MEMORANDUM OF
UNDERSTANDING dated this       day of January, 2007

between:

MARKHAM STOUFFVILLE
HOSPITAL

(hereinafter “MSH”)

and

THE CORPORATION OF
THE TOWN OF MARKHAM

(hereinafter the “Town”)

Whereas MSH intends to expand its
hospital services and construct a Health and Wellness Centre of approximately 180,000
sq. ft. incorporating some or all of the following: day surgery, diagnostics, a
health resource centre, asthma and diabetes clinics, outpatient rehabilitation
services, physicians’ offices, a family health team and health related
retail (the “Wellness Centre”);

AND WHEREAS
the construction of the expansion of the Hospital’s facilities has been
approved by the Government of Ontario for procurement through an Alternative
Financing and Procurement Model (“AFP”) under which the design,
financing and construction of such facilities will be carried out and completed
by a private sector consortium, selected jointly by MSH and Infrastructure Ontario
and, as a result thereof, MSH will not have the final say in the design and
timing of any Wellness Centre that is constructed as part of such expansion;

AND Whereas the Town intends to build
and operate a new Community Centre and Library of approximately 110,000 sq. ft.
incorporating some or all of the following: a library, gymnasium, program/
meeting rooms, an indoor pool, fitness area, cafeteria, youth space and senior
space (the “Community Centre”);

AND WHEREAS
it may be more cost effective for MSH to make use, on an exclusive or shared
basis, of services and/or space the Town will provide within the Community
Centre for the use of the community, including the Hospital community, rather
than for MSH to construct and operate its own services and/or space;

AND WHEREAS the
Town intends to relocate the proposed Community Centre from its intended
location on the east side of Bur Oak Road, to lands adjacent to the current Hospital
property;

and Whereas MSH and the Town are in
support of a site plan concept that combines the Wellness Centre and the Community
Centre into a complex comprised of one or more buildings having a total area of
approximately 290,000 sq. ft. (the “Facility”);

AND WHEREAS
the location of the Community Centre adjacent to the MSH campus may provide
opportunities for both capital and operating efficiencies to MSH and the Town;

AND WHEREAS
the number of employees employed by MSH in its existing facilities and proposed
for the new Wellness Centre who may wish to take advantage of the Town’s
programs and services offered at the Community Centre will exceed 1,500;

AND WHEREAS MSH
has prepared a conceptual Master Site Plan for the Facility (the “Master
Site Plan”), a copy of which is attached hereto as Schedule “A”;

and Whereas the Master Site Plan contemplates
the development of an above grade parking structure on lands owned by or to be
acquired by MSH (the “Site”) to serve the Facility;

and Whereas Markham District Energy
Inc. (“MDEI”) provides electricity and energy efficient and
environmentally sound heating and cooling through the distribution of hot and
chilled water;

AND WHEREAS MDEI
has expressed interest in expanding its service network to provide service to
MSH and the Facility;

and Whereas MSH and the Town have each
agreed to finance their proportionate share of the capital cost of the Facility,
including design, construction and all necessary approvals required for the
construction of the Facility;

NOW THEREFORE, the
parties agree that the following principles will form the basis of the
agreement between them for the development and operation of the Facility:

ACQUISITION OF THE SITE

1.
MSH will use its reasonable best efforts to acquire the
additional properties that are required by MSH to proceed with the construction
of the Wellness Centre, at its own expense and in a timely manner and in any
event, MSH shall use its reasonable best efforts to enter into Agreements of
Purchase and Sale to acquire all such properties on or before February 28, 2007
(the “Acquisitions”).

2.
The Town will use its reasonable best efforts to
acquire the properties that are required by the Town to proceed with the
construction of the Community Centre, at its own expense and in a timely manner
and in any event, the Town shall use its reasonable best efforts to enter into
Agreements of Purchase and Sale to acquire all such properties on or before February
28, 2007.

3.
Each of the Town and MSH shall use their reasonable
best efforts to have the transactions arising from the Agreements of Purchase
and Sale
referred to in Sections 1 and 2 completed by no later than May 30, 2007.

4.
MSH agrees to include a provision in the Agreement of
Purchase and Sale for the Acquisition of Parcel F shown on Schedule
“B” hereto permitting the agreement of purchase and sale for such
Parcel to be assigned to the Town or permitting MSH to direct that the transfer
from the owner of Parcel F be engrossed in favour of the Town and the Town
agrees to accept an assignment of such agreement of purchase and sale or a
direct transfer of such Parcel from the owner thereof in favour of the Town, as
the case may be, subject to approval by the Town’s Council.  For certainty, the Town acknowledges and
agrees that it shall be solely responsible to pay the Vendor of Parcel F the
purchase price to be paid to such owner to acquire such Parcel pursuant to the Agreement
of Purchase and Sale
entered into by MSH for such Parcel.  The Town further acknowledges and agrees
that the Parcel to be acquired pursuant to such Agreement of Purchase and Sale shall include the
lands required for the proposed east-west road running easterly from Ninth Line
which is sometimes referred to as “New Street”.

5.
MSH and the Town agree to enter into an agreement with
respect to the exchange of parcels acquired by the Town but required by MSH in
exchange for parcels acquired by MSH but required by the Town.  That agreement will establish a common
value per acre for the purposes of the exchange of lands.  The exchange may be accomplished by
conveyance in fee simple or long term lease, at the option of the transferee or
beneficial owner of the land.

MASTER SITE PLAN

6.
MSH and the Town shall jointly prepare a revised Master
Site Plan that incorporates the Community Centre and the Wellness Centre, in a
manner that permits each of the Wellness Centre and the Community Centre to be
independently designed and constructed.

7.
The Town and MSH shall jointly participate in the
preparation of revisions to the Master Site Plan, incorporating the following
features, to the extent required by either of MSH or the Town:

(a)
Each of the Community Centre and the Wellness Centre shall
be capable of being separately designed, constructed and operated.

(b)
The Community Centre and the Wellness Centre may be
integrated structurally provided that any such integration shall not delay the
construction of the Community Centre and provided that if there are additional
costs to accommodate such integration after construction of the first of the Centres
to be constructed, such additional costs shall be allocated as agreed between
the parties.

(c)
Each of the Community Centre and the Wellness Centre
may include areas suitable for use by the other party and third parties on a
shared or exclusive use basis.

DESIGN

8.
Each of MSH (or any private developer undertaking the
Wellness Centre on behalf of MSH) and the Town shall have the responsibility
for the design of that portion of the Facility that is for their use.  If MSH (or such private developer) chooses
to utilize the Town’s architect, it may do so, at its own expense, on
notice to the Town and likewise if the Town chooses to use MSH’s architect,
it may do so, at its own expense, and on notice to MSH.

9.
MSH and the Town agree that while each party shall independently
set the terms of reference for their architect, both parties shall agree to instruct
their respective architects on certain common terms of reference, including a
requirement to design the Wellness Centre and the Community Centre to be
integrated into a complex of buildings, with common elements around a central
courtyard.

10.
The Town and MSH agree to provide each of their respective
staff with a reasonable opportunity to review and comment upon the proposed
design of each of their respective Centres forming part of the Facility.

11.
Where facilities in either the Wellness Centre or the
Community Centre will be shared use areas for both parties, the parties shall
agree on design criteria for such areas, including but not limited to the
library, which shall be designed, for instance, to include a medical library
with 24 hour daily access.

12.
The Facility will be situated on the Site generally in accordance
with the Master Site Plan, except that the Community Centre and the Wellness
Centre shall be separate or capable of being separate building components of a
complex.

13.
Each of MSH and the Town shall be responsible for its
own design, tender and project management for the portion of the Facility
construction that is for its use.
Having regard to the sensitivity and impact of construction on the Site
of an existing, fully operational hospital, the parties agree that there shall
be joint participation in project coordination for the construction of the
Community Centre.  The parties
further agree that special consideration shall be provided to the delineation
of the extent of the construction site and site servicing requirements.

14.
A contractor who is awarded the initial construction
project may be qualified to bid on subsequent projects but shall do so on the
basis of a completely separate contract or contracts with separate project
managers and subcontractors.  Subject
to the AFP process that is proposed to be followed for the Wellness Centre, the
parties agree to give consideration to jointly pre-qualifying general
contractors and subcontractors.

COST ALLOCATION

15.
Where either of the Community Centre or the Wellness
Centre includes areas intended for use by the other party on a shared or
exclusive basis, MSH and the Town shall enter into an agreement, satisfactory
to both, regarding each party’s obligations for design, construction and
capital and operating costs of such shared use areas.

16.
MSH and the Town will each consider permitting the
other party to front-end the cost of design and construction in order to
facilitate the earliest possible construction of the Facility.  The parties acknowledge that some of the
site development and servicing costs may have to be front ended to accommodate
the timing for construction of the Community Centre.  The parties shall agree on a reasonable cost
allocation for site preparation, development, servicing, etc.

17.
The Town and MSH acknowledge that they will share site
plan preparation costs and each party shall be responsible for their own
architect’s fees.

18.
MSH acknowledges that the Town will fund its Community
Centre from Development Charges pursuant to its by-laws and the Development Charges Act, 1996.  MSH acknowledges that ownership,
financing, design and construction shall be structured by the Town to ensure
that development charges funds are eligible for use in the acquisition and
construction of the Community Centre.
The Town agrees to consult with and involve MSH in the consideration of
any aspects of the ownership, financing, design or construction of the Facility
that are influenced by the Town’s desire to ensure that development
charges funds are eligible for use in the acquisition and construction of the
Community Centre, as aforesaid.

PARKING STRUCTURE

19.
The parties acknowledge that the Community Centre will
require approximately 250 parking spaces and that the Wellness Centre will
require approximately 500 parking spaces.
The parties acknowledge and intend that a parking structure will be
developed as part of the Facility development in a location generally as
indicated on the Master Site Plan.
The parties further acknowledge that parking, whether surface or
structured parking, for the first phase of any part of the Facility must be in
place when that part of the Facility first becomes operational and must continue
to be available during the construction of any subsequent phases of the
Facility.

20.
The parties shall agree on a parking strategy which
shall include a strategy for the ownership, construction and operation of the
parking facility and the manner in which parking operating costs and revenues
will be shared and distributed and the manner in which patrons of the Community
Centre, patrons of the Wellness Centre and Hospital patients and visitors will
have access to the parking facility.
The parties shall further agree upon the design of the parking
structure.

21.
The Town and MSH agree to investigate operating models
for the effective administration and operation of the parking facility.

TIMING

22.
The Town and MSH acknowledge their intention to work
towards and agree upon a timetable to complete the matters set out in this
Memorandum of Understanding, but recognize that situations, both within and
beyond the Town’s and MSH’s control may impact the timing.  MSH and the Town agree to meet on a
regular basis to review, revise and update, if necessary, the said timetable.

PERMITS

23.
MSH will, at its own cost and expense, prepare and
submit the appropriate documents for Site Plan Approval, building permits and
any other approvals required for the Wellness Centre, and the Town shall, at
its own cost and expense, prepare and submit the appropriate documents and
plans for all approvals required in respect of the Community Centre.

24.
The Town acknowledges that a comprehensive zoning
by-law for the community is planned to come before Council in the spring of 2007.

25.
The Town will, upon application therefor by MSH, consider
appropriate zoning for the development of commercial or other compatible
development on the Site.

ENVIRONMENT

26.
The Town and MSH acknowledge the opportunity for
environmentally friendly building design, energy consumption and product
procurement in the development of the Facility.  The Town agrees to research and
recommend to the Council of the Town and MSH agrees to require consideration by
the private developer undertaking the Wellness Centre on behalf of MSH an
environmentally friendly building approach with respect to the Facility.

SHARED USE

27.
The Town and MSH will develop separate agreements
regarding program access and joint programs within the Facility.  The Town and MSH acknowledge that they
may also enter into separate agreements regarding the contracting of services
from one another (example:  grounds
maintenance, snow removal, cleaning of common areas, etc.).

MARKHAM
DISTRICT ENERGY

28.
MSH and the Town agree to work with MDEI to investigate
the feasibility of MDEI providing cost effective energy services to the
Facility either as the exclusive supplier or in joint venture with MSH.  If any such arrangements are to proceed,
they shall be addressed in a separate agreement that shall be entered into
between MSH, the Town and MDEI.

PAYMENT OF COSTS

29.
Except as specifically agreed herein or by other instrument
in writing, any costs or expenses incurred by any party in connection with the
matters outlined in this Memorandum of Understanding shall be payable solely
and in full by such party.

TERMINATION

30.
The Parties agree that if they are unable to agree on
the revisions to the Master Site Plan or any of the provisions set out in this
Memorandum of Understanding upon which the parties are to agree by December 31,
2007 then, unless the parties otherwise agree, this Memorandum of Understanding
shall be at an end and shall be terminated and of no further force or effect
and neither party hereto shall have any further liabilities or obligations to
the other party under this Memorandum of Understanding.  For certainty, each party acknowledges
and agrees that any costs or expenses incurred by any party in connection with
the matters outlined in this Memorandum of Understanding shall be payable
solely and in full by such party.

INTENT

31.
The Town and MSH acknowledge and agree that this
Memorandum of Understanding sets out the principles of the agreement between
them for the development and operation of the Facility.  The Town and MSH further agree that such
principles shall form the basis of further agreements to be entered into
between them as set out in this Memorandum of Understanding and the actions
that the Town and MSH shall undertake with respect to the Facility from and
after the date hereof.

32.
The Town acknowledges and agrees that, having regard to
the AFP process that is proposed to be followed for the expansion of
MSH’s facilities, all agreements and obligations of MSH under this
Memorandum of Understanding with respect to the design, financing and
construction of such expansion will be undertaken by the private developer
proceeding with the expansion under the AFP process.

IN WITNESS WHEREOF this Memorandum of Understanding has
been executed by the parties as of the            day of January, 2007.

MARKHAM STOUFFVILLE
HOSPITAL

Per:____________________________________

Name:

Title:

Per:____________________________________

Name:

Title:

THE CORPORATION OF
THE TOWN OF MARKHAM

Per:____________________________________

Frank Scarpitti,
Mayor

Per:____________________________________

Sheila Birrell,
Clerk