Lease Dated August 1, 1994

EXHIBIT 10.7


THIS LEASE dated as of the 1st day of August, 1994.


BETWEEN:
KEITH BUSINESS CENTRE LTD. (Incorporation Number 330740), a
British Columbia corporation with its registered and records
offices at 200 - 133 West 17th Street, North Vancouver,
British Columbia, V7M 1V5


(the "Landlord")


- and -


HARD SUITS INC. (Incorporation Number 312506), a British
Columbia corporation having its main location of business at
#3 - 1225 East Keith Road, North Vancouver, British Columbia,
V7J 1J3


(the "Tenant")


WITNESSES that in consideration of the mutual covenants, conditions and agreements herein contained, the Landlord and Tenant covenant and agree as follows:


ARTICLE ONE
DEFINITIONS


1.01 Definitions. In this lease, unless there is something in the context inconsistent therewith:


(a) "Basic Rent" means the rent referred to in Section 3.01;


(b) "Building" means the building located on the Lands;


(c) "Commencement Date" means September 1, 1994.


(d) "Common Areas and Facilities" means those areas, facilities,
utilities, improvements, equipment and installations on the
Lands which: (i) from time to time, are not designated or
intended by the Landlord to be leased to tenants of the
Building, and (ii) serve or are for the benefit of the tenants
of the Building, and which are designated or intended by the
Landlord from time to time to be part of the Common Areas and
Facilities 2
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of the Building. Common Areas and Facilities can be located
outside the Building itself but on the Lands and include,
without limitation, all areas, facilities, utilities,
improvements, equipment, furniture, furnishings and
installations which are provided or designated by the Landlord
for the use or benefit of the tenants of the Building, their
employees, customers and other invitees in common with others
entitled to the use or benefit thereof in the manner and for
the purposes permitted by this lease. Without limiting the
generality of the foregoing, Common Areas and Facilities
include the roof, exterior wall assemblies, including weather
walls, exterior and interior structural elements and bearing
walls in the Building including, without limitation: truck
courts, driveways, delivery passages, loading docks and
related areas, pedestrian sidewalks, exit stairways, shuttle
elevator and main escalator areas, landscaped and planted
areas, main entrance area, public seating and service areas,
corridors, and amenity areas, stairways, ramps, and elevators
and other transportation equipment and systems; public
washrooms, electrical, telephone, meter, valve, mechanical,
storage, service and janitor rooms; music, fire prevention,
security, switchboard and communication systems; general
signs, columns, pipes, electrical, plumbing, drainage,
security and life support system; building automation systems,
computers and central control apparatus as well as the
structures housing the same (including, without limitation,
the heating, ventilating and air conditioning systems of the
Building); emergency water facilities, generators, mechanical
and all other equipment installations or services located
therein or related thereto;


(e) "Common Costs" means the total, without duplication, of the
costs incurred by the Landlord during the Term, in accordance
with generally accepted accounting principles consistently
applied, for the continued maintenance, repair,
replacement, management and operation of the Common Areas and
Facilities and the Building excluding structural repairs, but,
including, without limitation, the costs of the following:


(i) non-structural repairs, replacements, and maintenance
except where the cost thereof is directly
attributable to inherent structural defects or
weaknesses and except in respect of items for which
the Landlord has elected to take depreciation but
only to the extend of the depreciation taken and with
the further exception of repairs for damage caused by
the Tenant, its servants, agents, patrons, 3
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invitees, or suppliers which shall be the
responsibility of the Tenant alone to bear the
Landlord's costs of repairing;


(ii) landscaping and gardening, rental or purchase of
signs and equipment, the uniforms of the personnel
referred to in Section 1.01(e)(iii) and the cleaning
and pressing thereof, supplies, lighting, security
protection, traffic control, refuse, removal, removal
of snow and ice, painting and window cleaning and
otherwise maintaining the Common Areas and
Facilities, and operating and maintaining any loading
and receiving areas and truck docks;


(iii) wages and compensation paid for maintenance, security
and operating personnel, including, without
limitation, payments for workers' compensation,
unemployment insurance, vacation pay, Canada Pension
Plan and fringe benefits whether statutory or
otherwise but to the extend only that such wages and
compensation are directly attributable to the
maintenance, operation, repair, replacement and
management of the Building;


(iv) service contracts with independent contractors in
respect of the maintenance, operation, repair (other
than structural repair), security enforcement,
replacement and management of the Building;


(v) operating, maintaining, repairing and replacing
security and life support systems, plumbing,
electrical, heating, water, sewer, air conditioning,
sprinkler and other utility systems and services in
respect of the Building including the building
automation system;


(vi) insurance coverage obtained by the Landlord from time
to time pursuant to section 11.04 of this lease;


(vii) real property taxes, charges, duties and assessments
or grants in lieu thereof that may be levied,
charged or assessed against or in respect of the
Building and against or in respect of the Common
Areas and Facilities and improvements thereon and
therein to the extent reasonably allocable to the
Building or against or in respect of any right or
interest of any occupier thereof; all local 4
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improvement rates and charges; frontage, water,
school, hospital and other taxes and assessments both
general and special, ordinary and extraordinary, and
foreseen or unforeseen, now or which may hereafter be
levied, imposed, rated, charged or assessed by any
federal, provincial, municipal, regional, school or
other statutory authority during the Term and
reasonable legal fees and appraising fees incurred
directly or indirectly by the Landlord in contesting
or appealing the amount or legality of any such
taxes;


(viii) corporation capital tax calculated as if the Building
were the sole asset of the Landlord;


(ix) supplying steam, electricity, water, sewer services,
natural gas and other fuel and utility services to
the Building. Should individual meters or apparatus
for measurement of consumption for such fuel and
utilities consumed on the Premises by the Tenant not
be provided, there shall be included the total cost
of supplying such fuel and utilities to the Building;


(x) accounting costs incurred in connection with
maintenance and operation including computations
required for the imposition of charges to tenants of
the Building and audit charges required to be
incurred for the conclusive determination of any
costs incurred hereunder, and reasonable reserves in
connection with any operating expense;


(xi) cleaning the Building and supplies and equipment used
in connection therewith;


(xii) costs otherwise attributable to capital account on
improvements, machinery and equipment which
substantially reduce Common Costs as herein defined;


(xiii) a management fee equal to FIVE (5%) PERCENT of the
monthly heat, light and power costs and basic rent as
defined in paragraph 3.01 monthly.


provided that Common Costs will not include any costs incurred by or on behalf of or at the request of any individual tenant or tenants and resulting in a benefit to such individual tenant or


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tenants which is not of general application to all tenants of the Building costs incurred by the Landlord solely to lease premises in the Building including costs of leasing commissions, lease incentive, costs of installation of demising walls and refurnishing vacant premises and wages and compensation reasonably allocated by the Landlord to persons retained by the Landlord for purposes of leasing the building. There shall be deducted from Common Costs:


(aa) all net recoveries by the Landlord, which reduce the expenses incurred
by the Landlord in operating and maintaining the Building and Common
Areas and Facilities, including recoveries from tenants other than the
Tenant as a result of any act, omission, default or negligence of such
tenants or by reason of a breach by such tenants of provisions in
their respective leases but excluding recoveries from tenants under
clauses in their respective leases similar to Section 3.02 or for
supervision and management performed in respect of work done for or on
behalf of a tenant;
(bb) net proceeds received by the Landlord from insurance policies taken
out by the Landlord to the extent that such proceeds relate to the
costs and expenses incurred in the maintenance and operation of the
Building; and
(cc) debt service incurred by the Landlord;


further provided that if any of the Common Costs or costs of a like nature at any time or from time to time apply disproportionately to one or more tenants of the Building then the Landlord in its sole discretion acting reasonably, may allocate all or portion of those costs to the tenant to whom the costs disproportionately apply;


(f) "Lands" means those lands located in the City of Vancouver,
British Columbia, legally described as:


City of North Vancouver
Parcel Identifier 013-965-816, Lot 6, (except portions in
Plans 22282 and 22694) Block F, District Lot 272, Plan 22257


(g) "Premises" means that portion of the Building on the lands
located on the main floor and consisting of approximately:


(1) Four Thousand and Twenty (4,020) square feet of
warehouse and office space as shown outlined in red
on the plan annexed hereto as Schedule "A" and
forming part of this lease; 6
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(h) "Proportionate Share" means that proportion expressed as a
fraction, the numerator of which is the rentable area of the
Premises and the denominator of which is the aggregate of all
rentable areas of the Building as designated by the Landlord
and whether rented or not. The Proportionate Share of the
Tenant is [5.86 %] (4,020/68,555.2 X 100 = 5.86)


(i) "Term" means the term of years and months commencing on the
Commencement date as set forth in Article 2.02.


ARTICLE TWO
DEMISE AND TERM


2.01 Demise. The Landlord, in consideration of the rents, covenants, agreements and conditions herein to be paid, observed and performed by the Tenant, docs hereby demise and lease to the Tenant the Premises for the Term.


2.02. Term. Subject to the terms and conditions of this lease, the Tenant shall have and hold the Premises for a term of THREE (3) years and THREE months from and including the 1st day of SEPTEMBER, 1994, to and including NOVEMBER 30, 1997.


ARTICLE THREE
RENT, TAXES AND OTHER CHARGES


3.01 Basic Rent. The Tenant will pay to the Landlord in advance in lawful money of Canada as monthly Basic Rent the sum of TWO THOUSAND SIX HUNDRED AND EIGHTY ($2,680.00) DOLLARS commencing on SEPTEMBER 1, 1994 and a like sum on the first day of each and every month thereafter up to and including NOVEMBER 1, 1997. Lessee agrees to pay to the Lessor monthly together with the rent and as part of the rent, GOODS AND SERVICES TAX at a rate equal to that determined to be due and payable by Revenue Canada, Taxation or any other competent taxing authority.


3.02 Additional Rent for Common Costs. Commencing on SEPTEMBER 1, 1994, and continuing on the first day of each month thereafter during the term of this lease the Tenant will pay to the Landlord the Tenant's Proportionate Share of Common Costs in addition to the Basic Rent. Prior to the commencement of each calendar year of the Term, the Landlord will deliver to the Tenant a statement setting forth in reasonable detail the Landlord's reasonable estimate of the Tenant's Proportionate Share of Common Costs for such year and thereafter during such year the Tenant will pay to the Landlord monthly in advance on the first day of each and every 7
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month during the Term, an amount equal to the product produced by multiply in a fraction (the numerator of which is one and the denominator of which is the number of full months in the Term contained in that year) by the Tenant's Proportionate Share of Common Costs for such year. The Landlord shall also have the right to reasonably adjust its estimate of Common Costs and the Tenant's Proportionate Share thereof during such year. Tenant agrees to pay its proportionate share of common costs for the period from the date of possession of the premises to September 1, 1994 on the date last mentioned.


3.03 Reporting on Tenant's Proportionate Share of Common Costs. As soon as reasonably practicable after the end of each fiscal year of the Landlord during the Term, the Landlord will deliver to the Tenant a statement showing the actual amount of the tenant's Proportionate Share of Common Costs and setting forth in reasonable detail the Common Costs incurred by the Landlord during such year. If an overpayment of the Tenant's Proportionate Share of Common Costs has been made by the Tenant, the Landlord will credit such amount to the Proportionate Share of Common Costs for the next ensuing period and, if there is no ensuing period, such amount will be forthwith paid to the Tenant. If an amount remains owing to the Landlord in respect of the Tenant's Proportionate Share of Common Costs, the Tenant will pay such amount forthwith to the Landlord. The covenants contained in this Section 3.03 will survive the termination or expiration of this lease.


3.04 Additional Rent. All monies which from time to time may be owing by the Tenant to the Landlord pursuant to this lease are hereby deemed to be additional rent. The Tenant will pay any such money to the Landlord upon demand by the Landlord unless other terms for payment are expressly stipulated in this lease. If the Tenant fails to pay any additional rent, as and when due, the Landlord will have the same remedies for the collection thereof as it has for the recovery of Basic rent in arrears. If the Tenant at any time or from time to time fails to pay to any person any sum which the Tenant is obliged to pay pursuant to this lease the Landlord may pay any such sum on behalf of the Tenant and same will then be a debt owing by the Tenant to the Landlord from and including the date of payment by the Landlord.


3.05 Irregular Periods. If for any reason, it becomes necessary to calculate Basic Rent or additional rent for irregular periods, an appropriate pro rata adjustment will be made on a daily basis.


3.06 Interest on Amounts in Arrears. When Basic Rent or additional rent, including any interest accrued thereon, payable hereunder is in arrears, the same will bear interest at a rate equal to 5% above the prime rate being charged by The Royal Bank of Canada, 1025 West Georgia Street, Vancouver, B.C., as its "prime rate" to its most favoured commercial customers at the time such Basic Rent or additional rent became due, compounded monthly from the date 8
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such rent became due to and including the date of such payment. The Landlord will have all remedies for the collection of such interest as it has for the recovery of Basic Rent in arrears.


3.07 Tenant's Taxes and Other Charges. The Tenant will pay, as and when due, to the authority or person to which same are owing:


(a) all taxes, license fees, duties and assessments imposed,
assessed or levied by any lawful authority during the Term
relating to the business carried on in and the use and
occupancy of the Premises by the Tenant including those
relating to personal property and all business and trade
fixtures and other improvements owned or installed by or on
behalf of the Tenant in, on, or affixed to the Premises,
whether any such taxes, license fees, rates, duties and
assessments are payable by law by the Tenant or by the
Landlord or whether or not the same are allocated separately
in respect of the Premises; and


(b) all charges, levies and assessments imposed, assessed or
levied by any lawful authority during the Term in respect of
utilities of whatsoever nature or kind (including works and
services in connection therewith) used in or supplied to the
Premises except to the extent such charges, rates, levies and
assessments are included in Common Costs.


The Tenant will indemnify and save harmless the Landlord from and against any and all taxes imposed by lawful taxing authority in respect of gross rent paid by the Tenant to the Landlord provided that such taxes are not classified as taxes upon the income of the Landlord. Upon request by the Landlord, the Tenant will deliver promptly to the Landlord, for inspection, receipts for payment of all charges payable by the Tenant pursuant to this Section 3.07.


3.08 Landlord as Supplier. Should the Landlord supply or elect to supply steam, water, gas, fuel, electricity, or sewage facilities and services or any other utility used or consumed on the Demised Premises or pay the same on a bulk basis on behalf of the Building or any part thereof such service shall be charged, at rates not in excess of public utility rates for the same service if supplied to the Tenant only. In no event will the Landlord have any obligations or liability in connection with the cessation or unavailability or interruption or suspension of any service or utilities at any time whether or not supplied by the Landlord.


3.09 Net Lease. The Tenant will pay to the Landlord duly and punctually all Basic Rent and additional rent required to be paid pursuant to this lease without any deduction, abatement or set-off whatsoever, it being the intention of the Landlord and the Tenant that this lease is a 9
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completely carefree net lease to the Landlord. All expenses, costs, payments and outgoings occurred in respect of or relating to the Premises whether or not referred to herein and whether or not within the contemplation of the Landlord and the tenant will be borne by the Tenant so that Basic Rent will be absolutely net to the Landlord except as otherwise specifically provided in this lease.


3.10 Dispute as to Costs. If the Tenant disputes the amount of any monies to be paid by the Tenant to the Landlord pursuant to this lease, the certificate of a chartered accountant appointed or acceptable to the Landlord to determine such amount will be conclusive and binding upon the Landlord and the Tenant. The cost of obtaining such certificate shall be for the account of the Tenant if the amount of money to be paid by the Tenant, as established in the certificate, is more than 95% of the amount claimed by the Landlord.


3.11 Landlord's Taxes. Subject to the obligation of the Tenant to pay its Proportionate Share of Common Costs, the Landlord will pay real property taxes with respect to the Lands as and when due, subject to lawful deferral.


3.12 Security Deposit. The Landlord acknowledges receipt of a deposit of $5,735.20 including G.S.T. from the Tenant which deposit shall be credited to the first and last months of Basic Rent and additional rent payable hereunder.


ARTICLE FOUR
QUALITY AND USE OF THE PREMISES


4.01 Possession and Use of Premises. The Landlord will use its best efforts to make the Premises available to the Tenant for its fixturing on or before AUGUST 15, 1994.The Tenant will not use or permit the Premises to be used for any purpose other than for the purpose of light manufacturing of atmosphere diving suits and associated offices. Without limiting the generality of the foregoing, the Tenant will not carry on any business which would, in the reasonable opinion of the Landlord, tend to lower the character of the Building.


4.02 Lighting. The Tenant shall at its own expense be responsible for and shall maintain and replace from time to time as may be necessary during the Term all light fixtures, tubes, ballasts and starters in the Premises.


4.03 No Nuisance, Overloading or Waste. The Tenant will not carry on or permit or suffer to be carried onto or in the Premises anything which is noxious or offensive or which would constitute a public or private nuisance or which would annoy or disturb or cause nuisance or damage to any other tenants of the Building. The Tenant will not cause any waste or damage 10
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to the Premises and will not permit any overloading on the floor of the Premises.


4.04 Windows. The Tenant will cause the windows of the Premises to be screened to the satisfaction of the Landlord. The Landlord shall replace any glass in the outside windows and doors of the perimeter of the Premises (including perimeter windows in the exterior walls) with as good quality and size and in the case of perimeter windows, with glass of the same type and colour with the expense to be deemed a Common Cost during the continuance of this lease, unless the glass shall be broken by the Tenant, invitees, employees or agents on its behalf, in which event the Tenant shall forthwith reimburse the Landlord for such costs.


4.05 Condition of Premises. The Tenant will not permit the Premises to become untidy or unsightly and will not permit waste or refuse to accumulate therein.


4.06 Not to Affect Landlord's Insurance. The Tenant will not do or omit to do or permit to be done or omitted to be done in the Premises or on the Lands anything which would directly or indirectly cause the insurance premiums in respect of the Premises or the Landlord's premiums for liability insurance to be increased. If any insurance premium is thereby increased the Tenant will pay to the Landlord the amount by which the insurance premiums are so increased. The Tenant will not store or permit to be stored upon the Premises anything of a dangerous, inflammable or explosive nature or anything which would have effect of increasing the Landlord's insurance premiums or of leading to the cancellation of the Landlord's insurance. In the event that an insurance policy of the Landlord is cancelled by reason of any act or omission of the Tenant, the Landlord shall have the right at its option to terminate this lease by giving seven days written notice of termination to the Tenant and, at its option, the Landlord may rectify the situation causing such cancellation. In the event that Landlord exercises its right to terminate pursuant to this Section 4.08, Basic Rent and additional rent will be apportioned and paid in full to the date of expiration of such notice (the "Expiration Date") together with an amount equal to the Basic Rent which would have been payable hereunder for the next three ensuing months had the Landlord not terminated this lease and all other monies owing hereunder as of the Expiration Date.


4.07 Compliance with Laws. The Tenant, during the Term at its own expense, will promptly comply with all statutory requirements of every competent federal, provincial, municipal, regional and other statutory authority and all requirements of fire insurance underwriters in force from time to time during the Term which relate to the Tenant's equipment, operation use of ...