U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 20-FR
[Check one]
[x] REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
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Sidus Systems Inc.
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(Exact name of Registrant as specified in its charter)
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(Translation of Registrant's name into English [if applicable])
Ontario, Canada
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(Province or other jurisdiction of incorporation or organization)
5734-07
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(Primary Standard Industrial Classification Code Number [if applicable])
68-0305439
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(I.R.S. Employer Identification Number [if applicable])
John S. Stoppelman, Esq., 1749 Old Meadow Road, Suite 610, McLean,
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VA 22102, (703) 827-7450
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(Name, address [including zip code] and telephone number [including area code]
of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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(Title of Class)
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Title of each class Name of each exchange on which registered
Common Stock NASDAQ
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Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
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(Title of Class)
For annual reports, indicate by check mark the information filed with this Form:
[ ] Annual information form [ ] Audited annual financial statements
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
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The Financial Statement item in the Registration Statement item the
registrant has elected to follow is Item 18.
Unless otherwise noted, all dollar amounts are stated in Canadian currency.
<PAGE>
ITEM 1 - DESCRIPTION OF BUSINESS
Background
Sidus Systems Inc. (the "Company" or "Sidus") was incorporated under
the laws of the Province of Ontario on January 29, 1981 and commenced operations
in 1983. Sidus' founders believed that the Company could rapidly respond to the
many new opportunities created by advances in personal computer ("PC")
technology. During its initial years of operation, Sidus established a
profitable distribution business concentrating on the resale of brand name PCs
and computer peripherals. The distribution business continues to be an important
and profitable operation for the Company and offers important synergies with the
Company's custom manufacturing operations.
During the mid-1980s, Sidus expanded the business into providing
systems integration services to end users. For example, in the late 1980s, the
Company provided systems integration services and acted as contract supervisor
for the installation of Northern Telecom Limited's computer network used for
online scanning and retrieval of architectural drawings. The Company's systems
integration business focused on providing (value-added) integrated systems that
utilized the brand name PCs and computer peripherals that Sidus distributed.
In 1988, after several years as a successful distributor and systems
integrator, Sidus determined that significant growth potential and opportunities
to earn higher gross margins existed in the custom manufacture of PCs and
workstations. Building on the business base provided by its distribution and
systems integration operations, Sidus developed the technical and manufacturing
infrastructure necessary to custom manufacture computers, using leading edge
components manufactured by major suppliers. The Company focused its marketing
efforts on sales of Sidus branded products to Canadian end users such as
government agencies and large corporations. In 1991, Sidus achieved Circle
Canada (formerly Group One) status as a supplier to departments and agencies of
the Canadian federal government. In early 1993, Sidus obtained ISO 9002
certification from the International Standards Organization.
Over the past several years Sidus has further expanded its custom
manufacturing operations by capitalizing on increased "outsourcing" by large,
brand-name computer manufacturers and from increased demand by original
equipment manufacturers ("OEMs") to include PCs as a component of their product
or service. To date, Sidus has established relationships with a wide range of
OEMs and multinational computer manufacturers. The Company intends to continue
to adapt to the changing technical environment in order to offer clients leading
edge technology customized for their specific needs.
On December 1, 1991 Sidus was amalgamated with Sidus Manufacturing Inc.
and Sidus Systems (Canada) Inc. under the Business Corporations Act
(Ontario)(the "OBCA"). On November 26, 1993, prior to completion of its initial
public offering, the Company amalgamated under the OBCA with its then holding
company, Sidus Holdings Inc., and Reshet Holdings Limited and Riverplex Holdings
Inc., the personal holding companies of its principal shareholders and continued
as Sidus Systems Inc. Sidus' registered and head office is currently located at
66 Leek Crescent, Richmond Hill, Ontario, L4B 1J7. The Company's wholly owned
U.S. subsidiary, Sidus Computer Corporation, was incorporated in Delaware on
October 16, 1995.
Business of the Company
Sidus targets those market niches in which customers require expertise
in manufacturing design, systems integration and customer-specific solutions for
specialized and/or complex PC systems and workstations. The requirements of
design flexibility and responsiveness, combined with the need for a high level
of technical expertise, reduce competition in such market niches from larger,
less responsive mass computer manufacturers and distributors and resellers with
less technical expertise.
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<PAGE>
Today, Sidus competes in three principal businesses which can be
distinguished by product and customer type: (i) custom manufacturing of Sidus
branded products for corporate and government end users; (ii) custom
manufacturing of private label (customer branded) products for OEMs and other
computer manufacturers in the United States and Canada; and (iii) the
distribution of a broad range of complementary computer peripheral, network,
telecommunications and multi-media products. The following chart breaks down the
relative revenue contribution for each of these businesses over the last three
years:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(in thousands of Canadian dollars except percentage amounts)
<S> <C> <C> <C> <C> <C> <C>
Custom Manufacturing:
Private label (OEM & Comp. Mfrs.) $ 40,531 21.7% $ 35,663 23.1% $ 19,750 20.3%
Sidus brand (End User) 73,662 39.6 69,738 45.1 51,530 53.1
-------- ----- --------- ----- --------- -----
Total Manufacturing 114,193 61.3 105,401 68.2 71,280 73.4
Distribution: 72,206 38.7 49,246 31.8 25,854 26.6
-------- ----- --------- ----- --------- -----
Total Sales $186,399 100.0% $ 154,647 100.0% $ 97,134 100.0%
======== ===== ========= ===== ========= =====
</TABLE>
The Company's sales have grown in Canada, the United States and in
various international markets. Revenue from the United States has increased from
zero in 1991 to approximately $8 million, or 10.1% of total sales in 1992;
approximately $15 million, or 15.4% of total sales in 1993; approximately $14.2
million, or 9.1% of total sales in 1994; and approximately $14 million or 7.5%
of total sales in 1995, virtually all of which came from private label sales.
Revenue from international markets increased from zero in 1991 to $6 million in
1992; approximately $3 million in 1993; approximately $5 million, or 3.2% of
total sales, in 1994; and approximately $9 million or 4.8% of total sales in
1995, all of which came from sales of Sidus branded products to end-users.
Custom Manufacturing Business
Products, Systems Integration Services, and Internet Services
-------------------------------------------------------------
Sidus manufactures a complete range of IBM-compatible PCs and Sun
SPARC-compatible workstations. Products are custom manufactured for sale to
OEMs, other computer manufacturers, Value-added resellers ("VARs") and computer
dealers under private labels or under the "Sidus Formula" and/or "Sidus SPARC"
brand names. The Company does not maintain an inventory of unsold computers.
Sidus' PC product range currently includes a family of personal
computers, notebook computers and file servers built upon Intel's 80486 and
Pentium families of microprocessors. A full range of memory and data storage
options allows Sidus to design PCs to meet its customers' requirements.
Computers are typically shipped with the most current operating system already
installed and are fully compatible with most software designed to run on PCs.
Sidus' SPARC workstation product range includes a family of
workstations, file servers and data security vaults built upon SPARC
microprocessor technology. A full range of memory and data storage options
allows Sidus to design the SPARC workstation to meet its customers'
requirements. Computers are shipped with the most current operating systems
already installed and are fully compatible with all software designed to run on
SPARC workstations. Sidus is one of only a small number of major manufacturers
of Sun/UNIX compatible workstations worldwide.
Sidus manufactures products for DOS/Windows, Windows NT, Windows95,
UNIX, Novell and Banyan operating systems. Sidus believes its ability to
manufacture products for a broad range of operating systems significantly
reduces the business risk to the Company of a given operating system environment
losing favor with customers.
The Company offers customers significant design flexibility to meet the
requirements of specific customers. A significant portion of Sidus' manufactured
products are shipped with installed software applications and networking
capability.
The Company's systems integration efforts are focused on providing
"turn-key" computer systems in
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<PAGE>
conjunction with networking and communication hardware and software installed in
the factory. Most systems integration is based on PCs and workstations
manufactured by Sidus, although Sidus is authorized to provide systems
integration solutions that include AT&T, NEC, Hewlett Packard Company ("Hewlett
Packard"), Compaq Computer Corporation ("Compaq") and Gateway 2000 computer
hardware. Sidus provides a PC system linked to other PCs by a local area network
("LAN") and/or wide area network ("WAN"). The LAN or WAN may or may not be
connected with a mainframe computer. Sidus can also install the necessary
communications hardware and software if the mainframe computer is in a different
location.
Sidus generally assembles and tests computer networks at its facilities
prior to shipping. This allows Sidus to resolve any network problems prior to
on-site assembly of the network, thus reducing installation time at customer
locations. As a part of its systems integration service, Sidus assists in the
final installation to ensure proper systems integration and trains the client's
personnel in the use of the networking and communication software.
Private Label Customers (OEMs/Computer Manufacturers)
-----------------------------------------------------
Sidus sells private label manufactured products in Canada and the
United States. Private label products have the customer's name and logo
prominently displayed on the product, all packaging and, typically, on all
manuals and other documentation. Total private label sales grew more than 100%
in 1992, 70% in 1993, 80% in 1994 and by approximately 14% in 1995. Private
label sales grew from 14.6% of total revenues in 1992 to 21.7 % of Sidus' total
revenue in 1995.
Typically, OEMs purchase PCs or workstations from Sidus as an integral
component of their finished product, systems solution or service. OEMs have
increasingly been outsourcing the production of PCs and workstations in order to
deal with the rapid pace of change in computer technology, new product
proliferation, greatly shortened product life cycles, intense cost pressures,
restricted capital availability and heightened user reliability and quality
expectations. Sidus offers direct shipment of products to the OEM's end-user
customer. This service saves the OEM the cost of handling the product and
reduces incidence of damage during transportation. Sidus believes that it is one
of only a few computer manufacturers who offer this service.
Currently, Sidus supplies custom manufactured computers used in a
variety of applications including reservation systems, point of sale terminals,
control systems and transportation systems to over 20 OEM accounts. These OEM
customers are principally large multinational corporations. The Company has
identified a large number of additional potential OEM customers, principally in
the United States market, and believes these OEMs represent a significant
opportunity to expand the business.
In addition, Sidus produces a line of PCs under private label for a
number of major computer manufacturers and a large number of computer dealers.
Sidus has entered into a product distribution alliance with EDS Corp. ("EDS").
Brand name computer companies often sub-contract with other firms to perform
private label manufacturing in order to produce product lines more cost
effectively, to meet short term demand that cannot be met internally, or to
increase the Canadian content of the product when bidding for Canadian
government contracts.
Sidus Brand (End User) - Internet Services and System Integration
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A typical corporate end user order involves between 20 to 50 PCs with a
purchase price between $75,000 and $100,000 and typically includes the provision
of systems integration services such as installation, networking and,
increasingly, internet services.
In 1995, approximately 61% of the Company's sales of Sidus branded
products (approximately $45 million) were made to various departments of the
Canadian federal government. Canadian federal government sales were made to over
10 separate government departments and agencies such as the Bank of Canada, the
Department of Defense, Statistics Canada, Department of Revenue and Department
of External Affairs. Each government department makes its purchase decisions.
Sidus is one of a relatively small number of Circle Canada (formerly Group One)
suppliers of PCs to the Canadian federal government. Sidus believes that it is
among the
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largest suppliers of PCs to the Canadian federal government because of the
superior price and performance of its products and Sidus' ability to provide
technical and service support across Canada. With a view to maintaining its
strong base of sales to Canadian federal government departments, Sidus acquired
a majority equity stake in Galahad Systems Information Inc., an Ottawa-based
systems integrator specializing in electronic archiving and retrieval
technology, for an initial investment of $375,000 in December 1994.
The remainder of the Company's sales of Sidus branded products are made
to large Canadian corporations and institutions. Sidus' corporate end user
customer base consists of a number of Canadian corporations and institutions,
including Computer City, Purolator, The Great-West Life Assurance Company,
Westinghouse, Inc., and Solby International.
Currently, most Sidus brand product sales are made in Canada. However,
Sidus continues to focus on expanding sales in the United States and other
international markets.
Production and Supply
---------------------
Sidus manufactures computers principally at its Toronto area facility.
Sidus has also recently leased facilities in Austin, Texas that will provide a
U.S. based production facility. Additional limited manufacturing capacity is
available at the Company's Ottawa, Montreal and Vancouver locations. The
Company's custom manufacturing process involves the assembly of components based
on customer-specific design requirements using brand name components such as
motherboards, disk drives and monitors manufactured by suppliers such as Intel,
Western Digital Corporation, LSI Logic Corporation, Seagate Technology and
Microsoft. Although Sidus generally uses standard industry components, the
Company utilizes certain Sidus-designed components for its motherboards,
multiprocessor servers and multi-media products. These Sidus-designed components
are manufactured for Sidus by component manufacturers. Sidus assembles the
components, installs the operating system software, loads any networking or
application software, configures and tests the computer system or network and
then packages the product for shipping.
Quality improvement programs are in place at all levels of product
development and production to ensure that the quality of Sidus' product equals
or exceeds that of its major competitors. Sidus works closely with its customers
to ensure the quality of the products delivered meets their individual
requirements. Since 1991, Sidus has achieved Circle Canada (formerly Group One)
status as a supplier to departments and agencies of the Canadian federal
government. In the spring of 1993, Sidus was granted ISO 9002 certification for
its Toronto area plant. This certification is awarded by independent examiners
to corporations which are able to demonstrate the implementation and continued
evolution of a quality system which meets or exceeds the requirements of the ISO
9000 Series of International Quality Standards.
The ready availability of components from Sidus' distribution business
together with its flexible manufacturing capability and central North American
location allow Sidus to offer "just in time" delivery of its custom manufactured
products to North American customers. In addition, Sidus' new Toronto area
manufacturing facilities, underutilized to date, possess the capacity to ensure
production will be able to keep pace with increased demand for the foreseable
future.
Sales and Marketing
-------------------
The Company's sales of custom manufactured products are made by its
team of over 50 commissioned sales people (out of a total sales force of over
60). Manufacturing sales representatives are located at the Company's main
office and manufacturing plant in Toronto and at regional and branch sales
offices in Halifax, Montreal, Ottawa, Winnipeg, Edmonton and Vancouver in Canada
and at Sidus' U.S. head office in Austin, Texas. A significant portion of Sidus'
manufacturing sales force has postsecondary technical education and industry
experience. The Company's commitment to upgrading the skills of its sales force
ensures its sales force remains knowledgeable of evolving computer technologies.
While the Company engages in trade advertising and participates in
national and regional trade shows throughout North America, Sidus focuses on
direct sales. Sidus provides an extensive level of customer support
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including engineering support ranging from software integration to hardware
installation. The Company also sponsors or participates in internal and industry
seminars to keep customers up-to-date on new computer technology and has a
toll-free number to facilitate customer contact. Sidus believes that such
examples of customer service these are important factors in maintaining and
increasing its customer base.
Distribution Business
Sidus distributes a broad range of complementary computer peripheral,
network, telecommunications and multi-media products throughout Canada. The
Company purchases products in large quantities directly from manufacturers to
achieve costs savings and to maintain adequate stock levels. The Company's
customer base for distributed products is comprised of computer manufacturers,
OEMs, VARs and a large number of computer dealers in Canada and the United
States.
Products
--------
Sidus' distribution revenues come primarily from computer peripherals,
including multi-media products. Described below are the major categories of
products currently distributed by the Company and its principal suppliers:
<TABLE>
<CAPTION>
Product Category Suppliers/Brands
- ---------------- ----------------
<S> <C>
CD-ROM/Multimedia: ........................ Toshiba, Sony
Disk Controllers: ......................... Adaptec
Floppy Drives: ............................ Panasonic, Sony, Epson
Hard Drives: .............................. Samsung, Seagate, Western Digital
Keyboards: ................................ Key Tronic, Sejin
Modems: ................................... US Robotics
Monitors: ................................. Philips, Samsung, Sony
Motherboards: ............................. AMI, Micronics, Intel, Mylex
Printers: ................................. Lex Mark
Tape Drives: .............................. Tandberg, IOMEGA
Standby Power Supplies:..................... American Power Conversion
</TABLE>
Sales and Marketing
-------------------
In Canada, Sidus has distribution centers in Toronto, Montreal and
Vancouver. Its current Canadian sales force consists of 14 sales representatives
(out of a total sales force of over 60) responsible for specific OEM and
reseller accounts. Sidus' distribution business in the United States is operated
by its manufacturing sales representatives.
Customers typically call their sales representative to place orders for
same or next day shipment. Sidus' on-line computer system allows the sales
representative to check current inventory levels, pricing and product
characteristics so that orders may be processed immediately. These orders then
trigger a sequence of automatic, same day functions, including a credit limit
and outstanding receivables check of the customer, inventory picking, invoicing
and shipment to the customer. Customers rely upon the Company's frequent
information facsimiles, price lists and other communications as sources of
product information. In addition, through arrangements with Deutsche Financial
Services Canada ("Deutsche"), floor plan financing is available to qualified
computer dealer customers of Sidus. Under such financing arrangements, which are
entered into between Deutsche and Sidus' computer dealer customers, Deutsche
advances credit to Sidus' customers to finance the purchase of computer
peripheral products from Sidus (subject to fixed credit limits) and Sidus
receives payment directly from Deutsche for products shipped under these
arrangements.
No single customer accounted for more than 10% of Sidus' distribution
revenues during fiscal 1993. The top 10 customers accounted for less than 30% of
its distribution revenues for that period.
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<PAGE>
Competition
The business of manufacturing PCs and workstations and distributing
computers is intensely competitive. However, only a small number of companies
compete for the custom manufacturing business. Companies who compete with Sidus
in the private label market niche include Acer Group, SCI Systems, Inc.,
Selectron, AST and Avax. In the end-user and systems integration market, Sidus
competes with larger computer manufacturers such as Dell, IBM, Compaq and
Hewlett Packard in partnership with their VARs and computer dealers. Barriers to
entry to the custom manufacture business include the need to have a high level
of technical expertise, a broad product line, a reputation for quality,
manufacturing flexibility and financial strength.
Competition in the computer distribution business is based on product,
price, delivery and various types of support provided by the distributor to the
dealer. Major competitors include Hamilton/Avnet, EMJ Data Systems Ltd.,
Computer Brokers of Canada Inc., Tech Data, Zentronics, Arrow Electronics, Inc.
and a variety of other small distributors. Unlike many of its competitors, Sidus
offers its clients a high level of application-specific technical knowledge
obtained through its custom manufacturing and systems integration business.
Sidus' management determined that, although alternative sources of
products are available, customers prefer to work with only a limited number of
suppliers who provide leading edge products on a timely and competitive basis.
In the Company's experience, rapid delivery from its three strategically placed
distribution centers (located in Toronto, Montreal and Vancouver), efficient
order processing, and competitive pricing allow the Company to maintain a
competitive position in both the manufacturing and distribution business.
Supplier Relations
Sidus considers numerous factors in selecting suppliers for each
category of product component, including quality of the component, acceptance of
the component by the industry, the ability of Sidus to use the component in its
custom manufacturing business and the distribution and marketing policy adopted
by the supplier. Sidus also attempts to establish relationships with those
suppliers who are committed to maintaining a broad and diversified customer base
by providing fair pricing, supply allocation and timely access to new technology
and products to all their customers.
The Company's distribution arrangements typically provide some form of
price protection and/or stock balancing provisions which protect Sidus from
price changes and/or the acquisition of obsolete inventory. Where practicable,
Sidus attempts to reduce costs by taking advantage of lower OEM pricing on the
purchase of those components required in its custom manufacturing business.
None of the Company's agreements with suppliers require it to sell a
specified quantity of products or restrict it from selling similar products
manufactured by competitors. Consequently, Sidus has the flexibility to
terminate sales of one product line in favor of another product line given
technological change, pricing considerations and customer demand.
To minimize dependence on any one supplier, Sidus employs a multiple
supplier strategy whereby it attempts to enter into distribution contracts with
more than one source of products in each major component category. This allows
Sidus to shift its purchases of product in each category among different
suppliers as the demand for a particular product changes. Historically, no one
supplier has represented more than 10% of the Company's distribution revenues in
any fiscal year.
Research and Development
In 1995, Sidus spent approximately $2.5 million ($2.0 million net of
investment tax credits) or 2.2% of its total custom manufacturing revenues on
research and development ("R&D") eligible for investment tax credit treatment in
Canada and has invested a total of approximately $12.6 million ($9.3 million net
of investment tax credits) in such R&D since the beginning of fiscal 1990. Sidus
also devotes significant additional efforts to the development of new PC and
workstation products in response to client-specific requirements. Sidus intends
to
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<PAGE>
continue to invest in R&D in order to ensure that its products reflect the most
current developments in PC and workstation technology. Sidus generally designs
new products around the introduction of new microprocessors. For example, within
three months of the introduction of the Pentium microprocessor by Intel, Sidus
had developed PCs which utilized the new chip. Over the past several years Sidus
has further expanded its custom manufacturing operations by capitalizing on the
increased "outsourcing" by large, brand-name computer manufacturers and from
increased demand by original equipment manufacturers ("OEMs") to include PCs as
a component of their product or service. To date, Sidus has established
relationships with a wide range of OEMs and multinational computer
manufacturers. The Company intends to continue to adapt to the changing
technical environment in order to offer clients leading edge technology
customized for their specific needs.
During 1995, Sidus focused on a number of research and development
projects relating to its PC and workstation product line. These included
initiatives in the development of a multiprocessor based platform, Redundant
Array of Inexpensive Disks ("RAID") technology and research into wireless LAN
communications technology. Each of these projects is consistent with the
Company's strategy to focus its research and development efforts towards
providing its customers with products including leading edge technology on a
timely basis.
In addition to those R&D activities related directly to the development
of its PC and workstation product line, Sidus has developed a proprietary
product called the interactive voice processor ("IVP"). The IVP enables a
computer to be used for electronic voice mail and allows a spoken message to be
attached to computer files. The user can pause, rewind and fastforward the
message. However, unlike a dictating system, the user has the ability to insert
and delete from within the voice message. Voice messages can be distributed
across computer networks in the same fashion as electronic mail to either a
single addressee or multiple addressees. Received messages can be stored
indefinitely or deleted by the touch of a key.
The IVP product consists of a computer half-card, a microphone, a
speaker and the relevant software. The product can be installed in any PC,
including laptop computers. IVP is available either as a plug-in-card for
existing PCs or Application Specific Integrated Chip ("ASIC") for OEMs and other
manufacturers. The IVP hardware and software are compatible with DOS and Windows
running on a single user or network environment.
In November of 1994, Sidus entered into an agreement to transfer the
IVP technology to IVP Technology Corporation, a company trading in the NASDAQ
over-the-counter market. In exchange for the technology, Sidus received
preferred shares of a wholly-owned subsidiary of IVP Technology Corporation
which are exchangeable into 2,500,000 shares of IVP Technology Corporation.
These shares will represent between 9% and 10% of the issued and outstanding
shares of IVP Technology Corporation. This transaction allowed Sidus to maintain
its interest in the interactive voice processing market, while freeing resources
to focus on the Company's core computer manufacturing business. Sidus has
retained the ability to market the IVP product to its existing customer base.
Employees
Sidus' workforce currently consists of over 200 employees of which
approximately 56 are engaged in custom manufacturing operations and material
management, approximately 60 are engaged in sales, marketing and related support
functions, approximately 54 are engaged in engineering, design and technical
support and approximately 29 are engaged in administrative and head office
functions. A significant portion of Sidus' total workforce is highly trained
with a significant proportion having received post-secondary technical
qualifications.
To date, no Company employees are represented by a union nor has any
union brought an application to represent any of the Company's employees.
However, in early 1995, Sidus was advised that a union was attempting, to
organize certain of its employees who are employed at its head office (other
than in sales and head office functions).
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<PAGE>
ITEM 2 - DESCRIPTION OF PROPERTY
The Company currently operates out of its principal manufacturing and
distribution center in the Toronto area (which also serves as its head Canadian
office), and its regional sales and distribution centers in Canada. Sidus' U.S.
subsidiary operates out of its head office in Austin, Texas. Sidus entered into
a 10 year lease of premises at 66 Leek Crescent, Richmond Hill, Ontario, Canada
in February of 1994 (which comprises approximately 120,000 square feet). Sidus
continues to lease its former premises at 25 Minthorn Court (comprising
approximately 50,000 square feet), which it owns, to a third party. Details of
Sidus' principal manufacturing and distribution facilities are as follows:
<TABLE>
<CAPTION>
Allocated to
------------
Sales and Allocated to Manufacturing,
--------- ---------------------------
Date Total Size Admin. Distribution and Warehouse
---- ---------- ------ --------------------------
Location Established (sq.ft.) (sq.ft.) (sq.ft.) Status
-------- ----------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Toronto May 1994 120,000 45,000 75,000 leased **
Ottawa July 1985 15,000 8,000 7,000 4,000 sq.ft.
owned *
11,000 sq.ft.
leased **
Montreal August 1988 10,700 5,000 5,700 leased **
Vancouver April 1989 10,000 5,000 5,000 leased **
Austin, TX March 1996 44,000 18,000 26,000 leased **
</TABLE>
* This property is currently subject to various mortgages. See Note 7 to
the Consolidated Financial Statements for the fiscal year ended
November 30, 1995.
** The expiration dates of the lease terms for these properties are as
follows: Toronto - March 31, 2004; Ottawa - April 30, 1996; Montreal -
October 31, 1995; Vancouver - September 30, 1996; Austin -September 30,
2003; San Francisco - December 31, 1996.
Sidus also currently leases smaller offices in Edmonton, Winnipeg, and
Halifax, which house its sales and technical support representatives in these
cities. Management believes that its current manufacturing and distribution
facilities will be sufficient to meet the Company's needs for the foreseeable
future. Additional expansion of Sidus' U.S. subsidiary's Austin, Texas
facilities may occur from time to time as warranted by growth in the Company's
customer base in the United States.
ITEM 3 - LEGAL PROCEEDINGS
Sidus is not currently involved in any legal proceedings which will
have a material effect on the business of the Company.
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<PAGE>
ITEM 4 - CONTROL OF REGISTRANT
The following table sets forth certain information as of July 1, 1996
regarding shares of Sidus Common Stock beneficially owned by (i) each person or
a group, known to the Company, who beneficially owns more than 5% of Sidus
Common Stock, (ii) each of the Company's directors, (iii) each of the executive
officers who appear in the Summary Compensation Table and (iv) all officers and
directors as a group:
<TABLE>
<CAPTION>
Common Shares
Year First Beneficially
Name and Elected/Appointed Owned or Percentage
Position Director/Officer Controlled(1) Ownership
--------------------- ----------------- --------------- ----------
<S> <C> <C> <C>
ALOJZ A. MUZAR......................... 1983 1,501,030(2) 18.8%
Chairman
HENRYK KALISKY......................... 1983 1,510,530(3) 19.0%
Chief Executive Officer
BRIAN DIAMOND.......................... 1991 -(4) -
Vice President-Sales
MILAN MUZAR............................ 1993 -(5) -
Executive Vice-President
REG TIESSEN............................ 1996 - -
Chief Financial Officer
JOHN L. ALBRIGHT(7).................... 1993 1,700(6) *
Director
ROBERT GIESE(7)(8)..................... 1995 2,000(7) *
Director
RODERICK F. BARRETT(8)................. 1993 -(6) -
Director
ROBERT W. KIRBY(7)..................... 1993 3,400(6) *
Director
JURI KOOR(8)........................... 1993 -(6) -
Director
ALL OFFICERS AND
DIRECTORS AS A GROUP................... 3,018,660 37.8%
</TABLE>
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Prospectus
upon the exercise of warrants or options. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person)
and which are exercisable within 60 days from the date of this
Prospectus have been exercised. Unless otherwise indicated, the Company
believes that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock
beneficially owned by them.
(2) Includes Common Shares owned by the Muzar Family Trust, 1153652 Ontario
Limited, 1153654 Ontario Limited, 1153655 Ontario Limited, 1153656
Ontario Limited and 1153687 Ontario Limited, the beneficiaries and
shareholders, respectively, of which are members of Mr. Muzar's family.
Does not include options to purchase 50,000 Common Shares exercisable
at $16.50 per share.
(3) Includes Common Shares owned by the Kalisky Family Trust and 1151741
Ontario Inc., the beneficiaries and shareholders, respectively, of
which are members of Mr. Kalisky's family. Does not include options to
purchase 50,000 Common Stock exercisable at $16.50 per share.
(4) Does not include options to purchase 20,000 Common Shares exercisable
at $16.50 per share.
(5) Does not include options to purchase 40,000 Common Shares exercisable
at $16.50 per share and options to purchase 40,000 Common Shares
exercisable at $8.75 per share.
10
<PAGE>
(6) Does not include options to purchase 22,500 shares exercisable at $4.20
per share. Such options have been approved by the Board of Directors
subject to shareholder approval at the next Annual Meeting of
Shareholders.
(7) Member of the Audit Committee.
(8) Member of the Human Resources Committee.
* Less than 1%.
ITEM 5 - MARKET FOR SECURITIES
The Common Stock of Sidus Systems Inc. are listed on The Toronto Stock
Exchange and trade under the symbol "SSM". The table below represents the
quarterly high and low sales prices and aggregate trading volume for the
Company's Common Stock for the last two fiscal years as reported by the Toronto
Stock Exchange.
<TABLE>
<CAPTION>
High Low Volume
---- --- ------
1994
-----------
<S> <C> <C> <C>
First Quarter $19.750 $12.125 350,475
Second Quarter 18.000 15.000 577,625
Third Quarter 17.500 7.875 936,918
Fourth Quarter 10.125 7.125 840,030
1995
-----------
First Quarter 8.625 5.500 1,015,675
Second Quarter 7.500 5.500 924,514
Third Quarter 7.250 3.000 1,741,968
Fourth Quarter 3.400 2.650 1,382,900
1996
-----------
First Quarter 4.750 2.900 769,617
Second Quarter 5.850 3.660 1,985,134
Third Quarter 4.450 3.500 572,930
</TABLE>
To date, there is no trading market for the Common Stock in the United
States. The Company has applied for listing of the Common Stock on the National
Association of Securities Dealers National Market System under the symbol SSMI.
As of May 31, 1996, there were 27 registered owners and approximately
1,333 beneficial owners of the Common Stock of the Company, including one
registered U.S. Holder.
The Company declared no cash dividends in 1993, 1994, or 1995. The
Company does not anticipate paying cash dividends in the foreseeable future as
it intends to retain earnings to finance the growth of the business. The payment
of future cash dividends will depend on such factors as earnings levels,
anticipated capital requirements, the operating and financial condition of the
Company and other factors deemed relevant by the Company.
11
<PAGE>
ITEM 6 - EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Canada has no system of exchange controls. There are no legal,
governmental or exchange restrictions on borrowing from foreign countries nor on
the remittance of dividends, interest, royalties and similar payments,
management fees, loan repayments, settlements of trade debts, or the
repatriation of capital.
The Investment Canada Act (the "ICA") requires notification to
Investment Canada, the responsible federal government department, and in certain
circumstances prior review by the Minister responsible for that department, of
an investment to establish or acquire "control" of a Canadian business by a
non-Canadian. "Control" is obtained, for the purposes of the ICA, by any one or
more non-Canadian persons acquiring, directly or indirectly, all or
substantially all of the assets used in the Canadian business, or, directly or
indirectly, acquiring a majority of the voting shares of a corporation (but not
another entity), unless it can be shown in fact that the purchaser will not
control the corporation, is deemed to be the acquisition of "control".
Investments requiring review by the Minister are all direct
acquisitions of Canadian businesses with total assets of $5,000,000 Canadian, or
more, and indirect acquisitions of Canadian businesses with total assets between
$5,000,000 and $50,000,000 Canadian, which represent more than 50% of the value
of the total international transaction. Indirect acquisition means the
acquisition of the voting rights of an entity controlling the Canadian business.
The Agreement establishing the World Trade Organization creates special
thresholds where the non-Canadian is a "WTO Investor", essentially meaning an
investor ultimate control of which rests in a country which is a member of the
World Trade Organization (including the U.S.). Only a direct acquisition of a
Canadian business which has total assets of $150 million or more in constant
1992 Canadian dollars, will be subject to review. This threshold amount will
change yearly and is $168 million Canadian for 1996. An indirect acquisition
will not be subject to review unless the Canadian business has assets
representing more than 50% of the value of total assets acquired in the
international transaction. In this case, the thresholds applicable to direct
acquisitions by WTO Investors apply. These special thresholds do not apply to
Canadian businesses which are uranium producers, financial services,
transportation services or cultural businesses.
In addition, specific acquisitions or new businesses in designated
types of business activities related to Canada's cultural heritage or national
identity, which would normally only be notifiable, could be reviewed if the
authorities had authorized such review in the public interest.
If an investment is reviewable, an application for review in the form
prescribed by regulation is normally required to be filed with Industry Canada
prior to the investment taking place and the investment may not be consummated
until the review has been completed. There are, however, certain exceptions.
Applications concerning indirect acquisitions may be filed up to 30 days after
the investment is consummated; applications concerning investments chosen for
review in culture-sensitive sectors are required upon receipt of a notice for
review. There is, moreover, provision for the Minister to permit an investment
to be consummated prior to completion of review if he is satisfied that delay
would cause undue hardship to the acquiror or jeopardize the operation of the
Canadian business that is being acquired.
Industry Canada will submit the application to the Minister, together
with any other information or written undertakings given by the acquiror and any
representation submitted to Industry Canada by a province that is likely to be
significantly affected by the investment. The Minister will then determine
whether the investment is likely to be of net benefit to Canada, taking into
account the information provided and having regard for certain factors of
assessment where they are relevant. Some of the factors to be considered are the
effect of the investment on the level and nature of economic activity in Canada,
including the effect on employment, resource processing on the utilization of
parts, components and services produced in Canada and exports from Canada.
Additional factors of assessment include (i) the degree and significance of
participation by Canadians in the Canadian business and in any industry in
Canada of which it forms a part; (ii) the effect of the investment on
productivity, industrial efficiency, technological development, product
innovations and product variety in Canada; (iii) the effect of the investment on
competition within any industry or industries in Canada; (iv) the compatibility
of the investment with national industrial, economic and cultural policies
taking into consideration industrial, economic and cultural policy objectives
12
<PAGE>
enunciated by the government or legislature of any province likely to be
significantly affected by the investment; and (v) the contribution of the
investment to Canada's ability to compete in world markets.
To ensure prompt review and decision, the Act set certain time limits
for Industry Canada and the Minister. Within 45 days after a completed
application for review has been received by Industry Canada, the Minister must
notify the acquiror that (a) he is satisfied that the investment is likely to be
of net benefit to Canada, or (b) he is unable to complete his review, in which
case he shall have 30 additional days to complete his review (unless the
acquiror agrees to a longer period), or (c) he is not satisfied that the
investment is likely to be of net benefit to Canada.
If 45 days have elapsed form completion date without such a notice, or
30 additional days (or the number of further days agreed upon) have elapsed
after notice that the Minister is unable to complete his review and no decision
has been taken, then the Minister is deemed to be satisfied that the investment
is likely to be of net benefit to Canada.
Where the Minister has advised the acquiror that he is not satisfied
that the investment is likely to be of net benefit to Canada, the acquiror has
the right to make representation and submit undertakings within 30 days of the
date of the notice (or any further period that is agreed upon between the
acquiror and the Minister). On the expiration of the 30 day period (or the
agreed extension), the Minister must immediately notify the acquiror (a) that he
is now satisfied that the investment is likely to be of net benefit to Canada or
(b) confirming that he is not satisfied that he investment is likely to be of
net benefit to Canada. In the later case, the acquiror may not proceed with the
investment or, if the investment has already been consummated, must relinquish
control of the Canadian business.
If the investment is merely notifiable and not subject to review,
Investment Canada is required on receipt of a fully completed notice in the
prescribed form to certify the date on which a complete notice was received.
Unless Investment Canada advises within 21 days after that date that the
transaction is reviewable, it will be deemed not to be and so further action
will be taken.
The Act authorizes the Minister to give written opinions, binding the
Minister, on the application of the Act or regulations to the persons seeking
the opinion and the Minister may delegate the authority to give opinions to the
Agency or a designated official. The Act also authorizes the Minister to issue
guidelines and interpretations with respect to the application and
administration of any provisions of the Act or the regulations.
The Act provides for civil penalties for non-compliance with any
provision except breach of confidentiality or provision of false information,
for which there are criminal penalties.
ITEM 7 - TAXATION
The following is a general summary of the principal Canadian federal
income tax considerations relating to the ownership of common shares ("Common
Shares") in the capital stock of the Company by a person who (a) is a
non-resident of Canada for the purposes of the Income Tax Act (Canada) (the
"Canadian Tax Act"), (b) is a resident of the United States for the purposes of
the Canada-United States Income Tax Convention, 1980 (the "Tax Convention"), (c)
deals at arm's length with the Company within the meaning of the Canadian Tax
Act, (d) holds such Common Shares as capital property, and (e) does not use or
hold and is not deemed to use or hold such Common Shares in, or in the course
of, carrying on a business in Canada (a "U.S. Shareholder").
This summary is based upon the current provisions of the Canadian Tax
Act and the regulations thereunder, the current provisions of the Tax
Convention, all specific proposals to amend the Canadian Tax Act that have been
publicly announced by or on behalf of the Minister of Finance (Canada) prior to
the date hereof, and the current published administrative practices of Revenue
Canada. This summary does not take into account provincial, territorial or
foreign (i.e., non-Canadian) tax legislation or considerations.
This summary is of a general nature only and is not intended to be, nor
should it be construed to be, legal or tax advice to any particular U.S.
Shareholder. No representation with respect to the Canadian federal income tax
13
<PAGE>
consequences to any particular U.S. Shareholder is made herein. Consequently,
U.S. Shareholders are urged to seek independent tax advice with respect to the
tax consequences to them having regard to their particular circumstances.
Dividends paid or credited on the Common Shares to a U.S. Shareholder
who is the beneficial owner of such dividends generally will be subject to
Canadian withholding tax at the rate of 15% of the gross amount of such
dividends. The rate of withholding tax is reduced to 6% (5% after 1996) if the
beneficial owner of the dividends is a company that owns at least 10% of the
voting stock of the Company. Dividends paid or credited on the Common Shares to
a U.S. Shareholder that is a religious, scientific, literary, educational or
charitable organization that is exempt from tax in the United States in respect
of such dividends generally are exempt from such withholding tax. Also,
dividends paid or credited on the Common Shares to a U.S. Shareholder that is a
pension fund, retirement fund or employee benefit plan that is generally exempt
from income taxation in the United States generally are exempt from such
withholding tax provided such dividends do not constitute income of the U.S.
Shareholder from carrying on a trade or business.
A U.S. Shareholder who disposes of Common Shares generally will not be
subject to Canadian tax in respect of any gain realized on such disposition
unless at the time of the disposition such Common Shares (a) constitute "taxable
Canadian property" to the U.S. Shareholder and (b) may reasonably be considered
to derive their value principally from real property situated in Canada. Common
Shares generally will not constitute "taxable Canadian property" to a U.S.
Shareholder unless (a) at any time during the period of five years immediately
preceding the disposition such U.S. Shareholder, persons with whom such U.S.
Shareholder did not deal at arm's length within the meaning of the Canadian Tax
Act, or such U.S. Shareholder together with such persons owned, or had an
interest in or option to acquire, 25% or more of the issued shares of any class
or series of the capital stock of the Company, (b) such U.S. Shareholder owned
shares in the capital stock of a predecessor corporation to the Company which
were taxable Canadian property to such U.S. Shareholder and upon the conversion
of which or in exchange for which such U.S. Shareholder's Common Shares were
issued, or (c) such U.S. Shareholder was previously a resident of Canada and
elected on ceasing to be a resident of Canada such that such U.S. Shareholder's
Common Shares are deemed to be taxable Canadian property. Special rules may
apply to a U.S. Shareholder that is an insurer that carries on business in
Canada and elsewhere. These rules are not discussed herein, and such persons
should consult their own tax advisers.
14
<PAGE>
ITEM 8 - SELECTED CONSOLIDATED FINANCIAL INFORMATION
(a) Five Year Data
The selected financial data of the Company for the fiscal years ended
November 30, 1995, November 30, 1994 and November 30, 1993 are derived from the
financial statements of the Company which have been audited by Cooper Molyneux &
Makuz, independent Chartered Accountants as indicated in their report which is
included elsewhere in this Registration Statement.
The selected financial data should be read in conjunction with the
financial statements, related notes and other financial information included
elsewhere in the Registration Statement.
The following table is derived from the financial statements of the
Company, which have been prepared in accordance with Canadian Generally Accepted
Accounting Principles (GAAP), the application of which, in the case of the
Company, conforms in all material respects for the periods presented with United
States GAAP, except as described in Note 15 to the financial statements. On
October 10, 1996, the noon buying rate in the City of New York for cable
transfers as certified for customs purposes by the Federal Bank of New York was
US$1 = Cdn$1.35.
(In thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
For 9 months
ended
For the years ended November 30, August 31,
--------------------------------------------------------------------------- ------------
1995 1994(1) 1993(1) 1992(1)(2) 1991(1)(2) 1996
-------- --------- --------- ---------- ---------- -------
(restated) (restated) (restated) (restated)
<S> <C> <C> <C> <C> <C> <C>
Sales $186,399 $154,647 $97,134 $79,020 $44,612 $162,737
Net earnings 214 1,742 1,616 1,189 (450) 2,350
Total Assets 75,133 80,037 43,005 25,915 18,249 73,643
Total Long-term Debt 1,622 2,168 3,290 4,439 7,477 1,552
Earnings per share - basic $ 0.03 $ 0.23 $ 0.47 $ 0.06 $ (0.13) $ 0.30
======== ======== ======= ======= ======= =======
- diluted $ 0.03 $ 0.22 $ 0.45 $ 0.06 $ (0.13) $ 0.30
======== ======== ======= ======= =======
Cash Dividends per
Common Share -- -- -- -- -- --
</TABLE>
(1) Amounts for these years have been restated. See Note 2 to the
Consolidated Financial Statements for the fiscal year ended November
30, 1995 contained elsewhere in this registration statement.
(2) On November 26, 1993, Sidus Holdings Inc. was amalgamated with its 100%
owned subsidiary, Sidus Systems Inc., and its two inactive parent
companies, Riverplex Holdings Inc. and Reshet Holdings Limited and
continued operations under the name Sidus Systems Inc. The amalgamation
has been accounted for using the continuity of interests method whereby
(in both the current year's and comparative years' presentations) the
assets, liabilities and results of operations of Riverplex Holdings
Inc. and Reshet Holdings Limited have been included with the
consolidated accounts of Sidus Systems Inc. (formerly Sidus Holdings
Inc.).
15
<PAGE>
(b) Exchange Rate Data
On October 10, 1996, the noon buying rate in the City of New York for
cable transfers as certified for customs purposes by the Federal Bank of New
York was US$1 = Cdn$1.35.
The table below represents the history of exchange rates for the five
most recent years, and any subsequent interim period for which financial
statements are presented setting forth the rates for period end, the average
rates, and the range of high and low rates for each year.
Canadian Dollars into U.S. Dollars
----------------------------------------------
Year End Average High Low
---- --- ------- ---- ---
1991 $1.1500 $1.1500 $1.1600 $1.1200
1992 $1.2710 $1.1023 $1.2747 $1.1728
1993 $1.3217 $1.2914 $1.3440 $1.2460
1994 $1.4018 $1.3650 $1.4064 $1.3110
1995 $1.3640 $1.3724 $1.4241 $1.3730
1996* $1.3690 $1.3674 $1.3850 $1.3550
* As of June 30, 1996
16
<PAGE>
ITEM 9 - MANAGEMENT DISCUSSION AND ANALYSIS
This analysis is supplemental to the consolidated financial statements
and notes to the financial statements included in this registration statement,
and is intended to provide investors with additional information concerning
Sidus' recent performance, its current financial position and its future
prospects. The following discussion should be read in conjunction with, and is
qualified entirely by, the consolidated financial statements and notes to the
financial statements. Sidus prepares its financial statements in accordance with
Canadian GAAP and in Canadian dollars. Canadian GAAP conforms in all material
respects to U.S. GAAP, except as dislosed in Note 15 to the financial statements
included in this registration statement. All tabular amounts are in thousands of
Canadian dollars, except as indicated.
Nine months ended August 31, 1996.
For the first nine months of fiscal 1996, Sidus reported a 21% increase
in sales, to $162.7 million, compared with sales of $134.0 million in the same
period last year.
During the period, the Company also recorded net earnings of $2.4
million compared with net loss of $400,000 in the first nine months of fiscal
1995. Basic earnings per common share for the period were $0.30 based on a
weighted average number of shares outstanding of 8.0 million, compared with
basic loss per common share of $0.05 based on 8.3 million shares outstanding in
the first nine months of 1995.
Gross profit for the nine month period increased to $21.3 million
compared with gross profit of $15.6 million in the first nine months of fiscal
1995. Gross margins increased to 13.1% compared with 11.6 in the first nine
months of fiscal 1995. The higher gross margins are primarily the result of the
increase in the private label sales in the United States.
For the three-month period ended August 31, 1996, sales increased by
35% to $44.4 million from $32.8 million in the corresponding period of the
previous year.
Net earnings for the three-month period, increased to $214,000, or
basic earnings per common share of $0.03, compared with a loss of $2.2 million,
or basic loss per common share of $0.26 in the corresponding period of the
previous year.
Operation expenses for the three-month period were $6.1 million. The
rise from $5.4 million reported during the third quarter of fiscal 1995 was due
to increased outlays as the Company expands U.S. operations.
Year ended November 30, 1995 compared to year ended November 30, 1994.
The Company reported sales of $186.4 million for the year ended
November 30, 1995, an increase of 20.5% over fiscal 1994 sales of $154.6
million. Net income for fiscal 1995 was $214,000 compared with $1.7 million
(restated) in fiscal 1994. The decline in income in fiscal 1995 is mainly
attributable to a $1.5 million inventory writedown in August of 1995. In
addition, operating results from its wholly-owned U.S. subsidiary, Sidus
Computer Corporation, were substantially lower than anticipated.
During fiscal 1995, the Company adopted a policy of expensing all of
its development expenditures in the period incurred. It restated its financial
statements to reflect this change in accounting policy. The policy of expensing
all of its development expenditures represents a more conservative accounting
approach for the Company's continuing investment in this area. The accounting
policy is consistent with generally accepted accounting principles in the United
States, where the Company plans its major expansion.
Sidus announced during the fourth quarter of fiscal 1995 that The
Toronto Stock Exchange had accepted a Notice of Intention from the Company to
make a Normal Course Issuer Bid for up to 500,000 of its Common Shares,
representing approximately 6% of the outstanding Common Shares of the Company
and approximately 9.5% of the public float. The Company's Board of Directors
concluded that, at the current trading prices, the purchase for cancellation of
a certain number of its outstanding Common Shares represents an appropriate use
of funds not
17
<PAGE>
required for the immediate use in the operation of its business. In fiscal 1995,
the Company repurchased 320,000 of its Common Shares for cancellation at a cost
of $995,500 an average purchase price of $3.11 per share. Subsequent to year
end, the Company repurchased a further 15,000 of its Common Shares for
cancellation at a cost of $42,905, an average purchase price of $2.86 per share.
<TABLE>
<CAPTION>
Comparison of operating results for the years ended
November 30, 1995 and November 30, 1994
-----------------------------------------------------------------------
1995 % 1994 %
-------- --------
(restated)
<S> <C> <C> <C>
Sales $186,399 $154,647
Cost of sales 164,592 88.3 131,759 85.2
-------- ---- -------- ----
Gross Profit 21,807 11.7 22,888 14.8
------ ---- ------ ----
Selling, general and administrative
expenses 21,184 11.4 20,154 13.0
Depreciation and amortization 514 .3 457 .3
--- -- --- --
21,698 11.7 20,611 13.3
-------- ---- -------- ----
Operating income 109 - 2,277 1.5
Interest (expense) income (85) - 71 -
Minority interest (22) - - -
-------- ---- -------- ----
Earnings before income taxes 2 - 2,348 1.5
Income taxes (212) (0.1) 606 .4
-------- ---- -------- ----
Net earnings for the year $ 214 0.1 $ 1,742 1.1
======== ==== ======== ====
Earnings per share - basic $ 0.03 $ 0.23
======== ========
- fully diluted $ 0.03 $ 0.22
======== ========
</TABLE>
Sales
The sales by business segment for fiscal 1995 are detailed below in comparison
to fiscal 1994 sales levels.
<TABLE>
<CAPTION>
1995 1994 % increase
-------- -------- ----------
<S> <C> <C> <C>
Internet Services & Systems Integration $ 73,662 $ 69,738 5.6%
Private Label 40,531 35,663 13.7
Distribution 72,206 49,246 46.6
--------- --------- ----
$ 186,399 $ 154,647 20.5%
========= ========= ====
</TABLE>
For the fiscal year ended November 30, 1995, the Company reported sales
of $186.4 million, a 20.5% increase over fiscal 1994 sales of $154.6 million.
Sales continued to grow in each of the Company's three business segments. The
distribution segment grew the fastest, with fiscal 1995 sales reaching $72.2
million compared with $49.2 million in fiscal 1994. Sales in Canada accounted
for the total increase during fiscal 1995 compared with fiscal 1994, as sales in
the United States totalled $14 million, similar to fiscal 1994 sales levels.
In fiscal 1995, sales to various departments of the Canadian Federal
government totalled $45 million which accounted from 24% of total sales,
compared with $43 million in fiscal 1994 or 28% of the company's total sales.
18
<PAGE>
No other customer accounted for more than 10% of the Company's sales.
Gross Profit
The gross profits by business segment and the gross margin percentage
for fiscal 1995 are detailed below, in comparison to fiscal 1994.
<TABLE>
<CAPTION>
Gross Gross
1995 Margin % 1994 Margin %
---- -------- ---- --------
<S> <C> <C> <C> <C>
Internet Services & Systems $ 11,879 16.1% $ 12,691 18.2%
Integration
Private Label 6,201 15.3 6,382 17.9
Distribution 5,221 7.2 3,815 7.7
Inventory writedown (1,494) -- -- --
-------- ------ -------- ------
Total $ 21,807 11.7% $ 22,888 14.8%
======== ====== ======== ======
</TABLE>
The Company's gross profit decreased to $21.8 million in fiscal 1995
from $22.9 million in fiscal 1994. The decrease reflects primarily a $1.5
million writedown of inventory resulting from indefinite delays in certain
government contracts and a general decline in gross margins throughout the
computer hardware industry.
Excluding the inventory writedown, the gross margin percentage for
fiscal 1995 was 12.5% compared with 14.8% for fiscal 1994. The lower gross
margin percentage for fiscal 1995 reflects that the majority of the Company's
growth came from the lower margin distribution business. While the gross margin
percentage declined during the first three quarters, the Company realized an
increase in the gross margin percentage during the fourth quarter.
Expenses
Selling, general and administrative expenses ("S, G&A") increased to
$21.2 million in fiscal 1995, an increase of $1.1 million over selling, general
and administrative expenses incurred during fiscal 1994. As a percentage of
sales, S, G&A expenses were 11.4% of fiscal 1995 sales in comparison with 13.0%
of fiscal 1994 sales.
Overhead expenses were generally maintained throughout fiscal 1995 at
the same levels as those incurred in fiscal 1994. Any increases were due to
variable wages and expenses associated with the higher sales levels achieved
during fiscal 1995.
Included in the selling, general and administrative expenses were
expenditures of $2.0 million for research and development in fiscal 1995
compared with $2.4 million in fiscal 1994.
The primary factor in the low effective tax rate for fiscal 1995 and
fiscal 1994 is the share issue costs, associated with the Company's initial
public offering in 1994 and subsequent offering in 1995, which are deductible
for Canadian tax purposes over a five-year period.
Liquidity and Capital Resources
At year end, the Company had cash on hand of $9.5 million and a $50
million credit facility with a Canadian chartered bank to provide the Company
with sufficient liquidity to fund the anticipated sales growth in the next year.
As in past years the Company utilized its banking facilities the most
during the second quarter due to the large volume of sales made to various
departments of the Canadian Federal government.
19
<PAGE>
Working capital decreased to $46.1 million in fiscal 1995 from $47.9
million in fiscal 1994. With the Company producing a small profit and the
operations utilizing approximately the same amount of cash as in fiscal 1994,
the repurchase of the 320,000 Common Shares for cancellation at a cost of
approximately $1 million represents one of the largest single uses of working
capital during fiscal 1995.
On December 1, 1994 the Company acquired a 60% interest in Galahad
Information Systems Inc. for nominal consideration of $1 and agreed to make
available to Galahad Information Systems Inc. a non-interested bearing loan in
the amount of $375,000. Subsequent to year end, on December 1, 1995, the Company
repaid a mortgage with an outstanding balance of $395,000.
Management of Operating Risks
As the Company's results are reported in Canadian dollars, the majority
of sales are generated in Canadian dollars and the purchases of material and
components made in U.S. dollars, fluctuations in the value of the U.S. dollar
relative to the Canadian dollar can adversely affect the Company's results from
operations. The Company has taken action to reduce its foreign exchange risk by
adopting a conservative policy using a combination of foreign exchange contracts
and foreign currency option contracts. The Company has also continued to promote
the policy of attempting, where possible, to sell in U.S. dollars to Canadian
customers.
Historically, a significant portion of the Company's sales have been to
various departments of the Canadian Federal Government. During the year sales to
the Canadian Federal government increased by $2 million, however these sales
represented only 24% of the Company's revenues in fiscal 1995, compared with 28%
in fiscal 1994. The Company anticipates expansion in the United States during
fiscal 1996 which is expected to further reduce the Company's dependence on the
Canadian Federal government as a major customer and to some extent, provide a
natural hedge against the Company's foreign exchange risk.
Outlook
During the year, the Company re-organized its reporting structure,
moving from a branch operations system to a system of three national sales
managers directly responsible and accountable for the profitability of their
individual business segments across Canada. This structure will promote a
greater emphasis on increasing sales and gross profits while helping to control
administrative costs.
At the same time, the Company eliminated its branch office structure in
the United States and completed the relocation and consolidation of its U.S.
operations at its main office in Austin, Texas.
20
<PAGE>
Year ended November 30, 1994 compared to year ended November 30, 1993.
Comparison of Operating Result for the Years Ended November 30, 1994 and
November 30, 1993 (In thousands of Canadian dollars, except share and per share
amounts)
<TABLE>
<CAPTION>
1994 1993 Variance
-------- -------- --------
(Restated) (Restated)
<S> <C> <C> <C>
Sales .................................... $154,647 $ 97,134 $ 57,513
Cost of sales ............................ 131,759 82,446 49,313
-------- -------- --------
Gross profit ............................. 22,888 14,688 8,200
-------- -------- --------
Selling, general and
administrative expenses ................ 20,154 10,531 9,623
Depreciation and amortization ............ 457 373 84
-------- -------- --------
20,611 10,904 9,707
-------- -------- --------
Operating income ......................... 2,277 3,784 (1,507)
Interest income (expense)................. 71 (1,436) 1,507
-------- -------- --------
Earnings before income taxes ............. 2,348 2,348 0
Income taxes ............................. 606 732 126
-------- -------- --------
Net earnings for the year ................ $ 1,742 $ 1,616 $ 126
======== ======== ========
(Basic)
Net earnings per share ................... $ 0.23 $ 0.47 $ 0.24
(Diluted) ======== ======== ========
0.22 0.45 0.23
======== ======== ========
Weighted average number of
common shares outstanding (in thousands) 7,608 3,408 4,200
======== ======== ========
</TABLE>
Sales and Gross Margins
For the year ended November 30, 1994, the Company reported sales of
$154.6 million, a 59% increase over fiscal 1993 sales of $97.1 million. Gross
profit margin was 14.8% for fiscal 1994, lower than the 15.1% reported in fiscal
1993. The lower gross profit percentage was primarily attributable to the sales
mix in 1994 compared with 1993. Lower material costs associated with increased
quantities purchased and early payment discounts helped offset the effect of a
weaker Canadian dollar on the cost of material sourced in the United States.
Expenses
Selling, general and administrative expenses were 13.0% of sales in
fiscal 1994, compared with 10.8% in fiscal 1993. The non-recurring expenses of
moving facilities and accounts receivable write-offs totaled $1.1 million,
representing 5.5% of total expenses for fiscal 1994 and 0.7% of fiscal 1994
sales. Variable expenses relating to the increased sales represented
approximately $4 million, or 42%, of the increase in expenses over fiscal 1993.
Higher expenses relating to the cost of the new facilities, the increases in
staff and the expenses in increasing the operations in the United States totaled
$3.4 million. These expenses were undertaken to provide the Company with the
ability to meet the demands of its projected sales growth in fiscal 1995 and
1996.
In fiscal 1994, the Company earned investment income of $642,000, which
offset interest expenses of $571,000 incurred from short-term borrowings and
long-term debt on its land and buildings. In fiscal 1993, the Company did not
have excess cash and, in addition to long-term interest costs, incurred interest
costs in utilizing its credit facilities to fund working capital requirements.
The primary factor in the low effective tax rate for 1994 is the share
issue costs, which are deductible for
21
<PAGE>
tax purposes over a five-year period.
Net Earnings
Net earnings for the year increased by 8.0% over net earnings in fiscal
1993. Basic earnings per share 1994 were $0.23 based on a weighted average
number of common shares outstanding of 7.6 million compared with $0.47 based on
a weighted average number of common shares outstanding of 3.4 million in fiscal
1993. Operating income in 1994 was lower than 1993, as the increased gross
margin from the higher sales was offset by increased operating expenses. As a
result of the funds raised through the two public offerings, interest expenses
decreased by $1.5 million in fiscal 1994, offsetting the reduced operating
income.
Liquidity and Capital Resources
The Company's financial position strengthened during the year, due to
the continued profitable operations and the raising of $24 million in gross
proceeds from the issue of 1.5 million special warrants, priced at $16 each,
effective March 8, 1994.
Working capital at November 30, 1994 increased $24.6 million, to $47.9
million. Increased cash used from operations was primarily due to a significant
increase in inventory levels. The inventory levels were higher than anticipated
due to the deferral of $5 million in orders from the fourth quarter of 1994 to
fiscal 1995. Capital acquisitions totaled $1.2 million, which consisted of
$700,000 in leasehold improvements, with an offsetting capitalized lease
inducement of $350,000 taken into income over the 10 year term of the lease, and
the acquisition of $500,000 of office, computer and production equipment.
In November 1994, the Company obtained a minority interest in IVP
Technology Corporation, which is publicly traded on NASDAQ. In exchange for the
minority interest, the Company transferred the rights to its IVP technology
worldwide, with the exception of Canada.
During the year the Company repaid two mortgages totaling $970,000
which matured, and made payments of $225,000, including interest in accordance
with the terms of other long-term debt obligations.
Subsequent to year end, the Company negotiated new credit facilities
with a Schedule A chartered bank providing an authorized limit of $50 million.
Borrowings under the operating line bear interest at a floating rate equal to
the bank's prime rate. With the continued profitable operating results, the
additional equity raised, and the new banking arrangements, Sidus has the
financial strength to undertake the continued sales growth it foresees in the
upcoming year.
Management of Operating Risks
The Company's results are affected by its ability to manage the risks
inherent in an industry characterized by rapidly changing technology and strong
international competition. Foreign exchange rates continue to impact Sidus'
results. The value of the U.S. dollar relative to the Canadian dollar could
adversely affect the Company's result form operations, as revenues are
predominantly in Canadian dollars, while component costs are predominantly in
U.S. dollars.
Over the past year, the Company attempted to minimize the risks
associated with currency fluctuations by negotiating to sell to a number of
Canadian customers in U.S. dollars, increasing sales in the United States and
employing hedging strategies. A significant portion of Sidus' revenue has
historically been derived from sales to various departments of the Canadian
federal government. In an effort to diversify its sales base and reduce its
dependence of federal government sales, Sidus has aggressively expanded into the
United States, and signed agreements with major corporations to increase OEM
sales.
22
<PAGE>
Year ended November 30, 1993 compared to year ended November 30, 1992.
Results of Operations
The table below sets forth certain financial data for each of fiscal
1993 and fiscal 1992.
<TABLE>
<CAPTION>
(In thousands of Canadian dollars, except per share amounts) 1993 1992
<S> <C> <C>
Sales ......................................................
Custom Manufacturing ..................................... $ 71,280 $ 55,920
Distribution ............................................. 25,854 23,100
Total sales ................................................ 97,134 79,020
Gross profit ............................................... 14,688 12,208
Custom Manufacturing margin .............................. 17.9% 18.6%
Distribution margin ...................................... 7.4% 7.7%
Selling, general and
administrative expenses .................................. 10,531 10,293
Operating income ........................................... 3,784 1,587
Net earnings ............................................... 1,616 189
Earnings per share (basic) ................................. 0.47 0.06
Earnings per share (fulling diluted) ....................... 0.45 0.06
</TABLE>
Sales
Total sales increased by 22.9% in 1993 to $97.1 million, compared with
$79.0 million in 1992. Custom manufacturing sales, which includes the sale of
Sidus brand products to end-users and private label sales to OEM's and other
computer manufacturers, increased by 27.5% in 1993 to $71.3 million, and
represented 73.4% of total sales. Custom manufacturing sales gains were largely
as a result of a 71.4% sales increase in private label (OEM) sales increase
private label (OEM) sales, to $19.8 million, representing the Company's fastest
growing business segment. Sidus continued to manage the growth of its lower
margin distribution business through 1993. The distribution business, although
generating lower margins, is strategically important to the Company and acts as
a complementary arm to its higher margin custom manufacturing and systems
integration business.
Gross Profit
The Company's gross profit increased to $14.7 million 1993, compared
with $12.2 million in the prior year. The blended custom manufacturing and
distribution gross margin percentage declined to 15.1% in 1993 from 15.4% in
1992. The decline was primarily as a result of the Company's minimal working
capital position of $0.8 million entering 1993. The Company's 1993 sales growth
was largely financed through extended terms from suppliers and early payment
discounts offered to customers with both factors negatively impacting the gross
margin. In addition, the Company was not in a position to take advantage of
supplier discounts which management estimates would have increased gross profit
margin by upwards of 1.5% in 1993.
Selling, General & Administrative Expenses
Selling, general and administrative expenses in 1993 were $10.5
million. These overhead expenses as a percentage of sales declined substantially
in 1993, to 10.8%, compared with 13.0% in 1992. The decline as a percentage of
sales reflects the return gained through the Company's substantial investment in
technical and sales support infrastructure in 1992, to support planned 1993 and
1994 expansion of custom manufacturing sales. The absolute $0.2 million increase
in dollar terms in selling, general and administrative expenses in 1993, to
$10.5 million, related to the Company opening a sales office in the United
States and increasing technical staff in order to support expected OEM order
increases in 1994.
23
<PAGE>
Interest Expense
Interest expense increased to $1.4 million in 1993 from $1.3 million in
1992 as the Company remained essentially fully drawn on its bank operating line
of credit throughout the period and financed incremental sales growth through
the extension of supplier trade terms.
Net Earnings
Net earnings increased by 75.5% to $1.6 million, from $0.2 million in
1992. The 1993 earnings per share of $0.45 (fully diluted) exceeded the prior
year's level of $0.06, largely on the strength of substantial sales gains
combined with lower overhead expenses as a percentage of sales. Tax advantages
of approximately $0.2 million were achieved by an amalgamation of a holding
company as at November 26, 1993 and utilization of related loss carry-forwards.
Liquidity and Capital Resources
The Company historically has financed its growth and cash requirements
through retention of operating profits and increased bank borrowings. Sales
growth throughout 1993 was constrained and largely financed through extension of
supplier terms, as Sidus was fully drawn under its existing line of credit.
To address the liquidity constraints and in order to provide sufficient
working capital to enable the Company to capitalize on significant custom
manufacturing sales growth opportunities, management undertook a major
recapitalization plan in the second half of 1993.
Sidus completed a subordinated debt placement of $6.0 million in August
of 1993 followed by an initial public offering of common shares at its fiscal
year-end raising net proceeds of approximately $22 million, strengthening its
balance sheet and competitive position. The subordinated debt financing was
fully repaid upon closing of the equity issue.
As at November 30, 1993, working capital increased to $23.3 million
compared with $0.8 million as at the prior year-end date. As a result of the
equity issue, the Company reported a healthy working capital ratio of 2.7:1 and
a low debt to equity ratio of 0.15:1 as at November 30, 1993.
Management increased the authorized limit under its bank line of credit
with a Schedule II Canadian Chartered Bank during the first quarter of 1994, to
$25 million from $14 million. Borrowings under the operating line bear interest
at a floating rate equal to the bank's prime rate (reduced from prime rate plus
0.5% per annum in 1993). The operating line is collateralized by a fixed and
floating charge on the assets of the Company. The operating line requires that
the Company satisfy certain financial covenants and that aggregate borrowings
under the facility not exceed a margin formula of accounts receivable and
inventory.
Management of Operating Risks
The computer industry is characterized by rapid and significant
technological advancements and the introduction of new products and services
which incorporate new technologies. To remain competitive, Sidus has adopted a
targeted research and development approach which focuses on satisfying specific
customer requirements. The Company's investment in people and its interactive
relationship with industry leaders such as Intel and Microsoft to bring new
products to market in a timely manner ensures that its product lines reflect the
latest developments in PC and workstation technology.
Many of Sidus' chief competitors are large, international companies
with substantially greater financial resources. The Company's ability to compete
effectively is largely the result of its highly-targeted custom manufacturing
strategy which focuses on the production of high-end PCs and workstations which
are made to order. It is also a product of the Company's lower operating costs
and grater manufacturing flexibility, recently strengthened by its increased
equity base of over $50 million.
24
<PAGE>
In the past, a large percentage of the Company's revenues have been
denominated in Canadian dollars while a large percentage of its expenses have
been incurred in U.S. dollars. Increases in the value of the U.S. dollar
relative to the Canadian dollar could adversely affect the Company's results of
operations. However, the percentage of the Company's sales derived from sales in
the United States or otherwise denominated in U.S. dollars has been increasing
in recent periods, and there are significant opportunities for market expansion.
In addition, the Company attempts to minimize risks associated with such
currency fluctuations through hedging strategies.
A large percentage of the Company's overall sales revenues currently
are derived from sales to the various departments of the Canadian federal
government. In the last three years, the Company has become its largest supplier
of personal computers. Diversification through increased sales to OEM customers
and other computer manufacturers have reduced this dependency, and the market
potential of this business has only begun to be realized. The Company is also
marketing its Sidus-brand of personal computer products more aggressively to
provincial and municipal government departments, Fortune 1000 companies, and to
a growing base of U.S. and international customers.
<TABLE>
<CAPTION>
November 30 November 30
1993 1992
(Restated) (Restated)
<S> <C> <C>
Cash....................................... $ 5,399 $ 1,908
Short term debt............................ 141 12,572
Working capital............................ 23,344 813
Working capital ratio...................... 2.70:1 1.04:1
Total debt................................. 3,431 17,011
Shareholders equity........................ 25,448 1,981
Total debt to equity ratio................. 0.13:1 8.59:1
</TABLE>
The above chart provides selected financial data
25
<PAGE>
ITEM 10 - DIRECTORS AND OFFICERS
The name, municipality of residence, office with the Company and
principal occupation for the past five years of each of the directors and
officers of the Company are as follows:
Name and Municipality of Residence Position
- ---------------------------------- --------
and Year First Became a Director or Officer
- -------------------------------------------
ALOJZ A. MUZAR....................................... Chairman of the Board
Richmond Hill, Ontario of Directors and
(1983) Director
HENRY KALISKY........................................ Chief Executive Officer
Richmond Hill, Ontario and Director
(1983)
BRIAN DIAMOND........................................ Vice President, Sales
Scarborough, Ontario
(1991)
SHAU BRETON.......................................... Vice President,
New Market, Ontario Operations
(1993)
REG TIESSEN.......................................... Chief Financial Officer
Burlington, Ontario and Secretary
(1996)
MILAN MUZAR.......................................... Executive Vice
Richmond Hill, Ontario President
(1993)
JOHN L. ALBRIGHT(1).................................. Director
Toronto, Ontario
(1993)
ROBERT GIESE(1)...................................... Director
Pittsford, New York
(1993)
ROBERT W. KIRBY(1)................................... Director
Markham, Ontario
(1993)
JURI KOOR(2)......................................... Director
Toronto, Ontario
(1993)
RODERICK F. BARRETT(2)............................... Director
Toronto, Ontario
(1995)
(1) Member of Audit Committee
(2) Member of Human Resources Committee
26
<PAGE>
During the last five years, all of the directors of the Company have
been associated in various executive capacities with the Company or the
companies or organizations indicated opposite their names in the table above or
with affiliates or predecessors thereof, except Mr. Albright, who was a Vice
President of North American Trust Company (formerly First City Trust Company)
prior to July 1994, Mr. Kirby, who was Vice Chairman of Enghouse Systems Limited
until July of 1995, and Mr. Koor who was retained to sell or restructure
Standard Trustco in 1991.
Al Muzar is Chairman and is a co-founder of the Company. Mr. Muzar has
over 25 years of experience in the computer industry in Canada. Prior to
founding Sidus in 1983, Mr. Muzar was employed by Digital Equipment Corporation
where he acquired extensive experience in computer design, sales and marketing.
Mr. Muzar holds a degree in electronics engineering from the University of
Zagreb.
Henry Kalisky is Chief Executive Officer and is a co-founder of the
Company. Mr. Kalisky has over 20 years of experience in the computer industry.
Prior to founding Sidus in 1983, Mr. Kalisky was employed by Computer Sciences
Corp., Digital Equipment Corporation and Wang Canada Ltd. in sales and
management positions. Mr. Kalisky holds a Bachelor of Science degree in Computer
Sciences from McMaster University.
Brian Diamond of Scarborough, Ontario is Vice-President-Sales. Mr.
Diamond joined Sidus in 1990 and has served as Director of Sales since 1991. Mr.
Diamond has over 25 years of sales experience in Canada, the United Kingdom and
Australia. Prior to joining Sidus, Mr. Diamond was employed as a National
Accounts Branch Manager of Wang Canada, a Regional Sales Manager of SHL
Systemhouse Ltd. and as a Director of Sales and a National Sales Manager by
Pansophic Systems Inc.
Shau Breton of Newmarket, Ontario is Vice-President-Operations and has
been with Sidus since 1985, starting as an accounting supervisor and progressing
through various positions to reach her current position. Ms. Breton received a
Bachelor of Commerce degree from the University of Toronto in 1983.
Reg Tiessen of Burlington, Ontario is Chief Financial Officer and
Secretary. Mr. Tiessen joined Sidus in September 1996. Mr. Tiessen served as
Director of Finance of Tee-Comm Electronics, Inc. from 1991-1996. Mr. Tiessen is
a Chartered Accountant.
Milan Muzar of Richmond Hill, Ontario is Executive Vice President.
Prior to becoming Executive Vice President, Mr. Muzar served as manager of
government sales in Sidus' Ottawa branch. Milan Muzar is the brother of Al
Muzar.
John L. Albright of Toronto, Ontario has served as a director of Sidus
since 1993. He currently serves as Executive Vice President of Jefferson
Partners Capital, Inc. (Merchant Bank). Prior to July 1994, Mr. Albright was a
Vice President of North American Trust Company (formerly First City Trust
Company).
Robert Giese of Pittsford, New York has served as a director of Sidus
since 1993. He has served as President of RG Data, Inc., a computer systems
corporation.
Robert W. Kirby of Markham, Ontario has served as a director of Sidus
since 1993. He has served as President of Wilsan Investments Limited since 1995.
For the previous twelve years, Mr. Kirby served as President and Chief Executive
Officer of Enghouse Systems, Ltd.
Juri Koor of Toronto, Ontario has served as a director of Sidus since
1993. He currently serves as President and Chief Executive Officer of Call-Net
Enterprises, Inc. and as Chairman of Sprint Canada, Inc., a telecommunications
company.
Roderick F. Barrett of Toronto, Ontario has served as a director of
Sidus since 1995. He has been a partner at Stikeman, Elliott, Barristers and
Solicitors, since 1982. Stikeman, Elliott serves as legal counsel to the
Company.
The directors and senior officers of the Company, as a group,
beneficially own, directly or indirectly, or
27
<PAGE>
exercise control or direction over approximately 38% of the Company's
outstanding Common Shares.
ITEM 11 - COMPENSATION OF DIRECTORS AND OFFICERS
The following table provides a summary of compensation earned during
the three most recent fiscal years by the Chief Executive Officer and the next
four most highly compensated other policy-making Executive Officers,
collectively the "Named Executive Officers."
<TABLE>
<CAPTION>
===================================================================================================================================
Long-Term
Annual Compensation Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Performance Awards
Compensation Securities
(Bonus and Other Annual under Options All Other
Name and Principal Salary Commission) Compensation (3) Granted Compensation
Position Year ($) ($) ($) (#) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alojz Muzar (1) 1995 237,000 nil 3,300 nil nil
Chairman 1994 237,000 nil 3,300 50,000 nil
1993 120,000 nil 2,500 nil nil
- -----------------------------------------------------------------------------------------------------------------------------------
Henry Kalisky (2) 1995 237,000 nil 3,300 nil nil
Chief Executive 1994 237,000 nil 3,300 50,000 nil
Officer 1993 120,000 nil 2,500 nil nil
- -----------------------------------------------------------------------------------------------------------------------------------
Brian Diamond 1995 104,000 213,890 nil nil nil
Vice-President - Sales 1994 104,000 99,000 nil 20,000 nil
1993 104,000 27,400 nil nil nil
- -----------------------------------------------------------------------------------------------------------------------------------
Milan Muzar 1995 144,000 15,000 nil nil nil
Executive Vice- 1994 96,000 30,000 nil 80,000 nil
President 1993 80,000 100,000 nil nil nil
- -----------------------------------------------------------------------------------------------------------------------------------
Gregory Smith (4) 1995 97,500 nil 4,200 nil nil
Chief Financial 1994 56,700 nil nil nil nil
Officer
===================================================================================================================================
</TABLE>
(1) Mr. Muzar served as Chief Executive Officer throughout Sidus' 1995
fiscal year.
(2) Mr. Kalisky served as President throughout Sidus' 1995 fiscal year.
(3) Consists of car allowances, life insurance and other benefits.
(4) Mr. Smith joined Sidus as Chief Financial Officer on May 16, 1994 at an
initial annual salary of $90,000. Mr. Smith resigned from the employ of
the Company in September 1996 for health reasons.
ITEM 12 - OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT
Special Executive Compensation Plans - Stock Option Plan
The Corporation has established a stock option plan (the "Option Plan")
to encourage ownership of the Corporation's shares by officers and employees of
the Corporation. The Option Plan is administered by the Board of Directors of
the Corporation. The total number of Common Shares which are reserved and set
aside under options to eligible persons pursuant to the Option Plan has
currently been fixed at 828,750 Common Shares. The aggregate number of Common
Shares at any time available for issuance under the Option Plan to any one
person may not exceed 5% of the Common Shares then issued and outstanding. The
Option Plan was amended effective July 18, 1996 to permit the issuance of
options to directors of the Corporation. This amendment is subject to approval
of the Corporation's shareholders.
28
<PAGE>
Pursuant to the Option Plan, the option exercise price will be such as
is fixed by the Board of Directors of the Corporation but may not be less than
the closing market price of the Common Shares on the day prior to the date of
grant. The options will be non-assignable, except than, in the event of an
optionee's death, the options may be exercised, to the extent the optionee was
entitled to do so at the time of the optionee's death, by the optionee's legal
personal representative at any time up to and including the date 180 days
immediately following the date of the optionee's death or the expiration of the
term of the option, whichever is earlier. The options may be for a term not
exceeding 10 years and may be made subject to earlier termination in the event
that an optionee ceases to be an officer, director or employee of the
Corporation. The Board of Directors of the Corporation may, from time to time,
amend or revise the terms of the Option Plan or may discontinue the Option Plan
at any time.
No options were granted to any Named Executive Officers during Sidus'
1995 fiscal year. Each participant in the Option Plan named below is entitled to
exercise options, which were granted on March 23, 1994 and, in the case of Milan
Muzar, also on October 17, 1994 equal to twenty-five percent of the total
options granted following each of the first four anniversaries of the date of
the grant and such exercise entitlements are cumulative and expire five years
from the date of the grant. The Option Plan was amended effective July 18, 1996
to permit the issuance of options to directors of the Corporation. This
amendment is subject to approval of the Corporation's shareholders. On July 18,
1996, the Company granted options to purchase an aggregate of 112,500 shares of
Common Stock at an exercise price of $4.20 per share to the Company's five
outside directors.
The following table provides a summary of all options to purchase
Common Shares of the Company outstanding as of thirty days before the filing of
this registration statement.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Exercise
or
base price Expiration
Name Options/Shares ($/Sh.) date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alojz Muzar 50,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
Henry Kalisky 50,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
Brian Diamond 20,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
Milan Muzar 40,000 $16.76 March 1999
40,000 $ 8.75 October 1999
- -----------------------------------------------------------------------------------------------------------------------
Shau Breton 30,000 $16.76 March 1999
30,000 $ 8.75 October 1999
- -----------------------------------------------------------------------------------------------------------------------
Paresh Shukla 10,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
Ken Wemyss 20,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
David Oberman 10,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
Bill Cripouris 5,000 $16.76 March 1999
- -----------------------------------------------------------------------------------------------------------------------
Dan Joyce 10,000 $ 3.10 March 2001
- -----------------------------------------------------------------------------------------------------------------------
Rudi Naglemaker 10,000 $ 3.10 March 2001
- -----------------------------------------------------------------------------------------------------------------------
Anthony Wright 10,000 $ 3.10 March 2001
- -----------------------------------------------------------------------------------------------------------------------
Ozzy Papic 10,000 $16.76 March 2001
- -----------------------------------------------------------------------------------------------------------------------
Robert Giese* 22,500 $ 4.20 July 2001
- -----------------------------------------------------------------------------------------------------------------------
Roderick F. Barrett* 22,500 $ 4.20 July 2001
- -----------------------------------------------------------------------------------------------------------------------
John L. Albright* 22,500 $ 4.20 July 2001
- -----------------------------------------------------------------------------------------------------------------------
Juri Koor* 22,500 $ 4.20 July 2001
- -----------------------------------------------------------------------------------------------------------------------
Robert Kirby* 22,500 $ 4.20 July 2001
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
* Options granted on July 18, 1996 and are subject to the approval of The
Toronto Stock Exchange and Company's shareholders.
Directors' Compensation Arrangements
Each director who was not an employee of the Corporation and who serves
as a director throughout the year is entitled to receive an annual fee of
$5,000. In addition, each director will receive a fee of $500 for each committee
or board meeting attended in person or by telephone throughout the year as well
as reimbursement of out-of-pocket expenses incurred in attending such meetings.
The board of directors is considering replacing all or a portion of the annual
fees paid to directors with a stock option plan. Directors who are also
employees of the Corporation will not receive compensation as directors (see
"Executive Compensation").
<TABLE>
<CAPTION>
================================================================================================================================
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY
COMPLETED FINANCIAL YEAR AND YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------------------
Value of
Unexercised Options In-the-Money
at Financial Option at Financial
Securities Acquired on Aggregate Value Year-End (#) Year-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Al Muzar Nil Nil 12,500/47,500 Nil/Nil
Chairman
- --------------------------------------------------------------------------------------------------------------------------------
Henry Kalisky Nil Nil 12,500/47,500 Nil/Nil
Chief Executive Officer
- --------------------------------------------------------------------------------------------------------------------------------
Brian Diamond Nil Nil 5,000/15,000 Nil/Nil
Vice President - Sales
- --------------------------------------------------------------------------------------------------------------------------------
Milan Muzar Nil Nil 20,000/60,000 Nil/Nil
Executive
Vice President
================================================================================================================================
</TABLE>
30
<PAGE>
ITEM 13 - INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Material Transactions
The Company has not entered into any material transactions during the
last three fiscal years in which any director, officer or 10% shareholder, or
any relative or spouse thereof, had or is to have a direct or indirect material
interest.
Indebtedness
As at April 4, 1996, the aggregate outstanding indebtedness (other than
"routine indebtedness" under applicable Canadian Securities laws) to Sidus of
all directors, officers and employees, current and former, was $72,400, none of
which related to purchases of securities of Sidus. The following table sets
forth details of such indebtedness incurred by any person who is, or at any time
during the most recently completed fiscal year was, a director, executive
officer or senior officer.
<TABLE>
<CAPTION>
=============================================================================================================================
TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------
Largest Amount
Outstanding During Amount Outstanding
Name and Involvement of Fiscal Year Ended as at
Principal Position Issuer or Subsidiary November 30, 1995 April 4, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Milan Muzar (1)
Executive Vice Lender $45,000 $45,000
President
- -----------------------------------------------------------------------------------------------------------------------------
Dave Urman (2)
Vice President, U.S. Lender $27,400 $27,400
Sales
=============================================================================================================================
</TABLE>
(1) This loan relates to an advance by the Corporation on April 27, 1995 to
Mr. Muzar against future bonuses from the Corporation. This loan is
repayable on or before April 26, 1996 and bears interest at prime plus
one percent.
(2) This loan relates to an advance by the Corporation on November 11, 1995
in the amount of U.S.$20,000 to Mr. Urman against future bonuses from
the Corporation. This loan is repayable on or before November 10, 1996
and bears interest at prime plus one percent. Mr. Urman is no longer
employed by the Company.
ITEM 14 - DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized capital of the Company consists of an unlimited number
of common shares of which 7,952,500 common shares are currently issued and
outstanding. Each common share entitles the holder to one vote at meetings of
the shareholders of the Company and to receive dividends if, as, and when
belated by the board of directors of the Company. Holders of common shares will
participate in any distribution of the assets of the Company upon its
liquidation, dissolution, or winding-up on an equal basis per share.
31
<PAGE>
PART IV
ITEM 18 - FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its
subsidiaries as of November 30, 1995, and 1994 and for the years ended November
30, 1995, 1994 and 1993 appearing in this Registration Statement have been
audited by Cooper, Molyneux & Makuz, C.A., independent auditors, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing. See Consolidated Financial Statements.
On March 18, 1996, the Board of Directors of Sidus Systems Inc. decided
not to recommend the reappointment of Cooper, Molyneux & Makuz as the auditors
of the Company at the Company's annual general meeting of shareholders,
scheduled to occur on May 15, 1996 (the "Meeting"). Having determined that it
was in the best interest of the Company to retain auditors with greater
international experience and presence to service the Company's increasing
international operations, the Company has asked Price Waterhouse to act as an
auditor of the Company subject to and from the time of their appointment at the
Meeting.
There were no reservations in the auditor's report for the Company's
three most recently completed fiscal years.
ITEM 19 - FINANCIAL STATEMENTS AND EXHIBITS
a) Financial Statements
--------------------
See Consolidated Financial Statements
32
<PAGE>
b) Exhibits
--------
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.01 Articles of Incorporation
3.02 By-Laws
10.01 Employment Agreement between the Company and Brian Diamond
10.02 Employment Agreement between the Company and Milan Muzar
10.03 Employment Agreement between the Company and Reg Tiessen
10.04 1996 Stock Option Plan
10.05 1995 Stock Option Plan
10.06 Charge/Mortgage of Land between the Company and
Scotia Mortgage Corporation dated April 1996
10.07 Lease Agreement between the Company and Carlvad Holdings Inc.
10.08 Lease Agreement between the Company and Newill Corporation
10.09 Lease Agreement between the Company and Landmark Properties, Inc.
10.10 Lease Agreement between the Company and Pension Fund Realty Limited
16.01 Letter from Cooper, Molyneux & Makuz, C.A. regarding changes and
disagreements in accounting principles
23.01 Consent of Cooper Molyneux & Makuz, Chartered Accountants
24.01 Power of Attorney*
</TABLE>
* Included with signature pages.
33
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1934, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form 20-F and authorized this registration
statement to be signed on its behalf by the undersigned, in the County of
Arlington in the State of Texas on 25th day of October, 1996.
Sidus Systems Inc.
By: /s/ Henry Kalisky
___________________________
Henry Kalisky
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Henry Kalisky and Alojz Muzar, their true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for them and in their names, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as full to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1934, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Henry Kalisky October 25
_____________________ Chief Executive Officer _______________, 1996
Henry Kalisky and Director
/s/ Reg Tiessen October 25
_____________________ Chief Financial Officer _______________, 1996
Reg Tiessen
/s/ Alojz Muzar October 25
_____________________ Chairman and Director _______________, 1996
Alojz Muzar
/s/ John L. Albright October 24
_____________________ Director _______________, 1996
John L. Albright
/s/ Robert Giese October 25
_____________________ Director _______________, 1996
Robert Giese
/s/ Robert W. Kirby October 25
_____________________ Director _______________, 1996
Robert W. Kirby
34
<PAGE>
/s/ Roderick F. Barrett October 25
_______________________ Director _______________, 1996
Roderick F. Barrett
/s/ Juri Koor October 25
_____________________ Director _______________, 1996
Juri Koor
35
<PAGE>
SIDUS SYSTEMS INC.
CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE>
AUDITORS' REPORT
To the Directors of
Sidus Systems Inc.
We have audited the consolidated balance sheets of Sidus Systems Inc. as at
November 30, 1995 and 1994 and the consolidated statements of operations,
retained earnings and changes in financial position for the years ended November
30, 1995, 1994 and 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at November 30, 1995
and 1994, and the results of its operations and the changes in its financial
position for the years ended November 30, 1995, 1994 and 1993 in accordance with
accounting principles generally accepted in Canada.
CHARTERED ACCOUNTANTS
Toronto, Ontario
February 8, 1996 (except with respect to
Note 15, which is as of October 23, 1996)
F-2
<PAGE>
SIDUS SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(all figures in thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
As at November 30,
1995 1994
---- ----
[Note 2]
Current
<S> <C> <C>
Cash and short-term investments [Note 4] $ 9,490 $ 10,412
Accounts receivable 32,976 30,540
Inventories [Note 5] 23,815 29,973
Prepaid expenses and other assets 936 588
Income tax receivable [Note 13] 383 1,343
---------- ---------
67,600 72,856
Investment tax credits recoverable [Note 13] 976 491
Fixed assets [Note 6] 6,357 6,690
Goodwill 200 -
--------- ---------
75,133 $ 80,037
========= =========
LIABILITIES
Current
Accounts payable $ 20,917 $ 24,760
Current portion of long-term debt [Note 7] 562 148
---------- ---------
21,479 24,908
Long-term debt [Note 7] 1,622 2,168
Deferred income taxes 618 788
Minority interest 22 -
---------- ---------
23,741 27,864
---------- ---------
Contingencies [Note 13]
SHAREHOLDERS' EQUITY
Share capital [Note 8] 45,840 46,835
Retained earnings 5,552 5,338
---------- ---------
51,392 52,173
---------- ---------
$ 75,133 $ 80,037
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
SIDUS SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
For the year ended November 30,
1995 1994 1993
---- ---- ----
[Note 2] [Note 2]
<S> <C> <C> <C>
Sales $186,399 $ 154,647 $ 97,134
Cost of sales 164,592 131,759 82,446
--------- ---------- ---------
Gross profit 21,807 22,888 14,688
------ ------ ------
Selling, general and administrative expenses [Note 9] 21,184 20,154 10,531
Depreciation and amortization 514 457 373
--------- ---------- ---------
21,698 20,611 10,904
------ ------ ------
Operating income 109 2,277 3,784
Interest (expense) income [Note 9] (85) 71 (1,436)
Minority interest (22) - -
--------- ---------- ---------
Earnings before income taxes 2 2,348 2,348
Income taxes [Note 10] (212) 606 732
--------- ---------- ---------
Net earnings for the year $ 214 $ 1,742 $ 1,616
======== ========== =========
Earnings per share - basic $ 0.03 $ 0.23 $ 0.47
========= ========= ========
- fully diluted $ 0.03 $ 0.22 $ 0.45
========= ========= ========
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(all figures in thousands of dollars)
For the year ended November 30,
1995 1994 1993
---- ---- ----
[Note 2] [Note 2]
Retained earnings, beginning of year
As previously stated $ 8,635 $ 5,832 $ 3,718
Adjustment for change in accounting policy [Note 2] (3,297) (2,236) (1,738)
-------- --------- ---------
As restated 5,338 3,596 1,980
Net earnings for the year 214 1,742 1,616
-------- --------- ---------
Retained earnings, end of year $ 5,552 $ 5,338 $ 3,596
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
SIDUS SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(all figures in thousands of dollars)
<TABLE>
<CAPTION>
For the year ended November 30,
1995 1994 1993
---- ---- ----
[Note 2] [Note 2]
<S> <C> <C> <C>
Cash flow from operations
Net earnings for the year $ 214 $ 742 $ 1,616
Items not affecting cash
Deferred income taxes (170) 230 105
Depreciation and amortization 514 457 373
Minority interest 22 - -
-------- -------- --------
580 2,429 2,094
Net change in non-cash working capital [Note 11] 491 (19,598) (6,609)
-------- -------- --------
1,071 (17,169) (4,515)
-------- -------- --------
Cash flow from financing activities
Repurchase of common shares (995) -
Net proceeds from issue of common shares - 24,983 21,851
Repayment of long-term debt (132) (1,115) (375)
Proceeds from subordinate debt financing - - 6,000
Repayment of subordinate debt financing - - (6,000)
Repayment of loan from EPSP - - (663)
--------- -------- ---------
(1,127) 23,868 20,813
--------- ------ ------
Cash flow from investing activities
Goodwill on acquisition of subsidiary (223) - -
Additions to fixed assets (158) (1,195) (265)
Long-term investment tax credits receivable (485) (491) -
--------- -------- ---------
(866) (1,686) (265)
--------- -------- ---------
(Decrease) increase in cash (922) 5,013 16,033
Cash and short-term investments, beginning of year 10,412 5,399 (10,634)
-------- -------- ---------
Cash and short-term investments, end of year $ 9,490 $ 10,412 $ 5,399
======== ======== ========
Cash is comprised of the following:
Cash $ 9,490 $ 6,386 $ 6,100
Short-term investments - 4,026 -
Bank operating line - - (701)
-------- -------- ---------
$ 9,490 $ 10,412 $ 5,399
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These consolidated financial statements include the accounts of the
Company, its wholly-owned United States subsidiary, Sidus Computer
Corporation and its 60% owned Canadian subsidiary, Galahad
Information Systems Inc. [see Note 3].
Inventories
The Company's inventories are valued at the lower of cost and net
realizable value. Cost is determined on the first-in, first-out
basis.
Investments
The Company's 4.16% interest in a United States partnership,
Claridge Holdings No. 1, and its 10% investment in IVP Technology
Corporation are carried at cost. For balance sheet presentation,
these investments have been included in prepaid expenses and other
assets.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided over the
related assets' estimated useful lives, using the following methods
and at the following annual rates:
Buildings - 5 % declining balance
Office and factory equipment - 20 % declining balance
Automobiles - 30 % declining balance
Leasehold improvements - straight-line over the
term of the lease
Goodwill
Goodwill, representing the excess of the purchase price of Galahad
Information Systems Inc. over the fair value of its net assets, is
being amortized over its estimated useful life of 10 years, using
the straight-line method [see Note 3].
Deferred Income Taxes
The Company makes full provision for income taxes deferred. These
taxes result from claiming depreciation and other costs for income
tax purposes which differ from the related amounts charged to
earnings.
Foreign Exchange
Current assets and liabilities in US dollars are translated into
Canadian dollars at the year end rate of exchange and any gains or
losses are reflected in income. Revenues and expenses are translated
into Canadian dollars at the rate of exchange prevailing at the time
of the transaction.
Research and Development Costs
Current research and development costs, net of recoverable
investment tax credits, are expensed as incurred and are included
with selling, general and administrative expenses.
Earnings Per Share
Earnings per share has been calculated on the basis of net earnings
for the year divided by the weighted average number of Common shares
outstanding during the year. Fully diluted earnings per share
reflect the dilutive effect of the assumed exercise of options
outstanding at the end of each year.
F-6
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
NOTE 2 CHANGE IN ACCOUNTING POLICY
During 1995, in order to comply with generally accepted accounting
principals of the United States, in addition to those of Canada, the
Company adopted the policy of expensing all development costs as
incurred. Previously, these costs were capitalized and amortized on
a straight-line basis over the products' estimated sales life, once
commercial production had commenced. The effect of expensing these
costs, net of related deferred income taxes, is a reduction in 1994
net income of $1,061,000 and a cumulative reduction in net income of
years prior to 1994, aggregating $2,236,000. The financial
statements of the prior years have been restated to reflect this
change.
NOTE 3 ACQUISITION
On December 1, 1994, the Company acquired a 60% interest in Galahad
Information Systems Inc. for total consideration of $1. As part of
this acquisition, the Company also agreed to make available to
Galahad Information Systems Inc. a non-interest bearing loan in the
amount of $375,000. This acquisition was accounted for by the
purchase method and accordingly, the purchase price was allocated to
the assets and liabilities based on their estimated fair values as
of the acquisition date. The purchase price exceeded the fair value
of the net current liabilities acquired by $223,000. This amount has
been recorded as goodwill and is being amortized on a straight-line
basis over 10 years. The consolidated results of operations for the
year ended November 30, 1995 include the operating results of
Galahad Information Systems Inc., since the date of acquisition.
NOTE 4 BANK INDEBTEDNESS
As at November 30, 1995, the Company has available an operating
loan, to a maximum of $50,000,000. This loan bears interest at prime
and is secured by a general assignment of book debts, a security
agreement over all inventories, security under section 427 of the
Bank Act, a general security agreement over all other property of
the Company, and an assignment of certain insurance policies.
<TABLE>
<CAPTION>
NOTE 5 INVENTORIES 1995 1994
---- ----
<S> <C> <C>
Work in progress $ 646 $ 779
Finished goods 23,169 29,194
---------- ----------
$ 23,815 $ 29,973
========= ========
</TABLE>
<TABLE>
<CAPTION>
NOTE 6 FIXED ASSETS
Accumulated Net Book Value
Cost Depreciation 1995 1994
---- ------------ ---- ----
<S> <C> <C> <C> <C> <C>
Land $ 1,000 $ - $ 1,000 $ 1,000
Buildings 5,247 1,314 3,933 4,119
Office and factory equipment 1,525 713 812 881
Automobiles 232 194 38 54
Leasehold improvements 708 134 574 636
---------- --------- ---------- ---------
$ 8,712 $ 2,355 $ 6,357 $ 6,690
========== ========= ========== ========
</TABLE>
F-7
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
<TABLE>
<CAPTION>
NOTE 7 LONG-TERM DEBT 1995 1994
---- ----
<S> <C> <C>
Mortgage payable to Manufacturers Life Insurance Company, bearing
interest at the rate of 8.25% per annum, maturing April 1, 1996, and
secured by certain property of the Company. Blended monthly payments
of principal and interest of $24,875 are required. The Company
intends to renew this mortgage under normal commercial terms.
$ 1,779 $ 1,927
First mortgage with The Canada Trust Company, due December 1, 1995,
payable in monthly payments of interest at its prime rate of
interest plus 0.5% per annum and principal of $250. The mortgage is
secured by certain property and personal guarantees by the principal
shareholders of the Company. This mortgage was repaid in full on
December 1, 1995.
395 389
Note payable to AQR Management Services Inc. requiring monthly
payments of $10,000 ending December 31, 1995.
10 -
---------- ---------
2,184 2,316
Less: Current portion 562 148
---------- ---------
$ 1,622 $ 2,168
======== =======
NOTE 8 SHARE CAPITAL
As at November 30, 1995, the Company is authorized to issue an
unlimited number of shares of one class, designated as Common
shares.
Issued 1995 1994
------ ---- ----
7,967,500 Common shares (1994 - 8,287,500) $45,840 $46,835
========= ======= =======
</TABLE>
During fiscal 1994, the Company entered into the following
transactions:
a) On December 14, 1993, the Company issued 250,000 Common shares
upon the exercise of 250,000 over-allotment options (granted
to the underwriters in connection with the initial public
offering) for gross proceeds of $2,500,000.
b) On May 8, 1994, the Company issued 1,500,000 Common shares
upon the exercise of 1,500,000 Special Warrants and 37,500
Common shares upon the exercise of 37,500 stock options, for
aggregate gross proceeds of $24,600,000 (net proceeds of
$22,640,000 after deducting expenses related to the granting
of the Special Warrants).
On October 16, 1995, the Company gave notice of its intention to
purchase, through the Toronto Stock Exchange, up to 500,000 Common
shares representing approximately 6% of the outstanding Common
shares and approximately 9.5% of the public float. The normal course
issuer bid expires October 15, 1996.
F-8
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
NOTE 8 SHARE CAPITAL - Continued
During 1995, under this normal course issuer bid, the Company
repurchased its Common shares for cancellation on the following
dates, in the following amounts:
<TABLE>
<S> <C> <C> <C>
Date of repurchase Oct. 16, 1995 Nov. 17, 1995 Nov. 27, 1995
Number of shares 160,000 90,000 70,000
Purchase price $ 496,000 $ 279,000 $ 220,500
</TABLE>
Subsequent to year end, the Company repurchased its Common shares
for cancellation on the following dates, in the following amounts:
Date of repurchase Dec. 19, 1995 Dec. 22, 1995
Number of shares 11,900 3,100
Purchase price $ 33,915 $ 8,990
At November 30, 1995, the Company has 365,000 stock options
outstanding, having the following prices and expiry dates (no stock
options were granted and 100,000 stock options expired during the
year):
Option price $ 16.76 $ 8.75
Number of shares 295,000 70,000
Year of expiry 1999 1999
NOTE 9 RESEARCH AND DEVELOPMENT AND FINANCIAL EXPENSES
Selling, general and administrative expenses include amounts in
respect of research and development as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Gross research and development expenditures $ 2,469 $ 2,941 $ 1,970
Less: investment tax credits (485) (540) (607)
-------- -------- --------
$ 1,984 $ 2,401 $ 1,363
======== ======== ========
</TABLE>
Interest includes approximately $291,000 (1994 - $642,000, 1993 -
nil) of interest income, $184,000 (1994 - $246,000, 1993 - $659,000)
of interest on long-term debt and $192,000 (1994 - $325,000, 1993 -
$777,000) of interest on the Company's operating line.
F-9
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
NOTE 10 INCOME TAXES
Income taxes are comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Provision for income taxes
- current $ (42) $ 376 $ 627
- deferred (170) 230 105
---------- ---------- ----------
$ (212) $ 606 $ 732
========== ========== ==========
The Company's effective income tax rate has been determined as
follows:
1995 1994 1993
---- ---- ----
Earnings before provision for income taxes $ 2 $ 2,348 $ 2,348
========= ========== ==========
Combined basic Canadian federal and provincial
income tax at 44.3% (1994 - 44.3%) $ - $ 1,040 $ 1,040
Increase (decrease) resulting from:
Share issue costs deducted for tax purposes (443) (443) -
Ontario superallowance (97) (127) (63)
Large corporation tax 95 81 -
Small business deduction on losses carried back 44 - (43)
Benefit of utilization of prior years' losses
not previously recognized - - (223)
Other 189 55 21
---------- ---------- ----------
$ (212) $ 606 $ 732
======== ========== ========
NOTE 11 NET CHANGE IN NON-CASH WORKING CAPITAL
1995 1994 1993
---- ---- ----
Accounts receivable $ (2,436) $ (8,626) $ (11,821)
Inventories 6,158 (21,513) 394
Prepaid expenses and other assets (348) (82) (332)
Income tax receivable 960 (569) (40)
Accounts payable (3,843) 11,192 5,190
---------- ---------- ----------
$ 491 $ (19,598) $ (6,609)
========== ========= ==========
</TABLE>
F-10
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
NOTE 12 COMMITMENTS
Certain of the Company's premises and equipment are held under
long-term leases. The aggregate rental charges payable under all
operating leases during the five years commencing December 1, 1995
are as follows:
1996 $ 1,225
1997 1,150
1998 861
1999 978
2000 1,004
Remaining 3,063
NOTE 13 CONTINGENCIES
Income Taxes
During fiscal 1994, the Company received a Notice of Reassessment
disallowing a partnership loss which the Company had claimed in
filing its 1988 income tax returns. The Company does not agree with
Revenue Canada's interpretation of law on the subject assessed and
has filed a Notice of Objection. The Company has recorded a
provision included in the deferred tax balance of approximately
$720,000 in respect of this liability.
Investment Tax Credits
The Company's scientific research and experimental development
claims for fiscal years 1993, 1994 and 1995 have not yet been
assessed by Revenue Canada. The 1993 claim is currently under review
and a preliminary proposal has been made to significantly reduce
this claim. However, because the review process is in the initial
stages, the outcome of the proposed adjustments cannot be determined
at this time.
Historically, adjustments by Revenue Canada have not been
significant and management is confident that the final assessment of
the 1993, 1994 and 1995 claims will not result in amounts that are
materially different from those recorded in the financial
statements.
Guarantees
As collateral for certain bid bonds and payroll commitments, the
Company has various letters of credit outstanding aggregating
approximately $670,000 at November 30, 1995 (1994 - $590,000).
Legal Proceedings
An action was filed in Ontario against the Company by a customer
claiming breach of contract and damages for interference in a
contractual relationship with a third party, amounting to
approximately $984,000. The Company has instituted a counterclaim
against this customer in the amount of $374,000 for breach of
contract. Management and counsel are unable to provide estimates on
the outcome as at the date of the Auditor's Report, but management
believes that should any amounts be payable, they would not have a
material impact on the financial position of the Company. In the
event that this claim does succeed, the amount will be charged
against earnings in the year of settlement.
NOTE 14 COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with
the current year's financial statement presentation.
F-11
<PAGE>
SIDUS SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all tabular figures in thousands of dollars)
NOTE 15 DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)
The Company's financial statements have been prepared using
accounting principles generally accepted in Canada. An explanation
of the significant differences between Canadian and United States
generally accepted accounting principles, and a reconciliation of
the financial statement amounts to United States GAAP, is as
follows:
Income Taxes
United States GAAP (under FASB 109) requires that the deferred tax
liability be based on temporary differences between the accounting
value and tax value of assets and liabilities. US GAAP also requires
that this liability is calculated using the tax rate at which these
temporary differences are expected to reverse. Canadian GAAP sets up
deferred taxes based on the timing of deductions for tax purposes
versus accounting purposes (i.e. an income statement approach) and
uses the rates in effect at the time the differences occur.
Earnings Per Share
United States GAAP requires that basic earnings per share be
calculated using the weighted average number of Common shares and
certain common stock equivalents outstanding during the year.
Canadian GAAP requires that basic earnings per share be calculated
using only the weighted average number of Common shares outstanding
during the period.
<TABLE>
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ---------------------
As reported US GAAP As reported US GAAP As reported US GAAP
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Net earnings for the year $ 214 $ 251 $ 1,742 $ 1,684 $ 1,616 $ 1,643
======= ======= ======= ======= ======= =======
Net earnings per
Common share (basic) $ 0.03 $ 0.03 $ 0.23 $ 0.22 $ 0.47 $ 0.46
======= ======= ======= ======= ======= =======
Total assets $75,133 $75,133 $80,037 $80,037 $43,005 $43,005
======= ======= ======= ======= ======= =======
Shareholders' equity $51,392 $51,064 $52,173 $51,808 $25,448 $25,141
======= ======= ======= ======= ======= =======
</TABLE>
Sales to Significant Customers
In fiscal 1995, sales to various departments of the Canadian federal
government totalled approximately $45 million (1994 - $43 million,
1993 - $38 million). No other customer accounted for more than 10%
of the Company's sales.
F-12
<TABLE>
<S> <C> <C>
For Ministry Use Only Ministere de Ontario Corporation Number
Ministry of Numero de la compagnie en Ontario
Consumer and la Consommation
Commercial
Ontario Relations et du Commerce
CERTIFICATE CERTIFICAT 1053546
This is to certify that these Ceci certifie cue les presents
articles are effective on status entrent en vigueur le
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Trans Line Comp Method
NOVEMBER 26, NOVEMBRE, 1993 Code No. Stat. Type Incorp. Share
- --------------------------------------------------------------------- [A] [0] [ 0 ] [ A ] [ 3 ] [ S ]
18 20 28 29 30 31
Notice
Req'd Jurisdiction
Director/Directeur [ N ] [ONTARIO ] [ A ]
Business Corporations Act/Loi de sur les compagnies 32 33 47 57
- --------------------------------------------------------------------------------
</TABLE>
ARTICLE OF AMALGAMATION
STATUTS DE FUSION
Form 4 Business Corporations Act 1982
Formule numero 4 Loi de 1982 sur les compagnies
<TABLE>
<S> <C>
1. The name of the amalgamated corporation is: Denomination sociale de la compagnie issue de la fusion:
SIDUS SYSTEMS INC.
2. The address of the registered office is: Adresse du siege social:
</TABLE>
25 Minthorn Court
---------------------------------------------------------------------------
(Street & Number or R.R. Number & if Multi-Office Building give Room No.)
(Rue et numero, ou numero de la R.R. et. s'il s'agit d'un edifice a bureaux,
numero du bureau)
Thornhill, Ontario [L][3][T][7][N][5]
---------------------------------------------------------------------------
(Name of Municipality, or Post Office) (Postal Code)
(Nom de la municipalite ou du bureau de poste) (Code Postal)
Town of Markham in the Regional Municipality of York
--------------------------- ------------------------------
(Name of Municipality, dans le/la (County, District, Regional
Geographical Township) Municipality)
(Nom de la municipalite, Comte, district, municipalite
du canton) regionale)
3. Number (or minimum and maximum number) Nombre (ou nombres minimal et
of directors is: maximal) d'administrateurs:
Minimum of three (3) and maximum of twelve (12)
4. The director(s) is/are:
Administrateur(s):
<TABLE>
<CAPTION>
First name, initials and surname Residence Address, giving Street & No. or Resident
Prenom, initiales at nom de famille R.R. No., Municipality and Postal Code Canadian
Adresse personnelle, y compris la rue et la State
numero, la numero de la R.R. ou la nom de la Yes or No
municipalite et le code postal Resident
Canadien
Oui/Non
<S> <C> <C>
Henry Kalisky 33 Old Park Lane Yes
Richmond Hill, Ontario
L4B 2L3
Alojz A. Muzar 22 Old Park Lane Yes
Richmond Hill, Ontario
L4B 2L3
Robert Kirby 4905 Cherry Street Yes
Stouffville, Ontario
L4A 7X4
John L. Albright 64 Dale Avenue Yes
Toronto, Ontario
M4W lK8
Barry Gekiere 94 Ennisclare Drive West Yes
Oakville, Ontario
L6J 4N2
Juri Koor 27 Cluny Drive Yes
Toronto, Ontario
M4W 2P9
Robert Giese 20 Framingham Lane No
Pittsford, New York
U.S.A. 14534
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5 A) The amalgamation agreement has been duly [ X ] A) Les actionnaires de chaque compagnie qui
adopted by the shareholders of each of fusionne ont dument adopte la convention de
the amalgamating corporations as required fusion conformement au paragraphe 154(4)
by Subsection 175(4) of the Business de la Loi sur les compagnies a la date
Corporations Act on the date set Out below. mentionnee
Check Cocher
A or B A ou B
B) The amalgamation has been approved by the B) Les administrateurs de chaque compagnie qui
directors of each amalgamating corporation fusionne ont approuve la fusion par voie de
by a resolution as required by section 176 resolution conformement a l'article 176 de la
of the Business Corporations Act on the Loi sur les compagnies a la date mentionnee ci-
the date set out below. dessous. Les statuts de fusion reprennent essent-
The articles of amalgamation in substance iellement les dispositions des statuts
contain the provisions of the articles of constitutifs de
incorporation of
- -------------------------------------------------------------------------------------------------------------------------
and are more particularly set out in these et sont enonces textuellement aux presents status
articles.
</TABLE>
<TABLE>
<CAPTION>
Names of amalgamating Ontario Corporation Number Date of Adoption/Approval
corporations Numero de la compagnie en Date d'adoption ou d'approbation
Denomination sociale des Ontario
compagnies qui fusionnent
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sidus Systems Inc. 965552 November 26, 1993
Sidus Holdings Inc. 864570 November 26, 1993
Reshet Hol dings Limited 606761 November 26, 1993
Riverplex Holdings Inc. 461032 November 26, 1993
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
6. Restrictions, if any, on business the Limites, sil y a lieu, imposees aux activites
corporation may carry on or on powers commerciales ou aux pouvoirs de la societe.
the corporation exercise.
No restrictions.
7. The classes and any maximum number of shares that Categories et nombre maximal, s'il y a lieu,
the corporation is authorized to issue. d' actions que la societe est autorisee a emettre:
An unlimited number of shares of one class designated as common.
<PAGE>
8. Rights, privileges, restrictions and conditions Droits,privileges,restrictions et conditions,
(if any) attaching to each class of shares and s'il y a lieu, rattaches a chaque categorie
directors authority with respect to any class d'actions et pouvoirs des administrateurs
of shares which is to be issued in series: relatifs a chaque categorie d'actions qui peut
etre emise en serie:
Not applicable.
<PAGE>
5
9. The issue, transfer or ownership of shares is/is not L'emission, le transfert ou la propriete d'actions
restricted and the restrictions (if any) are as est/n'est pas restreint. Les restrictions, s'il y a
follows: lieu, sont les suivantes:
Not applicable
10. Other provisions, (if any): Autres dispositions, s'il y a lieu:
10.01 The Corporation may use and be legally designated by the following
French form of its corporate name:
Les Systemes Sidus Inc.
10.02 Without in any way limiting the powers conferred upon the Corporation
and its directors by the Business Corporations Act, (Ontario), or any
successor statute, the board of directors may from time to time, in
such amounts and on such terms as it deems expedient charge, mortgage,
hypothecate or pledge all or any of the currently owned or
subsequently acquired real or personal, movable or immovable, property
of the Corporation, including book debts, rights, powers, franchises
and undertaking, to secure any debt obligations or any money borrowed,
or other debt or liability of the Corporation.
The board of directors may from time to time delegate to such one or
more of the directors and officers of the Corporation as may be
designated by the board all or any of the powers conferred on the
board above to such extent and in such manner as the board shall
determine at the time of each such delegation.
11. The statements required by subsection 178(2) of the Les declarstions exigees aux termes du paragraphe
Business Corporations Act are attached as Schedule "A". 178(2) de Is Loi sur les societes par actions
constituent l'annexe "A".
12. A copy of the amalgamation agreement or directors Una copie de la convention de fusion ou les
resolutions (as the case may be) is/are attached as resolutions dos administrateurs (selon le cas)
Schedule "B". constitute(nt) l'annexe "B".
</TABLE>
<PAGE>
<TABLE>
<S> <C>
These articles are signed in duplicate. Les Presents statuts sont signes en double
exemplaire.
- ------------------------------------------------------------------------------------------------------------------------
Names of the amalgamating corporations and signatures Denomination sociale des compagnies qui fusionnent
and descriptions of office of their proper officers. signature et fonction de leurs dirigeants
regulierement designes.
</TABLE>
SIDUS SYSTEMS INC.
Per: /s/ Henry Kalisky
----------------------
Henry Kalisky
President
SIDUS HOLDINGS INC.
Per: /s/ Henry Kalinsky
----------------------
Henry Kalisky
President
RESHET HOLDINGS LIMITED
Per: /s/ Henry Kalinksy
----------------------
Henry Kalisky
President
RIVERPLEX HOLDINGS INC.
Per: /s/ Alojz Muzar
---------------------
Alojz Muzar
President
<PAGE>
SCHEDULE "A.1"
STATEMENT OF DIRECTOR OR OFFICER
PURSUANT TO SUBSECTION 178(2) OF
THE BUSINESS CORPORATIONS ACT (ONTARIO)
---------------------------------------
I, Henry Kalisky, of the Town of Richmond Hill, in the Province of Ontario,
hereby certify and state as follows:
1. This Statement is made pursuant to subsection 178(2) of the Business
Corporations Act (Ontario) (the "Act");
2. I am the President of Sidus Systems Inc. and as such have knowledge of
its affairs.
3. I am the President of Sidus Holdings Inc. and as such have knowledge of
its affairs.
4. I am the President of Reshet Holdings Limited and as such have knowledge
of its affairs.
5. I have conducted such examinations of the books and records of Sidus
Systems Inc., Sidus Holdings Inc., Riverplex Holdings Inc. and Reshet
Holdings Limited (the "Amalgamating Corporation") as are necessary to enable me
to make the statements hereinafter set forth.
6. There are reasonable grounds for believing that:
(a) each of the Amalgamating Corporations is and Sidus Systems Inc., the
corporation continuing from the amalgamation of the Amalgamating
Corporations (the "Corporation"), will be able to pay its liabilities
as they become due, and
(b) the realizable value of the Corporation's assets will not be less than
the aggregate of its liabilities and stated capital of all classes.
7. There are reasonable grounds for believing that no creditor will be
prejudiced by the amalgamation.
8. Based on the statements made above, neither of the Amalgamating
Corporation is obligated to give notice to any creditor.
DATED this 26th day of November, 1993.
----
/s/ Henry Kalisky
--------------------------
Henry Kalisky,
<PAGE>
SCHEDULE "A.2"
STATEMENT OF DIRECTOR OR OFFICER
PURSUANT TO SUBSECTION 178(2) OF
THE, BUSINESS CORPORATIONS ACT (ONTARIO)
----------------------------------------
I, Alojz Muzar, of the Town of Richmond HUI, in the Province of Ontario,
hereby certify and state as follows:
1. This Statement is mad& pursuant to subsection 178(2) of the Business
Corporations Act (Ontario) (the "Act");
2. I am the President of Riverplex Holdings Inc. and as such have knowledge
of its affairs.
3. I am the Chairman of the Board and Chief Executive Officer of Sidus
Systems Inc. and as such have knowledge of its affairs.
4. I am the Chairman of the Board and Secretary of Sidus Holdings Inc. and
as such have knowledge of its affairs.
5. I have conducted such examinations of the books and records of Riverplex
Holdings Inc., Sidus Systems Inc., Sidus Holdings Inc. and Reshet Holdings
Limited (the 'Amalgamating Corporations") as are necessary to enable me to make
the statements hereinafter set forth.
6. There are reasonable grounds for believing that:
(a) each of the Amalgamating Corporations is and Sidus Systems Inc., the
corporation continuing from the amalgamation of the Amalgamating
Corporations (the "Corporation"), will be able to pay its liabilities
as they become due, and
(b) the realizable value of the Corporation's assets will not be less than
the aggregate of its liabilities and stated capital of all classes.
7. There are reasonable grounds for believing that no creditor will be
prejudiced by the amalgamation.
8. Based on the statements made above, neither of the Amalgamating
Corporations is obligated to give notice to any creditor.
DATED this 26th day of November, 1993.
----
/s/ Alojz Muzar
----------------------
Alojz Muzar
<PAGE>
Schedule "B"
AMALGAMATION AGREEMENT
AMALGAMATION AGREEMENT made as of the 26th day of November, 1993 among
Sidus Systems Inc. ('Systems'), Sidus Holdings Inc. ("Holdings'), Riverplex
Holdings Inc. ('Riverplex') and Reshet Holdings Limited ("Reshet').
WHEREAS each of Systems, Holdings, Riverplex and Reshet were incorporated
under the laws of the Province of Ontario;
AND WHEREAS Systems is authorized to issue an unlimited number of one class
of shares designated as common shares, of which 2 shares are issued and
outstanding as fully paid and non-assessable as of the date hereof and will be
issued and outstanding as of the Effective Date (as hereinafter defined);
AND WHEREAS Holdings is authorized to issue an unlimited number of one
class of shares designated as common shares, of which 1,000,000 common shares
are issued and outstanding as fully paid and non-assessable as of the date
hereof and will be issued and outstanding as of the Effective Date (as
hereinafter defined);
AND WHEREAS Riverplex is authorized to issue an unlimited number of one
class of shares designated as common shares, an unlimited number of one class of
special shares of one class designated as Class A Preference shares and an
unlimited number of special shares of one class designated as Class B shares, of
which 9 common shares, 3,893,750 Class A Preference shares and 3 Class B shares
are issued and outstanding -as fully paid and non-assessab le as of the date
hereof and will be issued and outstanding as of the Effective Date (as
hereinafter defined);
AND WHEREAS Reshet is authorized to issue an unlimited number of one class
of shares designated as common shares, an unlimited number of special shares of
one class designated as Class A Preference shares and an unlimited number of
special shares of one class designated as Class B shares, of which 8 common
shares, 3,893,750 Class A Preference shares and 2 Class B shares are issued and
outstanding as fully paid and non-assessable as of the date hereof and will be
issued and outstanding as of the Effective Date (as hereinafter defined);
AND WHEREAS the parties hereto, acting under the authority provided by the
Business Corporations Act (Ontario), have agreed to amalgamate upon the terms
and conditions set out;
NOW THEREFORE THIS AGREEMENT WITNESSETH as follows:
1. In this agreement:
(a) "Amalgamating Corporations" means Systems, Holdings, Reshet and
Riverplex;
<PAGE>
-2-
(b) "Amalgamation Agreement" or 'Agreement' means this amalgamation
agreement;
(c) "Act" means the Business Corporations Act (Ontario), as the same maybe
amended from time to time;
(d) "Corporation" means the corporation continuing from the amalgamation
of the Amalgamating Corporations; and
(e) "Effective Date" means the date set out on the certificate endorsed by
the Director appointed under the Act on the articles of amalgamation
giving effect to the amalgamation herein provided for.
2. The Amalgamating Corporations hereby agree to amalgamate on the Effective
Date under the provisions of the Act and to continue as one corporation upon the
terms and conditions herein set out.
3. The name of the Corporation shall be Sidus Systems Inc. and the Corporation
shall be authorized to set out its name in the French form of its corporate
name, which shall be Les Systemes Sidus Inc., and may use and be legally
designated by either the English or French form of its corporate name.
4. The registered office of the Corporation shall be in the Regional
Municipality of York, in the Province of Ontario. The address of the registered
office of the Corporation shall be 25 Minthorn Court, Thornhill, Ontario.
5. There shall be no restrictions on the business that the Corporation may
carry on or on the powers that the Corporation may exercise.
6. The class and any maximum number of shares that the Corporation is
authorized to issue is as follows:
an unlimited number of shares of one class designated as common
7. The number (or minimum and maximum number) of directors of the Corporation
shall be a minimum of three and a maximum of 12, until changed in accordance
with the Act. Until changed by special resolution of the Corporation, or if the
directors of the Corporation are so authorized by special resolution of the
Corporation, by resolution of the said directors, the directors of the
Corporation shall consist of 7 directors and the first directors of the
Corporation shall be the following:
<PAGE>
-3-
Residence Resident
Name Address Canadian
---- ------- --------
Henry Kalisky 33 Old Park Lane Yes
Richmond Hill
Ontario
L4B 2L3
Alojz A. Milzar 22 Old Park Lane Yes
Richmond Hill, Ontario
IAB 2L3
Robert Kirby 4905 Cherry Street Yes
Stouffville, Ontario
L4A 7X4
John L. Albright 64 Dale Avenue Yes
Toronto, Ontario
M4W lK8
Barry Gekiere 94 Ennisclare Drive West Yes
Oakville, Ontario
L6J 4N2
Juri Koor 27 Cluny Drive Yes
Toronto, Ontario
M4W 2P9
Robert Giese 20 Framingham Lane No
Pittsford, New York
U.S.A.
14534
The first directors shall hold office until the first annual meeting Of the
Corporation or until their successors are elected or appointed, subject to the
Corporation's by-laws.
9. The by-laws of the Corporation shall be the by-laws of Sidus Systems Inc. A
copy of such by-laws may be examined at the head office of the Corporation at
any time during regular business hours.
10. After the Effective Date, the shareholders of the Amalgamating Corporations
shall, when requested by the Corporation, surrender for cancellation the
<PAGE>
-4-
certificates representing the shares held by them in the Amalgamating
Corporations and shall be entitled to receive certificates for shares of the
Corporation as herein provided.
11. The issued and outstanding shares in the capital of the Amalgamating
Corporations shall be converted on the Effective Date into issued and
outstanding shares of the Corporation as follows:
(a) 75,000 issued and outstanding common shares of Holdings which are held
at the date hereof and will be held at the Effective Date by or on
behalf of North American Trust Company shall be converted into 300,000
common shares of the Corporation on the basis of 1 common share of
Holdings for 4 common shares of the Corporation;
(b) 62,838 issued and outstanding common shares of Holdings, which are
held at the date hereof and will be held at the Effective Date by or
on behalf of Penfund Investment Corporation shall be converted into
251,352 common shares of the Corporation on the basis of 1 common
share of Holdings for 4 common shares of the Corporation;
(c) 12,162 issued and outstanding common shares of Holdings which are held
at the date hereof and will be held at the Effective Date by or on
behalf of New York Life Insurance Company shall be converted into
48,648 common shares of the Corporation on the basis of 1 common share
of Holdings for 4 common shares of the Corporation;
(d) the 9 issued and outstanding common shares of Riverplex shall be
converted into 982,969 common shares of the Corporation on the basis
of 1 common share of Riverplex for 109,218.77 common shares of the
Corporation;
(e) 425,000 issued and outstanding common shares of Holdings, which are at
the date hereof and will be held at the Effective Date by or on behalf
of Riverplex, shall be cancelled without any repayment of capital in
respect thereof and shall not be converted into shares of the
Corporation;
(f) the 8 issued and outstanding common shares of Reshet shall be
converted into 1,048,500 common shares of the Corporation on the basis
of 1 common share of Reshet for 131,062.50 common shares of the
Corporation;
(g) 425,000 issued and outstanding common shares of Holdings, which are at
the date hereof and will be held at the Effective Date by or on behalf
of Reshet, shall be cancelled without any repayment of capital in
respect thereof and shall not be converted into shares of the
Corporation;
<PAGE>
-5-
(h) the 3,893,750 issued and outstanding Class A Preference shares of
Reshet, which are at the date hereof and will be held at the Effective
Date held by or on behalf of Henryk Kalisky, shall be converted into
389,375 common shares of the Corporation on the basis of 1 Class A
Preference share of Reshet for . 10 common shares of the Corporation;
(i) the 2 issued and outstanding Class B shares of Reshet, which are at
the date hereof and will be held at the Effective Date by or on behalf
of The Kalisky Family Trust, shall be converted into 262,125 common
shares of the Corporation on the basis of I Class B share of Reshet
for 131,062.50 common shares of the Corporation;
(j) the 3,893,750 issued and outstanding Class A Preference shares of
Riverplex, which are at the date hereof and will be held at the
effective date by or on behalf of Alojz Muzar, shall be converted into
389,375 common shares of the Corporation on the basis of I Class A
Preference share of Riverplex for IO common shares of the Corporation;
(k) the 3 issued and outstanding Class B shares of Riverplex, which are at
the date hereof and will be held at the Effective Date by or on behalf
of 'Me Muzar Family Trust, shall be converted into 327,656 common
shares of the Corporation on the basis of I Class B share of Riverplex
for 109,218.66 common shares of the Corporation; and
(l) the 2 issued and outstanding common shares of Systems, which are at
the date hereof and will be held at the Effective Date by or on behalf
of Holdings, shall be cancelled without any repayment of capital in
respect thereof and shall not be converted into shares of the
Corporation.
12. The aggregate of the stated capital account for the common shares of the
Corporation shall be equal to the sum of stated capital accounts for the common
shares, the Class A Preference shares and the Class B shares of each of
Riverplex and Reshet and the common shares of Holdings other than those held by
Riverplex and Reshet.
13. Upon the Effective Date:
(a) The Amalgamating Corporations are amalgamated and continue as one
Corporation under the terms and conditions prescribed in the
Amalgamation Agreement, effective as at 12:01 a.m. on the Effective
Date;
(b) The Corporation possesses all the property, rights, privileges and
franchises and is subject to all liabilities, including civil,
criminal and
<PAGE>
-6-
quasi-criminal, and all contracts, liabilities and debts of each of
the Amalgamating Corporations;
(c) A conviction against, or ruling, order or judgment in favour or
against an Amalgamating Corporation may be enforced by or against the
Corporation;
(d) The articles of amalgamation are deemed to be the articles of
incorporation of the Corporation and, except for the purposes of
subsection 117(l) of the Act, the certificate of amalgamation shall be
deemed to be the certificate of incorporation of the Corporation;
(e) The Corporation shall be deemed to be the party plaintiff or the party
defendant, as the case may be, in any civil action commenced by or
against an Amalgamating Corporation before the Effective Date.
15. At any time before the Effective Date, this Amalgamation Agreement may be
terminated by the directors of any one of the Amalgamating Corporations,
notwithstanding the approval of this Amalgamation Agreement by the shareholders
of any one of such Amalgamating Corporations.
<PAGE>
-7-
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
as of the day and year first above written.
SIDUS SYSTEMS INC.
Per: /s/ Henry Kalisky
-------------------------
Henry Kalisky
President
SIDUS HOLDINGS INC.
Per: /s/ Henry Kalisky
-------------------------
Henry Kalisky
President
RIVERPLEX HOLDINGS INC.
Per: /s/ Alojz Muzar
-------------------------
Alojz Muzar
President
RESHET HOLDING LIMITED
Per: /s/ Henry Kalisky
-------------------------
Henry Kalisky
President
BY-LAW NO. 1 OF SIDUS SYSTEMS INC., FORMED BY THE AMALGAMATION OF SIDUS SYSTEMS
INC., SIDUS HOLDINGS INC., RIVERPLEX HOLDINGS INC. AND RESHET HOLDINGS LIMITED
ON NOVEMBER 26, 1993.
BY-LAW NO. 1
a by-law relating generally to
the transaction of
the business and affairs of
SIDUS SYSTEMS INC.
(the "Corporation")
RESOLVED as a by-law of the Corporation that:
PART 1
INTERPRETATION
SECTION 1.01. Definitions. In this By-law and all other by-laws and resolutions
of the Corporation, unless the context otherwise requires:
(a) the following terms shall have the meanings specified:
(i) "Act" means the Business Corporations Act, 1982 (Ontario), or any
statute that may be substituted therefor, including the regulations
made thereunder, as amended from time to time;
(ii) "Articles" means the letters patent of the Corporation as amended or
restated from time to time;
(iii) "Board" means the board of directors of the Corporation;
(iv) "Chairman of the Board" means the Director appointed by the Board
from time to time to hold that office;
(v) "Corporation" means Sidus Systems Inc.;
(vi) "Director" means a member of the Board;
(vii) "meeting of shareholders" means an annual meeting of shareholders or
a special meeting of shareholders, or both, and includes a meeting
of any class or series of any class of shareholders;
(viii) "Officer" means an officer of the Corporation;
(b) terms that are defined in the Act are used in this By-law with the same
meaning; and
(c) words importing the singular number shall include the plural number and vice
versa, and words importing the masculine gender shall include the feminine
and neuter genders.
<PAGE>
Page 2
PART 2
DIRECTORS AND OFFICERS
SECTION 2.01. Number of Directors. The minimum and maximum number of Directors
of the Corporation shall be such as are from time to time set forth in the
Articles. The number of Directors within such range shall be determined from
time to time by special resolution or, subject to the provisions of the Act, by
the Board if so empowered by special resolution.
SECTION 2.02. Election and Term. The Directors shall be elected at each annual
meeting of shareholders to hold office until the next annual meeting or until
their respective successors are elected or appointed. At any annual meeting
every retiring Director shall, if qualified, be eligible for re-election.
SECTION 2.03. Quorum. A majority of the number of Directors from time to time
shall constitute a quorum for the transaction of business at any meeting of the
Board. If it is necessary to determine the number of Directors constituting a
quorum at a time when one or more vacancies exist on the Board, such a
determination shall be made as if such vacancies did not exist.
SECTION 2.04. Calling of Meetings. A meeting of the Board may be held at any
time upon call by the Board, the Chairman of the Board, the President or any
other Officer so empowered by the Board.
SECTION 2.05. Place of Meetings. Each meeting of the Board shall be held at such
place within or outside Ontario as may be determined by the person calling the
meeting.
SECTION 2.06. Notice. Subject as hereinafter provided, notice of every meeting
of the Board shall be given to each Director at least 48 hours prior to the
meeting. Notwithstanding the foregoing:
(a) no notice need be given of the first meeting of the Board
subsequent to a meeting of shareholders at which Directors are
elected if such Board meeting is held immediately following the
meeting of shareholders; and
(b) the Board may appoint a day or days in any month or months for
regular meetings at a place and hour to be named.
A copy of any resolution by the Board fixing the time and place of regular
meetings of the Board shall be sent to each Director forthwith after being
passed, but no other notice shall be required for any such regular meeting. The
accidental failure to give notice of a meeting of the Board to a Director or any
error in such notice not affecting the substance thereof shall not invalidate
any action taken at the meeting.
SECTION 2.07. Votes to Govern. Every question at a meeting of the Board shall be
decided by a majority of the votes cast on the question. In the event of an
equality of votes on any question at a meeting of the Board, the Chairman of the
Board shall be entitled to a second or casting vote.
<PAGE>
Page 3
SECTION 2.08. Audit, Executive and Other Committees. Subject to the provisions
of the Act, the Board may appoint annually from among its members an Audit
Committee and one or more other committees of Directors, including a committee
designated as an Executive Committee, and delegate to such committee or
committees any of the powers of the Board except those powers which, under the
Act, a committee of Directors has no authority to exercise.
Unless otherwise determined by the Board, each committee appointed by the Board
shall have the power to fix the quorum for its meetings at not less than a
majority of its members, to elect its presiding officer and to fix its rules of
procedure.
SECTION 2.09. Appointment of Officers. The Board may from time to time appoint
Officers, specify their duties and delegate to them such powers as the Board
deems advisable and which are permitted by the Act to be so delegated. The Board
may also from time to time appoint persons to serve the Corporation in such
positions other than as Officers, with such titles and such powers and duties
and for such terms of service, as the Board deems advisable. One person may hold
or discharge the functions of more than one officer or other position.
SECTION 2.10. Remuneration and Expenses. Each Director shall be remunerated for
his services as a Director at such rate as the Board may from time to time
determine. In addition, each Director shall be paid such sums in respect of the
out-of-pocket expenses incurred by him in attending meetings of the Board,
meetings of any committee of the Board of which he is a member, or meetings of
shareholders, or otherwise incurred by him in connection with the performance of
his duties as a Director, as the Board may from time to time determine. Nothing
herein contained shall preclude any Director from receiving remuneration for
serving the Corporation as an Officer or employee or in any other capacity.
SECTION 2.11. Indemnity. Without limit to the right of the Corporation to
indemnify any person to the full extent permitted by law, the Corporation shall
indemnify a Director or Officer, a former Director or Officer, or a person who
acts or acted at the Corporation's request as a director or officer of a body
corporate of which the Corporation is or was a shareholder or creditor, and his
heirs and legal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he is made a party by reason of being or having been a
Director or Officer, or director or officer of such body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the Corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds
for believing that his conduct was lawful.
<PAGE>
Page 4
PART 3
SHAREHOLDERS
SECTION 3.01. Annual and Special Meetings. The Board shall call an annual
meeting of shareholders not later than 15 months after the holding of the last
preceding annual meeting and may at any time call a special meeting of
shareholders.
SECTION 3.02. Place of Meetings. Each meeting of shareholders shall be held at
such place within or outside Ontario as the Board determines.
SECTION 3.03. Notice of Meetings. Notice of each meeting of shareholders shall
be sent not less than 10 days nor more than 50 days before the meeting to each
shareholder entitled to vote at the meeting, to each Director, to the auditor of
the Corporation and to any other persons who, although not entitled to vote at
the meeting, are entitled or required under any provision of the Act, the
Articles or any by-law of the Corporation to attend the meeting. The accidental
failure to give notice of a meeting of shareholders to any person entitled to
notice thereof or any error in such notice not affecting the substance thereof
shall not invalidate any action taken at the meeting.
SECTION 3.04. Persons Entitled to be Present. The only persons entitled to
attend a meeting of shareholders shall be those persons entitled to vote
thereat, the Directors, Officers and auditor of the Corporation and any other
persons who, although not entitled to vote at the meeting, are entitled or
required under any provision of the Act, the Articles or any by-law of the
Corporation to attend the meeting. Any other person may be admitted to the
meeting only on the invitation of the chairman of the meeting or with the
consent of the meeting.
SECTION 3.05. Quorum. At any meeting of shareholders, the holders of a majority
of the shares entitled to vote at a meeting of shareholders whether present in
person or represented by proxy, shall constitute a quorum for the transaction of
business.
SECTION 3.06 Voting.
(a) Voting at any meeting of shareholders shall be by a show of hands
except where, either before or after a vote by show of hands, a
ballot is required by the chairman of the meeting or is demanded
by any person present and entitled to vote at the meeting. On a
show of hands, each person present at the meeting and entitled to
vote thereat shall, subject to the Act, have one vote. On a
ballot, each person present at the meeting and entitled to vote
thereat shall, subject to the Act and the Articles, have one vote
for each share in respect of which such person is entitled to
vote. A ballot so required or demanded shall be taken in such
manner as the chairman of the meeting directs.
<PAGE>
Page 5
(b) Unless otherwise required by the Act or the Articles, every
question at a meeting of shareholders shall be decided by a
majority of the votes cast on the question. In the event of an
equality of votes on any question at a meeting of shareholders
either upon a show of hands or upon a ballot, the chairman of the
meeting shall be entitled to a second or casting vote.
(c) Subject to the Act and the Articles, where, after the date on
which a list of shareholders entitled to receive notice of a
meeting is prepared in accordance with the Act, a shareholder
named in such list transfers any of his shares, the transferee of
such shares shall be entitled to vote such shares at the meeting
if, at any time before the meeting, the transferee
(i) produces properly endorsed share certificates, or
(ii) otherwise establishes that he owns such shares.
SECTION 3.07. Representatives. Upon filing proof of his appointment reasonably
sufficient to the chairman of a meeting of shareholders,
(a) a person who holds shares as a personal representative,
(b) an individual who has been duly authorized to represent at the
meeting a shareholder which is a body corporate or an association,
or
(c) a proxyholder or alternate proxyholder of a personal
representative, body corporate or association,
shall be entitled to vote at the meeting in respect of the shares in respect of
which such person has been appointed.
SECTION 3.08. Joint Shareholders. Where two or more persons are registered
jointly as the holders of shares of the Corporation,
(a) any notice, cheque or other document directed to such persons
shall be sent to them at their address as recorded in the
Corporation's share register or, if there be more than one address
recorded for them in that register, at the first such address;
(b) any one of such persons may give a receipt on behalf of them for a
share certificate that is issued in respect of their shares, or
for any dividend that is paid in respect of their shares, or for
any warrant or other evidence of a right to subscribe for
securities of the Corporation that is issued in respect of their
shares, or for any evidence of the rights in respect of any
conversion, exchange or other change in the share capital of the
Corporation that is issued in respect of their shares; and
<PAGE>
Page 6
(c) any one of such persons present in person or represented by proxy
at a meeting of shareholders and entitled to vote thereat may, in
the absence of the other or others, vote their shares as if he
were solely entitled thereto, but, if more than one of such
persons is so present or represented, they shall vote as one the
shares jointly held by them.
For the purposes of this section, several personal representatives of a
shareholder in whose names shares of the Corporation are registered shall be
deemed to hold such shares jointly.
SECTION 3.09. Presiding Officer. The Chairman of the Board or, a Director
designated by him, or failing such designation, a Director designated by the
Board, shall preside at a meeting of shareholders. If neither the Chairman of
the Board nor any Director is present within thirty minutes after the time
appointed for the holding of a meeting of shareholders, the shareholders present
shall choose a shareholder then present to be chairman of the meeting.
SECTION 3.10. Scrutineers. At any meeting of shareholders, the chairman of the
meeting may appoint one or more persons, who may but need not be shareholders,
to serve as scrutineers at the meeting.
SECTION 3.11. Dividends. A dividend payable to any shareholder
(a) in cash may be paid by cheque payable to the order of the
shareholder, or
(b) in shares may be paid by a share certificate in the name of the
shareholder,
and shall be mailed to such shareholder by prepaid ordinary or air mail in a
sealed envelope addressed (unless he has directed otherwise) to him at his
address as shown in the Corporation's share register. The mailing of such cheque
or share certificate, as the case may be, unless in the case of a cheque it is
not paid on due presentation, shall discharge the Corporation's liability for
the dividend to the extent of the sum or number of shares represented thereby
plus the amount of any tax which the Corporation has properly withheld. In the
event of the non-receipt of any such dividend cheque or share certificate, the
Corporation shall issue to the shareholder a replacement cheque or share
certificate, as the case may be, for the same amount or number of shares on such
reasonable terms as to indemnity and evidence of non-receipt as the Board, or
any Officer or agent designated by the Board, may require.
PART 4
EXECUTION OF DOCUMENTS
SECTION 4.01 The Board may from time to time determine the Officers or other
persons by whom certificates, contracts or other documents of the Corporation
shall be executed and the manner of execution thereof, including the use of
printed or facsimile reproductions of any or all signatures and the use of a
corporate seal or a printed or facsimile reproduction thereof.
<PAGE>
Page 7
PART 5
BORROWING
SECTION 5.01. The Board may from time to time, in such amounts and on such terms
as it deems expedient, without authorization of the shareholders:
(a) borrow money upon the credit of the Corporation;
(b) issue, reissue, sell or pledge debt obligations of the
Corporation;
(c) except as limited by law, give a guarantee on behalf of the
Corporation to secure performance of an obligation of any person;
and,
(d) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any property of the Corporation, owned or
subsequently acquired, to secure any obligation of the
Corporation.
The foregoing resolution making By-law No. 1 of the Corporation is
passed by all of the directors of the Corporation pursuant to the Business
Corporations Act, 1982 (Ontario), the lst day of December, 1991.
/s/ Alojz Muzar /s/ Henryk Kalisky
- ----------------------------- -----------------------------
Alojz Muzar Henryk Kalisky
The foregoing resolution making By-law No. 1 of the Corporation is
confirmed without variation by all of the shareholders of the Corporation
pursuant to the Business Corporations Act, 1982 (Ontario), the lst day of
December, 1991.
RIVERPLEX HOLDINGS INC. RESHET HOLDINGS LIMITED
Per: /s/ Alojz Muzar Per: /s/ Henryk Kalisky
------------------------- -------------------------
Alojz Muzar, Henryk Kalisky,
President President
<PAGE>
BORROWING BY-LAW OF SIDUS SYSTEMS INC., FORMED BY THE AMALGAMATION OF SIDUS
SYSTEMS INC., SIDUS HOLDINGS INC., RIVERPLEX HOLDINGS INC. AND RESHET HOLDINGS
LIMITED ON NOVEMBER 26, 1993.
BORROWING BY-LAW
A By-Law to Regulate Borrowing by the Corporation
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of Sidus
Systems Inc. (herein referred to as the "Corporation") the special borrowing
by-law attached as Schedule "A" hereto.
The undersigned, being all the directors of Sidus Systems Inc.
(herein referred to as the "Corporation"), pursuant to subsection 129(l) of the
Business Corporations Act (Ontario), by their respective signatures, hereby
makes the foregoing Borrowing By-Law as a by-law of the Corporation.
DATED the 22nd day of July, 1992.
/s/ Henryk Kalisky
-----------------------------
Henryk Kalisky
/s/ Alojz A. Muzar
-----------------------------
Alojz A. Muzar
The undersigned, being all the shareholders of Sidus Systems
Inc. (herein referred to as the "Corporation"), entitled to vote thereon
pursuant to subsection 104(l) of the Business Corporations Act (Ontario), by the
signature of its proper officer, hereby confirms without amendment the foregoing
Borrowing By-Law of the Corporation as made by the directors thereof.
DATED the 22nd day of July, 1992.
SIDUS HOLDINGS INC.
Per:/s/ Henryk Kalisky c/s
--------------------------------
Henryk Kalisky, President
<PAGE>
SCHEDULE "A"
------------
BANQUE DE BOSTON DU CANADA
BANK OF BOSTON CANADA
SPECIAL BORROWING BY-LAW
SIDUS SYSTEMS INC. (A/K/A LES SYSTEMES SIDUS INC.) (the "COMPANY")
- -----------------------------------------------------------------
Amalgamated under BUSINESS CORPORATIONS ACT, 1990 (ONTARIO) (Name of Act)
----------------------------------------------
BE IT AND IT IS HEREBY ENACTED as a By-law of the COMPANY as follows:
"SPECIAL BORROWING BY-LAW"
1. That the Directors of the COMPANY may from time to time:
(a) borrow money upon the credit of the COMPANY by obtaining loans or
advances or by way of overdraft or instruments evidencing indebtedness
or otherwise with interest thereupon;
(b) issue, sell or pledge securities of the COMPANY including bonds,
debentures, debenture stock, for such sums on such terms and at such
prices as they may deem expedient;
(c) assign, transfer, convey, hypothecate, mortgage, pledge, charge or
give security in any manner upon all or any of the real or personal,
moveable or immoveable property, rights, powers, choses in action, or
other assets, present or future, of the COMPANY to secure any such
securities or other securities of the COMPANY or any money borrowed or
to be borrowed or any obligations or liabilities as aforesaid or
otherwise of the COMPANY heretofore, now or hereafter made or incurred
directly or indirectly or otherwise;
(d) without in any way limiting the powers herein conferred upon the
Directors, give security or promises to give security, agreements,
documents and instruments in any manner or form under the Bank Act or
otherwise to secure any money borrowed or to be borrowed or any
obligations or liabilities as aforesaid or otherwise of the COMPANY
heretofore, now or hereafter made or incurred directly or indirectly
or otherwise;
(e) without in any way limiting the powers herein conferred upon the
Directors, hypothecate, mortgage, pledge, cede and transfer the
moveable or immoveable property, undertakings and rights, present or
future, of the COMPANY, to secure any of such bonds, mortgage bonds,
debentures, debenture stock or other securities, or give part only of
such guarantee for such purposes and constitute the hypothec,
mortgage, pledge, cession and transfer above mentioned by Trust Deed
in accordance with the Special Corporate Powers Act (R.S.Q. 1977, ch.
p-16), or in any manner.
2. That any or all of the foregoing powers may from time to time be delegated
by the Directors to any one or more of the directors or officers of the
COMPANY.
3. That this By-law shall remain in force and be binding upon the COMPANY as
regards any person acting on the faith thereof until such person has
received written notification from the COMPANY that this By-law has been
repealed or replaced.
4. The Customer expressly requires that this document and all documents
accessory thereto be drawn up in English and the BANK, because of the
Customer's requirement and by making such documents available to the
Customer in the English language, expresses the same requirement.
Le client requiert expressement que ce document et tous les documents qui
s'y rapportent soient rediges en langue anglaise et la BANQUE, a cause de
cette exigence du client, exprime la mime volonte en faisant en sorte que
les documents en langue anglaise soient a la disposition du client.
I hereby certify that the foregoing is a true and complete copy of
"SPECIAL BORROWING BY-LAW" of the COMPANY duly enacted by the Directors of
the COMPANY, that the said By-law was duly confirmed and sanctioned by the
shareholders in the manner required by law and that the said By-law is now
in full force and effect in accordance with the incorporating documents,
By-laws and any Unanimous Shareholder's Agreement of the COMPANY.
Dated this 22 day of July 1992.
/s/ Alojz Muzar
--------------------------------
Alojz Muzar - Secretary
(Corporate Seal)
Effective
Jan 15 payroll
M E M O R A N D U M
TO: GREG SMITH, CFO 292
FROM: BRIAN DIAMOND, V.P. SALES
DATE: NOVEMBER 28, 1995
SUBJECT: RECOGNITION OF SALARY
Greg, I had a conversation with Milan today in which he requested that you and I
change the format in which my base salary is recognized. Milan feels that under
the new structure there may be some dissension in the ranks if the details of my
salary ever leak out.
My base salary today per annum is $104,200.00 and in light of Milan's request, I
would agree to the following method of salary recognition:
* Base Salary $75,000.00 (including car allowance)
* Paid $6,250.00 per month = 3,125.00\p.p.
* Balance $29,200 paid as non-recoverable draw or bonus @ $2,433.33
monthly
* Payment by either one (1) or two (2) cheques bi-weekly with standard
payroll practice to a total of $8,683.33 per month.
I think that this will solve Milan's issue and I have no problems with the above
solution in restating the base salary of $104,200.00 per annum for appearance
purposes.
Sincerely,
/s/ Brian
Brian Diamond
Millan Muzar
1265 Millburn Cr.
Cumberland Ont.
K4C 1C9
Re: Employment agreement with Sidus Systems Inc.
Dear Millan,
Concerning your position with Sidus in the capacity of Executive Vice
President, I would like to formalize your compensation package as follows:
1) Effective March 1995 your base annual salary was set at $ 160,000.00
2) You will also be paid 1 % commission on the net profit of the company
3) You will participate in the employee stock option plan as approved by the
Board of Directors.
4) Since you have been one of the key employees since 1984, should there be in
the future a restructure of the company management due to the takeover, as a
severance package you would be paid equivalent of your previous annual income;
should the new management decide to terminate your services. HK
Henry Kalisky
President
/s/ Henry Kalisky
August 30, 1996
Mr. Reg Tiessen
915 Falcon Blvd.
Burlington, Ontario
L7T 3B5
Dear Reg:
This will confirm our offer of employment as Chief Financial Officer.
In the above capacity you will receive the following remuneration:
* salary of $125,000.00 per annum
* $600 per month car allowance
* $25,000.00 bonus per annum 1/3 based on achieving an earnings per share
corporate goal, the remainder on achieving personal objectives (to be set)
* 20,000 shares option vested over three years; 50% in second year, the
remainder in the third year (future options to be awarded at Board's
discretion)
* matching existing pension plan (2% of annual salary)
* three week annual vacation
* $10,000.00 moving allowance
* Immediate eligibility for participation in Corporate benefit program.
I would appreciate if you would return a signed copy of this offer letter
indicating your acceptance and advising us of the earliest date you can join us.
I look forward to having you on board as soon as possible as is professionally
possible. I'm sure our relationship will be long and mutually rewarding.
Yours truly,
Henry Kalisky
Chief Executive Officer
SIDUS SYSTEMS INC.
SIDUS SYSTEMS INC. - LES SYSTEMES SIDUS INC.
(the "Corporation")
STOCK OPTION PLAN
(AMENDED AND RESTATED, 1995)
1. PURPOSE
(a) The Plan provides a means for employees of the Corporation and
its Subsidiaries to be granted Options to purchase Shares of the Corporation or
to receive a cash amount that is the equivalent of the opportunity to exercise
an Option.
(b) The Corporation, by means of the Plan, seeks to retain the
services of persons now holding key positions and to secure and retain the
services of persons capable of filling such positions.
2. INTERPRETATION
(a) In this Plan, unless the context otherwise requires,
(i) "Associate" has the meaning assigned thereto in the
Securities Act (Ontario);
(ii) "Board" means the Board of Directors of the
Corporation;
(iii) "Change of Control" means the acquisition, by any
entity or its affiliates, that prior to such
acquisition did not hold over 50% of the voting
rights attaching to all shares of the Corporation, of
over 50% of such voting rights, including voting
rights held prior to such acquisition;
(iv) "Closing Price" in respect of any particular date
means the closing board lot sale price per Share on
such date, or in case no such sale takes place on
such date, the average of the closing bid and asked
prices for each Share as reported by The Toronto
Stock Exchange (provided that if no such price exists
on such date and no bid and asked prices are
available for such date, the Closing Price in respect
of such date shall be established on the same basis
on the last previous date for which such price or
prices were reported);
(v) "Corporation" means Sidus Systems Inc. and any
successor corporation by amalgamation;
<PAGE>
- 2 -
(vi) "Delisted" means having the Shares delisted from
trading on The Toronto Stock Exchange and all other
stock exchanges on which the Shares are at that time
listed, and the effective date of Delisting for the
purposes of this Plan and any Option Agreement shall
be the date on which the board of directors of the
Corporation authorizes a formal request to the stock
exchanges for a delisting of the Shares or the date
on which the shares are in fact delisted, whichever
first occurs;
(vii) "Employee" means a full-time employee of the
Corporation or a Subsidiary, who is granted an Option
by the Corporation;
(viii) "Expiry Date" means 4:30 p.m. (Toronto time) on the
date that is the earlier of: (a)
180 days following the death of the Employee; (b) 30
days following the Termination of Employment of the
Employee; (c) 30 days following the Corporation being
Delisted or experiencing a Change of Control; and (d)
the date specified as the expiry date in the
applicable Option Agreement, which date shall not be
more than ten years after the date of grant of an
Option;
(ix) "Insider" means an Employee who is (a) an insider as
defined in the Securities Act (Ontario), (other than
a person who falls within that definition solely by
virtue of being a director or senior officer of a
Subsidiary) and (b) an Associate of any person who is
an insider by virtue of (a);
(x) "Market Price" means, with respect to a Share subject
to Option, the Closing Price of the Shares in respect
of the trading day immediately preceding the day on
which the Option is granted (or, for greater
certainty, such other date determined pursuant to the
definition of Closing Price); provided, however, that
if an event of a type analogous to any of the events
described in Section 11 hereof shall have caused any
Closing Price on any trading day not to be fully
comparable with the Closing Price on the day on which
the Option is granted, such Closing Price shall be
appropriately adjusted in the manner prescribed in
Section 11;
(xi) "Option" means the right to purchase Shares pursuant
to the terms and conditions of an Option Agreement;
(xii) "Option Agreement" means an agreement between the
Corporation and the Employee evidencing the grant of
an Option and the terms and conditions thereof;
(xiii) "Option Price" means the purchase price per Optioned
Share, determined by the Board at the time the Option
is granted;
(xiv) "Optioned Shares" means the number of Shares which
may be purchased by the Employee under the Option
Agreement;
(xv) "Outstanding Issue" means the number of Shares issued
and outstanding on a non-diluted basis;
(xvi) "Plan" means the Corporation's Stock Option Plan
(Amended and Restated, 1995):
(xvii) "Shares" means the common shares in the capital of
the Corporation or, in the event of any
reclassification of such common shares, the shares in
the capital of the Corporation resulting from such
reclassification;
(xviii) "Share Compensation Arrangement" means a stock
option, stock option plan, stock purchase plan or any
other compensation or incentive mechanism involving
the issuance or potential issuance of Shares to one
or more persons, including a Share purchase from
treasury which is financially assisted by the
Corporation by way of a loan, guarantee or otherwise;
(xix) "Subsidiary" means a subsidiary of the Corporation
and includes any affiliate or subsidiary thereof; and
(xx) "Termination of Employment" means termination of
employment for any reason other than death but does
not include a change of employment between the
<PAGE>
- 3 -
Corporation and any Subsidiary or between two
Subsidiaries.
(b) Where the singular or masculine is used in this Plan, they
shall be so construed as if the plural or the feminine or the neuter had been
used, when the context or the entity referred to so requires.
3. ADMINISTRATION
The Plan shall be administered by the Board. Any Executive
Committee of the Board or other committee so designated by the Board shall be
authorized to deal with the administration of the Plan between meetings of the
Board.
4. GRANT OF THE OPTIONS AND LIMITATIONS
(a) The Corporation may grant Options at any time and from time to
time, prior to the Plan being terminated or suspended. As soon as practicable
after an Option is granted, the Employee and the Corporation shall enter into an
Option Agreement which specifies the number of Optioned Shares, the Option
Price, the terms and conditions of the Option and any special restrictions on
the Optioned Shares.
(b) At the time it grants an Option under the Plan, the
Corporation may retain, for itself or others, such rights to purchase Shares
acquired under the Option, or may impose such other restrictions on the Shares,
as the Board may determine in its sole discretion. The terms and conditions of
any such rights or restrictions shall be set forth in the Option Agreement.
(c) The Corporation shall not grant such number of Options to
Insiders on such terms as, together with all other Share Compensation
Arrangements of the Corporation, could result, at any time, in the issuance to
any one Insider (and such Insider's Associates), within a one year period, of a
number of Shares exceeding five per cent (5%) of the Outstanding Issue. For the
purposes of this paragraph: (i) "Outstanding Issue" shall be determined on the
basis of the number of Shares that are outstanding immediately prior to the
Share issuance in question, excluding Shares issued pursuant to Share
Compensation Arrangements during the preceding one year period and (ii) Options
granted prior to an Insider becoming an Insider shall be excluded in determining
the number of shares issuable to such Insider.
5. SHARES RESERVED FOR OPTIONS
(a) The Shares which may be issued and sold upon the exercise of
Options granted pursuant to the Plan will be authorized but unissued Shares, but
in no event shall the aggregate number of Shares (i) available for issuance
under the terms of Options then or previously granted under the Plan exceed
828,750 (or such greater number as is approved by the Corporation's shareholders
by ordinary resolution from time to time) or (ii) available for issuance to any
one person under all Share Compensation Arrangements exceed 5 % of the
Outstanding Issue.
(b) For purposes of the limits prescribed by paragraph 5(a), if
Options are surrendered, or if Options terminate or expire without being
exercised in whole or in part, new Options may be granted covering the Shares
not purchased under such lapsed Options, provided that Options once issued
cannot be rescinded by mutual consent or agreement for the purpose of making
Shares available for issue pursuant to a new Option granted in favour of the
same Employee at a lower Option Price under the Plan.
6. OPTION PRICE
The Option Price shall be determined by the Board at the time
the Option is granted provided that the Option Price shall not be less than the
Market Price of the Shares.
<PAGE>
- 4 -
7. TERMS OF OPTION AGREEMENT
Unless otherwise modified by the Board generally or in regard
to specific grants, and subject to the applicable regulatory requirements, each
Option Agreement shall have the following terms:
(a) The term of any option shall not be greater than ten years
from the date of grant;
(b) To the extent the right to purchase Optioned Shares has
vested, Options shall be exercised in accordance with section
9 hereof;
(c) In the event of Termination of Employment, the Employee may
only exercise the Option to the extent that the right to
purchase the Optioned Shares has vested at the date of
Termination of Employment, as provided in the Employee's
Option Agreement, for a period of 30 days following the date
of Termination of Employment. At the close of business on the
30th day following such date, the Option shall expire and be
null and void in respect of the Optioned Shares for which the
Option has not been exercised;
(d) In the event that an Employee shall die while still in the
employ of the Corporation or a Subsidiary, the personal
representative of the Employee may only exercise the Option to
the extent that the right to purchase the Optioned Shares has
vested or may vest at the date of death, as provided in the
Employee's Option Agreement, for a period of 180 days
following the date of death. At the close of business on the
180th day following such date, the Option shall expire and be
null and void in respect of the Optioned Shares for which the
Option has not been exercised;
(e) In the event that the Corporation is Delisted or a Change of
Control shall occur, all of the Employee's Optioned Shares
which are not then vested shall vest on the effective date of
Delisting or Change of Control;
(f) The Option Agreement may not be assigned by the Employee and
an Option may not be assigned and shall be exercisable only by
the Employee or his personal representative as described in
subsection 7(d) hereof;
(g) The Option Agreement shall contain provisions permitting the
Corporation to pay cash, in lieu of delivering Optioned
Shares, in accordance with subsections 9(c), (d) and (e)
hereof; and
(h) Subject to section 11 hereof, the Employee shall have no
rights whatsoever as a shareholder in respect of any of the
Optioned Shares (including any right to receive dividends or
other distributions therefrom), unless and only to the extent
that the Employee shall from time to time duly exercise an
Option and become a registered shareholder.
8. VESTING
An Employee's right to purchase the Optioned Shares shall vest
on such dates and only in respect of such number of Optioned Shares as specified
in the Employee's Option Agreement.
9. EXERCISE OF OPTIONS
<PAGE>
- 5 -
(a) Options shall be exercisable at any time and from time to time
during the term of the Option Agreement as to all or any
lesser number of the Optioned Shares in respect of which the
Employee's right to purchase has vested.
(b) Options shall be exercised by written notice to the
Corporation in the manner provided in section 12 hereof,
specifying the number of Optioned Shares in respect of which
such Option is then being exercised and indicating whether the
Employee intends to sell the Optioned Shares within the next
90 days in order to realize the value thereof.
(c) Where an Employee exercises an Option, the Corporation shall
have the right, exercisable in its sole discretion, to elect
to pay the Employee, in lieu of delivering the Optioned Shares
in respect of which the Option is being exercised, a cash
amount equal to the difference between (i) the closing price
for the Optioned Shares on The Toronto Stock Exchange on the
last trading day immediately preceding the day the Employee
gives the Corporation written notice of his exercise of
Option, and (ii) the Option Price for the Optioned Shares in
respect of which the Option is being exercised, less
applicable withholding taxes, if any.
(d) Where the Corporation exercises its right to require the
Employee to accept a cash amount, in lieu of Optioned Shares,
it shall so notify the Employee within three business days
after receipt of the Employee's written notice of exercise of
Option.
(e) Where the Corporation elects to pay a cash amount to an
Employee under subsection 9(c), the Corporation shall at such
time pay to the Employee a further amount to compensate the
Employee for the additional tax, if any, payable by the
Employee in the taxation year in which the Option is exercised
because the Employee receives a cash payment, in lieu of
Optioned Shares, determined with reference solely to the
marginal rate of tax payable by the Employee on the base
salary (excluding benefits), payable to the Employee by the
Corporation or its Subsidiaries for the taxation year in which
the Option is exercised, less applicable withholding taxes, if
any.
10. COMPLETION OF PURCHASE OR PAYMENT TO EMPLOYEE
Unless otherwise provided in the Employee's Option Agreement,
(a) any purchase of Optioned Shares pursuant to subsection 9(b)
hereof shall be completed by the end of the fourth business
day after the date the Employee gives written notice of
exercise of Option and the consideration shall be paid in cash
or by certified cheque or official bank draft against delivery
of the Share Certificates representing the Optioned Shares and
duly registered to the order of the Employee; and
(b) any payment by the Corporation to an Employee of the cash
amounts described in subsection 9(c) and 9(e) hereof shall be
made within four business days after the Employee gives the
Corporation written notice of the exercise of any Option.
11. ADJUSTMENT UPON CHANGES IN SHARES
(a) In the event of any subdivision, redivision or other change in
the Shares of the Corporation at any time up to the close of
business on the Expiry Date into a greater number of Shares,
the number of Shares deliverable
<PAGE>
- 6 -
by the Corporation on any exercise thereafter of an Option
shall be increased to such number of Shares as would have
resulted from such subdivisions, redivision or change if such
exercise of Option had been prior to the date of such
subdivision, redivision or change.
(b) In the event of any consolidation or other change in the
Shares of the Corporation at any time up to the close of
business on the Expiry Date into a lesser number of Shares,
the number of Shares deliverable by the Corporation on any
exercise thereafter of an Option shall be reduced to such
number of Shares as would have resulted from such
consolidation or change if such exercise of Option had been
prior to the date of such consolidation or change.
(c) In the event that the Corporation shall amalgamate with any
other corporation at any time up to the close of business on
the Expiry Date, the Shares deliverable by the Corporation on
any exercise thereafter of an Option shall be such number and
kind of Shares as would have resulted from such amalgamation
if such exercise of Option had been prior to the date of such
amalgamation.
12. NOTICE
Any notice required or permitted to be given hereunder shall
be in writing and shall be sufficiently given if enclosed in a sealed envelope
addressed to the person entitled thereto, and if to the Corporation to its
President at its principal office in Ontario, and if to the Employee or to his
personal representative at the address indicated in the written notice of
exercise of Option, where applicable, or at the Employee's last known address
shown in the records of the Corporation or any Subsidiary, and delivered
personally or mailed by prepaid registered mail. Any notice so given shall be
deemed conclusively to have been given and received when so personally delivered
or four days after having been so mailed.
13. AMENDMENT TO THE PLAN
The Board may at any time, and from time to time, amend the
Plan, subject to the limitation, however, that except as prostided in Section
11, no amendment shall be effective unless and until approved in accordance with
the requirements of all applicable regulatory authorities including any
applicable stock exchanges. Rights and obligations under any Option granted
before amendment of the Plan shall not be altered or impaired by amendment of
the Plan, except with the consent of the person to whom the Option was granted.
14. TERMINATION OR SUSPENSION OF THE PLAN
The Board at any time may suspend or terminate the Plan. An
Option may not be granted under the Plan while the Plan is suspended or after it
is terminated. Rights and obligations under any Option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.
15. USE OF PROCEEDS
Proceeds from the sale of Optioned Shares shall be used for
general corporate purposes.
16. APPLICABLE LAW
<PAGE>
- 7 -
This Plan and the provisions hereof shall be governed by and
construed according to the laws of the Province of Ontario.
Adopted by the Board of Directors of
Sidus Systems Inc.
effective November________, 1993 as amended
and restated___________________, 1995.
___________________________ ___________________________
Chairman Secretary
<PAGE>
<PAGE>
Schedule "A"
<TABLE>
<CAPTION>
Stock Options
Options Currently Exercise
Person Position Granted Outstanding Price(s)
- ------ -------- ------- ----------- --------
<S> <C> <C> <C> <C>
Al Muzar Chairman 50,000 50,000 $16.76
Henry Kalisky Chief Executive Officer 50,000 50,000 16.76
Brian Diamond Vice-President-Sales 20,000 20,000 16.76
George Von Vice-President-Manufacturing 10,000 nil 16.76
Koenigsmarck(1)
Shau Breton Vice-President-Operations 30,000 30,000 16.76
30,000 30,000 8.75
Bill Niarchos(1) Vice-President-Engineering and 10,000 nil 16.76
Product Development
Sandy Dewar(1) Controller 10,000 nil 16.76
Paresh Shukla Manager, Technical Staff 10,000 10,000 16.76
Milan Muzar Vice-President-Government 40,000 40,000 16.76
Sales (Ottawa Office) 40,000 40,000 8.75
Ken Wemyss Manager, Government Sales 20,000 20,000 16.76
Ron Berringer(1) Sales Manager, Ottawa 10,000 nil 16.76
Ozzy Papic Manager, Technical Support, 10,000 10,000 16.76
Ottawa
David Oberman Regional Manager, Vancouver 10,000 10,000 16.76
Dave Urman(1) Vice President, U.S. Sales 10,000 nil 16.76
Bill Cripouris Purchasing 5,000 5,000 16.76
Dan Joyce National Sales Manager 10,000 10,000 3.10
Rudi Naglemaker National Sales Manager 10,000 10,000 3.10
Anthony Wright National Sales Manager 10,000 10,000 3.10
John L. Albright(1) Director 22,500 22,500 4.20
Robert Giese(2) Director 22,500 22,500 4.20
Roderick F. Barrett(2) Director 22,500 22,500 4.20
Robert W. Kirby(2) Director 22,500 22,500 4.20
Juri Koor(2) Director 22,500 22,500 4.20
------- ------
507,500 457,500
</TABLE>
- ----------
1 This person's employment has since terminated, with no options exercised.
2 This person's options are subject to the approval by the shareholders of
the Company of an amended stock option plan permitting the granting of
options to directors.
SIDUS SYSTEMS INC. - LES SYSTEMES SIDUS INC.
(the "Corporation")
STOCK OPTION PLAN
(AMENDED AND RESTATED, 1995)
1. PURPOSE
(a) The Plan provides a means for employees of the Corporation and its
Subsidiaries to be granted Options to purchase Shares of the Corporation or to
receive a cash amount that is the equivalent of the opportunity to exercise an
Option.
(b) The Corporation, by means of the Plan, seeks to retain the services of
persons now holding key positions and to secure and retain the services of
persons capable of filling such positions.
2. INTERPRETATION
(a) In this Plan, unless the context otherwise requires,
(i) "Associate" has the meaning assigned thereto in the
Securities Act (Ontario);
(ii) "Board" means the Board of Directors of the Corporation;
(iii) "Change of Control" means the acquisition, by any entity or
its affiliates, that prior to such acquisition did not hold
over 50% of the voting rights attaching to all shares of the
Corporation, of over 50% of such voting rights, including
voting rights held prior to such acquisition;
(iv) "Closing Price" in respect of any particular date means the
closing board lot sale price per Share on such date, or in
case no such sale takes place on such date, the average of
the closing bid and asked prices for each Share as reported
by The Toronto Stock Exchange (provided that if no such price
exists on such date and no bid and asked prices are available
for such date, the Closing Price in respect of such date
shall be established on the same basis on the last previous
date for which such price or prices were reported);
(v) "Corporation" means Sidus Systems Inc. and any successor
corporation by amalgamation;
<PAGE>
-2-
(vi) "Delisted" means having the Shares delisted from trading on
The Toronto Stock Exchange and all other stock exchanges on
which the Shares are at that time listed, and the effective
date of Delisting for the purposes of this Plan and any
Option Agreement shall be the date on which the board of
directors of the Corporation authorizes a formal request to
the stock exchanges for a delisting of the Shares or the date
on which the shares are in fact delisted, whichever first
occurs;
(vii) "Employee" means a full-time employee of the Corporation or a
Subsidiary, who is granted an Option by the Corporation;
(viii) "Expiry Date" means 4:30 p.m. (Toronto time) on the date that
is the earlier of: (a) 180 days following the death of the
Employee; (b) 30 days following the Termination of Employment
of the Employee; (c) 30 days following the Corporation being
Delisted or experiencing a Change of Control; and (d) the
date specified as the expiry date in the applicable Option
Agreement, which date shall not be more than ten years after
the date of grant of an Option;
(ix) "Insider" means an Employee who is (a) an insider as defined
in the Securities Act (Ontario), (other than a person who
falls within that definition solely by virtue of being a
director or senior officer of a Subsidiary) and (b) an
Associate of any person who is an insider by virtue of (a);
(x) "Market Price" means, with respect to a Share subject to
Option, the Closing Price of the Shares in respect of the
trading day immediately preceding the day on which the Option
is granted (or, for greater certainty, such other date
determined pursuant to the definition of Closing Price);
provided, however, that if an event of a type analogous to
any of the events described in Section 11 hereof shall have
caused any Closing Price on any trading day not to be fully
comparable with the Closing Price on the day on which the
Option is granted, such Closing Price shall be appropriately
adjusted in the manner prescribed in Section 11;
(xi) "Option" means the right to purchase Shares pursuant to the
terms and conditions of an Option Agreement;
(xii) "Option Agreement" means an agreement between the Corporation
and the Employee evidencing the grant of an Option and the
terms and conditions thereof;
(xiii) "Option Price" means the purchase price per Optioned Share,
determined by the Board at the time the Option is granted;
<PAGE>
-3-
(xiv) "Optioned Shares" means the number of Shares which may be
purchased by the Employee under the Option Agreement;
(xv) "Outstanding Issue" means the number of Shares issued and
outstanding on a non-diluted basis;
(xvi) "Plan" means the Corporation's Stock Option Plan (Amended and
Restated, 1995):
(xvii) "Shares" means the common shares in the capital of the
Corporation or, in the event of any reclassification of such
common shares, the shares in the capital of the Corporation
resulting from such reclassification;
(xviii) "Share Compensation Arrangement" means a stock option, stock
option plan, stock purchase plan or any other compensation or
incentive mechanism involving the issuance or potential
issuance of Shares to one or more persons, including a Share
purchase from treasury which is financially assisted by the
Corporation by way of a loan, guarantee or otherwise;
(xix) "Subsidiary" means a subsidiary of the Corporation and
includes any affiliate or subsidiary thereof; and
(xx) "Termination of Employment" means termination of employment
for any reason other than de ath but does not include a
change of employment between the Corporation and any
Subsidiary or between two Subsidiaries.
(b) Where the singular or masculine is used in this Plan, they shall be so
construed as if the plural or the feminine or the neuter had been used, when the
context or the entity referred to so requires.
3. ADMINISTRATION
The Plan shall be administered by the Board. Any Executive Committee of the
Board or other committee so designated by the Board shall be authorized to deal
with the administration of the Plan between meetings of the Board.
4. GRANT OF THE OPTIONS AND LIMITATIONS
(a) The Corporation may grant Options at any time and from time to time,
prior to the Plan being terminated or suspended. As soon as practicable after an
Option is granted, the Employee and the Corporation shall enter into an Option
Agreement which specifies the number of Optioned Shares, the Option Price, the
terms and conditions of the Option and any special restrictions on the Optioned
Shares.
<PAGE>
-4-
(b) At the time it grants an Option under the Plan, the Corporation may
retain, for itself or others, such rights to purchase Shares acquired under the
Option, or may impose such other restrictions on the Shares, as the Board may
determine in its sole discretion. The terms and conditions of any such rights or
restrictions shall be set forth in the Option Agreement.
(c) The Corporation shall not grant such number of Options to Insiders on
such terms as, together with all other Share Compensation Arrangements of the
Corporation, could result, at any time, in the issuance to any one Insider (and
such Insider's Associates), within a one year period, of a number of Shares
exceeding five per cent (5%) of the Outstanding Issue. For the purposes of this
paragraph: (i) "Outstanding Issue" shall be determined on the basis of the
number of Shares that are outstanding immediately prior to the Share issuance in
question, excluding Shares issued pursuant to Share Compensation Arrangements
during the preceding one year period and (ii) Options granted prior to an
Insider becoming an Insider shall be excluded in determining the number of
shares issuable to such Insider.
5. SHARES RESERVED FOR OPTIONS
(a) The Shares which may be issued and sold upon the exercise of Options
granted pursuant to the Plan will be authorized but unissued Shares, but in no
event shall the aggregate number of Shares (i) available for issuance under the
terms of Options then or previously granted under the Plan exceed 828,750 (or
such greater number as is approved by the Corporation's shareholders by ordinary
resolution from time to time) or (ii) available for issuance to any one person
under all Share Compensation Arrangements exceed 5 % of the Outstanding Issue.
(b) For purposes of the limits prescribed by paragraph 5(a), if Options are
surrendered, or if Options terminate or expire without being exercised in whole
or in part, new Options may be granted covering the Shares not purchased under
such lapsed Options, provided that Options once issued cannot be rescinded by
mutual consent or agreement for the purpose of making Shares available for issue
pursuant to a new Option granted in favour of the same Employee at a lower
Option Price under the Plan.
6. OPTION PRICE
The Option Price shall be determined by the Board at the time the Option is
granted provided that the Option Price shall not be less than the Market Price
of the Shares.
7. TERMS OF OPTION AGREEMENT
Unless otherwise modified by the Board generally or in regard to specific
grants, and subject to the applicable regulatory requirements, each Option
Agreement shall have the following terms:
<PAGE>
-5-
(a) The term of any option shall not be greater than ten years
from the date of grant;
(b) To the extent the right to purchase Optioned Shares has
vested, Options shall be exercised in accordance with section
9 hereof;
(c) In the event of Termination of Employment, the Employee may
only exercise the Option to the extent that the right to
purchase the Optioned Shares has vested at the date of
Termination of Employment, as provided in the Employee's
Option Agreement, for a period of 30 days following the date
of Termination of Employment. At the close of business on the
30th day following such date, the Option shall expire and be
null and void in respect of the Optioned Shares for which the
Option has not been exercised;
(d) In the event that an Employee shall die while still in the
employ of the Corporation or a Subsidiary, the personal
representative of the Employee may only exercise the Option
to the extent that the right to purchase the Optioned Shares
has vested or may vest at the date of death, as provided in
the Employee's Option Agreement, for a period of 180 days
following the date of death. At the close of business on the
180th day following such date, the Option shall expire and be
null and void in respect of the Optioned Shares for which the
Option has not been exercised;
(e) In the event that the Corporation is Delisted or a Change of
Control shall occur, all of the Employee's Optioned Shares
which are not then vested shall vest on the effective date of
Delisting or Change of Control;
(f) The Option Agreement may not be assigned by the Employee and
an Option may not be assigned and shall be exercisable only
by the Employee or his personal representative as described
in subsection 7(d) hereof;
(g) The Option Agreement shall contain provisions permitting the
Corporation to pay cash, in lieu of delivering Optioned
Shares, in accordance with subsections 9(c), (d) and (e)
hereof; and
(h) Subject to section 11 hereof, the Employee shall have no
rights whatsoever as a shareholder in respect of any of the
Optioned Shares (including any right to receive dividends or
other distributions therefrom), unless and only to the extent
that the Employee shall from time to time duly exercise an
Option and become a registered shareholder.
8. VESTING
An Employee's right to purchase the Optioned Shares shall vest on such
dates and only in respect of such number of Optioned Shares as specified in the
Employee's Option Agreement.
<PAGE>
-6-
9. EXERCISE OF OPTIONS
(a) Options shall be exercisable at any time and from time to
time during the term of the Option Agreement as to all or any
lesser number of the Optioned Shares in respect of which the
Employee's right to purchase has vested.
(b) Options shall be exercised by written notice to the
Corporation in the manner provided in section 12 hereof,
specifying the number of Optioned Shares in respect of which
such Option is then being exercised and indicating whether
the Employee intends to sell the Optioned Shares within the
next 90 days in order to realize the value thereof.
(c) Where an Employee exercises an Option, the Corporation shall
have the right, exercisable in its sole discretion, to elect
to pay the Employee, in lieu of delivering the Optioned
Shares in respect of which the Option is being exercised, a
cash amount equal to the difference between (i) the closing
price for the Optioned Shares on The Toronto Stock Exchange
on the last trading day immediately preceding the day the
Employee gives the Corporation written notice of his exercise
of Option, and (ii) the Option Price for the Optioned Shares
in respect of which the Option is being exercised, less
applicable withholding taxes, if any.
(d) Where the Corporation exercises its right to require the
Employee to accept a cash amount, in lieu of Optioned Shares,
it shall so notify the Employee within three business days
after receipt of the Employee's written notice of exercise of
Option.
(e) Where the Corporation elects to pay a cash amount to an
Employee under subsection 9(c), the Corporation shall at such
time pay to the Employee a further amount to compensate the
Employee for the additional tax, if any, payable by the
Employee in the taxation year in which the Option is
exercised because the Employee receives a cash payment, in
lieu of Optioned Shares, determined with reference solely to
the marginal rate of tax payable by the Employee on the base
salary (excluding benefits), payable to the Employee by the
Corporation or its Subsidiaries for the taxation year in
which the Option is exercised, less applicable withholding
taxes, if any.
10. COMPLETION OF PURCHASE OR PAYMENT TO EMPLOYEE
Unless otherwise provided in the Employee's Option Agreement,
(a) any purchase of Optioned Shares pursuant to subsection 9(b)
hereof shall be completed by the end of the fourth business
day after the date the Employee gives written notice of
exercise of Option and the consideration shall be paid in
cash or by certified cheque or official bank draft against
delivery of the Share Certificates representing the Optioned
Shares and duly registered to the order of the Employee; and
(b) any payment by the Corporation to an Employee of the cash
amounts described in subsection 9(c) and 9(e) hereof shall be
made within four business days after the Employee gives the
Corporation written notice of the exercise of any Option.
<PAGE>
-7-
11. ADJUSTMENT UPON CHANGES IN SHARES
(a) In the event of any subdivision, redivision or other change
in the Shares of the Corporation at any time up to the close
of business on the Expiry Date into a greater number of
Shares, the number of Shares deliverable by the Corporation
on any exercise thereafter of an Option shall be increased to
such number of Shares as would have resulted from such
subdivisions, redivision or change if such exercise of Option
had been prior to the date of such subdivision, redivision or
change.
(b) In the event of any consolidation or other change in the
Shares of the Corporation at any time up to the close of
business on the Expiry Date into a lesser number of Shares,
the number of Shares deliverable by the Corporation on any
exercise thereafter of an Option shall be reduced to such
number of Shares as would have resulted from such
consolidation or change if such exercise of Option had been
prior to the date of such consolidation or change.
(c) In the event that the Corporation shall amalgamate with any
other corporation at any time up to the close of business on
the Expiry Date, the Shares deliverable by the Corporation on
any exercise thereafter of an Option shall be such number and
kind of Shares as would have resulted from such amalgamation
if such exercise of Option had been prior to the date of such
amalgamation.
12. NOTICE
Any notice required or permitted to be given hereunder shall be in writing
and shall be sufficiently given if enclosed in a sealed envelope addressed to
the person entitled thereto, and if to the Corporation to its President at its
principal office in Ontario, and if to the Employee or to his personal
representative at the address indicated in the written notice of exercise of
Option, where applicable, or at the Employee's last known address shown in the
records of the Corporation or any Subsidiary, and delivered personally or mailed
by prepaid registered mail. Any notice so given shall be deemed conclusively to
have been given and received when so personally delivered or four days after
having been so mailed.
13. AMENDMENT TO THE PLAN
The Board may at any time, and from time to time, amend the Plan, subject
to the limitation, however, that except as prostided in Section 11, no amendment
shall be effective unless and until approved in accordance with the requirements
of all applicable regulatory authorities including any applicable stock
exchanges. Rights and obligations under any Option granted before amendment of
the Plan shall not be altered or
<PAGE>
-8-
impaired by amendment of the Plan, except with the consent of the person to whom
the Option was granted.
14. TERMINATION OR SUSPENSION OF THE PLAN
The Board at any time may suspend or terminate the Plan. An Option may not
be granted under the Plan while the Plan is suspended or after it is terminated.
Rights and obligations under any Option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Option was granted.
15. USE OF PROCEEDS
Proceeds from the sale of Optioned Shares shall be used for general
corporate purposes.
16. APPLICABLE LAW
This Plan and the provisions hereof shall be governed by and construed
according to the laws of the Province of Ontario.
Adopted by the Board of Directors of
Sidus Systems Inc.
effective November________, 1993 as amended
and restated___________________, 1995.
- --------------------------- ---------------------------
Chairman Secretary
<TABLE>
<S> <C> <C> <C> <C>
Province CHARGE/MORTGAGE OF LAND B
of
Ontario Form 2 - Land Registration Reform Act
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Registry [ ] Land Titles [X] (2) Page 1 of 1 pages
New Property Identifiers
Additional:
See
Schedule [ ]
--------------------------------------------------------------------------------------
(3) Property Block Property Additional:
Identifier(s) See
Schedule [ ]
--------------------------------------------------------------------------------------
(4) Principal Amount
One Million Seven Hundred Thirteen thousand Eight Hundred
Thirty Three..................................................Dollars $1,713,833.00
- -----------------------------------------------------------------------------------------------------------------------------------
Executions (5) Description
Parcel 7-2, Section 65M-2665, being Par of Block 7, Plan
65M-2655, designated as Parts 1 and 2, Plan 65R-13412
Additional: Town of Markham, Regional Municipality of York
See
Schedule [ ] Land Titles Division of York Region (No. 65)
- -----------------------------------------------------------------------------------------------------------------------------------
(6) This (a) Redescription (b) Schedule for: (7) Interest/Estate Charged
Document New Easement Additional Fee Simple
Contains Plan/Sketch [ ] Description [ ] Parties [ ] Other [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
(8) Standard Charge Terms - The parties agree to be bound by the provisions in
Standard Charge Terms filed as number 954 and the Chargor(s) hereby
acknowledge(s) receipt of a copy of these terms.
- -----------------------------------------------------------------------------------------------------------------------------------
(9) Payment Provisions
(a) Principal (b) Interest (c) Calculation semi-annually
Amount $ 1,713,833.00 Rate 8.000 % per annum Period not in advance
- -----------------------------------------------------------------------------------------------------------------------------------
Interest Y M D Payment First Y M D
(d) Adjustment (e) Date and (f) Payment
Amount 1996 05 01 Period first - monthly Date 1996 06 01
- -----------------------------------------------------------------------------------------------------------------------------------
Last Amount
(g) Payment (h) of Each Twenty Four Thousand Four Hundred Eighty Three........82
Date 1998 05 01 Payment Dollars $ 24,483.82
- -----------------------------------------------------------------------------------------------------------------------------------
Balance
(i) Due (j) Insurance See Standard Charge Terms 954 Dollars $
Date 1998 05 01
- -----------------------------------------------------------------------------------------------------------------------------------
(10) Additional Provisions
</TABLE>
Continued on
Schedule [ ]
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
(11) Chargor(s) The chargor hereby charges the land to the chargee.
The chargor(s) acknowledge(s) receipt of a true copy of this charge. Date of Signature
Name(s) Signature(s) Y M D
SIDUS SYSTEMS INC. Per: 1966 04
Al Muzar
I have authority to bind the Corporation. Chairman and CEO
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(12) Spouse(s) of Chargor(s) I hereby consent to this transaction. Date of Signature
Name(s) Signature(s) Y M D
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(13) Chargor(s) Address
for Service 25 Minthorn Court
Markham ON L3T 7N3
- -----------------------------------------------------------------------------------------------------------------------------------
(14) Chargee(s)
SCOTIA MORTGAGE CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------------
(15) Chargee(s) Address
for Service 2201 Eglinton Avenue East
Scarborough ON M1L 4S2
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(16) Assessment Roll Number Cty. Mun. Map Sub. Par. Fees
of Property 19 36 020 113 60100
- ---------------------------------------------------------------------------------------- ------------------------------------
- ---------------------------------------------------------------------------------------- ------------------------------------
(17) Municipal Address of Property (18) Document Prepared by: Registration Fee
----------------
George Vukelich /D
25 Minthorn Court WILSON, VUKELICH
Markham ON L3T 7N3 60 Columbia Way
Suite 710 ---------------- ----------------
Markham, Ontario ================ ================
L3R 0C9 02-1837 Total
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Page 1
Fixed Rate Charge/Mortgage
(Land Titles Act and Registry Act)
Land Registration Reform Act
SET OF STANDARD CHARGE TERMS NO. 954
1. DEFINITIONS
In this set of standard charge terms, mortgage means a Charge/Mortgage of Land
(Form 2) in which the set is referred to by its filing number, any schedules
attached to it and this set of standard charge terms. You and your mean each
person who signs the mortgage as chargor. We, our and us mean Scotia Mortgage
Corporation, the chargee. Your property means the land described in box 5, all
buildings now or later on it and anything now or later attached or fixed to the
buildings or the land, including additions, alterations and improvements.
Principal amount means the amount specified in box 4. Loan amount means the
outstanding balance of all amounts (including interest) owing to us from time to
time under the mortgage, as amended from time to time.
Any reference to a box in this set of standard charge terms refers to a box on
Form 2 (including anything set out in a schedule to Form 2 which deals with the
subject matter of that box) and any reference to signing the mortgage means
signing Form 2 or a schedule to it. References to paragraphs refer to paragraphs
of this set of standard charge terms.
2. WHAT THE MORTGAGE DOES
In return for our making a loan to you in the principal amount (which, by
signing the mortgage, you acknowledge having received from us), you:
(i) If you are the owner of your property, charge your property to
us and our successors and assigns (called our legal
representatives);
or
(ii) If you are a tenant of your property under a lease, charge
your interest in your property (including any option to
purchase) to us and our legal representatives, for the entire
term of the lease;
<PAGE>
Page 2
as security for repayment of the loan amount and the performance of all of your
other obligations under the mortgage. This means you charge your entire interest
in your property to us and to anyone to whom the mortgage is transferred in any
way.
Termination of the Mortgage:
Our interest in the property terminates when you have:
Repaid the loan amount (including interest) as provided in the mortgage; and
Complied with all of your other obligations under the mortgage.
3. INTEREST
A. Interest Rate
The interest rate payable by you on the loan amount is
specified in box 9(b). Interest is payable monthly and calculated half-yearly
not in advance. The first half-yearly calculation of interest after the interest
adjustment date (which is one month before the date on which your first regular
monthly loan payment is due) specified in box 9(d) shall be for the six month
period commencing on that date. That calculation shall be made six months after
the interest adjustment date and half-yearly calculations of interest shall
continue to be made every six months after that. Interest is payable on the loan
amount at this rate both before and after the final payment date as well as both
before and after default and judgment, until the loan amount has been paid in
full.
B. Compound Interest
If on any monthly loan payment date you do not make the
payment due on that day, we will charge you interest on any overdue portion of
the loan amount (including interest) until paid to us. This is called compound
interest. Compound interest shall be paid on your monthly loan payment dates. We
will also charge interest, at the rate payable on the loan amount, on compound
interest that is overdue until paid to us, both before and after the final
payment date as well as both before and after default and judgment.
4. HOW YOU WILL REPAY YOUR LOAN
A. Currency and Place of Payment
You shall pay the loan amount to us in Canadian dollars. Your
regular monthly loan payments and all other payments will be made at the Branch
address set
<PAGE>
Page 3
out in box 15, or at any other place we may designate, and are payable as
follows:
B. Interest Payable Prior to and on Interest Adjustment Date
Before your regular monthly loan payments begin you will pay
us interest, at the rate payable on the loan amount, on all money we have
advanced to you up to the interest adjustment date or, at our option, such
interest will be deducted from subsequent advances. Interest will be computed
from the date of each advance and will become due and payable in monthly
installments on the first day of the month next following the date of each
advance and on the first day of each and every month thereafter. The balance, if
any, of interest on such advances (computed by excluding the interest adjustment
date from the calculation) shall become due and be paid on the interest
adjustment date.
C. Payments after the Interest Adjustment Date
The principal amount, together with interest calculated from
the interest adjustment date, shall become due and be paid by you in regular
monthly loan payments.
You will make your regular monthly loan payments to us in equal installments in
the amount specified in box 9(h) beginning on the date specified in box 9(f) and
continuing on the FIRST day of each and every following month and ending on the
date specified in box 9(9). Each date that you are required to make a monthly
loan payment is called a monthly loan payment date. Each monthly loan payment
consists of a portion of the principal amount together with the interest due and
payable on the monthly loan payment date.
You will pay the balance of the principal amount, together with ali interest due
and payable on it, on the date specified in box 9(i) which is the same as the
date specified in box 9(g) and is called the last payment date).
The principal amount is stated in box 4 and interest is payable on it at the
same rate and calculated in the same manner as interest is payable on the loan
amount.
D. Application of Monthly Loan Payments
Each monthly loan payment will be used: first, to pay interest
due and payable and next, to reduce the principal amount.
<PAGE>
Page 4
E. Prepayments
You may prepay the principal amount only in accordance with
the prepayment provisions, if any, set out in a schedule attached to Form 2.
5. YOUR TITLE TO YOUR PROPERTY
A. As Owner of Your Property, you certify that:
(i) You are the lawful owner of your property;
(ii) You have the right to give us the mortgage;
(iii) There are no encumbrances on the title to your
property; and
(iv) There are no limitations or restrictions on your
title to your property except building by-laws,
zoning regulations and registered restrictions.
This paragraph A applies unless you have advised us in writing that you are a
tenant of your property under a lease, in which case paragraph B applies.
B. If you Are a Tenant of Your Property
(i) You certify that:
(a) The property is leased to you and your legal
or personal representatives under a lease, a
copy of which you have provided to us;
(b) The lease is a binding and existing lease
and all information you have provided to us
concerning it is true;
(c) All rents payable under the lease have been
paid to the date you sign the mortgage;
(d) You have permission or the right to assign
and mortgage or charge the lease; and
(e) Except as expressed in the lease, there are
no limitations, restrictions or encumbrances
on your interest under the lease other than
building by-laws, zoning regulations and
registered restrictions.
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(ii) You promise:
(a) To pay the rent as it falls due;
(b) To comply with all of the other terms of the
lease and not to do anything that would
cause the lease to be terminated;
(c) Not to surrender the lease;
(d) Not to make any change in the lease without
first obtaining our written consent;
(e) To give us a true copy of any notice or
request you receive concerning the lease;
and
(f) To notify us immediately if your landlord
advises you of early termination or takes
any steps to effect early termination of the
lease.
C. You will not do anything that will interfere with our interest
in your property.
D. In order to ensure that your entire interest in your property
is charged to us you will sign any other documents or do anything further that
we think is necessary.
6. USE OF YOUR PROPERTY
You will not make any additions, alterations or improvements to your
property or use your property for any business purposes without our prior
written consent.
7. WE ARE UNDER NO OBLIGATION TO MAKE ADVANCES TO YOU UNDER THE MORTGAGE
If we decide, for any reason, that we do not wish to advance the entire
principal amount or any part of it to you then we do not have to do so, even
though the mortgage is prepared, signed or registered, and whether or not any
part of the principal amount has already been advanced. However, by signing the
mortgage you charge all of your interest in your property to us. You will
reimburse us, on demand, for all our expenses of investigating the title to your
property and preparing and registering the mortgage.
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8. TAXES
A. You will make monthly tax payments to us on account of
property taxes on each monthly loan payment. The amount of each monthly tax
payment will be 1/12th of our estimate of a year's taxes on your property next
becoming due and payable and may change from time to time to reflect changes in
the annual taxes on your property. The monthly tax payments should enable us to
pay all property taxes on or before their annual due date. Or, if your property
taxes are payable in installments, the monthly payments should enable us to pay
the full year's installments of property taxes on or before the date on which
the first instalment is due.
B. If, however, the annual due date or the first instalment date
for the payment of your property taxes is less than one year from the interest
adjustment date, you will pay us equal monthly tax payments during that period
and during the next 12 months. These equal monthly tax payments will be based on
our estimate of the total taxes payable for both periods so that we will receive
enough money from you to pay all taxes for both of those periods.
C. You will also pay us, on demand, any amount by which the
actual taxes on your property exceed our estimate of your taxes. Or, at our
option, we may increase the monthly payment to cover this amount.
D. We will pay your taxes from the monthly payment we receive
from you as long as you are not in default under the mortgage. We are not
obliged to make tax payments on the dates they are due or more often than once a
year. If you have not paid us enough for taxes, we may still pay the taxes. This
will create a debit balance in your tax account. Any debit balance is
immediately payable by you. We are under no obligation to advise you that a
debit balance has been created.
E. We will pay you interest on any credit balance in your tax
account. The interest we pay will not be less than that paid by The Bank of Nova
Scotia on savings-chequing accounts with the same credit balance. We will charge
you interest on the debit balance in your tax account at the interest rate
payable on the loan amount until the debit balance is paid to us in full.
F. If you fail to pay us any amount when it is due, we may apply
the money in your tax account towards payment of such amount.
G. We can deduct from the total final advance of the principal
amount enough money to pay all taxes due on or before the interest adjustment
date and which have not been paid on the date the final advance is made.
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H. You will immediately send us all assessment notices, tax bills
or tax notices which you receive.
9. PAYMENTS WE CAN MAKE
We can pay off any liens, claims or encumbrances against your property which we
consider to have priority over the mortgage. We can also pay ali our expenses of
collecting any payments not received from you when due. These expenses will
include all our legal expenses on a solicitor and own client basis. You must
immediately reimburse us for any amount so paid.
If we pay off any liens, claims or encumbrances against your property, we will
be entitled to all the rights, equities and securities of the person, company,
corporation or Government so paid off. We are authorized to retain any discharge
which may be given for six months or more, if we consider it advisable to do so.
10. TRANSFER OF LEASES AND RENTS
A. If you have leased or, at a later date, lease all or part of
your property to another person or persons, then, upon our written request you
will transfer and assign to us:
(i) All leases, lease agreements and their renewals;
(ii) All rents and other money payable under the terms of
all leases and agreements. However, we may allow you
to receive the rents so long as there is no default
by you in making your payments to us or in complying
with your other obligations to us under the mortgage;
and
(iii) All rights under the leases and agreements as they
affect your property.
B. In addition, you confirm that:
(i) You must obtain our prior written consent for any
future leases of your property or for the renewal of
any lease (other than a renewal provided for in any
lease);
(ii) Nothing we do under this paragraph 10 shall put us in
possession of your property;
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(iii) However, if you default under the mortgage, we have
the right to take possession of your property; and
(iv) We are not obliged to collect any rent or other
income from your property nor to comply with any term
of any lease or agreement.
11. INSURANCE
You will without delay insure, and keep insured, in our favour and until the
mortgage is discharged, all buildings covered by the mortgage against loss or
damage by fire and other perils usually covered in fire insurance policies and
against any other perils we request. Such insurance must be provided by a
company approved by us for the replacement cost of the buildings (the maximum
amount for which the buildings can be insured) in Canadian dollars. Your policy
must be in form satisfactory (the maximum amount for which the buildings can be
insured) in Canadian dollars. Your policy must be in form satisfactory to us and
must include extended perils coverage and a mortgage clause stating that loss is
payable to us. You shall, at our request, transfer to us all insurance policies
and receipts you have on the buildings and any proceeds from that insurance.
If you do not:
- Maintain insurance on the buildings that, in our opinion,
complies with this paragraph;
- Deliver a copy of any insurance policy or receipt to us at our
request; or
- Provide us with evidence, at our request, of any renewal or
replacement of the insurance, at least ten full days before
your insurance expires or is terminated,
we can, but are not obliged to, insure any of the buildings. What we pay for
this insurance will immediately become payable by you to us. If any loss or
damage occurs, you will provide us immediately, at your expense, with all
necessary proofs of claim. You will also do all necessary acts to enable us to
obtain payment of insurance proceeds.
Insurance proceeds may, in whole or in part, at our option, be:
(a) Applied to rebuild or repair the damaged buildings;
(b) Paid to you;
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(c) Paid to any other person who owns or did own the property, as
established by the registered title; or
(d) Applied, at our sole discretion, to reduce any part of the
loan amount, whether due or not yet due.
This paragraph 11 does not apply (and paragraph 21E does apply) if your property
is a condominium unit.
12. KEEPING YOUR PROPERTY IN GOOD CONDITION
You shall keep your property in good condition and make any repairs needed. You
shall not do anything, or let anyone else do anything, that lowers the value of
your property. We can inspect your property at any reasonable time. If, in our
opinion, you:
- Do not keep your property in good condition; or
- Do or allow anything to be done that lowers the value of your
property;
we can make any repairs we think are advisable. The costs of any inspections and
any repairs we make are immediately payable by you.
13. ENVIRONMENTAL PROVISIONS
We (including, in this section, the Canada Mortgage and Housing Corporation if
this is a CMHC-insured mortgage) may inspect your property and the buildings on
it when we consider it appropriate. We may do this for any purpose but
particularly to conduct environmental testing, site assessments, investigations
or studies which we consider necessary. The costs of any testing, assessment or
study will be payable by you and you will pay us the costs immediately after we
give you notice of them. If you do not pay us when we request it, we can add the
amounts to the outstanding balance under your mortgage and they will bear
interest at your mortgage interest rate. If we do the things permitted under
this section, we will not be considered to be in control of your property.
14. REPAYMENT OF LOAN AMOUNT ACCELERATED
The loan amount will become payable immediately, at our option, if:
(a) You default in making any regular monthly loan payment, or any
other payment you are obliged to make to us under the
mortgage.
(b) You fail to comply with any of your other obligations under
the mortgage.
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(c) Any lien is registered against your property or we receive
written notice of any lien.
(d) Your property is abandoned.
(e) Any buildings being erected or additions, alterations or
improvements done on your property remain unfinished without
work being done on them for 30 consecutive days.
15. APPOINTING A RECEIVER TO RECEIVE INCOME
If you default in making any regular monthly loan payment or any other payment
which you have agreed to make to us, or in complying with any of your
obligations under the mortgage, we can, in writing, appoint a receiver (which
includes a receiver and manager) to collect any income from your property. We
can also, in writing, appoint a new receiver in place of any receiver appointed
by us. The receiver is considered to be your agent and not ours and his defaults
are considered to be solely your defaults.
The receiver has the right to:
- Use any available remedy (taken in your name or our name) to
collect the income from your property;
- Take possession of your property or part of it; and
- Manage your property and maintain it in good condition.
From the income collected the receiver may:
(a) Retain a commission of 5% of the total money received or any
higher rate permitted by a judge or other authorized officer.
(b) Retain enough money to pay disbursements spent on collecting
the income.
(c) Pay all taxes, fire insurance premiums, expenses of keeping
your property in good condition, interest on those payments
and all other charges that have priority over the mortgage and
interest on those charges.
(d) Pay us all interest that is due and payable under the mortgage
and then pay us all or part of any other amount payable under
the mortgage, whether it is due or not.
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Nothing done by the receiver puts us in possession of your property or makes us
accountable for any money except for money actually received by us.
16. ENFORCING OUR RIGHTS
A. Default in Payment
If you default in making any regular monthly loan payment or any other payment
that you are obliged to make to us under the mortgage, we may enforce any one or
more of the following remedies in any order:
(i) Sue you - We may take such action as is necessary to obtain
payment of the loan amount.
(ii) Foreclose or sell your property - We may commence court
proceedings to foreclose your right, title and equity of
redemption to all or part of your property. If we obtain a
final order of foreclosure, your property will by law become
our property.
We may also ask the court to order the sale of your property.
If the court makes such an order, it will supervise the sale
proceedings. The net proceeds of the sale will be applied to
reduce the loan amount. Any balance remaining after all claims
have been satisfied will be paid to you. If the amount we
receive from the sale of your property is less than the loan
amount, you must pay us the difference.
(iii) Power of sale - If you default in making any payment for 15
days, we can on 35 days' notice to you enter on your property
and:
(a) Take possession of it;
(b) Sell all or part of your property (for cash or on
credit, or partly for cash and partly on credit) by
private sale or public auction for the price and on
those terms that can be obtained;
(c) Lease it on such terms and for whatever period we may
decide upon; or
(d) Take any other remedy available to us under Ontario
law.
Notice shall be given to you and to such other persons in the
manner and as required by law at the time it is given. Where
there are no such
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requirements, notice may be given to you, at our option, by
one or more of the following means:
- Personal service at your last known address;
- Registered mail at your last known address;
- Publication in a newspaper published in the county or
district where your property is located;
- Leaving it with an adult on your property; or
- Posting it on your property.
If default continues for three months, we may enter on, sell
or lease your property without any notice unless notice is
required by law.
We may apply the net proceeds of the sale or lease to reduce any part of the
loan amount. Any balance remaining after all claims have been satisfied will be
paid to you. If the amount we receive from the sale or lease of your property is
less than the loan amount, you must pay us the difference.
B. Default in your obligations including default in payment - If
you default in any obligation under the mortgage (including any default referred
to in paragraph A), we can enforce our above rights and we can enter on your
property at any time, without the permission of any person, and make all
arrangements that we consider advisable to:
- Inspect, lease, collect rents or manage your
property;
- Repair or put in order any building on your property;
or
- Complete the construction of any building on your
property.
We can also take whatever action is necessary to take possession, recover and
keep possession of your property.
C. Sale of goods (commercial mortgage only) -
If this is a commercial mortgage and you fail to make any
payment to us when it is due, we can distrain against your goods. This means we
can take any goods on your property and sell them as permitted by Ontario law.
We may apply the net
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proceeds from the sale to reduce any part of the loan amount. Taking this action
does not put us in possession of your property not make us accountable for any
money except the money we actually receive.
D. You will not interfere - You will not interfere with our
possession of your property (if we go into possession of your property in
enforcing our above rights) nor with the possession of anyone to whom your
property is sold or leased by us or any receiver. You agree not to make any
claim concerning the sale or lease of your property against anyone who buys or
leases it from us or any receiver, or anyone who buys or leases it after that
time.
E. Our expenses - You will immediately pay all our expenses of
enforcing our rights. Our expenses include our costs of taking or keeping
possession or your property, an allowance for the time and services of Scotia
Mortgage Corporation's and/or The Bank of Nova Scotia's employees utilized in so
doing, our legal fees on a solicitor and own client basis and all other costs
related to protecting our interest under the mortgage.
F. Judgements - If we obtain a court judgement against you for
your failure to comply with any of your obligations to us under the mortgage,
the judgement will not result in a merger of the terms of the judgement with our
other remedies or rights to enforce your other obligations under the mortgage.
We will continue to be entitled to receive interest on the loan amount at the
rate payable on the loan amount and at the same times as provided for in the
mortgage. The rate of interest payable on any judgment shall be calculated and
payable in the same way as interest is calculated under the mortgage and at the
same rate that interest is payable on the loan amount until the judgment has
been Paid in full.
17. DELAY IN ENFORCEMENT OF OUR RIGHTS
No delay or extension of time granted by us to you or any other person in
exercising the enforcement of any of our rights under the mortgage nor any
agreement referred to in paragraph 20 shall affect our rights to:
(a) Receive all payments you are obliged to make to us, when they
are due and payable.
(b) Demand that you repay the loan amount and all interest which
is due and payable, on any default by you.
(c) Have you comply with all of your obligations to us under the
mortgage.
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(d) Have any other person comply with the obligations that person
has to us under the mortgage.
18. BUILDING MORTGAGE TERMS
An improvement means any alteration, addition or repair to any building on your
property or any construction, erection or installation on your property. If the
purpose of the mortgage is to finance an improvement, you must so inform us in
writing immediately and before any advances are made under the mortgage. You
must also provide us immediately with copies of all contracts and subcontracts
relating to the improvement and any amendments to them. You agree that any
improvement shall be made only according to contracts, plans and specifications
approved in writing by us in advance. You must complete all such buildings or
improvements as quickly as possible and provide us with proof of payment of all
contracts from time to time as we require. We will make advances (part payments
of the principal amount) to you based on the progress of the improvement, until
either completion and occupation or sale of your property. We will determine
whether or not any advances will be made and when they will be made. Whatever
the purpose of the mortgage may be, we may in our sole and absolute discretion
hold back funds from advances until we are satisfied that you have complied with
the holdback provisions of the Construction Lien Act as amended or re-enacted.
You authorize us to provide information about the mortgage to any person
claiming a construction lien on your property.
19. RELEASING YOUR PROPERTY FROM THE MORTGAGE
We may establish the terms for releasing our interest in all or part of your
property (that is, we may discharge, or partially discharge, your property) from
the mortgage whether we receive value for our release or not. If we release part
of your property from the mortgage at any time, the rest of your property will
continue to secure the loan amount. We are only accountable for money actually
received by us.
If your property is subdivided before our interest in your property comes to an
end, the mortgage will be secured by each part into which your property is
subdivided. This means that each part will secure repayment of the total amount
you owe us, even if we release another part of your property from the mortgage.
We can release you, any guarantor, or any other person from performing any
obligation contained in the mortgage or any other security document, without
releasing any part of your property secured by the mortgage or any other
security, and any such release shall not release any other person from the
obligations in the mortgage.
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20. RENEWING OR OTHERWISE AMENDING THE MORTGAGE
We may from time to time enter into one or more written agreements with you (or
with any one to whom your property is transferred) to amend the mortgage by
extending the time for payment, renewing it or its term for further periods of
time, changing the interest rate payable under the mortgage or otherwise
altering the provisions of the mortgage. Whether or not there are any
encumbrances on your property in addition to the mortgage at the time the
agreement is entered into, it will not be necessary to register the agreement on
title in order to retain priority for the mortgage, as amended, over any
instrument registered after the mortgage. Any reference in this set of standard
charge terms to the mortgage means the mortgage as amended by any such agreement
or agreements.
21. CONDOMINIUM PROVISIONS
If your property is a condominium unit, you are also to comply with the
provisions in this paragraph 21 in addition to all of the other provisions of
the mortgage (except paragraph 11).
In this paragraph 21, the Condominium Act, as amended or re-enacted, is called
the Act. Expressions used below which are the same as those in the Act have the
same meaning as those in the Act, except that the expression condominium
property has the same meaning as the word "property" in the Act.
A. You will comply with the Act, and with the declaration,
by-laws and rules of the condominium corporation (the corporation) relating to
your property and provide us with proof of your compliance from time to time as
we may request.
B. You will pay the common expenses for your property to the
corporation on the due dates. Or, if we exercise our right to collect your
contribution towards the common expenses from you, you will pay the same to us
upon being so notified. We can accept a statement which appears to be issued by
the corporation as conclusive evidence for the purpose of establishing the
amounts of the common expenses and the dates those amounts are due.
C. You will forward to us any notices, assessments, by-laws,
rules and financial statements of the corporation you receive (or are entitled
to receive) from the corporation.
D. You will maintain all improvements made to your unit and
repair them after, damage.
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E. Insurance - In addition to the insurance which the corporation
must obtain, you must:
(i) Insure all improvements which you or previous owners
have made to your unit;
(ii) Obtain insurance for those additional risks that we
require;
(iii) Insure your common or other interest in buildings
which are part of the condominium property or assets
of the corporation if the corporation fails to insure
the buildings or assets as required or if we require
you to do so;
(iv) Assign your insurance policies to us and (as far as
permitted by law) your interest in the policies held
by the corporation.
(v) Provide us with proof that the required insurance is
in force, if we ask for it;
(vi) Do all that is necessary to collect insurance
proceeds.
Each of your insurance policies (and those of the corporation) must comply with
the following:
- Your property must be covered against destruction or damage by
fire and other perils usually covered in fire insurance policies and against any
other perils we require for its full replacement cost (the maximum amount for
which it can be insured in Canadian dollars;
- The insurance company and the terms of the policy must be
satisfactory to us.
If you fail to insure your property as required in this paragraph 21, we can,
but are not obliged to, obtain any insurance which you are required to obtain.
What we pay for this insurance will immediately become payable by you to us. If
any loss or damage occurs, you will provide us immediately, at your expense,
with all necessary proofs of claim. You will also do all necessary acts to
enable us to obtain payment of insurance proceeds.
To the extent permitted by law, insurance proceeds may, in whole or in part, at
our option be:
(a) Applied to rebuild or repair the damage to your property;
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(b) Paid to you;
(c) Paid to any other person who owns or did own the property, as
established by the registered title; or
(d) Applied, at our sole discretion, to reduce any part of the
loan amount, whether due or not vet due.
F. You must pay certain other expenses - In addition to our other
rights and remedies contained in the mortgage, you will pay us immediately all
our expenses in relation to:
- Any by-law, resolution, rule or other matter (other
than one for which only a vote of the majority
present at the meeting is required);
- The enforcement of our right to have the corporation
or any owner comply with the Act, declaration,
by-laws and rules: and
- Our exercising any voting rights we may have.
Where our expenses relate to other units as well as to your property, the amount
you are required to pay will only be the expenses related to your property as we
determine.
G. Voting and other rights - You authorize us to exercise your
rights under the Act to vote, consent and dissent. You also authorize us to
exercise your rights to:
- Demand the corporation purchase Your unit and common
interest where provided under the Act;
- Elect to have the value of your unit and common
interest or that of the condominium property
determined by arbitration;
- Receive your share of the corporation's assets and
the proceeds from the sale of your unit and common
interest or of the condominium property or any part
of the common elements.
If we do not exercise your rights, you may do so according to any instructions
we may give you. Before making such a demand or election you must obtain our
prior written approval. You must do this even if we do not have the right to
make the demand or election as between ourselves and the corporation, and even
if we had previously arranged for you to exercise that right.
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Nothing done under this paragraph 21 puts us in possession of your property. We
are not liable for any action we may take in doing what you have authorized us
to do or for any failure to act. We may at any time revoke any arrangement we
make for you to do anything you have authorized us to do.
H. Our additional rights under the mortgage - You authorize us to
do the following:
(i) Inspect your property at any reasonable time.
(ii) Do any needed maintenance or repairs after damage.
(iii) Inspect the corporation's records
(iv) Remedy any failure of yours to comply with the Act or the
declaration by-laws and rules of the corporation.
I. Repayment of the loan amount may be accelerated - The loan
amount will become payable immediately, at our option, if:
(i) The corporation fails to comply with the Act and the
declaration, by laws and rules of the corporation;
(ii) The corporation fails to:
- insure all the condominium units and common
elements according to law and according to
any additional requirements of ours;
- insure its assets if we so require and
according to our requirements;
- provide us with proof that the insurance is
in force, if we ask for it; or
- do all that is necessary to collect
insurance proceeds;
(iii) The corporation does not, in our opinion, manage the
condominium property and assets in a careful way;
(iv) The corporation fails to keep the corporation's
assets in good repair and working order;
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(v) The corporation makes any substantial modification to
the common elements or the corporation's assets
without our approval;
(vi) There has been substantial damage and the owners have
voted for termination of the condominium:
(vii) A sale of the condominium property or any part of the
common elements is authorized.
(viii) A court makes an order that the government of the
condominium property by the Act be terminated; or
(ix) The condominium property ceases to be governed by the
Act.
Our rights will not be affected by the fact that we voted for or consented to
such termination, sale or order or to the condominium property not being
governed by the Act.
J. Termination of the corporation - If your property ceases to be
governed by the Act:
- All the terms of the mortgage continue to
apply;
- You authorize us to agree with anyone to a
partition of the condominium property. We
can pay or receive money to ensure that the
partition is equal and you will reimburse
us, immediately, for any money we have paid.
We can also execute all documents and do all
acts needed to carry out the partition;
- Your share of the corporation's assets and
the proceeds from the sale of your unit and
common interest or of the condominium
property or any part of the common elements
shall be paid to us (unless we notify you to
the contrary in writing) and you will do all
things necessary to accomplish this; and
- Any money received by us (after payment of
all our expenses) may be applied to reduce
any part of the loan amount. Any balance
remaining after all claims have been
satisfied will be paid to you.
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22. DISCHARGE
When our interest in your property comes to an end, we will prepare for you a
full discharge of our claim (which is called a Discharge of Charge/Mortgage) or,
if requested by you, an assignment of the mortgage. You will give us a
reasonable time in which to prepare and sign either the discharge or the
assignment and you will pay our usual administrative fee for preparing,
reviewing or signing either document and all legal and other expenses we incur
in so doing. You will be responsible for registering and for the costs of
registering any discharge or assignment.
22. HEADINGS
Headings form no part of the mortgage. They are used so that parts of the
mortgage can easily be referred to.
24. WHO IS BOUND BY THE MORTGAGE
You agree to observe and be bound by all of the terms and obligations contained
in the mortgage. The mortgage will also be binding on your legal or personal
representatives, our legal representatives and anyone else to whom your property
is transferred. As well, the mortgage will be binding on anyone to whom it is
transferred by us. All persons who sign the mortgage as chargors are
collectively and individually (that is, jointly and severally) bound to comply
with all obligations under the mortgage.
25. STATUTORY COVENANTS EXCLUDED
The covenants set out in Section 7(1) of the Land Registration Reform Act, 1984,
as amended or re-enacted, are excluded from the mortgage.
26. GUARANTEE
In this paragraph 26, guarantor means each person who signs the mortgage as
guarantor. Chargor means the person or persons who sign the mortgage as chargor
and property means the property charged by the mortgage.
In return for us making a loan to the chargor, the guarantor, by signing the
mortgage, guarantees the chargor's payments (including interest, whether or not
the interest rate is changed), and compliance with the chargor's other
obligations, under the mortgage. Each guarantor agrees that, if the chargor
defaults in making any payment or in performing any other obligation under the
mortgage, the guarantor will pay us all of the unpaid payments and comply with
all of the obligations which have not been complied with by the chargor. Each
guarantor will be collectively and individually (that is, jointly
<PAGE>
Page 21
and severally) responsible with the chargor and with one another (if more than
one) for all obligations under the mortgage.
It is understood that we can without lessening the guarantor's
liability and without obtaining the consent of or giving notice to the
guarantor:
- Grant any extensions of time for payment and extensions of the
term of the mortgage, including any renewals of the mortgage
or its term for further periods of time;
- Increase the rate of interest payable under the mortgage,
either during the initial term or in any subsequent renewal
period;
- Release the whole or any part of the property from the
mortgage or any other security;
- Otherwise deal with the chargor, any other person (including
any guarantor), any security (including the mortgage) or the
property, including releasing, realizing on or replacing any
security we may hold;
- Waive any provision of the mortgage or change any of the terms
of the mortgage at any time during the initial term of the
mortgage or in any subsequent renewal period;
either before or after requiring payment from any person without affecting the
guarantee. We may require payment from any guarantor without first trying to
collect from the chargor or any other person (including any guarantor) or on any
security (including the mortgage). Each guarantor's obligations shall be binding
upon the guarantor's successors or personal representatives.
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT
TO: SCOTIA MORTGAGE CORPORATION
The undersigned HEREBY EXPRESSLY AGREE that the following
amendments to the Standard Charge Terms No. 954 and to their application to the
Commercial First Mortgage over 25 Minthorn Court, Markham, Ontario.
Taxes
- -----
(Replace the "Taxes clause 8 with the following.)
You will pay all taxes on your property when they are due. You will immediately
give us a receipt showing that the taxes have been paid. If you do not pay any
taxes, when they are due, we may pay them and you must immediately re-imburse us
for any amount so paid.
Insurance
- ---------
(Replace the "Insurance" clause 11 with the following.)
You will insure with an insurer satisfactory to us and under a policy
satisfactory to us all buildings covered by the mortgage against all risks,
including extended coverage, to full 100% replacement cost and boiler and
pressure vessel and machinery insurance. You will insure against any other risks
which we require you to insure against. The buildings must be insured in
Canadian dollars.
If we think it necessary, we can require you to cancel any existing insurance on
your property, and to provide other insurance which meets our approval. You will
assign any insurance you have on your property or the proceeds of that insurance
to us at our request. You must give us proof that you have insured as required
above and you must, at least ten (10) days before any insurance expires, or is
terminated, give us proof that you have renewed or replaced it. If you fail in
any way to comply with these obligations, we may (but are not obliged to) obtain
insurance on your behalf and your will immediately reimburse us for the amount
of any premium paid. If loss or damage occurs, you will provide us with all
necessary proofs of claim and do everything else necessary to enable us to
obtain payment of insurance proceeds. Insurance proceeds may, subject to any
law, in whole or in part, at our option, be used to rebuild or repair damaged
buildings or be used to reduce all or part of the loan amount secured by this
mortgage whether or not the loan amount is then due and payable.
<PAGE>
Use of/Sale or Transfer of Property
- -----------------------------------
(Replace the "Use of Property" clause 6 with the following. Where no such clause
exists, add the following.)
You will not make any additions, alterations or improvements to your property
nor obtain secondary financing without our prior written consent. If you do any
of these things or if you sell or transfer your property, then, at our option,
you will immediately pay to us all of the loan amount secured by the mortgage
and, if we do not require you to pay to us all of the loan amount secured by the
mortgage, your continued liability and responsibilities under the mortgage and
our rights against either you or anyone else who is liable for the payment of
the loan amount are not affected.
In the event of sale or transfer of subject property, or any part thereof, the
mortgage loan may become due and payable at the sole option of SMC.
Repayment of Loan Amount Accelerated
- ------------------------------------
(Replace the "Repayment of Loan Amount Accelerated" clause 14 with the
following.)
The loan amount will become payable immediately, at our option, if any of the
following events (called events of default), occur:
(a) if you default in making any regular monthly loan payment, or any other
payment you are obliged to make to us under the mortgage; or
(b) if you fail to comply with any of your other obligations under the
mortgage; or
(c) if there is any default under any term or condition contained in any
other agreement to which you and we are parties; or
(d) if any bankruptcy, re-organization, compromise, arrangement, insolvency
or liquidation proceedings or other proceedings for the relief of
debtors are instituted by or against you and, if instituted by or
against you and, if instituted against you, are allowed against or
consented to by you or are not dismissed or stayed within 60 days after
such institution; or
(e) if a receiver is appointed over any of your assets or undertaking or
any judgement or order or any process of any court becomes enforceable
against you or any of your assets or any creditor takes possession of
any of your assets; or
(f) if any lien is registered against your property or we receive written
notice of any lien; or
(g) if any material adverse change occurs in your financial condition.
<PAGE>
Appointing a Receiver
- ---------------------
(Replace the "Appointing a Receiver to Receive Income" clause 15 with the
following.)
If any event of default under the mortgage occurs we may appoint in writing a
receiver (which includes a receiver and manager) on any terms (including
remuneration) that we think are reasonable, to do any or all of the things which
we are permitted to do under the mortgage. We may make the appointment even if
we have taken possession of your property. We may also, in writing, remove a
receiver appointed by us and appoint a new receiver. The receiver is considered
to be your agent and not ours; his defaults are considered your defaults and not
ours. Nothing done by the receiver puts us in possession of your property or
makes us accountable for any money except money we actually receive. The
receiver has the right to use any legal remedy (taken in your name or our name)
to collect the income from your property and any business conducted on your
property and maintain you property in good condition; lease your property, or
any part of it; enforce any of our rights under the mortgage which we delegate
to him; and borrow money on the security of your property in priority of the
mortgage for these purposes.
Enforcing Our Rights
- --------------------
(Replace the first sentence of Section A in the "Enforcing our Rights" clause 16
with the following.)
A. If any event of default under the mortgage occurs we may enforce our
rights in any of the ways set out below. These provisions do not limit
any other rights given to us by law or the mortgage. We may enforce
this and any other security we may have for any of the loan amount, and
enforce our rights under the mortgage, at the same time and at
different times and in any order we choose.
(The remainder of the clause 16 is as set out in the mortgage).
Renewing or Otherwise Amending the Mortgage
- -------------------------------------------
(Replace the "Renewing or Otherwise Amending the Mortgage" Clause 20 with the
following.)
We may, from time to time, enter into one or more written agreements with you
(or with any one to whom your property is transferred) to amend the mortgage by
extending the time for payment, changing the interest rate payable under the
mortgage or otherwise
<PAGE>
altering the provision of the mortgage. Whether or not there are any
encumbrances on your property in addition to the mortgage at the time the
agreement is entered into, it will be necessary to register the agreement on
title.
DATED this________day of April, 1996.
SIDUS SYSTEMS INC.
Per: c/s
------------------------
Chairman and CEO
THIS INDENTURE MADE THE 15TH DAY OF FEBRUARY, 1994,
BETWEEN:
CARLVAD HOLDINGS INC.
A COMPANY INCORPORATED UNDER THE
LAWS OF THE PROVINCE OF ONTARIO
(Hereinafter called the "Landlord"),
OF THE FIRST PART;
-and-
SIDUS SYSTEMS INC.
(Hereinafter called the "Tenant"),
OF THE SECOND PART;
ARTICLE I--DEMISE AND TERM
--------------------------
PREMISES
1.01 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 and
the Tenant leases from the Landlord, the Leased Premises.
TERM
1.02 To have and to hold the Leased Premises for and during the term of ten
(10) years, one (1) month and seventeen (17) days commencing on the 15th day of
February, 1994 and ending on the 31st day of March, 2004. Notwithstanding the
commencement of the Term it is understood and agreed by the parties hereto that
only the warehouse portion of the Leased Premises ("Warehouse Area") shall be
available for possession by the Tenant on the commencement date of the Term and
that the balance of the Leased Premises ("Office Area") shall be ready for
occupation by the Tenant on the 1st day of April, 1994. If the Office Area is
not ready for occupation by the Tenant by the 10th day of April, 1994 Rent in
respect of the Office Area only shall abate until such area is ready for
occupation by the Tenant and the Landlord shall credit the Tenant for the amount
of Rent paid by the Tenant in respect of the Office Area for the period
commencing April 1st, 1994. Any such abatement of Rent shall be accepted by the
Tenant in full settlement of all claims which the Tenant may have by reason of
portions of the Leased Premises not being vacant or ready for occupancy on the
dates hereinbefore set out.
"Ready for occupation" shall mean, in the case of the Warehouse Area, that
all furnishings, equipment, inventory and other chattels of the existing tenant
have been removed from the warehouse; and in respect of the Office Area shall
mean that the Landlord has substantially completed the Landlord's work as set
out in Schedule "D" hereto on or before April 1st, 1994.
ACCEPTANCE OF PREMISES
1.03 The Landlord shall, at its own expense, cause the existing tenant of the
Leased Premises, Wang Canada Inc., to deliver up vacant prossession of the
Warehouse Area to the Tenant not later than the 15th day of February, 1994 and
the Office Area not later than the 15th day of March, 1994. If either of these
covenants of the Landlord is performed late then, Rent shall be abated in
accordance with the provisions of Section 1.02. The Landlord shall, carry out
all of the work described in Schedule "D" hereto.
ARTICLE II--LANDLORD AND TENANT COVENANTS
-----------------------------------------
LANDLORD COVENANTS
2.01 If the Tenant pays the Rent hereby reserved and performs the covenants
herein on its part contained, the Tenant shall and may peaceably possess and
enjoy the Leased Premises for the Term hereby granted without any interruption
or disturbance from the Landlord or any other person or persons lawfully
claiming by, from or under the Landlord.
<PAGE>
-2-
TENANT COVENANTS
2.02 The Tenant covenants to pay Rent and all other charges provided for in
this Lease on their due dates and to observe and perform all of the covenants
and provisions of this Lease on its part to be observed and performed.
ARTICLE III--RENT
-----------------
INTENT OF LEASE
3.01 This is a carefree net lease to the Landlord, except as expressly
hereinafter set out 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 clear of
all taxes, costs and charges arising from or relating to the Leased Premises.
Charges of a kind personal to the Landlord such as taxes assessed on the income
of the Landlord, estate and inheritance tax and similar taxes and principal and
interest payments to be made by the Landlord in satisfaction of mortgages now or
hereinafter registered against the Leased Premises shall not be the
responsibility or obligation of the Tenant.
BASIC RENT
3.02 Yielding and paying therefor yearly and every year during the Term unto
the Landlord as Basic Rent for the Leased Premises in lawful money of Canada:
(a) During the first year, one (1) month and seventeen (17) days of the
Term, being from February 15, 1994 to and including March 31st, 1995,
the sum FOUR HUNDRED AND SIXTY THOUSAND FOUR HUNDRED DOLLARS AND FORTY
CENTS ($460,400.40) per annum to be paid in advance in equal
consecutive monthly installments of THIRTY EIGHT THOUSAND, THREE
HUNDRED AND SIXTY SIX DOLLARS AND SEVENTY CENTS ($38,366.70);
(b) During the next four (4) years of the Term, being from April 1, 1995
to and including March 31, 1999, the sum of FOUR HUNDRED AND EIGHTY
FOUR THOUSAND, SIX HUNDRED AND THIRTY TWO DOLLARS ($484,632.00) per
annum to be paid in advance in equal consecutive monthly installments
of FORTY THOUSAND, THREE HUNDRED AND EIGHTY SIX DOLLARS ($40,386.00);
and
(c) During the remaining five (5) years of the Term, being from April 1,
1999 to and including March 31, 2004 the sum of SIX HUNDRED AND SIXTY
SIX THOUSAND THREE HUNDRED AND SIXTY NINE DOLLARS ($666,369.00) per
annum to be paid in advance in equal consecutive monthly installments
of FIFTY FIVE THOUSAND FIVE HUNDRED AND THIRTY DOLLARS AND SEVENTY
FIVE CENTS ($55,530.75).
The aforesaid sums shall be paid in advance, on the first day of each and
every month during the Term to the Landlord, the first of such payments to be
made on the 15th day of February, 1994. 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.
Notwithstanding the foregoing and subject to the provisions of Section 1.02
hereof, for the period from the 15th day of February, 1994 to the 31st day of
March, 1994 the Tenant shall pay a proportionate share only of the Basic Rent,
such proportionate share to be in the same ratio as the area of the Warehouse
Area is to the area of the entire Leased Premises. Basic Rent for the entire
Leased Premises shall commence on the 1st day of April, 1994, subject to the
provisions of Section 1.02 hereof.
CALCULATION OF BASIC RENT
3.03 The Basic Rent is calculated on the basis of the area of the Leased
Premises being 121,158 square feet multiplied by:
(a) $3.80 per square foot per annum for the first year, one (1) month and
seventeen (17) days of the Term;
(b) $4.00 per square foot per annum for the next four (4) years of the
Term; and
(c) $5.50 per square foot per annum for the remaining five (5) years of
the Term.
Prior to the commencement date of the Term, the Landlord shall deliver to the
Tenant a certificate of the Landlord's architect confirming the area of the
Leased Premises as aforesaid.
ADDITIONAL RENT
3.04 The Tenant shall pay Additional Rent due and owing to the Landlord
within ten (10) days of written demand therefor or otherwise hereinafter
expressly set out and all other Additional Rent on the due date thereof.
<PAGE>
-3-
Subject to Section 1.02 hereof, for the period commencing on the 15th day of
February, 1994 to and including the 31st day of March, 1994, the Tenant shall
pay a proportionate share only of Additional Rent, such proportionate share to
be in the same ratio as the area of the Warehouse Area is to the area of the
entire Leased Premises. Commencing on the 1st day of April, 1994, the Tenant
shall be responsible for the entire amount of Additional Rent, subject to the
provisions of Section 1.02 hereof.
DEPOSIT
3.05 The Landlord acknowledges receipt of:
(a) THIRTY EIGHT THOUSANDD THREE HUNDRED AND SIXTY SIX DOLLARS AND
SEVENTY CENTS ($38,366.70) to be held without interest by the
Landlord and to be applied on account of the Basic Rent for the
first month of the Term hereunder; and APR 1 to APR 30/94.
(b) FIFTY FIVE THOUSAND FIVE HUNDRED AND THIRTY DOLLARS AND SEVENTY FIVE
CENTS ($55,530.75) to be held by the Landlord as security for the
full and faithful performance by the Tenant of all the agreements,
terms, covenants and conditions herein set forth and applied against
expenses or other costs or damages incurred by the Landlord as a
result of default hereunder by the Tenant. In the event the Tenant
observes and performs the terms and conditions of this Lease, such
money shall be applied on account of Basic Rent for the last month
of the Term.
PAYMENTS TO LANDLORD
3.06 All payments to be made by the Tenant to the Landlord under this Lease
shall be made at the address hereinafter designated or, at such other place or
places as the Landlord may designatee in writing, and to the Landlord or to such
agent of the Landlord as the Landlord shall from time to time direct.
OVERDUE RENT
3.07 The Tenant shall pay the Landlord interest on all overdue Rent, all such
interest to be calculated from the date upon which the amount is first due
hereunder until actual payment thereof and at a rate being the lesser of three
percent (3%) per annum in excess of the minimum lending rate charged to prime
commercial borrowers by the Landlord's bank from time to time or the rate
permitted by law.
SET-OFF
3.08 All Rent payable by the Tenant to the Landlord shall be paid without
deduction, set-off or abatement except as hereinafter expressly provided.
ADJUSTMENTS
3.09 Upon the termination of this Lease other than by reason of default of
the Tenant, the Landlord and Tenant shall pro-rate, adjust, apportion and allow
between themselves all items of Taxes, insurance, water rates and other matters
of a similar nature, to the intent and purpose that the Tenant shall bear the
burden thereof until it shall deliver up possession on the termination of this
Lease or of any holding over hereunder and not afterwards.
ARTICLE IV--TAXES
-----------------
TAXES PAYABLE BY TENANT
4.01 The Tenant shall pay:
(a) the Taxes levied, rated, charged or assessed against or in respect
of the Leased Premises;
(b) all taxes, rates, duties, assessments and other charges that are
levied, rated, charged or assessed against or in respect of all
improvements, equipment and facilities of the Tenant on or in the
Leased Premises or any part thereof; and
(c) every tax and license fee which is levied, rated, charged or
assessed against or in respect of every business carried on in the
Leased Premises or in respect of the use or occupancy thereof or any
part of the Lands or the Building by the Tenant and every sub-tenant
or licencee of the Tenant or against the Landlord on account of its
interest in the Leased Premises, and whether in any case, any such
taxes, rates, duties, assessments or license fees are rated, charged
or assessed by any federal, provincial, municipal, school or other
body during the Term; and
<PAGE>
-4-
(d) the full amount of any taxes in the nature of a business transfer
tax, value added tax, sales tax or any other tax levied, rated,
charged or assessed against the Tenant in respect of the Rent
payable by the Tenant under this Lease or in respect of the rental
of space under this Lease, whether characterized as a goods and
services tax, sales tax, value added tax, business transfer tax or
otherwise.
PAYMENT OF TAXES
4.02 (a) Taxes payable pursuant to Section 4.01(a) shall be paid by the
Tenant to the lawful taxing authority when due or, if directed in
writing by the Landlord, shall be paid to the Landlord within ten
(10) days written demand therefor;
(b) Taxes payable pursuant to Sections 4.01(b) and (c) shall be paid by
the Tenant to the lawful taxing authority when due;
(c) Taxes payable pursuant to Sections 4.01(d) shall be paid to the
Landlord at the time required by applicable law.
APPEAL OF ASSESSMENT
4.03 The Tenant shall have the right to contest at its own expense (and in the
name of the Landlord, if necessary) by appropriate legal proceedings the
validity of any Taxes and if the payment of such Taxes may legally be held in
abeyance without subjecting the Landlord to any liability of whatever nature for
failure to so pay, the Tenant may postpone such payment until the formal
determination of any such proceedings provided they be prosecuted with all due
diligence and dispatch. The Landlord shall execute all powers of attorney and
other documents or proceedings necessary or useful in order to permit the Tenant
to contest, at its own expense in its own name or in the Landlord's name, the
validity of any Taxes. Nothing herein shall oblige the Tenant or the Landlord to
contest the validity of such Taxes.
ARTICLE V--HEATING AND UTILITIES
UTILITY CHARGES
5.01 The Tenant shall pay to the suppliers thereof on the due dates, all
charges for telephone, electric current and all other utilities supplied to or
used in connection with the Leased Premises.
HEATING
5.02 The Tenant shall maintain the temperature in the Leased Premises at a
reasonable level to avoid damage occurring in or to the Leased Premises.
SERVICE CONTRACTS
5.03 The Tenant covenants and agrees to take out a standard servicing
contract with a capable company for the service and maintenance of heating units
and furnaces and air conditioning equipment in the Leased Premises, such
contract to include the monthly cleaning of exchangers and replacement of
filters, and to keep such contract in force for the Term of the within Lease or
any renewal thereof. The Tenant agrees to provide the Landlord with a copy of
the aforesaid servicing contract. In the event that during the first five (5)
years of the Term of the Leasee, any of the heating units, furnaces or air
conditioning equipment require repairs to the extent of more than $10,000.00 per
lease year or replacement, that portion of the repairs exceeding $10,000.00
shall be borne by the Landlord and any replacement shall be at the cost of the
Landlord provided that, in each case, such equipment has been maintained as
required hereunder, failing which the Tenant shall be responsible for the entire
cost of such repair or replacement. If, during the balance of the Term or any
renewal thereof any such equipment requires replacement, new units shall be
installed by the Landlord and the cost thereof shall be amortized over a period
of ten (10) years and the annual amortized portion of such costs shall be paid
by the Tenant annually for the balance of the Term and any renewal term.
ARTICLE VI--REPAIR AND ALTERATIONS
REPAIRS AND REPLACEMENTS
6.01 (a) Except for repairs and replacements which are the Landlord's
responsibility hereunder, the Tenant shall make all necessary
replacements to and repair the Leased Premises in all respects both
inside and outside including the drains and sanitary sewers, heating
and water apparatus, air conditioning and all fixtures and additions
thereto in a state of repair and condition to the same extent as
would a careful owner in occupation;
<PAGE>
-5-
(b) The Landlord shall, (i) repair, at its own expense, all defects or
deficiencies in the original construction of the Leased Premises or
any part thereof, (ii) repair (other than ordinary maintenance), and
replace, as required, at its own expense, the footings, foundations,
bearing walls and structural columns and beams, and, (iii) during
the first five (5) years of the Term, be responsible for the cost of
repairs to the roof to the extent such cost exceeds $5,000.00 in any
lease year and shall, at its own expense, replace, if necessary, the
roof (including the membrane thereof) provided such repairs and
replacement are not necessitated by the failure of the Tenant to
properly maintain the roof in which case the entire cost of any
repairs and replacement shall be borne by the Tenant. During the
balance of the Term the Landlord shall be responsible for any
replacement of the roof (including the membrane thereof) but the
cost of such replacement shall be amortized over a period of ten
(10) years and the annual amortized amount of such cost shall be
paid by the Tenant annually for the balance of the Term and any
renewal term.
MAINTENANCE
6.02 The Tenant shall at all times during the Term at its own cost and
expense keep or cause to be kept, the Leased Premises well maintained, clean and
tidy, including without limiting the generality of the foregoing, keeping the
Building properly painted and decorated and otherwise presentable and of good
apperance, the driveways and parking areas free and clear of snow and ice, and
the lawn, trees and shrubs in good order and condition, all to the standards of
a first class industrial building and in accordance with all the requirements of
this Lease and the reasonable requirements of the Landlord, its insurers and
governmental authorities having jurisdiction.
VIEW AND REPAIR
6.03 The Tenant shall allow the Landlord or its duly appointed agent and work
people at reasonable times on request to enter the Leased Premises and view the
state of repair and the Tenant shall repair as required hereunder according to
notice in writing, provided always that if the Tenant shall not within fifteen
(15) days after service of such notice, commence and proceed diligently with the
execution of the repairs and works mentioned in such notice, it shall be lawful
for the Landlord to enter upon the Leased Premises and execute such repairs and
works and to charge the cost thereof to the Tenant and the Tenant shall pay such
cost to the Landlord within ten (10) days of written demand therefor.
ALTERATIONS
6.04 The Tenant shall not, without the prior written approval of the Landlord
make any installations, alterations, additions, partitions, repairs or
improvements in or to the Leased Premises, which might affect the structural
portions of the Leased Premises or the electrical, lighting, heating,
ventilating, air-conditioning, sprinkler, fire protection or other systems
therein; the Tenant's request for approval 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 such 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 all work shall be subject to inspection by
and the reasonable supervision of the Landlord including a reasonable
supervision fee of the Landlord to be paid by the Tenant and shall be performed
in accordance with all laws and any reasonable conditions and regulations
imposed by the Landlord and shall be 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 base electrical, plumbing,
heating, ventilating or air-conditioning systems shall be deemed to be an
alteration within the meaning of this Section. 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.
REMOVAL OF FIXTURES AND IMPROVEMENTS
6.05 Leasehold Improvements shall immediately become the property of the
Landlord upon affixation or installation without compensation therefor to the
Tenant but the Landlord is under no obligation to repair, maintain or insure
such Leasehold Improvements. Such Leasehold Improvements shall not be removed
from the Leased Premises either during or at the expiration or earlier
termination of the Term, except that the Tenant shall, at the end of the Term
remove such Leaseholdd Improvements installed or constructed after the
commencement of the Term as the Landlord may require to be removed. The Tenant
may, during the Term, remove its trade fixtures provided that the Tenant is not
in default under this Lease and such trade fixtures are immediately replaced by
trade fixtures of equal or better value. Any removal of such Leasehold
Improvements and the Tenant's trade fixtures shall be done at the Tenant's sole
cost and expense and the Tenant shall make good any damage caused to the Leased
Premises or any part thereof by the installation or removal of such Leasehold
Improvements and trade fixtures. If the Tenant does not remove its trade
fixtures at the expiration or earlier termination of the Term the trade fixtures
shall, at the option of the Landlord, become the propoerty of the Landlord and
may be removed from the Leased Premises and sold or disposed of by the Landlord
in such manner as it deems advisable. For greater certainty, the Tenant's trade
fixtures shall not include any heating, ventilating and air-conditioning
equipment or other building services or floor covering affixed to the floor of
the Leased Premises. The obligations of the Tenant set forth herein shall
survive the expiry or other termination of the Term.
<PAGE>
-6-
CONSTRUCTION LIENS
6.06 The Tenant covenants to do any and all things necessary to minimize the
possibility of a lien attaching to the Leased Premises or to any part of the
Building or the Lands and, should any such lien be made or filed, the Tenant
shall discharge the same forthwith (after notice thereof is given to the Tenant)
at the Tenant's expense. In the event the Tenant shall fail to cause any such
lien to be discharged as aforesaid, then, in addition to any other right or
remedy of the Landlord, the Landlord may, but it shall not be so obligated,
discharge same by paying the amount claimed to be due into Court and the amount
so paid by the Landlord and all costs and expenses including solicitors fees (on
a solicitor and his client basis), incurred herein for the discharge of such
lien shall be due and payable by the Tenant to the Landlord as Additional Rent
on demand.
REPAIRS ON TERMINATION, ETC.
6.07 At the expiration or sooner termination of the Term the Tenant shall,
at its own expense:
(a) deliver up possession of the Leased Premises to the Landlord in the
same condition in which the Tenant is required hereunder to repair
and maintain the Leased Premises, together with all Leasehold
Improvements which the Tenant is required or permitted to leave
therein or thereon free and clear of all encumbrances and in a clean
and tidy condition and free of all rubbish and to deliver to the
Landlord all keys and security devices;
(b) remove any materials which may be deemed by any applicable
legislation as contaminated or hazardous and which have been brought
on to the Leased Premises by the Tenant or which are a result of the
Tenant's use or occupation of the Leased Premises; and
(c) remove any storage and/or holding tanks whether above ground or
below ground and all pits from the Leased Premises, at the option of
the Landlord, which have been installed on the Leased Premises by
the Tenant.
These covenants shall survive the expiry or other termination of the Term.
ARTICLE VII--ASSIGNING AND SUBLETTING
ASSIGNING OR SUBLETTING
7.01 (a) The Tenant shall not assign this Lease or sublet or franchise,
license, grant concessions in, or otherwise part with or share
possession of the Leased Premises, or any part thereof, without the
prior written consent of the Landlord, which consent shall not be
unreasonably withheld or delayed; 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 and the name,
address and nature of business and evidence as to the financial
strength of the proposed assignee or subtenant. In no event shall
any assignment of the Lease release the Tenant from its obligations
fully to perform all the terms, conditions and covenants of this
Lease.
PROVIDED however, and it is made a condition to the giving of such
consent that:
(i) The 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) The Tenant shall pay the Landlord all reasonable legal fees in
connection with the assignment;
(iii) The consent of the Landlord is not a waiver of the requirement
of the Landlord's consent for subsequent assignments of the
Lease or subletting of the Leased Premises;
(iv) The acceptance by the Landlord of Rent from an assignee or
sublessee without the Landlord's consent shall not constitute
a waiver of the requirement of such consent nor an acceptance
of such party as the Tenant;
(v) The Landlord may, at its option, cancel any options to renew
and any rights of first refusal or first opportunity on
additional space;
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(vi) If the assignment of Lease or subletting of the Leased
Premises does not take place within sixty (60) days of the
giving of consent by the Landlord the consent shall expire and
become null and void; and
(vii) If the Lease is disaffirmed, disclaimed or terminated by any
trustee in bankruptcy of an assignee or subleasee, the
original Tenant named in this Lease will be deemed on notice
from the Landlord given within sixty (60) days from the date
of such disaffirmation, disclaimer or termination to have
entered into a Lease with the Landlord containing the same
terms and conditions as in this Lease.
(b) If an assignment or subletting occurs without the consent of the
Landlord when required, the Landlord may collect Rent from the party
in whose favour the assignment or subletting was made and apply the
net amount collected to the Rent herein reserved but no such
assignment or subletting will be considered a waiver of this
covenant or the acceptance of the person in whose favour the
assignment or subletting was made as a tenant hereunder.
CHANGE OF CONTROL
7.02 If the Tenant is a private corporation and any part or all of the
corporate shares shall be transferred by sale, assignment, operation of law or
other disposition 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 provisions of Section 7.01 hereof. 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 Section.
EXCESS RENT
7.03 In the event that the Basic rent payable under any sublease or assignment
is in excess of the Basic Rent reserved hereunder or is in excess of the
prportionate Basic Rent reserved in the event of a sublease of part of the
Leased Premises, whether the excess be in the form of cash, goods or services
from the subtenant or assignee or anyone acting on its behalf, the Tenant shall
pay fifty percent (50%) of such excess to the Landlord immediately upon receipt
thereof; in the event that such excess is repre sented by goods or services
rendered to the Tenant or its nominee, the value of those goods or services
shall be determined by the Landlord and Tenant and fifty percent (50) of that
value shall be paid in cash to the Landlord immediately upon such determination.
MORTGAGE OF LEASEHOLD
7.04 The Tenant shall not mortgage, pledge, hypothecate or otherwise encumber
all or any portion of the Tenant's interest in this Lease or its Leasehold
Improvements, without the Landlord's consent, such consent not to be
unreasonably withheld and on condition that:
(a) such mortgagee or other encumbrancer is an institutional lender (the
"Lender"); and
(b) the Lender, at the time of the Landlord giving its consent hereunder,
agrees in writing with the Landlord that if the Lender enforces its
security under its mortgage, charge, debenture or other encumbrance
and/or takes possession of the Leased Premises either personally or by
its receiver or receiver/manager, the Lender shall bring the Lease into
good standing and observe and be bound by all of the terms of the Lease
(including the payment of Rent) for as long as it is in possession of the
Leased Premises either personally or by its receiver or receiver/manager.
ADVERTISING PREMISES
7.05 The Tenant shall not advertise or allow the Leased Premises or a portion
thereof to be advertised as being available for assignment, sublease or
otherwise without the prior written approval of the Landlord of 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
Rent for the Leased Premises.
DISPOSITION BY LANDLORD
7.06 If the Landlord sells or leases the Lands, the Building or any part
thereof, or assigns this Lease, and to the extent that the covenants and
obligations of the Landlord hereunder are assumed by the purchaser, lessee or
assignee, the Landlord, without further written agreement, will be discharged
and relieved of liability under the said covenants and obligations.
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ARTICLE VIII--USE
USE OF LEASED PREMISES
8.01 The Tenant shall not use the Leased Premises nor allow the Leased
Premises to be used for any purpose other than light manufacturing, warehousing,
assembly and associated office uses.
OBSERVANCE OF LAW
8.02 The Tenant shall comply promptly with and conform to the requirements of
all applicable statutes, by-laws, laws, regulations, ordinances and orders from
time to time or at any time in force during the Term of this Lease and affecting
the condition, equipment, maintenance, use or occupation of the Leased Premises
and with every applicable regulation, order and requirement of the Canadian Fire
Underwriters Association or any body having similar functions or of any
liability or fire insurance company by which the Landlord and the Tenant or
either of them may be insured at any time during the Term hereof, and, in the
event of the default of the Tenant under the provisions of this Section, the
Landlord may itself comply with any such requirements as aforesaid and the
Tenant will forthwith pay all costs and expenses incurred by the Landlord in
this regard 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.
WASTE AND NUISANCE
8.03 The Tenant shall not do or suffer any waste, damage, disfiguration or
injury to the Leased Premises or the fixtures and equipment thereof and shall
not use or permit to be used any part of the Leased Premises for any dangerous
noxious or offensive trade or business, nor keep, sell or handle and dispose of
any goods or things which may be objectionable nor cause or maintain any
nuisance in at or on the Leased Premises nor cause any annoyance, nuisance or
disturbance to the occupiers or owners of any adjoining lands and/or premises
and shall keep the Leased Premises free of hazardous waste and contaimination.
SIGNS
8.04 The Tenant may affix a sign or signs to the Building, subject to the
approval of the Landlord which shall not be unreasonably withheld or delayed and
subject to municipal and other governmental regulations in that respect and the
Tenant shall remove the same on the expiration of the Term of this Lease, or
sooner termination thereof, provided the Tenant at its expense shall forthwith
make good all damages which may be caused or occasioned by such removal and this
covenant shall survive the expiry or other termination of the Term.
OUTSIDE STORAGE
8.05 The Tenant shall not store any goods or matter of any kind outside the
Building without the written consent of the Landlord.
OVERLOADING FLOORS
8.06 The Tenant covenants that it will not bring upon the Leased Premises or
any part thereof any machinery, equipment, article or thing that, by reason of
its weight, size or operation, might damage the Leased Premises and will not at
any time overload the floors of the Leased Premises. The Tenant shall remove any
such machinery, equipment, article or thing within five (5) days written notice
thereof and if any damage is caused to the Leased Premises by any machinery,
equipment, article or thing or by overloading, the Tenant shall forthwith repair
such damage at its own expense.
ARTICLE IX--INSURANCE AND INDEMNITY
TENANT'S INSURANCE
9.01 The Tenant shall, at its expense, maintain in force during the Term and
any renewals thereof in the names of the Tenant, the Landlord and the Landlord's
mortgagee, if any, the following insurance:
(a) 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 Leased Premises, in amounts
required by the Landlord and any mortgagee of the Building or any
part thereof from time to time but in no event less than Five
Million Dollars ($5,000,000.00) per occurrence;
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(b) property insurance covering all property owned by the Tenant, or for
which the Tenant is responsible pursuant to this Lease, or which has
been installed by or on behalf of the Tenant including without
limitation all chattels, equipment, machinery, furniture, inventory,
all Leasehold Improvements and all other contents of the Leased
Premises, in an amount equal to the full replacement value thereof;
and
(c) such other forms of insurance as may be reasonably required by the
Landlord and its mortgagee from time to time.
Any policy written pursuant to paragraph (a) hereof shall contain a
severability of interest clause and cross liability clause. All policies shall
contain an undertaking by the insurers to notify the Landlord and its mortgagee,
if any, in writing not less than thirty (30) days prior to any material change,
cancellation or termination thereof.
The Tenant agrees to furnish upon request from the Landlord verification of
compliance with the provisions of this Section 9.01.
LANDLORD'S INSURANCE
9.02 The Landlord shall, throughout the Term, keep at the sole cost and
expense of the Tenant, the Building and appurtenances thereto, insured to the
following extent:
(a) against such loss or damage as are customarily insured against under
a policy of insurance commonly known as a Multi-Peril or All-Risk
policy;
(b) blanket broad boilder and pressure vessel insurance including repair
or replacement;
(c) rental income protection insurance with respect to fire and other
usual perils for which such insurance is customarily issued for a
period (as selected by the Landlord) of not less than six (6) months
and not more than twelve (12) months for the Basic Rent and other
sums payable as Additional Rent under this Lease;
(d) other casualties as are customarily insured against under insurance
contracts normally entered into from time to time during the Term by
owners of buildings in the area of a character similar to the Leased
Premises for such an amount as in the reasonable opinion of the
Landlord is necessary to protect the Landlord against loss or
damage.
Notwithstanding anything herein provided, including the covenant of the
Landlord to take out the aforesaid insurance or the contribution of the Tenant
to the cost of such insurance, nothing herein shall confer any insurable
interest on the Tenant in respect of such insurance and the Tenant acknowledges
that it has no right to receive the proceeds or any part thereof from such
insurance policies.
LIMIT OF LANDLORD'S LIABILITY
9.03 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 Leased Premises or to their
respective employees, agents, invitees, licensees or other persons from time to
time attending at the Leased Premises while such person or property is in or
about the Leased Premises, including without limiting the foregoing, any loss of
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 for any loss whatsoever with respect to the Leased Premises, goods placed
therein or any business carried on therein.
LIMIT OF TENANT'S LIABILITY
9.04 The Tenant shall not be liable to the Landlord for any direct injury,
loss or damage required to be insured by the Landlord pursuant to Section
paragraphs (a) or (b) of Section 9.02 to the extent of the proceeds actually
recovered by the Landlord under such policies of insurance or which would have
been recoverable if the Landlord had complied with its obligation under Section
9.02 hereof.
INDEMNITY
9.05 The Tenant shall 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; from any damage to property while such property
shall be in or about the Leased Premises including the systems, furnishings and
amenities thereof, as a result of the wilful or negligent act or omission of the
Tenant, its employees, agents, invitees or licensees; and from any injury to any
employee, agent, invitee or licensee, of the Tenant, including death resulting
at any time therefrom, occurring on or about the Leased Premises.
Notwithstanding anything else herein contained, this indemnity shall survive the
expiry or earlier termination of this Lease, in respect of any of the foregoing
circumstances during the Term.
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ARTICLE X--DAMAGE AND DESTRUCTION
ABATEMENT OF RENT
10.01 If the Building or any portion thereof is damaged or destroyed by fire
or by other casualty against which the Landlord is required to insure for
hereunder, Rent shall abate in proportion to the area of that portion of the
Building which, in the reasonable opinion of the Landlord, is thereby rendered
unfit for the purposes of the Tenant bears to the area of the entire Building
until the Building is repaired and rebuilt as certified by the Landlord's
architect and the Landlord agrees that it will, with reasonable diligence,
repair, restore and rebuild the Building. The Landlord's obligation to rebuild
and restore the Building shall not include the obligation to rebuild, restore,
replace or repair any chattel, fixture, Leasehold Improvement or any other thing
that is the property of the Tenant and/or for which the Tenant is to maintain
insurance under Section 9.01(b), (in this Section collectively called "Tenant's
Improvements"); the Building shall be deemed restored and rebuilt when the
Landlord's Architect certifies that the Building has been substantially restored
and rebuilt to the state where the Tenant could occupy it for the purpose of
rebuilding, restoring, replacing or repairing the Tenant's Improvements. The
issuance of the Architect's 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 6.04 shall apply to such work, mutatis mutandis.
TERMINATION
10.02 Notwithstanding the provisions of Section 10.01 hereof, if:
(i) the Building or any substantial portion thereof is 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 one hundred and eighty(180)
days from the date of damage or destruction, or,
(ii) the Building is damaged or destroyed by a peril against which
the Landlord is not required to insure for hereunder,
the Landlord in respect of both paragraphs (i) and (ii) above and the
Tenant in respect of paragraph (i) above only may, at their option,
terminate this Lease by giving to the other within forty-five (45) days
after the date of such damage or destruction, notice of termination and
thereupon Rent shall be apportioned and paid to the date of such damage
or destruction and the Tenant shall immediately deliver up possession of
the Leased Premises to the Landlord. If the Landlord does not elect to
terminate the Lease it shall repair and rebuild the Building and Rent
shall abate in accordance with the provisions of Section 10.01 hereof.
ARTICLE XI--DEFAULT
EVENTS OF DEFAULT
11.01 An "Event of Default" shall occur whenever:
(a) the Tenant fails to pay the Rent hereby reserved or any part
thereof on the day appointed for payment thereof, and does not
cure such default within five (5) days after receipt of written
notice thereof from the Landlord;
(b) the Tenant shall have breached or failed to comply with any of
its covenants and agreements contained in this Lease (save for
non-payment of Rent) and shall have failed to remedy such breach
or non-compliance within fifteen (15) days (or such longer period
as the Landlord may reasonably determine, having regard to the
nature of the default) after written notice thereof given by the
Landlord to the Tenant;
(c) the Tenant shall make any assignment for the benefit of creditors
or become bankrupt or insolvent or take the benefit of any act
now or hereinafter in force for bankrupt or insolvent debtors;
(d) 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;
(e) the Tenant makes or attempts to make a bulk sale of any of its
assets regardless of where they are situated (other than as part
of an assignment consented to by the Landlord under Section 7.01
hereof);
(f) a trustee, receiver, interim receiver, receiver and manager,
custodian or liquidator is appointed for the business, property,
affairs or revenue of the Tenant;
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(g) this Lease or any of the Tenant's assets on the Leased Premises
are taken or seized under writ of execution, an assignment,
pledge, charge, debenture or other security instrument;
(h) the Tenant abandons or attempts to abandon the Leased Premises;
(i) the Leased Premises shall be used by any person other than the
Tenant, the Tenant's permitted assignees or for any purposed
other than that for which the Leased Premises were let;
(j) any insurance policy on the Building or any part thereof shall be
cancelled or the coverage thereunder reduced in any way by the
insurer by reason of the used or occupation of the Leased
Premises or any part thereof by the Tenant and the Tenant shall
have failed to remedy the condition giving rise to cancellation,
threatened cancellation or reduction of coverage within
forty-eight (48) hours written notice given by the Landlord to
the Tenant;
(k) the Tenant sells or disposes of the goods, chattels or equipment
in the Leased Premises or removes, commences or threatens to
remove them from the Leased Premises so that in the opinion of
the Landlord there would not, in the event of such sale, disposal
or removal, be sufficient goods on the Leased Premises subject to
distress which would satisfy all Rent due or accruing hereunder
for a period of six (6) months;
(l) the Leased Premises are vacant for any period in excess of
fifteen (15) days other than during repairs or renovations unless
the tenant shall have arrange for regular inspections of the
Leased Premises in accordance with the requirements of the
Landlord's insurer.
Upon the occurrence of an Event of Default, the then current month's
Rent and next ensuing three (3) month's rent shall immediately become
due and be paid by the Tenant to the Landlord as accelerated Rent and
the Landlord may immediately distrain for the same together with any
Rent arrears then unpaid.
RIGHT OF RE-ENTRY
11.02
(a) Upon the occurrence of an Event of Default, the Landlord may at
any time thereafter, without notice of the Tenant, re-enter the
Leased Premises or any part thereof in the name of the whole and
terminate this Lease and all the rights of the Tenant thereunder.
(b) If and whenever the Landlord exercises its option to re-enter the
Leased Premises and terminate this Lease pursuant to paragraph
(a) of this Section 11.02:
(i) the Tenant shall immediately vacate the Leased Premises and
the Landlord may remove or cause to be removed from the
Leased Premises the Tenant or any other occupant or
occupants thereof and may remove all property therefrom and
sell or dispose of it as the Landlord considers appropriate
without liability for loss or damage and without prejudice
to the rights of the Landlord to recover arrears of Rent or
damages incurred by the Landlord;
(ii) the Landlord shall be immediately entitled to the payment or
Rent up to the date of termination together with all
expenses incurred by the Landlord in such termination.
RELETTING
11.03 At any time when the Landlord is entitled to re-enter the Leased
Premises or terminate this Lease, the Landlord may without notice to the Tenant
and without terminating the Lease enter upon and take custody of the Leased
Premises in the name of and as agent of the Tenant, together with all the
Tenants' improvements, fixtures and furnishings, and sublet the Leased Premises
in the name of and as the agent of the Tenant on whatever terms the Landlord may
deem appropriate but no such action by the Landlord shall waive any of the
obligations of the Tenant or the subsequent exercise of any of the Landlord's
remedies for default. If the Landlord shall sublet the Leased Premises as
aforesaid, the Landlord shall be entitled to receive all sublease rent and apply
the same in its discretion to any indebtedness of the Tenant to the Landlord
hereunder, and the payment of any costs and expenses of retelling, and the
Landlord shall be liable to account to the Tenant only for the excess, if any,
of monies actually received by it. If the sublease rent is less than is
necessary to apply and discharge all the then existing and continuing
obligations of the Tenant hereunder, the Tenant shall pay such deficiency from
time to time upon demand to the Landlord. Notwithstanding any such re-entry and
subletting without termination, the Landlord may at any time thereafter
terminate this Lease by reason of the previous or any other default under the
Lease and the provisions of Section 11.02 shall apply.
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DISTRESS
11.04 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 Leased Premises at any time during the Term shall be exempt
from levy by distress for rent in arrears.
RIGHT OF LANDLORD TO CURE DEFAULTS
11.05 If the Tenant fails to perform or cause to be performed any of the
covenants or obligations the Tenant herein, the Landlord shall have the right
(but shall no be obligated) to perform or cause to be performed and to do or
cause to 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 monies) 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 within ten (10) days
written demand therefor together with reasonable administrative costs of the
Landlord in respect thereof.
REMEDIES NOT EXCLUSIVE
11.06 Mention in this Lease of any particular remedy or remedies in respect
of any default or threatened default by the Tenant in the performance of its
obligations shall not preclude the Landlord from exercising, or limit the extent
of, any other remedy in respect thereof, whether at law, in equity or pursuant
to any express provision hereof. No remedy shall be interpreted as exclusive or
dependent upon any other remedy, but the Landlord may from time to time exercise
any one or more of such remedies independently or in combination.
NON-WAIVER
11.07 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.
RECOVERY OF ADJUSTMENTS
11.08 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.
ARTICLE XII--SUBORDINATION AND ACKNOWLEDGMENTS
MORTGAGES
12.01 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 Leased Premises in whole or in part, or the
Lands, or the Building whether or not any such mortgage, charge or deed of trust
affects only the Leased Premises or the Lands or the Building or affects other
premises as well. On request at any time and from time to time of the Landlord
or 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 mortgage,
chargee or trustee:
(a) attorn to such mortgagee, chargee or trustee and become its tenant
of the Leased Premises or the tenant of the Leased 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 the 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 Leased 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 the Lease (and notwithstanding any authority or consent of such
mortgagee, 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.
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The Landlord shall obtain from the holder of each such mortgage, charge and
deed of trust, an agreement with the Tenant pursuant to which such holder agrees
that the Tenant may continue to use, occupy and enjoy the Leased Premises in
accordance with the provisions of this Lease, notwithstanding any default any
default under such mortgage, charge or deed of trust. Notwithstanding the
foregoing provisions of this Section 12.01, the Tenant shall not be required to
postpone or subordinate this Lease to any such mortgage, charge or deed of trust
where the holder thereof has not so agreed the Tenant.
CERTIFICATES
12.02 Each of the Landlord and the Tenant shall execute and deliver to the
other at any time and from time to time at no cost to the other and upon not
less than ten (10) days' prior notice, a statement in writing certifying that
this Lease in 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 Basic Rent then being paid hereunder, the dates to
which the same, by installment or otherwise, and other charges hereunder have
been paid, whether or not there is any existing default on the part of the
Landlord or the Tenant of which the other has notice, any other information
reasonably required.
ARTICLE XIII--ACCESS BY LANDLORD
ENTRY BY LANDLORD
13.01 The Tenant shall permit the Landlord and its agents employees or
workmen to enter upon the Leased Premises at any time and from time to time for
the purpose of inspecting and (where permitted herein) making repairs,
alterations or improvements to the Leased Premises and the Tenant shall not be
entitled to any compensation for any inconvenience, nuisance or discomfort
occasioned thereby.
EXHIBITING LEASED PREMISES
13.02 The Tenant shall permit the Landlord or its agents to exhibit the
Leased Premises to prospective tenants during the last six (6) months of the
Term or any renewal thereof.
ARTICLE XIV--REPRESENATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF TITLE
14.01 The Landlord represents and warrants that it has or will have, at the
commencement of the Term of this Lease, a good and marketable title to the
Lands, subject only the following, (none of which will interfere with the
development situate on the Lands or4 that contemplated by the plans and
specifications approved by the parties hereto):
(a) Any rights of way and/or easements for the benefit of the Landlord
and Tenant in common with others to serve the Leased Premises and/or
adjoining or surrounding lands for the free and unobstructed ingress
and egress of vehicular traffic and for the installation, repair and
replacement of underground services including hydro, telephone,
sanitary and storm sewers, natural gas and water lines;
(b) Service easements in favour of Bell Telephone, Hydro Electric Power
Commission, Town of Richmond Hill, in the Regional Municipality of
Your, and easements for sewer or water easement for serving the
Lands or adjoining lands;
(c) Private deed restrictions (if any) which will have been complied
with prior to the commencement of the Term herein and none of which
adversely affects the use, occupation and enjoyment of the Leased
Premises by the Tenant for the purposes set out in Section 8.01
hereof;
(d) The financial agreement and/or subdivision agreement between the
developer and the Town of Richmond Hill, and/or the Regional
Municipality of York, (the provisions of which will have been
complied with the developer and/or the Landlord prior to the
commencement of the Term, including the installation of all services
and the discharge of all financial obligations thereunder,it being
intended that the Tenant shall not be required to pay for aor
perform any part of any of the said agreements);
(e) The Toronto Airport zoning regulations (if applicable); and
(f) Any mortgage or charge entered into form time to time by the
Landlord.
The Tenant acknowledges that some or all of the foregoing encumbrances may
not have been registered as of the commencement of the Term and agrees to
postpone its leasehold interest herein and/or to execute such consents and/or
postponements as may be necessary to give effect to the provisions of this
Section 14.01.
<PAGE>
-14-
ENVIRONMENTAL MATTERS
14.02 The Landlord represents and warrants that it does not have in its
possession or control any reports, audits, studies or other materials or
information relating to the environmental status of the Leased Premises or to
the compliance or non-compliance of the Leased Premises or any part thereof with
statutes, regulations or other requirements of law relating to environmental,
health or safety matters. The Landlord also represents and warrants that, to its
best knowledge and belief and without inquiry in respect thereof, there is no
hazardous waste, material or substance located on, under or about the Leased
Premises, and the Leased Premises are currently in compliance with all statutes,
regulations and other applicable requirements of law relating to environmental,
health or safety matters.
ARTICLE XVI--MISCELLANEOUS
NOTICE
15.01 (a) Any notice, request, statement or other writing pursuant to this
Lease shall be deemed to have been given if sent by registered
prepaid post as follows:
To: CARLVAD HOLDINGS INC.
6205 Airport Rd.,
Mississauga, Ontario, L4V IE3
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 Leased Premises
and such notice shall be deemed to have been received by the
Landlord or the 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).
(b) 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 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 any 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.
REGISTRATION
15.02 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 with shall be subject to the approval of the Landlord (such approval
not to be unreasonably withheld or delayed) and which shall only describe dthe
parties, the Leased Premises, the Term and any renewals or options. The Landlord
covenants to execute a short form of Lease prepared by and at the expense of the
Tenant setting out the aforesaid details within ten (10) days of written request
therefor.
PLANNING ACT
15.03 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.
INTERPRETATION OF LEASE
15.04 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.
<PAGE>
-15-
OVERHOLDING
15.05 If the Tenant shall continue to occupy all or part of the Leased
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 one hundred and fifty percent (150%) of the monthly Basic Rent payable during
the last year of this Lease and otherwise on the terms and conditions herein set
out except as to length of tenancy.
TENANT INDUCEMENT
15.06 In consideration of the Tenant entering into the Lease, the Landlord
agrees to pay to the Tenant as an inducement, the sum of Three Hundred and Fifty
Thousand Dollars ($350,000.00) plus goods and services tax thereon, said amount
to be credited by the Landlord to the cost of the work set out in Schedule "D"
hereto.
TIME OF ESSENCE
15.07 Time shall be of the essence of this Lease.
LAW
15.08 This lease shall be governed by and construed in accordance with the
laws of the Province of Ontario.
CAPTIONS
15.09 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 provision hereof.
JOINT AND SEVERAL LIABILITY
15.10 If the Tenant shall be comprised of more than one (1) person, the
liability of each such person under this Lease shall be joint and several.
TENANT PARTNERSHIP
15.11 If the Tenant shall be a partnership, each person who shall be a member
of such partnership or successor thereof shall be and continue to be jointly and
severally liable for the performance and observance of all covenants,
obligations and agreements of the Tenant under this Lease even if such person
ceases to be a member of such partnership or successor thereof.
UNAVOIDABLE DELAYS
15.12 Whenever and to the extent the Landlord or the Tenant is unable to
fulfill 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 fulfill 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, it shall be relieved from the fulfillment of such obligation
and the other not be entitled to compensation for any inconvenience, nuisance or
discomfort thereby occasioned. There shall be no deduction from the rent or
other monies payable hereunder by reason of any such failure or cause.
EVIDENCE OF PAYMENTS
15.13 The Tenant shall produce to the Landlord upon request, satisfactory
evidence of due payment by the Tenant of all payments required to be made by the
Tenant under this Lease.
ENTIRE AGREEMENT
15.14 The Tenant acknowledges that there have been no representations made by
the Landlord which are not set out in the Lease. The Tenant further acknowledges
that the Lease constitutes the entire agreement between the Landlord and the
Tenant and may not be modified expect as herein explicitly provide or except by
subsequent agreement in writing duly signed by the Landlord and the Tenant.
<PAGE>
-16-
EFFECT OF LEASE
15.15 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.
IN WITNESS WHEREOF the parties hereto have executed this lease.
LANDLORD: CARLVAD HOLDINGS INC.
Per:
--------------------------------
Authorized Signing Officer
Name:
Position:
Per:
--------------------------------
Authorized Signing Officer
Name:
Position:
WE HAVE AUTHORITY OF BIND THE CORPORATION.
TENANT: SIDUS SYSTEMS INC.
Per: /s/ Henry Kalisky
--------------------------------
Authorized Signing Office
Name: Henry Kalisky
Position: President
Per:
--------------------------------
Authorized Signing Officer
Name:
Positoin:
WE HAVE AUTHORITY TO BIND THE CORPORATION.
<PAGE>
SCHEDULE "B"
ATTACHED TO AND FORMING
PART OF A LEASE BETWEEN
CARLVAD HOLDINGS INC.
AS LANDLORD, AND
SIDUS SYSTEMS INC.
AS TENANT
ALL AND SINGULAR that certain parcel of land and premises situate, lying and
being in the Town of Richmond Hill, in the Regional Municipality of York, and
being composed of part of Block 8 on Registered Plan 65M-2202, and being more
particularly described as Part 2 on a Reference Plan of Survey of Record
deposited in the Land Registry Office for the Land Titles Division (No. 65) as
Plan 65R-8889.
<PAGE>
SCHEDULE "C"
DEFINITIONS
For the purpose 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 3.02 of
this Lease.
(c) "Building" means the building erected on the Lands and municipally known as
66 Leek Crescent, Town of Richmond Hill, in the Regional Municipality of
York.
(d) "Lands" means the parcel of land described in Schedule "B" hereto.
(e) "Lease" means the Lease and any schedules annexed hereto and any amendments
from time to time made to this Lease in accordance with the provisions
herein set out.
(f) "Leased Premises" means the Lands and Building.
(g) "Leasehold Improvements" means all fixtures (save for trade fixtures),
installations, additions, improvements and alterations made, erected or
installed on the Leased Premises by or on behalf of the Tenant.
(h) "Rent" means Basic Rent and Additional Rent.
(i) "Taxes" means all taxes, rates, duties, levies and assessments whatsoever
whether municipal, parliamentary or otherwise, levied, charged or assessed
upon the Lands and 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 any taxes which are personal to the Landlord, such as
taxes assessed on 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. Taxes
shall also include all costs and expenses incurred by the Landlord or the
Tenant in obtaining or attempting to obtain a reduction or prevent an
increase in the amount of such Taxes and the cost of all consultants
retained by the Landlord or the Tenant in connection therewith.
(k) "Term" means that period of time set out in Section 1.02 of this Lease.
<PAGE>
-2-
(j) All buildings on the Lands and all other things being purchased shall
remain until completion at the risk of the Landlord. Pending completion,
the Landlord shall hold all insuracne policies and the proceeds thereof in
trust for the parties as their interest may appear and in the event of
substantial damage, the Tenant may either terminate this Agreement and have
all monies theretofore paid returned without interest or deduction or else
take the proceeds of any insurance and complete the purchase.
(k) Provided that this Agreement shall be effective to create an interest in
the Property only if the subdivision control provisions of the Planning Act
are complied with by the Landlord on or before completion and the Landlord
hereby covenants to proceeds diligently, at its expense, to obtain any
necessary consent on or before completion.
(l) Any rents, Operating Costs, realty taxes, local improvement charges, water
and unmetered utility charges and the costs of fuel, as applicable, shall
be apportioned and allowed to the day of completion (the day itself to be
apportioned to the Tenant).
(m) The Transfer/Deed shall, save for the Land Transfer Tax Affidavits, be
prepared in registrable form at the expense of the Landlord. If requested
by the Tenant, the Landlord convenants that the transfer/Deed to be
delivered on completion shall contain the statements contemplated by
clauses 50(22)(a) and (b) of the Planning Act (Ontario).
(n) Time shall, in all respects, be of the essence hereof provided that the
time for doing or completing of any matter provided for herein may be
extended or abridged by an agreement in writing signed by the Landlord and
Tenant or by their respective solicitors who are hereby expressly appointed
in this regard.
(o) Any tender of documents or money hereunder may be made upon the Landlord or
Tenant or their respective solicitors on the day for completion of this
Agreement. Money may be tendered by bank draft or cheque certified by a
chartered bank, trust company or Province of Ontario Savings Office.
(p) This Agreement including nay schedules attached hereto shall constitute the
entire agreement between the Landlord and the Tenant. There is no
representation, warranty, collateral agreement or condition, whether
director collateral, or express or implied, which induced any party hereto
to enter into this Agreement or on which reliance is placed by any such
party, or which affects this Agreement or the Property or supported hereby
other than as expressed herein. This Agreement shall be read with all
changes of gender or number required by the context.
(q) No insurance shall be transferred on completion.
(r) Provided that if the Tenant exercises its Option to purchase the Property
as hereinbefore set out, this Lease shall be terminated as of the closing
of the sale of the Tenant without cost or penalty to either party.
<PAGE>
SCHEDULE "D"
------------
ORLANDO CORPORATION
6205 Airport Road, Mississauga, Ontario L4V1E3 Telephone (416) 677-5480
Fax: (416) 677-2824
February 15, 1994
Sidus Systems Inc.
25 Minthorn Crt.
Thornhill, Ontario
L3T 7N5
Attention: Mrs. Rachel Kalisky
Corporate Design
Subject: Renovations to new office facility
66 Leek Crescent
Dear Rachel,
We are pleased to provide you with an updated quotation to carry out the
renovations at 66 Leek Crescent. This quotation is based upon the following:
i) Architectural drawings marked up and reviewed at February 2, 1994 meeting
at Sidus Systems Inc.
ii) Revisions to scope made February 14, 1994.
iii) Items clarified February 15, 1994.
Total cost of the work: $525,000.00 + G.S.T.
<TABLE>
<CAPTION>
<S> <C>
We have included the following scope of work: enducement (350,000.00)
------------
$175,000.00 Net Leasehold
===========
</TABLE>
GROUND FLOOR
- ------------
1. DEMOLITION:
----------
- Remove existing raised computer floors in M.I.S. and production
areas, construct bulkheads to accommodate difference in ceiling heights.
- Computer room near washrooms; existing raised floor to be removed,
relocate existing glazed partition to expediting/purchasing area, fill
in with drywall.
- Remove partitions as noted on plan.
- Remove existing carpet.
- Remove mail slots in expediting/purchasing area.
- Allow for garbage boxes and dumping charges.
<PAGE>
-2-
2. PARTITIONS:
----------
- Provide drywall partitioning as shown on plan. - Reinstall 16 wood
doors in hollow metal frames. - Provide 2 hollow metal doors in hollow
metal frames. - Provide 16 hollow metal sidelights, 2 ft. wide, 8 ft.
high with 4 panels. - Re-use existing finishing hardware where
possible.
- Paint all new and existing walls, doors and frames.
- Provide insulation to walls of classroom, demo room, cafeteria and
engineer dept.
- Existing T-bar acoustic ceiling to be repaired where necessary.
3. FLOORING:
--------
- Provide new 28 oz/yd2 level loop 100% nylon carpet with carpet base.
- Provide ceramic tile to match existing throughout lobby, coffee
station adjacent to lobby and corridor to RMA department.
- Remove ceramic tile in expanded cafeteria, replace with new vinyl tile
to match existing vinyl tile.
- Existing vinyl tile in engineer department and RMA department to
remain. Allowance made for clean-up and re-wax.
- Carpet in three offices to north-east corner of production area to
remain.
- Provide urethane flooring to production room.
4. MISCELLANEOUS:
--------------
- All fixtures, vanities and accessories in washrooms to remain.
Washrooms to receive painting only.
WAREHOUSE
- ---------
- Remove fencing adjacent to RMA dept.
- Construct new customer pick-up room complete with drywall strapping on
warehouse wall, new T-bar acoustic ceiling, new vinyl tile floor and 2
ft. sidelight.
- Construct overhead foor enclosure: - 8" concret block to 8 ft. high,
drywall from top of masonry to underside of deck.
- Provide three pairs of 3'6" x 8'2" hollow metal doors complete with
rubber strip bumper.
- Overhead doors, dock levellers, door seals to be serviced (landlord's
work).
- Repair and service HVAC system (landlord's work).
- Remove and dispose of the UPS storage room (landlord's work).
- Repair existing lights including ballasts and fluorescent tubes
(landlord's work).
- Create one 12 ft. wide doorway to burn-in room.
<PAGE>
-3-
SECOND FLOOR
- ------------
1. DEMOLITION:
----------
- Remove partitions as noted.
- Remove existing carpet.
- Allow for garbage boxes and dumping charges.
2. PARTITIONS:
-----------
- Provide drywall partitioning as shown on plan.
- Provide sound insulation to 5 meeting rooms, 1 boardroom and 4
executive offices.
- Re-install 15 wood doors in hollow metal frames.
- Provide 10 wood doors in hollow metal frames.
- Provide 23 hollow metal sidelights, 2 ft. wide, 8 ft. high with 4
panels each.
- Provide 3 sets of hollow metal sidelights, 8 ft. high with 4 panels
each. Sidelight widths to be 2, 3 and 4 lites respectively.
- Provide hollow metal framed window complete with fire shutter to view
warehouse.
- Provide drywall baffle above ceiling for 5 meeting rooms, 1 boardroom
and 1 executive office.
- Paint all new and existing walls, doors and frames.
- Provide double-wall lighting detail to one meeting room.
3. CEILINGS:
---------
- Provide new T-bar acoustic ceiling to executive area defined by
colum lines H and Dy.
- Remainder of existing T-bar acoustic ceiling to be repaired where
necessary.
- Provide bulkheads for 3 meeting rooms and 1 boardroom.
- Provide drywall ceiling detail to design office.
4. FLOORING:
- Provide 28 oz/yd2 level loop 100% nylon carpet with carpet base to
carpeted areas.
- Existing vinyl tile in file room to remain.
- Provide ceramic floor to executive washroom and shower.
- Existing carpet to remain on second floor defined by grid lines 6x-10.
<PAGE>
-4-
5. MISCELLANEOUS:
-------------
- Provide hat shelf and coat rod for closet.
WAREHOUSE ELECTRICAL:
- --------------------
SCOPE OF WORK: Based upon drawing marked up January 31, 1994.
- --------------
1. Burn-in room:
- Provide 12 - 110v/15A receptacles, wall mounted.
- Provide 40 - 110v/15A dedicated outlets, cabtire drop.
- Provide 60 ct. panel complete with 45 KVA transformer.
2. Plant area:
- Provide one new 42 circuit panel complete with 30 KVA transformer.
- Provide 4 - 110v/15A duplex outlets at repair area A.
- Provide 4 - 110v/15A duplex outlets at drives area.
- Provide 2 - 110v/15A duplex outlets at copier/pre-packing area.
- Provide 1 - 220v outlet at skin machine.
- Provide 8 - 110v/15A duplex outlets at large assembly and packing
area.
- Provide 4 - 110v/15A duplex receptacles at south-west corner of plant.
3. Production area:
- Provide one new 60 circuit panel complete with 45 KVA transformer.
- Provide 4 - 110v/15A duplex outlets at repair area 2.
- Provide 8 - 110v/15A dedicated outlets along north wall.
- Provide 28 - 110v/15A dedicated outlets at 7 columns.
- Provide 8 - 110v/15A duplex outlets at assembly line.
- Provide 8 - 110v/15A duplex outlets at spare station.
OFFICE ELECTRICAL:
- -----------------
SCOPE OF WORK:
- -------------
- Perform all electrical work involved with demolition.
- Re-install fixtures in areas where T-bar acoustic ceiling is lowered.
- Relocate/add 2' x 4' fluorescent light fixtures to suit new partition
layout.
- Provide 70 - 110v/15A receptacles for office areas.
- Provide 30 telephone outlet boxes for office areas.
- Modify existing emergency, exit lighting, fire alarm system to suit
new layout.
- Remove all existing communication cable left in ceiling.
- Provide all power wiring to new mechanical equipment.
- Allow for 22 potlights in executive area.
- Provide 8 isolated ground receptacles for computer room.
- Provide 4 dedicated receptacles for demo room.
<PAGE>
-5-
MECHANICAL SCOPE:
- ----------------
- Provide exhaust fans for 5 meeting rooms and 1 boardroom.
- Provide 3 exhaust fans ducted to outside for 3 smoking areas.
- Provide one V.A.V. box, associated ducting and controls for each of
three areas: expanded cafeteria, demo room and classroom.
- Add new duct system and VAV boxes to existing roof top unit to
accommodate change of existing computer room to production area.
- Provide one exhaust fan for new washroom and shower in executive area.
- Relocate existing diffusers and thermostats to suit revised partition
layout.
- Expediting/purchasing area to remain as is.
- Burn-in room in plan to remain as is, i.e. no heating, cooling or
ventilation.
- Cafeteria equipment to be serviced (landlord's work).
- H.V.A.C. system to be serviced and left in proper working condition
(landlord's work).
PLUMBING SCOPE:
- --------------
- Provide one shower and 2-piece washroom complete with hot water tank
to executive area.
- All coffee stations to remain as is.
SPRINKLER SCOPE:
- ---------------
- Relocate/add sprinkler heads to suit revised layout where necessary.
- No alterations to existing warehouse sprinker system included.
We have included all design, engineering, permits and supervision.
PAYMENT SCHEDULE:
- ----------------
As per the Lease Agreement, Orlando's contribution towards Leasehold
Improvements is $350,000.00. We anticipate the work to be substantially complete
by the end of March.
<PAGE>
-6-
You will be billed $35,000.00 weekly, for a period of five weeks
commencing, February 28, 1994 as follows:
$525,000.00
-350,000.00
-----------
$175,000.00
+ 5 weeks
-----------
$ 35,000.00
No extras will be undertaken until Orlando receives a signed work order.
All invoices are due upon receipt.
Please sign and return one copy indicating your authorization to proceed.
*
Should you have any questions, please do not hesitate to call.
Yours truly,
ORLANDO CORPORATION
cc: Henry Kalisky Sidus
Al Muzar Sidus
Carlo Fidani Orlando
Jim Turner Orlando
David Wawrychuk, P.Eng. Gale Robertson Magerman & Page
Project Co-ordinator
dw/mc
ACCEPTED
---------------------------------
SIDUS SYSTEM INC.
* All payments hereunder are subject to the hold back requirements of the
Construction Lien Act (Ontario).
Barristers and Solicitors
Trade Mark Agents PERSONAL AND CONFIDENTIAL
Ronald Prehogan July 9, 1996
Howard Yegendorf
Donald H. Brazeau Sidus Systems Canada Inc.
Jamie Wyllie 101-2781 Lancaster Road
Fred E. Seller Ottawa, Ontario
Harold J. Feder KlB lA7
Allen Waassermuhl
D. Larry Segal Attention: Anthony Wright
Glenn Sheskay
Stephanie D. Spruston Dear Mr. Wright:
Counsel:
John W. Dickie
Re: Lease to Sidus Systems Inc.
Our File No.: 96-5575
------------------------------------------------------
Please find enclosed a revised Lease Agreement
between Sidus Systems Inc. and Newill Corporation. I
am also enclosing a copy of the Offer to Lease and
letter dated April 11, 1996 from Callaghan, Potter,
Letellier for your reference.
Please contact me with any further comments you
may have.
Yours very truly,
YEGENDORF, BRAZEAU, SELLER,
PREHOGAN & WYLLIE
/s/ Harold J. Feder
Harold J. Feder
HJF/kn
Encls.
cc: Ed Mulkins
c/o Shenkman Corporation
2001-130 Albert Street
Ottawa, Ontario
KlP 5G4
<PAGE>
OFFER TO LEASE
Dated this 4th day of April, 1996.
LANCASTER OFFICE PARK
2781 LANCASTER ROAD
(the "Building")
TO: NEWILL CORPORATION
(Landlord)
WE: SIDUS SYSTEMS INC.
(Tenant)
Hereby offer to lease from the Landlord, through Colliers Macauley
Nicolis (Ontario) Inc. ("ASCUS") upon the following terms and conditions of
approximately 9,643 square feet of Rentable Area on the entire fourth floor,
part of the ground floor (hereafter referred to as the "Leased Properties") in
the Building located at 2781 Lancaster Road.
The area of the Leased Premises is above outlined on the plan attached
hereto as Schedule "A".
1. Term
The Term of the lease shall be Five (5) years commencing on the 1st day of
May, 1996, (the "Commencement Date") and ending on the 30th day of April,
2001, (the "Termination Date").
2. Basic Rent
The Tenant shall pay to the Landlord the following minimum rent (the "Basic
Rent") payable in advance on the 1st day of each and every month during the
Term in accordance with the following schedule:
Years 1 to 5 $10.75 rent per square foot per annum (not negotiable).
<PAGE>
OFFER TO LEASE Page 2
3. Additional Rent
In addition to the Basic Rent, the Tenant shall pay an additional rent (the
"Additional Rent") to the Landlord her proportionate above of operating
costs and realty terms all as will be more fully described in the lease to
be entered into between the parties pursuant to this Order. The Tenant
acknowledges that the Lease shall be _______ out to the Landlord, except
that the Tenant shall not be obligated to reimburse the Landlord for
capital _____ or large ______ terms, ______, or repairs or replacements to
the _____ of the Building. Additionally, the aggregate administrative,
supervisory and management ____ payable by the Tenant shall not ____
fifteen percent (15%) of operating costs, excluding realty issues and
licenses. Notwithstanding anything to the contrary basics. Additional Rent
for the 1996 calendar year shall not exceed EIGHT DOLLARS AND FIFTY CENTS
($8.50) per square foot of irritable area of the Leased Premises. The
Landlord further covenants that if the 1996 calendar year actual Additional
Rent (calculated as if the Building were fully occupied by Tenants carrying
on business throughout such year") exceeds EIGHT DOLLARS AND FIFTY CENTS
($8.50) per square foot of rentable areas, the excess amount, if any, shall
be deducted from the Additional Rent payable by the Tenant for each
calendar year after 1996. The Tenant's proportionate share shall mean a
fraction of the _____ of which is the rentable area of the Leased Premises
(or the deemed receivable area as provided in section 4 of this Office:)
and the ______ of which is the rentable area of the Building.
<PAGE>
OFFER LEASE Page 3
4. Measurement
The Basic Rent and the Additional Rent shall be subject to adjustment based
on the actual Rentable Area of the Leased Premises as determined by the
Landlord's architect in accordance with the BOMA _____ of measurement (ANSI
765,1-1980). The Landlord's Architect's Certificate as to the Rentable Area
of the Leased Premises measured as aforesaid shall be delivered to the
Tenant on or before the Commencement Date.
5. Lease
The form of lease incorporating the terms of this Office shall be prepared
by the Landlord and shall be delivered by the Landlord to the Tenant within
Five (5) days after acceptance of this Offer. The parties shall forthwith
negotiate the terms of the lease in good faith.
6. Use
The Leased Premises shall be used only for the purpose of general office.
7. Option to Lease Additional Premises
Provided the Terms is not those in material default of its coverage and
obligations under the Lease, the Tenant shall, throughout the Term and any
renewal or contention thereof, have a continuing option to lease additional
premises on the ground floor and third floor of the Building as may from
time to time become available to be leased (the "Optioned Premises"), under
them prevailing reduced rates for a similar _____ building in the general
vicinity of 2781 Lancaster Road.
8. Parking
During the Term of the Lease and any renewal or extension thereof, the
Landlord shall provide to the Tenant thirty (30) unreserved parking stalls
at no charge whatsoever.
<PAGE>
OFFER TO LEASE Page 4
9. Storage and Graphics
Subject as compliance with all applicable by-laws, regulations and codes as
to size, location, arrangement, type of lettering, color, appearance and
design, the Landlord will allow Sidua Systems Inc. the right to cover the
standard graphics on the exterior wall of the building, the building lobby
and the main floor elevator lobby, as its sole cost, subject to prior
written approval from the Landlord, such approval not be unreasonably
withheld.
10. Moving Epenses
The Landlord will pay the Tenant a moving allowance of One Dollar ($1.00)
per rentable square foot of the Leased Premises plus the applicable Costs
and Service Tax, immediately upon the Tenant moving into the Leased
Premises.
11. Gross Free Rent
The Landlord hereby grants to the Tenant a free rental period of one month
starting at the commencement of the Term and ending on the 31st day of May,
1996 ("Free Rental Period"). During the Free Rental Period, the Tenant
shall not be called upon to pay Basic or Additional Rent, whatsoever.
12. Landlord's Warranties
The Landlord represents and warrants to the Tenant that, to the best of the
Landlord's knowledge and belief, the structure of the Building is in good
repair and the H.V.A.C. electrical and mechanical systems shall be
balanced, fully operational, and be of sufficient capacity for the Tenant's
use.
13. Heating, Ventilating and Air Conditioning
The Landlord covenants to operate or cause the operation of the building,
ventilation and air conditioning system serving the Leased Premises and the
common area and facilities to create a normal comfortable working
temperature during the Tenant's business hours.
<PAGE>
OFFER TO LEASE Page 5
14. Tenant Leasehold Improvements
The Landlord shall, at its sole costs and expense, construct or have
constructed in a good and workmanlike manner leasehold improvements in the
Leased Premises to a full "turnkey" package in accordance with the plan
ISPI, SPI.A dated April 2, 1996 attached herewith and identified as
Schedule "A". The Tenant's Leasehold Improvements will be substantially
exemplied prior to April 30, 1996 to allow Tenant occupancy of the Leased
Premises on April 30, 1996, both parties, given time con____, acting
reasonably.
The Landlord, at its sole expense, shall be responsible for all work and
professional services with regards to the design and construction of any
basic building and Leasehold Improvement requirements. In addition, the
Landlord shall be responsible to provide and pay all professional fees for
the electrical, mechanical engineers, the interior space phasing and design
constructions, along with any other mechanical and original services that
may be required to meet the __________ requirement of the Tenant. The
Landlord will be responsible to pay directly to Callaghan Proctor and
Leasllier Design Construction Inc., the interior architectual space
planning consultant its fees for interior space planning, construction
drawings, specifications for the interior fix-up for the Tenants. All
drawings and specifications produced by the Landlord's consultants shall be
reviewed and approved by the Tenant or their representatives prior to any
fix-up work taking place.
<PAGE>
OFFER TO LEASE Page 6
15. Early Access
The Tenant shall have excess to the Leased Premises for the purpose of the
installation of telephone and communication systems, computer equipment,
and furniture five (5) days prior to the Commencement Date. All terms and
conditions of the Lease will apply to the term of consignation prior to the
Commencement Date of the Lease, except that no Basic Rent or Additional
Rent shall be payable. The Tenant shall be entitled to hook up its computer
equipment along the wires of Bell Canada, subject to the prior written
connects of Bell Canada.
16. Option to Renew
Provided the tenant is not there in material default under the Lease and
that it has at least six (6) months prior to the expiration of the Term
delivered to the Landlord written terms of its selection to review the
Lease, the Tenant shall have the option to renew the Lease for the Lease
Premises for one (1) further term of five (5) years. The Lease as reserved
will be at current rental rate prevailing in the City of Oxtera for similar
accommodation (as if unfurnished, under contained and window partitions at
the time of commencement of the renewal period).
17. Landlord to Otherwise _______________________
Acceptance of this Offer by the Landlord is conditional upon the Tenant
providing the Landlord with wuch information regarding the financial status
of the Terms as the Landlord may reasonably required for the purpose of
determining the financial strength of the Tenant. Within one (1) day of the
date of execution of this Offer by the Landlord, the Landlord shall notify
the Tenant of the information it requests and the Tenant shall then
<PAGE>
OFFER TO LEASE Page 7
have one (1) day to supply the said information to the Landlord. The
Landlord shall have one (1) day from the date of receipt of the aforesaid
information to determine in its sole discretion or not the Tenant is of
sufficient financial strength. The condition referred to in this paragraph
shall have been satisfied when the Landlord has so notified the Tenant in
writing within the time set out above. If no such notification in writing
is given, or the Landlord advises the Tenant that it is not satisfied with
the Tenant's financial strength, this Offer shall become null and void and
the Deposit (and any secured interest thereon) shall be returned in full
forthwith to the Tenant.
18. Assignment Sublet
The Tenant shall not assign this Offer to Lease or One Lease resolving
herefrom or subject or part with possession of all or part of the Leased
Premises or the Lease without the prior written consent of the Landlord
which consent shall not be unreasonably withheld or delayed.
19. No Representations
There are no covenants, representations, agreements, warranties or
conditions in any way relating to the subject matter of this agreement
expressed or impled, collateral or otherwise, except as expressly set forth
herein.
20. Terms of the Escrow
This shall be of the _____ of this agreement and the conditions herein,
provided that the time for _____ or completing any matter herein may be
assigned by an agreement in notifying signed by both parties.
<PAGE>
OFFER TO LEASE Page 8
21. Definitions
Words defined in the Lease and used herein shall have the same meaning
described to them by the Lease.
22. Investment
This Offer and the agreement seeking _____- shall ensure to and be binding
upon the parties herein there, and their respective successor and
assignees.
23. Waiver to Agent
The parties to this agreement acknowledges that the Agent has recommended
that they obtain advice from their legal counsel prior to signing this
document. The parties further acknowledges that the information provided by
the Agent is not legal, accounting, environmental or no advice, and the
parties are cautioned not to rely on any such information, witness specific
legal accounting, or tax advice with respect to their unique circumstances.
24. Deposit
The Terms shall deliver to Colliers within three (3) days after acceptance
of this Offer, a check for FIFTEEN THOUSAND DOLLARS ($15,000.00)(the
"Deposit") payable to the agent, "Colliers Maculey Nicolis (Ontario) Inc.
In ___, as a deposit and to be applied in payment on the first termable
date. "First rentable date is noted above, remains both the first payment
of minimum or base rent due together with the first payment of any
additional rent, including operating costs and taxes due.
25. Professional Fees
The Landlord will be responsible for the payment of real issue fees to
Collier Maculey Nicolis (Ontario) Inc. And design fees, Callaghan Proctor
and Leasllier.
<PAGE>
OFFER TO LEASE Page 9
26. Merger
All terms of this Offer shall ____ the completion of this transaction and
shall not merge. In the event of any conflict between the terms of this
Offer and the terms of the Lease, the terms of this Offer shall prevail.
Dated at ______________ this 4th day of April, 1996.
SIDUS SYSTEMS INC.
___________________________ per: ___________________________________
Witness Date
title: ___________________________________
ACCEPTANCE
We hereby agree that the above correctly set forth the terms of our
agreement and undertake to carry out the provisions thereof.
Dated at ______________ this 4th day of April, 1996.
NEWILL CORPORATION
___________________________ per: ___________________________________
Witness Date
title: ___________________________________
Seal
<PAGE>
[DIAGRAM OF FLOOR PLAN HERE]
<PAGE>
[DIAGRAM OF FLOOR PLAN HERE]
<PAGE>
[DIAGRAM OF FLOOR PLAN HERE]
<PAGE>
April 11, 1996
Newill Corporation
217 Cardevco Road,
Carp, Ontario
KOA 1LO
Attn: Mr. Rob Rump
Re: Sidus/Lancaster Rd.
Dear Rob,
This is to confirm the floor areas for the Sidus space in the Lancaster Road
building. Useable area, calculated according to BOMA standards, is 9192 sq. ft.
on the 4th floor, and 450 sq. ft. on the 1st floor, for a total useable area of
9642 sq. ft.
It is our understanding that the building gross-up factor is 10%. This gives a
rentable area of 10606 sq. ft.
Sincerely,
/s/ Jim Potter
Jim Potter
<PAGE>
L E A S E
A G R E E M E N T
THIS INDENTURE made as of the 1st day of May, 1996.
BETWEEN:
SIDUS SYSTEMS INC.
(hereinafter called the "TENANT")
OF THE FIRST PART;
AND:
NEWILL CORPORATION
(hereinafter called the "LANDLORD")
OF THE SECOND PART.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
SPECIAL DEFINITIONS
SECTION DESCRIPTION PAGE
- ------- ----------- ----
1.1 Definitions
(a) "Accounting Period" 1
(b) "Additional Rent" 1
(c) "Amortization" 1
(d) "Architect" 1
(e) "Building Operating Costs" 1
(f) "Capital Tax" 1
(g) "Claims" 1
(h) "Commencement Date" 1
(i) "Common Facilities" 1
(j) "Development" 2
(k) "Electrical Costs" 2
(l) "Fuel, Gas and Steam Costs" 2
(m) "Gross Building Area" 2
(n) "HVAC Costs" 2
(o) "Injury" 2
(p) "Insurance Costs" 2
(q) "Landlord" 2
(r) "Landlord's Address" 2
(s) "Landlord's Work" 2
(t) "Lands" 2
(u) "Lease" 2
(v) "Leased Premises" 2
(w) "Leasehold Improvements" 2
(x) "Monthly Minimum Rent" 3
(y) "Mortgage" 3
(z) "Mortgagee" 3
(aa) "Notice" 3
(bb) "Permitted Use" 3
(cc) "Person" 3
(dd) "Recoverable Costs" 3
(ee) "Recoveries" 3
(ff) "Rent" 4
(gg) "Rentable Area" 4
(hh) "Rentable Area of Leased Premises" 4
(ii) "Stipulated Rate of Interest" 4
(jj) "Taxes" 4
(kk) "Tenant" 4
(ll) "Tenant's Address" 4
(mm) "Tenant's Ratio" 4
(nn) "Tenant's Trade Name" 4
(oo) "Tenant's Work" 4
(pp) "Term" 4
(qq) "Termination Date" 4
(rr) "Trade Fixtures" 4
(Ss) "Unavoidable Delay" 4
(tt) "Usable Area" 5
(uu) "Water Costs" 5
<PAGE>
ARTICLE 2
DEMISE, DELIVERY AND SURRENDER
------------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
2.1 Demise and Leased Premises 5
2.2 Landlord's Work 5
2.3 Tenant's Work 5
2.4 Leasehold Improvement Allowance 5
2.5 Acknowledgement of Commencement Date 6
2.6 Acceptance of Leased Premises 6
2.7 Use or Occupancy Prior to Commencement Date 6
2.8 Measurement of Leased Premises 6
2.9 Installation and Removal of Trade Fixtures and
Leasehold Improvements 6
2.10 Overholding by Tenant 7
ARTICLE 3
RENTAL
------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
3.1 Monthly Minimum Rent 7
3.2 Recoveries 7
3.3 Advance Rent 8
3.4 Security Deposit 8
3.5 Rent Covenant 8
3.6 Waiver of Offset 8
3.7 Rent Past Due 8
3.8 Net Lease 8
ARTICLE 4
BUSINESS TAXES AND OTHER AMOUNTS TO BE PAID BY TENANT
-----------------------------------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
4.1 Business Taxes 8
4.2 Separate School Taxes 9
4.3 Other Taxes 9
4.4 Third Party Services 9
4.5 Services of the Landlord 9
4.6 Upgrading Utility Systems 9
4.7 Pest Control 9
ARTICLE 5
OPERATION OF DEVELOPMENT
------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
5.1 Heating, Ventilating and Air Conditioning 9
5.2 Janitorial Services 9
5.3 Utility Services 10
5.4 Ground Floor Directory 10
5.5 Consequential Damage 10
ARTICLE 6
INSURANCE AND LIABILITY
-----------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
6.1 Landlord's Insurance 10
6.2 Tenant's Insurance 10
6.3 Premium Increases and Cancellation 11
6.4 Limitation of Landlord's Liability 11
6.5 Indemnity by Tenant 12
<PAGE>
ARTICLE 7
REPAIRS AND ALTERATIONS
-----------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
7.1 Tenant's Repairs 12
7.2 Tenant to Notify of Defects 12
7.3 Landlord's Consent to Changes 12
7.4 Construction by Tenant 12
7.5 Builder's or Mechanic's Liens 13
7.6 No Interference with Landlord and Other Tenants 13
7.7 Indemnification of Landlord 13
7.8 Installation of Meters 13
7.9 Repair Where Tenant at Fault 13
7.10 Repairs by Landlord 13
7.11 Door Locks 13
ARTICLE 8
DAMAGE OR DESTRUCTION
---------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
8.1 Right to Terminate 14
8.2 Repair and Rebuilding 14
8.3 Abatement of Rent 14
8.4 Certificate of Architect Binding 14
ARTICLE 9
DEMOLITION AND EXPROPRIATION
----------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
9.1 Demolition 14
9.2 Total Expropriation of Leased Premises 14
9.3 Partial Expropriation of the Building 14
9.4 Expropriation of Common Facilities 15
9.5 Mutual Co-Operation 15
ARTICLE 10
OUIET ENJOYMENT
---------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
10.1 Landlord's Covenant for Quiet Enjoyment 15
ARTICLE 11
ATTORNMENT, SUBORDINATION, STATUS STATEMENT
-------------------------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
11.1 Subordination and Attornment 15
11.2 Attorney 15
11.3 Financial Information 15
11.4 Status of Lease Statement 16
<PAGE>
ARTICLE 12
USE OF LEASED PREMISES
----------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
12.1 Type of Business Permitted 16
12.2 Conduct of Business 16
12.3 Observance of Law 16
12.4 Waste and Nuisance 16
12.5 Rules and Regulations 16
ARTICLE 13
ASSIGNMENT AND SUB-LETTING
--------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
13.1 Assignment by Landlord 16
13.2 Assignment and Sub-Letting by Tenant 17
13.3 Landlord's Option 17
13.4 Conditions to Consent 17
13.5 Corporate Ownership 17
ARTICLE 14
DEFAULT
-------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
14.1 Landlord's Right of Re-Entry 18
14.2 Re-Entry and Termination 18
14.3 Re-Entry and Re-Letting 18
14.4 Distress 19
14.5 Expenses 19
14.6 Bankruptcy of tenant 20
14.7 Landlord May Perform for Tenant 20
14.8 Remedies Generally 20
14.9 Default under Other Lease 21
14.10 Accord and Satisfaction 21
14.11 Excuse of Performance 21
ARTICLE 15
LANDLORD'S RIGHT OF ACCESS
--------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
15.1 Right of Access and Method of Re-Entry 21
15.2 Landlord's Right to Alter and Relocate the
Leased Premises 21
15.3 For Rent Signs 21
15.4 Obligation of Tenant and Landlord 21
ARTICLE 16
COMMON FACILITIES
-----------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
16.1 Non-Exclusive Right to Use Common Facilities 22
16.2 Alterations to Common Facilities 22
<PAGE>
ARTICLE 17
INTERPRETATION AND MISCELLANEOUS
--------------------------------
SECTION DESCRIPTION PAGE
- ------- ----------- ----
17.1 Waiver 22
17.2 Compliance with the Planning Act (Ontario) 22
17.3 Corporate Tenancy 22
17.4 No Partnership 22
17.5 Agency 23
17.6 Lease is Entire Agreement 23
17.7 Registration 23
17.8 No Offer 23
17.9 Joint and Several Liability 23
17.10 Governing Law 23
17.11 Time of the Essence 23
17.12 Interpretation 23
17.13 Construction 23
17.14 Schedules 23
17.15 Partial Invalidity 23
17.16 Successors and Assigns 24
SCHEDULES
---------
Schedule "A" Legal Description of Lands
Schedule "B" Outline of Lands
Schedule "C" Outline of Leased Premises
Schedule "D" Acknowledgment of Commencement Date
Schedule "E" Landlord's Work and Tenant's Work
Schedule "F" Parking
Schedule "G" Option to Renew
Schedule "H" Special Clauses
Schedule "I" Rules and Regulations
Schedule "J" Environmental Matters
<PAGE>
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions:
(a) "ACCOUNTING PERIOD" means the calendar year or such other accounting year
as the LANDLORD may adopt from time to time for the Development.
(b) "ADDITIONAL RENT" means the Recoveries and all amounts payable to the
LANDLORD under this Lease other than the Monthly Minimum Rent whether or
not characterized as additional rent under this Lease or payable to the
LANDLORD.
(c) "AMORTIZATION" means, for any Accounting Period, that amount of the
LANDLORD'S capitalized cost of furniture, signs, machinery, and equipment
(including electrical, mechanical, plumbing and HVAC systems) and of the
LANDLORD'S cost of capital replacements and major repairs to the
Development which is expended during such Accounting Period in accordance
with generally accepted accounting principles together with simple interest
on the unamortized portion of such costs, where such interest shall be
calculated each month at a rate equal to one-twelfth (1/12) of the
aggregate of two percent (2%) plus the rate of interest per annum charged
by the LANDLORD'S banker at the City of Ottawa on the first day of each
month for loans in Canadian dollars to its most creditworthy customers.
(d) "ARCHITECT" means the architect, Ontario Land Surveyor or professional
person named by the LANDLORD from time to time.
(e) "BUILDING OPERATING COSTS" means, for any Accounting Period, the total cost
to the LANDLORD, calculated in accordance with generally accepted
accounting principles, for the cleaning, maintenance, repair and operation
of the Common Facilities and the Development for such Accounting Period,
plus an administration fee of fifteen percent (15%). The total cost to the
LANDLORD for the maintenance, repair, replacement and operation of the
Common Facilities and the Development shall include, without duplication or
limitation, the LANDLORD'S costs for Taxes and business taxes which have
been reasonably apportioned by the LANDLORD to the Common Facilities,
Amortization applicable to the Common Facilities and the LANDLORD'S costs
for cleaning, painting, controlling pests, supervising, policing,
gardening, landscaping, striping, snow removal, electricity, water,
heating, ventilation, air-conditioning, materials, supplies, equipment
rental, wages, salaries and benefits paid and provided for employees,
maintenance, repairs, replacements, management fees, the cost of all
auditing, accounting, bookkeeping, legal, architectural, surveying and
other professional and consulting services and expenses incurred relating
to the operation and maintenance of the Common Facilities and the
Development and all other expenditures of a nature required to be made by a
prudent owner. Building Operating Costs shall not include debt service,
ground rents, costs incurred in connection with the leasing of the
Development, costs for rental advertising, TENANT improvement allowances,
depreciation nor repairs or replacement to the structure of the Development
or any other costs of a capital nature.
(f) "CAPITAL TAX" means the tax or excise imposed upon the LANDLORD which is
measured 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 Development computed as if the amount of such tax were that amount due
if the Development were the only 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 Development which said tax is imposed upon the capital
employed by the LANDLORD with respect to the Development and which said
capital shall be deemed to be the cost to the LANDLORD of the said
Development.
(g) "CLAIMS" means claims, losses, actions, suits, proceedings, causes of
action, demands, damages (direct, indirect, consequential or otherwise),
judgments, executions liabilities, responsibilities, losses, costs,
charges, payments and expenses including, without limitation, any
professional, consultant and legal fees (on a solicitor and his own client
basis).
(h) "COMMENCEMENT DATE" means the earlier of:
(i) the date the TENANT occupies the Leased Premises, or
(ii) May lst, 1996.
(i) "COMMON FACILITIES" means the Lands, the buildings, and all improvements
and facilities thereon together with all facilities from time to time
provided by the LANDLORD in or near the Development to serve the
Development, excluding all leasable premises, but including, as applicable,
without limitation, parking areas, public transit shelters, roadways,
entrances, exits, pedways, sidewalks, landscaped areas, entrance ways,
lobbies, common corridors, common or public lavatories, truck courts, truck
docks, common loading areas, exterior weather walls, roofs, exterior and
interior structural elements and bearing walls of the Development,
driveways, music and public address systems, first aid stations, property
management offices, public seating facilities, fire prevention and fire
detection systems, plumbing, heating,
<PAGE>
2
ventilation, air-conditioning (other than window units) and drainage
equipment and installations, fountains, furniture, furnishings, customer
and service stairways, elevators, directory boards, general signs including
pylon signs, maintenance equipment, service, janitorial and mechanical
rooms, transformer vaults, electrical distribution rooms, water meter
rooms, and all other areas, facilities, equipment and installations which
are provided or designated from time to time by the LANDLORD for the use by
or benefit of the TENANT, its employees, customers and invitees in common
with others entitled to their use or benefit in the manner and for the
purposes permitted by this Lease.
(j) "DEVELOPMENT" means the Lands, the buildings, and all improvements and
facilities erected thereon and as may be varied from time to time, located
at municipal address 2781 Lancaster Road, Ottawa, Ontario.
(k) "ELECTRICAL COSTS" means, for any Accounting Period, the total cost to the
LANDLORD, calculated in accordance with generally accepted accounting
principles, for electricity supplied to the Development during such
Accounting Period including, without duplication or limitation, all taxes,
surcharges or other charges thereon, applicable Amortization and the cost
of all fittings, machines, apparatus, meters, work or services required in
connection with the supply of electricity to the Development, plus an
administration fee of fifteen percent (15%).
(l) "FUEL, GAS AND STEAM COSTS" means, for any Accounting Period, the total
cost to the LANDLORD, calculated in accordance with generally accepted
accounting principles, for fuel, gas, steam, chilled water and all other
materials, excluding electricity and water other than chilled water,
supplied to the Development for the purpose of controlling the interior
environment of the Development during such Accounting Period including,
without duplication or limitation, all taxes, surcharges and other charges
thereon, applicable Amortization and the cost of all fittings, machines,
apparatus, meters, work or services required in connection with the supply
of such materials to the Development, plus an administration fee of fifteen
percent (15%).
(m) "GROSS BUILDING AREA' means the aggregate area of all floors in the
Development as measured from the exterior surfaces of the exterior building
walls and shall include the area of any loading docks.
(n) "HVAC COSTS" means, for any Accounting Period, the total cost to the
LANDLORD, calculated in accordance with generally accepted accounting
principles, for heating, ventilating and air-conditioning the Development
for such Accounting Period including, without duplication or limitation,
applicable Amortization, the cost of fuel, electricity, labour, materials,
repair, maintenance, service and other such costs reasonably attributable
to the heating, ventilating or air-conditioning of the Development, plus an
administration fee of fifteen percent (15%).
(o) "INJURY" means bodily injury, personal discomfort, mental anguish, shock,
sickness, disease, death, false arrest, detention or imprisonment,
malicious prosecution, libel, slander, defamation of character, invasion of
privacy, wrongful entry or eviction and discrimination, or any of them, as
the case may be.
(p) "INSURANCE COSTS" means, for any Accounting Period, the total cost to the
LANDLORD, calculated in accordance with generally accepted accounting
principles, for insuring the Development as described in Article 7 hereof,
plus an administration fee of fifteen percent (15%).
(q) "LANDLORD" means Newill Corporation and its successors and assigns.
(r) "LANDLORD'S ADDRESS" means 217 Cardevco Road, R.R. #2, Carp, Ontario, KOA I
LO or such other address as may be specified from time to time by the
LANDLORD in writing to the TENANT.
(s) "LANDLORD'S WORK" means the work which the LANDLORD agrees to complete at
its expense as set forth in Schedule "E".
(t) "LANDS" means the area more particularly described in Schedule "A" and
shown in heavy black outline on Schedule "B".
(u) "LEASE" means this Lease as from time to time amended in writing and
includes all Schedules hereto.
(v) "LEASED PREMISES" means those premises comprising part of the Development
on the fourth floor and part of the ground floor, containing a Usable Area
of 9,643 square feet, the approximate location of which is shown in heavy
black outline on Schedule "C" hereto, commonly known as Suite Numbers 101
and 400. The exact boundaries of such premises encompass the Useable Area,
excluding the outside surface of exterior walls, and extend from the top
surface of the structural subfloor to the bottom surface of the structural
ceilings.
(w) "LEASEHOLD IMPROVEMENTS" means and includes all fixtures (excluding the
TENANT'S Trade Fixtures), equipment, improvements, installations,
alterations and additions from time to time made, constructed, erected, or
installed by, for or on behalf of the TENANT or any previous occupant of
the
<PAGE>
3
Leased Premises in, on, to, for or which serve, the Leased Premises,
whether or not easily disconnected or moveable, including, without
limitation, all:
(i) partitions, doors, safes, vaults and hardware;
(ii) mechanical, plumbing, electrical, sprinkler, fire detection, safety,
utility, heating, humidity, ventilating and air- condition systems,
facilities, installations, fixtures, controls, fittings and
equipment;
(iii) carpeting, drapes and other floor, wall, ceiling and window
coverings and drapery hardware;
(iv) light fixtures;
(v) store-fronts;
(vi) grill and other security or locking devices securing allor any part
of the Leased Premises;
(vii) counters, cabinets, shelves and built-in furniture and furnishings;
(viii) internal stairways, escalators, elevators and any other
transportation equipment or systems;
(ix) ceilings and ceiling panels;
(x) awnings, canopies and exterior sign boxes, bands and the like; and
(xi) items that would not normally be considered to be the TENANT'S Trade
Fixtures.
(x) "MONTHLY MININUM RENT" means Nine Thousand, Five Hundred and Two Dollars
and Eleven Cents ($9,502.1 1) per month (One Hundred and Fourteen Thousand
and Twenty-Five Dollars and TwentyFive Cents ($114,025.25) per annum),
which is based upon a rate equal to Ten Dollars and Seventy-Five Cents
($10.75) per square foot per annum.
It is acknowledged that the above figures for the Monthly Minimum Rent are
based upon the Rentable Area of the Leased Premises being 10,607 square
feet. If the Rentable Area of the Leased Premises are adjusted in
accordance with Section 2.8 hereof, the Monthly Minimum Rent will be
adjusted accordingly.
(y) "MORTGAGE" means any mortgage, hypothec, charge (including a deed of trust
and mortgage securing bonds and all indentures supplemental thereto), lien
(resulting from any other method of financing or refinancing), or blanket
mortgage (affecting the Development as well as other property) now or
hereafter secured upon the Lands and the Development or any part thereof
and includes all renewals, modifications, consolidations, replacements and
extensions thereof.
(z) "MORTGAGEE" means the mortgagee or trustee for bondholders named in the
Mortgage.
(aa) "NOTICE" means any notice, statement or request herein required or
permitted to be given by either party to the other pursuant to this Lease
and shall be in writing and, if to the LANDLORD, addressed to the LANDLORD
at the LANDLORD'S Address and, if to the TENNANT, addressed to the TENANT
at the TENANT'S Address. Each notice shall be either hand delivered or
mailed by registered post and the date of receipt of such notice shall be
deemed to be the date of such hand delivering or the third (3rd) business
day following such mailing.
(bb) "PERMITTED USE" means for general office purposes, as more particularly
described in Section 12.
(cc) "PERSON", if the context allows, includes any individual, firm,
association, partnership or corporation, or any group of individuals,
firms, associations, partnerships or corporations or any combination
thereof.
(dd) "RECOVERABLE COSTS" means, for an Accounting Period, the aggregate of
Building Operating Costs, Electrical Costs, Fuel, Gas and Steam Costs, HVAC
Costs, Insurance Costs, Taxes and Water Costs for such Accounting Period
and all other costs to the LANDLORD, calculated in accordance with
generally accepted accounting principles, for the cleaning, maintenance,
repair, replacement and operation of the Development for such Accounting
Period, plus an administration fee of fifteen percent (15 %), other than
such costs which are directly chargeable by the LANDLORD to any tenant or
tenants of the Development.
(ee) "RECOVERIES" means, for any Accounting Period, the amount determined by
multiplying the Recoverable Costs for such Accounting Period by the
TENANT'S Ratio or such other portion of the Recoverable Costs for such
Accounting Period as may be allocated without duplication to the Leased
Premises by the LANDLORD, acting reasonably, having regard without
limitation to:
(i) with respect to Electrical Costs, Fuel, Gas and Steam Costs,
HVAC Costs and Water Costs, the
<PAGE>
4
consumption recorded by meters and check meters, engineering
studies and the connected load of the Leased Premises and of
specific areas of the Development;
(ii) with respect to Insurance Costs, the value of the Leasehold
Improvements, the Permitted Use and directives from the
LANDLORD'S insurers; and
(iii) with respect to Taxes, prevailing assessment principles,
separate tax bills for the Leased Premises, school support
elected by the TENANT and information available from the
authorities having jurisdiction over Taxes.
In all instances, the allocation of the LANDLORD (provided it has acted
reasonably) shall be final.
(ff) "RENT" means the Monthly Minimum Rent and Additional Rent payable
under this Lease.
(gg) "RENTABLE AREA" means, with respect to any leasable premise, the
Usable Area of such premise divided by the aggregate of the Usable
Area of all leasable premises in the Development and multiplied by
the Gross Building Area.
(hh) "RENTABLE AREA OF LEASED PREMISES " means the Rentable Area of the
Leased Premises being 10,607 square feet of area determined in
accordance with Section 1.1 (gg) hereof and subject to adjustment in
accordance with Section 2.8 hereof.
(ii) "STIPULATED RATE OF INTEREST" means the aggregate of six percent
(6%) per annum plus the rate of interest per annum charged by the
LANDLORD'S banker from time to time at the City of Ottawa for loans
in Canadian dollars to its most creditworthy customers.
(jj) "TAXES" means, for any Accounting Period, the total cost to the
LANDLORD, calculated in accordance with generally accepted
principles, for all taxes, rates, duties and assessments whatsoever,
whether municipal, provincial, parliamentary or otherwise, now
charged or hereafter to be charged upon the Development or upon the
LANDLORD in respect thereof for such Accounting Period, plus an
administration fee of fifteen percent (15%). The total of such costs
to the LANDLORD shall include, without duplication or limitation,
realty taxes, school taxes, municipal taxes and taxes for local
improvements or works assessed against the Development, taxes
assessed against the rental payable by the TENANTS and any
reasonable costs and fees (including, without limitation, audit,
legal, accounting and other professional fees) incurred by the
LANDLORD in contesting or negotiating with the public authorities as
to the same. Taxes shall not include income taxes of the LANDLORD to
the extent such income taxes are not levied in lieu of taxes, rates,
duties and assessments against the Development or upon the LANDLORD
in respect thereof, Capital Taxes or Large Corporations Tax.
(kk) "TENANT" means Sidus Systems Inc. and its permitted successors and
assigns.
(ll) "TENANT'S ADDRESS" means 400-2781 Lancaster Road, Ottawa, Ontario.
(mm) "TENANT'S RATIO" means that ratio determined by dividing the Usable
Area of the Leased Premises by the total Usable Area of all leasable
premises in the Development.
(nn) "TENANT'S TRADE NAME" means N/A.
(oo) "TENANT'S WORK" means the work which the TENANT agrees to complete
at its expense as set forth in Schedule "E".
(pp) "TERM" means Five (5) years commencing on the Commencement Date and
ending April 30, 2001.
(qq) "TERMINATION DATE" means April 30, 2001 or such earlier date as this
Lease may be determined by the LANDLORD.
(rr) "TRADE FIXTURES" means the personal chattels installed prior to the
commencement of the Term, at the commencement of the Term, or during
the Term by or on behalf of the TENANT in, on or which serve, the
Leased Premises for the sole purpose of the TENANT carrying on its
trade in the Leased Premises pursuant to Section 12.1 hereof and
which Trade Fixtures the TENANT is permitted to remove only to the
extent permitted by the terms of this Lease, but the Trade Fixtures
do not include Leasehold Improvements or any inventory of the
TENANT.
(ss) "UNAVOIDABLE DELAY" means any delay by a party in the performance of
its obligations under this Lease caused in whole or in part by any
acts of God, strikes, lockouts or other industrial disturbances,
acts of the Queen's enemies, sabotage, war, blockades,
insurrections, riots, epidemics, washouts, nuclear and radiation
activity or fallout, arrests, restraints of rulers and people, civil
disturbances, explosions, breakage of or accident to machinery, any
legislative, administrative or judicial action which has been
resisted in good faith by all reasonable legal means, any act,
omission or event whether of the kind herein enumerated
<PAGE>
5
or otherwise not within the control of such party and which, by the
exercise of control of such party, could not have been prevented,
but lack of funds on the part of such party shall not constitute an
Unavoidable Delay. Notwithstanding the foregoing, in no event shall
the TENANT be excused from the payment of Rent hereunder by reason
of Unavoidable Delay unless this Lease specifically so provides.
(tt) "USABLE AREA" means, with respect to any leasable premise in the
Development, the total area of such premise as measured from the
exterior surfaces of the exterior building walls and from the centre
line of all interior walls which divide the premise from other
premises or from the Common Facilities and shall include the area of
any loading docks for the sole use of the TENANT of such premise. No
deduction shall be made for columns, projections, structural members
or recesses.
(uu) "WATER COSTS" means, for any Accounting Period, the total cost to
the LANDLORD, calculated in accordance with generally accepted
accounting principles, for water, other than chilled water supplied
to the Development, all sewage charges for such Accounting Period
including, without duplication or limitation, all taxes, surcharges
or other charges thereon, applicable Amortization and the cost of
all fittings, machines, apparatus, meters, work or service required
in connection with the supply of water or removal of sewage to the
Development, plus an administration fee of fifteen percent (15%).
ARTICLE 2
DEMISE, DELIVERY AND SURRENDER
------------------------------
2.1 Demise and Leased Premises: In consideration of the covenants and
agreements hereinafter set out, the LANDLORD hereby leases the Leased Premises
to the TENANT, to have and to hold during the Term upon the conditions contained
in this Lease. The TENANT covenants to pay Rent and to observe and perform all
the covenants and provisions to be observed and performed by the TENANT pursuant
to this Lease.
2.2 LANDLORD'S Work: The LANDLORD shall, at its sole cost and expense,
construct the Leased Premises for the TENANT'S use and occupancy in accordance
with plans and specifications prepared by the LANDLORD or the Architect,
incorporating in such construction all items of work described as "LANDLORD'S
Work" in Schedule "E" attached hereto and made a part hereof. Any work in
addition to any of the items specifically enumerated in said Schedule 'E" as
"LANDLORD'S Work", or any equipment or work designated as LANDLORD'S Work, but
over and above the minimum of such LANDLORD'S Work, shall be performed by the
LANDLORD at the TENANT'S cost and expense. Any equipment or work other than
those items specifically enumerated under the heading "LANDLORD'S Work" in said
Schedule "E" which the LANDLORD installs or constructs in the Leased Premises on
the TENANT'S behalf shall be paid for by the TENANT in accordance with the
payment schedule therein. The TENANT agrees that there is no promise,
representation or undertaking by or binding upon the LANDLORD with respect to
any alterations, remodelling or decoration of, or installation of equipment of
fixtures in, the Leased Premises, except such, if any, as are expressly set
forth in this Lease or in Schedule "E" hereto; and, that in the case of any such
express provision, unless the same expressly provides for completion of the
alteration, remodelling or decoration or of any such installation after the
TENANT'S taking of possession of the Leased Premises, such taking of possession
shall constitute conclusive evidence as against the TENANT that such
alterations, remodelling or decoration or installation of equipment or fixtures
has been satisfactorily completed.
2.3 TENANT'S Work: Deleted
2.4 Inability to Give Occupancy: It is hereby agreed that if, due to the
failure of the LANDLORD for any reason whatsoever (other than any matter which
is in the control of the TENANT or its agents) to complete the LANDLORD'S Work
or to make available the services which the LANDLORD is hereby obligated to
furnish, the Leased Premises or any part thereof are not ready for occupancy by
the TENANT on the Commencement Date, the Monthly Minimum Rent shall abate in
proportion to the Usable Area of the Leased Premises which are untenantable for
the period prior to the date when the Leased Premises are ready for occupancy
and the full Monthly Minimum Rent shall accrue only after such aforementioned
date. The TENANT hereby agrees to accept such abatement of the Monthly Minimum
Rent which shall be in full settlement of any and all Claims which the TENANT
may otherwise have by reason of the Leased Premises not being ready for
occupancy on the Commencement Date. The decision of the LANDLORD'S Architect or
engineer shall be final and binding upon both parties hereto as to whether or
not the Leased Premises are ready for occupancy by the TENANT and, if necessary,
as to the portion of the Leased Premises that are available for occupancy.
Despite anything contained to the contrary in this Section 2.4, if the LANDLORD
is of the opinion that it is unable to deliver possession of all or part of the
Leased Premises by the expiration of six (6) months from the Commencement Date,
either the LANDLORD or the TENANT shall have the right to terminate the Lease
upon written notice to the other, whereupon neither party shall have any
liability to the other, and after the Termination Date, the LANDLORD shall
return to the TENANT, without interest, the Advance Rent and Security Deposit,
if any.
2.5 Acknowledgment of Commencement Date: The TENANT covenants to execute
and return to the LANDLORD within fifteen (15) days of written demand from the
LANDLORD an acknowledgment of the Commencement Date in the form set forth in
Schedule "D" hereto.
<PAGE>
6
2.6 Acceptance of Leased Premises: The TENANT shall notify the LANDLORD,
within ten (10) days after the date the TENANT shall be given occupancy by the
LANDLORD, of any defects or faults in, or in respect of the Leased Premises
which prevent or diminish its use; and, failing the giving of notice hereunder,
the TENANT shall be deemed for all purposes to have accepted the Leased Premises
in the then existing condition, and the LANDLORD shall not have any further
obligation to the TENANT for any such defects or faults. The TENANT agrees that
there is no promise, representation or undertaking by or binding upon the
LANDLORD with respect to any alteration, remodelling or decoration of the Leased
Premises or with respect to the installation of equipment or fixtures in the
Leased Premises, except as expressly provided in this Lease.
2.7 Use or Occupancy Prior to Commencement Date: If the TENANT shall for
any reason use or occupy the Leased Premises in any way prior to the
Commencement Date then, during such period, the TENANT shall be a tenant of the
LANDLORD and shall be subject to the same covenants and agreements as are
contained in this Lease including, without limitation, payment of Monthly
Minimum Rent and all Additional Rent, mutatis mutandis, except as otherwise
expressly provided herein.
2.8 Measurement of Leased Premises: Either the LANDLORD or the TENANT
may, at its own expense, and any time during the Term, verify the Rentable Area
of the Leased Premises and the Usable Area of the Leased Premises by submitting
the matter to the Architect or to such other qualified person as may be
nominated by the LANDLORD. The Rentable Area of the Leased Premises and the
Usable Area of the Leased Premises shall be set forth in a certificate prepared
by the Architect or other qualified person making the determination, such
certificate shall be final and binding upon the LANDLORD and TENANT and the
Rentable Area of Leased Premises and the Usable Area of the Leased Premises
shall, for all purposes, be deemed to be, and to always have been, as set forth
in such certificate.
2.9 Installation and Removal of Trade Fixtures and Leasehold
Improvements:
(a) All Leasehold Improvements in, on, for or which serve, the Leased Premises,
shall immediately become the absolute property of the LANDLORD upon
affixation or installation, without compensation therefore to the TENANT,
but the LANDLORD shall have no obligation to repair, replace, operate,
maintain, insure or be responsible in any way for them, all of which shall
be the TENANT'S responsibility. No Leasehold Improvements or Trade Fixtures
shall be removed by, or on behalf of, the TENANT from the Leased Premises
or elsewhere in the Development either during or at the expiration or
earlier termination of this Lease except that:
(i) The TENANT may, during the Term in the usual or normal course of its
business and with the prior written consent of the LANDLORD, remove
its Trade Fixtures from the Leased Premises, if such Trade Fixtures
have become excess for the TENANT'S purposes or if the TENANT is
substituting new and similar Trade Fixtures therefore, but only if
in each case:
(A) the TENANT is not in default under this Lease; and
(B) such removal is done at the TENANT'S sole cost and expense.
(ii) The TENANT shall, at the expiration or earlier termination of this
Lease, at its own cost and expense, remove from the Leased Premises
all its Trade Fixtures and such Leasehold Improvements as, the
LANDLORD, at its option, upon notice to the TENANT, requires to be
removed.
(b) If the TENANT does not remove its Trade Fixtures at the expiration or
earlier termination of the Term pursuant to Section 2.9(a)(ii) hereof, such
Trade Fixtures shall, at the option of the LANDLORD, thereupon become the
property of the LANDLORD, without compensation therefore to the TENANT and
without notice to the TENANT, and the LANDLORD may enter the Leased
Premises and remove such Trade Fixtures, without liability on the
LANDLORD'S part, at the TENANT'S expense, plus an administration charge of
fifteen percent (15 %), which shall be paid by the TENANT to the LANDLORD
as Additional Rent on demand, and such Trade Fixtures may, without notice
to the TENANT or to any other Person and without obligation to account for
them, be sold, destroyed, disposed of or used by the LANDLORD in such
manner as the LANDLORD determines, or may be stored in a public warehouse
or elsewhere, all at the TENANT'S expense, plus an administration cost of
fifteen percent (15%), which shall be paid by the TENANT to the LANDLORD as
Additional Rent on demand.
(c) If the TENANT does not remove the Leasehold Improvements requested by the
LANDLORD at the expiration or earlier termination of this Lease pursuant to
Section 2.9(a)(ii) hereof, the LANDLORD may, without liability on the
LANDLORD'S part, and without notice to the TENANT, enter the Leased
Premises and remove such Leasehold Improvements at the TENANT'S expense,
plus an administration charge of fifteen percent (15%), which shall be paid
by the TENANT to the LANDLORD as Additional Rent on demand, and such
Leasehold Improvements may, without notice to the TENANT or to any other
Person and without obligation to account for them, be sold, destroyed,
disposed of or used by the LANDLORD in such manner as the LANDLORD
determines, or may be stored in a public warehouse
<PAGE>
7
or elsewhere, all at the TENANT'S expense, plus an administration cost of
fifteen percent (15%), which shall be paid by the TENANT to the LANDLORD as
Additional Rent on demand.
(d) The TENANT, at its expense, shall, in the case of every such installation
or removal, either during or at the expiration or earlier termination of
this Lease, effect such installation or removal and immediately make good
any damage caused to the Leased Premises or the Development by the
installation or removal of any such Trade Fixtures or Leasehold
Improvements. The TENANT agrees that each and every such installation or
removal shall take place only at a time or times designated by the LANDLORD
uid in the presence of the LANDLORD or its representative.
(e) The TENANT'S obligation to observe and perform the provisions of this
Section 2.9 shall survive the expiration or earlier termination of this
Lease.
2.10 Overholding By TENANT: If the TENANT remains in possession of the
Leased Premises subsequent to the end of the Term with the consent of the
LANDLORD and without the execution and delivery of a new lease, or without the
written consent of the LANDLORD, there shall be no tacit renewal or extension of
this Lease and despite any statutory provision or legal presumption to the
contrary, the TENANT shall be deemed to be occupying the Leased Premises as a
TENANT from month-to-month upon the same terms and conditions as are set forth
in this Lease insofar as the same are applicable to a month-to-month tenancy,
provided, however, that the Monthly Minimum Rent for such overholding period
shall be an amount equal to one hundred and twenty-five percent (125 %) of the
Monthly Minimum Rent paid by the TENANT immediately prior to the end of the
Term. The TENANT shall pay such Monthly Minimum Rent and Additional Rent in
advance on the first day of each month of such overholding period. The TENANT
shall promptly indemnify and hold harmless the LANDLORD from any and all Claims
incurred by the LANDLORD as a result of the TENANT remaining in possession of
all or any part of the Leased Premises after the expiry of the Term. Such
month-to-month tenancy may not be terminated by the TENANT on less than ninety
(90) days Notice and may not be terminated by the LANDLORD on less than thirty
(30) days Notice.
ARTICLE 3
RENTAL
------
3.1 Monthly Minimum Rent: Subject to Section 2.4, the TENANT shall pay
to the LANDLORD as rental for the Leased Premises the Monthly Minimum Rent in
advance on the first day of each and every month from the Commencement Date to
the Termination Date and, if the Commencement Date or the Termination Date are
not the first and last days of a month respectively, then the Monthly Minimum
Rent for the first and last months of the Term shall be appropriately pro-rated.
3.2 Recoveries: The TENANT shall pay to the LANDLORD the Recoveries for
each Accounting Period by monthly installments on the first day of each month
throughout the Term and the amount of such installments shall be reasonably
stipulated from time to time by the LANDLORD. Notwithstanding anything
hereinbefore contained, if at the time when payment by the LANDLORD of any
Recoverable Costs, whether interim, instalment or final is due, the LANDLORD
shall not have on deposit a sufficient sum to pay the full amount of such
Recoverable Costs, the TENANT shall forthwith, upon demand, pay, as Additional
Rent, the TENANT'S share, determined as aforesaid of the amount of any such
deficiency to the LANDLORD. Following the end of each Accounting Period, the
LANDLORD shall compute the Recoveries for such Accounting Period and shall
submit a statement thereof to the TENANT. If the total of the monthly
instalments of Recoveries paid and payable by the TENANT in respect of such
Accounting Period is less than the amount of Recoveries for such Accounting
Period, the TENANT shall pay the difference to the LANDLORD forthwith. If the
total of such monthly instalments of Recoveries paid and payable is greater than
the amount of Recoveries for such Accounting Period, the difference shall
either, at the option of the LANDLORD, be repaid to the TENANT with such
statements, be applied in payment of other amounts owing by the TENANT, or be
applied in reduction of future payments due under this Lease.
3.3 Advance Rent: Deleted
3.4 Security Deposit: Deleted
3.5 Rent Covenant: The TENANT shall pay to the LANDLORD without demand,
in lawful money of Canada, at the times provided in this Lease, at the
LANDLORD'S Address or at such other place as the LANDLORD may designate from
time to time, the Monthly Minimum Rent and Additional Rent, without any
deduction, set-off, counter claim or abatement whatsoever. Prior to the
commencement of each and every Accounting Period, the TENANT shall forward
twelve (12) post-dated cheques in amounts equal to the sum of the Monthly
Minimum Rent and the monthly instalment of Recoveries determined pursuant to
Section 3.2 for each of the twelve (12) months of the next Accounting Period.
All amounts payable under this Lease, unless otherwise provided, become due with
the next instalment of Monthly Minimum Rent. If the TENANT defaults in payment
of any sum due hereunder, the LANDLORD shall have the same rights and remedies
upon default as if the sum were Rent in arrears.
<PAGE>
8
3.6 Waiver of Offset: The TENANT hereby waives and renounces any and all
existing and future claims, offsets and compensation against any Monthly Minimum
Rent or Additional Rent and agrees to pay all Monthly Minimum Rent and
Additional Rent regardless of any claim, offset or compensation which may be
asserted by the TENANT or on its behalf. The TENANT agrees that the LANDLORD
may, at its option, apply all sums received from the TENANT or due to the TENANT
against amounts due or payable hereunder as the LANDLORD determines
notwithstanding any instructions or designations to the contrary. No endorsement
on any cheque or statement in any letter accompanying a cheque shall be deemed
an accord or satisfaction and the LANDLORD may accept any payment without
prejudice to any rights the LANDLORD may have at law or under this Lease.
3.7 Rent Past Due: If the TENANT fails to pay any Rent or any other
amount when due by the TENANT under this Lease, such unpaid amounts shall bear
interest, payable as Additional Rent, from the due date thereof to the date of
payment at the Stipulated Rate of Interest and such interest shall be calculated
and payable monthly. Nothing herein contained shall be construed so as to compel
the LANDLORD to accept any payment of Rent in arrears should the LANDLORD elect
to apply its remedies under the forfeiture or any other clause of this Lease in
the event of default hereunder by the TENANT. Any cheque of the TENANT returned
to the LANDLORD because of non-sufficient funds or for any other reason by any
financial institution shall be immediately replaced by a certified cheque by the
TENANT delivered to the LANDLORD, together with an administration charge of one
Hundred Dollars ($100.00) payable by the TENANT to the LANDLORD as Additional
Rent on demand.
3.8 Net Lease: It is the intent of the parties that this Lease be
absolutely net to the LANDLORD and that the TENANT shall pay all costs and
expenses relating to the Leased Premises and the business carried on therein
except as expressly provided in this Lease. Any amount or obligation herein
relating to the Leased Premises which is not expressly declared to be that of
the LANDLORD shall be deemed to be an obligation of the TENANT to be performed
by or at the TENANT'S expense.
ARTICLE 4
BUSINESS TAXES AND OTHER AMOUNTS TO BE PAID BY TENANT
-----------------------------------------------------
4.1 Business Taxes: The TENANT shall pay all taxes, rates, duties,
assessments, licence fees and other charges whatsoever levied, rated, charged or
assessed against improvements, equipment and facilities of the TENANT in the
Leased Premises, and every tax and licence fee imposed in respect of all
business carried on in the Leased Premises, or in respect of the use or
occupancy thereof, including any business assessments imposed in respect of the
Common Facilities or any portion thereof (all of the foregoing being
collectively referred to as the "Business Taxes"), and all such amounts shall be
paid promptly and directly to the authorities responsible for collection. If
there are not separate tax bills provided for the Business Taxes, the LANDLORD
is entitled to reasonably allocate the Business Taxes to the TENANT.
4.2 Separate School Taxes: If the TENANT or any subtenant or licensee of
the TENANT or any occupant of the Leased Premises shall elect to have the Leased
Premises or any part thereof assessed for separate school taxes, the TENANT
shall pay to the LANDLORD, as Additional Rent, as soon as the amount of the
separate school taxes is ascertained, any amount by which the amount of separate
school taxes exceeds the amount which would have been payable for Tax had such
election not been made.
4.3 Other Taxes: The TENANT shall pay to the LANDLORD when due any and
all business transfer tax, multi-stage sales tax, sales tax, goods and services
tax or any like tax imposed on the TENANT by any governmental authority with
respect to rent, including any additional rent, (herein referred to as "sales
tax"), payable by the TENANT under this Lease or in respect of the rental of the
Leased Premises. In the event any such sales tax is imposed on the LANDLORD, the
TENANT shall reimburse the LANDLORD for the amount of such sales tax by paying
such tax forthwith upon demand (or at any time designated from time to time by
the LANDLORD). Sales taxes shall not be considered as rent or additional rent
but the LANDLORD shall have all of the same remedies for and rights of recovery
with respect to sales taxes as it has for non-payment of rent under this Lease
and at law. The TENANT shall not be obligated to pay the LANDLORD any amounts on
account of capital taxes or large corporation taxes.
4.4 Third Party Services: The TENANT shall be solely responsible for,
and promptly pay to the appropriate third party, all charges for services used
or consumed in or provided to the Leased Premises, excluding services supplied
by the LANDLORD and charged to the TENANT as Recoveries, but including, without
limitation, window cleaning, refuse removal, telephone, fuel, gas, water,
electricity and any other utility services directly charged to the TENANT. In no
event will the LANDLORD be liable to the TENANT in damages or otherwise for any
failure to supply any third party services to the Leased Premises.
4.5 Services of the LANDLORD: One hundred and fifteen percent (115%)
of the cost of all services provided by the LANDLORD or its agent to the TENANT
shall be payable forthwith by the TENANT upon demand by the LANDLORD. Such
services shall include any services performed at the TENANT'S request including,
without limitation, maintenance, repair and partitioning for which the TENANT is
otherwise responsible for pursuant to this Lease. Such services shall also
include any services provided at the LANDLORD'S discretion including, without
limitation, supervising and approving any work performed pursuant to Article 7.
<PAGE>
9
4.6 Upgrading Utility Systems: One hundred and fifteen percent (115%) of
the cost to the LANDLORD of upgrading the utility systems of the Development to
service any extraordinary requirements of the TENANT shall be payable forthwith
by the TENANT upon demand by the LANDLORD.
4.7 Pest Control: The TENANT shall, at its expense and at such
reasonable intervals as the LANDLORD may require, use such pest extermination
contractors for the Leased Premises as the LANDLORD may direct. If the TENANT
fails to exercise such pest control measures as so directed by the LANDLORD, the
LANDLORD shall have the right, at its option, to exercise such pest control
measures for (the Leased Premises and one hundred and fifteen percent (115%) of
the cost thereof shall be payable forthwith by the TENANT upon demand by the
LANDLORD.
ARTICLE 5
OPERATION OF DEVELOPMENT
------------------------
5.1 Heating, Ventilating and Air-Conditioning: The LANDLORD covenants to
operate or cause the operation of any heating, ventilating and air-conditioning
system serving the Leased Premises and the Common Facilities as a prudent owner
of a similar building would do as reasonably necessary having regard to its age,
size and location and to ensure a normal comfortable working environment during
the TENANT'S business hours. Where such heating, ventilating and
air-conditioning system serving the Common Facilities shall be damaged or
destroyed, or in the opinion of the LANDLORD require repairs, inspection,
overhauling or replacement, the LANDLORD shall commence and carry out any
necessary work with reasonable speed. The TENANT covenants to operate any
heating, ventilating and air-conditioning system serving only the Leased
Premises and to maintain a temperature sufficient at all times to prevent damage
to the Development by cold or freezing and to prevent any other tenant of the
Development having to incur higher than normal heating costs.
5.2 Janitorial Services: The LANDLORD shall provide, at the TENANT'S
expense as part of Additional Rent, janitor services to the Leased Premises so
that the floors and windows of the Leased Premises will be kept reasonably clean
and so the Leased Premises will be kept in a state of cleanliness fit for
occupancy. The LANDLORD shall not be responsible for the acts or omissions by
persons employed to provide janitor services, except that the LANDLORD shall be
responsible for the provision of such services as provided in this clause. The
TENANT agrees to allow the persons employed by the LANDLORD to provide such
service to take charge of the cleaning of the Leased Premises in accordance with
this clause and agrees not to interfere with the LANDLORD'S direction of such
persons. The LANDLORD shall cause the elevators, lobbies, hallways, stairways,
washrooms and other areas of the Leased Premises enjoyed in common with others
to be similarly maintained.
5.3 Utility Services: The LANDLORD shall permit the TENANT to have
access to the utility services serving the Development provided the TENANT does
not overload the capacity of any of such utility services and provided the
TENANT pays all costs and expenses resulting from the TENANT'S access thereto.
The TENANT shall advise the LANDLORD within five (5) days after written request
therefore of the nature and quantity of all lights, equipment and machines using
electricity in the Leased Premises and shall permit the LANDLORD or its
authorized agents to make periodic inspection of all facilities using
electricity located within the Leased Premises. Where the utility services of
the Development or any part thereof shall be damaged or destroyed, or in the
opinion of the LANDLORD require repairs, inspection, overhauling or replacement,
the LANDLORD shall commence and carry out such necessary work with reasonable
speed.
5.4 Ground Floor Directory: Should the LANDLORD erect a ground floor
directory, the TENANT shall be identified thereon. The size, location and style
of identification shall be determined by the LANDLORD in its sole discretion and
at its cost.
5.5 Consequential Damage: The LANDLORD shall not be liable for direct,
indirect or consequential damage or damages for personal discomfort or illness
of the TENANT, its clerks, servants, employees, invitees, clients, customers or
other persons nor shall the TENANT be entitled to any compensation, any
diminution or abatement of rent, any claim for constructive or actual eviction
or any claim of breach of the LANDLORD'S covenant of quiet enjoyment by reason
of the operation or non-operation of any of the equipment or systems referred to
in this Article 5, or by failure of the LANDLORD to provide any of the services
referred to in this Article 5, or for any act or omission on the part of any
person or persons employed or retained by the LANDLORD to perform any work under
this Article 5 unless such damage is a result of the gross negligence or wilful
misconduct of the LANDLORD or those for whom it is responsible at law.
ARTICLE 6
INSURANCE AND LIABILITY
-----------------------
6.1 LANDLORD'S Insurance: The LANDLORD, acting reasonably, shall carry
such insurance with such deductibles and exclusions for the account and benefit
of the LANDLORD as the LANDLORD from time to time considers useful, expedient or
beneficial, and such insurance may include, at the LANDLORD'S option, any or all
of the following:
<PAGE>
10
(a) insurance against all risks of loss or damage caused by or resulting
from fire, lightning, tempest or any additional peril defined in a
standard fire insurance additional perils supplemental contract,
including sprinkler leakage, covering all property owned by the
LANDLORD relative to the Development including the buildings, the
Common Facilities, the Leased Premises and the Leasehold Improvements,
but excluding all trade fixtures, furniture and stock-in-trade
belonging to the TENANT and other tenants of the Development;
(b) insurance against loss of the LANDLORD'S gross profits including loss
of Monthly Minimum Rent ind Additional Rent;
(c) insurance against mechanical break-down, explosion, rupture or failure
of boilers, pressure vessels, heating, ventilating and
air-conditioning equipment, electrical apparatus and other like
apparatus owned by the LANDLORD;
(d) comprehensive general liability insurance with respect to the
LANDLORD'S operation of the Development covering bodily injury, death
and damage to property of others; and
(e) any other form of insurance as the LANDLORD, acting reasonably, or the
Mortgagee requires from time to time.
Notwithstanding any contribution by the TENANT to the LANDLORD for
insurance premiums as provided in this Lease, no insurable interest is conferred
upon the TENANT under policies carried by the LANDLORD, and the TENANT shall
have no right to receive any proceeds of insurance from policies carried by the
LANDLORD. No contribution by the TENANT shall be deemed or construed as an
automatic waiver of subrogation by the LANDLORD against the TENANT. The LANDLORD
shall in no way be accountable to the TENANT regarding the use of any insurance
proceeds arising from any claim and the LANDLORD shall not be obliged to account
for such proceeds, nor to apply such proceeds to the repair or restoration of
that which was insured, except to the extent provided herein. If the TENANT
desires to receive indemnity by way of insurance for any property, work or thing
whatever including Leasehold Improvements, the TENANT shall insure same for its
own account and shall not took to the LANDLORD for reimbursement or recovery in
the event of loss or damage from any cause, whether or not the LANDLORD has
insured same and recovered therefor. The TENANT is not relieved of any liability
arising from or contributed by its acts, faults, negligence or omissions.
6.2 TENANT'S Insurance: The TENANT shall keep in force during the Term
at its own expense the following:
(a) insurance against all risks of direct physical loss or damage as
defined in a standard insurance industry wording in amounts equal to
the full insurable value, calculated on a replacement cost basis
without deduction for depreciation, covering all property of every
description and kind owned by the TENANT or for which the TENANT is
responsible pursuant to this Lease including stock-in-trade,
furniture, trade fixtures, alterations, moveable partitions,
additions, all other contents of the Leased Premises;
(b) comprehensive or commercial general liability insurance, including all
risks TENANT'S legal liability insurance in respect of the Leased
Premises, in an amount not less than Two Million Dollars
($2,000,000.00), or such greater amount as may be stipulated by the
LANDLORD from time to time, in respect of injury to or death of one or
more than one person, and for damage to property, regardless of the
number of claims arising as a result of any one occurrence;
(d) business interruption insurance in amounts sufficient to adequately
reimburse the TENANT for loss of gross profits or loss of earnings
attributable to all perils commonly insured against;
(e) motor vehicle insurance having third party liability limits not less
than Two Million Dollars ($2,000,000.00) covering all vehicles owned
or operated by or on behalf of the TENANT; and
(f) such other insurance as the LANDLORD may reasonably require from time
to time with respect to the property and operations of the TENANT.
All such policies of insurance shall be in a form satisfactory to
the LANDLORD and be placed with insurers licensed to do business in Canada and
shall exclude the exercise of any claim of the insurer or insurers, whether by
subrogation or otherwise, against the LANDLORD and against those for whom the
LANDLORD is in law responsible. Each such policy, with the exception of the
insurance referred to in subparagraph (e), shall name the LANDLORD as an
additional insured as its interests may appear and shall contain a waiver, in
favour of the LANDLORD and any Mortgagee, of any breach or violation of any
warranties, representations, declarations or conditions contained in the
policies. All such insurance shall be primary insurance and shall not call into
contribution any insurance carried by the LANDLORD or any Mortgagee. The
proceeds of insurance referred to in subparagraphs (a) and (c) of this Section
6.2 are hereby assigned to and shall be made payable to the LANDLORD. Such
proceeds received by the LANDLORD shall be released to the TENANT upon receipt
by the LANDLORD of a certificate of the Architect stating that repairs to the
<PAGE>
Leasehold Improvements to the extent of such proceeds having been satisfactorily
completed by the TENANT free of liens. All policies of comprehensive general
liability insurance shall contain a severability of interest clause and a
cross-liability clause as between the LANDLORD and the TENANT. All policies
shall contain a provision requiring that at least thirty (30) day's written
notice be given to the LANDLORD by the insurer prior to any material change,
cancellation or expiry, and the TENANT shall obtain undertakings from all
insurers to that effect. Upon the request of the LANDLORD, the TENANT shall
deliver certificates of insurance to the LANDLORD in a form acceptable to the
LANDLORD, and, if required, certified copies of each insurance policy. If the
TENANT fails to perform its obligations pursuant to this Section 6.2, the
LANDLORD may effect such insurance on behalf of the TENANT and one hundred and
fifteen percent (115%) of any premium paid by the LANDLORD shall be payable
forthwith by the TENANT upon demand by the LANDLORD.
6.3 Premium Increases and Cancellation: The TENANT shall promptly comply
with all requirements of the LANDLORD'S or Mortgagee's insurance underwriters
regarding the use and occupation of the Leased Premises, and the TENANT shall
not do, omit, or permit to be done or omitted anything which shall cause any
insurance premium with respect to the Development or any part thereof to be
increased, or which may cause any policy of insurance with respect to the
Development to be cancelled. If any insurance premium shall be so increased, the
TENANT shall pay to the LANDLORD forthwith upon demand the amount of such
increase. If any insurer threatens to cancel, cancels or refuses to renew any
insurance policy of the LANDLORD upon the Development by reason of the use of
occupation of the Leased Premises or any part thereof, the TENANT shall
forthwith remedy or rectify such use or occupation within the time limit
required by the insurer upon being requested to do so in writing by the
LANDLORD, and if the TENANT shall fail to do so the LANDLORD may, at its option,
without prejudice to any other rights it may have, terminate this Lease by
Notice to the TENANT. Thereupon the TENANT shall pay Monthly Minimum Rent and
Additional Rent in full to the date of such termination and shall immediately
deliver up possession of the Leased Premises to the LANDLORD and the LANDLORD
shall have the right to re-enter the Leased Premises.
6.4 Limitation of LANDLORD'S Liability: The LANDLORD shall not be liable
or responsible in any Injury that may be suffered or sustained by the TENANT or
any employee, agent or customer of the TENANT or any other person who may be
upon the Leased Premises or the Development, or for any loss or damage or injury
to any property belonging to the TENANT or its employees or to any other person
unless such Injury, loss or damage results from the gross negligence or wilful
misconduct of the LANDLORD, its agents, servants or employees or other persons
for whom it may be responsible. Without limiting the generality of the
foregoing, the LANDLORD shall not be liable for any Injury, damage or damages of
any nature whatsoever to persons or property on the Leased Premises or the
Development caused by explosion, fire, theft or breakage, by sprinkler, drainage
or plumbing systems, by failure for any cause to supply adequate drainage or
snow or ice removal, by the interruption of any public utility or service, by
steam, gas, water, rain, snow, or other substances leaking, issuing or flowing
into any part of the Leased Premises or the Development, unless as a result of
the gross negligence or wilful misconduct of the LANDLORD or those for whom it
is responsible at law, or by anything done or omitted to be done by any tenant,
occupant or person in the Development. In addition, the LANDLORD shall not be
liable for any Injury, loss or damage for which the TENANT is required to insure
pursuant to Section 6.2, nor for any loss or damage resulting from any
construction, alterations or repair.
6.5 Indemnity by TENANT: The TENANT shall indemnify the LANDLORD against
and from all Claims in respect of any Injury, loss or damage referred to in
Section 6.4, against and from any act, omission or neglect by the TENANT or
those over whom the TENANT is at law responsible, and against and from any
breach by the TENANT of any provision of this Lease.
ARTICLE 7
REPAIRS AND ALTERATIONS
-----------------------
7.1 TENANT'S Repairs: Subject to Section 7.3, Section 7.4 and Article 8
hereof, the TENANT shall, at its own expense, through the Term whenever
necessary or whenever reasonably required by the LANDLORD to do so, decorate,
repair, maintain and keep in first class condition, all as a careful Tenant
would do, the Leased Premises and every part thereof including, without
limitation, the Leasehold Improvements, Trade Fixtures, equipment, furnishing,
all glass, every part of the heating, cooling, ventilating, air-conditioning,
plumbing and other mechanical installations serving only the Leased Premises,
whether or not any such items were installed or furnished by the TENANT. The
TENANT covenants to perform such maintenance and to effect such repairs and
replacements, including major, minor, necessary and lesser repairs, and hereby
expressly releases the LANDLORD from performing necessary repairs. The TENANT
shall not be required to effect those repairs in and to the Leased Premises
which are expressly the obligation of the LANDLORD pursuant to Section 7.10 of
this Lease. If the TENANT fails to commence and diligently proceed to make such
repairs, maintenance or replacements which are the obligation of the TENANT
after Notice from the LANDLORD to do so, the LANDLORD shall have the right, at
is option, to make such repairs, maintenance and replacements, and one hundred
and fifteen percent (115%) of the cost thereof shall be payable forthwith by the
TENANT upon demand by the LANDLORD.
7.2 TENANT to Notify of Defects: The TENANT shall promptly notify the
LANDLORD of any damage to or defect in any part of the Leased Premises or the
Development, or in any equipment or utility system serving the Leased Premises
or the Development of which the TENANT becomes aware and which may cause or
result in
<PAGE>
12
Injury to any person or damage to property notwithstanding that the LANDLORD may
have no obligation with respect thereto.
7.3 LANDLORD'S Consent to Changes: The TENANT shall not, without the
LANDLORD'S prior written approval, make any change, alteration, repair, addition
or improvement in or to the Leased Premises which affects the structure or
perimeter walls, any sprinkler system, any heating, ventilating and/or
air-conditioning systems, the plumbing, electrical and mechanical equipment or
systems, the bearing floors, the signage, the ceilings, the columns or the roof,
nor make any change, alteration, major repair, addition or improvement to the
Leasehold Improvements. The TENANT shall submit to the LANDLORD adequate details
of any such proposed work which requires the LANDLORD'S approval including
drawings and specifications conforming to good engineering practice which have
been prepared by qualified designers. The LANDLORD reserves the right to
perform, at the expense of the TENANT, any such alterations other than
alterations to the Leasehold Improvements.
7.4 Construction by TENANT: The TENANT shall obtain, at its expense, a
building permit and all other necessary permits and licences before the TENANT
commences any work under this Article 7 and shall submit copies of same to the
LANDLORD. The TENANT shall also obtain, at its expense, such indemnification
against liens, costs and damages as the LANDLORD considers necessary. Any
construction, alteration, maintenance, repair, replacement, installation,
removal or decoration undertaken by or for the TENANT in connection with the
Leased Premises shall be completed in accordance with the drawings and
specifications approved by the LANDLORD, shall be carried out in a good and
workmanlike manner, shall comply with all applicable laws, regulations, by-laws,
orders or requirements of any competent authority, shall be subject to
supervision by the LANDLORD or its employees, agents or contractors, and shall
be performed only by persons approved by the LANDLORD in writing whose
labour-union affiliations are acceptable to the unions of which the LANDLORD'S
employees, contractors or sub-contractors are members. The TENANT shall allow
the LANDLORD, its agents or contractors to submit tenders for any construction,
alteration, maintenance, repair, replacement, installation, removal or
decoration to be undertaken by or for the TENANT in connection with the Leased
Premises. The TENANT shall deliver to the LANDLORD within thirty (30) days of
completion of any work pursuant to this Article 7 two (2) complete sets of "As
Built" drawings showing all work completed. The TENANT shall, at the LANDLORD'S
request, restore the Leased Premises to their former condition if any work to
the Leased Premises has not been completed in accordance with this Section 7.4
or if any such work has not been approved by the LANDLORD as required by Section
7.3
7.5 Builder's or Mechanic's Liens: The TENANT shall at all times,
throughout the Term promptly pay all its contractors, materialmen, suppliers and
workers and all charges incurred by or on behalf of the TENANT for any work,
materials or services which may be done, supplied or performed at any time in
respect of the Leased Premises and the TENANT shall do any and all things
necessary so as to ensure that no lien, encumbrance, charge or caveat
(collectively "lien") is registered against the Development or any part thereof,
against the LANDLORD'S interest in the Development, or against the TENANT'S
interest in the Leased Premises, by any Person claiming by, through, under or
against the TENANT or its employees, agents, invitees, licensees, contractors or
subcontractors, and if any such lien is made, filed or registered, the TENANT
shall discharge it or cause it to be discharged immediately, at the TENANT'S
expense. If the TENANT fails to discharge or cause any such lien to be
discharged as aforesaid, then, in addition to another right or remedy of (and
without liability to) the LANDLORD, the LANDLORD, in its sole discretion may,
but it shall not be obligated to, discharge the same by paying the amount
claimed to be due into court and the amount so paid by the LANDLORD and all
costs and expenses including all professional and solicitor's fees (on a
solicitor and his own client basis) incurred by or on behalf of the LANDLORD
with respect to such lien (including its registration and discharge), shall be
paid by the TENANT to the LANDLORD on demand as Additional Rent. If such lien is
discharged as aforesaid but the LANDLORD is still involved in any court action
as a result thereof, then the TENANT shall pay to the LANDLORD as Additional
Rent on demand, all professional and legal fees (on a solicitor and his own
client basis) and all costs and expenses incurred by or on behalf of the
LANDLORD in connection with any such court action. In addition, should any such
lien result in the LANDLORD either suffering a delay in receiving payment of all
or any part of any moneys from any Mortgagee or result in such Mortgagee
advancing funds that are not made available to the LANDLORD for the LANDLORD'S
sole use, the TENANT shall be responsible for and shall pay to the LANDLORD, as
Additional Rent, on demand, an amount equal to the sum of:
(a) interest on such moneys and funds at the rate specified in Section 3.7
until such lien has been discharged;
(b) an administration fee equal to fifteen percent (15%) of such lien and
interest aforesaid; and
(c) all damages, professional and legal fees (on a solicitor and his own
client basis), costs and expenses suffered or incurred by or on behalf
of the LANDLORD in arranging for removal of such lien or otherwise in
connection with such lien (including any court action with respect
thereto).
7.6 No Interference with LANDLORD and Other TENANTS: Any work under this
Article 7 shall be performed in such a manner that it will not interfere or
conflict with any activities of the LANDLORD or any other tenant or with the
operation of the Development. The TENANT shall, at its expense, remove forthwith
from the Development all trash and other refuse which accumulates from such
work.
7.7 Indemnification of LANDLORD: The TENANT covenants to indemnify the
LANDLORD against and
<PAGE>
13
from all Claims in respect of any Injury or damage caused by or resulting from
any work under this Article 7.
7.8 Installation of Meters: Delete
7.9 Repair Where TENANT at Fault: If the Development or any part thereof
including the Common Facilities and Leased Premises require repair or become
damaged or destroyed through any act, omission, negligence, or carelessness of
the TENANT, its servants, agents, employees, contractors, sublessees or
licensees, the LANDLORD shall effect the necessary alterations, replacements or
repairs and shall charge the TENANT one hundred and fifteen percent (115%) of
the cost thereof and such amount shall be payable forthwith by the TENANT upon
demand by the LANDLORD.
7.10 Repairs by LANDLORD: Subject to Section 7.9 and Article 8, the
LANDLORD shall make such repairs to the Common Facilities and structural
components of the Development as the LANDLORD, acting reasonably, considers
necessary. The structural components of the Development include, without
limitation, footings, foundations, pads, piers, columns, bearing walls, beams,
joists, roof and roof membrane but do not include interior glass, glass forming
exterior walls of the Development or any other component of the Leased Premises.
7.11 Door Locks: If the TENANT replaces any lock in the Leased Premises
with a lock of Medco or any other high security design whatever, the TENANT
shall provide the LANDLORD such keys as will permit the LANDLORD to enter the
Leased Premises as allowed by this Lease. Further, the TENANT shall on or before
the Termination Date replace such high security lock with a lock equal in
quality and comparable in design to the original lock and shall surrender to the
LANDLORD all keys to the Leased Premises and the Development. One hundred and
fifteen percent (115%) of the cost to the LANDLORD of replacing any such locks
which the TENANT fails to replace and any keys which the TENANT fails to
surrender shall be payable forthwith by the TENANT upon demand by the LANDLORD.
ARTICLE 8
DAMAGE OR DESTRUCTION
---------------------
8.1 Right to Terminate: If fifty percent (50%) or more of the Useable
Area of the Leased Premises or of the total Useable Area of the Development is
damaged or destroyed by any cause whatsoever or if at any time during the last
two (2) years of the Term any part of the Development is damaged or destroyed by
any cause whatsoever to the extent that, in the opinion of the Architect, the
Leased Premises, or the Development, as the case may be, cannot be repaired or
rebuilt with reasonable diligence within six (6) months of the date of the
occurrence of such damage or destruction, then the LANDLORD may, at its option
to be exercised by Notice to the TENANT within the thirty (30) days next
following such occurrence, elect to terminate this Lease. If the LANDLORD so
elects, the Term of this Lease and the tenancy hereby created shall expire by
lapse of time upon the thirtieth (30th) day after such Notice is given and the
TENANT shall, within such thirty (30) day period, vacate the Leased Premises and
surrender the same to the LANDLORD, failing which the LANDLORD shall have the
right to re-enter and repossess the Leased Premises discharged of this Lease and
to remove all persons and property therefrom. In no event shall the LANDLORD be
liable to reimburse the TENANT for damage to or replacement or repair of
fixtures, floor coverings, furniture, equipment or Leasehold Improvements.
8.2 Repair and Rebuilding: If the LANDLORD does not elect to terminate
this Lease pursuant to Section 8.1, the LANDLORD shall proceed to repair or
rebuild the Development, excluding the Leased Premises, to the extent possible
with the insurance proceeds received by the LANDLORD from the LANDLORD'S
insurers or which should have been received by the LANDLORD from its insurers
had the LANDLORD insured the Development as provided for in this Lease. In
repairing, reconstructing or rebuilding the Development or any part thereof the
LANDLORD may use designs, plans and specifications other than those used in the
original construction and may alter or relocate, or both, any or all of the
buildings, facilities and improvements, including the Leased Premises, provided
that the Leased Premises as altered or relocated shall be of substantially the
same size and be in all material respects reasonably comparable to the Leased
Premises as defined herein. Upon receipt of Notice from the LANDLORD that the
LANDLORD has completed its repair and rebuilding, the TENANT shall forthwith
commence and expeditiously finish the repair and rebuilding of the Leased
Premises and the Leasehold Improvements in accordance with the provisions of
Section 7.1 hereof and shall immediately thereafter open the Leased Premises for
business, which in no event shall be later than thirty (30) days after Notice
from the LANDLORD that its repair and rebuilding is complete.
8.3 Abatement of Rent: The Monthly Minimum Rent shall abate in
proportion to the Useable Area of the Leased Premises rendered untenantable by
the occurrence of damage or destruction to the Development, but only if such
damage or destruction was not caused by the TENANT. The abatement of Monthly
Minimum Rent shall continue until the earlier of thirty (30) days following
Notice to the TENANT pursuant to Section 8.2 hereof that the LANDLORD has
repaired or rebuilt the Leased Premises to the extent required, or the day the
TENANT opens the repaired and rebuilt portion of the Leased Premises for
business.
8.4 Certificate of Architect Binding: The certificate of the Architect
shall bind the parties as to the
<PAGE>
14
percentage of the Usable Area destroyed or damaged, the state of tenantability
of the Leased Premises, and the date upon which reconstruction and repair is
substantially completed.
ARTICLE 9
DEMOLITION AND EXPROPRIATION
----------------------------
9.1 Demolition. If any authority having jurisdiction issues or makes an
order, a law, a regulation or a judgment that would necessitate the demolition
of the Development or the Leased Premises, the LANDLORD shall have the right to
terminate this Lease by Notice to the TENANT and this Lease shall terminate on
the date set out in such Notice. If the LANDLORD or its successors, transferees
or those having the right to choose to demolish, renovate or sell the
Development or any part thereof, the LANDLORD shall have the right to terminate
this Lease by six (6) month's Notice to the TENANT and the LANDLORD shall, in no
event, be liable for damages to the TENANT in connection with any such
termination.
9.2 Total Expropriation of Leased Premises. If the whole of the Leased
Premises shall be expropriated for any public or quasi-public use or purpose,
then the Term shall cease and terminate upon possession being required, and all
Rent shall be paid up to that date, and the TENANT shall have no claim against
the LANDLORD for the value of any unexpired Term of this Lease or for damages or
for any other reason whatsoever but shall be reimbursed by the LANDLORD for any
amounts of rent paid in advance.
9.3 Partial Expropriation of the Building. In the event that 20% or more
of the Gross Building Area shall be expropriated by any lawful expropriating
authority, then the LANDLORD shall have the right, to be exercised by notice in
writing to the TENANT within ninety (90) days next following such expropriation,
to elect to cancel and terminate this Lease.
Upon the giving of such notice to the TENANT, the Term of this Lease
shall cease and terminate as of the date actual physical possession shall be
taken, and all Rent shall be paid up to that date, and the TENANT shall have no
claim against the LANDLORD for the value of any unexpired Term of this Lease or
for damages or for any other reasons whatsoever. In the event that the LANDLORD
does not so elect to cancel this Lease by notice as aforesaid, this Lease shall
continue in full force and effect without any deduction or abatement of Rent
provided that, if any part of the Leased Premises is expropriated, and, as a
result thereof, the area of the Leased Premises shall be adjusted to account for
such reduction in area, and the Monthly Minimum Rent and Additional Rent payable
by the TENANT shall be adjusted on the basis of the rental rate set out in
Section 1. 1 (x).
9.4 Expropriation of Common Facilities. If the whole or part of the
Common Facilities shall be acquired or expropriated for any public or
quasi-public use or purpose, then the term of this Lease shall, at the option of
the LANDLORD, case and terminate as of the date of title vesting in such
proceeding; and the TENANT shall have no claim against the LANDLORD for the
value of any unexpired Term of this Lease; and the Rent shall be adjusted to the
date of the said termination.
9.5 Mutual Co-operation. The LANDLORD and the TENANT agree to co-operate
with each other in respect of any expropriation of all of the Leased Premises or
any other part of the Development, so that each may receive the maximum award in
the case of any expropriation to which they are respectively entitled to at law.
If and to the extent that any portion of the Development other than the Leased
Premises is expropriated, then the full proceeds accruing therefrom or awarded
as a result thereof, shall belong solely to the LANDLORD, and the TENANT shall
abandon or assign to the LANDLORD any rights which the TENANT may have or
acquired by operation of law to such proceeds or award and shall execute such
documents as in the opinion of the LANDLORD are or may be necessary to give
effect to this intention.
ARTICLE 10
QUIET ENJOYMENT
---------------
10.1 LANDLORD'S Covenant for Quiet Enjoyment: If the TENANT pays the
Monthly Minimum Rent and Additional Rent and continuously and strictly performs
all its obligations hereunder, the TENANT shall and may, subject to the terms
and conditions of the Lease, peaceably possess and enjoy the Leased Premises
throughout the Term without any interruption or disturbance from the LANDLORD or
any other person or persons lawfully claiming by, from or under the LANDLORD.
ARTICLE 11
ATTORNMENT, SUBORDINATION, STATUS STATEMENT
-------------------------------------------
11.1 Subordination and Attornment: This Lease is subject and subordinate
to all mortgages, charges, leases and sale-and-leaseback transactions or deeds
of trust, which may now or at any time hereafter affect the Leased Premises in
whole or in part or the Development in whole or in part whether or not any such
mortgage, charge, lease or deed of trust shall affect only the Leased Premises
or the Development or shall affect other premises as well. On request, at any
time and from time to time, of the LANDLORD or of the mortgagee, chargee, lessee
or
<PAGE>
15
trustee under any such mortgage, charge, lease or deed of trust, the TENANT
covenants and agrees to promptly:
(a) attorn to such mortgagee, chargee, lessee or trustee and become its
tenant of the Leased Premises for the then unexpired residue of the
Term on the terms herein contained; or
(b) postpone and subordinate this Lease to such mortgage, charge, lease or
deed of trust to the extent that this Lease and all right, title and
interest of the TENANT in the Leased Premises shall be subject to the
rights of such mortgage, charge, lease or deed of trust as if such
mortgage, charge, lease or deed of trust had been made and registered
and the monies thereby secured had been advanced before the making of
this Lease (and notwithstanding any authority or consent of such
mortgagee, chargee, lessee or trustee, express or implied, to the
making of this Lease).
Any such attornment, postponement and subordination shall extend to
all renewals, modifications, consolidations, replacements and extensions of any
such mortgage, charge, lease or deed of trust. The TENANT shall forthwith
execute any instruments of attornment, postponement or subordination which may
be so required to give effect to this Section II. 1.
Such postponement and subordination shall be conditional upon the
LANDLORD obtaining from the holder of each Mortgage, Charge, Lease or Deed of
trust to which the TENANT is required to postpone and subordinate this Lease, an
agreement with the TENANT pursuant to which such holder agrees the TENANT may
continue to use
11.2 Attorney: Deleted
11.3 Financial Information: The TENANT will, upon request provide the
LANDLORD with such information to the TENANT'S or the Guarantor's financial
standing and corporate organization as the LANDLORD or Mortgagee requires.
Failure of the TENANT to comply with the LANDLORD'S request will be a default
under this Lease.
11.4 Status of Lease Statement: Within five (5) days of any request of
the LANDLORD, the TENANT shall execute, acknowledge and transmit forthwith to
the LANDLORD a statement in writing certifying that this Lease is in full force
and effect, certifying the extent of any prepayment of Monthly Minimum Rent or
Additional Rent, certifying the existence or non-existence of defaults and
modifications and certifying any other matters pertaining to this Lease as to
which the LANDLORD shall request a certificate.
ARTICLE 12
USE OF LEASED PREMISES
----------------------
12.1 Type of Business Permitted: The TENANT covenants not to use or
permit the Leased Premises or any part thereof to be used for any unlawful
purpose, lodging, cooking, storage of food, sleeping or any other purpose other
than the Permitted Use.
12.2 Conduct of Business: The TENANT will conduct its business in and use
the whole of the Leased Premises continuously throughout the Term in an
up-to-date, first class and reputable manner befitting the Development and on
the days and during the hours that the LANDLORD from time to time designates.
Nothing in this section requires the TENANT to conduct its business during a
period prohibited by law or by-law regulating the hours when the business may be
conducted. A business practice by the TENANT whether through advertising,
selling procedures or otherwise which may harm the business or reputation of the
LANDLORD or reflect unfavourably on the Development, the LANDLORD or other
tenants of the leased premises in the Development, or which may confuse, mislead
or deceive the public, will immediately be discontinued by the TENANT at the
request of the LANDLORD. The LANDLORD will not be prejudiced by or responsible
to the TENANT for the non-observance or violation of any lease by another TENANT
of the premises in the Development.
12.3 Observance of Law: The TENANT shall, at its sole cost and expense
and subject to Article 7, promptly:
(a) observe and comply with all provisions of law including without
limitation, all requirements of all governmental authorities,
including federal, provincial and municipal legislative enactments,
by-laws and other regulations now or thereafter in force which pertain
to or affect the Leased Premises, the TENANT'S use of the Leased
Premises or the conduct of any business in the Leased Premises, or the
making of any repairs, replacements, alterations, additions, changes,
substitutions or improvements of or to the Leased Premises;
(b) observe and comply with all requirements of, and pay for all costs and
expenses in connection with, the controls imposed by governmental
authorities for ambient air and environment standards; and
(c) carry out all modifications, alterations or changes of or to the
Leased Premises, and the TENANT'S conduct of business or use of the
Leased Premises, which are required by any such authorities as set out
above.
<PAGE>
16
12.4 Waste and Nuisance: The TENANT shall not commit or permit any waste
or injury to the Leased Premises including without limitation, the Leasehold
Improvements and Trade Fixtures therein. The TENANT shall not commit or permit
any nuisance in the Leased Premises. The TENANT shall not cause annoyance to the
other tenants of the Development by any means including the creation of
objectionable or offensive noises, vibrations or odours and the LANDLORD shall
determine in its sole discretion whether such annoyance is being caused.
12.5 Rules and Regulations: The rules and regulations adopted and
promulgated by the LANDLORD from time to time arc hereby made as part of this
Lease, and the TENANT agrees to comply with and observe the same. The rules and
regulations existing as at the Commencement Date are those set out in Schedule
"I" attached hereto. The LANDLORD reserves the right from time to time to amend,
supplement, suspend or cancel any or all of the rules and regulations applicable
to the Leased Premises or the Development and to notify the TENANT of any such
changes. The rules and regulations may differentiate between different types of
businesses. Notice of the rules and regulations and amendments and supplements,
if any, shall be given to the TENANT and the TENANT agrees thereupon to comply
with and observe all such rules and regulations, provided that no rules and
regulations and amendments thereto and supplements thereof shall contradict any
provision of this Lease. The LANDLORD shall not be liable or responsible to the
TENANT for the non- observance or violation of any of such rules and regulations
or of any of the terms, covenants or conditions of any other lease of premises
in the Development and shall be under no obligation to enforce any such rules
and regulations or terms, covenants or conditions.
ARTICLE 13
ASSIGNMENT AND SUB-LETTING
--------------------------
13.1 Assignment by LANDLORD: To the extent that the LANDLORD'S covenants
and obligations under this Lease are assumed by a purchaser or lessee of the
Development or a portion thereof, or are assumed by an assignee of this Lease or
any interest therein, the LANDLORD shall, without further written agreement, be
freed and relieved of such covenants and obligations.
13.2 Assignment and Sub-Letting by TENANT: The TENANT shall not assign
this Lease nor sublet or part with or share the occupation, control or
possession of the Leased Premises or any part thereof or mortgage or encumber
this Lease, its Leasehold Improvements, Trade Fixtures or the Leased Premises
(collectively a "Transfer") without the prior written consent of the LANDLORD
and such consent shall not be unreasonably withheld or delayed where, in the
LANDLORD'S judgment, the proposed transferee has satisfactory financial
standing, business history and reputation in the community but, in any event,
the LANDLORD shall be entitled to exercise its right of termination pursuant to
Section 13.3. This prohibition against Transfer includes Transfers by operation
of law. Consent to any Transfer shall not constitute consent to a subsequent
Transfer. If there is a Transfer without the consent of the LANDLORD, the
LANDLORD may collect rent from the transferee and apply such rent against
amounts owing hereunder without waiving its rights hereunder, and consent of the
LANDLORD shall not be deemed or presumed from such conduct.
13.3 LANDLORD'S Option: If the TENANT intends to effect a Transfer of the
Leased Premises or this Lease, in whole or in part or any estate or interest
hereunder, then the TENANT shall give prior written notice to the LANDLORD of
such intent, specifying therein the proposed Transferee and providing such
reasonable information with respect thereto including, without limitation,
information concerning the principals thereof and such credit, financial or
business information relating to the proposed Transferee as the LANDLORD
requires, including an original copy of the proposed document effecting or
evidencing the proposed Transfer; and the LANDLORD shall within thirty (30) days
thereafter notify the TENANT in writing either (a) that it consents to or does
not consent to the proposed Transfer, or (b) that it elects to cancel this Lease
in preference to the giving of such consent. If the LANDLORD elects to cancel
this Lease as aforesaid, the TENANT shall notify the LANDLORD in writing within
fifteen (15) days thereafter of the TENANT'S intention either to refrain from
such Transfer or to accept the cancellation of this Lease. Failure of the TENANT
to deliver such notice within the said fifteen (15) days shall be an acceptance
by the TENANT of the LANDLORD'S proposal to cancel this Lease. Any cancellation
of this Lease pursuant to this Section 13.3 shall be effective on either the
date originally proposed by the TENANT as being the effective date of Transfer,
or the last day of the month in which occurs the day that is 60 days following
the date of the LANDLORD'S notice to cancel this Lease, whichever is the latter.
13.4 Conditions to Consent: Where the LANDLORD gives its consent to a
Transfer under Section 13.2, such consent shall be subject to the following
conditions:
(a) that Transfer agreement be prepared by the LANDLORD'S solicitor on the
LANDLORD'S form and be executed by the TENANT or transferee as the
case may be;
(b) that the TENANT remains jointly and severally liable with any such
transferee or with respect to all terms of this Lease including the
payment of Monthly Minimum Rent and Additional Rent;
(c) that the TENANT pay forthwith to the LANDLORD fifty percent (50%) of
any consideration, including increased rent, received by the TENANT
either directly or indirectly from any transferee whether in the form
of cash, goods or services;
<PAGE>
17
(d) that the TENANT pay any and all reasonable legal costs and all
LANDLORD administrative costs with respect to the preparation and
review of the documents to give effect to the proposed Transfer;
(e) that the Permitted Use of the Leased Premises and all other terms of
the Lease remain unaltered; and
(f) the Transfer shall not be effective unless there shall not exist any
default hereunder on the part of the TENANT at that time.
13.5 Corporate Ownership: If the TENANT is a corporation or if the
LANDLORD has consented to a transfer of this Lease or the Leased Premises, as
the case may be, to a corporation, any transfer or issue by sale, assignment,
operation of law or other disposition, or by subscription, from time to time, of
all or any part of the corporate shares of the TENANT or of any parent or
subsidiary corporation of the TENANT or any corporation which is an associate or
affiliate of the TENANT (as those terms are defined pursuant to the Ontario
Business Corporation Act, 1982, and amendments thereto) which results in any
changes in the present effective voting control of the TENANT as at the date of
execution of this Lease (or at the date a Transfer of this Lease or of the
Leased Premises, as the case may be, to a corporation is permitted) shall
require the prior written consent of the LANDLORD; and all of the terms and
provisions of this Article 13 shall apply to same as if same were a request for
assignment or subletting pursuant to the provision of Section 13.2.
However, this Section shall not apply to the TENANT if and so long as: (a) the
TENANT is a public corporation whose shares are traded and listed on any
recognized stock exchange in Canada or the United States; or (b) the TENANT is a
private corporation defined as aforesaid; so long as in either case prior to any
such change of control of the TENANT, the LANDLORD receives assurances
satisfactory to the LANDLORD that there will be a continuity of the existing
management of the TENANT and of its business practices and policies (including
those affecting the advertising and promotion of the business in the Leased
Premises), notwithstanding any such change of control.
ARTICLE 14
DEFAULT
-------
14.1 LANDLORD'S Right of Re-Entry: If and whenever:
(a) the TENANT fails to pay any amount due hereunder when due and such
failure shall be continuing for a period of more than five (5) days
after the date such amount was due; or
(b) the TENANT fails to observe or perform any other of the terms,
covenants or conditions of this Lease to be observed or performed by
the TENANT (other than the terms, covenants or conditions set out
below in subparagraphs (c) to (k) inclusive, for which no notice shall
be required) provided the LANDLORD first gives the TENANT fifteen (15)
days, or such shorter period of time as is otherwise provided herein,
written notice of any such failure to perform and the TENANT within
such period of fifteen (15) days fails to cure any such failure to
perform; or
(c) the TENANT or any agent of the TENANT falsifies any report required to
be furnished to the Landlord pursuant to this Lease; or,
(d) the TENANT of this Lease or any person occupying the Leased Premises
or any part thereof become bankrupt or insolvent or takes benefit of
any act not or hereafter in force for bankrupt or insolvent debtors or
files any proposal or makes any assignment for the benefit of
creditors or any arrangement or compromise; or
(e) a receiver or a receiver and manager is appointed for all or a portion
of the TENANT'S property or any such Guarantor's or occupant's
property; or
(f) any steps are taken or any action or proceedings are instituted by the
TENANT or by any other party including, without limitation, any court
or governmental body of competent jurisdiction, for the dissolution,
winding-up, or liquidation of the TENANT or its assets; or
(g) the TENANT makes a sale in bulk of any of its assets, wherever
situated (other than a bulk sale made to an assignee or sublease
pursuant to a permitted assignment or subletting hereunder and
pursuant to the Bulk Sales Act (Ontario)); or
(h) the TENANT abandons the Leased Premises, or sells, disposes of or
removes from the Leased Premises the goods and chattels of the TENANT
so that there would not be in the event of such sale or disposal
sufficient goods of the Tenant on the Leased Premises subject to
distress to satisfy all Rent due or accruing hereunder for a period of
at least twelve (12) months; or
(i) the Leased Premises become and remain vacant for a period of five (5)
consecutive days or are used by
<PAGE>
18
any persons other than such as are entitled to use them hereunder; or
(j) the TENANT assigns, transfers, encumbers, sublets, or permits the
occupation, use, parting with, or sharing possession of all or any
part of the Leased Premises by anyone except in a manner permitted by
this Lease; or
(k) this Lease or any of the TENANT'S assets are taken under any writ of
execution; or
(l) re-entry is permitted under any other terms of this Lease,
then, and in every such case, the LANDLORD, in addition to any other rights or
remedies it has pursuant to this Lease or by law, has the immediate right of
re-entry upon the Leased Premises, and it may expel all persons and remove all
property from the Leased Premises, and such property may be removed and sold or
disposed of by the LANDLORD as it deems advisable, 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 of trespass or becoming liable for any loss or damage
which may be occasioned thereby.
14.2 Re-Entry and Termination: This Lease shall terminate upon a re-entry
under Section 14.1 if the LANDLORD delivers to the TENANT, prior to or
simultaneously with such re-entry, a Notice of termination. However, such
re-entry and termination shall not prejudice the LANDLORD'S claim against the
TENANT for damages, for loss of Rent which would have been payable during the
remainder of the Term had this Lease not been so terminated and for damages in
respect of any defaults of the TENANT under this Lease.
14.3 Re-Entry and Re-Letting: This Lease shall not terminate upon a
re-entry under Section 14.1 if the LANDLORD does not deliver a Notice of
termination pursuant to Section 14.2. In such case, the LANDLORD shall be the
agent of the TENANT and shall have the right to make those repairs and
alterations to the Leased Premises considered necessary by the LANDLORD, to
sublet the Leased Premises or to assign this Lease. Notwithstanding the exercise
of such rights by the LANDLORD, the TENANT shall remain liable for any
deficiency and for the performance of all its obligations under this Lease. The
LANDLORD shall apply proceeds received from such subletting or assignment to
first, the payment of indebtedness other than Rent due under the Lease from the
TENANT to the LANDLORD. Second, to the payment of costs and expenses of the
reletting including brokerage fees and solicitor fees and costs of the
alterations or repairs. Third, to the payment of Rent due and payable under the
Lease. The residue, if any, will be held by the LANDLORD and applied to payment
of future Rent as it becomes due and payable.
14.4 Distress:
(a) The TENANT hereby waives and renounces the benefit of any present or
future laws, statutory or otherwise, taking away or limiting or
purporting to take away or limit the LANDLORD'S right of distress and
the TENANT agrees with the LANDLORD that, notwithstanding any such
laws, all goods, chattels and inventory (collectively, "Goods") from
time to time on the Leased Premises shall be subject to distress for
Rent and the fulfilment of all of the TENANT'S obligations under this
Lease in the same manner as if such laws had not been made, and upon
any claim being made by the LANDLORD, this provision may be pleaded as
an estoppel against the TENANT in any legal proceeding brought to test
the rights to tile levying of distress upon any Goods as are named as
exempted in such laws, the TENANT hereby waiving all and every benefit
that it could or might have with regard thereto.
(b) The LANDLORD may, without notice to the TENANT, exercise any right of
distress on the Leased Premises and for such purpose the TENANT agrees
that the LANDLORD, for the protection of the Goods and of the
LANDLORD'S right of distress, may enter the Leased Premises by, if
necessary, using a key (which the TENANT shall provide to the LANDLORD
on or before the Commencement Date and throughout the Term) which will
at all times open the locks to the Leased Premises, but if the
LANDLORD is unable to gain access to the Leased Premises by use of
such key, or if such key has not been provided or is not available,
then the TENANT agrees that the LANDLORD shall have the right to use
such other means of ingress and such force as may be necessary under
the circumstances as the LANDLORD, in its sole discretion, determines,
including, without limitation, the breaking of any lock, door or
window or other point of entry into the Leased Premises, and the
LANDLORD shall have the right to lock the Leased Premises, change any
locks on the Leased Premises and by any means exclude the TENANT from
all or any parts of the Leased Premises and the LANDLORD shall not
thereby be terminating this Lease in the absence of express written
notice terminating this Lease. The TENANT consents to being excluded
by the LANDLORD from all or any parts of the Leased Premises for
purposes of the LANDLORD'S exercising any right of distress.
(c) The TENANT further agrees that distress of all or any Goods may be
effected by written notice posted in or on the Leased Premises,
whether or not the LANDLORD locks or otherwise secures such Goods from
the TENANT on the Leased Premises or elsewhere. If the LANDLORD
effects distress by written notice or any other means, the TENANT
agrees not to remove or permit to be removed any distrained Goods and
not to interfere with the exercise of any right of distress.
<PAGE>
19
(d) The TENANT agrees that the LANDLORD'S exercise of any right of
distress as permitted hereby or at law shall not:
(i) constitute a trespass or beach of any express or implied term of
this Lease or render the LANDLORD subject to any legal
proceeding, or
(ii) render the LANDLORD liable or responsible in any way to the
TENANT or any other Person for any act, fault, default,
negligence, breach or omission of the LANDLORD or its bailiffs,
agents, servants, employees or any other Persons, or for any
occurrence or for any cause whatsoever, including, without
limitation, any Injury to the TENANT or others or for any loss or
damage to any property of the TENANT or others.
(e) If any Goods of the TENANT shall be removed from the Leased Premises,
the LANDLORD shall have the right to follow the Goods and exert
against the Goods all of its rights as if such Goods had remained on
the Leased Premises, such right of the LANDLORD to include, without
limitation, the right to follow such Goods for thirty (30) days in the
same manner as is provided for in the Act.
14.5 Expenses: If any legal proceeding is brought for recovery of
possession of the Leased Premises, for the recovery of Rent or any other amount
due under this Lease, or because of the breach of any other terms, covenants or
conditions herein contained on the part of the TENANT to be kept or performed,
the TENANT shall pay to the LANDLORD as Additional Rent, upon demand, all costs
and expenses incurred therefore (including without limitation, all professional
and consultant fees, and all legal fees on a solicitor and his own client basis,
disbursements, and all court costs and expenses of any legal proceeding; and the
term "proceeding" shall include, without limitation, any arbitration,
administrative, governmental, quasi-governmental or any other mediation
proceeding).
Without limiting the generality of the immediately proceeding
paragraph or any other provisions of this Lease, the TENANT shall pay to the
LANDLORD, as Additional Rent upon demand, all reasonable costs and expenses
(including, without limitation, those fees, disbursements, costs and expenses
set out in the bracketed insert in the immediately preceding paragraph of this
Section 14.5) which the LANDLORD may incur or pay out by reason of, or in
connection with:
(a) any proceeding by the LANDLORD to terminate this Lease or for the
recovery of possession of the Leased Premises or for the recovery of
Rent;
(b) any other proceeding by the LANDLORD against the TENANT;
(c) any distress levied by the LANDLORD against the TENANT'S goods,
chattels and inventory or any of them, on the Leased Premises for the
recovery of Rent;
(d) any default by the TENANT in the observance or performance of any
obligations of the TENANT under this Lease whether or not the LANDLORD
commences any proceeding against the TENANT or any Guarantor;
(e) any proceeding brought by the TENANT against the LANDLORD (or any
officer, agent or employee of the LANDLORD) in which the TENANT fails
to secure a final judgment against the LANDLORD;
(f) any other appearance by the LANDLORD (or any officer, agent or
employee of the LANDLORD) as a witness or otherwise in any proceeding
whatsoever involving or affecting the LANDLORD, the TENANT, this
Lease, the Indemnity Agreement (if any) or the Development;
(g) any amendment, modification or change in any of the terms of this
Lease or the Indemnity Agreement, if any (and any request or
negotiations pertaining thereto, whether or not such amendment,
modification or change is finally agreed on);
(h) any renewal, extension, surrender or release of this Lease or the
Indemnity Agreement, if any (and any request or negotiations
pertaining thereto, whether or not such renewal, extension, surrender
or release becomes effective);
(i) any Transfer of this Lease (any request or negotiations pertaining
thereto, whether or not such Transfer is approved and finally agreed
on); and any alterations of or to the Leased Premises (and any request
or negotiations pertaining thereto, whether or not such alterations
are approved and finally agreed on).
The TENANT'S obligations under this Section 14.5 shall survive the expiration or
earlier termination of this Lease.
<PAGE>
20
14.6 Bankruptcy of TENANT: All arrears of the TENANT together with the
Monthly Minimum Rent and Additional Rent for the next ensuing three (3) months
shall immediately become due and be paid as accelerated rent in the same manner
as if it were Rent in arrears in each of the circumstances set forth in
subsections 14.1 (c) to (k):
14.7 LANDLORD May Perform for TENANT: If the TENANT fails to perform any
covenant of the TENANT under this Lease, the LANDLORD may perform or cause
performance of such covenants and the LANDLORD shall have the right to enter
upon the Leased Premises and to do such things as the LANDLORD may consider
requisite or necessary in connection with such performance. One hundred and
fifteen percent (115%) of all expenses incurred by or on behalf of the LANDLORD
under this Section 14.7 shall be payable forthwith by the TENANT upon demand by
the LANDLORD as Additional Rent. The LANDLORD shall have no liability to the
TENANT or any other Person for any Claims resulting from any such action, entry
or performance of such covenant by the LANDLORD.
14.8 Remedies Generally: Mention in this Lease of any particular right or
remedy of the LANDLORD in respect of the default by the TENANT shall not
preclude the LANDLORD from any other right or remedy in respect thereof, whether
available at law or in equity or by statute or expressly provided for in this
Lease. No right or remedy shall be exclusive or dependent upon any other right
or remedy, but the LANDLORD may from time to time exercise any one or more of
such rights or remedies independently or in combination, such rights or remedies
being cumulative and not alternative. Whenever the TENANT seeks a remedy in
order to enforce in observance or performance of any of the terms, covenants and
conditions contained in this Lease on 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 the TENANT has
suffered as a result of a breach (if established) by the LANDLORD in the
observance and performance of any of the terms, covenants and conditions
contained in this Lease on the part of the LANDLORD to be observed or performed.
If the TENANT shall default hereunder prior to the date fixed as the
commencement of any renewal or extension of this Lease, whether by renewal or
extension option herein contained or by separate agreement, the LANDLORD may
cancel such option herein contained or by separate agreement, the LANDLORD may
cancel such option or agreement for renewal or extension of this Lease, upon
written notice to the TENANT.
14.9 Default Under Other Lease: Deleted
14.10 Accord and Satisfaction: No payment by the TENANT or receipt by
the LANDLORD of a lesser amount than the Rent herein stipulated shall be deemed
to be other than on account of the earliest stipulated Rent, nor is any
endorsement or statement on any cheque or any letter accompanying any cheque or
payment as Rent deemed an acknowledgment of full payment or an accord and
satisfaction, and the LANDLORD may accept and cash such cheque or payment
without prejudice to the LANDLORD'S right to recover the balance of such Rent or
pursue any other right or remedy provided in this Lease or at law. No receipt of
moneys by the LANDLORD from the TENANT after the termination of this Lease in
any lawful manner shall reinstate, continue or extend the Term, or affect any
notice previously given to the TENANT, or operate as a waiver of the right of
the LANDLORD to enforce the payment of Rent then due or thereafter falling due
or operate as a waiver of the right of the LANDLORD to recover possession of the
Leased Premises by proper suit, action, proceeding or other remedy, it being
agreed that, after the service of notice to terminate this Lease and the
expiration of the time therein specified, and after the commencement of any
suit, action, proceeding or other remedy, or after a final order or judgment for
possession of the Leased Premises, the LANDLORD may demand, receive and collect
any moneys due or thereafter falling due without in any manner affecting such
notice, suit, action, proceeding, order or judgment, and any and all such moneys
so collected shall be deemed payments on account of the use and occupation of
the Leased Premises or at the election of the LANDLORD on account of the
TENANT'S liability hereunder.
14.11 Excuse of Performance: Notwithstanding anything contained in this
Lease, neither the LANDLORD nor the TENANT shall be deemed to be in default with
respect to the performance of any of the terms, covenants and conditions of this
Lease, except the TENANT'S obligations to pay Monthly Minimum Rent and
Additional Rent if such default is due to Unavoidable Delay.
ARTICLE 15
LANDLORD'S RIGHT OF ACCESS
--------------------------
15.1 Right of Access and Method of Re-Entry: The LANDLORD or its employee
or agent shall have the right to enter the Leased Premises during reasonable
hours or at any time during an emergency as determined by the LANDLORD to
examine the state of the Leased Premises and of the Leasehold Improvements,
equipment and fixtures therein, to make such changes, repairs, alterations,
improvements, additions or installations in and to the Development as the
LANDLORD may deem necessary or desirable, to take into the Leased Premises all
material and equipment required in connection with the foregoing. The LANDLORD
or its employee or agent shall have the right to enter the Leased Premises to
show the Leased Premises to any prospective purchaser, lessee or Mortgagee. If
the Leased Premises are locked, the LANDLORD or its employee or agent may enter
the Leased Premises using a master key, if available, and, in the case of an
emergency, by force without liability of the LANDLORD to the TENANT but the
LANDLORD shall pay repair costs necessited by such entry.
<PAGE>
21
15.2 LANDLORD'S Right to Alter and Relocate the Leased Premises: The
LANDLORD shall have the right to install, maintain and/or repair pipes, wires,
ducts or other installations in, under or through the Leased Premises for or in
connection with the supply of any services to the Leased Premises or the
Development or any part thereof; to relocate or alter the Common Facilities
and/or the Leased Premises from time to time as the LANDLORD may desire,
including the reduction, increase or change of the size, location and/or
contours thereof provided that any relocation or alteration of the Leased
Premises shall be at the LANDLORD'S expense, Monthly Minimum Rent shall be at
the same rate per square foot as set out in Section 1. 1(x) hereof, and the size
of the Leased Premises shall not increase or decrease by more than ten percent
(10.0%); to conduct repairs, renovations or additions to the Development or any
part thereof including the Leased Premises and none the above shall constitute a
breach by the LANDLORD of any of the LANDLORD'S covenants for quiet enjoyment or
shall entitle the TENANT to any damages, diminution of Rent of any other
remedies. The LANDLORD'S right to relocate shall include the relocation of the
TENANT to other premises within the building in which the Leased Premises are
then located or to any other building which may comprise part of the
Development.
15.3 For Rent Signs: The TENANT shall permit the LANDLORD during the last
six (6) months of the Term to enter the Leased Premises and place thereon a
notice stating that the Leased Premises are for rent, and the TENANT shall not
nor shall the TENANT permit such notice to be moved, removed, obstructed or
defaced.
15.4 Obligations of TENANT and LANDLORD: No entry under this Article 15
shall constitute an eviction of the TENANT in whole or in part and the Monthly
Minimum Rent and Additional Rent shall not abate while changes, repairs,
alterations, improvements, additions or installations in and to the Development
are being made. Nor shall any such entry affect the obligations and covenants of
the TENANT under this Lease and the TENANT shall have no Claim by reason of loss
or interruption of business. Nothing in this Article 15 shall be deemed or
construed to impose upon the LANDLORD any obligation, responsibility or
liability for the care, maintenance or repair of the Leased Premises, or any
part thereof.
ARTICLE 16
COMMON FACILITIES
-----------------
16.1 Non-Exclusive Right to Use Common Facilities: Subject to the terms
and conditions of this Lease, the TENANT, its officers, employees and customers
shall have the right, in common with others designated by the LANDLORD or
otherwise entitled, to use the Common Facilities for their proper and intended
purpose provided, however, no access shall be permitted to service, janitorial
and mechanical rooms, transformer vaults, electrical distribution rooms or water
meter rooms. The TENANT acknowledges that the Common Facilities are under the
exclusive control and management of the LANDLORD and that the TENANT is
permitted to use the Common Facilities under a revocable licence. If changes are
made to the Common Facilities by the LANDLORD, the LANDLORD shall not be subject
to any liability nor shall the TENANT be entitled to any compensation or any
diminution or abatement of Rent and such changes shall not be deemed to be a
constructive or actual eviction or a breach of the LANDLORD'S covenant for quiet
enjoyment.
16.2 Alterations to Common Facilities: The LANDLORD shall have the right
at any time and from time to time during the Term to change, add to, subtract
from, rearrange or alter the Common Facilities and other parts of the
Development including the Lands and all buildings thereon, to dedicate portions
of the Lands for municipal and other governmental purposes, to convey portions
of the Lands to others for any purposes whatsoever, to grant, modify and
terminate easements or other agreements pertaining to the use and maintenance of
all or part of the 'Development and to make changes or additions to the pipes,
common elements, utilities and other necessary building services in the Leased
Premises which serve other premises in the Development. The LANDLORD shall use
its best efforts not to unreasonably interfere with the normal business
operations of the TENANT, but the LANDLORD shall not be liable to the TENANT for
any interference or inconvenience caused by any action of die LANDLORD under the
provisions of this Section 16.2.
ARTICLE 17
INTERPRETATION AND MISCELLANEOUS
--------------------------------
17.1 Waiver: The failure of the LANDLORD to insist on the strict
performance of any provisions of this Lease, or the failure of the LANDLORD to
exercise any right, option or remedy, shall not be construed as a waiver for the
future of any such provision, right, option or remedy or as a waiver of
subsequent breach thereof. The waiver by the LANDLORD of any breach of any term,
covenant or condition herein contained is not deemed to be a waiver of such
term, covenant or condition or of any subsequent breach of the same or of any
other term, covenant or condition herein contained. The consent or approval by
the LANDLORD of any act by the TENANT requiring the LANDLORD'S consent or
approval shall not be construed to waive or render unnecessary the requirement
for the LANDLORD'S consent or approval of any subsequent similar act by the
TENANT. The subsequent acceptance of Rent hereunder by the LANDLORD is not
deemed to be a waiver of any preceding breach by the TENANT of any term,
covenant or condition of this Lease, regardless of the LANDLORD'S knowledge of
such preceding breach at the time of acceptance of such Rent. No term, covenant
or condition of this Lease is deemed to have been waived by the LANDLORD unless
such waiver is in writing by the LANDLORD.
<PAGE>
22
17.2 Compliance with the Planning Act (Ontario): It is an express
condition of this Lease, and the Landlord and the Tenant so agree and declare,
that the provisions of Section 50 of the Planning Act (Ontario), and amendment
thereto shall be complied with if applicable in law.
17.3 Corporate Tenancy: If the TENANT is a corporation, the undersigned
officers of the TENANT hereby warrant and certify to the LANDLORD:
(a) that the TENANT is a corporation in good standing and duly organized
under the laws of the Province of Ontario, or, if incorporated in a
jurisdiction other than Ontario, is a corporation in good standing and
duly organized under the laws of that jurisdiction and is authorized
to do business in the Province of Ontario; and
(b) that they, as such officers, are authorized and empowered to bind the
corporation to the terms of this Lease by their signatures hereto.
17.4 No Partnership: Nothing contained in this Lease or in any acts of
the parties hereto shall be construed to create any relationship between the
parties other than that of LANDLORD, TENANT and Covenantor, if any, or to create
a relationship of partnership or of joint venture between the parties hereto, or
to constitute this Lease as an emphyteutic lease, or to create any right of
ownership in the TENANT.
17.5 Agency: The TENANT acknowledges that the LANDLORD may perform any or
all of the LANDLORD'S obligations or exercise any of the LANDLORD'S rights
hereunder through or by means of such manager or other agency or agencies as the
LANDLORD may from time to time determine.
17.6 Lease is Entire Agreement: This Lease sets forth the entire
agreement between the TENANT and the LANDLORD with respect to the Leased
Premises. Any offer to lease or agreement to lease entered into by the LANDLORD
and TENANT prior to the execution of this Lease shall be deemed to have been
merged and extinguished in this Lease. No amendment or addition to this Lease
will bind the LANDLORD or the TENANT unless such amendment or addition is in
writing and signed by all parties to this Lease.
17.7 Registration: The Tenant shall not register this Lease (or any
assignment or subletting of this Lease) without the written consent of the
Landlord,. However, upon the request of either party hereto, the other party
shall join in the execution of memorandum, or so-called "short form" of this
Lease, for the purposes of registration. Said memorandum or short form of this
Lease shall only describe the parties, the Leased Premises and the Term of this
Lease. Any costs and expenses incurred in connection with the foregoing shall be
for the sole account of the Tenant. Upon expiration or sooner termination of the
Term, the Tenant shall discharge and vacate such notice or memorandum from title
to the Development, at its sole expense, failing which the Landlord is hereby
authorized to do so, as lawfully appointed attorney for the Tenant, and at the
Tenant's expense.
17.8 No Offer: No contractual or other rights shall exist between the
LANDLORD and the TENANT with respect to the Leased Premises until both have
executed and delivered this Lease notwithstanding that rental deposits have been
received by the LANDLORD and notwithstanding that the LANDLORD has delivered to
the TENANT an unexecuted copy of this Lease.
17.9 Joint and Several Liability: The liability to pay rent and perform
all other obligations under this Lease of each individual, corporation,
partnership or business association signing this Lease and of each member of any
such partnership or business association, the members of which are by law
subject to personal liability, shall be deemed to be joint and several.
17.10 Governing Law: This Lease shall be construed and governed by the
laws of the Province of Ontario.
17.11 Time of the Essence: Time is of the essence of this Lease and of
every part hereof, except as herein otherwise provided, provided that the time
for doing or completing any matter herein may be amended by an agreement in
writing signed by both parties.
17.12 Interpretation: Words importing the singular number shall include
the plural and words importing firms and corporations shall include persons.
Each obligation of the TENANT in this Lease, although not expressed as a
covenant, is considered to be a covenant for all purposes. The article and
section headings and index of this Lease form no part hereof and are inserted
for convenience only. If any section, article, paragraph, sub-paragraph, clause
or sub-clause in this Lease is held invalid or unenforceable by any court of
competent jurisdiction, this Lease shall be interpreted as if such section,
article, paragraph, sub-paragraph, clause or sub-clause had not been a part of
this Lease.
17.13 Construction: This Lease has been negotiated and approved by counsel
on behalf of all parties hereto and, notwithstanding any rule or maxim of
construction to the contrary, any ambiguity or uncertainty will not be construed
against any party hereto by reason of the authorship of any of the provisions
hereof.
17.14 Schedules: Schedules "A", "B", "C", "D", "E", "F", "G", "H", "I" and
"J" are hereby incorporated into and form part of this Lease. In the event of
any discrepancy between any provision contained in the Lease and in
<PAGE>
23
any Schedule, the provision contained in the Schedule shall prevail.
17.15 Partial Invalidity: If for any reason whatsoever any term, covenant
or condition of this Lease, or the application thereof to any person or
circumstance, is to any extent held or rendered invalid, unenforceable or
illegal, then such term, covenant or condition:
(a) is deemed to be independent of the remainder of the Lease and to be
severable and divisible therefrom, and its invalidity,
unenforceability and illegality does not affect, impair or invalidate
the remainder of the Lease or any part thereof; and
(b) continues to be applicable to and enforceable to the fullest extent
permitted by law against any person and circumstances other than those
as to which it has been held or rendered invalid, unenforceable or
illegal.
Neither party is obligated to enforce any term, covenant or
condition of this Lease against any person, if, or to the extent by so doing,
such party is caused to be in breach of any laws, rules, regulations or
enactments from time to time in force and nothing in this Lease entitles the
LANDLORD to stipulate the price or price range at which any article or service
is to be supplied, offered or advertised by the TENANT.
17.16 Successors and Assigns: This Lease shall be binding upon, extend to
and enure to the benefit of the LANDLORD, TENANT and Guarantor, if any, and to
each of their respective heirs, executors, administrators, successors and
permitted assigns.
IN WITNESS WHEREOF the parties hereto have executed this Lease.
SIGNED, SEALED AND DELIVERED
in the presence of
SIDUS SYSTEMS INC.
Per:______________________
Authorized Signing Officer
NEWILL CORPORATION
Per:______________________
Authorized Signing Officer
<PAGE>
SCHEDULE "A"
FIRSTLY, Parcel P-1, Section M-119, City of Ottawa, Regional Municipality of
Ottawa-Carleton being Parts of Blocks P, Q and all of Block T on Plan M-119,
designated as Parts 10, II, 12, 13, 14, 15, 16, 17, 18, 19 and 20 on Plan of
Survey of Record in the Land Titles Division of Ottawa-Carleton No. 4 as
4R-5996.
SECONDLY, Parcel Q1-2, Section M-119, City of Ottawa, Regional Municipality of
Ottawa-Carleton being Parts of Block Ql on Plan M-119, designated as Parts 21,
22, 23, 24 and 25 on a Plan of Survey of Record in the Land Titles Division of
Ottawa-Carleton No. 4 as 4R-5996.
THIRDLY, Parcel Streets-4, Section M-119, City of Ottawa, Regional Municipality
of Ottawa-Carleton being part of Lancaster Road on Plan M-119, City of Ottawa,
in the Regional Municipality of Ottawa-Carleton, as closed by By-Law 156-86, as
set out in Instrument 457069 and amended by By-Law 179-86, as set out in
Instrument 458901, registered in the Land Registry Office No. 4 for the Land
Titles Division of Ottawa-Carleton, at Ottawa, designated as Parts 5, 6, 7, 8
and 9 on a Plan of Survey of Record in the said Office as Plan 4R-5996.
FOURTHLY, Parcel A-13, Section M-121, City of Ottawa, Regional Municipality of
Ottawa-Carleton, being Part of Block A on Plan M-121, City of Ottawa, in the
Regional Municipality of Ottawa-Carleton, registered in the Land Registry Office
No. 4 for the Load Titles Division of Ottawa-Carleton, at Ottawa, designated as
Part 4 on a Plan of Survey of Record in the said Office as Plan 4R-5996.
<PAGE>
SCHEDULE "B"
OUTLINE OF LANDS
[DRAFTING NOTE - to be inserted]
<PAGE>
SCHEDULE "C"
OUTLINE OF LEASED PREMISES
[DRAFTING NOTE - to be inserted]
<PAGE>
SCHEDULE "D"
ACKNOWLEDGMENT OF COMMENCEMENT DATE
TO: THE LANDLORD
AND TO: THE MORTGAGEE
The undersigned TENANT hereby acknowledges and certifies to you that:
1. The Commencement Date of the Lease was ___________________.
2. We have accepted possession of the Leased Premises pursuant to the
terms of the Lease and are now in possession thereof.
3. The Leased Premises have been erected and delivered in accordance with
the terms of the Lease.
4. The Leased Premises have been fixtured and stocked and our normal
business operations are being conducted therein.
5. There has been no violation of any of the terms of the Lease, there is
no offset of rent or any other payment under the Lease and none of the
rent reserved under the Lease has been prepaid.
6. There is no violation of any of the terms of the Lease either on the
part of the LANDLORD or the TENANT.
7. The Lease is now in full force and effect in accordance with its terms
and there are no oral or written modifications, variations or
alterations thereof.
8. We have no knowledge of any assignment of the Lease.
Dated this _ day of 19__.
SIDUS SYSTEMS INC.
Per:_________________________
NOTE: If the TENANT is a Corporation, the TENANT shall affix its corporate seal
to this Acknowledgement and indicate the office (e.g. President, Secretary,
etc.) of the person or persons signing on behalf of the Corporation.
<PAGE>
SCHEDULE "E"
LANDLORD'S WORK
1. The LANDLORD shall, at its expense, install such leaseholds upon the Leased
Premises as agreed to by the LANDLORD and the TENANT and in accordance with
design drawings acceptable to both parties, and identified as Plan No. SP1,
SP I-A dated April 2, 1996 attached herewith as Appendix 1. All drawings
and specifications produced by the LANDLORD'S Consultants shall be reviewed
ind approved by the TENANT or their representatives prior to any of the
LANDLORD'S Work taking place. Specifically the LANDLORD, at its sole
expense, shall be responsible for all work and professional services with
regards to the design and construction of any base building and leasehold
improvement requirements. In addition, the LANDLORD shall be responsible to
provide and pay all professional fees for the electrical engineers,
mechanical engineers, the interior space planning and design consultants
along with any other architectural and engineering services that may be
required to meet the interior fit-up requirements of the TENANT as agreed
by the LANDLORD.
TENANT'S WORK
N/A
<PAGE>
2
APPENDIX 1
[DRAFTING NOTE - DRAWINGS TO BE ATTACHED]
<PAGE>
SCHEDULE "F"
PARKING
1. During the Term, the LANDLORD hereby agrees to provide to the TENANT the
use of thirty (30) unreserved stalls in the parking facilities located on
the Lands.
2. The parking facilities are for the use of the TENANT and its invitees only
and the LANDLORD shall not be responsible for any theft, loss or damage to
the TENANT'S vehicles whatsoever, or for injury to the TENANT or others in
the parking facilities.
3. The LANDLORD shall have the right to establish rules and regulations
governing the use of the parking facilities from time to time and the
TENANT hereby agrees to observe and abide by all such rules and
regulations.
<PAGE>
SCHEDULE "G"
OPTION TO RENEW
The LANDLORD hereby agrees that, if the TENANT duly and regularly pays the
Rent promptly in accordance with the terms hereof and performs and fulfils each
and every of the covenants, agreements and provisoes herein on the part of the
TENANT to be performed and fulfilled in accordance with the provisions of the
Lease, the LANDLORD shall, at the expiration of the Term hereof, upon the
written request of the TENANT given to the LANDLORD at least six (6) months
prior to the expiry of the Term hereby granted, failing which this option to
renew will be null and void, grant to the TENANT a renewal of this Lease of the
Leased Premises for a further period of five (5) year(s). Any renewal lease
entered into pursuant to this provision shall be on the same terms, covenants
and conditions as are contained herein except:
(a) there shall be no additional right of renewal; and
(b) the Monthly Minimum Rent payable by the TENANT for such renewal period
shall be the prevailing market rates for similar premises within the
City of Ottawa including within the Development, as agreed upon by the
parties hereto and, failing agreement being reached by the parties
no later than three (3) months prior to the expiration of the original
Term or any renewal thereof, to be determined by a single arbitrator
appointed pursuant to the Arbitrations Act of Ontario, whose decision
shall be final and binding on the parties hereto; provided, however,
the Monthly Minimum Rent shall in no event be lesser than that charged
for the fifth (5th) year of the Lease.
<PAGE>
SCHEDULE "H"
SPECIAL CLAUSES
Notwithstanding anything to the contrary contained in this Lease:
1. The LANDLORD agrees that the Recoveries for the TENANT shall be fixed at
Eight Dollars and Fifty Cents ($8.50) per square foot of Rentable Area of
the Leased Premises per annum for the 1996 calendar year. The LANDLORD
further covenants that if in the 1996 calendar year actual Recoveries
(calculated as if the Development were fully occupied by TENANTs carrying
on business throughout such year) exceed Eight Dollars and Fifty Cents
($8.50) per square foot of rentable area, the excess amount, if any, shall
be deducted from the Recoveries for the TENANT for each calendar year after
1996, until such excess amount is exhausted. The aggregate of all
administrative, supervisory and management fees payable by the TENANT shall
not exceed fifteen percent (15%) of operating costs excluding realty taxes
and interest.
2. The Monthly Minimum Rent and the Additional Rent shall be subject to
adjustment based on the actual Rentable Areas of the Leased Premises as
determined by the LANDLORD'S Architect in accordance with the BOMA Standard
of measurement (ANSI 765.1 - 1980). The LANDLORD'S Architect's Certificate
as to the Rentable Area of the Leased Premises measured as aforesaid shall
be delivered to the TENANT on or before the Commencement Date.
3. Provided the TENANT is not then in material default of its covenants and
obligations under the Lease, the TENANT shall, throughout the Term and any
renewal or extension thereof, have a continuing option to lease additional
premises on the ground floor and third floor of the Building, as may from
time to time become available to be leased (the "Optioned Premises"), under
then prevailing market rates for a similar quality building in the general
vicinity of 2781 Lancaster Road.
4. Subject to compliance with all applicable by-laws, regulations and codes as
to size, location, arrangement, type of lettering, colour, appearance and
design, the LANDLORD will allow the TENANT the right to erect its standard
graphics on the exterior wall of the building, the building lobby and the
main floor elevator lobby, at its sole cost, subject to prior written
approval from the LANDLORD, such approval not to be unreasonably withheld.
5. The LANDLORD will pay the TENANT a moving allowance of One Dollar ($1.00)
per square foot of Rentable Area of the Leased Premises plus the applicable
Goods and Services Tax, immediately upon the TENANT moving into the Leased
Premises.
6. The LANDLORD hereby grants to the TENANT a free rental period of one month
starting on the commencement of the Term and ending on the 31st day of May,
1996 ("Free Rental Period"). During the Free Rental Period the TENANT shall
not be called upon to pay Monthly Minimum Rent or Additional Rent,
whatsoever.
7. The LANDLORD represents and warrants to the TENANT that, to the best of the
LANDLORD's knowledge and belief, the structure of the Development is in
good repair and the H.V.A.C., electrical and mechanical systems shall be
balanced, fully operational, and be of sufficient capacity for the TENANT's
Use.
8. The TENANT shall have access to the Leased Premises for the purpose of the
installation of telephone and communication systems, computer equipment,
and furniture five (5) days prior to the Commencement Date. All terms and
conditions of the Lease will apply to the term of occupation prior to the
Commencement Date, except that no Monthly Minimum Rent or Additional Rent
shall be payable. The TENANT shall be entitled to hook up its computer
equipment along the wires of Bell Canada, subject to the prior written
consent of Bell Canada.
9. The LANDLORD will be responsible for the payment of real estate fees to
Colliers Macaulay Nicolls (Ontario) Inc. and all design fees to Callagham
Potter and Letellier (including fees for interior space planning,
construction drawings and specifications for interior fit-up).
10. The LANDLORD acknowledges receipt of a deposit in the amount of Fifteen
Thousand Dollars ($15,000.00) to be applied towards payment of the first
month's Rent.
<PAGE>
SCHEDULE "I"
The Rules and Regulations shall include the following:
(a) Animals and Birds - No animals or birds shall be kept in the Leased
Premises.
(b) Care of Interior of Leased Premises - The TENANT shall keep the
interior of the Leased Premises clean, orderly and tidy. The TENANT
shall keep perishable items properly refrigerated. The TENANT shall
deposit all debris, trash and refuse in ares, at times and in such
manner as the LANDLORD shall reasonably designate.
(c) Doors, Windows and Window Coverings - The skylights and windows that
reflect or admit light into any place in the Development shall not be
covered or obstructed by the TENANT and no awnings, curtains or
blinds shall be installed without the prior written consent of the
LANDLORD. Windows and doors shall not be left open so as to admit rain
or snow or to interfere with the heating or cooling of the
Development. The TENANT shall not and shall not permit its employees,
agents or invitees to throw anything out of the windows or doors of
the Development or into any passageways, stairways, lightwells or
elevator shafts of the Development.
(d) Electrical and Communications Wiring - The LANDLORD shall direct the
location and manner of installation of all wiring and equipment in the
Leased Premises. There shall be no boring, cutting, or installation of
telephone, telegraphic, electric or other wiring without the written
consent of the LANDLORD, which said consent shall not be unreasonably
withheld.
(e) Loading, Unloading, Delivery of Merchandise - Deliveries, shipments
and all loading and unloading of all items to and from the Leased
Premises shall be made by means of such doorways, corridors and
elevators and in such manner and during such hours as the LANDLORD
shall reasonably designate.
(f) Obstruction of Plumbing and Washroom Facilities - The TENANT agrees
that it will not use or permit its employees, agents or invitees to
use the plumbing or washroom facilities of the Leased Premises or the
Development for any purpose other than that for which they were
constructed.
(g) Overloading of Floors - The TENANT shall not permit any floor of the
Leased Premises to be overloaded. All safes and other heavy objects
liable to injure or destroy any part of the Leased Premises or the
Development shall be moved at such times by such means and by such
persons as the LANDLORD shall reasonably direct. Upon the termination
of this Lease, the TENANT shall forthwith inform the LANDLORD in
writing of the combinations of all locks, safes and vaults in or on
the Leased Premises.
(h) Parking - The TENANT and all persons employed by or doing business
with the TENANT shall park not more than the number of motor vehicles
which the LANDLORD has expressly permitted as noted in Schedule "F"
hereto; provided that no person or tenant shall have the exclusive use
of any particular parking space unless otherwise designated by the
LANDLORD, no motor vehicle shall be parked on any portion of the
Development which is a loading zone or is not designated by the
LANDLORD for parking or where signs are in place indicating that
parking is prohibited and no overnight parking shall be permitted and
the TENANT shall reimburse the LANDLORD on demand for the cost of
removal of any motor vehicle which is parked in excess of the number
expressly allowed by the LANDLORD, parked for a period of time deemed
by the LANDLORD to be excessive or parked in breach of this clause and
which belong to or is parked by any person employed by or doing
business with the TENANT.
(i) Radio and Television - The TENANT shall remove any radio, television
or other similar device in the Leased Premises if, in the sole
judgement of the LANDLORD, such radio, television or other similar
device is creating a nuisance. The TENANT shall not in any case erect
or cause to be erected any aerial anywhere in the Development.
(j) Restriction on Dangerous Materials - The TENANT shall not keep, use,
sell or offer for sale in the Leased Premises anything of a dangerous,
inflammable or explosive nature.
(k) Signs, Advertising and Displays - The TENANT shall not, in or about
the Leased Premises without the written consent of the LANDLORD, erect
interior or exterior signs, install window or door signs, affix window
or door lettering, erect awnings or canopies or display advertising
media or devices which may be seen or heard outside the Leased
Premises. The TENANT shall remove forthwith all signs, lettering,
awnings, canopies and displays which are found by the LANDLORD to be
objectionable. The TENANT shall indemnify and save harmless the
LANDLORD from all claims, demands, loss or damage to any person or
property arising out of or in any way caused by the erection,
maintenance or removal of any sign or other installation erected or
installed on or about the exterior of the Leased Premises. The TENANT
shall, at its own expense, maintain in good condition and repair all
such signs, lettering, awnings, canopies and displays, shall keep all
displays and signs lit during reasonable business hours and shall
observe and comply with all requirements of any competent authority
regarding the erection and maintenance of signs including the payment
of licence or other fees.
<PAGE>
2
(l) Temperature and Humidity of Leased Premises - To the extent that the
TENANT may exercise control, the TENANT shall keep the Leased Premises
at a temperature sufficient to prevent the freezing of pipes in the
Leased Premises and the TENANT shall keep the temperature and humidity
of the Leased Premises at a reasonable level. The TENANT shall not
vent the Leased Premises into other enclosed parts of the Development
nor appropriate warm or cool air from other enclosed parts of the
Development.
(m) Use of Entrance, Etc. - The sidewalks, entrances, lobbies, elevators,
stairways and corridors (if applicable) of the Development shall not
be obstructed by the TENANT or used by it for any other purpose than
for ingress and egress to and from the Leased Premises and the TENANT
shall not place or allow to be placed in any such areas any waste
paper, dust, garbage, refuse or anything whatever that shall tend to
make such areas appear unclean or untidy.
(n) Wheeled Vehicles - All wheeled vehicles used within the Leased
Premises shall be equipped with rubber wheels and rubber guards so as
not to damage the floors and walls of the Development. No motorized
vehicles shall be permitted for loading or unloading or parking
purposes within the Leased Premises other than electrically or propane
operated material handling equipment, except with the prior written
consent of the LANDLORD, and the TENANT shall comply with the rules
and regulations of any regulatory agency having jurisdiction in that
regard, in the use, operation and storage of all such equipment.
(o) No Smoking - No smoking shall be permitted upon the Development by the
TENANT, its employees, agents, and invitees.
<PAGE>
SCHEDULE "J"
ENVIRONMENTAL MATTERS
1. DEFINITION OF POLLUTANTS
"Pollutants" means any substance which is hazardous to persons or
property and includes, without limiting the generality of the
foregoing:
(a) radioactive materials;
(b) explosives;
(c) any substance that, if added to any water, would degrade or alter or
form part of a process of degradation or alteration of the quality of
that water to the extent that it is detrimental to its use by persons
or by any animal, fish or plant;
(d) any solid, liquid, gas or odour or combination of any of them that, if
emitted into the air, would create or contribute to the creation of a
condition of the air that: (i) endangers the health, safety or welfare
of persons or the health of animal life; (ii) interferes with normal
enjoyment of life or property; or (iii) causes damage to plant life or
to property;
(e) toxic substances;
(f) substances declared or defined to be hazardous, toxic, special waste
or waste under any law or regulation now or hereafter enacted or
promulgated by a governmental authority having jurisdiction over the
LANDLORD, the TENANT, the Leased Premises or the Development of which
the Leased Premises form a part;
(g) any substance the use or transportation of which or the release of
which into the environment is prohibited, regulated, controlled or
licensed under environmental legislation; and
(h) anything contaminated by any other Pollutant.
2. PRESENCE OF POLLUTANTS
The TENANT shall not, without the LANDLORD'S prior written consent,
bring any Pollutant onto or keep any Pollutant on or around the Leased
Premises, the Development or the Lands for the sale, storage, disposal,
manufacture, processing, packaging, use of or any other dealing with the
Pollutant or for any other purpose.
3. COVENANTS REGARDING POLLUTANTS
If the LANDLORD provides its consent under the preceding section or if
the TENANT brings any Pollutant onto the Leased Premises in
contravention of the preceding section, (without in any way limiting the
LANDLORD'S rights and remedies in respect of such breach), the TENANT
covenants with the LANDLORD as follows:
(a) Compliance with Laws - The TENANT shall promptly comply with and
conform to the requirements of every statute, law, bylaw,
regulation, ordinance and order (the "Environmental Laws") at any
time or from time to time in force regarding the proper and
lawful use, sale, storage, disposal, transportation, generation,
treatment, containment, cleanup of or any other dealing with
Pollutants.
(b) Access and Authorizations - The LANDLORD may enter the Leased
Premises at any time during the Term to verify the existence of
any Pollutants on the Leased Premises and the TENANT'S compliance
with these provisions and to take such steps as the LANDLORD may
deem necessary for the safety or preservation of the Leased
Premises or the Development. The TENANT shall provide the
LANDLORD with such written authorizations as the LANDLORD may
require from time to time to make inquiries at any governmental
authority regarding the TENANT'S compliance with Environmental
Laws.
(c) Responsibility for Damage - The TENANT shall be fully responsible
for any and all damage or injury (including death) to any
property or person arising or resulting from any Pollutant
brought onto or kept on or around the Leased Premises or the
Development by the TENANT or its agents, employees, contractors,
subtenants, invitees or licensees. The TENANT shall promptly
repair any damage to the Leased Premises or the Development in
respect of any such Pollutant.
<PAGE>
2
(d) Removal - The TENANT shall promptly at the LANDLORD'S request at
any time during the Term, remove all or any Pollutants from the
Leased Premises brought onto the Leased Premises by the TENANT
and cleanup any contamination to the Leased Premises, the
Development, the Lands or any other lands resulting from all or
any of the Pollutants which are caused by the TENANT, all in
accordance with Environmental Laws. The TENANT shall leave the
Leased Premises on termination of this Lease free from all and
any Pollutants resulting from the use or occupation of the Leased
Premises or the exercise of the TENANT'S rights hereunder. The
TENANT shall in no way be liable for any pollutants existing on
the Leased Premises, the Development or the Lands prior to the
Commencement Date.
(e) Indemnity - The TENANT agrees to indemnify and save the LANDLORD
harmless from any and all Claims arising out of any government
demand, direction or request that the LANDLORD or the TENANT test
for, monitor, cleanup, remove, contain, store, treat, detoxify or
neutralize Pollutants on the Leased Premises which are caused by
the TENANT and further agrees to indemnify and save harmless the
LANDLORD from any and all Claims arising out of the actual,
alleged or threatened discharge, dispersal, release or escape of
Pollutants at or from the Leased Premises or at or from the
Development.
(f) Survival - The obligations of the TENANT hereunder relating to
Pollutants or the lands prior to the commencement date (including
without limitation, the TENANT'S obligation regarding cleanup and
its indemnity in favour of the LANDLORD) shall survive the expiry
or earlier termination of this Lease.
Landmark Properties Inc.
August 3, 1995
SIDUS SYSTEMS INC.
8639 Dalton Road
Town Of Mount-Royal, Quebec
H4T IV5
Attention: Mr. Henry Kalisky
- ----------------------------
Subject: Deed of Lease dated for the Leased Premises located at
8623-8639 Dalton Road, Town of Mount-Royal, Quebec H4T IV5
----------------------------------------------------------
Dear Sir:
This letter shall form an integral part of the above-mentioned Deed of Lease.
Notwithstanding anything contained to the contrary in the above-captioned Deed
of Lease, and provided the lessee is not in default of its present Lease and has
fulfilled all of the terms and conditions contained therein, it is hereby agreed
that the months of August 1995, September 1995 and October 1, 1995 shall be free
of Basic NET Rental.
However, the Lessee shall be responsible to pay for its proportionate share of
building expenses, taxes and its metered gas and hydro utility consumption at
the date Of Occupancy and to the termination date of the Lease.
This letter shall become legal and binding only after [lie said Deed of Lease
has been executed by the Lessee and Lessor.
MINOCAN (a division or 2841-4837 Quebec Inc.)
Per:
--------------------------
Brian Cytrynbaum
BC/11
We agree and accept the foregoing.
SIDUS SYSTEMS INC.
Per: /s/ Henry Kalisky Date:
------------------------ ---------------------
Henry Kalisky
<PAGE>
DEED OF LEASE
between
MINOCAN (a division of 2841-4837 Quebec Inc.)
and
SIDUS SYSTEMS INC.
,1995
8623-8639 DALTON ROAD, TOWN OF MOUNT-ROYAL, QUEBEC
H4T lV5
<PAGE>
TABLE OF CONTENTS
-----------------
DESCRIPTION ............................................................... 1
TERM ...................................................................... 1
USE ....................................................................... 2
NET RENT .................................................................. 2
RENT ON NET RETURN BASIS .................................................. 2
PROPORTIONATE EXPENSE RENTAL .............................................. 3
TAXES ..................................................................... 3
CHANGE IN TAXING SYSTEM ................................................... 3
INSURANCE ................................................................. 3
OTHER EXPENSES ............................................................ 4
LESSEE'S CONTRIBUTION ..................................................... 4
TAXES, ASSESSMENTS, ETC ................................................... 4
LESSEE'S INSURANCE ........................................................ 5
UTILITIES & HEATING ....................................................... 5
MAINTENANCE AND REPAIRS ................................................... 6
IMPROVEMENTS AND ALTERATIONS .............................................. 6
INSPECTION AND REPAIR ..................................................... 7
FURNISH STATEMENT ......................................................... 8
FAILURE OF LESSEE TO PERFORM .............................................. 8
DEFAULT ................................................................... 8
LIQUIDATION SALES, ETC .................................................... 9
EXPIRATION OF LEASE ....................................................... 9
SIGNS ..................................................................... 10
SUBLETTING BY LESSEE ...................................................... 10
DESTRUCTION OF PREMISES ................................................... 10
COMPLIANCE WITH LAWS AND REGULATIONS ...................................... 11
LESSOR'S SECURITY ......................................................... 12
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
INDEMNIFICATIONS .......................................................... 12
ASSIGNMENT BY LESSOR ...................................................... 12
FLOOR LOADING ............................................................. 13
CONDITION OF LEASED PREMISES .............................................. 13
OCCUPANCY ................................................................. 13
PERMITS, ETC .............................................................. 13
RULES AND REGULATIONS ..................................................... 13
ACCESS TO LEASED PREMISES ................................................. 14
INCONVENIENCE ............................................................. 14
EXPROPRIATION ............................................................. 14
COSTS & REGISTRATION ...................................................... 15
SECURITY DEPOSIT .......................................................... 15
COLLECTION ................................................................ 15
CONSTITUTE OR TENURE SYSTEM ACT ........................................... 15
WAIVER .................................................................... 15
ENVIRONMENTAL CLAUSE ...................................................... 16
NOTICES ................................................................... 17
DESCRIPTIVE HEADINGS ...................................................... 17
INTERPRETATION ............................................................ 18
LANGUAGE .................................................................. 19
PRIOR AGREEMENTS .......................................................... 19
SPECIAL CONDITIONS ........................................................ 19
RESOLUTION OF THE BOARD OF DIRECTORS ...................................... 21
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
1
DEED OF LEASE ENTERED INTO AT THE CITY AND DISTRICT OF MONTEREAL, PROVINCE OF
QUEBEC, ON THE DAY OF 1995.
BETWEEN: MINOCAN (a division of 2541-4837 Quebec Inc.)
a body politic and corporate duly incorporated,
having its head office and principal place of
business at 5490 Royalmount, Suite 200, Montreal,
Quebec H4P 1H7, hereinacting through and
represented by Brian Cytrynbaum, its officer
hereunto duly authorized as he declares,
(hereinafter referred to as the "Lessor"),
AND: SIDUS SYSTEMS INC.
hereinacting through and represented by Nick
Coppola, its officer hereunto duly authorized as he
declares,
(hereinafter referred to as the "Lessee")
1. DESCRIPTION
-----------
Lessor, in consideration of the rent, convenants and agreements hereinafter
contained on the part of Lessee to be paid, kept and performed, hereby
leases to Lessee and Lessee does hereby hire and take from Lessor that
designated portion containing approximately TWELVE THOUSAND ONE HUNDRED AND
TWENTY SQUARE FEET (12,120ft), subject to adjustments based on actual
measurements by Lessor and representing THIRTY-TWO POINT EIGHTY-FIVE
PERCENT (32.85%) of total rentable area of the building of which the Leased
Premises form part, as shown outlined on sketch annexed hereto as Schedule
"A", bearing civic number 8623-8639 DALTON ROAD, TOWN OF MOUNT-ROYAL,
QUEBEC H4T 1VS (hereinafter referred to as the "Leased Premises").
The area is measured from the exterior face of all exterior walls and from
the centre line of all interior walls separating the Leased Premises from
adjacent premises.
2. TERM
----
The Term of this Lease shall be for SIX (6) YEARS and shall commence on the
1st day of August 1995 and terminate on the 31st day of july 2001 unless
sooner terminated under the provisions hereof (hereinafter referred to as
the "Term").
Should the Lessee continue to occupy the Leased Premises after the expiry
of the Term without a written agreement, there shall be no tack renewal and
the Lessee shall pay the Lessor rent and other charges for the period of
occupancy as set out in this Lease or renewal thereof, plus fifty percent
(50%) therof, provided that this overhold rent shall only apply if the
Lessor has given notice to the Lessee no later than three (3) mnths prior
to the expiry of the lease term of:
(i) the impending expiration of the Term, and
(ii) the increase of basic rent of 50% upon this expiration
without prejudice to such further damange claims as may be available to the
Lessor against the Lessee. However, the Lessee is not to have the right to
such occupancy beyond the expiry of the term.
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
2
3. USE
---
Lessee covenants that the premises shall be used solely for the purpose of:
OFFICE SPACE, WAREHOUSING AND DISTRIBUTION OF COMPUTER EQUIPMENT.
There shall be no outside storage permitted of any kind on any part of the
land.
4. NET RENT
--------
Lessee covenants and agrees to pay the Lessor in lawful money of Canada
without deduction, without necessity of any demand thereof abatement or set
off, a net annual rental payable in equal consecutive monthly instalments
of:
$ 4,545.00 per month, plus GST & QST (representing $4.50 net, per square
foot per annum) for the period commencing August 1, 1995 and terminating
July 31, 1996; and,
$ 4,798.00 per month, plus GST & QST (representing $4.75 net per square
foot per annum) for the period commencing August 1, 1996 and terminating
July 31, 1997; and,
$ 5,050.00 per month, plus GST & QST (representing $5.00 net per square
foot per annum) for the period commencing August 1, 1997 and terminating
July 31, 1998; and,
$ 5,303.00 per month, plus GST & QST (representing $5.25 net per square
foot per annum) for the period commencing August 1, 1998 and terminating
July 31, 1999; and,
$ 5,555.00 per month, plus GST & QST (representing $5.50 net per square
foot per annum) for the period commencing August 1, 1999 and terminating
July 31, 2001;
The rent as herein provided shall be paid to Lessor and/or its nominee,
each month in advance on the first day of each month during the Term
hereof, at the head office of the Lessor, at 5490 Royalmount, Suite 200,
Town of Mount Royal, Quebec H4P lH7 or at such other place in Canada as
shall be designated by Lessor in writing to Lessee.
5. RENT ON NET RETURN BASIS
------------------------
It is intended that the rent provided for in this Lease shall be an
absolute net return to Lessor for the Term of this Lease, free of any and
all costs, expenses of any nature whatsoever, taxes and charges with
respect to the Leased Premises, the contents thereof, or the business
carried on therein, other than any income or profit taxes which may be
levied against Lessor and any costs of Lessor in respect of mortgages or
hypothecs and other than:
- amounts payable by the Lessor under any ground lease, emphyteutic
lease or in respect of any easement;
- costs of complying with any environmental legislation, (except to the
extent such costs are, under this Lease or by law, the responsibility
of the Lessee or those for whom it is responsible at law);
- real estate agent's commissions, tenant inducements, leasehold
improvements and any other costs related to the leasing of other
premises in the Building; and
- any other costs or matters which are allocated to the Lessor
hereunder;
and the Lessee shall pay all such costs, expenses and charges.
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
3
6. PROPORTIONATE EXPENSE RENTAL
----------------------------
Without limiting the obligations of the Lessee, the Lessee shall pay during
the Term of this Lease, as additional rental to the Lessor, in the
proportion that the rentable area of the Leased Pre mises bears to the
total rentable area of the Building of which the Leased Premises form part
(such proportion being hereinafter referred to as Lessee's "proportionate
share") (without duplication) the aggregate of (adjusted in the first and
last year of the Term):
6.1 TAXES
-----
The Lessee shall pay, whether they be special or general, its proportionate
share of all taxes, property taxes, municipal taxes, school taxes, surtax,
service tax, water & business taxes, rates including local improvement
rates, duties and assessments and any tax on capital that may be levied,
rated, charged or assessed against or related to the Building and/or all
equipment and facilities thereon or therein, and/or the land and
appurtenant land on which the Building is situated, and/or any property on
or in the Building owned or brought thereon or therein by Lessor or Lessee,
and any and every of its assignees or sublessees and its and their
respective officers, agents, employees, servants, visitors or licensees
and/or against Lessor or Lessee in respect thereof, whether such taxes,
rates, duties or assessments are charged by a municipal, parliamentary,
school, or any other body of competent jurisdiction as well as all
reasonable expenses related to the contestation of any part of said
charges, all of which may be referred to as Taxes. In no case will the
Lessee's responsibility for tax on capital exceed the Lessee's
proportionate share of the current sum of Twelve Thousand Dollars
($12,000.00) per annum, except to the extent that the increase results from
government action and not from any action of the Lessor.
6.2 CHANGE IN TAXING SYSTEM
-----------------------
If, during the term of the Lease, any fiscal authority makes any change,
either by statute, regulation, or otherwise, in the method of taxation,
such that any of the said Taxes are replaced or changed, or if a new tax or
form of tax or assessment or the like is charged or imposed, and whether
such new tax is imposed on the Lessor or on the rents or revenues of the
Immoveable of which the Leased Premises form part, or the rents or revenues
of leasing the Immoveable, or any part thereof, the word "Taxes" will
include such new tax, assessment or the like. If any fiscal authority
eliminates any tax, assessment or the like, presently forming part of the
Taxes, the Lessor will eliminate such tax, assessment or the like from the
Taxes.
6.3 INSURANCE
---------
The Lessee shall pay its proportionate share of all premiums with respect
to insurance to be placed by Lessor with respect to the Building and
described as follows:
(i) Fire, extended Coverage and Malicious Damage insurance for the
full insurable value procurable at the time, of the Building, its
improvements and equipment and in addition upon the full annual
rental income thereof;
(ii) Broad Boiler and Unfired Pressure Vessels insurance, including
Repair or Replacement and rental income coverages in an amount
reasonably satisfactory to Lessor;
(iii) Such other insurance as institutional lenders may require or as it
may be or may become customary for owners of property to carry as
respects loss of or damage to the Leased Premises or liability
arising therefrom. The aforesaid insurance premiums shall include
an amount reasonably determined as being equivalent to a fair
premium for the deductible portion of the insurance policy in
question, provided that the total sum payable by the Lessee shall
not exceed the amount that would be payable by Lessee if the
insurance policy would not have any deductible portion. Lessee
will pay the amount of any increase in insurance premiums on the
whole of the Building of which the Leased Premises form part if
such increase is caused by Lessee's
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
4
operations in the Leased Premises.
6.4 OTHER EXPENSES
--------------
Without limiting the generality of the foregoing, the Lessee shall pay its
proportionate share of all costs related to the maintenance and repair and
reasonable replacement of the washrooms, corridors, malls, driveways and
parking, heating and air-conditioning equipment and services and all other
equipment, areas, and all facilities and services available at the
commencement of the Term or added or provided at any time thereafter,
(should such services, etc. be and to the extent that they are available),
provided that the Lessee shall not pay any share of expenditures or costs
which are the Lessor's responsibility hereunder.
The Lessee shall furthermore pay its proportionate cost of the expense
incurred to keep the exterior of the Leased Premises in good order and
condition and to provide winter and summer exterior ground maintenance.
The Lessee undertakes to pay to the Lessor an administrative fee of fifteen
percent (15%) of all sums due to the Lessor under this Lease, save for the
monthly net rental.
7. LESSEE'S CONTRIBUTION
-----------------------
Notwithstanding anything to the contrary hereinabove contained, the Lessor
may, instead of billing individually for taxes and other items to be paid
by the Lessee, as hereinabove stipulated, estimate (acting reasonably) the
amounts payable by, the Lessee under the provisions of this Lease for such
periods as the Lessor may determine, (but not exceeding twelve months) the
Lessee hereby agreeing to pay to the Lessor such amounts in monthly
instalments in advance to cover Lessor's estimated disbursements during
said period together with the rental payments as hereinabove provided.
Following the expiration of the period for which such estimated payments
have been made, the Lessor shall deliver to the Lessee a statement of the
actual costs payable pursuant to clause 6. This statement shall be
sufficiently detailed to permit the Lessee to satisfy itself as to the
particulars and the propriety of all costs. If the amounts actually due by
the Lessee for such period exceed the amount so collected by the Lessor,
the Lessee shall pay same forthwith upon receipt of said statement, and if
the amounts due by the Lessee for the said period are less than the amount
actually collected by the Lessor, then the Lessor shall remit same
forthwith or credit same to the next ensuing payments becoming due by the
Lessee to the Lessor.
All sums due by the Lessee to the Lessor in virtue of this Lease, whether
under this clause or otherwise, will be considered as rent for all legal
purposes.
The Lessee hereby agrees, to present to the Lessor, at the beginning of
each calendar year throughout the Term of the Lease, a series of monthly
post-dated cheques for the period of the ensuing calendar year, in amounts
fixed in accordance with Clauses 4 and 7, or the Lessee may pay by way of
preauthorized bank debits from Lessee's bank account to Lessor's bank
account, which alternative method of payment shall be at Lessee's option.
Late Payments: The acceptance by the Lessor of any postdated cheque or
money due for rent after its due date is to be considered as a mode of
collection only, without novation of, nor derogation from, any of the
Lessor's rights, recourses and actions in virtue of this Lease which
demands punctual payment of all obligations.
8. TAXES, ASSESSMENTS, ETC.
------------------------
a) Lessee will in each and every year during the Term of this Lease pay and
discharge or cause to be paid and discharged, all business taxes, licence
fees, public utility charges, water rates, sewer rates and other like fees,
charges, rates and assessments that may be levied, charged, rated or
assessed against the Leased Premises and/or all equipment and facilities
thereon or therein, and/or any property on the Leased Premises owned or
brought thereon by Lessor or Lessee, and any and every of its assignees or
sublessees and its and their respective officers, agents, employees,
servants, visitors or licensees and/or against Lessor or Lessee
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
in respect thereof, and every tax and licence fee in respect of any and
every business carried on therein, or in respect of the occupancy of the
Leased Premises by Lessee (and any and every of its assignees or
sublessees) whether such licence fees, charges, rates, assessments and
taxes are charged by a municipal, parliamentary, school or any other body
of competent jurisdiction, and all charges for public utilities including
electric current, gas, water, steam or hot water used upon or in respect of
the Leased Premises and for fitting, machines, apparatus, meters or other
things leased in respect thereof, and for all work or services performed by
any corporation or commission in connection with such utilities; and will
indemnify, and keep indemnified Lessor from and against payment of all
losses, costs, charges and expenses occasioned by, or arising from any and
every such licence fee, charge, rate, assessment and tax. Lessee will
furnish to Lessor within ten (10) days after request by the Lessor,
receipts or other appropriate evidence as to the payment of each such tax,
rate, charge, assessment duty and licence fee.
b) The Lessee undertakes to pay, or cause to be paid, during the term of this
Lease, all goods and services taxes, value added taxes, surtax and all
similar taxes, assessed presently or in the future on or with respect to
the Rent and/or any other sum payable to the Lessor or for the benefit of
the Lessor in accordance with applicable legislation.
c) If pursuant to any law or regulation or the like, any said taxes or
assessment is or becomes payable by the Lessor or by owners of property, or
if the method of collection of such taxes or assessments is changed such
that the Lessor is subject to them rather than the Lessee, the Lessee
undertakes to reimburse the Lessor, within seven (7) days of a request made
to the Lessee to do so, the Lessee's share of all sums so charged or
assessed against the Lessor, which shall be the proportion that the area of
the Leased Premises bears to the total leased area of the Building, and the
Lessee shall indemnify the Lessor and hold the Lessor harmless from all the
costs and expenses related thereto.
9. LESSEE'S INSURANCE
------------------
Lessee covenants not to do or omit to do anything whereby any policy shall
be cancelled or the premises rendered uninsurable.
The Lessee shall, at its expense, procure and maintain at all times during
the continuance of this Lease, such insurance as will protect the Lessee
and the Lessor from any claim for personal injury including death, and for
property damage in any way arising out of or attributable to the exercise
by the Lessee, or others, of any of the privileges or rights herein
granted. This insurance shall provide a combined minimum limit of $
2,000,000 or such higher amount as Lessor may reasonably require for
personal injury and property damage and shall extend to cover any liability
assumed by the Lessee under this Lease.
The Lessee shall forward to the Lessor the original of the insurance policy
and evidence of renewals thereof during the continuance of this Lease upon
request by the Lessor. The Lessee hereby agrees and understands that the
placing of such insurance shall in no way relieve the Lessee from any
obligation assumed under this Lease, and that failure by the Lessee to
obtain the above mentioned coverage will entitle the Lessor to obtain said
insurance and to charge Lessee for same.
10. UTTLITIES & HEATING
-------------------
The Lessee shall pay for its electricity, water, heat, gas, telephone, pest
control, garbage removal and all public utilities with respect to the
Leased Premises, and shall keep the premises suitably heated.
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
6
11. MAINTENANCE AND REPAIRS
-----------------------
Notwithstanding the provisions of the Civil Code of the Province of Queb
ec, and in particular Articles 1854 and 1864, the Lessee, at its own
expense, shall operate, maintain and keep the Leased Premises including all
facilities, equipment and services, both inside and outside, available to
the Lessee exclusively, in such good order and condition, both inside and
outside, as they would be kept by a careful owner, and shall promptly make
all needed repairs and replacements to the Leased Premises (save and except
for structural defects or repairs which shall be defined as being repairs
or replacements to the foundations, bearing walls and roof steel deck, all
of which will be the Lessor's responsibility), which a careful owner would
make, including, without limitations, the water, gas, drain and sewer
connections, pipes and mains, electrical wiring, water closets, sinks and
accessories thereof, and all equipment belonging to or connected with the
Leased Premises or used in its operation.
The Lessee shall have no obligation for repairs and replacements not caused
by the negligent or wrongful act of the Lessee or those for whom the Lessee
is responsible at law, which is covered by insurance maintained or required
to be maintained by the Lessor.
The Lessee undertakes to obtain and pay for full maintenance, repair and
replacement services and/or insurance contracts as may be available from
firms approved by the Lessor (such approval not to be unreasonably
withheld), with respect to the maintenance, repair and replacement of the
heating, ventilating and air conditioning equipment, if provided in the
Leased Premises, the whole without prejudice to the other obligations of
the Lessee with respect to such equipment. The Lessee shall forward,
without any further demand, to the Lessor copies of such contracts and
evidence of renewals thereof during the continuance of this Lease.
With respect to any repairs or replacements that are considered capital
expenses according to generally accepted accounting principles ("GAAP"),
the Lessee's responsibility shall be limited to an amount equivalent to the
amortization of the capital expense in question, calculated by Lessor's
accountant according to GAAP, over the service life of the repairs or
replacements (to be determined in accordance with GAAP), to the extent that
such amortization period falls within the Term, or any extension or renewal
thereof. Should such capital expense relate to a repair or replacement
which is common to more than one lessee, then the Lessee will pay only its
proportionate share of the amounts calculated as set out above.
Notwithstanding anything else contained in this Lease, the Lessee shall not
be responsible for any capital expenditure which, as of the date of
execution of this Lease, has been approved or proposed, or which is being
evaluated for implementation within the six (6) months following the
commencement date.
12. IMPROVEMENTS AND ALTERATIONS
----------------------------
Lessee shall have the right to make at its own expense, subject to the
prior written consent of the Lessor, whose consent may not be unreasonably
withheld, additions, alterations and changes in and to the Leased Premises
provided however, that no such work (except work which is minor or cosmetic
in nature) shall be commenced except with the prior written consent of
Lessor and except on compliance with the following conditions:
a) Lessee shall furnish to Lessor plans and specifications showing in
reasonably complete detail the work proposed to be carried out and the
estimated cost thereof and Lessor shall approve or reject such plans and
specifications within thirty (30) days after receipt of the same. If
such plans and specifications are approved, all work shall be carried
out in compliance with the same;
b) The value of the Leased Premises shall not, as a result of any work
proposed to be carried out by Lessee, be less than the value of the
Leased Premises before the commencement of such work and Lessor shall be
the sole judge of such value;
INITIALS
Lessor Losses
[ ] [ ]
<PAGE>
7
c) All work shall be carried out with reasonable dispatch and in a good
workmanlike manner and in compliance with all applicable permits,
authorizations and building and zoning by-laws and with all regulations
and requirements of all competent authorities having jurisdiction over
the Leased Premises;
d) In all events, Lessee shall be required to use Lessor's mechanical,
electrical and plumbing trades for Lessee's mechanical, electrical and
plumbing requirements, which shall be coordinated by Lessor at Lessee's
expense, provided that Lessor's trades shall at all times provide their
services at prices competitive with independent quotes obtained by the
Lessee, failing which, the Lessee shall be entitled to use the trades
which it chooses, acting reasonably.
e) The Leased Premises shall at all times be free of all conditional bills
of sale, pledges, registered privileges, workmen's and suppliers' liens
and other similar liens and charges. Lessor may require Lessee to
furnish security satisfactory to Lessor guaranteeing the completion of
the work and the payment of the cost thereof free and clear of all
conditional bills of sale, pledges, privileges, workmen's and suppliers'
liens and other similar liens and charges, as well as for the
replacement of the Leased Premises to their former state, as specified
in clause 19 below;
f) Lessee shall maintain Worker's Compensation insurance covering all
persons employed in connection with the work and shall produce evidence
of such insurance to Lessor and shall also maintain such general
liability insurance for the protection of Lessor and Lessee as Lessor
may require acting reasonably;
g) All work, when completed, shall be comprised in, and form part of the
Leased Premises and shall be subject to all the provisions of this Lease
and Lessee shall not have any right to claim compensation therefor and
the same shall not be removed by Lessee on termination of this Lease,
unless the Lessor requests that part or all of it be removed, in which
case the Lessee shall comply and shall repair any damage related thereto
or caused thereby. The foregoing obligation of the Lessee is limited to
items which have been installed by the Lessee.
h) Should the Lessee, after having obtained written consent from the
Lessor, effect changes in the partitions or otherwise modify the Leased
Premises, and accordingly had to relocate or modify the heating and, if
applicable, the air conditioning equipment, such changes and/or
modifications would have to be effected at the sole cost and risk of the
Lessee.
13. INSPECTION AND REPAIR
---------------------
Lessor and its agents shall have the right, at all reasonable times during
the Term of this Lease to enter the Leased Premises to examine the
condition thereof and to ascertain whether Lessee is performing its
obligations hereunder, and Lessee shall make any repairs and/or sign the
necessary service contract in order to comply with such obligations. If
Lessee fails to make any such repairs and/or sign the necessary service
contract within thirty (30) days after notice from Lessor requesting Lessee
so to do, provided that such repairs may reasonably be made within the said
period, Lessor may, without prejudice to any other rights or remedies it
may have, make such repairs and charge the cost thereof to Lessee to the
extent that such repairs are otherwise the responsibility of the Lessee
hereunder. Nothing in this Clause shall be construed to obligate or require
Lessor to make any repairs but Lessor shall have the right at any time to
make any emergency repairs without notice to Lessee and charge the cost
thereof to Lessee to the extent that such repairs are otherwise the
responsibility of the Lessee hereunder. Any costs chargeable to Lessee
hereunder shall be payable forthwith on demand as additional rent.
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Lessor Lessee
[ ] [ ]
<PAGE>
8
14. IMPROVEMENTS, ALTERATIONS, RENOVATIONS AND REPAIRS
--------------------------------------------------
DELETED.
15. FURNISH STATEMENT
-----------------
Lessee shall from time to time at the request of Lessor produce to Lessor
satisfactory evidence of the due payment by Lessee of all payments required
to be made by Lessee under this Lease.
16. FAILURE OF LESSEE TO PERFORM
If Lessee fails to pay any taxes, rates, insurance premium, charges or
debts which it owes or has herein covenanted to pay or has undertaken to
contract, Lessor may pay or contract the same and shall be entitled to
charge the sums so paid or contracted to Lessee who shall pay them
forthwith on demand as additional rent and Lessor, in addition to any other
rights, shall have the same remedies and may take the same steps for the
recovery of rent in arrears under the Terms of this Lease; all arrears of
rent and any monies paid by Lessor or due by Lessee to Lessor u nder this
Lease shall bear interest at the rate of fifteen percent (15%) per annum or
one point two five (1.25%) percent per month from the time such arrears
become due until paid to Lessor.
17. DEFAULT
-------
Without prejudice to all of the rights and recourses available to the
Lessor, the following shall be considered special defaults under the Terms
of this Lease;
a) in the event that Lessee shall be in default under any provision of this
Lease providing for the payment of rent or additional rent and such
default shall continue for ten (10) days after notice of same;
b) in the event that Lessee shall be adjudicated a bankrupt or make any
general assignment for the benefit of creditors, or take, or attempt to
take, the benefit of any insolvency or bankruptcy Act, or if a petition
in bankruptcy shall be granted against Lessee, or if a receiver or
trustee be appointed for the property of Lessee, or any part thereof, or
any execution be issued pursuant to a judgment, rendered against Lessee
or pursuant to this Lease, or if the estate of Lessee hereunder be
transferred or pass to or devolve upon any other person or corporation
by operation of law; or if the Lessee abandons the Leased Premises or if
they are vacant or unattended for more than thirty (30) days, or
occupied by persons other than the Lessee without Lessor's written
consent; or
c) in the event that Lessee shall be in default in observing any covenant
herein contained and/or performing any of its obligations contained in
the Lease (other than a default in the payment of rent or additional
rent) and such default shall continue for thirty (30) days after written
notice specifying such default shall have been given to Lessee by
Lessor.
In the event of any special default under the Terms of this Lease, the
Lessor without prejudice to any rights or remedies it may have hereunder or
by law shall have the right to terminate this Lease forthwith upon written
notice given to Lessee by Lessor. Lessee upon such a termination of this
Lease shall thereupon quit and surrender the Leased Premises to Lessor and
Lessor, its agents and servants, may immediately or at any time thereafter,
re enter the Leased Premises and dispossess Lessee, and remove any and all
persons and any or all property therefrom whether by summary dispossession
proceedings or by any suitable action or proceeding at law, or otherwise
without being liable to prosecution or damages therefore.
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[ ] [ ]
<PAGE>
9
In case of any termination, or in case Lessee, in the absence of such
termination, shall be dispossessed by or at the instance of Lessor in any
lawful manner, whether by force or otherwise, rent for the following twelve
(12) months shall immediately become due and payable and this Lease shall
immediately, at the option of the Lessor, become forfeited and terminated
and the Lessor may, without notice or any form of legal process, forthwith
re enter upon and take possession of the Leased Premises and remove the
Lessee's effects therefrom, the whole without prejudice to and under
reserve of all of the rights and recourse of the Lessor to claim any and
all losses and damages sustained by the Lessor by reason of and arising
from any default of the Lessee.
In the event of the bankruptcy of the Lessee, the Lessor shall be entitled
to rent for the following three (3) months, as accelerated rent, without
prejudice to all of the other rights of the Lessor under the circumstances.
In all circumstances the Lessee waives its right under Article 1883 of the
Civil Code of Quebec.
17A. DELETED.
18. LIQUIDATION SALES, ETC.
-----------------------
The Lessee undertakes not to carry out or permit a bankruptcy or
liquidation sale or sale of second hand goods, war surplus goods, insurance
salvage stock or auction in or from the Leased Premises. The Lessee
acknowledges that a violation of the present clause will cause irreparable
injury to the Lessor and consents to the Lessor enforcing the present
clause by way of interim and interlocutory injunction, without prejudice to
such other rights as the Lessor may have under the circumstances.
19. EXPIRATION OF LEASE
-------------------
The Lessee shall at the expiration or sooner termination of the Term of
this Lease peaceably surrender and yield up unto Lessor the Leased Premises
together with all buildings, alterations, replacements, additions,
erections, and improvements (leasehold or otherwise), including, but not
limited to electrical installations, electric or other fixtures, offices,
partitions, divisions, showrooms, air-conditioning and heating equipment,
panelling, built-in furniture, wall-to-wall carpets, attached carpets or
other floor coverings, attached cabinets, attached conveyor systems,
attached racks, or other attached equipment, wiring, switches, meters,
meter boxes and transformers, which at any time during the Term hereof
shall be placed, made, installed, fixed or attached therein or thereon by
the Lessee, in good repair and condition, subject to reasonable wear and
tear only, and without any compensation whatsoever being allowed to the
Lessee for same. Lessee shall not remove or alter any of the foregoing
during the Term of the Lease or Renewal or Extension thereof, without the
written consent of the Lessor. However, the Lessor shall have the right to
require the Lessee, by written notice given to the Lessee no later than the
expiration of the Term of the Lease or any renewal or extension thereof, to
remove -any or all of the foregoing items, in which case the Lessee shall
remove the items requested to be removed, repairing any damage related
thereto or caused thereby, and to the extent required by the Lessor, the
Lessee shall leave the Leased Premises in their original good and clean
state and condition, subject to reasonable wear and tear.
The foregoing obligation of the Lessee to remove items is limited to items
which have been installed by the Lessee.
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Lessor Lessee
[ ] [ ]
<PAGE>
10
20. SIGNS
-----
Lessor shall have the right at all times during the Term of this Lease to
place upon the Leased Premises a notice of reasonable dimensions and
reasonably placed, so as not to interfere with the business of the Lessee,
stating that the Leased Premises are for sale and for nine (9) months prior
to the termination of this Lease, Lessor shall have the right to place upon
the Leased Premises a similar notice that the Leased Premises are for rent
and Lessee will not remove such notice or knowingly permit same to be
removed.
Lessor shall have the right to exhibit the Leased Premises from time to
time to any insurer, prospective mortgagee, purchaser or Lessee at all
reasonable hours.
Any exterior signs or any signs visible from the exterior will be subject
to the Lessor's prior approval in writing and installation by the Lessee if
approved will be at the sole expense of the Lessee. All such signs shall
comply with the lawful requirements of municipal and governmental
authorities.
21. SUBLETTING BY LESSEE
--------------------
Subject to the provisions hereinafter detailed, the Lessee shall have the
right to sublet the Leased Premises or any portion thereof or assign its
rights in the present Lease with the consent of the Lessor which consent
shall not be unreasonably withheld and providing that the Leased Premises
are utilized only for the purposes permitted by zoning and which do not
conflict with the Lessor's obligations to other tenants of the Building and
which are no more onerous than the occupancy by the Lessee.
Notwithstanding such subletting and assignment, the Lessee shall remain
jointly and severally liable with such sublessee or assignee for the
performance of all the terms and conditions of the present Lease.
The Lessee undertakes to provide to the Lessor a signed copy of the
agreement by and between the sublessee and themselves indicating the terms
and conditions of the sublease or assignment. No consent of the Lessor
shall be required in respect of an assignment of this Lease, or a sublease
of all or part of the Leased Premises, to an affiliate (within the meaning
of the Business Corporations Act (Ontario) of the Lessee.
22. DESTRUCTION OF PREMISES
-----------------------
Provided, and it is hereby expressly agreed that if and whenever during the
Term hereby ]eased, the Building or the portion of the Building hereby
leased shall be destroyed or damaged by fire, lightning or tempest, or any
of the other perils insured against under the provisions of Clause 6.2,
then and in every such event;
a) if the damage or destruction is such that the portion of the Building
hereby leased, or the Building is rendered wholly or partially unfit for
occupancy or it is impossible or unsafe to use and occupy it and if in
either event the damage, in the reasonable opinion of Lessor's architect to
be given to Lessee within thirty (30) business days of the happening of
such damage or destruction, cannot be repaired with reasonable diligence
within one hundred and eighty (180) days from the happening of such damage
or destruction, then either Lessor or Lessee may within five (5) days next
succeeding the giving of the Lessor's opinion as aforesaid, terminate this
Lease by giving to the other notice in writing of such termination, in
which event this Lease and the term hereby leased shall cease and be at an
end as of the date of such destruction or damage and the rent and all other
payments for which Lessee is liable under the terms of this Lease shall be
apportioned and paid in full to the date of such destruction or damage; in
the event that neither Lessor or Lessee so terminate this Lease,
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Lessor Lessee
[ ] [ ]
<PAGE>
11
the Lessor shall repair the said Building (excluding the Lessee's Leasehold
Improvements) with all reasonable speed and the rent (including all
additional rent) hereby reserved shall abate from the date of the happening
of the damage until the damage shall be made good to the extent of enabling
Lessee to use and occupy the Leased Premises;
b) if the damage be such that the portion of the Building hereby leased is
wholly unfit for occupancy, or if it is impossible or unsafe to use or
occupy it but if in either event the damage, in the reasonable opinion of
Lessor's architect, to be given to Lessee within thirty (30) business days
from the happening of such damage, can be repaired with reasonable
diligence within one hundred and eighty (180) days of the happening of such
damage, then the rent (including all additional rental) hereby reserved
shall abate from the date of the happening of such damage until the damage
shall be made good to the extent of enabling Lessee to use and occupy the
Leased Premises and Lessor shall repair the damage (excluding the Lessee's
Leasehold Improvements) with all reasonable speed;
c) if, in the reasonable opinion of the Lessor's architect, the damage can be
made good, as aforesaid, within one hundred and eighty (180) days of the
happening of such destruction or damage and the damage is such that the
portion of the Building leased is capable of being partially used for the
purposes for which it is hereby leased, then until such damage has been
repaired the rent (including all additional rental) shall abate in the
proportion that the part of the portion of the Building leased is rendered
unfit for occupancy bears to the whole of the said portion of the Building
leased and Lessor shall repair the damage (excluding the Lessee's Leasehold
Improvements) with all reasonable speed.
Should any mortgage creditor who may have an interest in any insurance
proceeds refuse to permit the use of such proceeds for the repair,
replacement, rebuilding and/or restoration as hereinabove provided and for
the payment of amounts expended for such purposes, then the Lessor's
obligation to repair or rebuild as provided for hereinabove shall cease and
shall be null and void and the Lease shall be cancelled effective as of the
date of the damage, unless, the Lessor, at the Lessor's sole option,
chooses to repair or rebuild and provides the Lessee with notice thereof
within thirty (30) days after such damage.
23. COMPLIANCE WITH LAWS AND REGULATIONS
------------------------------------
The Lessee shall, at its own expense, promptly comply with the requirements
of every applicable statute, law and ordinance and with every applicable
lawful regulation or order with respect to the removal of any encroachment
placed by the Lessee, or to the condition, equipment, maintenance, or use
or occupation of the Leased Premises, (except to the extent that the work
necessary to so comply:
(a) is otherwise the Lessor's responsibility hereunder, or
(b) involves the retrofitting or remediation of any part of the Building to
comply with environmental or safety legislation generally. However,
should it relate to the nature of the Lessee's occupancy in particular
and not to office and warehouse space generally, then it shall be the
Lessee's responsibility)
whether or not such requirement, regulation or order be of a kind now
existing or within the contemplation of the parties hereto; and shall
comply with any applicable regulation, recommendation or order of the
Insurer's Advisory Organization, or any body having similar functions or of
any liability or fire insurance company by which the Lessor and/or the
Lessee may be insured.
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Lessor Lessee
[ ] [ ]
<PAGE>
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24. LESSOR'S SECURITY
-----------------
The Lessee undertakes to and does hereby grant a first ranking conventional
moveable hypothec to Lessor without delivery on the universality of
moveables which comprise the inventory and stock in trade of Lessee and a
moveable hypothec without delivery on the specific equipment used by the
Lessee in its business, and a floating charge on all of the assets of the
business of the Lessee, the whole in the amount of NINETY-THOUSAND DOLLARS
($90,000.00), plus interest at the rate of 15% per annum from this date, as
security for the obligations of the Lessee under this Lease. The Lessee
shall sign any further documents necessary or useful to give full effect to
this clause, and hereby authorizes a representative of the Lessor to sign
any such documents on Lessee's behalf.
As an alternative to the foregoing security, the Lessee may provide a
commercial bank guarantee reasonably satisfactory to the Lessor, or a cash
deposit in the same amount.
Should the Lessor not obtain the security to be furnished under the, first
paragraph of the present clause, then the Lessor shall be entitled to
demand a cash deposit from the Lessee in the same amount.
25. INDEMNIFICATIONS
----------------
Except if caused directly by the gross negligence or wrongful act of the
Lessor or for those for whom it may be responsible at law, the Lessor shall
not be liable nor responsible in any way for any injury of any nature
whatsoever that may be suffered or sustained by the Lessee or any employee,
agent or customer of the Lessee or any other person who may be upon the
Leased Premises or for any loss of or damages to any property belonging to
the Lessee or to its employees or to any other person while such property
is on the Leased Premises and in particular (but without limiting the
generality of the foregoing) the Lessor shall not be liable for any damage
or damages of any nature whatsoever to any such property caused by the
failure by reason of a breakdown or other cause, to supply adequate
drainage, snow or ice removal, or by reason of the interruption of any
public utility or service or in the event of steam, water, rain or snow
which may leak into, issue, or flow from any part of the Building or from
the water, steam, sprinkler, or drainage pipes or plumbing works of the
same, or from any other place or quarter or for any damage caused by
anything done or omitted by any lessee, but the Lessor shall use all
reasonable diligence to remedy such condition, failure or interruption of
service when not directly or indirectly attributable to the Lessee, after
notice of same, when it is within its power and obligation so to do. Nor
shall the Lessee be entitled to any abatement of rental in respect of any
such condition, failure or interruption of service.
The Lessee will indemnify and save harmless the Lessor from and against all
fines, liability, damages, suits, claims, demands and actions of any kind
or nature which the Lessor shall or may become liable for or suffer by
reason of any breach, violation or non-performance by the Lessee of any
covenant, term or provision hereof or by reason of any injury (including
death resulting at any time therefrom) or damage to property occasioned to
or suffered by any person or persons including the Lessor by reason of any
such breach, violation or non performance or of any wrongful act, neglect
or default on the part of the Lessee or any of its employees, officers,
agents, suppliers, or invitees.
Both Lessor and Lessee undertake to use their best efforts to the effect
that all insurance policies obtained by them hereunder shall, where
applicable, contain a waiver of any rights of subrogation which the insurer
might otherwise have against the other party.
26. ASSIGNMENT BY LESSOR
--------------------
Lessee hereby covenants and agrees that it will, if and whenever reasonably
required by Lessor at Lessor's expense, consent to and become a party to
any instrument or instruments permitting a mortgage, trust deed or hypothec
to be placed on the Leased Premises hereinabove described or any part
thereof of which the Leased Premises are a pad as security
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Lessor Lessee
[ ] [ ]
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13
for any indebtedness covered by the said trust deed, mortgage o r hypothec
and subordinating this Lease to the said trust deed, mortgage or hypothec.
Such consent by Lessee will not diminish the rights of Lessee under this
Lease provided the Lessee is not in default under the terms and conditions
of this Lease.
The Lessor covenants that it will, immediately upon request by the Lessee,
obtain from any holder of a mortgage, trust deed or hypothec which has
priority over this Lease, the covenant of such holder, not to disturb the
Lessee's rights under this Lease so long as the Lessee is not in default.
27. FLOOR LOADING
--------------
Lessee, shall not bring upon the Leased Premises or any part thereof any
machinery, equipment, article or thing that by reason of its weight or size
might damage the Leased Premises and will not at any time overload the
floors of the Leased Premises and if any damage is caused to the Leased
Premises by any machinery, equipment, article or thing or by overloading or
by, any act, neglect or misuse on the part of Lessee or any of its
invitees, agents or employees or any person having business with Lessee,
Lessee will forthwith pay to Lessor the cost of making good the same.
28. CONDITION OF LEASED PREMISES
----------------------------
The Lessee acknowledges having examined the Leased Premises and accepts
same in their present state, without any expressed or implied
representation or warranties from the Lessor and without any warranties
against apparent defects.
29. OCCUPANCY
---------
The Lessor covenants to complete the work set out in Section 51 hereof (the
"Lessor's Work") no later than August 1, 1995 (the "Commencement Date") in
order that the Lessee may take occupancy of the Leased Premises no later
than that date. If the Lessor's Work is not completed by August 1, 1995,
all rent and additional rent payable hereunder shall abate until it is
substantially completed such that the Leased Premises are fit for occupancy
by the Lessee.
Should the Lessee take occupancy of the Leased Premises prior to the
Commencement Date, the Lessee shall from the date of such possession be
bound by all the provisions of this Lease (save for the payment of the net
annual Rent), and without limiting the generality of the foregoing the
Lessee shall be liable for all damages caused by its actions or omissions
or those of its contractors, sub-contractors, agents, servants and
employees. The Lessee acknowledges that should there be work to be effected
by the Lessor prior to the Commencement Date, it shall be carried on during
the Lessee's occupancy and therefore, the Lessee will not hold the Lessor
responsible for any delays, damage, theft, fire or any other unforseen
event that may occur (except to the extent caused by the negligence or
those for whom it is responsible at law).
30. PERMITS, ETC
-------------
The Lessee shall obtain all necessary permits and licences required for the
occupancy and carrying on of its business. Should the Lessee fail to obtain
any required permit and/or licence, it shall remain bound to perform its
obligations under the present Lease. The Lessor represents and warrants
that the use as office, warehouse and distribution is permitted by zoning
currently applicable to the Leased Premises.
31. RULES AND REGULATIONS
---------------------
The Lessor shall have the right to make reasonable rules and regulations as
in its discretion may from time to time be needful for the safety, care,
cleanliness and proper administration of the Building including the Leased
Premises, and for the preservation of good order therein, and the same
shall be observed and performed by the Lessee and by the clerks,
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Lessor Lessee
[ ] [ ]
<PAGE>
14
servants, employees, agents, invitees and customers, of the Lessee, and all
such rules and regulations now or hereafter to be established by the Lessor
as herein provided shall form part of this Lease as if now set forth at
length herein. All Rules and regulations shall be subject to approval of
Lessor and Lessee, both acting reasonably.
32. ACCESS TO LEASED PREMISES
-------------------------
The Lessor shall have the right of access to the Leased Premises to perform
the work which it is responsible for hereunder, the Lessee renouncing any
claim to any indemnity or diminution of rent, provided the same be carried
out with reasonable diligence and provided the Lessor uses its best efforts
to minimize any interference with the Lessee's activities.
a) The Lessee, its employees, agents and customers will have access to the
Leased Premises at all times;
b) The Lessee, its employees, agents and customers to enter or leave the
Leased Premises, shall use the entrances and exits designated by the
Lessor, acting reasonably, and may also use in common with others, the
parking and shipping areas designated by the Lessor;
c) The Lessor, acting reasonably, reserves the right to change or relocate
the said roadways, parking or shipping areas, at its convenience and in
its sole discretion;
d) The Lessee will not use the said roadways, parking or shipping areas for
any other purpose except for parking in the spaces designated or as
access to the Leased Premises or shipping areas as designated by the
Lessor;
e) The Lessee, its employees, agents and customers may use, in common with
others who will have obtained the permission of the Lessor, all common
corridors, stairways, or vestibules of the Building providing access to
the Leased Premises, as well as common parking and access roads to the
Building;
f) The Lessor will, with reasonable diligence, maintain all such common
access roads, parking areas, shipping areas, corridors, stairways,
vestibules, or other common areas giving access to the Leased Premises
and the Lessee will pay to the Lessor its proportionate share of all
such maintenance costs a s provided for in Article 6 (4) hereof.
33. INCONVENIENCE
-------------
The Lessee will not hold the Lessor in any way responsible for any damages
or annoyance which the Lessee may sustain through the fault of any lessee
or lessees who occupy any leased premises adjacent to, near or above the
Leased Premises, provided that the Lessaor, at all times, enforces against
such lessees all remedies which it may have against them to minimizeany
interference with the Lessee's use of the Leased Premises, and the Lessee
shall not use the Leased Premises for any purpose, notwithstanding anything
stated herein, which may cause noise, disturbance or noxious odour, to the
discomfort of the other Lessees and neighbours, and renounces to any claims
it may have or acquire against the Lessor under Article 1861 of the Civil
Code of the Province of Quebec.
34. EXPROPRIATION
-------------
In the event that all or part of the Leased Premises are expropriated,
which would prevent the use or occupation of the inside floor space of the
building (which forms the major part
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[ ] [ ]
<PAGE>
15
of the Leased Premises), in whole or in part, then either party shall be
entitled to terminate this Lease by written notice to the other, effective
upon the date such expropriation is effective, provided that this right of
termination shall be without prejudice to any rights of the parties
against, or to be compensated by, the expropriating authority.
35. DELETED.
36. COSTS & REGISTRATION
--------------------
The Lessee shall not register this Lease othe rwise than by memorial and
then only after receiving the prior written consent of the Lessor to such
memorial (which consent shall not be unreasonably withheld or delayed).
Such memorial may only mention the land description, area of the Leased
Premises and the Term of the Lease (plus renewal rights) but there shall be
no reference to Rent or other financial matters. Upon the termination of
this Lease, the Lessee shall radiate, at its expense, the registration of
such memorial, the Lessee hereby expressly and irrevocably appointing the
Lessor as attorney for the Lessee with full power and authority to radiate
such memorial and to execute and deliver in the name of the Lessee any
instruments or certificates required for such purpose. The Lessee hereby
undertakes to forthwith sign and deliver to the Lessor any further power of
attorney or document which the Lessor may request to confirm the foregoing.
37. SECURITY DEPOSIT
----------------
Any prepaid rent or security deposit or other security given to the Lessor
shall be security for the performance of all of the obligations of the
Lessee under this Lease or any renewal or extension thereof.
In the event of the termination or cancellation of this Lease or of any
extension or renewal thereof prior to the contractual termination date by
the fault of the Lessee, then any prepaid rent or sums remitted to the
Lessor as security shall vest with the Lessor without prejudice to the
Lessor's claim for accelerated rent or damages or other sums due.
The Lessee shall remit to the Lessor the sum of Six Thousand Five Hundred
Dollars ($6,500.00), plus GST & QST, which shall be applied on account of
the first rental following the free rental period and the amount of Seven
Thousand Five Hundred Dollars, plus GST & QST, which shall be applied on
account of the last month's rental of the term.
38. COLLECTION
----------
DELETED.
39. CONSTITUTE OR TENURE SYSTEM ACT
-------------------------------
The Lessee hereby renounces any rights which it may have or acquire under
the Constitute or Tenure System Act 1964 R.S.Q., Chapter 322, to purchase
or acquire the land hereby leased or the land on which the Premises hereby
leased are situated.
40. WAIVER
------
The failure of Lessor to insist upon a strict performance of any of the
agreements, terms, covenants and conditions hereof shall not be deemed a
waiver of any rights or remedies that Lessor may have and shall not be
deemed a waiver of any subsequent breach or default in any such agreements,
terms, covenants and conditions.
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[ ] [ ]
<PAGE>
16
41. COMPLETE AGREEMENT
------------------
The Lessee declares that the Lessor has made no undertakings which are not
included in this lease, and the Lessee acknowledges that this lease
constitutes the entire agreement between the Lessee and Lessor, and that
this lease cannot be amended save by the subsequent written agreement duly
signed by the Lessor, the Lessee, and the Guarantor, if any, and no
representations, save for any stipulated in this lease, will be considered
binding upon the Lessor or any of its employees or agents, save for such
representations as may be stipulated in this lease.
42. RENUNCIATION OF RIGHTS TO COMPENSATION
--------------------------------------
The Lessee renounces to any right it may have to impute any claim and
compensation, present or future, against any rent or other sums due or to
become due to the Lessor under this Lease. The Lessee undertakes to pay the
rent and other sums due without taking into account any claims or
compensation rights which it may have or which any third party may wish to
exercise in its name or on its behalf.
43. ENVIRONMENTAL CLAUSE
--------------------
The Lessee undertakes and agrees that during the Term of this Lease or any
extension or renewal thereof, or during its occupancy of the Leased
Premises, no Pollutants shall be permitted on the Leased Premises or on or
in its appurtenant land, or released into the environment, either emanating
from the Leased Premises or in any way directly or indirectly resulting
from the use of the Leased Premises, or by the fault of the Lessee, its
subtenants, assignees, or any of their employees, agents, contractors,
suppliers, or others for whom they may in law be responsible. Without
limiting the generality thereof, the term "Pollutants" shall include:
1. Any substance that is hazardous to any person or property, including but
not limited to radioactive materials, explosives, any solid, liquid, gas or
odour or combination of any of them that, if released or emitted into the
environment would create or contribute to the creation of a condition that:
a) endangers or is detrimental to the health, safety or welfare of any
person, or to the health of animal life or plant life;
b) interferes with normal enjoyment of life or property
c) causes damage to property;
2. Substances that are, or from time to time declared to be hazardous or toxic
under any law or regulation;
3. Any substance, the use or transportation of which or the. release of which
into the environment is prohibited, regulated, controlled or licensed under
environmental legislation;
4. Anything contaminated by any other Pollutant.
The Lessee shall not bring into or near the Leased Premises nor use any
underground storage tanks; nor any transformers, capacitators, switches, or
other equipment, that contain PCBs.
The Lessee shall comply with all Federal, Provincial, or Municipal
statutes, laws, rules, regulations, or, judicial or administrative orders,
rulings, or decisions relating to the environment applicable to the Leased
Premises or its appurtenant land or any part thereof or to any activity
which shall take place thereon, provided that the Lessee shall have no
responsibility for any instance of non-compliance or contamination or for
any other mtter which:
(a) predates or results from events which predate its occupancy of the
Leased Premises or
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
17
(b) does not result from an act or omission of the Lessee or those for whom
it is responsible at law.
The Lessee agrees to indemnify and hold Lessor harmless from and against
any and all claims, losses, costs, damages, liabilities, civil fines and
penalties, criminal fines and penalties, expenses (including attorney
fees), cleanup costs or other injury resulting from or arising out of the
Lessee's (including employees, contractors and agents) failure to comply
with the foregoing. The foregoing indemnity shall survive the termination
of the Lease and any subsequent renewals and shall continue until the
applicable statute of limitation runs out.
The Lessor may at any time and from time to time (during business hours and
upon reasonable prior notice to the Lessee) inspect the Leased. Premises
for the purpose of identifying the existence, nature and extent of any
Pollutant on the Leased Premises and the Lessee's use, storage and disposal
of any Pollutant and the Lessee agrees to cooperate with the Lessor in its
performance of such inspection.
If any authority pursuant to any Environmental Laws or any other provisions
shall require the cleanup of any Pollutant held, released, spilled,
abandoned or placed upon the Leased Premises or released into the
environment by the Lessee in the course of the Lessee's business or as a
result of the Lessee's use or occupancy of the Leased Premises, then the
Lessee shall at its own expense, prepare all necessary studies, plans, and
proposals and submit the same for approval, provide all bonds and other
security required by the authority and carry out and complete the work
required, provide to the Lessor full information with respect to proposed
plans and the status from time to time of its cleanup work and comply with
the Lessor's reasonable requirements with respect to such plans:
If the Lessee creates or brings to the Leased Premises any Pollutant or if
the conduct of the Lessee's business shall cause there to be any Pollutant
at the Leased Premises, then notwithstanding any provision in this Lease or
rule of law to the contrary, such Pollutant shall be and remain the sole
and exclusive property of the Lessee and shall not become the property of
the Lessor notwithstanding the degree or affixation to the Leased Premises
of the Pollutant of the goods containing the Pollutant, and notwithstanding
the expiry or early termination of the Lease;
Upon the expiration or early termination of the Term, the Lessee at its
sole expense shall remove and dispose of all Pollutant and all storage
tanks and other containers therefor in accordance with all Environmental
Laws to the extent that such removal and disposal involves any excavation
work at the Leased Premises, the lessee shall restore the Leased Premises
to the same grade level as immediately prior to excavation, using only
clean uncontaminated soil or other material satisfactory to the Lessor.
44. NOTICES
-------
Any notice or demand given by Lessor to Lessee shall be deemed to be duly
given when served upon Lessee personally, or when left upon the Leased
Premises, or when sent by telecopier, or when mailed to Lessee at the
address of the Leased Premises.
Lessee elects domicile at the Leased Premises for the purpose of service of
all notices, writ of summons or other legal documents in any suit of law,
action or proceeding which Lessor may take under this Lease.
Any notice or demand given by Lessee to Lessor shall be deemed to be duly
given when served upon Lessor personally or when mailed to Lessor at the
address designated by Lessor for purposes of payment of the rent hereunder.
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
18
Either party may change its address of service by written notice to the
other party in accordance with the requirements of this section.
45. DESCRIPTIVE HEADINGS
--------------------
The descriptive headings of this Lease are inserted for convenience in
reference only and do not constitute a part of this Lease.
46. INTERPRETATION
--------------
This Lease shall be construed and governed by the laws of the Province of
Quebec. Should any of the provisions of this Lease and/or its conditions be
illegal or not enforceable under the Laws of the Province of Quebec, it or
they shall be considered severable and the Lease and its conditions shall
remain in force and be binding upon the parties as though the said
provision or provisions had never been included.
Words importing the singular number only shall include the plural and
vice-versa and words importing the masculine gender shall include the
feminine gender and words importing persons shall include firms and unless
the contrary intention appears the words "Lessor" and "Lessee" wherever
they appear in this Lease shall mean respectively Lessor, its executors,
administrators, successors and/or assigns", and "Lessee, its executors,
administrators, successors and/or assigns", and if there is more than one
Lessee or Lessor or the Lessee or Lessor is a female person or a
corporation this Lease shall be read with all grammatical changes
appropriate by reason thereof; and all covenants, liabilities and
obligations shall be joint and solidary.
47. LESSOR/LESSEE
-------------
47.1 The term "Lessor" as used in this Lease means only the owner for the time
being of the Building comprising the Leased Premises or the lessee of a
lease of the whole Building, so that in the event of any sale or sales or
transfer or transfers of the Building, or the making of any lease or leases
of the whole Building, or the sale or sales or the transfer or transfers of
the assignment or assignments of any such lease or leases, Lessor shall be
and hereby is relieved of all covenants and obligations of Lessor hereunder
and it shall be deemed and construed without further agreement between the
parties, or. their successors in interest or between the parties and the
transferees or acquiror at any such sale, transfer or assignment, or lessee
on the making of any such lease, that the transferee or acquiror has
assumed and agreed to carry out any and all of the covenants and
obligations of Lessor hereunder to Lessor's exoneration, and Lessee shall
thereafter be bound to such transferee, acquiror or lessee, as the case may
be, as Lessor under this Lease.
47.2 If Lessee shall be a partnership (hereafter referred to as the "Lessee
Partnership"), each person who is presently a member of the Lessee
Partnership, and each person who becomes a member of any successor Lessee
Partnership hereafter, shall be and continue to be liab le for the full and
complete performance of, and shall be and continue to be subject to, the
terms and provisions of this Lease, whether or not he ceases to be a member
of such Lessee Partnership or successor Lessee Partnership.
47.3 It is understood and agreed that nothing contained in this Lease nor in any
acts of the parties hereto shall be deemed to create any relationship
between the parties hereto other than the relationship of Lessor and
Lessee.
48. DELETED.
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
19
49. LANGUAGE
--------
The parties hereby confirm that they have requested that the present
document be drafted in the English language. Les parties confirment par les
presentes qu'elles ont demands que le present document soit redige dans la
langue anglaise.
50. PRIOR AGREEMENTS
----------------
The present Lease cancels and supersedes any and all prior leases and
agreements, written or otherwise, entered into the Lessor and the Lessee
regarding the premises leased hereunder. This Lease and such rules and
regulations as may be adopted and promulgated by the Lessor from time to
time constitute the entire agreement between the par-ties.
51. SPECIAL CONDITIONS
------------------
1. Lessor's Work
-------------
The Lessor shall, at its sole cost and expenses and according to its
standard building and finishing specifications effect the following work in
the Leased Premises prior to August 1, 1995:
Construct approximately nine thousand square feet (9,000 ft2)of
finished offices built according to the Lessee's floor plan (to be
prepared by the Lessor's space planner at the Lessor's sole cost).
The Lessor shall install the applicable "Base Building" standard
finishes which shall include a drpped T-bar ceiling system, H.V.A.C.
distribution, sprinkler head distribution, office standard 24 ounces
per square yard nylon fiber carpet, fresh paint and fluorescent
lighting.
2. Lessee's Work
-------------
The Lessee shall, at its sole cost and expense and according the Lessor's
standard building and finishing specifications effect the certain
alterations in the Leased Premises necessary to Lessee's mode of business
and install its equipment, provided the Lessee obtains Lessor's prior
approval, which approval shall not be unreasonably withheld or delayed.
3. Option to Renew
---------------
On the condition that the Lessee is not then in default under its present
Lease, the Lessee shall have the right to renew its lease, once only, for a
further period of Five (5) years, commencing August 1, 2001 and terminating
July 31, 2006 under the same terms and conditions, save for the rental
which shall be negotiated at the time between the parties, but it shall be
based on fair market rentals for other premises of comparable location, age
and condition as of that date; provided the Lessor receives written notice
from the Lessee of it intention to renew its Lease, no later, than six (6)
months prior to the expiration of said Lease.
The parties shall have thirty (30) days to agree on said rate, failing
which the matter shall be determined by arbitration.
4. Signage
-------
The Lessee shall have the right to install its corporate signage on the
exterior of the Building and on the Building's front lawn subject to
Lessor's reasonable approval which shall not be delayed unreasonably and
subject to all municipal by-laws relating to signage.
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
20
5. Parking
-------
The Lessee shall be entitled to twenty-five (25) unreserved unsupervised
parking spots in the common parking area of the building and directly in
the rear of Lessee's Leased Premises.
6. Quiet Enjoyment
---------------
On the condition that the Lessee has fully complied with all of its
obligations under its present Lease, and has not been in default, the
Lessee shall, subject to the terms and conditions of the Lease, be entitled
to quiet enjoyment of the Leased Premises throughout the term and any
renewal(s) thereof without interruption or interference by the Lessor, and
neighbouring Lessees.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THE FOREGOING DEED OF
LEASE ON THE DAY AND YEAR HEREINBEFORE SET FORTH.
MINOCAN (a division of 2841-4837 Quebec
- ----------------------------------- Inc.
Witness
Per:
- ----------------------------------- -----------------------------------
Witness Brian Cytrynbaum (Lessor)
- ----------------------------------- SIDUS SYSTEMS INC.
Witness
Per:/s/ Henry Kalisky
- ----------------------------------- ----------------------------------
Witness Henry Kalisky
INITIALS
Lessor Lessee
[ ] [ ]
<PAGE>
21
RESOLUTION OF THE BOARD OF DIRECTORS
------------------------------------
CORPORATION NAME: SIDUS SYSTEMS INC.
EFFECTIVE:
----------------------
RESOLVED:
THAT the Corporation be and it is hereby authorized to lease from
Minocan (a division of 2841-4837 Quebec Inc.) the premises described
in the Deed of Lease to be entered into between the Corporation and
Minocan (a division of 2841-4837 Quebec Inc.), a copy thereof attached
hereto;
THAT the said Deed of Lease be and it is hereby approved;
THAT HENRY KALISKY be and he is hereby authorized to sign, for and on
behalf of the Corporation, the said Deed of Lease with such amendments
as he may deem necessary;
THAT HENRY KALISKY be and he is hereby authorized to do all things and
to sign all other documents necessary or useful to give full effect to
this resolution.
CERTIFIED COPY
/s/ Henry Kalisky
------------------------------------------------------
(Authorized officer's signature and please print name)
President
------------------------------------------------------
(Please print title)
-------------------------
Affix-Corporation Seal
<PAGE>
SCHEDULE "A"
------------
8623-8639 DALTON ROAD, TOWN OF MOUNT-ROYAL, QUEBEC H4T 1V5
Plan showing the Leased Premises
(for identification purposes only - plan not to scale)
[Graphics to come]
INITIALS
Lessor Lessee
[ ] [ ]
February 26, 1991
Sidus Systems Inc.
1-3, 8765 Ash Street
Vancouver, B.C.
ATTENTION: Mr. Richard Coughlan
REFERENCE: Leased Premises
#1-3, 8765 Ash Street, Vancouver, B.C.
Dear Sir:
Enclosed please find a fully executed Lease Agreement for the above
captioned premises for retention in your files.
Please call if you should have any questions.
Yours truly,
Morguard Investments Limited
Bruce R. Cripps, B. Econ
Property Manager
Industrial Division
British Columbia Region
<PAGE>
<PAGE>
THIS INDENTURE made the 11th day of October 1990
BETWEEN: PENSIONFUND REALTY LIMITED, a Company duly
incorporated under the laws of the Province of Ontario and
registered to carry on business in the Province of British
Columbia;
(hereinafter called the "Lessor") OF THE FIRST PART AND:
SIDUS SYSTEMS INC., a Company incorporated under the laws of
the Province of British Columbia;
(hereinafter called the "Lessee") OF THE SECOND PART
BASIC TERMS 1.00 Witnessth that in consideration of the rents, covenants,
conditions and agreements hereinafter reserved and contained on
the part of the Lessee to be paid, observed, and performed, the
Lessor doth demise and lease unto the Lessee all and singular
those certain premises on those basic terms described in the
following sections:
1.01.01 Name of Building: Kent Corporate Centre
1.01.02 Address of Building: 8765 Ash Street
Vancouver, British Columbia
Lot 0, Blocks 4 & 5
1.01.03 Legal Description of District lot 311, Plan 22291
Building and Lands:
1.02.01 Demised Premises: ____Units 1, 2 & 3 pursuant to
(Schedule "A")
1.02.02 Address of Demised Premises:
1-3-8765 Ash Street
Vancouver, British Columbia
1.02.03 Rentable area of Demised Premises: _______10,296_______
square feet
pursuant to Schedule "A".
1.03.01 Lease Term:--Six (6) ___years and ___Fifteen (15) days--
1.03.02 First day of Term: September 15, 1990
1.03.03 Termination Date: September 30, 1996
1.04.01 Basic Rent Initial Term:
<TABLE>
<CAPTION>
<S> <C> <C>
Period Per Annum Per Month
September 15, 1990- $108,108.00 $9,009.00
September 30, 1996
</TABLE>
1.05 Use of Premises: Warehousing and distribution and related
offices for computer and related business
equipment.
1.06 Fixturing Period: N/A
1.07 Special Conditions: See attached overleaf.
2
<PAGE>
1.08 The foregoing Basic Terms are hereby approved by the parties
and each reference in this lease agreement to any of the
Basic Terms shall be construed to include the provisions set
forth above as well as all of the additional terms and
conditions of the applicable paragraphs of the Lease where
such Basic Terms are more fully set forth.
LEASE TERM 2.00 To have and to hold the demised premises for and during the
term set out in Paragraph 1.03.01.
BASIC RENT 3.00 Yielding and paying there for yearly and every year during
the said term unto the lessor the sums set out in Paragraph
1.04.01 of the lawful money of Canada to be paid in advance in
equal monthly installments for the stated periods on the first
day of each and every month during the said term to the Lessor,
the first of such payments to be made on the first day of the
term set out in Paragraph 1.03.02. If the said term commences on
any day other than the first, or ends on any day other than the
last day of a calendar month, rent for the fractions of a month
at the commencement and at the end of the said term shall be
adjusted pro rata. If this lease provides for a fixturing period,
the first of such rent payments shall be made on the day next
following the expiration of the Fixturing Period set out in
Paragraph 1.06.
<PAGE>
OPTION TO RENEW: 1.07 If the Lessee has duly and regularly paid the rent, has
performed all its other obligations under this Lease, is not
currently in default hereunder, and is in occupation of the
demised premises under this Lease, the Lessee may, at its
option, renew this Lease for a further period of FIVE (5)
years ("Renewal Term") commencing on the expiration of the
Term. To be effective, the option must be exercised at least
six (6) months prior to the expiration of the Term by
written notice served to the Lessor in the manner provided
for the in this Lease. The renewal lease shall, at the
Lessor's sole option, be either on the Lessor's standard
lease form containing the Lessor's standard terms and
conditions in effect at the time of the exercise of the
option for similar premises or on the terms and conditions
set out in the Lease, provided that, in either case, the
renewal lease shall exclude any further option to renew
clause and all provisions dealing with the Lessor's work,
Lessee improvement allowances or any other Lessee
inducement. The Annual Rent for each year of the Renewal
Term shall be the fair market rent prevailing three (3)
months prior to the commencement of the Renewal Term for
premises of the same kind, of the same age, and in the same
condition as the demised premises and without allowance for
any Lessor's improvements, work, allowances or other
inducements. Upon notice of the exercise of this option
being delivered to the Lessor, the parties agree to
immediately commence negotiations to determine the Annual
Rent for each year of the Renewal Term; provided that, the
Annual Rent for the Renewal Term shall not be less than the
Annual Rent for the immediately preceding year under this
Lease. If three (3) months prior to the commencement of the
Renewal Term the parties fail to agree upon the Annual Rent
for the Renewal Term, then the same shall be determined by
one arbitrator in accordance with the provisions of the
Commercial Arbitration Act of British Columbia, or any
statutory modification or re-enactment thereof, and shall be
based on fair market value generally for premises of the
same kind, of the same age, and in the same condition as the
demised premises and without allowance for any Lessor's
improvement, work, allowances or other inducements. The
renewal lease shall be prepared by the Lessor at the expense
of the Lessee and shall be executed by the Lessee prior to
the commencement of the Renewal Term. If the Option is not
exercised in the manner set out in this clause 1.07, then it
shall be null and void of no further force and effect.
Notwithstanding the rights granted in the Lease and Lessee
to assign the Lease, this Option may not be assigned by the
Lessee without the Lessor's consent, which consent the
Lessor may arbitrarily refuse. In the event a party has
guaranteed or indemnified the Lessee's covenants and other
obligations under the Lease, then if the Lessee exercises
this Option, the obligation on the part of the Lessor to
enter into a renewal lease with the Lessee for the Renewal
Term shall be condition upon the said party entering into a
new guarantee or indemnity agreement, on terms and
conditions satisfactory to the Lessor guaranteeing or
indemnifying the performance of the Lessee's covenants and
obligations under the renewal lease.
3
<PAGE>
PAY RENT 4.00 The Lessee shall, during the said term, pay unto the
Lessor the rent hereby reserved in the manner hereinbefore
mentioned.
BUSINESS TAX, ETC. 4.01 The Lessee shall pay all business or other taxes from
time to time levied in respect of the Lessee's use or
occupancy of the demised premises including penalties for
late payment thereof.
EVIDENCE OF 4.02 The Lessee shall produce to the Lessor from time to
PAYMENTS time at the request of the Lessor satisfactory evidence of
the due payment by the Lessee of all payments required to be
made by the Lessee under this lease.
ACTS 4.03 The Lessee shall not do or permit to be done any act or
CONFLICTING thing which may render void or voidable or conflict with the
WITH requirements of any policy or policies of insurance,
INSURANCE including any regulations of fire insurance underwriters
applicable to such policy or policies, whereby the demised
premises or the building are insured or which may cause any
increase in premium to be paid in respect of any such
policy. In the event that any such policy or policies is or
are cancelled by reason of any act or omission of the
Lessee, the Lessor shall have the right at its option to
terminate this lease forthwith by giving notice of
termination to the Lessee, and in the event that the premium
to be paid in respect of any such policy is increased by any
act or omission of the Lessee, the Lessee shall pay to the
Lessor the amount by which said premium shall be so
increased.
NO 4.04 The Lessee shall not at any time during the said term,
NUISANCE use, exercise or carry on or permit or suffer to be used,
exercised or carried on, in or upon the demised premises or
any part thereof any noxious, noisome or offensive art,
trade, business, occupation or calling, and no act, matter
or thing whatsoever shall at any time during the said term
be done in or upon the demised premises or any part thereof
which shall or may be or grow to the annoyance, nuisance,
damage or disturbance of the occupiers or owners of the said
building or adjoining land and properties.
COMPLY WITH 4.05 The Lessee shall comply promptly at its expense with
LAWS, ETC. all laws, ordinances, regulations, requirements and
recommendations, which may be applicable to the Lessee or to
the manner of use of the demised premises, of any and all
federal, provincial, civic, municipal and other authorities
or association of insurance underwriters or agents and all
notices in pursuance of same and whether served upon the
Lessor or the Lessee.
* See attached overleaf
COMPLY WITH 4.06 The Lessee agrees that the rules and regulations
RULES AND endorsed on this lease or attached hereto as Schedule C with
REGULATIONS such reasonable variations, modifications and additions as
shall from time to time be made by the Lessor and any other
and further reasonable rules and regulations that may be
made by the Lessor and intimated to the Lessee in writing
shall be observed and performed by the Lessee and its
agents, clerks, servants or employees and all such rules and
regulations now in force or hereafter put in force shall be
read as forming part of the terms and conditions of this
lease as if the same were embodied herein; all such rules
and regulations shall be deemed to be a part of this lease.
4
<PAGE>
DAMAGE TO 4.07 The Lessee shall reimburse the Lessor for costs
BUILDING incurred by Lessor in making good any damage caused to the
BY LESSEE said building or any part thereof including the furnishings
and amenities thereof as a result of the negligence or
wilful act of the Lessee, its invitees, licensees, agents,
servants or other persons from time to time in or about the
demised premises.
NOTICE OF 4.08 The Lessee shall give the Lessor prompt written notice
ACCIDENTS of any damage to or defect in the heating and air
DEFECTS, ETC. conditioning apparatus, water pipes, gas pipes, telephone
lines, electric light or other wires or other casualty.
ASSIGNING OR 4.09.01 The Lessee shall not assign or sublet the demised
SUBLETTING premises or any part thereof without the prior consent in
writing of the Lessor, which consent shall not be
unreasonably withheld. Provided that the Lessee shall, at
the time the Lessee shall request the
<PAGE>
* Lessor warrants that the demised premises comply with all
Municipal Building Codes as of the first day of the term.
<PAGE>
consent of the Lessor, deliver to the Lessor such
information in writing (herein called the "required
information") as the Lessor may reasonably require
respecting the proposed assignee or subtenant including the
name, address, nature of business, financial responsibility
and standing of such proposed assignee or subtenant.
Provided further that after receiving such request, the
Lessor shall have the right, at its option, to terminate
this lease by giving, within ten days after receiving the
required information, not less than thirty nor more than
sixty days written notice of termination to the Lessee. In
the event of such termination the rent and other payments
required to be made by the Lessee hereunder shall be
adjusted to the date of termination.
* 4.09.01 -- See attached overleaf
4.09.02 In no event shall any assignment or subletting to
which the Lessor may have consented release or relieve the
Lessee from his obligations fully to perform all the terms,
covenants and conditions of this lease on his part to be
performed and in any event the Lessee shall be liable for
the Lessor's reasonable costs incurred in connection with
the Lessee's request for consent.
4.09.03 If the Lessee is an incorporated company any change
in the control of such company shall be deemed, for the
purposes hereof, to be an assignment of this lease.
INDEMNITY See clause 4.11.06.
TO LESSOR
LESSEE See clause 4.11.02
INSURANCE
ASSIGNING OR * 4.09.01 If the Lessor exercises its option to terminate
SUBLETTING this Lease, the Lessee shall have the right to withdraw its
request for the assignment or sublease giving rise to the
Lessor's right to withdrawal within seven days after
receiving the Lessor's notice of termination. If such notice
of withdrawal is received within the aforesaid time period,
then the Lessor's option to terminate this Lease shall be of
no further force and effect. If the Lessor's notice of
withdrawal is not received within the aforesaid time period,
then the Lease shall terminate and be of no further force
and effect on the date specified in the Lessor's written
notice of termination. In the event of the Lessee's written
request for an assignment or sublease is withdrawn within
the time period as aforesaid, then the Lessor's option to
terminate is only rendered ineffective with respect to the
particular request and the Lessor's option to terminate and
the Lessee's right to withdraw are not ineffective with
respect to any subsequent request of the Lessee to assign or
sublet this Lease or any subsequent withdrawal by the Lessee
(as the case may be).
5
<PAGE>
LESSOR'S 4.11.01 During the Term, the Lessor shall place insurance
INSURANCE coverage on the building which coverage shall include the
following:
(a) all risks insurance for the full reconstruction value
of the building is determined by the Lessor;
(b) as an extension to the insurance maintained pursuant to
Section 4.11.01 (as the insurance on the rental income
derived by the Lessor from the building on a gross
rental income form with a period of indemnity of not
less than 24 months;
(c) comprehensive boiler and unfired pressure vessel
insurance, including air or replacement and rental
income coverages;
(d) comprehensive general bodily injury and property damage
liability insurance; and
(e) such other insurance which is or may become customary
or reasonable for owners of projects similar to the
building to carry in respect of loss of or damage to
the building or liability arising therefrom.
The insurance referred to in this Section 4.11.01 shall be
carried in amounts determined by the Lessor and shall be
obtained from a company or companies and be of a type and
form satisfactory to the Lessor. The insurance shall be
written in the name of the Lessor with loss payable to the
Lessor and to any mortgagee of the building from time to
time if required by the Lessor. The policies of insurance
referred to in Section 4.11.01 (a), (b) and (c) shall
contain a waiver of the insurer's right to subrogation as
against the Lessee, if obtainable. The Lessor hereby waives
its right of recovery against the Lessee, its employees and
those for whom the Lessee is in law responsible with respect
to occurrences required to be insured against by the Lessor
hereunder, but only to the extent that the Lessor receives
proceeds of insurance from this insurer or insurers with
respect to same after making reasonable efforts to collect.
Nothing contained in this Lease shall require the Lessor to
insure any of the Lessee's equipment, stock, leaseholder
improvements, fixtures or any other property owned or
brought onto or into the demised premises by the Lessee
whether affixed to the holding or not.
Premiums for use of the insurance coverage referred to in
this Section shall be included within Maintenance Costs.
LESSEE'S 4.11.02 At its license the Lessee shall take out and
INSURANCE thereafter maintain in forms at all times during the Term
insurance policies as follows:
(a) all risks insurance on all property of every
description, nature and kind signed by the Lessee or
for which the Lessee is legally liable, or installed in
the demised premises by or on behalf of the Lessor or
which is located or situate within the demised remises
including, without limitation all leasehold
improvements and Lessee's fixtures in an amount not
less than the full replacement cost thereof without
deduction for depreciation. Such insurance shall be
subject to replacement cost endorsement and shall
include a stated amount co-insurance clause;
(b) comprehensive general bodily injury and property damage
liability insurance for the minimum amount of
$3,000,000 and in a form satisfactory to the Lessor and
including owners and contractors protecting products
and completed operations, personal injury, occurred
property damage, blanket contractual and non-owned
automated liability extensions. Such insurance shall
include a cross liability and severability of interest
clause, shall be subject to replacement cost
endorsement and shall include a stated amount
co-insurance clause; and
(c) plate glass insurance.
6
<PAGE>
The insurance policies referred to in this Section 4.11.02 shall
contain a waiver of the insurer's right of subrogation as against
the Lessor, the Lessor's agents and employees and any person,
firm or corporation for whom the Lessor may in law or by
agreement be responsible or for whom the Lessor may have agreed
to obtain such a waiver. Any and all deductibles shall be at the
expense of the Lessee. The Lessee shall provide the Lessor at the
commencement of the Term, thirty days prior to the renewal of all
insurance referred to in this Section 4.11.02 and promptly at any
time upon request, a certificate of insurance on the Lessor's
form evidencing the insurance coverages maintained by the Lessee
in accordance with this Section 4.11.02. All policies of
insurance placed under this Section 4.11.02 shall be placed with
a company or companies reasonably satisfactory to the Lessor. All
policies shall provide that the insurance shall not be cancelled
or changed to the prejudice of the Lessor without at least thirty
days prior written notice given by the insurer to the Lessor.
PLACEMENT OF 4.11.03 If the Lessee fails to place or maintain all or any of
LESSEE'S the insurance coverages referred to in Section 4.11.02, the
INSURANCE BY Lessor may, at its option, place all or any part of such
LESSOR: insurance in the name of or on behalf of the Lessee and the
Lessee shall pay to the Lessor upon demand all costs incurred by
the Lessor in so doing, including the premium or premiums for
such insurance.
INCREASE IN 4.11.04 The Lessee covenants and agrees to pay the amount of any
INSURANCE: increase in insurance premiums in respect of the building if such
increase is caused by the Lessee's operation or actions in or
with respect to the demised premises. The Lessee convenants that
nothing will be done or omitted to be done whereby any policy of
insurance obtained by the Lessor pursuant to Section 4.11.01
shall be cancelled or the demised premises rendered uninsurable.
LIMITATION OF 4.11.05 The Lessor shall not be liable even if grossly negligent
LESSOR'S for any damage to the demised premises or any property located
LIABILITY therein caused by steam, water, rain or snow which may leak into,
issue or flow from any part of the demised premises or from the
water, steam, sprinkler or drainage pipes or plumbing works of
the same or from any other place or corridor or from any damage
caused by or attributable to the condition or arrangement of any
electrical or other wiring or for any damage caused by anything
done or omitted to be done by any other tenant of the building or
for damage caused by interruption or failure of any service or
utility including elevator or escalator service or for damage
however caused to books, records, files, money, securities,
negotiable instruments, papers or other valuables.
INDEMNITY 4.11.06 The Lessee shall indemnify and save harmless the Lessor
from any and all liabilities, damages, costs, claims, suits or
actions growing or arising out of:
(a) any breach, violation or non-performance of any covenant,
condition or agreement in this Lease set forth and contained
on the part of the Lessee to be fulfilled, kept, observed
and performed;
(b) any damage to property while the property is in or about the
demised premises; and
(c) any injury to person or persons including death resulting at
any time therefrom occurring in or about the demised
premises or the building.
SURVIVAL OF 4.11.07 The indemnities and other obligations of the Lessee
INDEMNITIES: contained in Sections 4.11.06 and 7.00, with respect to matters
arising during the term, shall survive the expiration or other
termination of this Lease.
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GOODS 4.12 The Lessee agrees that all goods, chattels and fixtures when
CHATTELS, moved into the demised premises will not, except in the normal
ETC. NOT TO course of business, be removed from the demised premises until
BE REMOVED all rent due during the term of this lease and all utility
charges are fully paid.
REPAIRS 4.13.01 The Lessee shall, during the said term, well and
sufficiently repair, maintain, amend and keep up demised
premises, with the appurtenances and all fixtures, in good and
substantial repair when, where and so often as need shall be,
reasonable wear and tear and damage by fire and other risks
against which the Lessor is insured (hereinafter collectively
referred to as "Lessee repair exceptions") only excepted.
[interior non-structural items of *required to be]
4.13.02 The Lessee and its agents shall have the right at all
reasonable times during the said terms to enter the demised
premises to examine the condition thereof, and further, that
amount of reparation that upon such view shall be found, and for
the amendment of that notice in writing shall be left at the
demised premises, the Lessee shall well and sufficiently repair
and make good accordingly.
USE OF 4.14 The Lessee shall not use the demised premises nor allow the
PREMISES demised premises to be used for any other purpose than that for
which the premises are hereby leased, under paragraph 1.05.
SIGNS 4.15 The Lessee shall not paint, display, inscribe, place or
affix any sign, picture, advertisement, notice offering or
direction on any part of the outside of the building or visible
from the outside of the building, or in any corridor, hallway,
entrance or other public part of the said building. Provided that
the Lessor shall prescribe a uniform pattern for identification
??? or tenants to be placed on the outside of the main door
leading into the demised premises. Provided that, at the request
of the Lessee and at the Lessee's expense, the Lessor shall cause
such a sign to be placed in position.
ALTERATIONS, 4.16.01 The Lessee shall not without the prior written consent of
the Lessor, which consent shall not be unreasonably withheld,
make any alterations, repairs or improvements to the ??? premises
or construct or place therein or alter any interior partitions
(including moveable partitions, partial partitions or other
installations) or do anything which may affect the proper
operation of the lighting, heating and air conditioning systems.
The Lessee shall submit to the Lessor detailed plans and
specifications of any such work on installation when applying for
consent, and the Lessor reserves the to right recover from the
Lessee the cost of having its architects or engineers examine
such plans and specifications. The Lessee understands that in
granting consent, the Lessor may impose conditions with respect
to the electrical and mechanical services (which term includes
heating and air conditioning) and those conditions may require
the Lessee charge for alterations or modifications to the said
electrical and mechanical services. The Lessor may require that
any or all work to be done, or materials to be supplied here nor
shall be done or supplied by the Lessor's contract and/or workmen
or by contractors and/or workmen engaged by the Lessee's but
first approved by the Lessor. In the event, any or all work to be
done or materials to be supplied hereunder shall be at the sole
cost and expense of the Lessee and shall be done and supplied and
performed in the manner and according to such terms and
conditions, if any, as the Lessor may prescribe. Any connections
of apparatus to the electrical system other than a connection to
an existing base receptacle, any connection of apparatus to the
plumbing lines or any connection to the heating or air
conditioning systems shall be deemed to be an alteration within
the meaning of this clause.
4.16.02 The Lessee covenants with the Lessor that the Lessee
shall promptly pay all charges incurred by the Lessee for any
work, materials of services that may be done, supplied or
performed in respect of the demised premises and shall forthwith
discharge any liens at the time filed against and keep the lands
and premises of which the demised premises forthwith free from
liens and in the event that the Lessee fails to do so, the Lessor
may but shall all be under no obligation to, pay into Court the
amount required to obtain a discharge of any such lien the name
of the Lessee and any amount to paid together with all
disbursements and costs in respect of such proceedings on a
solicitor and client bills shall be forthwith due and payable by
the Lessee to the Lessor as additional rent. The Lessee shall
allow the Lessor to post and keep posted on the demised premises
any services that the Lessor may desire to post under the
provisions of the Builders Lien Act or other legislation.
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4.16.03 The Lessee shall not without the prior written consent of
the Lessor put up any window, drapes, blinds, awnings or other
similar things or cover the floors with anything other than
____________.
PEACEFUL 4.17.01 the Lessee shall, at the expiration or sooner
SURRENDER determination of the said term, peaceably surrender and yield up
unto the Lessor the demised premises with the appurtenances,
together with all fixtures or erections which at any time during
the said term shall be made herein or thereon in good and
substantial repair and condition, except said Lessee listed
exceptions, and deliver to the Lessor all keys to the demised
premises with the Lessee has in its possession.
4.17.02 The Lessee further covenants that the Lessee will not
upon such expiration or sooner determination leave upon the
demised premises any rubbish or waste material and will leave
said premises in a clean and tidy condition.
UTILITIES 4.18 The Lessee shall pay all telephone, electric and other
utility charges in connection with the demised premises that are
not being supplied by the Lessor as provided herein and in the
event that there is not a separate meter for measuring the
consumption and charging for electricity used in the demised
premises the Lessee shall pay to the Lessor additional rent in
advance by monthly installments such amounts as may be required
by the Lessor from time to time as a reasonable estimate of the
cost of such electricity; the Lessee shall advice the Lessor
forthwith of any appliances or business machines installed by the
Lessee consuming or likely to consume large amounts of
electricity and further from time to time shall provide the
Lessor with a list of all electrical appliances and business
machines used in the demised premises.
REALTY see clause overleaf
TAXES
4.19.02 The Lessee shall pay as additional rent by monthly
instalments on account its Proportional share of the taxes as
estimated by the Lessor for the ensuing year. The Lessor may
estimate the amount of the tax for each year payable hereunder
and notify the Lessee of the estimate. When the tax for the year
in question is finally determined, the Lessor shall calculate the
Lessee's Proportionate Share thereof. The Lessee shall pay to the
Lessor any balance that remains unpaid as a result of the
calculation, and the Lessee shall pay to the Lessor such balance
within ten (10) days of receipt of notice from the Lessor. A
balance remaining unpaid or any excess paid at the termination of
this Lease shall, not withstanding such termination, be adjusted
within a reasonable period thereafter the part of the final
subsequent period is included within the term hereby demised, the
amount payable for such period shall be based upon the Lessor's
estimate of the taxes for the subsequent period and shall be
payable at the end of the term hereby demised.
4.19.03 If taxes shall be increased by reason of any
installations made in or upon or any alteration made in or to the
demised premises by the Lessee or by the Lessor on behalf of the
Lessee, the Lessee shall pay the amount of such increase as
additional rent.
4.19.04 Any expense incurred by the Lessor in obtaining or
attempting to obtain a reduction in the amount of Tax shall be
added to and included in the amount of such Tax. In the event of
the Lessee shall have paid its Proportionate Share pursuant to
Clause 4.19.02 of the lease and the Lessor shall thereafter
receive a refund of any portion of such Tax, the Lessor shall
make an appropriate refund to the Lessee.
9
<PAGE>
TAXES 4.19.01 In paragraphs 4.19.02 and 4.19.03, the following phrases
shall have the following meanings:
(a) "Tax" means an amount equivalent to all taxes, rates,
duties, levies and assessments whatsoever whether municipal,
parliamentary school or otherwise charged upon the building,
the lands and improvements now or hereafter thereon or upon
the Lessor on account thereof including all taxes, rates,
duties, levies and assessments for local improvements; and
any multi- ??? sales, use, consumption, value-added or other
similar taxes imposed upon the Lessor or the Lessee or in
respect of this Lessor, but excluding any tax which has been
attracted by the Lessee on improvements and equipment and
excluding such taxes as corporate income, profits or excess
profit taxes assessed upon the name of the Lessor and shall
also include any and all taxes which may in future be levied
in lieu of Tax as herein-before defined;
(b) "Proportionate Share" means that fraction of which the
numerator is the total rentable area of the demised premises
in paragraph 1.02.03, at the time of calculation, and the
denominator is the total rentable area of the building.
10
<PAGE>
MAINTENANCE 4.20.01 In paragraphs 4.20.02 and 4.20.03, the following phrases
COSTS shall have the following meanings:
(a) "Maintenance Costs" means the total amount paid or
payable whether by the Lessor or others on behalf of
the Lessor for complete maintenance for the lands, the
building and the improvements thereon such as are in
keeping with maintaining the standard of a first class
INDUSTRIAL complex, all repairs and replacements
required for such maintenance, the costs of providing
electricity not otherwise paid by tenants, the costs of
painting interior areas not normally rented by tenants
and the costs of painting and otherwise maintaining the
outside of the said building, the costs of snow
removal, landscape maintenance, refuse removal and
other costs in connection with the maintenance of
common outside uses and facilities, fire casualty,
liability and other insurance costs, service contracts
with independent contractors and all other expenses
including management fees (3% of gross revenue) paid or
payable by the Lessor in connection with the operation
of the building, improvements and lands but shall not
include interest on debt or capital retirement of debt
or any amounts directly chargeable by the Lessor to any
tenant or tenants as otherwise provided herein;
(b) "Proportionate Share" shall have the same meaning as
defined in Paragraph 4.19.01.
(c) "Accounting Year" means each twelve month period
commencing 1 October and ending on 30 September the
whole or part of which twelve month period is within
the term hereby demised or such other 12 month period
as may be reasonably determined by the Lessor.
4.20.02 The Lessee shall pay as additional rent to the Lessor by
monthly instalments to be fixed by Lessor from time to time its
Proportionate Share of maintenance costs.
4.20.03 At the end of each Accounting Year the Lessor shall
compute the amount of maintenance fees for such Accounting Year
and the Lessee's Proportionate Share thereof. A statement showing
these details shall be submitted to the Lessee stating also the
amount of the monthly installments for the ensuing Accounting
Year. The annual adjustment of Maintenance costs by the Lessor
shall be carried out following the practice of grossing the costs
an amount equivalent to that of a fully occupied building for the
Accounting Year.
CARE OF 4.21.01 The Lessee shall take good care of the demised premises
PREMISES and keep same in a clean, tidy and healthy condition. Subject to
Lessee repair exceptions.
4.21.02 The Lessee shall at its own expense be responsible for
and shall maintain and replace from time to time as may be
reasonably necessary during the term of this lease all light tube
costs starters and fuses in the demised premises.
4.21.03 The Lessee shall at its own expense replace or repair,
under the direction and to the reasonable satisfaction of the
Lessor, the glass, locks and trimmings of the doors and windows
in or upon the demised premises which become damaged or broken.
4.21.04 The Lessee shall not allow any ashes, refuse, garbage or
other loose or objectionable matter to accumulate in or about the
demised premises.
4.21.05 The Lessee shall place in containers of a type approved
by the Lessor all garbage and refuse and such containers shall be
deposited for pick-up at such times and places as designated in
writing from time to time by the Lessor.
4.21.06 The Lessee shall heat the demised premises at its own
expense during the term hereof at all times to the extent
necessary to prevent damage thereto by frost.
4.21.07 The Lessee shall maintain in good operating condition and
to the satisfaction of the Lessor, the plumbing fixtures and
heating and air conditioning equipment and shall keep the same in
clean and good working order. It is understood and agreed that in
case the same fixtures and equipment or any part thereof shall be
damaged or destroyed or the same incapable of performing their
function, the Lessee shall repair or replace the same*.
[Lessor warrant that all such equipemnt is new, properly installed and
in good working order as of the first day of the term and under manufacturers
warranty against defects for the term of such waranty.]
11
<PAGE>
QUIET 5.00 The Lessor hereby covenants with the Lessee that the Lessee,
ENJOYMENT paying the rent hereby reserved and performing the covenants
hereinbefore on the Lessee's part contained, shall and may
peaceably possess and enjoy the demised premises for the term
hereby granted without any interruption or disturbance from the
Lessor or any other person or persons lawfully claiming by, from
or under the Lessor.
TAXES 5.01 The Lessor hereby covenants that it will pay or cause to be
paid all property taxes with respect to the demised premises
except those directly assessed or charged to or payable by the
Lessee or assessed or charged with reference to the use or
occupation of the demised premises and except as herein otherwise
provided.
DAMAGE OR 6.00.01 Provided and it is hereby expressly agreed that if during
DESTRUCTION the term hereby demised the demised premises or any part thereof
OF PREMISES shall be destroyed or damaged by any hazard against which the
Lessor is obligated to insure or has insured as hereinafter
provided, the rent payable hereunder shall abated and the Lessor
shall proceed with reasonable diligence to rebuild and/or restore
or repair the demised premises. The covenants of the Lessee to
repair shall not include any repairs of damage required to be
made by the Lessor under this clause. All amounts which the
Lessor may receive from rental insurance in the case of any such
damage or destruction shall be credited towards the Lessee's
obligation on account of rent due and payable or to become due
and payable by the Lessee hereunder.
6.00.02 Notwithstanding anything in this lease contained, if in
the opinion of the Lessor's architect or engineer (given within
thirty (30) days of such damage or destruction), the demised
premises shall be damaged or destroyed by any hazard against
which the Lessor is obligated to insure or has insured as
hereinafter provided the extent that the demised premises shall
be incapable of being rebuilt and/or repaired or restored with
reasonable diligence within nine (9) months after the occurrence
of such damage or destruction then either the Lessor or the
Lessee may at its option, terminate this lease by notice in
writing to the other given within fifteen (15) days after the
giving of such opinion. In the event of such notice being so
given this lease shall terminate from the date of such damage or
destruction and the Lessee shall immediately surrender the
demised premises and all interest therein to the Lessor and the
rent shall be apportioned and shall be payable by the Lessee only
to this date of such damage or destruction and the Lessor may
re-enter and repossess the demised premises.
LESSOR'S see clause 4.11.01
INSURANCE
12
<PAGE>
ACCESS TO 6.01 The Lessor agrees that during the term of this lease the
PREMISES, USE Lessee and the employees, agents, customers and invitees
OF COMMON respectively of the Lessee shall have the rights and shall comply
AREAS, ETC. with the provisions set forth in the Second Part of Schedule A
hereto annexed, subject as set forth in this lease, including
said part of said Schedule; said Schedule A shall be deemed to be
a part of this lease.
ACCESS TO 6.02.01 The Lessor shall have the right to make additions to
RIGHT TO DO and/or improvements or installations in and/or repairs to the
WORK building and/or the common outside areas and whenever reference
is made in this lease to the building or the common outside
areas, it shall mean the building and/or the common outside areas
as the same may be changed, added to or improved from time to
time and in relation to any such additions, improvements,
installations, or repairs the Lessor may cause such reasonable
obstructions of and interference with the use or enjoyment of the
building, the demised premises and/or common outside areas as may
be reasonably necessary for the purposes aforesaid and may
interrupt or suspend the supply of electricity, water or other
services when necessary and until said additions, improvements,
installations or repairs shall have been completed and there
shall be no abatement in rent nor shall the Lessor be liable by
reason thereof provided that all such additions, improvements,
installations or repairs shall be made as expeditiously as
reasonably possible.
6.02.02 The Lessor and any persons authorized by the Lessor shall
have the right to use, install, maintain and/or repair pipes,
wires, ducts or other installations in, under or through the
demised premises for or in connection with the supply of any
services to the demised premises or any other premises in the
said building. Such services shall include, without limiting the
generality of the foregoing, gas, electricity, water, sanitation,
telephone, heating, air conditioning and ventilation.
6.02.03 The Lessor and any persons authorized by the Lessor
shall have the right* on reasonable notice to the Lessee
excepting emergency situations to enter upon the demised
premises to make such decorations, repairs, alterations,
improvements or additions as it may deem advisable and the
Lessor or any persons authorized by the Lessor shall be
allowed to take all material into and upon the said premises
that may be required therefore. The rent hereunder shall in
no way abate while such decorations, repairs, alterations,
improvements or additions are being made by reason of loss
or interruption of the business of the Lessee because of the
prosecution of any such work. Provided such entry shall not
unreasonably interfere with the Lessee's use and enjoyment
of the demised premises excepting emergency situations.
LESSOR'S 6.03 Provided also that during the term hereby created any
RIGHT TO person or persons may inspect the demised premises and all
INSPECT AND parts thereof at all reasonable times on producing a written
DISPLAY SIGN order to that effect signed by the Lessor or its agents. The
Lessor shall have the right during the last three months of
the said term to place upon the demised premises a notice of
reasonable dimensions and reasonably placed so as not to
interfere with the business of the Lessee, stating that the
demised premises are for rent and further provided that the
Lessee will not remove such notice or permit the same to be
removed.
LESSOR MAY 6.04 If the Lessee shall fail to perform or cause to be
PERFORM performed each and every the covenants and obligations of
LESSEE'S the Lessee in this lease contained the Lessor shall have the
COVENANTS, right (but shall not be obligated) to perform or cause the
ETC. same to be performed and to do or cause to 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 Lessor in repect thereof
shall be paid by the Lessee to the Lessor forthwith.
RE-ENTRY 6.05.01 Provided, and it is hereby expressly agreed, that if
and whenever the rent hereby reserved, or any part thereof,
shall be unpaid for fifteen days after any of the days on
which the same ought to have been paid, although no formal
demand shall have been made therefor, or in case of the
breach or non-performance of any of the covenants or
agreements herein contained on the part of the Lessee, then
and in either of such cases it shall be lawful for the
Lessor at any time thereafter, into and upon the demised
premises or any part thereof, in the name of the whole to
re-enter, and the same to have again, repossess and enjoy,
as of the Lessor's former estate, anything hereinafter
contained to the contrary notwithstanding.
13
<PAGE>
6.05.02 In case the Lessor shall re-enter the demised premises
prior to the expiry of this lease by reason of default by the
Lessee hereunder, the Lessee shall be liable to the Lessor for
the amount of the rent for the remainder of the term of this
lease as if such re-entry had not been made less the actual
amount received by the Lessor after such re-entry in respect of
any subsequent leasing applicable to the remainder of the term.
WAIVER OF 6.06 That in consideration of the premises and of the leasing and
EXEMPTIONS letting by the Lessor to the Lessee of the demised premises for
the term hereby created (and it is upon that express
understanding that these presents are entered into) that
notwithstanding anything contained in any Statute or in any
Statute which may hereafter be passed, none of the goods or
chattels of the Lessee at any time during the continuance of the
term hereby created on the demised premises shall be exempt from
levy by distress for rent in arrears by the Lessee as provided
for in any such Statute or any amendment or amendments thereto,
and that upon any claim being made for such exemption by the
Lessee or on distress being made by the Lessor this covenant and
agreement may be pleaded as an estoppel against the Lessee in any
action brought to test the right to the levying upon any such
goods as are named as exempted in any such Statute or amendment
or amendments thereto; the Lessee waiving as the Lessee hereby
does all and every benefit that could or might have accrued to
the Lessee under and by virtue of any such Statute or any amend-
ment or amendments thereto but for this covenant.
BANKRUPTCY, 6.07 The Lessee covenants that if the term hereby granted shall
ETC. be at any time seized or taken in execution or in attachment by
any creditor of the Lessee or if the Lessee shall make any
assignment for the benefit of creditors. or becoming bankrupt or
insolvent shall take the benefit of any Act that may be in force
for bankrupt or insolvent debtors, then in any such case ,he said
term shall at the option of the Lessor, immediately become
forfeited and void and the then current month's rent and the rent
for the three months next following shall immediately become due
and payable and in such case it shall be lawful for the Lessor at
any time thereafter into and upon the demised premises, or any
part thereof, in the name of the whole to re-enter and the same
to have again, repossess and enjoy as of its former estate,
anything herein contained to the contrary notwithstanding.
FOLLOW 6.08 Provided that in case of removal by the Lessee of the goods
CHATTELS and chattels of the Lessee from off the premises, the Lessor may
follow the same for thirty days.
OVERLOOKING 6.09 Any condoning, excusing or overlooking by the Lessor of any
AND default, breach or non-observance by the Lessee at any time or
CONDONING times in respect of any covenant, proviso or condition herein
contained shall not operate as a waiver of the Lessor's rights
here- under in respect of any subsequent default, breach or
non-observance nor so as to defeat or affect in any way the
rights of the Lessor hereunder in respect of any sub- sequent
default, breach or non-observance.
OCCUPANCY 6.10 If the demised premises shall not be available for occupancy
AVAILABILITY by the Lessee upon the date of commencement of the term hereby
demised, the rent under this lease shall abate until the d emised
premises are available for occupancy and the Lessor shall not be
liable in any way for the consequences of occupancy not being
available to the Lessee upon the date of commencement.
14
<PAGE>
OVERHOLDING 6.11 If at the expiration of the term of this lease the Lessee
shall hold over with the consent of the Lessor, the tenancy of
the Lessee thereafter shall, in the absence of written agreement
to the contrary. be from month to month only at a rental per
month equal to one-tenth, of the rental payable for the year
immediately preceding such expiration, payable monthy in advance
on the first day of each lease month and shall be subject to all
other terms and conditions of this lease.
REMOVAL OF 6.12 Subject to Clause 4.12 hereof the Lessee may at or prior to
FIXTURES the expiration of the term hereby granted, take, remove and carry
ETC. away from the demised premises all fixtures, fittings, she1ving,
counters or other articles upon the demised premises in the
nature of trade or tenants' fixtures, but the Lessee shall in
such removal do no damage to the demised premises, or shall make
good any damage which the Lessee may occasion thereto; provided
further that the Lessee shall not remove or carry away from the
demised premise,, any building or any plumbing, heating, air
conditioning or ventilating plant or equipment or other building
services: and further notwithstanding anything herein contained
the Lessor shall have the right upon the termination of this
lease by effluxion of time or otherwise to require the Lessee to
remove his installations, alterations, additions, partitions and
fixtures or anything in the nature of leasehold improvements made
or installed by the Lessee or by the Lessor on behalf of the
Lessee and to make good any damage caused to the demised premises
by such removal.
UNAVOIDABLE 6.13 Whenever and to the extent that the Lessor shall be unable
FAILURES OR to fulfil or shall be delayed or restricted in the fulfilment of
DELAYS BY any obligation hereunder in respect of the supply or provision of
LESSOR heating, air conditioning, elevator or janitor services, or any
other service or utility or the doing of any work 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 or order-in-council or any
regulation or order passed or made pursuant thereto or by reason
of the order or direction of any administration controller or
board of any governmental department or officer or other
authority or by reason of not being able to obtain any permission
or authority required thereby or by reason of any other cause
beyond its control whether of the foregoing character or not, the
Lessor shall be relieved from the fulfilment of such obligation
and the Lessee shall not be entitled to compensation for any
inconvenience. nuisance or discomfort thereby occasioned. There
shall be no deduction from the rent by reason of any such failure
or cause.
LESSOR NOT 6.14 The Lessor shall not be responsible in any way for any
RESPONSIBLE injury to any person or for any loss of or damage to any property
FOR INJURIES belonging to the Lessee or to other occupants of the demised
LOSS, DAMAGE premises or to their respective invitees, licensees, agents,
ETC. servants or other persons from time to time attending at the
demised premises while such person or property is in or about 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 of or damage to any such property caused
by theft or breakage, or by steam, water, rain or snow which may
15
<PAGE>
leak into, issue or flow from any part of the said building or
any adjacent or neighbouring lands or premises or from any other
place or quarter or for any loss of 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 said
building or for any other loss whatsoever with respect to the
demise premises and/or any business carried on therein.
NO LIABILITY 6.15 Under no circumstances shall the Lessor be liable for
FOR INDIRECT indirect or consequential damage or damages for personal
DAMAGES, ETC. discomfort or illness by reason of the non- performance or
partial performance of any covenants of the Lessor herein
contained including the heating of the demised premises or the
operation of the air conditioning equipment, elevators, plumbing
or other equipment in the said building or the demised premises.
See attached overleaf
NO 6.17.01 The Lessee covenants and agrees with the Lessor that the
REPRESENTATION Lessee shall from time to time upon the written request of the
BY LESSOR Lessor, enter into an indenture (i) subordi nating the term,
hereby demised and the rights of the Lessee hereunder to any
mortgage or ground lease, present or future, which includes the
demised premises, or, at the option of the Lessor, (ii) agreeing
that the term hereby demised shall be prior to any such mortgage
or ground lease.
6.17.02 Notwithstanding any such postponement or subordination as
aforesaid the Lessee agrees that its obligations under the lease
and pursuant to this indenture shall remain in full force and
effect notwithstanding any action at any time taken by a
mortgagee of the lands to enforce the security of any mortgage;
provided, however, that any postponement or subordination given
hereunder shall reserve to the Lessee the right to continue in
possession of the demised premises under the terms of this lease
so long as the Lessee shall not be in default under such terms.
NOTICES 6.18 Any notice herein provided for or given hereunder if given
by the Lessee to the Lessor shall be sufficiently given if mailed
in Canada by registered mail, postage pre- paid to the Lessor at
1027 Yonge Street. Toronto, Ontario. Any notice herein provided
for or given hereunder, if given by the Lessor to the Lessee,
shall be sufficienty given if mailed as aforesaid addressed to
the Lessee at the demised premises or left at the demised
premises. Any notice mailed as aforesaid shall be con- clusively
deemed to have been given on the second business day following
the day on which such notice is mailed as aforesaid. Either the
Lessor or the Lessee may at any time give notice in writing to
the other of any change of address of the party giving such
notice and from and after the giving of such notice the address
therein specified shall be deemed to be the address of such party
for the giving of such notices thereafter. The word "notice" in
this paragraph shall be deemed to include any request. demand,
direction or statement in writing in this lease provided or
permitted to be given by the Lessor to the Lessee or by the
Lessee to the Lessor.
[** with a copy there mailed to Sidus Systems Inc 25 Minthorn Court Thornhill,
Ontario L3T 7N5 ATTN: President]
PAYMENTS 6.19.01 All payments required to be made by the Lessee under or
TO LESSOR in respect of this lease shall be made, at such place or places
as the Lessor may designate in writing, to the Lessor or to such
agent or agents of the Lessor as the Lessor shall hereinafter
from time to time direct in writing to the Lessee. The Lessee
shall pay to the Lessor interest at 2 per cent per month on all
payments of rent and other sums required to be made under the
provisions of this lease which have become overdue so long as
such payments remain unpaid.
6.19.02 All sums paid or expenses incurred hereunder by the
Lessor, which ought to have been paid or incurred by the Lessee,
or for which the Lessor hereunder is entitled to reimbursement
from the Lessee, and any interest owing to the Lessor hereunder
may be recovered by the Lessor as additional rental by any and
all remedies available to it for the recovery of rent in arrears.
16
<PAGE>
NO
REPRESENTATION
BY LESSOR: 6.16 There is no promise, representation or undertaking by or
binding upon the Lessor with respect to any alteration,
remodeling or decorating of or installation of equipment or
fixtures in the Demised Premises or the Building except such, if
any, as is expressly set forth in this Lease and clauses 7.1,
8.1, and 8.2 of the Offer to Lease dated the 23rd day of August,
1990, entered into between the Lessor and the Lessee (the "Offer
to Lease") and this Lease and the Offer to Lease contain all the
agreements and conditions made between the parties hereto. In the
event of any conflict between the aforesaid clauses of the Offer
to Lease and this Lease, this Lease shall govern.
17
<PAGE>
NO CHANGES 6.20 No assent or consent to changes in or waiver of any of this
OR WAIVERS indenture in spirit or letter be deemed or taken as made unless
the same be done in writ. ing and attacheed to or endoresed
hereon by the Lessor; the Lessor's janitors, superintendents
and/or agents (unless such agents are authorized in writing by
the Lessor) are not authorized to amend this indenture and. any
alterations, amendments or qualifications made by the said
Lessor's janitors. superintendents and/or agents (unless such
agents are so authorized) shall be null and void.
MARGINAL 6.21 The marginal notes in this lease form no part of this lease
NOTES and shall be deemed to have been inserted for convenience of
reference only.
INTERPRETATIONS 6.22 Unless the context otherwise requires, the word "Lessor"
wherever it is used herein shall be construed to include and
shall mean the Lessor, its successors and/or assigns, and the
word "Lessee" shall be construed to include and shall mean the
Lessee, and the executors, administrators, successors and/or
assigns of the Lessee and when there are two or more Lessees or
two or more persons bound by the Lessee's covenants herein
contained their obligations hereunder shall be joint and several,
the word "Lessee" and the personal pronoun "it" re. lating
thereto a d used therewith shall be read and construed as
Lessees, and "his", "her", " -s" or "their" respectively, as the
number and gender of the Party or parties referred to each
require and the number of the verb agreeing therewith, shall be
construed and agree with the said word or pronoun so substituted'
6.23 The parties hereto agree that the Lessor shall not be
obliged to deliver this lease in form registerable under the Land
Title Act.
POLLUTANTS 7.00 The Les& shall at all times during the Term keep the Leased
Premise the Building and the Lands free from any and all
Pollutants and Waste. For purposes of this Section 7.00,
"Pollutants" means any solid, liquid, gaseous or thermal irritant
or contaminant including smoke, vapours, soot, fumes, acids,
alkalis, chemicals and Waste; and "Waste" includes materials to
be recycled, reconditioned or reclaimed. The Lessee agrees to
indemnify and save the Lessor harmless from loss, cost or expense
arising out of any. government demand, direction or request that
the Lessor or the Lessee test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize Pollutants and further
agrees to indemnnify and save harmless the Lessor from any damage
arising out of the actual, alleged or threatened discharge,
dispersal, release or escape of Pollutants at or from the Leased
Premises or at or from the Building or the Lands by or on behalf
of the Lessee.
The Lessee's covenant and indemnity in this section 7.00 shall
not apply to Pollutants and Waste existing prior to the Less
taking occupancy of Demised Premises.
IN WITNESS WHEREOF the parties hereto have executed this
Indenture.
For and on behalf For and on behalf of
PENSIONFUND REALTY LIMITED SIDUS SYSTEMS INC.
-------------------------- --------------------------
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
----------------------C.S. ----------------------C.S.
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
--------------------------
ASSISTANT SECRETARY
18
<PAGE>
SCHEDULA "A"
Referred to in Annexed Lease
FIRST PART The premises demised are shown by means of cross-hatching on the
floor plan hereto annexed to this Schedule A.
The demised premises shall exclude the outside face of all
perimeter walls of the demised premises but shall include window
and doors in said perimeter walls. The demised premises shall
include all installations, fixtures and furnishings and other
amenities situate in the demised premises.
SECOND PART The Lessee and the employees, agents, customers and invitees
respectively of the Lessee shall (subject as provided in the said
lease) have the following rights as appurtenant to the demised
premises in common with all others from time to time entitled
thereto:
(a) The right to use the driveways situate upon the lands
hereto for the purpose of access to and egress from the
demised premises.
(b) The right to park its passenger motor vehicles and
those of its employees and customers upon the lands
described in the said lease. The location and number of
parking spaces for the use of the Lessee, its employees
and customers shall be determined by the Lessor from
time to time.
Notwithstanding anything in this lease contained, the Lessor
shall have the right to make such changes and improvements as the
Lessor may from time to time determine in respect of the said
driveways and parking areas including the right to change the
size and shape thereof and to erect additions to the said
building or lease or sell part of the lands described in
Paragraph 1.01.03, provided that such changes shall not deny the
Lessee reasonable access to its premises.
<PAGE>
DIAGRAM OF FLOOR PLAN
<PAGE>
SCHEDULE "B"
Referred to in Annexed Lease
Legal Description Lot 0, Blocks 4 & 5,
District Lot 311,
Plan 22291
Municipal Address 8765 Ash Street
Vancouver, British Columbia
<PAGE>
SCHEDULE "C"
Rules and Regulations Referred to in Annexed Lease
1. Tenants shall not perform any acts or carry on any practice which may
injure the lands described in Schedule B or be a nuisance to any other
tenants of the said building.
2. Tenants shall not burn any trash or garbage in or about the demised pre-
mises or anywhere within the confines of the lands described in said
Schedule B.
3. Tenants shall not keep or display any merchandise on or otherwise obstruct
any part of the lands described in said Schedule B except as is
specifically per- mitted in said lease.
4. Floors shall not be overloaded.
5. All loading and unloading of merchandise, supplies, materials, garbage,
refuse and other chattels shall be made only through or by means of such
door- ways as the Lessor shall designate in writing from time to time.
6. Tenants shall in connection with their advertising in relation to the
business carried on in the demised premises use and promote the name Kent.
Industrial Centre or such other name as the Landlord may from time to time
designate and in using such name in any advertisement, sign, poster,
printing or other writing Tenants will print, write or designate the same
in a manner to be determined from time to time by the Landlord and in no
other manner. Tenants shall not use such name in regard to any business
other than their business upon the demised premises. Tenants agree that
they will not carry on or permit to be carried on any business in the
demised premises under a name or style other than their own name or call or
permit the premises or any business carried on therein to be called any
name other than their own name, without the prior written consent of the
Landlord.
7. Tenants shall, upon written notice from the Landlord, within five days fur-
nish the Landlord with the current Provincial License Number of any vehicle
owned or used by employees of Tenants.
8. Tenants shall not bring upon their premises any equipment, motor or any
other thing which might damage the said building.
9. Garbage or refuse shall be placed in containers of a type approved by the
Landlord in writing inside the demised premises and shall be removed only
at such time or times as the Landlord shall from time to time advise the
Tenant.
10. No merchandise, supplies, materials, garbage, refuse or other chattels
shall be allowed to remain on any loading dock or common area.
11. For the benefit and welfare of all or any tenants of premises upon the
lands described in Schedule B as it may exist from time to time, the
Landlord shall have the right to issue further Rules and Regulations and
such further Rules and Regulations shall thereupon be binding upon Tenants.
<PAGE>
This LEASE AMENDMENT AGREEMENT dated the 26th day of Septem- ber, 1996,
BETWEEN: PENSIONFUND REALTYLIMITED, a Company incorporated under the laws of
the Province of Ontario and registered to carry on business in the
Province of British Columbia under registration number 12053-A;
(hereinafter called the "Landlord") OF THE FIRST PART;
AND: SIDUS SYSTEMS INC., a Company incorporated under the laws of the
Province of British Columbia;
(hereinafter called the "Landlord ") OF THE SECOND PART.
WHEREAS by a lease dated the 11th day of October, 1990 (hereinafter re- ferred
to as the "Lease"), the Landlord did demise unto the Tenant for a term of six
(6) years and fifteen (15) days expiring on the 30th day of September, 1996,
those premises municipally identified as Units 1, 2 and 3, 8765 Ash Street,
Vancouver, British Columbia which premises are more particularly described in
said Lease;
NOW THEREFORE this Lease Amendment Agreement witnesseth that in consideration of
the sum of One Dollar ($1.00) now paid by each party hereto to the other
(receipt of which hereby acknowledged), the parties hereto cove- nant and agree
that the said Lease be and the same is hereby amended as follows:
EFFECTIVE OCTOBER 1, 1996
1. Clause 1.03.01, Lease Term, shall be deleted in its entirety and
replaced with the following:
"1.03.01 Lease Term: Eleven (11) Years and Fifteen (15) Days"
2. Clause 1.03.03, Termination Date, shall be deleted in its entirety and
re- placed with the following:
"1.03.01 Termination Date: September 30, 2001"
3. Clause 1.04.01, Basic Rent Initial Term, shall be deleted in its
entirety and replaced with the following:
"1.04.01 Basic Rent:
Period Per Annum Per Month
-----------------------------------------------------------------------
Sept. 15/90--Sept. 30/96 $108,108.00 $9,009.00
Oct. 1/96--Sept. 30/2001 $ 97,812.00 $8,151.00"
<PAGE>
4. HVAC shall be upgraded to provide a comfortable working environment. EXCEPT
as hereby expressly modified, amended and supplemented, the said Lease is
in all respect rat- ified and confirmed and the term, conditions and
covenants thereof shall remain in full force and ef- fect.
IN WITNESS WHEREOF the parties hereto have executed this LEASE AMENDMENT
AGREEMENT.
For and on behalf of
PENSIONFUND REALTYLIMITED
- -------------------------------- ----------------------------------
Authorized Signatory Authorized Signatory
For and on behalf of
SIDUS SYSTEMS INC.
- -------------------------------- ----------------------------------
Authorized Signatory Authorized Signatory
VALID ONLY WHEN COUNTERSIGNED AND SEALED BY THE LANDLORD
SIGNED & SEALED IN THE PRESENCE OF:
- ------------------------------------
WITNESS' SIGNATURE
- ------------------------------------
WITNESS' NAME
- ------------------------------------
ADDRESS
- ------------------------------------
COOPER, MOLYNEUX & MAKUZ
Chartered Accountants
A Member Firm of Associated Accounting Firms International
- --------------------------------------------------------------------------------
8th Floor
701 Evans Avenue
Etobicoke, Ontario
M9C 1A3
Tel: (416) 626-6000
Fax: (416) 626-8650
October 24, 1996
US Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.
USA 20549
Dear Sir/Madam:
RE: SIDUS SYSTEMS INC.
We were previously the principal accountant for Sidus Systems Inc. (the
"Company") and under the date February 8, 1996 (except with respect to Note 15,
which is as of October 23, 1996), reported on the consolidated financial
statements of the Company and its subsidiaries for the years ended November 30,
1995, November 30, 1994 and November 30, 1993. On March 18, 1996, our
appointment as principal accountant was terminated. We have read the Company's
statements included under the caption "Financial Statements" in the above
referenced registration statement of Form 20-F as filed with the Commission, and
we agree with such statements.
Yours very truly,
/s/ Cooper, Molyneux & Makuz
CHARTERED ACCOUNTANTS
COOPER, MOLYNEUX & MAKUZ
Chartered Accountants
A Member Firm of Associated Accounting Firms International
- --------------------------------------------------------------------------------
8th Floor
701 Evans Avenue
Etobicoke, Ontario
M9C 1A3
Tel: (416) 626-6000
Fax: (416) 626-8650
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANT
We hereby consent to the use in the Form 20-F Registration Statement of Sidus
Systems Inc. for the years ended November 30, 1995, November 30, 1994 and
November 30, 1993, of our report dated February 8, 1996 (except with respect to
Note 15, which is as of October 23, 1996), relating to the financial statements
of Sidus Systems, Inc. which appear in such Form 20-F.
/s/ Cooper, Molyneux & Makuz
CHARTERED ACCOUNTANTS
Toronto, Ontario
October 24, 1996
