ALBERNI INVESTMENTS (1988) INC. AND ENTRÉE GOLD INC.

TERM SHEET

1

ARTICLE I – DEFINITIONS

1

1.01 - Definitions

1

ARTICLE II - GRANT OF LEASE AND TERM

5

2.01

- Grant

5

2.02 - Reservation to Landlord

5

2.03 - Term

5

2.04 - Postponement of Term

5

2.05 - Early Possession

5

2.06 - Parking

5

ARTICLE III - RENT

6

3.01

- Rent

6

3.02 - Net Lease

6

3.03 - Goods and Services Tax (“GST”)

6

3.04 - Security Deposit

6

3.05 - Interest on Overdue Rent

7

ARTICLE IV - TAXES

7

4.01

- Sales Taxes

7

4.02 - Business Tax

7

4.03 - Other Taxes

7

5.01

- Control of Development by Landlord

8

5.02 - Operating Costs

8

5.03 - Certificate of Operating Costs

8

ARTICLE VI - UTILITIES, HEATING, VENTILATING AND AIR-CONDITIONING

8

6.01

- Electricity

8

6.02 - Heat

9

6.03 - Air-Conditioning

9

6.04 - Elevators

9

6.05 - Limitation

9

ARTICLE VII - USE OF LEASED PREMISES

9

7.01

- Use of Leased Premises

9

7.02 - Leased Premises Conform to Law

9

7.03 - No Nuisance

10

7.04 - Floor Load

10

7.05 - Names

10

7.06 - Continuous Occupancy

10

7.07 - Tidiness/Janitorial Service

10

ARTICLE VIII - INSURANCE AND INDEMNITY

10

8.01

- Tenant’s Insurance

10

8.02 - Landlord’s Insurance

11

8.03 - Indemnify Landlord

12

8.04 - Release of Landlord

12

8.05 - Release of Tenant

12

8.06 - Release from Third Party Interference

13

8.07 - Damage by ▇▇▇▇▇▇’s Equipment

13

8.08 - Damage by Tenant

13

ARTICLE IX - MAINTENANCE, REPAIRS AND ALTERATIONS

13

9.01

- Tenant to Repair Leased Premises

13

9.02 - Landlord to Repair Structure

13

9.03 - Notify Landlord of Accidents or Defects

13

9.04 - Alterations by Tenant

14

9.05 - Alterations by Landlord Permitted

14

9.06 - Removal and Restoration by Tenant

15

9.07 - No Liens

16

9.08 - Signs

16

9.09 - Blinds

16

9.10 - Repair of Appartus

16

ARTICLE X - TENANT'S AND LANDLORD'S ACCESS

17

10.01

- Tenant’s Access to Common Areas

17

10.02 - Access by Landlord

17

ARTICLE XI - DAMAGE AND DESTRUCTION

17

11.01

- Destruction or Damage

17

ARTICLE XII - ASSIGNMENT AND SUBLETTING

18

12.01

- Mortgage of Lease

18

12.02 - Assigning or Subletting

18

12.03 - Sale by Landlord

20

13.01

- Tenant’s Certificate

20

13.02 - Registration of Lease

20

13.03 - Subordination and Attornment

20

13.04 - Attorney

20

ARTICLE XIV - DEFAULT, TERMINATION AND LANDLORD'S REMEDIES

21

14.01

- Default

21

14.02 - Termination of Lease

21

14.03 - Right to Re-Let on Tenant’s Account

22

14.04 - Bankruptcy or Seizure

22

14.05 - Application of Distress

23

14.06 - Waiver Re Distress

23

14.07 - Indemnity Re Landlord’s Remedies

23

14.08 - Remedies Independent

23

14.09 - Landlord’s Expenses

23

ARTICLE XV - QUIET ENJOYMENT AND SURRENDER OF POSSESSION

23

15.01

- Quiet Possession

23

15.02 - Landlord not to Unreasonably Interfere

24

15.03 - Overholding

24

15.04 - Yield-Up

24

ARTICLE XVI - INTENT AND INTERPRETATION OF LEASE

24

16.01

- Force Majeure

24

16.02 - Headings

24

16.03 - Interpretation

24

16.04 - Governing Law

25

16.05 - Time of the Essence

25

16.06 - Enurement

25

16.07 - Representations

25

16.08 - Non-Waiver by Landlord

25

ARTICLE XVII - MISCELLANEOUS

25

17.01

- Notices

25

17.02 - Observe Rules and Regulations

26

17.03 - Corporate Authority

26

17.04 - Relocation

26

17.05 - Provisions Severable

26

17.06 - Costs of Landlord’s Consent

26

17.07 - Schedules

26

17.08 - Security

26

17.09 - Interest in Fixtures

27

SCHEDULE “A”

Lands

SCHEDULE “B”

Plan of Leased Premises

SCHEDULE “C”

Rules and Regulations

SCHEDULE “D”

Additional Terms and Covenants (if any)

SCHEDULE “E”

Tenant’s Work (if applicable)

1.

LANDLORD:

ALBERNI INVESTMENTS (1988) INC.

(a)

Address of Landlord’s Manager:

c/o DODWELL REALTY LTD.

Suite 1701 – ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

Vancouver, BC

V6E 3Z3

Telephone:

▇▇▇-▇▇▇-▇▇▇▇

Fax Number:

▇▇▇-▇▇▇-▇▇▇▇

(b)

Landlord's “Environmental Contact”:

Operations Manager

(c)

Landlord’s Head Office:

c/o DODWELL REALTY LTD.

Suite 1701 – ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

Vancouver, BC

V6E 3Z3

Telephone:

▇▇▇-▇▇▇-▇▇▇▇

Fax Number:

▇▇▇-▇▇▇-▇▇▇▇

2.

TENANT (legal name):

ENTRÉE GOLD INC.

(a)

Address of Leased Premises:

Suite ▇▇▇▇ – ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

Contact’s Name:

▇▇▇▇ ▇▇▇▇▇▇

Contact’s Title:

Telephone:

▇▇▇-▇▇▇-▇▇▇▇

Fax Number:

▇▇▇-▇▇▇-▇▇▇▇

(b)

Tenant’s Head Office:

Contact’s Name:

Contact’s Title:

Telephone:

Fax Number:

3.

Leased Premises:                                                  Attached as Schedule “B” to the Lease is a plan of the Project showing the Leased Premises by outlining. The Leased Premises are designated as Suite ▇▇▇▇ – ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇

4.

Rentable Area of Leased Premises:

Approximately 2,250 square feet.

5.

(a)

Security Deposit:

$10,464.60 (Section 3.04)

(b)

Other Deposit:

N/A (Schedule “D”)

6.

Term:

five (5) years

(a)

First Day of Term:

the 1st day of June, 2005,

(b)

Last Day of Term:

the 31st day of May, 2010

7.

Minimum Rent:                                                      The Tenant shall pay to the Landlord as annual minimum rent (the “Minimum Rent”), without any deduction, set-off or abatement, as follows:

(a)

for Lease Years 1 to 3, the amount of thirty-one thousand five hundred dollars and no cents ($31,500.00) per annum payable in equal consecutive

(b)

for Lease Years 4 to 5, the amount of thirty-three thousand seven hundred fifty dollars and no cents ($33,750.00) per annum payable in equal consecutive monthly instalments of two thousand eight hundred twelve dollars and fifty cents ($2,812.50) each in advance on the first day of each and every calendar month, based upon an annual rate of fifteen dollars and no cents ($15.00) per square foot per annum of the Rentable Area of the Leased Premises.

8.

Use of Leased Premises:                                     The Leased Premises shall be used solely for the purpose of general business office and for no other purpose.

9.

Trade Name of Permitted Business:

Entrée Gold Inc.

1.01 - Definitions

(a)

“Additional Rent” means any and all sums of money, operating costs or charges including Interest required to be paid by the Tenant under this Lease (except Minimum Rent), whether or not the same are designated as “Additional Rent”, or whether or not the same are payable to the Landlord or otherwise, and all such sums are payable in lawful money of Canada, without deduction, abatement, set-off or compensation whatsoever, except as provided in this Lease.

(b)

“Architect” means the independent Architect from time to time named by the Landlord. The decision of the Architect shall be final and binding on the parties, so long as such decisions are consistent with accepted architectural standards in British Columbia.

(c)

“Building” means, all improvements now or at any time located upon the Lands and comprising the Office Tower, Retail Level and Parkade together with the Common Elements.

(d)

“Business Day” means any of the days Monday through Friday, between the hours of 7:00 a.m. and 6:00 p.m., unless such day is a “holiday” (as defined in the Interpretation Act (B.C.)).

(e)

“City” means the City of Vancouver.

(f)

“Common Areas” means the areas of the Development that from time to time are not intended to be leased to tenants and are provided for the use of the tenants in common with other tenants.

(g)

“Common Elements” means:

(i)

the Common Areas and elements of the Development that from time to time are not intended to be leased to tenants of the Development or are designated from time to time as Common Elements by the Landlord, and

(ii)

the elements within areas rented or intended to be rented to tenants that are provided for the benefit of tenants in common with other tenants.

(h)

“Development” means collectively, the Lands and Building.

(i)

“Interest” means interest at the Prime Rate plus five percent (5%) per annum calculated and compounded monthly unless such rate is not permitted by law in which case it means the maximum rate which is permitted by law.

(j)

“Lands” means those lands in the City upon which the Building is being or has been constructed, and which are more particularly described in Schedule “A”.

(k)

“Landlord's Improvements” means all improvements forming part of the Leased Premises, but excluding all Tenant's Improvements.

(l)

“Leased Premises” means the premises described in section 2.01 consisting of the space within the top surface of the floor, bottom surface of the ceiling and the inside surface of all demised walls and glass but excludes all Common Elements.

(m)

“Mortgage” means any mortgagee(s) for the time being of all or any part of the Development.

(n)

“Occupation Rent” means the Minimum Rent plus Additional Rent estimated by the Landlord on a daily basis (section 2.05).

(o)

“Office Tower” means all parts of the Development but excluding the Retail Level and the Parkade.

(p)

“Operating Costs” means all reasonable costs and expenses, without limitation or duplication, incurred by or on behalf of the Landlord, for the operation, management, protection, preservation, security, cleaning, repair, and non-structural Building component replacement, renovation or updating, as well as all maintenance of the Development, including, for example, and without limitation:

(i)

the salary, wages, payroll expenses and other compensation benefits of employees, independent contractors and agents of the Landlord engaged in the operation, maintenance, repair, administration and management of the Development,

(ii)

the cost of goods, services, equipment and supplies incurred directly or indirectly in the operation, maintenance, repair, administration and management of the Development, including:

(A)

the costs of purchasing or renting materials, supplies, mechanical equipment, tools and signs,

(B)

sales, use and excise taxes on goods and services purchased by the Landlord,

(C)

the costs of professional and consulting services including services for the purposes of energy conservation or allocation of various costs and expenses among the tenants of the Development,

(D)

the costs incurred in legal proceedings taken to protect the general well-being of tenants or their use and enjoyment of the Development or to enforce covenants in the leases of the Development as they affect the general well-being of tenants in the Development,

(E)

the costs, whether incurred before or during the Term, of any capital improvements, equipment or devices (including the cost of extended warranties, if any), installed or paid for by the Landlord in order to:

(1)

conform with any change in legal or insurance requirements, or

(2)

effect a labour-saving, energy-saving or other economy, or

(3)

improve security, or

(4)

improve the comfort and enjoyment of the Development for the tenants of the Development,

(F)

a pro rata portion of any prepaid expenses as determined by the Landlord,

(iii)

all taxes, rates (including real property and local improvement rates and taxes), duties and assessments that may be levied, rated, charged or assessed against the Development and, without limiting the generality of the foregoing, every tax, charge, rate, assessment or payment which may become a charge or encumbrance upon or be levied or collected upon or in respect of all or any part of the Development, whether charged by any municipal, parliamentary or other authority,

(iv)

all charges for public services and utilities, including water, gas, sewer, electrical power, steam or hot water used upon or in respect of the Development and the rental of related fittings, machines, apparatus, meters, or other things and for all work or services performed by any corporation or commission in connection with such utilities,

(v)

license, permit and inspection fees,

(vi)

insurance premiums and other charges for insurance incurred pursuant to section 8.02 hereof including without limitation, reserves established by the Landlord for deductible amounts and losses in excess of insurance coverage in such amounts and for such risks including business interruption, loss of rental, by-law, earthquake, and flood insurance as the Landlord or any Mortgagee in their sole discretion shall elect to maintain,

(vii)

the reasonable charges and expenses of operating and maintaining the administration office within the Development including its deemed rental expenses,

(viii)

an administration fee of up to fifteen percent (15%) of the total cost incurred by the Landlord with respect to any work done by the Landlord at the Tenant's request or in respect of work done by the Landlord because of the Tenant's default in observing or performing any of the covenants of this Lease and on the part of the Tenant to be observed and performed,

(A)

depreciation,

(B)

income taxes of the Landlord,

(C)

interest on debt (other than debt contemplated in subparagraph 1.01(p)(ii)(E)) and legal fees, disbursements and other charges respecting such debt,

(D)

charges for the repair of damage to the Development but only to the extent that the Landlord has received reimbursement from tenants or from the net proceeds of insurance (after payment of any deductible),

(E)

expenses incurred by the Landlord in respect of the installation of the Landlord's Improvements,

(F)

leasing commissions, and

(G)

the capital costs of any expansion of the Building,

(q)

“Parkade” means all parts of the Development that are used for the purpose of parking of automobiles or ancillary to such use, or designated as Parkade by the Landlord from time to time.

(r)

“Prime Rate” means the rate of interest per annum as charged from time to time (no matter how calculated) designated by The Royal Bank of Canada as being its (highest, if more than one) prime commercial lending rate charged by it for demand loans in Canadian funds made at its main branch in Vancouver.

(s)

“Proportionate Share” means the fraction which equals the square footage of the Rentable Area of the Leased Premises (as determined by the Architect) divided by the total Rentable Area in the Development, whether leased or not.

(t)

“Rentable Area” means:

(i)

where the area leased to a tenant is a full floor in the Office Tower, then the area computed by measuring from the inside surface of glass in exterior walls and from the centre line of exterior walls where no glass exists (excluding any major vertical penetrations such as elevator and stairwell shafts), with no deduction for columns or projections based on BOMA Standard Method of Measuring Floor Area in office building (ANSI/BOMA Z65.1-1996), and

(ii)

where the area leased to a tenant is less than a full floor in the Office Tower, such area shall be computed by measuring the walls and partitions surrounding the Leased Premises from the inside surface of glass in exterior walls, or from the centre line of exterior walls where no glass exists, from the centre line of corridor walls and other permanent partitions, and from the centre line of partitions that separate the Leased Premises from other rentable premises with no deduction for columns or projections, plus a portion of the Common Areas on that floor, which portion shall be a fraction, the numerator of which shall be the area of the Leased Premises, as previously set forth in this clause (t)(ii), and the denominator of which shall be the total area of rentable premises on the floor (whether actually rented or not) BOMA Standard Method of Measuring Floor Area in office building (ANSI/BOMA Z65.1-1996), and

(iii)

where the area leased to a tenant is on the Retail Level, then the area computed by measuring the walls and partitions surrounding the Leased Premises from the inside surface of the glass in exterior walls, from the centre line of exterior walls where no glass exists, from the centre line of the corridor walls and other permanent partitions and from the centre line of the partitions that separate the Leased Premises from other rentable premises, with no deduction for columns or projections BOMA Standard Method of Measuring Floor Area in office building (ANSI/BOMA Z65.1-1996),

(u)

“Retail Level” means all parts of the Development that are not the Office Tower or Parkade and are from time to time constructed as Retail Level, or designated as such by the Landlord.

(v)

“Rules and Regulations” means the rules and regulations adopted by the Landlord from time to time acting reasonably and in such manner as would a prudent Landlord of a reasonably similar Development. The Rules and Regulations existing as at the Commencement Date are those set out in Schedule “C”.

(w)

“Sales Taxes” means any and all taxes, fees, levies, charges, assessments, rates, duties, and excises (whether characterized as sales taxes, purchase taxes, value-added taxes, goods and services taxes or any other form) which are imposed on the Landlord or which are levied, rated or assessed on the act of entering into this Lease or otherwise on account of this Lease, on the use or the occupancy of all or any part of the Leased Premises on the Minimum Rent, Additional Rent or any other sums deemed to be rent payable under this Lease or any portion of it or in connection with all or any part of the business of renting the Leased Premises but excluding income tax under the Income Tax Act.

(x)

“Tenant's Improvements” means all of the Tenant's furniture, equipment, stock and trade fixtures and such other property supplied by the Tenant in or forming part of the Leased Premises from time to time and shall include, without limitation, those improvements included in the “Tenant's Work” as set out in Schedule “E” hereto, if applicable, but shall exclude any “Landlord's Work”.

2.01 - Grant

2.02 - Reservation to Landlord

2.03 - Term

2.04 - Postponement of Term

2.05 - Early Possession

(a)

completion of all the Landlord's Improvements in the Leased Premises,

(b)

the Tenant receiving all necessary final approvals, licenses and occupancy permits,

(c)

the Leased Premises being ready for occupancy, and

(d)

proof of Tenant's insurance pursuant to Article VIII hereof,

2.06 - Parking

3.01 - Rent

(a)

Minimum Rent

(i)

The Tenant shall pay from and after the Commencement Date to the Landlord the Minimum Rent set out in Item 7 of the Term Sheet to be paid in advance on the first day of each calendar month during the Term.

(ii)

If the Commencement Date is other than on the first day of a calendar month, then the Tenant shall pay a pro rata portion of Minimum Rent for that month.

(b)

Additional Rent

(i)

The Tenant's Proportionate Share of realty taxes (except for Landlord's income taxes, capital taxes, business taxes, profits taxes, excess profits taxes, capital gains taxes, and other similar taxes and debt service, and capital retirement of debt on any security affecting the land and Building) and Tenant's Proportionate Share of all costs and expenses incurred by the Landlord to operate, maintain, repair and replace, manage and administer, insure, heat, air-condition and ventilate the Building and as further defined as “Operating Costs” in section 1.01(p) hereof.

(ii)

Any and all sums of money, including Operating Costs and Interest, paid or incurred by the Landlord and which ought to have been paid or incurred by the Tenant, or for which the Landlord is entitled to reimbursement from the Tenant shall be payable by the Tenant to the Landlord as Additional Rent with Interest from the date they were incurred or payable which Additional Rent and Interest shall also be recoverable as rent, and the rights that the Landlord has in respect of rent the Landlord shall also have in respect of Additional Rent whether or not such amounts are designated elsewhere in this Lease as rent or Additional Rent.

3.02 - Net Lease

3.03 - Goods and Services Tax (“GST”)

3.04 - Security Deposit

(a)

Payment of the Security Deposit is acknowledged as being received in the amount specified in Item 5(a) of the Term Sheet shall be paid to the Landlord from the Tenant upon the Landlord’s and ▇▇▇▇▇▇’s execution of this Lease. Such payment shall be held by the Landlord, without liability for interest, as security, to be applied on account for payment of first and last months’ Rent, or as otherwise provided in this section 3.04 for the faithful performance by the Tenant of all the terms, covenants and conditions of this Lease, and if, at any time during the Term, the Tenant breaches any term of this Lease, then the Landlord may, at its option, apply all or any portion of such Security Deposit as may in the Landlord's reasonable opinion be necessary to compensate it for such breach, including the Landlord's legal fees and disbursements on a full indemnity basis incurred to enforce

(b)

If, however, the Landlord does apply all or any portion of such Security Deposit as compensation for a breach of this Lease by the Tenant, then the Tenant shall upon written demand of the Landlord remit to the Landlord a sufficient amount in cash to restore the Security Deposit to the original sum deposited, and the Tenant's failure to do so within five (5) days after delivery of such demand to the Tenant constitutes a breach or default under this Lease.

3.05 - Interest on Overdue Rent

4.01 - Sales Taxes

(a)

The Tenant shall pay or reimburse to the Landlord, an amount equal to the Sales Taxes, it being the intention of the parties that the Landlord shall be fully reimbursed by the Tenant with respect to any and all Sales Taxes. The amount of the Sales Taxes shall be calculated by the Landlord in accordance with the applicable legislation and the provisions of this section 4.01 and shall be paid to the Landlord at the same time as the amounts to which Sales Taxes apply are payable to the Landlord under this Lease or upon demand at such other time or times as the Landlord may from time to time determine.

(b)

If the Sales Taxes payable by the Landlord are reduced because of any exemption or deduction to which the Landlord is entitled, then the Landlord may in its discretion allocate such exemption or deduction in such a way as to reduce the Sales Taxes to the extent and in such proportion as the Landlord may determine or in such a way as not to reduce Sales Taxes at all.

(c)

If Sales Taxes are reduced by reason of any exemption or deduction to which the Landlord is entitled by virtue of:

(i)

the payments of any taxes, fees, levies, charges, assessments, rates, duties or excises upon the purchase price of any lands or of any interest therein whether before, concurrently with, or after the execution and delivery of this Lease, or

(ii)

the payment of any taxes, fees, levies, charges, assessments, rates, duties or excises with respect to Minimum Rent, Additional Rent and any other amounts payable by the Landlord as a Tenant under any lease whether such lease is now existing or arises after the date of execution and delivery of this Lease,

4.02 - Business Tax

4.03 - Other Taxes

(a)

The Tenant covenants to pay or reimburse to the Landlord all rates, duties, charges, assessments and taxes including real property and local improvement rates and taxes which may be rated, charged, assessed and taxed with respect to the Leased Premises during the Term.

(b)

The Tenant agrees to transmit to the Landlord (if the same are received by the Tenant) and the Landlord agrees to transmit to the Tenant (if the same are received by the Landlord) copies of all assessment notices respecting such taxes immediately after receipt.

(c)

If the Landlord requires the Tenant to do so, the Tenant agrees to pay to the Landlord on the first day of each month the amount of money estimated by the Landlord to be sufficient to permit the Landlord to pay the taxes when they are due and any money in addition to the money already paid towards taxes so that the Landlord will be able to pay the taxes in full.

(d)

If the Tenant fails to pay the taxes when they are due, the Landlord will be at liberty to pay the taxes and from the date of such payment the amount paid by the Landlord will be payable by the Tenant as Additional Rent with Interest (but the Landlord shall not be under any obligation to pay the taxes for the Tenant).

(e)

The Landlord covenants and agrees to pay all taxes assessed against the Landlord or the Development on account of its ownership when due (except for taxes payable directly to the taxing authority by the Tenant and similar taxes levied or assessed separately from taxes and payable directly to the taxing authority by other tenants or occupants of the Development) and subject to the provisions hereinafter contained in this Article IV.

5.01 - Control of Development by Landlord

(a)

The Landlord shall operate and maintain the Development in such manner as the Landlord determines from time to time, as would a prudent landlord of a similar development having regard to size, age and location, subject to normal wear and tear and damage, other than by perils against which the Landlord is in receipt of sufficient insurance proceeds (as further set out in Article XI).

(b)

The Development and the Common Elements are at all times subject to the exclusive control and management of the Landlord.

5.02 - Operating Costs

5.03 - Certificate of Operating Costs

(a)

The Landlord shall furnish to the Tenant, upon written demand, as soon as possible after the end of each fiscal year of the Landlord, a certificate of the Landlord or his agent an audited statement prepared by an independent auditor specifying the Operating Costs for such fiscal year.

(b)

Such certificate shall contain sufficient information and be in reasonable detail so as to substantiate the amount of Operating Costs, and shall be prepared in accordance with the terms of this Lease.

(c)

If the Landlord and Tenant disagree on the accuracy of such certificate, the Tenant shall nevertheless make the payment in accordance with the certificate but the matter shall immediately be referred to and resolved by a single arbitrator agreed upon and appointed by the parties and in the absence of such agreement and appointment within fifteen (15) days of either party notifying the other of its wish to have the matter referred to arbitration, the matter shall be referred to and finally resolved by a single arbitrator in accordance with the provisions of the Commercial Arbitration Act or any Act amending or replacing same, on the application of either party.

6.01 - Electricity

6.02 - Heat

6.03 - Air-Conditioning

6.04 - Elevators

6.05 - Limitation

7.01 - Use of Leased Premises

7.02 - Leased Premises Conform to Law

7.03 - No Nuisance

7.04 - Floor Load

7.05 - Names

(a)

The Tenant agrees to operate its business only under the trade name set out in Item 9 of the Term Sheet.

(b)

The Tenant may use the name of the Building for the business address of the Tenant, but for no other purpose.

7.06 - Continuous Occupancy

7.07 - Tidiness/Janitorial Service

8.01 - Tenant’s Insurance

(a)

During construction of the any Tenant's Improvements, and Landlord's Improvements, the Tenant shall maintain broad form builders “all risk” course of construction insurance to at least the full replacement value of all of the Tenant's Improvements and the Landlord's Improvements on the Leased Premises during the construction period and shall provide to the Landlord evidence of such insurance prior to commencement of work.

(b)

The Tenant agrees to take out and keep in force during the Term:

(i)

comprehensive general public liability insurance on an occurrence basis with respect to the business carried on, in or from the Leased Premises and its use and occupancy by the Tenant in the sum of not less than Two Million Dollars ($2,000,000.), inclusive,

(ii)

commercial broad form “all risks” (including flood and earthquake) property damage insurance in respect of the Tenant's Improvements (excluding the Landlord's

(iii)

business interruption insurance against such perils and for such amounts as are normally insured in the circumstances by prudent Tenants, and as the Landlord may approve or require, acting reasonably,

(iv)

boiler and machinery insurance (if applicable), against such perils and in such amounts as are normally insured in the circumstances by prudent tenants as the Landlord may approve or require, acting reasonably.

(c)

At the request of the Landlord, the Tenant shall file with the Landlord such copies of current policies or certificates from insurance agents and proof of their renewal and payment of premiums as the Landlord may require, and if the Tenant fails to insure or to file satisfactory roof of insurance promptly when so required, the Landlord may, without notice to the Tenant, effect such insurance and recover any premiums paid therefor from the Tenant on demand. However, the Landlord shall not be responsible to do so and shall not be liable in any way for anything it does in effecting such insurance.

(d)

The Tenant shall promptly pay all premiums due on the insurance required to be effected by it under this Lease and shall not do anything upon the Leased Premises, which would impair or invalidate the obligation of any insurer, whether of the Landlord or of the Tenant.

(e)

The Tenant will not do or omit or permit to be done upon the Leased Premises anything which shall cause the rate of insurance upon the Building to be increased and that, if the rate of insurance upon the Building shall be increased by reason of the use made of the Leased Premises or by reason of anything done or committed or permitted to be done or omitted by the Tenant or by anyone permitted by the Tenant to be upon the Leased Premises, the Tenant will pay to the Landlord, on demand the amount of such increase. The Tenant will comply in every respect with the rules and regulations, if any, of the Insurers' Advisory Organization (1989) Inc. or any successor or substitute body, and with the requirements communicated to the Tenant of the Landlord's insurance company or companies having policies insuring the Building or its use.

(f)

All insurance policies effected by the Tenant under this clause shall:

(i)

be written by insurers licensed to do business in Canada and shall be in a form satisfactory to the Landlord,

(ii)

in the case of the builders “all risk” insurance, name the Landlord as an additional insured with loss payable to the Landlord.

(iii)

in the case of the “all risks” property damage insurance referred to in section 8.01(b)(ii) provide that loss shall be payable to the Landlord,

(iv)

in the case of the liability insurance include the Landlord as an additional named insured with a cross liability clause,

(v)

expressly provide that the insurer waives any right of subrogation against the Landlord,

(vi)

provide that such insurance cannot be canceled or materially changed without at least thirty (30) days prior written notice to the Landlord and that loss shall be payable to the Landlord notwithstanding any act, omission or negligence of the Tenant which might otherwise result in the forfeiture of the insurance,

(vii)

expressly provide that the insurer acknowledges receipt of a copy of this Lease or of the insurance provisions of this Lease.

(g)

The Landlord agrees to make available any of the Tenant's insurance proceeds paid to the Landlord toward the repair or replacement of the insured property unless the Landlord has paid for such repair or replacement or the Lease is terminated pursuant to any provision in this Lease except Article XI.

8.02 - Landlord’s Insurance

(a)

commercial broad form “all risks”, including boiler and machinery, by-law coverage, flood and earthquake, “extended coverage” perils and such other risks as are included in a standard additional perils supplementary insurance policy in an amount equal to the full replacement value of the Building, the equipment, the Landlord's Improvements contained in the Building (but excluding the Tenant's Improvements and other property belonging to the Tenant and located on the Leased Premises with respect to which the Tenant is required to insure under section 8.01(b)(ii) hereof),

(b)

public liability insurance in respect of Common Areas with limits of not less than Two Million Dollars ($2,000,000.) for any one occurrence,

(c)

rental abatement insurance as provided for in Article XI in respect of income to the Landlord from the operation of the Building.

8.03 - Indemnify Landlord

(a)

Notwithstanding any other provisions of this Lease, and except to the extent of any damage to property or injury to persons caused by the negligence or intentional act of the Landlord, the Tenant shall indemnify and save harmless the Landlord from and against any and all liabilities, damages, costs, expenses, claims, suits or actions arising out of:

(i)

any breach, violation or non-performance of any covenant, condition or agreement in this Lease set forth and agreed to by the Tenant to be fulfilled, kept, observed and performed,

(ii)

any damage to property occasioned by the Tenant's use and occupation of the Leased Premises,

(iii)

any injury to person or persons, including death resulting at any time, occurring in or about the Leased Premises; and/or the sidewalks or hallways adjacent or abutting to same,

(b)

Should the Landlord without fault on its part be made a party to any litigation commenced by or against the Tenant, then the Tenant shall protect, indemnify and hold the Landlord harmless and hereby consents to the Landlord at its option applying all or any portion of the Tenant's Security Deposit to compensate the Landlord for any and all costs, expenses, legal fees and disbursements on a full indemnity basis incurred or paid by the Landlord in connection with such litigation and to recover any deficiency remaining after application of all or any portion of the Security Deposit as Additional Rent upon demand.

(c)

The Tenant agrees to indemnify and save the Landlord harmless from and against all costs, expenses, legal fees and disbursements on a full indemnity basis that may be incurred or paid by the Landlord in enforcing this Lease, unless a court shall decide otherwise.

8.04 - Release of Landlord

(a)

The Landlord shall not be responsible for injury to or the death of any person in or about the Leased Premises or any damage to the Landlord's Improvements, and the Tenant's Improvements or to any furniture, equipment, stock and trade fixtures or any other property located within the Development with the express or implied consent of the Tenant or in respect of the Tenant's business. The Landlord shall not be responsible for insuring any Tenant's Improvements or other property of the Tenant in any part of the Leased Premises. The Tenant shall be solely responsible for the loss of, or damage to property of others kept or located in the Leased Premises during the Term.

(b)

The Landlord shall not be liable to the Tenant, its employees, invitees or licensees for any special, consequential damage(s) or economic loss arising from any breach of its obligations under this Lease.

8.05 - Release of Tenant

8.06 - Release from Third Party Interference

8.07 - Damage by Tenant’s Equipment

8.08 - Damage by ▇▇▇▇▇▇

9.01 - Tenant to Repair Leased Premises

(a)

The Tenant shall maintain, repair and keep the Leased Premises (including all the Landlord's Improvements and Tenant's Improvements) in first class condition and repair (except to the extent of any damage caused by the negligence or intentional act of the Landlord, or that the Landlord is obligated to repair the Landlord's Improvements under Article XI).

(b)

The Landlord and its agents and contractors may, at all reasonable times during the Term, enter the Leased Premises to inspect its condition, and if any maintenance or repairs are required to be made to the Leased Premises and providing the Landlord delivers to the Tenant, a notice setting out the necessary maintenance or repairs then the Tenant shall perform the maintenance or repairs required in a good and workmanlike manner within the time period set forth in the notice, and if there is no time period set forth in the notice, then the maintenance and repairs shall be done within a reasonable time.

(c)

Failing maintenance or repair within such time period, the Landlord and its agents and contractors may enter the Leased Premises and perform the necessary maintenance or repairs and to render the account for such work to the Tenant, which account shall be paid by the Tenant within three Business Days of receipt. Failing such payment within three (3) Business Days, Interest shall be chargeable to the Tenant and such account shall be recoverable with Interest as Additional Rent or may be set off against the Tenant's Security Deposit.

9.02 - Landlord to Repair Structure

9.03 - Notify Landlord of Accidents or Defects

9.04 - Alterations by ▇▇▇▇▇▇

(a)

The Tenant will not install or construct any Tenant's Improvements, partitions, fixtures, floor coverings, light fixtures, heavy equipment, safes or machinery upon the Leased Premises, nor undertake or permit any removal, change, alteration or addition, nor affix or attach any article to the Leased Premises without the prior written consent of the Landlord, which consent shall not be unreasonably withheld.

(b)

The Tenant may, with the prior written consent of the Landlord, from time to time improve or alter the Tenant's Improvements or trade fixtures in the Leased Premises to better suit the Tenant's business needs; provided that:

(i)

the Landlord shall have the right to post, (and if the Landlord fails to so post, the Tenant shall post and maintain on the Landlord's behalf) in conspicuous places in the Leased Premises, notices in writing (pursuant to the Builder's Lien Act or any other similar law) that the Landlord will not be responsible for any Tenant's Improvements or fixtures or other work done by the Tenant or on its behalf,

(ii)

the Tenant shall supply to the Landlord for its prior approval plans and specifications for such Tenant's Improvements or alterations,

(iii)

the Tenant shall cause all work done in connection with any Tenant's Improvements, fixtures or alteration to be done promptly and in a good and workmanlike manner and in accordance with the plans and specifications therefor which have been approved beforehand by the Landlord,

(iv)

any or all work to be done and material to be supplied in connection with such ▇▇▇▇▇▇'s Improvements, fixtures or alterations shall, subject to subparagraph 9.04(b)(vi), be done or supplied only by contractors or subcontractors and workmen engaged by the Tenant but first approved by the Landlord, and the Landlord shall have the right to grant such approval conditionally or to withdraw the same at any time with cause,

(v)

in any event, any work performed by or for the Tenant shall be performed by competent workmen whose labour union affiliations are not compatible with those of any workmen who may be employed on the Development by the Landlord, its contractors, or subcontractors,

(vi)

any work which affects the Common Elements will be done, if the Landlord so decides, by the Landlord or its contractor at the Tenant's expense, and

vii)

the Tenant will pay all of the Landlord's costs in retaining the necessary professional and consulting services to make the approvals or rejections contemplated in this section and all of the costs of any work done by the Landlord or on its behalf plus an administrative fee equal to fifteen percent (15%) of the foregoing costs.

9.05 - Alterations by Landlord Permitted

(a)

The Tenant acknowledges that it is the long term intention of the Landlord to expand and/or improve the Development from time to time as economic and market conditions permit. In furtherance of this intention, it is understood and agreed that despite anything to the contrary in this Lease, the Landlord, acting reasonably, shall have the right at all times and from time to time, throughout the Term to:

(i)

change the area, size, level, location and/or arrangement of all or any part of the Development,

(ii)

construct other buildings, structures or improvements in the Development, make alterations or rearrangements of or additions to, demolish parts of or build additional stories on any building in the Development (and, for such purposes, to construct and erect columns and support facilities in any building), and construct additional buildings or facilities adjoining or proximate to the Development,

(iii)

construct multiple deck, elevated or underground parking facilities, and expand, reduce or alter the same in any manner,

(iv)

make changes and additions to the pipes, conduits and ducts or other structural and non-structural installations in the Leased Premises or Development to serve the Common Areas, Common Elements and other premises in the Development or to facilitate expansion or alteration of the Development (including, without limitation, the construction and erection of columns and support facilities) but shall make best efforts not to unreasonably interfere with the Tenant's use and enjoyment of the Leased Premises beyond the extent necessarily incidental to such changes, additions and installations, and shall make good any damage to the Leased Premises arising in the ordinary course of such changes and additions,

(v)

make excavations for building or other purposes upon land adjacent to or under the Development and enter if necessary the Leased Premises for the purpose of doing such work as shall be reasonably necessary to protect or preserve the wall or walls of the Building or the Building from injury or damage and to support them by proper foundations pinning or underpinning but to no greater extent than reasonably necessary for such work,

(vi)

add additional lands to the Development,

(vii)

temporarily obstruct or close off the Common Areas or Common Elements or any parts of them for the purpose of making repairs, replacements, alterations or rearrangements of or additions to the Development, and

(viii)

have access for itself and all workmen, agents, contractors, invitees and licensees at all reasonable times for the purpose of carrying out the foregoing activities.

(b)

The Landlord agrees to use reasonable efforts to minimize any disruption or access to the Leased Premises to the Tenant during complete all construction, alterations, maintenance and repairs. as expeditiously as possible under the circumstances.

(c)

Notwithstanding anything else contained in this Lease, the Tenant agrees that if as a result of the exercise by the Landlord of its rights, the Common Areas or Common Elements are altered or diminished in any manner whatsoever the Landlord shall not be subject to any liability nor shall the Tenant be entitled to any compensation or abatement of Minimum Rent or Additional Rent, nor will any alteration or diminution of the Common Areas or Common Elements be deemed to be constructive or actual eviction, or a breach of the covenant for quiet enjoyment. The Tenant will, at the request and reasonable cost of the Landlord, execute such documents as are reasonably required by the Landlord to release the Tenant's interest in those parts of the Common Areas and the Common Elements designated by the Landlord.

(d)

The Tenant Landlord shall be responsible for relocating and protecting its the Tenant’s property during the course of any construction, relocation, alteration, reorganization or change to the Development or during the period of the exercise of the Landlord's rights under this section 9.05.

(e)

If any of the foregoing activities permanently reduce, upon completion, the Rentable Area of the Leased Premises then the Minimum Rent shall ▇▇▇▇▇ afterwards in proportion to the total Rentable Area taken.

9.06 - Removal and Restoration by ▇▇▇▇▇▇

(a)

All Landlord's Improvements and ▇▇▇▇▇▇'s Improvements or any other alterations to the Leased Premises made by the Tenant (or by the Landlord or others on behalf of the Tenant) are the property of the Landlord and will remain the property to the Landlord, without compensation to the Tenant. The Tenant will not remove any such Landlord's Improvements or Tenant's Improvements or alterations or its trade fixtures from the Leased Premises at any time except in compliance with the following:

(i)

the Tenant may, during the Term in the normal course of its business but only after obtaining the prior written consent of the Landlord, remove its trade fixtures if they exceed the Tenant's purposes. If the Tenant is substituting new and similar trade fixtures no consent will be required,

(ii)

the Tenant will, at the expiry of or on early termination of this Lease, remove at its own expense the Tenant's Improvements and those of the Landlord's Improvements that the Landlord requires. The Tenant will, at its own expense, repair any damage caused to the

(b)

The Tenant's Improvements do not include:

(i)

plumbing, electrical, heating, ventilating and air-conditioning systems and fixtures, in or serving the Leased Premises,

(ii)

floor and ceiling covering, partitions, doors, cabinets and paneling that are affixed,

(iii)

light fixtures,

(iv)

the store front or doors, or

(v)

internal stairways, escalators, or elevators.

9.07 - No Liens

9.08 - Signs

(a)

The Tenant shall not cause or permit any sign, picture, advertisement, notice, lettering, flag, decoration or direction to be painted, displayed, inscribed, placed, affixed or maintained in or on any windows or doors of the Development nor anywhere else on or in the Lands and Development, without the prior and continuous consent of the Landlord, which consent will not be unreasonably withheld provided that all such signage is consistent with any applicable municipal regulation and in the Landlord's unfettered discretion, considered consistent with the Development's character and standards. On termination of this Lease any such signage shall be removed by the Tenant at the Tenant's sole expense and after such removal the Development shall be restored and repaired by the Tenant to its original condition before installation of any such permitted signage.

(b)

The Tenant shall be responsible for all cost for installation of signage on doors and directory strips on main lobby and floor lobby.

9.09 - Blinds

9.10 - Repair of Appartus

10.01 - Tenant’s Access to Common Areas

10.02 - Access by Landlord

11.01 - Destruction or Damage

(a)

If during the Term, the Building shall be damaged by any cause, the following provisions shall have effect:

(i)

If the Leased Premises are, in the Architect's opinion, rendered partially unfit for occupancy by the Tenant and remain so for at least ten (10) days, then the Minimum Rent (but not the Additional Rent) shall ▇▇▇▇▇ from the date of the damage in proportion to the part of the Leased Premises so rendered unfit until the Leased Premises have been repaired or restored.

(ii)

If the Leased Premises are, in the Architect's opinion, rendered wholly unfit for occupancy by the Tenant and remain so for at least ten (10) days, then the Minimum Rent (but not the Additional Rent) shall ▇▇▇▇▇ from the date of the damage until the Leased Premises have been repaired or restored.

(b)

Notwithstanding the provisions of subsections 11.01(a) and (b), if the Leased Premises or Building shall be, in the Architect's opinion, incapable of being repaired or restored with reasonable diligence within one hundred and eighty (180) days of the happening of the damage and utilizing only the proceeds of insurance available to the Landlord therefor, then either the Landlord or the Tenant may, at its option, terminate this Lease by notice in writing to the other given within sixty (60) days of the date of the damage, and:

(i)

if such notice is given, this Lease shall cease and become null and void from the date of the damage, and the Tenant shall immediately surrender the Leased Premises and all of its interest in them to the Landlord, and the Minimum Rent and Additional Rent shall be apportioned and shall be payable by the Tenant only to the date of such damage or the date the Tenant ceases to occupy the Leased Premises, whichever last occurs, and the Landlord may re-enter and repossess the Leased Premises, provided that

(A)

if within the said period of sixty (60) days neither the Tenant nor the Landlord shall give notice terminating this Lease, or if within the said period the Landlord and Tenant shall agree not to give such notice, then upon the expiration of the said period of sixty (60) days or upon the Landlord and Tenant agreeing (whichever shall be the sooner), the Landlord shall begin to repair and restore the Leased Premises and the Landlord's Improvements and the Tenant shall as soon as it is reasonably possible after commencement of such repairs by the Landlord, repair and restore its Tenant's Improvements, to their original first class condition.

(c)

The Landlord shall have the Architect determine within thirty-five (35) days from the date of damage whether or not the Leased Premises are capable, with reasonable diligence, of being repaired or restored within the one hundred and eighty (180) day period.

(d)

If the Leased Premises are, in the Architect's opinion, capable with reasonable diligence of being repaired or restored within one hundred and eighty (180) days of the happening of such damage

(e)

The Tenant agrees that the obligation of the Landlord to rebuild and restore the Leased Premises shall not extend to, or be deemed to, include the rebuilding and restoration of any of the Tenant's Improvements. The Tenant further agrees that it shall carry out all of its obligations under this Article XI in compliance with and subject to sections 9.04 and 9.06.

12.01 - Mortgage of Lease

12.02 - Assigning or Subletting

(a)

Notwithstanding any rule of law or equity to the contrary, the Tenant shall not assign, sublet, transfer or enter into or grant a license, concession, or right of occupancy with respect to this Lease, the Leased Premises or any part thereof (a “Disposition”) without consent of the Landlord which consent may be withheld without reason in the following circumstances:

(i)

if the Tenant requests the Landlord's consent to a Disposition, the Tenant shall submit to the Landlord the name of the proposed person or other entity to whom the Tenant wishes to make a Disposition (the “Assignee”) and information as to the nature of the Assignee's business, reputation, and financial responsibility as the Landlord in its sole discretion may require. The Landlord may further require as a condition before considering a request to make a Disposition a proposed Assignee to agree in writing with the Landlord to fulfill all the obligations of the Tenant under this Lease and that all directors, officers and shareholders of the Assignee guarantee those obligations of the Assignee, on the terms prepared by the solicitors for the Landlord. Upon receipt by the Landlord of the Tenant's request to make a Disposition together with all required information and documents from the Tenant and the proposed Assignee, the Landlord has the right exercisable in writing (the “Notice”) within fourteen (14) days thereafter to:

(A)

if the request is to make a Disposition of this Lease or the whole of the Leased Premises, to cancel and terminate this Lease, or

(B)

if the request is to make a Disposition of a part of this Lease or part of the Leased Premises to cancel or terminate this Lease with respect to such part of the Leased Premises,

(ii)

if the Landlord exercises its right to terminate this Lease in whole or in part under section 12.02(a) hereof, the Tenant shall surrender possession of the Leased Premises or that part which is the subject of the right to terminate, on the date set out in the Notice in accordance with the provisions of this Lease relating to surrender of the Leased Premises at the expiration of the Term. If this Lease is terminated as to a part of the Leased Premises only, the rent payable by the Tenant under this Lease shall ▇▇▇▇▇ in proportion to the Rentable Area of the Leased Premises so surrendered,

(iii)

if the Landlord does not exercise the right to terminate this Lease after receipt of the Tenant's written request to make a Disposition, the Landlord's consent to the request may, notwithstanding any rule of law or equity to the contrary, be withheld without reason, and without limiting the generality of the foregoing may be withheld if in the Landlord's sole and unfettered opinion and discretion the proposed Assignee:

(A)

does not have a history of successful business operation in the business to be conducted in the Leased Premises, or

(B)

does not have a good credit rating and a substantial net worth, or

(C)

is not able to finance the Assignee's acquisition of its interest in the Leased Premises and its operations in the Leased Premises without a material risk of defaulting under this Lease and in a manner that will enable the Assignee to carry on business successfully in the Leased Premises throughout the balance of the Term, or

(D)

has a history of defaults under commercial leases entered into by the Assignee or by companies or partnerships that the Assignee was an affiliate, principal or shareholder of, or a partner in, at the time of the defaults, or

(E)

or any direct or indirect subsidiary, affiliate, parent, principal, shareholder or partner of the Assignee is a competitor of the Landlord or any direct or indirect subsidiary, affiliate, parent, principal, shareholder or partner of the Landlord,

(F)

pursuant to the terms of the Disposition proposes to pay to the Tenant a rental rate greater than the amount payable under this Lease, or

(G)

and/or the Tenant does not provide to the Landlord sufficient information about the Assignee or the terms of the proposed Disposition to enable the Landlord to make a determination concerning the Assignee's suitability or without limitation any of the matters set out above.

(b)

The Landlord shall not be liable for any claims or actions by, or any damages, liabilities, losses or expenses of the Tenant, or an Assignee arising out of the Landlord withholding its consent to any disposition and the Tenant waives all rights it may have and acknowledges that its only recourse shall be to bring an application for a declaration that the Landlord shall grant its consent to such a Disposition.

(c)

The Tenant shall pay the Landlord any and all costs incurred by the Landlord, including all legal fees and disbursements on a full indemnity basis in conjunction with the Tenant's request for consent of the Landlord to a Disposition under this Article XII or the execution of any certificate or agreement under this Article XII.

(d)

Any Disposition approved by the Landlord shall be in writing and a copy of the executed agreement evidencing the disposition shall be provided to the Landlord within seven (7) days of its effective date.

(e)

No Disposition of this Lease or of whole or any part of the Leased Premises shall in any manner relieve the Tenant from its responsibilities under all of the terms, covenants and conditions of this Lease. Any violation of any provision of this Lease whether by act or omission by any Assignee shall be deemed a violation of such provision by the Tenant.

(f)

If at any time during the Term any or all of the voting shares of the Tenant or of a parent corporation of which the Tenant is a direct or indirect subsidiary, are to be transferred by sale, assignment, bequest, inheritance, operation of law amalgamating, restructuring, reorganization or other disposition so as to result in a change in the present voting control or effective control of the Tenant, or of such parent corporation by the person or persons owning or controlling a majority of such shares of the Tenant or of such parent corporation on the date of the commencement of this Lease, then such a change shall be deemed to constitute a Disposition under section 12.02 and the Tenant shall promptly notify the Landlord in writing not less than forty-five (45) days prior to such a change taking effect. If the Tenant fails to give such notice, the Landlord may terminate this Lease at any time after such a change taking effect by giving thirty (30) days written notice of such termination. This provision shall not apply, however, to tenants that are public companies having more than fifty (50) shareholders at the date of this Lease.

(g)

If the Tenant is a partnership and if at any time during the Term any person who at the time of the execution of this Lease was a partner, ceases to be a partner, such cessation of partnership shall constitute a Disposition of this Lease for all purposes.

12.03 - Sale by Landlord

13.01 - Tenant’s Certificate

(a)

this Lease is unmodified and in full force and effect (or, if modified stating the modifications and that the same is in full force and effect as modified),

(b)

the amount of the Minimum Rent plus Additional Rent then being paid and the dates to which the same, by installments or otherwise, and other charges, have been paid,

(c)

whether or not there is any existing default on the part of the Landlord of which the Tenant has notice or rights of set off or counterclaim against the Landlord, and

(d)

any other information or statement that a proposed mortgagee or purchaser may reasonably require.

13.02 - Registration of Lease

13.03 - Subordination and Attornment

(a)

This Lease is and will remain subordinate to every mortgage, charge or lien and any renewals or extensions of them (collectively the “Encumbrance”) from time to time against the Leased Premises or the Development or any part of it.

(b)

The Tenant will not be required to execute any documents effecting the subordination and attornments provided for in this section 13.03 unless such document stipulates that the Encumbrance holder will not dispossess the Tenant (so long as it complies with the terms of this Lease) in return for the Tenant's agreement not to prepay rent or agree to any other modification f this Lease without the prior written consent of the Encumbrance holder. Provided that such document contains the foregoing agreement, the form and content of the document will be that required by the Encumbrance holder in each case, and each such document will be delivered by the Tenant to the Landlord within ten (10) days after the Landlord requests it.

(c)

The Tenant will attorn to the holder of any Encumbrance. If possession is taken under, or any proceedings are brought for the foreclosure of, or if a power of sale is exercised resulting from an Encumbrance, the Tenant will attorn to the person that so takes possession if that person requests it and will recognize that person as the Landlord under this Lease.

13.04 - Attorney

14.01 - Default

(a)

If the Tenant is in default in payment of Minimum Rent or Additional Rent or GST, the Landlord may give written notice of such default to the Tenant. If such default continues for three Business Days five (5) days after such notice in the event of a monetary default, or fifteen (15) days in the event of a non-monetary default:

(i)

the whole amount of the Minimum Rent reserved by this Lease for the remainder of the entire Term, together with any and all unpaid installments of Additional Rent and GST for the year in which such default occurs, and Interest, if applicable, shall, at the exclusive option of the Landlord immediately become due and payable by the Tenant, without prejudice to or waiver of the Landlord's right to collect any further Additional Rent or GST as it accrues due, or to cancel this Lease or re-let the Leased Premises as agent for the Tenant pursuant to this Article XIV in the event of any further, or continuing default by the Tenant to pay Minimum Rent, Additional Rent or GST or any other breach or default, or

(ii)

the Landlord may, at its exclusive option, declare that this Lease is in default and is canceled and give written notice of such cancellation to the Tenant as further set out in section 14.02 hereof, or

(iii)

the Landlord may re-let the Leased Premises as agent for the Tenant as further set out in section 14.03 hereof.

(b)

If the Tenant makes any default in the performance or observance of any covenant, condition, restriction, or stipulation, express or implied, arising under this Lease, and to be performed or observed by the Tenant and which has not been expressly waived in writing by the Landlord, the Landlord may give written notice of such default to the Tenant. If such default continues for five (5) Business Days after the receipt of such notice by the Landlord, (or, in the case of any default which would reasonably require more than five (5) Business Days to rectify, the Tenant has not commenced rectification within the five (5) day notice period and diligently and continuously continued with same) the Landlord may:

(i)

at its exclusive option, remedy such default and charge to the Tenant as Additional Rent and/or set off against the Tenant's Security Deposit, any and all costs, including all legal fees and disbursements on a full indemnity basis, to the Landlord of so remedying such default plus an administrative charge equal to fifteen percent (15%) of such costs, or

(ii)

at the Landlord's exclusive option, declare that this Lease is in default and is canceled, and give written notice of such cancellation to the Tenant, as further set out in section 14.02, or

(iii)

re-let the Leased Premises as agent for the Tenant as further set out in section 14.03.

14.02 - Termination of Lease

(a)

all rights and interests created or then existing in favor of the Tenant shall immediately terminate and the Landlord may re-enter the Leased Premises and repossess and enjoy the same as its former estate, anything to the contrary notwithstanding,

(b)

notwithstanding any such termination of this Lease, the provisions of this Lease relating to the consequences of termination shall survive,

(c)

the Landlord may use such force as it may deem necessary for the purpose of gaining admittance to and retaking possession of the Leased Premises and the Tenant hereby releases the Landlord from all actions, proceedings, claims and demands whatsoever for or in respect of any such forcible entry or any resulting loss or damage, and

(d)

the Tenant shall pay to the Landlord on demand:

(i)

Minimum Rent and Additional Rent and all other amounts payable up to the time of re-entry or to termination, whichever shall be the later,

(ii)

such reasonable expenses as the Landlord may incur or has incurred in connection with the re-entering, terminating, re-letting, collecting sums due or payable by the Tenant, realizing upon assets seized, including without limitation brokerage, legal fees and disbursements on a full indemnity basis, and the expenses of keeping the Leased Premises in good order, repairing the same and preparing them for re-letting,

(iii)

as liquidated damages for the loss of rental and other income of the Landlord expected to be derived from the Lease during the period which would have constituted the unexpired portion of the Term had it not been terminated an amount determined by reducing to present worth at an assumed interest rate of ten percent (10%) per annum, all Minimum Rent and Additional Rent to become payable during the period which would have constituted the unexpired portion of the Term, such determination to be made by the Landlord who may make reasonable estimates of any such other amounts which would have become due under this Lease, and may make such other assumptions of fact as may be reasonable in the circumstances, less any Minimum Rent and Additional Rent received by the Landlord from the Leased Premises and

(iv)

GST on amounts calculated in accordance with paragraphs 14.02(d)(i), (ii) and (iii) hereof.

14.03 - Right to Re-Let on Tenant’s Account

14.04 - Bankruptcy or Seizure

(a)

the Leased Premises:

(i)

remain vacant or are not used for a period of fifteen (15) days, or

(ii)

shall not be occupied by the Tenant within fifteen (15) days of the Commencement Date, or

(iii)

shall be used or occupied by any person other than the Tenant, or

(iv)

are used or occupied for any other purpose than that for which the Leased Premises were leased, or

(b)

the Term or any of the goods and chattels of the Tenant shall be at any time seized in execution or attachment by any creditor of the Tenant, or

(c)

the Tenant shall make any assignment for the benefit of creditors or become bankrupt or insolvent or take the benefit of any Act now or at any time in force for bankrupt or insolvent debtors, or

(d)

the Tenant becomes involved in voluntary or involuntary winding up, dissolution or liquidation proceedings,

14.05 - Application of Distress

14.06 - Waiver Re Distress

14.07 - Indemnity Re Landlord’s Remedies

14.08 - Remedies Independent

14.09 - Landlord’s Expenses

15.01 - Quiet Possession

15.02 - Landlord not to Unreasonably Interfere

15.03 - Overholding

15.04 - Yield-Up

16.01 - Force Majeure

(a)

For the purpose of this Lease, Force Majeure shall mean any acts of God, strikes, lockouts, or other industrial disturbances, acts of the Queen's enemies, sabotage, war, blockades, insurrections, riots, epidemics, lightning, earthquakes, floods, storms, fires, washouts, nuclear and radiation activity or fallout, arrests and restraints of rules and people, civil disturbances, explosions, breakage of, stoppage, or accident to machinery for necessary maintenance or repairs, inability to obtain labour, materials or equipment, any legislative, administrative or judicial action which has been resisted in good faith by all reasonable legal means, any act, omission or event, not within the control of such party, and which by the exercise of due diligence such party could not have prevented, but lack of funds on the part of such party shall be deemed not to be a Force Majeure.

(b)

Save and except for the obligations of the Tenant as set forth in this Lease to pay Minimum Rent, Additional Rent, GST or other money to the Landlord, if either party shall fail to meet its obligations within the time prescribed, and such failure shall be caused or materially contributed to by Force Majeure such failure shall be deemed not to be a breach of the obligations of such party, but such party shall use diligence to put itself in a position to carry out its obligations as soon as practicable.

16.02 - Headings

16.03 - Interpretation

16.04 - Governing Law

16.05 - Time of the Essence

16.06 - Enurement

16.07 - Representations

16.08 - Non-Waiver by Landlord

17.01 - Notices

(a)

Any notice provided or permitted to be given by the Tenant to the Landlord shall be sufficiently given if delivered, faxed, or mailed (and if mailed, by registered mail, postage prepaid), in writing and addressed to the Landlord's property manager at the following address or sent to the following fax numbers as applicable:

(b)

Any notice provided or permitted to be given by the Landlord to the Tenant shall be sufficiently given if delivered, faxed, or mailed (and if mailed, by registered mail, postage prepaid) in writing and addressed to the Tenant at the Leased Premises or sent to the fax number set out in Item 2(a) of the Term Sheet, or, at the Landlord’s option, to the Tenant’s head office address set out in Item 2(b).

(c)

Notice mailed as above set out shall be conclusively deemed to have been received on the fifth Business Day following the day on which such notice is mailed. Notice delivered as above set

(d)

Either party may, at any time, give notice in writing in the manner above provided to the other of any change of address of the party giving such notice, and from and after the giving of such notice, the address specified shall be deemed to be the address of such party for the giving of notice. The word "notice" in this clause shall be deemed to include any request, statement or other writing in this Lease provided or permitted to be given by the Landlord to the Tenant or by the Tenant to the Landlord.

17.02 - Observe Rules and Regulations

17.03 - Corporate Authority

17.04 - Relocation

17.05 - Provisions Severable

17.06 - Costs of Landlord’s Consent

17.07 - Schedules

17.08 - Security

17.09 - Interest in Fixtures

17.10 - Acceptance

Name:

▇▇▇ ▇▇▇▇▇

Title:

President

Name:

Title:

TENANT:

ENTRÉE GOLD INC.

Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇

Name:

▇▇▇▇▇▇▇ ▇▇▇▇▇

Title:

President

Per:

Name:

Title:

I/We have authority to bind the Corporation

1.

The definitions set forth in the Lease have the same meaning in these Rules and Regulations.

2.

No cooking except for the use of a microwave oven shall be permitted in the Leased Premises, and no electrical apparatus likely to cause an overloading of electrical circuits will be used therein.

3.

The sidewalks, entries, passages, elevators and staircases in the Building shall not be obstructed or used by the Tenant, its agents, servants, contractors, invitees or employees for any purpose other than ingress to and egress from the offices. The Landlord reserves unrestricted control of all parts of the Building employed for the common benefit of the tenants, including without limitation, the sidewalks, entries, corridors and passages not within the Leased Premises, washrooms, lavatories, air-conditioning closets, fan rooms, janitor's rooms, electrical rooms and other rooms, stairs, elevator shafts, flues, stacks, pipe shafts and ducts and shall have the right to place such signs and appliances therein, as it may deem advisable provided that ingress and egress from the Leased Premises is not unduly impaired thereby.

4.

The Tenant, its agents, servants, contractors, invitees or employees, shall not bring in or take out, position, construct, install or move any safe, business machine or other heavy office equipment without the prior written consent of the Landlord who shall have the absolute right to withhold consent or to prescribe the maximum weight permitted and the position thereof, and the use and design of the planks, skids or platforms to distribute the weight of such equipment. All damage done to the Building by the moving or use of any such heavy equipment or other office equipment or furniture shall be repaired at the expense of the Tenant. The moving of all heavy equipment or other, office equipment shall occur only between 6:00 p.m. and 7:30 a.m. or other time consented to by the Landlord, and the persons employed to move same in and out of the Building must be acceptable to the Landlord. Safes and other heavy office equipment will be moved through the halls and corridors only upon steel bearing plates. No deliveries requiring the use of an elevator for freight purposes will be received in the Office Tower or carried in the elevators, except during hours approved by the Landlord. The Tenant must provide the Landlord with twenty-four (24) hours notice in order to have an elevator locked off for their exclusive use. Failure to do so can result in the request being denied.

5.

Other than during normal business hours, the Landlord will have the right to prevent any person from entering or leaving the Building unless provided with a key to the Leased Premises and a valid access card. Any persons found in the Building at such times without such keys or access card will be subject to surveillance or eviction by the employees and agents of the Landlord without recourse. The Landlord shall be under no responsibility for failure to enforce this rule.

6.

The Tenant shall not place or cause to be placed any additional or substitute locks or bolts upon any doors of the Demised Leased Premises without the approval of the Landlord and subject to any conditions imposed by the Landlord. Additional keys may be obtained from the Landlord at the cost of the Tenant.

7.

The Tenant shall not tamper with the Heating, Ventilation, and Air Conditioning system or any apparatus relating thereto. Any damage resulting from tampering shall be borne by the Tenant by whom or by whose agents, servants, employees, licensees or invitees the same is caused.

8.

The water sinks, basins, urinals, toilets, sewers and other water apparatus shall not be used for any purpose other than those for which they were constructed, and no sweepings, rubbish, rags, ashes or other substances shall be thrown therein. Any damage resulting from misuse shall be borne by the Tenant by whom or by whose agents, servants, employees, licensees or invitees the same is caused. Tenants shall not let the water run unless it is in actual use and shall not deface or mark any part of the Building or drive nails, spikes, hooks or screws into the walls or woodwork of the Building.

9.

No one shall use the Leased Premises for sleeping apartments or residential purposes, or for the storage of personal effects or articles other than those required for business purposes.

10.

Canvassing, soliciting and peddling in the Building are prohibited.

11.

Any hand trucks, carryalls or similar appliances used in the Building shall be equipped with rubber tires, side guards and such other safeguards as the Landlord shall require.

12.

No animals or birds shall be brought into the Building.

13.

The Tenant shall not install or permit the installation or use of any machine dispensing goods for sale in the Leased Premises or the Building or permit the delivery of any food or beverage to the Leased Premises without the approval of the Landlord or in contravention of any regulation fixed or to be fixed by the Landlord. Only persons authorized by the Landlord shall be permitted to deliver or to use the elevators in the Building for the purpose of delivering food or other beverages to the Leased Premises.

•

repair any damages interior walls and replace any damaged ceiling tiles with like-new replaced tiles;

•

remove built-in counters and cabinets, as agreed between the Landlord and ▇▇▇▇▇▇;

•

install one (1) demising wall and install a new glass and drywall partition and door (to match the existing walls and doors in the Leased Premises), as agreed between the Landlord and Tenant;

•

paint all interior walls within the Leased Premises to the Tenant’s choice of colour;

•

ensure all lights, light fixtures, duplex plugs, mechanical systems and window blinds are in good working condition as of the Commencement Date; and

•

replace all interior fixed carpeting and rubber base cove moldings with Building standard carpeting and rubber moldings of the Tenant’s choice of colour.

(a)

one (1) Building standard directory board listing and Building standard 8th floor elevator lobby signage, subject to the Landlord’s approval of content, acting reasonably; and

(b)

interior Leased Premises signage.

(a)

$100.00 plus taxes for door signage (depending on the size of the signage requested);

(b)

$100.00 each plus taxes for floor and lobby directory signage;

(c)

$14.99 per strip plus installation and taxes for floor directory signage; and

(d)

$12.99 per strip plus installation and taxes for main lobby directory signage.