カナダのＲＥＩＴ運用会社間の戦略投資契約（Strategic Investment Agreement）

 

STRATEGIC INVESTMENT AGREEMENT

BETWEEN:

PRO REIT LIMITED PARTNERSHIP

-and-

LOTUS CRUX ACQUISITION LP

September 30, 2014

TABLE OF CONTENTS

Article 1 INTERPRETATION AND GENERAL MATTERS ……………………… 1

1.1 Definitions………………………………………………. 1

1.2 Time of the Essence …………………………………. 4

1.3 Calculation of Time …………………………………. 5

1.4 Business Days …………………………………………. 5

1.5 Headings ……………………………………………………………… 5

1.6 Plurals and Gender ………………………………………………… 5

1.7 Statutory References …………………………………………….. 5

1.8 Other References ………………………………………………….. 5

Article 2 MEZZANINE LOAN OPTION ……………………………. 5

2.1 Mezzanine Loan ………………………………………………… 5

2.2 Mezzanine Loan Terms………………………………………….. 6

Article 3 PROPERTY OPPORTUNITIES ……………………………….. 7

3.1 Master LP Purchase Option ……………………………………………… 7

Article 4 FEES ………………………………………………………………………. 8

4.1 Acquisition Fees………………………………………………… 8

Article 5 REPRESENTATIONS AND WARRANTIES …………………………. 9

5.1 Representations and Warranties of Lotus Crux Acquisition …………………. 9

5.2 Representations and Warranties of Master LP …………………………… 10

Article 6 AMENDMENTS ……………………………………………. 10

6.1 Amendments, Modifications, etc. …………………………………………….. 10

Article 7 DISPUTE RESOLUTION ……………………………………………… 10

7.1 Arbitration ………………………………… 10

Article 8 TERMINATION ……………………………………………… 11

8.1 Termination …………………………………………………. 11

Article 9 GENERAL …………………………………………………… 11

9.1 Public Filing …………………………………………… 11

9.2 Further Assurances…………………………………………….. 11

9.3 Severability ……………………………………………………. 11

9.4 Assignment and Enurement ………………………………… 11

9.5 Entire Agreement ………………………………………………… 12

9.6 Waiver ……………………………………………………………… 12

9.7 Notices …………………………………………………………………… 12

9.8 Negation of Partnership, Joint Venture or Lease ………………………………… 13

9.9 Counterparts ……………………………………………………………………….. 13

9.10 Governing Law ………………………………………………………………………… 13

9.11 Regulatory Approvals …………………………………………………. 14

9.12 Consent ……………………………………………………………………. 14

STRATEGIC INVESTMENT AGREEMENT

THIS AGREEMENT made as of the 30th day of September, 2014.

BETWEEN:

PRO REIT LIMITED PARTNERSHIP, a limited partnership existing under the laws of the Province of Québec, herein acting and represented by its general partner, PRO REIT GP INC., a corporation governed by the laws of Canada

(the “Master LP”)

-and-

LOTUS CRUX ACQUISITION LP, a limited partnership formed under the laws of the Province of Ontario, herein acting and represented by its general partner, LOTUS CRUX ACQUISITION GENERAL PARTNER INC., a corporation governed by the laws of Ontario

(“Lotus Crux Acquisition”)

WHEREAS the Master LP is a wholly owned subsidiary of the PRO Real Estate Investment Trust (the “REIT”);

WHEREAS the REIT will, in connection with a public offering and a concurrent private placement of trust units of the REIT, indirectly acquire, through its subsidiaries, a portfolio of income-producing commercial properties located in Nova Scotia, New Brunswick, Québec and Alberta;

AND WHEREAS Lotus Crux Acquisition is engaged in, among other things, the business of acquiring, stabilizing and developing commercial real estate;

AND WHEREAS the Parties have agreed to enter into this Agreement;

NOW, THEREFORE in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are acknowledged), the Parties agree as follows:

 

ARTICLE 1

INTERPRETATION AND GENERAL MATTERS

1.1 Definitions

In this Agreement, the following terms have the following meanings:

(a) “Affiliate” means a Person considered to be an affiliated entity of another Person within the meaning of Ontario Securities Commission Rule 45-501 – Ontario Prospectus and Registration Exemptions;

(b) “Agreement”, “this Agreement”, “the Agreement”, “hereof”, “herein”, “hereto”, “hereby”, “hereunder” and similar expressions mean this Agreement, including all of its schedules and all instruments supplementing, amending or confirming this Agreement. All references to “Articles” or “Sections” refer to the specified Article or Section of this Agreement;

(c) “Business Day” means any day other than Saturday, Sunday and statutory holidays in the Province of Québec;

(d) “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have corresponding meanings;

(e) “Encumbrance” means any security interest, lien, charge, pledge, encumbrance, mortgage, title retention agreement, easement, encroachment, right-of-way, restrictive covenant, license, lease, agreement or any other claim of any nature or kind, whether financial or otherwise, including, without limitation, any work order, notice of violation, notice of non-compliance or other instrument issued by any board, commission tribunal or government department or agency;

(f) “Equity Component” means, in respect of a proposed Investment Property, the portion of the total acquisition cost (including, but not limited to purchase price, capital expenditure budget, development costs, tenant improvement allowances and leasing costs) that cannot be financed pursuant to first mortgage financing;

(g) “Exchange” means the TSX Venture Exchange or such other principal stock exchange on which the trust units of the REIT are listed;

(h) “Event of Default” means (i) the occurrence of an Event of Insolvency in respect of the Master LP or Lotus Crux Acquisition, as applicable, (ii) a material breach by the Master LP or Lotus Crux Acquisition, as applicable, of the terms of this Agreement if such material breach is not cured within thirty (30) days of receipt by the Master LP or Lotus Crux Acquisition, as applicable, of Notice of such material breach from the Master LP or Lotus Crux Acquisition, as applicable, or (iii) fraudulent misconduct of, or the misappropriation of funds by, the Master LP or Lotus Crux Acquisition, as applicable;

(i) “Event of Insolvency” means any one or more of the following events in respect of the Master LP or Lotus Crux Acquisition, respectively:

(i) if the Party is:

(A) wound up, dissolved or liquidated, or becomes subject to the provisions of the Winding-Up and Restructuring Act (Canada) or any successor legislation thereto or has its existence terminated or has any resolution passed therefor;

(B) makes a general assignment for the benefit of its creditors or a proposal (including the filing of a notice of intention to make a proposal) under the Bankruptcy and Insolvency Act (Canada) or any successor legislation thereto; or

(C) proposes a compromise or arrangement under the Companies’ Creditors Arrangement Act (Canada) or any successor legislation thereto or files any petition or answer seeking a stay of proceedings or any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future law relative to bankruptcy, insolvency or other relief for debtors or for the benefit of creditors;

(ii) if a court of competent jurisdiction enters an order, judgment or decree approving a petition or application filed against the Party seeking a stay of proceedings or any reorganization, arrangement, composition, readjustment, liquidation, dissolution, winding up, termination of existence, declaration of bankruptcy or insolvency or similar relief under any present or future law relating to bankruptcy, insolvency or other relief for or against debtors and such Party acquiesces in the entry of such order, judgment or decree and such order, judgment or decree remains un-vacated or un-stayed for an aggregate of thirty (30) days (whether or not consecutive) from the day of entry thereof; or if any trustee in bankruptcy, receiver, receiver and manager, liquidator or any other officer with similar powers shall be appointed for the such Party or of all or any substantial part of its property with the consent or acquiescence of such Party or such appointment remains un-vacated or un-stayed for an aggregate of thirty (30) days (whether or not consecutive);

(iii) the Party becomes insolvent or admits its inability to pay its debts generally as they become due; or

(iv) an encumbrancer takes possession of all or substantially all of a Party’s assets and such possession remains for a period of fifteen (15) days (whether or not consecutive);

(j) “Governmental Authority” means, whether domestic or foreign, (i) any multinational, federal, provincial, state, regional, municipal, local or other government, or any governmental or public department, ministry, central bank, court, tribunal, arbitral body, commission, commissioner, board, regulatory body, bureau, agency or other similar instrumentality, (ii) any subdivision, agent or authority of any of the foregoing, or (iii) any quasi-governmental or private body, including any tribunal, commission, securities exchange, regulatory agency or self-regulatory organization exercising any regulatory, prosecutorial, administrative, expropriation, taxing or other governmental or quasigovernmental authority under or for the account of any of the foregoing;

(k) “Investment Properties” means potential acquisition or investment properties, identified by Lotus Crux Acquisition or a Lotus Crux Related Party and introduced to the REIT in writing by Lotus Crux Acquisition or a Lotus Crux Related Party and identified as such by Lotus Crux Acquisition, which, once income stabilized, will be consistent with the REIT’s investment guidelines and acquisition strategy;

(l) “Lotus Crux” means Lotus Crux REIT LP;

(m) “Lotus Crux Related Parties” means any Person (i) who is directly or indirectly controlled by, an affiliate of, or a related Party of the Lotus Pacific Investments Inc. or Crux Capital Corporation, or (ii) who is a vendor of a Prospective Property or a shareholder or limited partner of such vendor and, in each case, who has a voting arrangement with Lotus Crux with respect to the exercise of rights in the REIT, and “Lotus Crux Related Party” means any one of them;

(n) “Mezzanine Loan” means a loan by the Master LP to Lotus Crux Acquisition to fund the Equity Component relating to the acquisition, stabilization and/or development of an Investment Property;

(o) “Mezzanine Option Notice” has the meaning given to such term in Section 2.1(a);

(p) “Notice” has the meaning given to such term in Section 9.7;

(q) “Parties” means the Master LP, Lotus Crux Acquisition and their respective successors and permitted assigns, and “Party” means any one of them;

(r) “Person” means an individual, body corporate with or without share capital, partnership, joint venture, entity, unincorporated association, syndicate, firm, sole proprietorship, trust, pension fund, union, board, tribunal, Governmental Authority and the heirs, beneficiaries, executors, legal representatives or administrators of an individual;

(s) “Prospective Properties” means those properties that are presented to the REIT in writing by Lotus Crux Acquisition or a Lotus Crux Related Party and identified as such by Lotus Crux Acquisition, in which Lotus Crux Related Parties have an interest;

(t) “Purchase Option” has the meaning given to such term in Section 3.1;

(u) “Purchase Option Notice” has the meaning given to such term in Section 3.1;

(v) “Related Party” means, with respect to any Person, a Person who is a “related party” as that term is defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, as amended from time to time (including any successor rule, instrument or policy thereto);

(w) “Stabilized” or “Stabilization” means the point at which an Investment Property is stabilized, as such term is generally understood in the Canadian real estate market;

(x) “Subsidiaries” means, with respect to any company, partnership, limited partnership, trust or other entity, any company, partnership, limited partnership, trust or other entity controlled, directly or indirectly, by the first company, partnership, limited partnership, trust or other entity, and “Subsidiary” means any one of them; and

(y) “Third Party Properties” means any properties in which Lotus Crux Acquisition or a Lotus Crux Related Party do not have an ownership interest, other than Investment Properties, in each case introduced to the REIT in writing by Lotus Crux Acquisition or a Lotus Crux Related Party and identified as such by Lotus Crux Acquisition, and completed without a vendor broker (or which may include a vendor broker in situations of a unique nature for Third Party Properties that are not marketed on a national basis).

1.2 Time of the Essence

Time shall be of the essence of each provision of this Agreement. Any extension, waiver or variation of any provision of this Agreement shall not be deemed to affect this provision and there shall be no implied waiver of this provision.

1.3 Calculation of Time

Unless otherwise specified, time periods within or following which any act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends.

1.4 Business Days

Whenever any action to be taken pursuant to this Agreement would otherwise be required to be taken or made on a day that is not a Business Day, such action shall be taken on the first Business Day following such day.

1.5 Headings

The descriptive headings preceding Articles and Sections of this Agreement are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of the content of such Articles or Sections. The division of this Agreement into Articles and Sections shall not affect the interpretation of this Agreement.

1.6 Plurals and Gender

Words in the singular include the plural and vice versa and words in one gender include all genders.

1.7 Statutory References

Any reference to a statute shall mean the statute in force as at the date of this Agreement (together with all regulations promulgated thereunder) as the same may be amended, re-enacted, consolidated or replaced from time to time, and any successor statute thereto, unless otherwise stated.

1.8 Other References

“Include”, “includes” and “including” shall be deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import.

 

ARTICLE 2

MEZZANINE LOAN OPTION

2.1 Mezzanine Loan

(a) Forthwith upon identifying a potential Investment Property, Lotus Crux Acquisition shall advise the Master LP and the Master LP shall have a period of five (5) Business Days upon receipt of Notice of such Investment Property to send Lotus Crux Acquisition Notice (the “Mezzanine Option Notice”) of its intention to provide to Lotus Crux Acquisition a Mezzanine Loan for up to one hundred percent (100%) of the projected Equity Component for the acquisition, stabilization and/or development of such Investment Property. In the event that a Mezzanine Option Notice is received by Lotus Crux Acquisition within such five (5) Business Day period, Master LP will have five (5) Business Days to propose the general terms of such Mezzanine Loan (the “Mezzanine Term Sheet”). The Parties shall, within fifteen (15) Business Days of the date on which the Mezzanine Term Sheet is provided (the “Mezzanine Loan Settlement Period”) settle the terms of the Mezzanine Loan.

(b) If the Master LP has advanced or has agreed to advance a Mezzanine Loan to Lotus Crux Acquisition, whether or not subsequently prepaid by Lotus Crux Acquisition in relation to a particular Investment Property, the Master LP will have an option to purchase such Investment Property following Stabilization in accordance with Article 3.

2.2 Mezzanine Loan Terms

(a) Mezzanine Loans shall comply with the provisions set out in this Article 2, and otherwise shall be on market terms, at a rate agreed to by the Parties and on such terms and conditions as may be offered by the Master LP and agreed to by Lotus Crux Acquisition. If an agreement between the Master LP and Lotus Crux Acquisition is not reached during the Mezzanine Loan Settlement Period, Lotus Crux Acquisition shall have the right to obtain financing to fund the Equity Component relating to the acquisition, stabilization and/or development of the applicable Investment Property from a third party without further obligation to the REIT. Lotus Crux Acquisition shall promptly provide any information relating to the Investment Property reasonably requested by the Master LP during the Mezzanine Loan Settlement Period.

(b) Mezzanine Loans shall be full recourse to Lotus Crux Acquisition, and Lotus Crux Acquisition shall have the privilege of prepaying all or any part of the outstanding principal balance on two (2) Business Days’ Notice. In the event that the Master LP purchases the Investment Property or in the event that Lotus Crux Acquisition sells the Investment Property to a third party in compliance with this Agreement, the Mezzanine Loan, including all interest and other amounts due, shall be repaid in full on or before the date of completion of such transaction.

(c) Each Mezzanine Loan shall be secured by way of a registered second charge/mortgage/hypothec or other Encumbrance, as required, in favour of the Master LP on the title to the applicable Investment Property. In the event that Lotus Crux Acquisition is unable to secure a Mezzanine Loan by way of a registered second charge/mortgage/hypothec or other Encumbrance, as required, on the title to the applicable Investment Property, it shall covenant in favour of the Master LP not to grant any charge/mortgage/hypothec or other Encumbrance on the Investment Property which would adversely affect the rights of the Master LP under this Agreement (other than in favour of the construction lender in respect of the construction financing for such Investment Property) and in such case the Investment Property shall be transferred to and held by a single purpose entity that is wholly owned by Lotus Crux Acquisition until the Mezzanine Loan is repaid. Such obligation shall be secured by a pledge of the shares of the wholly owned subsidiary that holds registered title to the Investment Property in favour of the Master LP.

(d) Lotus Crux Acquisition shall structure the acquisition of the Investment Property and the Mezzanine Loan as requested by Master LP in order to preserve the status of the REIT and the Master LP as a “real estate investment trust” and “mutual fund trust” within the meaning of the Income Tax Act (Canada) provided it does not cause prejudice to Lotus Crux Acquisition.

ARTICLE 3

PROPERTY OPPORTUNITIES

3.1 Master LP Purchase Option

Forthwith upon Stabilization of an Investment Property in which the Master LP has advanced or agreed to advance a Mezzanine Loan, Lotus Crux Acquisition shall so advise the Master LP in writing (the “Stabilization Notice”) and thereafter the Master LP shall have the option to purchase, directly or indirectly, from Lotus Crux Acquisition and/or any Lotus Crux Related Party (collectively, the “Lotus Crux Sellers”) an undivided one hundred percent (100%) legal and beneficial interest in such Investment Property (the “Purchase Option”) in accordance with the procedure outlined below. Provided, however, that Lotus Crux Acquisition shall also have the right, following Stabilization of any such Investment Property, to cause a disposition thereof by giving notice to such effect to the Master LP (the “Sale Option Notice”), whereupon the following provisions of this Section 3.1 shall also apply.

(a) Following the receipt by the Master LP of a Stabilization Notice or, within fifteen (15) days of receipt of a Sale Option Notice, the Master LP shall send Lotus Crux Acquisition written notice (the “Purchase Option Notice”) of (i) its intention to exercise the Purchase Option to purchase, directly or indirectly, from the Lotus Crux Sellers an undivided one hundred percent (100%) legal and beneficial interest in such Investment Property and which shall contain a written summary of the terms and conditions upon which the Master LP is willing to purchase such interest (and which shall, amongst other things, set forth in detail the manner in which existing liabilities of the seller in relation to such Investment Property shall be dealt with), or (ii) its intention not to exercise the Purchase Option. In the event that the Master LP provides written notice to Lotus Crux Acquisition that it does not intend to exercise the Purchase Option, Sections 3.1(c), (d) and (e) hereof shall apply, mutatis mutandis.

(b) From the time that Lotus Crux Acquisition receives the Purchase Option Notice, the Master LP and Lotus Crux Acquisition shall work together in good faith for a period of forty-five (45) days to execute an agreement providing for the sale by the Lotus Crux Sellers and the purchase by the Master LP of an undivided one hundred percent (100%) legal and beneficial interest in such Investment Property. Lotus Crux Acquisition shall promptly provide any information relating to the applicable Investment Property reasonably requested by the Master LP during such forty-five (45) day period, including an appraisal of the applicable Investment Property (the “Lotus Crux Appraisal”). In the event that all other terms relating the purchase and sale hereinbefore described are agreed to by the Parties, the Master LP shall acquire such Investment Property at the price and on the terms and conditions agreed to by the Parties.

(c) If the Parties are not able to execute an agreement providing for the sale by Lotus Crux Acquisition and the purchase by the Master LP of an undivided one hundred percent (100%) legal and beneficial interest in such Investment Property, then the Lotus Crux Sellers shall be entitled to enter into a purchase agreement with a third party (the “Third Party Purchase Agreement”) to dispose of its/their respective interests therein at a price that is not less than the lowest price offered to the Master LP (the “Threshold Price”) and otherwise on terms and conditions not materially less favourable to the Lotus Crux Sellers than those offered to the Master LP. If the Lotus Crux Sellers are unable to negotiate a Third Party Purchase Agreement at or above the Threshold Price, then they shall forthwith advise the Master LP in writing and the Master LP shall be entitled, within five (5) days of receipt of such Notice, to advise the Lotus Crux Sellers that it will acquire an undivided one hundred percent (100%) legal and beneficial interest in such Investment Property at such lesser price and otherwise on such terms and conditions as were agreed to by the Parties or, at Master LP’s option, on such terms set out in such Third Party Purchase Agreement.

(d) Upon the sale of an undivided one hundred percent (100%) legal and beneficial interest in such Investment Property by the Lotus Crux Sellers to the Master LP or to a third party under a Third Party Purchase Agreement, Lotus Crux Acquisition shall cause to be repaid in full any outstanding Mezzanine Loan together with interest thereon, and in the event that the sale is between the Lotus Crux Sellers and the Master LP, the balance of the purchase price due on the completion of the purchase and sale of such Investment Property shall be adjusted accordingly to ensure such payments are made at the completion of the sale.

(e) In the event that the Master LP exercises its right under this Section 3.1, the applicable Lotus Crux Seller shall have the right to elect to take a portion of the sale consideration in the form of Class B limited partnership units of Master LP at a rate equal to (a) if the REIT is offering trust units to the public via a capital markets transaction co-incident with the exercise by the Lotus Crux Seller of its rights under this Section 3.1(e), the price offered to the public under such transaction (the “Public Offer Price”), or (b) one hundred percent (100%) of the weighted average closing price per trust unit of the REIT on the Exchange for the ten (10) days immediately preceding announcement of the transaction on which trades of the trust units of the REIT were recorded (the “VWAP Price”), provided that if the Public Offer Price or the VWAP Price is lower than the minimum discounted price at which such Class B LP Units may be issued pursuant to the rules of any stock exchange on which the trust units of the REIT are traded (the “Minimum Price”), then the Minimum Price will apply; provided however that such election shall be subject to (i) the acceptance of the Exchange and any required regulatory approval, (ii) the terms and conditions of the first amended and restated limited partnership agreement of the Master LP (as same may amended, restated or otherwise modified), and (iii) the prior written approval of the board of trustees of the REIT.

 

ARTICLE 4

FEES

4.1 Acquisition Fees

(a) Lotus Crux Acquisition shall receive from the Master LP a fee of 0.875% of the purchase price payable by the Master LP (directly or through one of its affiliates) for each acquisition of a Prospective Property or a Third Party Property brought to the REIT in writing by Lotus Crux Acquisition and identified as such by Lotus Crux Acquisition, and completed without a vendor broker. Such fees shall be payable within fifteen (15) days of completion of the acquisition of the applicable Prospective Property or Third Party Property.

(b) Lotus Crux Acquisition shall receive from the Master LP a fee based on the purchase price on acquisitions of Third Party Properties brought to the REIT in writing by Lotus Crux Acquisition and identified as such by Lotus Crux Acquisition, which may include a vendor broker, in situations of a unique nature for Third Party Properties that are not marketed on a national basis. The fee shall be: (i) 0.50% of the purchase price payable by the REIT if the Third Party Property forms part of the first $100 million of properties acquired by the REIT in any fiscal year, (ii) 0.375% of the purchase price payable by the REIT if the Third Party Property forms part of the next $100 million of properties acquired by the REIT in any fiscal year, or (iii) 0.25% of the purchase price payable by the REIT if the Third Party Property is acquired after the REIT has acquired in excess of $200 million of properties in any fiscal year. Such fees shall be payable within fifteen (15) days of completion of the acquisition of the applicable Third Party Property.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties of Lotus Crux Acquisition

(a) Lotus Crux Acquisition represents and warrants as follows and acknowledges that Master LP is relying on such representations and warranties in connection with the entering into of this Agreement:

(i) Status – Lotus Crux Acquisition is a limited partnership validly existing under the laws of Ontario and has all necessary power and authority to own and operate assets and carry on its business, and Lotus Crux Acquisition General Partner Inc. (the “General Partner”) is a corporation duly incorporated and validly existing under the laws of Ontario and has all necessary corporate power and authority to own and operate assets and carry on its business.

(ii) Corporate Authority – the General Partner has the corporate and partnership power and authority to enter into this Agreement for and on behalf of Lotus Crux Acquisition and to do all acts and to execute and deliver all other instruments as are required hereunder to be done, observed or performed by it in accordance with the terms hereof.

(iii) Valid Authorization – Lotus Crux Acquisition and the General Partner have taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and to observe and perform the provisions of this Agreement in accordance with its terms.

(iv) Validity of Agreement and Enforceability – This Agreement constitutes a valid and legally binding obligation of Lotus Crux Acquisition and the General Partner enforceable against them in accordance with its terms subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors’ rights and to the fact that equitable remedies are available only in the discretion of the court.

(v) Exercise of Powers – Lotus Crux Acquisition shall, in carrying out its duties and exercising its powers and authority under this Agreement (i) act honestly and in good faith with a view to the best interest of the REIT and the Master LP; and (ii) exercise the care, diligence and skills that a diligent asset manager would exercise in similar circumstances.

5.2 Representations and Warranties of Master LP

(a) The Master LP represents and warrants to Lotus Crux Acquisition as follows and acknowledges that Lotus Crux Acquisition is relying on such representations and warranties in connection with the entering into of this Agreement:

(i) Status – Master LP is a limited partnership validly existing under the laws of Québec and has all necessary power and authority to own and operate assets and carry on its business, and PRO REIT GP Inc. (“PRO REIT GP”) is a corporation duly incorporated and validly existing under the laws of Canada and has all necessary corporate power and authority to own and operate assets and carry on its business.

(ii) Authority – Master LP and PRO REIT GP have taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and to observe and perform the provisions of this Agreement in accordance with its terms.

(iii) Valid Authorization – Master LP and PRO REIT GP have taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and to observe and perform the provisions of this Agreement in accordance with its terms.

(iv) Validity of Agreement and Enforceability – This Agreement constitutes a valid and legally binding obligation of Master LP and PRO REIT GP enforceable against them in accordance with its terms subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors’ rights and to the fact that equitable remedies are available only in the discretion of the court.

 

ARTICLE 6

AMENDMENTS

6.1 Amendments, Modifications, etc.

This Agreement may not be amended or modified, or any provision hereof waived, except by an agreement in writing executed by all the Parties.

 

ARTICLE 7

DISPUTE RESOLUTION

7.1 Arbitration

Except as set forth in this Section 7.1, any controversy, claim or dispute arising out of or relating to this Agreement or its breach, including, without limitation, any claim that this Agreement or any of its parts is invalid, illegal or otherwise voidable or void, shall be submitted to arbitration. Said arbitration shall be conducted pursuant to the rules set out in the Arbitration Act, 1991 (Ontario) before a single arbitrator. The arbitrator shall be selected by the Parties within fifteen (15) days of service of the complaint, failing which either Party may apply to the Superior Court of Ontario for the appointment of the arbitrator. The seat of the arbitration shall be Toronto, Ontario and the proceedings shall be conducted in the English language. The arbitrator shall render a decision in writing and said decision will be final, binding and non appealable. It may be entered in any court having competent jurisdiction.

Notwithstanding the above, the obligation to arbitrate shall not preclude any Party herein from seeking temporary restraining orders, preliminary injunctions or other procedures in a court of competent jurisdiction to obtain interim relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution by arbitration of the actual dispute.

 

 

 

ARTICLE 8

TERMINATION

8.1 Termination

Each Party may terminate this Agreement immediately upon the occurrence of an Event of Default in respect of the other Party and the Master LP may terminate this Agreement immediately if Lotus Crux Acquisition ceases to be Controlled by Shenoor Jadavji or Peter Aghar, individually or collectively.

 

ARTICLE 9

GENERAL

9.1 Public Filing

The Parties hereby consent to the public filing of this Agreement if any Party is required to do so by law or by applicable regulations or policies of any regulatory agency of competent jurisdiction or any stock exchange.

9.2 Further Assurances

Each Party shall provide such further documents or instruments required by any other Party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions.

9.3 Severability

If any term or other provision of this Agreement shall be determined by a court, administrative agency or arbitrator in any jurisdiction to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not render the entire Agreement invalid and shall not affect the validity, legality or enforceability of such term or other provision in any other jurisdiction. Rather, this Agreement shall be construed as if not containing the particular invalid, illegal or unenforceable provision, and all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent permitted under applicable law.

9.4 Assignment and Enurement

Neither this Agreement nor any benefits or duties accruing under this Agreement shall be assignable by either Party without the written consent of the other Party. Subject to the foregoing, this Agreement shall enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

9.5 Entire Agreement

This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes (i) all prior oral or written proposals or agreements, (ii) all contemporaneous oral proposals or agreements and (iii) all previous negotiations and all other communications or understandings between the Parties, in each case with respect to the subject matter hereof and thereof.

9.6 Waiver

Any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the Party giving it, and only in the specific instance and for the specific purpose for which it has been given. No failure on the part of any Party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right. No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right.

9.7 Notices

Any notice, direction, 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 mail, or (iii) sent by fax or other means of recorded electronic communication, including email, in each case to the applicable address set out below, provided that any of the Parties may change the address designated from time to time, by Notice in writing to the other Parties:

 

(a) to the Master LP:

2000 Peel Street

Suite 758

Montréal, Québec

H3A 2W5

Attention: James W. Beckerleg

Facsimile No.: (514) 933-9094

Email: jbeckerleg@proreit.com

with a copy to:

Osler, Hoskin & Harcourt LLP

1000 De La Gauchetière Street West

Suite 2100

Montréal, Québec

H3B 4W5

Attention: Vitale A. Santoro

Facsimile No.: (514) 904-8101

Email: vsantoro@osler.com

 

(b) to Lotus Crux Acquisition:

475 West Georgia Street, Suite 950 Vancouver, BC V6B 4M9

Attention: Shenoor Jadavji and Peter Aghar

Facsimile No.: (604) 568-3302

Email: shenoor@lotuspacific.ca and peteraghar@bell.net

with a copy to:

Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9

Attention: Eric M. Carmona

Facsimile: (416) 947-0866

Email: ecarmona@stikeman.com

 

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 before 5:00 p.m. (Montréal time) on such day and, in the case of email, the recipient confirms receipt of such email. Otherwise, such communication shall be deemed to have been given and made and to have been received on the next following Business Day subject, in the case of email, to the recipient confirming receipt of such email. Any such communication sent by mail shall be deemed to have been given and made and to have been received on the fifth Business Day following the mailing thereof; provided however that no such communication shall be mailed during any actual or apprehended disruption of postal services. 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.

9.8 Negation of Partnership, Joint Venture or Lease

Nothing in this Agreement shall constitute or be construed to create a partnership, joint venture or lease between the Master LP and Lotus Crux Acquisition with respect to the Prospective Properties, the Investment Properties or the Third Party Properties.

9.9 Counterparts

This Agreement may be executed in separate counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same agreement. Delivery of an executed signature page to this Agreement by a Party by facsimile or electronic transmission shall be as effective as delivery of a manually executed copy of this Agreement by such Party.

9.10 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated, in all respects, as an Ontario contract.

9.11 Regulatory Approvals

The Parties agree that any Mezzanine Loan or other form of financing as well as any acquisition by Master LP, or one of its Affiliates, from Lotus Crux Acquisition or a Lotus Crux Related Party pursuant to the terms of this Agreement shall be subject to the prior acceptance of the Exchange, if applicable, and any other applicable required regulatory approval.

9.12 Consent

Where a provision of this Agreement requires an approval or consent by a Party and written notification of such approval or consent is not delivered within the applicable time in accordance with this Agreement, then the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.

 

IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be duly executed as of the date first written above. PRO REIT LIMITED PARTNERSHIP, by its general partner, PRO REIT GP INC.
By:	(signed) James W. Beckerleg
James W. Beckerleg
Authorized Representative

 

 

LOTUS CRUX ACQUISITION LP, by its General Partner, LOTUS CRUX ACQUISITION GENERAL PARTNER INC.
By:	(signed) Peter Aghar
Peter Aghar
Authorized Representative
By:	(signed) Shenoor Jadavji
Shenoor Jadavji
Authorized Representative