LEASE CONFIRMATION AND AMENDMENT TO DEVELOPMENT AGREEMENT
Exhibit 10.43
| PROJECT # | 0128 | |
| TENANT # | TRITCBR01 | |
| LEASE # | 0128 A01 |
LEASE CONFIRMATION AND
AMENDMENT TO DEVELOPMENT AGREEMENT
THIS AGREEMENT is dated as of May 6, 2010.
BETWEEN:
▇▇▇▇▇▇▇ BROS. PROPERTIES LTD.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(“RB”)
AND:
▇▇▇▇▇▇▇ BROS. AUCTIONEERS (CANADA) LTD.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(the “Tenant”)
AND:
THE GREAT-WEST LIFE ASSURANCE COMPANY
▇/▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(“Great-West Life”)
AND:
LONDON LIFE INSURANCE COMPANY
▇/▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(“London Life” and together with Great-West Life, the “Owner”)
WHEREAS:
| A. | Pursuant to a Development Agreement (the “Original Development Agreement”) dated August 12, 2008 between RB and the Owner, RB is responsible for managing the development, construction and completion of the Building and associated work on the Lands which are located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; |
| B. | Pursuant to a Lease dated August 12, 2008 between the Owner as landlord and the Tenant as tenant and a Lease Modification Agreement and an Indemnity Agreement each dated February 12, 2010 among the Owner as landlord, the Tenant as tenant and ▇▇▇▇▇▇▇ Bros. Auctioneers Incorporated as indemnifier (collectively, the “Lease”) the Owner agreed to demise and lease to the Tenant and the Tenant agreed to lease from the Owner the Building and the Lands, commencing on the Handover Date; |
| C. | The Tenant is an affiliate of RB; |
| D. | Pursuant to an agreement entitled “Pre-Handover Occupancy Rental Agreement and Amendment to Development Agreement” dated as of November 25, 2009 between RB, the Tenant and the Owner (the “Amendment Agreement”), RB, the Tenant and the Owner agreed to certain matters, including those amendments to the Original Development Agreement as set out in section 8 thereof (the Original Development Agreement as amended by the Amendment Agreement is hereafter called the “Development Agreement”); |
| E. | The Project was Totally Completed on or before the Outside Completion Date, but the correction of all deficiencies and the issuance of Acceptance will not be completed on or before the Outside Handover Date of May 7, 2010; and |
| F. | As contemplated by subsections 10.8(b) and (c) of the Development Agreement, the Owner has elected to proceed with Handover on May 7, 2010 despite the requirements for Handover under the Development Agreement not being fully satisfied, and accordingly, RB, the Tenant and the Owner have agreed to enter into this Agreement to confirm certain matters with respect to the Lease and to amend the Development Agreement as necessary to address the fact that the correction of certain deficiencies and the issuance Of Acceptance will be completed after the Handover Date. |
THIS AGREEMENT WITNESSES THAT in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
| 1. | Interpretation |
All terms that are capitalized in this Agreement and are not otherwise defined herein will have the same defined meanings as are ascribed to such terms in the Development Agreement
| 2. | Payment of Basic Rent |
RB, the Tenant and the Owner confirm, acknowledge and agree that, notwithstanding any provision of the Lease:
| (a) | no Basic Rent (as defined in the Lease) will be payable by the Tenant to the Owner under the Lease during the period prior to May 7, 2010; however, for greater certainty, occupation rent under the Amendment Agreement will be payable up to and including May 6, 2010; |
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| (b) | RB, the Tenant and the Owner agree that as of the date hereof, the Project Costs have been estimated as being approximately $53,000,000.00 and, accordingly, the annual Basic Rent (as defined in the Lease) payable by the Tenant to the Owner under the Lease for the period from and including the Handover Date to and including May 6, 2015 has been estimated (for purposes of Handover) to be $4,009,788.60 (as determined pursuant to Article 4 of the Lease and section 15.2 of the RB/Owner Purchase Agreement on the basis of the estimated Project Costs). Such estimated annual Basic Rent shall be subject to adjustment and to a final determination pursuant to subsection 2(e) below; |
| (c) | that portion of the occupation rent paid by the Tenant to the Owner under the Amendment Agreement in respect of the days of the month from and including the Handover Date of May 7, 2010 to and including May 31, 2010 (calculated on a per diem basis) will be deemed to be, and credited as, Basic Rent (as defined in the Lease) paid by the Tenant to the Owner pursuant to the Lease in respect of such period (the “Credited Basic Rent”); |
| (d) | the Owner will pay to the Tenant on or before May 31, 2010, $1,506.81 being the difference between (i) the Credited Basic Rent of $270,981.85 and (ii) the estimated amount of Basic Rent (as defined in the Lease) payable on the Commencement Date (as defined in the Lease) for the period from and including such Commencement Date to and including May 31, 2010 pursuant to subsection 2(b) above (namely, $269,475.04); |
| (e) | concurrently with the settlement of the final forth of the Project Cost reconciliation pursuant to section 11.4 of the Development Agreement, as amended by this Agreement, and section 9 hereof, RB, the Tenant and the Owner shall determine, on the basis of the actual Project Costs the actual amounts of Basic Rent (as defined in the Lease) payable under the Lease adjusted in accordance with section 15.2 of the RB/Owner Purchase Agreement, and the Tenant will pay to the Owner on the first day of the first month following the date on which RB and the Owner have settled the Project Cost reconciliation, the difference, if any, between (i) the amount of Basic Rent (as defined in the Lease) payable on and from the Commencement date (as defined in the Lease) to and including the day immediately before the first day of the first month following the date on which RB and the Owner have settled the Project Cost reconciliation, adjusted in accordance with section 15.2 of the RB/Owner Purchase Agreement and determined on the basis of the actual Project Costs, find (ii) the amount paid by the Tenant to the Owner pursuant to subsection 2(b) above on account of estimated Basic Rent (as defined in the Lease) in respect of such period- If the amount of such difference is negative as a result of an adjustment pursuant to section 15.2 of the RB/Owner Purchase Agreement, the Owner will pay the amount of such difference to the Tenant on the first day of the first month following the date on which RB and the Owner have settled the Project Cost reconciliation; and |
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| (f) | commencing on the first day of the first month following the date on which RB and the Owner have settled the final Project Cost reconciliation pursuant to section 9 of this Agreement, and after all amounts required to be paid under subsection 2(e) have been paid, the Tenant shall pay to the Owner the actual Basic Rent (as defined in the Lease) determined pursuant to such reconciliation. |
| 3. | Confirmations |
| (a) | The Owner and RB confirm, acknowledge and agree that the acceptance provisions in Article 10 of the Original Development Agreement and the handover provisions in Article 11 of the Original Development Agreement remain in full force and effect, subject to section 8 of the Amendment Agreement and this Agreement |
| (b) | With respect to subsection 10.8(a)(i) of the Development Agreement, the Owner and RB confirm, acknowledge and agree that Acceptance will not be issued by the Owner prior to Handover, and that such non-issuance will not prevent Handover from occurring. |
| (c) | With respect to subsection 10.8(a)(ii) of the Development Agreement the Owner and RB confirm, acknowledge and agree that the delivery of some or all of the Project Documents will be deferred until after Handover; and such deferral will not prevent Handover from occurring on the Handover Date. |
| (d) | With respect to subsection 10.8(a)(iii) of the Development Agreement the Owner and RB confirm, acknowledge and agree that the Tenant will be in occupation of the Building and the Lands under the Amendment Agreement at the time at which Handover occurs and such occupation will not prevent possession of the Project from being delivered to the Owner in accordance with the terms of the Development Agreement as amended by this Agreement |
| (e) | The Tenant confirms, acknowledges and agrees that: |
| (i) | the Commencement Date under the Lease is May 7, 2010; |
| (ii) | the Handover Date is May 7, 2010 and Acceptance will occur thereafter in accordance with section 8 hereof; |
| (iii) | the Tenant’s obligation to pay rent under the Lease will not be affected in any way by the presence of any defects or deficiencies in the Project which RB is required to remedy under this Agreement; and |
| (iv) | the Tenant shall not be entitled to any right of abatement, deduction or set-off under the Lease as a result of any defects or deficiencies in the Project which RB is required to remedy under this Agreement. |
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| 4. | Handover, Certificate of Completion and Project Documents |
| (a) | RB and the Owner will proceed with Handover on May 7, 2010 notwithstanding that the defects and deficiencies (the “Outstanding Deficiencies”) set out in Exhibit A hereto have not been fully corrected. |
| (b) | RB and the Owner acknowledge and agree that the Certificate of Completion contemplated by subsection 10.8(a)(ii) and subsection 11.2(a) of the Development Agreement will be delivered to the Owner at Handover, however, such delivery and acceptance thereof by the Owner will not be construed as a waiver by the Owner of RB’s obligation to rectify the Outstanding Deficiencies. A supplemental certificate of completion (the “Supplemental Certificate”) confirming that all deficiencies noted in the correspondence attached hereto as Schedule A-l from ▇▇▇▇▇▇▇ ▇▇▇▇▇, Architects (letter dated April 16, 2010 together with the attached Field Review Report dated March 1, 2010), except for those items numbered 1.16 “Feature Floors” and 1.22 “Perforated Panels” under the “General” heading in the said Field Review Report, the Landscape Deficiency List prepared by ▇▇▇▇▇▇▇▇ Farevaag Smallenberg dated April 15, 2010, and the letter from Stantec Consulting Ltd. dated May 3, 2010 (collectively, the “Material Deficiencies”) have been corrected will be issued by the Payment Certifier and delivered by RB to the Owner following Handover, in accordance with section 7 hereof. For greater certainty, the Outstanding Deficiencies include the Material Deficiencies, and any Outstanding Deficiencies which are not Material Deficiencies are hereinafter referred to as the “Remaining Outstanding Deficiencies”. |
| (c) | In the event the Payment Certifier is no longer in business at the time when the Payment Certifier is to inspect the Project for the purpose of issuing the Supplemental Certificate, the parties will, in a timely manner and acting reasonably, mutually appoint a qualified architectural firm to replace the Payment Certifier for such purpose. |
| (d) | Notwithstanding the assignment by RB of its interest in the Project Documents to the Owner, the Owner has agreed to extend the timeframe for delivery by RB of the Project Documents as required by subsection 10.8(a)(ii) and section 11.2 of the Development Agreement, to August 9, 2010 (except for the LEED Certificate which must be delivered by RB as soon as it is available, which is expected to be no later than eight (8) months following Handover). During such period as the Project Documents remain undelivered by RB, RB shall hold them in trust for the Owner, and shall provide the Owner with unrestricted access thereto. |
| 5. | Holdback for Outstanding Deficiencies |
RB and the Owner acknowledge and agree that the amount of the holdback being held by the Owner in respect of the Outstanding Deficiencies pursuant to section 10.4 of the Development Agreement is currently nil; however, at any time prior to or following Handover, the Owner may hold back funds in accordance with Section 10.4 of the Development Agreement to secure the costs of correcting and repairing the Outstanding Deficiencies. Such holdback funds will be released to RB in accordance with section 10.4 of the Development Agreement as and when such Outstanding Deficiencies are corrected and repaired and certified by the Payment Certifier as corrected and repaired.
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| 6. | Correction of Outstanding Deficiencies |
Without in any way derogating from subsection 3(a) hereof, RB shall diligently work with the Owner and the Owner’s consultants to correct all of the Outstanding Deficiencies as expeditiously as possible, and in any event, in respect of the Material Deficiencies, before September 30, 2010 (such that the Supplemental Certificate is issued by September 30, 2010), and in respect of the Remaining Outstanding Deficiencies, by October 30, 2010. If RB fails to correct any of the Outstanding Deficiencies by the aforesaid deadlines, the Owner may, at its option, do whatever it deems appropriate to correct such defects or deficiencies and may use the monies (if any) held back pursuant to section 10.4 of the Development Agreement to do so. If the Owner corrects such defects or deficiencies, any actual reasonable expenses incurred by the Owner which are not paid for using the monies held back pursuant to section 10.4 of the Development Agreement will be charged back to RB. RB shall reimburse the Owner for such reasonable expenses within thirty (30) days of the Owner invoicing RB.
| 7. | Notice of Completion of Outstanding Deficiencies |
RB covenants to deliver the Supplemental Certificate to the Owner by no later than September 30, 2010. RB acknowledges that such covenant is provided at the express request of the Owner and is intended to be relied upon by the Owner in providing certain commitments to its lenders. Within three (3) Business Days after delivery of the Supplemental Certificate, the Owner and RB (along with their respective consultants and representatives) will conduct a final joint inspection of all Remaining Outstanding Deficiencies to verify which, if any, have not yet been corrected to the Owner’s satisfaction. If any such Remaining Outstanding Deficiencies are identified, the Owner will notify RB, and RB will forthwith cause such Remaining Outstanding Deficiencies to be rectified, to the Owner’s satisfaction, by no later than October 30, 2010. If RB fails to deliver the Supplemental Certificate to the Owner by September 30, 2010 and/or fails to correct any Remaining Outstanding Deficiencies to the Owner’s satisfaction by October 30, 2010, such failure(s) will constitute a default by RB under the Development Agreement for which the Owner will have recourse to its rights and remedies thereunder, including Without limitation, the indemnity provided at Article 16 in respect of any Losses that the Owner may incur. For greater certainty, and without otherwise derogating from the scope of Election 16.1 of the Development Supplemental Certificate and with respect only to the Remaining Outstanding Deficiencies, RB will not be liable under Section 16.1 of the Development Agreement for loss of profits or special or consequential damages that arise in connection with any of the Remaining Outstanding Deficiencies that have been corrected in accordance with the Development Agreement (as amended by this Agreement), but in respect of which the Owner is not satisfied. The Owner will not act unreasonably in determining its satisfaction with the correction of the Remaining Outstanding Deficiencies.
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| 8. | Acceptance |
Subject to subsection 3(a) hereof, the Owner will issue Acceptance within ten (10) Business Days after all Remaining Outstanding Deficiencies have been rectified in accordance with sections 6 and 7 hereof.
| 9. | Project Cost Reconciliation |
Notwithstanding section 11.4 of the Development Agreement, RB and the Owner acknowledge and agree that the final form of Project Cost reconciliation will be completed within ten (10) Business Days following the issuance of Acceptance.
| 10. | Authorizations |
On the Handover Date, the Owner will execute and deliver to RB such authorizations as RB requires in order for RB to be able to continue to deal with third parties under the Project Documents and the Material Contracts as necessary in order for RB to complete the Outstanding Deficiencies in accordance with the terms of this Agreement. Such authorizations will be prepared by RB’s solicitors and will be delivered to the Owner’s solicitors as part of the Handover Documents under section 11.2 of the Development Agreement.
11. Entire Agreement
| (a) | This Agreement contains all of the terms and conditions of the agreement between the parties hereto relating to matters herein provided and supersedes all previous agreements or representations of any kind, written or verbal, made by anyone in reference thereto, except as specifically provided herein. |
| (b) | Notwithstanding subsection 11(a), RB and the Owner hereby ratify the Development Agreement, as amended by this Agreement, and confirm that, except as expressly provided in this Agreement, all covenants, representations, warranties, terms and other provisions of the Development Agreement are in full force and effect and binding on the parties (including, without limitation, the Owner’s right of enforcement pursuant to the terms of the Development Agreement in the event that RB is in default under this Agreement), will apply mutatis mutandis to RB’s obligations hereunder and will survive Handover. In the event of any inconsistency or conflict between any provision of this Agreement and any provision of the Development Agreement, the provision of this Agreement will govern. |
| 12. | Exhibits |
Exhibit A and Schedules A-l, A-2 and A-3 attached to this Agreement form a part of this Agreement.
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| 13. | Amendments |
This Agreement will not be modified or amended in any way except in writing signed by all parties hereto.
| 14. | Severability |
If any provision of this Agreement is or becomes illegal or unenforceable, it will during such period that it is illegal or unenforceable be considered separate and severable from the remaining provisions of this Agreement which will remain in force and be binding as though the said provision had never been included.
| 15. | Assignment |
This Agreement may not be assigned by any party hereto without the prior written consent of each of the other parties hereto.
| 16. | Binding Effect |
This Agreement will bind and enure to the benefit of the parties hereto and their respective successors and permitted assigns.
| 17. | Governing Law |
This Agreement will be governed by the laws applicable in the Province of British Columbia and the courts of the Province of British Columbia will have exclusive jurisdiction to entertain and determine all disputes and claims, whether for specific performance, injunction, declaration or otherwise arising out of or in any way connected with the construction, breach, or threatened breach of this Agreement.
| 18. | Headings for Convenience Only |
The division of this Agreement into sections, subsections and paragraphs and the insertion of headings is for the convenience of reference only and will not affect the construction or interpretation of this Agreement.
| 19. | Currency |
All sums of money expressed herein are in the lawful currency of Canada.
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| 20. | Time of tbe Essence |
Time is of the essence of this Agreement
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.
| ▇▇▇▇▇▇▇ BROS. PROPERTIES LTD. | |
| by its authorized signatory: | |
| /s/ ▇▇▇▇▇▇ ▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇▇▇▇ | |
| ▇▇▇▇▇▇▇ BROS. AUCTIONEERS | |
| (CANADA) LTD. | |
| by its authorized signatory: | |
| /s/ ▇▇▇▇▇▇ ▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇▇▇▇ | |
| THE GREAT-WEST LIFE ASSURANCE | |
| COMPANY | |
| by its authorized signatories: | |
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Senior Asset Manager | |
| /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Senior Vice President, Asset Management | |
| LONDON LIFE INSURANCE COMPANY | |
| by its authorized signatories: | |
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Senior Asset Manager | |
| /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Senior Vice President, Asset Management |
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Exhibit “A”
LIST OF OUTSTANDING DEFICIENCIES
| 1. | All deficiencies noted in the correspondence attached hereto as Schedule A-l from ▇▇▇▇▇▇▇ ▇▇▇▇▇, Architects (letter dated April 16, 2010 together with the attached Field Review Report dated March 1, 2010), except for those items numbered 1.16 “Feature Floors” and 1.22 “Perforated Panels” under the “General” heading in the said Field Review Report, the Landscape Deficiency List prepared by ▇▇▇▇▇▇▇▇ Farevaag Smallenberg dated April 15, 2010, and the Mechanical and Electrical Deficiency List prepared by Stantec Consulting dated May 3rd, 2010. |
| 2. | The following items from the Omicron Consulting Limited Deficiency List dated April 7, 2010 (attached as Schedule A-2): |
List #1 (Starting Page 1)
1.1
| 1.2 | (Clean Only) |
1.6
1.7
1.8
| 1.14 | only a deficiency in areas where a tripping hazard is identified |
1.15
1.20
1.22
1.23
1.25
2.2
2.4
3.4
3.6
3.11
3.12
| 4.4 | Ladder to be provided as per specifications. Conduit to be provided from the emergency generator to the main electrical room. |
4.6
For Items 1.3,1.5,1.11,1.12,2.1,4.7, and 4.9, as-built drawings are to be updated to reflect on site condition.
A general cleaning of the premises is still required.
List #2 (Starting Page 6)
1.5 (only deficiency if damaged pre-substantial completion)
1.7
1.10
1.14
4.1
4.2
4.3
4.4
4.8
1.8
4.11
5.7
| 3. | The following items from Section 3 of the ▇▇▇▇▇ ▇▇▇▇▇ Consulting Group Ltd. Preliminary Roof Condition Assessment dated April 16, 2010 (attached as Schedule A-3): |
1,2,3,5,6,7,8,9,10,11,12,13,14,15
| 4. | Such other non-material deficiencies which the Owner or RB, acting reasonably, is, or may become, aware of during the currency of this Agreement which the Owner reasonably expects to be rectified in the ordinary course of the completion of the Project The Owner and RB will maintain current lists of such items which will be available to either party for review and consultation throughout the deficiency correction process. |
