day of February, 1995, to and including the 31st day
of January 1997, in each year, the sum of EIGHTY-THREE THOUSAND, THREE HUNDRED
AND SEVENTY-FIVE ($83,375.00) DOLLARS annually of lawful money of Canada to be
payable in equal monthly instalments of SIX THOUSAND, NINE HUNDRED AND
FORTY-SEVEN ($6,947.92) DOLLARS and NINETY-TWO CENTS each on the 1st day of each
every month in each and every year in cash or by cheque payable at par at
Toronto (without deductions or defalcations of any kind).
(b) and yielding and paying as Basic Rent during the third year of the Lease
terms commencing on the 1st day of February, 1997, to and including the 31st day
of January 1998, the sum of ONE HUNDRED THOUSAND, AND FIFTY ($100,050.00)
DOLLARS annually of lawful money of Canada to be payable in equal monthly
instalments of EIGHT THOUSAND, THREE HUNDRED AND THIRTY-SEVEN ($8,337.50)
DOLLARS and FIFTY CENTS each on the 1st day of each every month in the said year
in cash or by cheque payable at par at Toronto (without deductions or
defalcations of any kind).
(c) and yielding and paying as Basic Rent during the fourth and fifth years of
the Lease term, commencing on the 1st day of February, 1998, to and including
the 31st day of January 2000, in each year the sum of ONE HUNDRED AND EIGHT
THOUSAND, THREE HUNDRED AND EIGHTY-SEVEN ($108,387.50) DOLLARS and FIFTY CENTS
annually of lawful money of Canada to be payable in equal monthly instalments of
NINE THOUSAND, AND THIRTY-TWO ($9032.29) DOLLARS and TWENTY-NINE CENTS each on
the 1st day of each every month in each and every year in cash or by cheque
payable at par at Toronto (without deductions or defalcations of any kind).
(d) and yielding and paying as Basic Rent during the sixth and seventh years of
the Lease term, commencing on the 1st day of February, 2000, to and including
the 31st day of January 2002, in each year the sum of ONE HUNDRED AND SIXTEEN
THOUSAND, SEVEN HUNDRED AND TWENTY-FIVE ($116,725.00) DOLLARS annually of lawful
money of Canada to be payable in equal monthly instalments of NINE THOUSAND,
SEVEN HUNDRED AND TWENTY SEVEN ($9,727.08) DOLLARS and EIGHT CENTS each on the
1st day of each every month in each and every year in cash or by cheque payable
at par at Toronto (without deductions or defalcations of any kind).
(e) and yielding and paying as Basic Rent during the eighth year of the Lease
term., commencing on the 1st day of February, 2002, to and including the 31st
day of January 2003, in each year, the sum of ONE HUNDRED AND TWENTY-FIVE
THOUSAND, AND SIXTY-TWO ($125,062.50) DOLLARS and FIFTY CENTS of lawful money of
Canada to be payable in equal monthly instalments of TEN THOUSAND, FOUR HUNDRED
AND TWENTY ONE ($10,421.87) DOLLARS and EIGHTY-SEVEN CENTS each on the 1st day
of each and every month in the said year in cash or by cheque payable at par at
Toronto (without deductions or defalcations of any kind).
(f) and yielding and paying as Basic Rent during the ninth and tenth years of
the Lease term, commencing on the 1st day of February, 2003, to and including
the 31st day of January 2005, in each year, the sun of ONE HUNDRED AND
THIRTY-THREE THOUSAND, AND FOUR HUNDRED ($133,400.00) DOLLARS annually of lawful
money of Canada to be payable in equal monthly instalments of ELEVEN THOUSAND,
ONE HUNDRED AND SIXTEEN ($11,116.67) DOLLARS and SIXTY-SEVEN CENTS each on the
1st day of each every month in each and every year in cash or by cheque payable
at par at Toronto (without deductions or defalcations of any kind).
In addition to the above rental, Basic Rental for the Initial Expansion Space
(as defined in Schedule 'B') shall be payable in equal monthly instalments on
the first of each and every month of the lease term, calculated in accordance
with the period rates as set out on page 2A above.
<PAGE>
Recovery of Adjustments
7. The Landlord (in addition to any other right or remedy of the Landlord) shall
have the same rights and remedies in the event of the default by the Tenant in
payment of any amounts payable pursuant to paragraph 5 and 6 as the Landlord
would have in the case of default in payment of rent.
Tenant's Covenants:
8. The Tenant covenants with the Landlord:
Pay Rent
a) to pay rent and the Tenant's proportionate share of Taxes and Operating Costs
and all other amounts payable by the Tenant to the Landlord under this lease as
Additional Rent.
Utility Charges, Bulbs, etc. & Meters
b) (i) and to pay all charges for telephone, electric current and all other
utilities supplied to or used in connection with the Premises. If there are no
separate meters for measuring the consumption of such utilities, the Tenant
shall pay to the Landlord, in advance by monthly instalments as Additional Rent,
such amount as may be reasonably estimated by the Landlord from time to time as
the cost of such utilities for the Premises. In the event of any dispute between
the Landlord and the Tenant as to the amount of such utility costs, the opinion
of the Landlord's Architect shall be final and binding on the Landlord and the
Tenant. The Tenant shall advise the Landlord forthwith of any installations,
appliances or business machines used by the Tenant and consuming or likely to
consume large amounts of electricity or other utilities and further on request
shall properly provide the Landlord with a list of all installations, appliances
and business machines used in the Premises, and the Landlord shall have the
right to require the Tenant to install a separate meter at the Tenant's expense.
(ii) The Tenant covenants to pay for the cost of any metering which may be
requested by the Tenant to be installed by the Landlord in the
Building for the purpose of determining any utility (including
electricity and water) consumed in the Premises or which may be
required by the Landlord to measure excess usage of electricity or
water.
(iii)The Landlord shall have the exclusive right to attend to any
replacement of electric light bulbs, tubes and ballasts in the
Premises throughout the Term and any renewal thereof. The Landlord may
adopt a system of relamping and reballasting periodically on a group
basis in accordance with good practice.
Maintain and Repair
(c) to repair, maintain and keep the Premises in good and substantial repair as
a prudent owner would do, reasonable wear and tear and damage by fire and any
other peril against which the Landlord is required under this lease to be
insured, and structural repairs only excepted, and that the Landlord may enter
and view state of repair; and that the Tenant will repair in accordance with
notice in writing, reasonable wear and tear and damage by fire and any other
insured peril, and structural repairs only excepted; and that the Tenant will
leave the Premises in good repair, reasonable wear and tear and damage by fire
and any other insured period and structural repairs only excepted; provided that
if the Tenant neglects to so maintain or to make such repairs promptly after
notice, the Landlord may, at its option, do such maintenance or make such
repairs at the expense of the Tenant, and in any and every such case the Tenant
covenants with the Landlord to pay to the Landlord forthwith as Additional Rent
all sums which the Landlord may have expended in doing such maintenance and
making such repairs; provided further that the doing of such maintenance or the
making of any repairs by the Landlord shall not relieve the Tenant from the
obligation to maintain and repair;
Repair Where Tenant At Fault
(d) if the Building, including the Premises, the elevators, boilers, engines,
pipes and other apparatus (or any of them) used for the purposes of heating,
ventilating or air-conditioning the Building or operating the elevators, or if
the water pipes, drainage pipes, electric lighting or other equipment of the
Building or the roof or outside walls of the Building get out of repair or
become damaged or destroyed through the wilful act, negligence, carelessness or
misuse of the Tenant, its servants, agents, employees, or anyone permitted by
the Tenant to be in the Building, or through it or them in any way stopping up
or injuring the heating, ventilating or air-conditioning apparatus, elevators,
water pipes, drainage pipes, or other equipment or part of the Building, the
expense of the necessary repairs, replacements or alterations, shall be borne by
the Tenant who shall pay the same to the Landlord forthwith upon demand;
Assigning or Sub-Letting
(e) not to assign this Lease or sublet or franchise, license, grant concessions
in, or otherwise part with or share possession of the Premises, or any part
thereof, without the prior written consent of the Landlord; at the time the
Tenant requests such consent the Tenant shall deliver to the Landlord such
information in writing (the "required information") as the Landlord may
reasonably require, including a copy of the proposed offer or agreement, if any,
to assign or sublet or otherwise, the name, address, nature of business and
evidence as to the financial strength of the proposed assignee or sub-tenant
upon receipt of such request and all required information, the Landlord shall
have the right, exercisable within fourteen ( 14) days after such receipt, to
terminate this Lease if the request relates to all of the Premises or, if the
request relates to a portion of the Premises only, the Landlord shall have the
right to terminate this Lease with respect to such portion and the rent payable
by the Tenant under this Lease shall abate in the proportion that the area of
the portion of the Premises for which this Lease is terminated bears to the area
of the Premises. If the Landlord exercises such right, the Tenant shall
surrender possession of the Premises or such portion thereof, as the case may
be, not less than sixty (60) days and not more than ninety (90) days following
the Landlord's notice or exercise of its right hereunder in accordance with all
the provisions of this Lease relating to the surrender. If the Landlord does not
exercise such right, then the Landlord's prior written consent shall not be
delayed or be unreasonably withheld. In no event shall any assignment or
subletting to which the Landlord has consented release the Tenant from its
obligations fully to perform all the terms, conditions and covenants of this
Lease. The Tenant shall pay on demand the Landlord's reasonable costs incurred
in connection with the Tenant's request for such consent. The Landlord's consent
may be conditional upon the subtenant or assignee entering into a covenant with
the Landlord in form satisfactory to the Landlord to observe and perform all
tenant's covenants in the Lease. If the Tenant is a private corporation and any
part or all of the corporate shares shall be transferred by sale, assignment,
bequest, inheritance, operation of law or other dispositions or dispositions so
as to result in a change in the control of the corporation, such change of
control shall be considered an assignment of this Lease and shall be subject to
the aforesaid provisions; the Tenant shall make available to the Landlord upon
its request for inspection and copying, all books and records of the Tenant, and
their respective shareholders which, alone or with other data may show the
applicability or inapplicability of this clause.
The Tenant shall not advertise or allow the Premises or a portion thereof to be
advertised as being available for assignment, sublease or otherwise without the
prior written approval of the Landlord to the form and content of such
advertisement, which approval shall not be unreasonably withheld, provided that
no such advertising shall contain any reference to the rental or the rental rate
of the Premises;
Rules and Regulations
(f) that the Tenant and its employees and all persons visiting or doing business
with them on the Premises shall be bound by and shall observe and perform the
Rules and Regulations and any further and other reasonable Rules and Regulations
made hereafter by the Landlord of which notice in writing shall be given to the
Tenant and all such Rules and Regulations shall be deemed to be incorporated
into and form part of this Lease;
Use of Premises
(g) not to use the Premises nor allow the Premises to be used for any purpose
other than an office: and that if the costs of insurance on the Building shall
be increased by reason of the use made of the Premises or by reason of anything
done or omitted or permitted by the Tenant or by anyone permitted by the Tenant
to be upon the Premises, the Tenant shall pay to the Landlord on demand as
Additional Rent the amount of such increase; and if any insurance policy upon
the Building shall be cancelled or be under notice of possible cancellation by
the insurer by reason of the use or occupation of the Premises or any part
thereof by the Tenant or any assignee or subtenant or by anyone permitted by the
Tenant to be upon the Premises, the Landlord may at its option terminate this
Lease and thereupon rent and any other payments for which the Tenant is liable
under this Lease shall be apportioned and paid in all to the later of the date
of such termination or the date on which actual possession is given up or taken,
and the Tenant shall immediately deliver up possession of the Premises to the
Landlord and the Landlord may re-enter and take possession of same;
Observance of Law
(h) in its use and occupation of the Premises, not to violate any law or
ordinance or any order, rule, regulation or requirement of any federal,
provincial or municipal government and any appropriate department, commission,
board or officer thereof, and to comply promptly and at the Tenant's sole cost
with all of the foregoing;
Waste and Nuisance
(i) nor to do or suffer any waste, damage, disfiguration or injury to the
Premises or the fixtures and equipment thereof or permit or suffer any
overloading of the floors thereof; and not to use or permit to be used any part
of the Premises for any dangerous, noxious or offensive trade or business and
nor to cause or maintain any nuisance in, at or on the Premises or cause any
annoyance, nuisance or disturbance to the occupiers or owners of any adjoining
lands and/or premises;
Entry by Landlord
(j) to permit the Landlord and its servants or agents to enter upon the Premises
at any time and from time to time for the purpose of inspecting and making
repairs, alterations or improvements to the Premises or the Building, and the
Tenant shall not be entitled to any compensation for any inconvenience, nuisance
or discomfort occasioned thereby;
Indemnity
(k) to promptly indemnify and save harmless the Landlord from any and all
liabilities, damages, costs, claims, suits or actions arising out of: any
breach, violation or non-observance by the Tenant of any of its covenants and
obligations under the Lease; any damage to property while said property shall be
in or about the Premises including the systems, furnishings and amenities
thereof, as a result of the wilful or negligent act or omission of the Tenant,
its invitees, licensees, agents, servants or employees, and any injury to any
licensee, invitee, agent, servant or employee of the Tenant, including death
resulting at any time therefrom, occurring on or about the Premises or the
Building; and this indemnity shall survive the expiry or earlier termination of
this Lease, in respect of any of the foregoing circumstances during the Term;
Exhibiting Premises
(l) to permit the Landlord or its agents to exhibit the Premises to prospective
tenants during the last six (6) months of the Term or any renewal thereof;
Alterations
(m) that the Tenant will not, without the prior written consent of the Landlord,
make or erect in or to the Premises any installations, alterations, additions,
partitions, repairs or improvements, or do anything which might affect the
proper operation of the electrical, lighting, heating, ventilating,
air-conditioning, sprinkler, fire protection or other systems; the Tenant's
request for consent shall be in writing and accompanied by an adequate
description of the contemplated work, and where appropriate, working drawings
and specifications therefor; the Landlord's costs of having its architects,
engineers or others examine such drawings and specifications shall be payable by
the Tenant upon demand as Additional Rent; the Landlord may require that any or
all work to be done hereunder be done by the Landlord's contractors or workmen
or by contractors or workmen engaged by the Tenant but first approved by the
Landlord and shall be performed in subject to inspection by and the reasonable
supervision of the Landlord and shall be performed in accordance with all laws
and any reasonable conditions (including a reasonable supervision fee of the
Landlord to be paid by the Tenant) or regulations imposed by the Landlord and
completed in a good and workmanlike manner and with reasonable diligence in
accordance with the approvals given by the Landlord; any connections of
apparatus to the electrical system, plumbing lines, or heating, ventilating or
air-conditioning systems shall be deemed to be an alteration within the meaning
of this paragraph: the Tenant shall, at its own cost and before commencement of
any work, obtain all necessary building or other permits and keep same in force
and the Tenant shall promptly pay all charges incurred by it for any work,
materials or services and shall forthwith discharge any liens resulting
therefrom: if the Tenant fails to so discharge any liens, the Landlord may (but
shall be under no obligation to) pay into court the amount required, or
otherwise obtain a discharge of the lien in the name of the Tenant and any
amount so paid together with all costs incurred in respect of such discharge
shall be payable by the Tenant to the Landlord forthwith upon demand plus
interest on all such amounts at the rate hereafter set out in this lease; the
Tenant shall not create any mortgage, conditional sale agreement, or other
encumbrance in respect of its leasehold improvements or trade fixtures nor shall
the Tenant lease the same from any third party, nor permit any such encumbrance
to attach to the Premises or to the Building;
Interior Walls and Exterior Walls
(n) that the Tenant will not deface or mark any part of the Building and will
not permit any hole to be drilled or made or nails, screws, hooks or spikes to
be driven into the exterior or interior walls, doors or floors or stone or brick
work of the Building or any appurtenances thereof without the prior written
consent of the Landlord;
(o) that the Tenant will not paint, place, affix, inscribe or display on any of
the windows of the Premises or the Building or on any part of the outside or
inside thereof, any sign, picture, direction, lettering, advertisement or notice
without the prior written consent of the Landlord, and the Landlord shall have
the right to prescribe the size, material, color, method of attachment, pattern
and location of identification signs for the Tenant, on the Tenant ceasing to be
a tenant of the Premises, the Landlord will cause any sign to be removed or
obliterated; the Tenant shall be entitled to have one name shown upon the
directory board or boards of the Building and any additional names or subsequent
changes shall be paid for by the Tenant, but the Landlord shall in its sole
discretion design the style of such identification and allocate the space on the
directory board or boards therefor;
Name of Building
(p) not to refer to the Building by any name or names other than such name or
names as may be designated from time to time by the Landlord, nor to use such
name or names for any purpose other than that of the business address of the
Tenant;
Glass
(q) the Landlord shall replace and the Tenant shall pay to the Landlord on
demand as Additional Rent the cost of replacement with as good quality any glass
on or within or in the walls or doors (exterior or interior) abutting or forming
part of the Premises, which is broken during the Term or any renewals thereof,
unless such breakage is solely the result of the negligence of the Landlord.
Certificates
(r) the Tenant will at any time and from time to time, at no cost to the
Landlord, and upon not less than ten (10) days' prior notice, execute and
deliver to the Landlord a statement in writing certifying that this Lease is
unmodified and in full force and effect (or if modified, stating the
modifications and that the Lease is in full force and effect as modified), the
amount of the annual rental then being paid hereunder, the dates to which the
same, by instalment or otherwise, and other charges hereunder have been paid,
whether or not there is any existing default on the part of the Landlord of
which the Tenant has notice, and any other information reasonably required,
Evidence of Payments
(s) to produce to the Landlord upon request, satisfactory evidence of the due
payment by the Tenant of all payments required to be made by the Tenant under
this Lease;
Notice of Accidents
(t) to notify the Landlord promptly and in writing of any accident or damages to
or defect in the Premises, the Building, or any part thereof including the
heating, ventilating and air-conditioning apparatus, water and gas pipes,
telephone lines, electrical apparatus or other building services;
Tenant Insurance
(u) At its expense to maintain in force (in addition to the insurance coverage
provided by the Landlord included under the operating costs provision paragraph
in 2 (f) during the term and any renewals thereof:
(i) comprehensive general liability insurance against claims for personal
injury, death or property damage arising out of all operations of the
Tenant, (including tenants' legal liability, personal liability,
property damage and contractual liability to cover all indemnities and
repair obligations) with respect to the business carried on in and
from the Premises, in amounts required by the Landlord and any
mortgagee of the Project or any part thereof from time to time but in
no event less than Two Million Dollars per occurrence;
(ii) all risks direct damage insurance covering all chattels and fixtures
and all leasehold improvements, installations, additions and
partitions made by the Tenant or by the Landlord at the Tenant's
expense, in an amount equal to the full replacement value thereof;
and,
(iii)such other forms of insurance as may be reasonably required by the
Landlord and any mortgagee from time to time; and the tenant agrees to
furnish upon request from the Landlord verification of compliance with
the provisions of this paragraph.
Surrender on Termination
(v) at the expiration or sooner termination of the Term, to deliver up
possession of the Premises to the Landlord, together with all fixtures or
improvements which the Tenant is required or permitted to leave therein or
thereon free of all rubbish and in a clean and tidy condition, and to deliver to
the Landlord all keys and security devices;
Fire and Safety
(w) the Tenant acknowledges that it may be or become desirable or necessary for
the Landlord to organize and coordinate arrangements within the Building for the
safety of all tenants and occupants in the event of fire or similar events and
the Tenant, its employees, servants, agents and invitees shall co-operate and
participate in any fire drills, evacuation drills and similar exercises as may
be arranged or organized by the Landlord from time to time, and to hold the
Landlord harmless from any personal or material loss, damage or injury arising
therefrom; and
Energy Conservation
(x) to cooperate with the Landlord in conserving energy of all types in the
Building, including complying at the Tenant's own cost with all reasonable
requests and demands of the Landlord made with a view to energy conservation;
any reasonable capital expenditures made by the Landlord in an effort to promote
energy conservation shall be added to Operating Costs in the Year such
expenditures are incurred.
Quiet Enjoyment
9. The Landlord covenants with the Tenant for quiet enjoyment.
Landlord's Covenants
Heating & Air Conditioning
10. The Landlord further covenants with the Tenant as follows:
(a) subject to any payment referred to in section 6 above required to be made by
the Tenant in respect thereof, to provide heating of the Premises and to operate
the air-conditioning and ventilating equipment to an extent sufficient to
maintain a reasonable temperature therein at all times during Normal Business
Hours except during the making of repairs; but should the Landlord default in so
doing, the Landlord shall not be liable for indirect or consequential damages of
any kind or damages for personal discomfort or illness by reason of the
operation or non-operation of such equipment or otherwise:
In the event that the Tenant requires heating or air-conditioning during other
than Normal Business Hours, then the Tenant shall pay to the Landlord the cost
of providing said additional heating and air-conditioning as may be reasonably
determined by the Landlord, in accordance with Schedule 'B'.
Taxes
(b) subject to any payment referred to in section 5 above required to be made by
the Tenant in respect thereof, to pay or cause to be paid any Taxes, payment of
which are not the responsibility of the Tenant under this Lease;
Elevator
(c) to furnish, except when repairs are being made, passenger elevator service
during Normal Business Hours and limited elevator service at other times;
operatorless and automatic elevator service if made available shall be deemed
elevator service; and to permit the Tenant and its employees to have free use of
such elevator service in common with others;
Access
(d) to permit the Tenant and its employees and all persons lawfully requiring
communication with them access in common with others of the entrances,
stairways, corridors and halls in the Building leading to the Premises and to
have the use of the same during Normal Business Hours and during Non Normal
Business Hours by the Building Security System;
Washrooms
(e) to permit the Tenant and its employees in common with others entitled
thereto to use the washrooms in the Building which may be designated for the
Premises;
Janitor Services
(f) to cause when reasonably necessary from time to time the floors to be swept
and windows to be cleaned and the desks, tables and other furniture of the
Tenant to be dusted all in keeping with a first-class office building but with
the exception of the obligation to cause such work to be done, the Landlord
shall not be responsible for any act of omission or commission on the part of
the person or persons employed to perform such work; such work shall be done at
the Landlord's direction without interference by the Tenant, his servants or
employees. The Tenant acknowledges that the Landlord shall be relieved from the
foregoing obligations in respect of any part of the Premises to which access is
not granted to the person or persons employed or retained to do such work.
Fixtures
11. Provided that the Tenant may remove its fixtures and chattels if and only if
all rent and other charges due or to become due are fully paid; provided
further, however, that all leasehold improvements, installations, additions,
partitions and fixtures (other than trade or tenant's fixtures in or upon the
Premises, which terms shall in no case include any heating, ventilating and
air-conditioning equipment or other building services or carpeting) whether
placed there by the Tenant or the Landlord, shall be the Landlord's property
upon the termination of this Lease without compensation therefor to the Tenant
and shall not be removed from the Premises at any time either during or after
the Term. Notwithstanding anything herein contained the Landlord shall be under
no obligation to replace, repair or maintain such leasehold improvements,
installations, additions, partitions and fixtures.
Damage or Destruction
12. (a) If the Premises or any portion thereof are damaged or destroyed by fire
or by other casualty against which the Landlord is required to be insured, rent
shall abate in proportion to the area of that portion of the Premises which, in
the reasonable opinion of the Landlord, is thereby rendered unfit for the
purposes of the Tenant until the Premises are repaired and rebuilt and the
Landlord agrees that it will, with reasonable diligence, repair and rebuild the
Premises. The Landlord's obligation to rebuild and restore the Premises shall
not include the obligation to rebuild, restore, replace or repair any chattel,
fixtures, leasehold improvement, installation, addition or partition in respect
of which the Tenant is to maintain insurance under section 8 (u), or any other
thing that is the property of the Tenant ( in this clause collectively called "
Tenant's Improvements"), the Premises shall be deemed restored and rebuilt and
fit for the Tenant's purposes when the Landlord's Architect certifies that they
have been substantially restored and rebuilt to the point where the Tenant could
occupy them for the purpose of rebuilding, restoring, replacing or repairing the
Tenant's Improvements; the issuance of the certificate shall not relieve the
Landlord of its obligation to complete the rebuilding and restoration as
aforesaid, but the Tenant shall forthwith after issuance of the certificate
proceed to rebuild, restore, replace and repair the Tenant's Improvements, and
the provisions of section 8 (m) shall apply to such work, mutatis mutandis;
(b) Notwithstanding section 12 (a), if the Premises or any portion thereof are
damaged or destroyed by any cause whatsoever and cannot in the reasonable
opinion of the Landlord be rebuilt or made fit for the purposes of the Tenant as
aforesaid within ninety (90) days of the damage or destruction, the Landlord
instead of rebuilding or making Premises fit for the Tenant may, at its option,
terminate this lease by giving to the Tenant within thirty (30) days after such
damage or destruction notice of termination and thereupon rent and any other
payments for which the Tenant is liable under this Lease shall be apportioned
and paid to the date of such damage and the Tenant shall immediately deliver up
possession of the Premises to the Landlord;
(c) Irrespective of whether the Premises or any portion thereof are damaged or
destroyed as aforesaid, in the event that fifty per cent (50%) or more, as
determined by the Landlord, of the Building, is damaged or destroyed by any
cause whatsoever, and if, in the reasonable opinion of the Landlord such area
cannot be rebuilt or made fit for the purpose of the tenants thereof within one
hundred and eighty ( 180) days of such damage or destruction, the Landlord may
at its option terminate this Lease by giving to the Tenant within thirty (30)
days after such damage notice of termination requiring vacant possession of the
Premises sixty (60) days after delivery of the notice of termination and
thereupon rent and any other payments for which the Tenant is liable under this
Lease shall be apportioned and paid to the date on which vacant possession is
given and the Tenant shall deliver up possession of the Premises to the Landlord
in accordance with such notice of termination.
Expansion, Alteration
13. The Landlord shall have the right to enter into the Premises and to bring
its workmen and materials thereon to make additions, alterations, improvements,
installations and repairs to the Lands, the Building, and the common areas and
services thereof as such may exist from time to time, including the right to
erect new buildings and facilities. The Landlord may cause such reasonable
obstructions and interference with the use and enjoyment of the Lands, the
Building and the Premises as may be necessary for the purposes aforesaid and may
interrupt or suspend the supply of electricity, water of other utilities or
services when necessary and until the additions, alterations, improvements,
installations or repairs have been completed, and there shall be no abatement in
rent nor shall the Landlord be liable by reason thereof, provided all such work
is done as expeditiously as reasonably possible. The Landlord shall have the
right to use, install, maintain and repair pipes, wires, ducts, shafts or other
installations in, under or through the Premises for or in connection with the
supply of any services to the Premises or any other premises in the Building.
The Landlord further reserves the right to monitor access to any of the parking
areas by means of barriers, control booths or any other method which the
Landlord deems proper. The Landlord reserves the right to change the location,
layout or size of the parking area and to charge for the use of parking spaces,
except as expressly set out in this Lease.
Injuries, Loss and Damage
14. The Landlord shall not be responsible in any way for any injury to any
person (including death) or for any loss of or damage to any property belonging
to the Tenant or to other occupants of the Premises or to their respective
invitees, licensees, agents, servants or other persons from time to time
attending at the Premises while such person or property is in or about the
Lands, the Premises, the Building, or any areaways, parking areas, lawns,
sidewalks, steps, truckways, platforms, corridors, stairways, elevators or
escalators in connection therewith, including without limiting the foregoing,
any loss or damage to any property caused by theft or breakage, or by steam
water, rain or snow or for any loss or damage caused by or attributable to the
condition or arrangements of any electric or other wiring or for any damage
caused by smoke or anything done or omitted to be done by any other tenant of
premises in the Building or for any other loss whatsoever with respect to the
Premises, goods placed therein or any business carried on therein.
Impossibility, Unavoidable Delays
15. Whenever and to the extent the Landlord is unable to fulfil or shall be
delayed or restricted in the fulfillment of any obligation hereunder by reason
of being unable to obtain the material, goods, equipment, service, utility or
labour required to enable it to fulfil such obligation or by reason of any
statute, law, regulation, by-law or order or by reason of any other cause beyond
its reasonable control, whether of the same nature as the foregoing or not, the
Landlord shall be relieved from the fulfilment of such obligation and the Tenant
shall not be entitled to compensation for any inconvenience, nuisance or
discomfort thereby occasioned. There shall be no deduction from the rent or
other moneys payable hereunder by reason of any such failure or cause.
Re-entry
16. PROVISO For re-entry by the said Landlord on non-payment of rent or
non-performance of covenants.
Bankruptcy, etc.
17. Provided further that in case without the written consent of the Landlord,
the Premises shall be used by any other person than the Tenant or for any other
purpose than that for which the same were let or in case the Premises shall be
vacated or remain unoccupied for fifteen (15) days, or in case the Term or any
of the goods and chattels of the Tenant shall be at any time seized in execution
or attachment by any creditor of the Tenant or the Tenant shall make any
assignment for the benefit of the creditors or any bulk sale or become bankrupt
or insolvent or take the benefit of any Act now or hereafter in force for
bankrupt or insolvent debtors, or, if the Tenant is a corporation and any order
shall be made for the winding-up of the Tenant, or other termination of the
corporate existence of the Tenant, then in any such case this Lease shall, at
the option of the Landlord, cease and determine and the Term shall immediately
become forfeited and void and the then current month's rent and the next ensuing
three (3) month's rent (including in both cases all other amounts payable as
Additional Rent) shall immediately become due and be paid and the Landlord
without prejudice to any claim for damages for any antecedent breach of covenant
may re-enter and take possession of the Premises as though the Tenant or other
occupant or occupants of the Premises was or were holding over after the
expiration of the Term without any right whatever.
Distress
18. The Tenant waives and renounces the benefit of any present or future statute
taking away or limiting the Landlord's right of distress, and covenants and
agrees that notwithstanding any such statute none of the goods and chattels of
the Tenant on the Premises at any time during the Term shall be exempt from levy
by distress for rent, in arrears.
Entry as Agent
19. The Tenant further covenants and agrees that on the Landlord becoming
entitled to re-enter upon the Premises under any of the provisions of this
Lease, the Landlord, in addition to all other rights shall have the right to
enter the Premises as the agent of the Tenant either by force or otherwise,
without being liable for any prosecution therefor and to relet the Premises as
the agent of the Tenant and to receive the rent therefor and as the agent of the
Tenant to take possession of any furniture or other property on the Premises and
to sell the same at public or private sale without notice and to apply the
proceeds of such sale and any rent derived from re-letting the Premises upon
account of the rent under this Lease and the Tenant shall be liable to the
Landlord for the deficiency, if any, for the remainder of the Term as if such
re-entry had not been made less the actual amount received by the Landlord after
such re-entry in respect of any re-letting applicable to the remainder of the
Term. The Tenant shall also reimburse the Landlord for all reasonable legal and
other costs incurred as a result of such re-entry and re-letting.
Right of Termination
20. The Tenant further covenants and agrees that on the Landlord becoming
entitled to re-enter upon the Premises under any of the provisions of this
Lease, the Landlord, in addition to all other rights, shall have the right to
determine forthwith this Lease and Term by leaving upon the Premises notice in
writing of its intention so to do and thereupon rent and any other payments for
which the Tenant is liable under the Lease shall be computed, apportioned and
paid in full to the date of such determination of this Lease and the Tenant
shall immediately deliver up possession of the Premises to the Landlord, and the
Landlord may re-enter and take possession of the same.
Non-waiver
21. No condoning, excusing or overlooking by the Landlord or any default, breach
or non-observance by the Tenant at any time or times in respect of any covenant,
proviso or condition herein contained shall operate as a waiver of the
Landlord's rights hereunder in respect of any continuing or subsequent default,
breach or non-observance, or so as to defeat or affect in any way the rights of
the Landlord herein in respect of any such continuing or subsequent default or
breach, and no waiver shall be inferred from or implied by anything done or
omitted by the Landlord save only express waiver in writing. All rights and
remedies of the Landlord in this Lease contained shall be cumulative and not
alternative.
Overholding
22. If the Tenant shall continue to occupy all or part of the Premises after the
expiration of this Lease with the consent of the Landlord, and without any
further written agreement, the Tenant shall be a monthly tenant at the basic
monthly rental payable during the last year of this Lease and otherwise on the
terms and condition herein set out except as to length of tenancy.
Landlord Performing Tenant's Covenants
23. If the Tenant fails to perform or cause to be performed any of the covenants
or obligations of the Tenant herein, the Landlord shall have the right (but
shall not be obligated) to perform or cause to be performed and to do or cause
or be done such things as may be necessary or incidental thereto (including
without limiting the foregoing, the right to make repairs, installations,
erections and expend moneys) and all payments, expenses, charges, fees and
disbursements incurred or paid by or on behalf of the Landlord in respect
thereof shall be paid by the Tenant to the Landlord forthwith upon demand.
Payments to Landlord
24. All payments to be made by the Tenant under this Lease shall be made, at
such place or places as the Landlord may designate in writing, and to the
Landlord or to such agent of the Landlord as the Landlord shall from time to
time direct. The Tenant shall pay the Landlord interest on all overdue rentals
including Basic Rent and Additional Rent or other amounts, all such interest to
be calculated from the date upon which the amount is first due or demanded until
actual payment thereof and at a rate of Five (5%) per cent per annum in excess
of the minimum lending rate to prime commercial borrowers from time to time
current at chartered banks in the municipality in which the building is situate.
Recovery of Adjustments
25. The Landlord shall have (in addition to any other right or remedy of the
Landlord) the same rights and remedies in the event of default by the Tenant in
payment of any amount payable by the Tenant hereunder, as the Landlord would
have in the case of default in payment of rent.
Registration & Planning Act
26. (a) The Tenant covenants and agrees with the Landlord that the Tenant will
not register or record this Lease against the title to the Lands, except by way
of notice.
(b) Where applicable, this Lease shall be subject to the condition that it is
effective only if The Planning Act is complied with. Pending such compliance the
Term, and any renewal periods, shall be deemed to be for a total period of one
(1) day less than the maximum lease term permitted by law without such
compliance.
Mortgages
27. At the option of the Landlord, this Lease shall be subject and subordinate
to any and all mortgages, charges and deeds of trust, which may now or at any
time hereafter affect the Premises in whole or in part, or the Lands, Building
whether or not any such mortgage, charge or deed of trust affects only the
Premises or the Lands, the building or affects other premises as well. On
request at any time and from time to time of the Landlord or of the mortgagee,
chargee or trustee under any such mortgage, charge or deed of trust the Tenant
shall promptly, at no cost to the Landlord or mortgagee, chargee or trustee:
(a) attorn to such mortgagee, chargee or trustee and become its tenant of the
Premises or the Tenant of the Premises of any purchaser from such mortgagee,
chargee or trustee in the event of an exercise of any permitted power of sale
contained in any such mortgage, charge or deed of trust for the then unexpired
residue of the Term on the terms herein contained, and/or
(b) postpone and subordinate this Lease to such mortgage, charge or deed of
trust to the intent that this Lease and all right, title and interest of the
Tenant in the Premises shall be subject to the rights of such mortgagee, chargee
or trustee as fully as if such mortgage, charge or deed of trust had been
executed and registered and the money thereby secured had been advanced before
the execution of this Lease (and notwithstanding any authority or consent of
such mortgagee, or trustee, express or implied, to the making of this Lease).
Any such attornment or postponement and subordination shall extend to all
renewals, modifications, consolidations, replacements and extension of any such
mortgage, charge or deed of trust and every instrument supplemental or ancillary
thereto or in implementation thereof. The Tenant shall forthwith execute any
instruments of attornment or postponement and subordination which may be so
requested to give effect to this section.
Assignment Landlord
28. If the Landlord sells or leases the Lands, the Building or any part thereof,
or assigns this Lease, and to the extent that the purchaser, lessee or assignee
is responsible for compliance with the covenants and obligations of the Landlord
hereunder, the Landlord without further written agreement will be discharged and
relieved of liability under the said covenants and obligations.
Captions
29. The captions appearing in the margin of 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.
Guarantee (if applicable)
30. omitted
Notice
31. (a) Any notice, request, statement or other writing pursuant to this Lease
shall be deemed to have been given if Notice sent by registered prepaid post as
follows:
TO THE LANDLORD
8 Vinci Crescent
Downsview, Ontario M3H 2Y7
or such other address as the Landlord shall notify the Tenant in writing any
time or from time to time;
TO THE TENANT - at the Premises
and such notice shall be deemed to have been received by the Landlord, Tenant,
as the case may be, on the third business day after the date on which it shall
have been so mailed (in the event that there is an interruption of postal
service, the aforesaid period shall be extended for a period equivalent to the
period of interruption).
(b) Notice shall also be sufficiently given if and when the same shall be
delivered, in the case of notice to Landlord, to an executive officer of the
Landlord, and in the case of notice to the Tenant to him personally or to an
executive officer of the Tenant if the Tenant is a corporation. Such notice, if
delivered, shall be conclusively deemed to have been given and received at the
time of such delivery. If in this Lease two or more persons are named as Tenant,
such notice shall also be sufficiently given if and when the same shall be
delivered personally to any one of such persons. Provided that either party may,
by notice to the other, from time to time designate another address in Canada to
which notices mailed more than ten (10) days thereafter shall be addressed.
Effect of Lease
32. This indenture and everything herein contained shall extend to and bind and
may be taken advantage of by the respective heirs, executors, administrators,
successors and assigns, as the case may be, of each and every of the parties
hereto, subject to the granting of consent by the Landlord as provided herein to
any assignment or sublease, and where there is more than one tenant or there is
a female party or a corporation, the provisions hereof shall be read with all
grammatical changes thereby rendered necessary and all covenants shall be deemed
joint and several.
Interpretation of Lease
33. All of the Provisions contained in this Lease are to be construed as
covenants and agreements and if any provision is illegal or unenforceable, it
shall be considered separate and severable from the remaining provisions, which
shall remain in force and be binding upon the Landlord and the Tenant.
Time of Essence
34. Time shall be of the essence of this Lease.
Law
35. This Lease shall be governed by and construed in accordance with the laws,
of the Province of Ontario.
Intent of Lease
36. This is a carefree lease and it is the mutual intention of the parties
hereto that the basic rent herein provided to be paid shall be net to the
Landlord and clear of all taxes, costs and charges arising from or relating to
the lands and building in that the Tenant shall bear its proportionate share of
all costs of and be responsible for all matters in relation to the operation,
maintenance and repair of the lands and building (save as otherwise provided
herein) including and without limiting the generality of the foregoing the
Tenant's proportionate share of taxes and operating costs. Charges of a kind
personal to the Landlord such as taxes on the income of the Landlord,
Corporation Tax, estate and inheritance tax and similar taxes, principal and
interest payments to be made by the Landlord in satisfaction of mortgages now or
hereinafter registered against the said lands and building shall not be the
responsibility or obligation of the Tenant.
37. Schedules. 'A' and 'B' and Rules and Regulations attached form part of this
Lease.
IN WITNESS WHEREOF the parties hereto have executed this lease.
SIGNED, SEALED AND DELIVERED ORFUS INVESTMENTS
in the presence of BY:/s/Elaine Orfus
SAVILLE SYSTEMS CANADA, LTD.
BY:/s/D.A. Saville
Authorized Signing Officer TENANT CS
<PAGE>
RULES AND REGULATIONS
1. The Tenant shall not place or permit to be placed or left in or upon any part
of the Building outside of the Premises, or in or upon any part of the Building
of which the Premises form a part, any debris or refuse.
2. The Landlord shall permit the Tenant and the Tenant's employees and all
persons lawfully requiring communication with them to have the use during Normal
Business Hours in common with others entitled thereto of the main entrance and
the stairways, corridors, elevators or other mechanical means of access leading
to the Premises. At times other than during Normal Business Hours the Tenant and
the employees of the Tenant and persons lawfully requiring communication with
the Tenant shall have access to the Building and to the Premises.
3. The Landlord shall permit the Tenant and the employees of the Tenant in
common with others entitled thereto, to use the washrooms on the floor of the
Building on which the Premises are situated or, in lieu thereof, those washrooms
designated by the Landlord, save and except when the general water supply may be
turned off from the public main or at such other times when repair and
maintenance undertaken by the Landlord shall necessitate the non-use of the
facilities.
4. The Tenant shall not permit any cooking in the Premises without the written
consent of the Landlord.
5. The sidewalks, entries, passages, escalators, elevators and staircases shall
not be obstructed or used by the Tenant, its agents, servants, contractors,
invitees or employees for any purpose other than ingress to and egress from the
offices. The Landlord reserves entire control of all parts of the Building
employed for the common benefit of the tenants and without restricting the
generality of the foregoing, the sidewalks, entries, corridors and passages not
within the Premises, washrooms, lavatories, air-conditioning closets, fan rooms,
janitor's closets, electrical closets and other closets, stairs, escalators,
elevator shafts, flues, stacks, pipe shafts and ducts and shall have the right
to place such signs and appliances therein, as it may deem advisable, provided
that ingress to and egress from the Premises is not unduly impaired thereby.
6. The Tenant, its agents, servants, contractors, invitees or employees, shall
not bring in or take out, position, construct, install or move any safe,
business machinery or other heavy machinery or equipment or anything liable to
injure or destroy any part of the Building without first obtaining the consent
in writing of the Landlord. In giving such consent, the Landlord shall have the
right in its sole discretion, to prescribe the weight permitted and the position
thereof, and the use and design of planks, skids, or platforms, to distribute
the weight thereof. All damage done to the Building by moving or using any such
heavy equipment or other office equipment or fixture shall occur only by prior
arrangement with the Landlord. No Tenant shall employ anyone to do its moving in
the Building other than the staff of the Building, unless permission to employ
anyone else is given by the Landlord and the reasonable cost of such moving
shall be paid by the Tenant. Safes and other heavy office equipment and
machinery shall be moved through the halls and corridors only upon steel bearing
plates. No freight or bulky matter of any description will be received into the
Building or carried in the elevators except during hours approved by the
Landlord.
7. The Tenant shall not place or cause to be placed any additional locks upon
any doors of the Premises without the approval of the Landlord and subject to
any conditions imposed by the Landlord. Two keys shall be supplied to the
Landlord for each door to the Leased Premises and all locks shall be standard to
permit access to the Landlord's master key. If additional keys are requested,
they must be paid for by the Tenant. No one, other than the Landlord's staff,
will have keys to the outside entrance doors of the Building.
8. The water closets and other water apparatus shall not be used for any purpose
other than those for which they were constructed, and no sweepings, rubbish,
rags, ashes or other substances shall be thrown therein. Any damage resulting by
misuse shall be borne by the Tenant by whom or by whose agents, servants, or
employees the same is caused. The Tenant shall not let the water run unless it
is in actual use, and shall not deface or mark any part of the Building, or
drive nails, spikes, hooks, or screws into the walls or woodwork of the
Building.
9. The Tenant shall not do or permit anything to be done in the Premises, or
bring or keep anything therein which will in any way increase the risk of fire
or the rate of fire insurance on the said Building or on property kept therein,
or obstruct or interfere with the rights of other tenants or in any way injure
or annoy them or the Landlord, or violate or act at variance with the laws
relating to fires or with the regulations of the Fire Department, or with any
insurance upon said Building or any part thereof, or violate or act in conflict
with any of the rules and ordinances of the Board of Health or with any statute
or municipal by-law.
10. No one shall use the Premises for sleeping apartments or residential
purposes, or for the storage of personal effects or articles other than those
required for business purposes.
11. The Tenant shall permit window cleaners to clean the windows of the Premises
during Normal Business Hours.
12. Canvassing, soliciting and peddling in or about the Building and in the
parking area are prohibited.
13. The Tenant shall not receive or ship articles of any kind except through
facilities, and designated doors and at hours designated by the Landlord and
under the supervision of the Landlord.
14. It shall be the duty of the respective tenants to assist and co-operate with
the Landlord in preventing injury to the premises demised to them respectively.
15. No inflammable oils or other inflammable, dangerous or explosive materials
save those approved in writing by Landlord's insurers shall be kept or permitted
to be kept in the Premises.
16. No bicycles or other vehicles shall be brought within the Building without
the consent of the Landlord.
17. No animals or birds shall be brought into the Building without the consent
of the Landlord.
18. The Tenant shall not install or permit the installation or use of any
machine dispensing goods for sale in the Premises or the Building or permit, the
delivery of any food or beverage to the Premises without the approval of the
Landlord or in contravention of any regulations fixed or to be fixed by the
Landlord. Only persons authorized by the Landlord shall be permitted to deliver
or to use the elevators in the Building for the purpose of delivering food or
beverages to the Premises.
19. If the Tenant desires telegraphic or telephonic connections, the Landlord
will direct the electricians as to where and how the wires are to be introduced,
and without such directions no boring or cutting for wires will be permitted. No
gas pipe or electric wire will be permitted which has not been ordered or
authorized by the Landlord. No outside radio or television materials shall be
allowed on the Leased Premises without authorization in writing by the Landlord.
20. The Tenant shall not cover or obstruct any of the skylights and windows that
reflect or admit light into any part of the Building except for the proper use
of approved blinds and drapes.
21. Any hand trucks, carryalls, or similar appliances used in the Building with
the consent of the Landlord, shall be equipped with rubber tires, slide guards
and such other safeguards as the Landlord shall require.
22. The Tenant shall not permit undue accumulations of garbage, trash, rubbish
or other refuse within or without the Premises or cause or permit objectionable
odours to emanate or be dispelled from the Leased Premises.
23. The Tenant shall not place or maintain any supplies or other articles in any
vestibule or entry of the Premises, on the footwalks adjacent thereto or
elsewhere on the exterior of the Premises or the Building.
24. The Landlord shall have the right to make such other and further reasonable
rules and regulations as in its judgment may from time to time be needful for
the safety, security, care and cleanliness of the Building, and for the
preservation of good order therein, and the same shall be kept and observed by
the Tenants, their clerks and servants.
25. The Tenant agrees to the foregoing Rules and Regulations, which are hereby
made a part of this Lease, and each of them, and agrees that for such persistent
infraction of them, or any of them, as determined by a competent court having
jurisdiction be calculated to annoy or disturb the quiet enjoyment of any other
tenant, or for gross misconduct upon the part of the Tenant, or any one under
it, the Landlord may declare a forfeiture and cancellation of the accompanying
Lease and may demand possession of the Premises.
<PAGE>
SCHEDULE A
to a Lease made the 25th day of November 1994 between Orfus Investments as
Landlord and Saville Systems Canada, Ltd. as Tenant
Part of Lots 3, and 4, and all of Lot 5
Plan 65M-2326
Town of Markham
Regional Municipality of York
<PAGE>
SCHEDULE 'B'
to a Lease made the 25th day of November, 1994 between Orfus Investments as
Landlord and Saville Systems Canada Ltd. as Tenant
1. TENANTS INSURANCE
Tenant covenants that, with respect to policies of Tenant's insurance as
required pursuant to Paragraph 8 (u) of the Lease, that such policies shall
include provisions noting the interest of the Landlord in the policy, and
requiring that the insurer provide at least thirty (30) days' written notice to
the Landlord prior to termination or material amendment to the policy during the
Lease term or any renewal thereof. Tenant shall, forthwith upon demand, deliver
to Landlord evidence of such insurance policies by way of a certificate from the
insurer.
Every such policy of insurance shall contain a waiver by the insurer of any
rights of subrogation or indemnity or any other claim over against the Landlord
or the agents or employees of the Landlord. If Tenant shall fail to take out or
keep in force such insurance as is required hereunder, or if the evidence
submitted therefore is unacceptable to the Landlord pursuant to this Lease, then
the Landlord may, but shall not be obliged to, obtain some or all such
insurance, and the Tenant shall pay all premium or other reasonable expenses
incurred by the Landlord as a result thereof on demand, as rent.
The Tenant shall furnish to the Landlord, upon request, evidence as to the full
replacement cost of the Tenant's fixtures furniture and equipment, and Tenant
shall insure that the insurance coverage under Paragraph 8(u)(ii) is adequate to
cover such fixtures, furniture and equipment.
Landlord's right of termination in Paragraph 8(g) shall apply only if Tenant
does not rectify the cause of insurance cancellation (to the effect that
Landlord is enabled to insure as before) within 72 hours of written notice from
Landlord to do so.
Landlord shall insure the building against risk of fire and order property
damage and shall maintain Liability insurance in such amounts and for such risks
as would a reasonably prudent Landlord of a similar property. The cost of such
insurances shall be included in Operating Costs.
2. ADDITIONAL RENT
(a) The management fees which form part of Operating Costs as detailed in
Paragraph 2(f) shall be calculated on the basis of 4%, for the relevant period,
of the aggregate Basic Rent and Additional Rent payable under this Lease.
Without limiting the generality of Paragraph 2(f), Tenant shall be responsible
for all charges for telephone service to the Leased Premises.
(b) Tenant covenants to pay to the Landlord when due, in addition to all other
amounts payable under this Lease, any Goods and Service Tax ( GST ) which shall
be applicable to, or which may be assessed, imposed or levied against the Basic
Rent and / or Additional Rent payable hereunder, and all such GST shall be
collectable hereunder in the same manner as rent.
c) Landlord agrees that additional rent, chargeable for the Landlord's fiscal
year, ending April 30, 1995, will not exceed $9.65 per rentable square foot.
Landlord further agrees that the operating expenses component of additional rent
shall not escalate by more than 5% per annum thereafter during the term of the
Lease. For greater clarity, it is acknowledged that no limitation is placed on
Hydro electric charges and Realty tax charges which form part of additional
rent.
(d) HVAC supplied to the Premises during regular business hours, i.e. between
7.00 a.m. - 6.30 p.m. Monday to Friday (excluding statutory holidays) shall be
included in Operating Costs, and subject to the limitation on Operating costs
set out above in subparagraph (c). After hours HVAC shall be available at all
times to Tenant with prior arrangement, at a cost of $1.25 per heat pump per
hour.
(e) The cost of replacement of electric bulbs, tubes, starters and ballasts in
the Premises in accordance with paragraph 8.(b) (iii) shall be included in
Operating Costs.
(f) Landlord shall provide Tenant annually, not more than 90 days following the
year end, with a Statement of additional rent prepared by an accountant or other
independent financial person, and any discrepancy between the Statement and
instalments paid during the year shall be rectified as provided in paragraph 6
of the Lease.
3. USE OF PREMISES
The Tenant shall use the Leased Premises for business offices, as a 24 hour data
centre, and for other uses permitted under prevailing municipal by-laws, and for
no other purpose.
4. LEASEHOLD IMPROVEMENTS
Landlord agrees to finish premises (the "Leasehold Improvements") in accordance
with space plan and final working drawings to be agreed upon between Landlord
and Tenant, as provided for in the Agreement to Lease as amended dated October
27, 1994. Landlord shall contribute up to $20.00 per square foot rentable area
toward the cost of the said work. Any costs in excess of $20.00 per square foot
shall be payable by Tenant on receipt of invoice from Landlord, provided that
there shall be no administrative overhead or profit charged by Landlord in
respect of the Leasehold Improvements.
If required by Tenant, Landlord shall provide, as part of Leasehold
Improvements, and in accordance with plans and specifications to be provided by
Tenant together with the Space Plan and approved by Landlord's engineer's, a
rooftop condenser and required connections to service Tenant's cooling system in
the premises, as well as any reinforcement or other alteration necessary for
installation of same.
Upon completion of the Leasehold Improvements, Landlord shall provide Tenant
with a summary of the total actual cost of the leasehold improvement, and any
balance of the $20.00 per square foot rentable area allowance remaining in
excess of the cost of the leasehold improvements, shall be credited to the
Tenant toward rental payments as they become due.
Landlord shall, as part of Leasehold Improvements, add the name of Tenant to
each Building Directory as appropriate, in accordance with Paragraph 8(o).
5. FIXTURING PERIOD
Upon substantial completion of the Leasehold improvements, which shall be no
later than 60 days after acceptance of Final Working drawings, Tenant shall have
the right to access and occupy the premises for the purpose of fixturing and
preparations for occupancy. No rent or additional rent shall be chargeable to
Tenant for such occupancy prior to the commencement date, provided that all
other obligations of Tenant pursuant to the Lease shall apply in respect of such
occupancy.
6. SPACE PLAN
This Lease shall be conditional upon the approval by both parties of a space
plan (the "Space Plan") and final working drawings for the Leasehold
Improvements to be prepared for the premises in accordance with the Agreement to
Lease. The Space Plan and up to one revision shall be provided by the Landlord
at its sole cost, or, at the Tenant's option, the Landlord shall pay the space
planning fees of the planner selected by Tenant up to a maximum of $0.08 per
square foot. Both parties hereby covenant and agree to cooperate and to
diligently pursue the approvals aforesaid and all other actions terms and
conditions of the Lease for the expansion space shall be the same as the
existing premises pursuant to this Lease. Provided that the Expansion Space
shall be taken on each occasion in the minimum amount of at least 1,000 feet,
and that in the event that Tenant does not take the entire available Expansion
Space on the 5th floor, that the remaining space not taken shall be at least
1,200 square feet of useable space.
12. LEASE CANCELLATION
(a) Tenant shall have the right to terminate the Lease as of January 31, 2000,
or if not exercised, on every successive anniversary date during the remaining
term of the Lease, upon not less than twelve months prior written notice to
Landlord, and, in each case, together with the Termination Payment defined
below. During the 12 months notice period, Tenant shall have the right to either
continue to occupy the Premises pursuant to the Lease, or to vacate the premises
upon payment to Landlord of a lump sum payment equal to the gross rent for the
period commencing on the date upon which they vacate until the end of the 12
month notice period, following which, the Landlord shall be free to lease the
space to another party. Said payment is separate from and in addition to the
Termination Payment.
(b) "Termination Payment". In consideration of the Tenant's right of termination
aforesaid, Landlord shall receive from Tenant not less than ninety day prior to
Tenant vacating the premises, a termination payment equivalent to a number of
months gross rent as set out below, at the rate payable in the particular year
ending on the date on which the termination takes effect. The Termination
Payment shall be for a number of months gross rent on a declining scale as set
out below:
Termination Date Termination Payment January 31, 2000- 12 months gross rent
January 31, 2001- 10 months gross rent January 31, 2002- 8 months gross rent
January 31, 2003- 6 months gross rent January 31, 2004- 3 months gross rent
13. CANCELLATION OF EXPANSION SPACE
(a) Tenant shall have the right to terminate its Lease in the Expansion Space as
of January 31, 2000, or if not exercised, on every successive anniversary date
during the remaining term of the Lease, upon not less than twelve months prior
written notice to Landlord, and, in each case, together with the Expansion Space
Termination Payment defined below. During the 12 months notice period, Tenant
shall have the right to either continue to occupy the premises pursuant to the
Lease, or to vacate the premises upon payment to Landlord of a lump sum payment
equal to the gross rent for the period commencing on the date upon which they
vacate until the end of the 12 month notice period, following which, the
Landlord shall be free to lease the space to another party. Said payment is
separate from and in addition to the Expansion Space Termination Payment.
(b) In consideration of the Tenant's right of termination aforesaid, Landlord
shall receive from the Tenant not less than ninety days prior to the date the
Tenant vacates the Premises, the Expansion Space Termination Payment.
"Expansion Space Termination Payment" means an amount equal to the amount which
would be outstanding on the date Tenant vacates, pursuant to a notional
calculation of the Landlord's Cost of Expansion, together with interest at the
Interest Rate, which would be repayable by the Payments, and amortized over a
period of time equal to the Expansion Space Term, assuming that all Payments
were made when due.
"Landlord's Cost of Expansion" means an amount equal to the aggregate of:
(i) the actual amount of the Landlord's cost of the Leasehold Improvements for
the Expansion Space: and
(ii) the amount of any additional real estate commissions actually incurred and
paid by the Landlord as a result of the Tenant's exercising its option to expand
under the lease.
"Interest Rate" means 8% per annum, calculated semi-annually, not in advance.
"Expansion Space Term" means that period of time commencing on the date of
occupancy by the Tenant of the Expansion Space and ending on the last day of the
term of the Lease for the Expansion Space.
"Payments" means blended monthly payments of principal and interest at the
Interest Rate.
14. OPTION TO RENEW
Provided the Tenant is not then in breach of the I-ease, and has duly and
regularly paid all rent and performed the covenants required pursuant to this
Lease, the Tenant shall have one (1) option to renew the Lease with respect to
the I-eased Premises for an additional term of five (5) years and on the same
terms and conditions as this Lease, save only for the Basic Rent and Additional
Rent and any further option to renew, and save and except for the Leasehold
Improvements. Tenant's option aforesaid shall be exercisable by delivery of
written notice to the Landlord not earlier than twelve (12) months and not later
than six (6) months prior to the expiry of the current Lease term. The Rent for
the renewal period shall be the fair market Rent for comparable premises in
comparable buildings, such amount to be agreed upon between the Parties not less
than 90 days prior to the expiry date of the initial term. If the Parties hereto
shall fail to agree upon the renewal rent within such limited time, then the
rent for the renewal term shall be determined by arbitration pursuant to the
Arbitration Act of Ontario or any successor legislation. Provided however that
in the event that the Arbitration proceedings shall reasonably extend into the
Renewal term, the rent payable in the last month prior to expiry of the original
term shall be payable monthly until a decision is reached, after which the rent
shall be retroactively adjusted in accordance with the Arbitration decision.
15. FIRST RIGHT OF REFUSAL TO LEASE ON FIFTH FLOOR
The Lessor hereby grants to the Lessee a first right of refusal for any offer to
lease, in respect of any space on the fifth floor of the building in which the
Demised Premises are located which shall become available from time to time
during the term of the Lease, as follows:
Prior to the Lessor accepting an offer for any available space on the said fifth
floor, Lessor shall deliver a notice to the Lessee's attention advising the
amount and location of such space available, the date upon which it becomes
available, and the Basic Rent which Lessor is willing to accept. If, within 48
hours after delivery of said notice to the Lessee, the Lessee shall deliver to
Lessor a notice whereby it exercises its right to lease hereunder, then there
shall be deemed to be an agreement between the Lessor and the Lessee to lease
the said space described in the Lessor's notice at the basic rental set out in
the notice but subject otherwise to the terms and conditions of the herein
Lease. Provided that, if the Lessee shall fail to exercise its right within the
aforesaid limited time, then Lessor shall be free to accept or make a third
party offer for such space. Provided further that this right shall not be
assignable.
Provided that where the Tenant's Option to Expand described in Paragraph 11
above shall apply, the provisions of the said Option shall prevail over the
provisions of the herein right of First Refusal. This Right of First Refusal
shall continue to apply throughout the term of the Lease as space on the fifth
floor becomes available from time to time.
CLARIFICATIONS TO LEASE AND GENERAL
16. Landlord's right of entry in paragraph 8 (j) and 13. shall be subject to
reasonable notice, and work done thereunder (except emergency work) shall be
upon reasonable notice, having regard to the circumstances.
17. The exclusion to Landlord's liability in paragraph 14 shall not apply where
caused by the wilful or negligent act or omission of Landlord.
18. The relief for unavoidable delay in paragraph 15 shall apply equally to
Landlord and Tenant.
19. For greater clarity, the requirement in paragraph 5(c) to pay instalments of
1/9th of the annual taxes, shall be limited to 9 such instalments per year.
20. In the event that Tenant shall be required to postpone or subordinate to a
Mortgagee pursuant to Paragraph 27, Landlord agrees to use its best efforts to
provide Tenant with a non-disturbance agreement from such Mortgagee.
21. To the extent that there is any conflict between the provisions of this
Schedule "B" and the printed Lease form, the provisions of Schedule "B" shall
prevail.
22. The restrictions in Paragraph 8.(e) respecting change in the shareholdings
of the Tenant Corporation shall not apply in respect of a transfer by a
shareholder of the Tenant to his spouse or immediate family member.
23. Landlord's right of re-entry for any breach by Tenant other than non-payment
of rent shall be preceded by 5 days written notice to Tenant.
24. Notice hereunder may also be given by facsimile transmission to such
telephone number as a party may have designated in writing for the purpose of
Notice, and shall be deemed received at the time of confirmed transmission
during normal business hours, and on the next ensuing business day if sent on a
Saturday, Sunday or Statutory Holiday.
SAVILLE SYSTEMS CANADA, LTD.
PER: /s/D.A. Saville /s/Elaine Orfus
Tenant Landlord
<PAGE>
SCHEDULE "D"
THIS INDENTURE OF AGREEMENT
made this 11th day of January, 1996
BETWEEN
ORFUS INVESTMENTS, a Partnership registered under the Partnership Registration
act of Ontario,
(hereinafter called the "Landlord"),
OF THE FIRST PART,
and
SAVILLE SYSTEMS CANADA, LTD., a company incorporated under laws of Canada,
(hereinafter called the "Tenant"),
OF THE SECOND PART,
WHEREAS by a Lease made on the 25th day of November, 1994 (hereinafter referred
to as the "original lease") the Landlord did lease to the Tenant, those premises
located in the Town of Markham, in the Regional Municipality of York in the
Province of Ontario, and being part of a building municipality known as 625
Cochrane Road, which premises are described in the original lease to consist of
an area of approximately 16,675 rentable square feet on the sixth (6th) floor
and an additional 2,951 rentable square feet on the fifth (5th) floor, for a
term of ten (10) years commencing February 1, 1995 and ending January 31, 2005;
AND WHEREAS pursuant to the lease, rent is calculated in accordance with the per
square foot rates set out in paragraph 2(k);
AND WHEREAS a measurement of the premises has determined that the actual square
footage of the fifth floor initial expansion space is 3,039 useable and 3,343
rentable, and not as provided in paragraph 11 of Schedule B of the original
lease;
AND WHEREAS pursuant to paragraph 11 of Schedule "B" of the original lease, the
Tenant has an option to expand the leased premises to include additional space
on the 5th floor;
AND WHEREAS by Letter Agreement dated November 22, 1995, the Tenant exercised
its said option in respect of approximately 4,550 additional rentable square
feet on the fifth floor, and being all remaining space on the 5th floor.
AND WHEREAS the remaining space on the fifth floor available for expansion
consists of 3,912 useable and 4,303 rentable square feet.
NOW THEREFORE WITNESSETH that in consideration of mutual promises and other good
and valuable consideration, and the sum of TWO ($2.00) DOLLARS now paid by the
Tenant to the Landlord (the receipt and sufficiency of which is hereby
acknowledged by the parties hereto), the parties hereto hereby agree as follows:
SECTION I, Suite 505
1. The Landlord doth demise and lease unto the Tenant those premises on the
fifth floor of the building, containing approximately 2,673 rentable square feet
rentable, being more particularly described in Schedule "A" attached hereto. The
said premises demised by this Section I of this Amending Agreement are herein
referred to and known as the said Suite 505.
TO HAVE AND TO HOLD the demised premises for and during the term of one (1) year
to be computed from the 15th day of February, 1998, and thenceforth next ensuing
and fully to be completed and ended on the 14th day of February, 1999.
2. YIELDING AND PAYING THEREFOR during the said term (without deduction or
defalcation of any kind) as a rental unto the Landlord, its successors and
assigns, as hereinafter particularly set out:
The basic rental for the one year term for Suite 505, commencing February 15,
1998 and ending on February 14, 1999, based on $10.50 per square foot, shall be
TWENTY-EIGHT THOUSAND, and SIXTY-SIX Dollars and Fifty cents ($28,066.50) and
shall be payable in equal monthly instalments of TWO THOUSAND, THREE HUNDRED and
THIRTY-EIGHT ($2,338.87) Dollars and eight-seven cents each, in advance, on the
fifteenth day of each and every month, in cash or by certified cheque payable at
par at Toronto, without deductions or defalcations of any kind.
3. DEPOSIT
Landlord acknowledges receipt of a deposit in the amount of $9,000.00 to be
applied on account of first and last months' rent plus GST for Suite 505.
4. Tenant acknowledges having inspected Suite 505 and agrees to accept it "as
is".
5. In addition to, and without limiting the provisions of the original lease,
Tenant agrees that upon termination of the lease of Suite 505, it shall deliver
up the said Suite 505 to Landlord in the same condition as upon commencement of
its lease therein. including specifically, that all walls, partitions, plumbing
and other leasehold improvements shall be in the same location and condition as
they were upon commencement, but the foregoing shall not include removal of
cable or electrical installations.
6. OPTION TO RENEW THE SUITE 505 LEASE
Subject to any prior rights of first refusal, and provided the Tenant has not
been in breach of the Lease, and has duly and regularly paid all rent and
performed the covenants required pursuant to this Lease, the Tenant shall have
the option to renew the Lease with respect to the Leased Premises for an
additional term of a duration to be mutually agreed upon by Landlord and Tenant
within the time provided below on the same terms and conditions as this Lease,
subject to reasonable revision of lease document to conform with Landlord's
current lease form, save only for the Basic Rent and Additional Rent and any
further option to renew. Tenant's option aforesaid shall be exercisable by
delivery of written notice to the Landlord not later than six (6) months prior
to the expiry of the current Lease term. The Basic Rent for the renewal period
shall be the fair market Basic Rent for comparable premises in comparable
buildings, such amount to be agreed upon between the Parties on or before ninety
(90) days prior to the expiry date of the initial term. If the Parties hereto
shall fail to agree upon the renewal rent within such limited time, then the
basic rent for the renewal term shall be determined by arbitration pursuant to
the Arbitration Act of Ontario or any successor legislation. The Agreement of
Landlord and Tenant in respect of the duration of the Renewal Term shall be
concluded in writing not less than three months prior to the expiry of the
current lease term, failing which there shall be no Renewal Term.
7. ORIGINAL LEASE PROVISIONS
The following provisions of Schedule B to the original lease shall not apply in
respect of Suite 505:
2(c) limitation on additional rent charges.
4 - Leasehold improvements
5 - Fixturing period
6 - Space Plan
10 - No restoration
11 - Additional Space
12, 13 - Lease Cancellation
14 - Renewal Option
SECTION II - SEVENTH FLOOR SPACE
1. The Landlord doth demise and lease unto the Tenant those premises on the 7th
floor of the Building, containing approximately 8,844 rentable square feet, as
being more particularly described in Schedule "A" attached hereto. The premises
demised by this Section II are herein referred to and known as the "7th Floor
Space" .
To HAVE AND TO HOLD the demised premises for and during the term of seven (7)
years and two months to be computed from the 1st day of December, 1998, and
thenceforth next ensuing and fully to be completed and ended on the 31st day of
January, 2005.
2. YIELDING AND PAYING THEREFOR yearly and every year during the said term
(without deduction or defalcation of any kind) as a rental unto the Landlord,
its successors and assigns, as hereinafter particularly set out:
(a) The basic rental for each year of the term for the Seventh Floor Space
commencing December 1, 1998, and ending on January 31, 2005, based on $9.50 per
square foot per annum, shall be an annual basic rental of EIGHTY-FOUR THOUSAND,
AND EIGHTEEN Dollars ($84,018.) and shall be payable in equal monthly
instalments of SEVEN THOUSAND AND ONE Dollars ($7,001.50) and fifty cents each,
in advance, on the first day of each and every month, in cash or by certified
cheque payable at par at Toronto, without deductions or defalcations of any
kind.
3. DEPOSIT
Tenant acknowledges receipt of a deposit in the amount of $18,000.00 to be
applied on account of first and last month's rent and GST.
4. Tenant acknowledges having inspected the Seventh Floor Space and agrees to
accept it "as is".
5. ORIGINAL LEASE PROVISIONS
The following provisions of Schedule to the original lease shall not apply in
respect of the Seventh Floor Space:
2(c) - limitation on additional rent charges
4 - Leasehold improvements
5 - Fixturing period
6 - Space Plan
10 - No restoration
11 - Additional Space
12, 13 - Lease Cancellation
14 - Renewal Option
6. LEASE CANCELLATION PROVISION-Seventh Floor Space
(a) Tenant shall have the right to terminate the Lease of the Seventh Floor
Space as of January 31, 2000, or if not exercised, on every successive
anniversary date during the remaining term of the Lease, upon not less than
twelve months prior written notice to Landlord, and, in each case, together with
the Termination Payment defined below. During the 12 months notice period,
Tenant shall have the right to either continue to occupy the Seventh Floor Space
pursuant to the Lease, or to vacate the premises upon payment to Landlord of a
lump sum payment equal to the gross rent for the period commencing on the date
upon which they vacate until the end of the 12 month notice period, following
which, the Landlord shall be free to lease the Seventh Floor Space to another
party. Said payment is separate from and in addition to the Termination Payment
(b) "Termination Payment". In consideration of the Tenants right of termination
aforesaid, Landlord shall receive from Tenant not less than ninety day prior to
Tenant vacating the Seventh Floor Space, a termination payment equivalent to a
number of months gross rent as set out below, at the rate payable in the
particular year ending on the date on which the termination takes effect. The
Termination Payment shall be for a number of months gross rent on a declining
scale as set out below:
Termination Date Termination Payment
January 31, 2000- 3 months gross rent
January 31, 2001- 3 months gross rent
January 31, 2002- 2 months gross rent
January 31, 2003- 2 months gross rent
January 31, 2004- 1 months gross rent
SECTION III - TENTH Floor Space
1. The Landlord doth demise and lease unto the Tenant those premises on the 10th
floor of the Building, containing approximately 16,675 rentable square feet,
being more particularly described in Schedule "A" attached hereto. The premises
demised by this Section III are herein referred to and known as the "10th Floor
premises"
TO HAVE AND TO HOLD the demised premises for and during the term of two (2)
years to be computed from the 1st day of May, 1998, and thenceforth next ensuing
and fully to be completed and ended on the 30th day of April 2000.
2. YIELDING AND PAYING THEREFOR yearly and every year during the said term
(without deduction or defalcation of any kind) as a rental unto the Landlord,
its successors and assigns, as hereinafter particularly set out:
(a) The basic rental for the first year of the term for the TENTH Floor Space
commencing May 1, 1998, and ending on April 30, 1999, based on $11.00 per square
foot per annum, shall be an annual basic rental of ONE HUNDRED and EIGHTY-THREE
THOUSAND, FOUR HUNDRED and TWENTY-FIVE Dollars ($183,425.00) and shall be
payable in equal monthly instalments of FIFTEEN THOUSAND, TWO HUNDRED and
EIGHTY-FIVE Dollars ($15,285.42) Dollars and Forty-two cents each, in advance,
on the first day of each and every month, in cash or by certified cheque payable
at par at Toronto, without deductions or defalcations of any kind.
(b) The basic rental for the second year of the term for the Tenth Floor Space
commencing May 1, 1999, and ending on April 30, 2000, based on $12.00 per square
foot per annum, shall be an annual basic rental of TWO HUNDRED THOUSAND, ONE
HUNDRED Dollars ($200,100.00) and shall be payable in equal monthly instalments,
of SIXTEEN THOUSAND, SIX HUNDRED AND SEVENTY-FIVE Dollars ($16,675.00) Dollars
each, in advance, on the first day of each and every month, in cash or by
certified cheque payable at par at Toronto, without deductions or defalcations
of any kind.
3. DEPOSIT
Tenant acknowledges receipt of a deposit in the amount of $34,197.68 to be
applied on account of first and last month's rent and GST.
4. Tenant acknowledges having inspected the Tenth Floor Space and agrees to
accept it "as is" .
5. In addition to, and without limiting the provisions of the original lease,
Tenant agrees that upon termination of the lease of the 10th floor space, it
shall deliver up the said 10th floor space to Landlord in the same condition as
upon commencement of its lease therein, including specifically, that all walls,
partitions, plumbing and other leasehold improvements shall be in the same
location and condition as they were upon commencement, but the foregoing shall
not include removal of cable or electrical installations.
6. OPTION TO RENEW THE 10th FLOOR SPACE
Subject to any prior rights of first refusal, and provided the Tenant has not
been in breach of the Lease, and has duly and regularly paid a rent and
performed the covenants required pursuant to this Lease, the Tenant shall have
the option to renew the Lease with respect to the Leased Premises for an
additional term of a duration to be mutually agreed upon by Landlord and Tenant
on the same terms and conditions as this Lease, subject to reasonable revision
of lease document to conform with Landlord's current lease form, and save only
for the Basic Rent and Additional Rent and any further option to renew. Tenant's
option aforesaid shall be exercisable by delivery of written notice to the
Landlord not later than six (6) months prior to the expiry of the current Lease
term. The Basic Rent for the renewal period shall be the fair market Basic Rent
for comparable premises in comparable buildings, such amount to be agreed upon
between the Parties on or before ninety (90) days prior to the expiry date of
the initial term. If the Parties hereto shall fail to agree upon the renewal
rent within such limited time, then the basic rent for the renewal term shall be
determined by arbitration pursuant to the Arbitration Act of Ontario or any
successor legislation. The Agreement of Landlord and Tenant in respect of the
duration of the Renewal Term shall be concluded in writing not less than three
months prior to the expiry of the current lease term, failing which there shall
be no Renewal Term.
7. ORIGINAL LEASE PROVISIONS
The following provisions of Schedule B to the original lease shall not apply in
respect of Suite 505:
2(c) - limitation on additional rent charges
4 - Leasehold improvements
5 - Fixturing period
6 - Space Plan
10 - No restoration
11 - Additional Space
12, 13 - Lease Cancellation
14 - Renewal Option
6. OPTION TO EXTEND
The Tenant shall have the right on one occasion, anytime during the first
eighteen months of the term, by written notice (the "Notice of Extension") to
the Landlord, to extend the term of the Lease beyond the expiry date, upon terms
and conditions to be mutually agreed upon by both parties acting reasonably. If
the Parties hereto shall fail to agree upon the duration of the Renewal Term and
all other terms and conditions thereof within 90 days of the delivery of the
Notice of Extension then there shall be no Renewal Term.
SECTION IV - GENERAL PROVISIONS
The following provisions apply in respect of all space in the Building leased by
the Tenant:
1. It is acknowledged and agreed that in all other respects, all of the
covenants, obligations, terms and provisions as contained in the original lease
as amended, shall remain in full force and effect, and shall apply to Suite 505,
the Seventh Floor Space and the 10th Floor Space, save and except as amended by
this Agreement and save and except for any Landlord's work or right of renewal,
and the Tenant hereby acknowledges that the Landlord is in full compliance with
all of its obligations under the original lease, as amended, and that it has no
claims to the Landlord for repairs or any other matter.
2. For greater clarity, a summary of space rented and rent payable by Tenant for
all space in the building is attached as Schedule "A". Tenant acknowledges that,
notwithstanding the allocation of various rental rates and provisions to various
spaces hereunder, it is agreed that Landlord has the right to apply any amounts
received from Tenant in payment of any balances due to Landlord in respect of
any space in the Building, and that any default by Tenant in respect of any
space shall entitle Landlord to exercise its remedies against all of the space
leased by Tenant or, at Landlord's option against any one or more of such
spaces.
3. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have hereunto caused to be affixed their
corporate seals duly attested by the hands of their proper signing officers as
of the date first above written.
SIGNED, SEALED and DELIVERED in the presence of:
ORFUS INVESTMENTS
per: /s/Elaine Orfus
SAVILLE SYSTEMS CANADA LTD.
per: /s/Christopher A. Hanson
<PAGE>
SCHEDULE "A"
SPACE RENTABLE SQUARE TERM RENT
FOOTAGE
6th Floor 16,675 To Jan. 31, 2005 per Par 2(k)
5th Floor 7,646 To Jan. 31, 2005 per Par 2(k)
Suite 505 2,673 To Feb. 14, 1999 10.50/ft.
7th Floor 8,844 To Jan. 31, 2005 9.50/ft.
10th Floor 16,675 To April 30, 2000 11.00/ft. 1st year
12.00/ft. 2nd year
Total 52,760
<PAGE>
SCHEDULE "D"
THIS INDENTURE OF AGREEMENT
made this 1st day of April, 1998
BETWEEN:
ORFUS INVESTMENTS, a Partnership registered under the Partnership Registration
Act of Ontario,
(hereinafter called the "Landlord"),
OF THE FIRST PART, -and
SAVILLE SYSTEMS CANADA LTD., a company incorporated under laws of the Province
of Ontario,
(hereinafter called the "Tenant"),
OF THE SECOND PART,
WHEREAS by a Lease made on the 25th day of November, 1994 (hereinafter referred
to as the "original lease") the Landlord did lease to the Tenant, those premises
located in the Town of Markham, in the Regional Municipality of York in the
Province of Ontario, and being part of a building municipally known as 625
Cochrane Road (the "Building"), which premises are described in the original
lease to consist of an area of approximately 16,675 rentable square feet on the
sixth (6th) floor and an additional 2,951 rentable square feet on the fifth
(5th) floor, for a term of ten (10) years commencing February 1, 1995 and ending
January 31, 2005;
AND WHEREAS by Indenture of Agreement dated January, 1996, the measurement of
the above described 2,951 rentable square foot space on the fifth floor was
revised to 3,343 rentable, square feet and an additional 4,303 square feet on
the 5th floor was added to the leased premises, so that the aggregate square
footage of the leased premises was confirmed at that time to be 24,321 rentable
square feet.
AND WHEREAS, by Offer to Amend Existing Lease dated January 14, 1998, the Tenant
agreed to lease an additional 2,673 rentable square feet on the 5th floor from
the Landlord upon terms and conditions as hereinafter set out ("the Suite 505")
AND WHEREAS, by offer to amend existing lease dated June 20, 1997, the Tenant
agreed to lease an additional 8,844 rentable square feet on the 7th floor from
the Landlord upon terms and conditions as hereinafter set out ("the Seventh
Floor Space")
AND WHEREAS, by offer to amend existing lease dated March 26, 1998, the Tenant
agreed to lease an additional 16,675 rentable square feet on the 10th floor from
the Landlord upon terms and conditions as hereinafter set out ("the Tenth Floor
Space")
NOW THEREFORE WITNESSETH that in consideration of mutual promises and other good
and valuable consideration, and the sum of TWO ($2.00) DOLLARS now paid by the
Tenant to the Landlord (the receipt and sufficiency of which is hereby
acknowledged by the parties hereto) the parties hereto hereby agree as follows:
1. Commencing February 1, 1996 and henceforth, until the end of the term of
the original lease, the Premises as defined in the original lease shall be
expanded to include the additional space of 3,912 useable, being 4,303
rentable square feet on the fifth floor, (the "Expansion Premises"), at the
same rental rate per rentable square foot, and upon the same terms and
conditions as set out in the original lease.
2. Landlord and Tenant each acknowledge that the original lease shall be
deemed amended from the Commencement Date to reflect the correct square
foot measurements as set out in the recitals above. For greater clarity, it
is confirmed that together with the expansion Premises, the total square
footage of the leased premises is 22,812 useable, being 24,321 rentable
square feet. The Landlord agrees to provide Tenant with an Architect's
Certificate confirming the total square footage of the Leased Premises in
accordance with this Section. No rent shall be paid or owing to the
Landlord for the adjusted square footage until such Certificate is
provided.
3. Landlord shall finish the Expansion Premises upon the same terms as
provided for Leasehold Improvements in paragraph 11B of Schedule "B" in the
original Lease.
4. It is acknowledged and agreed that in all other respects, all of the
covenants, obligations, terms and provisions as contained in the original
lease shall remain the same, and the Tenant hereby acknowledges that the
Landlord is in full compliance with all of its obligations under the Lease
and that it has no claims to the Landlord for repairs or any other matter.
5. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have hereunto caused to be affixed their
corporate seals duly attested by the ands of their proper signing officers as of
the date first above written.
SIGNED, SEALED AND DELIVERED in the presence of:
ORFUS INVESTMENTS
per: /s/Elaine Orfus
SAVILLE SYSTEMS CANADA, LTD.
per: /s/Marc J. Venator, CFO
January 11, 1996
per: /s/Jane Lewchuk
January 11, 1996
<PAGE>
SCHEDULE "E"
OFFER TO LEASE
(ICI)
To MONARCH CONSTRUCTION LIMITED (Lessor)
WE SAVILLE SYSTEMS CANADA LTD. (Lessee)
hereby offer to lease through CB Richard Ellis Limited ("Broker"), the premises
known municipally as (See Schedule "A"), in the Town of Markham comprising
approximately 110,000 rentable square feet, more or less for a term of fifteen
(15) years from August 1, 2000 ("Commencement Date") to July 31, 2015, at a
rental of (See Schedule "A") per annum payable $ (See Schedule "A") monthly, in
advance, on the first day of each month during the said term.
Cheque or letter of credit in the amount of $250,000.00 as a deposit payable to
the Broker in trust for the Lessor, is due upon execution of the lease by both
parties and is to be credited together with interest on account of rental
payments as they first become due. The Lease shall be drawn by the Lessor and
executed by the Lessee and to Lessor forthwith subject to amendments as
negotiated between the Lessors and the Lessee's Solicitors, both acting
reasonably.
The Premises are to be used for general office purpose and any similar other use
permitted by municipal by-laws.
IT IS UNDERSTOOD AND AGREED that
SCHEDULES "A", "B", "C", "D" AND "E" AND RIDER #1 ATTACHED HERETO SHALL BE READ
WITH AND FORM A PART OF THIS OFFER TO LEASE ........
THIS COUNTER OFFER shall be irrevocable by the Lessee until 5:00 (p.m.) on the
26th day of November, 1998 after which time if not accepted, this Offer shall be
null and void and all deposit monies paid by the Lessee hereunder shall be
refunded without any interest or deduction whatsoever.
It is further understood that all representations by the Lessor or any of his
representatives, are set out in this Agreement.
The heirs, executors, administrators, successors and assigns of the undersigned
are bound by the terms hereof. This Agreement shall be read with such changes of
gender or number as may be required by the context.
DATED at Boston/Edmonton this 25th day of November, 1998.
SIGNED, SEALED AND DELIVERED IN WITNESS whereof I have hereunto set my hand and
seal: in the presence of
/s/ Lisa Miller
Witness
I have authority to bind the Company
SAVILLE SYSTEMS CANADA, LTD.
/s/ Christopher A. Hanson
Lessee
/s/Jane Lewchuk
Lessee
WE hereby accept the above Offer and agree with the above named Broker to pay in
consideration of procuring this Offer a commission of as per agreement
Any deposit in respect of any agreement shall first be applied to reduce the
commission payable. Should such amounts paid to you from the deposit or by
my/our solicitor not be sufficient, I shall be liable to pay to you, on demand,
any deficiency in commission and taxes owing on such commission. All amounts set
out as commission are to be paid plus applicable federal goods and services tax
(G.S.T.) on such commission.
DATED at Toronto this 26th day of November, 1998
SIGNED, SEALED AND DELIVERED IN WITNESS whereof I have hereunto set my hand and
seal:
in the presence of
/s/Alan P. MacKenzie
Witness
I have authority to bind the Company
MONARCH CONSTRUCTION LIMITED
/s/Brian Johnston
Lessor
/s/David George
Lessor
<PAGE>
SCHEDULE "A"
To be read with and form a part of this Offer to Lease between
MONARCH CONSTRUCTION LIMITED (LESSOR) AND SAVILLE SYSTEMS CANADA LTD. (LESSEE)
1. BUILDING
The Lessor agrees to construct, at its expense, an eight storey office building
(the "Building") containing a total rentable area of approximately 196,166
square feet, subject to final measurement certified by the Lessor's architect in
a first class manner in accordance with sound engineering practices, the
provisions of this Offer, and in accordance with all prevailing government,
building and fire code regulation.
The Building will be constructed and situated on part of a 10.69 acre site
located on the south side of Commerce Valley Drive East Markham (the 'Site")
legally described and as indicated on the preliminary site plan attached hereto
as Schedule "B".
The Building will have typical floors having a minimum rentable floor area of
approximately 25,920 square feet subject to agreement between the parties as to
the final design and specifications of the Building.
All fees, permits and costs associated with the design and construction of the
Building shall be the sole responsibility of the Lessor.
2. BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultant(s), acting reasonably, for the purposes of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the Building
shall be finalized no later than December 22, 1998. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization of the permit
application drawings of the Building.
3. CONSTRUCTION SCHEDULE, PROGRESS REPORTS AND INSPECTION
a) Contemporaneously with the execution of the Lease, the Lessor shall deliver
to the Lessee a construction schedule indicating the construction sequence and
time requirements for completion of the Building and such schedule shall be
revised from time to time as required during the progress of construction. The
Lessor shall submit periodic reports of the progress of construction to
the Lessee's designated representative.
b) The Lessee shall have the right at all reasonable times during normal
business hours until the Commencement Date through the Lessor's designated
representative, to inspect and examine the work or construction, the standard of
workmanship employed and the materials used in the construction, erection and
installation of the Building, provided however, that the Lessee's representative
shall be on the lands at his or her own risk and shall not interfere with or
obstruct the Lessor or its contractors in their respective operations on the
lands.
c) The provision of the schedule and revisions thereto and progress reports
pursuant to subsection (1) and the making of inspections and examinations
pursuant to subsection (2) shall not constitute or be deemed to constitute a
waiver of any of the obligations of the Lessor to design, construct, erect and
install the Building as provided in this Offer.
4. BUILDING COMPLETION
Provided that the parties have finalized the conceptual design and
specifications of the Building by December 22, 1998 the Lessee agrees to
commence construction of the Building no later than June 1, 1999 and to
diligently pursue the construction of the Building in accordance with a
construction schedule to form part of the design and specifications, The Lessor
shall complete the Building such that the Lessee's fixturing work may commence
by no later than April 1, 2000, subject to force majeure.
For the purpose of this Offer and the Lease, the obligations of the Lessor to
design and construct the Building may be subject to delays caused by the act,
neglect, delay or default of the Lessee or its agents or contractors, strikes,
lock-outs, fire or other damage or destruction of the Building or any
substantial part thereof, adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each of which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly, but
in any event no later than five (5) days after the occurrence thereof comes to
the attention of the Lessor, give written notice to the Lessee of the occurrence
and of the Lessor's estimate of the length of delay resulting therefrom. The
time for completion of construction of the Building shall be extended so long as
the force majeure occurrence shall subsist which shall include not only the
length of time that the event causing force majeure subsists but also a
reasonable amount of time in respect of delays caused thereby, resulting
therefrom or relating thereto.
Substantial completion of the Building for the purposes of, and as used in this
Offer to Lease, shall be deemed to have occurred once the Lessor and the Lessee
have agreed or the designated consultant (the "Designated Consultant") acting
reasonably in good faith and without delay has certified have agreed that the
Building is sufficiently completed for the Lessee to commence construction of
its leasehold improvements with immediate and continuous access to allow
construction of the Lessee's improvements, including the full use of driveways,
elevators and loading docks. Final completion of the Building by the Lessor
shall occur no later than 15 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully co-operate with each other and to
co-ordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete the
Building as provided for herein then all dates contained in this Offer to Lease
shall be delayed by the same number of days that substantial or final completion
of the Building is delayed. Save and except for delays as a result of force
majeure, Lessor shall indemnify and save harmless Lessee from all costs, claims
and liabilities, howsoever arising by reason of the delay in the Commencement
Date by the Lessor pursuant to this Offer to Lease. The parties agree that a
genuine pre-estimate of such costs, claims and liabilities to be paid to the
Lessee by the Lessor shall be the aggregate of: firstly, the amounts of all
rental payments due by the Lessee under its existing leases as more particularly
set out in paragraph 31, and secondly, an increase in the Net Rent Free Period
set out in paragraph 11 by one day for each day of such delay for the first 30
days: an increase by two days for each day of such delay for the next 30 days
and an increase by three days for each day of such delay thereafter. And further
provided that, if the Commencement Date has been delayed 90 days, the Lessee
may, at its sole option, terminate this Offer to Lease and the Lease and this
Offer to Lease shall be terminated and the Deposit shall be returned to the
Lessee and the parties shall have no further obligation to each other. The
Lessee shall not be liable to the Lessor for repayment of any Tenant's
Improvement Allowance paid or accrued payable if this Offer to Lease is
terminated pursuant to this paragraph.
5. INSURANCE
The Lessor shall obtain at its cost all risk insurance for the full replacement
value of the Building during the period of construction and until completion.
6. NOTICE OF SUBSTANTIAL COMPLETION / OCCUPANCY PERMIT
Forthwith upon substantial completion, the Lessor shall give written notice
("Notice of Substantial Completion") to that effect to the Lessee. If an
occupancy permit is required by the municipality, the Lessor shall use its best
efforts to obtain such permit forthwith.
7. AS-BUILT DRAWINGS
The Lessor shall deliver to the Lessee with the Notice of Substantial Completion
of the Building, a set of "as built" plans and specifications including a
drawing showing the location of all concealed or buried mechanical, electrical
and equipment services.
8. PREMISES
The Premises shall comprise of approximately 110,000 square feet of rentable
area comprising the entire fifth (5th), sixth (6th), seventh (7th') and eighth
(8th) floors and part of the fourth (4th) and ground floors (the "Initial
Premises") subject to actual measurement in accordance with the current B.O.M.A.
standard method of measuring floor area in office buildings. The Lessor agrees
to provide the Lessee with an architect's certificate for the Initial Premises
on or before the Commencement Date.
9. LEASE
The Lease shall be drawn on the Lessor's standard form but will be otherwise
subject to the terms herein and otherwise to the reasonable satisfaction of the
Lessee and its solicitors. The Lease may not conflict with any of the provisions
of the Offer but may deal in greater detail with the matters dealt with herein
as well as other matters normally dealt with in commercial office leases and
subject to such non-financial amendments as may be reasonably requested by the
Lessee and Lessor in consultation with their solicitors. The Lessor shall
deliver to the Lessee the Lessor's standard form of lease, incorporating the
provisions of this Offer, within five (5) days of acceptance of this offer by
both parties. The Lease shall contain the Lessor's representation and warranty
that it is the registered beneficial owner of the Lands and the Building will be
constructed as provided for herein, that the Lands and Building are zoned to
permit the uses as contemplated hereby, and that the same are free of any
hazardous substances and in compliance with all environmental laws, by-laws and
regulations. Lessee agrees to abide by all the terms of the Lease except as
amended by this Offer, or other changes mutually agreed to by both parties as
described herein. The provisions of this Offer to Lease shall not merge with the
execution and delivery of the Lease.
This Offer to Lease shall be conditional for a period of thirty (30) days after
acceptance hereof upon both parties agreeing to all the terms of the Lease for
the Premises. If the parties cannot agree upon the final form of lease for the
Initial Premises within the thirty (30) day conditional period described above,
then this Offer to Lease shall become null and void.
In the event that this Offer to Lease becomes null and void as provided in this
paragraph, the Lessee agrees to reimburse the Lessor for fifty percent (50%) of
reasonable out-of-pocket expenses associated with work in progress up to a
maximum of Twenty-Five Thousand Dollars ($25,000.00)
10. NET RENT
The Lessee shall pay to the Lessor the following net rent ("Net Rent") in equal
monthly instalments in advance on the first day of each calendar month at the
rate of:
August 1, 2000 - July" 31, 2005 $18.50 per square foot of rentable area per
annum
August 1, 2005 - July" 31, 2010 $21.50 per square foot of rentable area per
annum
August 1, 2010 - July" 31, 2015 $25.00 per square foot of rentable area per
annum
11. NET RENT FREE PERIOD
The Tenant shall be permitted to occupy the Premises for the first month of the
lease term without the obligation to pay Net Rent ("Net Rent Free Period").
During this Net Rent Free Period the Tenant shall pay all Additional Rent for
the Premises and all other terms and conditions of the Lease shall be in full
force and effect.
12. ADDITIONAL RENT
In addition to the above Net Rent a proportionate share of costs reasonably
applicable to the Premises all as more particularly outlined in the Lease,
including but not limited to realty taxes, operating expenses and hydro,
directly applicable to the Premises, unless separately metered, will be paid by
the Lessee in equal monthly instalments as additional rent, and shall be subject
to escalation from time to time throughout the term of the Lease as provided for
herein.
Notwithstanding the foregoing, increases in operating expenses, if any, from
year to year shall not exceed the increase in the consumer price index for that
year, unless separately agreed to by the Lessor and Lessee.
Furthermore, the Lessee shall not pay any Capital Tax or Large Corporation Tax
on capital costs, which may form part of Additional Rent.
The Lessee agrees to pay a management fee to the Lessor equal to ten (10%)
percent of the total of realty taxes, hydro (unless paid directly by Lessee),
and operating expenses (excluding the management fee).
In the event that the Lessor requires the installation of separate meters for
any utilities, then the same shall be installed at the expense of the Lessor,
and all utility costs which are separately metered shall not be subject to any
management fees.
The Landlord's current estimate for Additional Rent, including management fees,
in 2000 is Eleven dollars and Fifty-Four Cents ($11.54).
13. AUDIT OF ADDITIONAL RENT
The Lessor shall provide annually to the Lessee, an audited statement of
Additional Rent within ninety (90) days of the fiscal year end of the Lessor.
Said statement shall be completed by an independent chartered accountant or
other qualified financial person. The Lessee or the Lessor as the case may be,
shall forthwith upon receipt of such statement remedy any differences between
said statement and the additional rent paid by the Lessee to the Lessor in the
previous year of the Lease term. If the Lessor or Lessee disputes the accuracy
of the statement, it shall deliver notice of dispute to the other within 10 days
of receipt of such statement. On delivery of such notice, the Lessor and the
Lessee shall diligently work to resolve such dispute, failing which, such
dispute shall be subject to arbitration. If the Lessor owes payment to the
Lessee on the basis of such statement and fails to either make such payment or
deliver a notice of dispute, Lessee shall have the right to set off the amount
of such payment against amounts next coming due under the Lease.
14. LEASEHOLD IMPROVEMENT ALLOWANCE
As an inducement to the Lessee to enter into a lease agreement with the Lessor,
the Lessor agrees to provide the Lessee with a leasehold improvement allowance,
the "Leasehold Improvement Allowance" equal to a value of twenty-five dollars
($25.00) plus G.S.T. per rentable square foot for the Initial Premises and 1st
expansion space and 2nd expansion space, if applicable. The Lessor shall make
drawdown payment as directed by the Lessee within 15 days of receipt of invoices
from the Lessee. Partial draw down will occur for the Leasehold Improvement
Allowance based on fixturing work completed and on Lessee's architects or
engineers written certification, less proper holdbacks and construction liens,
if any. In the event that less than twenty-five dollars ($25.00) per rentable
square foot is used towards such improvements, then the difference shall be
applied towards Net Rent reduction (based on 10% interest) over the entire term.
There shall be no administrative overhead or profit charged by the Lessor for
the improvements or alterations performed during either the fixturing period or
the term of the Lease, provided that the work is not completed by the Lessor.
All plans and specifications pertaining to the Lessee's fixturing work shall be
subject to the prior review and written approval of the Lessor, not unreasonably
withheld or delayed. The Lessee shall provide the Lessor with copies of the "as
built" drawings of the Lessee's fixturing work on or before ninety (90) days
after the Commencement Date.
15. SPACE PLAN
The Lessor agrees to provide the Lessee with a space plan allowance equal to ten
cents ($0.10) plus G. S.T. per rentable square foot of the Initial Premises, and
1st expansion space and 2nd expansion space payable within fifteen (15) days
after receipt of invoices from the Lessee or its consultant.
16. FIXTURING PERIOD
Upon substantial completion of the Building, the Lessee will be permitted access
to the Initial Premises for a period of not less than one hundred and twenty
(120) days in order to commence installation of its Leasehold improvements. Each
of the Lessor and the Lessee agrees to co-operate with the other so as not to
interfere with completion of each other's Work. During such fixturing period by
the Lessee, no Net Rent or Additional Rent shall be payable prior to the Lease
Commencement, however all other terms of the Lease shall be in effect.
17. INITIAL PREMISES EXPANSION
At any time prior to October 1, 1999 and prior to the Lessor accepting an arms
length Offer to Lease for any or all of the 2nd , 3rd or the balance of the 4th
floor, the Lessee shall have the right to amend the Lease to add the balance of
4th floor to the "Initial Premises" under the same terms and conditions as are
set forth in this Offer and as reflected in the Lease, at which time the "First
Option to Lease" referred to in clause 18 of this Offer and correspondingly in
the Lease shall then refer to the entire 3rd floor instead of the balance of the
4th floor, and the "Second Option to Lease", clause 19 of this Offer and
correspondingly in the Lease shall refer to the entire 2nd floor instead of the
3rd floor.
18. FIRST OPTION TO LEASE
The Lessee shall have the Option to lease the balance of the 4th floor of the
Building (the "1st expansion space") prior to December 31, 2001 and terminating
co-terminus with the lease of the Initial Premises. The Lessee shall provide
written notice no later than June 30, 2001 of its intent to exercise its Option
to Lease the balance of the 4th floor from a commencement date to be specified
in such notice. The terms and conditions of the lease for the 1st expansion
space shall be the same as those for the Initial Premises.
19. SECOND OPTION TO LEASE
The Lessee shall have the one time Option to lease the entire 3rd floor of the
Building (the "2nd expansion space") beginning at the commencement of the sixth
year of the term and terminating co-terminus with the lease of the Initial
Premises. The Lessee shall provide written notice no later than six months prior
to the commencement of the sixth year of the term of its intent to exercise its
Option to Lease the 3rd floor. The terms and conditions of the lease for the 2nd
expansion space shall be the same as those for the Initial Premises save and
except the Net Rent which shall be as follows:
Years 6-10 $21.50 per square foot per annum
Years 11-15 $25.00 per square foot per annum
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of five (5) cars per one thousand rentable
square feet leased for the term of the Lease and any renewals thereof rent free.
Within fifteen (15) days of acceptance hereof the Lessee, at its option, may
elect to increase the parking ratio from five (5) to seven (7) cars per thousand
square feet leased for the term of the lease and any renewals thereof by written
notice to the Lessor. Should the Lessee elect to increase the parking ratio as
contemplated herein then the Tenant agrees to pay one hundred dollars ($100.00)
per space per month for the additional two (2) cars per one thousand (1,000)
rentable square feet leased.
21. DEPOSIT
It is understood and agreed by the Lessor and the Lessee that the deposit cheque
will not be certified or deposited in the Broker's Real Estate Trust Account
until the Lease has been executed by both parties. Upon same occurring, Deposit
shall be placed in a term deposit, interest to accrue to the benefit of the
Lessee until the Commencement Date. The Lessee shall have the right to
substitute an unconditional letter of credit drawn on a Schedule I Canadian
chartered bank as deposit. Such letter of credit to be in a form acceptable to
Lessor, acting reasonably.
22. OPTION TO TERMINATE
Notwithstanding anything contained in the Lease to the contrary, and provided
Saville Systems Canada Ltd. or an affiliate or a corporation that purchased all
or substantially all of the business of Saville Systems Canada Ltd. (a
"Permitted Transferee") is carrying on business in the Initial Premises, the
Lessee shall have the right to terminate the Lease as of July 31, 2010 upon not
less than nine (9) months prior written notice to the Lessor. During the nine
(9) months notice period, the Lessee shall have the right to occupy the Premises
under the terms of its Lease, or the Lessee may vacate the Premises and pay the
Lessor a lump sum equal to the gross rent remaining during said notice period,
in which latter event, the Lessee shall surrender the Premises to the Lessor.
In the event the Lessee exercises the right to terminate its Lease as of July
31, 2010 in the manner described above, then the Lessor shall receive from the
Lessee thirty (30) days prior to the end of the tenth (10th) year of the term, a
sum equivalent to eight (8) months gross rent due in respect of the Premises and
all Expansion Premises then leased hereunder in the eleventh (11th) year of the
lease.
23. OPTION TO RENEW
Provided the Lessee is Saville Systems Canada Ltd. or a Permitted Transferee,
and is not then in material default under the Lease, either in payment of rent
or observance of the covenants therein, the Lessee shall have two Options to
renew the Lease for two (2) further terms of five (5) years each upon giving the
Lessor at least twelve (12) months' notice prior to the expiration of the
initial term or first renewal term of the exercise of such right subject to the
same provisions as are contained in the Lease except that during the second
renewal, there shall be no further right of renewal, the rent for the extended
term (the "New Annual Net Rent") shall be the then fair market rent for the
Leased Premises having regard to improvement allowance, turnkey package, the
quality of the existing leasehold improvements and/or cash inducements given by
Lessors to achieve such rent which rent shall be negotiated between the Lessor
and the Lessee at that time. Further, the New Annual Net Rent shall have regard
for prevailing rental rates for similar space in comparable buildings within the
market, within the vicinity of the Premises.
In the event that the parties cannot arrive at a mutually agreed upon New Annual
Net Rent for the Leased Premises within three (3) months prior to the expiration
of the term, the Lessee shall have the right to revoke its notice of intent to
renew within five (5) days from such date (in which case the notice shall be
deemed to never have been sent) failing which the matter shall be determined by
three (3) accredited commercial office leasing real estate brokers (the "Three
Experts") at least thirty (30) days prior to the expiration of the Lease Term,
which Three Experts shall be familiar with rental rates in the area of the
Leased Premises, one of whom shall be appointed by the Lessor (the "Lessor's
Expert") and all costs associated with the Lessor's Expert shall be the sole
responsibility of the Lessor, and one of whom shall be appointed by the Lessee
(the "Lessee's Expert") and all costs associated with the Lessee's Expert shall
be the sole responsibility of the Lessee. The appointment of the third expert
(the "Third Expert") shall be agreed upon by the Lessor's Expert and the
Lessee's Expert and fifty percent (50%) of costs attributable to the Third
Expert shall be borne by the Lessee and the remaining fifty percent (50%) of
costs attributable to the Third Expert shall be borne by the Lessor. Together
the Three Experts, acting reasonably, shall make the final determination of New
Annual Net Rent and should the Three Experts be unable to agree among themselves
on the determination, the opinion of the majority, being two (2) of the Three
Experts, shall be final and binding on the Lessor and Lessee. During any
arbitration, the Lessee may remain in the Leased Premises on the same terms and
conditions as are set out in this Offer to Lease and in the Lease and the annual
Net Rent shall be at the same rate as the annual Net Rent payable during the
last year of the Term until the final determination of New Annual Net Rent has
been made, whereupon there will be a retroactive adjustment.
24. RIGHT TO SUB-LEASE
The Lessee, when not in material default shall have the right to assign the
Lease or sublet the Premises in whole or in part at any time or times during the
Lease term or renewal thereof provided it has the Lessor's prior written
consent, which consent is not to be unreasonably withheld or delayed. No consent
should be required to a sub-lease or assignment to a Permitted Transferee. There
shall be no change of control restriction in the Lease. Notwithstanding an
assignment, the Lessee will be jointly and severally liable with the assignee
under the Lease and will not be released from performing its obligations
hereunder.
25. ALTERATIONS AND INSTALLATIONS
The Lessee shall have the right to make alterations and installations at its own
expense from time to time during the Lease term or any renewal thereof subject
to the Landlord's approval which shall not be unreasonably withheld or delayed.
26. SIGNAGE
Lessee shall have the sole, exclusive right to install roof-top signage at its
sole expense. In addition, the Lessee shall be entitled to install at its sole
cost and expense such additional installations on the roof as it may require for
the purposes of its business, signage on the exterior of the Building indicating
where its premises are located, and such other corporate identification signage
as it may require. At the Tenant's option, the Building shall be identified as
the "Saville" Building. Such signage shall be subject to the prior approval of
the Lessor, not be unreasonably withheld or delayed, as to size and manner of
installation. All costs in conjunction with the maintenance of the Lessee's
signage shall be paid for by the Lessee. All signage shall be in compliance with
all regulatory requirements affecting the same. Lessee shall be entitled to
replace such signage from time to time. If requested by the Lessor in writing
upon expiry of the Lease, the Tenant shall remove all such signage and any
additional installations on the roof at its own expense and shall make good any
damage caused to the Initial Premises or Building by such removal.
In addition, the Lessor, at its own expense, agrees to erect a pylon or ground
mounted sign (the "sign") in front of the Building denoting the tenancies
therein. The Lessee shall be granted a prominent position on the sign and shall
be permitted to install, at its expense, its corporate identification thereon
subject to the reasonable approval the Lessor.
27. IDENTIFICATION
The Lessor shall provide the Lessee with identification posted on any directory
boards in the Building denoting tenancies. The Lessor will provide the Lessee
with the building standard signage on or beside entrance doors as provided by
the Lessor. Building standard signage and identification are at Lessor's cost.
28. NO MAKE GOOD
On termination of the lease, the Lessee shall not be required to restore the
Initial Premises or any expansion or additional premises to the original base
building standard or original condition at the Commencement Date-, but shall
leave the Premises in good working order in a clean and broom-swept condition.
29. BUILDING ACCESS
Except in cases of emergency, the Lessor agrees to provide the Lessee with
access to the Building an a twenty-four hour basis, seven (7) days a week
through the main lobbies and entrances as well as parking lots and all
elevators.
30. RIGHT OF FIRST REFUSAL
Subject to the Lessee in its sole discretion agreeing to an acceptable
alternative arrangement during the 30 day lease negotiation period, provided
that the Lessee is not in material default, then after acceptance of this Offer
and throughout the Term, the Lessee shall have an ongoing Right of First Refusal
("ROFR") to lease additional space which becomes available in the Building. Such
additional space shall only be occupied pursuant to an arm's length Offer to
Lease.
Should the Lessor receive an arms length Offer to Lease (the "Offer") that it is
prepared to accept, then the Lessee shall be given written notice of said Offer,
accompanied by a copy of the Offer, and the Lessee shall have five (5) business
days to advise the Lessor that it will lease said space on the same terms and
conditions, failing which the ROFR shall be null and void and the Lessor shall
be free to proceed to lease the space to the other prospective Lessee pursuant
to the terms of the Offer.
Should the Lessee exercise this ROFR
a) the Lease shall be amended to include said ROFR space and the ROFR space
shall become part of the Premises and subject to the provisions of the Lease;
b) notwithstanding the terms of the Offer, the ROFR space shall be for a term
co-terminous with the term of the Lease, or such other term as mutually agreed;
and
c) notwithstanding the terms of the Offer, the ROFR space shall be taken on an
"as is" basis, except that the Lessor shall, within 30 days of the exercise of
the option, perform the Lessor's work described in Schedule "C" of this Offer.
The Lessee shall be entitled to a three month Rent free period within which to
perform its leasehold improvements in the ROFR space, in accordance with the
provisions of this Offer. If necessary, the Net Rent payable under the
provisions of the Offer shall be reduced to take into consideration the fact the
Lessee may, at its option, perform its own improvements and may not receive any
allowance in respect of such improvements, using a 10% discount factor with
respect to said Net Rent.
31. EXCLUSIVE USE
From and after acceptance of this Offer and during the term of the Lease and any
renewals thereof, the Lessor agrees not to lease any space in the Building or in
the proposed building making up the development to a Lessee whose principal or
ancillary business directly competitive with the business of the Lessee or any
Permitted Transferee.
The Lessee, acting reasonably and in good faith shall provide a list of its
principal competitors to the Lessor at the Commencement Date and on each
anniversary date during the Term and any renewals of the Lease.
32. ASSUMPTIONS OF LESSEE'S EXISTING LEASES
Subject to the Lessor verifying during the 30 day Lease negotiation period, the
Lessee's representations as to the rental obligations of its existing leases,
the Lessor agrees to assume and pay for all rental obligations on behalf of the
Lessee as of the Commencement Date for the Lessee's existing lease obligations
at 625 and 675 Cochrane Drive, copies of which are attached hereto as Schedule
"D".
It is understood that the Lessor shall not be required to perform any of the
covenants provided for in the existing lease obligations on behalf of the Lessee
other than the payment of all rental obligations.
In the event that either party defaults in the payment of their respective
rental obligations provided for in this Offer to Lease then the party who is not
in default shall have the right to cure such default and to withhold the
equivalent amount of rent owed to the defaulting party until the default is
remedied.
Furthermore, both parties hereby agree to co-operate fully with each other to
effect an assignment or sublet of the Lessee's existing leased premises prior to
the Commencement Date.
Furthermore, any proceeds, including any reductions of payments of rental
obligations on the Lessee's existing leases, resulting from an assignment or
sublet of the Lessee's existing leases net of leasing costs, reasonable
administrative fees and inducements, shall be rebated back to the Lessee on the
Commencement Date of the Lease in the Building.
(See attached page 14A)
33. SHIPPING/RECEIVING
The Lessee shall have the exclusive use of one of the loading bays serving the
Building for the term of the Lease and any renewals thereof. In addition, the
Lessee's ground floor premises contemplated in paragraph #4 of this Offer to
Lease shall be in a secure location as proximate to the shipping/receiving area
as possible.
34. BUILDING AMENITIES
Concurrent with the Commencement Date the Lessor agrees to provide the following
amenities on the ground floor of the Building and provide substantially
continuous service during the term of the Lease and any renewals thereof:
a) A full service restaurant similar to the restaurant currently in existence at
625 Cochrane Drive, Markham, subject to reasonable commercial leasing efforts.
b) A smoke and sundry shop.
c) Dedicated smoking area separately ventilated.
<PAGE>
SCHEDULE "E"
Page 14A to be read with and form a part of this Schedule "E", section 32 of the
Lease between Monarch Construction Limited and Saville Systems Canada Ltd. dated
January 26", 1999.
*Notwithstanding the foregoing or anything contained in this Schedule, any of
the Schedules or the Lease to the contrary, the payment of rental obligations by
the Landlord shall not exceed and be limited to the sum of $2,300,000.00. In the
event the rental obligations are greater than $2,300,000.00 the payment of the
excess will be the sole responsibility of the Tenant. **In the event the rental
obligations are less than $2,300,000.00 the difference shall be rebated by the
Landlord to the Tenant by way of a cash payment. The Tenant represents and
warrants to the landlord that on or before the Commercial Date of the Lease to
provide two estoppel certificates from its two existing landlords with respect
to its lease obligation at 625 and 675 Cochrane Drive, Markham, Ontario setting
out that there are know arrears due and owing under the two leases.
Provided that, on written request from the Tenant delivered on or before the
commencement Date, the Landlord will pay such excess on behalf of the Tenant and
add the amount of such excess to the Basic Rent to be paid by the Tenant to the
Landlord, the aggregate amount of such excess to be amortized over the first ten
years of the term of the Lease (based on a 10% interest rate factor) and paid
monthly as Basic Rent. If the Tenant does not deliver such written request on or
before the Commencement Date, it shall be responsible for the payment of such
excess.
<PAGE>
35. LESSEE'S / LESSOR'S CONDITION
This Offer to Lease shall be conditional for a period of thirty (30) days after
acceptance hereof by both parties upon approval by the Board of Directors of the
Lessee and Lessor. If such approval cannot be reached within the aforementioned
period and written notice of satisfaction or waiver of this condition, has not
been provided by both parties then this Offer shall be null and void and any
deposit monies shall be returned forthwith without interest or penalty. If no
written notice is delivered then this Offer shall be null and void. This
condition is inserted for the sole benefit of the Lessee and Lessor and may be
waived at any time.
36. FINANCIAL INFORMATION
Forthwith after the acceptance of this Offer to Lease, each of the Lessee, the
Indemnifier and the Lessor shall make available within five days to the other
such information as the other may reasonably request (including financial
information), to enable the other to satisfy itself that the Lessee or the
Lessor has satisfactory credit ratings and financial abilities. All information
shall be kept strictly confidential and shall not be disclosed or used in any
way. The Lessor and the Lessee shall have five (5) business days after receipt
of the other's financial information to satisfy itself as to the foregoing and
to notify the other in writing of its satisfaction or dissatisfaction of the
other's credit ratings and financial abilities. If either the Lessor or the
Lessee is not satisfied it may terminate this Offer to Lease by written notice
to the other within the said five (5) business days. Failure to deliver written
notice within the above specified time shall be deemed to be a waiver of such
condition.
37. GOODS AND SERVICES TAX (G.S.T.)
The Lessee covenants with the Lessor to pay, to the person or authority to whom
they are payable, on or before the due date thereof, any and all sales or
services taxes on the Premises, however designated which are levied, imposed or
assessed by lawful authority in this Lease, and whether they are levied, imposed
or assessed against the Lessor or the Lessee. Provided the Lessor complies with
all of its obligations to remit and report G.S.T., the Lessee further covenants
to indemnify and save the Lessor harmless from any and all liability, costs,
expenses or penalties incurred by the Lessor as a result of such sales or
services taxes. The Lessee's obligation to observe or perform this covenant
shall survive the expiration or other termination of its Lease Agreement.
The Lessor will comply with all provisions of the goods and services tax.
38. FACSIMILE
The Lessor and Lessee acknowledge that the negotiation of this Offer to Lease
may be by Facsimile machine and signed on a facsimile copy. Both parties accept
the facsimile copy as a legal and binding document. Original Offer to Lease
documents will be delivered to the Lessor and Lessee once the terms of this
Offer to Lease are fully negotiated and shall form the basis of the lease
documents to be executed by both parties.
39. NO REPRESENTATION
It is agreed and understood that there are no covenants, representations,
agreements, warranties or conditions in any way relating to this Offer whether
express or implied, collateral or otherwise, except those set forth in this
Offer.
40. LEGAL ADVICE
The Parties to this Agreement acknowledge that CB Richard Ellis Limited has
recommended that they obtain advice from their Legal Counsel prior to signing
this document. The Parties further acknowledge that no information provided by
CB Richard Ellis Limited is to be construed as expert legal or tax advice.
41. DUAL AGENCY
The parties to this transaction hereby acknowledge that the Listing Broker and
Co-operating Broker are the same Firm, such that there has been, and is dual
agency, the Lessor and Lessee having previously consented to such dual agency
and waiving any conflict of interest or duty of confidentiality.
42. NON DISTURBANCE
The Lessor shall provide a non-disturbance agreement to the Lessee on terms
satisfactory to the Lessee from any existing mortgagee, trustee or other
encumbrancer, and any future mortgagee, trustee, purchaser or other encumbrancer
to whom the Lessee is required to attorn or subordinate. The initial
non-disturbance agreement shall be provided forthwith after acceptance of this
Offer to Lease to the Lessee for its review and approval, and executed forthwith
thereafter. Lessee shall be permitted to register notice of the Lease including
the options to renew and the right of first refusal on title to the lands and
Building provided that the Lessee shall postpone to all arm's length lenders and
governmental authorities having jurisdiction. Forthwith on request by the
Lessor, the Lessee shall execute and deliver all such postponements and other
assurances as are reasonably required by such lender or authority.
43. NOTICES
Notices required or permitted to be given by this Offer to Lease shall be in
writing and shall be given by prepaid registered mail, telefax or personal
delivery to the parties at the following addresses, or other such addresses that
may from time to time be designated by the party in writing:
LESSOR'S ADDRESS
Attention: Mr. Alan MacKenzie, Director Commercial Properties
MONARCH CONSTRUCTION LIMITED
2025 Sheppard Avenue East
Suite 1201
Toronto, Ontario
M2J IV7
LESSEE'S ADDRESS
Saville Systems Canada Ltd.
Attention: Ms. Jane Lewchuk
<PAGE>
SCHEDULE "B"
Map of premises
<PAGE>
SCHEDULE "C"
To be read with and form a part of this Offer to Lease between
MONARCH CONSTRUCTION LIMITED (LESSOR) AND SAVILLE SYSTEMS CANADA LTD. (LESSEE)
REQUIREMENTS FOR NEW BUILDING
GENERAL
All building components will be in keeping with a Class "A" type building.
Building should meet energy performance requirements of ASHRAE 90.1.
Saville Systems to have opportunity to review building design and finishes to
ensure appearance in keeping with Saville Systems' corporate identity.
Responsibility for building performance, management and maintenance remains with
the building owner.
Saville reserves the right to use their own contractor and own consultants for
tenant improvement work.
EXTERIOR SITE DESIGN
Hard surface walkways to be at a minimum either concrete or interlocking pavers.
Planting:
o Minimum 10% of site area.
o Arranged to embellish the main building entrance and main building street
front. Also arranged to shelter the cafeteria or restaurant patio and the
edges of the parking area, as well as principal routes through parking to
the building.
o 1/3 of planting to be coniferous and 2/3 to be mixed deciduous and shrubs.
Smoking Areas:
o Independently ventilated smoking room on ground floor or in below-grade
parking area to accommodate at least 12 people.
o Provision will be made for exterior smoking areas away from main entry
doors.
Parking / Loading:
o Loading requirement as per proposal call with at least one loading bay to
be raised loading dock, with manually operated dock levellers, dock bumpers
and bollards.
- Breakout space at loading area to be minimum 250 square feet.
- Compactor to be in separate bay.
- Dry storage off the loading dock consisting of secure, fire-rated
drywall partitions.
o Parking: In addition to the parking ratio described in paragraph #15 of
Schedule "A", Saville requires a minimum of:
- Ten visitor spaces.
- Two courier spaces.
EXTERIOR CLADDING:
Appearance to be consistent with Class "A" office buildings:
Energy Performance:
o Thermally broken, aluminum curtain wall system including insulating units
with Low E coating on 3rd surface.
o Spandrel areas of wall to have a minimum aged R-value in keeping with
ASHRAE 90.1.
o Wall to have functioning air barrier.
ENTRANCES
Arrangement of building entrances will be designed to avoid adverse
microclimatic conditions such as excessive wind.
Main Entrance:
o 1 revolving door with pivot hinged swing doors on each side. Stainless
steel foot grilles within revolving door enclosures.
o Building management will be responsible for adequate matts and rotation of
matts to ensure no tracking of water reaches beyond main lobby.
o Security desk designed to be integral to main entrance lobby, 24 hours/7
days per week operation of desk to be at Saville option - cost to be
amortized against any other tenants - costs not to be considered when
calculating CPI ceiling increase in paragraph 12 of Schedule "A" of Offer
to Lease.
o Stainless steel directory. Signage to Saville design.
Parkade Building Entrances and Corridors:
o Painted floors / walls, generous lighting, and suspended gypsum board
ceilings.
Typical Office Floors:
o Floors: steel trowel finished concrete with 5/16" in 10' x 10' tolerance
for levelness.
o Walls: gypsum board prime painted including elevator core walls to be faced
with prime painted gypsum.
o Ceilings: mineral acoustic panels in a suspended lay-in grid, placed on
floors for installation by Saville during tenant improvements with the
exception of panels penetrated by sprinkler heads, which will be
pre-installed.
o Elevator lobby/ring corridor to provide security access to washrooms and
stairwell, with central locations for coffee stations and cabling rooms (2
per floor, minimum 10' x 10' each with 6" conduit running between all cable
rooms vertically and horizontally). Hard finishes (drywall/stone/ceramic)
as defined by Saville to be included.
Washrooms to be consistent with Class "A" quality finishings.
o Quantity: assume population of 1 person/100 square feet to establish
fixture count (50% more than code minimum).
Elevators:
o Provide four (4) passenger elevators, one of which shall be a high-top or
service elevator with a group supervisory control system complete with the
following control and operational features:
- Software programming micro-processor based control system
- Load weighing
- Anti-nuisance
- Terminal floor car call cancellation
- Direction reversal in response to hall calls being registered at the
same floor for both directions
- Independent service
- High call - low call reversal
- Advance selection and illumination of main lobby ball lantern of
designated next up car
- Hall call delay protection
- Dispatch failure protection
- Security provision (card access) to restrict access to certain floors
at Saville's option.
o Maximum waiting time and average load factor shall be as follows:
Morning Waiting time 21-25 seconds
Average load factor 35-60%
Load weighing Waiting time 27-32 seconds
Average load factor 45-55%
Anti-nuisance Waiting time 30-35 seconds
Average load factor 60-65%
Security:
o At a minimum, all stairwells, exterior door, doors to parking areas as well
as Saville's typical core areas to have card readers plus any other
location(s) to be determined by Saville.
STRUCTURAL:
Loading capacity:
o A total of 100 p.s.f. on each floor, is required.
o Horizontal variation in finished concrete floor slabs should not exceed
5/16" in 10'-0".
o Optimal bay size is 30'-0" x 30'-0".
o Floor to floor height minimum 12' (typical - 9' ceiling) and 16' for main
floor (14' ceiling).
ELECTRICAL:
Lighting:
o 20" x 60" recessed fluorescent fixtures with one piece faceplates with deep
cell parabolic louvers.
o Plug-in light fixtures rather than hard wired will be installed.
o Lighting control to provide local switching in all individual rooms.
o Maintain office light levels in the 55 to 65 feet candle range at desk
height.
o Lighting levels to be a minimum of 5 feet candles in all stairwells,
parking areas and service areas.
Power:
o Allow 2 watts per square foot for standard building lighting.
o Allow minimum of 3 watts per square foot for receptacles, miscellaneous
loads and general use.
o Bus duct riser to be sized to include additional capacity of 2 wafts per
square foot for tenant requirements.
o Duct bank to property line (data / voice / fibre).
o Diesel Generator with space capacity for Saville requirements (i.e. 20%).
Cable Tray:
o Ladder type 16" wide x 4" deep, arranged to allow entire floor to be
serviced with no cable runs to exceed 90 meters. Drawings to be approved by
Saville and/or its consultants prior to installation.
Energy Efficiency:
o An automated lighting control system should be considered with flexibility
to allow it to be disengaged on a floor-to-floor basis if Saville requires
it.
o T-8 lamps with electronic ballast.
MECHANICAL:
Design Conditions:
Summer Outdoor 90F db/ 76F wb
Summer Indoor 75F/ 50F RH
Winter Outdoor - 5F
Winter Indoor 72F / 30F RH
Occupancy: based on one person per 100 square feet.
Meet energy Performance criteria of ASHRAE 90.1
Ventilation and Air-Conditioning:
o Interior HVAC zones: 1,000 square feet maximum, allows for higher level of
temperature control and better air distribution.
o Perimeter HVAC zones: 450 square feet maximum, allows for higher level of
temperature control and better air distribution.
o 1 compartment VAV air handling unit per floor, allowing floor-by-floor
independent control
o Fresh air: 20 CFM per person or 0.2 CFM per square foot.
o Minimum air circulation ratio: 0.6 cfm per square foot.
o Supply air: 200 cfm/outlet maximum in offices areas.
o Maximum NC (noise criteria): NC 30-35 in office areas.
o Space cooling per square foot: 2 watts lights + 2.5 watts power + people
load + building skin heat gain (including solar).
o Provide dedicated sanitary exhaust system for washrooms including two 8" x
8" sanitary exhaust capped connections per floor.
o Provide general exhaust riser with two capped connections on each floor for
exhaust of coffee rooms, copier rooms, etc.
Cooling:
o Provide electric or gas fired chiller(s), pumps and cooling tower(s) to
provide chilled water to air handling units to meet load cooling
requirement.
o Provide supplementary cooling system on each floor offering 24 hours/day
all year round cooling. Assume a supplementary cooling load of 10 to 20
tons per floor.
Humidification:
o Gas fired steam or air atomizing humidifiers.
Heating:
o Gas fired hot water boilers for hydronic heating. Minimum two boilers and
two heating pumps, each sized for 60% of full load.
o Perimeter hydronic heating using radiant panels, fan powered boxes with
reheat coils, induction units or under window convectors.
o Hot water forced flow heaters at building entrances.
Fire Protection:
o Fully sprinklered building. Concealed sprinkler heads in high profile areas
(e.g.) building entrance, elevator lobbies. Semi-recessed heads everywhere
else.
o Standpipe system with two capped connections on each floor for additional
cabinets. (Additional cabinets may be required after partitions installed
at Lessor's cost.)
Plumbing and Drainage:
o All public washrooms to have wall hung w.c.'s and electronic flush on
urinals and lavatories. All fixtures to be CSA approved and vitreous china.
o Provide the following on each floor for future tenant improvements:
2 - 4" diameter sanitary drain capped connections
2 - 2" diameter sanitary drain vent capped connections
2 - 1 " diameter cold water capped connections
Building and Automation System (BAS):
o Provide a DDC (direct digital control) BAS to control and monitor air
handling units, chiller(s), boilers and humidification system. The BAS will
schedule equipment, setback temperatures during unoccupied hours, and reset
supply air temperatures to meet loads and minimize energy use.
o BAS shall be capable of providing lighting control.
o The BAS is required to monitor equipment for early detection and repair of
malfunctioning equipment, and to operate the building in an energy
efficient manner.
Energy Performance Upgrades:
o High efficiency boilers.
o Heat recovery system on any kitchen exhausts.
o Carbon dioxide monitor to control fresh air quantities.
Other:
Lessee standard window coverings to be provided by landlord as base building and
installed only during or after substantial completion of tenant improvements.
Lessor's Work
In connection with paragraph #24 of Schedule "A" of this Offer to Lease, the
Lessor shall complete the following work ("Lessor's Work") in proper and
workmanlike manner prior to the fixturing period at its own cost and expense and
in accordance with the building standard.
Suspended T-bar ceiling complete with acoustic ceiling tiles;
Recessed fluorescent light fixtures with parabolic lenses at 1/80 square feet as
per Lessee's space plan;
Level and smooth concrete floor ready to receive Lessee's carpet;
Male and female washrooms in accordance with Ontario Building Code;
Lessee's standard window coverings;
Demising walls taped, sanded, primed, and otherwise ready for Lessee's finishes;
Distribution of the Base Building Variable Air Volume HVAC system through the
ceiling plenum as per Lessee's space plan;
Base Building sprinkler system and sprinkler heads as per Lessee's space plan.
<PAGE>
RIDER #1
1 "Designated Consultant" as used herein is defined as Petroff Partnership,
professional architects.
2. "Final Completion", as used herein is defined as sufficient completion of the
construction of the Building and the Lessor's Work, with all electrical,
elevator, HVAC systems operational to enable the Lessee to occupy the Premises
and perform the uses described herein as certified by the Design Consultant,
notwithstanding that minor items such as landscaping, decorating, or other non
essential finishes remain incomplete provided they represent no more than 3% of
the cost of the Building.
3. "Indemnifier" shall mean Saville Systems PLC, the parent company of the
lessee, which shall at all times during fixturing period, term and renewals of
the Lease indemnify the Lessor in respect of all of the obligations of the
Lessee hereunder and in the Lease, pursuant to an indemnity agreement to be
finalized during the 30 day Lease negotiation period.
<PAGE>
AMENDMENT TO AGREEMENT
TYPE OF AGREEMENT: Offer to Lease DATED: November 25, 1998
SUBJECT PROPERTY: an office building totaling 196,000 rentable square feet to be
constructed on Commerce Valley Drive East, Markham
BETWEEN LESSEE (S) SAVILLE SYSTEMS CANADA, LTD.
AND LESSOR(S) MONARCH CONSTRUCTION LIMITED
*is hereby understood and agreed between the undersigned parties hereto that the
following changes shall be made to the above mentioned Agreement and except for
such changes noted below all other terms and conditions in the Agreement shall
remain in full force and effect:
DELETE
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of five (5) cars per one thousand rentable
square feet leased for the term of the Lease and any renewals thereof rent free.
Within fifteen (15) days of acceptance hereof the Lessee, at its option, may
elect to increase the parking ratio from five (5) to seven (7) cars per thousand
square feet leased for the term of the lease and any renewals thereof by written
notice to the Lessor. Should the Lessee elect to increase the parking ratio as
contemplated herein than the Tenant agrees to pay one hundred dollars ($100.00)
per space per month for the additional two (2) cars per one thousand (1,000)
rentable square feet leased.
INSERT
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of five (5) cars per one thousand rentable
square fee leased for the term of the Lease and any renewals thereof rent free.
No later than 5:00 p.m. on Monday December 14th, 1998 the Lessee, at its option,
may elect to increase the parking ratio from five (5) to seven (7) cars per
thousand square feet leased for the term of the lease and any renewals thereof
by written notice to the Lessor. Should the Lessee elect to increase the parking
ratio as contemplated herein than the Tenant agrees to pay one hundred dollars
($100.00) per space per month for the additional two (2) cars per one thousand
(1,000) rentable square foot leased.
DATED at Toronto this 10th day of December , 1998.
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Jane Lewchuk
(Purchaser/Lessee)
DATED at Willowdale this 10th day of December, 1998.
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Alan P. MacKenzie
(Vendor/Lessor)
<PAGE>
AMENDMENT TO AGREEMENT
TYPE OF AGREEMENT: Offer to Lease DATED: November 25, 1998
SUBJECT PROPERTY: an office building totaling 196,000 rentable square feet to be
constructed on Commerce Valley Drive East, Markham
BETWEEN LESSEE (S) SAVILLE SYSTEMS CANADA, LTD.
AND LESSOR(S) MONARCH CONSTRUCTION LIMITED
*is hereby understood and agreed between the undersigned parties hereto that the
following changes shall be made to the above mentioned Agreement and except for
such changes noted below all other terms and conditions in the Agreement shall
remain in full force and effect:
DELETE
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of five (5) cars per one thousand rentable
square feet leased for the term of the Lease and any renewals thereof rent free.
Within fifteen (15) days of acceptance hereof the Lessee, at its option, may
elect to increase the parking ratio from five (5) to seven (7) cars per thousand
square feet leased for the term of the lease and any renewals thereof by written
notice to the Lessor. Should the Lessee elect to increase the parking ratio as
contemplated herein than the Tenant agrees to pay one hundred dollars ($100.00)
per space per month for the additional two (2) cards per one thousand (1,000)
rentable square feet leased.
INSERT
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of five (5) cars per one thousand rentable
square fee leased for the term of the Lease and any renewals thereof rent free.
No later than 5:00 p.m. on Tuesday December 15th, 1998 the Lessee, at its
option, may elect to increase the parking ratio from five (5) to seven (7) cars
per thousand square feet leased for the term of the lease and any renewals
thereof by written notice to the Lessor. Should the Lessee elect to increase the
parking ratio as contemplated herein than the Tenant agrees to pay one hundred
dollars ($100.00) per space per month for the additional two (2) cars per one
thousand (1,000) rentable square foot leased.
DATED at Toronto this 10th day of December , 1998.
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Jane Lewchuk
(Purchaser/Lessee)
DATED at Willowdale this 10th day of December, 1998.
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Alan P. Mackenzie
(Vendor/Lessor)
<PAGE>
AMENDMENT TO AGREEMENT
TYPE OF AGREEMENT Offer to Lease DATED November 25, 1998
SUBJECT PROPERTY an office building totalling 196,000 square feet to be
constructed on Commerce Valley Drive East, Markham
BETWEEN LESSEE(S) SAVILLE SYSTEMS CANADA, LTD.
AND LESSOR(S) MONARCH CONSTRUCTION LIMITED
It is hereby understood and agreed between the undersigned parties hereto that
the following changes shall be made to the above mentioned Agreement and except
for such changes noted below all other terms and conditions in the Agreement
shall remain in full force and effect:
DELETE
4. BUILDING COMPLETION
Provided that the parties have finalized the Conceptual design and
specifications of the Building by December 22, 1998 the Lessee agrees to
commence construction of the Building no later than June 1, 1999 and to
diligently pursue the construction of the Building in accordance both a
construction schedule to form part of the design and specifications, The Lessor
shall complete the Building such that the Lessee's fixturing work may commence
by no later than April 1, 2000, subject to force majeure.
For the purpose of this Offer and the Lease, the obligations of the Lessor to
design and construct the Building may be Subject to delays caused by the act,
neglect, delay or default of the Lessee or its agents or Contractors, strikes,
lock-outs, fire or other damage or destruction of the Building or any
substantial part thereof adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each of which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly, but
in any event no later than five (5) days after the occurrence thereof comes to
the attention of the Lessor, give written notice to the Lessee of the occurrence
and of the Lessor's estimate of the length of delay resulting therefrom. The
time for completion of construction of the Building shall be extended so long as
the force majeure occurrence shall subsist which shall include not only the
length of time that the event causing force majeure subsists but also a
reasonable amount of time in respect of delays caused thereby, resulting
therefrom or relating thereto.
Substantial completion of the Building for the purposes of, and as used in this
Offer to Lease, shall be deemed to have occurred once the Lessor and the Losses
have agreed or the designated consultant (the "Designated Consultant") acting
reasonably in good faith and without delay has certified have agreed that the
Building is sufficiently completed for the Lessee to commence construction of
its leasehold improvements with immediate and continuous access to allow
construction of the Lessee's improvements, including the full use of driveways,
elevators and loading docks. Final completion of the Building by the Lessor
shall occur no later than 15 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully co-operate with each other and to
co-ordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete the
Building as provided for herein then all dates contained in this Offer to Lease
shall be delayed by the same number of days that substantial or final completion
of the building is delayed. Save and except for delays as a result of force
majeure, Lessor shall indemnify and save harmless Lessee from all costs, claims
and liabilities, howsoever arising by reason of the delay in the Commencement
Date by the Lessor pursuant to this Offer to Lease. The parties agree that a
genuine pre-estimate of such costs, claims and liabilities to be paid to the
Lessee by the Lessor shall be the aggregate of: firstly, the amounts of all
rental payments due by the Lessee under its existing leases as more particularly
set out in paragraph 31, and secondly, an increase in the Net Rent Free Period
set out in paragraph 11 by one day for each day of such delay for the first 30
days: an increase by two days for each day of such delay for the next 30 days
and an increase by three days for each day of such delay thereafter. And further
provided that if the Commencement Date has been delayed 90 days the Lessee may,
at its sole option, terminate this Offer to Lease and the Lease and this Offer
to Lease shall be terminated and the Deposit shall be returned to the Lessee and
the parties shall have no further obligation to each other. The Lessee shall not
be liable to the Lessor for repayment of any Tenants Improvement Allowance paid
or accrued payable if this Offer to Lease is terminated pursuant to this
paragraph.
9. LEASE
The Lease shall be drawn on the Lessor's standard form but will be otherwise
subject to the terms herein and otherwise to the reasonable satisfaction of the
Lessee and its solicitors. The Lease may not conflict with any of the provisions
of the Offer but may deal in greater detail with the matters dealt with herein
as well as other matters normally dealt with in commercial office leases and
subject to such non-financial amendments as may be reasonably requested by the
Lessee and Lessor in consultation with their solicitors. The Lessor shall
deliver to the Lessee the Lessor's standard form of lease, incorporating the
provisions of this Offer, within five (6) days of acceptance of this offer by
both parties. The Lease shall contain the Lessor's representation and warranty
that it is the registered beneficial owner of the Land and the Building will be
constructed as provided for herein, that the Lands and Building are zoned to
permit the uses as contemplated hereby, and that the same are free of any
hazardous substances and in compliance with all environmental laws, bylaws and
regulations. Lessee agrees to abide by all the terms of the Lease except as
amended by this Offer, or other changes mutually agreed to by both parties as
described herein. The provisions of this Offer to Lease shall not merge with the
execution and delivery of the Lease.
This Offer to Lease shad be conditional for a period of thirty (30) days after
acceptance hereof upon both parties agreeing to all the terms of the Lease for
the Premises. If the parties cannot agree upon the final form of lease for the
Initial Promises within the thirty (30) day conditional period described above,
then this Offer to Lease shall become null and void.
In the event that this Offer to Lease becomes null and void as provided in this
paragraph, the Lessee agrees to reimburse the Lessor for fifty percent (50%) of
reasonable out-of-pocket expenses associated with work in progress up to a
maximum of Twenty-Five Thousand Dollars ($25,000.00).
10. NET RENT
The Lessee shall pay to the Lessor the following net rent ('Net Rent') in equal
monthly instalments in advance on the first day of each calendar month at the
rate of:
August 1, 2000 - July 31, 2005 $18.50 per square foot of rentable area per annum
August 1, 2005 - July 31, 2010 $21.50 per square foot of rentable area per annum
August 1, 2010 - July 31, 2015 $25.00 per square foot of rentable area per annum
18. FIRST OPTION TO LEASE
The Lessee shall have the Option to lease the balance of the 4th floor of the
Building (the "1st expansion space") prior to December 31, 2001 and terminating
co-terminus with the lease of the Initial Premises. The Lessee shall provide
written notice no later than June 30, 2001 of its intent to exercise its Option
to Lease the balance of the 4th floor from a commencement date to be specified
in such notice. The terms and conditions of the lease for the 1st expansion
space shall be the same as those for the initial Premises.
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of five (5) cars par one thousand rentable
square foot leased for the term of the Lease and any renewals thereof rent free.
Within fifteen (15) days of acceptance hereof the Lessee, at its option, may
elect to increase the parking ratio from five (5) to seven (7) cars per thousand
square feet leased for the term of the lease and any renewals thereof by written
notice to the Lessor. Should the Lessee elect to increase the parking ratio as
contemplated herein then the Tenant agrees to pay one hundred dollars ($100.00)
per space per month for the additional two (2) cars per one thousand (1,000)
rentable square feet leased.
22. OPTION TO TERMINATE
Notwithstanding anything contained in the Lease to the contrary, and provided
Saville Systems Canada Ltd. or an affiliate or a corporation that purchased all
or substantially all of the business of Saville Systems Canada Ltd. (a
'Permitted Transferee') is carrying on business in the Initial Premises, the
Lessee shall have the right to terminate the Lease as of July 31, 2010 upon not
less than nine (9) months prior written notice to the Lessor. During the nine
(9) months notice period, the Lessee shall have the right to occupy the Premises
under the terms of its Lease, or the Lessee may vacate the Premises and pay the
Lessor a lump sum equal to the gross rent remaining during said notice period,
in which latter event, the Lessee shall surrender the Premises to the Lessor.
In the event the Lessee exercises the right to terminate its Lease as of July
31, 2010 in the manner described above, then the Lessor shall receive from the
Lessee thirty (30) days prior to the end of the tenth (10th) year of the term, a
sum equivalent to eight (8) months gross rent due in respect of the Premises and
all Expansion Premises then leased hereunder in the eleventh (11th) year of the
lease.
INSERT
4. BUILDING COMPLETION
Provided that the parties have finalized the conceptual design and
specifications of the Building by January 8, 1999 the Lessor agrees to commence
construction of the Building no later than June 1, 1999 and to diligently pursue
the construction of the Building in accordance with a construction schedule to
form part of the design and specifications, The Lessor shall complete the
Building such that the Lessee's fixturing work may commence by no later than
June 1st, 2000, subject to force majeure.
For the purpose of this Offer and the Lease, the obligations of the Lessor to
design and construct the Building may be subject to delays caused by the act,
neglect, delay or default of the Lessee or its agents or contractors, strikes,
lock-outs, fire or other damage or destruction of the building or any
substantial part thereof, adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each of which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly but in
any event no later than five (5) days after the occurrence thereof comes to the
attention of the Lessor, give written notice to the Lessee of the occurrence and
of the Lessor's estimate of the length of delay resulting therefrom. The time
for completion of construction of the Building shall be extended so long as the
force majeure occurrence shall subsist which shall include not only the length
of time that the event causing force majeure subsists but also a reasonable
amount of time in respect of delays caused thereby, resulting therefrom or
relating thereto.
Substantial completion of the Building for the purposes of, and as used in this
Offer to Lease, shall be deemed to have occurred once the Lessor and the Lessee
have agreed or its designated consultant (the "Designated Consultant") acting
reasonably in good faith and without delay has certified that the Building is
sufficiently completed for the Lessee to commence construction of its leasehold
improvements with immediate and continuous access to allow construction of the
Lessee's improvements, including the full use of driveways, elevators and
loading docks. Final completion of the Building by the Lessor shall occur no
later than 15 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully co-operate with each other and to
co-ordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete the
Building as provided for herein then all dates contained in the Offer to Lease
shall be delayed by the same number of days that substantial or final completion
of the Building is delayed. Save and except for delays as a result of force
majeure, Lessor shall indemnify and save harmless Lessee from all costs, claims
and liabilities, howsoever arising by reason of the delay in the Commencement
Date by the Lessor pursuant to this Offer to Lease. The parties agree that a
genuine pro-estimate of such costs, claims and liabilities to be paid to the
Lessee by the Lessor shall be the aggregate of: firstly, the amounts of all
rental payments due by the Lessee under its existing leases as more particularly
set out in paragraph 31, and secondly, an increase in the Net Rent Free Period
set out in paragraph 11 by one day for each day of such delay for the first 30
days: an increase by two days for each day of such delay for the next 30 days
and an increase by three days for each day of such delay thereafter. And further
provided that if the Commencement Date has been delayed 90 days, the Lessee may,
at its sole option, terminate this Offer to Lease and the Lease and this Offer
to Lease shall be terminated and the Deposit shall be returned to the Lessee and
the parties shall have no further obligation to each other. The Lessee shall not
be liable to the Lessor for repayment of any Tenants Improvement Allowance paid
or accrued payable if this Offer to Lease is terminated pursuant to this
paragraph.
9. LEASE
The Lease shall be drawn on the Lessor's standard form but will be otherwise
subject to the terms herein and otherwise to the reasonable satisfaction of the
Lessee and its solicitors. The Lease may not conflict with any of the provisions
of the Offer but may deal in greater detail with the matters dealt with herein
as well as other matters normally dealt with in commercial office leases and
subject to such non-financial amendments as may be reasonably requested by the
Lessee and Lessor in consultation with their solicitors. The Lessor shall
deliver to the Lessee the Lessor's standard form of lease, incorporating the
provisions of this Offer, within five (5) days of acceptance of this offer by
both parties. The Lease shall contain the Lessor's representation and warranty
that it is the registered beneficial owner of the Lands and the Building will be
constructed as provided for herein, that the Lands and Building are zoned to
permit the uses as contemplated hereby, and that the same are free of any
hazardous substances and in compliance with all environmental laws, by-laws and
regulations. Lessee agrees to abide by all the terms of the Lease except as
amended by this Offer, or other changes mutually agreed to by both parties as
described herein. The provisions of this Offer to Lease shall not merge with the
execution and delivery of the Lease.
This Offer to Lease shall be conditional until January 25th, 1999 upon both
parties agreeing to all the terms of the Lease for the Premises. If the parties
cannot agree upon the final form of lease for the Initial Premises by January
25th, 1999, then this Offer to Lease shall become null and void.
In the event that this Offer to Lease becomes null and void as provided in this
paragraph, the Lessee agree to reimburse the Lessor for fifty percent (50%) of
reasonable out-of-pocket expenses associated with work in progress up to a
maximum of Twenty-Five Thousand Dollars ($25,000.00).
10. NET RENT
The Lessee shall pay to the Lessor the following net rent ("Not Rent') in equal
monthly instalments in advance on the first day of each calendar month at the
rate of:
October 1st, 2000 - September 30, 2005 $18.50 per square foot of rentable area
per annum
October 1st, 2005 - September 30, 2010 $21.50 per square foot of rentable area
per annum
October 1st, 2010 - September 30, 2015 $25.00 per square foot of rentable area
per annum
18, FIRST OPTION TO LEASE
The Lessee shall have the Option to lease the balance of the 4th floor of the
Building (the "1st expansion space") prior to February 28th, 2002 and
terminating co-terminus with the lease of the Initial Premises. The Lessee shall
provide written notice no later than August 31, 2001 of its intent to exercise
its Option to Lease the balance of the 4th floor from a commencement date to be
specified in such notice. The terms and conditions of the lease for the lst
expansion space shall be the same as those for the Initial Premises.
20. PARKING
The Lessor agrees to provide the Lessee with unreserved surface, under building
and deck parking spaces at the ratio of six (6) cars per one thousand rentable
square feet leased for the term of the Lease and any renewals as follows:
o Five (5) per one thousand rentable square feet rent free
o One (1) per one thousand rentable square feet at $100.00 per space per
month
22. OPTION TO TERMINATE
Notwithstanding anything contained in the Lease to the contrary, and provided
Saville Systems Canada Ltd. or an affiliate or a corporation that purchase all
or substantially all of the business of Saville Systems Canada Ltd. (a
"Permitted Transferee") is carrying on business in the Initial Premises, the
Lessee shall have the right to terminate the Lease as of September 30, 2010 upon
not less than nine (9) months prior written notice to the Lessor. During the
nine (9) months notice period, the Lessee shall have the right to Occupy the
Premises under the terms of its Lease, or the Lessee may vacate the Premises and
pay the Lessor a lump sum equal to the gross rent remaining during said notice
period, in which latter event. the Lessee shall surrender the Promises to the
Lessor.
In the event the Lessee exercises the right to terminate its Lease as of
September 30, 2010 in the manner described above, then the Lessor shall receive
from the Lessee thirty (30) days prior to the and of the tenth (10th) year of
the term, a sum equivalent to eight (8) months gross rent due in respect of the
Premises and all Expansion Premises then leased hereunder in the eleventh (11th)
year of the lease
DATED at Burlington, Mass this 17th day of December, 1998
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Jane Lewchuk
Purchase/Lessee
DATED at Willowdale this 18th day of December, 1998
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Alan P. MacKenzie
(Vendor/Lessor)
<PAGE>
WAIVER
I/WE the undersigned Lessor of property known as: as an office building
totalling 196,000 rentable square feet to be constructed on Commerce Valley
Drive East, Markham hereby waive the following condition(s):
32. ASSUMPTIONS OF LESSEE'S EXISTING LEASES
Subject to the Lessor verifying during the 30 day Lease negotiation period, the
Lessee's representations as to the rental obligations of its existing leases,
the Lessor agrees to assume and pay for all rental obligations on behalf of the
Lessee as of the Commencement Date for the Lessee's existing lease obligations
at 625 and 675 Cochrane Drive, copies of which are attached hereto as Schedule
"D".
It is understood that the Lessor shall not be required to perform any of the
covenants provided for in the existing lease obligations on behalf of the Lessee
other than the payment of all rental obligations.
In the event that either party defaults in the payment of their respective
rental obligations provided for in this Offer to Lease then the party who is not
in default shall have the right to cure such default and to withhold the
equivalent amount of rent owned to the defaulting party until the default is
remedied.
Furthermore, both parties hereby agree to co-operate fully with each other to
effect an assignment or sublet of the Lessee's existing leased premises prior to
the Commencement Date.
Furthermore, any proceeds, including any reductions of payments of rental
obligations on the Lessee's existing leases, resulting from an assignment or
sublet of the Lessee's existing leases net of leasing costs, reasonable
administrative fees and inducements, shall be rebated to the Lessee on the
Commencement Date of the Lease in the Building.
35. LESSEE'S/LESSOR'S CONDITION
This Offer to Lease shall be conditional for a period of thirty (30) days after
acceptance hereof by both parties upon approval by the Board of Directors of the
Lessee and Lessor. If such approval cannot be reached with the aforementioned
period and written notice of satisfaction or waiver of this condition, has not
been provided by both parties then this Offer shall be null and void and any
deposit monies shall be returned forthwith without interest or penalty. If no
written notice is delivered then this offer shall be null and void. This
condition is inserted for the sole benefit of the Lessee and Lessor and may be
waived at any time.
<PAGE>
WAIVER
WE the undersigned Lessor of property known as: as an office building totalling
196,000 rentable square feet to be constructed on Commerce Valley Drive East,
Markham hereby waive the following condition(s):
35. LESSEE'S /LESSOR 'S CONDITION
This Offer to Lease shall be conditional for a period of thirty (30) days after
acceptance hereof by both parties upon approval by the Board of Directors of the
Lessee and Lessor. If such approval cannot be reached with the aforementioned
period and written notice of satisfaction or waiver of this condition has not
been provided by both parties then this Offer shall be null and void and any
deposit monies shall be returned forthwith without interest or penalty. If no
written notice is delivered then this offer shall be null and void. This
condition is inserted for the sole benefit of the Leases and Lessor and may be
waived at any time.
as set out in an Offer to Lease, dated November 25, 1998
between Saville Systems Canada Ltd. as Lessee
and Monarch Construction Limited as Lessor.
We will proceed with the lease of the above-mentioned property. All terms and
conditions of the said Offer to Lease will remain the same, and shall be deemed
to be firm and binding upon the parties hereto,
Dated at Burlington, Mass. this 22nd day of December 1998.
/s/Michael Cayer Per: /s/Christopher A. Hanson 12/22/98
(Witness) (Lessee) (Date)
Per: /s/John J. Boyle III 12/22/98
(Lessee) (Date)
as set out in an Offer to Lease, dated November 25, 1998.
between Saville Systems Canada Ltd. as Lessee
and Monarch Construction Limited as Lessor.
We will proceed with the lease of the above-mentioned property All terms and
conditions of the said Offer to Lease will remain the same, and shall be deemed
to be firm and binding upon the parties hereto.
Dated at North York this 22nd day of December, 1998.
Per: /s/Alan P. MacKenzie 12/22/98
(Lessor) (Date)
<PAGE>
AMENDMENT TO AGREEMENT
TYPE OF AGREEMENT OFFER TO LEASE DATED NOVEMBER 25, 1998
SUBJECT PROPERTY An office building 196,000 sq. ft. to be constructed on
Commerce Valley Drive East, Markham
BETWEEN LESSEE(S) SAVILLE SYSTEMS CANADA LTD.
AND LESSOR(S) MONARCH CONSTRUCTION LIMITED
It is hereby understood and agreed between the undersigned parties hereto that
the following changes shall be made to the above mentioned Agreement, and except
for such changes noted below all other terms and conditions in the Agreement
shall remain in full force and effect:
DELETE
BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultant(s), acting reasonably, for the Purposes of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the Building
shall be finalized no later than December 22, 1998. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization of the permit
application drawings of the Building.
INSERT
BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultant(s), acting reasonably, for the purposes of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the Building
shall be finalized no later than January 8th, 1999. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization of the permit
application drawings of the Building.
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Jane Lewchuk 12/22/98
(Purchaser/Lessee) (Date)
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Alan P. MacKenzie 12/22/98
(Vendor/Lessor) (Date)
<PAGE>
Monarch Development Corporation
Heron's Hill, 2025 Sheppard Avenue East
Toronto, Ontario Canada
M2J 1V7
Tel: (416) 491-7440
Fax: (416) 495-0043
December 23, 1998
Ms. C. Jane Lewchuk
Manager
Global Administrative Services
Saville Systems Canada Ltd.,
7" Floor
4445 Calgary Trail
Edmonton. Alberta
T6H SR7
Dear Ms. Lewchuk:
Re: PARKING RATIOS FOR MONARCH CORPORATE CAMPUS
MARKHAM, ONTARIO
For greater clarification, Saville's request and Monarch's agreement to provide
Saville with unreserved surface, under building and deck parking spaces at a
ratio of six (6) cars per one thousand rentable square feet leased for the Term
of the Lease and any renewals will be limited to Saville leasing 150,000 square
feet of leased space or 900 parking stalls. Monarch will be providing for all
900 stalls on Lease commencement and Saville will be contributing $100.00 per
stall per month calculated by the following equation:
110 stalls (based on 1 stall/1000 square feet of Saville rentable area)
x $100.00/month *$11,000/month or $132,000/year
*Assuming Saville's rentable area is 110,000 sq. ft.
If/when Saville's rentable area exceeds 110,000 sq. ft. Saville will pay
$100.00/month for each additional stall to a maximum of 150,000 square feet of
rentable area.
Please kindly sign below to acknowledge your agreement of this letter.
Sincerely,
MONARCH DEVELOPMENT CORPORATION
/s/Alan P. MacKenzie
Alan P. MacKenzie
Director, Commercial Property Developments
Acknowledgement: /s/C. Jane Lewchuk
C. JANE LEWCHUK
SAVILLE SYSTEMS CANADA, LTD.
Date: December 23, 1998
<PAGE>
AMENDMENT TO AGREEMENT
TYPE OF AGREEMENT OFFER TO LEASE DATED NOVEMBER 25, 1998
SUBJECT PROPERTY an office building 196,000 sq. ft. to be constructed on
Commerce Valley Drive East, Markham
BETWEEN LESSEE(S) SAVILLE SYSTEMS CANADA LTD.
AND LESSOR(S) MONARCH CONSTRUCTION LIMITED
It is hereby understood and agreed between the undersigned parties hereto that
the following changes shall be made to the above mentioned Agreement, and except
for such changes noted below all other terms and conditions in the Agreement
shall remain in full force and effect:
DELETE
2. BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultant(s), acting reasonably, for the purpose of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the Building
shall be finalized no later than January 8th 1999. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization of the permit
application drawings of the Building.
4. BUILDING COMPLETION
Provided that the parties have finalized the conceptual design and
specifications of the Building by January 8th 1999 the Lessor agrees to commence
construction of the Building no later than June 1, 1999 and to diligently pursue
the construction of the Building in accordance with a construction schedule to
form part of the design and specifications, The Lessor shall complete the
Building such that the Lessee's fixturing work may commence by no later than
June 1st 2000, subject to force majeure.
For the purpose of this Offer and the Lease, the obligations of the Lessor to
design and construct the Building may be subject to delays caused by the act,
neglect, delay or default of the Lessee or its agents or contractors, strikes,
lock-outs, fire or other damage or destruction of the Building or any
substantial part thereof, adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each of which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly, but
in any event no later than five (6) days after the occurrence thereof comes to
the attention of the Lessor, give written notice to the Lessee of the occurrence
and of the Lessor's estimate of the length of delay resulting therefrom. The
time for completion of construction of the Building shall be extended so long as
the force majeure occurrence shall subsist which shall include not only the
length of time that the event causing force majeure subsists but also a
reasonable amount of time in respect of delays caused thereby, resulting
therefrom or relating thereto.
Substantial completion of the Building for the purposes of, and as used in this
Offer to Lease, shall be deemed to have occurred once the Lessor and the Lessee
have agreed or its designated consultant (the "Designated Consultant") acting
reasonably in good faith and without delay has certified that the Building is
sufficiently completed for the Lessee to commence construction of its leasehold
improvements with immediate and continuous access to allow construction of the
Lessee's improvements, including the full use of driveways, elevators and
loading docks. Final completion of the Building by the Lessor shall occur no
later than 15 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully cooperate with each other and to
coordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete the
Building as provided for herein then all dates contained in this Offer to Lease
shall be delayed by the same number of days that substantial or final completion
of the Building is delayed. Save and except for delays as a result of force
majeure, Lessor shall indemnify and save harmless Lessee from all costs, claims
and liabilities, howsoever arising by reason of the delay in the Commencement
Date by the Lessor pursuant to this Offer to Lease.
The parties agree that a genuine pre-estimate of such costs, claims and
liabilities to be paid to the Lessee by the Lessor shall be the aggregate of:
firstly, the amounts of all rental payments due by the Lessee under its existing
leases as more particularly set out in paragraph 31, and secondly, an increase
in the Net Rent Free Period set out in paragraph 11 by one day for each day of
such delay for the first 30 days: an increase by two days for each day of such
delay for the next 30 days and an increase by three days for each day of such
delay thereafter. And further provided that if the Commencement Date has been
delayed 90 days, the Lessee may, at its sole option, terminate this Offer to
Lease and the Lease and this Offer to Lease shall be terminated and the Deposit
shall be returned to the Lessee and the parties shall have no further obligation
to each other. The Lessee shall not be liable to the Lessor for repayment of any
Tenants Improvement Allowance paid or accrued payable if this Offer to Lease is
terminated pursuant to this paragraph.
INSERT
2. BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultant(s), acting reasonably, for the purpose of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the Building
shall be finalized no later than January 25th, 1999. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization of the permit
application drawings of the Building.
4. BUILDING COMPLETION
Provided that the parties have finalized the conceptual design and
specifications of the Building by January 25, 1999 the Lessor agrees to commence
construction of the Building no later than June 1, 1999 and to diligently pursue
the construction of the Building in accordance with a construction schedule to
form part of the design and specifications. The Lessor shall complete the
Building such that the Lessee's fixturing work may commence by no later than
June 1st, 2000, subject to force majeure.
For the purpose of this Offer and the Lease, the obligations of the Lessor to
design and construct the Building may be subject to delays caused by the act,
neglect, delay or default of the Lessee or its agents or contractors, strikes,
lock-outs, fire or other damage or destruction of the Building or any
substantial part thereof, adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each of which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly, but
in any event no later than five (6) days after the occurrence thereof comes to
the attention of the Lessor, give written notice to the Lessee of the occurrence
and of the Lessor's estimate of the length of delay resulting therefrom. The
time for completion of construction of the Building shall be extended so long as
the force majeure occurrence shall subsist which shall include not only the
length of time that the event causing force majeure subsists but also a
reasonable amount of time in respect of delays caused thereby, resulting
therefrom or relating thereto.
Substantial completion of the Building for the purposes of, and as used in this
Offer to Lease, shall be deemed to have occurred once the Lessor and the Lessee
have agreed or the its designated consultant (the "Designated Consultant")
acting reasonably in good faith and without delay has certified that the
Building is sufficiently completed for the Lessee to commence construction of
its leasehold improvements with immediate and continuous access to allow
construction of the Lessee's improvements, including the full use of driveways,
elevators and loading docks. Final completion of the Building by the Lessor
shall occur no later than 16 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully co-operate with each other and to
coordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete the
Building as provided for herein then all dates contained in this Offer to Lease
shall be delayed by the same number of days that substantial or final completion
of the Building is delayed. Save and except for delays as a result of force
majeure, Lessor shall indemnify and save harmless Lessee from all costs, claims
and liabilities, howsoever arising by reason of the delay in the Commencement
Date by the Lessor pursuant to this Offer to Lease. The parties agree that a
genuine pre-estimate of such costs, claims and liabilities to be paid to the
Lessee by the Lessor shall be the aggregate of: firstly, the amounts of all
rental payments due by the Lessee under its existing leases as more particularly
set out in paragraph 31, and secondly, an increase in the Net Rent Free Period
set out in paragraph 11 by one day for each day of such delay for the first 30
days: an increase by two days for each day of such delay for the next 30 days
and an increase by three days for each day of such delay thereafter. And further
provided that if the Commencement Date has been delayed 90 days, the Lessee may,
at its sole option, terminate this Offer to Lease and the Lease and this Offer
to Lease shall be terminated and the Deposit shall be returned to the Lessee and
the parties shall have no further obligation to each other. The Lessee shall not
be liable to the Lessor for repayment of any Tenant's Improvement Allowance paid
or accrued payable if this Offer to Lease is terminated pursuant to this
paragraph.
DATED at Edmonton this 8th day of January 1999.
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Jane Lewchuk January 8, 1999
(Purchaser/Lessee) (Date)
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Alan P. MacKenzie January 7, 1999
(Vendor/Lessor) (Date)
<PAGE>
AMENDMENT TO AGREEMENT
TYPE OF AGREEMENT OFFER TO LEASE DATED NOVEMBER 25, 1998
SUBJECT PROPERTY an office building 196,000 sq. ft. to be constructed on
Commerce Valley Drive East, Markham
BETWEEN LESSEE(S) SAVILLE SYSTEMS CANADA LTD.
AND LESSOR(S) MONARCH CONSTRUCTION LIMITED
INSERT
2. BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultant(s) acting reasonably, for the purpose of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the Building
shall be finalized no later than January 29th, 1999. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization of the permit
application drawings of the Building.
4. BUILDING COMPLETION
Provided that the parties have finalized the conceptual design and
specifications of the Building by January 20", 1999 the Lessor agrees to
commence construction of the Building no later than June 1, 1999 and to
diligently pursue the construction of the Building in accordance with a
construction schedule to form part of the design and specifications. The Lessor
shall complete the Building such that the Lessee's fixturing work may commence
by no later than June 1st, 2000, subject to force majeure.
For the purpose of this Offer and the Lease, the obligations of the Lessor to
design and construct the Building may be subject to delays caused by the act,
neglect delay or default of the Lessee or its agents or contractors, strikes,
look-outs, fire or other damage or destruction of the Building or any
substantial part thereof, adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each of which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly, but
in any event no later than five (5) days after the occurrence thereof comes to
the attention of the Lessor, give written notice to the Lessee of the occurrence
and of the Lessor's estimate of the length of delay resulting therefrom. The
time for completion of construction of the Building shall be extended so long as
the force majeure occurrence shall subsist which shall include not only the
length of time that the event causing force majeure subsists but also a
reasonable amount of time in respect of delays caused thereby, resulting
therefrom or relating thereto.
Substantial completion of the Building for the purposes of, and as used in this
Offer to Lease, shall be deemed to have occurred once the Lessor and the Lessee
have agreed or the its designated consultant (the "Designated Consultant")
acting reasonably in good faith and without delay has certified that the
Building is sufficiently completed for the Lessee to commence construction of
its leasehold improvements with immediate and continuous access to allow
construction of the Lessee's improvements, including the full use of driveway,
elevators and loading docks. Final completion of the Building by the Lessor
shall occur no later then 18 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully co-operate with each other and to
coordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete the
Building as provided for herein then all data contained in this Offer to Lease
shall be delayed by the same number of days that substantial or final completion
of the Building is delayed. Save and except for delays as a result of force
majeure, Lessor shall indemnity and save harmless Lessee from all costs, claims
and liabilities, howsoever arising by reason of the delay in the Commencement
Date by the Lessor pursuant to this Offer to Lease. The parties agree that it
genuine pre-estimate of such costs, claims and liabilities to be paid to the
Lessee by the Lessor shall be the aggregate of: firstly, the amounts of all
rental payments due by the Lessee under its existing lease as more particularly
set out in paragraph 31, and secondly, an increase in the Net Rent Free Period
set out in paragraph 11 by one day for each day of such delay for the first 30
days: an increase by two days for each day of such delay for the next 30 days
and an increase by three days for each day of such delay thereafter. And further
provided if the Commencement Date has been delayed 90 days, the Lessee may at
its sole option, terminate this Offer to Lease and the Lease and this Offer to
Lease shall be terminated and the Deposit shall be returned to the Lessee and
the parties shall have no further obligation to each other. The Lessee shall not
be liable to the Lessor for repayment of any Tenant's Improvement Allowance paid
or accrued payable If this Offer to Lease Is terminated pursuant to this
paragraph,
9. LEASE
The Lease shall be drawn on the Lessor's standard form but will be otherwise
subject to the terms herein and otherwise to the reasonable satisfaction of the
Lessee and its solicitors. The lease may not conflict with any of the provisions
of the Offer but may deal in greater detail with the matters dealt with herein
as well an other matters normally dealt with in commercial office leases and
subject to such non-financial amendments as may be reasonably requested by the
Lessee and Lessor in consultation with their solicitors. The Lessor shall
deliver to the Lessee the lessor's standard form of lease, incorporating the
provisions of this Offer, within five (5) days of acceptance of this offer by
both parties. The Lease shall contain the Lessor's representation and warranty
that it is the registered beneficial owner of the Lands and the Building will be
constructed as provided for herein, that the Lands and Building are zoned to
permit the uses as contemplated hereby, and that the same are free of any
hazardous substances and in compliance with all environmental laws, bylaws and
regulations. Lessee agrees to abide by all the terms of the Lessee except as
amended by this offer, or other changes mutually agreed to by both parties as
described herein. The provisions of this Offer to Lease shall not merge with the
execution and delivery of the Lease.
This Offer to Lease shall be conditional until January 29, 1999 upon both
parties agreeing to all the terms of the Lease for the Premises. If the parties
cannot agree upon the final form of lease for the initial Premises by January
29, 1999, then this Offer to Lease shall become null and void.
In the event that this Offer to Lease becomes null and void as provided in this
paragraph, the Lessee agrees to reimburse the Lessor for fifty percent (50%) of
reasonable out-of-pocket expenses associated with work In progress up to a
maximum of Twenty-Five Thousand Dollars ($25,000.00).
DELETE:
2. BUILDING DESIGN AND CONSTRUCTION
The Lessor agrees to construct the Building substantially in accordance with the
Lessee's specifications attached hereto as Schedule "C" subject to further
modification to be mutually agreed upon.
The Lessor agrees to co-operate fully with the Lessee or its designated
consultants, acting reasonably, for the purpose of finalizing the design and
specifications of the Building.
The parties agree that the conceptual design and specifications of the building
shall be finalized no later than January 25th, 1999. Lessor agrees to provide a
full set of final construction drawings to Lessee on finalization at the permit
application drawings of the Building.
4. BUILDING COMPLETION
Provided that the parties have finalized the conceptual design and
specifications of the Building by January 25, 1999 the Lessor agrees to Commence
construction of the Building no later than June 1, 1999 and to diligently pursue
the construction of the building in accordance with a construction schedule to
form part of the design and specifications. The Lessor shall complete the
Building such that the Lessee's fixturing, work may commence by no later than
June 1st, 2000 subject to force majeure.
For the purpose of this Offer and the Lease the obligations, of the
Lessor to design and construct the Building may be subject to delays caused by
the act, neglect, delay or default of the Lessee or its agents or contractors,
strikes, lock-outs fire or other damage or destruction of the building or any
substantial part thereof, adverse weather conditions or other cause or causes
relative to the construction of the Building beyond the control of the Lessor
(each at which events is herein referred to as force majeure), but not relating
to the Lessor's financial capacity or resulting from its negligence or wilful
act or default.
In the event of an occurrence of force majeure, the Lessor shall promptly, but
in any event no later than five (5) days after the occurrence thereof comes to
the attention of the Lessor, give written notice to the Lessee of the occurrence
and of the Lessor's estimate of the length of delay resulting therefrom. The
time for completion at construction of the Building shall be extended so long as
the force majeure occurrence shall subsist which shall include not only the
length of time that the event causing force majeure subsists but also a
reasonable amount of time in respect of delays caused thereby, resulting
therefrom or relating thereto.
Substantial completion of the Building for the purposes of, and as used
in this Offer to Lease shall be deemed to have occurred once the Lessor and the
Lessee have agreed or the its designated consultant (the "Designated Consultant)
acting reasonably in good faith and without delay has certified that the
Building to sufficiently completed for the Lessee to commence construction of
its leasehold improvements with immediate and continuous access to allow
construction of the Lessee's improvements, including the full use of driveways,
elevators and loading docks. Final completion at the Building by the Lessor
shall occur no later than 15 days prior to the Commencement Date.
The Lessor and Lessee hereby agree to fully co-operate with each other and to
co-ordinate their efforts for the completion of their respective work in the
Building.
In the event that the Lessor does not substantially or finally complete
the Building as provided for herein then all dates contained in this Offer to
Lease shall be delayed by the same number of days that substantial or final
completion of the Building is delayed. Save and except for delays as a result of
force majeure, Lessor shall indemnify and save harmless Lessee from all costs,
claims and liabilities, howsoever arising by reason of the delay in the
Commencement Date by the Lessor pursuant to this Offer to Lease. The parties
agree that a genuine pre-estimate of such costs, claims and liabilities to be
paid to the Lessee by the Lessor shall be the aggregate of: firstly, the amounts
of all due rental payments due by the Lessee, under its existing leases as more
particularly set out in paragraph 31, and secondly, an increase in the Net Rent
Free Period set out in paragraph 11 by one day for each day of such delay for
the first 30 days: an increase by two days for each day of such delay for the
next 30 days and an increase by three days for each day of such delay
thereafter. And further provided that, if the Commencement Date has been delayed
90 days, the Lessee may, at its sole option terminate this Offer to Lease and
the Lease and this Offer to Lease shall be terminated and the Deposit shall be
returned to the Lessee and the parties shall have no further obligation to each
other. The Lessee shall not be liable to the Lessor for repayment of any Tenants
Improvement Allowance paid or accrued payable if this Offer to Lease is
terminated pursuant to this paragraph.
8. LEASE
The Lease shall be drawn on the Lessor's standard form but will be otherwise
subject to the terms herein and otherwise to the reasonable satisfaction of the
Lessee and its solicitors. The laws may not conflict with any of the provisions
of the Offer but may deal in greater detail with the matters dealt with herein
as well as other matters normally dealt with in commercial office leases and
subject to such non-financial amendments as may be reasonably requested by the
Lease and Lessor in consultation with their solicitors. The Lessor shall deliver
to the Lessee the lessor's standard form of lease, incorporating the provisions
of this Offer, within five (5) days of acceptance of this offer by both parties.
The Lease shall contain the Lessor's representation and warranty that it is the
registered beneficial owner of the Lands and the Building will be constructed as
provided for herein, that the Lands and Building are zoned to permit the uses as
contemplated hereby, and that the same are free of any hazardous substances and
in compliance with all environmental laws, by-laws and regulations. Lessee
agrees to abide by all the terms of the Lease except as amended by this offer,
or other changes mutually agreed to by both parties as described herein. The
provisions of this Offer to Lease shall not merge with the execution and
delivery of the Lease.
This Offer to Lease shall be conditional until January 25th, 1999 upon both
parties agreeing to all the terms of the Lease for the Premises. It the parties
cannot agree upon the final form of lease for the initial Premises by January
25th, 1999, then this Offer to Lease shall become null and void.
In the event that this Offer to Lease becomes null and void as provided in this
paragraph, the losses agrees to reimburse the Lessor for fifty percent (50%) of
reasonable out-of-pocket expenses associated with work in progress up to a
maximum of Twenty-Five Thousand Dollars ($25,000.00).
DATED at Edmonton this 22 day of January, 1999
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/C. Jane Lewchuk 01/22/99
(Purchaser/Lessee) (Date)
IN WITNESS whereof I have hereunto set my hand and seal:
I have authority to bind the Company
/s/Alan P. MacKenzie 01/25/99
(Vendor/Lessor) (Date)
<PAGE>
SCHEDULE "F"
RULES AND REGULATIONS
COMMERCE VALLEY DRIVE EAST,
MARKHAM/ ONTARIO
To be read with and form a part of this lease between MONARCH CONSTRUCTION
LIMITED (LESSOR) and SAVILLE SYSTEMS CANADA LTD. (LESSE)
1. INTENTIONALLY DELETED
2. The sidewalks, entries, passages, elevators and staircases shall not be
obstructed or used by the Tenant, his agents, servants, contractors, invitees or
employees for any purpose other than ingress to and egress from the Premises.
The Landlord reserves entire control of all parts of the Building employed for
the common benefit of the tenants including, without restricting the generality
of the foregoing, the sidewalks, entries, corridors and passages not within the
Premises, washrooms, lavatories, air conditioning closets, fan rooms, janitor's
closets, as it may deem advisable, provided that ingress to and egress from the
Premises is not unduly impaired thereby.
3. The Tenant, his agents, servants, contractors, invitees or employees shall
not bring into, take out, position, construct, install or move any business
machine or other heavy office equipment without first obtaining the consent in
writing of the Landlord. In giving such consent. the Landlord shall have the
right in its sole discretion to prescribe the weight permitted and the position
thereof and the use and design of planks, skids or platforms to distribute the
weight thereof. All damage done to the Building by moving or using any such
heavy equipment or other office equipment or furniture shall be repaired at the
expense of the Tenant. The moving of all heavy equipment or other office
equipment or furniture in or out of the Building shall take place only at such
times and using such entrance, hallways, corridors and elevator as shall be
approved in writing by the Landlord and the persons employed to move the same
must be acceptable to the Landlord. Safes and other heavy office equipment will
be moved through the halls and corridors only upon steel bearing plates. No
freight or bulky matter of any description shall be received into the Building
or carried in the elevators, except during hours approved by the Landlord.
4. The Tenant shall permit and facilitate the entry of the Landlord or those
designated by it, into the Premises for the purpose of inspection, repair,
window cleaning and the performance of other services.
5. INTENTIONALLY DELETED
6. The water closets and other water apparatus shall not be used for any purpose
other than those for which they were constructed, and no sweepings, rubbish,
rags, ashes or other substances shall be thrown therein or in the passages. Any
damage resulting by misuse shall be borne by the Tenant by whom or by whose
agents, servants, or employees the same is caused. The Tenant shall not let the
water run unless it is in actual use.
7. INTENTIONALLY DELETED
8. INTENTIONALLY DELETED
9. INTENTIONALLY DELETED
10. No one shall use the Premises for sleeping apartments or residential
purposes, or for the storage of personal effects or articles other than those
required for business purposes.
11. No animals or birds shall be brought into the Premises. nor shall the Tenant
operate or permit to be operated any musical or sound-producing instrument or
device which may be heard outside the Premises.
12. Canvassing, soliciting and peddling in the Building are prohibited.
13. No vehicles shall be brought within the Building. Any hand trucks,
carryalls, or similar appliances used in the Building shall be equipped with
rubber tires, side guards and other safeguards as the Landlord shall require.
14. The Tenant shall permit window cleaners to clean the windows of the Premises
during normal business hours.
15. No inflammable oils or other inflammable, dangerous or explosive materials
shall be kept or permitted to be kept in the Premises.
16. All deliveries to the Premises of bulky goods shall be made during such
hours and by using such entrance, hallways, corridors and elevator as the
Landlord and Tenant shall mutually agree upon, both parties acting reasonably.
17. The foregoing regulations, as from time to time amended are not necessarily
of uniform application, but may be waived in whole or in part in respect of
other tenants without affecting their enforceability with respect to the Tenant
and the Premises, and may be waived in whole or in part with respect to the
Premises without waiving them as to future application to the Premises, and the
imposition of such regulations shall not create or imply any obligation of the
Landlord to enforce them or create any liability of the Landlord for their
non-enforcement.
<PAGE>
SCHEDULE"G"
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made and entered into
between SAVILLE SYSTEMS CANADA, LTD. ("Tenant") and
a
("Lender") and MONARCH CONSTRUCTION LIMITED ("Landlord").
RECITALS:
WHEREAS, Landlord executed a Lease dated as of January 26th, 1999 in favour of
Tenant (the "Lease"), a short form of which will be registered simultaneously
herewith, covering a certain Demised Premises therein described located on a
parcel of real estate, a legal description of which is attached hereto and
incorporated herein by this reference as Exhibit "A" (said parcel of real estate
and the Demised Premises being sometimes collectively referred to herein as the
"Property"): and
WHEREAS, it is a condition to said loan that said Mortgage shall unconditionally
be and remain at all times a lien or charge upon the Property, prior and
superior to the lease and to the leasehold estate created thereby; and
WHEREAS, the parties hereto desire to assure Tenant's possession and control of
the Property under the Lease upon the terms and conditions therein contained;
NOW, THEREFORE. for and in consideration of the mutual covenants and premises
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged and agreed to, the parties hereto do hereby agree
as follows:
AGREEMENT:
1. The Lease is and shall be subject and subordinate to the Mortgage, and to all
renewals, modifications, consolidations, replacements and extensions thereof,
and to all future advances made thereunder.
2. Should Lender become the owner or a mortgage in possession of the Property,
or should the Property be sold by reason of foreclosure, or other proceedings
brought to enforce the Mortgage which encumbers the Property, or should the
Lender appoint a Receiver/Manager of the Property or should the Property be
transferred by deed in lieu of foreclosure, or should any portion of the
Property be sold under a trustee's or Judicial sale or power of sale, the Lease
shall continue in full force and effect as a direct lease between the then owner
of the Property covered by the Mortgage and Tenant, upon, and subject to, all of
the terms, covenants and conditions of the Lease for the balance of the Term
thereof remaining, including any extensions therein provided. Tenant does hereby
agree to attorn to Lender or to any such owner as its landlord, and Lender
hereby agrees that it will accept such attornment.
3. Notwithstanding any other provision of this Agreement, Lender shall not be
(a) liable for any default of any landlord under the Lease (including Landlord),
except that Lender agrees to cure any default of Landlord that is continuing as
of the date Lender forecloses the Property or becomes a Mortgagee in possession
or appoints a Receiver/Manager for the Property or commences proceedings in
connection with the Property under power of sale within thirty (30) days from
the date Tenant delivers written notice to Lender of such continuing default.
unless such default is of such a nature to reasonably require more than thirty
(30) days to cure and then Lender shall be permitted such additional time as is
reasonably necessary to effect such cure, provided Lender diligently and
continuously proceeds to cure such default: (b) subject to any offsets or
defenses which have accrued prior to the date of foreclosure or power of sale
proceedings, unless Tenant shall have delivered to Lender written notice of the
default which gave rise to such offset or defense and permitted Lender the same
right to cure such default as permitted Landlord under the Lease: (c) bound by
any Rent that Tenant may have paid under the Lease more than one month in
advance, (d) bound by any amendment or modification of the Lease hereafter made
without Lender's prior written consent, (e) responsible for the return of any
security deposit delivered to Landlord under the Lease and not subsequently
received by Lender.
4. If Lender sends written notice to Tenant to direct its Rent payments under
the Lease to lender instead of Landlord. then Tenant agrees to follow the
instructions set forth in such written instructions and deliver Rent payments to
Lender: however, Landlord and Lender agree that Tenant shall be credited under
the Lease for any Rent payments sent to Lender pursuant to such written notice.
5. All notices which may or are required to be sent under this Agreement shall
be in writing and shall be sent by first-class registered mail, postage prepaid,
return receipt requested, and sent to the party at the address appearing below
or such other address as any party shall hereafter inform the other party by
written notice given as set forth above:
LANDLORD:MONARCH CONSTRUCTION LIMITED
2025 Sheppard Avenue East
Toronto. Ontario
M2J 1V7
Attention: The Corporate Secretary
Facsimile: (416) 491-7216
All notices delivered as set forth above shall be deemed effective three (3)
days from the date deposited in the Canadian mail.
6. Said Mortgage shall not cover or encumber and shall not be construed as
subjecting in any manner to the lien thereof any of Tenant's improvements or
trade fixtures, furniture, equipment or other personal property at any time
placed or installed in the Premises. In the event the Property or any part
thereof shall be taken for public purposes by expropriation or transfer in lieu
thereof or the same are damaged or destroyed, the rights of the parties to any
expropriation award or insurance proceeds shall be determined and controlled by
the applicable provisions of the Lease.
7. This Non-Disturbance and Attornment Agreement shall inure to the benefit of
and be binding upon the parties hereto, their successors in interest, heirs and
assigns and any subsequent owner of the Property secured by the Mortgage.
8. Should any action or proceeding be commenced to enforce any of the provisions
of this Non-Disturbance and Attornment Agreement or in connection with its
meaning, the prevailing party in such action shall be awarded, in addition to
any other relief it may obtain, its reasonable costs and expenses, not limited
to taxable costs, and reasonable legal fees on "a solicitor and his client"
basis.
<PAGE>
APPENDIX " 1 "
INDEMNITY AGREEMENT
THIS AGREEMENT is dated January 26th 1999
BETWEEN:
MONARCH CONSTRUCTION LIMITED
(the "Landlord")
and
SAVILLE SYSTEMS PLC
(the "Indemnifier")
In order to induce the Landlord to sign the lease between the Landlord and
Saville Systems Canada, Ltd. as Tenant, dated January 26th, 1999 (the "Lease"),
the Indemnifier agrees with the Landlord that:
1.(a) Throughout the Term of the Lease and any extension or renewal, the
Indemnifier will : (1) promptly pay all Rent and any other amounts payable by
the Tenant under the Lease, whether to the Landlord or anyone else; (ii)
promptly perform each and every obligation of the Tenant under the Lease, and
(iii) indemnify and protect the Landlord from any losses or costs incurred by
the Landlord if the Tenant fails to pay the Rent or other amounts or to perform
any of its obligations under the Lease.
(b) Even if there is an Early Termination, the Indemnifier will remain obligated
under this Agreement throughout the Term and any renewals or extensions as
though the Early Termination had not occurred. An "Early Termination" means a
disaffirmance, disclaimer, repudiation, rejection or termination of the Lease
(as a result of court proceedings or otherwise), or a surrender of the Lease
which the Landlord did not accept in writing, which occurs prior to the
originally specified expiry date of the Term or renewal or extension. If there
is an Early Termination, the Indemnifier will, at the Landlord's option, become
the Landlord's tenant on the terms of the Lease.
2. This indemnity is absolute and unconditional. The Indemnifier's obligations
under this Agreement will not be affected by (a) any modifications to the
Tenant's obligations under the Lease which the Landlord allows the Tenant, (b)
the fact that the Landlord does not enforce any of the terms of the Lease: (c)
any assignment of the Lease by the Tenant or by any trustee, receiver or
liquidator: (d) any consent which the Landlord gives to any Transfer (as defined
in the Lease): (c) any amendment to the Lease or any waiver by the Tenant of its
rights under the lease, or (f) the expiry of the Term.
3. The Landlord is not required to notify the Indemnifier that the Landlord has
accepted this Agreement or that the Tenant has failed to perform any of its
obligations under the Lease. Nevertheless, if the Landlord wishes to send any
notice to the Indemnifier. it must deliver it or mail it by prepaid registered
mail addressed to the Indemnifier at One Van de Graaff Drive, Burlington, MA
01803 or, at the Landlord's option, at the Leased Premises. Any notice will be
considered to have been given on the day it was delivered, or if mailed, three
(3) days after the date it was mailed. The Indemnifier may notify the Landlord
in writing of a substitute address for the above address. If two or more parties
are named as Indemnifier, the Landlord may give any notice to be given to the
Indemnifier to only one of the parties, and in doing so both of them will be
considered to have been notified.
4. If there is a default under the Lease or under this Agreement, the Landlord
will not be required to: (a) proceed against or pursue anything against the
Tenant first: (b) proceed against any security of the Tenant held by the
Landlord: or (c) pursue any other remedy whatsoever. The Landlord has the right
to enforce this Agreement even if it accepts additional security from the Tenant
and even if it or anyone else releases or discharges the Tenant or if the Tenant
is released or discharged by operation of any law. The Indemnifier is not a mere
guarantor: the Indemnifier is primarily responsible for the Tenant's obligations
under the Lease.
5. The Indemnifier's obligations under this Agreement will not be affected by
the release or discharge of the Tenant ("Release") in any receivership,
bankruptcy, winding-up or other creditors' proceedings. The Indemnifier's
obligations will continue to apply to the periods before and after the Release
as if the Release had not occurred. The Indemnifier's obligations will not be
affected by any repossession of the leased premises by the Landlord, except that
if the Landlord regrets the Leased Premises then the payments received by the
Landlord (after deducting all costs and expenses of repossessing and reletting
the Leased Premises) will be credited by the Landlord against the Indemnifier's
obligations under this Agreement.
6. Even though the Landlord may have already taken action against the
Indemnifier under this Agreement because of a default under the Lease, and
whether or not that action has succeeded or been completed, the Landlord may
take further action against the Indemnifier under this Agreement if there is any
further default under the Lease.
7. This Indemnity can only be modified in writing, signed by both the
Indemnifier and the Landlord.
8. If two or more parties are named as Indemnifier, each party is responsible
for the obligations of the Indemnifier, both individually and together with the
others.
9. All of the terms of this Agreement apply to the Indemnifier and to his or her
heirs, executors, administrators, successors and assigns, and may be enforced by
the Landlord. its successors and assigns. and any holder of any charge over all
or any part of the lands on which the Leased Premises are located.
10. The expressions "Landlord", "Tenant", "Rent", "Term", and "Leased Premises"
and other capitalized words used in this Agreement have the same meaning,
respectively, as they are given in the Lease.
11. This Agreement will be governed by the laws of the Province of Ontario.
12. The Indemnifier's obligations under this Indemnity Agreement are at an end
in the event of the exercise of the option to terminate contained in section 22
of Schedule "E" of this Lease but not until all amounts are paid to the Landlord
pursuant to section 22 of Schedule "E" of the Lease.
THE LANDLORD AND INDEMNIFIER HAVE SIGNED BELOW, to confirm the terms of this
Agreement.
SIGNED, SEALED AND DELIVERED in the presence of:
MONARCH CONSTRUCTION LIMITED
(Landlord)
per: Name: /s/Ian R. Taylor
per: Name: /s/
SAVILLE SYSTEMS PLC
(Indemnifier)
per: Name: /s/John J. Boyle III
Title: Chairman and CEO
per: Name: /s/Christopher A. Hanson
Title: CFO
<PAGE>
November 26, 1998
Mr. Elliot Greenberg
Associate Vice President
C.B. Richard Ellis
2005 Sheppard Avenue East, Suite 600
North York, Ontario
M2J 5B4
Dear Elliot:
RE: OFFER TO LEASE BETWEEN SAVILLE SYSTEMS AND MONARCH CONSTRUCTION LIMITED
This letter hereby amends sentence 2 of Clause 9 - LEASE as follows:
The Lessor shall deliver to the Lessee the Lessor's standard form of lease,
incorporating the provisions of this Offer, within five (5) business days of
acceptance of this offer by both parties.
Yours truly,
/s/C. Jane Lewchuk
C. Jane Lewchuk
Manager, Global Administrative Services
Acknowledged and agreed this 27th day of November, 1998.
/s/ Alan P. MacKenzie
Director, Commercial Property Developments
Monarch Construction Limited
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of January 4, 1999, by and between
SAVILLE SYSTEMS PLC, a public limited company incorporated under the laws of the
Republic of Ireland, and its subsidiaries, SAVILLE SYSTEMS, INC. ("SSUS"),
SAVILLE SYSTEMS CANADA, LTD. ("SSC"), SAVILLE SYSTEMS (UK) LIMITED ("SSUK") and
SAVILLE SYSTEMS AUST. PTY LTD ("SSA") (collectively, the "Companies"), and
Lawrence S. Barker, a resident of Maryland (the "Executive");
WITNESSETH:
WHEREAS, each of the Companies wishes to employ the Executive as its
Executive Vice President, Operations, to serve in such capacity for all five
Companies simultaneously; and
WHEREAS, the Executive wishes to be employed in this capacity by the
Companies, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual obligations set forth
herein, the parties hereto hereby agree as follows:
1. Engagement. Each Company hereby employs the Executive to serve as Executive
Vice President, Operations of each Company for the period beginning on the date
first above written and ending at the close of business on January 5, 2000 or on
such earlier date as the Executive's employment is terminated pursuant to the
terms hereof (hereinafter, the "Term"). The Executive hereby accepts such
employment for such Term, on the terms and conditions hereinafter set forth.
2. Duties. During the Term, the Executive shall be responsible for the
management of the operation functions of the Companies and shall have such
duties and responsibilities as may be assigned to him by the President, Chief
Executive Officer or the Board of Directors of the Company (the "Board"). The
Executive shall use his best efforts and shall act in good faith in performing
all duties reasonably required to be performed under this Agreement. The
Executive's principal place of business shall be in or near Boston,
Massachusetts, at the offices of SSUS located there.
3. Availability. While employed by the Companies pursuant to this Agreement, the
Executive shall devote his entire working time, attention and energies to the
Companies' business and shall not be engaged in any other business activity
without the express approval of the Board.
4. Expenses. Each Company shall reimburse the Executive, with reasonable
promptness upon presentation of itemized vouchers or receipts, for all ordinary
and necessary business expenses incurred by the Executive in the performance of
his duties hereunder to such Company. Air travel by the Executive for any
Company shall be by business class for international flights, by first class for
U.S. domestic flights with a scheduled duration of three hours or longer, and
otherwise by coach class; provided, however, that the Companies will, when
possible, provide the Executive with frequent flyer (or similar program) upgrade
coupons to enable the Executive to upgrade to first class on an as available
basis.
5. Compensation. As compensation for the services to be rendered hereunder, the
Companies agree as follows:
(a) The Companies will pay to the Executive, in bi-weekly installments, an
annual base salary of $275,000 during the Term. The Companies shall not be
obligated to pay the Executive a salary for any time after the last day of the
Term except as provided herein.
(b) The Executive shall have the right to participate in an incentive bonus
plan to be established by the Companies, pursuant to which the Executive will be
eligible to receive an aggregate bonus within 60 days after the end of the 1999
calendar year equal to up to 100% of his base salary during the year, with the
amount or the bonus to which he is entitled determined by the Compensation
Committee of the Board of Directors of Saville Systems PLC based upon
performance by the Executive and the Companies. Half of such bonus shall be
payable based upon the Companies meeting financial performance projections
adopted by the Boards with respect to the fiscal year for which such bonus
applied, with the remaining half based on the achievement of personal objectives
established by the Companies for the Executive.
(c) The Companies shall pay the Executive a one-time cash signing bonus of
$200,000.00 on May 1, 1999 provided that the Executive is an employee of the
Company at that date.
(d) The Executive shall be entitled to participate in the benefits package
of the Companies for United States employees, including comprehensive health
insurance. The Executive shall be entitled to three weeks of paid vacation per
year.
6. Stock Option. The Company shall grant to the Executive a non-qualified option
for the Company's Ordinary Shares in accordance with the terms specified in the
Stock Option Agreement between the Executive and Saville Systems PLC of even
date herewith.
7. Ownership of Material Information. All right, title and interest of every
kind and nature whatsoever in and to discoveries, inventions, improvements,
patents (and applications therefor), copyrights, ideas, processes, developments,
know-how, laboratory notebooks, creations, properties and all other proprietary
rights arising from, or in any way related to, the Executive's employment
hereunder, whether developed by the Executive independently or jointly with
others ("Intellectual Property"), shall become and remain the exclusive property
of the Companies, and the Executive shall have no interest therein. The
Executive shall promptly disclose to the Companies and assign or transfer to the
Companies all rights in any Intellectual Property. If any Company elects to seek
patent or other protection with respect to any Intellectual Property, the
Executive shall, at such Company's expense, take all actions reasonably
requested by such Company to obtain such protection for the benefit of such
Company and to fully vest in such Company and its successors and assigns full
right and title to such Intellectual Property. Upon the termination of the
Executive's employment by the Companies for any reason, the Executive shall
return to each Company all property of such Company, including all copies of or
relating to any Intellectual Property, in the possession or under the control of
the Executive.
8. Confidentiality. The Executive shall not, during the term of his employment
by the Companies pursuant to this Agreement or thereafter, disclose to anyone
(except to the extent reasonably necessary for the Executive to perform his
duties hereunder or as may be required by law) any confidential information
concerning the business or affairs of any Company (or of any affiliate or
subsidiary of any Company), including but not limited to lists of and records
relating to customers, business plans, business negotiations, market
information, financial and cost information, and scientific and technical
information (whether of any Company or entrusted to any Company by a third party
under a confidentiality agreement or understanding) which the Executive shall
have acquired in the course of, or incident to, the performance of his duties
pursuant to the terms of this Agreement or pursuant to any prior dealings with
any Company or any affiliate or subsidiary of any Company. The Executive shall
hold in strictest confidence, as a fiduciary, any and all such confidential
information, and shall comply with all instructions of the Companies for
preservation of the confidentiality of such information. In the event of a
breach or threatened breach by the Executive of the provisions of this Section
8, the Companies shall be entitled to an injunction restraining the Executive
from disclosing, in whole or in part, such information or from rendering any
services to any person, firm, corporation, association or other entity to whom
such information has been disclosed or is threatened to be disclosed. Nothing
herein shall be construed as prohibiting the Companies from pursuing any other
remedies available to the Companies for such breach or threatened breach,
including the recovery of damages from the Executive. Nothing herein shall be
construed as prohibiting the Executive from disclosing to anyone any information
which is, or which becomes, available to the public (other than by reason of a
violation of this Section 8) or which is a matter of general business knowledge
or experience.
9. Termination for Cause.
(a) The Companies may terminate their employment of the Executive under
this Agreement for cause in the event that the President or the Board determines
that the Executive (i) has been convicted of, or entered a plea of nolo
contendere to, a crime of moral turpitude or a felony (whether or not in
conjunction with the performance by the Executive of his duties under this
Agreement), or (ii) has through willful misconduct or gross negligence engaged
in an act or course of conduct that causes material injury to any of the
Companies (or any affiliate or subsidiary of any of the Companies) (each of the
reasons specified in clauses (i) and (ii) hereof being referred to herein as
"Cause").
(b) Upon a termination of employment under Section 9(a), the Companies
shall be relieved of all further obligations under this Agreement.
Notwithstanding such termination of employment, the Executive shall continue to
be bound by the provisions of Sections 7, 8, 13 18.
10. Termination Without Cause or for Good Reason.
(a) If, during the Term of this Agreement, the employment of the Executive
is terminated (i) by the Companies other than pursuant to Section 9(a) or
Section 12 or (ii) by the Executive for Good Reason (as defined below), the
Executive shall be entitled to receive, upon such termination, a severance
payment in an amount equal to two times the annual salary set forth in Section
5(a) and, if such termination occurs prior to May 1, 1999, $200,000. Such
severance payment shall be payable in equal monthly installments over the
remaining months of calendar 1999, provided that the $200,000 payment due if
termination occurs prior to May 1, 1999 shall be paid on May 1, 1999. The
Company shall not be obligated to pay (i) any bonus under Section 5(b) or (ii)
any amount due to unused vacation time.
(b) For purposes of this Agreement, "Good Reason" means the occurrence,
without the Executive's written consent, of any of the events or circumstances
set forth in clauses (i) through (iii) below. Notwithstanding the occurrence of
any such event or circumstance, such occurrence shall not be deemed to
constitute Good Reason if, prior to the date of termination specified in the
Notice of Termination (as defined in Section 11) given by the Executive in
respect thereof, such event or circumstance so identified by the Executive as
"Good Reason" has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Companies shall only apply to the first Notice of
Termination for Good Reason given by the Executive).
(i) the assignment to the Executive of duties inconsistent in any
material respect with the Executive's position (including status, offices,
titles and reporting requirements), authority or responsibilities in effect
as of January 15, 1999, or any other action or omission by the Companies
which results in a material diminution in such position, authority or
responsibilities;
(ii) the failure of the Companies to obtain the agreement, in a form
reasonably satisfactory to the Executive, from any successor to the
Companies to assume and agree to perform this Agreement; or
(iii) any failure of the Companies or any successor to pay or provide
to the Executive any portion of the Executive's compensation or benefits
due under this Agreement within fourteen days of the date such compensation
is due, or any material breach by the Companies of this Agreement.
(c) Termination of employment under this Section 10 shall terminate all other
obligations of the Companies hereunder, except the obligations of the companies
under this Section 10, but shall not terminate the Executive's obligations under
Sections 7, 8 and 13 and shall not modify the terms of any stock option between
the Executive and the Companies.
11. Notice of Termination. Any termination of the Executive's employment by the
Companies or by the Executive under Sections 9 or 10 hereof shall be
communicated by a written notice to the other party hereto (the "Notice of
Termination"), given in accordance with Section 17. Any Notice of Termination
shall: (a) indicate the specific termination provision (if any) of this
Agreement relied upon by the party giving such notice, (b) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (c) specify the date of termination, which date may
not be less than 15 days or more than 120 days after the date of delivery of
such Notice of Termination. In the event of a Notice of Termination by the
Executive, the Company may, in its discretion, reduce the period prior to the
date of termination by notice to the Executive.
12. Death or Inability to Perform of the Executive. In the event that the
Executive, during the period while employed under this Agreement, shall die or
at any time become unable to carry out his duties under this Agreement, the
Companies may terminate this Agreement and be relieved of all further
obligations hereunder. Termination of employment under this Section 12 shall not
terminate the Executive's obligations under Sections 7, 8 and 13.
13. Non-Competition.
(a) The Executive hereby agrees that, except as provided in Section 13(b),
during the term of his employment by the Companies pursuant to this Agreement
and for a period of one year following the termination of his employment under
this Agreement prior to December 31, 1999 pursuant to Section 10(a), he will
not, directly or indirectly and in any way, whether as principal or as director,
officer, employee, consultant, agent, partner or stockholder to another entity
(other than by the ownership of a passive investment interest of not more than
5% in a company with publicly traded equity securities), (i) own, manage,
operate, control, be employed by, participate in, or be connected in any manner
with the ownership, management, operation or control of any business competing
with any business of the Companies in which Executive participated during the
two years immediately preceding such termination, (ii) interfere with, solicit
on behalf of another or attempt to entice away from the Companies (or any
affiliate or subsidiary of any of the Companies) (x) any project, financing or
customer that any of the Companies (or any affiliate or subsidiary of any of the
Companies) has under contract (including unfulfilled purchase orders), or any
letter of supply or other supplier contract or arrangement entered into by any
of the Companies (or any affiliate or subsidiary of any of the Companies), and
all extensions, renewals and resolicitations of such contracts or arrangements,
(y) any contract, agreement or arrangement that any Companies (or any affiliate
or subsidiary of any of the Companies) is actively negotiating with any other
party, or (z) any prospective business opportunity that any of the Companies (or
any affiliate or subsidiary of any of the Companies) has identified at the time
of termination as being actively pursued by such of the Companies, or (iii) for
himself or another, attempt to hire, or assist in or facilitate in any way the
solicitation of any employee of any of the Companies (or any affiliate or
subsidiary of any of the Companies), or any employee of any person, firm or
other entity, the employees of which any of the Companies (or any affiliate or
subsidiary of any of the Companies) has agreed not to hire or endeavor to hire.
(b) In the event that the Executive's employment is terminated pursuant to
Section 10(a), the Executive shall have the option, exercisable at any time by
written notice to the Companies received prior to the date of termination set
forth in the Notice of Termination, to be relieved of his obligations under
clause (i) of Section 13(a), but not clauses (ii) and (iii) of Section 13(a).
Upon the giving of such notice by the Executive, the Companies shall be relieved
and discharged of all payment obligations to the Executive arising under Section
10(a) and payable on or after the date of such notice.
(c) Because of the Executive's knowledge of the Companies' business, in the
event of the Executive's actual or threatened breach of the provisions of this
Section 13 any of, the Companies shall be entitled to, and the Executive hereby
consents to, an injunction restraining the Executive from any of the foregoing.
However, nothing herein shall be construed as prohibiting the Companies from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from the Executive. The Executive agrees that
the provisions of this Section 13 are necessary and reasonable to protect the
Companies in the conduct of its business. If any restriction contained in this
Section 13 shall be deemed to be invalid or unenforceable by reason of the
extent, duration or geographic scope thereof, then the extent, duration, and
geographic scope of such restriction shall be deemed to be reduced to the
fullest extent, duration and geographic scope permitted by law and enforceable.
14. Capacity. The Executive represents and warrants to the Companies that he is
not now under any enforceable obligation, of a contractual nature or otherwise,
to any person, firm, corporation, association or other entity that is
inconsistent or in conflict with this Agreement or which would prevent, limit or
impair in any way the performance by him of his obligations hereunder.
15. Withholding. The Executive acknowledges that salary and all other
compensation payable under this Agreement shall be subject to withholding for
income and other applicable taxes to the extent required by applicable law, as
determined by the Companies in their reasonable judgment.
16. Waivers and Amendments. No act, delay, omission or course of dealing on the
part of any party hereto in exercising any right, power or remedy hereunder
shall operate as, or be construed as, a waiver thereof or otherwise prejudice
such party's rights, powers and remedies under this Agreement. This Agreement
may be amended only by a written instrument signed by the Executive and a duly
authorized officer of each of the Companies.
17. Notice. Any and all notices referred to herein shall be sufficient if
furnished in writing and delivered by hand, by facsimile transmission or by
overnight delivery service maintaining records of receipt, to the respective
parties at the following addresses:
<PAGE>
If to the Companies:
Saville Systems
One Van de Graaff Drive
Burlington, Massachusetts 01803
Facsimile: 781-270-6503
Attention: President
If to the Executive:
Mr. Lawrence S. Barker
P.O. Box 125
Great Falls, VA 22066
or to such other address or addresses as any party may from time to time
designate by notice given to the others as aforesaid. Notices shall be effective
when delivered.
18. Arbitration; Jurisdiction. Except for disputes arising under or in
connection with Sections 7, 8, and 13, all disputes arising under or in
connection with this Agreement or concerning in any way the Executive's
employment shall be submitted exclusively to arbitration in Boston,
Massachusetts, under the Commercial Arbitration Rules of the American
Arbitration Association then in effect, and the decision of the arbitrator shall
be final and binding upon the parties. Judgment upon the award rendered may be
entered and enforced in any court having jurisdiction. The parties hereto
consent to personal jurisdiction of any state or Federal court sitting in the
District of Massachusetts, in order to enforce any arbitration judgment or the
rights of the Companies under Sections 7, 8 and 13, and waive any objection that
such forum is inconvenient. Each party hereby consents to service of process in
any such action by U.S. mail or other commercially reasonable means of receipted
delivery. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the choice of
law provisions thereof.
19. Assignability. The rights and obligations contained herein shall be binding
on and inure to the benefit of the successors and assigns of the Companies. The
Executive may not assign any of his rights or obligations hereunder without the
express written consent of the Companies.
20. Miscellaneous. This Agreement, the stock option agreement described in
Section 6 above and all existing stock option agreements between the Executive
and the Companies set forth all, and are intended by each party to be an
integration of all, of the promises, agreements and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement may be
executed in multiple counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one agreement binding on
the parties hereto. Each provision of this Agreement shall be considered
severable and if for any reason any provision that is not essential to the
effectuation of the basic purpose of the Agreement is determined to be invalid
or contrary to any existing or future law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement that are valid.
21. Headings; Construction. Headings contained in this Agreement are inserted
for reference and convenience only and in no way define, limit, extend or
describe the scope of this Agreement or the meaning or construction of any of
the provisions hereof. As used herein, unless the context otherwise requires,
the single shall include the plural and vice versa, words of any gender shall
include words of any other gender, and "or" is used in the inclusive sense.
22. Survival of Terms. If this Agreement is terminated for any reason, the
provisions of Sections 5(b), 7, 8, 10, 13 and 18 shall survive and the Executive
and the Companies, as the case may be, shall continue to be bound by the terms
thereof to the extent provided therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SAVILLE SYSTEMS PLC
SAVILLE SYSTEMS, INC.
SAVILLE SYSTEMS CANADA, LTD.
SAVILLE SYSTEMS (UK) LIMITED
SAVILLE SYSTEMS AUST. PTY LTD
/s/ Lawrence S. Barker By: /s/ John J. Boyle III
Lawrence S. Barker Name: John J. Boyle III
Title: President and Chief Executive Officer
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of January 4, 1999, by and between
SAVILLE SYSTEMS PLC, a public limited company incorporated under the laws of the
Republic of Ireland, and its subsidiaries, SAVILLE SYSTEMS, INC. ("SSUS"),
SAVILLE SYSTEMS CANADA, LTD. ("SSC"), SAVILLE SYSTEMS (UK) LIMITED ("SSUK") and
SAVILLE SYSTEMS AUST. PTY LTD ("SSA") (collectively, the "Companies"), and JOHN
J. KILEY, a resident of Massachusetts (the "Executive");
WITNESSETH:
WHEREAS, each of the Companies wishes to employ the Executive as its
Executive Vice President, Global Sales and Marketing, to serve in such capacity
for all five Companies simultaneously; and
WHEREAS, the Executive wishes to be employed in this capacity by the
Companies, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual obligations set forth
herein, the parties hereto hereby agree as follows:
1. Engagement. Each Company hereby employs the Executive to serve as Executive
Vice President, Global Sales and Marketing of each Company for the period
beginning on the date first above written and ending at the close of business on
January 5, 2000 or on such earlier date as the Executive's employment is
terminated pursuant to the terms hereof (hereinafter, the "Term"). The Executive
hereby accepts such employment for such Term, on the terms and conditions
hereinafter set forth.
2. Duties. During the Term, the Executive shall be responsible for the
management of the sales and marketing functions of the Companies and shall have
such duties and responsibilities as may be assigned to him by the President,
Chief Executive Officer or the Board of Directors of the Company (the "Board").
The Executive shall use his best efforts and shall act in good faith in
performing all duties reasonably required to be performed under this Agreement.
The Executive's principal place of business shall be in or near Boston,
Massachusetts, at the offices of SSUS located there.
3. Availability. While employed by the Companies pursuant to this Agreement, the
Executive shall devote his entire working time, attention and energies to the
Companies' business and shall not be engaged in any other business activity
without the express approval of the Board.
4. Expenses. Each Company shall reimburse the Executive, with reasonable
promptness upon presentation of itemized vouchers or receipts, for all ordinary
and necessary business expenses incurred by the Executive in the performance of
his duties hereunder to such Company. Air travel by the Executive for any
Company shall be by business class for international flights, by first class for
U.S. domestic flights with a scheduled duration of three hours or longer, and
otherwise by coach class; provided, however, that the Companies will, when
possible, provide the Executive with frequent flyer (or similar program) upgrade
coupons to enable the Executive to upgrade to first class on an as available
basis.
5. Compensation. As compensation for the services to be rendered hereunder, the
Companies agree as follows:
(a) The Companies will pay to the Executive, in bi-weekly installments, an
annual base salary of $250,000 during the Term. The Companies shall not be
obligated to pay the Executive a salary for any time after the last day of the
Term except as provided herein.
(b) Within 45 days of the end of each fiscal quarter during the Term, the
Executive shall receive a commission determined as follows. In each fiscal
quarter during the Term, the Companies shall determine the amount of each
commission paid or to be paid to each sales employee of the Companies with
respect to the efforts of such employee during such quarter. Each such
commission amount shall then be recalculated as if the percentage of the
applicable commission were 0.33% higher. For example, a 3% commission would be
recalculated as a 3.33% commission. The excess of the recalculated, higher
amount over the commission payable to the applicable employee shall be paid to
the Executive within 45 days of the end of the applicable fiscal quarter, as set
forth above. Notwithstanding the foregoing, if the applicable commission amount
is not payable in full with respect to calendar year 1999, then the 0.33%
additional amount shall be reduced in the same manner as the applicable
commission. For example, if a sales employee is entitled to a 3% commission on
the guaranteed minimum payments under a service bureau contract but will be paid
1.5% of such commission during calendar year 1999, the amount payable to the
Executive hereunder will be determined by adding 0.165% (half of 0.33%) to 1.5%.
(c) In no event shall the total amount paid to the Executive by the Company
pursuant to Sections 5(a) and (b) exceed $1,000,000.
(d) The Companies shall pay the Executive a one-time cash signing bonus of
$100,000.00 on May 1, 1999 provided that the Executive is an employee of the
Company at that date.
(e) The Executive shall be entitled to participate in the benefits package
of the Companies for United States employees, including comprehensive health
insurance. The Executive shall be entitled to three weeks of paid vacation per
year.
6. Stock Option. The Company shall grant to the Executive a non-qualified option
for the Company's Ordinary Shares in accordance with the terms specified in the
Stock Option Agreement between the Executive and Saville Systems PLC of even
date herewith.
7. Ownership of Material Information. All right, title and interest of every
kind and nature whatsoever in and to discoveries, inventions, improvements,
patents (and applications therefor), copyrights, ideas, processes, developments,
know-how, laboratory notebooks, creations, properties and all other proprietary
rights arising from, or in any way related to, the Executive's employment
hereunder, whether developed by the Executive independently or jointly with
others ("Intellectual Property"), shall become and remain the exclusive property
of the Companies, and the Executive shall have no interest therein. The
Executive shall promptly disclose to the Companies and assign or transfer to the
Companies all rights in any Intellectual Property. If any Company elects to seek
patent or other protection with respect to any Intellectual Property, the
Executive shall, at such Company's expense, take all actions reasonably
requested by such Company to obtain such protection for the benefit of such
Company and to fully vest in such Company and its successors and assigns full
right and title to such Intellectual Property. Upon the termination of the
Executive's employment by the Companies for any reason, the Executive shall
return to each Company all property of such Company, including all copies of or
relating to any Intellectual Property, in the possession or under the control of
the Executive.
8. Confidentiality. The Executive shall not, during the term of his employment
by the Companies pursuant to this Agreement or thereafter, disclose to anyone
(except to the extent reasonably necessary for the Executive to perform his
duties hereunder or as may be required by law) any confidential information
concerning the business or affairs of any Company (or of any affiliate or
subsidiary of any Company), including but not limited to lists of and records
relating to customers, business plans, business negotiations, market
information, financial and cost information, and scientific and technical
information (whether of any Company or entrusted to any Company by a third party
under a confidentiality agreement or understanding) which the Executive shall
have acquired in the course of, or incident to, the performance of his duties
pursuant to the terms of this Agreement or pursuant to any prior dealings with
any Company or any affiliate or subsidiary of any Company. The Executive shall
hold in strictest confidence, as a fiduciary, any and all such confidential
information, and shall comply with all instructions of the Companies for
preservation of the confidentiality of such information. In the event of a
breach or threatened breach by the Executive of the provisions of this Section
8, the Companies shall be entitled to an injunction restraining the Executive
from disclosing, in whole or in part, such information or from rendering any
services to any person, firm, corporation, association or other entity to whom
such information has been disclosed or is threatened to be disclosed. Nothing
herein shall be construed as prohibiting the Companies from pursuing any other
remedies available to the Companies for such breach or threatened breach,
including the recovery of damages from the Executive. Nothing herein shall be
construed as prohibiting the Executive from disclosing to anyone any information
which is, or which becomes, available to the public (other than by reason of a
violation of this Section 8) or which is a matter of general business knowledge
or experience.
9. Termination for Cause.
(a) The Companies may terminate their employment of the Executive under
this Agreement for cause in the event that the President or the Board determines
that the Executive (i) has been convicted of, or entered a plea of nolo
contendere to, a crime of moral turpitude or a felony (whether or not in
conjunction with the performance by the Executive of his duties under this
Agreement), or (ii) has through willful misconduct or gross negligence engaged
in an act or course of conduct that causes material injury to any of the
Companies (or any affiliate or subsidiary of any of the Companies) (each of the
reasons specified in clauses (i) and (ii) hereof being referred to herein as
"Cause").
(b) Upon a termination of employment under Section 9(a), the Companies
shall be relieved of all further obligations under this Agreement.
Notwithstanding such termination of employment, the Executive shall continue to
be bound by the provisions of Sections 7, 8, 13 18.
10. Termination Without Cause or for Good Reason.
(a) If, during the Term of this Agreement, the employment of the Executive
is terminated (i) by the Companies other than pursuant to Section 9(a) or
Section 12 or (ii) by the Executive for Good Reason (as defined below), the
Executive shall be entitled to receive, upon such termination, a severance
payment in an amount equal to two times the annual salary set forth in Section
5(a) and, if such termination occurs prior to May 1, 1999, $100,000. Such
severance payment shall be payable in equal monthly installments over the
remaining months of calendar 1999, provided that the $100,000 payment due if
termination occurs prior to May 1, 1999 shall be paid on May 1, 1999. The
Company shall not be obligated to pay (i) any commission under Section 5(b) with
respect to the fiscal quarter in which a termination under this Section 10(a)
occurs, or thereafter, or (ii) any amount due to unused vacation time.
(b) For purposes of this Agreement, "Good Reason" means the occurrence,
without the Executive's written consent, of any of the events or circumstances
set forth in clauses (i) through (iii) below. Notwithstanding the occurrence of
any such event or circumstance, such occurrence shall not be deemed to
constitute Good Reason if, prior to the date of termination specified in the
Notice of Termination (as defined in Section 11) given by the Executive in
respect thereof, such event or circumstance so identified by the Executive as
"Good Reason" has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Companies shall only apply to the first Notice of
Termination for Good Reason given by the Executive).
(i) the assignment to the Executive of duties inconsistent in any
material respect with the Executive's position (including status, offices,
titles and reporting requirements), authority or responsibilities in effect
as of January 15, 1999, or any other action or omission by the Companies
which results in a material diminution in such position, authority or
responsibilities;
(ii) the failure of the Companies to obtain the agreement, in a form
reasonably satisfactory to the Executive, from any successor to the
Companies to assume and agree to perform this Agreement; or
(iii) any failure of the Companies or any successor to pay or provide
to the Executive any portion of the Executive's compensation or benefits
due under this Agreement within fourteen days of the date such compensation
is due, or any material breach by the Companies of this Agreement.
(c) Termination of employment under this Section 10 shall terminate all
other obligations of the Companies hereunder, except the obligations of the
companies under this Section 10, but shall not terminate the Executive's
obligations under Sections 7, 8 and 13 and shall not modify the terms of any
stock option between the Executive and the Companies.
11. Notice of Termination. Any termination of the Executive's employment by the
Companies or by the Executive under Sections 9 or 10 hereof shall be
communicated by a written notice to the other party hereto (the "Notice of
Termination"), given in accordance with Section 16. Any Notice of Termination
shall: (a) indicate the specific termination provision (if any) of this
Agreement relied upon by the party giving such notice, (b) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (c) specify the date of termination, which date may
not be less than 15 days or more than 120 days after the date of delivery of
such Notice of Termination. In the event of a Notice of Termination by the
Executive, the Company may, in its discretion, reduce the period prior to the
date of termination by notice to the Executive.
12. Death or Inability to Perform of the Executive. In the event that the
Executive, during the period while employed under this Agreement, shall die or
at any time become unable to carry out his duties under this Agreement, the
Companies may terminate this Agreement and be relieved of all further
obligations hereunder. Termination of employment under this Section 12 shall not
terminate the Executive's obligations under Sections 7, 8 and 13.
13. Non-Competition.
(a) The Executive hereby agrees that, except as provided in Section 13(b),
during the term of his employment by the Companies pursuant to this Agreement
and for a period of one year following the termination of his employment under
this Agreement prior to December 31, 1999 pursuant to Section 10(a), he will
not, directly or indirectly and in any way, whether as principal or as director,
officer, employee, consultant, agent, partner or stockholder to another entity
(other than by the ownership of a passive investment interest of not more than
5% in a company with publicly traded equity securities), (i) own, manage,
operate, control, be employed by, participate in, or be connected in any manner
with the ownership, management, operation or control of any business competing
with any business of the Companies in which Executive participated during the
two years immediately preceding such termination, (ii) interfere with, solicit
on behalf of another or attempt to entice away from the Companies (or any
affiliate or subsidiary of any of the Companies) (x) any project, financing or
customer that any of the Companies (or any affiliate or subsidiary of any of the
Companies) has under contract (including unfulfilled purchase orders), or any
letter of supply or other supplier contract or arrangement entered into by any
of the Companies (or any affiliate or subsidiary of any of the Companies), and
all extensions, renewals and resolicitations of such contracts or arrangements,
(y) any contract, agreement or arrangement that any Companies (or any affiliate
or subsidiary of any of the Companies) is actively negotiating with any other
party, or (z) any prospective business opportunity that any of the Companies (or
any affiliate or subsidiary of any of the Companies) has identified at the time
of termination as being actively pursued by such of the Companies, or (iii) for
himself or another, attempt to hire, or assist in or facilitate in any way the
solicitation of any employee any of the Companies (or any affiliate or
subsidiary of any of the Companies), or any employee of any person, firm or
other entity, the employees of which any of the Companies (or any affiliate or
subsidiary of any of the Companies) has agreed not to hire or endeavor to hire.
(b) In the event that the Executive's employment is terminated pursuant to
Section 10(a), the Executive shall have the option, exercisable at any time by
written notice to the Companies received prior to the date of termination set
forth in the Notice of Termination, to be relieved of his obligations under
clause (i) of Section 13(a), but not clauses (ii) and (iii) of Section 13(a).
Upon the giving of such notice by the Executive, the Companies shall be relieved
and discharged of all payment obligations to the Executive arising under Section
10(a) and payable on or after the date of such notice.
(c) Because of the Executive's knowledge of the Companies' business, in the
event of the Executive's actual or threatened breach of the provisions of this
Section 13 any of, the Companies shall be entitled to, and the Executive hereby
consents to, an injunction restraining the Executive from any of the foregoing.
However, nothing herein shall be construed as prohibiting the Companies from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from the Executive. The Executive agrees that
the provisions of this Section 13 are necessary and reasonable to protect the
Companies in the conduct of its business. If any restriction contained in this
Section 13 shall be deemed to be invalid or unenforceable by reason of the
extent, duration or geographic scope thereof, then the extent, duration, and
geographic scope of such restriction shall be deemed to be reduced to the
fullest extent, duration and geographic scope permitted by law and enforceable.
14. Capacity. The Executive represents and warrants to the Companies that he is
not now under any enforceable obligation, of a contractual nature or otherwise,
to any person, firm, corporation, association or other entity that is
inconsistent or in conflict with this Agreement or which would prevent, limit or
impair in any way the performance by him of his obligations hereunder.
15. Withholding. The Executive acknowledges that salary and all other
compensation payable under this Agreement shall be subject to withholding for
income and other applicable taxes to the extent required by applicable law, as
determined by the Companies in their reasonable judgment.
16. Waivers and Amendments. No act, delay, omission or course of dealing on the
part of any party hereto in exercising any right, power or remedy hereunder
shall operate as, or be construed as, a waiver thereof or otherwise prejudice
such party's rights, powers and remedies under this Agreement. This Agreement
may be amended only by a written instrument signed by the Executive and a duly
authorized officer of each of the Companies.
17. Notice. Any and all notices referred to herein shall be sufficient if
furnished in writing and delivered by hand, by facsimile transmission or by
overnight delivery service maintaining records of receipt, to the respective
parties at the following addresses:
If to the Companies:
Saville Systems
One Van deGraaff Drive
Burlington, Massachusetts 01803
Facsimile: 781-270-6503
Attention: President
If to the Executive:
Mr. John J. Kiley
c/o Christopher Weld, Jr., Esq.
28 State Street
Boston, Massachusetts 02109
Facsimile: 617-227-5777
or to such other address or addresses as any party may from time to time
designate by notice given to the others as aforesaid. Notices shall be effective
when delivered.
18. Arbitration; Jurisdiction. Except for disputes arising under or in
connection with Sections 7, 8, and 13, all disputes arising under or in
connection with this Agreement or concerning in any way the Executive's
employment shall be submitted exclusively to arbitration in Boston,
Massachusetts, under the Commercial Arbitration Rules of the American
Arbitration Association then in effect, and the decision of the arbitrator shall
be final and binding upon the parties. Judgment upon the award rendered may be
entered and enforced in any court having jurisdiction. The parties hereto
consent to personal jurisdiction of any state or Federal court sitting in the
District of Massachusetts, in order to enforce any arbitration judgment or the
rights of the Companies under Sections 7, 8 and 13, and waive any objection that
such forum is inconvenient. Each party hereby consents to service of process in
any such action by U.S. mail or other commercially reasonable means of receipted
delivery. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the choice of
law provisions thereof.
19. Assignability. The rights and obligations contained herein shall be binding
on and inure to the benefit of the successors and assigns of the Companies. The
Executive may not assign any of his rights or obligations hereunder without the
express written consent of the Companies.
20. Miscellaneous. This Agreement, the stock option agreement described in
Section 6 above and all existing stock option agreements between the Executive
and the Companies set forth all, and are intended by each party to be an
integration of all, of the promises, agreements and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement may be
executed in multiple counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one agreement binding on
the parties hereto. Each provision of this Agreement shall be considered
severable and if for any reason any provision that is not essential to the
effectuation of the basic purpose of the Agreement is determined to be invalid
or contrary to any existing or future law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement that are valid.
21. Headings; Construction. Headings contained in this Agreement are inserted
for reference and convenience only and in no way define, limit, extend or
describe the scope of this Agreement or the meaning or construction of any of
the provisions hereof. As used herein, unless the context otherwise requires,
the single shall include the plural and vice versa, words of any gender shall
include words of any other gender, and "or" is used in the inclusive sense.
22. Survival of Terms. If this Agreement is terminated for any reason, the
provisions of Sections 5(b), 7, 8, 10, 13 and 18 shall survive and the Executive
and the Companies, as the case may be, shall continue to be bound by the terms
thereof to the extent provided therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SAVILLE SYSTEMS PLC
SAVILLE SYSTEMS, INC.
SAVILLE SYSTEMS CANADA, LTD.
SAVILLE SYSTEMS (UK) LIMITED
SAVILLE SYSTEMS AUST. PTY LTD
/s/ John J. Kiley By: /s/ John J. Boyle III
John J. Kiley Name: John J. Boyle III
Title: President and Chief Executive Officer
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