SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______ .
Commission File Number 0-25346
TRANSACTION SYSTEMS ARCHITECTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 47-0772104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 South 108th Avenue
Omaha, Nebraska 68154
(Address of principal executive offices, including zip code)
(402) 390-7600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
---- ----
Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date:
24,004,708 shares of Class A Common Stock at January 31, 1997
2,171,252 shares of Class B Common Stock at January 31, 1997
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
Page
Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of
December 31, 1996 and September 30, 1996 3
Condensed Consolidated Statements of Operations
for the three months ended December 31, 1996 and 1995 4
Condensed Consolidated Statement of Stockholders'
Equity for the three months ended December 31, 1996 5
Condensed Consolidated Statements of Cash Flows for the
three months ended December 31, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Index to Exhibits 13
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 31,012 $ 31,546
Receivables, net 59,345 49,135
Deferred income taxes 1,688 4,348
Other 1,269 1,010
------------ ------------
Total current assets 93,314 86,039
Property and equipment, net 13,797 13,001
Software, net 4,913 5,424
Intangible assets, net 7,294 7,236
Installment receivables 1,789 1,593
Investment and notes receivable 8,796 8,105
Other 1,712 1,761
------------ ------------
Total assets $ 131,615 $ 123,159
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,309 $ 1,147
Current portion of capital lease obligations 303 342
Accounts payable 7,815 8,322
Accrued employee compensation 3,395 5,210
Accrued liabilities 8,655 7,631
Income taxes 3,493 4,383
Deferred revenue 23,394 17,987
------------ ------------
Total current liabilities 48,364 45,022
Long-term debt 1,574 1,431
Capital lease obligations 294 256
------------
------------
Total liabilities 50,232 46,709
------------ ------------
Stockholders' equity:
Class A Common Stock 120 119
Class B Common Stock 11 11
Additional paid-in capital 96,868 96,062
Accumulated translation adjustments 258 (236)
Accumulated deficit (15,862) (19,494)
Treasury stock, at cost (12) (12)
------------ ------------
Total stockholders' equity 81,383 76,450
------------ ------------
Total liabilities and stockholders' equity $ 131,615 $ 123,159
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended December 31
------------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
Revenues:
Software license fees $ 25,251 $ 17,217
Maintenance fees 9,961 8,409
Services 11,877 8,618
Hardware, net 553 1,239
-------------- ---------------
Total revenues 47,642 35,483
-------------- ---------------
Expenses:
Cost of software license fees:
Software costs 5,397 3,905
Amortization of purchased software 801 788
Cost of maintenance and services 12,473 8,771
Research and development 3,955 3,537
Selling and marketing 10,282 8,404
General and administrative:
General and administrative costs 7,666 5,695
Amortization of goodwill and purchased
intangibles 217 150
-------------- ---------------
Total expenses 40,791 31,250
-------------- ---------------
Operating income 6,851 4,233
-------------- ---------------
Other income (expense):
Interest income 427 568
Interest expense (57) (44)
Other (317) (30)
-------------- ---------------
Total other 53 494
-------------- ---------------
Income before income taxes 6,904 4,727
Provision for income taxes (3,096) (1,798)
-------------- ---------------
Net income $ 3,808 $ 2,929
============== ===============
Net income per common and equivalent share $ 0.14 $ 0.11
============== ===============
Weighted average shares outstanding 26,998 26,908
============== ===============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the three months ended December 31, 1996
(unaudited and in thousands)
<TABLE>
<CAPTION>
Class A Class B Additional Accumulated
Common Common Paid-in Translation Accumulated Treasury
Stock Stock Capital Adjustments Deficit Stock Total
-------- -------- -------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1996 $ 119 $ 11 $ 96,062 $ (236)$ (19,494) $ (12)$ 76,450
Adjustment for Open Systems Solutions,
Inc. pooling of interests 1 5 (176) (170)
Issuance of Class A Common Stock 196 196
Exercise of stock options 165 165
Tax benefit of stock options exercised 440 440
Net Income 3,808 3,808
Translation adjustments 494 494
-------- -------- -------- ---------- ---------- -------- --------
Balance, December 31, 1996 $ 120 $ 11 $ 96,868 $ 258 $ (15,862) $ (12)$ 81,383
======== ======== ======== ========== ========== ======== =========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRANSACTION SYSTEM ARCHITECTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
<TABLE>
<CAPTION>
Three months ended December 31,
----------------------------------
1996 1995
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,808 $ 2,929
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,273 997
Amortization 1,637 1,429
(Increase) decrease in receivables, net (8,394) 463
Decrease in other current assets 2,431 813
(Increase) decrease in installment receivables (196) 867
Increase in other assets (97) (61)
Increase (decrease) in accounts payable (823) 1,065
Decrease in accrued employee compensation (1,919) (1,097)
Increase (decrease) in accrued liabilities 1,458 (1,142)
Decrease in income tax liabilities (585) (628)
Increase (decrease) in deferred revenue 4,472 (1,136)
------------ -------------
Net cash provided by operating activities 3,065 4,499
------------ -------------
Cash flows from investing activities:
Purchases of property and equipment (1,802) (2,235)
Additions to software (643) (1,020)
Other 33 -
Acquisiton of businesses, net of cash acquired - (1,536)
Additions to investment and notes receivable (1,691) (1,000)
------------ -------------
Net cash used in investing activities (4,103) (5,791)
------------ -------------
Cash flows from financing activities:
Proceeds from issuance of Class A Common Stock 197 -
Purchase of Treasury Stock - (7)
Proceeds from exercise of stock options 161 194
Payments of long-term debt - (130)
Payments on capital lease obligations (32) (126)
------------ ------------
Net cash provided by (used in)financing activities 326 (69)
Effect of exchange rate fluctuations on cash 178 (39)
------------ -----------
Decrease in cash and cash equivalents (534) (1,400)
Cash and cash equivalents, beginning of period 31,546 35,511
------------ ------------
Cash and cash equivalents, end of period $ 31,012 $ 34,111
============ =============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Consolidated Financial Statements
The condensed consolidated financial statements at December 31, 1996 and 1995
and for the three months then ended are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1996. The
results of operations for the three months ended December 31, 1996 are not
necessarily indicative of the results for the entire fiscal year ending
September 30, 1997.
The condensed consolidated financial statements include all domestic and foreign
subsidiaries which are more than 50% owned and controlled. Investments in
companies owned less than 20% are carried at cost.
2. Net Income Per Common and Equivalent Share
Net income per common and common equivalent share is determined by dividing net
income by the weighted average number of shares of common stock and dilutive
common equivalent shares outstanding during each period using the treasury stock
method.
3. Stock Split
On June 7, 1996, the Company's Board of Directors authorized a two-for-one stock
split effected in the form of a 100% stock dividend to be distributed on July 1,
1996 to shareholders of record on June 17, 1996. All references in the condensed
consolidated financial statements to number of shares and per share amounts have
been restated to retroactively reflect the stock split.
4. Acquisition
On October 8, 1996, the Company completed the acquisition of Open Systems
Solutions, Inc. (OSSI). Stockholders of OSSI received 209,993 shares of TSA
Class A Common Stock in exchange for 100% of OSSI's common stock. The stock
exchange was accounted for as a pooling of interests. OSSI's results of
operations prior to the acquisition were not material.
5. Investment and Notes Receivable
The Company has entered into a transaction with Insession, Inc. (Insession)
whereby the Company acquired a 7.5% minority interest in Insession for $1.5
million. In addition, the Company has loaned Insession $4.8 million under
promissory notes. The promissory notes bear an interest rate of prime plus
0.25%, are payable in January 1999 ($1.0 million), January 2000 ($1.0 million)
and January 2001 ($1.5 million). The remaining $1.3 million of promissory notes
are payable upon demand. The promissory notes are secured by future royalties
owed by the Company to Insession.
The Company has extended a $4.5 million line of credit to U. S. Processing, Inc.
(USPI), a start-up transaction processing business, and has the right to acquire
the start-up venture. USPI has borrowed $4.5 million under the credit facility.
Borrowings under the credit facility bear interest at prime plus 1.0% and are
payable in quarterly installments of $250,000 commencing in June 1998.
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The following table sets forth certain financial data and the percentage of
total revenues of the Company for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
1996 1995
--------------------------------------
% of % of
Amount Revenue Amount Revenue
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 25,251 53.0 % $ 17,217 48.5 %
Maintenance fees 9,961 20.9 8,409 23.7
Services 11,877 24.9 8,618 24.3
Hardware, net 553 1.2 1,239 3.5
------------- ------------ ------------ ------------
Total Revenues 47,642 100.0 35,483 100.0
------------- ------------ ------------ ------------
Expenses:
Cost of software license fees:
Software costs 5,397 11.3 3,905 11.0
Amortization of purchased software 801 1.7 788 2.2
Cost of maintenance and services 12,473 26.2 8,771 24.7
Research and development 3,955 8.3 3,537 10.0
Selling and marketing 10,282 21.6 8,404 23.7
General and administrative:
General and administrative costs 7,666 16.1 5,695 16.0
Amortization of goodwill and purchased
intangibles 217 0.5 150 0.4
------------- ------------ ------------ ------------
Total expenses 40,791 85.6 31,250 88.1
------------- ------------ ------------ ------------
Operating income 6,851 14.4 4,233 11.9
------------- ------------ ------------ ------------
Other income (expense):
Interest income 427 0.9 568 1.6
Interest expense (57) (0.1) (44) (0.1)
Other (317) (0.7) (30) (0.1)
------------- ------------ ------------ ------------
Total other 53 0.1 494 1.4
------------- ------------ ------------ ------------
Income before income taxes 6,904 14.5 4,727 13.3
Provision for income taxes (3,096) (6.5) (1,798) (5.1)
------------- ------------ ------------ ------------
Net income $ 3,808 8.0 % $ 2,929 8.3 %
============= ============ ============ ============
</TABLE>
<PAGE>
Revenues
Total revenues for the first quarter of fiscal 1997 increased 34.3% or $12.2
million over the comparable period in fiscal 1996. Of this increase, $8.0
million of the growth resulted from a 46.7% increase in software license fee
revenue, $3.3 million from a 37.8% increase in services revenue and $1.6 million
from a 18.5% increase in maintenance fee revenue.
The growth in software license fee revenue is the result of increased demand for
the Company's BASE24 products and continued growth of the installed base of
customers paying monthly license fee (MLF) revenue. Contributing to the strong
demand for the Company's products is the continued world-wide growth of
electronic payment transaction volume and the growing complexity of electronic
payment systems. MLF revenue was $6.8 million in the first quarter of fiscal
1997 compared to $4.5 million in the first quarter of fiscal 1996.
The growth in services revenue for the first quarter of fiscal 1997 is the
result of increased demand for technical and project management services which
is a direct result of the increased installed base of the Company's BASE24
products.
The increase in maintenance fee revenue for the first quarter of fiscal 1997 is
a result of the continued growth of the installed base of the Company's BASE24
products.
Expenses
Total operating expenses for the first quarter of fiscal 1997 increased 30.5% or
$9.5 million over the comparable period in fiscal 1996. The primary reason for
the overall increase in operating expenses is the increase in staff required to
support the increased demand for the Company's products and services. Total
staff including both employees and independent contractors increased from 1,105
at December 31, 1995 to 1,391 at December 31, 1996.
The Company's operating margin for the first quarter of fiscal 1997 was 14.4% as
compared to 11.9% for the comparable period in fiscal 1996. These improvements
are primarily due to the impact of the growth in the Company's recurring
revenues (MLF's, maintenance and facilities management fees).
The Company's gross margin (total revenues minus cost of software and cost of
maintenance and services) for the first quarter of fiscal 1997 was 60.8% as
compared to 62.1% for the comparable period in fiscal 1996. The decline in gross
margin is primarily due to increased useage of independent contractors who
typically are more expensive than employees and a general increase in technical
staff labor costs. To allow for flexibility in its staffing requirements, the
Company typically utilizes a mix of employees and independent contractors. The
increase in technical staff labor costs is directly attributed to intense
competition for such personnel.
Research and development(R&D) costs for the first quarter of fiscal 1997
increased 11.8% or $418,000 over the comparable period in fiscal 1996. This
increase is due to hiring of additional staff who are working on the development
of new applications and enhancements. R&D costs as a percentage of total
revenues were 8.3% and 10.0% for the first quarter of fiscal 1997 and 1996,
repectively. This decrease is the result of the Company's total revenues
increasing at a faster rate than the growth in R&D staffing levels. The Company
capitalized software development costs of $368,000 and $331,000 in the first
quarter of fiscal 1997 and 1996, respectively.
Selling and marketing costs as a percentage of total revenues decreased to 21.6%
in the first quarter of fiscal 1997 from 23.7% in the first quarter of fiscal
1996. This decrease is due primarily to higher levels of service revenues and
backlog which typically have a lower level of sales commission expense
associated with it.
EBITDA
The Company's earnings before interest expense, income taxes, depreciation and
amortization (EBITDA) increased from $6.5 million in the first quarter of fiscal
1996 to $9.8 million for the first quarter of fiscal 1997. The increase in
EBITDA can be attributed to the continued growth in both recurring and
non-recurring revenues more than offsetting the growth in operating expenses.
EBITDA is not intended to represent cash flows for the periods.
Other Income and Expense
Other income and expense consists primarily of interest income derived from
short-term investments and foreign currency transaction losses. The Company
incurred foreign currency transaction losses in the first quarter of fiscal 1997
as a result of revaluing U.S. dollar cash and receivables in its U.K.
subsidiary.
Income Taxes
The effective tax rate for the first quarter of fiscal 1997 was 44.8% as
compared to 38.0% for the first quarter of fiscal 1996. The increase in the
effective tax rate is principally the result of deferred tax assets which were
recognized in the first quarter of fiscal 1996 which reduced the effective tax
rate for that period with no corresponding recognition of deferred tax assets in
the first quarter of fiscal 1997.
As of December 31, 1996, the Company has deferred tax assets of $ 9.6 million
and deferred tax liabilities of $.6 million. Each quarter, the Company evaluates
its historical operating results as well as its projections for the next 24
months to determine the realizability of the deferred tax assets. This analysis
indicated that $1.7 million of the deferred tax assets were more likely than not
to be realized. Accordingly, the Company has recorded a valuation allowance of $
7.9 million as of December 31, 1996.
Backlog
- -------
As of December 31, 1996 and 1995, the Company had non-recurring revenue backlog
of $21.9 million and $17.2 million in software license fees and $14.6 million
and $10.7 million in services, respectively. The Company includes in its
non-recurring revenue backlog all fees specified in contracts which have been
executed by the Company to the extent that the Company contemplates recognition
of the related revenue within one year. There can be no assurance that the
contracts included in non-recurring revenue backlog will actually generate the
specified revenues or that the actual revenues will be generated within the one
year period.
As of December 31, 1996 and 1995, the Company had recurring revenue backlog of
$75.0 million and $57.3 million, respectively. The Company defines recurring
revenue backlog to be all monthly license fees, maintenance fees and facilities
management fees specified in contracts which have been executed by the Company
and its customers to the extent that the Company contemplates recognition of the
related revenue within one year. There can be no assurance, however, that
contracts included in recurring revenue backlog will actually generate the
specified revenues.
Liquidity and Capital Resources
- -------------------------------
As of December 31, 1996, the Company had working capital of $45.0 million, cash
and cash equivalents of $31.0 million and a $10 million bank line of credit of
which there are no borrowings outstanding. The bank line of credit expires in
June 1997.
During the three months ended December 31, 1996, the Company's cash flow from
operations amounted to $3.1 million and cash used in investing activities
amounted to $4.1 million. Of the $4.1 million of cash used in investing
activities, $1.7 million consisted of advances to Insession ($800,000) and
USPI ($900,000) under promissory notes.
In the normal course of business, the Company evaluates potential acquisitions
of complementary businesses, products or technologies. In October 1996, the
Company acquired 100% of OSSI in exchange for 209,993 shares of the Company's
Class A Common Stock.
Management believes that the Company's working capital, cash flow generated from
operations and borrowing capacity are sufficient to meet the Company's working
capital requirements for the foreseeable future.
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.24 Lease respecting facility at 200 Wellington Street West,
Toronto, Canada
27.00 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 7, 1997
TRANSACTION SYSTEMS ARCHITECTS, INC
(Registrant)
/s/ Dwight G. Hanson
--------------------
Dwight G. Hanson
Controller
(Principal Accounting Officer)
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
10.24 Lease respecting facility at 200 Wellington Street West,
Toronto, Canada
27.00 Financial Data Schedule
TABLE OF CONTENTS
SECTION 1 Summary of Specific
Terms......................................................................1
SECTION 2
Definitions................................................................3
(a) Additional
Rent..............................................................3
(b) Basic
Rent..............................................................3
(c)
Building..........................................................3
(d) Capital
Tax...............................................................3
(d.1) Commencement
Date..............................................................3
(e) Landlord's
Architect.........................................................3
(f)
Lands.............................................................3
(g)
Lease.............................................................3
(h) Lease
Year..............................................................3
(i) Leasehold
Improvements......................................................3
(j) Normal Business
Hours.............................................................4
(k) Operating
Costs.............................................................4
(l)
Premises..........................................................5
(m)
Project...........................................................5
(n) Proportionate
Share.............................................................5
(o) Rentable
Area..............................................................5
(p) Rentable Area of the
Building..........................................................6
(q) Restoration
Work..............................................................6
(r) Retail
Concourse.........................................................6
(s) Rules and
Regulations.......................................................6
(t)
Taxes.............................................................6
(u)
Term..............................................................7
(v) Useable
Area..............................................................7
(w) Wellington Street
Lands.............................................................7
(x)
Year..............................................................7
SECTION 3
Premises...................................................................7
SECTION 4
Term.......................................................................8
SECTION 5 Basic
Rent.......................................................................8
SECTION 6
Taxes......................................................................8
SECTION 7 Operating
Costs......................................................................9
SECTION 8 Recovery of
Adjustments................................................................9
SECTION 9 Net
Lease.....................................................................10
SECTION 10 Tenant's
Covenants.................................................................10
(a) Pay
Rent.............................................................10
(b) Utility
Charges..........................................................10
(c) Maintain &
Repair...........................................................10
(d) Repair Where Tenant at
Fault............................................................11
(e) Assigning or
Subletting.......................................................11
(f) Rules and
Regulations......................................................13
(g) Use of
Premises.........................................................13
(h) Observance of
Law..............................................................13
(i) Waste and
Nuisance.........................................................13
(j) Entry by
Landlord.........................................................13
(k)
Indemnity........................................................14
(l) Exhibiting
Premises.........................................................14
(m)
Alterations......................................................14
(n) Interior
Walls............................................................15
(o)
Signs............................................................15
(p) Name of
Building.........................................................15
(q)
Glass............................................................15
(r)
Certificates.....................................................15
(s) Evidence of
Payments.........................................................15
(t) Notice of
Accidents........................................................15
(u) Tenant
Insurance........................................................16
(v) Surrender on
Termination......................................................16
(w) Fire and
Safety...........................................................16
(x) Energy
Conservation.....................................................17
SECTION 11 Quiet
Enjoyment.................................................................17
SECTION 12 Landlord's
Covenants.................................................................17
(a) Heating and
Air-Conditioning.................................................17
(b)
Taxes............................................................17
(c)
Elevator.........................................................17
(d)
Access...........................................................17
(e)
Washrooms........................................................17
(f) Janitor
Services.........................................................17
(g)
Insurance........................................................18
SECTION 13 Leasehold Improvements and
Fixtures.................................................................18
SECTION 14 Damage or
Destruction..............................................................19
SECTION 15 Injuries, Loss and
Damage...................................................................20
SECTION 16 Impossibility, Unavoidable
Delays...................................................................20
SECTION 17
Re-Entry.................................................................20
SECTION 18 Bankruptcy,
etc......................................................................20
SECTION 19
Distress.................................................................21
SECTION 20 Entry As
Agent....................................................................21
SECTION 21 Right of
Termination..............................................................21
SECTION 22
Non-Waiver...............................................................21
SECTION 23
Overholding..............................................................21
SECTION 24 Landlord Performing Tenant's
Covenants ...............................................................21
SECTION 25 Payments to
Landlord.................................................................22
SECTION 26 Legal
Costs....................................................................22
SECTION 27
Registration.............................................................22
SECTION 28
Mortgages................................................................22
SECTION 29 Assignment by
Landlord.................................................................23
SECTION 30
Relocation...............................................................23
SECTION 31 Effect of
Lease....................................................................23
SECTION 32 Interpretation of
Lease....................................................................23
SECTION 33 Time of
Essence..................................................................24
SECTION 34
Law......................................................................24
SECTION 35
Notice...................................................................24
SECTION 36 Expansion,
Alteration...............................................................24
SECTION 37
Captions.................................................................25
Schedule "A" Floor Plan of Premises
Schedule "B" Site Plan of Project
Schedule "C" Legal Description of Lands
Schedule "D" Rules and Regulations
Schedule "E" Special Provisions
page 52.
.................
Please Initial
<PAGE>
902CEP1096
METROCENTRE
WELLINGTON STREET OFFICE BUILDING
200 WELLINGTON STREET WEST, TORONTO
THIS LEASE made the 24th day of October,
1996
IN PURSUANCE OF THE SHORT FORMS OF LEASES ACT
BETWEEN:
MARATHON REALTY
COMPANY LIMITED,
a corporation
incorporated
under the laws
of Canada,
(hereinafter
called the
"Landlord")
OF THE FIRST PART
- and -
APPLIED
COMMUNICATIONS
CANADA, INC.
(hereinafter
called the
"Tenant")
OF THE SECOND PART
WITNESSETH that in consideration of the
rents, covenants, conditions and agreements hereinafter
reserved and contained, the Landlord and the Tenant covenant
and agree as follows:
.c.SECTION 1 Summary of Specific Terms;
Summary of Specific Terms
1. The terms set out below are certain basic
terms of this Lease which form part of and are referred to
in subsequent provisions of this Lease.
(a) (i) Landlord:
Marathon Realty Company
Limited
(ii) Address of Landlord:
Suite 1700
120 Adelaide Street West
Toronto, Ontario
M5H 1T1
Attention: Legal
Counsel
with a copy to:
Vice-President
Toronto
Region, at the same address
(b) (i) Tenant:
Applied Communications
Canada, Inc.
(ii) Address of Tenant:
Prior to the commencement
of the Term:
155 University Avenue
Suite 1900
Toronto, Ontario
M5H 3B7
<PAGE>
with a copy to:
Baker &
McKenzie
Barristers
and Solicitors
BCE Place,
181 Bay Street
Suite 2100,
P.O. Box 874
Toronto,
Ontario
M5J 2T3
Attention:
M.E.
Kowalski/S.J.
McAuley
From and after the
commencement of the Term, the Premises.
(c) Premises:
All of the seventh (7th) floor and
part of the sixth (6th) floor
200 Wellington Street West
Toronto, Ontario
(d) Useable Area of the Premises:
(i) approximately 2,895
square feet (268.95 square metres)
on the sixth floor; and
(ii) approximately 23,553
square feet (2,188.15 square
metres) on the seventh (7th)
floor,
subject to certification pursuant
to Section 2(v) and subject to
clause 1 of Schedule "E".
(e) Rentable Area of the Premises:
Approximately 26,795 square feet
(2,489.34 square metres), subject
to certification pursuant to
Section 2(o) and subject to clause
1 of Schedule "E".
(f) Term:
Ten (10) years plus the number of
days (if any) from and including
the Commencement Date to and
including the last day of the
calendar month in which the
Commencement Date occurs,
commencing on the Commencement
Date and ending on the day
immediately preceding the tenth
(10th) anniversary of the
Commencement Date (if the
Commencement Date is the first day
of a calendar month) or on the
tenth (10th) anniversary of the
last day of the calendar month in
which the Commencement Date occurs
(if the Commencement Date is other
than the first day of a calendar
month).
(g) Basic Rent (Section 5):
- ---------------------------------------------- ------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lease Years Basic Rent rate per square Per annum (subject to clause Per month (suibject to
foot of the Rentable Area 1 of Schedule "E" and clause 1 of Schedule "E" and
of the Premsies subject to adjustment subject to adjustment
pursuant to Section 5) pursuant to Section 5)
- -------------------------------------- ----------------------------- ------------------------------ ------------------------------
- -------------------------------------- ----------------------------- ------------------------------ ------------------------------
First five (5) Lease Years plus the
period (if any) from and inlcuding
the Commencement Date to and
including the last day of the
calendar month in which the
Commencement Date occurs
$8.50 $227,757.50 $18,979.79
- -------------------------------------- ----------------------------- ------------------------------ ------------------------------
- -------------------------------------- ----------------------------- ------------------------------ ------------------------------
Last five (5) Lease Years $11.50 $308,142.50 $25,678.54
- -------------------------------------- ----------------------------- ------------------------------ ------------------------------
</TABLE>
(h) Permitted Use (Section 10(g)):
an office for the Tenant's
business, including a computer centre
(i) Special Provisions:
Schedule "E"
.c.SECTION 2 Definitions;
Definitions
2. For the purposes of this Lease:
.c2.(a) Additional Rent;
(a) "Additional Rent" means all amounts
payable by the Tenant under the terms of
this Lease, whether payable to the
Landlord or otherwise, over and above
Basic Rent, and the Landlord shall have
the same rights and remedies for recovery
thereof as it has in respect of Basic Rent
reserved hereunder.
.c2.(b) Basic Rent;
(b) "Basic Rent" means the rent payable pursuant to
Section 5.
.c2.(c) Building;
(c) "Building" means the Wellington Street
Lands and the multi-storey office building
so indicated on page 1 of Schedule "B"
annexed hereto constructe thereon, and all
other structures, improvements, facilities
and appurtenances that have been or will
be constructed on the Wellington Street
Lands, and any additions, reductions,
deletions, alterations, substitutions and
improvements made thereon or thereto from
time to time, but excluding the Retail
Concourse.
.c2.(d) Capital Tax;
(d) "Capital Tax" is an amount determined by
multiplying each of the "Applicable Rates"
by the "Project Capital" and totalling the
products. "Project Capital" is the amount
of capital which the Landlord determines,
without duplication, is invested from time
to time by the Landlord, any owner of a
freehold or leasehold title or titles of
the Project, or a part of it, from time to
time (each, an "Owner", and collectively
the "Owners"; provided that a tenant of
leaseable premises comprising part of a
building in the Project is not an Owner)
or all of them, in doing all or any of:
acquiring, developing, expanding,
redeveloping and improving the Project.
Project Capital will not be increased by
any financing or refinancing except to the
extent that the proceeds are invested
directly as Project Capital. An
"Applicable Rate" is the capital tax rate
specified from time to time under any
statute of Canada and any statute of the
Province of Ontario which imposes a tax in
respect of the capital of corporations.
Each Applicable Rate will be considered to
be the rate that would apply if none of
the Landlord or the Owners employed
capital outside of the Province of
Ontario. Where part of the capital of the
Landlord or the Owners (or corporations
that are considered to be related to or
associated with any of them) is not
taxable under any such statute, such
non-taxable capital will be apportioned by
the Landlord and the Owners among each of
their respective assets and the assets of
the related or associated corporations for
the purpose of determining Project Capital.
.c2.(d.1) Commencement Date;
(d.1) "Commencement Date" means the date which
is the later of:
(i)
March 1, 1997; and
(ii)
the sixtieth (60th) day next following the
date on which the Landlord provides
non-exclusive possession of the Premises to
the Tenant pursuant to and in accordance
with clause 2 of Schedule "E".
.c2.(e) Landlord's Architect;
(e) "Landlord's Architect" means a qualified
architect, engineer or Ontario Land
Surveyor from time to time chosen by the
Landlord.
.c2.(f) Lands;
(f) "Lands" means those lands and premises
described in the legal description annexed
hereto as Schedule "C" which Lands include
the Wellington Street Lands, and the lands
on which the office building known
municipally as 225 King Street West,
Toronto has been built.
.c2.(g) Lease;
(g) "Lease" means this Lease and any
amendments and alterations from time to
time made to this Lease in accordance with
the provisions herein set out.
.c2.(h) Lease Year;
(h) "Lease Year" means a period of twelve (12)
consecutive full calendar months; the
first Lease Year shall commence on the
first day of the Term if such day is the
first day of a calendar month, but, if
not, on the first day of the calendar
month next following the date of
commencement of the Term; and each
successive Lease Year shall commence on
the anniversary date of the commencement
date of the first Lease Year.
.c2.(i) Leasehold Improvements;
(i) "Leasehold Improvements" means all
fixtures, improvements, installations,
alterations and additions from time to
time made, erected or installed by or on
behalf or for the benefit of the Landlord,
the Tenant or any previous tenant or
occupant in the Premises, including all
partitions however affixed (including
moveable and demountable partitions),
millwork and affixed wall units, internal
stairways, doors, hardware, light
fixtures, carpeting and other applied
floor finishes, and heating, ventilating
and air-conditioning equipment and other
building services not forming part of the
Landlord's base building equipment and
services, but excluding trade fixtures,
drapes, and furniture and equipment
(including, without limitation, portable
work stations and cubicles) not of the
nature of fixtures.
.c2.(j) Normal Business Hours;
(j) "Normal Business Hours" means 8:30 a.m. to
6:00 p.m. Monday through Friday (but
excluding Saturdays, Sundays, public or
statutory holidays and Boxing Day), as
such hours may be varied by the Landlord
from time to time.
.c2.(k) Operating Costs;
(k) "Operating Costs;" means the aggregate of
all costs, expenses or amounts incurred,
whether by the Landlord or others on
behalf of the Landlord, in connection with
the complete maintenance, operation,
management and repair of the Building and
all components thereof and all
improvements of the Landlord thereon or
therein including, without limiting the
foregoing and without duplication: the
costs of all repairs and replacements
required for such operation and
maintenance; all costs in respect of any
heating, ventilating and air-conditioning
or other equipment and fuel, energy and
other costs of providing heat, ventilating
and air-conditioning; all expenditures
including capital expenditures made by the
Landlord in an effort to promote energy
conservation including those set out in
Section 10(x) of this Lease; the cost of
operating and maintaining elevators,
escalators, and moving sidewalks (if any);
the cost of providing hot and cold water;
depreciation (in accordance with generally
accepted accounting principles from time
to time) of all capital and maintenance
equipment which by its nature requires
periodic replacement including all
heating, ventilating and air-conditioning
equipment; the cost of electricity
including lighting not otherwise charged
to tenants; the cost of snow, ice and
refuse clearance and removal; landscape
maintenance and window cleaning; the cost
of all insurance with respect to the
Building; the cost of replacement of
electric bulbs, tubes, starters and
ballasts not otherwise charged to tenants;
accounting costs incurred in connection
with preparation of statements and
opinions for tenants and the reasonable
cost of collecting payments of all amounts
payable by tenants; the cost of providing
security services and equipment; the cost
of all rental equipment and building
supplies used by the Landlord for all such
operations and maintenance or any other
purpose; the cost (including the fair
market office rental therefor) of
providing and operating the management
office for the Building; amounts paid on
serice contracts; the amount of all
salaries, wages, fees, and benefits paid
to or on behalf of persons engaged in
cleaning, supervision, maintenance,
operation, management, and repair; Capital
Tax; any business taxes which may be
imposed on the Landlord by reason of its
operation of the Building or parts
thereof; and management fees or charges of
managing agents or Landlord's reasonable
charges in lieu thereof if the Landlord
undertakes management of the Project.
In calculating Operating Costs, if less
than one hundred percent (100%) of the
Building is occupied by tenants (including
the Tenant), then the amount of such
Operating Costs shall be adjusted to be an
amount equal to the amount of Operating
Costs which would have been incurred had
one hundred percent (100%) of the Building
been occupied by tenants throughout the
entire period for which Operating Costs
are being calculated.
With respect to any Operating Costs not
charged separately from similar costs on
other parts of the Project, the Landlord
shall have the right from time to time to
reasonably allocate and re-allocate such
costs among the Building and any and all
other phases or portions of the Project
built or to be built from time to time and
among the various phases and any portion
or portions of the Project remaining
vacant or not built upon, and the amount
so allocated to the Building shall be
included in Operating Costs. Operating
Costs shall also include an equitable
allocation of all costs, expenses and
amounts of the nature described in this
Section 2(k) incurred, whether by the
Landlord or others on behalf of the
Landlord, in connection with the complete
maintenance, operation, management and
repair of common areas and facilities in
or about the Project provided for the use
or benefit of tenants in the Building in
common with occupants of other parts of
the Project, including, without limiting
the generality of the foregoing, the
underground parking areas comprising part
of the Property.
Operating Costs shall not include:
(i) the Landlord's income tax;
(ii) interest on Landlord's debt or
capital retirement of debt;
(iii) except as otherwise expressly
provided herein, amounts directly
chargeable to capital account;
(iv) the cost of any item which would
otherwise be included in Operating
Costs to the extent of recovery in
respect thereof by the Landlord
under a warranty or guarantee
relating to the construction of
the Building;
(v) the cost of repairing or replacing
any item which would otherwise be
included in Operating Costs to the
extent of recovery in respect
thereof by the Landlord under
insurance carried by the Landlord;
(vi) any costs of enforcing the
observance and performance of
covenants and obligations of other
tenants of the Building in the
event of default under their
respective leases;
(vii) structural repair or replacement
resulting from inferior or
deficient workmanship materials or
equipment in the initial
construction of the Building for
which the Landlord is reimbursed
by its insurers;
(viii) fines, late payment charges or
penalties incurred by reason of
non-compliance on the part of the
Landlord with applicable laws,
by-laws and regulations arising by
reason of the negligent or wilful
act or omission of the Landlord or
any person for whom it is in law
responsible.
.c2.(l) Premises;
(l) "Premises" means that portion of the
Building identified in Section 1(c) and
approximately as shown outlined in red on
the floor plan annexed hereto as Schedule
"A".
.c2.(m) Project;
(m) "Project" means the Lands and any
buildings, structures or improvements
thereon from time to time (including the
Building and the Retail Concourse),
together with any additional lands and any
buildings, structures or improvements
thereon from time to time used as part of
or in connection with the Project but not
owned by the Landlord (including
passageways, tunnels, concourses or other
facilities serving the Project that may
extend or be located beyond the boundaries
of the Lands and including, without
limitation, pedestrian concourses linking
the Project with the St. Andrew subway
station of the Toronto Transit Commission
or other neighbouring developments), and
all outside areas and landscaped areas
(save and except the public park so
indicated on Schedule "B" annexed hereto
and located or to be located on lands
leased by the Landlord to The Municipality
of Metropolitan Toronto pursuant to a
lease made as of the 30th day of October,
1989, registered in the Land Registry
Office for the Registry Division of
Toronto (No. 63) as Instrument Number CA
57678), roadways and driveways, tunnels
and ramps, and outside and covered parking
areas, all as existing or to be
constructed from time to time in, under or
upon the Lands or such other lands, and
any additions, reductions, deletions,
alterations, substitutions and
improvements made thereon or thereto from
time to time.
.c2.(n) Proportionate Share;
(n) "Proportionate Share" means that fraction
having as its numerator the Rentable Area
of the Premises, and having as its
denominator the Rentable Area of the
Building. Provided that if any tenant
performs or provides at its own cost any
service or aspect of those items the cost
of which would normally constitute part of
Operating Costs, or if for any other
reason the Landlord does not render to any
tenant a service or perform for any tenant
an aspect the cost of which would normally
constitute part of Operating Costs, then
the Landlord, acting reasonably, may
adjust the Proportionate Share for the
purpose of determining the Tenant's
Proportionate Share of Operating Costs for
those services or aspects as may be
necessary to provide an equitable
distribution of Operating Costs among the
tenants who are provided with such
services or aspects.
.c2.(o) Rentable Area;
(o) "Rentable Area" with reference to the
Premises means the area of the Premises,
expressed in square feet or square meters
in a certificate prepared by the
Landlord's Architect, measured in
accordance with applicable B.O.M.A.
standards, as amended from time to time,
which certificate shall be conclusive and
binding, subject as herein provided, and
shall be delivered to the Tenant on or
after the commencement of the Term, at
which time any adjustment to the area that
is required thereby shall be made. The
approximate Rentable Area of the Premises
is set forth in Section 1(e).
The Rentable Area of all premises in the Building
shall be measured and determined as
follows:
(1) In the case of premises occupying
the whole of one or more floors,
the Rentable Area of such premises
shall be the Useable Area of such
premises, as determined in
accordance with subparagraph 2(v).
(2) In the case of premises occupying part of
a floor, the Rentable Area of such
premises shall be the Useable Area
of such premises, as determined in
accordance with subparagraph 2(v),
plus a portion of the area of
public and/or service areas which
without limitation shall include
corridors, elevator lobbies,
washrooms, air conditioning
equipment rooms, fan rooms,
janitors' closets and electrical
closets within and exclusively or
primarily serving only that
floor. The portion of the area of
said public and/or service areas
so added shall be that portion,
from time to time, which the
Useable Area of such premises
bears to the Useable Areas of all
premises leased or set aside from
time to time for leasing by the
Landlord on that floor (including
such premises). No deductions
shall be made for columns and
projections necessary to the
Building.
.c2.(p) Rentable Area of the Building;
(p) "Rentable Area of the Building;" means the total of
the Rentable Areas of all premises leased
or set aside from time to time by the
Landlord for leasing in the Building
(including the Premises), and shall
include the areas of all corridors,
lobbies and other areas from time to time
set aside by the Landlord for common use
on all floors of the Building (excluding
the parking and below grade or penthouse
level storage areas of the Building and
those common areas at the ground level of
the said building from time to time set
aside by the Landlord for common use by
all tenants of the said building including
building entrance lobbies, ramps and
corridor areas), such areas being as
certified from time to time by the
Landlord's Architect.
.c2.(q) Restoration Work;
(q) "Restoration Work" means the following
items of work in the Premises:
(i) removal of all partitions within
the Premises relating to the
computer room and operations room
constructed or to be constructed
by or on behalf of the Tenant
therein, except for demising walls
of the Premises, and removal of
all structural alterations
(including, without limitation,
internal staircases) made in or to
the Premises by or on behalf of
the Tenant; and
(ii) all restoration and repair work
required in connection with and to
the extent applicable to the work
described in paragraph (i) of this
Section 1(q) and areas in the
Premises affected thereby,
including:
(A) patching, to a state of
readiness for paint, of all
existing drywall surfaces and wall
scars where partitions are removed
and the application of one (1)
coat of white drywall primer to
all drywall surfaces;
(B) removal of all applied
floor finishes (thereby returning
floor to smooth trowelled concrete
condition);
(C) removal of all telephone
and computer cables and electrical
wiring back to the source (that
is, electrical/telephone closets
and/or rooms); removal of
telephone jacks from columns and
demising walls and patching as
required; and the restoration of
all existing building light
fixtures to clean working order
with lenses in place;
(D) removal of all plumbing
installations (including, without
limitation, sinks, private
washrooms and showers) back to
source and properly capping as
required;
(E) restoring ceiling to
building standard suspended
acoustical ceiling, which includes
patching or replacing damaged
T-bar grid, replacement of damaged
ceiling tiles and the removal of
existing drywall ceilings or
special ceilings; and
(F) ensuring that the drywall
baffle above the existing demising
walls is complete and that
adequate return air openings are
maintained.
.c2.(r) Retail Concourse;
(r) "Retail Concourse" means the retail commercial
buildings, structures, improvements and
facilities constructed or to be
constructed on the Lands as so indicated
on page 2 of Schedule "B" annexed hereto
and any additions, reductions, deletions,
alterations, substitutions and
improvements made thereon or thereto from
time to time.
.c2.(s) Rules and Regulations;
(s) "Rules and Regulations;" means those Rules and
Regulations set out in Schedule "D" to
this Lease, and any additional Rules and
Regulations made from time to time in
accordance with section 10(f) of this
Lease.
.c2.(t) Taxes;
(t) "Taxes;" means all taxes, rates, duties,
levies and assessments whatsoever whether
municipal, parliamentary or otherwise,
levied, charged or assessed upon the
Building, or upon any part or parts
thereof and all improvements now or
hereafter erected or placed on the
Wellington Street Lands, or charged
against the Landlord on account thereof,
including local improvement charges and
any present or future commercial
concentration tax or other rate, duty,
levy or assessment charged or assessed
based upon the floor area or size of the
Building or the Project or any part or
parts thereof, but excluding any taxes
such as corporate, income, profit and
excess profit taxes assessed upon the
income of the Landlord. In addition to
the foregoing, Taxes shall include any and
all taxes, charges, levies, or assessments
which may in the future be levied, charged
or assessed in lieu thereof or in addition
thereto. Taxes shall also include all
costs and expenses incurred by the
Landlord in obtaining or attempting to
obtain a reduction or prevent an increase
in the amount of such Taxes. In
calculating Taxes, if less than one
hundred percent (100%) of the Building is
occupied by tenants (including the
Tenant), then the amount of such Taxes
shall be adjusted to be an amount equal to
the amount of Taxes which would have been
incurred had one hundred percent (100%) of
the Building been occupied by tenants
throughout the entire period for which
Taxes are being calculated, it being
intended hereby that the Landlord shall
obtain full reimbursement of Taxes
attributable to or in respect of occupied
premises, and not that the Landlord shall
recover more than actual Taxes. In
calculating Taxes, if any portion of the
Building is assessed or taxed other than
at the prevailing commercial assessment
rates and mill rates due to the occupancy
of any tenants or the nature of any
tenant's operation, then the amount of
such Taxes shall be adjusted to be an
amount equal to the amount of Taxes which
would have been incurred had such portion
of the Building been assessed and taxed at
the prevailing commercial assessment rates
and mill rates throughout the entire
period for which Taxes are being
calculated. With respect to any such
Taxes and any similar taxes on other parts
of the Project, the Landlord, acting
reasonably, shall have the right from time
to time to allocate and re-allocate such
Taxes on a fair and equitable basis among
the Building and any and all other phases
or portions of the Project built or to be
built from time to time, and among the
various phases and any portion or portions
of the Project remaining vacant or not
built upon, and the amount so allocated to
the Building shall constitute Taxes.
Taxes shall also include an allocation on
a fair and equitable basis by the
Landlord, acting reasonably, of all taxes,
rates, duties, levies and assessments of
the nature included in the foregoing
definition of Taxes which are levied,
charged or assessed upon common areas and
facilities in or about the Project
provided for the use or benefit of tenants
in the Building in common with occupants
of other parts of the Project including,
without limiting the generality of the
foregoing, the underground parking areas
comprising part of the Project.
.c2.(u) Term;
(u) "Term;" means that Term set out in Section 4 of
this Lease or as such Term may be altered,
extended or reduced in accordance with the
provisions of this Lease.
.c2.(v) Useable Area;
(v) "Useable Area" with reference to the Premises means
the area of the Premises, expressed in
square feet or square meters in a
certificate prepared by the Landlord's
Architect, measured in accordance with
applicable B.O.M.A. standards, as amended
from time to time, which certificate shall
be conclusive and binding, subject as
herein provided, and shall be delivered to
the Tenant on or after the commencement of
the Term, at which time any adjustment to
the area that is required thereby shall be
made. The approximate Useable Area of the
Premises is set forth in Section 1(d).
The Useable Area of all premises in the
Building shall be measured and determined
as follows:
(1) In the case of premises occupying the
whole of one or more floors, the
Useable Area of such premises
shall be determined by measuring
to and from the inside faces of
the office glass lines of the
outer building walls, but shall
not include stairs, elevator
shafts (except as hereinafter
provided), stacks, pipe shafts and
vertical ducts with their
enclosing walls. Washrooms,
air-conditioning rooms, fan rooms,
janitors' closets, electrical
closets, elevator shafts and
stairs within and exclusively or
primarily serving only that floor
or floors shall be included in the
Useable Area of such premises. No
deductions shall be made for
columns and projections necessary
to the Building.
(2) In the case of premises occupying
part of a floor, the Useable Area
of such premises shall be
determined by measuring from and
to whichever of the following form
the boundaries of such premises:
the inside face of the office
glass line of the outer building
walls; the centre of partitions
which separate such premises from
adjoining premises or public
and/or service areas; and the
office side of corridor walls or
other permanent partitions. No
deductions shall be made for
columns and projections necessary
to the Building.
.c2.(w) Wellington Street Lands;
(w) "Wellington Street Lands" means the lands described
in Part A of Schedule "C" annexed hereto.
.c2.(x) Year;
(w) "Year;" means each calendar year, the whole or part
of which is included within the Term.
.c.SECTION 3 Premises
3. The Landlord hereby leases to the Tenant
the Premises.
.c.SECTION 4 Term
4. To have and to hold the Premises for and
during the Term specified in Section 1(f) commencing and
ending on the dates set forth therein.
.c.SECTION 5 Basic Rent
5. Yielding and paying therefor during each
Lease Year of the Term unto the Landlord for the Premises
without any set-offs, deductions or defalcations whatsoever,
Basic Rent in the amount per square foot of the Rentable
Area of the Premises set forth in Section 1(g) for such
Lease Year, to be paid in advance in equal consecutive
monthly instalments in the amount set forth in Section 1(g)
for such Lease Year on the first day of each and every month
during such Lease Year, subject to adjustment as hereinafter
provided.
If the Term commences on any day other
than the first or ends on any day other than the last day of
a month, Basic Rent and Additional Rent for the fractions of
a month at the commencement and at the end of the Term shall
be adjusted pro rata on a per diem basis. If the
Commencement Date is other than the first day of a calendar
month, the Tenant shall pay to the Landlord Basic Rent for
the period from and including the Commencement Date to and
including the last day of such month at the rate per square
foot of the Rentable Area of the Premises set forth in
Section 1(g).
The annual Basic Rent for each Lease Year
set forth in Section 1(g) shall be adjusted, if necessary,
based upon the Landlord's Architect's certificate of the
Rentable Area of the Premises referred to in Section 2(o) by
multiplying the Rentable Area of the Premises so certified
expressed in square feet by the rental rate for such Lease
Year set forth in Section 1(g), and the monthly instalments
of Basic Rent shall be adjusted accordingly.
Basic Rent and Additional Rent shall be
paid to the Landlord at the address of the Landlord set
forth in Section 1(a)(ii), or at such other place or places
as the Landlord shall designate from time to time in writing.
.c.SECTION 6 Taxes
6. (a) The Tenant covenants to pay the Tenant's
Proportionate Share of Taxes for the Year,
during each Year of the Term, to the
Landlord as Additional Rent within fifteen
(15) days following receipt by the Tenant
of written notice of the amount of such
Tenant's Proportionate Share of Taxes for
such Year, notwithstanding that the Year
in question or the Term may have ended.
If after initial determination by the
Landlord of the Tenant's Proportionate
Share of Taxes for a Year there is a
further increase in Taxes with respect to
such Year by reason of the issue of
supplemental assessment notices or taxes
or both, or a variation in the basis upon
which the Taxes are calculated, or for any
other reason, the Landlord shall, as often
as necessary, recalculate the Tenant's
Proportionate Share of Taxes for that
Year, and if that amount is greater than
originally calculated, the Tenant
covenants to pay any excess amount to the
Landlord (together with the original
calculated amount of the Tenant's
Proportionate Share of Taxes for that Year
if not already paid) as Additional Rent in
the manner aforesaid. The Landlord shall
reimburse the Tenant for the Tenant's
Proportionate Share of any reduction or
decrease during the Term in Taxes to the
extent to which the Tenant shall have
previously paid its Proportionate Share of
such Taxes under this Section 6.
(b) The Landlord shall be entitled, at any time or
times in any Year, upon at least fifteen
(15) days' notice to the Tenant, to
require the Tenant to pay to the Landlord
monthly, on the date of payment of monthly
rental instalments, as Additional Rent, an
amount equal to one-twelfth (1/12) of the
amount estimated by the Landlord to be the
Taxes payable by the Tenant for such
Year. The Landlord shall be entitled
subsequently during such Year, upon at
least fifteen (15) days' notice to the
Tenant, to revise its estimate of the
amount of the Taxes payable by the Tenant
and the said monthly instalments shall be
revised accordingly. All amounts received
under this provision in any Year, on
account of the estimated amount of the
Taxes payable by the Tenant, shall be
applied in reduction of the actual amount
of the Taxes payable by the Tenant for
such Year. If the amount received is less
than the actual Taxes payable by the
Tenant for such Year, the Tenant shall pay
such deficiency to the Landlord as
Additional Rent, within fifteen (15) days
following receipt by the Tenant of notice
of the amount of such deficiency. If the
amount received is greater than the actual
Taxes payable by the Tenant for such Year,
the Landlord shall either refund the
excess to the Tenant as soon as possible
after the end of the Year in respect of
which such payments were made, or at the
Landlord's option shall apply such excess
against any amounts owing or becoming due
to the Landlord by the Tenant.
Notwithstanding the foregoing, the
Landlord shall always have the right to
revise the amount of tax instalment
payments to an amount that allows the
Landlord to collect all Taxes by the final
due date of Taxes for the year.
(c) If the Term commences or ends on any day
other than the first or last day,
respectively, of a Year, the Tenant shall
be liable only for the portion of the
Taxes payable by the Tenant for such Year
as falls within the Term, determined on a
per diem basis.
(d) If the Taxes payable by the Tenant shall
be increased by reason of any
installations made in or upon or any
alterations made in or to the Premises by
the Tenant, or by the Landlord on behalf
of the Tenant, the Tenant shall pay the
amount of such increase forthwith to the
Landlord upon receipt of notice thereof.
The Tenant shall also pay every tax and
licence fee in respect of any business
conducted upon the Premises. All payments
referred to herein shall be paid and
discharged by the Tenant as soon as they
become due and payable, and the Tenant
shall, upon the written request of the
Landlord, promptly deliver to the
Landlord, receipts evidencing such
payments, where applicable.
(e) At its sole expense, the Tenant shall have
the right to appeal any separate
assessment for Taxes issued in respect of
the Premises, after having first obtained
the Landlord's written approval. By
initiating such action, the Tenant shall
not detrimentally affect the position of
the Landlord, nor permit any lien or other
encumbrances to be filed or assessed
against the Building and if required, the
Tenant shall provide the Landlord with an
indemnity for any costs, expenses,
liabilities or damages, including, without
limitation, any increases in Taxes, which
are, or may be, incurred or suffered by
the Landlord directly or indirectly as a
result of such appeal. The Tenant shall
also serve the Landlord with a copy of the
notice of appeal, pertaining to any such
appeal which is so commenced by the Tenant.
.c.SECTION 7 Operating Costs
7. (a) The Tenant covenants to pay the Tenant's
Proportionate Share of Operating Costs for
the Year, during each Year of the Term, to
the Landlord as Additional Rent within
thirty (30) days following receipt by the
Tenant of written notice of the amount of
such Tenant's Proportionate share of
Operating Costs for such Year,
notwithstanding that the Year in question
or the Term may have ended. Any amounts
payable pursuant to this subsection (a)
shall be determined and certified by the
Landlord following the end of the Year for
which such amounts are payable. If only
part of a Year is included within the
Term, any such amount payable shall be
pro-rated accordingly and, during the last
year of the Term, shall be paid on the
last day of the Term. Any balance
remaining unpaid or any excess paid shall,
notwithstanding such termination, be
adjusted between the Landlord and Tenant
within a reasonable period thereafter.
(b) The Landlord shall be entitled at any time in any
Year, upon at least thirty (30) days'
notice to the Tenant, to require the
Tenant to pay to the Landlord monthly, on
the date for payment of monthly rental
instalments, as Additional Rent, an amount
equal to one-twelfth (1/12th) of the
amount estimated by the Landlord to be the
amount of the Tenant's Proportionate Share
of Operating Costs for such Year. The
Landlord shall be entitled subsequently
during such Year upon at least thirty (30)
days' notice to the Tenant, to reasonably
revise its estimate of the amount of the
Tenant's Proportionate Share of Operating
Costs and the said monthly instalments
shall be revised accordingly. All amounts
received under this provision in any Year
on account of the estimated amount of the
Tenant's Proportionate Share of Operating
Costs shall be applied in reduction of the
actual amount of the Tenant's
Proportionate Share of Operating Costs for
such Year. If the amount received is less
than the actual Tenant's Proportionate
Share of Operating Costs for such Year,
the Tenant shall pay any deficiency to the
Landlord as Additional Rent within thirty
(30) days following receipt by the Tenant
of notice of the amount of such
deficiency. If the amount received is
greater than the actual Tenant's
Proportionate Share of Operating Costs,
the Landlord shall either refund the
excess to the Tenant as soon as possible
after the end of the Year in respect of
which such payments were made or at the
Landlord's option shall apply such excess
against any amounts owing or becoming due
to the Landlord by the Tenant.
.c.SECTION 8 Recovery of Adjustments
8. The Landlord (in addition to any other
rights or remedies of the Landlord) shall have the same
rights and remedies in the event of the default by the
Tenant in payment of any amount payable by the Tenant
hereunder (including, without limitation, any amounts
payable pursuant to Sections 6 and 7) as the Landlord would
have in the case of default in payment of rent.
.c.SECTION 9 Net Lease
9. The Tenant acknowledges that it is
intended and agreed that this Lease is a completely carefree
net lease for the Landlord and that the Landlord is not
responsible during the Term or any renewal thereof for any
costs, charges, expenses or outlays of any nature relating
to the Project or the Premises, or the contents thereof, or
otherwise, except as specifically set forth in this Lease,
and that the Tenant will pay all charges, taxes,
impositions, costs and expenses of every kind relative to
the Premises, and the Tenant covenants with the Landlord
accordingly.
Notwithstanding any other provisions of
this Lease to the contrary, the Tenant shall pay to the
Landlord an amount equal to any and all goods and services
taxes, sales taxes, value added taxes, or any other similar
taxes imposed on the Tenant or the Landlord, by any level of
government, with respect to Basic Rent, Additional Rent or
any other amounts payable by the Tenant to the Landlord
under this Lease, whether characterized as a goods and
services tax, sales tax, value added tax or otherwise
(except income taxes payable by the Landlord under the
Income Tax Act (Canada)) (herein called "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 payable or collectable by the Landlord. The
amount of such Sales Taxes so payable by the Tenant shall be
calculated in accordance with the applicable legislation and
shall be paid to the Landlord at the same time as the
amounts to which such Sales Taxes apply are payable to the
Landlord under the terms of this Lease or earlier if
required by the applicable legislation. Notwithstanding any
other provision in this Lease to the contrary, the Sales
Taxes payable by the Tenant under this paragraph shall be
deemed not to be Basic Rent or Additional Rent, but the
Landlord shall have all of the same remedies for and rights
of recovery of such amounts as it has for recovery of rent
under this Lease.
.c.SECTION 10 Tenant's Covenants
10. The Tenant covenants with the Landlord:
.c2.(a) Pay Rent
(a) to pay Basic Rent, the Tenant's Proportionate Share
of Taxes and the Tenant's Proportionate
Share of Operating Costs and all other
amounts payable by the Tenant to the
Landlord under this Lease as Additional
Rent. In the event of any dispute between
the Landlord and the Tenant as to any
Additional Rent payable, the opinion of
the Landlord's independent auditor as to
the Additional Rent payable shall be final
and binding on the Landlord and the
Tenant. If the Landlord's auditor's
opinion is that the Additional Rent in
dispute has been overstated by more than
three percent (3%), then the Landlord
shall pay the cost of the auditor's
opinion. If the Landlord's auditor's
opinion is that the Additional Rent in
dispute has not been overstated, or has
been overstated by three percent (3%) or
less, then the Tenant shall pay the cost
of the auditor's opinion;
.c2.(b) Utility Charges
(b) to pay all charges for telephone, electric current
and all other utilities supplied to or
used in connection with the Premises, and
the total cost of any replacement of
electric bulbs, tubes, starters and
ballasts in the Premises. If there are no
separate meters for measuring the
consumption of such utilities, the Tenant
shall pay to the Landlord, in advance by
monthly instalments as Additional Rent,
such amount as may be reasonably estimated
by the Landlord from time to time as the
cost of such utilities for the Premises.
In the event of any dispute between the
Landlord and the Tenant as to the amount
of such utility costs, the opinion of the
Landlord's Architect shall be final and
binding on the Landlord and the Tenant.
The Tenant shall advise the Landlord
forthwith of any installations, appliances
or business machines used by the Tenant
and consuming or likely to consume large
amounts of electricity or other utilities
and further on request shall promptly
provide the Landlord with a list of all
installations, appliances and business
machines used in the Premises, and the
Landlord shall have the right to install a
separate meter at the Tenant's expense to
measure the consumption of such utilities;
.c2.(c) Maintain & Repair
(c) to repair, maintain and keep the Premises in good
and substantial repair as a prudent tenant
would do, reasonable wear and tear and
damage by fire and any other peril against
which the Landlord is or is required
hereunder to be insured, only excepted,
and that the Landlord may enter and view
state of repair; and that the Tenant will
repair in accordance with notice in
writing, reasonable wear and tear and
damage by fire and any other peril against
which the Landlord is or is required
hereunder to be insured, only excepted;
and that the Tenant will leave the
Premises in good repair, reasonable wear
and tear and damage by fire and any other
peril against which the Landlord is or is
required hereunder to be insured, only
excepted; provided that if the Tenant
neglects to so maintain or to make such
repairs promptly after notice, the
Landlord may, at its option, do such
maintenance or make such repairs at the
expense of the Tenant, and in any and
every such case the Tenant covenants with
the Landlord to pay to the Landlord
forthwith as Additional Rent all sums
which the Landlord may have expended in
doing such maintenance and making such
repairs; provided further that the doing
of such maintenance or the making of any
repairs by the Landlord shall not relieve
the Tenant from the obligation to maintain
and repair;
.c2.(d) Repair Where Tenant at Fault
(d) if the Building or the Project, including the
Premises, the elevators, boilers, engines,
pipes and other apparatus (or any of them)
used for the purposes of heating,
ventilating or air-conditioning the
Building or the Project or operating the
elevators, or if the water pipes, drainage
pipes, electric lighting or other
equipment of the Building or the Project,
or the landscaping, trees, shrubs and
flowers, or the roof or outside walls of
the Building or the Project get out of
repair or become damaged or destroyed
through the wilful act, negligence,
carelessness or misuse of the Tenant or
any person for whom the Tenant is in law
responsible or through it or them in any
way stopping up or injuring the heating,
ventilating or air- conditioning
apparatus, elevators, water pipes,
drainage pipes, or other equipment or part
of the Building or the Project, the
expense of the necessary repairs,
replacements or alterations shall be borne
by the Tenant who shall pay the same to
the Landlord forthwith upon demand;
.c2.(e) Assigning or Subletting
(e) not to assign this Lease or sublet or franchise,
license, grant concessions in, or
otherwise part with or share possession of
the Premises, or any part thereof, without
the prior written consent of the
Landlord; at the time the Tenant requests
such consent the Tenant shall deliver to
the Landlord such information in writing
(the "required information") as the
Landlord may reasonably require, including
a copy of the proposed offer or agreement,
if any, to assign or sublet or otherwise
and the name, address, nature of business
and evidence as to the financial strength
of the proposed assignee or subtenant;
upon receipt of such request and all
required information, the Landlord shall
have the right, exercisable within thirty
(30) days after such receipt, to terminate
this Lease if the request relates to all
of the Premises or, if the request relates
to a portion of the Premises only, the
Landlord shall have the right to terminate
this Lease with respect to such portion
and the rent payable by the Tenant under
this Lease shall abate in the proportion
that the area of the portion of the
Premises for which this Lease is
terminated bears to the area of the
Premises. If the Landlord exercises such
right, the Tenant shall notify the
Landlord in writing within five (5) days
thereafter of the Tenant's intention
either to refrain from effecting the
transaction in respect of which the Tenant
requested the Landlord's consent or to
accept such termination. If the Tenant
advises the Landlord that it intends to
refrain from effecting the transaction,
then the Landlord's exercise of its right
of termination will become null and void.
If the Tenant accepts the termination or
fails to deliver such notice within such
five (5) day period, the Tenant shall
surrender possession of the Premises or
such portion thereof, as the case may be,
not less than sixty (60) days and not more
than ninety (90) days following the
Landlord's notice of exercise of its right
hereunder in accordance with all the
provisions of this Lease relating to the
surrender of the Premises at the
expiration of the Term and all rent and
other charges shall be deemed to be
adjusted accordingly and the Lease shall
be deemed to be amended accordingly, as of
the date of actual surrender. If the
Landlord does not exercise such right,
then the Landlord's prior written consent
shall not, subject as hereinafter
provided, be unreasonably withheld.
Notwithstanding any statutory provision or
rule of law to the contrary, it shall not
be considered unreasonable for the
Landlord to withhold its consent if,
without limiting any other factors or
circumstances which the Landlord may
reasonably take into account:
(i) the Tenant is then in default
under this Lease;
(ii) the proposed assignment, sublease,
franchise, license, concession or
other parting with or sharing of
possession of the Premises (each,
a "Transfer") would be or could
result in the violation or breach
of any covenants or restrictions
made or granted by the Landlord to
other tenants or occupants, or
prospective tenants or occupants,
of the Building;
(iii) in the Landlord's reasonable
opinion, the financial background,
business history and capability of
the proposed assignee, subtenant,
franchisee, licensee,
concessionaire or other occupant
(each, a "Transferee") is not
satisfactory;
(iv) the proposed Transfer is to an
existing tenant of the Building or
a prospective tenant which has
otherwise been introduced to the
Landlord or the Building to the
extent the Landlord has premises
available of similar size; or
(v) the use of the Premises by the
proposed Transferee, in the
Landlord's opinion arrived at in
good faith, could result in
excessive use of the elevators or
other systems or services in the
Building, be inconsistent with the
image and standards of the
Building or expose the occupants
of the Building to risk of harm,
damage or interference with their
use and enjoyment thereof.
The Landlord's consent to any Transfer, or any assignment or
sublease to an affiliate of the Tenant permitted without the
Landlord's consent as provided in the paragraph next
following, shall be subject to the condition that the Tenant
shall pay forthwith, as received, to the Landlord any
consideration, including increased rent, received by or for
the account of the Tenant either directly or indirectly from
any Transferee whether in the form of cash, goods or
services. The amount of any leasing commissions or fees and
the cost of any inducements, whether by way of cash,
leasehold improvements, rent-free periods, lease takeovers
or other like concessions or inducements, paid or given by
the Tenant to secure such Transfer may be amortized by the
Tenant over the term of the Transfer on a straight-line
basis without interest and deducted from the amount of
minimum rent and additional rent payable by the Transferee
for the purposes of determining the Tenant's obligation to
pay any amount to the Landlord under this paragraph.
Notwithstanding the foregoing provisions of this Section
10(e):
(i) the Tenant shall have the right at
any time or times to assign this
Lease or sublet all or any part or
parts of the Premises to any
affiliate of Applied
Communications Canada, Inc. (the
term "affiliate" being defined in
this Lease as such term is defined
in the Business Corporations Act
(Ontario), as amended to the date
of this Lease), without consent of
the Landlord but upon prior
written notice to the Landlord,
and the Landlord shall not have
the right of termination set forth
in the first paragraph of this
Section 10(e) in respect of any
such assignment or subletting,
provided that:
(A) upon request by the
Landlord, the assignee or
subtenant shall enter into a
covenant with the Landlord in form
satisfactory to the Landlord to
observe and perform all of the
Tenant's covenants, liabilities
and obligations under this Lease;
(B) the provisions of the
immediately preceding paragraph
shall apply to any such assignment
or sublease; and
(C) upon any such assignee or
subtenant ceasing to be an
affiliate of Applied
Communications Canada, Inc., this
Lease shall be re-assigned to
Applied Communications Canada,
Inc. or the sublease shall be
terminated, as the case may be;
(ii) the amalgamation of the Tenant
with one or more corporations,
provided that the amalgamated
corporation is subject to and
bound by all of the Tenant's
covenants, liabilities and
obligations under this Lease,
shall not require the Landlord's
consent under this Section 10(e)
and the Landlord shall not have
the right of termination set forth
in the first paragraph of this
Section 10(e) in respect of any
such amalgamation; and
(iii) the Landlord shall not have the
right of termination set forth in
the first paragraph of this
Section 10(e) in respect of, but
all other terms and provisions of
this Section 10(e) shall apply to,
an assignment of this Lease made
by the Tenant to the purchaser of
all of the Tenant's property,
assets and undertaking.
In no event shall any Transfer to which
the Landlord has consented, or in respect
of which the Landlord's consent is not
provided hereunder, release the Tenant
from its obligations fully to perform all
the terms, conditions and covenants of
this Lease. The Tenant shall pay on
demand the Landlord's reasonable costs
incurred in connection with the Tenant's
request for such consent and any agreement
referred to in paragraph (i)(A) of this
Section 10(e). The Landlord's consent may
be conditional upon the Transferee
entering into a covenant with the Landlord
in form satisfactory to the Landlord,
acting reasonably, to observe and perform
all tenant's covenants in the Lease. If
the Tenant is a private corporation and
any part or all of the corporate shares
shall be transferred by sale, assignment,
bequest, inheritance, operation of law or
other disposition or dispositions so as to
result in a change in the control of the
corporation, such change of control shall
be considered an assignment of this Lease
and shall be subject to the aforesaid
provisions; the Tenant shall make
available to the Landlord upon its request
for inspection and copying, all books and
records of the Tenant, any Transferee and
their respective shareholders which, alone
or with other data, may show the
applicability or inapplicability of this
clause.
The Tenant shall not advertise or allow
the Premises or a portion thereof to be
advertised as being available for
assignment, sublease or otherwise without
the prior written approval of the Landlord
to the form and content of such
advertisement, which approval shall not be
unreasonably withheld or delayed, provided
that no such advertising shall contain any
reference to the rental or the rental rate
of the Premises;
.c2.(f) Rules and Regulations
(f) that the Tenant and its employees and all persons
visiting or doing business with them on
the Premises shall be bound by and shall
observe and perform the Rules and
Regulations and any further and other
reasonable Rules and Regulations made
hereafter by the Landlord of which notice
in writing shall be given to the Tenant
and all such Rules and Regulations shall
be deemed to be incorporated into and form
part of this Lease;
.c2.(g) Use of Premises
(g) not to use the Premises nor allow the Premises to
be used for any purpose other than an
office for the Tenant's business,
including a computer centre; and not to
carry on nor allow to be carried on in or
from the Premises any activity which would
in the Landlord's determination lower the
respectable character of the Building as a
first-class commercial building; and that
if the costs of insurance on the Building
or the Project shall be increased by
reason of the use made of the Premises or
by reason of anything done or omitted or
permitted by the Tenant or by anyone
permitted by the Tenant to be upon the
Premises, the Tenant shall pay to the
Landlord on demand as Additional Rent the
amount of such increase; and if any
insurance policy upon the Building or the
Project shall be cancelled by the insurer
or be under notice of possible
cancellation by the insurer by reason of
the use or occupation of the Premises or
any part thereof by the Tenant or any
assignee or subtenant of the Tenant or by
anyone permitted by the Tenant to be upon
the Premises, the Landlord may at its
option terminate this Lease forthwith by
leaving upon the Premises notice in
writing of its intention to do so and
thereupon rent and any other payments for
which the Tenant is liable under this
Lease shall be apportioned and paid in
full to the later of the date of such
termination or the date on which actual
possession is given up or taken, and the
Tenant shall immediately deliver up
possession of the Premises to the Landlord
who may re-enter and take possession of
same;
.c2.(h) Observance of Law
(h) in its use and occupation of the Premises, not to
violate any law or ordinance or any order,
rule, regulation or requirement of any
federal, provincial or municipal
government and any appropriate department,
commission, board or officer thereof, and
to comply promptly and at the Tenant's
sole cost with all of the foregoing;
.c2.(i) Waste and Nuisance
(i) not to do or suffer any waste, damage,
disfiguration or injury to the Premises or
the fixtures and equipment thereof or
permit or suffer any overloading of the
floors thereof; and not to use or permit
to be used any part of the Premises for
any dangerous, noxious or offensive trade
or business and not to cause or maintain
any nuisance in, at or on the Premises or
cause any annoyance, nuisance or
disturbance to the occupiers or owners of
any adjoining lands and/or premises;
.c2.(j) Entry by Landlord
(j) to permit the Landlord and its servants or agents
to enter upon the Premises at any time and
from time to time for the purpose of
inspecting and making repairs, alterations
or improvements to the Premises or to the
Building or the Project and the Tenant
shall not be entitled to any compensation
for any inconvenience, nuisance or
discomfort occasioned thereby;
.c2.(k) Indemnity
(k) to promptly indemnify and save harmless the
Landlord from any and all liabilities,
damages, costs, claims, suits or actions
arising out of: any breach, violation or
non-observance by the Tenant of any of its
covenants and obligations under this
Lease; any damage to property while said
property shall be in or about the Premises
including the systems, furnishings and
amenities thereof, as a result of the
wilful or negligent act or omission of the
Tenant, its invitees, licensees, agents,
servants or employees; and any injury to
any licensee, invitee, agent, servant or
employee of the Tenant, including death
resulting at any time therefrom, occurring
on or about the Premises or the Building
or the Project, save and except, in
respect only of any injury (including
death) not covered by insurance maintained
or required pursuant to Section 10(u) to
be maintained by the Tenant, to the extent
that any such injury (including death) is
caused, or to the extent contributed to,
by the negligent or wilful acts or
omissions of the Landlord or those for
whom it is in law responsible, and then
only to the extent that the Landlord is or
is required hereunder to be insured in
respect of such injury or death; and this
indemnity shall survive the expiry or
earlier termination of this Lease, in
respect of any of the foregoing
circumstances arising during the Term;
.c2.(l) Exhibiting Premises
(l) to permit the Landlord or its agents, upon
not less than twenty-four (24) hours'
prior notice (which notice,
notwithstanding Section 35, need not be in
writing and may be given orally to
management at the Premises) to exhibit the
Premises to prospective purchasers or
mortgagees of the Building and, during the
last twelve (12) months of the Term or any
renewal thereof, to prospective tenants,
provided that the Tenant's business is not
materially adversely affected thereby;
.c2.(m) Alterations
(m) that the Tenant will not, without the
prior written consent of the Landlord,
which consent shall not be unreasonably
withheld, make or erect in or to the
Premises any installations, alterations,
additions, partitions, repairs or
improvements, or do anything which might
affect the proper operation of the
electrical, lighting, heating,
ventilating, air- conditioning, sprinkler,
fire protection or other systems; the
Tenant's request for such consent shall be
in writing and accompanied by an adequate
description of the contemplated work and,
where appropriate, working drawings and
specifications therefor; on completion
the Tenant shall provide the Landlord with
a full set of "as-built" drawings; the
Landlord's costs of having its architects,
engineers or others examine such drawings
and specifications shall be payable by the
Tenant upon demand as Additional Rent;
the Landlord may require that any or all
work to be done hereunder be done by the
Landlord's contractors or workmen or by
contractors or workmen engaged by the
Tenant but first approved by the Landlord;
the Landlord has provided the Tenant with
the Landlord's design criteria for the
Building, including the Landlord's
approved contractors, and the Tenant shall
be permitted to use any of such approved
contractors; and all work shall be subject
to inspection by and the reasonable
supervision of the Landlord and shall be
performed in accordance with all laws and
any reasonable conditions (including a
reasonable supervision fee of the Landlord
to be paid by the Tenant) or regulations
imposed by the Landlord and completed in a
good and workmanlike manner and with
reasonable diligence in accordance with
the approvals given by the Landlord; any
connections of apparatus to the electrical
system, plumbing lines, or heating,
ventilating or air-conditioning systems
shall be deemed to be an alteration within
the meaning of this paragraph; the Tenant
shall, at its own cost and before
commencement of any work, obtain all
necessary building or other permits and
keep same in force and the Tenant shall
promptly pay all charges incurred by it
for any work, materials or services and
shall forthwith discharge any liens
resulting therefrom; if the Tenant fails
to so discharge any liens, the Landlord
may (but shall be under no obligation to)
pay into court the amount required, or
otherwise obtain a discharge of the lien
in the name of the Tenant and any amount
so paid together with all costs incurred
in respect of such discharge shall be
payable by the Tenant to the Landlord
forthwith upon demand plus interest on all
such amounts at the rate hereafter set out
in this Lease; the Tenant shall not
create any mortgage, conditional sale
agreement, or other encumbrance in respect
of its Leasehold Improvements or trade
fixtures nor shall the Tenant lease the
same from any third party, nor permit any
such encumbrance to attach to the Premises
or to the Building or the Project;
.c2.(n) Interior Walls
(n) that the Tenant will not deface or mark any part of
the Premises, the Building or the Project
and will not permit any hole to be drilled
or made or nails, screws, hooks or spikes
to be driven into perimeter or demising
walls, doors or floors or stone or brick
work of the Building or any appurtenances
thereof without the prior written consent
of the Landlord, which consent shall not
be unreasonably withheld. The Tenant may,
without the consent of the Landlord, hang
any wall coverings, artwork or decorations
on the interior walls of the Premises;
.c2.(o) Signs
(o) that the Tenant will not paint, place, affix,
inscribe or display on any of the windows
of the Premises or the Building or on any
part of the outside or inside thereof, any
sign, picture, direction, lettering,
advertisement or notice without the prior
written consent of the Landlord; and the
Landlord shall have the right to prescribe
the size, material, colour, method of
attachment, pattern and location of
identification signs for the Tenant; on
the Tenant ceasing to be a tenant of the
Premises, the Landlord will cause any sign
to be removed or obliterated at the
Tenant's expense; the Tenant shall be
entitled to have one name shown upon the
directory board or boards of the Building
and any additional name or subsequent
changes shall be paid for by the Tenant,
but the Landlord shall in its sole
discretion design the style of such
identification and allocate the spice on
the directory board or boards therefor;
.c2.(p) Name of Building
(p) not to refer to the Building or the Project by any
name or names other than such name or
names as may be designated from time to
time by the Landlord, nor to use such name
or names for any purpose other than that
of the business address of the Tenant; the
Tenant shall not use the name "Metro Hall"
or any derivative thereof or any name
which uses or references Metro or Metro
Hall or is similar thereto, whether in
connection with the Building or the
Project or for any other purpose,
including without limitation, signage,
advertising and business forms;
.c2.(q) Glass
(q) the Landlord shall replace and the Tenant shall pay
to the Landlord on demand as Additional
Rent the cost of replacement with as good
quality any glass on or within or in the
walls or doors (exterior or interior)
abutting or forming part of the Premises,
which is broken during the Term or any
renewals thereof, unless (save and except
with respect to the glass curtainwall)
such breakage is solely the result of the
negligence of the Landlord and is not the
result of matters required to be insured
against by the Tenant hereunder, and in
the case of breakage in the glass
curtainwall, only where such breakage is
caused by reason of the wilful or
negligent act or omission of the Tenant or
any person for whom it is in law
responsible;
.c2.(r) Certificates
(r) the Tenant will at any time and from time to time,
at no cost to the Landlord, and upon not
less than ten (10) days' prior notice,
execute and deliver to the Landlord a
statement in writing certifying that this
Lease is unmodified and in full force and
effect (or if modified, stating the
modifications and that the Lease is in
full force and effect as modified), the
amount of the annual rental then being
paid hereunder, the dates to which the
same, by instalment or otherwise, and
other charges hereunder have been paid,
whether or not there is any existing
default on the part of the Landlord of
which the Tenant has notice, and any other
information reasonably required;
.c2.(s) Evidence of Payments
(s) to produce to the Landlord upon request,
satisfactory evidence of the due payment
by the Tenant of all payments required to
be made by the Tenant under this Lease;
.c2.(t) Notice of Accidents
(t) to notify the Landlord promptly and in writing of
any accident or damage to or defect in the
Premises, the Building, the Project, or
any part thereof including the heating,
ventilating, and air- conditioning
apparatus, water and gas pipes, telephone
lines, electrical apparatus or other
building services;
.c2.(u) Tenant Insurance
(u) at its expense to maintain in force during the Term
and any renewals thereof:
(i) comprehensive general liability insurance
against claims for personal
injury, death or property damage
arising out of all operations of
the Tenant (including tenants' all
risk legal liability, personal
liability, property damage and
contractual liability to cover all
indemnities and repair
obligations) with respect to the
business carried on in and from
the Premises, in amounts required
by the Landlord and any mortgagee
of the Project or any part thereof
from time to time but in no event
less than Two Million Dollars
($2,000,000.00) per occurrence;
(ii) all risks direct damage insurance
covering all chattels and fixtures
and all Leasehold Improvements,
installations, additions and
partitions made by the Tenant or
by the Landlord at the Tenant's
expense, in an amount equal to the
full replacement value thereof;
(iii) when applicable, broad form
comprehensive boiler and machinery
insurance on a blanket repair and
replacement basis in an amount not
less than the full replacement
cost of all boilers, pressure
vessels, air conditioning
equipment, electrical or
mechanical apparatus owned or
operated by the Tenant in,
relating to or servicing the
Premises;
(iv) business interruption insurance in
such amounts as will reimburse the
Tenant for direct or indirect loss
of earnings attributable to all
perils insured against in
subsections 10(u)(ii) and
10(u)(iii); and
(v) such other forms of insurance as
may be reasonably required by the
Landlord and any mortgagee from
time to time;
All such insurance shall be with insurers and upon such
terms and conditions as the Landlord reasonably approves,
and certificates of insurance and renewal shall be delivered
to the Landlord; all such policies shall include the
Landlord and any mortgagees as named insureds as their
interests may appear, shall contain, where applicable, a
waiver of subrogation in favour of the Landlord and those
for whom in law it is responsible, and the insurance
described in subsection 10(u)(i) shall contain a
cross-liability clause protecting the Landlord in respect of
claims by the Tenant as if the Landlord were separately
insured; all policies shall also contain a provision
prohibiting the insurer from altering in a manner adverse to
the Landlord and any mortgagee or cancelling the coverage
without first giving the Landlord thirty (30) days' prior
written notice thereof; if the Tenant fails to take out and
maintain in force such insurance, the Landlord may do so and
pay the premiums and the Tenant shall pay the Landlord the
amount of such premiums forthwith upon demand. If both the
Landlord and the Tenant have claims to be indemnified under
any such insurance, the indemnity shall be applied first to
the settlement of the Landlord's claim and the balance, if
any, to the settlement of the Tenant's claim;
.c2.(v) Surrender on Termination
(v) at the expiration or sooner termination of the
Term, to deliver up possession of the
Premises to the Landlord, together with
all fixtures or improvements which the
Tenant is required or permitted to leave
therein or thereon, free of all rubbish
and in a clean and tidy condition, and to
deliver to the Landlord all keys and
security devices;
.c2.(w) Fire and Safety
(w) the Tenant acknowledges that it may be or become
desirable or necessary for the Landlord to
organize and co-ordinate arrangements
within the Building for the safety of all
tenants and occupants in the event of fire
or similar event, and the Tenant, its
employees, servants, agents and invitees
shall co- operate and participate in any
fire drills, evacuation drills and similar
exercises as may be arranged or organized
by the Landlord from time to time, and to
hold the Landlord harmless from any
personal or material loss, damage or
injury arising therefrom; and,
.c2.(x) Energy Conservation
(x) to co-operate with the Landlord in conserving
energy of all types in the Building and
the Project, including complying at the
Tenant's own cost with all reasonable
requests and demands of the Landlord made
with the view to energy conservation; any
reasonable capital expenditures made by
the Landlord in an effort to promote
energy conservation shall be added to
Operating Costs in the Year such
expenditures are incurred.
.c.SECTION 11 Quiet Enjoyment
11. The Landlord covenants with the Tenant for
quiet enjoyment.
.c.SECTION 12 Landlord's Covenants
12. The Landlord further covenants with the
Tenant as follows:
.c2.(a) Heating and Air-Conditioning
(a) to provide heating of the Premises and to operate
the air-conditioning and ventilating
equipment (collectively, "HVAC Service")
to an extent sufficient to maintain a
reasonable temperature therein at all
times during the hours from 7:00 a.m. to
7:00 p.m. Monday through Friday (but
excluding Saturdays, Sundays, public or
statutory holidays and Boxing Day) ("HVAC
Hours") and, subject to payment by the
Tenant to the Landlord as Additional Rent
of all costs and expenses attributable to
or in respect thereof, outside HVAC Hours
(subject as hereinafter provided), except
in each case during the making of
repairs; charges for HVAC Service outside
HVAC Hours, as of the date of this Lease
(and subject to increase in accordance
with actual increases in cost), are at a
rate of between $10.00 and $45.00 per hour
per floor depending on the number of
tenant floors utilizing such service, plus
$5.00 per hour per floor for fan;
notwithstanding the foregoing, HVAC
Service shall not be used or provided
outside HVAC Hours in or to the computer
and operations centre in the Premises;
should the Landlord default in so doing,
the Landlord shall not be liable for
direct, indirect or consequential damages
of any kind or damages for personal
discomfort or illness by reason of the
operation or non-operation of such
equipment or otherwise;
.c2.(b) Taxes
(b) to pay or cause to be paid any Taxes, the payment
of which is not the responsibility of the
Tenant under this Lease;
.c2.(c) Elevator
(c) to furnish, except when repairs are being made,
passenger elevator service during Normal
Business Hours and limited elevator
service at other times; operator less and
automatic elevator service if made
available shall be deemed elevator
service; and to permit the Tenant and its
employees, invitees and persons lawfully
requiring communication with them to have
free use of such elevator service in
common with others;
.c2.(d) Access
(d) to permit the Tenant and its employees and all
persons lawfully requiring communication
with them, in common with others entitled
thereto, to have the use during Normal
Business Hours and, subject to compliance
with the Landlord's security system and
procedures for the Building, outside
Normal Business Hours, of the entrances,
stairways, corridors, and halls in the
Building leading to the Premises;
.c2.(e) Washrooms
(e) to permit the Tenant and its employees, invitees
and persons lawfully requiring
communication with them in common with
others entitled thereto to use the
washrooms in the Building which may be
designated for the Premises;
.c2.(f) Janitor Services
(f) to provide janitorial and cleaning services to the
Premises in accordance with normal office
cleaning standards and intervals for a
building of similar age and location;
provided, however, that all draperies and
carpeting in the Premises shall be cleaned
and maintained by the Tenant at its
expense. The Tenant acknowledges that the
Landlord will be relieved of its
obligations hereunder if:
(i) access to any part of the Premises
is denied to any person or persons
employed or retained by the
Landlord to perform such
functions; or
(ii) the Tenant does not leave the
Premises in a reasonably tidy
condition at the end of each day
in order to assist the Landlord,
its employees and agents in the
performance of their work and
duties.
The Landlord shall not be responsible for any act or
omission on the part of any person or persons employed or
retained to perform such work or for any loss thereby
sustained by the Tenant, its employees, agents, or invitees;
and
.c2.(g) Insurance
(g) to take out and keep in full force and effect
throughout the Term, in amounts such as
would be carried by a prudent owner, the
following:
(i) "all risks" insurance and where
applicable, boiler and machinery
insurance, on real and personal
property of the Landlord or
property for which it is legally
responsible comprising and
incidental to the Project but
specifically excluding any
property with respect to which the
Tenant and other tenants are
obligated to insure pursuant to
their respective leases;
(ii) public liability and property damage
insurance with respect to the
Landlord's operations in the
Project; and
(iii) such other forms of insurance as
the Landlord or its mortgagee may
reasonably consider advisable from
time to time.
If the Tenant so requests, the Landlord agrees that
all property damage insurance policies
written on behalf of the Landlord and
applicable to the Building shall contain a
waiver of any subrogation rights which the
Landlord's insurers may have against the
Tenant and those for whom the Tenant is in
law responsible provided that the
Landlord's insurers grant such waiver.
The Tenant covenants and agrees to pay to
the Landlord any increase in the
Landlord's insurance premiums resulting
from the Landlord obtaining such waiver of
subrogation rights in favour of the Tenant
and such increase in cost shall be payable
by the Tenant as Additional Rent on demand.
.c.SECTION 13 Leasehold Improvements and Fixtures
13. (a) The Tenant may remove its fixtures and
chattels if and only if all rent and other
charges due or to become due are fully
paid. If the Tenant does not remove its
fixtures and chattels prior to the expiry
or earlier termination of the Term, such
fixtures and chattels shall, at the option
of the Landlord, become the property of
the Landlord and may be removed from the
Premises and sold or disposed of by the
Landlord in such manner as it deems
advisable.
(b) All Leasehold Improvements shall be the
Landlord's property upon the termination
of this Lease without compensation
therefor to the Tenant and shall not be
removed from the Premises at any time
either during or after the Term except as
hereinafter provided.
Notwithstanding anything herein contained:
(i) the Landlord shall be under no
obligation to replace, repair or
maintain Leasehold Improvements;
and
(ii) on or before the date of expiry of
the Term or, in the case of an
earlier termination of the Term,
by no later than 45 days after the
date the Landlord recovers
possession of the Premises, the
Tenant shall, at its sole cost,
complete all Restoration Work,
unless the Landlord shall
otherwise require by written
notice given by the Landlord to
the Tenant no later than 30 days
prior to the date of expiry of the
Term or, in the case of an earlier
termination of the Term, no later
than 15 days after the date the
Landlord recovers possession of
the Premises, and if such notice
is given by the Landlord to the
Tenant, the Tenant shall comply
with the Landlord's requirements
set forth therein for completion
of Restoration Work within the
applicable time period set forth
herein.
(c) The Tenant shall provide to the Landlord
upon request copies of all drawings, plans
and specifications and other relevant
information in the Tenant's possession or
control concerning the Leasehold
Improvements in the Premises. The Tenant
shall at its own expense repair any damage
caused to the Building by the
installation, use or removal of the
Leasehold Improvements or trade fixtures
and all Restoration Work, and all such
work shall be done by contractors or
workmen approved by the Landlord, acting
reasonably,shall be subject to inspection
by and supervision of the Landlord and
shall be performed in accordance with all
laws and any rules or regulations imposed
by the Landlord, acting reasonably, and in
a good and workmanlike manner.
(d) The Tenant shall pay compensation to the
Landlord for each day after the date of
expiry or earlier termination of the Term
until the completion of the work to be
completed by the Tenant pursuant to this
Section 13 at a rate equal to 150% of the
per diem aggregate of Basic Rent and
Additional Rent payable during the last
month preceding the expiry or earlier
termination of the Term, which sum is
agreed by the parties to be a reasonable
estimate of the damages suffered by the
Landlord for loss of use of the Premises.
(e) If the Tenant fails to complete any work
referred to in this Section 13 within the
period specified, the Landlord shall have
the right (but shall not be obligated) to
perform or cause to be performed such work
in accordance with Section 24.
(f) For greater certainty, the Tenant's
covenants and obligations under this
Section 13 shall survive and remain in
full force and effect and binding on the
Tenant notwithstanding the expiry or
earlier termination of the Term.
.c.SECTION 14 Damage or Destruction
14. (a) If the Premises or any portion thereof are
damaged or destroyed by fire or by another
casualty against which the Landlord is or
is required hereunder to be insured, rent
shall abate in proportion to the area of
that portion of the Premises which, in the
reasonable opinion of the Landlord, is
thereby rendered unfit for the purposes of
the Tenant until the earlier of the:
(i) date on which no insurance
proceeds are available to the
Landlord under its loss of rental
income insurance coverage in
respect of the Premises; and
(ii) the Premises are repaired and
rebuilt (as hereinafer defined),
and, subject as hereinafter provided in
this Section 14, the Landlord agrees that
it will with reasonable diligence repair
and rebuild the Premises. The Landlord's
obligation to rebuild and restore the
Premises shall not include the obligation
to rebuild, restore, replace or repair any
chattel, fixture, Leasehold Improvement,
installation, addition or partition in
respect of which the Tenant is to maintain
insurance under Section 10(u), or any
other thing that is the property of the
Tenant (in this clause collectively called
"Tenant's Improvements"); the Premises
shall be deemed repaired and rebuilt and
fit for the Tenant's purposes when the
Landlord's Architect certifies that they
have been substantially restored and
rebuilt to the point where the Tenant
could occupy them for the purpose of
rebuilding, restoring, replacing or
repairing the Tenant's Improvements; the
issuance of the certificate shall not
relieve the Landlord of its obligation to
complete the rebuilding and restoration as
aforesaid (and subject as hereinafter
provided in this Section 14), but the
Tenant shall forthwith after issuance of
the certificate proceed to rebuild,
restore, replace and repair the Tenant's
Improvements, and the provisions of
Section 10(m) shall apply to such work,
mutatis mutandis.
(b) Notwithstanding Section 14(a):
(i) if the Premises or any portion
thereof are damaged or destroyed
by any cause whatsoever and cannot
in the reasonable opinion of the
Landlord's Architect be rebuilt or
made fit for the purposes of the
Tenant as aforesaid within ninety
(90) days of the damage or
destruction; or
(ii) if the cost (as estimated by the
Landlord) of such rebuilding or
making fit the Premises exceeds
the proceeds of insurance actually
made or to be made available to
the Landlord for such purpose,
the Landlord instead of rebuilding or making the Premises
fit for the Tenant may, at its option, terminate this Lease
by giving to the Tenant within thirty (30) days after such
damage or destruction notice of termination and thereupon
rent and any other payments for which the Tenant is liable
under this Lease shall be apportioned and paid to the date
of such damage and the Tenant shall immediately deliver up
possession of the Premises to the Landlord.
(c) Irrespective of whether the Premises or any portion
thereof are damaged or destroyed as
aforesaid, in the event that twenty-five
per cent (25%) or more, as determined by
the Landlord, of the Project, the
Building, or any other single building
included within the Project is damaged or
destroyed by any cause whatsoever, and if:
(i) in the reasonable opinion of the
Landlord's Architect, such area
cannot be rebuilt or made fit for
the purposes of the tenants
thereof within one hundred and
eighty (180) days of such damage
or destruction; or
(ii) the cost (as estimated by the
Landlord) of rebuilding or making
fit such area exceeds the proceeds
of insurance actually made or to
be made available to the Landlord
for such purpose,
the Landlord may at its option terminate this Lease by
giving to the Tenant within thirty (30) days after such
damage notice of termination requiring vacant possession of
the Premises sixty (60) days after delivery of the notice of
termination and thereupon rent and any other payments for
which the Tenant is liable under this Lease shall be
apportioned and paid to the date on which vacant possession
is given and the Tenant shall deliver up possession of the
Premises to the Landlord in accordance with such notice of
termination.
(d) Notwithstanding Section 14(a), if this
Lease is not terminated in accordance with
Section 14(b) or 14(c), in repairing or
rebuilding in the event of damage or
destruction, the Landlord shall not be
obligated to expend more than the amount
of insurance proceeds actually made
available to the Landlord for the purpose
of such repair or rebuilding, and in
effecting such repairs and rebuilding, the
Landlord shall be entitled to vary or
alter the design and materials from those
originally used.
.c.SECTION 15 Injuries, Loss and Damage
15. Except, in respect only of loss, damage or
injury (including death) not covered by insurance maintained
or required pursuant to Section 10(u) to be maintained by
the Tenant, to extent that any such loss, damage or injury
(including death) is caused, or to the extent contributed
to, by the negligent or wilful acts or omissions of the
Landlord or those for whom it is in law responsible, and
then only to the extent that the Landlord is or is required
hereunder to be insured in respect of such loss, damage or
injury (including death), the Landlord shall not be
responsible in any way for any injury to any person
(including death) or for any loss of or damage to any
property belonging to the Tenant or to other occupants of
the Premises or to their respective invitees, licensees,
agents, servants or other persons from time to time
attending at the Premises while such person or property is
in or about the Lands, the Premises, the Building, the
Project, or any areaways, parking areas, lawns, sidewalks,
steps, truckways, platforms, corridors, stairways,
elevators, or escalators in connection therewith, including
without limiting the foregoing, any loss of or damage to any
property caused by theft or breakage, or by steam, water,
rain or snow or for any loss or damage caused by or
attributable to the condition or arrangements of any
electric or other wiring or for any damage caused by smoke
or anything done or omitted to be done by any other tenant
of premises in the Building or the Project or for any other
loss whatsoever with respect to the Premises, goods placed
therein or any business carried on therein.
.c.SECTION 16 Impossibility, Unavoidable Delays
16. Whenever and to the extent the Landlord is
unable to fulfil or shall be delayed or restricted in the
fulfilment of any obligation hereunder by reason of being
unable to obtain the material, goods, equipment, service,
utility or labour required to enable it to fulfil such
obligation or by reason of any statute, law, regulation,
by-law or order or by reason of any other cause beyond its
reasonable control, whether of the same nature as the
foregoing or not, the Landlord shall be relieved from the
fulfilment of such obligation and the Tenant shall not be
entitled to compensation for any inconvenience, nuisance or
discomfort thereby occasioned. There shall be no deduction
from the rent or other monies payable hereunder by reason of
any such failure or cause.
.c.SECTION 17 Re-Entry
17. PROVISO for re-entry by the said Landlord
on non-payment of rent or non-performance of covenants.
.c.SECTION 18 Bankruptcy, etc.
18. Provided further that in case without the
written consent of the Landlord, the Premises shall be used
by any other person than the Tenant or for any other purpose
than that for which the same were let or in case the
Premises shall be vacated or remain unoccupied for fifteen
(15) days, or in case the Term or any of the goods and
chattels of the Tenant located in the Premises shall be at
any time seized in execution or attachment by any creditor
of the Tenant or the Tenant shall make any assignment for
the benefit of creditors or any bulk sale or become bankrupt
or insolvent or take the benefit of any Act now or hereafter
in force for bankrupt or insolvent debtors, or, if the
Tenant is a corporation and any order shall be made for the
winding-up of the Tenant, or other termination of the
corporate existence of the Tenant, then in any such case
this Lease shall, at the option of the Landlord, cease and
determine and the Term shall immediately become forfeited
and void and the then current month's rent and the
next(ensuing three (3) months' rent (including in both cases
all other amounts payable as Additional Rent) shall
immediately become due and be paid and the Landlord without
prejudice to any claim for damages for any antecedent
breach of covenant, may re-enter and take possession of the
Premises as though the Tenant or other occupant or occupants
of the Premises was or were holding over after the
expiration of the Term without any right whatever.
.c.SECTION 19 Distress
19. The Tenant waives and renounces the
benefit of any present or future statute taking away or
limiting the Landlord's right of distress, and covenants and
agrees that notwithstanding any such statute none of the
goods and chattels of the Tenant on the Premises at any time
during the Term shall be exempt from levy by distress for
rent in arrears.
.c.SECTION 20 Entry As Agent
20. The Tenant further covenants and agrees
that on the Landlord becoming entitled to re-enter upon the
Premises under any of the provisions of this Lease, the
Landlord, in addition to all other rights, shall have the
right to enter the Premises as the agent of the Tenant,
either by force or otherwise, and to re-let the Premises as
the agent of the Tenant and to receive the rent therefor and
as the agent of the Tenant to take possession of any
furniture or other property on the Premises and to sell the
same at public or private sale without notice and to apply
the proceeds of such sale and any rent derived from
re-letting the Premises upon account of the rent under this
Lease and the Tenant shall be liable to the Landlord for the
deficiency, if any, for the remainder of the Term as if such
re-entry had not been made less the actual amount received
by the Landlord after such re-entry in respect of any
re-letting applicable to the remainder of the Term. The
Tenant shall also reimburse the Landlord for all reasonable
legal and other costs incurred as a result of such re-entry
and re-letting.
.c.SECTION 21 Right of Termination
21. The Tenant further covenants and agrees
that on the Landlord becoming entitled to re-enter upon the
Premises under any of the provisions of this Lease, the
Landlord, in addition to all other rights, shall have the
right to determine forthwith this Lease and Term by leaving
upon the Premises notice in writing of its intention so to
do and thereupon rent and any other payments for which the
Tenant is liable under the Lease shall be computed,
apportioned and paid in full to the date of such
determination of this Lease and the Tenant shall immediately
deliver up possession of the Premises to the Landlord, and
the Landlord may re-enter and take possession of the same.
.c.SECTION 22 Non-Waiver
22. No condoning, excusing or overlooking by
the Landlord of any default, breach or non-observance by the
Tenant at any time or times in respect of any covenant,
proviso or condition herein contained shall operate as a
waiver of the Landlord's rights hereunder in respect of any
continuing or subsequent default, breach or non-observance,
or so as to defeat or affect in any way the rights of the
Landlord herein in respect of any such continuing or
subsequent default or breach, and no waiver shall be
inferred from or implied by anything done or omitted by the
Landlord save only by express waiver in writing. All rights
and remedies of the Landlord in this Lease contained shall
be cumulative and not alternative.
.c.SECTION 23 Overholding
23. If the Tenant shall continue to occupy all
or part of the Premises after the expiration of this Lease
with the consent of the Landlord, and without any further
written agreement, the Tenant shall be a monthly tenant at a
basic monthly rental equal to one hundred and fifty percent
(150%) of the annual rental payable during the last year of
this Lease and otherwise on the terms and conditions herein
set out except as to length of tenancy.
.c.SECTION 24 Landlord Performing Tenant's Covenants
24. If the Tenant fails to perform or cause to
be performed any of the covenants or obligations of the
Tenant herein, the Landlord shall have the right (but shall
not be obligated) to perform or cause to be performed and to
do or cause to be done such things as may be necessary or
incidental thereto (including, without limiting the
foregoing, the right to make repairs, installations and
erections and expend monies) and all payments, expenses,
charges, fees and disbursements incurred or paid by or on
behalf of the Landlord in respect thereof shall be paid by
the Tenant to the Landlord forthwith upon demand.
.c.SECTION 25 Payments to Landlord
25. (a) All payments to be made by the Tenant
under this Lease shall be made at such
place or places as the Landlord may
designate in writing, and to the Landlord
or to such agent of the Landlord as the
Landlord shall from time to time direct.
(b) The Tenant shall pay the Landlord interest
on all overdue rentals including Basic
Rent and Additional Rent or other amounts,
all such interest to be calculated and
compounded monthly from the date upon
which the amount is first due or demanded
until actual payment thereof and at a rate
per annum equal to Bank of Montreal's
prime commercial lending rate of interest
in effect in Canada from time to time plus
five percent (5%).
(c) Notwithstanding anything to the contrary
contained in this Lease, in order to cover
the extra expense involved in handling
delinquent payments, the Tenant, at the
Landlord's sole option, and in addition to
interest as aforesaid, shall pay a "late
charge" of $25.00 when any instalment of
Basic Rent or Additional Rent is received
at the place for payment designated by the
Landlord more than five (5) days after the
due date thereof. It is hereby understood
that such late charge is charged as
Additional Rent, and not as a penalty or
interest, for the purpose of defraying the
Landlord's expenses incidental to the
processing of such overdue payments.
(d) Upon request by the Landlord, the Tenant
shall forthwith forward to the Landlord
(or as it may direct) twelve (12)
post-dated cheques in the amounts equal to
the sum of the monthly Basic Rent and the
estimated monthly instalment of the
Tenant's Proportionate Share of Taxes, the
Tenant's Proportionate Share of Operating
Costs and utility charges determined
pursuant to Sections 6, 7 and 10(b) hereof
for each of the twelve (12) months next
following. In the alternative, the Tenant
may elect to provide to the Landlord a
pre-authorized debit form to permit
automatic debiting of the Tenant's account
with its banker for monthly Basic Rent and
Additional Rent charges as aforesaid. The
Tenant agrees to provide replacement
authorizations from time to time as the
monthly amounts of either monthly Basic
Rent or Additional Rent change during the
Term forthwith upon notice of such change
being given to the Tenant by the
Landlord. The Tenant agrees to make all
other Additional Rent payments to the
Landlord by cheque at the times
contemplated by the terms of this Lease.
If and for so long as the Tenant is
Applied Communications Canada, Inc. or an
affiliate thereof to which this Lease has
been assigned in compliance with Section
10(e) or a corporation resulting from an
amalgamation as referred to in subsection
10(e)(ii), the provisions of this Section
25(d) shall not apply.
.c.SECTION 26 Legal Costs
26. The Tenant shall pay to the Landlord,
forthwith upon demand, all reasonable legal fees, on a
solicitor and his own client basis, incurred by the Landlord
for the enforcement of any rights of the Landlord under this
Lease, or in the enforcement of any of the provisions of
this Lease, or in the obtaining of possession of the
Premises, or for the collection of any monies from the
Tenant, or for any advice with respect to any other matters
related to this Lease. The Landlord shall pay to the Tenant
all reasonable legal fees, on a solicitor and his own client
basis, incurred by the Tenant as a result of the default of
the Landlord under the terms of this Lease.
.c.SECTION 27 Registration
27. The Tenant covenants and agrees with the
Landlord that the Tenant will not register this Lease in
this form in the Registry Office or the Land Titles Office.
.c.SECTION 28 Mortgages
28. At the option of the Landlord, this Lease
shall be subject and subordinate to any and all mortgages,
charges and deed of trust, which may now or at any time
hereafter affect the Premises in whole or in part, or the
Lands, the Building or the Project in whole or in part,
whether or not any such mortgage, charge or deed of trust
affects only the Premises or the Lands, the Building or the
Project or affects other premises as well. On request at any
time and from time to time of the Landlord or of the
mortgagee, chargee or trustee under any such mortgage,
charge or deed of trust, the Tenant shall promptly, at no
cost to the Landlord or mortgagee, chargee or trustee:
(a) attorn to such mortgagee, chargee or trustee and
become its tenant of the Premises or the
Tenant of the Premises of any purchaser
from such mortgagee, chargee or trustee in
the event of an exercise of any permitted
power of sale contained in any such
mortgage, charge or deed of trust for the
then unexpired residue of the Term on the
terms herein contained, and/or
(b) postpone and subordinate this Lease to
such mortgage, charge or deed of trust to
the intent that this Lease and all right,
title and interest of the Tenant in the
Premises shall be subject to the rights of
such mortgagee, chargee or trustee as
fully as if such mortgage charge or deed
of trust had been executed and registered
and the money thereby secured had been
advanced before the execution of this
Lease (and notwithstanding any authority
or consent of such mortgagee, chargee or
trustee, express or implied, to the making
of this Lease).
Any such attornment or postponement and
subordination shall extend to all renewals, modifications,
consolidations, replacements and extensions of any such
mortgage, charge or deed of trust and every instrument
supplemental or ancillary thereto or in implementation
thereof. The Tenant shall forthwith execute any instruments
of attornment or postponement and subordination which may be
so requested to give effect to this Section.
Upon written request by, and at the sole
cost and expense of, the Tenant, the Landlord agrees to use
reasonable efforts to obtain from any present or future
mortgagee, chargee or trustee holding a mortgage, charge or
deed of trust on the Premises, the Lands, the Building or
the Project to which this Lease is postponed or subordinate,
a non-disturbance agreement in favour of the Tenant in a
form acceptable to such mortgagee, chargee or trustee.
.c.SECTION 29 Assignment by Landlord
29. If the Landlord sells or leases the Lands,
the Project or the Building or any part thereof, or assigns
this Lease, and to the extent that the purchaser, lessee or
assignee is responsible for compliance with the covenants
and obligations of the Landlord hereunder, the Landlord
without further written agreement will be discharged and
relieved of liability under the said covenants and
obligations.
.c.SECTION 30 Relocation
30. The Landlord shall have the right, at any
time and from time to time before and during the Term and
any renewal of this Lease, to change the location of the
Premises from the location described in this Lease to
another location anywhere else in the Building, provided
that:
(a) the relocated Premises are in all
material respects comparable to the
original Premises;
(b) notwithstanding such relocation,
the Premises shall remain contiguous and
on adjacent floors;
(c) the Landlord shall give the Tenant
reasonable notice of such relocation; and
(d) the Landlord shall at its expense
improve the relocated Premises to a
similar quality and character as that of
the original Premises and shall reimburse
the Tenant for all reasonable direct or
indirect costs incurred by the Tenant by
reason of the relocation.
All terms and conditions of this Lease
shall apply to the relocated Premises for the remainder of
the Term.
.c.SECTION 31 Effect of Lease
31. This indenture and everything herein
contained shall extend to and bind and may be taken
advantage of by the respective heirs, executors,
administrators, successors and assigns, as the case may be,
of each and every of the parties hereto, subject to the
granting of consent by the Landlord as provided herein to
any assignment or sub-lease, and where there is more than
one Tenant or there is a female party or a corporation, the
provisions hereof shall be read with all grammatical changes
thereby rendered necessary and all covenants shall be deemed
joint and several.
.c.SECTION 32 Interpretation of Lease
32. All of the provisions contained in this
Lease are to be construed as covenants and agreements and if
any provision is illegal or unenforceable, it shall be
considered separate and severable from the remaining
provisions, which shall remain in force and be binding upon
the Landlord and the Tenant.
This Lease contains all the covenants,
promises, agreements, conditions and understandings between
the Landlord and the Tenant concerning the Premises. Except
as otherwise provided herein, no subsequent alteration,
amendment, change or addition to this Lease shall be binding
upon the Landlord or the Tenant unless reduced to writing
and signed by both of them.
.c.SECTION 33 Time of Essence
33. Time shall be of the essence of this Lease.
.c.SECTION 34 Law
34. This Lease shall be governed by and
construed in accordance with the laws of the Province of
Ontario.
.c.SECTION 35 Notice
35. Any notice required or contemplated by any
provision of this Lease shall be given in writing enclosed
in a sealed envelope addressed, in the case of notice to the
Landlord, to the address of the Landlord set forth in
Section 1(a)(ii), and in the case of notice to the Tenant,
to the address of the Tenant set forth in Section 1(b)(ii),
and mailed in the Province of Ontario, registered and
postage prepaid provided that there is no actual or
contemplated disruption of mail services at the time of such
mailing. The time of giving of such notice shall be
conclusively deemed to be the second business day after the
day of such mailing provided that there is no disruption of
mail services at the time of such mailing. Such notice
shall also be sufficiently given if and when the same shall
be delivered, in the case of notice to the Landlord, to an
executive officer of the Landlord, and in the case of notice
to the Tenant, to him personally or to an officer or
employee of the Tenant, if the Tenant is a corporation or by
leaving such notice addressed to the Tenant on the
Premises. Such notice, if delivered, shall be conclusively
deemed to have been given and received at the time of such
delivery. If in this Lease two or more persons are named as
Tenant, such notice shall also be sufficiently given if and
when the same shall be delivered personally to any one of
such persons. Provided that the Landlord may, by notice to
the Tenant, from time to time designate another address in
Canada to which notices mailed to the Landlord more than ten
(10) days thereafter shall be addressed.
.c.SECTION 36 Expansion, Alteration
36. The Landlord shall have the right, upon
reasonable prior notice to the Tenant (which notice,
notwithstanding Section 35, need not be in writing and may
be given orally to management at the Premises, and except in
the case of emergency, when no notice shall be required), to
enter into the Premises and to bring its workmen and
materials thereon to make additions, alterations,
improvements, installations and repairs to the Lands, the
Building, the Project and the common areas and services
thereof as such may exist from time to time. The Landlord
may cause such reasonable obstructions and interference with
the use and enjoyment of the Lands, the Building and the
Project, and the Premises as may be necessary for the
purposes aforesaid and may interrupt or suspend the supply
of electricity, water or other utilities or services when
necessary and until the additions, alterations,
improvements, installations or repairs have been completed,
and there shall be no abatement in rent nor shall the
Landlord be liable by reason thereof, provided all such work
is done as expeditiously as reasonably possible. The
Landlord shall have the right to use, install, maintain and
repair pipes, wires, ducts, shafts or other installations
in, under or through the Premises for or in connection with
the supply of any services to the Premises or any other
premises in the Building or the Project. Without limiting
the foregoing the Landlord shall be permitted to allow
Unitel Communications Company, its successors and assigns
("Unitel") to leave in the Premises upon vacating the same,
and to use during the Term, Unitel's interfloor cabling
system, and each of the Landlord and Unitel shall have the
rights set forth in this Section 36, upon and subject to the
terms and conditions herein contained, with respect to the
use, operation, maintenance, repair and replacement of such
interfloor cabling system.
Without limiting the foregoing, the
Landlord hereby reserves the right at any time and from time
to time to make changes or revisions in its plans for the
Lands, the Building, or the Project, including additions to,
subtractions from, or rearrangements of the building areas,
walkways, parking areas or driveways, tunnels, roadways and
covered parking garages, and particularly the right to
construct other buildings and improvements on the Lands and
within the Project. The Landlord shall have the right to
enter into the Premises for such purposes, even during
Normal Business Hours, without abatement of rent or any
compensation to the Tenant. The Landlord shall have the
right to specify the date on which any such changes to the
Lands, the Building, or the Project become part of the
Lands, the Building or the Project, as the case may be for
all purposes.
The Landlord covenants and agrees to use
all reasonable efforts to minimize disruption of the
Tenant's use and occupancy of the Premises in exercising its
rights pursuant to this Section 36.
<PAGE>
.c.SECTION 37 Captions
37. The captions appearing in the margin of
this Lease have been inserted as a matter of convenience and
for reference only and in no way define, limit or enlarge
the scope of meaning of this Lease or any of the provisions
hereof.
IN WITNESS WHEREOF the parties hereto have
executed this Lease.
SIGNED, SEALED AND DELIVERED )
MARATHON REALTY COMPANY LIMITED
in the presence of: )
)
)
)
) By: L/S
Witness ) Name:
) Title:
SIGNED, SEALED AND DELIVERED ) APPLIED
COMMUNICATIONS CANADA, INC.
in the presence of: )
)
)
)
) By:
Witness ) Name:
) Title:
)
) And:C/S
Witness ) Name:
) Title:
I
am/We are authorized to bind the Corporation
<PAGE>
SCHEDULE "A"
FLOOR PLAN OF PREMISES
.c.Schedule "A" Floor Plan of Premises:
.c.Schedule "B" Site Plan of Project:
.c.Schedule "C" Legal Description of Lands:
.c.Schedule "D" Rules and Regulations:
.c.Schedule "E" Special Provisions:
<PAGE>
SCHEDULE "B"
SITE PLAN
<PAGE>
SCHEDULE "C"
LEGAL DESCRIPTION OF LANDS
PART A: WELLINGTON STREET LANDS
Firstly: Part of Lots 9 and 10, North side of Simcoe Place,
Town of York, and part of Blocks A and B, Plan 378,
designated as Parts 7, 10, 15 and 16 on Reference Plan
63R-4544, City of Toronto, Municipality of Metropolitan
Toronto.
Secondly: Part of Lots 8, 9, 10, 20, 22, 23 and 24, south
side of Russell Square and part of Lots 6, 7, 8, 9, 10, 21,
22 and 23, north side of Simcoe Place, Town of York Plan;
part of Lots 8 and 9, Plan 151; part of Blocks A, B and C,
Plan 378; part of Blocks D and E and one foot reserve, Plan
525E, City of Toronto, Municipality of Metropolitan Toronto,
all designated as Parts 2, 4, 6, 9, 11, 12 14 and 17 on
Reference Plan 63R-4544; save and except those premises in
the City of Toronto, in the Municipality of Metropolitan
Toronto consisting of Parts 2, 4, 6, 9, 11, 12, 14 and 17 on
Reference Plan 63R-4544 to a depth of five feet above the
upper limit of the Garage Protection System (which upper
limit shall be no higher than the Canadian Geodetic Datum
elevation of 84 metres, and more particularly described in a
lease registered on October 31, 1989 as Instrument No.
CA57678).
Thirdly: Part of Lot 10, north side of Simcoe Place, Town
of York Plan, designated as Part 2 on Reference Plan
63R-4597, City of Toronto, Municipality of Metropolitan
Toronto; and part of Lots 14 and 15, Registered Plan 151,
Part of Blocks C, D, E, F, G and Part of One Foot Reserve,
Registered Plan 378, Part of Block E, Registered Plan 525E,
Part of Lot 10 north side of Simcoe Place, Town of York
Plan, Part of Lots 20 and 21 south side of Russell Square,
Town of York Plan, all designated as Part 1 on Reference
Plan 63R-4597.
PART B: KING STREET LANDS
Part of Lots 20, 21 and 22, South side of Russell Square,
Town of York, and Part of Lot 9, Plan 151, all designated as
Part 3 on Reference Plan 63R-4544, City of Toronto,
Municipality of Metropolitan Toronto.
<PAGE>
SCHEDULE "D"
RULES AND REGULATIONS FORMING
PART OF THE WITHIN LEASE
1. The sidewalk, entry passages, elevators, patios,
fire escapes and common stairways of the Building and the
Project shall not be obstructed by any of the tenants or
used by them for any purpose other than for ingress and
egress to and from their respective premises. Tenants will
not place or allow to be placed in the building corridors or
public stairways any waste paper, dust, garbage, refuse or
anything whatever that would tend to make them unclean or
untidy.
2. The skylights and windows that reflect or admit
light into passageways and common areas of the Building
shall not be covered or obstructed by any of the tenants,
and no awnings shall be put up, without the prior written
consent of the Landlord.
3. The water-closets and other water apparatus shall
not be used for any purpose other than those for which they
were constructed, and no sweepings, rubbish, rags, ashes or
other substances shall be thrown therein. Any damage
resulting by misuse shall be borne by the tenant by whom or
by whose agents, servants or employees the same is caused.
Tenants shall not let the water run unless in actual use,
nor shall they deface any part of the Building or the
Project.
4. No tenant shall do or permit anything to be done in
the Premises or bring or keep anything therein which will in
any way increase the risk of fire, or obstruct or interfere
with the rights of other tenants, or violate or act at
variance with the laws relating to fires or with the
regulations of the Fire Department or the Board of Health.
5. Tenants, their clerks or servants, shall not make
or commit any improper noises on the Building or the
Project, lounge about doors or corridors or interfere in any
way with other tenants or those having business with them.
6. Nothing shall be thrown by the tenants, their
clerks or servants, out of windows or doors, or down the
passages, elevator shafts or skylights of the Building or
the Project.
7. No birds or animals shall be kept in or about the
Premises nor shall the tenants operate or permit to be
operated any musical or sound producing instrument or device
inside or outside the Premises which may be heard outside
the Premises.
8. 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.
9. The Landlord shall have the right:
(a) to require all persons entering or leaving the
Building or the Project during such hours
as the Landlord may reasonably determine,
to identify themselves to a watchman by
registration or otherwise to establish
their right to enter or leave;
(b) to exclude or expel any pedlar or beggar
at any time from the Premises, the
Building or the Project; and
(c) to institute, at the Landlord's option, a
system whereby access to the Building or
the Project, during such hours as the
Landlord may reasonably determine, is only
available by means of an identity card
which may contain a photograph of the
bearer, and if the Landlord institutes
such system the Landlord shall make such
cards available and the Tenant shall pay
the Landlord the reasonable cost of such
cards and photographs.
10. All tenants must observe strict care not
to allow their suite doors or windows to remain open so as
to admit rain or snow, or so as to interfere with the
heating or air-conditioning of the Building or the Project.
Any injury or damage caused to the Building or the Project
or its appointments, furnishings, heating and other
appliances, or to any other tenant or to the premises
occupied by any other tenant, by reason of windows being
left open so as to admit rain or snow, by interference with
or neglect of the heating appliances or by reason of any
other misconduct or neglect upon the part of a tenant or any
other person or servant subject to it, shall be made good by
the tenant in whose premises the neglect, interference or
misconduct occurred.
11. The Tenant shall assist and co-operate
with the Landlord in preventing injury to the premises
demised to them respectively.
12. No inflammable oils or other inflammable,
radioactive, dangerous or explosive materials shall be kept
or permitted to be kept in the Premises. Nothing shall be
placed on the outside of window sills or projections.
13. Furniture, effects and supplies shall not
be taken into or removed from the Building or the Premises,
except at such time and in such manner as may be previously
approved by the Landlord, which approval shall include
permission to use entrances, doorways and freight elevators
at certain times nor such purposes, and upon such terms
(including payment of any usual charges for the use of
freight elevators) as the Landlord shall impose.
14. No bicycles or other vehicles shall be
brought within the Building or the Project except in the
parking garage, and then only in compliance with the rules
and regulations as established and in force from time to
time for the use of said parking garage.
15. Business machines, filing cabinets, heavy
merchandise, or other articles liable to overload, injure or
destroy any part of the Building or the Project shall not be
taken into it without the prior written consent of the
Landlord and the Landlord shall in all cases retain the
right to prescribe the weight and proper position of all
such articles and the times and routes for moving them into
or out of the Building and the Project; the cost of
repairing any damage done to the Building or the Project by
such moving or by keeping any such articles on the Premises
shall be paid by the Tenant.
16. The Tenant shall not change any locks nor
place any additional lock upon any door of the Premises
without the prior written consent of the Landlord. The
Tenant shall be responsible for all locks and all keys to
such locks and shall return all keys to the Landlord upon
termination of the Lease.
17. The Tenant shall give the Landlord prompt
notice of any accident to or any defect in the plumbing,
heating, air-conditioning, mechanical or electrical
apparatus or any other part of the Building or the Project.
18. The Tenant shall not install or permit the
installation or use of any machine dispensing goods for sale
in the Premises or the Building or permit the delivery of
any food or beverage to the Premises without the prior
written approval of the Landlord, except in either case as
reasonably required for an employee cafeteria in the
Premises, and shall not contravene any regulations fixed or
to be fixed by the Landlord. Only persons authorized by the
Landlord, acting reasonably, shall be permitted to deliver
or to use the elevators in the Building for the purpose of
delivering food or beverage to the Premises.
19. The parking of vehicles in the parking
areas designated by the Landlord shall be subject to the
usual charges and reasonable regulations of the Landlord.
The Landlord shall not be responsible for loss of or damage
to said vehicles or anything contained therein.
20. The Tenant shall not mark, paint, drill
into or in any way deface the walls, ceilings, partitions,
floors or other parts of the Premises, the Building or the
Project except with the prior written consent of the
Landlord, which consent shall not be unreasonably withheld or
delayed, and as it may direct. The Tenant shall be
permitted to hang wall coverings, artwork and decorations on
the interior walls of the Premises without the Landlord's
consent.
21. The lining of all window drapes facing the
interior surface of all windows shall be subject to the
prior written approval of the Landlord as to colour and
material and the Tenant shall not hang and will remove all
draperies which in the Landlord's opinion do not conform to
any uniform scheme of window coverings established for the
Building. The Landlord may regulate, and the Tenant agrees
to comply with the Landlord's instructions and regulations
from time to time with respect to whether or not and at what
times the windows, drapes and blinds shall be open or closed.
22. The Tenant shall at the end of each
business day leave the Premises in a reasonably tidy
condition for the purpose of allowing the performance of the
Landlord's cleaning services.
23. The Landlord shall have the right to make
such other and further reasonable rules and regulations as
in its judgment may from time to time be needed for the
safety, care, cleanliness and appearance of the Premises,
the Building and the Project, and for the preservation of
good order therein, and the same shall be kept and observed
by the tenants, their clerks and servants.
24. No public or private auction or other
similar type of sale of any goods, wares or merchandise
shall be conducted in or from the Premises.
25. No telephonic, telegraphic, electronic,
wire service or other connections or electric wiring shall
be made in places other than those designated by the
Landlord or without the authority of the Landlord, which
will direct the electricians or other workmen as to where
and how any wires or equipment are to be introduced and
without any such directions, no boring or cutting or
otherwise will be permitted.
26. Any alterations, additions or changes made
in the partitions or divisions of the rooms during the
currency of this Lease shall, if made at the request of the
Tenant, be done at the expense of the Tenant, and shall be
subject to the approval and direction of the Landlord.
27. The Tenant agrees to abide by the
foregoing RULES AND REGULATIONS, which are hereby made a
part of this Lease, including any Rules and Regulations bona
fide made under section 23 of these Rules and Regulations,
provided that no rule or regulation shall be promulgated or
enforced in a manner that discriminates against the Tenant's
lawful and proper use and occupation of the Premises in
accordance with this Lease.
<PAGE>
SCHEDULE "E"
SPECIAL PROVISIONS
1. Sixth Floor Premises
The Landlord and the Tenant acknowledge
that there are portions of the existing corridor serving the
Tenant's Premises on the 6th floor which are unuseable in
the Tenant's business. For purposes of calculation of Basic
Rent, Operating Costs, Taxes and utility charges, the
Rentable Area of the Premises will be deemed to be 400
square feet less than the final certified Rentable Area.
Should the Tenant expand its Premises on the 6th floor, the
reduction of 400 square feet shall be adjusted downward by
the proportion of the unuseable corridor space which would
become part of the expansion space.
2. Tenant's Work and Tenant Inducement
The Premises shall be accepted by the
Tenant on an "as is" basis except as otherwise expressly
provided in this paragraph and the Landlord shall not be
required to do any work in respect thereof prior to
delivering possession of the Premises to the Tenant, save
and except the following work with respect to the sixth
(6th) floor Premises only to be completed by the Landlord at
no cost to the Tenant:
I. Construct full height (slab to
slab) demising wall, insulated
with 6 mil. vapour barrier and one
layer fire rated 5/8" drywall on
each side, finished ready for
painting by the Tenant;
II. Install building standard entrance
and exit doors;
III. Construct all common corridors as
required, finished with ceiling,
lighting and carpeting; and
IV. Finish all walls in common hallway
and elevator lobby in compatible
vinyl or paint.
Any additional installations, removals,
alterations, additions, partitions, repairs or improvements
which are necessary to enable the Tenant to carry on its
business on the Premises (the "Tenant's Work") shall be
made, erected or installed (including design, co-ordination
and construction thereof) at the sole cost of the Tenant,
subject as hereinafter provided, and subject to and in
accordance with the provisions of Section 10(m) of this
Lease. The Tenant shall be permitted non-exclusive access to
the seventh (7th) floor Premises on January 1, 1997 and to
the sixth (6th) floor Premises on November 10, 1996 (subject
as hereinafter provided in the paragraph next following) for
the purpose of permitting the Tenant to carry out the
Tenant's Work, provided that this Lease has been executed
and delivered by the Landlord and the Tenant. As of, from
and including the date on which the Tenant is granted such
access, all of the terms and conditions of this Lease shall
apply to and bind the Tenant, but Basic Rent, the Tenant's
Proportionate Share of Taxes, the Tenant's Proportionate
Share of Operating Costs, and utility charges pursuant to
Section 10(b) shall not be payable by the Tenant for and
during the period prior to the Commencement Date.
The provision to the Tenant of
non-exclusive access to the sixth (6th) floor Premises on
November 10, 1996 is subject to the Landlord securing the
agreement of the existing tenant thereof to vacate such
sixth (6th) floor Premises prior to such date, failing which
the Tenant shall be permitted non-exclusive access to the
sixth (6th) floor Premises on the same basis as for the
seventh (7th) floor Premises.
As an inducement to the Tenant to enter
into this Lease, the Landlord shall pay to the Tenant, or to
the extent, if any, by which the amount of such inducement
exceeds the actual cost of the Tenant's Work credit against
Basic Rent and Additional Rent as it becomes due hereunder,
an amount equal to the product obtained by multiplying the
sum of $16.00 by the certified Rentable Area of the Premises
expressed in square feet, plus applicable goods and services
tax on such amount exigible pursuant to Part IX of the
Excise Tax Act (Canada).
Ninety percent (90%) of the amount of such
inducement shall be due and payable by the Landlord upon,
but not until, the occurrence or completion of all of the
following:
(a) the Tenant's execution and delivery of
this Lease and any acknowledgments
required;
(b) commencement of the Term;
(c) completion of all Tenant's Work in
compliance with Section 10(m) of this
Lease;
(d) commencement by the Tenant of the conduct
of its business in all of the Premises; and
(e) the delivery to the Landlord of proof of
payment of Workers' Compensation
assessments for all Tenant's contractors
and sub-contractors.
The Landlord shall be entitled to hold back ten percent
(10%) of the inducement amount until the occurrence or
completion of all of the following:
(f) delivery to the Landlord of the following:
(i) a statutory declaration of an
officer of the contractor that has
performed the Tenant's Work that
the contract under which such work
was performed has been completed
or abandoned, as those terms are
defined under the Construction
Lien Act, 1983 (the "Act");
and one of
(ii) declarations of last supply in the
form prescribed in the Act given
by officers of all of the
sub-contractors employed by the
contractor in its performance of
the Tenant's Work;
or
(iii) a certificate of completion in the
form prescribed in the Act in
respect of the subcontract of each
sub-contractor employed by the
contractor that has performed the
Tenant's Work, together with
evidence of delivery of a copy of
such certificate to the
sub-contractor in respect of whose
sub-contract it was given;
(g) the expiry of the periods pursuant to the
Act within which workmen, materialmen,
contractors or suppliers in connection
with completion of the Tenant's Work may
file a claim for lien for unpaid work or
service performed or material supplied,
provided no claim for lien for unpaid work
or service performed or material supplied
has been filed, and if such liens have
been filed, then only upon such liens
being released and vacated; and
(h) receipted and paid invoices, verifying the
actual cost of the Tenant's Work.
Further, neither the initial ninety
percent (90%) nor the final ten percent (10%) of the
inducement shall be due and payable if, at the time it is
otherwise payable, the Tenant is in default under this
Lease, or the Landlord has re-entered or become entitled to
do so, or the Landlord has distrained, or the Tenant has
become bankrupt, or any right, title or interest in such
payment has been assigned, voluntarily or otherwise, to
anyone other than the Tenant. The Landlord may deduct from
the amount of any portion of the inducement any arrears of
Basic Rent and Additional Rent outstanding as of the date on
which such portion of the inducement is payable or to be
credited by the Landlord.
At the time the inducement is paid or
credited to the Tenant in full or at any time thereafter,
upon request by the Landlord, the Tenant shall execute and
deliver to the Landlord a written acknowledgment in a form
satisfactory to the Landlord and the Tenant, each acting
reasonably, that the inducement has been so paid and
credited and that all of the Landlord's obligations under
this clause 2 have been fully performed and thereafter this
Lease shall be deemed to have been amended by deleting this
clause 2 therefrom.
If the Landlord fails to pay either the
initial ninety percent (90%) or the remaining ten percent
(10%) of the inducement to the Tenant within five (5) days
after receipt by the Landlord from the Tenant of notice of
default in payment of such portion of the inducement on the
date on which it is due and payable in accordance with the
foregoing provisions, the Tenant shall have the right to set
off against Basic Rent and Additional Rent next becoming due
hereunder the amount of the inducement payable but not paid
by the Landlord.
3. Deposit
The Landlord acknowledges receipt by the
Landlord's agent, Colliers Macaulay Nicolls (Ontario) Inc.,
in trust, a deposit in the amount of $50,000.00 which shall
be held in an interest-bearing account for the Tenant and
paid to the Landlord and applied, together with interest, on
account of Basic Rent and Additional Rent first becoming due
hereunder.
4. Parking
The Tenant shall be entitled during the
Term to have the use of up to nine (9) unreserved and six
(6) twenty-four (24) hour reserved parking spaces in the
parking garage of the Project. The Tenant shall provide
written notice to the Landlord prior to the Commencement
Date as to the number of parking spaces to which it commits
for the Term. The Tenant shall initially pay to the
Landlord or its parking contractor or agent, as directed,
for the use of such parking spaces and as Additional Rent,
the sum of $160.00 per month for each unreserved space and
$250.00 per month for each reserved space (taxes included in
each case), which sums shall be adjusted from time to time
to the then current monthly rates charged by the Landlord or
its parking contractor or agent for unreserved and reserved
parking spaces in such parking garage. The use of such
parking spaces shall be subject to the rules and regulations
prescribed by the Landlord, its contractor or agent from
time to time for parking in the parking garage. The Tenant
shall execute and deliver the Landlord's standard parking
agreement, subject to those amendments reasonably requested
by the Tenant, for such unreserved and reserved parking
spaces.
5. Early Termination by Tenant
Provided that, and for so long only as,
the Tenant pays the rents and performs each and every of the
covenants, conditions and agreements herein reserved and
contained and on the part of the Tenant to be paid and
performed and is not and has not been in default in respect
of any of the same, the Tenant shall have the right to
terminate this Lease effective as of the sixth (6th)
anniversary of (i) the Commencement Date (if the
Commencement Date is the first day of a calendar month), or
(ii) the last day of the month in which the Commencement
Date occurs (if the Commencement Date is not the first day
of a calendar month), (the "Termination Date"), such right
to be exercised by the Tenant giving to the Landlord written
notice of such termination not less than twelve (12) months
prior to the Terminate Date. The Tenant shall deliver to
the Landlord not less than ten (10) days prior to the
earlier of the Termination Date and the date on which the
Tenant intends to vacate the Premises, as a termination fee,
a bank draft or certified cheque payable to the Landlord in
the amount equal to the product obtained by multiplying the
sum of $18.50 by the number of square feet comprised in the
Rentable Area of the Premises.
If the Tenant exercises such right of
termination, this Lease shall be terminated as of, from and
including the Termination Date, Basic Rent and Additional
Rent shall be adjusted and paid by the Tenant to the
Termination Date, and the Tenant shall, on or before the
Termination Date, surrender and vacate the Premises in
accordance with all of the provisions of this Lease
applicable at the expiration of the Term.
<PAGE>
6. Renewal
If the Tenant pays the rents and performs
each and every of the covenants, conditions and agreements
herein reserved and contained and on the part of the Tenant
to be paid and performed and is not in material default in
respect of any of the same, and provided that the Tenant is
Applied Communications Canada, Inc., an affiliate thereof to
which this Lease has been assigned in compliance with
subsection 10(e)(i) or a corporation resulting from an
amalgamation as referred to in subsection 10(e)(ii), and is
itself in possession of and occupying and conducting its
business in the whole of the Premises, this Lease has not
been assigned and neither the whole nor any part of the
Premises has been subleased by the Tenant, and there has not
occurred a change in effective control of the Tenant, the
Landlord will, upon the request in writing by the Tenant
given at least twelve (12) months prior to the expiration of
the Term (the "Notice Period"), grant to the Tenant a
renewal lease of the Premises for one (1) further term of
five (5) years upon and subject to the covenants, conditions
and agreements as are set forth in the Landlord's standard
form of lease for the Building then in use, and the renewal
lease shall not contain any provision for further renewal
and the Basic Rent shall be the Market Rent (as hereinafter
defined) at the time when such rental is determined (the
"New Basic Rent"). If requested by the Tenant during the
Notice Period, the Landlord will provide the Tenant with a
copy of its standard form of lease for the Building then in
use. The New Basic Rent shall be mutually agreed to by the
Landlord and the Tenant at least one hundred and eighty
(180) days prior to the expiration of the Term, and failing
agreement, shall be determined by arbitration in the manner
hereinafter provided. In the event that the Landlord and the
Tenant fail to agree on the New Basic Rent, then each of the
Landlord and the Tenant, at least one hundred and seventy
(170) days prior to the expiry of the Term, shall notify the
other of n arbitrator selected by such party and at least
one hundred and sixty (160) days prior to the expiry of the
Term, the two arbitrators so nominated shall name a third
arbitrator; in the event that either the Landlord or the
Tenant fails to name an arbitrator within the period of time
hereinbefore specified, the arbitrator named by the other
party shall determine the New Basic Rent; in the event the
two arbitrators named fail to agree on a third arbitrator
within the time hereinbefore specified, the third arbitrator
shall be such person as shall be appointed by a Judge of the
Ontario Court (General Division) upon application by either
of the Landlord or the Tenant. In no event shall the New
Basic Rent be less than the Basic Rent payable (or which
would otherwise have been payable, but for any abatement of
Basic Rent pursuant to this Lease) during the last twelve
(12) months of the Term.
For the purposes of this clause 6, "Market
Rent" means the rate of minimum (basic) rent per square foot
per annum for premises in the Building that a willing tenant
renewing a lease would pay and a willing landlord would
accept in bona fide arm's length negotiations.
7. Option to Lease Additional Space
Provided that, and for so long only
as :
(a) the Tenant pays the rents herein reserved
and to be paid by the Tenant and is not
and has not been in material default in
the performance of the covenants,
conditions and agreements herein contained
and on the part of the Tenant to be
performed; and
(b) the Tenant is Applied Communications
Canada, Inc., an affiliate thereof to
which this Lease has been assigned in
compliance with subsection 10(e)(i) or a
corporation resulting from an amalgamation
as referred to in subsection 10(e)(ii),
and is itself in possession of and
occupying and conducting its business in
the whole of the Premises and this Lease
has not been assigned and neither the
whole nor any part of the Premises has
been subleased by the Tenant,
the Landlord agrees that if, at any time during the Term or
any renewal thereof, space on the sixth (6th) floor (or, if
the Tenant has been relocated in accordance with Section 30
of the Lease, space on the floor to which the Tenant's
computer room is relocated) (the "Option Premises") becomes
available for leasing, the Landlord shall give to the Tenant
written notice of such availability, which notice shall set
forth the current fair market rental rate for the Option
Premises and other market terms and conditions applicable
thereto as are determined by the Landlord (the "Offered
Terms"). The Tenant shall have the right, to be exercised
by written notice given to the Landlord within ten (10
business days of the Tenant's receipt of the Landlord's
notice, to elect to lease from the Landlord all of the
Option Premises, upon and subject to the Offered Terms and
otherwise upon and subject to the terms and conditions of
this Lease (save and except this Schedule "E"). If the
Tenant elects to so lease the Option Premises, the
Landlord's notice to the Tenant shall be deemed to have
constituted an offer to the Tenant and the Tenant's notice
to the Landlord shall constitute acceptance thereof,
resulting in a binding agreement to lease between the
parties. If the Tenant elects not or fails to exercise its
right to lease all of the Option Premises within the
aforesaid period of ten (10) business days, then the
Landlord shall have the right for a period of ninety (90)
days after the expiry of such ten (10) business day period
to offer the Option Premises to any other third party on the
Offered Terms and if the Landlord does not enter into an
agreement to lease with a third party for the Option
Premises on the Offered Terms within such ninety (90) day
period, the right of first offer set forth in this clause 7
shall once again arise and apply. If the Landlord desires
to offer the Option Premises on terms and conditions more
favourable to a tenant than the Offered Terms (the "New
Terms"), the Landlord shall offer the Option remises to the
Tenant on the New Terms, and the provisions of this clause 7
shall apply thereto, prior to making the Option Premises
available or offering the Option Premises for lease to, or
accepting any offer to lease the Option Premises from, any
other third party.
The Option Premises shall be deemed to be
"available for leasing" if, and on the date, the Option
Premises are available to the Landlord for leasing to third
parties, free of any rights of or commitments to any third
party.
8. Computer Room and Operations Centre;
U.P.S. System
Subject to Section 12(d) of the Lease, the
Tenant shall have the right to operate its computer room and
operations centre on a 24 hours per day basis. The Tenant
shall further have the right, subject to compliance with
Section 10(m) of the Lease, to install at the Tenant's sole
cost and expense separate heating and cooling equipment to
facilitate such operations, to be accommodated by connecting
new air-conditioning units having a capacity of 20 tons of
cooling for the computer room and 6 tons of cooling for the
operations centre to the existing base building
supplementary condenser risers available 24 hours per day.
The Tenant shall also have the right,
subject to compliance with Section 10(m) of the Lease, to
install a U.P.S. system in the Premises and related diesel
generator in a suitable (roof top) location in the most cost
effective application, as approved by the Landlord, acting
reasonably. All terms and conditions of this Lease (save
and except this Schedule "E") shall apply to any space on
the roof provided by the Landlord for the Tenant's diesel
generator and all connections thereto, except that Basic
Rent, Taxes and Operating Costs shall not be payable by the
Tenant for such space. The Tenant shall be solely
responsible for all costs incurred either by the Tenant or
the Landlord by reason of or in connection with the
installation, operation, maintenance, repair and replacement
of such U.P.S. system and diesel generator, including any
modifications to the roof required to install the diesel
generator and approved by the Landlord.
The Tenant shall comply strictly with all
present and future requirements, administrative and judicial
orders, laws, statutes, ordinances, rules and regulations of
all federal, provincial and municipal ministries,
departments, commissions, boards and agencies having or
claiming jurisdiction with respect to or in connection with
the installation, operation, maintenance, repair and
replacement of such U.P.S. system and diesel generator.
The Tenant shall have the right but not
the obligation to remove the diesel generator installed by
the Tenant at the expiry or earlier termination of this
Lease.
The cost and all associated costs for the
connection to the base building supplementary condenser
water system together with all costs of the Tenant's share
(as determined by the Landlord, acting reasonably) of the
on-going operation, maintenance and repair of such
supplementary system will be paid for by the Tenant.
The Tenant shall be responsible for all
costs associated with the installation of and the on going
operation, maintenance and repair of the Tenant's
air-conditioning units.
<PAGE>
METROCENTRE
WELLINGTON STREET OFFICE BUILDING
200 WELLINGTON STREET WEST, TORONTO
L E A S E
DATED: October 24, 1996
BETWEEN:
MARATHON REALTY COMPANY LIMITED
(Landlord)
- and -
APPLIED COMMUNICATIONS CANADA, INC.
(Tenant)
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0
0
<COMMON> 131
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<TOTAL-LIABILITY-AND-EQUITY> 131,615
<SALES> 47,642
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