Exhibit 10.3
COURTNEY SQUARE LTD.
and
EPR NORTH TRUST
and
ENTERTAINMENT PROPERTIES TRUST
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WHITBY ENTERTAINMENT CENTRUM AGREEMENT
November 14, 2003
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions........................................................2
1.2 Business Days.....................................................18
1.3 Schedules.........................................................18
1.4 Interpretation....................................................18
ARTICLE 2
AGREEMENT OF PURCHASE AND SALE
2.1 Purchase and Sale.................................................20
2.2 Binding Agreement.................................................20
2.3 Governmental Authorizations.......................................20
2.4 Property Documents................................................20
2.5 Access............................................................24
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price....................................................25
3.2 Closing Adjustments...............................................25
3.3 Additional Adjustments............................................28
3.4 Special Adjustments...............................................29
3.5 Payment of Purchase Price and Special Adjustments.................31
3.6 Post Closing Receipts by Vendor...................................33
3.7 GST...............................................................34
3.8 Fees/Commission...................................................34
3.9 Time of Closing Payment...........................................34
ARTICLE 4
INTERIM PERIOD
4.1 Ordinary Course...................................................35
4.2 Risk/Expropriation................................................36
4.3 Contracts/Lease Agreements........................................37
4.4 Title.............................................................37
4.5 Approvals of the Purchaser........................................38
4.6 Lease Proposal....................................................39
ARTICLE 5
LEASE-UP PERIOD
5.1 Vendor's Obligations..............................................39
5.2 Purchaser's Approval; Arbitration.................................40
5.3 Form of Lease and Execution.......................................42
5.4 Adjustments to Improvements.......................................42
5.5 Plans.............................................................42
5.6 Construction of Additional Improvements...........................43
5.7 Municipal Approvals...............................................44
5.8 Construction Advance..............................................44
5.9 Items to be Paid by the Vendor....................................46
5.10 Tenant Improvements and Landlord's Work...........................48
5.11 Delegation of Duties..............................................48
5.12 Force Majeure/Acts or Omissions of Purchaser......................48
ARTICLE 6
COVENANTS
6.1 Insurance After Closing...........................................49
6.2 Property Management Agreement.....................................49
6.3 Covenants by the Vendor...........................................51
6.4 Hotel.............................................................52
6.5 Servicing Obligations.............................................52
6.6 Covenant Not To Encumber..........................................53
6.7 Limited Partnership...............................................54
6.8 [INTENTIONALLY DELETED]...........................................54
6.9 Liberty ITM Guarantee.............................................54
6.10 GMAC Fees.........................................................54
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Vendor's Representations and Warranties...........................55
7.2 Vendor's Knowledge................................................59
7.3 Purchaser's Representations and Warranties........................59
7.4 EPR's Representations and Warranties..............................61
7.5 Survival of Representations.......................................62
ARTICLE 8
CONDITIONS
8.1 Conditions of the Vendor..........................................63
8.2 Conditions of the Purchaser.......................................64
8.3 Non-Satisfaction of Conditions....................................66
ARTICLE 9
CLOSING DOCUMENTS
9.1 Vendor's Closing Documents........................................66
9.2 Purchaser's Closing Documents.....................................69
9.3 Closing Procedures................................................71
9.4 Taxes and Fees....................................................72
ARTICLE 10
DISPUTE RESOLUTION AND DEFAULT
10.1 Dispute Resolution................................................72
10.2 Vendor's Default; Purchaser's Remedies............................74
10.3 Purchaser's Default; Vendor's Remedies............................75
10.4 Liquidated Damages................................................75
10.5 Default and Security..............................................75
ARTICLE 11
11.1 Indemnification in Favour of the Purchaser........................78
11.2 Indemnification in Favour of the Vendor...........................78
11.3 Claims for Breach of Representations or Warranties................79
11.4 Post-Closing Assistance...........................................80
11.5 Indemnification Proceedings - Third Party Claims..................80
11.6 Consequential Damages.............................................82
ARTICLE 12
GENERAL
12.1 Obligations as Covenants..........................................82
12.2 Amendment of Agreement............................................82
12.3 Further Assurances................................................83
12.4 Waiver............................................................83
12.5 Planning Act......................................................83
12.6 Solicitors as Agents and Tender...................................83
12.7 Survival..........................................................84
12.8 Successors and Assigns............................................84
12.9 Confidentiality...................................................84
12.10 Announcements.....................................................85
12.11 No Registration of Agreement......................................85
12.12 Notices...........................................................85
12.13 Counterparts......................................................88
SCHEDULES
EPR NORTH TRUST
SCHEDULE "A" LEGAL DESCRIPTION - MISSISSAUGA
SCHEDULE "B" Exchangeable Preference Securities
SCHEDULE "C" Permitted Encumbrances
SCHEDULE "D" Mandatory Assumed Contracts
SCHEDULE "E" Liberty ITM Guarantee
MASTER AGREEMENT
WHITBY ENTERTAINMENT CENTRUM, WHITBY, ONTARIO
THIS AGREEMENT made as of the 14th day of November, 2003,
B E T W E E N:
PENEX WHITBY LTD.
OF THE FIRST PART
- and -
EPR NORTH TRUST
OF THE SECOND PART
- and -
ENTERTAINMENT PROPERTIES TRUST
OF THE THIRD PART
RECITALS
(A) The Vendor is the registered owner of the Purchase Assets for and on behalf
of the Beneficial Owner and has the power and authority to enter into this
Agreement and to perform its obligations under this Agreement.
(B) The Vendor has agreed to sell, transfer, assign, set over and convey the
Purchase Assets to the Purchaser and the Purchaser has agreed to purchase,
acquire and assume the Purchase Assets from the Vendor on the terms and
conditions set out in this Agreement.
IN CONSIDERATION of the mutual covenants and agreements set out in this
Agreement and for other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties covenant and
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the meanings set out
below unless the context requires otherwise:
"ACCELERATION" has the meaning given to it in Schedule "B".
"ACCEPTANCE DATE" means the date upon which this Agreement has been
executed and delivered by each of the parties hereto.
"ADDITIONAL ADJUSTMENTS" means the adjustments to the Purchase Price
determined in accordance with Section 3.3.
"ADDITIONAL DENSITY LEASE" means any Lease for Additional Density Space.
"ADDITIONAL DENSITY SPACE" means premises that may be built in the future
beyond the Currently Existing Space and Contemplated Space.
"ADDITIONAL DENSITY ADJUSTMENTS" means the adjustments for each Additional
Density Lease in accordance with Section 3.4(1)
"ADDITIONAL IMPROVEMENTS" means any Improvements constructed or to be
constructed in respect of Additional Leases or Additional Density Leases (for
which the Vendor is entitled to the Additional Density Adjustments) that are
entered into during the Lease-Up Period, including site work and servicing.
"ADDITIONAL LEASE" means any Lease for Additional Space.
"ADDITIONAL LEASE ADJUSTMENTS" means the adjustments for each Additional
Lease in accordance with Section 3.4(1)
"ADDITIONAL SPACE" means the Leased Unbuilt Space, Unleased Built Space and
Unleased Unbuilt Space.
"AGREEMENT" means this Agreement, including the Schedules and the recitals
to this Agreement, as it or they may be amended or supplemented from time
to time, and the expressions "hereof", "herein", "hereto", "hereunder", "hereby"
and similar expressions refer to this Agreement and not to any particular
Section or other portion of this Agreement.
"AMC ADDITIONAL ADJUSTMENT" has the meaning given to it in Section 3.3(2).
"AMC LEASE" means the lease in favour of AMC Entertainment International,
Inc. ("AMC") dated November 13, 1997 as amended by agreements dated December 11,
1999 and July 30, 1999.
"AMC SPACE" means premises leased by AMC pursuant to the AMC Lease, as the
same may be amended.
"ANCILLARY AGREEMENTS" means all agreements required pursuant to or arising
out of this Agreement, including, without limitation, the Escrow Agreement, all
agreements required in connection with the Exchangeable Preference Securities,
the Property Management Agreement, the Property Management Indemnity, the
Registration Rights Agreement, the EPR Payment Indemnity, the Covenant not to
Encumber, the Covenant not to Transfer, the Pledge, the Trademark License, the
Hotel Parcel Agreement, the Default and Security Agreement, the Limited
Partnership Agreement and the Trust Agreement.
"APPLICABLE LAW" means all applicable laws, statutes, regulations,
guidelines and policies having the force of law, including but not limited to
official plans, zoning bylaws, development agreements and restrictive covenants.
"ARBITRATOR" means, with respect to any dispute, disagreement, question or
matter to be decided by arbitration pursuant to the provisions of this
Agreement, the Person named in Section 10.1(2) to act as arbitrator for such
dispute, disagreement, question or matter.
"ARTICLE" and "SECTION" mean and refer to the specified article and section
of this Agreement.
"ASSIGNMENT OF CONTRACTS" means an assignment and assumption of all of the
right, title and interest of the Vendor in the Assumed Contracts, with
reciprocal obligations of indemnity by the Vendor and the Purchaser with respect
to such Assumed Contracts and with the Purchaser's obligations taking effect
from the Closing Date.
"ASSIGNMENT OF LAND LEASES" means an assignment and assumption of all of
the right, title and interest of the Vendor in the Land Leases, with reciprocal
obligations of indemnity by the Vendor and the Purchaser with respect to the
Land Leases and with the Purchaser's obligations taking effect from the Closing
Date.
"ASSIGNMENT OF LEASES" means an assignment and assumption of all of the
right, title and interest of the Vendor in the Leases, with reciprocal
obligations of indemnity by the Vendor and the Purchaser with respect to the
Leases and with the Purchaser's obligations taking effect from the Closing Date.
"ASSUMED CONTRACTS" means those Contracts which are to be assumed by the
Purchaser on Closing, set out in Schedule "D" hereto (the "MANDATORY ASSUMED
CONTRACTS") as well as any additional contracts that the Purchaser elects to
assume by notice in writing given to the Vendor prior to the end of the Due
Diligence Period.
"AUTHORIZATION" means, with respect to any Person, any order, permit,
approval, waiver, license or similar authorization of any Governmental Authority
having jurisdiction over the Person.
"BASE PURCHASE PRICE" has the meaning given to it in Section 3.1.
"BENEFICIAL OWNER" means Courtney Square Limited Partnership, an Ontario
limited partnership of which the Vendor is the general partner.
"BUILDINGS" means the buildings, erections and structures constructed or to
be constructed on the Lands by the Vendor or any Tenant in accordance with the
terms of this Agreement, but excluding any tenant fixtures and other leasehold
improvements which a Tenant has the right to remove pursuant to any of the
Leases.
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
holiday in the Province of Ontario and the State of Missouri.
"CAPITALIZATION RATE" means the applicable capitalization rate set out in
Section 3.4(1).
"CLAIM" means any obligation, liability, lien, encumbrance, loss, damage,
cost, expense or claim, including, without limitation, any claim for damage to
property or injury to or death of any person or persons.
"CLOSING" means the closing of the sale of the Purchase Assets as
contemplated by this Agreement.
"CLOSING ADJUSTMENTS" means adjustments to the Base Purchase Price which
are usual in a purchase and sale of assets similar in nature to the Purchase
Assets, as described in Section 3.2(2).
"CLOSING DATE" means 10:00 a.m. on Tuesday, December 16, 2003 or as
otherwise agreed by the parties.
"CLOSING PAYMENT" has the meaning given to in Section 3.5(1)(c).
"CONFIDENTIAL INFORMATION" has the meaning given to it in Section 12.9.
"CONSTRUCTION ADVANCE" means any advance made by the Purchaser to the
Vendor, pursuant to this Agreement which shall be used by the Vendor for the
construction of Improvements during the Lease-Up Period, and in respect of
construction of certain Improvements that has begun prior to Closing and which
Improvements have been approved by the Purchaser in accordance with the terms of
this Agreement.
"CONSTRUCTION ADVANCE ADJUSTMENT" means an amount equal to the aggregate of
each Construction Advance with respect to such Lease multiplied by the
Capitalization Rate applicable to such Construction Advance, multiplied by a
percentage equal to the number of days elapsed from the date of advance of such
Construction Advance to the Vendor divided by the number of days in the
applicable year.
"CONSTRUCTION CONTRACTS" means the construction contracts entered into by
the Vendor or the Property Manager for the construction of the Additional
Improvements.
"CONTEMPLATED SPACE" means the Leased Unbuilt Space and Unleased Unbuilt
Space.
"CONTRACTS" means (a) the Warranties, (b) all material contracts and
agreements entered into by the Vendor or the Beneficial Owner or by which they
are bound with third parties, excluding Governmental Authorities, in respect of
the maintenance, operation, cleaning, security, fire protection, insurance,
parking, servicing or other operational aspects of the Property, but excluding
any management or other agreements between the Vendor and PenEquity, and also
excluding the Leases.
"COVENANT NOT TO ENCUMBER" has the meaning given to it in Section 6.6.
"COVENANT NOT TO TRANSFER" means a covenant to be registered on title to
the Freehold Lands wherein the Nominee agrees not to transfer title to the
Freehold Lands without the approval of the Vendor.
"CURRENTLY EXISTING SPACE" means the Leased Built Space and Unleased Built
Space.
"DEFAULT AND SECURITY AGREEMENT" has the meaning given to it in Section
10.5(1).
"DEFAULT RATE" means the rate published and quoted from time to time by the
Royal Bank of Canada as its "prime rate" plus five percent (5%) per annum.
"DEFAULT LC" has the meaning given to it in Section 10.5(1).
"DEPOSIT" has the meaning given to it in Section 3.5(1)(a).
"DISPUTE" has the meaning given to it in Section 10.1(1).
"DISTRIBUTION" has the meaning given to it in Schedule "B".
"DUE DILIGENCE DATE" means 5:00 p.m. (Toronto time) on December 3, 2003.
"DUE DILIGENCE MATERIALS" means the information to be provided by the
Vendor to the Purchaser pursuant to the provisions of Article 2 hereof.
"DUE DILIGENCE PERIOD" means the period between the Acceptance Date and the
Due Diligence Date.
"EMPLOYEES" means any employees engaged in the construction, development,
operation, maintenance or management of the Property, whether employees of the
Vendor or the Beneficial Owner or any property management company or other
contractor or consultant engaged by the Vendor or the Beneficial Owner or
otherwise.
"ENGINEERING DOCUMENTS" means all site plans, surveys, soil and substrata
studies, architectural drawings, plans and specifications, engineering plans and
studies, floor plans, landscape plans, environmental reports and studies,
professional inspection reports, and other similar plans and studies in the
possession or control of the Vendor that relate to the Property.
"ENVIRONMENTAL LAWS" means all applicable Laws, including but not limited
to the ENVIRONMENTAL PROTECTION ACT (Ontario), and all agreements with
Governmental Authorities and all other statutory requirements relating to public
health or the protection of the environment and all Authorizations issued
pursuant to such Laws, agreements or statutory requirements relating to
environmental matters applicable in the Province of Ontario, including all
regulations under such legislation.
"EPR" means Entertainment Properties Trust.
"EPR PAYMENT INDEMNITY" has the meaning given to it in Section 3.5(3).
"ESCROW AGREEMENT" has the meaning given to it in Section 3.5(2).
"ESCROW FUND" has the meaning given to it in Section 3.5(2).
"ESTOPPEL CERTIFICATE" means an estoppel certificate in a form prepared by
the Purchaser and approved by the Vendor, acting reasonably, or as otherwise
required pursuant to the applicable Tenant's Lease or the Purchaser's lenders
dated as of a date not more than thirty (30) days prior to the Closing Date.
"EVENT" means:
(a) a default by any Person which has not been cured within the
applicable cure period, of its respective covenants and obligations under
this Agreement, or any Ancillary Agreement, any of the Other Purchase
Agreements or Other Ancillary Agreements; or
(b) a transfer or assignment of the Purchaser's registered or
beneficial interest in the Property or any of the Other Properties, or a
change in control of the Purchaser, other than a transfer or assignment to
an affiliate of EPR which has assumed the obligations of the Purchaser, or
as collateral security in connection with the Permitted Financing; or
(c) a default under the First Mortgage or other mortgage pursuant to
the Permitted Financing, which has not been cured within the applicable
cure period; or
(d) an Event of Insolvency.
If there is any dispute as to whether a Person is in default of its
post-closing obligations pursuant to this Agreement or any Ancillary
Agreement, such dispute shall be determined by way of arbitration pursuant
to Section 10. 1 of this Agreement.
"EVENT OF INSOLVENCY" means, in respect of any Party, if such party (i)
becomes insolvent or generally not able to pay its debts as they become due,
(ii) admits in writing its inability to pay its debts generally or makes a
general assignment for the benefit of creditors, (iii) institutes or has
instituted against it any proceeding seeking (x) to adjudicate it a bankrupt or
insolvent, (y) liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors including any plan
of compromise or arrangement or other corporate proceeding involving or
affecting its creditors, or (z) the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for any
substantial part of its properties and assets, and in the case of any such
proceeding instituted against it (but not instituted by it), either the
proceeding remains undismissed or unstayed for a period of thirty (30) Business
Days, or any of the actions sought in such proceeding (including the entry of an
order for relief against it or the appointment of a receiver, trustee, custodian
or other similar official for it or for any substantial part of its properties
and assets) occurs, or (iv) has an encumbrancer take possession of, or if a
distress or execution or any similar process is levied or enforced upon or
against, all or substantially all of its assets and the same remains unsatisfied
for five (5) Business Days or for such longer period of time (not exceeding
thirty (30) Business Days) as may be reasonable in the circumstances unless such
party shall have commenced proceedings to vacate or satisfy such distress or
execution or similar process within such five (5) Business Day period and
thereafter diligently prosecutes such proceedings to vacate or satisfy such
distress or execution or similar process; notwithstanding the foregoing, the
period of time during which such distress or execution or similar process may
remain unsatisfied shall be unlimited if the ability of such party to conduct
its operations with respect to the Purchase Assets or the Property Management
Agreement is not materially adversely affected and provided that in no event
shall any period permitted to such party to vacate or satisfy such distress or
execution or similar process exceed the period that would permit its interest in
the Purchase Assets, the Property Management Agreement or any part thereof to be
sold, or (v) takes any corporate action to authorize any of the above actions.
"EXCHANGE ACT" has the meaning given to it in Section 7.4(f).
"EXCHANGEABLE PREFERENCE SECURITIES" means limited partnership units in the
Limited Partnership carrying an eight (8%) percent return, payable quarterly in
priority to all other distributions, and providing for exchange into common
stock of EPR and otherwise generally with the characteristics set forth in
Schedule "B".
"FIRST MORTGAGE" means a first mortgage to be granted by the
Purchaser/Nominee in a principal amount not greater than sixty-five (65%)
percent of the sum of the Base Purchase Price plus the amount of the Escrow
Fund.
"FIVE YEAR PAYMENT/STOCK ISSUANCE" has the meaning given to it in Schedule
"B".
"FIXTURES" means all equipment, machinery, fixtures, and other items of
real and/or personal property, including all components thereof, now or on the
Closing Date located in, on or used in connection with, and permanently affixed
to or incorporated into, the Lands or Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, electronic
security equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air cooling and
air conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the Parties to constitute real property,
together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all such items located on the Property and
owned by the Tenants and excluding any of the foregoing that are not owned by
the Vendor.
"FREEHOLD LANDS" means the lands and premises described firstly in Schedule
"A", together with all appurtenant interests, covenants, licences, privileges
and benefits, including any easements, rights-of-way, and rights of ingress and
egress.
"GOVERNMENTAL AUTHORITY" means (i) any multi-national, federal, provincial,
state, municipal, local or other governmental or public department, central
bank, court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision or authority of the foregoing, or (iii) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the above.
"GP INDEMNITY" has the meaning given to it in Section 3.5 (4).
"GP PLEDGE" means a security interest granted by the general partner in the
Limited Partnership in and to its units in the Limited Partnership and shares of
the Nominee, which security interest shall not be subordinate or postponed to
any security interests in favour of the Purchaser's mortgagee.
"GROSS LEASABLE AREA" means, in respect of any rentable premises on the
Lands, the area expressed in square feet of all floor space of the rentable
premises measured in accordance with the applicable provisions of the applicable
Lease or, in respect of any unleased space, the applicable provisions of the
standard form of Lease for the Property.
"HAZARDOUS MATERIALS" means any pollutant or contaminant or hazardous,
dangerous or toxic chemicals, materials or substances within the meaning of any
applicable federal, provincial or local Law relating to or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste
substances or materials including, without limitation any contaminant as defined
in the ENVIRONMENTAL PROTECTION ACT (Ontario).
"HYDRO LICENSE" means the license entered into betwen the Vendor and
Ontario Hydro dated September 17, 1998, as amended, pursuant to which the Vendor
has licensed from Ontario Hydro the Licensed Lands.
"IMPROVEMENTS" means all Buildings, structures, Fixtures and other
improvements located or constructed or to be constructed on the Lands by the
Vendor or any Tenant, both before Closing and during the Lease-Up Period,
including, without limitation, landscaping, parking areas, lots and structures,
roads, drainage and all above ground and underground utility structures,
equipment systems, site servicing and site works and other so-called
"infrastructure" improvements.
"INCREASED AMC SPACE" has the meaning given to it in Section 3.3(2).
"INITIAL DEPOSIT" has the meaning given to it in Section 3.5(1)(a)(i).
"INTANGIBLE PROPERTY" means all permits, agreements and other intangible
property or any interest therein now or on the Closing Date owned or held by the
Vendor in connection with the Property, and zoning rights related to the Lands,
or any part thereof, to the extent the same are assignable by the Vendor;
provided, however, "Intangible Property" shall not include the general corporate
trademarks, tradenames, service marks, logos or insignia or the books and
records of the Vendor, the Vendor's accounts receivable and the Vendor's
business and operating licences for the facilities on the Lands but shall
include the Trademark License. The Purchaser acknowledges that PenEquity holds
the trademark for Mississauga "Entertainment Centrum" and its accompanying
brand/logo and that such trademark is not being assigned or transferred to the
Purchaser.
"INTERIM PERIOD" means the period between the Acceptance Date and the
Closing Date.
"KANATA PURCHASE AGREEMENT" means an agreement of purchase and sale entered
into between Penex Kanata Ltd. and Penex Main Ltd., as vendors, and the
Purchaser dated as of the date of this Agreement, in connection with the Kanata
Property.
"KANATA PROPERTY" means the property known municipally as Kanata Centrum
Walk, consisting of an entertainment centre containing a Gross Leaseable Area as
at the date hereof of approximately 371,888 square feet and situated on
approximately forty-four (44) acres of improved land.
"LAND LEASE LANDLORDS" means Stan Vine Construction Inc. the landlord under
the Stan Vine Lease.
"LAND LEASE" means the Stan Vine Lease.
"LANDS" means the Freehold Lands, Leased Lands and Licensed Lands.
"LAWS" means any and all applicable laws including all statutes, codes,
ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral
or administrative or ministerial or departmental or regulatory judgments,
orders, decisions, rulings or awards, policies, guidelines and general
principles of common and civil law and equity, binding on or affecting the
person referred to in the context in which the word is used.
"LEASE ADJUSTMENTS" means part of the Special Adjustments to the Purchase
Price identified as such in to Section 3.4.
"LEASE NOI" means the aggregate minimum annual rent payable during the
first year under a Lease less a vacancy allowance of five (5%) percent of such
rent and a structural reserve of point five (0.5%) percent of such rent (except
in the case of the AMC Lease, where no deduction shall be made for a vacancy
allowance or a structural reserve). For the purpose of this calculation, no
deduction will be made for any rent-free periods, rent concessions or
inducements, including tenant allowances or landlord's work, or for applicable
withholding tax. The following example illustrates the foregoing calculation:
| | Gross Leaseable Area of Premises: two thousand (2,000) square feet
| | Minimum/Base Rent: twenty ($20.00) Dollars per square foot per annum
during the first year of the term
| | Fixturing Period: sixty (60) days
| | Free Minimum/Base Rent: sixty (60) days following Fixturing Period
| | Lease NOI: (2,000 x $20.00) x 0.945 (in respect of any Lease other
than the AMC Lease) = $37,800.00
"LEASE PROPOSAL" has the meaning given to it in Section 4.6.
"LEASED BUILT SPACE" means the premises that are currently leased and
Occupied, containing Gross Leaseable Area of approximately 149,671 square feet,
subject to increase pursuant to Section 3.3.
"LEASED BUILT SPACE LEASE" means any Lease for Leased Built Space.
"LEASED UNBUILT SPACE" means the premises that are currently leased, not
yet built, but anticipated to be built, to contain Gross Leaseable Area of
approximately 56,000 square feet, as reflected more or less in the Leasing Plan,
subject to adjustment to the extent any currently Unleased Unbuilt Space becomes
leased, in accordance with the provisions of this Agreement,
"LEASEHOLD INTEREST" means the Vendor's leasehold interest in the Leased
Lands, pursuant to the Land Leases.
"LEASED LANDS" means the Courten Lands and Boldco Lands described secondly
and thirdly, respectively, in Schedule "A" in respect of which the Vendor holds
a leasehold interest pursuant to the Land Leases.
"LEASES" means all agreements to lease, leases, renewals of leases, and
other rights or licenses to possess or occupy rentable premises within the
Property now existing or made in accordance with the provisions of this
Agreement (other than the Land Leases), together with all security, guarantees
and indemnities of the tenants', subtenants' and licensees' obligations
thereunder, in each case as amended, renewed or otherwise varied from time to
time.
"LEASING PLAN" means the plan of the Property that shows the current
locations of the Leased Built Space and Unleased Built Space and anticipated
locations of the Leased Unbuilt Space and Unleased Unbuilt Space, as amended
from time to time in accordance with the terms of this Agreement.
"LEASE-UP PERIOD" means the period commencing on the Closing Date and
ending on the fifth anniversary of the Closing Date.
"LIBERTY ITM GUARANTEE" means the guarantee in respect of the Liberty ITM
Tenants as governed by Section 6.9 and Schedule "E".
"LIBERTY ITM GUARANTEE PERIOD" means the four (4) year period following the
Closing Date, in connection with the Liberty ITM Guarantee.
"LIBERTY ITM TENANTS" means the restaurant tenants operating as Wolfgang
Puck, Cafe Tu Tu Tango and Gordon Biersch.
"LICENSOR" means Ontario Hydro, the licensor under the Hydro License.
"LICENSED LANDS" means the lands and premises described thridly in Schedule
"A" in respect of which the Vendor holds a license pursuant to the Hydro
License.
"LIMITED PARTNERSHIP" means the limited partnership to be created under the
laws of Delaware by EPR, the general partner of which is a wholly owned
subsidiary of EPR.
"LIMITED PARTNERSHIP AGREEMENT" means the agreement governing the Limited
Partnership.
"MANDATORY ASSUMED CONTRACTS" means those Contracts described in a list to
be attached as Schedule "D", that are to be assumed by the Purchaser on Closing,
subject to the terms and provisions hereof.
"MISSISSAUGA PURCHASE AGREEMENT" means an agreement of purchase and sale
entered into between Courtney Square Ltd. and the Purchaser dated as of the date
of this Agremeent, in connection with the Mississauga Property.
"MISSISSAUGE PROPERTY" means the property known municipally as Mississauge
Entertainment Centrum, consisting of an entertainment centre containing a gross
leaseable area as at the date hereof of approximately 230,544 square feet and
situated on approximately 27 acres of improved land.
"MUNICIPAL APPROVALS" means any site plan approval, building permit and any
other approval, including Zoning Amendments, from any Governmental Authority
required for the construction of the Improvements in accordance with the Plans.
"NEWLY LEASED/COMPLETED SPACE" has the meaning given to it in Section 3.3.
"NOMINEE" means Whitby Entertainment Holdings Inc.
"NOTE" means the promissory note to be issued by the Purchaser to the
Vendor, bearing arm's length commercial interest and repayment terms, in partial
payment of the Purchase Price, as provided in Section 3.5(1)(b) and to be
transferred immediately after Closing and as a condition of Closing to the
Limited Partnership in exchange for the Exchangeable Preference Securities,
which Note shall be non-assignable by the Limited Partnership during the period
that the obligations that are secured by the Pledge, GP Pledge and Default LC
remain outstanding.
"OAKVILLE PURCHASE AGREEMENT" means an agreement of purchase and sale
entered into between Penex Winston Ltd. and the Purchaser dated as of the date
of this Agreement, in connection with the Oakville Property.
"OAKVILLE PROPERTY" means the property known municipally as Oakville
Entertainment Centrum, consisting of an entertainment centre containing a gross
leaseable area as at the date hereof of approximately 216,221 square feet and
situated on approximately twenty-seven (27) acres of improved land.
"OCCUPANCY" means, in respect of any Lease, that the Tenant has taken
possession of the leased premises thereunder, provided that such possession is
not prohibited by Applicable Law and in the case of leased premises in excess of
5,000 square feet of Gross Leaseable Area, an Estoppel Certificate has been
provided by such Tenant or, in the alternative a statutory declaration of a
senior officer of the Vendor, confirming the terms of such Lease, has been
delivered; and "OCCUPIED" or "UNOCCUPIED" shall have a corresponding meaning.
"OTHER ANCILLARY AGREEMENTS" means the Ancillary Agreements (as defined
therein) in connection with the Other Purchase Agreements.
"OTHER PROPERTIES" means the Oakville Property, Kanata Property and Whitby
Property.
"OTHER PROPERTY ADDITIONAL DENSITY ADJUSTMENTS" means the Additional
Density Adjustments pursuant to the Other Purchase Agreements.
"OTHER PURCHASE AGREEMENTS" means the Oakville Purchase Agreement,
Mississauga Purchase Agreement and Kanata Purchase Agreement.
"OTHER VENDORS" means the Vendors under the Other Purchase Agreements.
"PARTIES" mean the parties to this Agreement.
"PAYMENT DATE" has the meaning given to it in Section 3.5(1)(d).
"PAYMENT NOTICE" means, in respect of each Additional Lease or Additional
Density Lease, a notice in writing from the Vendor to the Purchaser, (i)
confirming that Occupancy has occurred in respect of such Additional Lease or
Additional Density Lease and that all conditions set out in this Agreement with
respect to completion of construction of any relevant Improvements have been
satisfied, (ii) attaching an Estoppel Certificate for Tenants occupying 5,000 or
more square feet of Gross Leaseable Area (or if the Vendor is unable to obtain
an Estoppel Certificate from such the Tenant, after using reasonable efforts, a
statutory declaration of a senior officer of the Vendor confirming the status of
the Lease), (iii) attaching a statutory declaration of a senior officer of the
Vendor confirming the status of the Lease for Tenants occupying less than 5,000
square feet of Gross Leaseable Area, or at the option of the Vendor, an Estoppel
Certificate, and (iv) setting out the amount of the Additional Adjustment
pertaining to such Additional Lease or Additional Density Lease.
"PENEQUITY" means PenEquity Management Corporation and its successors and
assigns.
"PERMITTED ENCUMBRANCES" means those encumbrances listed in Schedule "C".
"PERMITTED FINANCING" has the meaning given to it in Section 6.6.
"PERSON" is to be broadly interpreted and includes an individual, a
corporation, a partnership, a trust, an unincorporated organization, the
government of a country or any political subdivision thereof, or any agency or
department of any such government, and the executors, administrators or other
legal representatives of an individual in such capacity.
"PERSONAL PROPERTY" means all Intangible Property, Warranties, and
Engineering Documents, other than the Fixtures, now or on the Closing Date owned
by the Vendor and located on or about the Property or used in connection with
the operation thereof (specifically excluding personal property owned by
employees of the Vendor or owned or leased by the Tenants).
"PLANS" means the plans and specifications prepared by or on behalf of the
Vendor for the construction of the Additional Improvements, and all revisions,
amendments and supplements made thereto from time to time made, all as approved
by the Purchaser in accordance with the provisions hereof.
"PLEDGE" means a security interest granted by EPR in and to (i) its
interest in the Purchaser, (ii) its limited partnership units in the Limited
Partnership, and (iii) its shares in the general partner of the Limited
Partnership, the exercise of which, together with the exercise of the GP Pledge,
will give the Vendor effective control of the Property subject only to the First
Mortgage.
"PREFERENCE SECURITIES EXCHANGE" has the meaning given to it in Schedule
"B".
"PREFERENCE SECURITIES EXCHANGE AGREEMENT" means the agreement to be
entered into to reflect the terms and provisions set out in Schedule "B".
"PREVIOUSLY ADJUSTED LEASE" has the meaning given to it in Section
3.4(1)(a).
"PROPERTY" means the Freehold Lands, Leasehold Interest, the Improvements
and the Fixtures.
"PROPERTY DOCUMENTS" means the documents and information listed or referred
to in Section 2.4.
"PROPERTY MANAGEMENT AGREEMENT" means the agreement between the Purchaser
and the Property Manager for leasing, project management and property management
of the Property during the Lease-Up Period.
"PROPERTY MANAGEMENT FEES" has the meaning given to it in Section 6.2(a).
"PROPERTY MANAGEMENT INDEMNITY" has the meaning given to it in Section
6.2(b).
"PROPERTY MANAGER" means 2010364 Ontario Inc., a management company
controlled by David Johnston and Glenn Miller, and its successors and assigns.
"PURCHASE ASSETS" means all of the Vendor's right, title and interest in:
(a) the Property; and
(b) the Leases; and
(c) the Personal Property.
"PURCHASE PRICE" has the meaning given to it in Section 3.1.
"PURCHASE PRICE SPACE" means the Currently Existing Space, Contemplated
Space and, Additional Density Space (for which the Vendor is paid the Additional
Density Adjustments).
"PURCHASER" means EPR North Trust, a trust established pursuant to the laws
of the State of Delaware, of which EPR is the sole beneficiary.
"PURCHASER'S SOLICITORS" means Stikeman Elliott LLP, 5300 Commerce Court
West, 199 Bay Street, Toronto, Ontario M5L 1B9, Attention: Brenda Hebert.
"PURCHASER'S SOLICITOR'S OPINION" has the meaning given to it in Section
9.2 (p).
"REGISTRATION RIGHTS AGREEMENT" means an agreement to be entered into
among, inter alia, EPR, the Vendor and Other Vendors, as contemplated by the
Preference Securities Exchange Agreement.
"REGISTRY OFFICE" means the land registry office governing the Lands.
"RENT ROLLS" means the rent rolls provided to the Purchaser as part of the
Property Documents.
"SECOND DEPOSIT" has the meaning given to it in Section 3.5(1)(a)(ii).
"SECURITIES ACT" has the meaning given to it in Section 7.4(f).
"SPECIAL ADJUSTMENTS" means the Additional Lease Adjustments, the
Additional Density Adjustments described in Section 3.4.
"STAN VINE LEASE" means thelease entered into between the Vendor and 292441
Ontario Limited (which corporation's name later changed to become Stan Vine
Construction Inc.), dated June 10, 1998, as amended, pursuant to which the
Vendor has leased from Stan Vine Construction Inc. the Stan Vine Lands.
"STAN VINE LANDS" means the lands and premises described thridly in
Schedule "A" in respect of which the Vendor holds a leasehold interest pursuatn
to the Stan Vine Lease.
"STATEMENT OF ADJUSTMENTS" means a statement of the Base Purchase Price and
Closing Adjustments and Additional Adjustments thereto prepared by the Vendor
and delivered to the Purchaser not less than five (5) Business Days prior to the
Closing Date. The Statement of Adjustments shall have annexed to it reasonable
details of the calculations used by the Vendor to arrive at the Purchase Price
and all debits and credits set out in the Statement of Adjustments. The
Statement of Adjustments shall also reflect the Escrow Amount, to be delivered
on Closing by way of additional cash and/or letter of credit.
"SUBSTANTIAL COMPLETION" means, with reference to any part of the
Improvements, that all work required to achieve "substantial performance", as
defined in the CONSTRUCTION LIEN ACT (Ontario), of all Construction Contracts
for such part of the Improvements has been achieved, as evidenced by a
certificate of a member in good standing of the Ontario Association of
Architects; and "SUBSTANTIALLY COMPLETE" and "SUBSTANTIALLY COMPLETED" shall
have corresponding meanings.
"TENANT CONCESSIONS" has the meaning given to it in Section 3.4(1)(a).
"TENANT RECOVERIES" means amounts received by the Vendor from Tenants on
account of operating expenses, realty taxes and other expenses which are
calculated for additional rent purposes under a Lease on an annual basis
determined within the Lease but payable by the Tenant on an estimated monthly or
other periodic basis.
"TENANTS" means all Persons having a right to occupy any part of the
Improvements pursuant to a Lease.
"TRADEMARK LICENSE" means the license to be provided by PenEquity to the
Purchaser in respect of the use of the name and logo of "Entertainment Centrum",
and which shall be terminable only on a change of use of the Property to a use
other than that of an entertainment complex.
"TRUST AGREEMENT" means the trust instrument and all documents in
connection therewith that govern the Purchaser trust.
"UNITED STATES INTERNAL REVENUE CODE" or "CODE" means the Internal Revenue
Code of 1986 of the United States, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"UNLEASED BUILT SPACE" means the premises that have not yet been leased,
which are built, but which are anticipated to be leased, containing Gross
Leaseable Area of approximately 1,505 square feet, as reflected more or less in
the
Leasing Plan, subject to adjustment prior to Closing to the extent any of same
becomes Leased Built Space.
"UNLEASED UNBUILT SPACE" means the premises that have not yet been built or
leased, but which are anticipated to be built and leased, to contain Gross
Leaseable Area of approximately 41,000 square feet, as reflected more or less in
the Leasing Plan, subject to adjustment prior to Closing to the extent any of
such space becomes leased prior to Closing, in accordance with the provisions of
this Agreement. The foregoing includes buildings that are under construction.
"VENDOR" means Penex Whitby Ltd.
"VENDOR'S SOLICITORS" means Gardiner Roberts LLP, Suite 3100, 40 King
Street West, Toronto, Ontario, M5H 3Y2, Attention: Robert Schwartz.
"VENDOR'S SOLICITOR'S OPINION" has the meaning given to it in Section
9.1(u)
"WARRANTIES" means all warranties and guaranties with respect to the
Purchase Assets, whether express or implied, including all warranties and
guarantees of the Improvements and Personal Property by general contractors,
subcontractors, suppliers and manufacturers which the Vendor now holds or under
which the Vendor is the beneficiary, to the extent the same are assignable by
the Vendor.
"ZONING AMENDMENTS" has the meaning given to it in Section 5.5(1).
1.2 BUSINESS DAYS
Where anything is required to be done under this Agreement on a date which
is not a Business Day, then the date for such thing to be done shall be the next
Business Day.
1.3 SCHEDULES
The following Schedules are attached to and form part of this Agreement.
Schedule "A - Legal Description
Schedule "B" - Exchangeable Preference Securities
Schedule "C" - Permitted Encumbrances
Schedule "D" - Mandatory Assumed Contracts
Schedule "E" - Liberty Guarantee
1.4 INTERPRETATION
(1) HEADINGS AND TABLE OF CONTENTS. The division of this Agreement into
Articles and Sections, the insertion of headings, and the provision of
any table of contents are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
(2) NUMBER AND GENDER. Unless the context requires otherwise, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
(3) ENTIRE AGREEMENT. This Agreement, together with any agreements,
instruments, certificates and other documents contemplated to be
executed and delivered pursuant to this Agreement, constitutes the
entire agreement between the parties with respect to the subject
matter of this Agreement and, except as stated in this Agreement and
in the agreements, instruments, certificates and other documents to be
executed and delivered pursuant to this Agreement, contains all of the
representations, undertakings and agreements of the parties. This
Agreement supersedes all prior negotiations or agreements between the
parties, whether written or verbal, with respect to the subject matter
of this Agreement.
(4) CURRENCY. Unless otherwise expressly stated in this Agreement, all
references to money shall refer to Canadian funds.
(5) SEVERABILITY. If any provision contained in this Agreement or its
application to any Person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the
application of such provision to Persons or circumstances other than
those to which it is held to be invalid or unenforceable, shall not be
affected and shall be valid and enforceable and each provision of this
Agreement shall be separately valid and enforceable to the fullest
extent permitted by law.
(6) STATUTE REFERENCES. Any reference in this Agreement to any statute or
any section thereof shall, unless otherwise expressly stated, be
deemed to be a reference to such statute or section as amended,
restated or re-enacted from time to time.
(7) TIME. Time shall be of the essence of this Agreement. Except as
expressly set out in this Agreement, the computation of any period of
time referred to in this Agreement shall exclude the first day and
include the last day of such period. The time limited for performing
or completing any matter under this Agreement may be extended or
abridged by an agreement in writing by the parties or by their
respective solicitors.
(8) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the applicable
laws of Canada.
ARTICLE 2
AGREEMENT OF PURCHASE AND SALE
2.1 PURCHASE AND SALE
The Vendor hereby agrees to sell, transfer, assign, set over and convey the
Purchase Assets to the Purchaser and the Purchaser hereby agrees to purchase,
acquire and assume the Purchase Assets from the Vendor at the Purchase Price and
on and subject to the terms and conditions of this Agreement. The Vendor
acknowledges that the Purchaser shall direct legal title to the Purchase Assets
to be conveyed to the Nominee.
2.2 BINDING AGREEMENT
Upon execution of this Agreement by the Parties, the agreements of the
Vendor and the Purchaser set forth in Section 2.1 create and constitute a
binding agreement of purchase and sale of the Purchase Assets on and subject to
the provisions of this Agreement.
2.3 GOVERNMENTAL AUTHORIZATIONS
At the request of the Purchaser, the Vendor shall promptly execute and
deliver to the Purchaser letters prepared by the Purchaser or the Purchaser's
Solicitors addressed to such Governmental Authorities as may be requested by the
Purchaser or the Purchaser's Solicitors authorizing each such Authority to
release to the Purchaser such information on compliance matters that such
Authority may have with respect to the Lands. The Purchaser agrees not to
request any inspections of the Lands by any Governmental Authority.
2.4 PROPERTY DOCUMENTS
(1) DOCUMENTS TO BE DELIVERED. The Vendor shall deliver to the Purchaser,
to the offices of the Purchaser's Solicitors or other professional
advisors, in Toronto, no later than 5 Business Days following the
Acceptance Date, and from time to time thereafter during the Interim
Period as there are amendments, replacements, supplements or other
changes thereto, true, complete and legible copies of the following
items relating to the Purchase Assets:
(a) the most recent plan or plans of survey or reference plans of
survey for the Lands prepared by an Ontario Land Surveyor;
(b) the existing Leases;
(c) the standard form(s) of agreement to lease and lease for the
Property;
(d) all material agreements with, and permits and licences from,
Governmental Authorities, other than those registered against
title to the Lands;
(e) all agreements with owners of adjoining lands relating to the
ownership, construction, development or operation of the
Property, other than as may be registered against title to the
Lands or adjoining lands;
(f) a rent roll for the Property dated as of the first day of the
month in which the Acceptance Date occurs;
(g) all contracts or agreements respecting the operation of the
Property, including without limitation all Contracts, but
excluding those which are registered against title to the Lands;
(h) all current realty tax assessment notices and tax bills relating
to the Property;
(i) area measurements for each of the rentable premises comprising
the Leased Built Space, certified by a professional engineer or
quantity surveyor or by a member in good standing of the Ontario
Association of Architects;
(j) all work orders affecting the Property and all fire health and
safety inspection reports relating to the Property;
(k) all insurance policies pertaining to the Property;
(l) a list of all major or extraordinary repairs made by the Vendor
or of which the Vendor is aware need to be made with respect to
the Property, if any;
(m) all documents pertaining to the environmental status of the
Property, including all permits, certificates of approval, soil
or other test reports, engineering reports, environmental studies
or other professional studies in respect of the storage or
release on, above or below the surface of the Lands of any
radioactive, toxic or hazardous substances or materials, and
copies of any manifests or consent orders in respect of the
production, manufacture, transportation across, over or through,
storage or location on or beneath the surface of the Lands of any
radioactive, toxic, hazardous or other noxious substances or
materials;
(n) the Land Lease and Hydro License;
(o) any and all litigation files with respect to any pending
litigation and claim files for any claims made or threatened, the
outcome of which might materially affect the Purchase Assets or
the use and operation of the Property, together with summaries
and such other more detailed information as the Purchaser may
reasonably request with respect to any other pending litigation
or claim the outcome of which might materially affect the Vendor
or the Purchase Assets;
(p) the list of Permitted Encumbrances.
(2) EXEMPTION FROM US WITHHOLDING TAX. The Vendor shall deliver to the
offices of the Purchaser's Solicitors or other professional advisors,
in Toronto, no later than five (5) Business Days following the Due
Diligence Date, two (2) duly completed and signed original Internal
Revenue Service Forms W-8 BEN or W-8 IMY (or applicable successor
forms), in either case entitling the beneficial owners of the income,
as defined for U.S. income tax purposes under the United States
Internal Revenue Code, to a complete exemption from or treaty based
reduction of the deduction or withholding of United States federal
income taxes on all amounts to be received by the Vendor under this
Agreement on behalf of the beneficial owners of the income, as defined
above. The Purchaser acknowledges that not all the beneficial owners
of income as aforesaid are entitled to a complete exemption from or
treaty based reduction of the deduction or withholding of United
States federal income taxes on the income received. The Vendor shall
promptly notify the Purchaser if it is required to withdraw or cancel
any form previously submitted by it or if any such form has otherwise
become ineffective or inaccurate and shall simultaneously deliver two
(2) revised duly completed and signed original Internal Revenue
Service Forms W-8 BEN or W-8 IMY (or applicable successor forms),
entitling the beneficial owners of the income, as defined above, to
any treaty benefit or other similar claim for exemption or reduction
of the deduction or withholding of United States federal income taxes
to the maximum extent to which such beneficial owners are then
entitled under Applicable Law (the "REVISED FORMS"). Failure by the
Vendor to provide such notification shall render null and void any
gross-up entitlement as defined hereinafter.
If a deduction or withholding is required under the Code as a result
of any beneficial owner of the income, as defined above, not having or
losing its status as an exempt organization, as defined for purposes
of the Canada-United States Income Tax Convention (the "TREATY") , the
Purchaser shall pay or cause to be paid the relevant amount of the
deduction or withholding within the time period required (including
any and all penalties, interest or other payments on or in respect
thereof imposed, assessed or collected by the United States federal
revenue authorities) and shall remit the net amount after all required
deductions or withholdings to the Vendor.
If for any other reason other than any beneficial owner of the income,
as defined above, not having or losing its status as an exempt
organization as defined for purposes of the Treaty, a deduction or
withholding is required under the Code, and subject to the Vendor
timely delivering to the Purchaser's Solicitors or other professional
advisors, in Toronto, two (2) Revised Forms:
(a) the Purchaser shall gross-up the amount otherwise payable to the
Vendor on behalf of the beneficial owners of the income, as
defined above, by the amount of the revised deduction or
withholding of United States federal income taxes thereby
determined (including any and all penalties, interest or other
payments on or in respect thereof imposed, assessed or collected
by the United States federal revenue authorities relating
thereto); and
(b) if such revised deduction or withholding of United States federal
income taxes thereby determined (including any and all penalties,
interest or other payments on or in respect thereof imposed,
assessed or collected by the United States federal revenue
authorities relating thereto) is paid directly by the beneficial
owners of the income, as defined above, the Purchaser shall
indemnify and hold harmless the beneficial owners of the income,
as defined above, subject to the Purchaser being provided, not
later than 30 days after any such payment, the original receipt
of payment thereof or a certified copy of such receipt or other
evidence of such payment reasonably satisfactory to the
Purchaser.
(3) DOCUMENTS TO BE MADE AVAILABLE. Not later than five (5) Business Days
following the Acceptance Date and from time to time thereafter during
the Interim Period as there are amendments, replacements, supplements
or other changes thereto, the Vendor shall make the following
documents and information available, for examination by the Purchaser,
its representatives and advisors at the Vendor's business offices in
Toronto at reasonable times to be agreed to between the Vendor and the
Purchaser:
(a) all material correspondence in the Vendor's files received from
or sent to any Tenant of the Property and other pertinent leasing
information;
(b) all "as built" plans, specifications and drawings for the
Currently Existing Space;
(c) all construction and related contracts pursuant to which
Improvements are being constructed and all plans and
specifications for such Improvements, including the Plans and the
Engineering Documents with respect thereto; and
(d) originals or legible copies of all records kept in accordance
with all applicable provincial and municipal fire and safety
regulations, such as records relating to inspections, checks and
tests of fire extinguishers, loudspeakers, sprinklers and other
life safety systems and records and reports from health
inspectors.
The Vendor shall make or arrange to be made photocopies of any of the
foregoing, at the Purchaser's request and expense.
2.5 ACCESS
(1) INSPECTIONS. During the Interim Period, the Purchaser and its agents
and employees shall have access to the Property during normal business
hours at reasonable times approved by the Vendor or PenEquity, upon
reasonable prior notice to the Vendor, at the Purchaser's sole risk
and expense, for the purpose of conducting an in-depth evaluation and
inspection of the Property, as is reasonably required. Any intrusive
or invasive testing such as soil testing or roof core sampling shall
be subject to the Vendor's prior consent, not to be unreasonably
withheld. Such access shall be subject to the rights of Tenants and
shall, at the Vendor's option, be in the company of a representative
of the Vendor.
(2) ENVIRONMENTAL ASSESSMENT REPORT. Prior to the Due Diligence Date, the
Purchaser may, at its expense, cause an environmental engineering
firm, acting reasonably, to inspect the Property and carry out an
environmental inspection, audit of the Property, including invasive
testing with the prior approval of the Vendor, not to be unreasonably
withheld.
(3) REPAIR OF DAMAGE. The Purchaser and EPR covenant to repair forthwith
any damage to the Property arising from such access, inspections and
testing by the Purchaser and its agents and employees and to restore
the Property to the same condition it was in prior to such inspections
and testing, at the Purchaser and EPR'S sole expense, subject to the
approval of the Vendor or its property manager, acting reasonably. The
Purchaser and EPR hereby agree to indemnify and save the Vendor and
PenEquity harmless from and against any and all claims, damages,
losses and liabilities that may be suffered or incurred by them
arising out of and caused by the access and testing granted to the
Purchaser and its agents and employees pursuant to this Section 2.5.
For greater certainty, any damage caused by inspections and testing
performed by any other Person, including the agents or employees of a
Person inspecting the Property in relation to financing
relating to the Property shall not be the responsibility of the
Purchaser or EPR.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
The purchase price payable by the Purchaser to the Vendor for the Purchase
Assets (the "PURCHASE PRICE") shall be the aggregate of (i) Thirty Seven
Million, Nine Hundred and Nine Thousand, Eight Hundred and Twelve
($37,909,812.00) Dollars (the "BASE PURCHASE PRICE"), subject to the Closing
Adjustments and Additional Adjustments payable on Closing, and (ii) the Special
Adjustments.
3.2 CLOSING ADJUSTMENTS
(1) ADJUSTMENTS. Closing Adjustments shall be made as of the Closing Date.
Except as otherwise provided in this Agreement, the Vendor shall be
responsible for all expenses and entitled to all revenues accrued from
the Purchase Assets for the period ending at 11:59 p.m. on the day
before the Closing Date. Except as otherwise provided in this
Agreement, the Purchaser shall be responsible for all expenses and
shall be entitled to all revenues accruing from the Purchase Assets
for the period from and including the Closing Date and thereafter. The
Closing Date shall be for the account of the Purchaser.
(2) ADJUSTMENT ITEMS. The Closing Adjustments shall include the Deposit,
all current rents, including current basic rent and current additional
rent and other charges for the Lands and Buildings under the Leases,
prepaid rents, prepaid monthly parking charges, security deposits,
Tenant Recoveries, realty taxes, local improvement rates and charges,
water and assessment rates, all of the foregoing in respect of the
Land Lease and Hydro Lease, prepaid amounts and current amounts
payable under Contracts assumed by the Purchaser on Closing, and
operating costs, utilities, utility deposits, and fuel licences
necessary for the operation of the Purchase Assets and all other items
normally adjusted between a vendor and purchaser in respect of the
sale of properties similar to the Purchase Assets provided that
prepaid rent, security deposits and other prepaid amounts or charges,
including interest thereon, if any, shall only be adjusted to the
extent actually paid by the Tenant or other responsible person, or by
the Vendor in the case of the Land Leases, and not applied to rent or
other charges under the Leases prior to the
Closing Date. Utilities, utility deposits and other costs and expenses
shall be adjusted to the extent that they are not the direct
responsibility of the Tenants and are the responsibility of the
Vendor. If the final cost or amount of an item which is to be adjusted
cannot be determined at Closing, then an initial adjustment for such
item shall be made at Closing, such amount to be estimated by the
Vendor acting reasonably, as of the Closing Date on the basis of the
best evidence available at the Closing as to what the final cost or
amount of such item will be.
(3) TENANT RECOVERIES. With respect to Tenant Recoveries, the Vendor shall
make reasonable estimate of the total Tenant Recoveries with respect
to each Tenant for the applicable lease year (as defined in the
applicable Lease), apportioning same as at the Closing Date as
provided in Section 3.2(1) and there shall be credited against the
Vendor's estimate all amounts due from Tenants on account of Tenant
Recoveries to the Closing Date
(4) TENANT RECEIVABLES. Rental arrears and accounts receivable and any
other claims against a Tenant (the "TENANT RECEIVABLES" due and
payable more than ten (10) days prior to the Closing Date and unpaid
on the Closing Date shall remain the property of the Vendor and there
shall be no adjustment in favour of the Vendor on the statement of
adjustments for such amounts. Tenant Receivables which are in arrears
less than ten (10) days on the Closing Date shall be allowed as a
credit on the adjustments in favour of the Vendor and shall become the
property of the Purchaser. The Purchaser agrees to use its reasonable
commercial efforts (excluding the payment of money) to collect the
Vendor's Tenant Receivables on behalf of the Vendor while any Tenant
that owes such Tenant Receivables remains in occupancy of premises at
the Property. Any Tenant Receivables received or collected by the
Purchaser after the Closing Date shall be on account, first of the
Purchaser's Tenant Receivables and, second, of any Tenant Receivables
owed to the Vendor. After the Closing Date, the Vendor shall have the
right to recover the Vendor's Tenant Receivables directly from the
Tenants and the Purchaser shall cooperate and provide such assurances
as are reasonably required by the Vendor in this regard, at no cost to
the Purchaser. The Vendor may commence litigation to recover the
Vendor's Tenant Receivables, provided that the Vendor shall not levy
distress or take any similar proceeding, or terminate such tenancy or
petition such Tenant into bankruptcy, if it is a tenant of the
applicable premises. The Vendor shall only take such action after
giving the Purchaser ten (10) Business Days notice of its plans to do
so, during which period the Purchaser shall be entitled to pay to the
Vendor the amount of such Vendor's Tenant Receivables, whereupon the
Vendor shall assign such Tenant Receivables to the Purchaser and cease
all collection activities with respect thereto.
(5) POST-CLOSING RECEIPTS. As also provided in Section 3.6, the Vendor
shall hold all cheques for Tenant Recoveries and Tenant Receivables
that are the Property of the Purchaser that it receives in respect of
the period after the Closing Date in trust for the Purchaser and shall
endorse (without recourse) in favour of the Purchaser and deliver to
the Purchaser all such cheques on Closing or, if received after
Closing, forthwith upon receipt. The Purchaser shall receive and hold
all cheques for Tenant Recoveries and Tenant Receivables which are the
property of the Vendor in trust for the Vendor and shall endorse
(without recourse) in favour of the Vendor and deliver to the Vendor
all such cheques forthwith upon receipt.
(6) INSURANCE. Insurance premiums shall not be adjusted as of the Closing
Date, but insurance shall remain the responsibility of the Vendor
until the Closing Date, and thereafter the Purchaser shall be
responsible for placing its own insurance.
(7) STATEMENT OF ADJUSTMENTS. A statement of adjustments shall be
delivered to the Purchaser by the Vendor at least five (5) Business
Days prior to the Closing Date and shall have annexed to it details of
the calculations used by the Vendor to arrive at all debits and
credits on the statement of adjustments.
(8) PROPERTY TAX REBATES. Notwithstanding any provision to the contrary
contained herein, the Vendor shall retain the right to receive all
property tax/business tax refunds, rebates or credits (the "TAX
REBATES") in connection with the Property with respect to the period
prior to the Closing Date arising in any manner, including pursuant to
realty/business tax appeals and/or re-assessments (initiated prior to
or after the Closing Date) or new legislation or amendments to
existing legislation. Such entitlement of the Vendor is net of
consultant's fees and disbursements relating thereto and any amounts
due to any Tenants of a portion of same. In the event the Purchaser
receives any such Tax Rebates or to the extent it receives a credit
for same, it shall forthwith remit the applicable amount to the
Vendor.
(9) READJUSTMENT. Closing Adjustments shall be readjusted after Closing on
a quarterly basis, provided that the final readjustment of the Closing
Adjustments shall be no later than the first anniversary of the
Closing Date. At least ten (10) Business Days prior to any such
readjustment date, the Purchaser shall provide a statement of all of
readjustments to the Vendor and shall annex to it details of the
calculations used by the Purchaser to arrive at all debits and credits
on such statement of readjustments. Items to be readjusted shall
include realty taxes, Tax Rebates, Tenant Recoveries, Tenant
Receivables, items which were estimated on the statement of
adjustments, incorrect or inaccurate adjustments on the statement of
adjustments.
(10) QUALIFICATION. Notwithstanding anything to the contrary contained
herein, the only Closing Adjustments in connection with Leases shall
be those relating to the Leased Built Space Leases.
3.3 ADDITIONAL ADJUSTMENTS
(1) NEWLY LEASED/COMPLETED SPACE. To the extent any Unleased Built Space
becomes Leased Built Space, where such new Leases have been approved
in accordance with the provisions of this Agreement, or Leased Unbuilt
Space becomes Leased Built Space prior to Closing (the "NEWLY
LEASED/COMPLETED SPACE"), the Base Purchase Price shall be increased
by an amount equal to the Lease NOI in respect of such Newly
Leased/Completed Space, capitalized at a rate of eleven (11%) percent.
(i.e. the Lease NOI divided by .11) less the Tenant Concessions which
are with respect to any period after the Closing Date.
(2) AMC SPACE. To the extent AMC confirms by way of lease amending
agreement or Estoppel Certificate prior to Closing that the Gross
Leasable Area of the AMC Space is greater than the amount shown in the
current Rent Roll for the Property (the "INCREASED AMC SPACE") and
advises as to the rent in connection therewith, the Purchase Price
shall be increased by capitalizing the Lease NOI in respect of such
AMC Increased Space at the rate of eleven (11%) percent (the "AMC
ADDITIONAL ADJUSTMENT") and such increase shall be added to the Base
Purchase Price payable on Closing.
3.4 SPECIAL ADJUSTMENTS
The Base Purchase Price shall be adjusted by the following amounts (the
"ADDITIONAL LEASE ADJUSTMENTS" and the "ADDITIONAL DENSITY ADJUSTMENTS"
respectively), which shall be paid by the Purchaser to the Vendor in accordance
with Section 3.5(1)(d) if, as and when such amounts become payable:
(1) ADDITIONAL LEASE ADJUSTMENTS:
(a) the amount, for each Additional Lease, save and except for any
such Lease which replaces a previous Lease for the same space
with respect to which an Additional Lease Adjustment or
Additional Density Adjustment has been made (each a
"PREVIOUSLY ADJUSTED LEASE"), in respect of which Occupancy did
not occur on or before Closing but in respect of which Occupancy
occurs during the first eighteen (18) months of the Lease-Up
Period, obtained by capitalizing the Lease NOI arising from such
Additional Lease at the rate of eleven (11%) percent (i.e. Lease
NOI divided by .11) and subtracting from such amount (i) the
aggregate of all rent-free periods, rent conversions and
reductions (other than to the extent that such items have been
advanced by the Purchaser pursuant to the terms of this
Agreement) to the Tenant under the applicable Additional Lease
for the period after the applicable Payment Date (collectively,
the "TENANT Concessions"), if any and (ii) the Construction
Advance Adjustment;
(b) the amount, for each Additional Lease, save and except for any
Previously Adjusted Lease, in respect of which Occupancy did not
occur on or before Closing or during the first eighteen (18)
months of the Lease-Up Period but in respect of which Occupancy
occurs during months 19 to 36 inclusive, of the Lease-Up Period,
obtained by capitalizing the Lease NOI arising from such
Additional Lease at a rate of eleven point two (11.2%) percent
(i.e. Lease NOI divided by .112) and subtracting from such amount
the Tenant Concessions, if any, and the Construction Advance
Adjustment;
(c) the amount, for each Additional Lease, save and except for any
Previously Adjusted Lease, in respect of which Occupancy did not
occur on or before Closing or during the first thirty-six (36)
months of the Lease-Up Period but in respect of which Occupancy
occurs during months 37 to 48 inclusive of the Lease-Up Period,
obtained by capitalizing the Lease NOI arising from such
Additional Lease at a rate equal to eleven point four (11.4%)
percent (i.e. Lease NOI divided by .114) and subtracting from
such amount the Tenant Concessions, if any, and the Construction
Advance Adjustment;
(d) the amount, for each Additional Lease, save and except for any
Previously Adjusted Lease, in respect of which Occupancy did not
occur on or before Closing or during the first forty-eight (48)
months of the Lease-Up Period but in respect of which Occupancy
occurs during months 49 to 60 inclusive of the Lease-Up Period,
obtained by capitalizing the Lease NOI arising from such
Additional Lease at a rate equal to eleven point five (11.5%)
percent (i.e. Lease NOI divided by .115) and subtracting
from such amount the Tenant Concessions, if any, and the
Construction Advance Adjustment; and
(e) There shall be no adjustment for any Additional Lease in respect
of which Occupancy occurs after the end of the Lease-Up Period,
subject to Section 5.2(3).
Notwithstanding anything to the contrary contained herein, there
shall be no adjustment to Lease NOI or any Additional Lease
Adjustments or Additional Density Adjustments resulting from: (A)
the difference, if any and howsoever arising, between actual and
estimated amounts or recoveries of operating costs/common area
maintenance charges, property taxes or management fees; (B) any
non-payment of rent, additional rent or any other amounts payable
under such Lease at any point in the term of the Lease; or (C)
any other default, breach, termination or surrender of the Lease
whenever occurring. The foregoing is subject to the Liberty ITM
Guarantee.
(2) ADDITIONAL DENSITY ADJUSTMENTS. The Purchase Price shall be further
adjusted by the amount, for each Additional Density Lease, save and
except for any Previously Adjusted Lease, entered into in respect of
which Occupancy occurs during the Lease-Up Period, obtained by
capitalizing the Lease NOI arising from such Additional Density Lease
at a rate equal to the applicable Capitalization Rate, depending on
when Occupancy occurs, provided that the aggregate of such Additional
Density Adjustments in respect of the Property and the Other Property
Additional Density Adjustments shall not exceed Four Million Three
Hundred Thousand ($4,300,000.00) Dollars. For greater certainty, the
Vendor shall be entitled to complete and receive payment in respect of
Additional Density Leases prior to completing or being paid for
Additional Leases, it being acknowledged that Additional Density Space
may be leased and Occupied prior to the lease-up and Occupancy of all
of the Additional Space.
3.5 PAYMENT OF PURCHASE PRICE AND SPECIAL ADJUSTMENTS
(1) MANNER AND TIMING OF PAYMENT. The Purchase Price shall be paid and
satisfied as follows:
(a) DEPOSIT.
(i) As to the sum of Two Hundred and Fifty Thousand ($250,000)
Dollars (the "INITIAL DEPOSIT"), by cheque or bank draft or
wire transfer payable to the Vendor's Solicitors, in trust,
within two (2) Business Days following the Acceptance Date,
to be credited on the Closing Date on account of the
Purchase Price;
(ii) As to the sum of One Million ($1,000,000) Dollars (the
"SECOND DEPOSIT"), by cheque or bank draft or wire transfer
payable to the Vendor's Solicitors, in trust, within two (2)
Business Days
following the Due Diligence Date, to be credited on the
Closing Date on account of the Purchase Price.
The Initial Deposit and Second Deposit are hereinafter referred
to collectively as the "DEPOSIT" and shall be invested on the
instructions of the Purchaser given at the time such Deposit is
paid, in a daily interest rate trust account, interest bearing
investment certificate or other similar investment vehicle of a
Canadian chartered bank pending the completion or other
termination of this Agreement and the interest accrued thereon
shall be remitted to the Purchaser forthwith after Closing.
(b) NOTE. As to the sum of Eight Million, One Hundred and Thirty
Thousand, Five Hundred and Eighty Two ($8,130,582.00) Dollars ,
the Purchaser shall issue to the Vendor the Note, which shall
immediately be exchanged for the Exchangeable Preference
Securities.
(c) BALANCE OF BASE PURCHASE PRICE. As to the balance, subject to the
Closing Adjustments and Additional Adjustments, (the "CLOSING
PAYMENT") by certified cheque, bank draft or wire transfer on the
Closing Date.
(d) SPECIAL ADJUSTMENTS. On the date (a "PAYMENT DATE") which is 20
Business Days following the date on which a Payment Notice in
respect of an Additional Lease or Additional Density Lease, as
the case may be, is given to the Purchaser, the Purchaser shall
deliver to the Vendor by certified cheque, bank draft or wire
transfer, the Additional Lease Adjustment or Additional Density
Adjustment, as the case may be, less the Construction Advance in
respect of the premises with respect to which such adjustment is
being made, and adjusted for prepaid rent, security deposits,
other prepaid amounts, current rents, Tenant Recoveries and
Tenant Receivables in the same manner as Closing Adjustments were
made in respect of Leases for Leased Built Space on Closing.
(e) AMC ADDITIONAL ADJUSTMENT. To the extent AMC confirms an increase
in the Gross Leaseable Area of the AMC Space in accordance with
Section 3.3 (2) after Closing, the Purchase Price shall be
increased by capitalizing the Lease NOI in respect of such
Increased AMC Space at the rate of eleven (11%) percent and the
Purchaser shall forthwith remit such amount to the Vendor within
10 Business Days following the provision to the Purchaser of such
confirmation (the "AMC ADDITIONAL Adjustment").
(f) INTEREST PAYABLE. If the Purchaser fails to make payment of any
portion of the Purchase Price or any adjustment thereto owing to
the Vendor when required by this Agreement, then without limiting
any of the other rights and remedies available to the Vendor
under this Agreement, the unpaid amount shall bear interest at
the Default Rate calculated from the date such payment was due to
the date such payment is made.
(2) LEASED UNBUILT SPACE AND UNLEASED BUILT SPACE. In respect of the
anticipated Additional Lease Adjustments in connection with the Leased
Unbuilt Space and Unleased Built Space, on or before Closing, the
Purchaser, the Vendor and Vendor's Solicitors shall enter into an
agreement (the "ESCROW AGREEMENT") pursuant to which the Purchaser
shall deliver the sum of Eleven Million, Four Hundred Twenty Two
Thousand, Four Hundred and Thirty Eight ($11,422,438.00) Dollars, in
cash or by way of a letter of credit issued by a Canadian chartered
bank, to be held in escrow by Vendor's Solicitors (the "ESCROW FUND")
as security for the Purchaser's obligations to pay the Additional
Lease Adjustments in respect of the Additional Leases for the Leased
Unbuilt Space and Unleased Built Space. To the extent any Unleased
Unbuilt Space becomes leased prior to Closing, in accordance with the
provisions of this Agreement (the "NEWLY LEASED SPACE"), the Escrow
Fund shall be increased by an amount equal to the Lease NOI in respect
of such Newly Leased Space capitalized at the rate of eleven (11%)
percent (i.e. Lease NOI divided by .11). The Escrow Fund shall be
reduced from time to time as the applicable Additional Lease
Adjustments are made. The Escrow Fund shall be maintained for 12
months following Closing.
(3) EPR INDEMNITY. For greater certainty, the Purchaser's obligation to
pay the AMC Additional Adjustment, Special Adjustments, any amount
payable pursuant to Section 5.2 and the Property Management
Fees shall survive Closing. Furthermore, EPR agrees to indemnify and
save the Vendor harmless from all costs, losses, damages and
liabilities suffered or incurred by the Vendor as a result of the
Purchaser's failure to make any of such adjustments or pay any such
fees as required, but not including any consequential damages, (the
"EPR PAYMENT INDEMNITY", which is also described in Section 6.2 (e)),
which EPR Payment Indemnity shall be embodied in a separate closing
agreement and shall be secured by the Pledge and GP Pledge and the
Default LC, but shall otherwise be non-recourse.
(4) GP INDEMNITY. The general partner of the Limited Partnership hereby
agrees to indemnify and save the Vendor harmless from all costs,
losses, damages and liabilities suffered or incurred by the Vendor as
a result of the Purchaser's or EPR's failure to observe or perform any
of their respective covenants and obligations pursuant to this
Agreement and the Ancillary Agreements, but not including any
consequential damages (the "GP INDEMNITY"), which GP Indemnity shall
be embodied in a separate closing agreement and shall be secured by
the GP Pledge and the Default LC, but shall otherwise be non-recourse.
3.6 POST CLOSING RECEIPTS BY VENDOR
As provided in Section 3.2(5), the Vendor covenants and agrees that, in
respect of all rental cheques and rental receipts received by the Vendor from
any Tenant in respect of the period following the later of (i) Occupancy, and
(ii) the Closing Date, the Vendor shall receive and hold same in trust for the
Purchaser and, at the option of the Purchaser, shall either deposit such
receipts into its bank account and reimburse the Purchaser forthwith in respect
of all such amounts or endorse any rental cheques over to the Purchaser without
recourse and deliver same forthwith to the Purchaser. At the Purchaser's written
request, the Vendor shall provide the Purchaser with reasonable supporting
documentation and data in connection with all such monies. Notwithstanding the
foregoing, until the Vendor has been paid as provided in Section 3.5(1)(d) for
an Additional Lease or Additional Density Lease, it shall be entitled to all
base rent/minimum rent paid by the applicable Tenant in respect of such Lease
(without any deduction for applicable withholding tax), which amount shall be
credited to the applicable Additional Lease Adjustment or Additional Density
Adjustment. Furthermore, until the Vendor has been paid the AMC Additional
Adjustment, it shall be entitled to all base rent/minimum rent in respect of the
Increased AMC Space (without any deduction for applicable withholding tax),
which amount shall be credited to the AMC Additional Adjustment.
3.7 GST
(1) COLLECTION BY VENDOR. Subject to Section 3.7(2), the Purchaser shall
pay all goods and services tax ("GST") applicable to the sale and
transfer of the Purchase Assets to the Vendor on Closing by certified
cheque or bank draft. For the purpose of determining the amount of GST
payable by the Purchaser on Closing, the Vendor shall be entitled to
estimate, acting reasonably, the entire Purchase Price, including all
Additional Adjustments.
(2) EXCEPTION. The Purchaser shall not be required to pay GST to the
Vendor in accordance with Section 3.7(1) if the Purchaser provides the
Vendor on or before the Closing Date with a certificate of the
Purchaser confirming that the Purchaser is registered for the purposes
of the EXCISE TAX ACT (Canada) on the Closing Date and each Payment
Date, that the Purchaser is holding the Property for its own account
and not in trust for or as agent for another party and an indemnity
whereby the Purchaser agrees to indemnify and save harmless the Vendor
from and against any and all losses, costs, damages and liabilities
that may be suffered or incurred by the Vendor as a result of the
Purchaser's failure to register for the purposes of the goods and
services tax imposed under the EXCISE TAX ACT (Canada) or the
Purchaser's failure to perform its obligations under such Act in
connection with the purchase of the Property.
3.8 FEES/COMMISSION
The Purchaser shall be responsible for payment of any fees relating to RBC
Capital Markets Realty Inc. Each party shall be responsible for its own other
fees, costs and expenses, including professional advisory fees, incurred in
connection with this transaction, subject to Section 6.10.
3.9 TIME OF CLOSING PAYMENT
To the extent the Closing Payment is not available to the Vendor for
deposit in its bank in downtown Toronto by 3:00 p.m. on the Closing Date, the
Purchaser shall be responsible for all interest on the Vendor's mortgages that
are being paid out from and including the Closing Date until receipt by the
Vendor of the Closing Payment prior to 3:00 p.m. on a Business Day.
ARTICLE 4
INTERIM PERIOD
4.1 ORDINARY COURSE
(1) COVENANTS AND AGREEMENTS OF VENDOR. The Vendor covenants and agrees
with the Purchaser that during the Interim Period,
(a) the Vendor shall (i) operate the Property in the ordinary course
of business and in substantially the same manner as currently
operated; and (ii) fully maintain, repair and keep the Buildings,
the Improvements, the Fixtures, and the Personal Property in good
condition and repair;
(b) the Vendor shall pay when due all bills and expenses of the
Property;
(c) the Vendor shall not create or permit to be created any liens,
easements or other conditions affecting any portion of the
Property or the uses thereof, without the prior written consent
of Purchaser except to the extent they constitute Permitted
Encumbrances;
(d) from and after the date which is three (3) Business Days prior to
the Due Diligence Date, the Vendor shall not amend, modify or
terminate any Lease, Land Lease or Material Contract, or enter
into any new Lease or Material Contract, or commence or cease any
construction of Improvements without the prior written consent of
the Purchaser;
(e) the Vendor shall not remove any Fixtures from the Lands,
Buildings or Improvements without replacing same with
substantially similar items of equal or greater value and
repairing the damage, if any, to the Property as a result of such
removal.
(2) COVENANTS AND AGREEMENTS OF PURCHASER.
The Purchaser's consent required pursuant to Section 4.1(1) shall not
be unreasonably withheld, conditioned or delayed.
4.2 RISK/EXPROPRIATION
(1) GENERAL. The Purchase Assets shall be at the risk of the Vendor until
Closing. Until Closing, the Vendor shall maintain, at its sole cost
and expense, insurance against fire and other perils and against third
party and rental interruption insurance with respect to the Property
in such amounts as a careful and prudent owner of similar property and
premises would maintain. The Vendor shall cause the Purchaser to be
named as an additional named insured to the extent of its interest in
the Property. All such insurance shall be held for the benefit of the
parties as their interests may appear. If any loss or damage to the
Improvements occurs on or before the Closing Date, the Vendor will
retain an independent expert to estimate the cost of repair and shall
promptly deliver a written notice (the "NOTICE OF LOSS") to the
Purchaser specifying the nature and extent of the loss or damage.
(2) DAMAGE LESS THAN ONE MILLION ($1,000,000.00) DOLLARS. If the estimated
total aggregate of all losses and damage to the Improvements is less
than or equal to One Million ($1,000,000.00) Dollars, the Purchaser
shall have no right to terminate this Agreement pursuant to this
Section and the Purchaser shall complete this Agreement on the Closing
Date, shall be entitled to receive any insurance proceeds in respect
of such loss or damage (including the proceeds of rental interruption
insurance, but only in respect of the period from and after the
Closing Date) and the Vendor shall release its interest in any such
insurance proceeds (other than the proceeds of rental interruption
insurance in respect of the period prior to the Closing Date). In
addition, the Purchase Price shall be reduced by the amount of the
deductible under the Vendor's insurance coverage, if the Vendor has
not already paid the deductible.
(3) DAMAGE MORE THAN ONE MILLION ($1,000,000.00) DOLLARS. If the estimated
total aggregate of all losses and damage to the Improvements is more
than One Million ($1,000,000.00) Dollars, the Purchaser may elect to
terminate this Agreement by giving notice of termination to the Vendor
on or before the 5th Business Day following delivery of the Notice of
Loss, in which case this Agreement shall be terminated, be null and
void and of no further force or effect whatsoever and the Deposit,
together with all interest accrued thereon, shall be returned to the
Purchaser forthwith without deduction. If the Vendor fails to deliver
a Notice of Loss disclosing losses or damages of more than One Million
($1,000,000.00) Dollars within sufficient time to enable the Purchaser
to have five (5) Business Days within which to respond prior to the
Closing Date, the Closing Date shall be extended accordingly. If the
Purchaser does not elect to terminate this
Agreement, then the Purchaser shall complete this Agreement on the
Closing Date, the Purchaser shall receive any insurance proceeds in
respect of the Property (including the proceeds of rental interruption
insurance, but only in respect of the period from and after the
Closing Date) and the Vendor shall release its interest in any
insurance proceeds in respect of the Property (other than the proceeds
of rental interruption insurance in respect of the period prior to the
Closing Date). In addition, the Purchase Price shall be reduced by the
amount of the deductible under the Vendor's insurance coverage, if the
Vendor has not already paid the deductible.
(4) EXPROPRIATION. If the Property or any part thereof is condemned or
expropriated (other than an expropriation for a road widening or
similar purpose which would not have a material adverse effect on the
Property) by any public or other lawful authority on or before the
Closing Date, the Purchaser shall have the right to (i) elect by
notice in writing to take the damages awarded or compensation, as the
case may be, and complete the transaction contemplated by this
Agreement, or (ii) terminate this Agreement by notice in writing to
the Vendor, in which latter case the Purchaser shall be entitled to
the return, with interest and without deduction, of the Deposit. If
part of the Property is expropriated for a road widening or similar
purpose, which would not have a material adverse effect on the
Property, the Purchaser shall be required to complete the transaction
and the Vendor shall assign to it any damages awarded or compensation,
as the case may be, in connection therewith.
4.3 CONTRACTS/LEASE AGREEMENTS
On or before the Due Diligence Date, the Purchaser shall advise the Vendor
in writing (i) as to which of the Contracts (excluding the Permitted
Encumbrances) the Purchaser wishes to assume on Closing, and (ii) whether it
approves the Vendor's standard forms of agreement to lease and lease.
Furthermore, the Purchaser agrees to assume the Mandatory Assumed Contracts on
Closing, subject to the condition benefiting the Purchaser in Section 8.2 (a).
4.4 TITLE
The Purchaser shall be allowed until the Due Diligence Date to investigate
the Vendor's title to the Property, to satisfy itself that there are no
outstanding municipal work orders or deficiency notices affecting the Property,
that its present use may be lawfully continued and that the Buildings may be
insured against risk of fire and to submit any valid objections to title. If
within that time any objection to title is made in writing to the Vendor, which
the Vendor shall be unwilling or unable to remove and which the Purchaser will
not waive, this
Agreement shall, notwithstanding any intermediate acts or negotiations in
respect of such objections, be null and void and the Deposit and interest
accrued thereon shall be returned to the Purchaser by the Vendor forthwith
without deduction. Except for any objections to title so made on or before the
Due Diligence Date and except for any objection going to the root of title, the
Purchaser shall be deemed to have accepted the Vendor's title to the Property,
provided that the Purchaser shall retain the right to make objections to title
and shall not be deemed to have accepted the Vendor's title to the Property to
the extent that any document or instrument is registered against title to the
Property after the Due Diligence Date and before the Closing Date. Except as
otherwise provided herein, the Vendor agrees, on or before the Closing Date, to
discharge at its own sole cost and expense, any liens, charges or encumbrances
affecting title to the Property other than the Permitted Encumbrances, subject
to Section 9.1(m). Notwithstanding the foregoing, the Purchaser shall satisfy
itself in all respects with respect to all of the Permitted Encumbrances by the
Due Diligence Date. The Purchaser shall not request of the Vendor that it
provide or require the Vendor to provide evidence that the Permitted
Encumbrances are in good standing or that the terms of same have been complied
with or that they will not adversely affect the Purchaser's intended use or
ownership of the Property.
The Purchaser covenants to assume the obligations and responsibilities of
the Vendor under the Permitted Encumbrances and pursuant to the other
unregistered development, site plan, subdivision and servicing agreements that
have been provided by the Vendor to the Purchaser prior to the Due Diligence
Date (the "UNREGISTERED DEVELOPMENT/SERVICING AGREEMENTS") and to execute such
documentation as may be required thereunder, including without limitation,
assumption agreements (as contemplated thereunder) with parties thereto.
Furthermore, the Purchaser shall indemnify and save the Vendor harmless from all
costs, losses, damages and liability in connection with such Permitted
Encumbrances and Unregistered Development/Servicing Agreements, from and after
Closing.
The Purchaser covenants to advise the Vendor in writing at least five (5)
Business Days prior to Closing as to the particulars of all instruments that it
proposes to register on Closing, in order to enable the Vendor to obtain such
consents as may be required pursuant to any applicable inhibiting orders.
4.5 APPROVALS OF THE PURCHASER
(1) From the 3rd Business Day prior to the Due Diligence Date until
Closing, the Purchaser shall have the right to approve proposed Leases
in respect of the Unleased Built Space, Unleased Unbuilt Space and
Additional Density Space, such approval not to be unreasonably
withheld. If the Purchaser does not notify the Vendor of its decision
to approve or disapprove a Lease Proposal within seven (7) Business
Days following receipt of a Lease Proposal from the Vendor, the
Purchaser shall be deemed to have approved such Lease Proposal,
provided that the Vendor shall have sent the Purchaser an additional
notice with respect to such Lease Proposal five (5) days following
receipt of a Lease Proposal if the Purchaser has not yet responded
prior to that date.
(2) Notwithstanding anything to the contrary contained herein, the
Purchaser shall be deemed to be acting unreasonably if it withholds
approval for a Lease whose Tenant is of similar stature, reputation
and financial worth as other existing Tenants at the Property and the
Other Properties and whose use is consistent with the
retail/entertainment nature of the Property and the Other Properties,
and whose terms are consistent with then prevailing Lease terms for
other Tenants at the Property provided the prevailing Lease terms do
not include any reverse steps in minimum or base rent over the term of
the Lease.
4.6 LEASE PROPOSAL
All proposals for new Leases or amendments or modifications to existing
Leases submitted to the Purchaser by the Vendor shall be in writing and contain
complete and accurate information about the proposed Lease (or Lease
modification), and include a draft agreement to lease or lease or amending
agreement, full information about the Tenant including its financial position,
the Vendor's calculation of the Lease NOI (or revised Lease NOI) for such Lease
based on the proposed area of the leased premises and otherwise calculated in
accordance with the provisions of this Agreement, information relating to the
matters set out in Section 4.5 (2) and details about any proposed construction
of Improvements by the Vendor including a copy of the Plans showing the
approximate location and size of the premises, details about all tenant
inducements and landlord's work and tenant's work and a budget, (collectively,
called a "LEASE PROPOSAL").
ARTICLE 5
LEASE-UP PERIOD
5.1 VENDOR'S OBLIGATIONS
(1) During the Lease-up Period, the Vendor shall be responsible for
leasing the Unleased Built Space, the Unleased Unbuilt Space and the
Additional Density Space (for which the Vendor is entitled to receive
the Additional Density Adjustments) to suitable Tenants considering
the nature of the Property and the existing Tenants.
(2) With respect to any proposed Lease of the Unleased Built Space, the
Unleased Unbuilt Space and the Additional Density Space (for which the
Vendor is entitled to receive the Additional Density Adjustments), the
Vendor shall submit a Lease Proposal to the Purchaser for its approval
in respect of which the provisions of Section 4.5(2) apply, MUTATIS
MUTANDIS. The parties agree that it is in the best interests of each
party that they consult on a regular basis while a Lease is being
negotiated, and agree to respond to enquiries and requests for
information as soon as reasonably possible. The Purchaser agrees to
execute all Leases or amendments thereto promptly following its
approval of the applicable Lease Proposal.
(3) Subject to its right to delegate such function as provided herein, the
Vendor is hereby granted and shall have the exclusive authority to
carry out the foregoing leasing during the Lease-Up Period. In order
to effect same, within regular business hours it shall be provided
with complete and unimpeded access to the Property, all Leases and all
information and records of the Purchaser pertaining to the Property as
it reasonably requires, subject to the right of the Tenants to quiet
possession. For greater certainty, the Vendor shall be entitled to
retain leasing agents and brokers in connection with the foregoing.
5.2 PURCHASER'S APPROVAL; ARBITRATION
(1) After receipt of a complete Lease Proposal from the Vendor, the
Purchaser shall, within seven (7) Business Days, notify the Vendor of
its decision to approve or disapprove the Lease Proposal, failure to
notify being deemed approval, provided that the Vendor shall have sent
to the Purchaser an additional notice with respect to such Lease
Proposal five (5) days following receipt of the Lease Proposal if the
Purchaser has not yet responded prior to that date.
(2)
(a) Any dispute regarding the approval of a Lease Proposal between
the Vendor and the Purchaser shall be settled pursuant to Section
10.1(3).
(b) If the result of such arbitration is that the Purchaser was
unreasonable in failing to approve the Lease Proposal, and the
Lease Proposal is not then accepted by the Purchaser and the
prospective tenant remains committed to the transaction
contemplated by the Lease Proposal, the Purchaser, in its sole
discretion, may elect, within seven (7) days following the
decision, to make a cash payment to the Vendor equal in
amount to the Additional Lease Adjustment or Additional Density
Adjustment which would have been payable with respect to such
proposed Lease net of the lesser of (the "ESTIMATED CONSTRUCTION
COSTS"): (a) the amount, if any, that would have been required to
complete such premises; and (b) One Hundred ($100) dollars per
square foot of Gross Leaseable Area of such premises. For the
purpose of clarification, such Additional Lease Adjustment or
Additional Density Adjustment which would have been payable shall
be calculated by capitalizing the Lease NOI arising from such
Lease Proposal by the Capitalization Rate applicable to the date
upon which such prospective tenant would have taken Occupancy and
subtracting therefrom any Tenant Concessions and the Estimated
Construction Costs.
(c) If the result of such arbitration is that the Purchaser was
unreasonable in failing to approve the Lease Proposal and the
prospective tenant is no longer interested in completing the
transaction contemplated in the Lease Proposal, primarily as a
result of the delay caused by the Purchaser's failure to approve
the Lease Proposal and the arbitration process, the Purchaser
shall, within seven (7) days following the decision, make a cash
payment to the Vendor in the amount and calculated as set forth
in Section 5.2(2)(b).
(d) If the Purchaser elects or is obliged to make such cash payment
as provided in Section 5.2(2)(b) or (c), the Vendor shall not
proceed with the proposed Lease and thereafter shall continue to
use reasonable commercial efforts to lease the Gross Leasable
Area referred to therein, provided that there shall be no further
payment to the Vendor in respect of any subsequent Lease of such
premises.
(3) Notwithstanding any provision contained in this Agreement, if a Lease
is entered into by the Vendor prior to Closing or is entered into or
is required to be entered into (based on the applicable provisions of
this Agreement) by the Purchaser during the Lease-Up Period, but
Occupancy thereunder does not occur until after the Lease-Up Period,
such Occupancy shall be deemed for all purposes of this Agreement to
have occurred within the Lease-Up Period and, notwithstanding the
expiry of the Lease-Up Period, the Vendor shall continue to have
access to the Property following the expiry of the Lease-Up Period for
the purpose of completing such work on the Property required to obtain
such Occupancy and the Purchaser shall pay the Additional Lease
Adjustment or Additional Density Adjustment, as the case may
be, due to the Vendor hereunder upon Occupancy under such Lease. No
Lease Proposal may be submitted to the Purchaser later than seven (7)
Business Days prior to the end of the Lease-Up Period, and any such
Lease that is approved by the Purchaser shall be deemed to have been
entered into during the Lease-Up Period. Moreover, if the Purchaser
does not approve such a Lease Proposal and it is ultimately determined
by arbitration that the Purchaser was unreasonable in failing to
approve such Lease Proposal and the Purchaser subsequently accepts
such Lease Proposal, the Purchaser shall be deemed to have entered
into the Lease in connection therewith during the Lease-Up Period. The
right of the Purchaser to make a cash payment as provided in Section
5.2(2) shall also apply in these circumstances.
5.3 FORM OF LEASE AND EXECUTION
During the Lease-Up Period, if the Purchaser has approved such forms, as
provided in Section 4.3, the Purchaser shall continue to use the Vendor's
standard forms of agreement to lease, without requiring that long form leases be
entered into except in cases where a specific Tenant requires that its standard
form of lease be used, or it may present a modified form of agreement to lease
or lease for use during this period. Regardless of which form of Lease is used,
non-material provisions may be amended or modified by the Vendor, acting
reasonably and as would a prudent landlord, provided that the Lease must comply
with the Lease Proposal as approved by the Purchaser. No other amendments or
modifications shall be made without the prior approval of the Purchaser, not to
be unreasonably withheld, conditioned or delayed.
5.4 ADJUSTMENTS TO IMPROVEMENTS
The Vendor may at any time during the Lease-Up Period propose to the
Purchaser alterations to the configuration, size and location of the Purchase
Price Space, so as to facilitate leasing potential or accommodate Tenants,
providing the Purchaser with full details with respect to such alterations and
their benefit to the Property as a whole. If the Purchaser does not notify the
Vendor of its decision to approve or disapprove such a proposal within ten (10)
Business Days following receipt thereof from the Vendor, the Purchaser shall be
deemed to have approved such proposal. The Purchaser shall not unreasonably
withhold or delay such approval.
5.5 PLANS
(1) The Vendor and the Purchaser acknowledge that the Plans and Leasing
Plan are not final or complete and that the Vendor shall supplement or
make any changes or revisions to same along with any site plan
amendments, zoning or official plan amendments or any
other changes that require Municipal Approvals, if any, that may be
required in connection therewith (the "ZONING AMENDMENTS"), as it may
determine are necessary from time to time, subject to the prior
approval of the Purchaser, acting reasonably and without delay. If the
Purchaser does not respond within 10 Business Days to any written
request by the Vendor to approve additional plans and specifications,
or any change or revision to the Plans or Zoning Amendments (any such
request to include copies of such additional plans and specification,
revisions or changes), then the Purchaser shall be deemed to have
approved such additional plans and specifications, revisions or
changes to the Plans or Zoning Amendments, as the case may be,
provided that the Purchaser shall consent to any Zoning Amendments or
change to the Plans which are necessary to satisfy the requirements of
any Governmental Authority or Applicable Law; or comply with the terms
of any Lease approved by the Purchaser as provided in this Agreement.
(2) Notwithstanding the foregoing, the Vendor shall not make any changes
to the Plans or seek Zoning Amendments which materially and adversely
affect the overall design and quality of the Improvements or which
adversely affect the value of the Property.
5.6 CONSTRUCTION OF ADDITIONAL IMPROVEMENTS
(1) Upon acceptance by the Purchaser of a Lease Proposal, the Vendor shall
construct or cause to be constructed the Additional Improvements
described in the approved Lease Proposal in a good and workmanlike
manner in compliance with the Plans for such Additional Improvements
and Applicable Law. Subject to the foregoing, the Vendor covenants to
use its commercially reasonable efforts to cause the Additional
Improvements to be Substantially Completed by the end of the Lease-Up
Period. For greater certainty, the Vendor shall not be required to
construct Additional Improvements unless the Purchaser has first
entered into Additional Leases or Additional Density Leases in respect
thereof.
(2) The Vendor shall not commence construction of any portion of the
Additional Improvements (other than the footings in place as of the
date of this Agreement), or any component thereof, prior to obtaining
the Purchaser's consent to the applicable Lease Proposal and all
Municipal Approvals for such portion or component of the Additional
Improvements.
5.7 MUNICIPAL APPROVALS
The Purchaser agrees to co-operate with the Vendor, at the sole cost and
expense of the Vendor, in obtaining all Municipal Approvals required for the
construction of the Additional Improvements and agrees to execute and deliver,
all such applications and other documentation as may be necessary for the
Purchaser to execute and deliver to obtain such Municipal Approvals or to obtain
any requisite Zoning Amendments.
5.8 CONSTRUCTION ADVANCE
(1) The Purchaser shall advance funds to the Vendor from time to time as
requested by the Vendor during the Lease-Up period to fund the
Additional Improvements, including, without limitation, all related
tenant improvements, tenant inducements, tenant allowances, site
works, servicing costs, levies, provision of letters of credit and
other security and development charges, costs to obtain permits and
Municipal Approvals, professional fees, and the costs of the Vendor
pursuant to Section 5.9 by way of monthly payments pursuant to written
requests (each a "DRAW REQUEST") which shall include particulars of
the amount requested to be advanced, together with such back-up as is
reasonably required by the Purchaser to support the request, including
an architect's certificate that confirms the construction contract
price, value of work in place and cost to complete, and, in the case
of the final Draw Request with respect to any Additional Improvements,
a copy of the relevant Payment Notice. Provided that all Draw Request
requirements are satisfied, and a Draw Request is submitted to the
Purchaser by the last day of a month, the Purchaser shall, by the 15th
day of the following month, deliver the funds requested in such Draw
Request to the Vendor. The Vendor will not make a Draw Request until
the last week in any month. All advances shall be subject to
compliance with all applicable CONSTRUCTION LIEN ACT (Ontario)
requirements, including compliance with holdback requirements. To the
extent advances are required to complete any particular Building and
related amenities, it shall be a condition of the advance that
Lease(s) be entered into for not less than sixty-five (65%) percent of
the Gross Leaseable Area of such Building. The foregoing sixty-five
(65%) percent threshold shall not be applicable to space that is
currently under construction.
(2) With respect to the construction of the Additional Improvements, the
Vendor shall be solely responsible for performing, observing and
otherwise complying with all of its applicable obligations hereunder,
all sub-contracts it enters into, the Municipal Approvals and
Applicable Laws all in connection with the completion of the
Additional Improvements and shall indemnify and save the Purchaser
harmless with respect to all claims, losses, damages, costs, actions
and proceedings that arise from or relate to any such obligations,
including in connection with any construction liens that may be
registered against the Property in connection therewith. Without
limiting the generality of the foregoing, the Vendor shall pay when
due all amounts owing to its contractors and consultants in connection
with the construction of such Improvements, subject at all times to
compliance with the CONSTRUCTION LIEN ACT (Ontario), and subject to
the Purchaser funding the Construction Advance.
(3) The Vendor shall use its reasonable commercial efforts to obtain
warranties and guarantees from its contractors in respect of the
Additional Improvements (the "WARRANTIES") comparable to the
warranties and guarantees that it has obtained with respect to the
Leased Built Space, and, upon Substantial Completion of any Additional
Improvements, shall either cause the Warranties obtained with respect
to such Additional Improvements to be given directly to the Purchaser
or shall assign its interest in such Warranties to the Purchaser.
(4) The Vendor shall, at its own expense, comply with all work orders or
other orders relating to the Additional Improvements (excluding any
such work orders which are a Tenant's responsibility pursuant to any
Lease) which are issued and outstanding at any time during the
Lease-Up Period from any Governmental Authority. The Vendor shall use
its reasonable commercial efforts to cause Tenants to comply with any
work orders or other orders relating to any work performed by a Tenant
or which are otherwise a Tenant's responsibility pursuant to any
Lease.
(5) Notwithstanding any other provision hereof, in no event shall the
aggregate of the outstanding Construction Advance with respect to the
Property and Other Properties at any point in time exceed Twenty-Five
Million ($25,000,000.00) Dollars.
(6) The Purchaser shall advance monies to the Vendor on Closing in respect
of costs incurred by the Vendor prior to the Due Diligence Date in
respect of certain Leased Unbuilt Space and Unleased Built Space, in
an amount agreed to by the parties prior to Closing.
(7) Each applicable component of the outstanding Construction Advance
shall be repaid out of the applicable Lease Adjustments or Additional
Density Adjustments, as the case may be, referable to the
corresponding Improvements that have been completed. To the extent
any Improvements have been constructed by the Vendor that relate to
premises for which: (i) a Lease Proposal has not been submitted to the
Purchaser within the Lease-Up Period; or (ii) a Lease Proposal has
been submitted to the Purchaser but in respect of which a Tenant has
not taken Occupancy during the Lease-Up Period (the "UNOCCUPIED
SPACE"), the Construction Advance that has been made to the Vendor in
respect of such Improvements, together with that portion of other
Construction Advances that have been made with respect to landscaping,
parking areas, roads, drainage, utilities, site servicing, site works
and other so-called "infrastructure" improvements reasonably allocated
to such Unoccupied Space, shall be considered fully repaid and no
deduction in respect thereof shall be made to any monies paid or owing
to the Vendor. The Construction Advance Adjustment with respect to
such amounts shall be calculated to and paid by the Vendor at the end
of the Lease-Up Period.
(8) In order to effect the foregoing construction function, during regular
business hours, the Vendor shall be provided with complete and
unimpeded access to the Property, all Leases and all information and
records of the Purchaser pertaining to the Property as it reasonably
requires, such rights subject to the rights of the Tenants to quiet
possession and the ability of customers to access the Property and
utilize the parking areas. For greater certainty, the Vendor shall be
entitled to retain construction managers in connection with the
foregoing.
(9) EPR agrees to indemnify and save the Vendor harmless from all costs,
losses, damages and liabilities, but not including any consequential
damages, suffered or incurred by the Vendor as a result of the
Purchaser's failure to make any Construction Advance as contemplated
by this Agreement (the "EPR CONSTRUCTION INDEMNITY"), which EPR
Construction Indemnity shall be embodied in a separate closing
agreement.
5.9 ITEMS TO BE PAID BY THE VENDOR
The Vendor shall be responsible for and pay when due (subject to receiving
a Construction Advance pursuant to the terms of this Agreement, where
applicable), the following, only in connection with the Leased Built Space
Leases, Additional Leases and Additional Density Leases in respect of which the
Vendor is paid the Lease Adjustments and Additional Density Adjustments:
(a) REAL ESTATE OR LEASING COMMISSIONS. Any real estate or leasing
commissions in respect of the applicable Leases (other than those
payable on or as a result of any rights of renewal or
expansion options under any of the Leases exercised after the
initial term of such Lease, which shall be the responsibility of
the Purchaser);
(b) TENANT INDUCEMENTS AND TENANT ALLOWANCES. Any tenant inducements
or tenant allowances payable under the applicable Leases (but
excluding those payable on or as a result of any rights of
renewal or expansion options under any of the applicable Leases
exercised after the initial term of such Lease, which shall be
the responsibility of the Purchaser);
(c) LEASE TAKE-OVER COSTS. Any costs and expenses of any lease
take-over, assignment, assumption or other similar commitments to
Tenants or to third parties required pursuant to the applicable
Leases;
(d) LANDLORD'S WORK. The costs and expenses of any landlord's work or
improvements to rentable or rental space in the Improvements
required and arising pursuant to the applicable Leases (other
than those payable on, or as a result of any rights of renewal or
expansion options under any of the applicable Leases exercised
after the initial term of such applicable Lease, which shall be
the responsibility of the Purchaser); and
(e) CONSTRUCTION COSTS. All costs and expenses incurred by the Vendor
in respect of the construction of the applicable Improvements
prior to Closing and during the Lease-Up Period in respect of the
Leased Built Space Leases, Additional Leases and Additional
Density Leases for which the Vendor has been paid the Leasing
Adjustments and Additional Density Adjustments.
To the extent the foregoing items set out in paragraphs (a) to (e)
relate to Leased Built Space Leases, the Vendor shall be responsible
for and pay same on or before Closing. To the extent the foregoing
costs relate to Additional Leases or Additional Density Leases, they
shall be funded by the Purchaser as a Construction Advance pursuant to
the terms of this Agreement.
For greater certainty, subject to the provisions of the Liberty ITM
Guarantee, the Vendor shall not be responsible for payment of any of
the foregoing costs in connection with Leases that replace the
Additional Leases or Additional Density Leases in respect of which the
Vendor has been paid the applicable Additional Lease Adjustments and
Additional Density Adjustments or in connection with Leases that
replace any of the Leased Built Space Leases, nor shall the Vendor be
responsible for any of the foregoing costs beyond the Lease-Up Period,
unless extended as provided herein.
5.10 TENANT IMPROVEMENTS AND LANDLORD'S WORK
Notwithstanding any other provision of this Agreement, the construction of
any tenant's improvements or landlord's work under any Additional Lease or
Additional Density Lease approved by the Purchaser under this Agreement shall be
governed exclusively by the terms of such Lease. The Vendor shall exercise any
rights of approval under such Leases with respect to material issues (including,
without limitation, signage and storefront design) only with the prior approval
of the Purchaser and shall exercise any rights of approval under such Leases
with respect to nonmaterial issues as would a prudent owner of comparable
property, acting reasonably. If the Purchaser does not respond within seven (7)
Business Days to any written request by the Vendor to approve the proposed
exercise by the Vendor of any right of approval under a Lease, then the
Purchaser shall be deemed to have approved such exercise by the Vendor, provided
that the Vendor shall have sent the Purchaser an additional notice with respect
to such request five (5) days following receipt of such request if the Purchaser
has not responded prior to that date.
5.11 DELEGATION OF DUTIES
The Vendor shall be permitted to delegate its obligations and duties under
this Article 5 to the Property Manager or PenEquity or to such other party with
similar experience and expertise, provided that such alternative party shall be
subject to the approval of the Purchaser, which approval shall not be
unreasonably withheld or delayed.
5.12 FORCE MAJEURE/ACTS OR OMISSIONS OF PURCHASER
Notwithstanding anything in this Agreement, during the Lease-Up Period, if
the Vendor or the Property Manager is bona fide delayed or hindered in or
prevented from completing its leasing or construction activities by reason of:
strikes or labour troubles; inability to procure materials or services; power
failure; restrictive governmental laws or regulations; riots; insurrection;
sabotage; rebellion; war; act of God; or other reason whether of a like nature
or not which is not the fault or within the reasonable control of the Vendor or
the Property Manager, then the performance of that term, covenant or act is
excused for the period of the delay and the time for performing that term,
covenant or act will be extended accordingly, including, without limitation, the
Lease-Up Period or any applicable period within the Lease-Up Period. The same
shall apply, mutatis mutandis, to any of such delays experienced by the Vendor
or the Property Manager that are caused by the acts or omissions of the
Purchaser, EPR, or those for whom they are at law responsible. In
no event shall the operation of the foregoing with respect to a single force
majeure event or a Purchaser/EPR caused delay extend the applicable period by
more than one year.
ARTICLE 6
COVENANTS
6.1 INSURANCE AFTER CLOSING
(1) PURCHASER'S INSURANCE. After Closing and until the end of the Lease-Up
Period, the Purchaser shall maintain, at its sole cost and expense,
insurance against fire and other perils and against third party
liability and rental interruption insurance with respect to the
Property in such amounts as a careful and prudent owner of similar
property and premises would maintain or as the Purchaser's mortgagee
shall require.
(2) VENDOR'S INSURANCE. Notwithstanding Section 6.1(1), after Closing and
until the end of the Lease-Up Period, the Vendor shall maintain, at
its sole cost and expense, builders all-risk insurance and third party
liability insurance with respect to its construction and other
activities in connection with and on the Property in such amounts as a
careful and prudent owner of similar property and premises would
maintain, or as the Purchaser's mortgagee shall require. The Vendor
shall cause the Purchaser to be named as an additional named insured
on such policies.
(3) MINIMUM LIABILITY COVERAGE. In no event shall the liability coverage
be less than two million dollars ($2,000,000.00).
6.2 PROPERTY MANAGEMENT AGREEMENT
The Property Manager shall be retained by the Purchaser to act as property
manager during the Lease-Up Period in accordance with the provisions of the
Property Management Agreement. The terms of the Property Management Agreement
shall be agreed upon by the Vendor and the Property Manager prior to the Due
Diligence Date and shall include provisions giving effect to the following:
(a) PROPERTY MANAGER DUTIES AND FEES. The Property Manager shall
carry out typical property management and administration duties
including (i) preparing an annual budget for approval by the
Purchaser, (ii) leasing duties in respect of any re-leasing of
the Purchase Price Space (other than the initial replacement
leasing for Liberty ITM Tenants who have been
terminated or who have vacated, which shall be carried out by the
Vendor) and leasing of any space beyond the Purchase Price Space;
(iii) construction management in respect of any Improvements
constructed in connection with re-leasing of the Purchase Price
Space (other than in connection with the initial replacement
leasing for Liberty ITM Tenants who have been terminated or who
have vacated, which shall be carried out by the Vendor) and
leasing of any space beyond the Purchase Price Space (which
construction management duties may be subcontracted to parties
meeting criteria to be established in the Property Management
Agreement); and (iv) general lease administration. In addition,
the Property Manager shall work with the Purchaser to formulate
an operating budget for the Property. It shall be paid fees for
each of the foregoing in accordance with the fee schedule set out
in the Property Management Agreement (the "PROPERTY MANAGEMENT
FEES").
(b) TERMINATION. The Purchaser shall be entitled to terminate the
Property Management Agreement at any time during the Lease-Up
Period upon the occurrence of a Material Default (as defined in
the Property Management Agreement) or an Event of Insolvency in
relation to the Property Manager, in which event the Purchaser
shall be entitled to damages assessed by an Arbitrator pursuant
to the expedited arbitration process contemplated by Article
10.1(3), as the quantum that would be reasonably suffered or
incurred by the Purchaser as a result of Material Default. The
Vendor shall indemnify the Purchaser for the payment of such
damages which indemnity (the "PROPERTY MANAGEMENT INDEMNITY")
shall include provisions with respect to such damages being
satisfied by way of a reduction in the number of Exchangeable
Preference Securities held by the Vendor (based on their face
value on the date issued). To the extent that the Vendor's
liability cannot be so satisfied, the Purchaser's recourse
against the Vendor shall not be limited, however, the Vendor
shall in no event be liable for consequential damages.
Notwithstanding the foregoing, in the case of an Event of
Insolvency in relation to the Property Manager, the Purchaser
shall permit the rights and obligations of the Property Manager
under the Property Management Agreement to be assigned to/assumed
by an entity controlled by David Johnston and Glenn Miller,
subject to the consent of the Purchaser's mortgagee(s) and to the
Purchaser's consent, which consent shall not be unreasonably
withheld or delayed. The parties agree that the existence of the
Trademark Licence
shall not be affected by the termination or assignment of the
Property Management Agreement.
(c) INSURANCE. So long as the Property Management Agreement is in
force and effect, the Purchaser shall cause the Property Manager
to be named as an additional insured on the third party liability
insurance carried by the Vendor as required herein.
(d) SUBCONTRACTING. The Purchaser acknowledges that the Property
Manager shall be entitled to subcontract its obligations under
the Property Management Agreement, provided the Property Manager
maintains overall supervisory responsibility.
(e) EPR INDEMNITY. EPR agrees to indemnify and save the Vendor and
the Property Manager harmless from all costs, losses, damages and
liabilities suffered or incurred by the Vendor or Property
Manager as a result of the Purchaser's failure to pay the
Property Management Fees as required, as part of the EPR Payment
Indemnity (which is also described in Section 3.5 (3)), but not
including any consequential damages, which EPR Payment Indemnity
shall be embodied in a separate closing agreement and shall be,
inter alia, secured by the Pledge and GP Pledge and the Default
LC, but shall otherwise be non-recourse.
(f) SECTION 216(4) TAX ELECTION. The Property Manager shall act
reasonably and do all things necessary as required by the
Purchaser, including delivering tax forms and/or tax elections,
in order for the Purchaser to be able to benefit from the
optional method of payment under subsection 216(4) of the INCOME
TAX ACT.
6.3 COVENANTS BY THE VENDOR
The Vendor covenants:
(a) to provide to the Purchaser, on Closing, title to the Purchase
Assets on Closing free and clear of all encumbrances other than
Permitted Encumbrances and to discharge from title to the
Purchase Assets on or before Closing all existing mortgages and
other encumbrances which are not Permitted Encumbrances;
(b) if any facts or information become known to the Vendor prior to
Closing which constitute a breach of or otherwise materially
affect the representations and warranties of the Vendor contained
in this Agreement to the adverse position of the
Purchaser, the Vendor will immediately communicate such facts or
information to the Purchaser;
(c) the Vendor shall use its reasonable commercial efforts to cause
Tenants to comply with any work orders or other orders relating
to any work performed by a Tenant or which are otherwise a
Tenant's responsibility pursuant to any Lease; and
(d) the Vendor shall, at its own expense, comply with all work orders
or other orders by a Governmental Authority relating to the
Property for work done prior to Closing (excluding any such work
orders which are a Tenant's responsibility pursuant to any
Lease), whether such orders are issued prior to or after the
Closing Date.
6.4 INTENTIONALLY DELETED
6.5 SERVICING OBLIGATIONS
The Purchaser acknowledges that there are certain outstanding servicing
obligations in connection with the Property (the "EXISTING SERVICING
OBLIGATIONS") in respect of which the Vendor has provided letters of credit to
certain Governmental Authorities (the "EXISTING LCS"). Subject to the provisions
hereof, the Purchaser shall assume the Existing Servicing Obligations and shall
deliver to the applicable Governmental Authorities replacement letters of credit
pursuant to the requirements of such Governmental Authorities (the "REPLACEMENT
LCS") in exchange for the Existing LCs. In order to assure that the Replacement
LCs are accepted by the applicable Governmental Authorities and that the
Existing LCs are released on Closing, the Parties shall co-operate in submitting
draft Replacement LCs to the applicable Governmental Authorities no later than
seven (7) days prior to Closing, along with a joint request by the Purchaser and
Vendor that such Replacement LCs be accepted and that the Existing LCs be
released on Closing; and following up as necessary with the applicable
Governmental Authorities until Closing to effect the foregoing.
If despite such efforts, the foregoing Governmental Authorities do not
accept the Replacement LCs and release the Existing LCs on Closing, the
Purchaser shall provide security/cash to the issuer of the Existing LCs to
permit the Vendor to obtain a release of its security posted for same. In such
case, the Purchaser agrees to pay all fees and charges in connection with the
Existing LCs and to indemnify and save the Vendor harmless in connection with
same until the Existing LCs are released.
The Purchaser shall be responsible for all costs and charges relating to
the Replacement LCs, except to the extent of the pro rata portion of such costs
and charges relating to that portion of the Replacement LCs for servicing work
that is required and has not been completed in connection with the Leased Built
Space.
In respect of ongoing and new development of the Property, in connection
with Additional Improvements, that is carried out by the Vendor following
Closing and during the Lease-Up Period, to the extent additional letters of
credit or other forms of security are required by any Governmental Authorities
(the "ADDITIONAL LCS"), the Purchaser shall provide same but the Vendor shall be
responsible for the fees and charges in connection therewith during the Lease-Up
Period, which amounts shall be included in the Construction Advance for the
Lease or Leases to which such Additional LCs relate.
The Vendor hereby agrees to indemnify and save harmless the Purchaser from
and against any and all claims, damages, losses and liabilities that may be
suffered or incurred by the Purchaser during the Lease-Up Period as a result of
the Additional LCs being called upon in whole or in part, unless resulting from
the default of the Purchaser or EPR under this Agreement or any Ancillary
Agreements.
Notwithstanding anything to the contrary contained herein, following expiry
of the Lease-Up Period, the Purchaser shall be solely responsible for all costs
and expenses of maintaining the Additional LCs, Replacement LCs and Existing
LCs, as the case may be. Furthermore, to the extent any Existing LCs remain
outstanding, it shall cause same to be released.
EPR agrees to indemnify and save the Vendor harmless from all costs,
losses, damages and liabilities, but not including any consequential damages,
suffered or incurred by the Vendor as a result of the Purchaser's failure to
carry out its covenants and obligations pursuant to this Section 6.5 (the "EPR
SERVICING INDEMNITY"), which EPR Servicing Indemnity shall be embodied in a
separate closing agreement..
6.6 COVENANT NOT TO ENCUMBER
The Purchaser covenants not to encumber the Property or the Other
Properties, beyond (i) an aggregate amount of up to sixty-five (65%) percent of
the Base Purchase Price plus the amount of the Escrow Fund; and (ii) from time
to time, sixty-five (65%) percent of the remaining value of the Property (net of
mortgages) as Unleased Unbuilt Space or Additional Density Space (for which the
Vendor is entitled to receive the Additional Density Adjustments), becomes
leased (the "PERMITTED FINANCING"). The foregoing covenant by the Purchaser not
to encumber
beyond the Permitted Financing shall be registered on title to the Property (the
"COVENANT NOT TO ENCUMBER"). The Purchaser acknowledges and confirms that the
foregoing covenant does not constitute an illegal restraint on alienation of the
Property.
6.7 LIMITED PARTNERSHIP
EPR and a wholly-owned subsidiary of EPR acting as a general partner shall
form a Delaware Limited Partnership with three (3) classes of units, one of
which shall be the Exchangeable Preference Securities, all in form and substance
satisfactory to the Vendor in its sole and absolute discretion, to be determined
on or prior to the Due Diligence Date.
6.8 [INTENTIONALLY DELETED]
6.9 LIBERTY ITM GUARANTEE
The Vendor shall provide a guarantee in respect of the Liberty ITM Tenants,
in accordance with the Liberty ITM Guarantee, in accordance with the terms set
out in Schedule "E".
6.10 GMAC FEES
If the Purchaser proceeds with a First Mortgage in favour of GMAC
Commercial Mortgage of Canada, Limited or any of its related entities ("GMAC"),
it will reimburse the Vendor and PenEquity (as a credit to the Vendor on
Closing) for the commitment and standby fees paid by them to GMAC and it will
also pay on Closing to TD Securities Inc. ("TDSI") the fees in connection with
its engagement letter with PenEquity, on behalf of, inter alia, the Vendor,
dated May 9, 2003 (the "TDSI FEES") that would have been payable to TDSI by the
Vendor/PenEquity, if the Vendor had proceeded with the financing with GMAC. The
Purchaser shall not be required to reimburse the Vendor/PenEquity or pay the
TDSI Fees as aforesaid if the terms of its financing with GMAC are substantially
changed from those negotiated by the Vendor/PenEquity to the extent that the
Purchaser is required to pay to GMAC and/or TDSI comparable costs to those
paid/payable to them by the Vendor/PenEquity.
If the Purchaser does not arrange its First Mortgage with GMAC, it
nonetheless agrees to pay the Vendor (as a credit on Closing) the sum of
Twenty-Seven Thousand Five Hundred Dollars ($27,500).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 VENDOR'S REPRESENTATIONS AND WARRANTIES
The Vendor hereby represents and warrants to and in favour of the
Purchaser, and confirms that the Purchaser is relying upon the representations
and warranties in connection with the sale by the Vendor of the Purchase Assets,
that:
(a) STATUS. The Vendor is a corporation duly incorporated and
subsisting under the laws of its incorporating jurisdiction and
has the corporate power, authority, right and capacity to own its
property and assets and to enter into, execute and deliver this
Agreement and to carry out the transactions contemplated by this
Agreement in the manner contemplated by this Agreement. The
Beneficial Owner is a limited partnership duly formed and
subsisting under the laws of Ontario and has the partnership
power, authority, right and capacity to own its property and
assets and to enter into, execute and deliver this Agreement and
to carry out the transactions contemplated by this Agreement in
the manner contemplated by this Agreement.
(b) AUTHORIZATION. The transactions contemplated by this Agreement
have been or shall on Closing be duly and validly authorized by
all requisite corporate proceedings of the Vendor and constitute
legal, valid and binding obligations of the Vendor. The
transactions contemplated by this Agreement have been or shall on
Closing be duly and validly authorized by all requisite
partnership proceedings of the Beneficial Owner and (shall)
constitute legal, valid and binding obligations of the Vendor
binding on the Beneficial Owner.
(c) NO DEFAULT UNDER OTHER AGREEMENTS, ETC. Neither the execution of
this Agreement nor its performance by the Vendor, nor the
consummation by the Vendor of the transactions contemplated
hereby, will result in a breach of or constitute a default or a
condition which upon notice or lapse of time or both would ripen
into a default under any term or provision of the constating
documents or by-laws of the Vendor, or the limited partnership
agreement of the Beneficial Owner, subject to obtaining the
consent of the Land Lease Landlords to the assignment by the
Vendor of its interest in the Land Leases.
(d) NO BANKRUPTCY. No Event of Insolvency has occurred and is
continuing with respect to the Vendor.
(e) NO LITIGATION. There are no actions, suits or proceedings pending
or to the knowledge of the Vendor, threatened against or
affecting the Vendor or the Beneficial Owner in relation to the
Property or the occupancy or use of the Property by the Vendor or
the Beneficial Owner or affecting the Property, in law or in
equity or by any Governmental Authority, which could affect the
validity of this Agreement or the validity of any transaction
provided for in this Agreement or affect the right of the
Purchaser from and after the Closing Date to own, occupy and
obtain the revenue from the Property or any action taken or to be
taken in connection with this Agreement.
(f) NO INDEBTEDNESS CONSTITUTING A LIEN. Neither the Vendor nor the
Beneficial Owner will on the Closing Date have any indebtedness
to any Person that might by operation of law or otherwise
constitute a lien, charge or encumbrance on the Property or any
part of the Property or which could affect the right of the
Purchaser, from and after the Closing Date, to own, occupy and
obtain the revenue from the Property, subject to ongoing work in
connection with the Property.
(g) RESIDENCE. Neither the Vendor nor any of the partners of the
Beneficial Owner is a non-resident of Canada within the meaning
of Section 116 of the INCOME TAX ACT (Canada).
(h) NO UNREGISTERED AGREEMENTS. There are no material unregistered
agreements to which the Vendor is a party, in respect of the
Property, the Improvements or the Lands other than the Leases,
the Contracts, Construction Contracts, the other documents and
agreements comprising the Property Documents, and management and
other agreements between the Vendor and PenEquity (which
management and other agreements between the Vendor and PenEquity
shall not be binding upon the Purchaser or upon the Property).
(i) PROPERTY INSURANCE. Within the past year, no written notice has
been received from any insurance company that has issued a policy
with respect to any portion of the Property or from any board of
fire underwriters (or other body exercising similar functions),
claiming any defects or deficiencies or requiring the performance
of any repairs, replacements, alterations or other work which has
not been cured and as of the Closing no such
written notice will have been received which has not been cured
other than as disclosed in the Property Documents. No written
notice has been received by the Vendor from any issuing insurance
company that any of such policies will not be renewed.
(j) NO EMPLOYEES AFTER CLOSING. There are no Employees employed in
connection with the Property in respect of which the Purchaser
will incur any liabilities whatsoever as a result of the
completion of the transaction contemplated by this Agreement.
(k) NOT IN DEFAULT. Neither the Vendor nor, to the best of the
Vendor's knowledge, any other party is in default in any manner
which would result in a material adverse effect on the Property
or the present use under any of the Contracts, Leases, management
or other agreements other than in connection with any defaults by
Tenants under their Leases which are disclosed as part of the
Property Documents or as disclosed in the Tenant files that are
made available for inspection to the Purchaser. There exist no
service contracts, management or other agreements applicable to
the Property, to which Vendor is a party or otherwise known to
Vendor which are not otherwise terminable by Vendor upon thirty
(30) days notice other than the Mandatory Assumed Contracts.
(l) CONSTRUCTION CONTRACTS. Neither the Vendor nor, to the best of
the Vendor's knowledge, any other party to a Construction
Contract is in default in any material respect under any of the
Construction Contracts.
(m) NO OPTIONS. There are no options to purchase or rights of first
refusal to purchase with respect to the Property or any part
thereof that have not expired or been waived by all necessary
parties, other than such rights in favour of the Vendor under the
Land Leases.
(n) NO EXPROPRIATION. None of the Freehold Lands, Leasehold Interest
or the Licensed Lands have been expropriated and the Vendor has
not received notice that there are any existing or contemplated
expropriation proceedings or other similar public or private
proceedings affecting the Freehold Lands, Leasehold Interest or
Licensed Lands.
(o) LEASES. As at the date hereof, the only leases affecting the
Property are the Leases, copies of which have been provided to
the Purchaser in accordance with Section 2.4. Such Leases
constitute the entire agreement with each respective Tenant. The
Vendor is not in material default under any of such Leases and
there is no material default or dispute under any of such Leases
except as disclosed to the Purchaser.
(p) INCLUDING REQUIRED ASSETS. The Purchase Assets include all items
of property, tangible and intangible, currently used by Vendor in
connection with the operation of the Property, other than the
property expressly excluded from the definition thereof and
excluding the Hotel Parcel.
(q) UREA FORMALDEHYDE, ASBESTOS AND OTHER NOXIOUS SUBSTANCES AND
HAZARDOUS MATERIALS. The Vendor has not brought on to the
Property or caused it to contain any urea formaldehyde foam
insulation, asbestos (other than as may be contained in floor or
ceiling tiles), arsenic, polychlorinated biphenyls, lead,
above-ground or below-ground storage tanks or other noxious
substances including, without limitation, any contaminant as
defined in the ENVIRONMENTAL PROTECTION ACT (Ontario) or any
other Hazardous Materials, except in compliance with applicable
environmental legislation and except as contained in the
environmental reports provided to the Purchaser nor to the best
of the Vendor's knowledge and belief, during the Vendor's period
of ownership of the Property, has a third party caused the
foregoing. The Vendor has not caused, nor to the best of the
Vendor's knowledge and belief, has a third party caused the
release or discharge of Hazardous Materials from the Property or
into any water course, body of surface or subsurface water or
wetland or into the atmosphere.
(r) NO NOTICES. Neither the Vendor nor the Beneficial Owner has
received, and neither have been made aware of, any order, notice
or demand from any Governmental Authority or other Person under
any Environmental Laws with respect to spills or contamination in
respect of the Property or requiring compliance with any Law
respecting Hazardous Materials.
(s) COMPETITION ACT. For the purposes of Part IX of the COMPETITION
ACT and the Notifiable Transactions Regulations thereunder, the
Beneficial Owner and the Vendor, and their respective affiliates,
as such term is defined in subsection 2(2) of the COMPETITION
ACT, do not have
assets in Canada or gross revenues from sales in, from or into
Canada, that exceed $400,000,000 in aggregate value.
(t) INVESTMENT CANADA ACT. For the purposes of the INVESTMENT CANADA
ACT and the Investment Canada Regulations thereunder, the value
of the Purchase Assets together with the value of the Purchase
Assets pursuant to the Other Purchase Agreements is less than Two
Hundred and Twenty-Three Million ($223,000,000.00) Dollars.
(u) DISCLOSURE. To the best of the Vendor's knowledge, it has not
failed to disclose to the Purchaser any matter which would
reasonably be expected to have a material adverse effect on the
Purchase Assets.
7.2 VENDOR'S KNOWLEDGE
Any reference to the knowledge of the Vendor shall mean to the actual
knowledge of David Johnston, Glenn Miller, Marc Charlebois (Chief Operating
Officer) or Doug Peters (Vice-President) or their replacements prior to the
Closing Date, based upon information in their possession or control, without
undertaking independent investigations or inquiries. If any statement is made in
this Agreement or in any document or instrument contemplated to be delivered in
this Agreement by any such individual, such statement shall be deemed to have
been made in his or her capacity as a corporate officer or employee and shall be
made without personal liability to that individual.
7.3 PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser hereby represents and warrants to and in favour of the
Vendor, and confirms that the Vendor is relying upon the representations and
warranties in connection with the purchase by the Purchaser of the Purchase
Assets, that:
(a) CORPORATE STATUS. The Purchaser is a United States trust formed
and subsisting under the laws of the state of Delaware and has
the power, authority, right and capacity to own its property and
assets and to enter into, execute and deliver this Agreement and
to carry out the transactions contemplated by this Agreement in
the manner contemplated by this Agreement;
(b) GST REGISTRANT. The Purchaser will be a GST registrant under the
EXCISE TAX ACT (Canada) on the Closing Date;
(c) NO BREACH OF INSTRUMENTS OR LAWS. Neither the entering into nor
the delivery of this Agreement or any of the Ancillary
Agreements, nor the completion of the transactions contemplated
hereby, including pursuant to the Ancillary Agreements, conflict
with, or constitute a breach or default under, or result in a
material violation of or condition which upon notice or lapse of
time or both would ripen into a default under (i) any of the
provisions of the trust declaration of the Purchaser, or (ii) any
Applicable Laws; or (iii) any other agreements or instruments to
which the Purchaser is a party;
(d) AUTHORIZATION. The transactions contemplated by this Agreement
have been duly and validly authorized by all requisite
proceedings of the Purchaser and constitute legal, valid and
binding obligations of the Purchaser;
(e) ENFORCEABILITY OF OBLIGATIONS. This Agreement has been validly
executed and delivered by the Purchaser and is a valid and
legally binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms, subject to the
limitations with respect to enforcement imposed by Applicable
Laws in connection with bankruptcy, insolvency, liquidation,
reorganization or other laws affecting the enforcement of
creditors' rights generally and subject to the availability of
equitable remedies such as specific performance and injunction
which are only available in the discretion of the court from
which they are sought;
(f) LITIGATION. There is no outstanding suit, action, litigation,
claim or legal proceeding, including appeals and applications for
review, in progress relating to the Purchaser before any court,
commission, board or arbitration panel which, if determined
adversely to the Purchaser, would prevent the Purchaser from
satisfying any of its obligations under this Agreement, including
without limitation, pursuant to any of the Ancillary Agreements;
(g) NO BANKRUPTCY. No Event of Insolvency has occurred and is
continuing with respect to the Purchaser; and
(h) DISCLOSURE. To the best of the Purchaser's knowledge, it has not
failed to disclose to the Vendor any matter which would
reasonably be expected to have a material adverse affect on the
Purchaser's ability to carry out its obligations under this
Agreement or the Ancillary Agreements.
7.4 EPR'S REPRESENTATIONS AND WARRANTIES
EPR hereby represents and warrants to and in favour of the Vendor, and
confirms that the Vendor is relying upon the representations and warranties in
connection with the purchase by the Purchaser of the Purchase Assets and EPR
entering into the Ancillary Agreements, that:
(a) CORPORATE STATUS. EPR is a real estate investment trust duly
formed and subsisting under the laws of the state of Maryland and
has the power, authority, right and capacity to own its property
and assets and to enter into, execute and deliver this Agreement
and to carry out the transactions contemplated by this Agreement
in the manner contemplated by this Agreement;
(b) NO BREACH OF INSTRUMENTS OR LAWS. Neither the entering into nor
the delivery of this Agreement or any of the Ancillary
Agreements, nor the completion of the transactions contemplated
hereby including pursuant to the Ancillary Agreements to which it
is a party, will conflict with, or constitute a material breach
or default under, or result in a material violation of or
condition which upon notice or lapse of time or both would ripen
into a default under (i) any of the provisions of the trust
declaration of EPR, or (ii) any Applicable Laws; or (iii) any
other agreements or instruments to which EPR is a party;
(c) AUTHORIZATION. The transactions contemplated by this Agreement
have been duly and validly authorized by all requisite
proceedings of EPR and constitute legal, valid and binding
obligations of EPR;
(d) NO BANKRUPTCY. No Event of Insolvency has occurred and is
continuing with respect to EPR;
(e) LITIGATION. There is no outstanding suit, action, litigation,
claim or legal proceeding, including appeals and applications for
review, in progress relating to EPR before any court, commission,
board or arbitration panel which, if determined adversely to EPR,
would prevent EPR from satisfying any of its obligations under
this Agreement, including without limitation, pursuant to any of
the Ancillary Agreements;
(f) SECURITIES LAWS. (i) EPR has filed all reports, filings,
registration statements and other documents required to be filed
by it with the United States Securities and Exchange Commission
(the "SEC") since January 2003 (the "EPR SEC DOCUMENTS"). No EPR
subsidiary is required to file any form, report, registration
statement or prospectus or other document with the SEC. (ii) As
of its filing date, each EPR SEC Document complied as to form in
all material respects with the applicable requirements of the
SECURITIES ACT OF 1933, as amended (the "SECURITIES ACT") and/or
the SECURITIES EXCHANGE ACT OF 1934, as amended (the "EXCHANGE
ACT"), as the case may be. (iii) No EPR SEC Document filed
pursuant to the Exchange Act contained, as of its filing date,
any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading (except any statement or omission therein
which was corrected or otherwise disclosed or updated in a
subsequent EPR SEC Document). No EPR SEC Document, as amended or
supplemented, if applicable, filed pursuant to the Securities Act
contained, as of the date such document or amendment became
effective, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and
(g) DISCLOSURE. To the best of EPR's knowledge, it has not failed to
disclose to the Vendor any matter which would reasonably be
expected to have a material adverse affect on EPR's ability to
carry out its obligations under this Agreement or the Ancillary
Agreements.
7.5 SURVIVAL OF REPRESENTATIONS
The representations and warranties contained in this Agreement shall not
merge on Closing but shall continue in full force and effect for the benefit of
the party entitled thereto for a period of two (2) years following the Closing
Date. The representations and warranties contained in this Agreement will cease
to have effect two (2) years following the Closing Date except to the extent
that a claim has been made thereunder prior to that date.
ARTICLE 8
CONDITIONS
8.1 CONDITIONS OF THE VENDOR
The obligation of the Vendor to complete the transaction contemplated by
this Agreement on Closing shall be subject to the following conditions:
(a) PERFORMANCE OF OBLIGATIONS. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by
the Purchaser and EPR shall have been complied with or performed
in all material respects at the times contemplated herein;
(b) REPRESENTATIONS AND WARRANTIES. On Closing, the representations
and warranties of the Purchaser and EPR contained in Sections 7.3
and 7.4 shall be true and accurate in all material respects with
the same effect as if made on and as of the Closing Date and the
Purchaser shall have delivered to the Vendor a certificate of a
senior officer of the Purchaser and EPR dated the Closing Date to
this effect, as amended to reflect changes that have been
disclosed to the Purchaser during the Interim Period;
(c) LAND LEASE CONSENT. On or before Cloasing, the Vendor will have
received consent by the Land Lease Landlord to the assignment by
the Vendor of its interestin the Land Lease (the "Land Lease
Consent"). The Purchaser hereby agrees to provide such
information and execue such documentation as is reasonably
required by the Land Lease Landlord to assess the purchaser and
provide the Land Lease Consent;
(d) LICENSE CONSENT. On or before Closing, the Vendor will have
received consent by the Licensor to the assignment by the Vendor
of its interest in the Hydro License (the "License Consent"). The
Purchaser hereby agrees to provide such information and execute
such documentation as is reasonably required by the Licensor to
assess the Purchaser and provide the License Consent;
(e) PURCHASER'S MORTGAGEE'S REQUIREMENTS. No later than 15 Business
Days prior to Closing, the Vendor will have satisfied itself,
acting reasonably, that it can comply with the requirements of
the Purchaser's mortgagee with respect to the Purchaser's and
EPR's continuing obligations hereunder and that such requirements
do not adversely affect its rights and remedies pursuant to this
Agreement or any of the Ancillary
Agreements. The Purchaser and EPR agree to promptly provide all
particulars and information with respect to such mortgage
financing affecting the Vendor or the Property Manager;
(f) ANCILLARY AGREEMENTS. All of the Ancillary Agreements shall have
been executed and delivered substantially in the form agreed to
by the Due Diligence Date; and
(g) TERMS OF ANCILLARY AGREEMENTS AND PURCHASER'S SOLICITOR'S
OPINION. The Vendor shall be satisfied, in its sole and absolute
discretion with the form and substance of the Purchaser's
Solicitor's Opinion and the Ancillary Agreements by the Due
Diligence Date.
The conditions set out in this Section 8.1 are for the sole benefit of the
Vendor and may be waived in whole or in part by the Vendor, in its sole
discretion, by written notice to the Purchaser.
8.2 CONDITIONS OF THE PURCHASER
The obligation of the Purchaser to complete the transaction contemplated by
this Agreement on Closing shall be subject to the following conditions:
(a) DUE DILIGENCE. On or before the Due Diligence Date, the Purchaser
shall have delivered written notice to the Vendor that the
Purchaser has: (i) completed its due diligence with respect to
the Property, the Permitted Encumbrances and the Mandatory
Assumed Contracts to its satisfaction, in its sole and absolute
discretion; (ii) satisfied itself with respect to any financing
it requires to complete the purchase of the Purchase Assets;
(iii) satisfied itself that all consents, approvals, licences and
permits, if any, deemed by it, in its sole discretion, to be
necessary or appropriate to consummate the transactions
contemplated herein have been or will be obtained by Closing; and
(iv) has determined that the transactions contemplated herein do
not violate any law or regulation applicable to the Purchaser or
EPR;
(b) ESTOPPEL CERTIFICATES. At least five (5) Business Days prior to
the Closing Date, the Vendor shall have delivered (i) Estoppel
Certificates to the Purchaser from all of the Tenants of the
Leased Built Space whose premises are larger than 5,000 square
feet of Gross Leaseable Area, or as otherwise required by the
Purchaser's institutional first mortgagee, dated as of a date not
more than 30 days prior to the Closing Date; and (ii) a statutory
declaration sworn by a knowledgeable officer of the Vendor with
respect to the other Leases with respect to the Leased Built
Space;
(c) PERFORMANCE OF OBLIGATIONS. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by
the Vendor shall have been complied with or performed in all
material respects at the times contemplated herein;
(d) REPRESENTATIONS AND WARRANTIES. On Closing, the representations
and warranties of the Vendor contained in Section 7.1 shall be
true and accurate in all material respects with the same effect
as if made on and as of the Closing Date and the Vendor shall
have delivered to the Purchaser a certificate of a senior officer
of the Vendor dated the Closing Date to this effect, as amended
to reflect changes that have been disclosed to the Purchaser
during the Interim Period;
(e) NO MATERIAL ADVERSE CHANGE. No material adverse change shall have
occurred with respect to the Purchase Assets, including the
legal, physical and financial aspects of the Purchase Assets,
during the period from the Due Diligence Date until the Closing
date;
(f) LAND LEASE/LICENSE CONSENT. On or before Closing, the Vendor will
have received the Land Lease Consent and any consent required for
the assignment of the Hydro License;
(h) ANCILLARY AGREEMENTS. All of the Ancillary Agreements shall have
been executed and delivered, substantially in the form agreed to
by the Due Diligence Date;
(i) TITLE. On the Closing Date, the title to the Property shall be
free and clear of all mortgages, liens and charges except for the
Permitted Encumbrances; and
(j) TERMS OF ANCILLARY AGREEMENTS AND VENDOR'S SOLICITOR'S OPINION.
The Purchaser shall be satisfied, in its sole and absolute
discretion with the form and substance of the Vendor's
Solicitor's Opinion and the Ancillary Agreements by the Due
Diligence Date.
The conditions set out in this Section 8.2 are for the sole benefit of the
Purchaser and may be waived in whole or in part by the Purchaser, in its sole
discretion, by written notice to the Vendor.
8.3 NON-SATISFACTION OF CONDITIONS
Subject to the provisions of Sections 10.2, 10.3 and 10.4, if any of the
conditions set out in Sections 8.1 and 8.2 is not satisfied or waived on or
before the stipulated date, this Agreement shall be null and void and of no
further force or effect whatsoever and the Deposit shall be returned to the
Purchaser with interest and without deduction and neither party to this
Agreement shall have any claim against the other with respect to this Agreement.
Except for conditions to be satisfied on Closing, if by 5:00 p.m. (Toronto
time) on the applicable date referred to in Sections 8.1 and 8.2, the party
having the benefit of the condition has not given notice to the other party that
the condition has been satisfied or waived, such condition shall be deemed not
to have been waived and this Agreement and the respective obligations of the
parties shall be terminated. All conditions to be satisfied on Closing shall be
deemed to be satisfied if Closing occurs. The waiver of any condition hereunder
shall not remove or diminish the obligations, covenants, representations or
warranties of the Vendor and the Purchaser except to the extent of the subject
matter of the condition that was waived.
ARTICLE 9
CLOSING DOCUMENTS
9.1 VENDOR'S CLOSING DOCUMENTS
On or before Closing, the Purchaser shall prepare and the Vendor shall
execute or cause to be executed and shall deliver or cause to be delivered to
the Purchaser's Solicitors the following items, duly executed by the Vendor and
in registerable form wherever appropriate:
(a) a transfer/deed(s) of land, in fee simple, for the Freehold Lands
transferring the Freehold Lands to the Purchaser or as it may
direct in accordance with this Agreement; such transfer/deed
shall contain the statement of the Vendor or officer of the
Vendor and of the Vendor's Solicitors pursuant to Sections
50(22)(a) and (b) of the PLANNING ACT (Ontario);
(b) a transfer/deed of land, in fee simple (not for registration),
for the Property binding on the Beneficial Owner transferring all
of the beneficial right, title and interest in the Property of
the Beneficial Owner to the Purchaser or as it may direct,
authorizing the Vendor to execute and deliver EPR all of the
documents contemplated to be executed and delivered by the Vendor
pursuant to this Article 9;
(c) the Assignment of Land Leases, including any options to purchase
on the Leased Lands held by the Vendor;
(d) the Assignemnt of the Hydro License, including any options to
purchase the Licensed Lands held by the Vendor;
(e) the Assignment of Leases;
(f) the Assignment of Contracts;
(g) such notice or notices as the Purchaser may reasonably require to
be given to Tenants under the Leases and other parties under the
assigned Contracts of their assignment to the Purchaser, together
with directions relating to the payment of rent and other
payments under the Leases, all in such form as the Purchaser may
reasonably require;
(h) a certificate of the Vendor executed by a senior officer of the
Vendor certifying that:
(i) neither the Vendor nor the Beneficial Owner is a
non-resident of Canada within the meaning of Section 116 of
the INCOME TAX ACT (Canada);
(ii) the representations and warranties of the Vendor contained
in Section 7.1 are true and accurate as of the Closing Date,
as contemplated by Section 8.2(d); and
(iii)there are no registrations against the Vendor or the
Beneficial Owner under the PERSONAL PROPERTY SECURITY ACT
(Ontario) affecting the Purchase Assets, other than in
connection with financing that is being paid out on Closing
or in connection with the Assumed Contracts;
(i) an irrevocable direction as to the payee of the balance of the
Purchase Price;
(j) originals, as available, or true copies of all of the Property
Documents delivered or made available for inspection pursuant to
Section 2.4, including original executed copies of all Leases and
Contracts;
(k) the Estoppel Certificates referred to in Section 8.2(b), all
other Estoppel Certificates delivered by Tenants pursuant to the
requirements hereof, and, to the extent that any Tenant (other
than those Tenants identified in Section 8.2(b)) has not
delivered an Estoppel Certificate on or before Closing, a
statutory declaration from a senior officer of the Vendor
certifying the truth and accuracy of the information contained in
the form of Estoppel Certificate with respect to such Tenant,
with such amendments as are reasonably required thereto having
regard to the fact that the Vendor/its officer cannot confirm
certain matters that the Tenant could otherwise confirm;
(l) the Statement of Adjustments;
(m) an undertaking by the Vendor to readjust the Adjustments, as
contemplated in Section 3.2;
(n) discharges in registerable form of all mortgages, liens, charges
and encumbrances, except for the Permitted Encumbrances, provided
that if a discharge of any mortgage or charge held by a chartered
bank, trust company, insurance company or lending institution is
not available in registerable form on Closing, the Purchaser
agrees to accept the personal undertaking of the Vendor's
Solicitors to obtain out of the balance of the Purchase Price
payable on Closing a discharge of such mortgage or charge in
registerable form and to register the same within 60 days
following Closing, provided that on or before Closing the Vendor
shall provide to the Purchaser a mortgage statement prepared by
the mortgagee setting out the balance required to obtain the
discharge, without any errors and omissions exception or other
qualifications together with a direction executed by the Vendor
directing payment to the mortgagee of the amount required to
obtain the discharge out of the balance of the Purchase Price
payable on Closing;
(o) master keys to the Property tagged for identification, if
available;
(p) all post-dated rent cheques for the rental period following
Closing received from Tenants that are in the Vendor's possession
or control, endorsed without recourse in favour of the Purchaser;
(q) evidence of termination of all Contracts that the Purchaser has
advised the Vendor that it wishes to have terminated prior to
Closing;
(r) the Ancillary Agreements;
(s) copies of such of the Plans, as-built construction and
architectural plans and drawings and Construction Contracts
pertaining to the Additional Improvements as then exist;
(t) consent by the Land Lease Landlords to the Assignment of the
Leasehold Interest in favour of the Purchaser;
(u) consent by the Licensor to the Assignment of the License Interest
in favour of the Purchaser;
(v) the Trademark Licence;
(w) an opinion from the Vendor's counsel in a form agreed to by the
Due Diligence Date (the "VENDOR'S SOLICITOR'S OPINION");
(x) two (2) duly completed and signed original Internal Revenue
Service Forms W-8 BEN or W-8 IMY (or applicable successor forms);
and
(y) such other bills of sale, transfers, assignments and documents
relating to the completion of this Agreement as the Purchaser may
reasonably require to transfer title to the Property from the
Vendor to the Purchaser,
all in form and substance satisfactory to the Purchaser and the Vendor, each
acting reasonably.
9.2 PURCHASER'S CLOSING DOCUMENTS
On or before Closing, the Purchaser and EPR, as applicable, shall execute
or cause to be executed and shall deliver or cause to be delivered to the
Vendor's Solicitors the following items, duly executed by the Purchaser, EPR and
any other applicable party, as the case may be:
(a) the balance of the Closing Payment;
(b) the Note;
(c) the Assignment of Land Leases;
(d) the Assingment of Hydro License;
(e) the Assignment of Leases;
(f) the Assignment of Contracts;
(g) an undertaking by the Purchaser to readjust the Adjustments, as
contemplated in Section 3.2;
(h) the GST certificate and indemnity contemplated by Section 3.11;
(i) a certificate of the Purchaser executed by a senior officer of
the Purchaser certifying that the representations and warranties
with respect to the Purchaser contained in Section 7.3 are true
and accurate as of the Closing Date, as contemplated by Section
8.1(b);
(j) a certificate of EPR executed by a senior officer of EPR
certifying that the representations and warranties with respect
to EPR contained in Sections 7.3 and 7.4 are true and accurate as
of the Closing Date, as contemplated by Section 8.1(b);
(k) representations and warranties of the Limited Partnership and
Nominee, confirming such matters as are contained in the
Purchaser's representations and warranties in Section 7.3, as
modified to reflect their limited partnership and corporate
status, respectively, along with a certificate of a senior
officer of the general partner of the Limited Partnership and a
certificate of a senior officer of the Nominee confirming that
the applicable representations and warranties with respect to the
Limited Partnership and Nominee, respectively, are true and
accurate as of the Closing Date;
(l) the Property Management Agreement;
(m) if the Purchaser is assuming the First Mortgage, the Mortgage
Assumption in such form as may be required by the Mortgagee,
acting reasonably, and agreed to by the Purchaser;
(n) the Pledge;
(o) the Ancillary Agreements, to the extent not specifically listed
herein;
(p) an opinion from counsel for the Purchaser, EPR, the Limited
Partnership and the Nominee with respect to matters in
Subsections 7.3 (a), (c)(i) and (ii), (d) and (e), 7.4 (a), (b)
(i) and (ii), (c) and (f), the corresponding matters relating to
the Limited Partnership and Nominee, and an opinion from counsel
to all parties to the Ancillary Agreements (with the exception of
the
Vendor, PenEquity and the Property Manager) confirming, inter
alia, that same have been duly executed, authorized and delivered
and are enforceable and legally binding upon such parties, and
that all approvals that are required to give effect to same,
including, without limitation, to effect the Unit Exchange, Five
Year Payment/Stock Issuance and Acceleration, have been obtained
and relating to such other matters required by the Vendor, all in
the form agreed to by the Due Diligence Date (collectively, the
"PURCHASER'S SOLICITOR'S OPINION");
(q) the Mortgagee Easement and Operating Assumption, if necessary;
(r) the Covenant Not to Encumber;
(s) the Covenant Not to Transfer;
(T) [INTENTIONALLY DELETED];
(u) the Escrow Fund;
(v) the Exchangeable Preference Securities;
(w) an executed copy of the Limited Partnership Agreement;
(x) an executed copy of the trust agreement governing the Purchaser;
(y) the trust agreement between the nominee title holder of the
Purchase Assets and the Purchaser;
(z) such further documentation relating to the completion of this
Agreement as the Vendor may reasonably require,
all in form and substance satisfactory to the Purchaser and the Vendor, each
acting reasonably.
9.3 CLOSING PROCEDURES
All documents and monies shall be delivered in escrow at 10:00 o'clock a.m.
(Toronto time) on the Closing Date at the offices of Gardiner Roberts LLP in
Toronto, Ontario pending registration of the documents referred to in Sections
9.1 and 9.2 as reasonably required by the solicitors for the parties and receipt
of such evidence as they shall reasonably request that all conditions of this
Agreement have been satisfied. It is a condition of Closing that all matters of
payment, execution and delivery of documents by each party to the other and the
acceptance for registration of the appropriate documents in the appropriate
offices of public record shall be
deemed to be concurrent requirements and it is specifically agreed that nothing
will be complete at the Closing until everything required at the Closing has
been paid, executed and delivered and until all documents have been accepted for
registration.
If the transaction herein can be completed by electronic registration, the
parties hereto agree to do so and exchange all non-registerable documents and
funds, in escrow and shall complete the transaction in accordance with the terms
of the Document Registration Agreement recommended from time to time by the Law
Society of Upper Canada.
9.4 TAXES AND FEES
The Vendor and the Purchaser shall be, respectively, responsible for the
costs of the Vendor's Solicitors and the Purchaser's Solicitors with respect to
the transaction contemplated by this Agreement. The Purchaser shall be
responsible for the costs of registration of the transfer referred to in Section
9.1(a) and all applicable land transfer taxes and other registration costs
relating to the transfer of the Purchase Assets, save and except for
registration fees relating to discharges of existing security which shall be
paid by the Vendor.
ARTICLE 10
DISPUTE RESOLUTION AND DEFAULT
10.1 DISPUTE RESOLUTION
(1) BEST EFFORTS TO SETTLE DISPUTES.
In the event any dispute, claim, question or difference (a "DISPUTE")
arises with respect to this Agreement and any of the Ancillary Agreements, or
its performance, enforcement, breach, termination or validity, the Parties shall
use their best efforts to settle the Dispute. To this end, either Party may
deliver formal notice of a Dispute to the other Party and senior officers of the
Parties shall consult and negotiate with each other, in good faith and
understanding of their mutual interests, to reach a just and equitable solution
satisfactory to all Parties within 10 Business Days of delivery of the notice of
Dispute (other than as specifically provided herein).
(2) ARBITRATION.
If the Parties do not reach a solution pursuant to Section 10.1(1) within a
period of 10 Business Days following the first notice of the Dispute by any
Party to the other, then upon further written notice by either Party to the
other, the Dispute shall be finally settled by arbitration in accordance with
the provisions of the ARBITRATIONS ACT (Ontario) and the INTERNATIONAL
COMMERCIAL ARBITRATION ACT (Ontario) based upon the following:
(a) The arbitration tribunal shall consist of one arbitrator of an
initial list of ten (10) arbitrators from ADR Chambers in
Toronto, who are agreed to and ranked in descending order of
preference by the Vendor and Purchaser prior to the Due Diligence
Date (the "ARBITRATION LIST");
(b) The arbitrator shall be instructed that time is of the essence in
the arbitration proceeding and request that the arbitration award
be made as soon as possible, with a view to obtaining same within
thirty (30) days of the submission of the Dispute to arbitration.
If the highest ranked arbitrator on the Arbitration List is not
able to meet the foregoing deadline, the parties shall seek the
next highest ranking arbitrator on the Arbitration List, who is
able to meet the foregoing deadline;
(c) The arbitration shall take place in Toronto, Ontario;
(d) The arbitration award shall be given in writing and shall be
final and binding on the Parties, not subject to any appeal, and
shall deal with the question of costs of arbitration and all
related matters;
(e) Judgment upon any award may be entered in any Court having
jurisdiction or application may be made to the Court for a
judicial recognition of the award or an order of enforcement, as
the case may be;
(f) All Disputes referred to arbitration (including, but without
limitation, the scope of the agreement to arbitrate, any statute
of limitations, set-off claims, conflict of laws rules, tort
claims and interest claims) shall be governed by the substantive
law of Ontario;
(g) The Parties agree that the arbitration shall be kept confidential
and that the existence of the arbitration proceeding and any
element of it (including any pleadings, briefs or other documents
submitted or exchanged, any testimony or other oral submissions
and any awards) shall not be disclosed beyond the arbitrator, the
Parties, their counsel and any person necessary to the conduct of
the arbitration proceeding, except as may lawfully be required
pursuant to legislation or court order or in connection with any
enforcement proceedings contemplated by (e) above;
(h) To the extent the number of available arbitrators on the
Arbitration List drops below six (6), each party shall choose one
(1) additional arbitrator from ADR Chambers and a coin toss shall
determine whether such newly appointed arbitrators shall be
ranked last or second to last on the revised Arbitration List;
and
(i) To the extent ADR Chambers ceases to exist, and replacements are
required to the Arbitration List, the parties shall choose
arbitrators who shall be retired members of the Ontario Superior
Court or Court of Appeal.
(3) EXPEDITED PROCEDURES.
Disputes regarding the approval of a Lease Proposal will be resolved in the
manner set forth in Section 10.1(2) without the consultations and negotiations
provided for in Section 10.1(1), and except that (i) written notice of a Dispute
may be given immediately upon the notice period having elapsed under Section
5.2, (ii) the arbitration award will be requested to be given within 15 to 30
days (or such shorter period as may be reasonably possible) of the submission of
the Dispute to arbitration. In all other respects the provisions of Section 10.1
(2) shall apply, MUTATIS MUTANDIS.
10.2 VENDOR'S DEFAULT; PURCHASER'S REMEDIES
If the Vendor's Conditions contained in Section 8.1 have been satisfied or
waived, or the Vendor's Conditions would have been satisfied except for a wilful
act or omission of the Vendor to prevent such satisfaction, and the Vendor
refuses to close this Agreement, the Vendor shall be deemed to be in default
hereunder, and the Purchaser may, at its sole option, terminate this Agreement
by written notice delivered to the Vendor on or before the Closing whereupon the
Deposit and all interest accrued thereon shall be immediately refunded to the
Purchaser together with liquidated damages in the amount of One Million Two
Hundred and Fifty Thousand ($1,250,000.00) Dollars and, except as specifically
provided herein, the parties shall have no further rights or obligations
hereunder. The Purchaser's remedies described in this Section 10.2 shall be the
sole remedies of the Purchaser in the event of such default by the Vendor
hereunder and neither the Purchaser nor EPR nor any other party related thereto
shall have any further recourse against the Vendor.
10.3 PURCHASER'S DEFAULT; VENDOR'S REMEDIES
If the Purchaser or EPR shall be in default hereunder, and, as a result,
this Agreement is not closed, the Vendor may, at its sole option, terminate this
Agreement by written notice delivered to the Purchaser on or before the Closing
and
retain the Deposit and all interest accrued thereon. Upon receipt of such notice
of termination, the Purchaser shall deliver to the Vendor the documents and
materials described in Section 2.4 and any other Confidential Information
provided to the Purchaser by the Vendor or its agents. Thereafter, except as
specifically provided herein, the parties shall have no further rights or
obligations hereunder. The Vendor's remedies described in this Section 10.3
shall be the sole remedies of the Vendor in the event of such default by the
Purchaser hereunder and the Vendor shall have no other or further recourse
against the Purchaser.
10.4 LIQUIDATED DAMAGES
The parties acknowledge and agree that the One Million Two Hundred and
Fifty Thousand ($1,250,000.00) Dollar payment described in Section 10.2 and the
retention of the Deposit described in Section 10.3 are their best estimate of
the damages that would be suffered by the Purchaser or the Vendor, respectively,
in the circumstances described in this Article and shall constitute liquidated
damages and not a penalty. For greater certainty, the foregoing relates solely
to the parties' respective remedies in connection with the failure of one party
to complete the Closing of this transaction. It does not relate to remedies of
each party in respect of default after Closing.
10.5 DEFAULT AND SECURITY
(1) On Closing, the Parties shall enter into an agreement (the "DEFAULT
AND SECURITY AGREEMENT") detailing the matters which shall constitute
default in the various Ancillary Agreements and default under this
Agreement in respect of post-Closing obligations and providing
security with respect thereto and the consequences of default. The
Default and Security Agreement shall include, INTER ALIA, provisions
for the granting of (i) the Pledge and GP Pledge to secure the
Purchaser's and EPR's covenants, obligations and liability pursuant to
the Preference Securities Exchange Agreement and agreements in
connection therewith, including, pursuant to the Preference Securities
Exchange, Five Year Payment/Stock Issuance, Acceleration and
Distribution and to secure the GP Indemnity, EPR Construction
Indemnity, EPR Servicing Indemnity and Distribution Indemnity; (ii)
the Covenant Not to Encumber and Covenant Not to Transfer as security
for the Purchaser's and EPR's covenants under this Agreement and the
Ancillary Agreements (the Purchaser acknowledges and agrees that such
covenants are granted as collateral security to its and EPR's
continuing covenants and obligations under this Agreement and the
Ancillary Agreements and do not constitute illegal restraints on
alienation of the Property); (iii) a letter of credit (the "DEFAULT
LC") to secure the covenants and obligations of the Purchaser and EPR
under this Agreement and the Ancillary
Agreements, including pursuant to the EPR Payment Indemnity.
Notwithstanding the foregoing, the Purchaser may elect not to provide
the Default LC on Closing in which case the Pledge and GP Pledge
shall, in addition to securing the Purchaser's and EPR's obligations
pursuant to (i), also secure the Purchaser's and EPR's covenants under
this Agreement and the Ancillary Agreements, including the EPR Payment
Indemnity; however, the Purchaser may, at its option, at any time
following Closing, provide the Default LC, in which case the Pledge
and GP Pledge shall only secure the obligations set out in (i).
(2) The consequences of an Event shall include:
(a) The unpaid Additional Lease Adjustments and Additional Density
Adjustments shall immediately become due and payable to the
Vendor, net of the greater of (i) the outstanding balance of the
Construction Advance, if any, that has been advanced in
connection with the Leased Unbuilt Space plus the Construction
Advance Adjustment with respect thereto, and (ii) One Hundred
($100.00) Dollars per square foot of Leased Unbuilt Space that
has not yet been built and in respect of which no Construction
Advance has been advanced. Any component of the Construction
Advance relating to the Existing LCs, Additional LCs or
Replacement LCs shall not be deducted from the foregoing Lease
Adjustments or Additional Density Adjustments. In connection with
the foregoing, the Vendor shall be entitled to call on the Escrow
LC and/or Escrow Fund, or both, as the case may be;
(b) the Liberty ITM Guarantee shall be released;
(c) the aggregate outstanding Construction Advance and Construction
Advance Adjustment and monies owing thereunder shall be
considered fully repaid and the Vendor shall be released from all
liability thereunder;
(d) at the option of the Vendor, it may exercise the Preference
Securities Exchange;
(e) at the option of the Vendor, it may trigger the Acceleration;
(f) the Vendor shall be entitled to call on the Default LC (if same
has been provided); and
(g) the Vendor may exercise its rights under the Pledge and GP
Pledge. If the Vendor has been provided with the Default LC, the
Vendor shall have the right to exercise its rights under the
Pledge and GP Pledge if it has not received payment or the
appropriate EPR stock, pursuant to the provisions of the
Preference Securities Exchange Agreement, within ten (10)
Business Days of demand therefor.
(3) The Default and Security Agreement shall provide for dispute
resolution as set forth in Article 10 hereof, MUTATIS MUTANDIS. If an
Event has occurred, an Arbitrator shall determine the quantum of
costs, losses and damages that would be reasonably suffered or
incurred by the Vendor and the Property Manager as a result of such
Event by way of arbitration in accordance with Article 10. In
determining such costs, losses and damages, the Arbitrator shall be
directed by the Parties to take into account such factors as it deems
appropriate, including, without limitation, the following:
(a) loss of Additional Lease Adjustments that would reasonably have
been payable to the Vendor throughout the Lease-Up Period, net of
reasonable costs that would have been incurred to achieve
Occupancy;
(b) loss of Additional Density Adjustments that would reasonably have
been payable to the Vendor throughout the Lease-Up Period, net of
reasonable costs that would have been incurred to achieve
Occupancy;
(c) loss to the Property Manager of anticipated Property Management
Fees that would have been payable throughout the Lease-Up Period;
(d) loss of Distribution; and
(e) failure by EPR to pay monies owed or issue EPR stock in
accordance with the terms of the Preference Securities Exchange
Agreement.
ARTICLE 11
11.1 INDEMNIFICATION IN FAVOUR OF THE PURCHASER
The Vendor shall indemnify and save the Purchaser harmless of and from any
loss, liability, claim, damage (excluding consequential damage) or expense
including legal expenses (collectively, "DAMAGES") suffered by, imposed upon or
asserted against the Purchaser as a result of, in respect of, connected with, or
arising out of, under, or pursuant to:
(a) third party claims relating to the ownership, management or
control of the Purchase Assets prior to the Closing;
(b) any failure of the Vendor to perform or fulfil any post-Closing
covenant of the Vendor under this Agreement or any Ancillary
Agreement; and
(c) any material breach or inaccuracy of any representation or
warranty given by the Vendor contained in this Agreement or in
any Ancillary Agreement.
11.2 INDEMNIFICATION IN FAVOUR OF THE VENDOR
(1) The Purchaser shall indemnify and save the Vendor harmless of and from
any Damages suffered by, imposed or asserted against the Vendor as a
result of, in respect of, connected with, or arising out of, under or
pursuant to:
(a) third party claims relating to the ownership, management (subject
to the management functions performed by the Property Manager) or
control of the Purchase Assets after the Closing;
(b) any failure of the Purchaser to perform or fulfil any
post-Closing covenant of the Purchaser under this Agreement or
any Ancillary Agreement; and
(c) any material breach or inaccuracy of any representation or
warranty given by the Purchaser contained in this Agreement or in
any Ancillary Agreement.
(2) EPR shall indemnify and save the Vendor harmless of and from any
Damages suffered by, imposed or asserted against the Vendor as a
result of, in respect of, connected with, or arising out of, under or
pursuant to:
(a) any failure of EPR to perform or fulfil any post-Closing covenant
of EPR under this Agreement or any Ancillary Agreement; and
(b) any material breach or inaccuracy of any representation or
warranty given by EPR contained in this Agreement or in any
Ancillary Agreement.
Recourse against EPR pursuant to the indemnity in Section 11.2
(2) (a) above, shall be limited to the Pledge, the GP Pledge and
the Default LC, except in connection with EPR's covenants,
obligations and liability pursuant to the Preference Securities
Exchange Agreement, including, pursuant to the Preference
Securities Exchange, Five Year Payment/Stock Issuance,
Acceleration and Distribution Indemnity, as well as pursuant to
the EPR Construction Indemnity and EPR Servicing Indemnity.
11.3 CLAIMS FOR BREACH OF REPRESENTATIONS OR WARRANTIES
(1) No party shall be entitled to claim for indemnification as a result of
a breach of a representation or warranty of which it had actual notice
prior to the Closing. If the Vendor has knowledge or constructive
knowledge of a breach of representation or warranty by the Purchaser
or EPR hereunder prior to Closing and closes the Agreement, it shall
be deemed to have waived such breach; if the Purchaser or EPR has
knowledge or constructive knowledge of a breach of representation or
warranty by the Vendor hereunder prior to Closing and closes the
Agreement, it shall be deemed to have waived such breach.
(2) In the event that any Party hereto has notice prior to Closing of a
breach of representation by another Party and it does not waive such
breach, its sole right and remedy with respect to such breach shall be
to terminate this Agreement as provided in Article 8 for
non-satisfaction of the condition set forth in Section 8.1(a) or
8.2(a), as the case may be, subject to Section 10.3.
(3) Subject to (1) above, the Vendor may make a claim for indemnification
for breach of a representation or warranty by the Purchaser or EPR,
and the Purchaser or EPR may make a claim for indemnification for
breach of a representation or warranty by the Vendor by delivering
notice thereof, together with details, forthwith upon becoming aware
of such breach. Upon receipt of such notice, the provisions of Section
11.5 shall become applicable.
11.4 POST-CLOSING ASSISTANCE
The Vendor shall and shall cause PenEquity to provide the Purchaser with
reasonable assistance with respect to any third-party claim after Closing by
making available to the Purchaser during regular business hours the books and
records relating to the Purchase Assets and such employees of PenEquity as may
be reasonably required. The Purchaser shall reimburse the Vendor and PenEquity
for their reasonable costs and expenses with respect to such assistance,
including
salaries of employees during any period when they are examined for discovery or
required to be present at an arbitration or court hearing.
11.5 INDEMNIFICATION PROCEEDINGS - THIRD PARTY CLAIMS
(1) Promptly after receipt by an indemnified party (an "INDEMNIFIED
PARTY") of commencement of any proceeding against it by a third party
(a "PROCEEDING"), the Indemnified Party will, if a claim is to be made
against an indemnifying party hereunder, give notice to the
indemnifying party (an "INDEMNIFYING PARTY") of the commencement of
such claim. The failure to notify the Indemnifying Party will not
relieve the Indemnifying Party of any liability that it may have to
any Indemnified Party, except to the extent that the Indemnifying
Party demonstrates that the defence of such action is prejudiced by
the Indemnified Party's failure to give such notice.
(2) If any Proceeding is brought against an Indemnified Party and it gives
notice to the Indemnifying Party of the commencement of the
Proceeding, the Indemnifying Party will be entitled to participate in
the Proceeding as hereinafter provided. Subject to the next following
sentence, to the extent that the Indemnifying Party wishes to assume
the defence of the Proceeding, it may do so provided it reimburses the
Indemnified Party for all of its reasonable expenses with respect to
the Proceeding for solicitor's and experts' fees and disbursements
arising prior to or in connection with such assumption. The
Indemnifying Party may not assume defence of the Proceeding if (i) the
Indemnifying Party is also a party to the Proceeding and the
Indemnified Party determines in good faith that joint representation
would be inappropriate, or (ii) the Indemnifying Party fails to
provide reasonable assurance to the Indemnified Party of its financial
capacity to defend the Proceeding and provide indemnification with
respect to the Proceeding. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defence of the
Proceeding as against the Indemnified Party, the Indemnifying Party
will not, as long as it diligently conducts such defence, be liable to
the Indemnified Party under this Section 11.5 for any fees of other
counsel or any other expenses with respect to the defence of the
Proceeding, in each case subsequently incurred by the Indemnified
Party in connection with the defence of the Proceeding, other than
reasonable costs of investigation approved in advance by the
Indemnifying Party acting reasonably. If the Indemnifying Party
assumes the defence of a Proceeding as against the Indemnified Party
(i) it will be established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of, and subject
to, indemnification unless the Indemnifying Party provides prompt
notice to the
Indemnified Party that it reserves its rights to dispute the
underlying claim for indemnification, (ii) no compromise or settlement
of such claims may be made by the Indemnifying Party without the
Indemnified Party's consent unless (A) there is no admission of any
violation of Laws or any violation of the rights of any Person and no
adverse effect on any other claims that may be made against the
Indemnified Party, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party, and (iii) the
Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent.
If notice is given to an Indemnifying Party of the commencement of any
Proceeding and the Indemnifying Party does not, within ten days after
receipt of such notice, give notice to the Indemnified Party of its
election to assume the defence of the Proceeding, the Indemnifying
Party will be bound by any determination made in the Proceeding or any
compromise or settlement effected by the Indemnified Party in each
case acting in good faith, subject to reservation of its right to
dispute the underlying claim for indemnification, if applicable.
Notwithstanding the foregoing, if an Indemnified Party determines in
good faith that there is a reasonable probability that a Proceeding
may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification
under this Agreement, the Indemnified Party may, by notice to the
Indemnifying Party, assume the exclusive right to defend, compromise,
or settle the Proceeding. In such case, the Indemnifying Party will
not be bound by any compromise or settlement effected in good faith
without its consent (which may not be unreasonably withheld) but shall
be bound by a final and conclusive judgment of a court of competent
jurisdiction, subject to reservation of its right to dispute the
underlying claim for indemnification, if applicable.
Where the defence of a Proceeding is being undertaken and controlled
by the Indemnifying Party, the Indemnified Party will use its best
efforts to make available to the Indemnifying Party those employees
whose assistance, testimony or presence is necessary to assist the
Indemnifying Party in evaluating and defending any such claims.
However, the Indemnifying Party shall be responsible for the expense
associated with any employees made available by the Indemnified Party
to the Indemnifying Party pursuant to this Section 11.5, which expense
shall be equal to an amount to be mutually agreed upon per person per
hour or per day for each day or portion thereof that the employees are
assisting the Indemnifying Party and which expenses
shall not exceed the actual cost to the Indemnified Party associated
with the employees.
With respect to any Proceeding at the request of the Indemnifying
Party, the Indemnified Party shall make available to the Indemnifying
Party or its representatives on a timely basis all documents, records
and other materials in the possession of the Indemnified Party, at the
expense of the Indemnifying Party, reasonably required by the
Indemnifying Party for its use in defending any such claim and shall
otherwise cooperate on a timely basis with the Indemnifying Party in
the defence of such claim.
11.6 CONSEQUENTIAL DAMAGES
The Parties agree that, notwithstanding any other provision of this
Agreement, no Person granting an indemnity hereunder, in any of the Ancillary
Agreements or otherwise in connection herewith shall in any circumstances be
liable for consequential damages.
ARTICLE 12
GENERAL
12.1 OBLIGATIONS AS COVENANTS
Each agreement and obligation of the parties contained in this Agreement,
even though not expressed as a covenant, shall be considered for all purposes to
be a covenant.
12.2 AMENDMENT OF AGREEMENT
No supplement, modification, waiver or amendment of this Agreement shall be
binding unless executed and delivered in writing by the parties to this
Agreement.
12.3 FURTHER ASSURANCES
Each of the parties shall from time to time hereafter and upon any
reasonable request of the other, execute and deliver, make or cause to be made
all such further acts, deeds, assurances and things as may be required or
necessary to more effectually implement and carry out the true intent and
meaning of this Agreement.
12.4 WAIVER
No waiver of any default, breach or non-compliance under this Agreement
shall be effective unless in writing and signed by the party to be bound by the
waiver or its solicitor. No waiver shall be inferred from or implied by any
failure to act or delay in acting by a party in respect of any default, breach
or non-observance or by anything done or omitted to be done by the other party.
The waiver by a party of any default, breach or non-compliance under this
Agreement shall not operate as a waiver of that party's rights under this
Agreement in respect of any other default, breach or non-observance.
12.5 PLANNING ACT
This Agreement shall be effective to create an interest in the Lands only
if the provisions of the PLANNING ACT (Ontario) are complied with. The Vendor
shall at its own expense forthwith apply for and diligently pursue any required
consent under the PLANNING ACT (Ontario) to the conveyance of the Freehold Lands
and the Leasehold Interest to the Purchaser which consent shall be final and
binding (and not subject to appeal) on the Closing Date subject only to
conditions acceptable to both the Purchaser and the Vendor, which conditions
shall have been satisfied by the Vendor, at its expense, on or before the
Closing Date, failing which, this Agreement shall be terminated, and in which
event neither party shall be under any further obligation to the other under
this Agreement and the Deposit, together with all accrued interest thereon,
shall be returned to the Purchaser forthwith without deduction.
12.6 SOLICITORS AS AGENTS AND TENDER
Any notice, approval, waiver, agreement, instrument, document or
communication permitted, required or contemplated by this Agreement may be given
or delivered and accepted or received by the Purchaser's Solicitors on behalf of
the Purchaser and by the Vendor's Solicitors on behalf of the Vendor and any
tender of closing documents and the balance of the Closing Payment may be made
upon the Vendor's Solicitors and the Purchaser's Solicitors, as the case may be.
12.7 SURVIVAL
Except as otherwise provided in this Agreement, this Agreement shall
survive the delivery and registration, where necessary, of the closing documents
on the Closing Date and shall remain in full force and effect thereafter in
accordance with its terms.
12.8 SUCCESSORS AND ASSIGNS
(1) All of the covenants and agreements in this Agreement shall be binding
upon the parties and their respective successors and assigns
and shall enure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns pursuant to the
terms and conditions of this Agreement.
(2) Except as provided in this Section 12.8, neither this Agreement nor
any of the rights or obligations under this Agreement shall be
assignable by the Purchaser without the prior consent of the Vendor,
or by the Vendor without the prior consent of the Purchaser. The
Purchaser acknowledges that it is critical to this transaction that
the Person holding registered and beneficial title to the Property and
the Other Properties be bound by the obligations of the Purchaser
under this Agreement and the Ancillary Agreements.
12.9 CONFIDENTIALITY
Subject to Section 12.10, the Purchaser shall keep in strict confidence
this Agreement, the transactions contemplated by this Agreement and all
Confidential Information made available or obtained with respect to the Property
pursuant to this Agreement until such time as the transaction contemplated by
this Agreement is completed, provided that the Purchaser shall be entitled to
disclose such transactions and any and all Confidential Information to its
directors, prospective institutional lenders, professional consultants, agents
and advisors and agrees to instruct those parties to comply with the provisions
of this Section. For the purposes of this Section, "CONFIDENTIAL INFORMATION"
means any of the Property Documents, but not including:
(a) public information or information in the public domain at the
time that such information is obtained by the Purchaser;
(b) information that becomes public through no fault of the
Purchaser, its directors, prospective institutional lenders,
consultants, agents or advisors;
(c) information required to be disclosed by law;
(d) information received in good faith from a third party; and
(e) information required to be disclosed by the Purchaser to enforce
any of its rights and/or remedies hereunder, at law, in equity or
by statute.
If this Agreement is terminated, the Purchaser shall promptly return to the
Vendor all documentation, written information and similar material provided to
the Purchaser or its advisors by the Vendor. This Section 12.9 shall survive the
termination of this Agreement.
12.10 ANNOUNCEMENTS
Any press release or public statement or announcement (a "PUBLIC
STATEMENT") with respect to the transaction contemplated in this Agreement shall
be made only with the prior written consent and joint approval of the Vendor and
the Purchaser unless such Public Statement is required by Law or by any stock
exchange, in which case the Party required to make the Public Statement shall
use its best efforts to obtain the approval of the other Party as to the form,
nature and extent of the disclosure.
12.11 NO REGISTRATION OF AGREEMENT
The Purchaser shall not register this Agreement or any notice of this
Agreement against title to the Property. If the Purchaser registers this
Agreement or any notice of this Agreement against title to the Property in
contravention of this Section, the Purchaser agrees that the Vendor shall be
entitled to injunctive relief to cause the removal of such registration.
12.12 NOTICES
(1) ADDRESSES FOR NOTICE. Any notice, certificate, consent, determination
or other communication required or permitted to be given or made under
this Agreement (a "NOTICE") shall be in writing and shall be
effectively given and made if (i) delivered personally, (ii) sent by
prepaid courier service, or (iii) sent by fax or other similar means
of electronic communication, in each case to the applicable address
set out below:
(a) in the case of the Vendor, PenEquity and the Property Manager,
addressed to each:
c/o PenEquity Management Corporation
Suite 400
370 King Street West
Toronto, Ontario
M5V 1J9
Attention: David Johnston, President and C.E.O.
Fax: 416-408-3075
with a copy to:
Gardiner Roberts LLP
Scotia Plaza, Suite 3100
40 King Street West
Toronto, Ontario
M5H 3Y2
Attention: Robert K. Schwartz
Fax: 416-865-6636
(b) in the case of the Purchaser and EPR, addressed to each:
in care of Entertainment Properties Trust
Suite 201
30 Pershing Road
Kansas City, Missouri
USA
64108
Attention: David Brain, President and C.E.O.
Fax: 816 472 5794
with a copy to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Brenda Hebert
Fax: 416 947 0866
(2) RECEIPT OF NOTICE. Any such communication so given or made shall be
deemed to have been given or made and to have been received on the day
of delivery if delivered, or on the day of faxing or sending by other
means of recorded electronic communication, provided that such day in
either event is a Business Day and the communication is so delivered,
faxed or sent prior to 4:30 p.m. on such day. Otherwise, such
communication shall be deemed to have been given and made and to have
been received on the next following Business Day. Any such
communication given or made in any other manner shall be deemed to
have been given or made and to have been received only upon actual
receipt.
(3) CHANGE OF ADDRESS. Any party may from time to time change its address
under this Section by notice to the other party given in the manner
provided by this Section.
12.12.1 ENTIRE AGREEMENT
This Agremeent and the Ancillary Agreements constitute the entire agreement
between the parties with respect to the transactions contemplated in this
Agreement and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. There are no
representations, warranties, covenants, conditions or other agreements,
express or implied, collateral, statutory or otherwise, between the parties
in connection with the subject matter of this Agreement, except as
specifically set forth in this Agreement and the Ancillary Agreements. The
parties have not relied and are not relying on any other information,
discussion or understanding in entering into and completing the
transactions contemplated by this Agreement.
12.13 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument. Counterparts may be executed
either in original or faxed form and the parties adopt any signatures received
by a receiving fax machine as original signatures of the parties; provided,
however, that any party providing its signature in such manner shall promptly
forward to the other party an original of the signed copy of this Agreement
which was so faxed.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date
hereof.
ENTERTAINMENT PROPERTIES TRUST
By:
--------------------------------
By:
--------------------------------
EPR NORTH TRUST
By:
-------------------------------
TRUSTEE
PENEX WHITBY LTD., in its
capacities as general partner and
nominee of Whitby Centrum Limited
Partnership
By:
--------------------------------
By:
--------------------------------
SCHEDULE "A"
LEGAL DESCRIPTION - WHITBY
FIRSTLY: FREEHOLD LANDS
Registered Owner: Penex Whitby Ltd.
PIN: 26488-0135 (LT)
Lots 2 and 3, Part Lot 1, Plan M-1204, designated as Part 1 on 40R-18261, Town
of Whitby, Regional Municipality of Durham.
SECONDLY: LEASEHOLD LANDS
PIN 26488-0252 (LT)
Registered Owner: Stan Vine Construction Inc.
Part of Lot 21, Concession 1, Town of Whitby, designated as Parts 4, 5 and 6 on
Plan 40R-18261, Regional Municipality of Durham.
SUBJECT TO D201697 and D201719 assigned by D205890.
THIRDLY: LICENCED LANDS
PIN 26488-0069 (LT)
Registered Owner: The Hydro-Electric Power Commission of Ontario
Part of the south half of Lot 22, Concession 1, Town of Whitby, as in C0158426
lying south of Consumers Drive, designated as Parts 2, 3, 7, 8, 9 and 10 on Plan
40R - 18261, Regional Municipality of Durham, being the whole of the PIN.
SUBJECT TO WH8332 and assigned by D200411.
SUBJECT TO D201719.
SCHEDULE "B"
EXCHANGEABLE PREFERENCE SECURITIES
The Exchangeable Preference Securities will include and carry with them the
following terms and conditions:
(a) distributions will be paid thereon to the Vendor at the rate of eight
(8%) percent per annum calculated on the stated value of same, which
shall be payable quarterly on a senior basis from interest income
generated by the Limited Partnership (the "DISTRIBUTION");
(b) commencing two (2) years from Closing (or earlier, at the option of
the Vendor, if an Event has occurred), the holders of the Exchangeable
Preference Securities may exchange at any time or times all or part of
the Exchangeable Preference Securities, (subject to the requirement to
retain a certain number of such Securities while the Liberty ITM
Guarantee remains outstanding), for that number of shares of common
stock in EPR equal to the stated value of the Exchangeable Preference
Securities tendered for exchange, divided by the Exchange Price (the
"PREFERENCE SECURITIES EXCHANGE"). The Exchange Price will be equal to
one hundred and twenty (120%) percent of the Canadian Dollar
equivalent price of the 30 day moving average of EPR common stock as
at the date of execution of this agreement, using the exchange rate
published as the noon rate by the Bank of Canada on the date of
execution of this Agreement.
For the purpose of clarification, the number of shares of common stock
in EPR that may be issued to the holders of the Exchangeable
Preference Securities on the exchange shall be equal to the result
obtained by dividing (i) the stated value of the Exchangeable
Preference Securities the Vendor holds at the date of conversion (it
being acknowledged that the stated value of such units would only be
less than at Closing if some and not all of the Exchangeable
Preference Securities are exchanged) plus the Distribution accrued to
that date (provided that such date is a quarterly payment date) less
any amount outstanding under the Liberty ITM Guarantee, by (ii) one
hundred and twenty (120%) percent times the Canadian Dollar equivalent
price of EPR common stock as at the date of execution of this
Agreement. The Exchange Price will be subject to standard
anti-dilution provisions, as more particularly reflected in the
Preference Securities Exchange Agreement. The following example shall
illustrate the operation of the foregoing Preference Securities
Exchange:
1. Stated value of Exchangeable Preference Securities on Closing:
$9,000,000.00 Cdn.
2. EPR common stock as at date of execution of Agreement: $30.00
U.S. = $39.60 Cdn. (assuming exchange rate of $1.00 U.S. as at
date of execution of this Agreement = $1.32 Cdn.; Exchange Price
= 120%x $39.60 = $47.52 Cdn.
3. Assume Liberty ITM Guarantee no longer in effect and nothing
owing thereunder.
4. Assume no Distribution is payable.
5. Vendor wishes to exchange 1/3 of Exchangeable Preference
Securities. Therefore, stated value of Exchangeable Preference
Securities to be exchanged = $3,000,000.00 Cdn.
6. Number of EPR common stock issued in return for Exchangeable
Preference Securities = $3,000,000.00/$47.52 = 63,131.
7. Assume that 3 months later, Vendor wishes to exchange the balance
of Exchangeable Preference Securities (no Distribution is
payable): stated amount for remaining Exchangeable Preference
Securities = $6,000,000.00 Cdn.
8. Number of EPR common stock issued in return for Exchangeable
Preference Securities = $6,000,000.00/$47.52 = 126,262
(c) the agreement governing the Limited Partnership shall prohibit the
issuance of any other units or other securities ranking, or capable of
ranking, equal to or in priority with the Exchangeable Preference
Securities or the alteration of its unit characteristics in a way that
would be prejudicial to the rights and privileges of the holder of the
Exchangeable Preference Securities;
(d) at the end of the Lease-Up Period, if Vendor elects to "convert" the
remaining Exchangeable Preference Securities, then at EPR's option
either:
(A) EPR shall pay to the Vendor the stated value of all then
outstanding Exchangeable Preference Securities, together
with all Distributions accruing to the end of the Lease-Up
Period; or
(B) EPR shall issue EPR common stock equal in value to the
stated value of all then outstanding Exchangeable Preference
Securities together with all Distributions accruing to the
end of the Lease-Up Period.
(the "FIVE YEAR PAYMENT/STOCK ISSUANCE").
By way of example, if no Exchangeable Preference Securities have been
exchanged pursuant to the Preference Securities Exchange; the Liberty
ITM Guarantee has been released; no Distribution is payable, the
Vendor will receive $9,000,000.00 Cdn. based on the exchange rate
published as the noon rate by the Bank of Canada on the Business Day
immediately prior to the payment to the Vendor, or EPR common stock
which is then worth $9,000,000.00 Cdn., based on the exchange rate
published as the noon rate by the Bank of Canada on the Business Day
immediately prior to the issuance of EPR common stock to the Vendor
and at a price for the EPR common stock based on the 30 day moving
average for EPR common stock.
(e) notwithstanding any provision contained herein, the Purchaser
acknowledges and agrees that if an Event has occurred at any time
within the Lease-Up Period, the Vendor may, at its option, accelerate
the Five Year Payment/Stock Issuance (the "ACCELERATION");
(f) the Preference Securities Exchange, Five Year Payment/Stock Issuance,
Acceleration and Distribution shall be governed by the terms and
provisions of the Preference Securities Exchange Agreement and Limited
Partnership Agreement;
(g) on or prior to Closing, EPR shall provide the Vendor with a
Registration Rights Agreement, in form and substance satisfactory to
the Vendor;
(h) the Vendor agrees that it will hold the Exchangeable Preference
Securities, together with the other Vendors through a nominee/security
trustee; and
(i) EPR shall indemnify and save the Vendor harmless from all costs,
losses, damages and liabilities suffered or incurred by the Vendor as
a result of the Limited Partnership's failure to make the Distribution
as required, excluding any consequential damages (the "DISTRIBUTION
INDEMNITY"), which shall be secured by the Pledge and GP Pledge.
SCHEDULE "C"
PERMITTED ENCUMBRANCES - FREEHOLD LANDS
AS AT NOVEMBER 4, 2003
TAB REGISTRATION NO. REGISTRATION DATE DESCRIPTION
- --- ---------------- ----------------- -----------
1. LT117328 December 11/80 Agreement with Region of Durham
2. LT156604 November 8/82 Agreement with Town
3. LT857573 June 26/98 Part Lot Exemption By-law
4. LT883624 January 08/99 Notice of Lease - AMC
5. LT889583 March 1/99 Agreement with Town of Whitby
6. LT906103 June 29/99 Agreement with Region of Durham
7. LT906104 June 29/99 Easement to Region of Durham
8. LT906106 June 29/99 Partial Determination of Lease re LT883624 & LT883626
9. LT929753 November 10/99 Agreement with Town of Whitby
10. LT935346 December 15/99 Agreement with Region of Durham
11. LT949422 March 31/00 Notice of Lease - Cara Operations
12. LT967667 July 6/00 Agreement with Town (re LT866666)
13. LT970313 July 20/00 Agreement with Town
14. LT981144 September 5/00 Agreement with Town
15. LT987117 October 3/00 Agreement with Town
16. LT1007479 January 16/01 Agreement with Town
17. LT1007480 January 16/01 Agreement with Town
18. DR131518 November 26/02 Agreement with Town
19. DR165468 April 17/03 Agreement with Town
20. DR175528 May 29/03 Notice of Lease - Kelsey's Holdings Inc.
PERMITTED ENCUMBRANCES - LEASEHOLD LANDS
AS AT NOVEMBER 4, 2003
TAB REGISTRATION NO. REGISTRATION DATE DESCRIPTION
- --- ---------------- ----------------- -----------
1. D201697 August 7/85 Easement - Hydro-Electric Power Commission
2. D201718 August 7/85 Easement - Hydro-Electric Power Commission
3. D205890 October 7/85 Easement - Public Utilities Commission, Town of Whitby
4. D521932 September 3/98 Notice of Lease - Penex Whitby Ltd.
5. D542315 November 10/99 Agreement - Penex Whitby & Town of Whitby
6. D546297 March 31/00 Notice of Lease - Penex Whitby & Cara Operations
7. LT1027713 May 9/01 Notice of Sublease - AMC
8. DR71703 April 29/02 Surrender of Lease - Cara Operations
9. DR120869 October 17/02 Notice - Amend Parcel Register
10. DR170824 May 8/03 Change of Name - 292441 to Stan Vine Construction Inc.
11. DR171680 May 13/03 Application General - amend parcel
PERMITTED ENCUMBRANCES - LICENSED LANDS
AS AT NOVEMBER 4, 2003
TAB REGISTRATION NO. REGISTRATION DATE DESCRIPTION
- --- ---------------- ----------------- -----------
1. WH8332 December 22/27 transfer of easement - Hydro-Electric Power Commission
2. D200411 July 17/85 multiple easements - Ontario Hydro to Public Utilities Commission
3. D201719 August 7/85 easement - Hydro-Electric Power Commission
4. D542315 November 20/99 Agreement - Penex Whitby & Town of Whitby
5. D546297 March 31/00 Notice of Lease - Cara Operations Limited
PERMITTED ENCUMBRANCES - GENERAL
1. All reservations, limitations, provisos and conditions expressed in the
original grant from the Crown.
2. Any registered or unregistered licenses, easements, rights-of-way, rights
in the nature of easements and agreements with respect thereto which relate
to the provisions of utilities or services to the Property or adjacent
lands (including, without limitation, agreements, easements, licenses,
rights-of-way and interests in the nature of easements for sidewalks,
public ways, sewers, drains, gas, steam and water mains or electric light
and power, or telephone and telegraphic conduits, poles, wires and cables)
and which do not in the aggregate materially detract from the value or
marketability of the Property or impair the existing or proposed uses
thereof, provided such are complied with.
3. Minor title defects being defects or irregularities in title to the
Property, or encroachments which are of a minor nature and which do not in
the aggregate materially detract from the value or marketability of, or
impair the existing or proposed uses of the Property or that part of the
Property affected by the defect, irregularity or encroachment.
4. Subdivision, site plan, development or other municipal agreements or
agreements with publicly regulated utilities, provided such are complied
with and do not materially detract from the value or marketability of the
Property or impair the existing or proposed uses thereof.
5. Any registered restrictions or covenants that run with the Property
provided such have been complied with and do not materially detract from
the value or marketability of the Property or materially impair the
existing or proposed uses thereof.
6. Any Instrument registered by the Purchaser, or due to the action of the
Purchaser or its agents.
7. Any notice of lease in respect of any leases that are being assumed by the
Purchaser.
SCHEDULE "D"
MANDATORY ASSUMED CONTRACTS
TO BE PROVIDED
SCHEDULE "E"
LIBERTY ITM GUARANTEE
If the Vendor does not satisfy any amounts owing pursuant to the Liberty
ITM Guarantee by the end of a calendar quarter, any such amounts shall be
satisfied by setting off (the "SET-OFF") same against either the cash payable or
value of EPR common stock issued pursuant to the agreements required in
connection with the Exchangeable Preference Securities, or against other amounts
owing to the Vendor under this Agreement, as directed by the Vendor.
The Liberty ITM Guarantee shall only apply with respect to Liberty ITM
Tenants for which the Vendor has been paid (either the applicable Liberty ITM
Tenant was in Occupancy pursuant to a Leased Built Space Lease on Closing, or
the lease is a Previously Adjusted Lease). Furthermore, at its option, the
Vendor may at any time prior to being paid in respect of such Liberty ITM Tenant
(either prior to or after Closing), substitute another tenant in its place,
pursuant to the terms of this Agreement, in which case there shall be no rental
guarantee in respect of such Liberty ITM Tenant or applicable premises.
If a Liberty ITM Tenant for which the Vendor has been paid is terminated
during the Liberty ITM Guarantee Period, the Vendor may replace such tenant in
order to mitigate the loss of revenue. Furthermore, if a Liberty ITM Tenant is
in default, the Vendor shall be permitted to terminate such tenancy or negotiate
a surrender of such tenancy with the approval of the Purchaser, acting
reasonably.
The Purchaser recognizes that if a Liberty ITM Tenant has vacated its
premises and the Liberty ITM Guarantee is in effect, the additional rent payable
pursuant to the Liberty ITM Guarantee while the premises are vacant may be less
than the amount that was otherwise payable by such Liberty ITM Tenant while it
was in possession.
In order to secure the Set-Off, at no time during the third (3rd) year
following the Closing Date and during the fourth (4th) year following the
Closing Date shall the stated amount of the Exchangeable Preference Securities
fall below amounts to be agreed upon between the parties prior to Closing,
subject to the pro rata reduction of such numbers to the extent any of the
applicable Liberty ITM Tenants are replaced as set out above, in which case the
Liberty ITM Guarantee shall be reduced accordingly. For greater certainty, if
the Liberty ITM Guarantee is released, the foregoing restriction on the Vendor's
right to effect the Preference Securities Exchange shall not apply.
The Vendor shall not be required to expend any monies pursuant to the
Liberty ITM Guarantee, including in connection with tenant improvements or
commissions for replacement tenants that it has secured, it being the parties'
intention that the Purchaser shall pay such amounts, which will then be set off
against the amounts payable to the Vendor pursuant to the agreements in
connection with the Exchangeable Preference Securities, which set off would be
against either the cash payable or value of EPR common stock issued.
Notwithstanding anything to the contrary contained herein, the Vendor shall
in no event be liable under the Liberty ITM Guarantee for any applicable
tenancy, for an amount in excess of the amount paid to it by the Purchaser for
such tenancy either as part of the Base Purchase Price or Leasing Adjustments,
net of the corresponding Construction Advance applicable to such tenancy;
provided that if the Tenant under the applicable Lease was in Occupation prior
to Closing, the Liberty ITM Guarantee shall not exceed, for such Lease, the
applicable portion of the Base Purchase Price less $100 per square foot of Gross
Leaseable Area for such premises.