EX-10.14 10 y16469exv10w14.txt AMENDED AND RESTATED LEASE AGREEMENT Exhibit 10.14 EXECUTION COPY AMENDED AND RESTATED LEASE AGREEMENT by and between PG-NOM (ALBERTA), INC., an Alberta corporation, as nominee for PG-TRUST (DE), a trust formed under the laws of the State of Delaware as LANDLORD and CWD WINDOWS AND DOORS, INC., a Canadian corporation, as TENANT Premises: Calgary, Alberta Dated as of: March__________, 2005 Effective as of : August 27, 2004 TABLE OF CONTENTS
Page ---- 1. Demise of Premises...................................................... 1 2. Certain Definitions..................................................... 1 3. Title and Condition..................................................... 8 4. Use of Leased Premises; Quiet Enjoyment................................. 10 5. Term.................................................................... 10 6. Basic Rent.............................................................. 11 7. Additional Rent......................................................... 11 8. Net Lease; Non-Terminability............................................ 13 9. Payment of Impositions.................................................. 13 10. Compliance with Laws and Easement Agreements; Environmental Matters..... 14 11. Liens; Recording........................................................ 16 12. Maintenance and Repair.................................................. 17 13. Alterations and Improvements............................................ 17 14. Permitted Contests...................................................... 19 15. Indemnification......................................................... 19 16. Insurance............................................................... 20 17. Casualty and Condemnation............................................... 24 18. Termination Events...................................................... 25 19. Restoration............................................................. 26 20. Intentionally Omitted................................................... 27 21. Assignment and Subletting; Waiver of Landlord's Liens................... 27 22. Events of Default....................................................... 30 23. Remedies and Damages Upon Default....................................... 32 24. Notices................................................................. 36 25. Estoppel Certificate.................................................... 36 26. Surrender............................................................... 36 27. No Merger of Title...................................................... 37 23. Books and Records....................................................... 37 29. Determination of Value.................................................. 38 30. Non-Recourse as to Landlord............................................. 39 31. Landlord's Financing.................................................... 40 32. Subordination: Non-Disturbance and Attornment........................... 40
-i- 33. Tax Treatment; Reporting................................................ 40 34. Permitted Leasehold Mortgage............................................ 41 35. Rights of Permitted Leasehold Mortgagee................................. 41 36. Grants and Releases of Easement......................................... 44 37. Intentionally Omitted................................................... 45 38. Post-Closing Obligations................................................ 45 39. Miscellaneous........................................................... 47
EXHIBITS Exhibit "A" - Land Exhibit "B" - Machinery and Equipment Exhibit "C" - Schedule of Permitted Encumbrances Exhibit "D" - Rent Schedule Exhibit "E-l" - Form of Subordination Attornment and Non-Disturbance Agreement Exhibit "E-2" - Tenant Estoppel Certificate Exhibit "F" - Post-Closing Obligations -ii- AMENDED AND RESTATED LEASE AGREEMENT, made as of this ____________ day of March, 2005, effective the 27th day of August, 2004, between PC-NOM (ALBERTA), INC., an Alberta corporation as nominee for PG-TRUST (DE), a trust formed under the laws of the State of Delaware ("Landlord"), with an address c/o W. P. Carey & Co. LLC, 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020, and CWD WINDOWS AND DOORS, INC., a Canadian corporation, (singly and collectively, as the context may require "Tenant"), with an address for notice purposes at care of Ply Gem Holdings, Inc., 185 Platte Clay Way, Suite A, Kearney, Missouri, 64060 U.S.A. BACKGROUND: 1. Landlord and Tenant entered into a certain Lease Agreement dated August 27, 2004 (the "Original Lease") for the Leased Premises (as hereinafter defined). 2. Landlord and Tenant desire to amend and restate the Original Lease in its entirety as hereinafter set forth. NOW, THEREFORE. in consideration of the rents and provisions herein stipulated to be paid and performed, Landlord and Tenant hereby covenant and agree as follows: 1. Demise of Premises. Landlord hereby demises and lets to Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon the provisions hereinafter specified, the following described property (collectively, the "Leased Premises"): (a ) the premises described in Exhibit "A" hereto, together with the Appurtenances (collectively, the "Land"); (b) the buildings,structures and other improvements now or hereafter constructed on the Land (collectively, the "Improvements"); and (c) the fixtures, machinery, equipment and other property described in Exhibit "B" hereto (collectively, the "Equipment"). 2. Certain Definitions. "AACI" shall mean an Accredited Appraiser of the Appraisal Institute of Canada. "Acquisition Cost" shall mean $7,100,811. "Acquisition Fee" shall mean $334,593. "Additional Rent" shall mean Additional Rent as defined in Paragraph 7. "Adjoining Property" shall mean all sidewalks, driveways, curbs, gores and vault spaces adjoining any of the Leased Premises. "Affiliate" shall mean any Person which shall (i) control, (ii) be under the control of, or (iii) be under common control with Tenant (the term "control" as used herein shall be deemed to mean ownership of more than 50% of the outstanding voting stock of a corporation -1- or other majority equity and control interest if such Person is not a corporation) and the power to direct or cause the direction of the management or policies of such Person. "Alterations" shall mean all changes, additions, improvements or repairs to, all alterations, reconstructions, renewals, replacements or removals of and all substitutions or replacements for any of the Improvements or Equipment, both interior and exterior, structural and non-structural, and ordinary and extraordinary. "Appurtenances" shall mean all tenements, hereditaments, easements, rights-of-way, rights, privileges in and to the Land, including (a) easements over other lands granted by any Easement Agreement and (b) any streets, ways, alleys, vaults, gores or strips of land adjoining the Land. "Assignment" shall mean any assignment of rents and leases from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified from time to time. "Basic Rent" shall mean Basic Rent as defined in Paragraph 6. "Basic Rent Payment Date" shall mean Basic Rent Payment Date as defined in Paragraph 6. "Business Days" shall mean any day except Saturdays, Sundays and legal holidays on which banks are generally not open for business in the City of Calgary. "Canadian Funds" shall mean immediately available funds which at the time of payment are legal tender for the payment of public and private debts in Canada. "Capital Tax" shall mean any tax or taxes exigible under any provincial or federal legislation based upon or computed by reference to the paid-up capital or place of business of the Landlord, as determined for the purposes of such tax, or based upon or computed by reference to the taxable capital employed or invested in Canada, as determined for the purposes of such tax, or any similar tax levied, imposed or assessed in the future in lieu thereof, or in addition thereto by any governmental authority and includes for greater certainty, the tax imposed of under Parts 1.3 and VI of the Income Tax Act (Canada). Provided, however, that Capital Tax shall be calculated as though the Leased Premises were the only asset of the Landlord in excess of any minimum taxable capital. "Casualty" shall mean any loss of or damage to any property (including the Leased Premises) included within or related to the Leased Premises as a result of any fire, earthquake or other event of casualty. "Commencement Date" shall mean Commencement Date as defined in Paragraph 5. "Condemnation" shall mean (a) any taking of all or a portion of any of the Leased Premises (i) in or by expropriation, condemnation or other eminent domain proceedings pursuant to any Law, general or special, or (ii) by reason of any agreement with any expropriating body or condemnor in settlement of or under threat of any such expropriation, condemnation or other eminent domain proceeding, or (b) any conveyance in lieu of -2- expropriation or condemnation. The Condemnation shall be considered to have taken place as of the later of the date actual physical possession is taken by the expropriating body or condemnor, or the date on which the right to compensation and damages accrues under the law applicable to the Leased Premises. "Condemnation Notice" shall mean notice or knowledge of the institution of or intention to institute any proceeding for Condemnation. "Costs" of a Person or associated with a specified transaction shall mean all reasonable costs and expenses incurred by such Person or associated with such transaction, including without limitation, legal fees and expenses, court costs, brokerage fees, escrow fees, title insurance premiums, mortgage commitment fees, mortgage points, recording fees and transfer taxes, but excluding the internal administrative costs (including overhead) of such Person, as the circumstances require. "CPI" shall mean CPI as defined in Exhibit "D" hereto. "Defalt Rate" shall mean the Default Rate as defined in Paragraph 7(a)(iv). "Easement Agreement" shall mean any conditions, covenants, restrictions, easements, declarations, licenses and other agreements listed as Permitted Encumbrances or as may hereafter affect the Leased Premises. "Environmental Law" shall mean (a) whenever enacted or promulgated, any applicable federal, provincial, foreign and Local law, statute, ordinance, rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code, requirement or agreement with any governmental entity, (i) relating to pollution (or the cleanup thereof), or the protection of air, water vapour, surface water, groundwater, drinking water supply, land (including land surface or subsurface), plant, aquatic and animal life from injury caused by a Hazardous Substance or (ii) concerning exposure to, or the use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, handling, labeling, production, disposal or remediation of Hazardous Substances, Hazardous Conditions or Hazardous Activities, in each case as amended and as now or hereafter in effect, and (b) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations or injuries or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Hazardous Substance. The term Environmental Law includes, without limitation, the Canadian Environmental Protection Act, 1999, Environmental Protection and Enhancement Act (Alberta), Water Act (Alberta) and Municipal Government Act (Alberta) as amended from time to time, and any successor legislation. "Environmental Violation" shall mean (a) any direct or indirect discharge, disposal, spillage, emission, escape, pumping, pouring, injection, leaching, release, seepage, filtration or transporting of any Hazardous Substance at, upon, under, onto or within the Leased Premises, or from the Leased Premises to the environment, in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which is likely to result in any liability to Landlord, Tenant or Lender, any Federal, provincial or local government or any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or properly damage, (b) any deposit, storage, dumping, placement or use of any Hazardous Substance at, upon, under or within the Leased Premises (or -3- which extends to any Adjoining Property) in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which is likely to result in any liability to any Federal, provincial or local government or to any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (c) the abandonment or discarding of any barrels, containers or other receptacles containing any Hazardous Substances in violation of any Environmental Laws, (d) any activity, occurrence or condition which is likely to result in any liability, cost or expense to Landlord or Lender or any other owner or occupier of the Leased Premises, or which is likely to result in a creation of a lien on the Leased Premises under any Environmental Law, or (e) any violation of or noncompliance with any Environmental Law. "Equipment" shall mean the Equipment as defined in Paragraph 1. "Event of Default" shall mean an Event of Default us defined in Paragraph 22(a). "Expiration Date" shall mean Expiration Date as defined in Paragraph 5(a). "Fair Market Rental Value" shall mean thc fair market rental value of the Leased Premises for the relevant Renewal Team determined in accordance with the procedure specified in Paragraph 29. "Fair Market Value Date" shall mean the date when the Fair Market Rental Value is determined in accordance with Paragraph 29. "Guarantee" shall mean the Guaranty and Suretyship Agreement dated as of the date hereof from Guarantor to Landlord guaranteeing the payment and performance by Tenant of all of Tenant's obligations under the Lease. "Guarantor" shall collectively mean Ply Gem Holdings, Inc., a Delaware corporation, MWM Holding, Inc., a Delaware corporation, Great Lakes Window Inc., an Ohio corporation, MW Manufacturers Holding Corp., a Delaware corporation, MW Manufacturers Inc., a Delaware corporation, Napco Window Systems, Inc., a Delaware corporation, Kroy Building Products, Inc., a Delaware corporation and Thermal-Gard Inc., a Pennsylvania corporation. "Hazardous Activity" means any activity, process, procedure or undertaking which directly or indirectly (a) procures, generates or creates any Hazardous Substance; (b) causes or results in (or threatens to cause or result in) the release, seepage, spill, leak, flow, discharge or emission of any Hazardous Substance into the environment (including the air, ground water, watercourses or water systems) (c) involves the containment or storage of any Hazardous Substance; or (d) would cause the Leased Premises or any portion thereof to become a hazardous waste treatment, recycling, reclamation, processing, storage or disposal facility within the meaning of any Environmental Law. "Hazardous Condition" means any condition which would support any claim or liability under any Environmental Law, including the presence of underground storage tanks. -4- "Hazardous Substance" means (i) any substance, material, product, petroleum, petroleum product, derivative compound or mixture, mineral (including asbestos), chemical, gas, medical waste, or other pollutant, in each case whether naturally occurring, man-made or the by-product of any process, that is toxic, harmful or hazardous or acutely hazardous to the environment or public health or safety or (ii) any substance supporting a claim under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law. Hazardous Substances include, without limitation, any toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or petroleum-derived substances or waste, radon, radioactive materials, asbestos, asbestos containing materials, microbial matter (including but not limited to mold, mildew and other fungi or bacterial matter which reproduces through the release of spores or the splitting of cells), urea formaldehyde foam insulation, lead and polychlorinated biphenyls. "Impositions" shall mean the Impositions as defined in Paragraph 9(a). "Improvements" shall mean the Improvements as defined in Paragraph 1. "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15. "Initial Term" shall mean Initial Term as defined in Paragraph 5(a). "Insurance Requirements" shall mean the requirements of all insurance policies required to be maintained in accordance with this Lease. "Land" shall mean the Land as defined in Paragraph. 1. "Landlord Expenses" shall mean (i) any cost or expense that is the express obligation of Landlord under this Lease, (ii) debt service for any indebtedness of Landlord, (iii) any Landlord Impositions, (iv) except as expressly set forth in Paragraph 7(a)(i), administrative expenses of Landlord, and (v) except as expressly set forth herein with respect to any initial financing, costs incurred by Landlord in connection with financing, or refinancing the Leased Premises. "Landlord Impositions" shall mean: (a) any estate, gift or inheritance tax of Landlord; (b) any transfer or other taxes incurred by Landlord in connection with a conveyance of the fee interest in the Leased Premises to any Person except Tenant or its designee, or a transfer of any direct or indirect equity interests in Landlord to any Person except Tenant or its designee, or any mortgage recording taxes incurred in connection with a mortgage of Landlord's fee interest in the Leased Premises except for mortgage recording taxes payable on the initial fee Mortgage; (c) any franchise tax, net income tax, withholding tax, capital gains tax, gross receipts tax or similar tax (other than any gross receipts tax or similar tax imposed in lieu of any tax or imposition that Tenant is obligated to pay under Paragraph 9); provided, that if at any time during the term of this Lease, the method of taxation shall be such that there shall be assessed. levied, charged or imposed on Landlord a tax, in lieu of real estate taxes or any other Imposition payable by Tenant, upon the value of the Leased Premises, men all such levies and taxes or the part thereof so measured or based shall be payable by Tenant, but only to the extent that such levies or taxes would be payable if the Leased Premises were the only property of Landlord, and Tenant shall pay and discharge the same as herein provided. "Law" shall mean any constitution, statute, rule of law, code, ordinance, order, judgment, decree injunction, rule, regulation, policy, requirement or administrative or -5- judicial determination, even if unforeseen or extraordinary, of every duly constituted governmental authority, court or agency; now or hereafter enacted or in effect. "Lease" shall mean this Amended and Restated Lease Agreement. "Leasehold Estate" shall mean Tenant's leasehold estate under this Lease. "Lease Year" shall mean, with respect to the first Lease Year, the period commencing on the Commencement Date and ending an midnight on the last day of the twelfth (12th) consecutive calendar month following the month in which the Commencement Date occurred, and each succeeding twelve (12) month period during the Term. "Leased Premises" shall mean the Leased Premises as defined in Paragraph 1. "Legal Requirements" shall mean the requirements of all present and future Laws (including but not limited to Environmental Laws and Laws relating to accessibility to, usability by, and discrimination against, disabled individuals) and all covenants, restrictions and conditions now or hereafter of record which may be applicable to Tenant or to any of the Leased Premises, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of any of the Leased Premises, even if compliance therewith necessitates structural changes or improvements or results in interference with the use or enjoyment of any of the Leased Premises or requires Tenant to carry insurance other than as required by this Lease. "Lender" shall mean any Person (and its respective successors and assigns) which may, on or after the date hereof, make a Loan to Landlord or be the holder of a Note. "Limited Remedy Default" shall mean an Event of Default specified in the following clauses of Paragraph 22(a): clause (iii) if the misrepresentation is with respect to the penultimate sentence of Sections 2, 3, 4, 7 and 24 of the Lessee's Certificate, the first sentence of Section 3 or the first or last sentence of Section 7 of the Lessee's Certificate, clause (iv), clause (v)(B) clause (vi)(E), clause (ix)(B), clause (xi), clause (xiii) (if such Event of Default is with respect to or arises as a result of a default under Paragraphs 6 or 9 of the Guarantor's Certificate, Sections 3.03(ii), 3.04(iv), 4.01 (c) or 4.01 (d) of the Guaranty), or clause (xiv). "Loan" shall mean any loan (or the portion thereof allocable to the Leased Premises, if applicable) made by one or more Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by a Note. "Monetary Obligations" shall mean Rent and all other sums payable by Tenant under this Lease to Landlord, to any third party on behalf of Landlord or to any Indemnitee. "Moody's" shall mean Moody's Investor Services, Inc. "Mortgage" shall mean any mortgage or deed of trust from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified. -6- "Net Award" shall mean (a) the entire award payable to Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or by agreement or otherwise, or (b) the entire proceeds of any insurance required under clauses (i), (ii) (to the extent payable to Landlord or Lender),(iv), (v) or (vi) of Paragraph I6(a), as the case may be, less any expenses incurred by Landlord and Lender in collecting such award or proceeds. "Note" shall mean any promissory note (or an allocable portion thereof, if applicable) evidencing Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified. "Partial Condemnation" shall mean any Condemnation which does not constitute a Termination Event. "Permitted Encumbrances" shall mean those covenants, restrictions, reservations, liens, conditions and easements and other encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall not be deemed to revive any such encumbrances that have expired or terminated or are otherwise invalid or unenforceable). "Permitted Leasehold Mortgage" shall mean any first lien, mortgage, deed of trust, security deed, deed to secure debt, assignment, security interest, pledge, financing statement, or any other instrument(s) or agreement(s) intended to grant security for any obligation (including a purchase-money or other promissory note) encumbering the Leasehold Estate, as entered into, renewed, modified, consolidated, amended, extended, or assigned from time to time. "Permitted Leasehold Mortgagee" shall mean the holder of Permitted Leasehold Mortgage, and its successors and assigns. "Person" shall mean an individual, partnership, association, corporation or other entity. "Post-Closing Obligations" shall mean those obligations of Tenant specified in Exhibit "F" hereto. "Preapproved Assignee" shall mean Preapproved Assignee as defined in Paragraph 21 (a)(i). "Prepayment Premium" shall mean any payment (other than a payment of principal and/or interest which Landlord is required to make under a Note or a Mortgage) by reason of any prepayment by Landlord of any principal due under a Note or Mortgage, and which may be (in lieu of such prepayment premium or prepayment penalty) (a) a "make whole" or yield maintenance clause requiring a prepayment premium or (b) a defeasance payment (such defeasance payment to be an amount equal to the positive difference between (i) the total amount required to defease a Loan and (ii) the outstanding balance of the Loan as of the date of such defeasance, in the case of either (a) or (b) in an amount sufficient to compensate the Lender for the loss of the benefit of the Loan due to a prepayment. "Present Value" of any amount shall mean such amount discounted by a rate per annum which is the lower of (a) the Prime Rate plus two percent (2%) at the time such present value is determined or (b) eight percent (8%) per annum. -7- "Prime Rate" shall mean the interest rate per annum as published from time to time, in The Wall Street Journal as the "Prime Rate" in its column entitled "Money Rate". The Prime Rate may not be the lowest rate of interest charged by any "large U.S. money center commercial banks" and Landlord makes no representations or warranties to that effect. In the event The Wall Street Journal ceases publication or ceases to publish the "Prime Rate" as described above, the Prime Rate shall be the average per annum discount rate (the "Discount Rate" on ninety-one (91) day bills ("Treasury Bills") issued from time to time by the United States Treasury at its most recent auction, plus three hundred (300) basis points. If no such 91-day Treasury Bills are then being issued, the Discount Rate shall be the discount rate on Treasury Bills then being issued for the period of time closest to ninety-one (91) days. "Province" shall mean the Province of Alberta, Canada. "Relevant Date" shall mean the date on which Fair Market Rental Value is determined in the event of any extension of this Lease pursuant to Paragraph 5(b). "Renewal Term" shall mean Renewal Term as. defined in Paragraph 5. "Rent" shall mean, collectively, Basic Rent and Additional Rent. "S&P" shall mean Standard and Poor's Rating Services. "Site Assessment" shall mean a Site Assessment as defined in Paragraph 10(c). "Surviving Obligations" shall mean any obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease or which survive such expiration or termination by their own terms. "Tenant's Equipment" shall mean all trade fixtures, machinery, office, manufacturing storage materials, handling and warehouse equipment which are used by Tenant in the operation of its business, including any air compressors and exhaust fans used by Tenant in the operation of its business. "Term" shall mean the Initial Term and any exercised Renewal Term. "Termination Notice" shall mean Termination Notice as defined in Paragraph 18(a). "Third Party Purchaser" shall mean the Third Party Purchaser as defined in Paragraph 21(h). "U.S. Dollars" shall mean the legal currency of the United States of America. "Warranties" shall mean Warranties as defined in Paragraph 3(d). 3. Title and Condition. (a) The Leased Premises are demised and let subject to (i) the Mortgage and Assignment, (ii) the rights of any Persons in possession of the Leased Premises, -8- (iii) the existing state of title of any of the Leased Premises, including any Permitted Encumbrances, (iv) any state of facts which an accurate survey or physical inspection of the Leased Premises might show, (v) all Legal Requirements, including any existing violation of any thereof, and (vi) the condition of the Leased Premises as of the commencement of the Term, without representation or warranty by Landlord. (b) Tenant acknowledges that the Leased Premises are in good condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE. (c) Tenant represents to Landlord that Tenant has examined the title to the Leased Premises prior to the execution and delivery of this Lease and has found the same to be satisfactory for the purposes contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal and equitable) to the Leased Premises is in Landlord and that Tenant has only the leasehold right of possession and use of the Leased Premises as provided herein, (ii) the Improvements conform to all material Legal Requirements and all Insurance Requirements, (iii) all easements necessary or appropriate for the use or operation of the Leased Premises have been obtained, (iv) all contractors and subcontractors who have performed work on or supplied materials to the Leased Premises have been fully paid, and all materials and supplies have been -9- fully paid for, (v) the Improvements have been fully completed in all material respects in a workmanlike manner, and (vi) all Equipment necessary or appropriate for the use or operation of the Leased Premises has been installed and is presently fully operative in all malarial respects. (d) Landlord hereby assigns to Tenant, without recourse or warranty whatsoever, all assignable warranties, guaranties, indemnities and similar rights (collectively, "Warranties") which Landlord may have against any manufacturers, seller, engineer, contractor or builder in respect of any of the Leased Premises. Such assignment shall remain in effect until the expiration or earlier termination of this Lease, whereupon such assignment shall cease and all of the Warranties shall automatically revert to Landlord. In confirmation of such reversion Tenant shall execute and deliver promptly any certificate or other document reasonably required by Landlord. Landlord shall also retain the right to enforce any Warranties upon the occurrence and during the continuance of an Event of Default. Tenant shall use commercially reasonable efforts to enforce the Warranties in accordance with their respective terms. 4. Use of Leased Premises: Quiet Enjoyment. (a) Tenant may occupy and use the Leased Premises, for a manufacturing and distribution facility with ancillary office, storage and parking uses and for no other purpose without the prior written consent of Landlord which shall not be unreasonably withheld or delayed. Tenant shall not use or occupy or permit any of the Leased Premises to be used or occupied, nor do or permit anything to be done in or on any of the Leased Premises, in a manner which would or might (i) violate any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it difficult or impossible to obtain any such insurance at commercially reasonable rates, (iii) make void or voidable, cancel or cause to be cancelled or release any of the Warranties, (iv) cause structural injury to any of the Improvements or (v) constitute a public or private nuisance or waste. (b) Subject to the provisions hereof, so long as no Event of Default has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the Leased Premises throughout the Term, without any hindrance, ejection or molestation by Landlord or anyone claiming through or under Landlord with respect to matters that arise after the date hereof, provided that Landlord or its agents may enter upon and examine any of the Leased Premises at such reasonable times as Landlord may select and upon reasonable notice to Tenant (except in the case of any emergency, in which event no notice shall be required), but at all times accompanied by a representative designated by Tenant, for the purpose of inspecting the Leased Premises, verifying compliance or non-compliance by Tenant with its obligations hereunder and the existence or non-existence of an Event of Default, showing the Leased Premises to prospective Lenders and purchasers, making any repairs and taking such other action with respect to the Leased Premises as is permitted by any provision hereof. 5. Term. -10- (a) Subject to the provisions hereof, Tenant shall have and hold the Leased Premises for an initial term (the "Initial Term") which commenced on August 27, 2004 (the "Commencement Date") and ends on August 31, 2024 (the "Expiration Date"). (b) Provided that if, on or prior to the Expiration Date or any other Renewal Date (as hereinafter defined) this Lease shall not have been terminated pursuant to any provision hereof, then on the Expiration Date and on the tenth (10th) anniversary of the Expiration Date (the Expiration Date and such anniversary being a "Renewal Date"), the Term shall be deemed to have been automatically extended for an additional period of ten (10) years (each such extension, a "Renewal Term"), unless Tenant shall notify Landlord in writing at least eighteen (18) months prior to the next Renewal Date that Tenant is terminating this Lease as of the next Renewal Date. At Landlord's request at any time after the giving of a notice of termination, Tenant shall execute a notice in recordable farm confirming such termination. Any such extension of the Term under this Paragraph 5(b) shall be subject to all of the provisions of this Lease, as the same may be amended, supplemented or modified. (c) If Tenant exercises its option pursuant to Paragraph 5(b) not to have the Term automatically extended, or if an Event of Default occurs and is continuing, then Landlord shall have the right during the remainder of the Term then in effect and, in any event, Landlord shall have the right during the last year of the Term, to (i) advertise the availability of the Leased Premises for sale or reletting and to erect upon the Leased Premises signs indicating such availability and (ii) show the Leased Premises to prospective purchasers or tenants or their agents subject to the conditions in Paragraph 4(b) at such reasonable times as Landlord may select. 6. Basic Rent. Tenant shall pay to Landlord, as annual rent ("Basic Rent") for the Leased Premises during the Term, the amounts determined in accordance with Exhibit "D" hereto. Basic Rent is payable quarterly in advance on the twenty-fifth (25th) day of each September, December, March and June during the Term for the next three (3) calendar months as set forth in said Exhibit "D". The date that each payment of Basic Rent is due is hereinafter referred to as a "Basic Rent Payment Date". Basic Rent for the period from the Commencement Date to and including September 30, 2004 was paid on the Commencement Date and quarterly payments of Basic Rent have been made through March 31, 2005. Each such rental payment shall be made (a) at Landlord's sole discretion, to Landlord at its address set forth above and/or to such one or more other Persons, at such addresses and in such proportions as Landlord may direct by ten (10) Business Days' prior written notice to Tenant (in which event Tenant shall give Landlord notice of each such payment concurrent with the making thereof), and (b) at Tenant's option, by a cheque hand delivered at least two (2) Business Days before or mailed at least five (5) Business Days before the applicable Basic Rent Payment Date, or on the applicable Basic Rent Payment Date by wire transfer of Canadian Funds to an account designated by Landlord in writing. Pro rata Basic Rent for the period from the date hereof through the last day of the month hereof shall be paid on the date hereof. 7. Additional Rent. -11- (a) Tenant shall pay and discharge, as additional rent (collectively, "Additional Rent"): (i) Except for Landlord's Expenses or as otherwise specifically provided herein, all costs and expenses of Tenant, Landlord and any other Persons specifically referenced herein which are incurred in connection or associated with (A) the ownership, use, non-use, occupancy, possession, operation, condition, design, construction, maintenance alteration, repair or restoration of any of the Leased Premises, (B) the performance of any of Tenant's obligations under this Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant under this Lease, (D) the prosecution, defense or settlement of any litigation involving or arising from any of the Leased Premises, this Lease, or the sale of the Leased Premises to Landlord unless such litigation arises as a result of the gross negligence or willful misconduct of Landlord, (E) the exercise or enforcement by Landlord, its successors and assigns, of any of its rights under this Lease during the pendency of an Event of Default, (F) any amendment to or modification or termination of this Lease made at the request of Tenant, (G) Costs of Landlord's counsel incurred in connection with any act undertaken by Landlord (or its counsel) at the request of Tenant, or incurred in connection with any act of Landlord performed on behalf of Tenant, (H) sales taxes payable by the Landlord on the purchase of goods and services included in Additional Rent (excluding any such sales taxes as are available to and claimed by the Landlord as a credit in determining the Landlord's net tax liability on account of sales taxes but only to the extent that such sales taxes are included in Additional Rent); (I) Capital Taxes, (J) the review of Post-Closing Obligations, (K) an administrative fee of $10,000 payable to Landlord in connection with any Exchange and (L) any other items specifically required to be paid by Tenant under this Lease; (ii) after the date that is seven (7) days after all or any portion of any installment of Basic Rent is due and not paid, a late charge in an amount equal to three percent (3%) of the amount of such unpaid installment or portion thereof, as liquidated damages in order to compensate Landlord for a portion of the costs and expenses related to handling such late payment, the amounts of which are difficult or impossible to measure; (iii) in addition to the amounts payable under clauses 7(a)(ii) and (iv) a sum equal to any additional sums (including any late charge payable on the portion of Basic Rent equal to installments of principal and interest on the then outstanding Loan, default penalties, interest and fees of lender's counsel) which are payable by Landlord to any Lender under any Note by reason of Tenant's late payment or non-payment of Basic Rent or by reason of an Event of Default, provided, however, that Tenant shall receive as a credit against any late charge or default interest payable on the then outstanding Loan an amount equal to the product of (x) the sum of the late charge paid pursuant to Paragraph 7(a)(ii) and the amount of the default interest paid pursuant to Paragraph 7(a)(iv) and (y) the ratio of the amount of the Loan to the Acquisition Cost; and (iv) interest at the rate (the "Default Rate") of three percent (3%) over the Prime Rate per annum on the following sums until paid in full: (A) all overdue installments of Basic Rent from the date that is (5) Business Days after the respective due dates -12- thereof, (B) all overdue amounts of Additional Rent relating to obligations which Landlord shall have paid on behalf of Tenant and delivered notice to Tenant, and (C) all other overdue amounts of Additional Rent, from the date that is ten (10) Business Days after the date upon which Landlord shall have notified Tenant in writing of such overdue amount. (b) Tenant shall pay and discharge (i) any Additional Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided that amounts which are billed to Landlord or any third party, but not to Tenant, shall be paid within ten (10) Business Days after Landlord's written request for payment thereof, and (ii) any other Additional Rent, within; ten (10) Business Days after Landlord's written request for payment thereof. (c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and (iv), or elsewhere in this Lease exceed the maximum amount permitted by applicable Law. 8. Net Lease Non-Terminability. (a) This is a net lease and all Monetary Obligations shall be paid without notice or demand (except as expressly set forth herein) and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a "Set-Off"). (b) Except as expressly set forth in this Lease, this Lease and the rights of Landlord and the obligations of Tenant hereunder shall not be affected by any event or for any reason or cause whatsoever foreseen or unforeseen. (c) The obligations of Tenant hereunder shall be separate and independent covenants and agreements, all Monetary Obligations shall continue to be payable in all events (or in lien thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant hereunder shall continue unaffected unless the requirement to pay or perform same shall have been terminated pursuant to an express provision of this Lease. All Rent payable by Tenant hereunder shall constitute "rent" for all purposes. (d) Except as otherwise expressly provided in this Lease, Tenant shall have no right and hereby waives all rights which it may have under any Law (i) to quit, terminate or surrender this Lease or any of the Leased Premises, or (ii) to any Set-Off of Any Monetary Obligations. 9. Payment of Impositions. Tenant shall, before interest or penalties are due thereon, pay and discharge all taxes (including real and personal property, franchise, sales, goods and services, gross receipts or rent taxes), all charges for any easement or agreement maintained for the benefit of any of the Leased Premises, all assessments and levies, all permit, inspection and license fees, all rents and charges for water, sewer, utility and communication services relating to any of the Leased Premises, all ground rents and all other public charges whether of a like or different nature, even if unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii) Tenant's leasehold interest in the Leased Premises, (iii) any of -13- the Leased Premises, (iv) Landlord as a result of or arising in respect of the acquisition, ownership, occupancy, leasing, use, possession of any of the Leased Premises or the sale of any of the Leased Premises or any part thereof to Tenant or its designee or any activity conducted on any of the Leaed Premises, or imputed to or payable by Landlord as the result of its ownership of the Leased Premises or the Rent, or (v) any Lender by reason of any Note, Mortgage, Assignment or other document evidencing or securing a Loan and which (as to this clause (v)) Tenant has agreed to pay (collectively the "Imposition"): provided, that (A) nothing herein shall obligate Tenant to pay Landlord Expenses, and (B) so long as no Event of Default exists, Tenant shall enroll the Leased Premises into the "TIPP" program and pay realty taxes to the applicable taxing authority on a monthly basis in accordance with the "TIPP" program. Landlord shall have the right to require Tenant to pay, together with scheduled installments of Basic Rent, the amount of the gross receipts or rent tax, if any, payable with respect to the amount of such installment of Basic Rent. If any Imposition may be paid in installments without penalty, tenant shall have the option to pay such Imposition in installments. In any event, Tenant shall be liable only for those Impositions which accrue or become due and payable during the Term, and Landlord shall reimburse Tenant as of the expiration of the Term for any Impositions paid by Tenant that accrue on account of the period from and after the expiration of the Term. Tenant shall prepare and file all tax reports required by governmental authorities which relate to the Impositions. Tenant shall deliver to Landlord (1) copies of all settlements and notices pertaining to the Impositions which may be issued by any governmental authority within ten (10) Business Days after Tenant's receipt thereof, (2) receipts for payment of all taxes required to be paid by Tenant hereunder within thirty (30) Business Days after the due date thereof (including the monthly due date under the "TIPP" program) and (3) receipts for payment of all other Impositions within ten (10) Business Days after Landlord's request therefor. 10. Compliance with Laws and Easement Agreements: Environmental Matters. (a) Tenant shall, at its expense, comply with and conform to, and cause the Leased Premises and any other Person occupying any part of the Leased Premises to comply with and conform to, all Insurance Requirements and Legal Requirements (including all applicable Environmental Laws). Tenant shall not at any time (i) cause, permit or suffer to occur any Environmental Violation or (ii) permit any sublessee, assignee or other Person occupying the Leased Premises under or through Tenant to cause, permit or suffer to occur any Environmental Violation and, at the request of Landlord or Lender, Tenant shall promptly remediate or undertake any other appropriate response action to correct any existing Environmental Violation, however immaterial and (iii) without the prior written consent of Landlord and Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof Any and all reports prepared for or by Landlord with respect to the Leased Premises shall be for the sole benefit of Landlord and Lender and no other Person shall have the right to rely on any such reports. (b) Tenant, at its sole cost and expense, will at all times promptly and faithfully abide by, discharge and perform all of the covenants, conditions and agreements -14- contained in any Easement Agreement on the part of Landlord or the occupant of the Leased Premises to be kept and performed thereunder. Tenant will not alter, modify, amend or terminate any Easement Agreement, give any consent or approval thereunder, or enter into any new Easement Agreement, in each case in any manner that would have an adverse effect on the value of Landlord's residual interest in the Leased Premises, without the prior written consent of Landlord which consent shall not be unreasonably withheld or delayed. Landlord shall not alter, modify, amend or terminate any Easement Agreement, give any consent or approval thereunder, or enter into any new Easement Agreement without the prior written consent of Tenant, which may be withheld in Tenant's sole discretion, unless such modification or amendment to an existing Easement Agreement or a new Easement Agreement is necessary in the reasonable opinion of Landlord for the continued operation of the Leased Premises after the expiration of this Lease, in which event Tenant's consent shall not be unreasonably withheld or delayed. (c) Upon reasonable prior written notice from Landlord, Tenant shall permit such persons as Landlord may designate ("Site Reviewers") to visit the Leased Premises at reasonable times and, in each event, accompanied by a representative designated by Tenant perform environmental site investigations and assessments ("Site Assessments") on the Leased Premises (i) in connection, with any sale, financing or refinancing of the Leased Premises (ii) within the six month period prior to the expiration of the Term, (iii) if reasonably required by Lender or the terms of any credit facility to which Landlord is bound, (iv) if an Event of Default exists or (v) at any other time that, in the opinion of Landlord or Lender, a reasonable basis exists to believe that an Environmental Violation exists. Such Site Assessments may include both above and below the ground testing for Environmental Violations and such other tests as may be necessary, in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant shall supply to the Site Reviewers Such historical and operational information in its possession regarding the leased Premises as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments and shall make available for meetings with the Site Reviewers appropriate, personnel having knowledge of such matters. The cost of performing and reporting any Site Assessments (i) reasonably required by the Lender that makes the initial Loan or (ii) if an Environmental Violation is found to exist shall be paid by Landlord. The cost of performing and reporting any other Site Assessments shall be paid by Landlord. All such Site Assessments shall be conducted in a manner that shall not interfere in any material respect with the conduct by Tenant of its business in the Leased Premises (d) If an Environmental Violation occurs or is found to exist and, in Landlord's reasonable-judgment, the cost of remediation of or other response action with respect to, the same is likely to exceed ten percent (10%) of the Acquisition Cost for the Leased Premises. Tenant shall provide to Landlord, within ten (10) Business Days after Landlord's request therefor, adequate assurances that Tenant has the financial resources to effect such remediation in accordance with applicable Environmental Laws. (e) Notwithstanding any other provision of this Lease, If an Environmental Violation occurs or is found to exist at the Leased Premises, and the Term would otherwise terminate or expire, and Landlord after good-faith efforts to relet the Leased Premises through a third-party broker at market rate is unable to do so solely as a result of such -15- Environmental Violation, then, at the option of Landlord, the Term shall be automatically extended beyond the date of termination "or expiration and this Lease shall remain in full force and effect beyond such date until the earlier to occur of (i) the completion of all remedial action in accordance with applicable Environmental Laws or (ii) the date specified in a written notice from Landlord to Tenant terminating this Lease. (f) If Tenant fails to commence to correct any Environmental Violation which occurs or is discovered to exist, within ninety (90) days following such occurrence or discovery Landlord shall have the right (but no obligation) to take any and all actions as Landlord shall deem necessary or advisable in order to cure such Environmental Violation. (g) Tenant shall notify Landlord immediately after becoming aware of any Environmental Violation for alleged Environmental Violation) Or noncomp with any of the covenants contained in this Paragraph 10 and shall forward to Landlord immediately upon receipt thereof copies of all orders, reports., notices, permits, applications or other communications relating to any such violation or noncompliance. (h) All future leases, subleases or concession agreements relating to the Leased Premises entered into by Tenant shall contain covenants of the other party not to at any time (i) cause any Environmental Violation to occur are (ii) permit any Person occupying the Leased Premises through said subtenant or concessionaire to cause any Environmental Violation to occur. 11. Liens: Recording. (a) Tenant shall not, directly or indirectly, create or permit to be created or to remain and shall promptly discharge or remove any Lien, levy or encumbrance on Landlord's fee interest in any of the Leased Premises or on any Rent or any other sums payable by Tenant under this Lease, other than any Mortgage or Assignment, the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge created by or resulting solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOUR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO CONSTRUCTION OR OTHER LIENS FOR ANY SUCH LABOUR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES, LANDLORD MAY AT ANY TIME, AND PRIOR TO COMMENCEMENT OF ANY WORK UPON THE LEASED PREMISES THAT COULD RESULT IN THE FILING OF ANY SUCH LIEN TENANT SHALL PROMPTLY AND PROPERLY, POST ON THE LEASED PREMISES, A NOTICE OF LANDLORD'S NON-LIABILITY. (b) Landlord and Tenant shall execute, deliver and record, file or register (collectively, "record") all such instruments as may be required or permitted by any -16- present or future Law in order to evidence the respective interests of Landlord and Tenant in the Leased Premises, and shall cause a notice, caveat or memorandum of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any supplement hereto or thereto, to be registered in the land titles office where the Leased Premises are located in order to protect the validity and priority of this Lease. 12. Maintenance and Repair. (a) Subject to Tenant's rights to make Alterations in accordance with Paragraph 13, Tenant shall at all times maintain the Leased Premises and, to the extent that Landlord or Tenant have any obligations, the Adjoining Property in as good repair and condition as they are in on the date hereof, fit to be used as a manufacturing and/or distribution facility (or as otherwise permitted under the Section 4 of this Lease) in safe condition and in compliance with applicable Laws and, in the case of the Equipment, in as good mechanical condition as it was on the later of the date hereof or the date of its installation, except in each instance for ordinary wear and tear. Tenant shall promptly make all Alterations of every kind and nature, whether foreseen or unforeseen, which may be required to comply with the foregoing requirements of this Paragraph 12(a). Landlord shall not be required to make any Alteration, whether foreseen or unforeseen, or to maintain any of the Leased Premises or Adjoining Property in any way, and Tenant hereby expressly waives any right which may be provided for in any Law now or hereafter in effect to make Alterations at the expense of Landlord or to require Landlord to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall be made in conformity with the provisions of Paragraph 13. (b) If any Improvement hereafter constructed shall (i) encroach upon any setback or any property, street or right-of-way adjoining the Leased Premises, (ii) violate the provisions of any restrictive covenant affecting the Leased Premises, (iii) hinder or obstruct any easement or right-of-way to which the Leased Premises is subject or (iv) impair the rights of others in, to or under any of the foregoing, Tenant shall, promptly after receiving notice from an interested party, either (A) obtain from all necessary parties waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, hindrance, obstruction or impairment, whether the same shall affect Landlord, Tenant or both, or (B) take such action as shall be necessary to remove all such encroachments, hindrances or obstructions and to end all such violations or impairments, including, if necessary, making Alterations. 13. Alterations and Improvements. (a) Tenant shall have the right, without having obtained the prior written consent or Landlord and Lender, to (i) make non-structural Alterations to the interior of the Improvements (including, without limitation, construction, removal or relocation of partition walls, but excluding interior stairways), without limitation as to amount so long as the primary use of the Improvements is manufacturing and distribution and to install, remove and/or relocate Tenant's Equipment, or (ii) make any other non-structural Alterations or a series of related non-structural Alterations that, as to any such Alterations or series of related Alterations, do not cost in excess of ten percent (10%) of the Acquisition Cost of the Leased Premises, (iii) install -17- Equipment in the Improvements or accessions to the Equipment that, as to such Equipment or accessions, do not cost in excess of len percent (10%) of the Acquisition Cost of the Leased Premises so long as at the time of construction or installation of any such Equipment, Alterations or expansion no Event of Default exists and the value and utility of the Leased Premises is not diminished thereby in any material respect. If Tenant desires to make any Alterations not permitted above, the prior written approval of Landlord and Lender shall be required, which shall not be unreasonably withheld or delayed. Except as provided in this Paragraph 13(a) Tenant shall not construct upon the Land any additional buildings without having first obtained the prior written consent of Landlord and Lender, which shall not be unreasonably withheld or delayed. Landlord shall have the right to require Tenant to remove and/or restore any Alterations, other than Alterations (w) required by Law or by this Lease (including Paragraph 12(a)), (x) permitted pursuant to clause (iv) above or constituting additional buildings constructed upon the Land with the consent of Landlord and Lender, or(y) with respect to which Landlord has agreed in writing, as provided below, are not required to be removed or restored. Tenant shall have the right, with respect to any Alteration that Tenant would otherwise be required to remove or restore pursuant to the preceding sentence, to give notice to Landlord describing such Alteration and requesting that Landlord determine whether or not such Alteration will be required to be removed or restored at the end of the Term. Within ten (10) Business Days after receipt of Tenant's notice, Landlord shall give notice to Tenant informing Tenant whether Landlord will require removal or restoration of such Alteration at the expiration of the Term; provided, that Landlord shall act reasonably in determining whether or not to require such restoration or removal. (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or as required by Paragraph 12 or 17, whether or not Landlord's consent is required, then (i) the market value of the Leased Premises shall not be lessened by any such Alterations in any material respect or its usefulness impaired in any material respect, (ii) all such Alterations shall be performed by Tenant in a good and workmanlike manner, (iii) all such Alterations shall be expeditiously completed in compliance with all Legal Requirements, (iv) all such Alterations shall comply with the Insurance Requirements, (v) if any such Alterations involve the replacement of Equipment or parts thereto, all replacement Equipment or parts shall be in good repair and condition and fit for its intended use and shall have a value and useful life equal to or greater than the value and useful life of the Equipment being replaced immediately prior to the occurrence of the event which required its replacement (assuming such replaced Equipment was then in the condition required by this Lease), (vi) Tenant shall promptly discharge or remove all liens filed against any of the Leased Premises arising out of such Alterations, (vii) Tenant shall procure and pay for all permits and licenses required in connection with any such Alterations, (viii) all such Alterations shall be the property of Landlord and shall be subject to this Lease, and Tenant shall execute and deliver to Landlord any document reasonably requested by Landlord evidencing the assignment to Landlord of all estate, right, title and interest (other than the leasehold estate created hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall comply, to the extent requested by Landlord or required by this Lease, with the provisions of Paragraphs 12(a) and the applicable provisions of Paragraph 19(a), whether or not such Alterations involve restoration of the Leased Premises. -18- 14. Permitted Contests. Notwithstanding any other provision of this Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or remove any lien referred to in Paragraph 11 or 13, (c) take any action with respect to any encroachment, violation, hindrance, obstruction or impairment referred to in Paragraph 12(b), or (d) comply with any Law or Legal Requirement including Environmental Laws (such non-compliance, with the terms hereof being hereinafter referred to collectively as "Permitted Violations"), so long as at the time of such contest no Event of Default exists and so long as Tenant shall contest, in good faith and in accordance with all applicable Laws, the existence, amount or validity thereof, the amount of the damages caused thereby, or the extent of its or Landlord's liability therefor by appropriate proceedings which shall operate during the pendency thereof to prevent or stay (i) the collection from, or other realization upon the Leased Premises or the Rent as a result of, the Permitted Violation so contested, (ii) the imminent sale, forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to pay any damages caused by any Permitted Violation, (iii) any interference with the payment of any Rent, or (iv) the cancellation of any insurance policy affecting the Leased Premises or a statement by the carrier that coverage will be denied. Tenant shall provide Landlord security which is satisfactory, in Landlord's reasonable judgment, to assure that such Permitted Violation is corrected, including all Costs, interest and penalties that may be incurred or become due in connection therewith. While any proceedings which comply with the requirement of this Paragraph 14 are pending and the required security is held by Landlord, Landlord shall not have the right to correct any Permitted Violation thereby being contested unless Landlord is required by law to correct such Permitted Violation and Tenant's contest does not prevent or stay such requirement as to Landlord. Each such contest shall be promptly and diligently prosecuted by Tenant to a final conclusion, except that Tenant, so long as the conditions of this Paragraph 14 are at all times complied with, has the right to attempt to settle or compromise such contest through negotiations Tenant shall pay any and all losses, judgments, decrees and Costs in connection with any such contest and shall, promptly after the final determination of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest and Costs thereof or in connection therewith, and perform all acts the performance of which shall be ordered or decreed as a result thereof. No such contest shall subject Landlord to the risk of any criminal liability or, unless paid by Tenant, civil liability. 15.Indemnification. (a) Tenant shall pay, protect, indemnify, defend, save and hold harmless Landlord, Lender and all other Persons described in Paragraph 30 (each an "Indemnitee") from and against any and all liabilities, losses, damages (including punitive damages), penalties, Costs (including reasonable legal fees and costs), causes of action, suits, claims, demands or judgments of any nature whatsoever, howsoever caused, without regard to the form of action and whether based on strict liability, negligence or any other theory of recovery at law or in equity (but excluding Landlord Expenses and any matter caused by the gross negligence or willful misconduct of the Indemnitee seeking indemnification or an agent of such Indemnitee) arising from (i) any matter pertaining to the acquisition (or the negotiations leading thereto) ownership, use, non-use, occupancy, operation, condition, design, construction, -19- maintenance, repair or restoration of the Leased Premises or, to the extent that Landlord or Tenant has any obligations with respect thereto, the Adjoining Property, or any liability imputed to such party as the result of Landlord's ownership of the Leased Premises, (ii) any casualty in any manner arising from the Leased Premises or Adjoining Property, whether or not Indemnitee has or should have knowledge or notice of any defect or condition causing or contributing to said casualty, (iii) any violation by Tenant of any provision of this Lease, any contract or agreement to which Tenant is a party, any Legal Requirement or any Permitted Encumbrance or any encumbrance Tenant consented to (other than the Mortgage or the Assignment) or (iv) any alleged, threatened or actual Environmental Violation (unless caused by the Indemnitee seeking indemnification or an agent of such Indemnitee, including (A) liability for response costs and for costs of removal and remedial action incurred by the Canadian Government, any provincial or local governmental unit or any other Person, or damages from injury to or destruction or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss, incurred pursuant to law, (B) liability for costs and expenses of abatement, correction or clean-up, fines, damages, response costs or penalties which arise from the provisions of any of the other Environmental Laws and (C) liability for personal injury or property damage arising under any statutory or common-law tort theory, including damages assessed for the maintenance of a public or private nuisance or for carrying on of a dangerous activity. (b) In case any action or proceeding is brought against any indemnitee by reason of any such claim, (i) Tenant may, except in the event of a conflict of interest or a dispute between Tenant and any such Indemnitee (a "Conflict") or during the continuance of an Event of Default, retain its own counsel and defend such action (it being understood that Landlord may employ counsel of its choice to monitor the defense of any such action, the cost of which shall be paid by Landlord except in the case of a Conflict) and (ii) such Indemnitee shall notify Tenant to resist or defend such action or proceeding by retaining counsel reasonably satisfactory to such Indemnitee, and such indemnitee will cooperate and assist in the defense of such action or proceeding if reasonably requested so to do by Tenant. In the event of a Conflict or during the continuance of an Event of Default, Landlord shall have the right to select counsel, and the cost of such counsel shall be paid by Tenant. (c) The obligations of Tenant under this Paragraph 15 shall survive any termination, expiration or rejection in bankruptcy of this Lease with respect to any matter that occurred or existed to such termination, expiration or rejection. 16. Insurance. (a) Tenant shall maintain the following insurance on or in connection with the Leased Premises: (i) Insurance against all risk of physical loss or damage to the Improvements and Equipment as provided under "Special Causes of Loss" form coverage, and including customarily excluded perils of hail, windstorm, flood coverage, earthquake and, to the extent required by Lender, terrorism insurance in amounts not less than the actual replacement cost of the Improvements and Equipment; provided that, if Tenant's insurance company is unable -20- or unwilling to include any of all of such excluded perils, Tenant shall have the option of purchasing coverage against such perils from another insurer on a "Difference in Conditions" form or through a stand-alone policy. Such policies shall contain Replacement Cost and Agreed Amount Endorsements and "Law and Ordinance" coverage (at full replacement cost). Such Policies and endorsements shall contain deductibles not more than $100,000 per occurrence. (ii) Commercial General Liability Insurance (including but not limited to Incidental Medical Malpractice and Host Liquor Liability) and Business Automobile Liability Insurance (including Non-Owned and Hired Automobile Liability) against claims for personal and bodily injury, death or property damage occurring on, in or as a result of the use of the Leased Premises, in an amount not less than $1,000,000 per occurrence and $15,000,000 U.S. Dollars excess liability on a claims occurrence basis, and all other coverage extensions that are usual and customary for properties of this size and type provided, however, that the Landlord shall have the right to require such higher limits as may be reasonable and customary for properties of this size and type. (iii) Workers' compensation insurance covering all persons employed by Tenant in connection with any work done on or about any of the Leased Premises for which claims for death, disease or bodily injury may be asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of such Workers' Compensation Insurance, a program of self-insurance complying with the rules, regulations and requirements of the appropriate agency of the Province. (iv) Comprehensive Boiler and Machinery Insurance on any of the Equipment or any other equipment on or in the Leased Premises, in an amount not less than $6,500,000 per accident for damage to property. Either such Boiler and Machinery policy or the All-Risk policy required in (i) above may contain a deductible not to exceed $100,000 and shall include at least $4,000,000 per incidence for Off-Premises Service Interruption, and at least $150,000 per incidence for Expediting Expenses, Ammonia Contamination and Hazardous Materials Clean-Up Expense. (v) Business Income/Extra Expense Insurance at limits sufficient to cover 100% of the period of indemnity not less than one year from time of loss plus a six month extended period of indemnity. Such insurance shall name Landlord as loss payee solely with respect to Rent payable to or for the benefit of Landlord as its interest appears under this Lease. (vi) During any period in which substantial Alterations at the Leased Premises are being undertaken, builder's risk insurance covering the total completed value including any "soft costs" with respect to the Improvements being altered or repaired (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction or repair of Improvements or Equipment, together with such "soft cost" endorsements and such other endorsements as Landlord may reasonably require and general liability, worker's compensation and automobile liability insurance with respect to the Improvements being constructed, altered or repaired. -21- (vii) Such other insurance (or other terms with respect to any insurance required pursuant to this Paragraph 16, including without limitation amounts of coverage, deductibles, form of mortgagee clause) on or in connection with any of the Leased Premises as Landlord or Lender may reasonably require, which at the time is usual and commonly obtained in connection with properties similar in type of building size, use and location to the Leased Premises. (b) The insurance required by Paragraph 16(a) shall be written by companies which have a Best's rating of A:X or above and a claims paying ability rating of A or better by S&P or equivalent rating agency approved by Landlord and Lender and are admitted in, and approved to write insurance policies by, the State Insurance Department for the State. Notwithstanding the foregoing, Landlord and Lender shall, with respect to the insurance required pursuant to Paragraph 16(a)(i), accept policies written by Factory Mutual Insurance Company ("F.M. Global") during any period while F.M. Global does not have an A or better S&P claims paying ability rating so long as F.M. Global has a Best's rating of A:X or above. The insurance policies (i) shall be for such terms as Landlord may reasonably approve and (ii) shall be in amounts sufficient at all times to satisfy any coinsurance requirements thereof. The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and Lender as loss payee, as its interest may appear, and Tenant as its interest may appear. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional insureds, and the insurance referred to in Paragraph 16(a)(v) shall name Landlord as insured and Lender and Landlord as loss payees, as their respective interests may appear. If said insurance or any part thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any reason, including a breach of any condition thereof by Tenant or the failure or impairment of the capital of any insurer, or if for any other reason whatsoever said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or additional insurance reasonably satisfactory to Landlord. (c) Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in favor of and acceptable to Lender. Each policy required by any provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be cancelled, substantially modified or allowed to lapse on any renewal date except after thirty (30) days' prior notice to Landlord and Lender. Each such policy shall also provide that any loss otherwise payable thereunder shall be payable notwithstanding (i) any act or omission of Landlord or Tenant which might, absent such provision, result in a forfeiture of all or a part of such insurance payment, (ii) the occupation or use of any of the Leased Premises for purposes more hazardous than those permitted by the provisions of such policy, (iii) any foreclosure or other action or proceeding taken by Lender pursuant to any provision of the Mortgage, Note, Assignment or other document evidencing or securing the Loan upon the happening of an event of default therein or (iv) any change in title to or ownership of any of the Leased Premises. (d) Tenant shall pay as they become due all premiums for the insurance required by Paragraph 16(a), shall renew or replace each policy and deliver to Landlord evidence of the payment of the full premium therefor or installment then due at least -22- thirty (30) days prior to the expiration date of such policy, and shall promptly deliver to Landlord all original certificates of insurance or, if required by Lender, original or certified policies. (e) Anything in this Paragraph 16 to the contrary notwithstanding, any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies covering other properties or liabilities of Tenant, provided (that such "blanket" or Umbrella policy or policies otherwise comply with the provisions of this Paragraph 16 and provided further that Tenant shall provide to Landlord a Statement of Values which shall be reviewed annually and amended as necessary based on Replacement Cost Valuations. The original or a certified copy of each such "blanket" or umbrella policy shall promptly be delivered to Landlord. (f) Tenant shall promptly comply with and conform to (i) all provisions of each insurance policy required by this Paragraph 16 and (ii) all requirements of the insurers thereunder applicable to Landlord, Tenant or any of the Leased Premises or to the use, manner of use, occupancy, possession, operation, maintenance, alteration or repair of any of the Leased Premises, even if such compliance necessitates Alterations or results in interference with the use or enjoyment of any or the Leased Premises. (g) Tenant shall not carry separate insurance concurrent in form or contributing in the event of a Casualty with that required in this Paragraph 16 unless (i) Landlord and Lender are included therein as named insureds, with loss payable as provided herein, and (ii) such separate insurance complies with the other provisions of this Paragraph 16. Tenant shall immediately notify Landlord of such separate insurance and shall deliver to Landlord the original policies or certified copies thereof. (h) All policies shall contain effective waivers by the carrier against all claims for insurance premiums against Landlord and shall contain full waivers of subrogation against the Landlord. (i) All proceeds of any insurance required under Paragraph 16(a) shall be payable as follows: (i) Proceeds payable under clauses (ii), (iii) and (iv) of Paragraph 16(a) and proceeds attributable to the general liability coverage of Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall be payable to the person entitled to receive such proceeds. (ii) Proceeds of insurance required under clause (i) of Paragraph 16(a) and proceeds attributable to Builder's Risk insurance (other than its general liability coverage provisions) under clause (vi) of Paragraph 16(a) shall be payable to Landlord or Lender and applied as set forth in Paragraph 17 or, if applicable, Paragraph l8. Tenant shall apply the Net Award to restoration of the Leased Premises in accordance with the applicable provisions of this Lease unless a Termination Event shall have occurred and Tenant has given a Termination Notice. -23- 17. Casualty and Condemnation. (a) If any Casualty to the Leased Premises occurs the insurance proceeds of which are reasonably likely to be in excess of One Hundred Fifty Thousand Dollars ($150,000), Tenant shall give Landlord and Lender immediate notice thereof. So long as no Event of Default then exists Tenant is hereby authorized to adjust, collect and compromise all claims under any of the insurance policies required by Paragraph 16(a) (except public liability insurance claims payable to a Person other than Tenant, Landlord or Lender) and to execute and deliver on behalf of Landlord all necessary proofs of loss, receipts, vouchers and releases required by the insurers and Landlord shall have the right to join with Tenant therein. Any final adjustment, settlement or compromise of any such claim in excess of $325,000 shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld or delayed, and Landlord shall have the right to require Tenant to prosecute or contest any such claim, adjustment, settlement or compromise. If an Event of Default then exists, (i) Tenant shall not be entitled to adjust, collect or compromise any such claim or to participate with Landlord in any adjustment, collection and compromise of the Net Award payable in connection with a Casualty, (ii) Tenant agrees to sign, upon the request of Landlord, all such proofs of loss, receipts, vouchers and releases, (iii) each insurer is hereby authorized and directed to make payment under said policies, including return of unearned premiums, directly to Landlord or, if required by the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if and to the extent that any Mortgage so provides. (b) Tenant, immediately upon receiving a Condemnation Notice, shall notify Landlord and Lender thereof. So long as no Event of Default exists, Tenant is authorized to collect, settle and compromise the amount of any Net Award and Landlord shall have the right to join with Tenant herein. If an Event of Default exists, Landlord shall be authorized to collect, Settle and compromise the amount of any Net Award and Tenant shall not be entitled to participate with Landlord in any Condemnation proceeding or negotiations under threat thereof or to contest the Condemnation or the amount of the Net Award therefor. No agreement with any expropriating body or condemnor in settlement or under threat of any Condemnation shall be made by Landlord or Tenant without the written consent of the other party, not to be unreasonably withheld or delayed. Upon receipt, any Net Award shall be distributed first, to Landlord, up to an amount equal to the sum of the Acquisition Cost and the applicable Prepayment Premium which Landlord will be required to pay in prepaying any Loan with the proceeds of the Net Award, then to Tenant up to an amount equal to the value of Tenant's leasehold estate hereunder and the value of any expansion or addition or any additional buildings constructed by Tenant during the Term, and, any balance of such Net Award to Landlord. Moreover, nothing in this Lease (i) shall impair Tenant's right to any award or payment on account of Tenant's trade fixtures, equipment or other tangible property which is not part of the Equipment, moving expenses or loss of business, if available, to the extent that and so long as (A) Tenant shall have the right to make, and does make, a separate claim therefor against the condemnor and (B) such claim does not in any way reduce the amount of the Net Award or, if Tenant gives a Termination Notice to Landlord, affect the obligations of Tenant under Paragraph -24- 18 hereof to pay the Termination Amount. The rights of Landlord under this Paragraph 17(b) shall also be extended to Lender if and to the extent that any Mortgage so provides. (c) If any Casually (whether or not insured against) or Partial Condemnation shall occur, this Lease shall continue, notwithstanding such event, and there shall be no abatement or reduction of any Monetary Obligations, except as provided in Paragraph 19(c). Promptly after such Casualty or Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and diligently continue to restore the Leased Premises as nearly as possible to their value, condition and character immediately prior to such event (assuming the Leased Premises to have been in condition required by this Lease). So long as no Event of Default exists, any Net Award up to and including $325,000 shall be paid by Landlord to Tenant and Tenant shall restore the Leased Premises in accordance with the requirements of Paragraph 13(b) of this Lease. Any Net Award in excess of $325,000 shall (unless such Condemnation resulting in the Net Award is a Termination Event) be made available by Landlord (or Lender, if required by the terms of any Mortgage) to Tenant for the restoration of any of the Leased Premises pursuant to and in accordance with the provisions of Paragraph 19 hereof. If any Condemnation which is not a Partial Condemnation shall occur, Tenant shall comply with the terms and conditions of Paragraph 18. 18. Termination Events. (a) If (i) the entire Leased Premises shall be taken by a Condemnation or (ii) any substantial portion of the Leased Premises shall be taken by a Condemnation and, in the case of clause (ii), Tenant certifies and covenants to Landlord that it will be unable to continue to conduct its business at the Leased Premises and that it will forever abandon operations at the Leased Premises (each of the events described in the above clauses (i) and (ii) shall hereinafter be referred to as a "Termination Event"), then Tenant shall have the option, within sixty (60) days after Tenant receives a Condemnation Notice to give to Landlord written notice in the form described in Paragraph 18(b) of the Tenant's election to terminate this Lease (a "Termination Notice"). If Tenant elects under clause (ii) above not to give Landlord a Termination Notice, (then Tenant shall rebuild or repair the Leased Premises in accordance with Paragraphs 17 and 19. (b) A Termination Notice shall contain (i) notice of Tenant's intention to terminate this Lease as to the Affected Premises on the first Basic Rent Payment Date which occurs at least sixty (60) days after the date of the Termination Notice (the "Termination Date") (ii) if the Termination Event is an event described in Paragraph 18(a)(ii), the certification and covenants described (therein and a certified resolution of the Board of Directors of Tenant authorizing the same. (c) This Lease shall terminate on the Termination Date; provided that, if Tenant has not satisfied all Monetary Obligations and all other obligations and liabilities under this Lease which have arisen on or prior to the Termination Date (collectively, "Remaining Obligations") on the Termination Date, then Landlord may, at its option, extend the date on which this Lease may terminate to a dale which is no later than the first Basic Rent Payment -25- Date after the Termination Date on which Tenant has satisfied all Remaining Obligations. Upon such termination (i) all obligations of Tenant hereunder shall terminate except for any Surviving Obligations, (ii) Tenant shall immediately vacate and shall have no further right, title or interest in or to any of the Leased Premises and (iii) the portion of any Net Award payable to Landlord in the event of a Condemnation shall be retained by Landlord. Notwithstanding anything to the contrary hereinabove contained, if, on the Termination Date, Landlord shall not have received the full amount of the Net Award payable to Landlord by reason of the applicable Termination Event, then the date on which this Lease is to terminate with respect to the Affected Premises shall be automatically extended to the first Basic Rent Payment Date after the receipt by Landlord of the full amount of the Net Award payable to Landlord provided that, if Tenant has not satisfied all Remaining Obligations on such date, then Landlord may, at its option, extend the date on which this Lease may terminate to a date which is no later than the first Basic Rent Payment Date after such date on which Tenant has satisfied all such Remaining Obligations. 19. Restoration. (a) So long as no Event of Default has occurred and is continuing any Net Award up to the amount of Three Hundred Twenty-five Thousand Dollars $325,000 shall be paid by Landlord to Tenant and applied by Tenant to restoration of the Leased Premises in accordance with this Lease. Landlord (or Lender if required by any Mortgage) shall hold Net Award in excess of Three Hundred Twenty-five Thousand Dollars ($325,000) in a fund (the "Restoration Fund") and disburse amounts from the Restoration Fund only in accordance with the following conditions: (i) prior to commencement of restoration, (A) the architects, contracts, contractors, plans and specifications for the restoration shall have been reasonably approved by Landlord, and (B) Landlord and Lender shall be provided with construction lien insurance (if available) and reasonably acceptable performance and payment bonds which insure satisfactory completion of and payment for the restoration, are in an amount and form and have a surety acceptable to Landlord, and name Landlord and Lender as additional dual obligees; (ii) at the time of any disbursement, no Event of Default shall exist and no construction or materialmen's liens shall have been filed against any of the Leased Premises and remain undischarged unless the same are being contested pursuant to the terms of Paragraph 14 hereof; (iii) disbursements shall be made Form time to time in an amount not exceeding the amount due on the work completed up until the time of such disbursement together with any soft costs related thereto, upon receipt of (A) satisfactory evidence, including architects' certificates, of the stage of completion, the estimated total cost of completion and performance of the work to date in a good and workmanlike manner in accordance with the contracts, plans and specifications, (B) waivers of liens, (C) contractors' and subcontractors' sworn statements as to completed work and the cost thereof for which payment is requested, (D) a satisfactory bringdown of title insurance and (E) other evidence of cost and payment so that Landlord can verify that the amounts disbursed from time to time are -26- represented by work that is completed, in place and free and clear of construction and materialmen's lien claims and related soft costs; (iv) each request for disbursement shall be accompanied by a certificate of Tenant, signed by a duly authorized officer of Tenant, describing the work for which payment is requested, stating the cost incurred in connection therewith, stating that Tenant has not previously received payment for such work and, upon completion of the work, also stating that the work has been fully completed and complies with the applicable requirements of this lease; (v) Landlord may retain ten percent (10%) of the Restoration Fund, to be dealt with in accordance with applicable construction lien legislation which shall be released on a contract-by-contract basis as the restoration is completed; (vi) if the Restoration fund is held by Landlord, the Restoration Fund shall not be commingled with Landlord's other funds and shall be invested in an interest-bearing investment permitted pursuant to the Loan, and the interest therefrom shall became part of the Restoration Fund; and (vii) such other reasonable conditions as Landlord or Lender may impose. (b) Prior to commencement of restoration and at any time during restoration, if the estimated cost of completing the restoration work free and clear of all liens, as reasonably determined by Landlord, exceeds the amount of the Net Award available for such restoration, the amount of such excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be added to the Restoration Fund. Any sum so added by Tenant which remains in the Restoration Fund upon completion of restoration shall be refunded to Tenant. For purposes of determining the source of funds with respect to the disposition of funds remaining after the completion of restoration, the Net Award shall be deemed to be disbursed prior to any amount added by Tenant. (c) If any sum remains in the Restoration Fund after completion of the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum shall be retained by Landlord or, if required by a Note or Mortgage, paid by Landlord to a Lender. 20. Intentionally Omitted. 21. Assignment and Subletting; Waiver of Landlord's Liens. (a) (i) Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, with no consent of Landlord or Lender being required or necessary ("Preapproved Assignment") to assign this Lease by operation of law or otherwise to any Person ("Preapproved Assignee") that (A) immediately following such assignment and having given effect thereto will have a publicly traded unsecured senior debt rating of "Ba1" or better from Moody's or a rating of "BB+" or better from S&P (and in the event both of such -27- rating agencies cease to furnish such ratings, then a comparable rating by any rating agency reasonably acceptable to Landlord and Lender) or (B) is and shall continue to be for the balance of the Term to be a wholly-owned subsidiary of any Tenant. (ii) If Tenant desires to assign this Lease, whether by operation of law or otherwise, to a Person ("Non-Preapproved Assignee") who would not be a Preapproved Assignee ("Non-Preapproved Assignment") then Tenant shall, not less than thirty (30) days prior to the date on which it desires to make a Non-Preapproved Assignment submit to Landlord and Lender financial and background information and other information reasonably required by Landlord and Lender with respect to the Non-Preapproved Assignee (collectively, the "Review Criteria"). Landlord and Lender shall review such information and shall approve or disapprove the Non-Preapproved Assignee, which approval shall not be unreasonably withheld or delayed, no later than the tenth (10th) Business Day fallowing receipt of all such information, and Landlord and Lander shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their review of the Review Criteria applying prudent business judgment, taking into account the value of the Leased Premises and the creditworthiness of Tenant and the proposed assignee, in both cases on a proforma basis after such assignment and having given effect thereto. In the event that Landlord and/or Lender shall have not responded to Tenant's request for approval within such ten (10) Business Day period, Tenant may deliver to Landlord a second written request for approval and Landlord will be deemed to have consented do such assignment if it does not notify Tenant that it is withholding its consent within ten (10) Business Days after its receipt of the second written request. (b) Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, and with no consent or approval of Landlord or Lender being required or necessary, to enter into a sublease than demises one hundred percent (100%) of the gross space in the Improvements with any (i) Affiliate, or (ii) Person that purchases Tenant's business (each, a "Preapproved Sublet"). Other than pursuant to Preapproved Sublets, at no time during the Term shall any Related Premises be subject to subleases without the prior written consent of Landlord and, to the extent required under any Mortgage or other documents with respect to any Loan, Lender, which consent shall not be unreasonably withheld or delayed, and which shall be granted or withheld based on a review of the Review Criteria as they relate to the proposed sublessee. Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their review of the Review Criteria, applying prudent business judgment, taking into account the value of the Leased Premises and the creditworthiness of Tenant and the proposed sublessee. (c) If Tenant assigns all its rights and interest under this Lease, the assignee under such assignment shall expressly assume all the obligations of Tenant hereunder, actual or contingent including obligations of Tenant which may have arisen on or prior to the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment Each sublease of any of the Leased Premises shall be subject and subordinate to the provisions of this Lease. No assignment or sublease shall affect or reduce any of the obligations of Tenant hereunder, and all such obligations, shall continue in full force and effect as obligations of a principal and not as obligations of a guarantor, as if no assignment or sublease had been -28- made. No assignment or sublease shall impose any additional obligations on Landlord under this Lease. (d) Notwithstanding any provision in this Paragraph 21 or elsewhere in this Lease to the contrary, including any right or option Tenant may have to assign this Lease or sublease all or any portion of the Leased Premises without Landlord's consent, Tenant shall, upon the request of Landlord, provide and cause such assignee or sublessee to provide, such information (including, without limitation, any certification) as to any proposed assignee or sublessee and its principals as may be required for Landlord and Tenant to comply with regulations administered by the Office of Foreign Asset Control ("OFAC") of the Department of the Treasury, codified at 31 C.F.R. Part 500 (including those named on OFAC's Specially Designated and Blocked Persons list) or under any statute, executive order (including the September 24, 2001. Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action regarding persons or entities with whom U.S. persons or entities are restricted from doing business. (e) With respect to any Preapproved Assignment or Preapproved Sublet, Tenant shall provide to Landlord information reasonably required by Landlord to establish that any proposed Preapproved Assignment or Preapproved Sublet satisfies the criteria set forth above. (f) Tenant shall, within ten (10) Business Days after the execution and delivery of any assignment or sublease, deliver a duplicate original copy thereof to Landlord which, in the event of an assignment, shall be together with a transfer of caveat, in registerable form, with respect thereto. (g) As security for performance of its obligations under this Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title and interest of Tenant in and to all subleases now in existence or hereafter entered into for any or all of the Leased Premises, any and all extensions, modifications and renewals thereof and all rents, issues and profits therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all rents and other sums of money payable under any sublease of any of the Leased Premises, provided, however, that Landlord shall have the absolute right at any time upon notice to Tenant and any subtenants to revoke said license and to collect such rents and sums of money and to retain the same. Tenant shall apply the same to amounts then due to Landlord hereunder, with any balance paid to Tenant. Tenant shall not accept any rents more than thirty (30) days in advance of the accrual thereof. (h) Landlord hereby waives (i) any right to distrain trade fixtures, inventory and other personal property of Tenant and (ii) any Landlord's lien or similar lien upon Tenant's Equipment, inventory and any other personal property of Tenant regardless of whether such lien is created by statute or otherwise. At the request of Tenant, Landlord shall execute a waiver of any Landlord's or similar lien for the benefit of any holder of a security interest in or lessor of any of Tenant's Equipment, inventory or any other personal property of Tenant and -29- shall agree in writing to grant reasonable access to such holder for the purpose of removing any such property, including without limitation, Tenant's Equipment. Landlord agrees to acknowledge (in a written form reasonably satisfactory to Landlord) to such persons and entities at such times and for such purposes as Tenant may reasonably request that Tenant's Equipment owned by Tenant are Tenant's property and not part of the Leased Premises (regardless of whether or to what extent Tenant's Equipment and/or other personal property are affixed to the Leased Premises) or otherwise subject to the terms of this Lease. (i) Landlord may sell or transfer the Leased Premises at any time without Tenant's consent to any third party (each a "Third Party Purchaser") In the event of any such transfer, Tenant shall attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer and the Third Party Purchaser expressly assumes Landlord's obligations under this Lease. At the request of Landlord, Tenant will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder. The Landlord shall be released from all obligation pursuant to this Lease upon delivery of the transfer and Third Party Purchaser assumption of the Landlord's obligations under this Lease. 22. Events of Default. (a) The occurrence of any one or more of the following (after expiration of any applicable cure period as provided in Paragraph 22(b)) shall, at the sole option of Landlord, constitute an "Event of Default" under this Lease: (i) a failure by Tenant to make any payment of any Monetary Obligation, regardless of the reason for such failure; (ii) a failure by Tenant duly to perform and observe, or a violation or breach of, any other provision hereof not otherwise specifically mentioned in this Paragraph 22(a); (iii) any representation or warranty made by Tenant herein or in any certificate, demand or request made pursuant hereto proves to be incorrect, now or hereafter, in any material respect; (iv) a default beyond any applicable cure period or at maturity by Tenant or any Guarantor in any payment of principal or interest on any obligations for borrowed money having an original principal balance of $5,000,000 U.S. Dollars or more in the aggregate, or in the performance of any other provision contained in any instrument under which any such obligation is created or secured (including the breach of any covenant thereunder), (x) if such payment is a payment at maturity or a final payment unless the lender shall have extended such maturity date in writing, or (y) if an effect of such default is to cause such obligation to be accelerated prior to its stated maturity; -30- (v) (1) a final, non-appealable, uninsured judgment or judgments for the payment of money in excess of $30,000,000 U.S. Dollars in the aggregate shall be rendered against any Tenant or any Guarantor and the same shall remain undischarged for a period of sixty (60) consecutive days; (2) Tenant or any Guarantor shall default beyond any applicable cure period in the payment of rent under or in the performance of any other material provision of, any other lease or leases that have, in the aggregate, rental obligations over the terms thereof of $3,000,000 or more. (vi) any Tenant or any Guarantor shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or trustee for itself or for the Leased Premises, (C) file a petition seeking relief under the bankruptcy or other similar laws of Canada or of the United States, any province or state or any jurisdiction, (D) make a general assignment for the benefit of creditors, or (E) be unable to pay its debts as they mature; (vii) a court shall enter an order, judgment or decree appointing, without the consent of Tenant, a receiver or trustee for it or for any of the Leased Premises or approving a petition filed against Tenant or any Guarantor which seeks relief under the bankruptcy or other similar laws of Canada or the United States, any province or state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed ninety (90) days after it is entered; (viii) the Leased Premises shall have been vacated for more than three hundred sixty-five (365) consecutive days; (ix) (A) Tenant or any Guarantor shall be liquidated or (B) Tenant or any Guarantor shall be dissolved or shall begin proceedings towards its liquidation or dissolution; (x) the estate or interest of Tenant in any of the Leased Premises shall be levied upon or attached in any proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within ninety (90) days after it is made; (xi) a failure by Tenant to perform or observe, or a violation or breach of, or a misrepresentation by Tenant under, any provision of any Assignment to which Tenant is a party or any other document between Tenant and Lender, if such failure, violation, breach or misrepresentation gives rise to a default beyond any applicable cure period with respect to any Loan; provided that Landlord has promptly given Tenant a copy of any notice Landlord shall have received regarding such default; (xii) Tenant shall sell or transfer or enter into an agreement to sell or transfer all or more than 75% of the fair market value of its assets unless such Tenant's leasehold interest in this Lease is sold or transferred as part of such transaction and the buyer or -31- transferee assumes all of the obligations of such Tenant under the terms of Paragraph 21(c) of the Lease; (xiii) an Event of Default (as defined in the Guarantee) beyond any applicable cure period shall occur under the Guarantee; (xiv) Tenant shall fail to comply with the provisions of Paragraph 25 or Paragraph 32 of this Lease; or (xv) Tenant's failure to timely comply with any of Tenant's Post Closing Obligations and such failure continues for ten (10) Business Days after written notice from Landlord. (b) No notice or cure period shall be required in any one or more of the following events: the occurrence of an Event of Default under clause (iv), (v), (vi), (vii), (viii), (ix), (X), (xi), (xii), (xiii) or (XV) of Paragraph 22(a). If the default consists of the failure to pay Basic Rent, the applicable cure period shall be five (5) Business Days from the date on which notice of such default is given, provided, that Landlord shall not be obligated to give notice of any such default more than one time during any Lease Year, provided, further that even where Landlord is not required to give notice of any such default by operation of the immediately preceding proviso. Tenant nevertheless shall be entitled to a grace period of five (5) Business Days. If the default consists of the failure to pay any other Monetary Obligation or a default under clause (xiv) of Paragraph 22(a) the applicable cure period shall he five (5) Business Days after notice from Landlord. If the default consists of a default under clause (ii) or clause (iii) of Paragraph 22(a) (and provided that any default under Paragraph 22(a)(iii) is reasonably susceptible of cure), the applicable cure period shall be thirty (30) days from the date on which notice is given or, if the default cannot be cured within such thirty (30) day period and delay in the exercise of a remedy would not (in Landlord's reasonable judgment) cause any material adverse harm to Landlord or any of the Leased Premises, the cure period shall be extended for the period required to cure the default (but such cure period, including any extension, shall not in the aggregate exceed ninety (90) days), provided that Tenant shall commence to cure the default within the said thirty-day period and shall actively, diligently and in good faith proceed with and continue the curing of the default until it shall be fully cured. 23. Remedies and Damages Upon Default. (a) If an Event of Default shall have occurred and is continuing, Landlord shall have the right, at its sole option and to the extent permitted by applicable Law, to exercise its remedies and to collect damages from Tenant in accordance with this Paragraph 23, subject in all events to applicable Law, without demand upon or notice to Tenant except as otherwise provided in Paragraph 22(b) and this Paragraph 23. (i) Landlord may give Tenant notice of Landlord's intention to terminate this Lease on a date specified in such notice. Upon such date, this Lease, the estate hereby granted and all rights of Tenant hereunder shall expire and terminate. Upon such -32- termination, Tenant shall immediately surrender and deliver possession of the Leased Premises to Landlord in accordance with Paragraph 26. If Tenant does not so surrender and deliver possession of the Leased Premises, Landlord may re-enter and repossess the Leased Premises, by means of legal process, summary proceedings, ejectment or any other lawful means or procedure. Upon or at any time after taking possession of the Leased Premises, Landlord may, by peaceable means or legal process, remove any Persons or property therefrom. Landlord shall be under no liability for or by reason of any such entry, repossession or removal. Notwithstanding such entry or repossession, Landlord may (A) exercise the remedy set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(i) or 23(b)(ii). (ii) After repossession of the Leased Premises pursuant to clause (i) above, Landlord shall have the right to relet any of the Leased Premises to such tenant or tenants, for such term or terms, for such rent, on such conditions and for such uses as Landlord in its sole discretion may determine, and collect and receive any rents payable by reason of such reletting. Landlord may make such Alterations in connection with such reletting as it may deem advisable in its sole discretion. Notwithstanding any such reletting. Landlord may collect the damages set forth in Paragraph 23(b)(ii). (iii) Landlord may declare by notice to Tenant the entire Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the then current Term to be immediately due and payable. Tenant shall immediately pay to Landlord all such Basic Rent discounted to its Present Value, all accrued Rent then due and unpaid, all other Monetary Obligations which are then due and unpaid and all Monetary Obligations which arise or become due by reason of such Event of Default (including any Costs of Landlord). Upon receipt by Landlord of all such accelerated Basic Rent and Monetary Obligations, this Lease shall remain in full force and effect and Tenant shall have the right to possession of the Leased Premises from the date of such receipt by Landlord to the end of the Term, and subject to all the provisions of this Lease, including the obligation to pay all increases in Basic Rent and all Monetary Obligations that subsequently become due, except that (A) no Basic Rent which has been prepaid hereunder shall be due thereafter during the said Term and (B) Tenant shall have no option to extend or renew the Term. (iv) In addition to any and all other rights available to the Landlord, the Landlord may upon notice to Tenant declare the full amount of the current quarterly installment of Basic Rent and of all Additional Rent for the current quarter (all of which shall be deemed to be accruing on a day-to-day basis) immediately due and payable as accelerated Rent. (b) The following constitute damages to which Landlord shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii): (i) If Landlord exercises its remedy under Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such remedy and is unsuccessful in reletting the Leased Premises) then, upon written demand from -33- Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages for Tenant's default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount equal to the Present Value of the excess, if any, of (A) all Basic Rent from the date of such demand to the date on which the Term is scheduled to expire hereunder in the absence of any earlier termination, re-entry or repossession Over (B) the then fair market rental value of the Leased Premises for the same period. Tenant shall also pay to Landlord all of Landlord's Costs in connection with the repossession of the Leased Premises and any attempted reletting thereof, including all brokerage commissions, legal expenses attorneys' fees, employees' expenses, costs of Alterations and expenses and preparation for reletting. (ii) If Landlord exercises its remedy under Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the end of what would have been the Term in the absence of the termination of the Lease, and whether or not any of the Leased Premises shall have been relet, be liable, to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages all Monetary Obligations which would be payable under this Lease by Tenant in the absence of such termination less the net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after deducting from Such proceeds all of Landlord's Costs (including the items listed in the lust sentence of Paragraph 23(b)(i) hereof) incurred in connection with such repossessing and reletting; provided, that if Landlord has not relet the leased Premises, such Costs of Landlord shall be considered to be Monetary Obligations payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and Landlord may recover such damages from Tenant and institute and maintain successive actions or legal proceedings against Tenant for the recovery of such damages. Nothing herein contained shall be deemed to require Landlord to wait to begin such action or other legal proceedings until the date when the Term would have expired by its own terms had there been no such Event of Default. (c) Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, Landlord may exercise any remedies and collect any damages available to it at law or in equity; provided, however, if a Limited Remedy Default exists, the aggregate maximum amount Tenant shall be required to pay to Landlord as a result of such Limited Remedy Default from and after the date of the occurrence of such Limited Remedy Default (the "Occurrence Date") shall be limited to the sum of (i) the present value as of the Occurrence Date, discounted at the annual rate of ten and one-half percent (10.5%) (taking into account that Basic Rent payments are required to be made quarterly), of all Basic Rent reserved hereunder for the unexpired portion of the Term after the Occurrence Date as if this Lease had not expired or been terminated, (ii) any amounts of Additional Rent which are due and payable or have accrued under this Lease through the Occurrence Date, and (iii) any amounts of Additional Rent which are due and payable or have accrued under this Lease after the Occurrence Date while the Tenant remains in possession of the Leased Premises or any Related Premises after any Limited Remedy Default that relates to Impositions, insurance, utilities, repairs, maintenance, environmental maintenance, remediation and compliance and other routine and customary costs and expenses of operating and maintaining the Leased Premises or the Related Premises which remain occupied by Tenant. Nothing contained in this Paragraph 23(c) -34- shall limit any amounts payable by Tenant with respect to Basic Rent or Additional Rent or indemnification obligation if any Event of Default that is not a Limited Remedy Default has occurred. (d) Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, landlord may exercise any remedies and collect any damages available to it at law or in equity. If Landlord is unable to obtain full satisfaction pursuant to the exercise of any remedy, it may pursue any other remedy which it has hereunder or at law or in equity. (e) Except for retaining a third-party broker to relet the Leased Premises upon commercially reasonable terms, if this Lease is terminated and Tenant vacates the Leased Premises pursuant to Paragraph 23(a)(i), Landlord shall not be required to mitigate any of its damages hereunder unless required to by applicable Law. If any Law shall validly limit the amount of any damages provided for herein to an amount which is less than the amount agreed to herein, Landlord shall be entitled to the maximum amount available under such Law. (f) No termination of this Lease, repossession or reletting of the Leased Premises, exercise of any remedy or collection of any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations. (g) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD OR TENANT HEREUNDER, LANDLORD AND TENANT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. (h) Upon the occurrence and during the continuance of any Event of Default, Landlord shall have the right (but no obligation) to perform any act required of Tenant hereunder and, if performance of such act requires that Landlord enter the Leased Premises, Landlord may enter the Leased Premises, at reasonable times and upon reasonable notice for such purpose. (i) No failure of Landlord (i) to insist at any time upon the strict performance of any provision of this Lease or (ii) to exercise any option, right, power or remedy contained in this Lease shall be construed as a waiver, modification or relinquishment thereof. A receipt by Landlord of any sum in satisfaction of any Monetary Obligation with knowledge of the breach of any provision hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision hereof shall be deemed to have been made unless expressed in a writing signed by Landlord. (j) Tenant hereby waives and surrenders, for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future Law to redeem any of the Leased Premises or to have a continuance of this Lease after termination of this Lease or of Tenant's right of occupancy or possession pursuant to any court order or any provision hereof, and (ii) the benefits of any present or future Law which exempts property from liability for debt or for distress for rent. -35- (k) Except as otherwise provided herein, all remedies are cumulative and concurrent and no remedy is exclusive of any other remedy. Each remedy may be exercised at any time an Event of Default has occurred and is continuing and may be exercised from time to time. No remedy shall be exhausted by any exercise thereof. 24. Notices. All notices, demands, requests, consents, approvals, offers, statements and other instruments or communications required or permitted to be given pursuant to the provisions of this Lease shall be in writing and shall be deemed to have been given and received for all purposes when delivered in person or by Federal Express or other reliable 24-hour delivery service or five (5) Business Days after being deposited in the mail in Canada or in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed to the other party at its address stated above or when delivery is refused. A copy of any notice given by Tenant to Landlord shall simultaneously be given by Tenant to Reed Smith LLP, 2500 One Liberty Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. A copy of any notice given by Landlord to Tenant shall simultaneously be given by Landlord to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064, Attention: Carl L. Reisner. For the purposes of this Paragraph, any party may substitute another address stated above (or substituted by a previous notice) for its address by giving fifteen (15) Business Days' notice of the new address to the other party, in the manner provided above. 25. Estoppel Certificate. At any time upon not less than fifteen (15) days' prior written request by either Landlord or Tenant (the "Requesting Party") to the other party (the "Responding Party"), the Responding Party shall deliver to the Requesting Party a statement in writing, executed by an authorized officer of the Responding Party, certifying (a) that, except as otherwise specified, this Lease is unmodified and in full force and effect, (b) the dates to which Basic Rent, Additional Rent and all other Monetary Obligations have been paid, (c) that, to the knowledge of the signer of such certificate and except as otherwise specified, no default by either Landlord or Tenant exists hereunder, (d) Such other matters as the Requesting Party may reasonably request including the matters set forth in "Exhibit E-2" and (e) if Tenant is the Responding Party that, except as otherwise specified, there are no proceedings pending or, to the knowledge of the signer, threatened, against Tenant before or by any court or administrative agency which, if adversely decided, would materially and adversely affect the financial condition and operations of Tenant. Any such statements by the Responding Party may be relied upon by the Requesting Party, any Person whom the Requesting Party notifies the Responding Party in its request for the Certificate is an intended recipient or beneficiary of the Certificate, any Lender, any Permitted Leasehold Mortgagee or their assignees and by any prospective purchaser or mortgagee of any interest in the Leased Premises. Any certificate required under this Paragraph 25 and delivered by Tenant shall state that, in the opinion of each person signing the same, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to the subject matter of such certificate, and shall briefly state the nature of such examination or investigation. 26. Surrender. Except if Tenant purchases the Leased Premises, upon the expiration or earlier termination of this Lease, Tenant shall peaceably leave and surrender the -36- Leased Premises to Landlord in the same condition in which the Leased Premises were at the commencement of this Lease, except as repaired, rebuilt, restored, altered, replaced or added to as permitted or required by any provision of this Lease, and except for ordinary wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased Premises all property which is owned by Tenant or third parties other than Landlord and (b) repair any damage to the structural elements of the Improvements or the building systems caused by such removal. Property not so removed shall become the property of Landlord, and Landlord may thereafter cause such property to be removed from the Leased Premises. The cost of removing and disposing of such property and repairing any damage to any of the Leased Premises caused by such removal shall be paid by Tenant to Landlord upon demand. Landlord shall not in any manner or to any extent be obligated to reimburse Tenant for any such property which becomes the property of Landlord pursuant to this Paragraph 26. 27. No Merger of Title. There shall be no merger of the leasehold estate created by this Lease with the fee estate in any of the Leased Premises by reason of the fact that the same Person may acquire or hold or own, directly or indirectly, (a) the leasehold estate created hereby or any part thereof or interest therein and (b) the fee estate in any of the Leased Premises or any part thereof or interest therein, unless and until Landlord, Tenant, Lender and any Permitted Leasehold Mortgagee shall join in a written instrument effecting such merger and shall duly record the same. 28. Books and Records. (a) Tenant shall keep adequate records and books of account with respect to the finances and business of Tenant generally and with respect to the Leased Premises, in accordance with accounting principles which are recognized as being generally accepted in Canada from time to time as set forth in the handbook published by the Canadian Institute of Chartered Accountants, consistently applied ("GAAP") and shall permit Landlord and Lender by their respective agents, accountants and legal counsel, upon reasonable notice to Tenant, to visit and inspect the Leased Premises and examine (and make copies of) the records and books of account and to discuss the finances and business with the officers of Tenant, at such reasonable times as may be requested by Landlord. Upon the request of Lender or Landlord (either telephonically or in writing), Tenant shall provide the requesting party with copies of any information to which such party would be entitled in the course of a personal visit. (b) If at any time during the Term, a Tenant shall not be part of the Guarantor's group for the purpose of reporting financial positions and results on a consolidated basis, such Tenant shall deliver to Landlord and to Lender within ninety (90) days of the close of each Fiscal year, annual audited financial statements of Tenant prepared by a nationally recognized firm of independent chartered accountants. Tenant shall also furnish to Landlord within forty-five (45) days after the end of each of the three remaining quarters unaudited financial statements and all other quarterly reports of Tenant, certified by Tenant's chief financial officer. All financial statements shall be prepared in accordance with GAAP consistently applied. All annual financial statements shall be accompanied (i) by an opinion of said accountants stating that (A) there are no qualifications as to the scope of the audit and -37- (B) the audit was performed in accordance with GAAP. All financial statements shall be accompanied by the affidavit of the president or a vice president of Tenant, dated within five (5) Business Days of the delivery of such statement, stating that (C) the affiant knows of no Event of Default, or event which, upon notice or the passage of time or both, would become an Event of Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Tenant has taken or proposes to take with respect thereto and (D) except as otherwise specified in such affidavit, that Tenant has fulfilled all of its obligations under this Lease which are required to be fulfilled on or prior to the date of such affidavit. 29. Determination of Value. (a) Whenever a determination of Fair Market Rental Value is required pursuant to any provision of this Lease, such Fair Market Rental Value shall be determined in accordance with the fallowing procedure: (i) Landlord and Tenant shall endeavor to agree on Fair Market Rental Value on the date (the "Applicable Initial Date") which is six (6) calendar months prior to the expiration of the then current Term unless Tenant has previously exercised its option pursuant to Paragraph 5(b) not to have the Term automatically extended. Upon reaching such agreement, the parties shall execute an agreement setting forth the amount of such Fair Market Rental Value. (ii) If the parties shall not have signed such agreement within thirty (30) days after the Applicable Initial Date, Tenant shall within fifty (50) days after the Applicable Initial Date select an appraiser and notify Landlord in writing of the name, address and qualifications of such appraiser. Within twenty (20) days following Landlord's receipt of such notice, Landlord shall select an appraiser and notify Tenant of the name, address and qualifications of such appraiser. If Landlord shall fail to select an appraiser and notify Tenant as aforesaid within said twenty-day period, then provided that such failure shall continue for five (5) additional Business Days after notice thereof from Tenant to Landlord, the determination of Tenant's appraiser shall govern. Otherwise, such two appraisers shall endeavor to agree upon Fair Market Rental Value based on a written appraisal made by each of them (and given to both parties) as of the Relevant Date. If such two appraisers shall agree upon a Fair Market Rental Value, the amount of such Fair Market Rental Value as so agreed shall be binding and conclusive upon Landlord add Tenant. (iii) If such two appraisers shall be unable to agree upon Fair Market Rental Value within twenty (20) days after the selection of an appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of their respective determinations of Fair Market Rental Value and shall select a third appraiser to make the determination of Fair Market Rental Value. The selection of the third appraiser shall be binding and conclusive upon Landlord and Tenant. (iv) If such two appraisers shall be unable to agree upon the designation of a third appraiser within ten (10) Business Days after the expiration of the twenty (20) day period referred to in clause (iii) above, or if such third appraiser does not make a determination of Fair Market Rental Value within twenty (20) days after his selection, then such third appraiser or a substituted third appraiser, as applicable, shall, at the request of either party hereto, be appointed by the President or Chairman of the American Arbitration Association in -38- New York, New York. The determination of Fair Market Rental Value made by the third appraiser appointed pursuant hereto shall be made within twenty (20) days after such appointment. (v) If a third appraiser is selected, Fair Market Rental Value shall be the average of the determination of Fair Market Rental Value made by the third appraiser and the determination of Fair Market Rental Value made by the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair Market Rental Value is nearer to that of the third appraiser. Such average shall be binding and conclusive upon Landlord and Tenant. (vi) All appraisers selected or appointed pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no right, power or authority to alter or modify the provisions of this Lease, (C) utilize the definition of Fair Market Rental Value set forth herein, and (D) be registered in the state where the Leased Premises or applicable Related Premises are located if the state requires such registration. The Cost of the procedure described in this Paragraph 29(a)(i) clauses (A) through (C) above shall be shared equally between Landlord and Tenant and the cost of the procedure described in this Paragraph 29(a)(i)(D) shall be paid by Tenant. (b) If, by virtue of any delay, Fair Market Rental Value is not determined by the expiration or termination of the then current Term, then until Fair Market Rental Value is determined, Tenant shall continue to pay Basic Rent during the succeeding Renewal Term in the same amount which it was obligated under this Lease to pay prior to the commencement of the Renewal Term. When Fair Market Rental Value is determined, the appropriate Basic Rent shall be calculated retroactive to the commencement of the Renewal Term and Tenant shall either receive a refund from Landlord (in the case of an overpayment) or shall pay any deficiency to Landlord (in the case of an underpayment). (c) In determining Fair Market Rental Value, the appraisers shall determine with respect to the Leased Premises the amount that a willing tenant would pay, and a willing landlord of a comparable building located in a radius of fifty (50) miles of the Leased Premises would accept, at arm's length, to rent a building of comparable size and quality as the Improvements, taking into account: (i) the age, quality and condition (as required by the Lease) of the Improvements and that the Improvements are being leased on an "as-is" basis without any improvement allowance or free rent; (ii) that the Leased Premises will be leased as a whole or substantially as a whole to a single user for the uses permitted under this Lease, (iii) a lease term of ten (10) years, with annual CPI-based increases; (iv) an absolute triple net lease; and (v) such other items that professional real estate appraisers customarily consider. 30. Non-Recourse as to Landlord. ANYTHING CONTAINED HEREIN TO THE CONTRARY NOTWITHSTANDING, ANY CLAIM BASED ON OR IN RESPECT OF ANY LIABILITY OF LANDLORD UNDER THIS LEASE SHALL BE ENFORCED ONLY AGAINST THE LEASED PREMISES AMD NOT AGAINST ANY OTHER ASSETS, PROPERTIES OR FUNDS OF (I) LANDLORD, (II) ANY DIRECTOR, OFFICER, MEMBER, GENERAL PARTNER, SHAREHOLDER, LIMITED PARTNER, BENEFICIARY, EMPLOYEE OR AGENT OF LANDLORD OR ANY GENERAL PARTNER OF LANDLORD OR ANY OF ITS MEMBERS OR GENERAL PARTNERS (OR ANY LEGAL -39- REPRESENTATIVE, HEIR, ESTATE, SUCCESSOR OR ASSIGN OF ANY THEREOF), (III) ANY PREDECESSOR OR SUCCESSOR PARTNERSHIP OR CORPORATION (OR OTHER ENTITY) OF LANDLORD OR ANY OF ITS GENERAL PARTNERS, SHAREHOLDERS, OFFICERS, DIRECTORS, MEMBERS, EMPLOYEES OR AGENTS, EITHER DIRECTLY OR THROUGH LANDLORD OR ITS GENERAL PARTNERS, SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS OR ANY PREDECESSOR OR SUCCESSOR PARTNERSHIP OR CORPORATION (OR OTHER ENTITY), OR (IV) ANY PERSON AFFILIATED WITH ANY OF THE FOREGOING, OR ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF ANY THEREOF. 31. Landlord's Financing. (a) Tenant agrees to pay directly to Lender, if required by a Lender, any cost, charge or expense for which Tenant has agreed to reimburse or indemnify Landlord hereunder. (b) If Landlord desires to obtain or refinance any Loan, Tenant shall negotiate in good faith with Landlord concerning any request made by any Lender or proposed Lender for changes or modifications in this Lease; provided, that Landlord shall reimburse Tenant for its out-of-pocket costs relating thereto and provided further that no such change or modification shall increase Tenants' obligations or decrease Tenant's rights under the Lease in any material respect. In particular, Tenant shall agree, upon request of Landlord, to supply any such Lender with such notices and information as Tenant is required to give to Landlord hereunder and to extend the rights of Landlord hereunder to any such Lender and to consent to such financing if such consent is requested by such Lender. Tenant shall provide any other consent or statement and shall execute any and all other documents that such Lender reasonably requires in connection with such financing, including any environmental indemnity agreement, so long as the same do not adversely affect any right, benefit or privilege of Tenant under this Lease or increase Tenant's obligations under this Lease in any material respect. 32. Subordination; Non-Disturbance and Attornment. This Lease and Tenant's interest hereunder shall be subordinate to any Mortgage or other security instrument hereafter placed upon the Leased Premises by Landlord provided that the Lender shall have delivered to Tenant an agreement (an "SNDA Agreement") in a form substantially identical to Exhibit "E-1" annexed hereto and acknowledged by Lender and such Landlord. Tenant covenants and agrees that Tenant shall enter into such SNDA Agreement within five (5) Business days following Landlord's written request and with such modifications as the Lender shall reasonably request; provided that Paragraph 1 (Subordination) of Exhibit "E-1" shall not be subject to any modifications, and, provided further that, if Lender requests substantive modifications to the SNDA Agreement, Tenant shall have such additional time to negotiate such modifications as is reasonably required based on the nature and scope of the requested modifications. 33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each shall treat this transaction as a lease for tax purposes and for income tax purposes each -40- shall report this Lease as a lease with Landlord as the owner of the Leased Premises and Equipment and Tenant as the lessee of such Leased Premises and Equipment including: (1) treating Landlord as the owner of the Leased Premises eligible to claim depreciation deductions under applicable tax laws with respect to the Leased Premises and Equipment but only as the same exist on the date hereof or are hereafter paid for by Landlord, (2) treating Tenant as the owner of the property eligible to claim depreciation deductions by Tenant with respect to the Equipment and Alterations paid for by Tenant and incorporated into the Leased Premises after the date hereof, (3) Tenant reporting its Rent payments as rent expense under applicable tax laws, and (4) Landlord reporting the Rent payments as rental income under applicable tax laws. Tenant shall be entitled to withhold from any amount payable to landlord under this Lease such amount (and only such amount) required to be withheld by Tenant pursuant to any applicable Canadian Federal withholding tax provisions or any other Canadian Federal or provincial tax laws and Tenant shall immediately remit any such amounts withheld to the Canada Revenue Agency, or any successor thereto, on behalf of the Landlord. 34. Permitted Leasehold Mortgage. Tenant shall not encumber its leasehold estate in the Leased Premises, by means of a leasehold mortgage, deed of trust, pledge or similar security device, except by means of a Permitted Leasehold Mortgage. The Leased Premises shall not be encumbered by more than one Permitted Leasehold Mortgage at any one time. Tenant shall deliver to Landlord an executed counterpart of any Permitted Leasehold Mortgage within ten (10) days after its execution thereof. 35. Rights of Permitted Leasehold Mortgagee. Landlord hereby agrees that, so long as any Permitted Leasehold Mortgage shall remain unsatisfied of record, the following provisions shall apply: (a) Landlord, upon giving Tenant any notice of a default or an Event of Default hereunder, shall also give such notice to any Permitted Leasehold Mortgagee from whom it had received an address in writing. (b) Upon the occurrence of an Event of Default hereunder, the Permitted leasehold Mortgagee shall, within the period provided for in Paragraph 22 hereof, as extended as hereinafter provided, have tie right to remedy such default, or cause the same to be remedied, and Landlord shall accept such performance by or at the instance of the Permitted Leasehold Mortgagee as if the same had been made by Tenant. (c) Upon the occurrence of an Event of Default hereunder, Landlord shall not terminate this Lease without first giving the Permitted Leasehold Mortgagee ninety (90) days after notice thereof within which either (i) to obtain possession of the Leased Premises (including possession by a receiver) or (ii) to institute foreclosure proceedings or (iii) otherwise act to acquire Tenant's interest under this Lease with diligence. The preceding sentence shall not apply and Landlord may terminate this Lease if: (1) An Event of Default shall have occurred that is then Susceptible of being Cured by the Permitted Leasehold Mortgagee without obtaining possession -41- of the Leased Premises and the Permitted Leasehold Mortgagee (1) shall not have cured any Event of Default consisting of a failure to pay Basic Rent or Additional Rent within five (5) Business Days after notice from Landlord of such Event of Default, or (2) shall not, within the applicable cure period specified in Paragraph 22(b) after notice from Landlord of such Event of Default, have cured any Event of Default (other than a failure to pay Basic Rent or Additional Rent); (2) an Event of Default (other than any Event of Default described in subparagraph (A)(i) above) shall have occurred and either (1) the Permitted Leasehold Mortgagee, within fifteen (15) days after the giving by Landlord of notice of such Event of Default, shall not have given written notice to Landlord that such Event of Default cannot be remedied without obtaining possession of the Leased Premises; or (2) the Permitted Leasehold Mortgagee shall not have paid or caused to be paid all Rent and other sums payable under this Lease; or (3) the Permitted Leasehold Mortgagee shall. within fifteen (15) days after notice from Landlord of such Event of Default, fail to give Landlord a written notice that it shall, after obtaining possession, and within the applicable cure period provided in Paragraph 22(b), curt any such Event of Default which is susceptible of cure only upon taking possession; (D) the Permitted Leasehold Mortgagee shall fail to pursue with diligence the activities specified in (i), (ii) or (iii) of the first sentence of this Paragraph 35(c); or (5) the Permitted Leasehold Mortgagee within thirty (30) days after the giving by Landlord of notice of such Event of Default shall not have given written notice to Landlord that such Event of Default is not reasonably susceptible of being cured by the Permitted Leasehold Mortgagee. (d) It is expressly understood, without limiting the generality of the foregoing language, that any failure of Tenant to perform any of its obligations under Paragraph 18, Paragraph 23(b)(iii) or Paragraph 29 is susceptible of cure by the Permitted Leasehold Mortgagee without taking possession, and Tenant hereby authorizes the Permitted Leasehold Mortgagee, on behalf of Tenant, to send any notice, make any offer, pay any amount, select an appraiser, and perform any other obligation of Tenant provided in said Paragraphs. (e) In addition to curing any Event of Default which is susceptible of being cured without taking possession, the Permitted Leasehold Mortgagee shall, during the period it is taking the action in clauses (i), (ii) or (iii) of the first sentence of Paragraph 35(c) above, pay Basic Rent and Additional Rent as the same shall become due and payable and, upon obtaining possession or acquiring Tenant's interest under this Lease, shall be required to commence to cure within thirty (30) days of such acquisition or possession all Events of Default then outstanding and reasonably susceptible of being cured by the Permitted Leasehold Mortgage, and thereafter diligently prosecute such cure to completion; provided, that: (i) the Permitted Leasehold Mortgagee shall not be obligated to continue such possession or to continue such foreclosure proceedings after such Events of Default shall have been cured, and (ii) the Permitted Leasehold Mortgagee shall agree with Landlord in writing to comply during the period of such forbearance with such of the terms, conditions and covenants of this Lease as are reasonably susceptible of being complied with by the Permitted Leasehold Mortgagee. -42- (f) It is understood and agreed, that the Permitted Leasehold Mortgagee or its designees or any purchaser in foreclosure proceedings (including a corporation formed by any Permitted Leasehold Mortgagee or the holder or holders of the obligations secured by the Permitted Leasehold Mortgage) may become the legal owner and holder of this Lease through such foreclosure proceedings or by assignment of this Lease in lieu of foreclosure provided, however that the Permitted Leasehold Mortgagee shall guarantee all of the obligations and Liabilities of Tenant hereunder (except those which are personal to Tenant, e.g., the obligations of Tenant under Paragraph 28) except that the Permitted Leasehold Mortgagee shall be released from liability under this Lease if the substitute tenant is approved by Landlord in its reasonable discretion applying prudent business judgment or if the substitute tenant is a Preapproved Assignee. (g) If a termination of this Lease occurs prior to the expiration of the Term by reason of the rejection of this Lease or other action by a trustee, court or debtor in possession pursuant to the Bankruptcy & Insolvency Act (Canada), as amended, or any other Federal, provincial or local insolvency laws, Landlord shall give the Permitted Leasehold Mortgagee written notice that this Lease has been terminated, together with a statement of any and all sums which would at that time be due under this Lease but for such termination, and of all other Events of Default, if any, under this Lease then known to Landlord. The Permitted Leasehold Mortgagee shall thereupon have the option to obtain a new lease in accordance with and upon the following terms and conditions: (i) such new lease shall be effective as of the date of termination of this Lease and shall be for the remainder of the full original term and at the rent and upon all the agreements, terms, covenants and conditions hereof; (ii) such new lease shall require the tenant to perform any unfulfilled obligations of Tenant under this Lease which are reasonably susceptible of being performed by such tenant; (iii) if the Permitted Leasehold Mortgagee designates an entity to enter into such new lease, die Permitted Leasehold Mortgagee shall guarantee all of the obligations and liabilities of such designee hereunder on the same terms and conditions as those contained in the Guarantee (except those which are personal to such designee, e.g., the obligations of such designee to permit Landlord to inspect its books and records or to supply financial statements to Landlord except that no such guarantee shall be required if such designee is approved by Landlord in its sole discretion; (iv) upon the execution of such new lease, the tenant named therein shall pay any and all Rent which would at the time of the execution thereof be due under this Lease but for such termination, less the net proceeds, if any, of any reletting or other occupancy, after deducting from such proceeds all of Landlord's expenses in connection with such reletting (including all repossession costs, brokerage commissions, legal expenses, attorneys, fees, employees' expenses, costs of alterations and expenses of preparation for reletting). (h) Any notice or other communication which Landlord shall desire or is required to give to or serve upon any Permitted Leasehold Mortgagee shall be addressed to such Permitted Leasehold Mortgagee by notice in writing given to Landlord in accordance with Paragraph 24 hereof. Any notice or other communication which any Permitted Leasehold Mortgagee shall desire or is required to give to or serve upon Landlord shall be deemed to have been duly given or served if sent in accordance with Paragraph 24 hereof. -43- (i) The provisions of this Paragraph 35 shall be self-operative and shall benefit any Permitted Leasehold Mortgagee of which Landlord has actual notice. Notwithstanding the foregoing, Landlord shall, at the request of Tenant or the Permitted Leasehold Mortgagee, and at the sole cost and expense of Tenant or the Permitted Leasehold Mortgagee, enter into an agreement directly with the Permitted Leasehold Mortgagee having terms and provisions identical to the provisions of this Paragraph 35. (j) A Permitted Leasehold Mortgagee shall have the right but not the duty to attempt to remedy a default or an Event of Default. (k) The Tenant agrees to pay to the Landlord, in addition to Basic Rent, and Additional Rent, any goods and services tax, business transfer tax, value-added tax, multi-stage sales tax, sales, use or consumption tax, or any like tax imposed by any governmental authority in respect of this Lease or in respect of the Leased Premises and services provided hereunder, including without limitation, such taxes calculated on or in respect of any Rent (whether Basic Rent or Additional Rent) payable under this Lease; any such tax shall he deemed not to be Rent, but the Landlord shall have the same remedies for and rights of recovery of such amount as it has for recovery of Rent under this Lease. 36. Grants and Releases of Easements. So long as no Event of Default has occurred and is continuing Landlord hereby agrees to reasonably cooperate with, the following actions by Tenant, in the name and stead of Landlord and cause Lender to cooperate with, but at Tenant's sole cost and expense: (a) the granting of easements, licenses, rights-of-way and other rights and privileges in the nature of easements reasonably necessary or desirable for the construction, operation, restoration, use, repair, renovation or maintenance of the Leased Premises as herein provided; (b) the execution of petitions to have the Leased Premises annexed to any municipal corporation or utility district; (c) the execution of amendments to any covenants and restrictions affecting the Leased Premises; (d) Tenant's obtaining all necessary government or third-party actions, consents or agreements necessary for the performance and completion of any Alteration provided, that in each case Tenant shall have delivered to Landlord a certificate stating that: (i) such grant, release, dedication, transfer, amendment or government action, or other action or agreement (any of the foregoing, a "Property Action") does not impair the value, utility and remaining useful life of the Leased Premises, (ii) such Property Action is reasonably necessary in connection with the use, maintenance, alteration, renovation, construction, operation, restoration, repair or improvement of the Leased Premises, (iii) Tenant shall remain obligated under this Lease and under any instrument executed by Tenant consenting to the assignment of Landlord's interest in this Lease as security for indebtedness, in each such case, in accordance with their terms, as though such Property Action had not been effected and (iv) Tenant shall pay any Costs or Landlord under such Properly Action. Without limiting the effectiveness of the foregoing, Landlord shall, within thirty (30) days of receipt of the written request of Tenant, and at Tenant's sole cost and expense (including reasonable fees and disbursements of counsel to Landlord and Lender to review such Property Action), review and either approve or disapprove in writing the proposed Property Action, and, if approved, execute and deliver any instruments and take any other action reasonably necessary or appropriate to -44- confirm any such Property Action, to any person permitted under this Paragraph 36 or to implement any such Property Action. 37. Intentionally Omitted. 38. Post-Closing Obligations. (a) Pursuant to those certain Property Condition Reports, Environmental Audit Reports and Zoning Reports received by Landlord with respect to the Leased Premises Tenant shall complete, remediate or obtain or caused to be completed, remediated or obtained the Post-Closing Obligations within the time periods specified in Exhibit "F". (b) (i) On the date hereof, Tenant has deposited wide Landlord a letter of credit (the "Environmental Letter of Credit" in the amount of $1,622,250 (the "Environmental Escrow") which shall secure the obligation of Tenant to complete the Post-Closing Obligation listed in Paragraphs B and C of Exhibit "F" (the "Post-Closing Environmental Obligations"). (ii) The Environmental Letter of Credit shall be issued by a bank acceptable to Landlord and having a long-term unsecured debt rating of not less than "A" from S&P and in form and substance satisfactory to Landlord The Environmental Letter of Credit shall be renewed at least thirty (30) days prior to any expiration thereof. If Tenant fails to renew the Environmental Letter of Credit by the date, time being of the essence, Landlord shall have the right at any time after the thirtieth (30th) day before such expiration date to draw on such Environmental Letter of Credit and to hold the proceeds thereof as a cash Environmental Escrow. (iii) The Environmental Letter of Credit shall remain in full force and effect until Tenant is entitled to the return or reduction of the applicable Environmental Escrow as provided for herein. The Environmental Letter of Credit shall be returned to Tenant within thirty (30) days following the earlier to occur of (A) written consent of Lender to release the Environmental Letter of Credit or (B) (ix) remediation of the environmental contamination and completion of those matters specified in Paragraph C of Exhibit "F" in accordance with Paragraph C of Exhibit "F" and evidence of payment in full of all remediation costs in connection with such remediation and (y) Tenant provides Landlord evidence of completion of the items specified in Paragraph B of Exhibit "F" as evidenced by written and photographic evidence reasonably satisfactory to Landlord that the applicable Environmental Obligations have been completed and evidence of payment in full of all remediation costs. (iv) So long as no Event of Default has occurred and is continuing, if the amount Landlord's Lender requires to be deposited in connection with the initial Loan with respect to environmental matters is less then the amount of the applicable Environmental Escrow set forth above, then, Tenant shall have the right to substitute new Environmental Letters of Credit in such reduced amounts and upon receipt by Landlord of such -45- new Environmental Letters of Credit, Landlord shall promptly return the applicable original Environmental Letter or Credit to Tenant. (c) On the date hereof, Tenant has deposited with Landlord the amount of $3,750 U.S. Dollars (the "Post-Closing Compliance Escrow") in the form of cash which shall secure the obligation of Tenant to complete (the Post Closing Obligations listed in Paragraph E of Exhibit "F" (the "Post-Closing Compliance Obligations"), and shall be held and disbursed as set forth in this Paragraph 39. The Post-Closing Compliance Escrow shall be released to Tenant within thirty (30) days following the date on which Landlord receives written and photographic evidence reasonably satisfactory to Landlord that all Post-Closing Compliance Obligations have been completed (which shall include written and photographic evidence and evidence of payment in full). (d) If, at any time prior to the release of the Post-Closing Environmental Escrow or the Post-Closing Compliance Escrow, an Event of Default shall have occurred and be continuing, Landlord shall be entitled to draw upon the Post-Closing Environmental Letter of Credit, any cash Post-Closing Environmental Escrow or the Post-Closing Compliance Escrow (collectively, the "Post-Closing Escrow") and shall use the proceeds of the Post-Closing Escrow to the extent required to satisfy the Post-Closing Environmental Obligations or Post-Closing Compliance Obligations, as applicable, and be entitled, at its sole discretion, to apply any remaining balance in payment of any Rent or other charges which have not been made pursuant to this Lease and any other sums due to Landlord in connection with any default or the curing thereof, including, without limitation, any damages incurred by Landlord by reason of such default. Tenant acknowledges and agrees that such proceeds shall not constitute assets or funds of Tenant or its estate, or be deemed to be held in trust for Tenant, but shall be, for all purposes, the property of Landlord (or Lender, to the extent assigned). Tenant further acknowledges and agrees that Landlord's application of the proceeds of any Post-Closing Escrow towards the payment of Basic Rent, Additional Rent or the reduction of any damages due Landlord in accordance with Paragraph 23 of this Lease, constitute a fair and reasonable use of such proceeds, and the application of such proceeds by Landlord towards the payment of Basic Rent, Additional Rent or any other sums due under this Lease shall not constitute a cure by Tenant of the applicable default, provided that an Event of Default shall not exist if Tenant restores the applicable Post-Closing Escrow to its full amount within three (3) days and in accordance with the requirements of this Paragraph 39, so that the applicable amount of the Post-Closing Escrow shall be again on deposit with Landlord. (e) Landlord shall have the right to designate Lender or any other holder of a Mortgage as the holder of the Post-Closing Escrow (including assigning to Lender the Post-Closing Environmental Letter of Credit at Tenant's sole cost or expense) during the term of the applicable Loan who shall have all of the rights of Landlord under this Paragraph 39. Tenant covenants and agrees to execute such agreements, consents and acknowledgements as may be requested by Landlord from time to time to change the holder of each Post-Closing Escrow as hereinabove provided. -46- 39. Miscellaneous. (a) The paragraph headings in this Lease are used only for convenience in finding the subject matters and are not part of this Lease or to be used in determining the intent of the parties or otherwise interpreting this Lease. (b) As used in this Lease, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (i) "including" shall mean "including without limitation"; (ii) "provisions" shall mean "provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of the Leased Premises" shall mean "the Leased Premises or any part thereof or interest therein, including any one or more Related Promises"; (vi) "any of the Land" shall mean "the Land or any part thereof or interest therein"; (vii) "any of the Improvements" shall mean "the Improvements or any part thereof or interest therein"; (viii) "any of the Equipment" shall mean "the Equipment or any part thereof or interest therein"; and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or any part thereof or interest therein". (c) Any act which Landlord is permitted to perform under this Lease may be performed at any time and from time to time by Landlord or any person or entity designated by Landlord. Each appointment of Landlord as attorney-in-fact for Tenant hereunder is irrevocable and coupled with an interest. Landlord shall not unreasonably withhold or delay its consent, approval or other determination, whenever such consent, approval or other determination, is requited under this Lease. Time is of the essence with respect to the performance by the parties of their obligations under this Lease. (d) Landlord shall in no event be construed for any purpose to be a partner, joint venturer or associate of Tenant or of any subtenant, operator, concessionaire or licensee of Tenant with respect to any of the Leased Premises or otherwise in the conduct of their respective businesses. (e) This Lease and any documents which may be executed by Tenant on or about the effective date hereof at Landlord's request constitute the entire agreement between the parties and supersede all prior understandings and agreements, whether written or oral, between the parties hereto relating to the Leased Premises and the transactions provided for herein. Landlord and Tenant are business entities having substantial experience with the subject matter of this Lease and have each fully participated in the negotiation and drafting of this Lease. Accordingly, this Lease shall be construed without regard to the rule that ambiguities in a document are to be construed against the drafter. (f) This Lease may be modified, amended, discharged or waived only by an agreement in writing signed by the party against whom enforcement of any such modification, amendment, discharge or waiver is sought. -47- (g) The covenants of this Lease shall run with the land and bind Tenant, its successors and assigns and all present and subsequent encumbrancers and subtenants of any of the Leased Premises, and shall inure to the benefit of Landlord, its successors and assigns. If there is more than one Tenant, the obligations of each shall be joint and several. (h) If any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. (i) All exhibits attached hereto are incorporated herein as if fully set forth. (j) This Lease shall be governed by and construed and enforced in accordance with the Laws of the Province. (k) All dollar amounts set forth in this Lease are Canadian Dollars except as expressly set forth to the contrary herein. (l) Tenant represents, warrants and covenants with Landlord that Tenant is not, nor will Tenant become, a Person with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control ("OFAC") of the Department of the Treasury (including those named on OFAC's Specially Designated and Blocked Persons list) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Parsons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and Tenant will not engage in any dealings or transactions or be otherwise associated with such persons or entities. (m) This Lease may be executed in a number of counterparts and by different parties hereto in separate counterparts each of which, when so executed, shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] -48- IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed as of the day and year first above written. LANDLORD: PG-NOM (ALBERTA), INC., an Alberta corporation, as nominee for PG-TRUST (DE), a trust formed under the laws of the State of Delaware By: /s/ Peter E. Kaplan --------------------------- Title: Director TENANT: CWD WINDOWS AND DOORS, INC., a Canadian corporation By: /s/ Shawn K. Poe --------------------------- Title: Vice President SIGNATURE PAGE OF PLY GEM LEASE AGREEMENT, CANADA-1 EXHIBIT A PREMISES Those pieces of land situate in the Province of Alberta described as follows: FIRSTLY: PLAN 316GV BLOCK 1 LOT 1 EXCEPTING THE CORNER CUT ON PLAN 7710238 EXCEPTING THEREOUT ALL MINES AND MINERALS SECONDLY: PARCEL 1 PLAN 316GV BLOCK 6 LOT 3 EXCEPTING THEREOUT ALL MINES AND MINERALS PARCEL 2 PLAN 316GV BLOCK 6 LOTS 4 AND 5 EXCEPTING THEREOUT ALL MINES AND MINERALS THIRDLY: PLAN 316GV BLOCK 6 LOT 1 EXCEPTING THEREOUT ALL MINES AND MINERALS FOURTHLY: PARCEL 1 PLAN 31GV BLOCK 6 LOT 6 EXCEPTING THEREOUT ALL MINES AND MINERALS PARCEL 2 PLAN 316GV BLOCK 6 LOTS 7, 8 and 9 EXCEPTING THEREOUT ALL MINES AND MINERALS PARCEL 3 PLAN 316GV BLOCK 6 THE NORTH HALF OF LOT 10 EXCEPTING THEREOUT ALL MINES AND MINERALS EXHIBIT A EXHIBIT A PARCEL 4 PLAN 316GV BLOCK 6 THE SOUTH HALF OF LOT 10 EXCEPTING THEREOUT ALL MINES AND MENERALS PARCEL 5 PLAN 316GV BLOCK 6 LOT 11 EXCEPTING THEREOUT ALL MINES AND MENERALS PARCEL 6 PLAN 3I6GV BLOCK 6 LOT 12 EXCEPTING THEREOUT THAT PORTION OF LOT 12 FOR CORNER CUT ON PLAN 7710195 EXCEPTING THEREOUT ALL MINES AND MINERALS FIFTHLY: PARCEL 1 PLAN 5998JK BLOCK 19 LOT 15 EXCEPTING THEREOUT ALL MINES AND MINERALS PARCEL 2 PLAN 5998JK BLOCK 19 LOTS 16 AND 17 EXCEPTING THEREOUT ALL MINES AND MINERALS PARCEL 3 PLAN 5882AB BLOCK 19 THE SOUTH HALF OF LOT C EXCEPTING THEREOUT ALL MINES AND MINERALS EXHIBIT A EXHIBIT B MACHINERY AND EQUIPMENT All fixtures, machinery, apparatus, equipment, fitting and appliances of every kind and nature whatsoever now or hereafter affixed or attached to or installed in any of the Leased Premises (except as hereafter provided), including all electrical, anti-pollution, heating, lighting (including hanging fluorescent lighting), incinerating, power, air cooling, air conditioning, humidification, sprinkling, plumbing, lifting, cleaning, fire prevention, fine extinguishing and ventilating Systems, devices and machinery and all engines, pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors, conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil burners, boilers, doors, windows, loading platforms, lavatory facilities, stairwells, fencing (including cyclone fencing), passenger and freight elevators, overhead cranes and garage units, together with all additions thereto, substitutions therefor and replacements thereof required or permitted by this Lease, but excluding all Tenant's Equipment. EXHIBIT B EXHIBIT C PERMITTED ENCUMBRANCES 1. Liens for taxes, assessments or governmental charges or levies not at the time due and delinquent; 2. Undetermined or inchoate liens and charges incidental to current operations which have not at such time been filed pursuant to law against the Lessee or which relate to obligations not due or delinquent; 3. Any rights of expropriation, access or use or any other similar right conferred or reserved by Or in any statute or Canada or Alberta; 4. Municipal by-laws and regulations affecting the use and occupancy of the Leased Premises; 5. Encroachments revealed by the survey of the Leased Premises dated January 26, 2004 prepared by Global Surveys Corp.; and 6. Instrument No. 981 367 918 registered against title to a portion of the Leased Premises on November 24,1998, being & Caveat regarding a lease in favour of Telus Mobility Inc. EXHIBIT C EXHIBIT D BASIC RENT PAYMENTS 1. Basic Rent. (a) Initial Term. Subject to the adjustments provided for in Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Initial Term shall be $692,329.07 per annum, payable quarterly in advance on each Basic Rent Payment Date, in equal installments of $173,087.27. Pro rata Basic Rent for the period from the date hereof through the last day of September 2004 shall be paid on the date hereof. (b) Renewal Term. Annual Basic Rent for the first year of each Renewal Term shall be an amount equal to the Fair Market Rental Value as of the first day of the applicable Renewal Term, as determined in accordance with Paragraph 29 of this Lease, shall be payable in equal quarterly installments and shall be subject to the adjustments provided for in Paragraphs 2, 3 and 4 below. 2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to adjustment, in the manner hereinafter set forth, for increases in the index known as Canadian Consumer Price Index for "all items excluding food and energy" ("CPI") or the successor index that most closely approximates the CPI. If the CPI shall be discontinued with no successor or comparable successor index, Landlord and Tenant shall attempt to agree upon a substitute index or formula, but if they are unable to so agree, then the matter shall be determined by arbitration in accordance with the rules of the Arbitration Act (Alberta). Any decision or award resulting from such arbitration shall be final and binding upon Landlord and Tenant and judgment thereon may be entered in any court of competent jurisdiction. In no event will the Basic Rent as adjusted by the CPI adjustment be less than the Basic Rent in effect for the one (1) year period immediately preceding such adjustment. 3. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted to reflect changes in the CPI until September 25, 2005 (the "First Basic Rent Adjustment Date"). As of the First Basic Rent Adjustment Date and on each anniversary of the First Basic Rent Adjustment Date thereafter during the Initial Term and as of the first (1st) anniversary of the first full Basic Rent payment date of each exercised Renewal Term (each, a "First Basic Rent Renewal Adjustment Date") and on each anniversary of the First Basic Rent Renewal Adjustment Date thereafter during such Renewal Term (each such date being hereinafter referred to as a "Basic Rent Adjustment Date"), Basic Rent shall be adjusted to reflect increases in the CPI over the CPI used to calculate the most recent increase in Basic Rent (or, with respect to the first Basic Rent Adjustment Date during the Initial Term or any Renewal Term, such increases shall be measured against the CPI as of the first payment date during the Initial Term or such Renewal Term, as the case may be). 4. Method of Adjustment for CPI Adjustment. (a) As of each Basic Rent Adjustment Date when the average CPI determined in clause (i) below exceeds the Beginning CPI (as defined in this Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of which shall be the difference between (i) the average CPI for the three (3) most recent calendar months (the "Prior Months") ending prior to such EXHIBIT D-1 EXHIBIT D Basic Rent Adjustment Date for which the CPI has been published on or before the forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the Beginning CPI, and the denominator of which shall be the Beginning CPI. The product of such multiplication shall be added to the Basic Rent in effect immediately prior to such Basic Rent Adjustment Date. As used herein, "Beginning CPI" shall mean the average CPI for the three (3) calendar months corresponding to the Prior Months, but occurring immediately prior to the effective date of the most recent increase in Basic Rent (or, with respect to the first Basic Rent Adjustment Date during the Initial Term or any Renewal Term, occurring immediately prior to the first payment date during the Initial Term or such Renewal Term as the case may be). If the average CPI determined in clause (i) is the same or less than the Beginning CPI, the Basic Rent will remain the same for the ensuing one (1) year period and the Beginning CPI for the adjustment (but not any subsequent adjustment) occurring at the end of such ensuing one (1) year period shall continue to be such Beginning CPI By way of example and for purposes of clarification, if Basic Rent was $1 and CPI increased by 5%, 3%, and 2%, respectively, over three years. then annual rent for those three years would be $1,$1, and $1.02 respectively. As a further example, if Basic Rent was SI and CPI increased by 5%, 6%, and 2%, respectively. over three years, then annual rent for those three years would be $1, $1.1007, and $1.02704, respectively. (b) Effective as of a given Basic Rent Adjustment Date, Basic Rent payable under this Lease until the next succeeding Basic Rent Adjustment Date shall be the Basic Rent in effect after the adjustment provided for as of such Basic Rent Adjustment Date. (c) Notice of the new annual basic Rent shall he delivered to Tenant on or before the tenth (10th) day preceding each Basic Rent Adjustment Date, but any failure to do so by Landlord shall not be or be deemed to be a waiver by Landlord of Landlord's rights to collect such sums. Tenant shall pay to Landlord, within ten (10) Business Days after a notice of the new annual Basic Rent is delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated amount as set forth above was not delivered to Tenant at least ten (10) Business Days preceding the Basic Rent Adjustment Date in question. EXHIBIT D-2 EXHIBIT E-1 RECORDING REQUESTED BY AND AFTER RECORDING, RETURN TO: GMAC Commercial Mortgage of Canada, Limited 70 York Street, Suite 710 Toronto, ON M5J 1S9 Attn: Servicing - Executive Vice President SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT This Subordination, Non-Disturbance and Attornment Agreement ("Agreement"), is made between GMAC COMMERCIAL MORTGAGE OF CANADA, LIMITED, a corporation formed under the Canada Business Corporations Act (" Lender" ), ___________________________________, a__________________________ ("Tenant") and _________________________________, a_________________________("Landlord"). 7. Background EXHIBIT E-1 - 1 EXHIBIT E-1 A. Lender is about to make a loan to Landlord in the original principal amount $___________________("Loan"), which will be secured by a first priority charge or mortgage (as modified or extended from time to time, "Security Instrument") on Landlord's property described more particularly on Exhibit A attached hereto ("Property"). B. Tenant has leased a portion of the Property from Landlord pursuant to a certain lease agreement between Landlord and Tenant dated______________ ("Lease"). C. Tenant has been requested to subordinate its Lease to the Security Instrument and has agreed to do so on the condition that it is assured of continued occupancy of its leased space under the terms of the Lease and this Agreement. NOW, THEREFORE, in consideration of the mutual promises of this Agreement, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Subordination. Tenant agrees that the Lease, and all estates, options and rights created under the Lease, hereby are subordinated and made subject to the lien and effect of the Security Instrument, as if the Security Instrument had been executed and recorded prior to the Lease. 2. Nondisturbance. As long as no Tenant Event of Default exists under the Lease no foreclosure, conveyance, or other sale of the Property in connection with enforcement of the Security Instrument or otherwise in satisfaction of the Loan shall operate to terminate the Lease or Tenant's rights thereunder (except as set forth in Section 3). Provided that (i) Tenant is not in default, after the giving of notice and the expiration of all applicable periods of grace or cure, under the terms of the Lease and complies with this Agreement or (ii) if Tenant is in default, after the giving of notice and the expiration of all applicable periods of grace or cure, under the terms of the Lease, (x) the period for a Permitted Leasehold Mortgagee (as such term is defined in the Lease) to exercise its cure rights with respect to such default has not expired in accordance with the provisions of Section 35 of the Lease or (y) a Permitted Leasehold Mortgagee has performed the obligations of Tenant under the Lease and has remedied any such default in accordance with the provisions of Section 35 of the Lease, Lender agrees that in the event Lender acquires title to the Property by reason of a foreclosure. Tenant's possession and occupancy of the Property and Tenant's and Permitted Leasehold Mortgagee's rights and privileges under the Lease during the term thereof (including any renewal term) shall not be disturbed, diminished or interfered with, and Lender shall recognize the Lease and Tenant's and Permitted Leasehold Mortgagees rights hereunder. Subject to the limitations and conditions contained herein, Lender upon foreclosure shall be deemed to be Landlord and shall assume the obligations of Landlord under the Lease thereafter arising. Lender EXHIBIT E-1 - 2 EXHIBIT E-1 agrees to execute and deliver at any time and from time to time, upon the reasonable request of Tenant or any Permitted Leasehold Mortgagee, and at Tenant's or Permitted Leasehold Mortgagee's cost and expense, any instrument or certificate in recordable form (and otherwise in form reasonably satisfactory to Tenant or Leasehold Mortgagee, as applicable) deemed to be necessary of appropriate to evidence Tenant's rights to recognition and non-disturbance pursuant to this Agreement, provided however, that such instruments or certificates shall be on the same terms, covenants and conditions as this Agreement. 3. Attornment. Tenant agrees to attorn to and recognize as its landlord under the Lease each party acquiring legal title to the Property by foreclosure, conveyance or other sale in connection with enforcement of the Security Instrument of otherwise in satisfaction of the Loan ("Successor Owner"). As Successor Owner such party shall perform all obligations of the landlord under the Leases arising from and after the date title to the Property was transferred to Successor Owner. In no event, however, will any Successor Owner be: (a) liable for any default, act, or omission of any prior landlord under the Lease; (b) subject to any offset or defense which Tenant may have against any prior landlord under the Lease; (c) bound by any payment of rent or additional rent made by Tenant to Landlord more than 30 days before the same is due; (d) bound by any modification or supplement to the Lease, or waiver of Lease terms, made without Lender's written consent thereto; (e) liable for the return of any Security deposit or other prepaid charge paid by Tenant under the Lease, except to the extent such amounts were delivered to Lender, (f) liable or bound by any right of first refusal or option to purchase all or any portion or the Property except for the option to purchase as set out in Section 37 hereof, subject to the provisions of this Agreement; (g) liable for construction or completion of any improvements to the Property or as required under the Lease for Tenant's use and occupancy (whenever arising): or (h) liable beyond its interest in the Property for the payment of any claim or indemnification arising under the Lease (whenever arising) including any title and casualty insurance proceeds and condemnation awards actually paid to Lender. Although the foregoing provisions of this Agreement are self-operative, Tenant agrees to execute and deliver to Lender or any Successor Owner such further instruments as Lender or a Successor Owner may from time to time reasonably request in order to confirm this Agreement. 4. Lender Opportunity to Cure Landlord Defaults. Tenant agrees that, until the Security instrument is released by Lender, it will not exercise any remedies under the Lease for Landlord defaults without having first given to Lender (a) written notice of the alleged Landlord default and (b) the opportunity to cure such default within the longer of (i) 30 days after the cure period provided under the Lease to Landlord, (ii) 30 days from Landlord's receipt of Tenant's notice to Lender of a Landlord default, or (iii) if cure of such default requires possession of the Property, 30 days after Lender has obtained possession of the Property. Tenant acknowledges that Lender is not obligated to cure any Landlord default, but if Lender so elects to do so, Tenant agrees to accepts cure by Lender as that of Landlord under the Lease and will not exercise any right or remedy under the Lease for a Landlord default. Performance rendered by Lender on Landlord's behalf is without prejudice to Lender's rights against Landlord under the Security Instrument or EXHIBIT E-1 - 3 EXHIBIT E-1 any other documents executed by Landlord in favor of Lender in connection with the Loan. 5. Tenant to Pay Rents to Lender upon Notice. Tenant is hereby notified that the Security Instrument and the other documents securing Loan contain an assignment of the rents due to Landlord pursuant to the Lease. In the event that Lender notifies Tenant that there has been a default under the Loan and that Lender is entitled to receive the rent due Landlord under the Lease, Tenant shall thereafter pay to Lender or as directed by Lender all rentals and other monies due or to become due to Landlord under the Lease and Landlord expressly authorizes Tenant to make such payments to Lender and hereby releases and discharges Tenant from any liability to Landlord on account of such payments. 6. No Amendments. Tenant and Landlord each acknowledge agree that they require Lender's consent to any future modification, waiver, expansion or renewal (except for expansion or renewal rights currently permitted to Tenant by the express terms of the Lease), and no modification, waiver, expansion or renewal made without Lender's written consent will be enforceable against Lender. 7. Termination. Tenant agrees that in the event that Tenant is entitled to terminate the Lease pursuant to Section 18 of the Lease, any Termination Notice given by Tenant to Landlord shall also be delivered to Lender, contemporaneously with delivery to Landlord. 8. Permitted Leasehold Mortgagee. Tenant agrees with Landlord and Lender that any Permitted Leasehold Mortgagee shall, prior to any grant of security by Tenant to the Permitted Leasehold Mortgagee, enter into a subordination and non-disturbance agreement substantially in the form of this Agreement. 9. Miscellaneous. (a) Notices. All notices under this Agreement will be effective only if made in writing and addressed to the address for a party provided below such party's signature. A new notice address may he established from time to time by written notice given in accordance with this Section. All notices will be deemed received only upon actual receipt. (b) Entire Agreement: Modification. This Agreement is the entire agreement between the parties and supersedes all prior discussions, representations and agreements (oral and EXHIBIT E-1 - 4 EXHIBIT E-1 written) with respect to the subordination nondisturbance of the Lease. This Agreement controls any conflict between the terms of this Agreement and the Lease. This Agreement may not be modified, supplemented or terminated, nor any provision hereof waived, unless by written agreement of Lender and Tenant. (c) Binding Effect. This Agreement binds and Inures to the benefit of each party hereto and their respective heirs, executors, legal representatives, successor and assigns, whether by voluntary action of the parties or by operation of law. Upon any safe of the Property by the Lender, the Lender shall obtain the covenant of any purchaser to be bound by the terms hereof and the Lender shall be relieved, of its obligations hereunder. (d) Unenforceability. No determination by any court government body or otherwise that any provision of this Agreement is invalid or unenforceable in any instance affects the validity or enforceability of any other provision or such invalid or unenforceable provision in any circumstance not controlled by such determination. Each invalid or unenforceable provision will be ineffective only to the extent of such invalidity or unenforceability and otherwise construed to the greatest extent possible to accomplish fairly the purposes and intentions of the parties hereto. (e) Governing Law. This Agreement shall be governed by the laws of the province in which the Property is located and the laws of Canada applicable therein. (f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together constitute a fully executed agreement even though all signatures do not appear on the same document. IN WITNESS WHEREOF, this Agreement is executed this _______ day of __________, 200__. LENDER: TENANT: GMAC Commercial Mortgage of Canada, Limited___________________________________ EXHIBIT E-1 - 5 EXHIBIT E-1 By:____________________________ By:______________________ Name: Name: Title: Title: LENDER NOTICE ADDRESS: TENANT NOTICE ADDRESS: GMAC Commercial Mortgage of Canada, Limited _________________________ 70 York Street, Suite 710 Toronto, ON M5J 1S9 _________________________ Attn: Servicing - Executive Vice President Attn: LANDLORD: By:____________________________ Name: Title: Landlord notice address: Attach: Notary acknowledgments for each signer. EXHIBIT E-1 - 6 EXHIBIT E-1 Exhibit A - Legal Description of the Property EXHIBIT E-l - 7 EXHIBIT E-2 TENANT ESTOPPEL CERTIFICATE Tenant Name: CWD WINDOWS AND DOORS, INC. Landlord Name: PG-NOM (ALBERTA), INC. Leased Space: _________________________ Landlord requests Tenant to complete this Certificate for the benefit of GMAC Commercial Mortgage of Canada, Limited ("Lender") in connection with a pending loan to be made by Lender that will be secured by a mortgage on Landlord's property located at ______________ ("Mortgaged Property"). Tenant's Leased Space is located within the Mortgaged Property. Tenant acknowledges that its statements made in this Certificate will be relied upon by Lender and may be enforced against Tenant with respect to Tenant's Lease. 8. TENANT STATEMENTS ABOUT ITS LEASE 1. An accurate and complete copy of Tenant's lease agreement ("Lease") is attached as Schedule A. No other agreements (verbal or written) modify or supplement the Lease or Tenant's rights with respect to the Leased Space. 2. Tenant currently is the sole tenant and occupier of the Leased Space. Tenant has not entered into any agreement to assign, sublet, encumber, or otherwise transfer all or any portion of the Leased Space or the Lease. 3. The Lease is [__] or is not [__] guaranteed. If guaranteed, the name and current address of each guarantor is attached. 4. No default by Landlord (to Tenant's knowledge) or by Tenant currently exists under the Lease. Tenant has no setoffs, credits, claims or defenses to Tenant's obligation to pay rent or to enforcement of the Lease. EXHIBIT E-2-1 EXHIBIT E-2 5. The current lease term began on _______________ [insert date], and the rent commencement date, if different, began on _______________ [insert date or "N/A" if not applicable]. The current lease term ends on _______________ [insert date]. Tenant has no option to terminate the Lease prior to such date, except in accordance with the rights of the Tenant pursuant to subsection 18(a) of the Lease. 6. Tenant has the option to extend the term of the Lease for _______________ renewal periods [insert number of renewals or "none"]. Each renewal offers a term of _______________ [insert term or "N/A" if not applicable]. Tenant has not exercised any renewal option as of the date hereof. 7. Tenant has none of the following rights: Right to expand the Leased Spaces; right to relocate the Leased Space; right of first refusal (offer) with respect to any other space in the Mortgaged Property; or option or right of first refusal (offer) to purchase the Mortgaged Property, except for the Tenant's option to purchase set out in Section 37 of the Lease. 8. Tenant's last payment of base rent in the amount of $_______________ [insert amount] was paid on _______________ [insert date]. No other advance rent has been paid by Tenant. 9. Tenant has paid Landlord a security deposit in the amount of $ NONE. 10. There are no rent-free periods or rent concessions provided under the Lease and no rent concession will become effective during the remainder of the Lease. 11. There are no tenant improvements to be constructed as a condition to the Lease. No damage to the Leased Space exists which has not been repaired to Tenant's satisfaction. 12. No bankruptcy, reorganization, insolvency or similar proceedings under any provincial or federal law has been initiated by or against Tenant. 13. Tenant has all licenses and permits which Tenant must have to operate its business from the Leased Space, and all are current and have not been revoked. EXHIBIT E-2-2 EXHIBIT E-2 14. Since taking possession of the Leased Space, Tenant has not received any notice that the Leased Space or Tenant's use of the Leased Space violates any applicable law, regulation ordinance or directive of any governmental or agency or insurance company. 15. Since taking possession of the Leased Space, Tenant has not stored, generated, manufactured, refined, treated, transported, disposed or in any way used materials which are considered hazardous substances or wastes under applicable environmental laws and regulations (including, without limitation, petroleum or petroleum by-products) at the Leased Space or on any other part of the Mortgaged Property, except as in compliance with the Lease. 16. Tenant understands that a condition of the loan from Lender to Landlord will require Lender's consent to any future modification, waiver, expansion or renewal (except for expansion or renewal rights currently permitted to Tenant by the express terms of the Lease), and no modification, waiver, expansion or renewal made without Lender's written consent will be enforceable against Lender. 17. Tenant understands that a condition of the loan from Lender to Landlord will prohibit Landlord from accepting Tenant's rent more than 30 days prior to its due date, and no payment of rent by Tenant more than 30 days in advance will be binding on Lender. 18. Listed below are any exceptions asserted by Tenant to the foregoing statements (Lender has no obligation to address Tenant's exceptions in connection with the loan):____________________________________________ BY SIGNING BELOW, Tenant certifies that all information stated above is accurate and correct and does not omit any material fact that would make any statement false or misleading. Date:____________________________ By:________________________ Name: Title: EXHIBIT E-2-3 EXHIBIT E-2 ATTACH: COMPLETE COPY OF LEASE AS SCHEDULE A. NAMES AND ADDRESSES OF GUARANTORS, IF ANY. EXHIBIT E-2-4 EXHIBIT E-2 Landlord signs below to certify to Lender that, to Landlord's knowledge, the information disclosed by Tenant in the attached Tenant Estoppel Certificate is accurate and complete and does not omit any material feel that would cause any statement made by Tenant to be false or misleading. Landlord: Date:___________________________ By:______________________________ Name: Title: EXHIBIT E-2-5 EXHIBIT F TENANT'S POST-CLOSING OBLIGATIONS Tenant shall conduct the following actions and provide Landlord with written confirmation, satisfactory to Landlord, within sixty (60) days of the Commencement Date (or such other period of time expressly set forth below), that all of the activities listed in Paragraphs A and B below have been satisfactorily completed. Tenant shall provide written confirmation, satisfactory to Landlord, within sixty(60) days of the completion of each activity identified in Paragraph B below. A. ENGINEERING ISSUES 1. Replace roof joist in warehouse area of building one. 2. Replace skylight on building two. B. ENVIRONMENTAL REGULATORY COMPLIANCE ISSUES 1. Registration of used oil AST. 2. Prepare Spill Prevention and Response Plan. 3. Provide evidence that storage of motor oil, isopropyl alcohol and used antifreeze currently stored outside have been moved to an indoor storage area with secondary containment. 4. Provide evidence that the Surfcon material has been moved to a heated storage area. 5. Provide evidence that the City of Calgary has been contacted and has approved the discharge of wastewater from the reverse osmosis waste treatment system to the city's POTW. 6. Disposal of investigation derived wastes from the investigation of the former dip tank. EXHIBIT F-1 EXHIBIT F C. REMEDIATION/INVESTIGATION ISSUES 1. Remediate soil and groundwater contamination identified in the August 2004 "Environmental Review of Plygem Industries, Inc. and MW Manufacturers Inc" report prepared by ENVIRON to applicable CLEANUP standards and to the written approval of the applicable environmental agency. EXHIBIT F-2 EXHIBIT F D. NOTIFICATION Tenant shall provide all communications regarding the Post-Closing Obligations specified in Paragraphs B and C of this Exhibit "F including Tenant's proof of satisfactory completion of these obligations to Landlord addressed to: Louis A. Naugle, Esquire Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 Telephone: 412-288-8586 Fax: 412-288-3063 E-mail: lnaugle@reedsmith.com E. MISCELLANEOUS POST-CLOSING ISSUES 1. Make best efforts (with the co-operation of the Landlord as required) to obtain encroachment agreements from The City of Calgary in respect of those encroachments set out in the Real Property Reports concerning the Leased Premises dated January 26, 2004 and prepared by Global Surveys Corp. 2. Make best efforts to obtain the issuance of development completion permits and/or occupancy permits, where same are required by Law from The City of Calgary with respect to any buildings, structures or improvements on or to the lands comprising the Leased Premises. 3. Make best efforts to obtain and register an amendment to the Caveat registered as instrument number 981 367 918 against title to a portion of the Leased Premises on the 24th day of November, 1998., to set out the correct location of the tower and component rooms as shown on the Real Property Report dated January 26, 2004 and prepared by Global Surveys Corp.. EXHIBIT F-3 EXHIBIT F 4. Obtain from Global Surveys Corp. reliance letters, separately addressed to the following, parties in respect of the Real Property Reports dated January 26, 2004 concerning the Leases Premises and prepared by Global Surveys Corp.: i) GMAC Commercial Mortgage of Canada, Limited, 70 York Street, Suite 710, Toronto, ON, M5J 1S9; ii) PG-NOM (Alberta) Inc., c/o WP Carey & CO. LLC, 2nd Floor, 50 Rockefeller Plaza, New York, New York, USA, 10020; and iii) PG-Trustee (Can) QRS 16-10, Inc., c/o WP Carey & Co. LLC, 2nd Floor, 50 Rockefeller Plaza, New York, New York, USA 10020; to the effect that such parties may rely on the Real Property Reports as if each of them was listed as a "client" thereon. 5. Tenant shall pay all amounts required to pay in full, and shall obtain and register in the South Alberta Land Registry Office, a valid discharge of the following encumbrance; INSTRUMENT NO. ENCUMBRANCE ENCUMBRANCER 2840JQ Mortgage Foster's Garden Chapel Ltd. by October 29, 2004 and within five (5) days thereafter to provide to FIRST CANADIAN TITLE INSURANCE COMPANY and BLAKE, CASSELS & GRAYDON LLP a copy of the registered discharge, together with a release of interest in insurance policies duly executed by the encumbrancer named above. EXHIBIT F-4