CBA SKILLED LAWYER SERIES 2016 - Amazon Web Services

CBA SKILLED LAWYER SERIES 2016

DRAFTING A COMMERCIAL LEASE AGREEMENT MAY 26, 2016

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KEY COMPONENTS

1. Planning and Managing an M & A Deal

2. Structuring the Deal: Asset vs. Share Transactions

3. Negotiating the Deal: Preliminary Agreements

4. Investigating the Deal: Effective Due Diligence

5. Financing the Deal: Secured Loan Transactions

6. Drafting the Deal: The Purchase and Sale Agreement

7. Managing Deal Risk: Drafting Financial Terms

8. Closing the Deal: A Transactional Lawyer’s Toolkit

ANATOMY OF A DEAL

COLLATERAL AGREEMENTS

1. Drafting a Shareholder Agreement

2. Drafting a Commercial Lease Agreement

3. Drafting an IP Licensing Agreement

4. Drafting an Employment Agreement

LARGE M&A DEALS

1. Raising Capital: Private Placements and Public Offerings

2. Cross-Border Deal Considerations: US and Europe

3. Corporate Governance: The Role of Directors

4. Regulatory Issues: Competition and Anti-Corruption Compliance

Presenters

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Jeanne Banka Daoust Vukovich LLP Toronto

Ned Steinman Norton Rose Fulbright Canada LLP Ottawa

Preliminary Matters

Corporate Name Search

• www.cyberbahngroup.com

Title Search

Is there a head lease?

Zoning

Confirm the terms of the Lease match the Offer

http://www.cyberbahngroup.com/

Financial Implications of a Lease

Gross-Up – What is it?

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Sample Clause:

"Operating Costs" means without duplication the total cost, expense and capital outlay incurred, accrued or attributed by the Landlord for complete operating, maintaining, repairing and replacing the Building and the Lands or allocated by the Landlord to the Lands and Building and for services provided generally to the tenants and all components thereof and all improvements of the Landlord thereon or therein and all other costs and expenses for maintaining, operating, managing and administering the Lands and Building, acting reasonably and in accordance with sound accounting principles as practised in the commercial real estate industry and calculated as if the Building were one hundred percent (100%) occupied during the Term, including, without limiting the generality of the foregoing, the following…

Financial Implications of a Lease

Repair vs. Replacement

• Who is performing the obligation?

• Who is paying for the obligation?

• Does tenant pay 100% or its proportionate share?

• Capital items, depreciation and interest on unamortized portion of costs

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M&A and the Commercial Lease

5 Leases

• Due Diligence reveals various assignment/sublease/change of control provisions

• Review the leases

• Determine if notice to landlord is required

• Determine if landlord consent is required

• Advise on the transaction

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Examine the Transaction:

Sale of Shares Change of Control

Purchase of Assignment of Lease

Assets

IS LANDLORD CONSENT REQUIRED?

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Lease #1

“The Tenant will not assign this Lease in whole or in part nor sublet all or any part of the Leased Premises, nor mortgage by either specific or floating charge or encumber In any way whatsoever this Lease or the Leased Premises or any part thereof, nor suffer or permit the occupation of all or any part of the Leased Premises by others, without the prior written consent of the Landlord in each instance, which consent shall not be unreasonably withheld or delayed.”

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Lease #1:

Is Landlord consent required for an assignment of the lease?

Is Landlord consent required for the change of control?

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Lease #2

“Tenant will not assign this lease in whole or in part, nor sublet all or part of the Premises, nor mortgage or encumber this lease with respect to all or part of the Premises, nor suffer or permit the occupation of, or part with or share possession of, all or part of the Premises with any person including, but not limited to, an assignee or subtenant of an approved subtenant (all the foregoing being sometimes hereinafter-collectively referred to as a "Transfer"), unless, in each case, it has first requested in writing and obtained the Landlord's written consent thereto, which will not be unreasonably withheld.”

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See Appendix A

Lease #2



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Lease #3:

“The Tenant shall not assign or transfer this Lease, (which includes a mortgage, charge or debenture (floating or otherwise) or other encumbrance of this Lease or the Premises or any part of them), nor sublet any part of the Premises nor part with or share possession of the Premises or any part with a third party or undergo a change in effective voting control without the Landlord's consent, which consent may not be unreasonably or arbitrarily withheld notwithstanding any statutory provision to the contrary.”

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Lease #3



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Lease #4

“The Tenant may assign this Lease or sublet the whole or any part of the Premises with the Landlord's written approval, which approval shall not be unreasonably or arbitrarily withheld or delayed. Notwithstanding anything to the contrary contained herein, the Tenant shall have the right without the approval of the Landlord to assign this Lease or sublet the whole or any part of the Premises to (i) a corporation which is related to the Tenant including, without limitation, a parent, subsidiary or affiliate of the Tenant; (ii) an acquirer of substantially all of the stores of the Tenant; or (iii) a successor corporation resulting from a merger, arrangement or reorganization.

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See Appendix A

Lease #4



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Lease #5

“Transfer" means an assignment of this Lease in whole or in part, a sublease of all or any part of the Premises, any transaction whereby the rights of the Tenant under this Lease or to the Premises are transferred to another person, any transaction by which any right of use or occupancy of all or any part of the Premises is shared with or conferred upon any person, any mortgage, charge or encumbrance of this Lease or the Premises or any part thereof, or any transaction or occurrence whatsoever which has changed or will change the identity of the person having lawful use or occupancy of any part of the Premises;”

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See Appendix A

Lease #5



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Negotiating the Commercial Lease

Factors to consider when contemplating an M&A

- Tenant View

- Landlord View

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See Appendix A

Discussion on the form of Landlord Consent Agreement

• Landlord Position

• Tenant Position

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See Appendix B – Forms of Agreements

Stupid Lease Clauses

• Who signs these things?

• What to look for?

• Examples…

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Attornment

The Tenant shall promptly, as required by the Landlord, attorn to any mortgagee, or ground lessee affecting the Building or Land or the purchaser on any foreclosure or sale proceeding taken under any mortgage, and shall recognize such ground lessee or mortgagee and the Tenant hereby irrevocably constitutes the Landlord the agent or attorney of the Tenant for the purpose of executing any documentation to effect such attornment.

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Tenant's Failure to Comply

If the Tenant fails to execute any certificate, agreement, instrument, or other document as required by this Lease within ten (10) days after request by the Landlord, then the Landlord shall have the right, to execute any such certificate, agreement, instrument or document on behalf of the Tenant and in the Tenant's name, for which purpose the Tenant hereby appoints the Landlord as the Tenant's attorney pursuant to the Powers of Attorney Act (Ontario).

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Registration

The Tenant is prohibited from registering on title to the Lands, this Lease or any short form or notice of lease.

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Demolition

In the event that the Landlord requires the Building for redevelopment or demolition and the Landlord determines that vacant possession of the Premises is required for such redevelopment and demolition, the Landlord shall have the right to terminate this Lease on not less than six (6) months' prior written notice to the Tenant. On the termination date specified in such notice (the "Termination Date"), the Tenant shall deliver up vacant possession of the Premises, all Rent shall be apportioned and paid to the Termination Date, and this Lease will be fully and completely ended as of the Termination Date.

Questions?

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CBA SKILLED LAWYER SERIES 2016

Next Skilled Lawyer Series Program

Cross-Border Deal Considerations: US and Europe May 31, 2016

www.cbapd.org/national

CBA SKILLED LAWYER SERIES 2016 - Amazon Web Services

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