UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2000
---------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission file number: 000-27407
-------------------------------
DELTA CAPITAL TECHNOLOGIES, INC.
---------------------------------
(Exact name of small business issuer as specified in charter)
Delaware 98-018770
--------------------------------------------- ---------------------------------
(State of Other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
Suite 255, 999-8th Street, SW, Calgary, Alberta T2R 1J5 Canada
--------------------------------------------------------------
(Address of principal executive offices)
(403) 244-7300
------------------------------------------
(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
The number of shares of the Registrant's common stock par value $0.001 per
share (the "Common Stock"), outstanding as of August 14, 2000 was 15,701,254
shares.
Transitional Small Business Disclosure Format (check one): Yes ______ No X
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<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- --------------------
ASSETS
<S> <C> <C>
Current Assets
Cash $ - $ 351
Accounts Receivable - affiliate 954,042 82,041
Accounts Receivable 213,850
------------------- --------------------
Total current assets 1,167,892 82,392
Fixed Assets, net of accumulated
depreciation of $4,830 and $76 40,586 488
Other Assets
Investment, net of accumulated
amortization of $902,778 and $486,111 1,597,222 2,013,889
Goodwill, net of accumulated
amortization of $209,457 802,919 -
Marketing License, net of accumulated
amortization of $12,200 and $6,569 21,585 27,216
Capitalized Development Costs 609,238 -
------------------- --------------------
3,030,964 2,041,105
------------------- --------------------
$ 4,239,442 $ 2,123,985
=================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Checks issued in excess of cash in banks $ 30,272 $ -
Accounts Payable 249,991 40,912
Accrued Liabilities 42,313 -
Notes Payable 25,408 214,619
------------------- --------------------
Total current liabilities 347,984 255,531
Shareholders' Equity
Common stock, $.001 par value, 25,000,000 shares authorized;
14,951,254 and 13,800,000 issued and outstanding 14,951 13,800
Additional paid-in capital 4,926,518 2,546,407
Deficit accumulated during the development stage (1,050,011) (691,753)
------------------- --------------------
3,891,458 1,868,454
------------------- --------------------
$ 4,239,442 $ 2,123,985
=================== ====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2000 and 1999 and
the Period from March 4, 1998 (Inception) to June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Total
Accumulated
During the
Development
Stage
Three months ended Six months ended (March 4,
------------------------------- -------------------------------- 1998 to
June 30, June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000)
---------------- ---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Revenue $ 245,064 $ - $ 408,823 $ - $ 408,823
Expenses
General and administrative (71,842) (2,194) (113,292) (20,289) (307,255)
Goodwill amortization (104,728) - (209,457) - (209,457)
Investment amortization (208,333) - (416,666) - (902,777)
License agreement amortization (2,815) - (5,630) - (12,199)
Interest expense (13,336) - (22,036) - (27,146)
--------------- --------------- --------------- --------------- ------------------
Total expenses (401,054) (2,194) (767,081) (20,289) (1,458,834)
--------------- --------------- --------------- --------------- ------------------
Net loss $ (155,990) $ (2,194) $ (358,258) $ (20,289) $ (1,050,011)
--------------- --------------- --------------- --------------- ------------------
Basic and diluted loss per share $ (0.01) $ 0.00 $ (0.02) $ 0.00 $ (0.10)
=============== =============== =============== =============== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period From March 4, 1998 (Inception) to June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
----------------------------------- Paid-in
Shares Amount Capital
----------------- ---------------- ------------------
<S> <C> <C> <C>
Balance, March 4, 1998 - $ - $ -
Issuance of common stock for services (March 1998) 800,000 800 (593)
Issuance of common stock for cash (June 1998) 8,000,000 8,000 52,000
Net loss for the period
----------------- ---------------- ------------------
Balance, December 31, 1998 8,800,000 8,800 51,407
Issuance of common stock (September 1999) 5,300,000 5,300 2,496,692
Cancellation of common stock (December 1999) (300,000) (300) (1,692)
Net loss for the year
----------------- ---------------- ------------------
Balance, December 31, 1999 13,800,000 $ 13,800 $ 2,546,407
Issuance of common stock in exchange for
Matridigm Corporation (January 2000) 500,000 500 999,500
Issuance of common stock for cash (February 2000) 26,000 26 51,974
Issuance of common stock for cash (March 2000) 200,000 200 341,800
Issuance of common stock for cash (March 2000) 62,500 62 124,938
Issuance of common stock for cash (May 2000) 226,000 226 451,774
Issuance of common stock for repayment of debt (June 2000) 136,754 137 410,125
Net loss for the period
----------------- ---------------- ------------------
Balance, June 30, 2000 14,951,254 $ 14,951 $ 4,926,518
================= ================ ==================
</TABLE>
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Development
Stage Total
----------------- ----------------
<S> <C> <C>
Balance, March 4, 1998 $ - $ -
Issuance of common stock for services (March 1998) 207
Issuance of common stock for cash (June 1998) 60,000
Net loss for the period (39,281) (39,281)
----------------- ----------------
Balance, December 31, 1998 (39,281) 20,926
Issuance of common stock (September 1999) 2,501,992
Cancellation of common stock (December 1999) (1,992)
Net loss for the year (652,472) (652,472)
----------------- ----------------
Balance, December 31, 1999 $ (691,753) $ 1,868,454
Issuance of common stock in exchange for
Matridigm Corporation (January 2000) 1,000,000
Issuance of common stock for cash (February 2000) 52,000
Issuance of common stock for cash (March 2000) 342,000
Issuance of common stock for cash (March 2000) 125,000
Issuance of common stock for cash (May 2000) 452,000
Issuance of common stock for repayment of debt (June 2000) 410,262
Net loss for the period (358,258) (358,258)
----------------- ----------------
Balance, June 30, 2000 $ (1,050,011) $ 3,891,458
================= ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOW
For the Six Months Ended June 30, 2000 and 1999 and
the Period from March 4, 1998 (Inception) to June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Total
Accumulated
During the
Development
Stage
(March 4,
1998 to
June 30, June 30, June 30,
2000 1999 2000)
------------------- ------------------ ---------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $ (358,258) $ (20,289) $ (1,050,011)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 4,754 - 4,830
Amortization 631,753 - 1,124,433
Increase in accounts payable 209,079 - 249,991
Increase in accrued liabilities 42,313 - 42,313
Increase in accounts receivable (1,085,851) - (1,167,892)
------------------- ------------------ ---------------------
Net cash used in operating activities (556,210) (20,289) (796,336)
Cash Flows From Investing Activities
Capitalized development costs (609,238) - (609,238)
Purchase of marketing license - (33,785)
Purchase of office equipment and leasehold improvements (44,852) - (45,416)
------------------- ------------------ ---------------------
Net cash used in investing activities (654,090) 0 (688,439)
Cash Flows From Financing Activities
Proceeds from loans 208,677 - 423,503
Proceeds from issuance of common stock 971,000 - 1,031,000
------------------- ------------------ ---------------------
Net cash provided by financing activities 1,179,677 0 1,454,503
------------------- ------------------ ---------------------
Net increase (decrease) in cash (30,623) (20,289) # (30,272)
Cash, beginning of period 351 20,926 0
------------------- ------------------ ---------------------
Cash, end of period $ (30,272) $ 637 $ (30,272)
=================== ================== =====================
</TABLE>
No cash payments for interest or income taxes have been made.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2000 (Unaudited)
Note 1. Basis of Presentation
The interim period consolidated financial statements contained herein include
the accounts of Delta Capital Technologies, Inc. and The Matridigm Corporation,
its wholly-owned subsidiary (the "Company").
The interim period consolidated financial statements have been prepared by the
Company pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC"). Certain information and footnote disclosure
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
SEC rules and regulations. The interim period consolidated financial statements
should be read together with the audited consolidated financial statements and
accompanying notes included in the Company's latest annual report on Form 10-KSB
for the fiscal year ended December 31, 1999. In the opinion of the Company, the
unaudited consolidated financial statements contained herein contain all
adjustments necessary to present a fair statement of the results of the interim
periods presented.
Note 2. Summary of Significant Accounting Policies
Acquisition of A Company
------------------------
Effective January 1, 2000, the Company acquired 100% of the outstanding shares
of common stock of The Matridigm Corporation ("Matridigm"), a privately held
marketing and communications company in Calgary, Alberta. This acquisition has
been accounted for under the purchase method. As consideration for this
acquisition, the Company issued 500,000 shares of its own common stock, warrants
which entitle the seller to acquire 490,000 shares of common stock of the
Company at $2.00 per share, and a cash payment of $69,286. The cost of the
acquisition totaled $1,069,286. In connection with this acquisition, the Company
has recorded $1,012,376 of goodwill, which is being amortized over 29 months,
its estimated useful life.
From and after January 1, 2000, the Company's consolidated statement of
operations includes the revenue and expenses of Matridigm. Combining Matridigm's
operating results for the six months ended June 30, 1999 with those of the
Company results in the following pro forma data:
Revenue $ 611,289
Expenses 565,364
---------
Net Income $ 35,925
=========
Income per Share $ 0.00
=========
Earnings Per Share
------------------
Basic earnings per share is computed by dividing income (loss) for the period by
the weighted average number of shares of common stock outstanding during a
period. Diluted earnings per share takes into
6
<PAGE>
consideration shares of common stock outstanding (computed under basic earnings
per share) and potentially dilutive common shares. The weighted average number
of shares was 14,535,157 and 8,800,000 for the six months ended June 30, 2000
and June 30, 1999, respectively. The weighted average number of shares of common
stock was 9,938,241 for the period from March 4, 1998 to June 30, 2000.
Capitalized Development Costs
-----------------------------
The Company's product reached the stage of technological feasibility as defined
by Statements of Financial Accounting Standards ("SFAS") No. 86 on January 1,
2000. Accordingly, all product development costs prior to that date have been
charged to expense and all product development costs subsequent to that date
have been included in capitalized development costs.
Subsequent Event
----------------
Subsequent to the quarter ended June 30, 2000, management arranged a private
placement financing pursuant to Regulation S under the Securities Act of 1933,
as amended, pursuant to which it issued, or will issue, 500,000 shares of common
stock for net proceeds in the amount of $500,000 and anticipates issuing an
additional 500,000 shares of common stock for net proceeds in the amount of
$500,000 in the near future. Management continues to monitor the capital markets
and believes that is will be able to raise sufficient capital to continue the
Company's progress. Management also continues to work with interested parties to
secure funding, primarily through equity financing, but will also participate in
industry standard software/hardware vendor financing programs as they become
available to the Company on terms which the Company's management considers
reasonable. However, no assurance can be given that Delta Capital will
successfully consummate any further financings or that, if consummated, any such
further financing would be consummated on terms favorable to the Company.
7
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan Of Operation.
This Quarterly Report contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," and other similar expressions or variations of
such words are intended to identify these forward-looking statements.
Additionally, statements concerning future matters such as the development of
new products, enhancements or technologies, possible changes in legislation and
other statements regarding matters that are not historical fact are
forward-looking statements. Forward-looking statements involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, availability of financial resources
adequate for short-, medium- and long-term needs, demand for our products and
services and market acceptance, as well as those factors discussed in this "ITEM
2. Management's Discussion and Analysis or Plan of Operations" and elsewhere in
this Quarterly Report.
Mid-Point
---------
At mid year, Delta Capital Technologies, Inc. ("Delta Capital") is at the
mid-point of its transition from being an "early stage" company to a fully
operational corporation with a complete set of products and services. From June
1, 1999, when Delta Capital acquired the worldwide license to the relBUILDER(TM)
technology that is critical to its e-Commerce/e-Business software, through the
quarter ended June 30, 2000, Delta Capital has made significant progress in
developing and taking to market its innovative product and services offering.
--------------------------------------------------------------------------------
Highlights at mid-year include:
o Product Development
o Completion of v2 of the relBUILDER(TM)i-Suite of electronic business
tools;
o Continued progress toward a mid-September 2000 market launch of the
Enterprise Edition, a fully scalable e-Commerce/e-Business mid-market
solution;
o Marketing launches:
Launch of two major products:
o The Merchant Edition - aimed at small to medium sized businesses that
want to capitalize on the growing use of the Internet for business to
consumer (B2C) transactions;
o The Business Edition - a more robust product, designed to take
businesses that already utilize the Internet to establish online
business to business (B2B) trading communities.
o Sales Development:
o US National sales office established in Austin, Texas, with branches
in Baltimore, Maryland and Orange County, California
o Canadian sales offices in Vancouver, British Columbia; Calgary,
Alberta and Toronto, Ontario
o Customer service:
o Implementation of 24 hour x 7 day customer support services
o Continued development of training and support materials
--------------------------------------------------------------------------------
Modest Revenues
---------------
Delta Capital continues to forecast modest revenues in 2000 with a substantial
growth starting in the first quarter of 2001 as effects of its marketing and
promotional activities combine with deployment of sales personnel as per plan.
Revenue for the first six months of 2000 are as per plan and amounted to
$408,823 as compared to no revenues in the comparable period a year earlier. Net
loss for the six months was $358,258 as compared to $20,298 in the pervious
year. Delta Capital continues to focus its efforts on exploiting the middle
market - the "gap" between large-scale e-Commerce/e-Business solutions providers
and the small-scale "off the shelf" solutions - for its future success.
8
<PAGE>
Continued Fund Raising
----------------------
Delta Capital will continue to require additional working capital during the
next two quarters of 2000 to be successful in its planned activities.
Continuation of Delta Capital as a going concern is dependent upon obtaining the
necessary working capital. Management continues to monitor the capital markets
and is confident that it will be able to raise sufficient capital to continue
Delta Capital's operations and progress. Net cash provided by financing
activities to June 30, 2000 amounted to $1,179,677. Subsequent to the end of the
second quarter, management arranged a private placement financing that will net
Delta Capital $1 million, $500,000 of which has been received to date.
Management continues to work with interested parties to secure funding,
primarily through equity financing, but will also participate in industry
standard software/hardware vendor financing programs as they become available to
Delta Capital. However, no assurance can be given that Delta Capital will
successfully consummate any further financings or that such further financings
will be pursuant to terms which are favorable to the Company.
Strengthened Management
-----------------------
Delta Capital continued to strengthen its management team. On July 24, 2000,
Delta Capital entered into an employment agreement with Mr. Lawrence Tombari as
interim Chief Financial Officer with the intent that over a 90-day period both
parties will agree to a permanent executive position for Mr. Tombari. Mr.
Tombari was most recently the CFO & Senior Vice President for a Las Vegas-based
gaming company with casinos in several states.
Delta Capital also hired U.S. and Canadian vice-presidents of sales. Mr. Robert
Burnette is located in Austin, Texas, and supervises Delta Capital's U.S. sales
force. Mr. Garry Leitch is located in Calgary, Alberta, Canada, and supervises
Delta Capital's Canadian sales force through Delta Capital's subsidiary company,
Delta Enterprise Technologies (Canada) Inc. In all, there are 15 persons
actively engaged in selling the company's "Partners" or value added resellers.
It is anticipated, subject to adequate funding, that the sales force will grow
to 85 personnel in the next two quarters as Delta Capital emphasizes its
determination to capture market share. In all, including Delta Capital's wholly
owned subsidiary, The Matridigm Corporation and through its 37 percent ownership
of Delta Enterprise Technologies (Canada) Inc., there are currently 73 personnel
engaged in the development, sales and support of Delta Capital's products and
services.
Material Purchases/Leases
-------------------------
Delta Capital concluded, shortly after the end of the period under review, an
agreement with O & Y Properties Inc. to lease approximately 13,500 square feet
of space on the tenth floor of Phoenix Place, an office tower in downtown
Calgary, Alberta. Tenant improvements and Landlord's work had been approximately
65 per cent completed under the terms of a lease undertaken by a high technology
company (unrelated to Delta Capital). When that company failed to meet certain
of its obligations, Delta Capital was able to assume the space on an as-is,
where-is basis and the landlord agreed to build out the space to plans and
specifications of the previous tenant. There are minor design changes required
to provide Delta Capital's personnel with first-class, highly attractive office
and operational facilities. The net annual rent will be $127,416 with additional
occupancy costs estimated at $66,438 per annum for a period of five years with
an option to renew for a further five years (all figures converted to U.S.
dollars from Canadian at $1.4616).
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Delta Capital is not a party to any material pending legal
proceedings other than ordinary routine litigation incidental to the business of
Delta Capital which Delta Capital does not believe is material.
ITEM 2. Changes in Securities and Use of Proceeds.
In March, 2000 Delta Capital completed a $200,000 private placement
pursuant to which Delta Capital issued to Interward Capital Corporation, 100,000
common shares of Delta Capital at US$2.00 per common share. The shares were
exempt under Regulation S as promulgated by the Securities and Exchange
Commission (the "SEC"), under the Securities Act of 1933, as amended (the "1933
Act") and the appropriate restrictive legend was placed on the share certificate
issued. The sole investor represented to Delta Capital that is was not a U.S.
person as defined under Regulation S and that the securities were acquired for
investment purposes only, for its own account and not with a view towards
distribution. The sole investor further represented that at the time the order
originated and through its execution and delivery, it remained outside the
United States. Delta Capital used the proceeds for working capital purposes.
On April 18, 2000, Delta Capital closed a transaction pursuant to
which it purchased all the issued and outstanding common stock of The Matridigm
Corporation, a private Canadian corporation ("Matridigm") from Michael Steele,
Cecilia Lanz, Diana Steele, Andre Lanz and Robert Sweetman, representing all of
the stockholders of Matridigm. The exchange agreement provided for Delta Capital
to receive all of the issued and outstanding shares of Matridigm in exchange for
a cash payment of Cdn$100,000, 500,000 shares of Common Stock, and 490,000
warrants, each warrant exercisable to purchase one share of Common Stock at
US$2.00 per share.
At the end of May, 2000 Delta Capital completed a $250,000 private
placement pursuant to which Delta Capital issued to Eaglecrest Ventures Ltd., a
Turks & Caicos Islands company, 125,000 units at US$2.00 per unit, each unit
consisting of 125,000 common shares and 125,000 share purchase warrants
exercisable at US$2.00 at any time prior to May 11, 2002. The shares were exempt
under Regulation S as promulgated by the Securities and Exchange Commission (the
"SEC"), under the Securities Act of 1933, as amended (the "1933 Act") and the
appropriate restrictive legend was placed on the share certificate issued. The
sole investor represented to Delta Capital that is was not a "U.S. person" as
defined under Regulation S and that the securities were acquired for investment
purposes only, for its own account and not with a view towards distribution. The
sole investor further represented that at the time the order originated and
through its execution and delivery, it remained outside the United States. Delta
Capital used the proceeds for working capital purposes.
On June 19, 2000 Delta Capital issued 136,754 common shares at a
deemed price of US$3.00 per common shares to Bonanza Mgmt Ltd., a British
Columbia company, in connection with a debt settlement agreement dated April 14,
2000. The shares were exempt under Regulation S as promulgated by the Securities
and Exchange Commission (the "SEC"), under the Securities Act of 1933, as
amended (the "1933 Act") and the appropriate restrictive legend was placed on
the share certificate issued.
In July, 2000 Delta Capital completed a $500,000 private placement
pursuant to which Delta Capital issued to Eaglecrest Ventures Ltd., a Turks &
Caicos Islands company, 500,000 units at US$1.00 per unit, each unit consisting
of 500,000 shares of common stock and 500,000 share purchase warrants
exercisable at US$1.00 at any time prior to July 6, 2002. The shares were exempt
under Regulation S as
10
<PAGE>
promulgated by the Securities and Exchange Commission (the "SEC"), under the
Securities Act of 1933, as amended (the "1933 Act") and the appropriate
restrictive legend was placed on the share certificate issued. The sole investor
represented to Delta Capital that is was not a "U.S. person" as defined under
Regulation S and that the securities were acquired for investment purposes only,
for its own account and not with a view towards distribution. The sole investor
further represented that at the time the order originated and through its
execution and delivery, it remained outside the United States. Delta Capital
used the proceeds for working capital purposes.
ITEM 4. Submission of Matters to a Vote of Security Holders.
As reported in Delta Capital's 10-Q filed on May 22, 2000, at the
annual meeting stockholders of Delta Capital held on May 18, 2000, the following
individuals were unanimously elected as directors of Delta Capital for a term of
one year or until a successor has been elected and qualified: Paul Davis,
Michael Horsey, Kevin Wong, Judith Miller and Michael Steele. Peterson Sullivan,
P.L.L.C. was elected unanimously as Delta Capital's accountants for the next two
years.
11
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(1) Articles of Incorporation dated March 4, 1998 together
with Amended Articles of Incorporation dated April 23,
1998
3.2(2) By-Laws of Delta Capital Technologies, Inc., a Delaware
corporation, dated April 23, 1998
4.1(3) Stock Option Agreement between Delta Capital
Technologies, Inc., a Delaware corporation, and Judith
Miller, Corporate Secretary and Director of Delta
Capital dated September 15, 1999
4.2(4) Letter from Delta Capital Technologies, Inc., a Delaware
corporation, to Judith Miller dated January 7, 2000
4.3(5) Form of Offshore Securities Subscription Agreement to
purchase 200,000 shares of common stock of Delta Capital
Technologies, Inc., a Delaware corporation, issued to
Winward Overseas Limited, dated March 16, 2000
4.4(6) Schedule of Subscribers that purchased subscriptions
pursuant to the Form of Offshore Securities Subscription
Agreement set forth in 4.3 above
4.5(7) Placement Agent Letter Agreement by and between Delta
Capital Technologies, Inc., a Delaware corporation, and
Traction Capital, dated March 1, 2000
4.6 Form of Offshore Subscription Agreement to purchase
125,000 units of Delta Capital Technologies, Inc. issued
to Eaglecrest Ventures Ltd. dated May 11, 2000
4.7 Form of Offshore Subscription Agreement to purchase
500,000 units of Delta Capital Technologies, Inc. issued
to Eaglecrest Ventures Ltd. dated July 6, 2000
4.8 Form of Offshore Subscription Agreement to purchase
100,000 common shares of Delta Capital Technologies,
Inc. issued to Interward Capital Corporation dated March
16, 2000
4.9 Delta Capital Technologies, Inc.'s Stock Option Plan
approved by the directors of Delta on June 9, 2000
10.1(8) License Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and 827109 Alberta Ltd.
dated June 1, 1999
----------
1 Incorporated by reference to Exhibit 3(I) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
2 Incorporated by reference to Exhibit 3(II) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
3 Incorporated by reference to Exhibit 99(B) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
4 Incorporated by reference to Exhibit 99(C) of the Company's Form 10SB, filed
with the SEC on January 11, 2000.
5 Incorporated by reference to Exhibit 4.3 of the Company's Form 10-Q filed
with the SEC on May 22, 2000. 6 Incorporated by reference to Exhibit 4.4 of
the Company's Form 10-Q filed with the SEC on May 22, 2000.
7 Incorporated by reference to Exhibit 4.5 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
8 Incorporated by reference to Exhibit 10(A) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
12
<PAGE>
10.2(9) License Agreement between SiCom Solutions Inc. and
827109 Alberta Ltd. dated June 1, 1999
10.3(10) Letter from 827109 Alberta Ltd. to Delta Capital
Technologies, Inc., a Delaware corporation, dated
September 2, 1999 acknowledging receipt of the $20,000
payment and granting a three month extension of the
$30,000 payment to November 1, 1999
10.4(11) Letter from SiCom Solutions Inc. to 827109 Alberta Ltd.
dated September 2, 1999 acknowledging receipt of the
$20,000 payment and granting a three month extension of
the $30,000 payment to November 1, 1999
10.5(12) Share Exchange Agreement between Delta Capital
Technologies, Inc., a Delaware corporation, and 827109
Alberta Ltd. dated June 1, 1999
10.9(13) Letter from Rajesh Taneja dated December 3, 1999
regarding acquisition of corporate names by Delta
Capital Technologies, Inc., a Delaware corporation
10.10(14) Exchange Agreement, executed April 14, 2000, among Delta
Capital Technologies Inc., a Delaware corporation, The
Matridigm Corporation, a Canadian corporation, Michael
Steele, Cecilia Lanz, Diana Steele, Andre Lanz and
Robert Sweetman
10.11(15) Form of Employment Agreement
10.12(16) Schedule of directors and employees of Delta Capital
Technologies, Inc., a Delaware corporation, who executed
employment agreements the form of which is set forth in
Exhibit 10.11
10.13(17) Debt Settlement Agreement by and between Delta Capital
Technologies, Inc., a Delaware corporation, and Bonanza
Mgmt Ltd., a British Columbia company
10.14 Debt Settlement Letter, dated May 12, 2000, between
Delta Capital Technologies, Inc., a Delaware
corporation, and Paul Davis, President of Delta Capital
Technologies, Inc.
10.15 Employment Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and Bernie J. Malach dated
April 17, 2000
10.16 Employment Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and Lawrence P. Tombari
dated July 24, 2000
----------
9 Incorporated by reference to Exhibit 10(B) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
10 Incorporated by reference to Exhibit 10(C) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
11 Incorporated by reference to Exhibit 10(D) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
12 Incorporated by reference to Exhibit 99(A) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
13 Incorporated by reference to Exhibit 99(E) of the Company's Form 10SB, filed
with the SEC on January 14, 2000.
14 Incorporated by reference to Exhibit 2.1 of the Company's Form 8-K, filed
with the SEC on May 3, 2000.
15 Incorporated by reference to Exhibit 10.11 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
16 Incorporated by reference to Exhibit 10.12 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
17 Incorporated by reference to Exhibit 10.13 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
13
<PAGE>
10.17 Services Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and Bonanza Mgmt Ltd., a
British Colombia company, dated January 1, 2000
10.18 Lease Agreement between Delta Capital Technologies, Inc.
and O&Y Properties Inc. dated July 19, 2000.
10.19 Fund Raising Letter Agreement between Delta Capital
Technologies, Inc. and Reovest Financial, Inc. dated May
3, 2000.
10.20 Assignment of Lease between Alberni Investments (1988)
Inc., Flanagan Enterprises Inc. and Delta Capital
Technologies, Inc. dated June 30, 2000 together with the
Head Lease between Alberni Investments (1988) Inc. and
Flanagan Enterprises Inc. dated December 12, 1996.
27.1 Financial Data Schedule
(b) A report was filed on Form 8-K on May 3, 2000, reporting the acquisition
of all the issued and outstanding shares of capital stock of The Matridigm
Corporation.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DELTA CAPITAL TECHNOLOGIES, INC.
Date: August 14, 2000 By: /s/ Michael Horsey
------------------------------
Name: Michael Horsey
Title: Chairman
Date: August 14, 2000 By: /s/ Lawrence Tomberry
------------------------------
Name: Lawrence Tomberry
Title: Chief Financial Officer
15
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
3.1(1) Articles of Incorporation dated March 4, 1998 together
with Amended Articles of Incorporation dated April 23,
1998
3.2(2) By-Laws of Delta Capital Technologies, Inc., a Delaware
corporation, dated April 23, 1998
4.1(3) Stock Option Agreement between Delta Capital
Technologies, Inc., a Delaware corporation, and Judith
Miller, Corporate Secretary and Director of Delta
Capital dated September 15, 1999
4.2(4) Letter from Delta Capital Technologies, Inc., a Delaware
corporation, to Judith Miller dated January 7, 2000
4.3(5) Form of Offshore Securities Subscription Agreement to
purchase 200,000 shares of common stock of Delta Capital
Technologies, Inc., a Delaware corporation, issued to
Winward Overseas Limited, dated March 16, 2000
4.4(6) Schedule of Subscribers that purchased subscriptions
pursuant to the Form of Offshore Securities Subscription
Agreement set forth in 4.3 above
4.5(7) Placement Agent Letter Agreement by and between Delta
Capital Technologies, Inc., a Delaware corporation, and
Traction Capital, dated March 1, 2000
4.6 Form of Offshore Subscription Agreement to purchase
125,000 units of Delta Capital Technologies, Inc. issued
to Eaglecrest Ventures Ltd. dated May 11, 2000
4.7 Form of Offshore Subscription Agreement to purchase
500,000 units of Delta Capital Technologies, Inc. issued
to Eaglecrest Ventures Ltd. dated July 6, 2000
4.8 Form of Offshore Subscription Agreement to purchase
100,000 common shares of Delta Capital Technologies,
Inc. issued to Interward Capital Corporation dated March
16, 2000
4.9 Delta Capital Technologies, Inc.'s Stock Option Plan
approved by the directors of Delta on June 9, 2000
10.1(8) License Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and 827109 Alberta Ltd.
dated June 1, 1999
----------
1 Incorporated by reference to Exhibit 3(I) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
2 Incorporated by reference to Exhibit 3(II) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
3 Incorporated by reference to Exhibit 99(B) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
4 Incorporated by reference to Exhibit 99(C) of the Company's Form 10SB, filed
with the SEC on January 11, 2000.
5 Incorporated by reference to Exhibit 4.3 of the Company's Form 10-Q filed
with the SEC on May 22, 2000. 6 Incorporated by reference to Exhibit 4.4 of
the Company's Form 10-Q filed with the SEC on May 22, 2000.
7 Incorporated by reference to Exhibit 4.5 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
8 Incorporated by reference to Exhibit 10(A) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
16
<PAGE>
10.2(9) License Agreement between SiCom Solutions Inc. and
827109 Alberta Ltd. dated June 1, 1999
10.3(10) Letter from 827109 Alberta Ltd. to Delta Capital
Technologies, Inc., a Delaware corporation, dated
September 2, 1999 acknowledging receipt of the $20,000
payment and granting a three month extension of the
$30,000 payment to November 1, 1999
10.4(11) Letter from SiCom Solutions Inc. to 827109 Alberta Ltd.
dated September 2, 1999 acknowledging receipt of the
$20,000 payment and granting a three month extension of
the $30,000 payment to November 1, 1999
10.5(12) Share Exchange Agreement between Delta Capital
Technologies, Inc., a Delaware corporation, and 827109
Alberta Ltd. dated June 1, 1999
10.9(13) Letter from Rajesh Taneja dated December 3, 1999
regarding acquisition of corporate names by Delta
Capital Technologies, Inc., a Delaware corporation
10.10(14) Exchange Agreement, executed April 14, 2000, among Delta
Capital Technologies Inc., a Delaware corporation, The
Matridigm Corporation, a Canadian corporation, Michael
Steele, Cecilia Lanz, Diana Steele, Andre Lanz and
Robert Sweetman
10.11(15) Form of Employment Agreement
10.12(16) Schedule of directors and employees of Delta Capital
Technologies, Inc., a Delaware corporation, who executed
employment agreements the form of which is set forth in
Exhibit 10.11
10.13(17) Debt Settlement Agreement by and between Delta Capital
Technologies, Inc., a Delaware corporation, and Bonanza
Mgmt Ltd., a British Columbia company
10.14 Debt Settlement Letter, dated May 12, 2000, between
Delta Capital Technologies, Inc., a Delaware
corporation, and Paul Davis, President of Delta Capital
Technologies, Inc.
10.15 Employment Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and Bernie J. Malach dated
April 17, 2000
10.16 Employment Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and Lawrence P. Tombari
dated July 24, 2000
----------
9 Incorporated by reference to Exhibit 10(B) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
10 Incorporated by reference to Exhibit 10(C) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
11 Incorporated by reference to Exhibit 10(D) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
12 Incorporated by reference to Exhibit 99(A) of the Company's Form 10SB, filed
with the SEC on January 5, 2000.
13 Incorporated by reference to Exhibit 99(E) of the Company's Form 10SB, filed
with the SEC on January 14, 2000.
14 Incorporated by reference to Exhibit 2.1 of the Company's Form 8-K, filed
with the SEC on May 3, 2000.
15 Incorporated by reference to Exhibit 10.11 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
16 Incorporated by reference to Exhibit 10.12 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
17 Incorporated by reference to Exhibit 10.13 of the Company's Form 10-Q filed
with the SEC on May 22, 2000.
17
<PAGE>
10.17 Services Agreement between Delta Capital Technologies,
Inc., a Delaware corporation, and Bonanza Mgmt Ltd., a
British Colombia company, dated January 1, 2000
10.18 Lease Agreement between Delta Capital Technologies, Inc.
and O&Y Properties Inc. dated July 19, 2000.
10.19 Fund Raising Letter Agreement between Delta Capital
Technologies, Inc. and Reovest Financial, Inc. dated May
3, 2000.
10.21 Assignment of Lease between Alberni Investments (1988)
Inc., Flanagan Enterprises Inc. and Delta Capital
Technologies, Inc. dated June 30, 2000 together with the
Head Lease between Alberni Investments (1988) Inc. and
Flanagan Enterprises Inc. dated December 12, 1996.
27.1 Financial Data Schedule
18
<PAGE>
EXHIBIT 4.6
SECURITIES SUBSCRIPTION AGREEMENT
This Securities Agreement is executed in reliance upon the transaction exemption
afforded by Regulation S ("Regulation S") as promulgated by the Securities and
Exchange Commission ("SEC"), under the Securities Act of 1933, as amended ("1933
Act").
This Agreement has been executed by the undersigned in connection with the
private placement of units of Common Stock (hereinafter referred to as the
"Units") of:
DELTA CAPITAL TECHNOLOGIES, INC.
Suite 255, 999 - 8th St. SW
Calgary, AB T2R 1J5 Canada
a corporation organized under the laws of the state of Delaware, USA, OTC
Electronic Bulletin Board symbol (DCTG) (hereinafter referred to as the "Seller"
or the "Company")
The Undersigned:
Eaglecrest Ventures Ltd.
PO Box 67, Providenciales,
Turks & Caicos Islands, BWI
a resident of a non USA jurisdiction (hereinafter referred to as the
"Purchaser"), hereby represents and warrants to, and agrees with the Seller as
follows:
1. Agreement to Subscribe
a. Purchase Price. The undersigned hereby subscribes for
125,000 Units, each Unit consisting of one common share and
one share purchase warrant (the "Warrants") entitling the
holder thereof to purchase an additional common share of
the Company at US$2.00 per common share for a term of 2
years following closing of this transaction. The total
consideration payable to the Company is $250,000 United
States Dollars (the "Purchase Price").
b. Form of Payment. The Purchaser shall pay the Purchase Price
by delivering good funds in U.S. dollars to the designated
depository for closing as determined by the Seller by
delivery of securities versus payment.
2. Subscriber Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. The Purchaser represents and warrants
to the Seller as follows:
i The Purchaser is not a U.S. person as defined
under Regulation S;
ii At the time the buy order was originated, the
Purchaser was outside the United States and is
outside the United States as of the date of the
execution and delivery of this Agreement;
iii The Purchaser is purchasing the Units for its own
account and not on behalf of any U.S. person, and
the sale has not been prearranged with a
purchaser in the United States. Notwithstanding
the contents of this paragraph, the Purchaser may
purchase the subject Units under its own name or
under the name of other Non U.S. persons as
defined under Regulation S;
19
<PAGE>
iv Each distributor participating in the offering of
securities, if any, has agreed in writing that
all offers and sales of the securities prior to
the expiration of a period commencing on the date
of the transaction and ending 1 year thereafter
shall only be made in compliance with the safe
harbor contained in Regulation S pursuant to
registration of Units under the Securities Act of
1933 or pursuant to an exemption from
registration;
v The Purchaser represents and warrants and hereby
agrees that all offers and sales of the
securities prior to the expiration of a period
commencing on the date of the transaction and
ending 1 year thereafter shall only be made in
compliance with the safe harbor contained in
Regulation S pursuant to registration of Units
under the Securities Act of 1933 or pursuant to
an exemption from registration, and all offers
and sales after the expiration of the 1 year
period shall be made only pursuant to such a
registration or to such exemption from
registration;
vi The Purchaser acknowledges that the Units have
not been registered under the Securities Act of
1933 and may not be offered or sold in the United
States or to U.S. persons during a period
commencing on the date of the transaction and
ending 1 year thereafter unless the Units are
registered under the Securities Act of 1933 or an
exemption from the registration requirements is
available;
vii The Purchaser acknowledges that the purchase of
the Units involves a high degree of risk and
further acknowledges that it can bear the
economic risk of the purchase of the Units
including the total loss of its investment;
viii The Purchaser understands that the Units are
being offered and sold to it in reliance on
specific exemptions from the registration
requirements of the Federal and State securities
laws and that the Seller is relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgements and
understandings of the Purchaser set forth herein
in order to determine the applicability of such
exemptions and suitability of the Purchaser to
acquire the Units.
b. Current Public Information. The Purchaser acknowledges that
the Purchaser has been furnished with or has acquired
copies of the Company's most recent Annual Report on the
Form 10-K files with the SEC and the Forms 10-Q and 8-K
filed thereafter (collectively the "SEC Filings"), and
other publicly available documents.
c. Independent Investigation; Access. The Purchaser
acknowledges that the Purchaser is making the decision to
purchase the Units subscribed for, has relied upon
Independent Investigations made by it and it's purchaser
representatives, if any, and the Purchaser and such
representatives, if any, have, prior to any sale to it,
been given access and the opportunity to examine all
material books and records of the Corporation, all material
contracts and documents relating to this offering and an
opportunity to ask questions of, and to receive answers
from the Seller or any person acting on its behalf
concerning the terms and conditions of this offering. The
Purchaser and its advisors, if any, have been furnished
with access to all publicly available materials relating to
the business, finances and operation of the Seller and
materials relating to the offer and sale of the Units which
have been requested. The Purchaser, and its advisors, if
any, have received complete and satisfactory answers to any
such inquiries.
d. No Government Recommendation or Approval. The Purchaser
understands that no Federal or State agency has passed on
or made any recommendation or endorsement of the Units.
3. Issuer Representations.
20
<PAGE>
a. Reporting Company Status. The Seller is a reporting issuer
as defined by Rule 902 of Regulation S. The Seller is in
full compliance, to the extent applicable, with all
reporting obligations under wither Section 12(b), 12(g), or
15(d) of the Securities Act of 1934, as amended (the
"Exchange Act"). The Seller has registered its common stock
pursuant to Section 12 of the Exchange Act and the common
stock trades on the OTC Electronic Bulletin Board.
b. Offshore Transaction.
i The Seller has not offered these securities to
any person in the United States or to any U.S.
person as that term is defined in Regulation S;
ii At the time the buy order was originated, the
Seller and/or its agent reasonably believed the
Purchaser was outside the United States and was
not a U.S. person;
iii The Seller and/or its agents reasonably believe
that the transaction has not been prearranged
with a purchaser in the United States.
c. No Directed Selling Efforts. In regard to this transaction,
the Seller has not conducted any "direct selling efforts"
as that term is defined in Rule 902 of Regulation S nor has
the Seller conducted any general solicitation relating to
the offer and sale of the Units within securities to
persons resident within the United States or elsewhere.
4. Legends on Certificates. The transaction restriction in connection
with this offer and sale restrict the Purchaser from offering and
selling to U.S. persons, or for the account or benefit of a U.S.
person, for a 1 year period. The rules require the placement of such
a restrictive legend on share certificates. Rule 903 governs the 1
year transaction restriction.
5. Exemption; Reliance on Representations. The Purchaser understands
that the offer and sale of the Units is not being registered under
the 1933 Act. The Seller is relying on the rules governing offers and
sales made outside the United States pursuant to Regulation S. Rules
901 through 905 of Regulation S govern this transaction.
6. Transfer Agent Instructions. The Seller's transfer agent will be
instructed to issue one or more share certificates representing Units
with a restrictive legend in the names of purchasers to be specified
prior to the closing and that the Units have been issued pursuant to
Regulation S. The Seller further warrants that no instructions have
been given to the transfer agent and that these Units be freely
transferable on the books and records of the Company subject to
compliance with applicable securities laws.
7. Stock Delivery Instructions. The share certificates shall be
delivered to the Purchaser on a delivery versus payment basis at such
times and places to be mutually agreed.
8. Closing Date. The date of the issuance of the sale of the Units (the
"Closing Date") shall be on or before May 11, 2000, or such other
mutually agreed to time and place.
9. Conditions to the Company's Obligation to Sell. The Purchaser
understands the Seller's obligation to sell the Units to the
Purchaser is conditioned upon:
21
<PAGE>
a. The receipt and acceptance by the Seller of this
Subscription Agreement for all the Units as evidenced by
execution of this Subscription Agreement by the President
or Vice President of the Seller;
b. Delivery into the closing depository by the Purchaser of
good funds as payment in full for the purchase of the
Units;
c. The shareholders of the Seller approving additional units
to be authorized, if necessary, sufficient to satisfy the
terms of this Agreement.
10. Conditions to the Purchaser's Obligation to Purchase. The Seller
understands that the Purchaser's obligation to purchase the Units is
conditioned upon:
a. Acceptance by the Purchaser of a satisfactory Subscription
Agreement for the sale of the Units;
b. Delivery of Units of common stock with restrictive legend;
c. The Purchaser's determination, in its sole and absolute
discretion, to acquire the Units pursuant to this
Agreement.
11. Governing Law. This Agreement shall be governed by and interpreted in
accordance of the laws of the State of Delaware.
IN WITNESS WHEREOF, This Securities Subscription Agreement was
executed on the date first written below.
Dated at Providenciales, this 11th day of May, 2000.
EAGLECREST VENTURES LTD.
Per: /s/ Graham Douglas
------------------
Graham Douglas, President
Accepted this 11th day of May, 2000
DELTA CAPITAL TECHNOLOGIES, INC.
Per: /s/ Paul Davis
--------------
Paul Davis, President
22
<PAGE>
EXHIBIT 4.7
SECURITIES SUBSCRIPTION AGREEMENT
This Securities Agreement is executed in reliance upon the transaction exemption
afforded by Regulation S ("Regulation S") as promulgated by the Securities and
Exchange Commission ("SEC"), under the Securities Act of 1933, as amended ("1933
Act").
This Agreement has been executed by the undersigned in connection with the
private placement of units of Common Stock (hereinafter referred to as the
"Units") of:
DELTA CAPITAL TECHNOLOGIES, INC.
Suite 255, 999 - 8th St. SW
Calgary, AB T2R 1J5 Canada
a corporation organized under the laws of the state of Delaware, USA, OTC
Electronic Bulletin Board symbol (DCTG) (hereinafter referred to as the "Seller"
or the "Company")
The Undersigned:
Eaglecrest Ventures Ltd.
PO Box 67, Providenciales,
Turks & Caicos Islands, BWI
a resident of a non USA jurisdiction (hereinafter referred to as the
"Purchaser"), hereby represents and warrants to, and agrees with the Seller as
follows:
1. Agreement to Subscribe
a. Purchase Price. The undersigned hereby subscribes for
500,000 Units, each Unit consisting of one common share and
one share purchase warrant (the "Warrants") entitling the
holder thereof to purchase an additional common share of
the Company at US$1.00 per common share for a term of 2
years following closing of this transaction. The total
consideration payable to the Company is $500,000 United
States Dollars (the "Purchase Price").
b. Form of Payment. The Purchaser shall pay the Purchase Price
by delivering good funds in U.S. dollars to the designated
depository for closing as determined by the Seller by
delivery of securities versus payment.
2. Subscriber Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. The Purchaser represents and warrants
to the Seller as follows:
i The Purchaser is not a U.S. person as defined
under Regulation S;
ii At the time the buy order was originated, the
Purchaser was outside the United States and is
outside the United States as of the date of the
execution and delivery of this Agreement;
iii The Purchaser is purchasing the Units for its own
account and not on behalf of any U.S. person, and
the sale has not been prearranged with a
purchaser in the United States. Notwithstanding
the contents of this paragraph, the Purchaser may
purchase the subject Units under its own name or
under the name of other Non U.S. persons as
defined under Regulation S;
23
<PAGE>
iv Each distributor participating in the offering of
securities, if any, has agreed in writing that
all offers and sales of the securities prior to
the expiration of a period commencing on the date
of the transaction and ending 1 year thereafter
shall only be made in compliance with the safe
harbor contained in Regulation S pursuant to
registration of Units under the Securities Act of
1933 or pursuant to an exemption from
registration;
v The Purchaser represents and warrants and hereby
agrees that all offers and sales of the
securities prior to the expiration of a period
commencing on the date of the transaction and
ending 1 year thereafter shall only be made in
compliance with the safe harbor contained in
Regulation S pursuant to registration of Units
under the Securities Act of 1933 or pursuant to
an exemption from registration, and all offers
and sales after the expiration of the 1 year
period shall be made only pursuant to such a
registration or to such exemption from
registration;
vi The Purchaser acknowledges that the Units have
not been registered under the Securities Act of
1933 and may not be offered or sold in the United
States or to U.S. persons during a period
commencing on the date of the transaction and
ending 1 year thereafter unless the Units are
registered under the Securities Act of 1933 or an
exemption from the registration requirements is
available;
vii The Purchaser acknowledges that the purchase of
the Units involves a high degree of risk and
further acknowledges that it can bear the
economic risk of the purchase of the Units
including the total loss of its investment;
viii The Purchaser understands that the Units are
being offered and sold to it in reliance on
specific exemptions from the registration
requirements of the Federal and State securities
laws and that the Seller is relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgements and
understandings of the Purchaser set forth herein
in order to determine the applicability of such
exemptions and suitability of the Purchaser to
acquire the Units.
b. Current Public Information. The Purchaser acknowledges that
the Purchaser has been furnished with or has acquired
copies of the Company's most recent Annual Report on the
Form 10-K files with the SEC and the Forms 10-Q and 8-K
filed thereafter (collectively the "SEC Filings"), and
other publicly available documents.
c. Independent Investigation; Access. The Purchaser
acknowledges that the Purchaser is making the decision to
purchase the Units subscribed for, has relied upon
Independent Investigations made by it and it's purchaser
representatives, if any, and the Purchaser and such
representatives, if any, have, prior to any sale to it,
been given access and the opportunity to examine all
material books and records of the Corporation, all material
contracts and documents relating to this offering and an
opportunity to ask questions of, and to receive answers
from the Seller or any person acting on its behalf
concerning the terms and conditions of this offering. The
Purchaser and its advisors, if any, have been furnished
with access to all publicly available materials relating to
the business, finances and operation of the Seller and
materials relating to the offer and sale of the Units which
have been requested. The Purchaser, and its advisors, if
any, have received complete and satisfactory answers to any
such inquiries.
d. No Government Recommendation or Approval. The Purchaser
understands that no Federal or State agency has passed on
or made any recommendation or endorsement of the Units.
3. Issuer Representations.
24
<PAGE>
a. Reporting Company Status. The Seller is a reporting issuer
as defined by Rule 902 of Regulation S. The Seller is in
full compliance, to the extent applicable, with all
reporting obligations under wither Section 12(b), 12(g), or
15(d) of the Securities Act of 1934, as amended (the
"Exchange Act"). The Seller has registered its common stock
pursuant to Section 12 of the Exchange Act and the common
stock trades on the OTC Electronic Bulletin Board.
b. Offshore Transaction.
i The Seller has not offered these securities to
any person in the United States or to any U.S.
person as that term is defined in Regulation S;
ii At the time the buy order was originated, the
Seller and/or its agent reasonably believed the
Purchaser was outside the United States and was
not a U.S. person;
iii The Seller and/or its agents reasonably believe
that the transaction has not been prearranged
with a purchaser in the United States.
c. No Directed Selling Efforts. In regard to this transaction,
the Seller has not conducted any "direct selling efforts"
as that term is defined in Rule 902 of Regulation S nor has
the Seller conducted any general solicitation relating to
the offer and sale of the Units within securities to
persons resident within the United States or elsewhere.
4. Legends on Certificates. The transaction restriction in connection
with this offer and sale restrict the Purchaser from offering and
selling to U.S. persons, or for the account or benefit of a U.S.
person, for a 1 year period. The rules require the placement of such
a restrictive legend on share certificates. Rule 903 governs the 1
year transaction restriction.
5. Exemption; Reliance on Representations. The Purchaser understands
that the offer and sale of the Units is not being registered under
the 1933 Act. The Seller is relying on the rules governing offers and
sales made outside the United States pursuant to Regulation S. Rules
901 through 905 of Regulation S govern this transaction.
6. Transfer Agent Instructions. The Seller's transfer agent will be
instructed to issue one or more share certificates representing Units
with a restrictive legend in the names of purchasers to be specified
prior to the closing and that the Units have been issued pursuant to
Regulation S. The Seller further warrants that no instructions have
been given to the transfer agent and that these Units be freely
transferable on the books and records of the Company subject to
compliance with applicable securities laws.
7. Stock Delivery Instructions. The share certificates shall be
delivered to the Purchaser on a delivery versus payment basis
at such times and places to be mutually agreed.
8. Closing Date. The date of the issuance of the sale of the Units (the
"Closing Date") shall be on or before July 6, 2000, or such other
mutually agreed to time and place.
9. Conditions to the Company's Obligation to Sell. The Purchaser
understands the Seller's obligation to sell the Units to the
Purchaser is conditioned upon:
25
<PAGE>
a. The receipt and acceptance by the Seller of this
Subscription Agreement for all the Units as evidenced by
execution of this Subscription Agreement by the President
or Vice President of the Seller;
b. Delivery into the closing depository by the Purchaser of
good funds as payment in full for the purchase of the
Units;
c. The shareholders of the Seller approving additional units
to be authorized, if necessary, sufficient to satisfy the
terms of this Agreement.
10. Conditions to the Purchaser's Obligation to Purchase. The Seller
understands that the Purchaser's obligation to purchase the Units is
conditioned upon:
a. Acceptance by the Purchaser of a satisfactory Subscription
Agreement for the sale of the Units;
b. Delivery of Units of common stock with restrictive legend;
c. The Purchaser's determination, in its sole and absolute
discretion, to acquire the Units pursuant to this
Agreement.
11. Governing Law. This Agreement shall be governed by and interpreted in
accordance of the laws of the State of Delaware.
IN WITNESS WHEREOF, This Securities Subscription Agreement was
executed on the date first written below.
Dated at Providenciales, this 6th day of July, 2000.
EAGLECREST VENTURES LTD.
Per: /s/ Graham Douglas
------------------
Graham Douglas, President
Accepted this 6th day of July, 2000
DELTA CAPITAL TECHNOLOGIES, INC.
Per: /s/ Paul Davis
--------------
Paul Davis, President
26
<PAGE>
EXHIBIT 4.8
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Agreement is executed in reliance upon the transaction
exemption afforded by Regulation S ("Regulation S") as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities Act of 1933, as
amended ("1933 Act")
This Agreement has been executed by the undersigned in connection
with the private placement of shares of Common Stock (hereinafter referred to as
the "Shares") of
DELTA CAPITAL TECHNOLOGIES, INC.
Suite 255, 999 - 8th St. SW
Calgary, AB T2R 1J5 Canada
a corporation organized under the laws of the state of Delaware, USA, OTC
Electronic Bulletin Board symbol (DCTG) (hereinafter referred to as the
"Seller")
The Undersigned:
Interward Capital Corporation
Canada Trust Tower - BCE Place, PO Box 520
161 Bay Street - Suite 3610
Toronto, Ontario M5J 2S1
a resident of a non USA jurisdiction (hereinafter referred to as the
"Purchaser"), hereby represents and warrants to, and agrees with the Seller as
follows:
1. Agreement to Subscribe
a. Purchase Price. The undersigned hereby subscribes for
100,000 common shares in the capital of the Seller (the
"Shares") at $2.00 per share payable in U.S. Dollars for a
total consideration of $200,000 dollars ($US) (the
"Purchase Price").
b. Form of Payment. The Purchaser shall pay the Purchase
Price by delivering good funds in U.S. dollars to the
designated depository for closing as determined by the
Seller by delivery of securities versus payment.
2. Subscriber Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. The Purchase represents and warrants
to the Seller as follows:
i The Purchaser is not a U.S. person as defined
under Regulation S;
ii At the time the buy order was originated, the
Purchaser was outside the United States and is
outside the United States as of the date of the
execution and delivery of this Agreement;
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iii The Purchaser is purchasing the Shares for its
own account and not on behalf of any U.S.
person, and the sale has not been prearranged
with a purchaser in the United States.
Notwithstanding the contents of this paragraph,
the Purchaser may purchase the subject shares
under its own name or under the name of other
Non U.S. persons as defined under Regulation S;
iv Each distributor participating in the offering
of securities, if any, has agreed in writing
that all offers and sales of the securities
prior to the expiration of a period commencing
on the date of the transaction and ending 1 year
thereafter shall only be made in compliance with
the safe harbor contained in Regulation S
pursuant to registration of Shares under the
Securities Act of 1933 or pursuant to an
exemption from registration;
v The Purchase represents and warrants and hereby
agrees that all offers and sales of the
securities prior to the expiration of a period
commencing on the date of the transaction and
ending 1 year thereafter shall only be made in
compliance with the safe harbor contained in
Regulation S pursuant to registration of Shares
under the Securities Act of 1933 or pursuant to
an exemption from registration, and all offers
and sales after the expiration of the 1 year
period shall be made only pursuant to such a
registration or to such exemption from
registration;
vi The Purchaser acknowledges that the Shares have
not been registered under the Securities Act of
1933 and may not be offered or sold in the United
States or to U.S. persons during a period
commencing on the date of the transaction and
ending 1 year thereafter unless the Shares are
registered under the Securities Act of 1933 or an
exemption from the registration requirements is
available;
vii The Purchaser acknowledges that the purchase of
the Shares involves a high degree of risk and
further acknowledges that it can bear the
economic risk of the purchase of the Shares
including the total loss of its investment;
viii The Purchaser understands that the Shares are
being offered and sold to it in reliance on
specific exemptions from the registration
requirements of the Federal and State securities
laws and that the Seller is relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgements and
understandings of the Purchaser set forth herein
in order to determine the applicability of such
exemptions and suitability of the Purchaser to
acquire the Shares.
b. Current Public Information. The Purchaser acknowledges that
the Purchaser has been furnished with or has acquired
copies of the Company's most recent Annual Report on the
Form 10-K files with the SEC and the Forms 10-Q and 8-K
filed thereafter (collectively the "SEC Filings"), and
other publicly available documents.
c. Independent Investigation; Access. The Purchaser
acknowledges that the Purchaser is making the decision to
purchase the Shares subscribed for, has relied upon
Independent Investigations made by it and it's purchaser
representatives, if any, and the Purchaser and such
representatives, if any, have, prior to any sale to it,
been given access and the
28
<PAGE>
opportunity to examine all material books and records of
the Corporation, all material contracts and documents
relating to this offering and an opportunity to ask
questions of, and to receive answers from the Seller or any
person acting on its behalf concerning the terms and
conditions of this offering. The Purchaser and its
advisors, if any, have been furnished with access to all
publicly available materials relating to the business,
finances and operation of the Seller and materials relating
to the offer and sale of the Shares which have been
requested. The Purchaser , and its advisors, if any, have
received complete and satisfactory answers to any such
inquiries.
d. No Government Recommendation or Approval. The Purchaser
understands that no Federal or State agency has passed on
or made any recommendation or endorsement of the Shares.
3. Issuer Representations.
a. Reporting Company Status. The Seller is a reporting issuer
as defined by Rule 902 of Regulation S. The Seller is in
full compliance, to the extent applicable, with all
reporting obligations under wither Section 12(b), 12(g), or
15(d) of the Securities Act of 1934, as amended (the
"Exchange Act"). The Seller has registered its common stock
pursuant to Section 12 of the Exchange Act and the common
stock trades on the OTC Electronic Bulletin Board.
b. Offshore Transaction.
i The Seller has not offered these securities to
any person in the United States or to any U.S.
person as that term is defined in Regulation S;
ii At the time the buy order was originated, the
Seller and/or its agent reasonably believed
the Purchaser was outside the United States and
was not a U.S. person;
iii The Seller and/or its agents reasonably believe
that the transaction has not been prearranged
with a purchaser in the United States.
c. No Directed Selling Efforts. In regard to this transaction,
the Seller has not conducted any "direct selling efforts"
as that term is defined in Rule 902 of Regulation S nor has
the Seller conducted any general solicitation relating to
the offer and sale of the Shares within securities to
persons resident within the United States or elsewhere.
4. Legends on Certificates. The transaction restriction in
connection with this offshore offer and sale restrict the Purchaser
from offering and selling to U.S. persons, or for the account or
benefit of a U.S. person, for a 1 year period. The rules require the
placement of such a restrictive legend on share certificates. Rule
903 governs the 1 year transaction restriction.
5. To the extent that the Purchaser is a resident of Ontario the
Purchaser is purchasing the Shares under the exemption from
prospectus requirements available under section 72(1)(d) of the
Ontario Securities Act which provides that the Purchaser must
purchase as Principal and the trade must have an aggregate
acquisition cost of not less than $150,000. Under the Ontario
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<PAGE>
Securities Act the Shares purchased will be subject to restrictions
on resale within Ontario until such time as:
a) the appropriate "hold period" has been satisfied and the
Purchaser has complied with other applicable requirements,
including the filing of appropriate reports pursuant to
applicable securities legislation;
b) a further statutory exemption may be relied upon by the
Purchaser; or
c) an appropriate discretionary order is obtained pursuant to
applicable securities laws.
Since the Seller's not a reporting issuer in the Province of Ontario,
the applicable hold period may never expire, and if no further
statutory exemption may be relied upon and if no discretionary order
or ruling is obtained this could result in the Purchaser having to
hold the Shares for an indefinite period of time. Pursuant to the
Ontario Securities Act a restrictive legend will be placed on the
certificate representing the Shares which reflect the above
referenced hold period.
6. Exemption; Reliance on Representations. The Purchaser understands
that the offer and sale of the Shares is not being registered under
the 1933 Act. The Seller is relying on the rules governing offers and
sales made outside the United States pursuant to Regulation S. Rules
901 through 905 of Regulation S govern this transaction.
7. Transfer Agent Instructions. The Seller's transfer agent will be
instructed to issue one or more share certificates representing
Shares with a restrictive legend in the names of purchasers to be
specified prior to the closing and that the Shares have been issued
pursuant to Regulation S. The Seller further warrants that no
instructions have been given to the transfer agent and that these
shares be freely transferable on the books and records of the Company
subject to compliance with applicable securities laws.
8. Stock Delivery Instructions. The share certificates shall be
delivered to the Purchaser on a delivery versus payment basis at
such times and places to be mutually agreed.
9. Closing Date. The date of the issuance of the sale of the Shares
(the "Closing Date") shall be on or before March 16, 2000, or such
other mutually agreed to time and place.
10. Conditions to the Company's Obligation to Sell. The Purchaser
understands the Seller's obligation to sell the Shares to the
Purchaser is conditioned upon:
a. The receipt and acceptance by the Seller of this Subscription
Agreement for all the Shares as evidenced by execution of this
Subscription Agreement by the President or Vice President of the
Seller;
b. Delivery into the closing depository by the Purchaser of good
funds as payment in full for the purchase of the Shares;
c. The shareholders of the Seller approving additional shares to be
authorized, if necessary, sufficient to satisfy the terms of
this Agreement.
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<PAGE>
11. Conditions to the Purchaser's Obligation to Purchase. The Seller
understands that the Purchaser's obligation to purchase the Shares
is conditioned upon:
a. Acceptance by the Purchaser of a satisfactory Subscription
Agreement for the sale of the Shares;
b. Delivery of Shares of common stock with restrictive legend;
c. The Purchaser's determination, in its sole and absolute
discretion, to acquire the Shares pursuant to this Agreement.
12. Governing Law. This Agreement shall be governed by and interpreted in
accordance of the laws of the State of Delaware.
IN WITNESS WHEREOF, This Offshore Securities Subscription Agreement
was executed on the date first written below.
Dated at Toronto, Ontario, this 16th day of March, 2000
INTERWARD CAPITAL CORPORATION
Per: /s/ Andrew Best
---------------------------------------
(Authorized Signatory)
Title: President
Accepted this 16th day of March, 2000
DELTA CAPITAL TECHNOLOGIES, INC.
Per: /s/ Paul Davis
-----------------------------------------
Paul Davis, President
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<PAGE>
EXHIBIT 4.9
2000 STOCK OPTION PLAN OF
DELTA CAPITAL TECHNOLOGIES, INC.
May 30, 2000
A Delaware Corporation
May 30, 2000
As approved by the Board of Directors
June 9, 2000
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<PAGE>
STOCK OPTION PLAN OF
DELTA CAPITAL TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page No.
PURPOSE OF THE PLAN...................................................1
TYPES OF STOCK OPTIONS................................................1
DEFINITIONS...........................................................1
ADMINISTRATION OF THE PLAN............................................2
GRANT OF OPTIONS......................................................3
STOCK SUBJECT TO PLAN.................................................3
TERMS AND CONDITIONS OF OPTIONS.......................................4
TERMINATION OR AMENDMENT OF THE PLAN..................................8
INDEMNIFICATION.......................................................8
EFFECTIVE DATE AND TERM OF THE PLAN...................................9
33
<PAGE>
STOCK OPTION PLAN OF
DELTA CAPITAL TECHNOLOGIES, INC.
A Delaware Corporation
--------------------------------------------------------------------------------
1. PURPOSE OF THE PLANPURPOSE OF THE PLANPURPOSE OF THE PLANPURPOSE OF
THE PLANPURPOSE OF THE PLANPURPOSE OF THE PLANPURPOSE OF THE
PLANPURPOSE OF THE PLANPURPOSE OF THE PLANPURPOSE OF THE PLAN
The purpose of this Plan is to strengthen Delta Capital Technologies, Inc.
(hereinafter the "Company") by providing incentive stock options as a means to
attract, retain and motivate key corporate personnel, through ownership of stock
of the Company, and to attract individuals of outstanding ability to render
services to and enter the employment of the Company or its subsidiaries.
2. TYPES OF STOCK OPTIONSTYPES OF STOCK OPTIONSTYPES OF STOCK
OPTIONSTYPES OF STOCK OPTIONSTYPES OF STOCK OPTIONSTYPES OF
STOCK OPTIONSTYPES OF STOCK OPTIONSTYPES OF STOCK OPTIONSTYPES OF
STOCK OPTIONSTYPES OF STOCK OPTIONS
There shall be two types of Stock Options (referred to herein as "Options"
without distinction between such different types) that may be granted under this
Plan: (1) Options intended to qualify as Incentive Stock Options under Section
422 of the Internal Revenue Code ("Qualified Stock Options"), and (2) Options
not specifically authorized or qualified for favorable income tax treatment
under the Internal Revenue Code ("Non-Qualified Stock Options").
3. DEFINITIONS
The following definitions are applicable to the Plan:
(1) Board. The Board of Directors of the Company.
(2) Code. The Internal Revenue Code of 1986, as amended from time
to time.
(3) Common Stock. The shares of Common Stock of the Company.
(4) Company. Delta Capital Technologies, Inc., a Delaware
corporation.
(5) Consultant. An individual or entity that renders professional
services to the Company as an independent contractor and is not
an employee or under the direct supervision and control of the
Company.
(6) Disabled or Disability. For the purposes of Section 7, a
disability of the type defined in Section 22(e)(3) of the Code.
The determination of whether an individual is Disabled or has a
Disability is determined under procedures established by the
Plan Administrator for purposes of the Plan.
(7) Fair Market Value. For purposes of the Plan, the "fair market
value" per share of Common Stock of the Company at any date
shall be: (a) if the Common Stock is listed on an established
stock exchange or exchanges or the NASDAQ National Market, the
closing price per share on the last trading day immediately
preceding such date on the
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<PAGE>
principal exchange on which it is traded or as reported by
NASDAQ; or (b) if the Common Stock is not then listed on an
exchange or the NASDAQ National Market, but is quoted on the
NASDAQ Small Cap Market, the NASDAQ electronic bulletin board
or the National Quotation Bureau pink sheets, the average of
the closing bid and asked prices per share for the Common Stock
as quoted by NASDAQ or the National Quotation Bureau, as the
case may be, on the last trading day immediately preceding such
date; or (c) if the Common Stock is not then listed on an
exchange or the NASDAQ National Market, or quoted by NASDAQ or
the National Quotation Bureau, an amount determined in good
faith by the Plan Administrator.
(8) Incentive Stock Option. Any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(9) Non-Qualified Stock Option. Any Stock Option that is not an
Incentive Stock Option.
(10) Optionee. The recipient of a Stock Option.
(11) Plan Administrator. The board or the Committee designated by
the Board pursuant to Section 4 to administer and interpret the
terms of the Plan.
(12) Stock Option. Any option to purchase shares of Common Stock
granted pursuant to Section 7.
4. ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Board of Directors or by a Compensation
Committee (hereinafter the "Committee") composed of members selected by, and
serving at the pleasure of, the Board of Directors (the "Plan Administrator").
Subject to the provisions of the Plan, the Plan Administrator shall have
authority to construe and interpret the Plan, to promulgate, amend, and rescind
rules and regulations relating to its administration, to select, from time to
time, among the eligible employees and non-employee consultants (as determined
pursuant to Section 5) of the Company and its subsidiaries those employees and
consultants to whom Stock Options will be granted, to determine the duration and
manner of the grant of the Options, to determine the exercise price, the number
of shares and other terms covered by the Stock Options, to determine the
duration and purpose of leaves of absence which may be granted to Stock Option
holders without constituting termination of their employment for purposes of the
Plan, and to make all of the determinations necessary or advisable for
administration of the Plan. The interpretation and construction by the Plan
Administrator of any provision of the Plan, or of any agreement issued and
executed under the Plan, shall be final and binding upon all parties. No member
of the Committee or Board shall be liable for any action or determination
undertaken or made in good faith with respect to the Plan or any agreement
executed pursuant to the Plan.
All of the members of the Committee shall be persons who, in the opinion of
counsel to the Company, are outside directors and "non-employee directors"
within the meaning of Rule 16b-3(b)(3)(i) promulgated by the Securities and
Exchange Commission. From time to time, the Board may increase or decrease the
size of the Committee, and add additional members to, or remove members from,
the Committee. The Committee shall act pursuant to a majority vote, or the
written consent of a majority of its members, and minutes shall be kept of all
of its meetings and copies thereof shall be provided to the Board. Subject to
the provisions of the Plan and the directions of the Board, the Committee may
establish and follow such rules and regulations for the conduct of its business
as it may deem advisable.
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<PAGE>
At the option of the Board, the entire Board of Directors of the Company may act
as the Plan Administrator during such periods of time as all members of the
Board are "outside directors" as defined in Prop. Treas. Regs. '1.162-27(e)(3),
except that this requirement shall not apply during any period of time prior to
the date the Company's Common Stock becomes registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended.
5. GRANT OF OPTIONSGRANT OF OPTIONSGRANT OF OPTIONSGRANT OF
OPTIONSGRANT OF OPTIONSGRANT OF OPTIONSGRANT OF OPTIONSGRANT OF
OPTIONSGRANT OF OPTIONSGRANT OF OPTIONS
The Company is hereby authorized to grant Incentive Stock Options as defined in
section 422 of the Code to any employee or director (including any officer or
director who is an employee) of the Company, or of any of its subsidiaries;
provided, however, that no person who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or any of
its parent or subsidiary corporations, shall be eligible to receive an Incentive
Stock Option under the Plan unless at the time such Incentive Stock Option is
granted the Option price is at least 110% of the fair market value of the shares
subject to the Option, and such Option by its terms is not exercisable after the
expiration of five years from the date such Option is granted.
An employee may receive more than one Option under the Plan. Non-Employee
Directors shall be eligible to receive Non-Qualified Stock Options in the
discretion of the Plan Administrator. In addition, Non-Qualified Stock Options
may be granted to Consultants who are selected by the Plan Administrator.
6. STOCK SUBJECT TO PLAN
The stock available for grant of Options under the Plan shall be shares of the
Company's authorized but unissued, or reacquired, Common Stock. Subject to
adjustment as provided herein, the maximum aggregate number of shares of the
Company's common stock that may be optioned and sold under the Plan is _________
shares. The maximum aggregate number of shares of the Company's common stock
that may be optioned and sold under the Plan will be increased effective the
first day of each of the Company's fiscal quarters, beginning with the fiscal
quarter commencing January 1, 2001, by an amount equal to the lesser of:
(1) The number of shares which is equal to 15% of the outstanding shares of
the Common Stock on the first day of the applicable fiscal quarter,
less the number of shares of Common Stock which may be optioned and
sold under the Plan prior to the first day of the applicable fiscal
quarter; and
(2) a lesser number of shares of Common Stock determined by the board of
directors of the Company.
The maximum number of shares for which an Option may be granted to any Optionee
during any calendar year shall not exceed three percent (3%) of the issued and
outstanding common shares of the Company. In the event that any outstanding
Option under the Plan for any reason expires or is terminated, the shares of
Common Stock allocable to the unexercised portion of the Option shall again be
available for Options under the Plan as if no Option had been granted with
regard to such shares.
7. TERMS AND CONDITIONS OF
Options granted under the Plan shall be evidenced by agreements (which need not
be identical) in such form and containing such provisions that are consistent
with the Plan as the Plan Administrator shall from
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<PAGE>
time to time approve. Such agreements may incorporate all or any of the terms
hereof by reference and shall comply with and be subject to the following terms
and conditions:
(1) Number of Shares. Each Option agreement shall specify the number of
shares subject to the Option.
(2) Option Price. The purchase price for the shares subject to any Option
shall be determined by the Plan Administrator at the time of the grant,
but shall not be less than 85% of Fair Market Value per share. Anything
to the contrary notwithstanding, the purchase price for the shares
subject to any Incentive Stock Option shall not be less than 100% of
the Fair Market Value of the shares of Common Stock of the Company on
the date the Stock Option is granted. In the case of any Option granted
to an employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, or any of
its parent or subsidiary corporations, the Option price shall not be
less than 110% of the Fair Market Value per share of the Common Stock
of the Company on the date the Option is granted. For purposes of
determining the stock ownership of an employee, the attribution rules
of Section 424(d) of the Code shall apply.
(3) Notice and Payment. Any exercisable portion of a Stock Option may be
exercised only by: (a) delivery of a written notice to the Company
prior to the time when such Stock Option becomes unexercisable herein,
stating the number of shares bring purchased and complying with all
applicable rules established by the Plan Administrator; (b) payment in
full of the exercise price of such Option by, as applicable, delivery
of: (i) cash or check for an amount equal to the aggregate Stock Option
exercise price for the number of shares being purchased, (ii) in the
discretion of the Plan Administrator, upon such terms as the Plan
Administrator shall approve, a copy of instructions to a broker
directing such broker to sell the Common Stock for which such Option is
exercised, and to remit to the Company the aggregate exercise price of
such Stock Option (a "cashless exercise"), or (iii) in the discretion
of the Plan Administrator, upon such terms as the Plan Administrator
shall approve, shares of the Company's Common Stock owned by the
Optionee, duly endorsed for transfer to the Company, with a Fair Market
Value on the date of delivery equal to the aggregate purchase price of
the shares with respect to which such Stock Option or portion is
thereby exercised (a "stock-for-stock exercise"); (c) payment of the
amount of tax required to be withheld (if any) by the Company, or any
parent or subsidiary corporation as a result of the exercise of a Stock
Option. At the discretion of the Plan Administrator, upon such terms as
the Plan Administrator shall approve, the Optionee may pay all or a
portion of the tax withholding by: (i) cash or check payable to the
Company, (ii) a cashless exercise, (iii) a stock-for-stock exercise, or
(iv) a combination of one or more of the foregoing payment methods; and
(d) delivery of a written notice to the Company requesting that the
Company direct the transfer agent to issue to the Optionee (or his
designee) a certificate for the number of shares of Common Stock for
which the Option was exercised or, in the case of a cashless exercise,
for any shares that were not sold in the cashless exercise.
Notwithstanding the foregoing, the Company, in its sole discretion, may
extend and maintain, or arrange for the extension and maintenance of
credit to any Optionee to finance the Optionee's purchase of shares
pursuant to the exercise of any Stock Option, on such terms as may be
approved by the Plan Administrator, subject to applicable regulations
of the Federal Reserve Board and any other laws or regulations in
effect at the time such credit is extended.
(4) Terms of Option. No Option shall be exercisable after the expiration of
the earliest of: (a)
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<PAGE>
ten years after the date the Option is granted, (b) three Months after
the date the Optionee's employment with the Company and its
subsidiaries terminates, or a Non-Employee Director or Consultant
ceases to provide services to the Company, if such termination or
cessation is for any reason other than Disability or death, (c) one
year after the date the Optionee's employment with the Company, and its
subsidiaries, terminates, or a Non-Employee Director or Consultant
ceases to provide services to the Company, if such termination or
cessation is a result of death or Disability; provided, however, that
the Option agreement for any Option may provide for shorter periods in
each of the foregoing instances. In the case of an Incentive Stock
Option granted to an employee who owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the
Company, or any of its parent or subsidiary corporations, the term set
forth in (a) above shall not be more than five years after the date the
Option is granted.
(5) Exercise of an Option. No Option shall be exercisable during the
lifetime of an Optionee by any person other than the Optionee. Subject
to the foregoing, the Plan Administrator shall have the power to set
the time or times within which each Option shall vest or be exercisable
and to accelerate the time or times of vesting and exercise; provided,
however each Option shall provide the right to exercise at the rate of
at least 20% per year over five years from the date the Option is
granted. Unless otherwise provided by the Plan Administrator, each
Option will not be subject to any vesting requirements. To the extent
that an Optionee has the right to exercise an Option and purchase
shares pursuant hereto, the Option may be exercised from time to time
by written notice to the Company, stating the number of shares being
purchased and accompanied by payment in full of the exercise price for
such shares.
(6) No Transfer of Option. No Option shall be transferable by an Optionee
otherwise than by will or the laws of descent and distribution.
(7) Limit on Incentive Stock Option. The aggregate Fair Market Value
(determined at the time the Option is granted) of the stock with
respect to which an Incentive Stock Option is granted and exercisable
for the first time by an Optionee during any calendar year (under all
Incentive Stock Option plans of the Company and its subsidiaries) shall
not exceed $100,000. To the extent the aggregate Fair Market Value
(determined at the time the Stock Option is granted) of the Common
Stock with respect to which Incentive Stock Options are exercisable for
the first time by an Optionee during any calendar year (under all
Incentive Stock Option plans of the Company and any parent or
subsidiary corporations) exceeds $100,000, such Stock Options shall be
treated as Non-Qualified Stock Options. The determination of which
Stock Options shall be treated as Non-Qualified Stock Options shall be
made by taking Stock Options into account in the Order in which they
were granted.
(8) Restriction on Issuance of Shares. The issuance of Options and shares
shall be subject to compliance with all of the applicable requirements
of law with respect to the issuance and sale of securities, including,
without limitation, any required qualification under state securities
laws. If an Optionee acquires shares of Common Stock pursuant to the
exercise of an Option, the Plan Administrator, in its sole discretion,
may require as a condition of issuance of shares covered by the Option
that the shares of Common Stock be subject to restrictions on transfer.
The Company may place a legend on the share certificates reflecting the
fact that they are subject to restrictions on transfer pursuant to the
terms of this Section. In addition, the Optionee may be required to
execute a buy-sell
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<PAGE>
agreement in favor of the Company or its designee with respect to all
or any of the shares so acquired. In such event, the terms of any such
agreement shall apply to the optioned shares.
(9) Investment Representation. Any Optionee may be required, as a condition
of issuance of shares covered by his or her Option, to represent that
the shares to be acquired pursuant to exercise will be acquired for
investment and without a view toward distribution thereof, and in such
case, the Company may place a legend on the share certificate(s)
evidencing the fact that they were acquired for investment and cannot
be sold or transferred unless registered under the Securities Act of
1933, as amended, or unless counsel for the Company is satisfied that
the circumstances of the proposed transfer do not require such
registration.
(10)Rights as a Shareholder or Employee. An Optionee or transferee of an
Option shall have no right as a stockholder of the Company with respect
to any shares covered by any Option until the date of the issuance of a
share certificate for such shares. No adjustment shall be made for
dividends (Ordinary or extraordinary, whether cash, securities, or
other property), or distributions or other rights for which the record
date is prior to the date such share certificate is issued, except as
provided below. Nothing in the Plan or in any Option agreement shall
confer upon any employee any right to continue in the employ of the
Company or any of its subsidiaries or interfere in any way with any
right of the Company or any subsidiary to terminate the Optionee's
employment at any time.
(11)No Fractional Shares. In no event shall the Company be required to
issue fractional shares upon the exercise of an Option.
(12)Exercise in the Event of Death. In the event of the death of the
Optionee, any Option or unexercised portion thereof granted to the
Optionee, to the extent exercisable by him or her on the date of death,
may be exercised by the Optionee's personal representatives, heirs, or
legatees subject to the provisions of paragraph (d) above.
(13)Recapitalization or Reorganization of the Company. Except as otherwise
provided herein, appropriate and proportionate adjustments shall be
made (1) in the number and class of shares subject to the Plan, (2) to
the Option rights granted under the Plan, and (3) in the exercise price
of such Option rights, in the event that the number of shares of Common
Stock of the Company are increased or decreased as a result of a stock
dividend (but only on Common Stock), stock split, reverse stock split,
recapitalization, reorganization, merger, consolidation, separation, or
like change in the corporate or capital structure of the Company. In
the event there shall be any other change in the number or kind of the
outstanding shares of Common Stock of the Company, or any stock or
other securities into which such common stock shall have been changed,
or for which it shall have been exchanged, whether by reason of a
complete liquidation of the Company or a merger, reorganization, or
consolidation with any other corporation in which the Company is not
the surviving corporation, or the Company becomes a wholly-owned
subsidiary of another corporation, then if the Plan Administrator
shall, in its sole discretion, determine that such change equitably
requires an adjustment to shares of Common Stock currently subject to
Options under the Plan, or to prices or terms of outstanding Options,
such adjustment shall be made in accordance with such determination.
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<PAGE>
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustment shall be made by the Plan
Administrator, the determination of which in that respect shall be
final, binding, and conclusive. No right to purchase fractional shares
shall result from any adjustment of Options pursuant to this Section.
In case of any such adjustment, the shares subject to the Option shall
he rounded down to the nearest whole share. Notice of any adjustment
shall be given by the Company to each Optionee whose Options shall have
been so adjusted and such adjustment (whether or not notice is given)
shall be effective and binding for all purposes of the Plan.
In the event of a complete liquidation of the Company or a merger,
reorganization, or consolidation of the Company with any other
corporation in which the Company is not the surviving corporation, or
the Company becomes a wholly-owned subsidiary of another corporation,
any unexercised Options granted under the Plan shall be deemed
cancelled unless the surviving corporation in any such merger,
reorganization, or consolidation elects to assume the Options under the
Plan or to issue substitute Options in place thereof; provided,
however, that notwithstanding the foregoing, if such Options would be
cancelled in accordance with the foregoing, the Optionee shall have the
right exercisable during a ten-day period ending on the fifth day prior
to such liquidation, merger, or consolidation to exercise such Option
in whole or in part without regard to any installment exercise
provisions in the Option agreement.
(14) Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the
Plan Administrator may modify, extend or renew outstanding
options granted under the Plan and accept the surrender of
outstanding Options (to the extent not theretofore exercised).
The Plan Administrator shall not, however, without the approval
of the Board, modify any outstanding Incentive Stock Option in
any manner that would cause the Option not to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code. Notwithstanding the foregoing, no modification of an Option
shall, without the consent of the Optionee, alter or impair any
rights of the Optionee under the Option.
(15) Other Provisions. Each Option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may
be determined by the Plan Administrator.
8. TERMINATION OR AMENDMENT OF THE PLANTERMINATION OR AMENDMENT OF THE
PLANTERMINATION OR AMENDMENT OF THE PLANTERMINATION OR AMENDMENT OF
THE PLANTERMINATION OR AMENDMENT OF THE PLANTERMINATION OR AMENDMENT
OF THE PLANTERMINATION OR AMENDMENT OF THE PLANTERMINATION OR
AMENDMENT OF THE PLANTERMINATION OR AMENDMENT OF THE PLANTERMINATION
OR AMENDMENT OF THE PLAN
The Board may at any time terminate or amend the Plan; provided that, without
approval of the holders of a majority of the shares of Common Stock of the
Company represented and voting at a duly held meeting at which a quorum is
present or the written consent of a majority of the outstanding shares of Common
Stock, there shall be (except by operation of the provisions provided above) no
increase in the total number of shares covered by the Plan, no change in the
class of persons eligible to receive options granted under the Plan, no
reduction in the exercise price of Options granted under the Plan, and no
extension of the latest date upon which Options may be exercised; and provided
further that, without the
40
<PAGE>
consent of the Optionee, no amendment may adversely affect any then outstanding
Option or any unexercised portion thereof.
9. INDEMNIFICATIONINDEMNIFICATIONINDEMNIFICATIONINDEMNIFICATIONINDEMNIFI
CATIONINDEMNIFICATIONINDEMNIFICATIONINDEMNIFICATIONINDEMNIFICATIONIND
EMNIFICATION
In addition to such other rights of indemnification as they may have as members
of the Board Committee that administers the Plan, the members of the Plan
Administrator shall be indemnified by the Company against reasonable expense,
including attorney's fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein to which they, or any of them, may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against any and all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company). In addition, such members shall be indemnified by the
Company for any amount paid by them in satisfaction of a judgment in any action,
suit, or proceeding, except in relation to matters as to which it shall have
been adjudged that such member is liable for negligence or misconduct in the
performance of his or her duties, provided however that within 60 days after
institution of any such action, suit, or proceeding, the member shall in writing
offer the Company the opportunity, at its own expense, to handle and defend the
same.
10. EFFECTIVE DATE AND TERM OF THE PLANEFFECTIVE DATE AND TERM OF THE
PLANEFFECTIVE DATE AND TERM OF THE PLANEFFECTIVE DATE AND TERM OF THE
PLANEFFECTIVE DATE AND TERM OF THE PLANEFFECTIVE DATE AND TERM OF THE
PLANEFFECTIVE DATE AND TERM OF THE PLANEFFECTIVE DATE AND TERM OF THE
PLANEFFECTIVE DATE AND TERM OF THE PLANEFFECTIVE DATE AND TERM OF THE
PLAN
This Plan shall become effective (the "Effective Date") on the date of adoption
by the board of directors. Options granted under the Plan prior to shareholder
approval are subject to cancellation by the Plan Administrator if shareholder
approval is not obtained within 12 months of the date of adoption. Unless sooner
terminated by the Board in its sole discretion, this Plan will expire on
December 31, 2009.
IN WITNESS WHEREOF, the Company by its duly authorized officer, has caused this
Plan to be executed as of the 30th day of May, 2000.
DELTA CAPITAL TECHNOLOGIES, INC.
/s/ Michael Horsey
By: Michael Horsey
Its: Chairman
41
<PAGE>
EXHIBIT 10.14
DELTA CAPITAL TECHNOLOGIES, INC.
Suite 255, 999 - 8th Street SW
Calgary, AB T2R 1J5
Tel. (403) 244-7300 Fax. (403) 244-7211
May 12, 2000
Mr. Paul Davis
3 Stratton Place SW
Calgary, AB T3H 1T6
RE: Settlement of Outstanding Debts
Dear Paul:
Further to our discussions over the past two weeks concerning outstanding
indebtedness owed by our company to you on account of expenses and advances made
and incurred by you on our behalf since incorporation, we write to confirm our
agreement whereby you will accept the sum of $60,000 in full satisfaction of all
amounts owing by our company to you in this respect.
Kindly indicate your agreement to the above terms by signing below and returning
a copy of this letter.
Yours truly,
DELTA CAPITAL TECHNOLOGIES, INC.
/s/ Michael Horsey
Michael Horsey
Chairman
ACCEPTED AND AGREED TO THIS 12th day of May, 2000
/s/ Paul Davis
--------------------------------------------------------------
Paul Davis
42
<PAGE>
EXHIBIT 10.15
Delta Capital Technologies Inc. April 17, 2000
Suite 806 - 1904 Third Avenue
Seattle, Washington 98101
Attention: Mr. Michael Horsey
Chairman
Dear Sirs: RE: In House Legal Counsel Services Agreement
Thank you for the opportunity to act as In House Legal Counsel to Delta
Capital Technologies Inc. by submitting this proposal for services.
Scope. The scope of my duties as In House Legal Counsel will be:
1. Advise on general corporate and contractual matters involving Delta Capital,
including relationship agreements, joint venture/partnerships, leases,
employment contracts, licensing agreements, royalty agreements and such other
contracts as Delta Capital my become involved in from time to time.
2. Assist in negotiating/documenting joint venture/partnership opportunities
with other entities involved in the e-Business applications distribution
network.
3. Liaise with and instruct professional advisors to Delta Capital respecting
structure, terms and conditions of all contractual arrangements for any
development opportunity including legal, accounting, tax, lobby and other areas,
as and when may be required by Delta Capital;
4. Liaise with other members of the Delta Capital Executive Team on corporate
initiatives involving a commitment or obligation for Delta Capital;
5. Report to the Chairman of the Board.
Term. Month to month commencing May 1, 2000
Fees.
The fee for my In House Counsel Services hereunder will be $ 3,000 per month
payable on the first of May and the same
date each month thereafter..
Stock Options: I will be entitled to participate in Delta Capital's Executive
Stock Option Program and will be granted an option to purchase 25,000 shares in
the capital of Delta Capital at a price of $US 2.00 per share, subject to
regulatory approval, and subject to approval of the Company's 2000 Stock Option
Plan by the Board of Directors of the Company.
Expenses. Reasonable expenses incurred in fulfilling my duties hereunder will
be reimbursed by Delta Capital upon presentation.
Other: The following will apply throughout the term of this agreement:
1. The association shall be considered as a fee consultant/client relationship,
wherein the consultant may represent himself as In House Legal Counsel of Delta
Capital at its direction, but will not be considered as or represent himself as
an employee of Delta Capital or associated entities and will have no authority
to bind Delta Capital.
43
<PAGE>
2. All conversations, memos, files, data or other information acquired and/or
shared during the course of this study that are confidential to Delta Capital,
including this agreement will be treated as confidential and will not be
transmitted to other parties without prior mutual consent.
3. I have advised you that I carry on business in my own law firm, as well as a
business consultant and am active in advising clients on various matters. My
work hereunder will not prevent me from acting in that capacity unless there is
a conflict involved.
4. After three months of service under this contract, Delta Capital will review
it needs for in house counsel services to determine if an increase in my
involvement is warranted at that time with a view to considering full time
employment in this capacity. If such is the case, an appropriate employment
contract would be entered into at that time.
If this proposal is acceptable please sign below and fax back a copy
to me at 1.604.985.4472 and I will provide your office with particulars for the
first fee payment. Again, I sincerely look forward to assisting Delta Capital in
its expansion endeavors.
Yours very truly,
/s/ Bernie J. Malach
Bernie J. Malach
ACCEPTED AND AGREED TO this 28th day of April, 2000
DELTA CAPITAL TECHNOLOGIES INC.
/s/ Michael Horsey
Michael Horsey, Chairman
44
<PAGE>
EXHIBIT 10.16
Delta Capital Technologies Inc. July 24, 2000
Suite 806 - 1904 Third Avenue
Seattle, Washington 98101
Attention: Mr. Michael Horsey
Chairman
Dear Sirs: RE: Chief Financial Officer Services Agreement
Thank you for the opportunity to act as Chief Financial Officer for Delta
Capital Technologies Inc. on the terms outlined in this letter, which when
accepted by you will constitute the agreement between Delta Capital Technologies
("Delta Capital") and Lawrence P. Tombari ("Tombari").
Scope. The scope of my duties as acting Chief Financial Officer and expending
in the order of 70-80 hours per month, providing the following services:
1. Advise on general financial matters involving Delta Capital as requested;
2. Examine existing financial operational controls, reporting, and resources and
make recommendations for financial management of Delta Capital;
3. Liaise with other members of the Delta Capital Executive Team on
corporate initiatives involving a financial commitment or obligation for
Delta Capital;
4. Liaise with and instruct professional advisors to Delta Capital respecting
structure, terms and conditions of all financial arrangements for the company
including legal, accounting, tax, lobby and other areas, as and when may be
required by Delta Capital;
5. Report to the Chairman of the Board.
Term. The Term of this agreement commences on July 1, 2000 and ends on the
earlier of: a] three months; or b] execution of a full-time employment
agreement
Fees. The fee for my financial services hereunder will be $ 9,000 US per
month payable on the last day of each month of this contract.
Expenses. Reasonable expenses incurred in fulfilling my duties hereunder will
be reimbursed by Delta Capital upon presentation.
Full Time Employment: Our mutual intent is to progress to full time employment
of Tombari as the Chief Financial Officer of Delta Capital. The formal
employment agreement would address matters typical for a contract of this
nature, including:
Compensation: To be negotiated, but starting not significantly above
budget range.
Term: Full time permanent employee for a term to be negotiated, or
permanent open ended with notice requirements both ways
Preferred Stock: 250,000 shares, upon execution of full time
employment agreement.
Stock Options: 200,000 shares, vesting to be negotiated.
Other Terms: The following will apply throughout the term of this agreement:
------------
1. The association shall be considered as a fee consultant/client relationship,
wherein Tombari may represent himself as Chief Finanical Officer of Delta
Capital at its direction, but will not be considered as or represent himself as
an employee of Delta Capital or associated entities and will have no authority
to bind Delta Capital.
45
<PAGE>
2. All conversations, memos, files, data or other information acquired and/or
shared during the course of this study that are confidential to Delta Capital,
including this agreement will be treated as confidential and will not be
transmitted to other parties without prior mutual consent.
3. I have advised you that I carry on business as a business consultant and am
active in advising clients on various matters. My work hereunder will not
prevent me from acting in that capacity unless there is a conflict involved.
4. Tombari agrees not to provide any level of competition to Delta Capital or
accept any work for a competitor of Delta Capital during the currency of this
agreement.
If the above is acceptable, please sign below and return a copy to
me. I sincerely look forward to assisting Delta Capital in its expansion
endeavors.
Yours very truly,
/s/ Lawrence P. Tombari
Lawrence P. Tombari
ACCEPTED AND AGREED TO this _______day of July, 2000
DELTA CAPITAL TECHNOLOGIES INC.
/s/ Michael Horsey
Michael Horsey, Chairman
46
<PAGE>
EXHIBIT 10.17
DELTA CAPITAL TECHNOLOGIES, INC.
Suite 255, 999 - 8th Street SW
Calgary, Alberta T2R 1J5
Phone (403) 244-7300
Fax (403) 244-7211
January 1, 2000
Attention: Mr. Terry Butchart
Dear Mr. Butchart:
Re: Financial Advisory Agreement
We are writing to confirm the Agreement between Delta Capital Technologies, Inc.
(the "Company") and Bonanza Mgmt Ltd. ("Bonanza") pursuant to which the Company
will engage Bonanza on the term contained herein and subject to regulatory
approval, to furnish certain financial services to the Company.
1. Engagement
The company hereby engages Bonanza to provide promotional and public relations
services to the Company including but not limited to, the following:
(a) contacting persons registered to trade in securities pursuant to the
provisions of the Securities Act or of the securities legislation of
the jurisdiction where such persons reside or conduct business and
informing them of the particulars of the development of the Company's
business and the potential of the Company's shares as an investment;
(b) assisting the Company's board of directors in co-coordinating any
advertising and other public relations programs being
implemented by the Company;
(c) acting in a liaison capacity between the directors and senior
officers of the Company, the persons referred to in subsection
1.1(a) and the shareholders of the Company;
(d) circulating to the persons referred to in subsection 1.1(a) such of
the quarterly reports and other documents referred to in subsection
1.1(b) as may be reasonably requested by such persons;
(e) to assist with and/or secure future major financing for the Company
through Private Placements with securities firms or other financial
opportunities; and
(f) such other services as may be agreed upon by the Company's board of
directors and Bonanza.
2. Term and Fee
The term of this Agreement will be two (2) years, commencing January 1, 2000 and
ending on January 1, 2002. In consideration of the services to be rendered by
Bonanza hereunder, the Company agrees to pay Bonanza a fee of $6,000 US per
month. Expenses incurred by Bonanza in providing the services rendered hereunder
will be reimbursed.
3. Payment of Fee
The Company will make a payment upon signing of this Agreement and thereafter on
the 1st day of each month. Each such payment shall be made in cash. Expenses
will be reimbursed upon receipt of an Expense Summary with receipts.
47
<PAGE>
4. Approvals and Filings
The Company will apply for and use its best efforts to obtain the acceptance of
the United States Securities and Exchange Commission ("SEC") of this Agreement
(the "Acceptance"). If required, the Company agrees to file with the SEC, within
the time periods required, such reports, forms and applicable fees that may be
required in connection with the foregoing. Bonanza expressly acknowledges and
understands that this Agreement and the obligations of the Company hereunder are
expressly conditional upon the Company receiving the Acceptance failing which
this Agreement shall be of no force of effect.
The Company agrees to provide to Bonanza, from time to time and as soon as
is available, financial statements, press releases, material change
reports, quarterly reports and filing statements of the Company.
Bonanza represents and warrants to, and covenants with, the Company, as
follows:
(a) Bonanza has the ability, experience and skills necessary to carry
out its obligations under this Agreement;
(b) Bonanza and its officers, employees, agents and consultants shall
comply with all applicable securities laws and regulations of the
SEC and federal laws applicable therein, and
(c) Bonanza shall, and shall cause its officers, employees, agents and
consultants to act at all times in the best interests of the
Company.
5. Termination
The Company may terminate its obligations under this Agreement prior to expiry
of the term hereof in the following manner:
(a) upon, not less than thirty (30) days notice in writing to Bonanza,
effective upon the last day of the month in which the 30th day
arises; and
(b) Immediately and without notice, in the event of change of control of
the Company.
6. Assignment
Bonanza shall not transfer over or assign to any other person, firm or
corporation its rights or obligations under this Agreement.
7. Entire Agreement
This Agreement constitutes the entire Agreement between the parties hereto and
supersedes all prior agreements, discussions and understandings, whether oral or
written.
8. Arbitration
All disputes arising out of or in connection with this Agreement shall be
referred to and finally resolved by arbitration under the rules of the British
Columbia International Commercial Arbitration Centre. The arbitration shall be
administered by the British Columbia International Commercial Arbitration Centre
in accordance with its "Procedures of Cases under the B.C.I.C.A.C. Rules" and
the place for arbitration shall be Vancouver, British Columbia, Canada.
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<PAGE>
9. Legal Fees
The parties agree that all legal fees incurred in connection with preparation of
this Agreement and obtaining necessary approvals of the SEC, together with costs
and fees associated therewith, shall be borne equally as between the Company and
Bonanza.
10. Notices
Any notice or other writing required or permitted to be given hereunder shall be
deemed to be sufficiently given if delivered or if mailed by registered mail or
sent by telecopy, addressed as follows:
In the case of the Company: In the case of Bonanza:
Delta Capital Technologies, Inc. Bonanza Mgmt Ltd.
255, 999 - 8th Street SW PO Box 48792 Bentall
Calgary, AB T2R 1Jt Vancouver, BC V7X 1A6
Attention: Michael Horsey Attention: Terry Butchart
--------- ---------
Facsimile: (403) 24407211 Facsimile: (604) 943-5727
11. Successors and Assigns
All rights and obligations of the parties hereunder shall be binding on their
heirs, executors, administrators, successors and assigns.
If the above sets forth your understanding of our Agreement, kindly execute this
letter where indicated below and return one copy to us.
Yours very truly,
DELTA CAPITAL TECHNOLOGIES, INC.
/s/ Michael E. Horsey
Michael E. Horsey
Chair
ACCEPTED AND AGREED to this _______ day of January 1, 2000
BONANZA MGMT LTD.
/s/ Terry Butchart
Terry Butchart
President
49
<PAGE>
EXHIBIT 10.18
LEASE SUMMARY
BUILDING: Phoenix Place
LANDLORD: O&Y Properties Inc.
TENANT: Delta Capital Technologies Inc.
TRADE NAME: Delta Capital Technologies Inc.
TENANT ADDRESS: Suite 1000, 840 - 7th Avenue S.W.
Calgary, Alberta
T2P 3G2
INDEMNIFIER: N/A
PREMISES: 1000
FLOOR: 10th Floor
AREA: 13,325 sq.ft.
TERM: 5 yrs.
COMMENCEMENT
DATE: September 15, 2000
EXPIRY DATE: September 30, 2005
BASE RENT:
<TABLE>
<CAPTION>
From Monthly To Rate Annual
---- ------- -- ---- ------
<S> <C> <C> <C> <C>
September 15, 2000 September 30, 2005 $14.00 $186,550.00 $15,545.83
DEPOSIT: $51,803.15 Applied to:last two (2) months' Basic & Additional Rent inc. GST
</TABLE>
PARKING: 4 permits for random parking in the Phoenix Place parking facility and
4 permits for random parking in the 910-7th Avenue SW parking facility. At this
time the prevailing rate is $185.00 per permit per month for permit in the
Phoenix Place parking facility; $200.00 per permit per month for permit in the
910 - 7th Avenue SW parking facility Per Month
SECURITY AGREEMENT SIGNED: No
RENEWAL TERM: 5 yrs.
IMPORTANT AND ADDITIONAL CLAUSES
50
<PAGE>
1. Assignment - Section 7.6;
2. Relocation - Section 8.10;
3. Tenant's Insurance- Section 8.5;
4. Default - Section 8.2;
5. Deposit - Section 10.1;
6. Parking - Section 10.2;
7. Tenant's Leasehold Improvements - Section 10.3;
8. Extension of Term - Section 10.4;
9. Right of First Offer - Section 10.5;
10. Letter of Credit - Section 10.6;
51
<PAGE>
<PAGE>
O&Y PROPERTIES INC.
LANDLORD
- and -
Delta Capital Technologies Inc.
TENANT
OFFICE LEASE
BUILDING: Phoenix Place
PREMISES: 1000
52
<PAGE>
TABLE OF CONTENTS
ARTICLE I
1.1 Definitions
ARTICLE II INTENT OF LEASE
2.1 Net Lease
ARTICLE III
3.1 Demise
ARTICLE IV
4.1 Term
ARTICLE V
5.1 Rental
5.2 Pay By Direction
5.3 General Rent Provisions
5.4 Rent Disputes
ARTICLE VI COVENANTS OF LANDLORD
6.1 Caretaking and Repairs
6.2 Building Services
6.3 Access to Premises
6.4 Utilities
6.5 Quiet Possession
6.6 Impositions
ARTICLE VII COVENANTS OF TENANT
7.1 Utility Rates
7.2 Repairs
7.3 Notice of Accident or Defect
7.4 Alterations by Tenant
7.5 Ownership of Leasehold Improvements
7.6 Assigning or Subletting
7.7 Insolvency, etc.
7.8 Tenant's Taxes
7.9 Municipal By-laws
7.10 Indemnification
7.11 Last Six Months of Tenancy
7.12 Interest on Overdue Accounts
7.13 Rules and Regulations
7.14 Costs
ARTICLE VIII LANDLORD AND TENANT COVENANT WITH EACH OTHER
8.1 Occupancy After Term
8.2 Default
8.3 Damage and Destruction
8.4 Removal of Fixtures
53
<PAGE>
8.5 Insurance
8.6 Landlord's Non-Liability
8.7 Accidental Stoppage of Services
8.8 Inability of the Landlord or Tenant to Perform
Covenants
8.9 Installation, Repair or Reconstruction of Services
or Common Areas
8.10 Relocation
8.11 Tax Amount, Utility Costs to the Premises and
Costs of Operation
ARTICLE
8.12 Statement Re Lease Standing
8.13 Postponement, Subordination and Assignment
8.14 Remedies to Subsist
8.15 Control of Project
8.16 Landlord's Right to Enter Premises
8.17 Special Services
8.18 Security Agreement
8.19 Indemnity
8.20 Notices
8.21 Registration
8.22 Governing Law
8.23 Gender
8.24 Captions
ARTICLE IX MISCELLANEOUS
9.1 Successors and Assigns
9.2 Complete Agreement
9.3 Time of the Essence
ARTICLE X ADDITIONAL PROVISIONS
10.1 Deposit
10.2 Parking
10.3 Tenant's Leasehold Improvements
10.4 Extension of Term
10.5 Right of First Offer
10.6 Letter of Credit
54
<PAGE>
THIS INDENTURE made July 19, 2000
BETWEEN:
O&Y PROPERTIES INC.
(herein called "Landlord"),
OF THE FIRST PART
- and -
Delta Capital Technologies Inc.
(herein called "Tenant"),
OF THE SECOND PART
ARTICLE I
DEFINITIONS
1.1 In this Lease:
(a) "Additional Rent" means all monies other than Basic Rent payable by Tenant
to Landlord pursuant to this Lease or any other agreement or obligation between
the parties in respect of the Premises or the Project.
(b) "Amendments" means such changes as set out in Paragraph (ii) of Subsection
7.6(g).
(c) "Basic Rent" means the amount set out in Subsection 5.1(a).
(d) "Building" means all structures, improvements, facilities, and amenities on
the Lands and appurtenances thereto as they exist on the Lands from time to time
and which together constitute Phoenix Place
(e) "Capital Tax" means the amount calculated pursuant to Part 1 of
Schedule "B".
(f) "Centre" means the retail commercial portion of the Project, as reasonably
designated, altered or redesignated by Landlord from time to time.
(g) "Common Areas" means, on a floor occupied by more than one tenant, those
areas which do not constitute Occupiable Area on such multiple occupancy floor,
but which would have been included in Occupiable Area if such floor were being
fully occupied by one tenant.
(h) (i) "Costs of Operation" means the aggregate of all expenses and costs
of every kind determined for each fiscal period designated by Landlord,
without duplication and, except as hereinafter provided, on an accrual
basis incurred by or on behalf of the Landlord or the Head Landlord
with respect to and for the operation, maintenance, repair, replacement
and management of the Project and all insurance relating to the
Project. If the Project is less than
55
<PAGE>
100% completed or occupied during the whole of any fiscal period, Costs
of Operation shall be calculated so as to include such additional
costs, as reasonably determined by Landlord, as would have been
incurred if the Project had been 100% completed and occupied.
(ii) Without in any way limiting the generality of the foregoing, Costs
of Operation shall include all costs in respect of the following:
(A) all remuneration including wages and fringe benefits
of employees directly employed or engaged in the
operation, maintenance, repair, replacement, and
management of the Project;
(B) cleaning, janitorial services, window cleaning and
garbage and waste removal;
(C) policing, supervision, security and traffic control;
(D) landscaping and maintenance of all outside or enclosed
areas, including snow and ice removal;
(E) heating, ventilating, air-conditioning and humidity
control;
(F) operation, maintenance, repairs and replacements in
respect of any elevators, escalators and transportation
vehicles and equipment within the Project;
(G) communications, sound, visual, lighting and other
systems;
(H) signs, including the cost of all repairs, maintenance
and rental charges in respect thereof;
(I) decoration;
(J) all utilities supplied to the Project including hot
and cold water, gas, electricity, sewer charges and any
other utilities or forms of energy;
(K) maintenance, repairs, improvements and replacements
including structural maintenance, repairs, improvements
and replacements;
(L) engineering, accounting, legal and other consulting
and professional fees, including without limitation the
preparation of statements, calculations and allocations
relating to Rentable Areas in the Project and contesting
Impositions in good faith;
(M) office expenses including telephone, stationery and
supplies and the fair rental value of space occupied by
Landlord for management, supervisory or administrative
purposes relating to the Project and furnishing and
fixtures for this space;
56
<PAGE>
(N) all insurance which Landlord is obliged to obtain
and/or which Landlord otherwise obtains and the cost of
any deductible amounts paid by Landlord in respect of any
insured risk or claim;
(O) an administration charge which is a percentage of the
aggregate of all Costs of Operation, such percentage to be
as set out in part 2 of Schedule B;
(P) the amount of all capital costs incurred for any of
the matters set out in this Section 1.1(h)(ii), which may
be expensed in the year incurred, or, at Landlord's sole
discretion, amortized over Landlord's reasonable estimate
of the economic life thereof, which shall not exceed ten
(10) years, and depreciation for all structures,
improvements, furnishings, fixtures, equipment, machinery,
facilities, systems, and property which is part of or
installed in or used in connection with the Project which,
by their nature require periodic or substantial repair or
replacement, or which are installed or used primarily to
reduce the cost or consumption of other items included in
Costs of Operation (whether or not such costs in respect
of the same are, in fact, reduced) and, interest on the
undepreciated cost of all items in respect of which
depreciation or amortization is included herein at one
(1%) percent in excess of the prime rate of interest
charged by Landlord's bank in Toronto from time to time;
(Q) all costs in the nature of any of the foregoing:
(1) incurred by Landlord in consequence of its
interest in the Project such as maintaining, cleaning, and
clearing of ice and snow from municipal sidewalks,
adjacent property and the like;
(2) contributed, as determined by Landlord
acting reasonably and bona fide but in Landlord's sole
discretion, in respect of all shared facilities and
services including, without limitation, loading areas and
docks, parking ramps, driveways and exterior areas, which
will be shared by users of the Project and the users of
any other property and all costs to the extent Landlord is
required to contribute to the same in respect of the
Project or Landlord's ownership of the same, whether or
not such costs are incurred directly in respect of the
Project;
(R) rent, under all ground or land leases relating to the
Project, payable by Landlord, if any;
(S) Impositions and interest and penalties related to
contesting Impositions in good faith.
(iii) Costs of Operation shall be reduced by the following to the
extent otherwise included in Costs of Operation and to the extent
actually received by Landlord:
(A) proceeds of insurance and damages paid by third
parties;
57
<PAGE>
(B) repairs or replacements to the extent that the cost of
the same is recovered by Landlord pursuant to original
construction warranties;
(C) amounts recovered from tenants on account of Special
Services;
(D) Common Area costs; and
(E) Utility Costs.
(iv) Costs of Operation shall exclude the following:
(A) The Tax Amount with respect to the Premises, and
relevant analogous amounts relating to all other Rentable
Areas, the intent being not to duplicate Tenant's
obligations in respect thereof pursuant to other
provisions of this Lease;
(B) expenses incurred by Landlord in respect of leasing
expenses and any tenant's leasehold improvements; and
(C) capital costs, depreciation, interest and principal on
mortgages, and other debt costs, except to the extent
included as set forth above.
(v) To the extent that it is feasible to do so, Costs of Operation
shall be allocated by Landlord acting reasonably among the Centre,
the Office Portion or the Storage Areas, if any.
(i) "Data Request" means a request by the Landlord to the Tenant whereby the
Landlord requests that the Tenant furnish and provide to the Landlord such
information as the Landlord may reasonably require with respect to a Transfer
Offeror and the transaction contemplated by a Transfer Offer which has been
furnished to the Landlord, and whereby the Landlord may, without limitation,
request financial data with respect to the Transfer Offeror and a consent from
the Transfer Offeror to enable and permit the Landlord to make inquiries and
obtain any information with respect to the Transfer Offeror from credit and
financial agencies and institutions.
(j) "Government Body" means any municipal, provincial, federal or other
government, governmental agency, authority or body having jurisdiction with
respect or in matters which relate to the Project.
(k) "Gross Rentable Area" means the sum of all Rentable Areas within the
Project.
(l) "Impositions" means all taxes, rates, duties, levies and assessments
whatever, levied, imposed, assessed, charged or rated by a Government Body
against, on, or in respect of the Project or any part thereof or upon Landlord
in respect thereof or in respect of any related rental or other monies
receivable by Landlord, or from time to time levied, imposed, assessed, charged
or rated in the future in lieu or in substitution thereof, or for which Landlord
is liable in respect of the Project or any part thereof, including, without
limitation, those levied, imposed, assessed, charged or rated for business,
education, schools, local improvements, public works or for any other public
purpose, and Capital Tax , but excluding, except to the extent levied, imposed,
assessed, charged or rated in lieu or in substitution of any of the foregoing,
Landlord's income tax.
If the formula or method of computation of any component of Impositions
has not been applied for the whole of any fiscal period in respect of the
Project as fully completed, fully assessed and fully
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occupied by tenants having no special exemption with respect to such component,
such component shall be calculated so as to include such additional amount as
would have formed part of such component, if such formula or method of
computation had been applied for the whole of such fiscal period in respect of
the Project as fully completed, fully assessed and fully occupied by tenants
with no special exemptions. Impositions shall be calculated so as to include
such additional costs, as reasonably determined by Landlord, as would have been
incurred if the Project had been 100% completed and occupied.
(m) "Lands" means the lands described in Schedule "A" hereto as they may be
expanded, reduced or otherwise altered from time to time.
(n) "Large Corporations Tax" means the tax imposed upon a corporation under Part
I.3 of the Income Tax Act (Canada) and any amendments thereto or any successor
statutory provisions hereof.
(o) "Laws" means all statutes, regulations, by-laws, orders, rules, requirements
and directions of all federal, provincial, municipal and other governmental
authorities having jurisdiction.
(p) "Lease" means this Lease including all of the Schedules attached hereto.
(q) "Leasehold Improvements" means, without limitation, all fixtures,
improvements, installations, alterations and additions from time to time made,
erected or installed in or about the Premises, and includes all the following,
whether or not any of the same are in fact trade fixtures: doors, partitions and
hardware; mechanical, electrical and utility installations; stairwells, floor
and window coverings and hardware; heating, ventilating, air-conditioning and
humidity control equipment; lighting fixtures; built-in furniture, furnishings
and counters and anything else in any way connected to the Premises or to any
utility services located therein.
(r) "Net Rentable Area" of premises in the Office Portion shall have the same
meaning set out in Schedule "C-1".
(s) "Normal Business Hours" means those hours as set out in part 3 of Schedule B
attached hereto or such other further hours as Landlord, in its discretion,
determines.
(t) "Office Portion" means that portion of the Project as reasonably designated
or redesignated by Landlord from time to time as office areas.
(u) "Premises" means the Occupiable Area of the space in the Building outlined
in heavy black on Schedule "C".
(v) "Project" means the Lands and the Building, as they may exist from time to
time.
(w) "Proportionate Share" means the fraction the numerator of which is the
Rentable Area of the Premises and the denominator of which is set out in part 4
of Schedule "B".
Provided, however, that if any tenant, at its cost, provides any goods
or services or if Landlord provides any goods or services specifically for any
tenant or group of tenants, the cost of which would usually be included in Costs
of Operation, then, in respect of the cost of such goods or services Landlord
shall, acting reasonably, adjust the denominator for determining a Proportionate
Share or adjust the Costs of Operation to provide for the equitable distribution
of the cost of such goods and services.
(x) "Rent" means Basic Rent and Additional Rent.
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(y) "Rentable Area" of premises shall have the meaning set out in Schedule
"C-1".
(z) "Rules and Regulations" means those rules and regulations referred to in
Article 7.13 hereof.
(aa) "Security Agreement" means the agreement described in Article 8.18.
(bb) "Service Areas" means all elevator shafts and stairwells, excluding those
within the premises of a tenant which are restricted to the exclusive use of
such tenant, and the enclosing walls thereof.
(cc) "Special Services" means:
(i) items, materials or services requested by or for any other
reason provided for a tenant in respect of its premises or the
Project, the cost of which would otherwise be included in Costs of
Operation, to the extent supplied or provided for a tenant in
excess of that supplied or provided for tenants generally as may
be determined by Landlord acting reasonably or as Landlord may
designate from time to time including, without limitation,
replacement of tubes, bulbs and ballasts, cleaning of carpet,
drapes and curtains, general repairs, locksmithing and hoisting;
and
(ii) heating and air-conditioning requested by and provided to a
tenant beyond Normal Business Hours.
(dd) "Storage Areas" means all areas, if any, as designated by Landlord from
time to time not within the Centre or the Office Portion to be used by tenants
exclusively or primarily for storage purposes.
(ee) "Tax Amount" means in any fiscal period the aggregate, without
duplication, of:
(i) (a) with respect to a component of Impositions
which is calculated or determined on the basis of
assessments and mill rates (as those terms are
understood with respect to realty taxes in 1988), the
amount which results from applying the relevant
commercial mill rate for such fiscal period to the
assessment of the Premises for such fiscal period; or
(b) with respect to a component of Impositions
which is or was calculated on the basis of
assessments and mill rates (as those terms are
understood with respect to realty taxes in 1988), but
with respect to which either the relevant Government
Body does not provide a separate assessment for the
Premises, or the bases or principles used in 1988
with respect to assessments or the rate or multiplier
applied thereto, are abandoned, changed or varied,
then, at Landlord's option, an amount allocated to
the Premises by Landlord, who in making such
allocation shall act reasonably and take relevant
factors, including, without limitation, the
provisions of Section 7.8, into consideration; and
(ii) the amount or amounts of other components of Impositions
allocated pursuant to Section 7.8.
(ff) "Tenant's Rentable Area" means the Rentable Area of the Premises.
(gg) "Term" means the period of time set out in Article IV.
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(hh) "Transfer" means (other than for purposes of mortgaging, hypothecating or
charging), any assignment, transfer, sublease, parting with possession or
setting over or otherwise by any act or deed whereby the Premises or any part of
them is sublet or rights of occupancy are given or this Lease is assigned,
transferred, or set over to any person, firm or corporation.
(ii) "Transferee" means the person, firm or corporation to whom a Transfer is
made.
(jj) "Transfer Offer" means a bona fide arms length written offer received or
procured by the Tenant, which offer is not inconsistent with this Lease and the
acceptance of which would not breach any provision of this Lease and which
Tenant has determined to accept subject to compliance with Article 7.6.
(kk) "Transfer Offeror" means the offeror named in a Transfer Offer.
(ll) "Transfer Request" means a request in writing by Tenant for the Landlord's
consent to a proposed Transfer.
(mm) "Utility Costs" means the costs of supplying utilities including, without
limitation, hot and cold water, electricity, steam and fuel to the Gross
Rentable Area.
ARTICLE II
INTENT OF LEASE
2.1 NET LEASE
It is the intent of the parties hereto that, except as expressly
herein set out, this Lease be a lease that is absolutely net to Landlord, and
that Landlord shall not be responsible for any expenses or obligations of any
kind whatsoever in respect of or attributable to the Premises or the Project.
ARTICLE III
DEMISE
3.1 In consideration of the rents, covenants and agreements hereinafter reserved
and contained on the part of Tenant to be paid, observed and performed, Landlord
hereby demises and leases the Premises, suite number 1000 to Tenant for use and
occupation as executive, administrative and general offices, including, without
limitation, the purposes of an application service provider, internet service
provider, and software research and development, carrying on business under the
name and style of Delta Capital Technologies Inc. and other related activities
in which Tenant may engage so long as same are consistent with the dignity and
character of the Building and not inconsistent with, or contrary to, any of the
covenants, agreements or provisions contained in this Lease and for no other
purpose.
3.2 Landlord and Tenant acknowledge that the Rentable Area of the Premises for
purposes, inter alia, of calculating Basic Rent and Proportionate Share is
approximately 13,325 square feet on the 10th Floor floor of the Building.
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ARTICLE IV
TERM
4.1 TO HAVE AND TO HOLD the Premises for and during the Term of 5 years to be
computed from September 15, 2000 the "Commencement Date" and ending 5 years
later, or, if the Commencement Date is not the first of a month, then ending 5
years after the last day of the month in which the Commencement Date occurs.
ARTICLE V
RENTAL
5.1 The Tenant agrees to pay to the Landlord during each year of the
Term, as set out below, the aggregate of:
(a) during the period of September 15, 2000 through September 30,
2005, a fixed minimum annual rent of $186,550.00 of lawful money
of Canada, (based on a net annual rental rate of $14.00 per square
foot of Rentable Area of the Premises) payable at par in Calgary
in equal monthly instalments of $15,545.83 each, without demand in
advance on the 1st day of each month during the period, the first
of such payments, unless already made, to be paid on September 15,
2000, and
(b) Additional Rent as and when the same shall be due and payable
pursuant to any agreement or other obligation, relating to the
Premises or the Project, between Landlord and Tenant including,
without limitation, the following:
(i) Proportionate Share of Costs of Operation;
(ii) the Tax Amount;
(iii) Utility Costs in respect of the Tenant's Rentable Area;
(iv) amounts payable by Tenant for Special Services
provided to Tenant; and
(v) if any of the Premises comprises less than a full
floor, then, a fraction of the cost of maintaining
the Common Area on that floor, which fraction has as
its numerator the Rentable Area of that part of the
Premises on such floor and as its denominator the
total Rentable Area on such floor.
5.2 PAY BY DIRECTION
Landlord may direct, at its option, that Tenant pay any amounts
payable pursuant to Article 5.1 by way of pre-authorized bank debit and/or to
any other party specified by Landlord.
5.3 GENERAL RENT PROVISIONS
(a) If Tenant defaults in payment of any Rent (whether to Landlord or otherwise)
as and when the same is due and payable hereunder, Landlord shall have the same
rights and remedies against Tenant (including rights of distress) upon such
default as if such sum or sums were Basic Rent in arrears.
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(b) All Rent shall be paid in accordance with this Lease without any deduction,
abatement or set-off whatsoever.
(c) Landlord may, at its option, from time to time, apply or allocate or
re-apply or re-allocate any sums received from or payable by Tenant to Landlord
on account of any amounts payable by Tenant hereunder in such manner as Landlord
determines in its sole and absolute discretion, without regard to and
notwithstanding any instructions given by or allocations in respect of such
amounts made by Tenant.
(d) Landlord will not be bound or prejudiced by any endorsement, note, direction
or statement accompanying any payment made to Landlord by Tenant notwithstanding
that Landlord retains any such payment and such retention shall be without
prejudice to any of Landlord's other rights under this Lease or at law, whether
or not Landlord notifies Tenant of any disagreement with or non-acceptance of
any amount paid or any endorsement, direction, note, instruction or statement
received.
(e) If Tenant is required to pay Rent for less than a one month period, such
Rent shall be determined on a pro-rated basis based on the number of days over
365 days for which the Rent is payable and such Rent shall be payable either on
the first day the Term commences or on the first day of the partial month,
whichever is applicable.
5.4 RENT DISPUTES
Tenant may dispute an invoice or statement in respect of Rent only by
giving written notice to Landlord specifying the basis of the dispute within 12
months after delivery of the invoice or statement. Tenant will, in any event,
continue to pay Rent in accordance with Landlord's invoice or statement until
the dispute is resolved.
ARTICLE VI
COVENANTS OF LANDLORD
6.1 CARETAKING AND REPAIRS
Landlord shall effect all structural repairs to the Project as may be
required, and shall repair, maintain and operate the Project in a reasonable
manner having regard to the size, age, location and character of the Project,
and shall provide cleaning and maintenance services, and, when requested by
Tenant, provide the services as set out in Schedule "E" hereto annexed.
6.2 BUILDING SERVICES
Landlord shall during Normal Business Hours provide the following
services to the Building and the Premises:
(a) heating with apparatus or appliances except during the making of repairs or
other causes beyond control of Landlord, and in case the boilers, engines,
pipes, or other apparatus or any of them used in effecting the heating shall at
any time become incapable of heating as aforesaid, or be damaged or destroyed,
repairing of such damage or replacing of such boilers, engines, pipes or
apparatus or any of them or, at the option of Landlord, substituting other
heating apparatus therefor within a reasonable time and in case the heating
apparatus or pipes connected therewith or water pipes, wash basins, plumbing or
drains, is or are injured by accident or freezing or from any cause, Landlord
replacing or repairing same with reasonable dispatch having reference to season
in which such injury happens;
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(b) air-conditioning in the manner appropriate to the season of the year except
during the making of repairs; provided that Landlord shall not be responsible
for the failure of air-conditioning equipment to perform its function if such
failure shall result from any arrangement of partitioning in the Premises or
changes or alterations thereto, where such changes or alterations have not been
prior approved by Landlord, or failure on the part of Tenant to shade windows
which are exposed to the sun, or from any excessive use of electrical power by
Tenant;
(c) when no lavatories are provided within the Premises, separate lavatories for
male and female persons on each typical office floor of the Building shall be
provided except at such times as the general supply of water may be turned off;
and
(d) operation of elevators by electric or other power and, except when
prevented by a failure of electric or other power or by reason of repairs or
other causes beyond the control of Landlord, operation of at least one of the
elevators each day at all times and in common with other persons lawfully using
same, for the reasonable use of Tenant, its agents, clerks, servants or
employees, and all other persons lawfully requiring communication with it.
Notwithstanding anything herein contained to the contrary, air-conditioning and
heating shall be provided on a 24 hour basis.
6.3 ACCESS TO PREMISES
Landlord shall allow Tenant, its agents, clerks, servants, employees
and other persons transacting business with it in common with other persons
entitled thereto, to have access to the Premises by the main entrance or
entrances of the Project and to use the elevators, stairways and passages
therefrom at all reasonable times, subject to the rules and regulations in
regard to the Project.
6.4 UTILITIES
Subject to Landlord's ability acting reasonably to do so, Landlord
shall supply or cause to be supplied to the Premises reasonable utilities to
enable use of the Premises for their intended purposes.
6.5 QUIET POSSESSION
Landlord shall upon payment of Rent hereby reserved by Tenant and upon
Tenant performing the covenants herein on its part contained, allow Tenant to
possess and enjoy the Premises peaceably for the Term hereby granted, without
any interruption or disturbance from Landlord or any other person or persons
lawfully claiming by, from or under it.
6.6 IMPOSITIONS
Landlord shall pay Impositions.
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ARTICLE VII
COVENANTS OF TENANT
7.1 UTILITY RATES
If no separate meter or meters exist for measuring electrical power or
other utility consumption in the Tenant's Rentable Area and Landlord and Tenant
are unable to agree on the appropriate distribution of the costs of any of the
foregoing, then Landlord's engineers may from time to time determine such costs
including the electrical consumption for lighting a square foot of Rentable
Area, and may determine Tenant's electrical and other utility consumption upon
whatever reasonable basis may be selected by such engineers.
7.2 REPAIRS
(a) Tenant shall, except for reasonable wear and tear, repair the Premises,
which obligation shall include keeping and maintaining the Premises in a good
and substantial state of repair and decoration.
(b) Landlord and its agents may at all reasonable times enter the Premises to
inspect the state thereof. Tenant shall, with reasonable diligence after notice
from Landlord, make all needed repairs in accordance with such notice.
Landlord's failure to make any inspection or to give any notice shall not
relieve Tenant of its obligations under (a) above.
(c) If Tenant fails to make any repairs as hereinbefore required, Landlord and
its agents may enter the Premises and make the repairs as a Special Service for
Tenant.
7.3 NOTICE OF ACCIDENT OR DEFECT
Tenant shall give Landlord prompt written notice of any accident to or
defect in the heating apparatus, electrical light or other wires, or of any fire
in the Premises of which it is aware but, unless otherwise expressly provided,
as for example, in Section 6.4, there shall be no obligation on the part of
Landlord to repair or make good any such matters.
7.4 ALTERATIONS BY TENANT
(a) Tenant shall not make any alterations in the Premises without the written
consent of Landlord, which consent will not be unreasonably withheld provided
such alterations shall be done in accordance with the Landlord's then current
"Guidelines for Tenant Improvements" as set out in Schedule "H" attached hereto.
(b) All installations, alterations, partitions and repairs performed or required
to be performed by Tenant pursuant to any of the provisions of this Lease or any
other leasehold improvements, work or service which Tenant may desire, may be
performed by contractors other than Landlord engaged by Tenant but, in each
case, only subject to the prior written approval of the contractor by Landlord
and only under written contract approved in writing by Landlord and subject to
all reasonable conditions which Landlord may impose provided, nevertheless, that
Landlord may at its option require Landlord's contractors be engaged for any
mechanical or electrical work. Without limiting the generality of the foregoing,
any work performed by or for Tenant shall be performed by competent workmen
whose labour union affiliations are not incompatible with those of any workmen
who may be employed in the Project by Landlord, its contractors or
subcontractors.
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(c) Whether or not Landlord is the contractor, Landlord shall be entitled to
supervise any construction or work on the Premises. The Tenant shall pay to the
Landlord, within 10 days after the receipt of the Landlord's invoice, the
Landlord's reasonable out-of-pocket costs incurred in examining and approving
the Tenant's plans, specifications and designs and in inspecting any
construction or work on the Premises and any additional expenses actually
incurred by the Landlord in connection with such construction or work together
with a co-ordination and supervision fee equal to 5% of the total cost to the
Tenant of the construction or work.
(d) Tenant shall require that any contractors, prior to effecting any work on
the Premises, and if permitted under the governing law, provide Landlord with a
waiver and release of any and all construction, mechanic's, builder's and other
liens and encumbrances that may then or thereafter exist for work done/or to be
done or labour performed/or to be performed or material furnished or to be
furnished under any contract or subcontract, and if such waiver and release is
not permitted or is not obtained, Tenant shall provide adequate security
acceptable in all respects to Landlord to guarantee the payment in full for all
such work, labour or materials.
(e) In any event, any construction or mechanic's lien or other liens and
encumbrances filed against the Premises or the Project for work claimed to have
been done or materials claimed to have been furnished to Tenant shall be
discharged by Tenant within ten (10) days thereafter at Tenant's expense. For
the purposes hereof, the bonding of any such lien or encumbrance by a reputable
casualty or insurance company reasonably satisfactory to Landlord shall be
deemed the equivalent of a discharge of any such lien or encumbrance. Should any
action, suit or proceeding be brought upon any such lien or encumbrance for the
enforcement or foreclosure of the same, Tenant agrees, at its own cost and
expense, to defend Landlord therein, by counsel satisfactory to Landlord, and to
pay any damages and satisfy and discharge any judgment entered therein against
Landlord.
(f) If Tenant permits any such lien registration or fails to cause any such
registration to be discharged or vacated as aforesaid then, in addition to any
other rights of Landlord, Landlord may, but shall not be obliged to, discharge
or vacate the same by paying the amount claimed to be due together with any
other amounts into court or otherwise as Landlord determines, and the amounts so
paid and all costs incurred by Landlord, including legal fees and disbursements,
in thus arranging for the discharging or vacating of any such lien shall be paid
by Tenant to Landlord immediately upon demand together with reasonable
compensation to Landlord for administration in respect thereof.
7.5 OWNERSHIP OF LEASEHOLD IMPROVEMENTS
All Leasehold Improvements installed in the Premises shall immediately
after the installation thereof become the absolute property of Landlord without
compensation therefor but without Landlord's having or thereby accepting any
responsibility in respect of the maintenance, repair, replacement or insurance
thereof, all of which shall be Tenant's responsibility.
7.6 ASSIGNING OR SUBLETTING
(a) Tenant will not make a Transfer except in accordance with this Article 7.6.
Tenant will not make or attempt to make a Transfer unless it has received or
procured a Transfer Offer and has delivered a Transfer Request to the Landlord,
which Transfer Request shall be accompanied by a true copy of the Transfer
Offer. Landlord may, within 10 days after receipt of a Transfer Request, deliver
a Data Request to the Tenant.
(i) if the proposed Transfer is by way of a sublease:
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(A) Landlord shall have the right to
sublease from Tenant the Rentable Area
to be sublet under the Transfer Offer on
the same terms and conditions as set out
in the Transfer Offer, except in respect
of rent which shall be the lesser of the
rent paid therefor by Tenant under this
Lease or the rent specified in such
Transfer Offer, and Landlord shall have
the further rights thereafter to
sublease without requiring the further
consent of the Tenant as sublessor, and
to terminate this Lease in respect of
the Rentable Area sublet by Tenant to
Landlord as of a termination date which
shall be the day following the end of
the term of the sublease, which right of
termination shall be exercised by giving
written notice to Tenant not less than
180 days prior to the end of the term of
such sublease; or
(B) Landlord shall have the right to
terminate this Lease in respect of the
Rentable Area to be sublet under the
Transfer Offer;
(ii) if the proposed Transfer is by way of an assignment of this
Lease, Landlord shall have the right to terminate this Lease.
(b) Landlord's termination rights set out in Subsection 7.6(a) shall be
exercised by giving written notice to Tenant within twenty-one (21) days of the
later of receipt by Landlord of the Transfer Request and compliance by Tenant
with a Data Request made by Landlord, and the termination date shall be such
date as is stipulated in Landlord's notice which shall in no event be less than
sixty (60) days nor more than ninety (90) days following the giving of such
notice by Landlord. If this Lease is terminated by Landlord with respect to a
part of the Premises, then Rent payable under this Lease shall thereafter abate
proportionately and all other appropriate recalculations shall be made to
recognize that the Rentable Area of the Premises has diminished. If Landlord
does not exercise any of its rights under Subsection 7.6(a), then, subject to
the consent of Landlord being first obtained, which consent shall not be
unreasonably withheld, Tenant shall be free to effect a Transfer to the Transfer
Offeror on the terms and conditions contained in the Transfer Offer. Landlord's
refusal to consent to any such Transfer shall not be deemed to be unreasonable
and shall be deemed to be a justifiable refusal if:
(i) the Transfer Offer provides for a rental which is less than
the rental payable under this Lease in respect of the Rentable
Area to be sublet; or
(ii) the Transfer Offer is made by, or the Transfer is to be made
to, any tenant of the Building or any tenant who has been a tenant
of the Building within the last six month period, or to any tenant
in any building in Calgary that is owned or co-owned by the
Landlord.
All of the foregoing rights of Landlord shall be alternative to, but
not in substitution for any other rights which Landlord may have to either
consent or withhold its consent to a Transfer.
(c) If Tenant, with the consent of Landlord;
(i) sublets Rentable Area to the Transfer Offeror pursuant to the
Transfer Offer and the Transfer Offer provides for a rental which
is more than the rental payable under this Lease in respect of the
Rentable Area so sublet, the excess, when received by the Tenant,
shall be paid by the Tenant to Landlord as Additional Rent under
this Lease;
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(ii) assigns this Lease pursuant to the Transfer Offer, and if the
Basic Rent then payable under this Lease is less than the
Landlord's then current relevant rental rates in the Building,
this Lease shall be deemed amended to provide for Basic Rent to be
increased by 50% of the difference between the Basic Rent
previously prevailing under this Lease and the said current
relevant rental rates.
(d) All Transfer Requests shall be accompanied by payment to Landlord of a fee
in the amount of Seven Hundred and Fifty ($750.00) Dollars for considering and
processing the Transfer Request. Landlord shall further be entitled to charge
all costs of completing or executing any documentation to implement any Transfer
and all other agreements contemplated hereby, (all of which, if so requested by
Landlord, shall be prepared by Landlord or its solicitor) which costs shall be
paid by Tenant immediately after demand, whether or not Landlord grants its
consent to any proposed Transfer. Tenant and proposed Transferee under the
Transfer Offer must execute Landlord's then standard form of consent before the
proposed Transfer is effective.
(e) If consent to a Transfer is obtained or dispensed with by the order of a
court of competent jurisdiction, or if a Transfer occurs as a result of
operation of laws without requiring Landlord's consent, Landlord shall have the
right, which shall be deemed to have been agreed to by Tenant, and the
Transferee, to increase the Basic Rent payable in respect of the premises which
are the subject of such Transfer for the balance of the Term to the Landlord's
then current relevant prevailing rental, as of the effective date of the
Transfer for premises in the same or similar location as such premises.
(f) If a Transfer is made or occurs whether with the consent of Landlord or as
contemplated by Subsection 7.6(e), the Landlord shall have the right:
(i) to require the Transferee thereunder to enter into an
agreement with Landlord in writing and under seal to be bound by
all of Tenant's obligations under this Lease amended as herein
provided; and
(ii) to require the Transferee thereunder to waive any rights
pursuant to any laws which might entitle the Transferee to pay any
Rent less than the amount payable hereunder.
(g) (i) No consent of Landlord to a Transfer shall be effective
unless given in writing and executed by Landlord under seal and
no such consent shall be deemed or presumed by any act or
omission of Landlord or by Landlord's failure to respond to any
Transfer Request or by Landlord's accepting any payment of any
amount payable hereunder from any party other than Tenant.
Without limiting the generality of the foregoing, Landlord may
collect rent and any other amounts from any Transferee and apply
the net amount collected to any Rent and the collection or
acceptance of any Rent shall not be deemed to be a waiver of
Landlord's rights under this Paragraph (i) of Subsection 7.6(g)
nor an acceptance of or consent to any such Transfer or a release
of any of Tenant's obligations under this Lease. No Transfer and
no consent by Landlord to any Transfer shall constitute a waiver
of the necessity to obtain Landlord's consent to a subsequent or
other Transfer.
(ii) In the event of any Transfer or any consent by Landlord to
any Transfer, Tenant shall not thereby be released from any of its
obligations hereunder but shall remain bound by all such
obligations pursuant to this Lease for the balance of the Term.
Tenant hereby consents to any amendments of this Lease which may
be made between the Transferee and Landlord without the further
consent or agreement of Tenant and Tenant also consents to all
alterations in the Premises as referred to in Article 7.4 above,
after any such Transfer. Tenant shall continue to
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be bound by all of its obligations pursuant hereto notwithstanding
any such amendments or alterations, to the extent of what would
have been Tenant's obligations pursuant hereto had such amendments
or alterations not been made.
(iii) Every Transferee shall be obliged to comply with all of the
obligations of Tenant under this Lease. Tenant shall enforce all
of such obligations against each Transferee. Any default of any
Transferee shall also constitute a default of Tenant hereunder.
(iv) Tenant agrees that if this Lease is ever disclaimed or
terminated by a trustee in bankruptcy of a Transferee or, if,
Landlord terminates this Lease as a result of the bankruptcy,
insolvency or any act or default of any Transferee, Tenant shall,
upon Landlord's request, enter into a new lease of the Premises on
the identical terms hereof subject to such amendments hereto which
had been agreed upon prior to such disclaimer or termination, with
the exception that the length of the Term shall commence on the
date upon which Landlord exercises its right to require Tenant to
enter into such new lease and shall expire on the date upon which
the Term would have expired but for such disclaimer or termination
by such trustee in bankruptcy or such termination by Landlord, and
with the further exception that Tenant will accept the Premises on
an "as is" condition, as of such date upon which Landlord
exercises its right to require Tenant to enter into such new
lease.
(h) Tenant shall not advertise this Lease or all or any part of the Premises or
the business or fixtures or contents therein for sale without Landlord's prior
written consent, which consent Landlord shall not unreasonably withhold subject
to the other provisions hereof.
(i) If Tenant or any occupant of the Premises at any time is a corporation, it
is acknowledged and agreed that an amalgamation or merger of Tenant, or the
transfer of the majority of the issued shares in the capital stock or any
transfer, issuance or division of any shares of the corporation sufficient to
transfer control to others than the present shareholders of the corporation
shall be deemed for all purposes of this section 7.6 to be a Transfer and,
accordingly, a breach of Subsection 7.6(a) unless the prior written consent of
Landlord is first obtained, and it is agreed that the parties hereto shall have
all of the same rights and obligations in respect thereof as are applicable to a
Transfer which is by way of an assignment. The provisions of this Subsection
7.6(i) shall not apply to Tenant if and as long as Tenant is in occupancy of the
Premises and is a corporation whose shares are listed and traded on any
recognised public stock exchange in Canada or the United States.
(j) Tenant shall not be entitled to make or effect any assigning, subletting,
mortgaging, charging or otherwise transferring of the Premises, any part
thereof, or this Lease, for the purpose of securing any loan or the repayment
thereof by Tenant, without the consent of Landlord having been first obtained,
which consent may be arbitrarily refused.
Notwithstanding anything to the contrary in this Article 7.6, so long
as the Tenant is Delta Capital Technologies Inc. and is itself in possession of
and conducting its business from the whole of the Premises throughout the Term
in accordance with the Lease and if Tenant is not in default under the Lease,
Tenant shall be entitled without the consent of but on prior written notice to
Landlord to assign the Lease or sublet all or any part of the Premises to any
corporation which is affiliated with Tenant (the "Affiliate"), as the term
"affiliate" is defined in the Canada Business Corporations Act, as of the date
of execution of the Lease, provided that any such Transfer shall be solely for
the purpose of a bona fide corporate reorganisation. The Transfer shall not in
any way adversely affect the operation of the business in the Premises and the
net worth of the Affiliate shall be equal to or better than that of Tenant.
Tenant shall furnish Landlord with copies of Articles of Incorporation and
financial statements and any other
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confirmation of the relationship and financial strength of the Affiliate as
Landlord may reasonably require. The Affiliate shall execute Landlord's standard
document undertaking to perform all of the covenants of Tenant under the Lease,
jointly and severally with Tenant.
7.7 INSOLVENCY, ETC.
In case Tenant shall become insolvent or bankrupt or make an assignment
for the benefit of its creditors, or shall take the benefit of any Act that may
be in force for bankrupt or insolvent debtors, this Lease shall at the option of
Landlord cease and be void and the Term hereby created expire and be at an end,
anything hereinbefore to the contrary notwithstanding, and the then current
month's Rent and an additional three months' Rent shall thereupon become
immediately due and payable, and Landlord may re-enter and take possession of
the Premises by force or otherwise as it may see fit as though Tenant or its
servants, or other occupant or occupants of the Premises, was or were holding
over after the expiration of the Term, without any right whatever, and the Term
shall be forfeited and void, and Landlord may thereupon re-let the Premises, but
Tenant shall remain liable to Landlord for any and all loss occasioned by reason
of such re-letting.
7.8 TENANT'S TAXES
Tenant will pay as and when due:
(a) all business and other taxes, parliamentary or otherwise charged, assessed,
rated or imposed upon Tenant resulting from or in respect of any Rent or other
amounts payable hereunder or of any alterations, fixtures, renovations,
improvements or installations made or installed by or on behalf of Tenant, or
resulting from or in respect of Tenant's tenancy or occupancy of or conduct
related to the Premises, or resulting from or in respect of the business or
income of Tenant; and
(b) those components of Impositions resulting from or in respect of any
alterations, fixtures, renovations, improvements or installations made or
installed by or on behalf of Tenant, or resulting from or in respect of Tenant's
tenancy or occupancy of or conduct relating to the Premises, or from or in
respect of the business or income of Tenant, as allocated to the Premises or
Tenant by Landlord, acting reasonably and taking relevant factors into
consideration.
7.9 MUNICIPAL BY-LAWS
Tenant will comply with all laws and by-laws of the local municipal
authorities, and the provisions, rules and regulations of the public health act,
and requirements of all governmental officials, authorities or agencies, in
respect of its use and occupation of the Premises.
7.10 INDEMNIFICATION
Indemnity of Landlord
Tenant shall indemnify Landlord and all of its servants, agents,
employees, contractors and persons for whom Landlord is in law responsible and
all other tenants and occupants of the Project and shall hold them and each of
them harmless from and against any and all liabilities, claims, damages, losses
and expenses, including all legal fees and disbursements, due to, arising from
or to the extent contributed to by:
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(a) any breach by Tenant of any of the provisions of this Lease;
(b) any act or omission of any person on the Premises or any use or occupancy of
or any articles in the Premises;
(c) any act or omission of Tenant or any of its servants, agents, employees,
invitees, licensees, sub-tenants, concessionaires, contractors or persons for
whom Tenant is in law responsible on the Premises or elsewhere on or about the
Project;
(d) any injury, death or damage to persons or property of Tenant or its
servants, agents, employees, customers, contractors or any other persons on the
Project by or with the invitation, licence or consent of Tenant; and
(e) any damage, destruction or need of repair to any part of the Project caused
by any act or omission of Tenant or its servants, agents, employees, customers,
contractors, or persons for whom Tenant is in law responsible, notwithstanding
any other provisions of this Lease including Landlord's repair obligations under
Article 6.1 above.
7.11 LAST SIX MONTHS OF TENANCY
During the last six months of the tenancy hereby created, unless Tenant
shall have renewed this Lease in which event during the last six months of the
renewal term, Landlord shall have the right at reasonable times, and so as not
to interfere with Tenant's business, to enter and show the Premises to
prospective tenants.
7.12 INTEREST ON OVERDUE ACCOUNTS
If Tenant shall fail to pay any Rent from time to time payable by it to
Landlord hereunder promptly when due, Landlord shall be entitled to interest
thereon at a rate of three (3%) percent per annum in excess of the prime rate of
interest charged by Landlord's bank in Toronto from time to time from the date
upon which same was due until actual receipt of payment thereof.
7.13 RULES AND REGULATIONS
The rules and regulations in regard to the Project endorsed in this
Lease or attached hereto as Schedule "D", with such reasonable variation,
modifications and additions as shall from time to time be made by Landlord, of
which notice thereof shall have been given to Tenant in writing, shall be
observed and performed by Tenant 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. The rules and regulations shall not conflict with the
provisions of this Lease.
7.14 COSTS
Tenant shall be responsible for and pay to Landlord immediately after
demand all costs incurred by Landlord, including, without limitation, reasonable
compensation for all time expended by Landlord's own personnel, legal costs on a
solicitor and his own client basis, and all other costs of any kind whatsoever,
arising from or incurred as a result of any default of Tenant or any enforcement
by Landlord of any of Tenant's obligations under this Lease or any other
agreement or obligation of Tenant to Landlord, whether or not related to the
Premises.
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ARTICLE VIII
LANDLORD AND TENANT COVENANT WITH EACH OTHER
8.1 OCCUPANCY AFTER TERM
In the event of Tenant holding over beyond the Term hereby granted with
or without the consent of Landlord and without any further written agreement,
the tenancy resulting shall be a monthly tenancy only at a monthly rental
equivalent to 150% of the monthly amount of Basic Rent last herein mentioned,
and Additional Rent as provided herein and subject to termination at the
election of Landlord or Tenant upon one month's notice in writing, and subject
also to the terms, conditions and covenants herein set out, except as to the
length of tenancy, it being understood that the acceptance of rent or any
implied condition in no way renews this Lease as a yearly tenancy.
8.2 DEFAULT
(a) The following are events of default hereunder:
(i) If and whenever the Rent hereby reserved, or any part thereof,
shall not be paid on the day appointed for payment thereof and if such
non- payment continues for five (5) days after written notice thereof
to Tenant by Landlord,
(ii) in case of default, breach or non performance by the Tenant of any
of the Tenant's covenants or agreements herein contained and if such
default continues for fifteen (15) days after written notice thereof to
Tenant by Landlord and Tenant shall not have remedied within such
fifteen (15) day period or, if such default will take more than fifteen
(15) days to remedy, the Tenant has not commenced to remedy and is
proceeding diligently to remedy such default,
(iii) in case of the seizure or forfeiture of the Term for any of the
causes in this Lease mentioned,
(iv) if Tenant shall attempt or threaten to move its goods, chattels or
equipment out of the Premises, other than as allowed under this Lease,
(v) if a receiver shall be appointed for the business, property,
affairs or revenues of Tenant, or if the Tenant shall file for
bankruptcy protection or shall be adjudged bankrupt or the Tenant shall
be filed into bankruptcy or take the benefit of any insolvency or
bankruptcy legislation, or
(vi) the Lease is transferred without the Landlord's consent,
then and in any of such cases, the then current and the next three (3) months'
Basic Rent and Additional Rent shall be forthwith due and payable and Landlord
shall have the following rights and remedies, all of which are cumulative and
not alternative:
(i) to terminate this Lease in respect of the whole or any part of the
Premises and to re-take possession of the whole of any part of the
Premises and expel all persons from the Premises and remove all
property from the Premises and sell or dispose of it as the Landlord
sees fit, all with service of written notice on Tenant. If this Lease
is terminated in respect of
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part of the Premises, this Lease shall be deemed to be amended by the
appropriate amendments, and proportionate adjustments in respect of
Rent and any other appropriate adjustments shall be made;
(ii) itself, or by its agents or employees, or by a receiver or
replacement thereof appointed in writing by Landlord, to enter the
Premises as agent of Tenant and as such agent to relet the Premises for
whatever term (which may be for a term extending beyond the Term) and
on whatever terms and conditions as Landlord in its sole discretion may
determine and to receive the rent therefor and, as the agent of Tenant,
to take possession of any furniture, fixtures, equipment, stock or
other property thereon and, upon giving written notice to Tenant, to
store the same at the expense and risk of Tenant or to sell or
otherwise dispose of the same at public or private sale without further
notice, and to make such alterations to the Premises in order to
facilitate their reletting as Landlord shall determine, and to apply
the net proceeds of the sale of any furniture, fixtures, equipment,
stock or other property or from the reletting of the Premises, less all
expenses incurred by Landlord in making the Premises ready for
reletting and in reletting the Premises, on account of the Rent due and
to become due under this Lease and Tenant shall be liable to Landlord
for any deficiency and for all such expenses incurred by Landlord as
aforesaid; no such entry or taking possession of or performing
alterations to or reletting of the Premises by Landlord shall be
construed as an election on Landlord's part to terminate this Lease
unless a Notice of such intention or termination is given by Landlord
to Tenant;
(iii) to remedy or attempt to remedy any default of Tenant in
performing any repairs, work or other covenants of Tenant hereunder
and, in so doing, to make any payments due or claimed to be due by
Tenant to third parties and to enter upon the Premises, without any
liability to Tenant therefor or for any damages resulting thereby, and
without constituting a re-entry of the Premises or termination of this
Lease, and without being in breach of any of Landlord's covenants
hereunder and without thereby being deemed to infringe upon any of
Tenant's rights pursuant hereto, and, in such case, Tenant shall pay to
Landlord forthwith upon demand all amounts paid by Landlord to third
parties in respect of such default and all reasonable costs of Landlord
in remedying or attempting to remedy any such default as Additional
Rent;
(iv) to take possession of the Premises and all contents thereof itself
or by a receiver or any replacement thereof appointed by Landlord in
writing and carry on the business on the Premises and sell this Lease
or sub-let the Premises and sell the contents of the Premises in such
manner as may seem advisable to Landlord or the receiver or any
replacement thereof, all in the name of Tenant;
(v) to obtain damages from Tenant including, without limitation, if
this Lease is terminated by Landlord, all deficiencies between all
amounts which would have been payable by Tenant for what would have
been the balance of the Term but for such termination, and all net
amounts actually received by Landlord for such period of time; and
(vi) to suspend or cease to supply any utilities, services, heating,
ventilating, air-conditioning and humidity control to the Premises, all
without liability of Landlord for any damages, including indirect or
consequential damages, caused thereby.
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(b) Default hereunder by Tenant entitling Landlord to declare forfeiture of this
Lease and, if it so elects, to terminate shall not affect or prejudice the right
of Landlord to sue for all arrears of Rent prior to termination or Landlord's
right to damages arising from the unexpired portion of the Term.
8.3. DAMAGE AND DESTRUCTION
(a) Damage to Premises
If the Premises are damaged or destroyed, in whole or in part, by fire
or any other casualty or occurrence, this Lease shall nonetheless continue in
full force and effect unless terminated as expressly hereinafter in this
Subsection 8.3(a) provided, and the following provisions shall apply:
(i) If such damage or destruction is caused by an occurrence against
which and to the extent that Landlord either is required to insure
pursuant to this Lease or against which Landlord is otherwise insured,
then the following provisions shall apply:
(A) if the damage is such as to render
the whole or any part of the Premises
unusable for the purpose of Tenant's use
and occupancy thereof, Landlord shall
deliver to Tenant within sixty (60) days
following the occurrence of the damage
its reasonable written opinion as to
whether or not the damage is capable of
being repaired, to the extent of
Landlord's repair obligations under this
Lease, within one hundred eighty (180)
days following such occurrence;
(B) if in Landlord's opinion the
Premises are capable of being repaired
as aforesaid within one hundred eighty
(180) days following such occurrence,
Landlord shall diligently proceed to
perform such repairs as are its
responsibility under this Lease;
(C) if it is Landlord's opinion that
the Premises are not capable of being
repaired as aforesaid within one hundred
eighty (180) days following such
occurrence, Landlord may, at its option,
elect by written notice given to Tenant
within sixty (60) days after such
occurrence, to terminate this Lease,
whereupon Tenant shall immediately
surrender possession of the Premises,
and Rent and all other payments for
which Tenant is liable hereunder shall
be apportioned to the effective date of
such termination. If Landlord does not
so elect to terminate this Lease, it
shall diligently proceed to repair the
Premises to the extent of its
obligations under this Lease;
(D) if the Premises are, as a result
of any such occurrence, rendered
unusable in whole or in part for the
purpose of Tenant's use and occupancy
thereof, then Basic Rent shall abate,
but only to the extent that Tenant's use
and occupancy of the Premises is thereby
diminished, which determination shall be
conclusively made by Landlord acting
reasonably, until the seventh (7th) day
following the date of delivery to Tenant
of written notice from Landlord that the
Premises are ready for Tenant to
commence its repairs to the Premises
pursuant to its obligations under this
Lease; and
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(E) the respective obligations of
Landlord and Tenant with respect to the
repair and restoration of the Premises
following any damage, shall be performed
in accordance with the applicable
obligations to repair contained in this
Lease and shall be performed with all
reasonable speed. Tenant acknowledges
that the obligations of Tenant pursuant
hereto to repair the Premises after
damage shall be performed without the
benefit of the contribution, if any,
made by Landlord to the cost of the
original construction of Leasehold
Improvements therein.
(ii) If the damage or destruction is caused by an occurrence against
which Landlord is not insured or required to insure or beyond the
extent to which Landlord is required to insure pursuant to this Lease
or if such damage or destruction occurs within two (2) years prior to
the expiry of the Term if there are no remaining rights of either of
the parties hereto to extend or renew the same or if within fifteen
(15) days after such occurrence any party hereto having the right to
renew or extend the Term fails to do so, and if, in Landlord's
reasonable opinion, the Premises are not capable of being repaired
within thirty (30) days from the occurrence of such damage or
destruction, Landlord may, at its option, elect by written notice given
to Tenant within thirty (30) days after such occurrence, to terminate
this Lease whereupon Tenant shall immediately surrender possession of
the Premises and Rent shall be apportioned to the effective date of
such termination; if this Lease is not terminated as aforesaid there
shall be no abatement of Rent unless and to the extent expressly
provided in Paragraph (i) of Subsection 8.3(a) above and the parties
shall repair as provided above.
(b) Partial Destruction of Building
Notwithstanding anything to the contrary contained herein, in the event
that twenty-five percent (25%) or more of the Gross Rentable Area in the
Building is destroyed or substantially damaged by any cause, whether or not
there is any damage to the Premises, Landlord may, at its option, elect by
written notice given to Tenant within ninety (90) days after such occurrence, to
terminate this Lease as of a date specified therein, which date shall be not
less than thirty (30) days after the giving of such notice, in which event
Tenant shall vacate and surrender possession of the Premises by not later than
the effective date of termination, and Rent shall be apportioned to the
effective date of termination. If Landlord does not so elect to terminate the
Lease, Landlord shall diligently proceed to repair and rebuild the Building to
the extent of its obligations under this Lease, provided that Landlord's
obligations pursuant to this Subsection 8.3(b) shall be limited to the extent
that any failure to repair or rebuild the Building would adversely affect
Tenant's access to or use of the Premises.
(c) Restoration of Premises or Building
It is agreed that, in the event that Landlord repairs or rebuilds the
Premises or the Building, to the extent required herein and in accordance with
the provisions of Subsections 8.3(a) and 8.3(b) hereof, it shall not be obliged
to do so precisely in accordance with the plans and specifications for the
construction of the Premises or the Building prior to such damage, so long as
the Premises as repaired or rebuilt to the extent required herein are reasonably
similar in form and condition to the Premises as they existed prior to such
damage, and so long as Tenant's use and occupancy of and access to the Premises
is not unreasonably diminished by any difference in plans and specifications for
the reconstruction of the Premises or the Building after damage.
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8.4 REMOVAL OF FIXTURES
(a) Except as may be otherwise expressly agreed by Landlord in writing, or
provided herein, no Leasehold Improvements, trade fixtures, furniture or
equipment shall be removed by Tenant from the Premises, either during or at the
expiration or sooner termination of the Term of this Lease.
(b) Provided that notwithstanding the foregoing:
(i) During the Term of this Lease, Tenant may remove from the Premises
furniture, drapery or equipment in the normal course of its business,
and where and to the extent that such furniture, drapery or equipment
has become excess for Tenant's purposes, or when Tenant is substituting
therefor furniture, drapery or equipment of equivalent value; and at
the end of the Term of this Lease, Tenant may remove furniture and
equipment and trade fixtures, and may, if Landlord so expressly agrees
in writing, remove drapery and drapery hardware;
(ii) Tenant shall at the end of the Term of this Lease remove such
Leasehold Improvements from the Premises as Landlord shall require to
be removed and on the termination of this Lease or any renewal hereof,
in case any alterations shall have been made, restore the Premises to
the condition they were in previous to such alterations unless Landlord
should prefer that such alterations should remain but, in such case,
without any compensation being allowed to Tenant for same; and any such
restoration work required to be made by Tenant shall be undertaken
prior to the expiry of the Term or immediately after termination of
this Lease and shall be carried through and completed expeditiously.
This Article 8.4 shall survive the expiry or earlier termination of
this Lease.
Notwithstanding anything to the contrary contained in this
Article 8.4(b)(ii), so long as Tenant is Delta Capital Technologies
Inc., or an Affiliate, and is itself in possession of and conducting
its business from the whole of the Premises throughout the Term in
accordance with this Lease, the Tenant shall not be required to remove
those Leasehold Improvements provided by the Landlord on Tenant's
behalf as Turn-Key Improvements, as more particularly defined in
Article 10.3.
(iii) In the case of any removal either during or at the end of the
Term of its Lease, Tenant shall at its expense, make good any damage
caused to the Premises or the Project by the installation or removal;
(iii) In the event that, for whatever reason, Tenant has not completed
restoration work either prior to the expiry of the Term or immediately
after the termination of the Term, Tenant shall pay to Landlord,
Landlord's reasonable estimate of the cost to complete such restoration
as a Special Service.
8.5 INSURANCE
(a) Landlord's Insurance
Landlord shall take out and keep in force throughout the Term, upon
such terms and conditions and in such amounts as would be maintained by a
prudent owner of a property similar to the Project, the following insurance:
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(i) public liability and property damage liability insurance with
respect to the Project;
(ii)fire and standard extended perils or "all risks" coverage and
boiler and machinery insurance on all real and personal property owned
by Landlord or for which it is legally responsible comprising or
located upon the Project; and
(iii) such other forms of insurance as Landlord or its mortgagee,
debenture holder or other secured creditor may from time to time
consider advisable.
For greater certainty, nothing herein shall be construed as requiring
Landlord to insure Tenant's Leasehold Improvements or any other property owned
or brought onto the Project by Tenant whether affixed to the Project or not.
Tenant acknowledges and agrees that, notwithstanding that Tenant
shall be contributing to the cost of Landlord's insurance with respect to the
Project, Tenant shall not have any insurable interest in, or any right to
recover any proceeds under any of Landlord's policies.
(b) Tenant not to Jeopardise Landlord's Insurance
Tenant shall neither do, permit nor omit to be done, anything in the
Premises or the Project which might result in any increase in the premiums for
Landlord's insurance coverage or which might result in actual or threatened
reduction or cancellation of or material adverse change in such coverage.
Tenant shall pay any such increases in premiums forthwith upon demand
as a Special Service. In determining Tenant's responsibility for any increased
premiums, a statement by the party establishing the relevant insurance rate
shall be conclusive evidence of the various components of such rate.
If any insurance coverage with respect to the Project or any part
thereof is actually, or threatened to be, either cancelled, reduced or
materially adversely changed by the insurer by reason of the condition, use or
occupancy of the Premises or any part thereof, or any act or omission of Tenant
or any person for whom Tenant is in law responsible, and if Tenant fails to
remedy the condition, use, occupancy, act or omission giving rise to such actual
or threatened cancellation, reduction or change within ten (10) days after
Notice thereof from Landlord (or any shorter period which shall be two (2) days
less than the period allowed to Landlord in the notice from Landlord's insurer),
Landlord may at its option either:
(i) re-enter and take possession of the Premises forthwith by leaving
upon the Premises Notice of its intention so to do and thereupon the
provisions of this Lease respecting Landlord's remedies shall apply; or
(ii)enter upon the Premises and remedy such condition, use, occupancy,
act or omission and Tenant shall on demand pay Landlord for the remedy
as a Special Service. Tenant agrees that no such entry by Landlord
shall be deemed re-entry or a breach of any covenant of quiet enjoyment
contained in this Lease.
Tenant agrees that Landlord shall not be liable for any damage to any
property located on the Premises as a result of any such entry or re-entry by
Landlord.
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(c) Tenant's Insurance
(i) Throughout the Term and such other times as Tenant occupies the Premises or
any part thereof, Tenant shall, at its expense, take out and keep in force the
following insurance:
(A) "all risks" insurance upon property of every kind
owned by Tenant, or for which Tenant is legally
liable, or installed by or on behalf of Tenant in the
Project, including, without limitation, Leasehold
Improvements, in an amount of not less than the full
replacement cost thereof without any deduction for
depreciation, which amount shall be conclusively
determined by Landlord in the event of any dispute
with respect thereto. Such coverage shall insure
against fire and all other perils as are from time to
time included in the standard "all risks" coverage
including, without limitation, sprinkler leakages
(where applicable), and earthquake, flood and
collapse, and shall be subject to a replacement cost
endorsement and a stated amount co-insurance clause.
Loss shall be payable to Tenant and Landlord as their
interests may appear;
(B) comprehensive general liability insurance
including but not limited to occurrence basis
property damage, personal injury liability, blanket
contractual liability, liquor liability if Tenant has
a liquor license, non-owned automobile liability and
products and completed operations with respect to the
Premises and Tenant's use of the Project, coverage to
include the activities conducted by Tenant and any of
its servants, agents, contractors, subcontractors and
persons for whom Tenant is in law responsible, in any
part of the Project. Such policies shall have
inclusive limits of at least Five Million
($5,000,000) Dollars for each occurrence involving
bodily injury, death or property damage, or such
higher limits as Landlord may reasonably require from
time to time. Such policies shall also include
Tenant's legal liability insurance under an "all
risks" form for the whole replacement cost of the
Premises, including loss of use thereof. Such
policies shall also contain cross liability and
severability of interest clauses, and Landlord shall
be named as an additional insured as shall Tenant's
contractors and subcontractors, where applicable;
(C) business interruption insurance providing "all
risks" coverage;
(D) any other form of insurance in such amounts and
against such risks as Landlord may reasonably require
from time to time, including without limitation the
following insurance:
(1) plate glass insurance on all
internal and external glass in or about
the Premises;
(2) comprehensive boiler and machinery
insurance on a blanket repair and
replacement basis with limits for each
accident in an amount not less than the
full replacement cost of all Leasehold
Improvements and providing coverage with
respect to all objects introduced into
the Project by or on behalf of Tenant
and containing a joint loss endorsement
or agreement.
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(ii) Each of Tenant's insurance policies as aforesaid or any other
policies which Tenant may take out shall contain:
(A) a waiver of any subrogation rights which Tenant's
insurers would have against Landlord or any person,
firm or corporation for whom Landlord may in law or
by agreement be responsible or for whom Landlord may
have agreed to obtain such a waiver;
(B) a provision that Tenant's insurance policy shall
be primary and shall not call into contribution any
other insurance available to Landlord;
(C) a waiver, as respects the interest of Landlord,
of any provision in any tenants' insurance policies
with respect to any breach of any warranties,
representations, declarations or conditions contained
in the said policies; and
(D) an undertaking by the insurers that no material
change, cancellation or termination of any policy
will be made unless Landlord has received not less
than thirty (30) days prior Notice thereof, delivered
in accordance with the provisions of this Lease.
(iii) All policies shall be taken out with such insurers and be in such
form as are satisfactory from time to time to Landlord. Tenant shall
deliver to Landlord certificates of insurance in the form designated by
Landlord within thirty (30) days after the placement or renewal of such
insurance, and shall from time to time furnish to Landlord upon demand
similar certificates confirming the renewal or continuation in force of
Tenant's insurance.
(iv) Tenant hereby releases Landlord and its servants, agents,
employees, contractors and those for whom Landlord is in law
responsible from all losses, damages and claims of any kind in respect
of which Tenant is required to maintain insurance or is otherwise
insured.
(d) Landlord's Right to Place Tenant's Insurance
If Tenant at any time fails to take out and keep in force any
insurance required by or pursuant to this Lease or to deliver to Landlord
satisfactory proof of the good standing of any such insurance, Landlord shall,
without prejudice to any of its other rights hereunder, have the right but not
the obligation to effect such insurance on behalf of Tenant, and the cost
thereof together with all reasonable expenses incurred by Landlord shall be paid
by Tenant to Landlord upon demand as a Special Service.
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8.6 LANDLORD'S NON-LIABILITY
Tenant agrees that Landlord shall not be liable or responsible in any
way for any injury or death to any person or for any loss or damage to any
property at any time in, on or about the Premises or any property owned by or
being the responsibility of Tenant or any of its servants, agents, customers,
contractors or persons for whom Tenant is in law responsible elsewhere in, on or
about the Project, no matter how the same shall be caused and unless any such
death, injury, loss or damage is caused or contributed to by the gross
negligence of Landlord, its servants, agents, employees, contractors or persons
for whom Landlord is in law responsible. Without limiting the generality of the
foregoing, Landlord shall not be liable or responsible for any injury, death,
loss or damage to any persons or property caused or contributed to by any of the
following: fire, explosion, steam, water, rain, snow, electricity, gas, or
falling plaster; or by dampness or leaks from any pipes, appliances, plumbing
works, roof, exterior walls or any other source whatsoever; and Landlord shall
not be liable or responsible in any way for any injury, death, loss or damage to
any person or property caused by any other tenants or occupants of the Project
or by any occupants of any adjoining property or by the public or by the
construction of any public, quasi public, or private work or utilities. All
property kept or stored in or about the Premises or kept or stored by Tenant or
any of its servants, agents, customers, contractors or persons for whom Tenant
is in law responsible elsewhere in the Project shall be at the sole risk of
Tenant and Tenant shall indemnify Landlord and save it harmless in respect of
the same. Without in any way limiting or affecting the generality or
interpretation of the foregoing provisions of this Article 8.6, it is agreed
that Landlord shall in no event be liable for any indirect or consequential
damages suffered by Tenant. Irrespective of whether Landlord installs or
requires Tenant to install any particular type of demising wall or partition,
and even if the same is for any reason accessible to easy unauthorized entry,
Landlord shall not be liable for any losses or damages sustained thereby on or
in respect of the Premises or any persons or property thereon, and Tenant shall
be responsible for its own security and alarm systems, subject to Landlord's
consent, but the giving or withholding of consent shall not impose any liability
whatever on Landlord, and shall indemnify Landlord for any such losses or
damages.
8.7 ACCIDENTAL STOPPAGE OF SERVICES
Landlord shall not be responsible for any damage which may be caused
if, nor shall Tenant be entitled to claim diminution or abatement of Rent should
accidentally or temporarily, the water, heating, air-conditioning or supply of
electric or other utility be stopped or cease working.
8.8 INABILITY OF LANDLORD OR TENANT TO PERFORM COVENANTS
Whenever and to the extent that Landlord or Tenant shall be unable to
fulfil or shall be delayed or restricted in the fulfilment of any of their
respective obligations hereunder in respect of the supply or provision of any
service or utility or the doing of any work or the making of any repairs 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 of direction of any
administration, controller or board, or 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, Landlord or Tenant, as the case may
be, shall be relieved from the fulfilment of such obligation during the period
of such delay or restriction and the other of them shall not be entitled to
compensation for any inconvenience, nuisance or discomfort. If Landlord or
Tenant, as the case may be, can provide the required material without infringing
on any of the governmental regulations in force, the other of them shall avail
itself of such material in order to do any work or make any repairs as
hereinbefore provided.
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8.9 INSTALLATION, REPAIR OR RECONSTRUCTION OF SERVICES OR COMMON AREAS
Landlord and any person authorized by Landlord shall have the right
but without unduly interfering with Tenant's business:
(a) to install, maintain and/or repair pipes, wires, ducts or other
installations in, under or through the Premises for or in connection with the
supply of any services to the Premises or the Project or any part thereof. Such
services shall include, without limitation, telephone or intercommunication
systems, and
(b) to relocate or alter Project common areas including Common Areas from time
to time as Landlord may desire, including the reduction, increase or change of
the size, location and contours thereof provided always that access to and from
the Premises to the elevator lobbies, at least one washroom for men, at least
one washroom for women and fire escapes required by law on the floor on which
the Premises are located, are at all times available.
8.10 RELOCATION - INTENTIONALLY DELETED
8.11 TAX AMOUNT, UTILITY COSTS TO THE PREMISES AND COSTS OF OPERATION
(a) During the Term, Tenant shall pay the Tax Amount, the Utility Costs
consumed within the Tenant's Rentable Area and Tenant's Proportionate Share
of the Costs of Operation.
(b) Prior to the commencement of the Term and of the commencement of each fiscal
period selected by Landlord thereafter which commences during the Term, Landlord
shall estimate the Costs of Operation, Tax Amount and Utility Costs of the
Tenant's Rentable Area, for the ensuing fiscal period or, if applicable, broken
portion thereof, as the case may be, and notify Tenant in writing of the
estimated Tax Amount and Utility Costs to the Tenant's Rentable Area and
Tenant's Proportionate Share of the Costs of Operation. The amount so estimated
shall be payable in equal monthly instalments in advance over such fiscal period
or, if applicable, broken portion thereof, such monthly instalments being
payable on the same day and in the same manner as the monthly payments of Basic
Rent. Landlord may, from time to time, alter the fiscal period selected, in
which case, and in the case where only a broken portion of the fiscal period is
included within the Term, the appropriate adjustment in monthly payments shall
be made. From time to time during the fiscal period, Landlord may re-estimate
any of the foregoing on a reasonable basis for such fiscal period or broken
portion thereof, in which event Landlord shall notify Tenant in writing of such
re-estimate and fix monthly instalments for the then remaining balance for such
fiscal period or broken portion thereof such that, after giving credit for the
instalments paid by Tenant on the basis of the previous estimate or estimates,
the entire Tax Amount, Utility Costs to the Tenant's Rentable Area and
Proportionate Share of the Costs of Operation will have been paid during such
fiscal period or broken portion thereof. As soon as practicable after the
expiration of each fiscal period, Landlord shall make a final determination of
the Costs of Operation and of the Proportionate Share thereof for such fiscal
period or, if applicable, broken portion thereof and of Tax Amount and Utility
Costs to the Tenant's Rentable Area and notify Tenant, and Landlord and Tenant
shall make the appropriate re-adjustment and payments. Notices by Landlord
stating the amount of any estimate, re-estimate or determination of Costs of
Operation and Utility Costs to the Tenant's Rentable Area, or the Proportionate
Share of the Costs of Operation, or monthly installments payable, need not
include particulars of costs.
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(c) If any of the Premises are located on part of a floor that is less than a
full floor, Tenant's fraction of Common Area costs will be estimated, charged,
paid, determined and settled in the same manner as Tenant's Proportionate Share
of Costs of Operation.
8.12 STATEMENT RE LEASE STANDING
Landlord and Tenant, at any time and from time to time, upon not less
than ten (10) days prior notice to the other, shall execute, acknowledge and
deliver to the other, or to whomsoever the other may direct, a statement in
writing stating that this Lease is unmodified and in full force and effect, or
if there has been modification, that the same is in full force and effect as
modified, and the dates to which the Rent has been paid, and stating whether or
not, to the best knowledge of the signatory of such certificate, Landlord or
Tenant, as the case may be, is in default of any covenant, agreement or
condition contained in this Lease, and if so, specifying each such default of
which the signatory may have knowledge, it being intended that any such
statement delivered pursuant hereto may be relied upon by any prospective
purchaser and/or assignee of Landlord's or Tenant's respective interest in this
Lease or in the Project.
8.13 POSTPONEMENT, SUBORDINATION AND ASSIGNMENT
(a) Tenant agrees that it will, at the request of Landlord from time to time,
postpone and subordinate this Lease and all Tenant's rights hereunder in favour
of any mortgage or mortgages covering the Project, or any part thereof, which
Landlord may arrange and make from time to time, and Tenant agrees that it will
execute all postponement agreements and any other documents or assurances which
may be required by Landlord from time to time to give effect to this provision;
provided that, in any event, before requiring Tenant to postpone or subordinate
as hereinbefore set out, Landlord shall make reasonable effort to obtain from
any mortgagee an acknowledgement and assurance in writing addressed to Tenant,
whereby such mortgagee acknowledges that, in the event of any such mortgagee
realising upon the security, it will not disturb Tenant and will permit Tenant
to remain in possession under this Lease and in accordance with the terms
thereof, so long as Tenant is not in default.
Tenant agrees that, whenever requested by Landlord or a mortgagee, it
shall attorn to and become the tenant of such mortgagee, or any purchaser from
such mortgagee in the event of the exercise by the mortgagee of its remedies
under the mortgage, or to any assignee from Landlord of Landlord's interest
under this Lease, on the same terms and conditions as are set forth in this
Lease for the unexpired residue of the Term. Tenant shall execute promptly on
request by Landlord or a mortgagee, any certificates, agreements, instruments of
attornment and other such instruments or agreements in such form as requested by
Landlord or a mortgagee from time to time to give effect to such attornment or
to otherwise give full effect to any of the provisions of this section 8.13.
(b) Landlord and/or Head Landlord shall have the right to sell, lease, convey,
mortgage or otherwise dispose of the Project or any part thereof and to assign
this Lease and any interest of Landlord and/or Head Landlord pursuant to this
Lease without any restriction. If Landlord and/or Head Landlord shall sell,
lease, convey, mortgage or otherwise dispose of the Project or any part thereof
or shall assign this Lease and any interest of Landlord and/or Head Landlord
pursuant to this Lease, then, to the extent that the purchaser or assignee
agrees with Landlord and/or Head Landlord to assume the covenants and
obligations of Landlord and/or Head Landlord hereunder, Landlord and/or Head
Landlord shall thereupon and without further agreement be released of all
liability pursuant to the terms of this Lease.
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Nothing in this clause shall operate to prevent Landlord and Tenant
from amending or varying any of the terms of, or cancelling this Lease, as they
may agree, provided that, notwithstanding the foregoing, Landlord and Tenant
shall not be entitled to amend this Lease by deleting this section 8.13(b)
therefrom, or for the purposes of providing for any further prepayment of rental
in addition to those provisions for prepayment of rentals, if any, contained in
this Lease at the time of execution of this Lease.
8.14 REMEDIES TO SUBSIST
No waiver of any of Tenant's obligations under this Lease and no
waiver of any of Landlord's rights hereunder in respect of any default by Tenant
hereunder shall be deemed to have occurred or be given as a result of any
condoning, excusing, overlooking or delay in acting upon by Landlord in respect
of any default by Tenant or by any other act or omission of Landlord. All rights
and remedies of Landlord under this Lease and at law shall be cumulative and not
alternative, and the exercise by Landlord of any of its rights pursuant to this
Lease or at law shall at all times be without prejudice to any other rights of
Landlord, whether or not they are expressly reserved.
8.15 CONTROL OF PROJECT
The Project is at all times subject to the exclusive control and
management of Landlord. Without limiting the generality of the foregoing,
Landlord shall have the right to police and supervise any or all portions of the
Project; obstruct, lock up or close off all or any part of the Project for
purposes of performing any maintenance, repairs or replacements or for security
purposes or to prevent the accrual of any rights to any person or the public or
any dedication thereof; grant, modify and terminate any easements or other
agreements respecting any use or occupancy, maintenance of or supply of any
services to any part of the Project; and use or permit to be used any part of
the Common Areas in the Project for promotional activities, merchandising,
display, entertainment or special features.
(b) Tenant agrees that it has no interest in any lands or air rights above the
lands now or in the future excluded from the Project as aforesaid and Tenant
agrees to execute and deliver immediately after the request of Landlord all
documents reasonably requested by Landlord to confirm Tenant has no interest in
any lands now or in the future excluded from the Project; in default of Tenant
executing or delivering any such documents within ten (10) days after request of
Landlord, Landlord shall be and is hereby appointed attorney for Tenant to
execute such documents for and on behalf of Tenant and in its name, and shall
survive and may be exercised during any subsequent legal incapacity of Tenant
8.16 LANDLORD'S RIGHT TO ENTER PREMISES
Landlord, without limiting any other rights Landlord may have
pursuant hereto or at law, shall have the right, but not the obligation, to
enter the Premises at any time and for any of the following purposes: as set out
in Article 7.2; to protect the Premises or any part of the Project in respect of
any construction or other work being performed in premises adjoining or in the
vicinity of the Premises or the Project; for any purposes as determined by
Landlord in cases of emergency; to read any utility or other similar meters
located in the Premises; and at any time during the Term, to show the Premises
to prospective purchasers, mortgagees or lenders.
8.17 SPECIAL SERVICES
(a) Landlord shall be the exclusive supplier, at Tenant's expense, of any
Special Services unless Landlord otherwise advises Tenant. If Landlord advises
that it shall not be the supplier of any aspect of Special Services, only
persons approved by Landlord acting reasonably may supply such aspect of Special
Services to Tenant but subject to reasonable rules and regulations established
by Landlord.
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(b) Unless otherwise expressly agreed between Landlord and Tenant to the
contrary in respect of any specific matter from time to time, all work performed
and materials supplied by Landlord for Tenant described as Special Services or
otherwise shall be paid for by Tenant to Landlord immediately after demand at
Landlord's cost for the same plus ten percent (10%) for inspection, supervision,
overhead and profit or such other reasonable amounts as may be charged by
Landlord for overhead and profit from time to time.
8.18 SECURITY AGREEMENT - Intentionally Deleted
8.19 INDEMNITY - Intentionally Deleted
8.20 NOTICES
Any notice required or contemplated by any provision of this Lease
which Landlord or Tenant may desire to give to the other shall be in writing and
shall be sufficiently given to Tenant, by personal delivery or by registered
mail, postage prepaid, and mailed in one of Canada Post Corporation's Post
Offices and addressed to Tenant at the Premises, attention President, with a
copy to Delta Capital Technologies Inc., Suite 1400, 1166 Alberni Street,
Vancouver, B.C., V6E 3Z3 and to Landlord, by registered mail, postage prepaid,
and mailed in said Post Office and addressed to Landlord as follows:
c/o O&Y Enterprise Alberta,
Suite 1250, 555 4th Avenue S.W.,
Calgary, Alberta, T2P 3E7,
with a copy to: O&Y Enterprise,
1 First Canadian Place,
Suite 3300, P.O. Box 20,
Toronto, Ontario, M5X 1B5,
Attention: Vice-President and Counsel, Leasing Legal Services
and such notice shall be effective as of the date of such personal delivery or
five (5) days after posting as the case may be. In the case of postal
disruption, all notices pursuant to this Article 8.20 are to be delivered, with
delivery to Landlord as set out above.
8.21 REGISTRATION
(a) Tenant shall not register this Lease or any assignment or sublease
or other document evidencing an interest of Tenant or anyone claiming through or
under Tenant in this Lease or the Premises except that Tenant may register a
Caveat which describes the parties, the Term, and contains the other minimum
information required under the Land Titles Act of Alberta, but the Caveat must
be in a form satisfactory to Landlord, acting reasonably. The cost of
preparation, Landlord's approval, execution, and registration of such Caveat
shall be borne by Tenant and shall be paid by Tenant forthwith upon demand.
Promptly upon registration of such Caveat, Tenant shall forthwith provide to
Landlord details of such registration together with a duplicate registered copy
of the Caveat. Upon the expiration of the Term of this Lease, Tenant shall at
its sole cost and expense and without request or demand by Landlord, discharge
the registration of such Caveat.
(b) Tenant irrevocably appoints Landlord as Tenant's attorney with full
power and authority to execute and deliver in the name of and on behalf of
Tenant; such discharges and other documents as shall
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be required or desired by Landlord to expunge or discharge (after the expiry
or earlier termination of this Lease) from the title of the Land on which the
Project is located, any such Caveat which may be filed by Tenant with respect
to this Lease; or any other documents necessary to give full effect to
Landlord's rights under this Section 8.21.
8.22 GOVERNING LAW
This Lease is to be governed by and construed according to the laws
of the Province of Alberta.
8.23 GENDER
The words "Landlord" and "Tenant" and the personal pronouns "it" and
"its" relating thereto and used therewith shall be read and construed as
"Landlord" or "Landlords", "Tenant" or "Tenants" respectively, as the number and
gender of the party or parties in each case require and the number of the verb
agreeing therewith shall be construed as agreeing with the said word or pronoun
so substituted and all covenants shall be deemed to be joint and several.
8.24 CAPTIONS
The captions and headings in this Lease form no part of the Lease and
shall be deemed to have been inserted for convenience of reference only.
ARTICLE IX
MISCELLANEOUS
9.1 SUCCESSORS AND ASSIGNS
This indenture shall enure to the benefit of and be binding upon
the parties hereto, their respective executors, administrators, successors and
assigns.
9.2 COMPLETE AGREEMENT
It is understood and agreed that, other than and to the extent that
any other written agreement between Landlord and Tenant respecting the Premises
expressly remains in force, this Lease constitutes the complete agreement
between the parties and that there are no covenants, representations,
agreements, warranties or conditions in any way relating to the subject matter
of this Lease or the tenancy created hereby expressed or implied, collateral or
otherwise, except as expressly set forth herein. Tenant acknowledges that no
representatives of Landlord are authorized to make, on Landlord's behalf, any
covenants, representations, agreements, warranties or conditions of any kind or
in any manner whatsoever other than as expressly set forth in writing in this
Lease in the form in which it is executed by Landlord.
No amendment to this Lease shall be binding upon Landlord unless the
same is in writing and executed by Landlord.
9.3 TIME OF THE ESSENCE
Time is of the essence of this Lease and of every part of it.
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ARTICLE X
ADDITIONAL PROVISIONS
10.1 DEPOSIT
Tenant has delivered a cheque made payable to O&Y Enterprise Alberta in
the amount of $51,803.15 to be held by Landlord without interest as a deposit
pursuant to the terms of this Lease to be applied to the last two (2) months'
Basic and Additional Rent including G.S.T., when due. If Tenant defaults in the
payment of Rent at any time during the Term, Landlord may apply the amount of
such deposit then remaining to the amount of Rent then unpaid. Upon so doing,
Landlord will advise Tenant and Tenant will forthwith replenish the deposit.
Landlord may deliver the deposit to any purchaser of Landlord's
interest in the Project and Landlord shall thereby be discharged of any further
liability with respect to such deposit. Landlord may commingle the deposit with
its own funds and shall not hold the deposit as a trustee.
10.2 PARKING
If Tenant is Delta Capital Technologies Inc., or an Affilitate and is
in occupation of the Premises throughout the Term in accordance with the Lease
and if Tenant is not in default, then Landlord shall, throughout the Term of the
Lease, provide Tenant with 4 permit(s) for random parking in Phoenix Place's
parking facility and 4 permit(s) for random parking in the 910 - 7th Avenue SW
parking facility, at Landlord's prevailing rates for parking from time to time.
At this time, the prevailing rate is $185.00 per permit per month for a permit
in the Phoenix Place parking area; $200.00 per permit per month for a permit in
the 910 - 7th Avenue SW parking area. Although Landlord will attempt to
accommodate Tenant's request for a specific type of permit, Tenant acknowledges
that permits for some types of parking areas are subject to availability. If
Landlord cannot accommodate Tenant's request, Landlord will, in any event,
provide Tenant with its permit(s) in the 910 - 7th Avenue SW parking area.
Tenant must accept from Landlord all the permits to which it is entitled on the
Commencement Date or forfeit the number it has not elected to take. Tenant
acknowledges and agrees that this is a contractual right only and does not form
part of the Premises demised to Tenant and no landlord and tenant relationship
exists with respect to this parking right, but the obligations shall be binding
upon successors and assigns of Landlord's interest in the Building. Tenant
agrees to sign, on Landlord's request, Landlord's standard form of parking
license agreement for the Building's parking facility.
10.3 TENANT'S LEASEHOLD IMPROVEMENTS
Provided Tenant has executed the Lease in a form satisfactory to
Landlord, Landlord shall complete a turnkey improvement package (the "Turnkey
Improvements") in accordance with the Working Drawings, and similar to the
preliminary plan (the "Preliminary Plan") attached hereto as Schedule "C-2", on
or before the Commencement Date. Any work in addition to Landlord's work set out
above shall be performed by Tenant at its sole cost, subject to Landlord's prior
approval. If the Lease is terminated by Landlord due to Tenant's default in the
performance of any of its covenants or obligations under the Lease prior to
expiration of the Term, Tenant shall, without prejudice to Landlord's other
rights and remedies contained in the Lease, pay to Landlord an amount calculated
by multiplying the actual cost of the Landlord's Work to complete the Premises
(as of the date Landlord starts to conduct Tenant's fixturing) by a fraction
which has, as its numerator, the number of months then left in the Term and, as
its denominator, the number of months in the Term. The projected cost of the
Landlord's Work to complete construction of the Premises shall be provided to
Tenant prior to the Commencement Date. Tenant shall be granted access to the
Premises prior to the Commencement Date of the Lease to
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commence with business operations subject to substantial completion of
construction. No Rent shall be charged during this early occupancy period.
Landlord and Tenant acknowledge the Premises are partially completed in
accordance with the Preliminary Plan. It is agreed and understood Tenant shall
be permitted to meet with the Landlord's interior designer and general
contractor to make minor modifications to the Preliminary Plan, and subject to
Landlord's prior approval.
10.4 EXTENSION OF TERM
If Tenant is Delta Capital Technologies Inc., or an Affiliate and is
itself in occupation of the whole of the Premises throughout the Term in
accordance with the Lease and if Tenant is not in material default and has not
been in material default during the Term which default was not cured within the
applicable period provided in this Lease, and Tenant has delivered a written
Notice to Landlord not more than 18 months and not less than 12 months before
the expiration of the Term that Tenant wishes to extend the Term, then Landlord
shall extend the Term of the Lease for the entire Premises at the expiration of
the Term for a period of 5 years (the "Extended Term"). There will be no other
right to extend the Term. The Basic Rent rate for the Extended Term shall be the
then current market Basic Rent rate for equivalent space in the downtown core.
In no event, however, shall such rate be less than the Basic Rent payable during
the 12-month period immediately preceding the commencement of the Extended Term.
All other terms and conditions of the Lease will apply to the Extended Term,
except that there will be no Leasehold Improvement Allowance, no Free Rent and
no Landlord's work. If the parties are unable to agree on the Basic Rent to be
paid during the Extended Term within 60 days of the date of the Tenant's Notice,
then this right to Extend the Term and the Extended Term shall be null and void
and neither party shall have any rights or obligations towards the other arising
therefrom. If the parties are able to agree upon a Basic Rent rate within such
60 day period, then Tenant shall sign Landlord's then current standard form of
net lease for the Building to document the Extended Term or, at the Landlord's
option, a Lease Extension Agreement prepared by the Landlord to reflect the
terms of the Extended Term. It is understood and agreed that Tenant, in
exercising this right, shall be deemed to be exercising a right to extend the
Term for all space which Tenant is occupying in the Building.
10.5 RIGHT OF FIRST OFFER
If Tenant is Delta Capital Technologies Inc., or an Affiliate and is in
occupation of the Premises and is not in material default of its obligations
under the Lease, then at anytime after February 28, 2001 Landlord shall notify
Tenant of the availability of space (not to be less than 6,000 contiguous
rentable square feet) available for Leasing in the Building (the "ROFO Space").
If such space becomes available, then Landlord shall first give Notice to
Tenant, which Notice shall (i) set forth, in reasonable detail, the terms
(including term, rent, inducement, renovations and fixturing period) on which
Landlord is prepared to offer the ROFO Space to third parties and (ii) offer the
ROFO Space to Tenant on the same terms and conditions as Landlord is prepared to
offer to or to accept from a third party except that the expiry date shall be
the expiry date of the Lease and such terms shall be adjusted, if necessary, as
set out in the following sentence. If the amount of Term left in the Tenant's
existing lease is less than the term for which Landlord is prepared to offer the
ROFO Space to third parties, then any amounts payable by Landlord on account of
inducement or renovation or the length of any fixturing period shall be reduced
pro rata to reflect the reduced period in the Tenant's Term. Tenant shall have 5
business days after receipt of Landlord's Notice in which to confirm that it
will lease the ROFO Space on the terms set forth in Landlord's Notice, failing
which, Landlord shall be free to lease the ROFO Space to a third party and the
Tenant shall have no further rights with respect to the ROFO Space.
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If Tenant delivers written Notice within the time specified that it
accepts Landlord's offer to lease the ROFO Space, a binding agreement to lease
shall exist between Landlord and Tenant on the terms and conditions contained in
Landlord's offer. Prior to Tenant being entitled to possession of the ROFO
Space, Tenant agrees to enter into a lease amending agreement prepared by
Landlord incorporating the terms of Landlord's offer. The ROFO Space shall be
accepted by Tenant in an "as is" condition.
This right granted to Tenant hereby is however subject to the prior
rights or privileges of other tenants of either re-leasing their premises or
exercising options or privileges to take additional space.
This right shall expire at such time as the Tenant has leased an
additional area(s) in the Building comprising a minimum of 13,325 square feet.
10.6 LETTER OF CREDIT
Tenant agrees to deliver to Landlord upon the execution of the Lease
but, in any event, prior to its possession of the Premises, an irrevocable
Letter of Credit to remain in place for the first 3 years of the term from and
after the Commencement Date in a form and from an institution satisfactory to
the Landlord in the amount of $100,000.00 to secure the timely performance of
Tenant's obligations under the Lease. Landlord shall have the right to draw
against the Letter of Credit as follows:
(a) in an amount equal to the amount then due under the
Lease to Landlord or, pursuant to the Lease, to a third
party up to the face amount of the Letter of Credit in the
event of a default under the Lease; and
(b) in an amount equal to the then undrawn amount of the
Letter of Credit (if any) if Landlord has exercised its
right to terminate the Lease or to retake possession of the
Premises and re-let as agent for Tenant in the event of a
default by Tenant under the Lease permitting Landlord so to
do or if the Tenant is bankrupt. The parties hereto
acknowledge that any amount drawn under the provisions of
this subsection (b) shall be received by Landlord and
retained by it as a bona fide pre-estimate of damages
incurred by Landlord and not as a penalty.
Any amount drawn under subsection (a) above shall be applied by
Landlord towards any default by Tenant under the Lease. The Letter of Credit
shall permit partial draws. If Landlord makes a partial draw, Landlord shall so
notify Tenant and, within 10 days of such notification, Tenant shall provide
Landlord with a Letter of Credit for the amount so drawn, it being the intention
that, at all times during the first 3 years of the Term from and after the
Commencement Date, Landlord shall have in its possession Letter(s) of Credit for
the full value stated in the first paragraph of this section. Failure by Tenant
to comply with the provisions of this section shall constitute a default under
the Lease.
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IN WITNESS WHEREOF the parties hereto have executed these presents as of the
date first above written.
LANDLORD: O&Y PROPERTIES INC.
Per:
/s/ Robert P. Duteau
Robert P. Duteau
I/We have the authority to bind the corporation
TENANT: Delta Capital Technologies Inc.
Per:
/s/ Michael Horsey
Michael Horsey
I/We have the authority to bind the corporation
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EXHIBIT 10.19
REOVEST Financial, Inc.
"Maximizing Equity Value Through Awareness"
03/30/2000
Fund Raising Letter of Agreement
This letter is to acknowledge that Reovest Financial, Inc. (Reovest or the
"company") through its own abilities and affiliated operatives, shall seek to
provide funding relationships for Delta Technologies Capital, Inc. (DCTG).
Upon the successful receipt of funds brought to the company through these
various relationships, which will be delineated as they become available, a
commission payment based upon 8% (eight percent) to Reovest on all gross
proceeds secured.
Reovest will not be entitled to any other fees from the funding party(s) and
payment must be made to Reovest within fifteen days of receipt of funds by DCTG.
In addition, this letter shall acknowledge that one-half of this commission
amount, or any amounts due to Reovest and as negotiated by Reovest and a third
party shall be payable to Joseph A. Lynch by the company directly, and Joseph
Lynch acknowledges that he has no other financing commission agreements in place
with the company. Full confidentiality of any and all financial information sent
to Reovest by DCTG, and this agreement shall be binding for a period of twelve
months from date of signature.
If these terms are satisfactory to you, please sign and e-mail back to my office
([email protected]) as soon as possible.
Client Company: DCTG
Company Officer : Paul Davis Title: President
---------------------------- ------------------
(please clearly print name)
Signature : /s/ Paul Davis Date: __________
Sincerely, Robert E. Oberndorf
President, Reovest Financial, Inc.
32271 Lodgepole Drive, Suite A, Evergreen, CO 80439
(303) 679-1368 fax (303) 679-0076 e-mail: Reovest @ aol.com
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EXHIBIT 10.20
ASSIGNMENT OF LEASE
Dated this 30th day of June, 2000.
BETWEEN:
ALBERNI INVESTMENTS (1988) INC. [The Landlord]
And
FLANAGAN ENTERPRISES INC. [The Assignor]
And
DELTA CAPITAL TECHNOLOGIES, INC. [The Assignee]
The Assignee hereby offers to assume the Existing Lease of the Premises
comprising approximately 1600 square feet within the Building known as 1166
Alberni Street, Vancouver, BC.
The Premises are outlined in the lease agreement attached hereto as Schedule "A"
for the balance of the Term of 7 months. The term expires on January 31, 2001.
In Assignee has further option to renew the Existing Lease at the expiration of
the Lease Term.
The Assignee agrees to the following additional terms and conditions.
1. The Premises are to be occupied and used specifically for business purposes
only.
2. The Assignee shall abide by all the terms and conditions contained in the
Existing Lease.
3. Any leasehold improvements or changes are the responsibility of the
Assignee.
4. The Assignee accepts the Premises on an "as is, where is" condition.
5. The Assignment of Lease document is to be prepared and attached to and shall
form part of the Existing Lease and shall be firm and binding upon all
parties to the Agreement.
6. All costs assessed with this Assignment of Lease to be borne by the Assignor.
SIGNED, SEALED AND DELIVERED By the Landlord I the presence of:
s/s Maria Johnson s/s
------------------------- -----------------------------------
Landlord:
ALBERNI INVESTMENTS (1988) INC.
SIGNED, SEALED AND DELIVERED
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by the Assignor in the presence of:
s/s Wei Ge s/s Ian Flanagan
-------------------------- -----------------------------------
Assignor:
FLANAGAN ENTERPRISES INC.
SIGNED, SEALED AND DELIVERED
by the Assignee in the presence of:
s/s Beverley Kniffen s/s Michael E. Horsey
-------------------------- ----------------------------------
Assignee:
DELTA CAPITAL TECHNOLOGIES INC.
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LEASE
THIS LEASE dated for reference the 12th day of December, 1996
BETWEEN:
ALBERNI INVESTMENTS (1988) INC., a body corporate, having an office at
------------------------------- 1701 - 1166 Alberni Street, Vancouver,
British Columbia
(the "Landlord")
--------
OF THE FIRST PART
AND:
FLANAGAN ENTERPRISES INC.
(the "Tenant")
------
OF THE SECOND PART
ARTICLE I
BASIC TERMS AND DEFINITIONS
1.01 BASIC TERMS
The following basic terms are a part of and are referred to in
subsequent provisions of this Lease. Any conflict or inconsistency
shall be resolved in favor of the other provisions of this Lease and
not the Basic Terms:
(a) "Premises": suite/unit number 1400 on the 14th floor of the
building at 1166 Alberni Street, Vancouver, B.C., V6E 3Z3
containing an area of approximately 1,629 square feet (151.33
square meters) as located on the Lands described in Schedule "A"
and outlined in bold on the plan attached as Schedule "B" ,
------------
(b) "Commencement Date": the 1st day of February, 1997 (section 2.03),
(c) "Term" subject to postponement of the Term pursuant to section
2.04 hereof, the Term of this Lease begins on the Commencement
Date and ends on the 31st day of January, 2001 (section 2.03),
(d) "Minimum Rent": $19,548 per year ($1,629.00 per month) for the
period February 1st, 1997 to January 31st, 1999 and $21,177.00 per
year ($1,764.75 per month) for the period February 1st, 1999 to
January 31st, 2001 based upon an annual rate of $13.00 per square
foot of the Rentable Area (section 3.01(a)),
(e) "Permitted Use of the Premises": Office purposes only (section
7.01),
(f) "Tenant's Trade name": N/A (section 7.05),
(g) "Security Deposit": $1,888.28 (incl. GST) (section 3.04),
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(h) "Address for Notice of Tenant": 1400 - 1166 Albernie Street,
Vancouver, BC V6E 3Z3 (section 17.01).
1.02 DEFINITIONS
In this Lease, unless the context otherwise requires:
(a) "Additional Rent" means any and all sums of money, operating costs
or charges including Interest required to be paid by the Tenant
under this Lease (except Minimum Rent), whether or not the same
are designated as "Additional Rent", or whether or not the same
are payable to the Landlord or otherwise, and all such sums are
payable in lawful money of Canada, without deduction, abatement,
set-off or compensation whatsoever, except as provided in this
Lease.
(b) "Architect" means the independent Architect from time to time
named by the Landlord. The decision of the Architect shall be
final and binding on the parties, so long as such decisions are
consistent with accepted architectural standards in British
Columbia.
(c) "Building" means, all improvements now or at any time located upon
the Lands and comprising the Office Tower, Retail Level and
Parkade together with the Common Elements.
(d) "Business Day" means any of the days Monday through Friday,
between the hours of 7:00 a.m. and 6:00 p.m., unless
such day is a "holiday" (as defined in the Interpretation Act
(B.C.)). ------------------
(e) "City" means the City of Vancouver.
(f) "Common Areas" means the areas of the Development that from time
to time are not intended to be leased to tenants and are provided
for the use of the tenants in common with other tenants.
(g) "Common Elements" means:
(i) the Common Areas and elements of the Development
that from time to time are not intended to be
leased to tenants of the Development or are
designated from time to time as Common Elements by
the Landlord, and
(ii) the elements within areas rented or intended to be
rented to tenants that are provided for the benefit
of tenants in common with other tenants.
For example, the Common Elements include, but are not limited to, the
roof, exterior weather walls, exterior and interior structural elements and
bearing walls on the Development; pedestrian sidewalks; exterior landscaped
areas; parking areas; enclosed malls, courts and arcades; public hallways and
stairways, open malls, service and utility corridors and accommodation;
escalators, ramps, moving sidewalks, elevators and other transportation
equipment and systems; interior landscaped areas; washrooms; electrical,
telephone, meter, valve, mechanical, boiler, mail, storage and janitor rooms and
galleries; music, fire prevention, security and communication systems;
maintenance workshops; general
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signs, columns, pipes, electrical, heating, ventilating, air-conditioning,
plumbing, drainage, mechanical and all other installations or services
located on the Development as well as all truck docks and common loading areas
and driveways.
(h) "Development" means collectively, the Lands and Building.
(i) "Interest" means interest at the Prime Rate plus 5 % per annum
calculated and compounded monthly unless such rate is not
permitted by law in which case it means the maximum rate which is
permitted by law.
(j) "Lands" means those lands in the City upon which the Building is
being or has been constructed, and which are more particularly
described in Schedule "A".
(k) "Landlord's Improvements" means all improvements forming part of
the Premises, but excluding all Tenant's Improvements.
(l) "Mortgage" means any mortgagee(s) for the time being of all or
any part of the Development.
(m) "Occupation Rent" means the Minimum Rent plus Additional Rent
estimated by the Landlord on a daily basis (section 2.05).
(n) "Office Tower" means all parts of the Development but excluding
the Retail Level and the Parkade.
(o) "Operating Costs" means all reasonable costs and expenses,
without limitation or duplication, incurred by or on behalf of
the Landlord, for the operation, management, protection,
preservation, security, cleaning, repair, replacement,
renovation, updating and maintenance of the Development,
including, for example, and without limitation:
(i) the salary, wages, payroll expenses and other compensation
benefits of employees, independent contractors and agents of
the Landlord engaged in the operation, maintenance, repair,
administration and management of the Development,
(ii) the cost of goods, services, equipment and supplies incurred
directly or indirectly in the operation, maintenance,
repair, administration and management of the Development,
including:
(A) the costs of purchasing or renting materials, supplies,
mechanical equipment, tools and signs,
(B) sales, use and excise taxes on goods and services
purchased by the Landlord,
(C) the costs of professional and consulting services
including services for the purposes of energy
conservation or allocation of various costs and
expenses among the tenants of the Development,
(D) the costs incurred in legal proceedings taken to
protect the general well-being of tenants or their use
and enjoyment of the Development or to enforce
covenants in the leases of the Development as they
affect the general well-being of tenants in the
Development,
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(E) the costs, whether incurred before or during the Term,
of any capital improvements, equipment or devices
(including the cost of extended warranties, if any),
installed or paid for by the Landlord in order to:
(1) conform with any change in legal or insurance
requirements, or
(2) effect a labour-saving, energy-saving or other
economy, or
(3) improve security, or
(4) improve the comfort and enjoyment of the
Development for the tenants of the Development,
amortized over the useful life of such capital
improvement, equipment or device (determined in
accordance with generally accepted accounting
principles), plus interest on the unamortized balance
at the Prime Rate or such higher rate as may have been
paid by the Landlord from time to time on borrowed
funds,
(F) a pro rata portion of any prepaid expenses as
determined by the Landlord,
(iii)all taxes, rates (including real property and local
improvement rates and taxes), duties and assessments that
may be levied, rated, charged or assessed against the
Development and, without limiting the generality of the
foregoing, every tax, charge, rate, assessment or payment
which may become a charge or encumbrance upon or be levied
or collected upon or in respect of all or any part of the
Development, whether charged by any municipal, parliamentary
or other authority,
(iv) all charges for public services and utilities, including
water, gas, sewer, electrical power, steam or hot water used
upon or in respect of the Development and the rental of
related fittings, machines, apparatus, meters, or other
things and for all work or services performed by any
corporation or commission in connection with such utilities,
(v) license, permit and inspection fees,
(vi) insurance premiums and other charges for insurance incurred
pursuant to Article 8.02 hereof including without
limitation, reserves established by the Landlord for
deductible amounts and losses in excess of insurance
coverage in such amounts and for such risks including
business interruption, loss of rental, by-law, earthquake,
and flood insurance as the Landlord or any Mortgagee in
their sole discretion shall elect to maintain,
(vii)the reasonable charges and expenses of operating and
maintaining the administration office within the Development
including its deemed rental expenses,
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(viii) an administration fee of up to 15% of the total cost
incurred by the Landlord with respect to any work done by
the Landlord at the Tenant's request or in respect of work
done by the Landlord because of the Tenant's default in
observing or performing any of the covenants of this Lease
and on the part of the Tenant to be observed and performed,
all of which costs shall be allocated to each fiscal year of
the Landlord without any duplication in accordance with
generally accepted accounting principles as determined by
the accountants of the Landlord, and such costs shall be
allocated between the tenants in the Office Tower, Retail
Level and Theater on a fair and reasonable basis as
determined by the Landlord in its sole discretion from time
to time, but excluding:
(A) depreciation,
(B) income taxes of the Landlord,
(C) interest on debt (other than debt contemplated in
subparagraph 1.02(o)(ii)(E)) and legal fees,
disbursements and other charges respecting such debt,
(D) charges for the repair of damage to the Development but
only to the extent that the Landlord has received
reimbursement from tenants or from the net proceeds of
insurance (after payment of any deductible),
(E) expenses incurred by the Landlord in respect of the
installation of the Landlord's Improvements,
(F) leasing commissions, and
(G) the capital costs of any expansion of the Building,
PROVIDED that if in any fiscal period designated by the
Landlord the Building is less than 95% occupied during the
whole of that fiscal period, "Operating Costs" shall mean
the amount obtained by adjusting the actual Operating Costs
for such fiscal period as if the Building had been 95%
occupied during the whole of such fiscal period. Such
adjustment shall be made by adding to the actual Operating
Costs an amount which would allow the Landlord to receive
95% of the actual operating costs from the tenants as if the
Building had been 95% occupied.
(p) "Parkade" means all parts of the Development that are used for
the purpose of parking of automobiles or ancillary to such use,
or designated as Parkade by the Landlord from time to time.
(q) "Premises" means the premises described in section 1.01(a)
consisting of the space within the top surface of the floor,
bottom surface of the ceiling and the inside surface of all
demised walls and glass but excludes all Common Elements.
(r) "Prime Rate" means the rate of interest per annum as charged from
time to time (no matter how calculated) designated by The Royal
Bank of Canada as being its (highest, if more
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than one) prime commercial lending rate charged by it for
demand loans in Canadian funds made at its main branch in
Vancouver.
(s) "Proportionate Share" means the fraction which equals the square
footage of the Rentable Area of the Premises (as determined by
the Architect) divided by the total Rentable Area in the
Development, whether leased or not.
(t) "Rentable Area" means:
(i) where the area leased to a tenant is a full floor in the
Office Tower, then the area computed by measuring from the
inside surface of glass in exterior walls and from the
centre line of exterior walls where no glass exists
(excluding any major vertical penetrations such as elevator
and stairwell shafts), with no deduction for columns or
projections based on BOMA Standard Method of Measuring Floor
Area in office building (ANSI/BOMA Z65.1-1996), and
(ii) where the area leased to a tenant is less than a full floor
in the Office Tower, such area shall be computed by
measuring the walls and partitions surrounding the Premises
from the inside surface of glass in exterior walls, or from
the centre line of exterior walls where no glass exists,
from the centre line of corridor walls and other permanent
partitions, and from the centre line of partitions that
separate the Premises from other rentable premises with no
deduction for columns or projections, plus a portion of the
Common Areas on that floor, which portion shall be a
fraction, the numerator of which shall be the area of the
Premises, as previously set forth in this clause (s)(ii),
and the denominator of which shall be the total area of
rentable premises on the floor (whether actually rented or
not) BOMA Standard Method of Measuring Floor Area in office
building (ANSI/BOMA Z65.1-1996), and
(iii)where the area leased to a tenant is on the Retail Level,
then the area computed by measuring the walls and partitions
surrounding the Premises from the inside surface of the
glass in exterior walls, from the centre line of exterior
walls where no glass exists, from the centre line of the
corridor walls and other permanent partitions and from the
centre line of the partitions that separate the Premises
from other rentable premises, with no deduction for columns
or projections BOMA Standard Method of Measuring Floor Area
in office building (ANSI/BOMA Z65.1-1996),
(u) "Retail Level" means all parts of the Development that are not the
Office Tower or Parkade and are from time to time constructed as
Retail Level, or designated as such by the Landlord.
(v) "Rules and Regulations" means the rules and regulations adopted by
the Landlord from time to time acting reasonably and in such
manner as would a prudent Landlord of a reasonably similar
Development. The Rules and Regulations existing as at the
Commencement Date are those set out in Schedule "C".
(w) "Sales Taxes" means any and all taxes, fees, levies, charges,
assessments, rates, duties, and excises (whether characterized as
sales taxes, purchase taxes, value-added taxes, goods and services
taxes or any other form) which are imposed on the Landlord or
which are levied,
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rated or assessed on the act of entering into this Lease or
otherwise on account of this Lease, on the use or
the occupancy of all or any part of the Premises on the Minimum
Rent, Additional Rent or any other sums deemed to be rent payable
under this Lease or any portion of it or in connection with all or
any part of the business of renting the Premises but excluding
income tax under the Income Tax Act.
(x) "Tenant's Improvements" means all of the Tenant's furniture,
equipment, stock and trade fixtures and such other property
supplied by the Tenant in or forming part of the Premises from
time to time and shall include, without limitation, those
improvements included in the "Tenant's Work" as set out in
Schedule "E" hereto, if applicable, but shall exclude any
"Landlord's Work".
ARTICLE II
GRANT OF LEASE AND TERM
2.01 GRANT
In consideration of the rents, covenants and agreements contained in
this Lease on the part of the Tenant to be paid, observed and performed, the
Landlord leases to the Tenant and the Tenant leases from the Landlord the
Premises.
2.02 RESERVATION TO LANDLORD
All Common Elements within the Premises as well as access to them
through the Premises for the purpose of their use, operation, maintenance, and
repair and replacement from time to time are expressly reserved to the Landlord.
2.03 TERM
TO HAVE AND TO HOLD the Premises for the Term set out in section
1.01(c) commencing on the Commencement Date set out in section 1.01(b), unless
postponed pursuant to section 2.04, and ending on the expiry of the Term unless
sooner terminated, or extended by renewal (if applicable) under section 17.02
hereof.
2.04 POSTPONEMENT OF TERM
The Landlord shall make all reasonable efforts to have the Premises
ready for occupancy before the Commencement Date. If the Premises are not ready
for occupancy by such time, the Commencement Date shall be postponed for a
period equal to the duration of the delay. The Landlord shall not be liable for
any loss, damage, injury or inconvenience which the Tenant may sustain by reason
of the inability of the Landlord to deliver the Premises ready for occupancy on
the Commencement Date.
2.05 EARLY POSSESSION
The Tenant may, subject to:
(a) completion of all the Landlord's Improvements in the Premises,
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(b) the Tenant receiving all necessary final approvals, licenses
and occupancy permits,
(c) the Premises being ready for occupancy, and
(d) proof of Tenant's insurance pursuant to Article VIII hereof,
if it desires, but only with the Landlord's prior written approval, begin to use
and occupy all or part of the Premises prior to the Commencement Date but the
Tenant shall pay Occupation Rent to the Landlord for such use and occupancy
until the Commencement Date. Such Occupation Rent shall be proportionate to the
relation that the area of the Premises, occupied from time to time, bears to the
Rentable Area of the Premises. Possession shall be granted and taken subject to
the terms and conditions of this Lease, except to the extent that such terms and
conditions are inconsistent with this clause.
2.06 PARKING
Tenant parking is available within the Development and shall be
negotiated separately by the Tenant with the Landlord or the Landlord's parking
operator as the Landlord may designate and retain and shall be available only on
such terms and conditions as are agreed to in writing between the Tenant and the
Landlord or the Landlord's parking operator as the Landlord may designate and
retain from time to time.
ARTICLE III
RENT
3.01 RENT
The Tenant will pay Minimum Rent and Additional Rent without any
deduction or set off to the office of the Landlord, or at such other place as
the Landlord may from time to time designate in writing as follows:
(a) Minimum Rent
The Tenant shall pay from and after the Commencement Date to
the Landlord the Minimum Rent set out in section 1.01(d) to
be paid in advance on the first day of each calendar month
during the Term.
If the Commencement Date is other than on the first day of a
calendar month, then the Tenant shall pay a pro rata portion
of Minimum Rent for that month.
(b) Additional Rent
(i) The Tenant's Proportionate Share of realty taxes
(except for Landlord's income taxes, capital taxes,
business taxes, profits taxes, excess profits
taxes, capital gains taxes, and other similar taxes
and debt service, and capital retirement of debt on
any security affecting the land and Building) and
Tenant's Proportionate Share of all costs and
expenses incurred by the Landlord to operate,
maintain, repair and replace, manage and
administer, insure, heat, air-condition and
ventilate the Building and as further defined as
"Operating Costs" in section 1.02(o) hereof.
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(ii) Any and all sums of money, including Operating
Costs and Interest, paid or incurred by the
Landlord and which ought to have been paid or
incurred by the Tenant, or for which the Landlord
is entitled to reimbursement from the Tenant shall
be payable by the Tenant to the Landlord as
Additional Rent with Interest from the date they
were incurred or payable which Additional Rent and
Interest shall also be recoverable as rent, and the
rights that the Landlord has in respect of rent the
Landlord shall also have in respect of Additional
Rent whether or not such amounts are designated
elsewhere in this Lease as rent or Additional Rent.
3.02 NET LEASE
The Tenant agrees that this Lease is a completely carefree Net Lease to
the Landlord, except as expressly set out. The Landlord is not responsible
during the Term for any costs, charges, expenses and outlays of any nature
arising from or relating to the Premises, or their use and occupancy, or their
contents or the business carried on in them. The Tenant shall pay all charges,
impositions, costs and expenses of every nature and kind relating to the
Premises, their use and occupancy, their contents or the business carried on in
them.
3.03 "GST" (GOODS AND SERVICES TAX)
The Tenant agrees to pay the Landlord GST or any similar tax replacing
same on all Minimum Rent and Additional Rent, and the Landlord shall have all
the rights in respect of GST that the Landlord has in respect of Minimum Rent or
Additional Rent under this Lease.
3.04 SECURITY DEPOSIT
(a) Payment of the Security Deposit is acknowledged as being received in
the amount specified in section 1.01(g) from the Tenant upon the
execution of this Lease. Such payment shall be held by the Landlord,
without liability for interest, as security for the faithful
performance by the Tenant of all the terms, covenants and conditions
of this Lease, and if, at any time during the Term, the Tenant
breaches any term of this Lease, then the Landlord may, at its option,
apply all or any portion of such Security Deposit as may in the
Landlord's reasonable opinion be necessary to compensate it for such
breach, including the Landlord's legal fees and disbursements on a
full indemnity basis incurred to enforce the Tenant's performance of
all the terms, covenants and conditions of this Lease, without
limiting or excluding any other rights which the Landlord may have at
law, and if the Tenant has not defaulted under this Lease, then such
sum shall be paid to the Tenant upon expiry of the Term.
(b) If, however, the Landlord does apply all or any portion of such
Security Deposit as compensation for a breach of this Lease by the
Tenant, then the Tenant shall upon written demand of the Landlord
remit to the Landlord a sufficient amount in cash to restore the
Security Deposit to the original sum deposited, and the Tenant's
failure to do so within five days after delivery of such demand to the
Tenant constitutes a breach or default under this Lease.
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3.05 INTEREST ON OVERDUE RENT
All Rent including Minimum Rent, Additional Rent and GST in arrears
shall bear Interest from the date the same became due and payable by the Tenant
to the Landlord until the date of payment or repayment to the Landlord.
ARTICLE IV
TAXES
4.01 SALES TAXES
(a) The Tenant shall pay or reimburse to the Landlord, an amount equal to
the Sales Taxes, it being the intention of the parties that the
Landlord shall be fully reimbursed by the Tenant with respect to any
and all Sales Taxes. The amount of the Sales Taxes shall be calculated
by the Landlord in accordance with the applicable legislation and the
provisions of this Article 4.01 and shall be paid to the Landlord at
the same time as the amounts to which Sales Taxes apply are payable to
the Landlord under this Lease or upon demand at such other time or
times as the Landlord may from time to time determine.
(b) If the Sales Taxes payable by the Landlord are reduced because of any
exemption or deduction to which the Landlord is entitled, then the
Landlord may in its discretion allocate such exemption or deduction in
such a way as to reduce the Sales Taxes to the extent and in such
proportion as the Landlord may determine or in such a way as not to
reduce Sales Taxes at all.
(c) If Sales Taxes are reduced by reason of any exemption or deduction to
which the Landlord is entitled by virtue of:
(i) the payments of any taxes, fees, levies, charges, assessments,
rates, duties or excises upon the purchase price of any lands or
of any interest therein whether before, concurrently with, or
after the execution and delivery of this Lease, or
(ii) the payment of any taxes, fees, levies, charges, assessments,
rates, duties or excises with respect to Minimum Rent, Additional
Rent and any other amounts payable by the Landlord as a Tenant
under any lease whether such lease is now existing or arises
after the date of execution and delivery of this Lease,
then the Sales Taxes shall be deemed to be the amount which would have
been imposed on the Landlord with respect to the Minimum Rent and
Additional Rent paid by the Tenant to the Landlord under this
Lease had no such exemption or deduction been permitted.
4.02 BUSINESS TAX
The Tenant covenants to pay or reimburse to the Landlord all taxes with
respect to any and every business carried on in the Premises or in respect of
the occupancy of the Premises, and any special franchise or other tax in
relation to such business as and when such taxes become due and payable,
together with any taxes levied on Tenants Improvements made in or to the
Premises by or for the Tenant, and all taxes in the nature of business taxes and
any taxes levied on fixtures, machinery or equipment of the Tenant assessed by
any governmental authority upon the Premises whether levied against, the
Landlord or the Tenant.
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4.03 OTHER TAXES
(a) The Tenant covenants to pay or reimburse to the Landlord all
rates, duties, charges, assessments and taxes including real
property and local improvement rates and taxes which may be
rated, charged, assessed and taxed with respect to the
Premises during the Term.
(b) The Tenant agrees to transmit to the Landlord (if the same
are received by the Tenant) and the Landlord agrees to
transmit to the Tenant (if the same are received by the
Landlord) copies of all assessment notices respecting such
taxes immediately after receipt.
(c) If the Landlord requires the Tenant to do so, the Tenant
agrees to pay to the Landlord on the first day of each month
the amount of money estimated by the Landlord to be
sufficient to permit the Landlord to pay the taxes when they
are due and any money in addition to the money already paid
towards taxes so that the Landlord will be able to pay the
taxes in full.
(d) If the Tenant fails to pay the taxes when they are due, the
Landlord will be at liberty to pay the taxes and from the
date of such payment the amount paid by the Landlord will be
payable by the Tenant as Additional Rent with Interest (but
the Landlord shall not be under any obligation to pay the
taxes for the Tenant).
ARTICLE V
DEVELOPMENT AND COMMON ELEMENTS - CONTROL, COSTS AND PAYMENT
5.01 CONTROL OF DEVELOPMENT BY LANDLORD
(a) The Landlord shall operate and maintain the Development in
such manner as the Landlord determines from time to time, as
would a prudent Landlord of a similar development having
regard to size, age and location, subject to normal wear and
tear and damage, other than by perils against which the
Landlord is in receipt of sufficient insurance proceeds (as
further set out in Article XI - Damage and Destruction).
(b) The Development and the Common Elements are at all times
subject to the exclusive control and management of the
Landlord.
5.02 OPERATING COSTS
The Tenant covenants to pay monthly, in advance, to the Landlord as
Additional Rent, in addition to Minimum Rent, the Tenant's Proportionate Share
of the Landlord's estimate of all Operating Costs, subject to adjustment at the
end of each fiscal year once actual Operating Costs are known.
5.03 CERTIFICATE OF OPERATING COSTS
(a) The Landlord shall furnish to the Tenant, upon written
demand, as soon as possible after the end of each fiscal year
of the Landlord, a certificate of the Landlord or his agent
specifying the Operating Costs for such fiscal year.
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(b) Such certificate shall contain sufficient information and be
in reasonable detail so as to substantiate the amount of
Operating Costs, and shall be prepared in accordance with the
terms of this Lease.
(c) If the Landlord and Tenant disagree on the accuracy of such
certificate, the Tenant shall nevertheless make the payment
in accordance with the certificate but the matter shall
immediately be referred to and resolved by a single
arbitrator agreed upon and appointed by the parties and in
the absence of such agreement and appointment within 15 days
of either party notifying the other of its wish to have the
matter referred to arbitration, the matter shall be referred
to and finally resolved by a single arbitrator in accordance
with the provisions of the Commercial Arbitration Act or any
Act amending or replacing same, on the application of either
party.
ARTICLE VI
UTILITIES, HEATING, VENTILATING AND AIR-CONDITIONING
6.01 ELECTRICITY
The Landlord will supply all of the electricity which is used in the
Premises for building standard lighting and the operation of typewriters, cash
registers, and other small equipment used for retail or office purposes. If the
Tenant's electrical requirements appear to exceed the normal use (as compared to
other tenants) of the electricity, the Landlord may, at its discretion and at
the cost of the Tenant, have the Premises separately metered and charge the
Tenant separately for such additional consumption as Additional Rent.
6.02 HEAT
The Landlord will supply adequate heating to the Premises and interior
Common Areas at all times during the normal heating season as established by
custom and practice for similar buildings in the City. The Landlord may withhold
the supply of heat when necessary by reason of accidents or breakdowns or during
repairs or improvements which, in the opinion of the Landlord, are necessary.
6.03 AIR-CONDITIONING
The Landlord will supply air-conditioning to the Premises and interior
Common Areas during Business Days in the manner appropriate to the season of the
year. The Landlord may withhold the supply of air-conditioning when necessary by
reason of accidents or breakdowns or during repairs or improvements which, in
the Landlord's opinion, are necessary. The Landlord shall not be responsible for
the failure of air-conditioning equipment to perform its function if such
failure shall result from any arrangement of partitioning in, or changes or
alterations to the Premises; or failure on the part of the Tenant to shade
windows which are exposed to the sun; or from any excessive generation of heat
by the Tenant's activities or equipment.
6.04 ELEVATORS
The Landlord will operate the elevators by electric or other power and
agrees, except when prevented by a failure of electricity or other power or by
reason of repairs or other causes beyond the control of the Landlord, to operate
at least one of the elevators each day at all times, subject to any Rules
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and Regulations imposed by the Landlord on the Tenant from time to time for
the reasonable use of the Tenant, and to permit the Tenant, its employees,
invitees or licensees, the free use of the elevators while operating, in
common with other persons lawfully using them.
6.05 LIMITATION
The Landlord shall not, in any event, be liable to the Tenant, its
employees, invitees or licensees for any direct, indirect, special or
consequential damage(s) or economic loss arising by reason of the interruption
to any of them of the rights and services described in this Lease whether or not
such interruption was caused by the Landlord's negligence.
ARTICLE VII
USE OF LEASED PREMISES
7.01 USE OF PREMISES
The Tenant shall use and occupy the Premises for the purposes only as
set out in paragraph 1.01(e) and shall comply in respect of such use with the
requirements of federal, provincial and municipal laws and regulations. If a
government license or permit shall be required for the proper and lawful conduct
of the Tenant's business, and if the failure to secure such license or permit
would affect the Landlord, the Tenant, prior to occupying the Premises, shall
produce such license or permit for inspection by the Landlord. The Tenant shall
at all times comply with the terms and conditions of any such license or permit.
7.02 PREMISES CONFORM TO LAW
(a) The Tenant shall at its own expense comply with all provisions of
law, including without limitation, Federal, Provincial and Municipal
legislative enactments, rules and regulations, and by-laws which relate
to or affect the Premises, the operation and the use of the Premises,
any business conducted by the Tenant on the Premises, or the making of
any repairs, changes, substitutions or improvements on or to the
Premises or to the abatement of nuisance or conditions which have been
created by or at the instance of the Tenant, and comply with all
police, fire and sanitary regulations, directives or recommendations
imposed or made by any Federal, Provincial, or Municipal authorities or
by any fire or liability insurance underwriters or companies by which
the Tenant or Landlord may be insured or any recommendations of the
Insurers' Advisory Organization (1989) Inc. or any body having similar
functions.
(b) If the Tenant should desire to contest any such law, directive,
order or recommendation with which the Tenant is obligated to comply it
may, at its expense, (but only with the Landlord's prior written
consent) contest same, and during such contested non-compliance period
by the Tenant shall not be deemed to be in breach of this section 7.02.
The Tenant agrees to indemnify and hold the Landlord harmless against
the cost and against all liability for any damages, interest, penalties
and expenses (including all legal expenses on a full indemnity basis)
resulting from or incurred in connection with such contest or
non-compliance, except that non-compliance shall not continue so as to
subject the Landlord to the risk of prosecution for any offense or to
cause all or any part of the Development to be condemned or vacated by
order of public authority.
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7.03 NO NUISANCE
The Tenant shall not do or suffer any waste or damage,
disfiguration or injury to the Premises or its fixtures and equipment; and shall
not use or permit to be used any part of the Premises for any dangerous, noxious
or offensive trade, business or occurrence, and shall not cause or maintain or
permit the occurrence or maintenance of any nuisance in, at or on the Premises,
or the creation or emission of any noxious fumes on or from the Premises.
7.04 FLOOR LOAD
The Tenant shall not place or permit to be placed a load upon any
portion of any floor of the Premises which exceeds the floor load which the area
of such floor being loaded was designed to carry having regard to the loading of
adjacent areas. The Landlord reserves the right to prescribe the weight and
position of all safes and heavy installations which the Tenant wishes to place
in the Premises so as to properly distribute the weight, and the Tenant agrees
to such reservation.
7.05 NAMES
(a) The Tenant agrees to operate its business only under the trade
name set out in section 1.01(f).
(b) The Tenant may use the name of the Building for the business
address of the Tenant, but for no other purpose.
7.06 CONTINUOUS OCCUPANCY
The Tenant shall carry on business at the Premises on a regular and
continuous basis throughout the Term hereof, and not leave the Premises
unoccupied for a period of 15 days or longer without the prior written consent
of the Landlord.
7.07 TIDINESS/JANITORIAL SERVICE
The Tenant will leave the Premises in a reasonably tidy and clean
condition at the end of each business day for the performance of the cleaning
service. The Landlord will provide for janitorial service to the Premises as
frequent as, and at a level, which it deems appropriate for the Development.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.01 TENANT'S INSURANCE
(a) During construction of the Tenant's Improvements and Landlord's
Improvements, the Tenant shall maintain broad form builders "all risk"
course of construction insurance to at least the full replacement value
of all of the Tenant's Improvements and the Landlord's Improvements on
the Premises during the construction period and shall provide to the
Landlord evidence of such insurance prior to commencement of work.
(b) The Tenant agrees to take out and keep in force during the Term:
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(i) comprehensive general public liability insurance on an
occurrence basis with respect to the business carried on, in
or from the Premises and its use and occupancy by the Tenant
in the sum of not less than $2,000,000, inclusive,
(ii) commercial broad form "all risks" (including flood and
earthquake) property damage insurance in respect of the
Tenant's Improvements (excluding the Landlord's
Improvements), as the Landlord may from time to time
require, against such perils and in such amounts as are
normally insured in the circumstances by prudent Tenants,
and as the Landlord may require or approve, acting
reasonably,
(iii) business interruption insurance against such perils and for
such amounts as are normally insured in the circumstances by
prudent Tenants, and as the Landlord may approve or require,
acting reasonably,
(iv) boiler and machinery insurance (if applicable), against such
perils and in such amounts as are normally insured in the
circumstances by prudent tenants as the Landlord may approve
or require, acting reasonably.
(c) At the request of the Landlord, the Tenant shall file with the
Landlord such copies of current policies or certificates from
insurance agents and proof of their renewal and payment of
premiums as the Landlord may require, and if the Tenant fails to
insure or to file satisfactory proof of insurance promptly when so
required, the Landlord may, without notice to the Tenant, effect
such insurance and recover any premiums paid therefor from the
Tenant on demand. However, the Landlord shall not be responsible
to do so and shall not be liable in any way for anything it does
in effecting such insurance.
(d) The Tenant shall promptly pay all premiums due on the insurance
required to be effected by it under this Lease and shall not do
anything upon the Premises, which would impair or invalidate the
obligation of any insurer, whether of the Landlord or of the
Tenant.
(e) The Tenant will not do or omit or permit to be done upon the
Premises anything which shall cause the rate of insurance upon the
Building to be increased and that, if the rate of insurance upon
the Building shall be increased by reason of the use made of the
Premises or by reason of anything done or committed or permitted
to be done or omitted by the Tenant or by anyone permitted by the
Tenant to be upon the Premises, the Tenant will pay to the
Landlord, on demand the amount of such increase. The Tenant will
comply in every respect with the rules and regulations, if any, of
the Insurers' Advisory Organization (1989) Inc. or any successor
or substitute body, and with the requirements communicated to the
Tenant of the Landlord's insurance company or companies having
policies insuring the Building or its use.
(f) All insurance policies effected by the Tenant under this clause
shall:
(i) be written by insurers licensed to do business in
Canada and shall be in a form satisfactory to the
Landlord,
(ii) in the case of the builders "all risk" insurance, name
the Landlord as an additional insured with loss payable
to the Landlord.
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(iii) in the case of the "all risks" property damage insurance
provide that loss shall be payable to the Landlord,
(iv) in the case of the liability insurance include the
Landlord as an additional named insured with a cross
liability clause,
(v) expressly provide that the insurer waives any right of
subrogation against the Landlord,
(vi) provide that such insurance cannot be canceled or materially
changed without at least 30 days prior written notice to the
Landlord and that loss shall be payable to the Landlord
notwithstanding any act, omission or negligence of the
Tenant which might otherwise result in the forfeiture of the
insurance,
(vii)expressly provide that the insurer acknowledges receipt of
a copy of this Lease or of the insurance provisions of this
Lease.
(g) The Landlord agrees to make available any of the Tenant's
insurance proceeds paid to the Landlord toward the repair or
replacement of the insured property unless the Landlord has
paid for such repair or replacement or the Lease is
terminated pursuant to any provision in this Lease except
Article XI (Damage and Destruction).
8.02 LANDLORD'S INSURANCE
The Landlord agrees to maintain insurance on the Development for the
types and in the amounts of coverage which, in its sole discretion, it deems
appropriate and subject to the availability of the following types of coverage:
(a) commercial broad form "all risks", including boiler and
machinery, by-law coverage, flood and earthquake, "extended
coverage" perils and such other risks as are included in a
standard additional perils supplementary insurance policy in
an amount equal to the full replacement value of the
Building, the equipment, the Landlord's Improvements
contained in the Building (but excluding the Tenant's
Improvements and other property belonging to the Tenant and
located on the Premises with respect to which the Tenant is
required to insure under Article 8.01(b)(ii) hereof),
(b) public liability insurance in respect of Common Areas with
limits of not less than $2,000,000.00 for any one
occurrence,
(c) rental abatement insurance as provided for in Article XI
(Damage and Destruction) in respect of income to the Landlord
from the operation of the Building.
8.03 INDEMNIFY LANDLORD
(a) Notwithstanding any other provisions of this Lease, and
except to the extent of any damage to property or injury to
persons caused by the negligence of the Landlord, the Tenant
shall indemnify and save harmless the Landlord from and
against any and all liabilities, damages, costs, expenses,
claims, suits or actions arising out of:
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(i) any breach, violation or non-performance of any
covenant, condition or agreement in this Lease set
forth and agreed to by the Tenant to be fulfilled,
kept, observed and performed,
(ii) any damage to property occasioned by the Tenant's
use and occupation of the Premises,
(iii) any injury to person or persons, including death
resulting at any time, occurring in or about the
Premises and/or the sidewalks or hallways adjacent
or abutting to same,
and such liability to indemnify and save harmless shall
survive any termination of this Lease, anything to the
contrary notwithstanding.
(b) Should the Landlord without fault on its part be made a party
to any litigation commenced by or against the Tenant, then
the Tenant shall protect, indemnify and hold the Landlord
harmless and hereby consents to the Landlord at its option
applying all or any portion of the Tenant's Security Deposit
to compensate the Landlord for any and all costs, expenses,
legal fees and disbursements on a full indemnity basis
incurred or paid by the Landlord in connection with such
litigation and to recover any deficiency remaining after
application of all or any portion of the Security Deposit as
Additional Rent upon demand.
(c) The Tenant agrees to indemnify and save the Landlord harmless
from and against all costs, expenses, legal fees and
disbursements on a full indemnity basis, that may be incurred
or paid by the Landlord in enforcing this Lease, unless a
court shall decide otherwise.
8.04 RELEASE OF LANDLORD
(a) The Landlord shall not be responsible for injury to or the
death of any person in or about the Premises or any damage to
the Landlord's Improvements, and the Tenant's Improvements or
to any furniture, equipment, stock and trade fixtures or any
other property located within the Development with the
express or implied consent of the Tenant or in respect of the
Tenant's business. The Landlord shall not be responsible for
insuring any Tenant's Improvements or other property of the
Tenant in any part of the Premises. The Tenant shall be
solely responsible for the loss of, or damage to property of
others kept or located in the Premises during the Term.
(b) The Landlord shall not be liable to the Tenant, its
employees, invitees or licensees for any special,
consequential damage(s) or economic loss arising from any
breach of its obligations under this Lease.
8.05 RELEASE OF TENANT
The Tenant is not responsible for loss or damage in excess of
$2,000,000.00 or such greater amount for which it may carry liability insurance
caused by perils against which the Landlord is insured even if caused by the
negligence of the Tenant. However, this release does not apply with respect to
the wilful or grossly negligent acts of the Tenant.
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8.06 RELEASE FROM THIRD PARTY INTERFERENCE
That no space attached to or connected with the Premises lying in, on
or under any public highway or other public or quasi-public property is included
in this Lease; and the Landlord shall not be responsible for any loss or damage
caused by any interference with or taking away of the whole or any part of such
space; and the Tenant shall not be relieved from any of the covenants and
conditions of this Lease nor be entitled to any abatement of Minimum Rent or
Additional Rent in respect of any such interference or taking.
8.07 DAMAGE BY TENANT'S EQUIPMENT
The Tenant shall be responsible for any loss or damage whatsoever
caused in the Development by the leakage or escape of any water, gas or other
substance from any pipes, machinery or equipment installed by the Tenant and
used for the purposes of servicing the Premises or any machinery or equipment
installed or put there by the Tenant. The responsibility of the Tenant is
subject to the exception of loss or damage due to the negligent acts or
omissions or willful or wanton misconduct of the Landlord or its agents,
employees, independent contractors or other persons for whom the Landlord is
responsible at law.
8.08 DAMAGE BY TENANT
If the Development, including the Premises, elevators, boilers,
engines, pipes and other apparatus (or any Common Elements) used for the purpose
of heating or air-conditioning the Development or operating the elevators, or,
if the water pipes, drainage pipes, electric lighting, windows or other
equipment of the Development get out of repair or become damaged or destroyed
through the conduct of negligence, carelessness or, misuse by the Tenant, its
employees, licensees or invitees in any way stopping up or injuring the heating
apparatus, elevators, water pipes, drainage pipes or other equipment or any part
of the Development, the expense of the necessary repairs, replacements or
alterations shall be borne by the Tenant who shall pay the same to the Landlord
immediately on demand.
ARTICLE IX
MAINTENANCE, REPAIRS AND ALTERATIONS
9.01 TENANT TO REPAIR PREMISES
(a) The Tenant shall maintain, repair and keep the Premises
(including all the Landlord's Improvements and Tenant's
Improvements) in first class condition and repair (except to
the extent that the Landlord is obligated to repair the
Landlord's Improvements under Article XI - Damage and
Destruction).
(b) The Landlord and its agents and contractors may, at all
reasonable times during the Term, enter the Premises to
inspect its condition, and if any maintenance or repairs are
required to be made to the Premises and providing the
Landlord delivers to the Tenant, a notice setting out the
necessary maintenance or repairs then the Tenant shall
perform the maintenance or repairs required in a good and
workmanlike manner within the time period set forth in the
notice, and if there is no time period set forth in the
notice, then the maintenance and repairs shall be done within
a reasonable time.
(c) Failing maintenance or repair within such time period, the
Landlord and its agents and contractors may enter the
Premises and perform the necessary maintenance or repairs and
to render the account for such work to the Tenant, which
account shall be paid by the
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Tenant within three Business Days of receipt. Failing such
payment within three Business Days, Interest shall be
chargeable to the Tenant and such account shall be
recoverable with Interest as Additional Rent or may be set
off against the Tenant's Security Deposit.
9.02 LANDLORD TO REPAIR STRUCTURE
Subject to Article XI "Damage and Destruction", and only to the extent
that insurance proceeds are available to and have been received by the Landlord,
the Landlord will make structural repairs to the Development. In the event that
any repairs shall be required to be made by the Landlord to the Lands or
Development, by reason of the negligence, willful act, or default, of the
Tenant, its employees, invitees or licensees, the Tenant shall pay the Landlord
the entire cost of such repairs.
9.03 NOTIFY LANDLORD OF ACCIDENTS OR DEFECTS
The Tenant will immediately notify the Landlord or its agent or
representative of any accidents or defects (of which the Tenant is aware) in the
Development including, without limitation, the Premises, water pipes, plumbing
and heating apparatus, ventilation and air conditioning equipment and electrical
wiring and fixtures and, as well, of any matter or condition which may cause
injury or damage to the Development or any person or property, but unless
otherwise expressly provided for in this Lease there shall be no obligation on
the part of the Landlord to repair or make good any such matters.
9.04 ALTERATIONS BY TENANT
(a) The Tenant will not install or construct any Tenant's
Improvements, partitions, fixtures, floor coverings, light
fixtures, heavy equipment, safes or machinery upon the
Premises, nor undertake or permit any removal, change,
alteration or addition, nor affix or attach any article to
the Premises without the prior written consent of the
Landlord, which consent shall not be unreasonably withheld.
(b) The Tenant may, with the prior written consent of the
Landlord, from time to time improve or alter the Tenant's
Improvements or trade fixtures in the Premises to better suit
the Tenant's business needs; PROVIDED THAT:
(i) the Landlord shall have the right to post, (and if
the Landlord fails to so post, the Tenant shall
post and maintain on the Landlord's behalf) in
conspicuous places in the Premises, notices in
writing (pursuant to the Builder's Lien Act or any
other similar law) that the Landlord will not be
responsible for any Tenant's Improvements or
fixtures or other work done by the Tenant or on its
behalf,
(ii) the Tenant shall supply to the Landlord for
its prior approval plans and specifications for
such Tenant's Improvements or alterations,
(iii) the Tenant shall cause all work done in connection
with any Tenant's Improvements, fixtures or
alteration to be done promptly and in a good and
workmanlike manner and in accordance with the plans
and specifications therefor which have been
approved beforehand by the Landlord,
(iv) any or all work to be done and material to be
supplied in connection with such Tenant's
Improvements, fixtures or alterations shall,
subject to subparagraph
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9.04(b)(vi), be done or supplied only by
contractors or subcontractors and workmen engaged
by the Tenant but first approved by the Landlord,
and the Landlord shall have the right to grant such
approval conditionally or to withdraw the same at
any time with cause,
(v) in any event, any work performed by or for the
Tenant shall be performed by competent workmen
whose labour union affiliations are not compatible
with those of any workmen who may be employed on
the Development by the Landlord, its contractors,
or subcontractors,
(vi) any work which affects the Common Elements will be
done, if the Landlord so decides, by the Landlord
or its contractor at the Tenant's expense, and
(vii) the Tenant will pay all of the Landlord's costs in
retaining the necessary professional and consulting
services to make the approvals or rejections
contemplated in this section and all of the costs
of any work done by the Landlord or on its behalf
plus an administrative fee equal to 15% of the
foregoing costs.
9.05 ALTERATIONS BY LANDLORD PERMITTED
(a) The Tenant acknowledges that it is the long term intention of
the Landlord to expand and/or improve the Development from
time to time as economic and market conditions permit. In
furtherance of this intention, it is understood and agreed
that despite anything to the contrary in this Lease, the
Landlord shall have the right at all times and from time to
time, throughout the Term to:
(i) change the area, size, level, location and/or
arrangement of all or any part of the Development,
(ii) construct other buildings, structures or
improvements in the Development, make alterations
or rearrangements of or additions to, demolish
parts of or build additional stories on any
building in the Development (and, for such
purposes, to construct and erect columns and
support facilities in any building), and construct
additional buildings or facilities adjoining or
proximate to the Development,
(iii) construct multiple deck, elevated or underground
parking facilities, and expand, reduce or alter
the same in any manner,
(iv) make changes and additions to the pipes, conduits
and ducts or other structural and non-structural
installations in the Premises or Development to
serve the Common Areas, Common Elements and other
premises in the Development or to facilitate
expansion or alteration of the Development
(including, without limitation, the construction
and erection of columns and support facilities) but
shall make best efforts not to unreasonably
interfere with the Tenant's use and enjoyment of
the Premises beyond the extent necessarily
incidental to such changes, additions and
installations, and shall make good any damage to
the Premises arising in the ordinary course of such
changes and additions,
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(v) make excavations for building or other purposes
upon land adjacent to or under the Development and
enter if necessary the Premises for the purpose of
doing such work as shall be reasonably necessary to
protect or preserve the wall or walls of the
Building or the Building from injury or damage and
to support them by proper foundations pinning or
underpinning but to no greater extent than
reasonably necessary for such work,
(vi) add additional lands to the Development,
(vii) temporarily obstruct or close off the Common Areas
or Common Elements or any parts of them for the
purpose of making repairs, replacements,
alterations or rearrangements of or additions to
the Development, and
(viii) have access for itself and all workmen, agents,
contractors, invitees and licensees at all
reasonable times for the purpose of carrying out
the foregoing activities.
(b) The Landlord agrees to use reasonable efforts to complete all
construction, alterations, maintenance and repairs as
expeditiously as possible under the circumstances.
(c) Notwithstanding anything else contained in this Lease, the
Tenant agrees that if as a result of the exercise by the
Landlord of its rights, the Common Areas or Common Elements
are altered or diminished in any manner whatsoever the
Landlord shall not be subject to any liability nor shall the
Tenant be entitled to any compensation or abatement of
Minimum Rent or Additional Rent, nor will any alteration or
diminution of the Common Areas or Common Elements be deemed
to be constructive or actual eviction, or a breach of the
covenant for quiet enjoyment. The Tenant will, at the request
and reasonable cost of the Landlord, execute such documents
as are reasonably required by the Landlord to release the
Tenant's interest in those parts of the Common Areas and the
Common Elements designated by the Landlord.
(d) The Tenant shall be responsible for relocating and protecting
its property during the course of any construction,
relocation, alteration, reorganization or change to the
Development or during the period of the exercise of the
Landlord's rights under this section 9.05.
(e) If any of the foregoing activities permanently reduce, upon
completion, the Rentable Area of the Premises then the
Minimum Rent shall abate afterwards in proportion to the
total Rentable Area taken.
9.06 REMOVAL AND RESTORATION BY TENANT
(a) All Landlord's Improvements and Tenant's Improvements or any
other alterations to the Premises made by the Tenant (or by
the Landlord or others on behalf of the Tenant) are the
property of the Landlord and will remain the property to the
Landlord, without compensation to the Tenant. The Tenant will
not remove any such Landlord's Improvements or Tenant's
Improvements or alterations or its trade fixtures from the
Premises at any time except in compliance with the following:
(i) the Tenant may, during the Term in the normal
course of its business but only after obtaining the
prior written consent of the Landlord, remove its
trade fixtures if they
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exceed the Tenant's purposes. If the Tenant is
substituting new and similar trade fixtures no
consent will be required,
(ii) the Tenant will, at the expiry of or on early
termination of this Lease, remove at its own
expense the Tenant's Improvements and those of the
Landlord's Improvements that the Landlord requires.
The Tenant will, at its own expense, repair any
damage caused to the Premises or the Development by
such removal. If the Tenant does not remove its
Tenant's Improvements, within 15 days of the expiry
of, or earlier termination of this Lease, they
will, at the Landlord's option, become the property
of the Landlord and the Tenant will be deemed to be
overholding pursuant to Article 15.03 hereof and
will pay rent in accordance with the terms of
Article 15.03 until the said Tenant's Improvements
are removed. The Tenant further agrees that the
Landlord may at any time during such a period of
deemed overholding enter the Premises and remove
the Tenant's Improvements at the Tenant's sole
expense and without recourse against the Landlord.
(b) The Tenant's Improvements do not include:
(i) plumbing, electrical, heating, ventilating and
air-conditioning systems and fixtures, in or
serving the Premises,
(ii) floor and ceiling covering, partitions, doors,
cabinets and paneling that are affixed,
(iii) light fixtures,
(iv) the store front or doors, or
(v) internal stairways, escalators, or elevators.
9.07 NO LIENS
The Tenant agrees that it will not permit or cause anything to be done
on the Premises or with respect to the Premises, which may result in any liens,
lis pendens, or judgments being imposed on, or registered against, either the
Premises or the Development. If any such lien or encumbrance is registered
against the Development then the Tenant shall immediately at its own expense
cause the same to be removed by payment or the posting of security in an
appropriate court or any other like proceeding.
9.08 SIGNS
(a) The Tenant shall not cause or permit any sign, picture,
advertisement, notice, lettering, flag, decoration or
direction to be painted, displayed, inscribed, placed,
affixed or maintained in or on any windows or doors of the
Development nor anywhere else on or in the Lands and
Development, without the prior and continuous consent of the
Landlord, which consent will not be unreasonably withheld
provided that all such signage is consistent with any
applicable municipal regulation and in the Landlord's
unfettered discretion, considered consistent with the
Development's character and standards. On termination of
this Lease any such signage shall be removed by the Tenant
at the Tenant's sole expense and after such removal the
Development shall be restored and repaired by the Tenant to
its original condition before installation of any such
permitted signage.
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(b) The Tenant shall be responsible for all cost for
installation of signage on doors and directory strips on
main lobby and floor lobby.
9.09 BLINDS
The Tenant will not, without the prior written consent of the Landlord,
which consent will not be unreasonably withheld, install any blinds, drapes,
curtains, or other window coverings in the Premises and will not remove, add to
or change the blinds, curtains, drapes or other window covering, installed by
the Landlord from time to time, and agrees to keep window coverings open or
closed at various times as the Landlord may from time to time direct or as may
be provided from time to time by the Rules and Regulations.
9.10 REPAIR OF APPARATUS
In case equipment, machinery or any ventilating apparatus, or any part
of it, used in connection with the Common Areas or Common Elements becomes
inoperable, malfunctioning, obsolete, damaged or destroyed, the Landlord shall
have a reasonable time within which to repair the damage to, or replace the
equipment, machinery or other apparatus.
ARTICLE X
TENANT'S AND LANDLORD'S ACCESS
10.01 TENANTS ACCESSED TO COMMON AREAS
The Tenant and its employees, invitees and licensees shall have the use
during any Business Day in common with others, those parts of the Common Areas
leading to the Premises. At times other than any business Day, the Tenant and
its employees, invitees and licensees shall have access to the Development and
to the Premises and use of the elevators only in accordance with the Rules and
Regulations.
10.02 ACCESS BY LANDLORD
The Landlord may, at any time and without liability to the Tenant, enter the
Premises to examine the same or for any purpose which it may deem advisable for
the operation and/or maintenance of the Development. During the last six months
of the Term, the Tenant shall allow such person or persons as may be desirous of
leasing the Premises to visit the same on Business Days, provided reasonable
notice is given to the Tenant.
ARTICLE XI
DAMAGE AND DESTRUCTION
11.01 DESTRUCTION OR DAMAGE
If during the Term, the Building shall be damaged by any cause, the
following provisions shall have effect:
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(a) If the Premises are, in the Architect's opinion, rendered
partially unfit for occupancy by the Tenant and remain so for
at least 10 days, then the Minimum Rent (but not the
Additional Rent) shall abate from the date of the damage in
proportion to the part of the Premises so rendered unfit
until the Premises have been repaired or restored.
(b) If the Premises are, in the Architect's opinion, rendered
wholly unfit for occupancy by the Tenant and remain so for at
least 10 days, then the Minimum Rent (but not the Additional
Rent) shall abate from the date of the damage until the
Premises have been repaired or restored.
Notwithstanding the provisions of subsections 11.01(a) and (b), if the Premises
or Building shall be, in the Architect's opinion, incapable of being repaired or
restored with reasonable diligence within 180 days of the happening of the
damage and utilizing only the proceeds of insurance available to the Landlord
therefor, then either the Landlord or the Tenant may, at its option, terminate
this Lease by notice in writing to the other given within 60 days of the date of
the damage, and:
(c) if such notice is given, this Lease shall cease and become
null and void from the date of the damage, and the Tenant
shall immediately surrender the Premises and all of its
interest in them to the Landlord, and the Minimum Rent and
Additional Rent shall be apportioned and shall be payable by
the Tenant only to the date of such damage or the date the
Tenant ceases to occupy the Premises, whichever last occurs,
and the Landlord may re-enter and repossess the Premises,
provided that
(d) if within the said period of 60 days neither the Tenant nor
the Landlord shall give notice terminating this Lease, or if
within the said period the Landlord and Tenant shall agree
not to give such notice, then upon the expiration of the said
period of 60 days or upon the Landlord and Tenant agreeing
(whichever shall be the sooner), the Landlord shall begin to
repair and restore the Premises and the Landlord's
Improvements and the Tenant shall as soon as it is reasonably
possible after commencement of such repairs by the Landlord,
repair and restore its Tenant's Improvements, to their
original first class condition.
11.02 DESTRUCTION OR DAMAGE
The Landlord shall have the Architect determine within 35 days from the date of
damage whether or not the Premises are capable, with reasonable diligence, of
being repaired or restored within the 180 day period.
11.03 DESTRUCTION OR DAMAGE
If the Premises are, in the Architect's opinion, capable with reasonable
diligence of being repaired or restored within 180 days of the happening of such
damage with proceeds of insurance available to the Landlord, then the Landlord
shall restore or repair the Premises (including the Landlord's Improvements) and
the Tenant shall immediately afterwards repair and restore the Tenant's
Improvements and its furniture, equipment, stock and trade fixtures to their
original first class condition.
11.04 DESTRUCTION OR DAMAGE
The Tenant agrees that the obligation of the Landlord to rebuild and restore the
Premises shall not extend to, or be deemed to, include the rebuilding and
restoration of any of the Tenant's Improvements. The
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Tenant further agrees that it shall carry out all of its obligations under
this Article XI in compliance with and subject to sections 9.04 and 9.06.
ARTICLE XII
ASSIGNMENT AND SUBLETTING
12.01 MORTGAGE OF LEASE
The Tenant shall be entitled upon receiving the Landlord's written
consent, which consent will not be unreasonably withheld, to mortgage, pledge or
hypothecate this Lease as security for any loan by the Tenant which is
specifically taken out and used for the Tenant's Improvements to the Premises
during this Lease provided that the amount secured by such mortgage does not
exceed 75% of the then current value of the Tenant's Improvements on the
Premises supplied by the Tenant and the lender is a chartered bank, trust
company, life insurance company or other financial institution authorized to do
such business in Canada and that within 10 days after the execution of such
mortgage, pledge or hypothecation agreement, a true and complete copy thereof
shall be served on the Landlord.
12.02 ASSIGNING OR SUBLETTING
Notwithstanding any rule of law or equity to the contrary, the Tenant
shall not assign, sublet, transfer or enter into or grant a license, concession,
or right of occupancy with respect to this Lease, the Premises or any part
thereof (a "Disposition") without consent of the Landlord which consent may be
withheld without reason in the following circumstances:
(a) if the Tenant requests the Landlord's consent to a
Disposition, the Tenant shall submit to the Landlord the
name of the proposed person or other entity to whom the
Tenant wishes to make a Disposition (the "Assignee") and
information as to the nature of the Assignee's business,
reputation, and financial responsibility as the Landlord in
its sole discretion may require. The Landlord may further
require as a condition before considering a request to make
a Disposition a proposed Assignee to agree in writing with
the Landlord to fulfill all the obligations of the Tenant
under this Lease and that all directors, officers and
shareholders of the Assignee guarantee those obligations of
the Assignee, on the terms prepared by the solicitors for
the Landlord. Upon receipt by the Landlord of the Tenant's
request to make a Disposition together with all required
information and documents from the Tenant and the proposed
Assignee, the Landlord has the right exercisable in writing
(the "Notice") within 14 days thereafter to:
(i) if the request is to make a Disposition of this
Lease or the whole of the Premises, to cancel and
terminate this Lease, or
(ii) if the request is to make a Disposition of a part
of this Lease or part of the Premises to cancel or
terminate this Lease with respect to such part of
the Premises,
and if the Landlord shall exercise any such right to
terminate then in each case, the termination date shall be
such date as is stipulated in the Notice, shall and in any
event be not less than 60 days and not more than 90 days
following the giving of Notice by the Landlord. All of the
foregoing rights of the Landlord shall be an alternative to,
but not in
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substitution for any other rights which the Landlord
may have either to consent or withhold its consent to any
such disposition,
(b) if the Landlord exercises its right to terminate this Lease
in whole or in part under Article 12.02(a) hereof, the Tenant
shall surrender possession of the Premises or that part which
is the subject of the right to terminate, on the date set out
in the Notice in accordance with the provisions of this Lease
relating to surrender of the Premises at the expiration of
the Term. If this Lease is terminated as to a part of the
Premises only, the rent payable by the Tenant under this
Lease shall abate in proportion to the Rentable Area of the
Premises so surrendered,
(c) if the Landlord does not exercise the right to terminate this
Lease after receipt of the Tenant's written request to make a
Disposition, the Landlord's consent to the request may,
notwithstanding any rule of law or equity to the contrary, be
withheld without reason, and without limiting the generality
of the foregoing may be withheld if in the Landlord's sole
and unfettered opinion and discretion the proposed Assignee:
(i) does not have a history of successful business
operation in the business to be conducted in the
Premises, or
(ii) does not have a good credit rating and a
substantial net worth, or
(iii) is not able to finance the Assignee's acquisition
of its interest in the Premises and its operations
in the Premises without a material risk of
defaulting under this Lease and in a manner that
will enable the Assignee to carry on business
successfully in the Premises throughout the balance
of the Term, or
(iv) has a history of defaults under commercial leases
entered into by the Assignee or by companies or
partnerships that the Assignee was an affiliate,
principal or shareholder of, or a partner in, at
the time of the defaults, or
(v) or any direct or indirect subsidiary, affiliate,
parent, principal, shareholder or partner of the
Assignee is a competitor of the Landlord or any
direct or indirect subsidiary, affiliate, parent,
principal, shareholder or partner of the Landlord,
(vi) pursuant to the terms of the Disposition proposes
to pay to the Tenant a rental rate greater than the
amount payable under this Lease, or
(vii) and/or the Tenant does not provide to the Landlord
sufficient information about the Assignee or the
terms of the proposed Disposition to enable the
Landlord to make a determination concerning the
Assignee's suitability or without limitation any of
the matters set out above.
12.03 ASSIGNING OR SUBLETTING
The Landlord shall not be liable for any claims or actions by, or any damages,
liabilities, losses or expenses of the Tenant, or an Assignee arising out of the
Landlord withholding its consent to any disposition and the Tenant waives all
rights it may have and acknowledges that its only recourse shall be to bring an
application for a declaration that the Landlord shall grant its consent to such
a Disposition.
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12.04 ASSIGNING OR SUBLETTING
The Tenant shall pay the Landlord any and all costs incurred by the Landlord,
including all legal fees and disbursements on a full indemnity basis in
conjunction with the Tenant's request for consent of the Landlord to a
Disposition under this Article XII or the execution of any certificate or
agreement under this Article XII.
12.05 ASSIGNING OR SUBLETTING
Any Disposition approved by the Landlord shall be in writing and a copy of the
executed agreement evidencing the disposition shall be provided to the Landlord
within seven days of its effective date.
12.06 ASSIGNING OR SUBLETTING
No Disposition of this Lease or of whole or any part of the Premises shall in
any manner relieve the Tenant from its responsibilities under all of the terms,
covenants and conditions of this Lease. Any violation of any provision of this
Lease whether by act or omission by any Assignee shall be deemed a violation of
such provision by the Tenant.
12.07 ASSIGNING OR SUBLETTING
If at any time during the Term any or all of the voting shares of the Tenant or
of a parent corporation of which the Tenant is a direct or indirect subsidiary,
are to be transferred by sale, assignment, bequest, inheritance, operation of
law amalgamating, restructuring, reorganization or other disposition so as to
result in a change in the present voting control or effective control of the
Tenant, or of such parent corporation by the person or persons owning or
controlling a majority of such shares of the Tenant or of such parent
corporation on the date of the commencement of this Lease, then such a change
shall be deemed to constitute a Disposition under section 12.02 and the Tenant
shall promptly notify the Landlord in writing not less than 45 days prior to
such a change taking effect. If the Tenant fails to give such notice, the
Landlord may terminate this Lease at any time after such a change taking effect
by giving 30 days written notice of such termination. This provision shall not
apply, however, to tenants which are public companies having more than 50
shareholders at the date of this Lease.
12.08 ASSIGNING OR SUBLETTING
If the Tenant is a partnership and if at any time during the Term any person who
at the time of the execution of this Lease was a partner, ceases to be a
partner, such cessation of partnership shall constitute a Disposition of this
Lease for all purposes.
12.09 SALE BY LANDLORD
In the event of the sale by the Landlord of all or any part of the Lands or the
Development, or the assignment by the Landlord of this Lease or any interest of
the Landlord, and to the extent that any purchaser or Assignee assumes the
covenants and obligations of the Landlord, the Landlord shall, without further
agreement, be freed and relieved of all liability with respect to such covenants
and obligations.
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ARTICLE XIII
STATUS OF LEASE CERTIFICATE, REGISTRATION AND PRIORITY OF LEASE
13.01 TENANT'S CERTIFICATE
The Tenant agrees at any time and from time to time, upon not less than
10 days, prior notice, to execute and deliver to the Landlord a statement in
writing certifying that:
(a) this Lease is unmodified and in full force and effect (or, if
modified stating the modifications and that the same is in
full force and effect as modified),
(b) the amount of the Minimum Rent plus Additional Rent then
being paid and the dates to which the same, by installments
or otherwise, and other charges, have been paid,
(c) whether or not there is any existing default on the part of
the Landlord of which the Tenant has notice or rights of set
off or counterclaim against the Landlord, and
(d) any other information or statement that a proposed mortgagee
or purchaser may reasonably require.
13.02 REGISTRATION OF LEASE
The Tenant agrees, at the Landlord's request, to register this Lease
(at the Landlord's expense) immediately at the Vancouver Land Title Office. The
Tenant may request the Landlord to deliver the Lease in a form registrable under
the Land Title Act, but the Tenant shall bear all costs of obtaining any
necessary plan and effecting registration of this Lease.
13.03 SUBORDINATION AND ATTORNMENT
(a) This Lease is and will remain subordinate to every mortgage,
charge or lien and any renewals or extensions of them
(collectively the "Encumbrance") from time to time against
the Premises or the Development or any part of it.
(b) The Tenant will not be required to execute any documents
effecting the subordination and attornments provided for in
this section 13.03 unless such document stipulates that the
Encumbrance holder will not dispossess the Tenant (so long as
it complies with the terms of this Lease) in return for the
Tenant's agreement not to prepay rent or agree to any other
modification of this Lease without the prior written consent
of the Encumbrance holder. Provided that such document
contains the foregoing agreement, the form and content of the
document will be that required by the Encumbrance holder in
each case, and each such document will be delivered by the
Tenant to the Landlord within 10 days after the Landlord
requests it.
(c) The Tenant will attorn to the holder of any Encumbrance. If
possession is taken under, or any proceedings are brought for
the foreclosure of, or if a power of sale is exercised
resulting from an Encumbrance, the Tenant will attorn to the
person that so takes possession if that person requests it
and will recognize that person as the Landlord under this
Lease.
13.04 ATTORNEY
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The Tenant will execute and deliver whatever instruments and
certificates are requested by the Landlord or others to give effect to sections
9.05(c), 13.01 and 13.03 hereof. If 10 days after the date of delivery of a
request, the Tenant has not executed whatever instruments and certificates it is
required to execute, the Tenant irrevocably appoints the Landlord as the
Tenant's attorney with full power and authority to execute and deliver in the
name of the Tenant any of those instruments or certificates, or, the Landlord
may, at its option, terminate this Lease without incurring any liability to the
Tenant and any Indemnifier.
ARTICLE XIV
DEFAULT, TERMINATION AND LANDLORD'S REMEDIES
14.01 DEFAULT
(a) If the Tenant is in default in payment of Minimum Rent or
Additional Rent or GST, the Landlord may give written notice
of such default to the Tenant. If such default continues for
three Business Days after such notice:
(i) the whole amount of the Minimum Rent reserved by this
Lease for the remainder of the entire Term, together
with any and all unpaid installments of Additional Rent
and GST for the year in which such default occurs, and
Interest, if applicable, shall, at the exclusive option
of the Landlord immediately become due and payable by
the Tenant, without prejudice to or waiver of the
Landlord's right to collect any further Additional Rent
or GST as it accrues due, or to cancel this Lease or
relet the Premises as agent for the Tenant pursuant to
this Article XIV in the event of any further, or
continuing default by the Tenant to pay Minimum Rent,
Additional Rent or GST or any other breach or default,
or
(ii) the Landlord may, at its exclusive option, declare that
this Lease is in default and is canceled and give
written notice of such cancellation to the Tenant as
further set out in section 14.02 hereof, or
(iii)the Landlord may relet the Premises as agent for the
Tenant as further set out in section 14.03 hereof.
(b) If the Tenant makes any default in the performance or
observance of any covenant, condition, restriction, or
stipulation, express or implied, arising under this Lease,
and to be performed or observed by the Tenant and which has
not been expressly waived in writing by the Landlord, the
Landlord may give written notice of such default to the
Tenant. If such default continues for 5 Business Days after
the receipt of such notice by the Landlord, (or, in the case
of any default which would reasonably require more than 5
Business Days to rectify, the Tenant has not commenced
rectification within the 5 day notice period and diligently
and continuously continued with same) the Landlord may:
(i) at its exclusive option, remedy such default and charge
to the Tenant as Additional Rent and/or set off against
the Tenant's Security Deposit, any and all costs,
including all legal fees and disbursements on a full
indemnity basis, to the
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Landlord of so remedying such default plus an
administrative charge equal to 15% of such costs, or
(ii) at the Landlord's exclusive option, declare that this
Lease is in default and is canceled, and give written
notice of such cancellation to the Tenant, as further
set out in section 14.02, or
(iii)relet the Premises as agent for the Tenant as further
set out in section 14.03.
14.02 TERMINATION OF LEASE
Upon this Lease being terminated other than by effluxion of
time:
(a) all rights and interests created or then existing in favor of
the Tenant shall immediately terminate and the Landlord may
re-enter the Premises and repossess and enjoy the same as its
former estate, anything to the contrary notwithstanding,
(b) notwithstanding any such termination of this Lease, the
provisions of this Lease relating to the consequences of
termination shall survive,
(c) the Landlord may use such force as it may deem necessary for
the purpose of gaining admittance to and retaking possession
of the Premises and the Tenant hereby releases the Landlord
from all actions, proceedings, claims and demands whatsoever
for or in respect of any such forcible entry or any resulting
loss or damage, and
(d) the Tenant shall pay to the Landlord on demand:
(i) Minimum Rent and Additional Rent and all other amounts
payable up to the time of re-entry or to termination,
whichever shall be the later,
(ii) such reasonable expenses as the Landlord may incur or
has incurred in connection with the re-entering,
terminating, re-letting, collecting sums due or payable
by the Tenant, realizing upon assets seized, including
without limitation brokerage, legal fees and
disbursements on a full indemnity basis, and the
expenses of keeping the Premises in good order,
repairing the same and preparing them for re-letting,
(iii)as liquidated damages for the loss of rental and other
income of the Landlord expected to be derived from the
Lease during the period which would have constituted
the unexpired portion of the Term had it not been
terminated an amount determined by reducing to present
worth at an assumed interest rate of 10% per annum, all
Minimum Rent and Additional Rent to become payable
during the period which would have constituted the
unexpired portion of the Term, such determination to be
made by the Landlord who may make reasonable estimates
of any such other amounts which would have become due
under this Lease, and may make such other assumptions
of fact as may be reasonable in the circumstances, less
any Minimum Rent and Additional Rent received by the
Landlord from the Premises and
(iv) GST on amounts calculated in accordance with paragraphs
14.02(d)(i), (ii) and (iii) hereof.
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14.03 RIGHT TO RELET ON TENANT'S ACCOUNT
The Tenant further agrees that, on the Landlord becoming entitled to
cancel this Lease, the Landlord in addition to all other rights, shall have the
right to maintain the Lease, re-enter the Premises or any portion or portions of
them as agent of the Tenant, either by force or otherwise, without being liable
for any prosecution or damages, and to relet the Premises (or any portion or
portions of them for a term which may be lesser or greater than the balance of
the Term) as agent of the Tenant, and to take possession of any furniture or
other property on the Premises and to sell same at a public or private sale
without notice and to apply the proceeds of such sale and any rent derived from
reletting the Premises upon account of the Minimum Rent, Additional Rent and GST
under this Lease, and the Tenant shall be liable to the Landlord for any
deficiency, if any.
The Tenant shall pay to the Landlord, on demand, or the Landlord may
set off against the Tenant's Security Deposit all such reasonable expenses as
the Landlord may incur in re-entering and re-letting the Premises, or collecting
arrears of Minimum Rent, Additional Rent and GST, including legal fees and
disbursements on a full indemnity basis, brokerage fees, the expenses of keeping
the Premises in good order and of preparing the Premises for re-letting, and an
administrative charge equal to 15% of the foregoing amounts.
14.04 BANKRUPTCY OR SEIZURE
In the event that, without the prior written consent of the Landlord:
(a) the Premises:
(i) remain vacant or are not used for a period of 15
days, or
(ii) shall not be occupied by the Tenant within 15 days
of the Commencement Date, or
(iii) shall be used or occupied by any person other than
the Tenant, or
(iv) are used or occupied for any other purpose than that
for which the Premises were leased, or
(b) the Term or any of the goods and chattels of the Tenant
shall be at any time seized in execution or attachment by
any creditor of the Tenant, or
(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 at any time in force for bankrupt or
insolvent debtors, or
(d) the Tenant becomes involved in voluntary or involuntary
winding up, dissolution or liquidation proceedings,
then in any such case, this Lease shall, at the exclusive option of the
Landlord, terminate and the Term shall immediately become forfeited and void and
the then current month's Minimum Rent, Additional Rent plus applicable GST and
the next ensuing three months, Minimum Rent, Additional Rent plus applicable GST
shall immediately become due and payable, and the Landlord may re-enter and take
possession of the Premises as though the Tenant or other occupant of the
Premises was holding over after
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the expiration of the Term without any right whatsoever and the Landlord may
proceed against the Tenant for any and all past, present, or future damages
incurred or to be incurred by the Landlord.
14.05 APPLICATION OF DISTRESS
The Tenant covenants and agrees that all Tenant's Improvements,
furniture, equipment, stock and trade fixtures on the Premises, or wherever
situated, shall be liable to distress and sale in the usual manner for any
arrears of Minimum Rent, Additional Rent plus applicable GST owing with respect
to the Premises and that none of the foregoing goods and chattels shall be
exempt from distress, and for the purposes of making such distress, the Landlord
by itself, its agents and bailiffs may break open any door or window and enter
upon the Premises at any time after such Minimum Rent and/or Additional Rent
plus applicable GST shall accrue due without liability for any consequent damage
in so doing.
14.06 WAIVER RE DISTRESS
The Tenant waives and renounces the benefit of any present or future
statute, regulation or other enactment taking away or limiting the Landlord's
right of distress, and covenants and agrees that, notwithstanding any such
statute, regulation or other enactment, none of the goods and chattels of the
Tenant on the Premises, or wherever situated, at any time during that Term shall
be exempt from levy by distress for Minimum Rent or Additional Rent plus
applicable GST in arrears.
14.07 INDEMNITY RE LANDLORD'S REMEDIES
The Tenant agrees to indemnify the Landlord against any and all manner
of costs or expenses, including all legal fees and disbursements on a full
indemnity basis, of any kind which the Landlord may sustain by reason of any act
or omission made in good faith in enforcing this Lease under this Article XIV.
Such liability to indemnify the Landlord shall survive any termination of this
Lease, anything in this Lease to the contrary notwithstanding.
14.08 REMEDIES INDEPENDENT
The rights and remedies of the Landlord in this Article XIV are in
addition to, and not in substitution of or diminution of, any right or remedy
which the Landlord may have whether arising under the terms of this Lease, at
law, or in equity. No action by the Landlord in consequence of default by the
Tenant shall act as a bar or estoppel in respect of any other default committed
by the Tenant. The rights of the Landlord shall operate notwithstanding the
provisions of section 21 of the Law and Equity Act unless a court otherwise
orders.
14.09 LANDLORD'S EXPENSES
If the Landlord is required to undertake any action, whether pursuant
to this Lease or otherwise, to enforce any covenant, condition, restriction, or
stipulation of this Lease, and as a consequence has reasonably incurred any
expense, legal fee or disbursement, the Tenant shall pay on demand, to the
Landlord on a full indemnity basis, the amount of such expense or cost so
incurred by the Landlord with Interest from the date incurred to the date of
payment.
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ARTICLE XV
QUIET ENJOYMENT AND SURRENDER OF POSSESSION
15.01 QUIET POSSESSION
Provided that the Tenant pays the rents (including all Minimum Rent,
Additional Rent and GST) reserved under this Lease at the time and manner
required and observes and performs each and every one of the covenants,
conditions, restrictions and stipulations of the Tenant to be observed or
performed under this Lease, and subject to the qualifications to quiet enjoyment
contained in this Lease, and in particular without limiting the generality of
the foregoing, subject to the Landlord's right to make alterations under Article
IX hereof, the Tenant shall and may peaceably and quietly possess and enjoy the
Premises during the said Term without interruption from or by the Landlord, or
by any persons lawfully claiming by, through or under it.
15.02 LANDLORD NOT TO UNREASONABLY INTERFERE
Except as expressly provided otherwise in this Lease, there shall be no
allowance to the Tenant by way of diminution of Minimum Rent or Additional Rent
or otherwise and no liability on the part of the Landlord by reason of
inconvenience, annoyance or injury to business arising from the happening of any
event which gives rise to the need for any repairs, alterations, additions or
improvements or from the making of any repairs, alterations, additions or
improvements in, or to any portion of the Development or the Premises or in and
to their fixtures, appurtenances and equipment. The Landlord agrees to use its
best efforts to do any work done by it in such a manner as not to unreasonably
interfere with or impair the Tenant's use of the Premises beyond the extent
necessarily incidental to such work.
15.03 OVERHOLDING
If the Tenant shall continue to occupy the Premises after the
expiration of the Term without any further written agreement, or in the absence
of such an agreement, without objection by the Landlord, the Tenant shall be a
tenant at will, and not a tenant from month to month or from year to year. Such
a tenancy at will shall be at double the Minimum Rent and double the Additional
Rent, but otherwise on the terms of this Lease, except as to rent, and the
length of tenancy. The Landlord or the Tenant may terminate such tenancy at will
at any time.
15.04 YIELD-UP
At the expiration or sooner termination of this Lease, the Tenant will
peaceably surrender and give up the Premises (and subject to Article 9.06
hereof, the Landlord's Improvements and Tenant's Improvements) in first class
condition and repair, without notice from the Landlord, any right or notice to
quit or vacate being hereby expressly waived by the Tenant, any law, usage or
custom to the contrary notwithstanding and the Tenant further agrees that if
this Lease shall be registered in the Land Title Office at the time of the
expiration or sooner termination of this Lease, the Tenant shall immediately and
at its sole expense take all necessary steps to release its charge so registered
in the Land Title Office.
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ARTICLE XVI
INTENT AND INTERPRETATION OF LEASE
16.01 FORCE MAJEURE
(a) For the purpose of this lease, Force Majeure shall mean any
acts of God, strikes, lockouts, or other industrial
disturbances, acts of the Queen's enemies, sabotage, war,
blockades, insurrections, riots, epidemics, lightning,
earthquakes, floods, storms, fires, washouts, nuclear and
radiation activity or fallout, arrests and restraints of
rules and people, civil disturbances, explosions, breakage
of, stoppage, or accident to machinery for necessary
maintenance or repairs, inability to obtain labour,
materials or equipment, any legislative, administrative or
judicial action which has been resisted in good faith by all
reasonable legal means, any act, omission or event, not
within the control of such party, and which by the exercise
of due diligence such party could not have prevented, but
lack of funds on the part of such party shall be deemed not
to be a Force Majeure.
(b) Save and except for the obligations of the Tenant as set
forth in this Lease to pay Minimum Rent, Additional Rent, GST
or other money to the Landlord, if either party shall fail to
meet its obligations within the time prescribed, and such
failure shall be caused or materially contributed to by Force
Majeure such failure shall be deemed not to be a breach of
the obligations of such party, but such party shall use
diligence to put itself in a position to carry out its
obligations as soon as practicable.
16.02 HEADINGS
The parties agree that the headings form no part of this Lease and
shall be deemed to have been inserted for convenience of reference only.
16.03 INTERPRETATION
The terms "Landlord", "Tenant" and "Indemnifier" and their pronouns
shall, where the context makes it appropriate, include the heirs, executors,
administrators, successors and assigns of the parties and shall include the
feminine and plural and a body corporate where the context or the party or
parties so require, and where there is more than one Tenant, all covenants shall
be deemed joint and several.
16.04 GOVERNING LAW
This Lease, the Rules and Regulations and the use and occupation of the
Premises by the Tenant shall all be governed by the laws of the Province of
British Columbia. If any part or parts of this Lease be illegal or not
enforceable under the laws of the Province of British Columbia, such part or
parts shall be considered severable, and this Lease and the remainder of its
provisions shall remain in full force and be binding upon the parties as though
such unenforceable part had never been included.
16.05 TIME OF THE ESSENCE
Time is of the essence of this Lease.
16.06 ENUREMENT
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This Lease shall inure to the benefit of and be binding upon the
parties and their respective permitted successors, assigns and personal
representatives and executors.
16.07 REPRESENTATIONS
The Tenant acknowledges that the Premises are taken without
representation of any kind on the part of the Landlord or its agent other than
as herein set forth. No representative or agent of the Landlord or Tenant is or
shall be authorized or permitted to vary or modify this Lease in any way, and
this Lease contains all of the agreements and conditions made between the
parties, and any addition to or alteration of or changes in this Lease, or other
agreement made or condition created must be made in writing and signed by both
parties in order to be binding.
16.08 NON-WAIVER BY LANDLORD
The failure of the Landlord to insist upon strict performance of any of
the covenants or conditions of this Lease or to exercise any right or option
shall not be construed as a waiver or relinquishment of any such covenant,
condition, right or option, but the same shall remain in full force and effect.
The acceptance by the Landlord of any Minimum Rent, Additional Rent or other
payment from the Tenant or any other person shall not be construed as a
recognition of any rights which are not expressly granted, or as a waiver of any
of the Landlord's rights, or as an admission that any person other than the
Tenant is, or as a consent that such persons shall be deemed to be, an assignee
of this Lease or a subtenant of all or any part of the Premises, or any portion
thereof, irrespective of whether the Tenant or said person claims that such
person is a subtenant or assignee or licensee. The Landlord may accept rent from
any person occupying the Premises at any time without, in any way, waiving any
right under this Lease.
ARTICLE XVII
MISCELLANEOUS
17.01 NOTICES
(a) Any notice provided or permitted to be given by the Tenant to
the Landlord shall be sufficiently given if delivered, faxed,
or mailed (and if mailed, by registered mail, postage
prepaid), in writing and addressed to the Landlord's property
manager at the following address or sent to the following fax
numbers as applicable:
Dodwell Realty Ltd.
#1701 - 1166 Alberni Street
Vancouver, B.C.
V6E 3Z3
Fax: (604) 688-3245
(b) Any notice provided or permitted to be given by the Landlord
to the Tenant shall be sufficiently given if delivered,
faxed, or mailed (and if mailed, by registered mail, postage
prepaid) in writing and addressed to the Tenant at the
address for the Tenant or sent to the fax number set out in
section 1.01(h) as applicable.
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(c) Notice mailed as above set out shall be conclusively deemed
to have been received on the fifth Business Day following the
day on which such notice is mailed. Notice delivered as above
set out shall be conclusively deemed to have been delivered
if delivered in the same manner in which service of process
is required to be made under the Rules of the Supreme Court
of British Columbia. Notice faxed as above shall be
conclusively deemed to have been received upon the sender
receiving confirmation of transmission.
(d) Either party may, at any time, give notice in writing in the
manner above provided 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 specified shall be deemed
to be the address of such party for the giving of notice.
The word "notice" in this clause shall be deemed to include
any request, statement or other writing in this Lease
provided or permitted to be given by the Landlord to the
Tenant or by the Tenant to the Landlord.
17.02 OPTION TO RENEW
If the Tenant has paid the Minimum Rent, Additional Rent and any other amounts
owing to the Landlord, promptly when the same fell due and has observed and
performed all the agreements an covenants on the part of the Tenant, the
Landlord shall upon receipt of notice in writing by the Tenant requesting
renewal of this Lease, and upon receipt of the covenant of Indemnifier, in any,
under seal and in favor of the Landlord, to join in the renewal lease as
Indemnifier both delivered to the Landlord not less than six months before the
expiration of the Term, grant to the tenant a further term of FOUR (4) years
upon the same terms and conditions set forth and contained in this Lease save
this right of renewal and the amount of Minimum Rent. The Minimum Rent payable
during the renewal term shall be agreed upon by the Landlord and the Tennant as
equal to the fair market rental rate of the initial Term under similar leases of
comparable premises (including the then fair market value of any of the
Landlord's Improvements and Tenant's Improvements the cost of which were
contributed by the Landlord to the extent of such contribution either by way of
direct payment or allowance) of the same class of space in the downtown area of
the City, and failing such agreement by the commencement of the renewal term,
shall be determined by arbitration under the provisions of the Commercial
Arbitration Act then in effect in British Columbia. Until the final outcome of
such arbitration, the Tenant shall pay Additional Rent and Minimum Rent as it
stood upon expiry of the Term plus 15% per annum) which Minimum Rent shall be
adjusted retroactively following the determination of the arbitration to the
Minimum Rent determined payable during the renewal term and any increase in the
minimum Rent so payable shall be payable with Interest calculated from
17.03 OBSERVE RULES AND REGULATIONS
The Tenant, its servants, employees and invitees shall observe and
comply strictly with the Rules and Regulations, attached hereto as Schedule "C"
and as amended by the Landlord from time to time. The Landlord shall have the
right to make reasonable changes in and additions to the Rules and Regulations
and shall promptly notify the Tenant in writing. Any failure by the Landlord to
enforce any Rules and Regulations, now or at any time in effect, either against
the Tenant or any other tenant in the Development, shall not constitute a waiver
of any of the Rules and Regulations.
17.04 CORPORATE AUTHORITY
The Tenant, if a corporation, warrants and represents that it has the
corporate power to lease the Premises, to carry on the business carried on by
it, and is qualified to carry on business in British Columbia and further
warrants and represents that the Tenant has passed all necessary resolutions to
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authorize execution and delivery of this Lease and agrees to provide the
Landlord with a certified copy of such resolution.
17.05 PROVISIONS SEVERABLE
If any provisions of this Lease are illegal or unenforceable, they will
be considered separate and severable from this Lease and the remaining
provisions will remain in force and be binding on the parties as if the severed
provisions had not been included.
17.06 COSTS OF LANDLORD'S CONSENT
The Tenant shall pay to the Landlord any and all costs incurred by the
Landlord, including all legal fees and disbursements on an indemnity basis, plus
an administration fee equal to 15% of the total of such costs, fees and
disbursements incurred by the Landlord in connection with any request for the
consent of the Landlord under this Lease.
17.07 SCHEDULES
The following Schedules attached hereto are integral to and form part
of this Lease:
Schedule "A" - Lands (1.01(a))
Schedule "B" - Plan of Premises (1.01(a))
Schedule "C" - Rules and Regulations (17.03)
Schedule "D" - Additional Terms and Covenants
Schedule "E" - Tenant's Work (9.04(a))]
17.08 SECURITY
As security for the financial obligations of the Tenant to the Landlord
under this Lease, the Tenant hereby grants to the Landlord a security interest
in all of the Tenant's Improvements, Landlord's Improvements, and inventory held
by the Tenant from time to time and all proceeds of the foregoing, including all
money, cheques, accounts receivable and deposit accounts, provided that the
Tenant may sell his inventory in the ordinary course of business until notice to
the contrary from the Landlord.
17.09 INTEREST IN FIXTURES
Notwithstanding anything to the contrary contained in this Lease, the
Tenant will not acquire any right, title or interest in or to the Landlord's
Improvements or any other goods, chattels or personal property supplied by the
Landlord to the Premises until 24 hours after affixation of such Landlord's
Improvements or any other goods, chattels or personal property to the Premises
and after such affixation the Tenant will only have the right and interest, if
any, respecting such Landlord's Improvements or any other goods, chattels or
personal property that are granted to the Tenant pursuant to this Lease.
17.10 ACCEPTANCE
The Tenant hereby accepts this Lease of the Premises to be held by it
as Tenant, and subject to the conditions, restrictions and covenants above set
forth.
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IN WITNESS WHEREOF, the parties have executed this Lease.
Alberni Investments (1998) Inc. (The Landlord) )
by its Authorized Signatories, )
)
Per BEN YOUNG )
-----------
Authorized Signatory )
)
Per /s/ Ben Young )
Authorized Signatory )
)
)
on the 18th day of December, 1995. )
)
)
FLANAGAN ENTERPRISES INC. (The Tenant) )
by its Authorized Signatories, )
)
Per IAN FLANAGAN )
------------
Authorized Signatory )
)
Per /s/ Ian Flanagan )
Authorized Signatory )
)
On the 18th day of December, 1995. )
)
)
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<PAGE>
SCHEDULE "A"
LANDS
Legal Description
City of Vancouver
Parcel Identifier 016-751-841
Lot F
Block 18
District Lot 185
Plan 23073
131
<PAGE>
SCHEDULE "B"
PLAN OF PREMISES
132
<PAGE>
SCHEDULE "C"
RULES AND REGULATIONS
1. The definitions set forth in the Lease have the same meaning in these Rules
and Regulations.
2. No cooking except for the use of a microwave oven shall be permitted in the
Premises, and no electrical apparatus likely to cause an overloading of
electrical circuits will be used therein.
3. The sidewalks, entries, passages, elevators and staircases in the Building
shall not be obstructed or used by the Tenant, its agents, servants,
contractors, invitees or employees for any purpose other than ingress to and
egress from the offices. The Landlord reserves unrestricted control of all parts
of the Building employed for the common benefit of the tenants, including
without limitation, the sidewalks, entries, corridors and passages not within
the Premises, washrooms, lavatories, air-conditioning closets, fan rooms,
janitor's rooms, electrical rooms and other rooms, stairs, elevator shafts,
flues, stacks, pipe shafts and ducts and shall have the right to place such
signs and appliances therein, as it may deem advisable provided that ingress and
egress from the Premises is not unduly impaired thereby.
4. The Tenant, its agents, servants, contractors, invitees or employees, shall
not bring in or take out, position, construct, install or move any safe,
business machine or other heavy office equipment without the prior written
consent of the Landlord who shall have the absolute right to withhold consent or
to prescribe the maximum weight permitted and the position thereof, and the use
and design of the planks, skids or platforms to distribute the weight of such
equipment. All damage done to the Building by the moving or use of any such
heavy equipment or other office equipment or furniture shall be repaired at the
expense of the Tenant. The moving of all heavy equipment or other, office
equipment shall occur only between 6:00 p.m. and 7:30 a.m. or other time
consented to by the Landlord, and the persons employed to move same in and out
of the Building must be acceptable to the Landlord. Safes and other heavy office
equipment will be moved through the halls and corridors only upon steel bearing
plates. No deliveries requiring the use of an elevator for freight purposes will
be received in the Office Tower or carried in the elevators, except during hours
approved by the Landlord. The Tenant must provide the Landlord with twenty-four
(24) hours notice in order to have an elevator locked off for their exclusive
use. Failure to do so can result in the request being denied.
5. Other than during normal business hours, the Landlord will have the right to
prevent any person from entering or leaving the Building unless provided with a
key to the Premises and a valid access card. Any persons found in the Building
at such times without such keys or access card will be subject to surveillance
or eviction by the employees and agents of the Landlord without recourse. The
Landlord shall be under no responsibility for failure to enforce this rule.
6. The Tenant shall not place or cause to be placed any additional or substitute
locks or bolts upon any doors of the Demised Premises without the approval of
the Landlord and subject to any conditions imposed by the Landlord. Additional
keys may be obtained from the Landlord at the cost of the Tenant.
7. The tenant shall not tamper with the Heating, Ventilation, and Air
Conditioning system or any apparatus relating thereto. Any damage resulting
from tampering shall be borne by the Tenant by whom or by whose agents,
servants, employees, licensees or invitees the same is caused.
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8. The water sinks, basins, urinals, toilets, sewers and other water apparatus
shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags, ashes or other substances shall be
thrown therein. Any damage resulting from misuse shall be borne by the Tenant by
whom or by whose agents, servants, employees, licensees or invitees the same is
caused. Tenants shall not let the water run unless it is in actual use and shall
not deface or mark any part of the Building or drive nails, spikes, hooks or
screws into the walls or woodwork of the Building.
9. No one shall use the Premises for sleeping apartments or residential
purposes, or for the storage of personal effects or articles other than those
required for business purposes.
10. Canvassing, soliciting and peddling in the Building are prohibited.
11. Any hand trucks, carryalls or similar appliances used in the Building shall
be equipped with rubber tires, side guards and such other safeguards as the
Landlord shall require.
12. No animals or birds shall be brought into the Building.
13. The Tenant shall not install or permit the installation or use of any
machine dispensing goods for sale in the Premises or the Building or permit the
delivery of any food or beverage to the Premises without the approval of the
Landlord or in contravention of any regulation fixed or to be fixed by the
Landlord. Only persons authorized by the Landlord shall be permitted to deliver
or to use the elevators in the Building for the purpose of delivering food or
other beverages to the Premises.
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SCHEDULE "D"
ADDITIONAL TERMS AND COVENANTS
Nil.
135
<PAGE>
NY/295536.2
ARTICLE I
BASIC TERMS AND DEFINITIONS 93
1.01 BASIC TERMS 93
-----------
1.02 DEFINITIONS 94
-----------
ARTICLE II
GRANT OF LEASE AND TERM 98
2.01 GRANT 99
-----
2.02 RESERVATION TO LANDLORD 99
-----------------------
2.03 TERM 99
----
2.04 POSTPONEMENT OF TERM 99
--------------------
2.05 EARLY POSSESSION 99
----------------
2.06 PARKING
-------
ARTICLE III
RENT 100
3.01 RENT 100
----
3.02 NET LEASE 101
---------
3.03 "GST" (GOODS AND SERVICES TAX) 101
------------------------------
3.04 SECURITY DEPOSIT 101
----------------
3.05 INTEREST ON OVERDUE RENT 101
------------------------
4.01 SALES TAXES 102
-----------
4.02 BUSINESS TAX 102
------------
4.03 OTHER TAXES 103
-----------
ARTICLE V
DEVELOPMENT AND COMMON ELEMENTS - CONTROL, COSTS AND PAYMENT 103
5.01 CONTROL OF DEVELOPMENT BY LANDLORD 103
----------------------------------
5.02 OPERATING COSTS 103
---------------
5.03 CERTIFICATE OF OPERATING COSTS 103
------------------------------
6.01 ELECTRICITY 104
-----------
6.02 HEAT 104
----
6.03 AIR-CONDITIONING 104
----------------
6.04 ELEVATORS 104
---------
6.05 LIMITATION 105
----------
ARTICLE VII
136
<PAGE>
USE OF LEASED PREMISES 105
7.01 USE OF PREMISES 105
---------------
7.02 PREMISES CONFORM TO LAW 105
-----------------------
7.03 NO NUISANCE 106
-----------
7.04 FLOOR LOAD 106
----------
7.05 NAMES 106
-----
7.06 CONTINUOUS OCCUPANCY 106
--------------------
7.07 TIDINESS/JANITORIAL SERVICE 106
---------------------------
ARTICLE VIII
INSURANCE AND INDEMNITY 106
8.01 TENANT'S INSURANCE 106
------------------
8.02 LANDLORD'S INSURANCE 108
--------------------
8.03 INDEMNIFY LANDLORD 108
------------------
8.04 RELEASE OF LANDLORD 109
-------------------
8.05 RELEASE OF TENANT 109
-----------------
8.06 RELEASE FROM THIRD PARTY INTERFERENCE 109
-------------------------------------
8.07 DAMAGE BY TENANT'S EQUIPMENT 110
----------------------------
8.08 DAMAGE BY TENANT 110
----------------
ARTICLE IX
MAINTENANCE, REPAIRS AND ALTERATIONS 110
9.01 TENANT TO REPAIR PREMISES 110
-------------------------
9.02 LANDLORD TO REPAIR STRUCTURE 111
----------------------------
9.03 NOTIFY LANDLORD OF ACCIDENTS OR DEFECTS 111
---------------------------------------
9.04 ALTERATIONS BY TENANT 111
---------------------
9.05 ALTERATIONS BY LANDLORD PERMITTED 112
---------------------------------
9.06 REMOVAL AND RESTORATION BY TENANT 113
---------------------------------
9.07 NO LIENS 114
--------
9.08 SIGNS 114
-----
9.09 BLINDS 115
------
9.10 REPAIR OF APPARATUS 115
-------------------
ARTICLE X
TENANT'S AND LANDLORD'S ACCESS 115
10.01 TENANT'S ACCESS TO COMMON AREAS 115
-------------------------------
10.02 ACCESS BY LANDLORD 115
------------------
ARTICLE XI
DAMAGE AND DESTRUCTION 115
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<PAGE>
11.01 DESTRUCTION OR DAMAGE 115
---------------------
11.02 DESTRUCTION OR DAMAGE 116
---------------------
11.03 DESTRUCTION OR DAMAGE 116
---------------------
11.04 DESTRUCTION OR DAMAGE 116
---------------------
ARTICLE XII
ASSIGNMENT AND SUBLETTING 117
12.01 MORTGAGE OF LEASE 117
-----------------
12.02 ASSIGNING OR SUBLETTING 117
-----------------------
12.03 ASSIGNING OR SUBLETTING 118
-----------------------
12.04 ASSIGNING OR SUBLETTING 119
-----------------------
12.05 ASSIGNING OR SUBLETTING 119
-----------------------
12.06 ASSIGNING OR SUBLETTING 119
-----------------------
12.07 ASSIGNING OR SUBLETTING 119
----- -----------------------
12.08 ASSIGNING OR SUBLETTING 119
----- -----------------------
12.09 SALE BY LANDLORD 119
----------------
ARTICLE XIII
STATUS OF LEASE CERTIFICATE, REGISTRATION AND PRIORITY OF LEASE 120
13.01 TENANT'S CERTIFICATE 120
--------------------
13.02 REGISTRATION OF LEASE 120
---------------------
13.03 SUBORDINATION AND ATTORNMENT 120
----------------------------
13.04 ATTORNEY 120
--------
ARTICLE XIV
DEFAULT, TERMINATION AND LANDLORD'S REMEDIES 121
14.01 DEFAULT 121
-------
14.02 TERMINATION OF LEASE 122
--------------------
14.03 RIGHT TO RELET ON TENANT'S ACCOUNT 123
----------------------------------
14.04 BANKRUPTCY OR SEIZURE 123
---------------------
14.05 APPLICATION OF DISTRESS 124
-----------------------
14.06 WAIVER RE DISTRESS 124
------------------
14.07 INDEMNITY RE LANDLORD'S REMEDIES 124
--------------------------------
14.08 REMEDIES INDEPENDENT 124
--------------------
14.09 LANDLORD'S EXPENSES 124
-------------------
ARTICLE XV
QUIET ENJOYMENT AND SURRENDER OF POSSESSION 125
15.01 QUIET POSSESSION 125
----------------
15.02 LANDLORD NOT TO UNREASONABLY INTERFERE 125
--------------------------------------
138
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15.03 OVERHOLDING 125
-----------
15.04 YIELD-UP 125
--------
ARTICLE XVI
INTENT AND INTERPRETATION OF LEASE 126
16.01 FORCE MAJEURE 126
-------------
16.02 HEADINGS 126
--------
16.03 INTERPRETATION 126
--------------
16.04 GOVERNING LAW 126
-------------
16.05 TIME OF THE ESSENCE 126
-------------------
16.06 ENUREMENT 126
---------
16.07 REPRESENTATIONS 127
---------------
16.08 NON-WAIVER BY LANDLORD 127
----------------------
ARTICLE XVII
MISCELLANEOUS 127
17.01 NOTICES 127
-------
17.02 OBSERVE RULES AND REGULATIONS 128
-----------------------------
17.03 CORPORATE AUTHORITY 128
-------------------
17.04 PROVISIONS SEVERABLE 129
--------------------
17.05 COSTS OF LANDLORD'S CONSENT 129
---------------------------
17.06 SCHEDULES 129
---------
17.07 SECURITY 129
--------
17.08 INTEREST IN FIXTURES 129
--------------------
17.09 ACCEPTANCE 129
----------
SCHEDULE "A" LANDS 131
SCHEDULE "B" PLAN OF PREMISES 132
SCHEDULE "C" RULES AND REGULATIONS 133
SCHEDULE "D" ADDITIONAL TERMS AND COVENANTS 135
139
