RE: SRF 424921468 – NEXT GENERATION PROPERTIES LTD
October 23, 2026
NEXT GENERATION PROPERTIES LTD.
208-5010 4TH STREET NE
CALGARY, AB
T2K5X8
Dear Sir/Madam:
We are pleased to confirm that Royal Bank of Canada has approved a First mortgage loan (hereinthe “Loan”) upon the terms and conditions set out herein and in the attached Schedule of Standard
Mortgage Loan Terms.
MORTGAGOR: Next Generation Properties Ltd. (“you” or the “Mortgagor”).
MORTGAGEE: Royal Bank of Canada (“us” or “we” or the “Mortgagee”).
LOAN AMOUNT: $50,950,000.00
LOAN PURPOSE: The proceeds of the Loan will be used to finance the purchase of the Property,as hereinafter defined.
INTEREST RATE AND TERM: A fixed rate of interest will be set on the day of advance and will be equal toRoyal Bank of Canada’s cost of funds, as determined by us in our solediscretion, for the term of the Loan set out below, plus a spread as indicatedin the chart below, per annum, calculated semi-annually not in advance, bothbefore and after maturity, default and judgment.
Please have all Mortgagors and guarantors initial in the “Initial” box of the rowthat represents the selected Term:
Term(years)Royal Bank ofCanada Costof Funds (%)Spread(%)IndicationInterestRate* (%)MortgagorInitialsGuarantor(s)Initials
1_year 3.62 0.70 4.32
2_years 4.01 0.70 4.71
3_years 4.21 0.70 4.91
4_years 4.25 0.70 4.95
*Rates are indication rates only and are subject to change daily. As notedabove the interest rate will be set on the day of advance.
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The Term will commence on the interest adjustment date as hereinafterdefined.
AMORTIZATION: 25 years.
REPAYMENT: Interest shall accrue on the amounts advanced from time to time, from therespective dates of such advances, and be paid monthly by you until theinterest adjustment date inclusively, which shall be the first day of the monthnext following the final advance, unless the date of such final advance is thefirst day of a month, whereupon that date will be the interest adjustment date.
Thereafter, a blended payment of principal and interest, in an amount set atthe advance date of the Loan, shall be paid by you on the 1st day of eachmonth during the term of the Loan and the balance shall be due and payablein full on maturity.
PREPAYMENT: This is a fixed rate loan, you have no right to prepay the loan, or any part ofthe loan, prior to its maturity date. Any prepayment of the loan prior to itsmaturity date, in whole or in part, requires an amendment of the terms of thisagreement and your agreement to pay the Prepayment Fee as defined below.
The Prepayment Fee will be calculated by us as the sum of:
(a) the greater of:
(i) the amount equal to three (3) months’ interest payable on theamount of the loan being prepaid, calculated at the interestrate applicable to the loan on the date of prepayment; or
(ii) the present value of the cash flow associated with thedifference between our original cost of funds for the loan andthe current cost of funds for a loan with a term substantiallysimilar to the remaining term of the loan and an amortizationperiod substantially similar to the remaining amortizationperiod of the loan, each as determined by us on the date ofsuch prepayment;
plus:
(b) foregone margin over the remainder of the term of the loan. Foregonemargin is defined as the present value of the difference between ouroriginal cost of funds for the loan and the interest that would have beencharged to you over the remaining term of the loan;
plus:
(c) a processing fee.The Prepayment Fee shall also be payable by you in the event we demandrepayment of the outstanding principal of the loan on the occurrence of adefault. Your obligation to pay the Prepayment Fee will be in addition to anyother amounts then owing by you to us, will form part of the loan amount andwill be secured by the security described herein.
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PAYMENT AUTHORIZATION: You authorize us to automatically debit any account maintained by you withRoyal Bank of Canada or its affiliates for principal, interest and all otheramounts due in respect of the Loan. Alternatively, you will execute suchdocuments as may be required to permit us to automatically debit your accountat another financial institution for all amounts owing under this commitmentletter.
SECURITY: The security for the Loan (the “Security”) shall be:
(a) a first mortgage and charge (the “Mortgage”) on the freehold property, inthe amount of $50,950,000.00, known municipally as 12085, 12101,12121 Lake Fraser Drive, SE, Calgary, AB, T2J 7G9 and having 7
buildings thereon of not less than 60,974 leasable commercialsquare feet and 12445 Lake Fraser Drive, Calgary, AB, T2J 7A4 andhaving 5 buildings thereon of not less than 92,605 leasable commercial square feet and (the “Property”);
(b) a first general assignment of rents and leases from the Property uponterms which will, until default, permit you to continue to receive suchrents and revenues. We reserve the right to require specific assignments of present and future leases of the Property at any time;
(c) a site specific security agreement comprising a first security interest onthe personal property owned by the Mortgagor now or hereafter situatedon, used in connection with or arising from the Property,including,without limitation, accounts receivable;
(d) the joint and several unconditional guarantee of Peter Tong, GraceEng Choo Tong, Timothy Tong, and Calvin Yi-Yi Tong, guaranteeing payment of the principal of the Loan, limited to the principal sum of
$12,737,500.00 and all other amounts due hereunder, including,without limitation, interest;
(e) the several unconditional guarantee of Solid Gem Properties Ltd.,guaranteeing payment of the principal of the Loan, limited to the principal sum of $12,737,500.00 and all other amounts due hereunder,
including, without limitation, interest;
(f) letter of undertaking signed by the Borrower to provide documentation within 60 days of advance confirming the initiation of the Domestic Use Aquifer with the City of Calgary and the Alberta Environmental and Protected Areas;
(g) letter of undertaking signed by the Borrower to provide within 60 days of advance documentation confirming the order-of-magnitude remediations costs estimate provided by Pinchin or a Bank approved
consultant.
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All documentation shall be in the forms used by us and must in all respects be satisfactory to us and our solicitors in our and their absolute discretion. Further details regarding legal counsel options are provided in Schedule “B” hereto.
REPORTS/FINANCIALINFORMATION:
Each year during the term of the Loan, within 90 days of each fiscal year end(or by such other date as indicated below, if applicable), you shall provide the following information to us:
(a) Compilation Engagement financial statements of Next Generation Properties Ltd., duly signed and dated;
(b) Compilation Engagement financial statements of Solid GemProperties Ltd., duly signed and dated;
(c) An updated personal statement of affairs for Peter Tong, Grace Eng Choo Tong, Timothy Tong, and Calvin Yi-Yi Tong, signed and dated
36 months from the date of the first advance and at the end of every
36 months thereafter;
(d) Operating statements relating specifically to the Property, for the preceding fiscal year including inter alia, realty taxes, repairs and maintenance, utilities, management costs, tenant inducements and
leasing commissions;
(e) A current rent-roll for the Property showing inter alia, the area and location leased, annual payment (specifying gross or net), recovered amounts, any revenue escalation entitlement and/or leasing
inducements, as well as expiry date and renewal options for each lease;
(f) Copies of any new commercial leases signed in the past year or amendments to previous leases provided to us;
(g) A property tax receipt indicating that taxes are paid, by the deadline indicated under the section entitled “Taxes” below;
(h) Every third year during the term of the Loan, within 90 days of every third fiscal year end (or by such other date as indicated below, if applicable), you shall provide the following information to us:
Groundwater monitoring report;
(i) A copy of the current insurance policy or certificate of insurance. In addition, we may require that you and/or the guarantor provide to us any of the above-described financial statements or statements of net worth, as the case may be, updated to any date subsequent to the end of the last complete fiscal year or the effective date of the last statement of net worth, as the case
may be. We may also require that you provide to us an interim financial statement relating specifically to the operation of the Property, including a current rent roll showing, inter alia, base rent, recovered amounts and expenses, updated to any date subsequent to the end of your last complete operating period.
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Upon our request, you and/or the guarantor(s) shall provide to us such further information, reports or statements as may be required from time to time.
Failure to provide any statement when due or within 30 days of a written request will constitute a default under this commitment letter and under the Mortgage.
LEASES: You represent and warrant to us that the Property is leased in accordance with the non-residential leases set out in Schedule “A” and on the terms and for the rents set out in Schedule “A” to this commitment letter and that no payment by anticipation was, or will be, accepted with respect to these leases and any future leases affecting the Property. You will, at our request, provide executed
copies of such leases and all future non-residential leases and all amendments and renewals. You agree that any future non-residential lease with a minimum leasable area in excess of 20% of the rentable area of building(s) on the Property or where the revenue from such lease will be in excess of 20% of the gross income from the Property (a “Major Lease”) shall be on terms acceptable to us, acting reasonably. At the time of advance each tenant must be in possession of the whole of its leased premises, be carrying on business
thereupon, be paying rent pursuant to the terms of the lease, and you and the tenant shall otherwise have performed all your respective obligations contained in the lease. You agree you shall not, without our prior written consent, terminate any present or future Major Lease, nor amend any of them in a way which, in our opinion, acting reasonably, would adversely affect our rights under the Security. You also agree to advise us if any of the following occur with respect to a Major Lease:
(i) an event of default by either you or the tenant;
(ii) bankruptcy or insolvency of the tenant;
(iii) non-renewal;
(iv) vacancy of the premises;
(v) termination of the lease;
(vi) a subletting of all or part of the premises; or
(vii) any material adverse change.
TAXES: All realty taxes and local improvement assessments (“Taxes”) pertaining to the Property are to be paid directly by you or your tenants to the municipality when due and you shall provide us with receipted copies of the Tax bills for the Property or other evidence of payment of Taxes satisfactory to us within 30 days after the same has become payable. If at any time you do not pay any Taxes when due or fail to provide us with copies of your receipted Tax bills or other satisfactory evidence of payment, we may pay these Taxes and you shall repay us, on demand, any amount so paid. Any amount paid by us and
remaining unpaid by you shall bear interest at the rate set out in this commitment letter. We may, at our option, at any time following a default by the Mortgagor which remains unresolved, require that you pay to us in monthly instalments on the dates on which the monthly payments on the Loan are payable hereunder, sums, which in our estimation, will be sufficient to enable us to pay the whole amount of Taxes due, on or before the date for payment thereof or, if such amount of Taxes is payable in instalments, on or before the due date for payment of the first instalment thereof. Any deficiency on your tax escrow account at any time shall be payable to us immediately upon demand.
COSTS AND FEES: Whether or not the transaction contemplated hereby is completed, you will pay all reasonable costs incurred by us in connection with this commitment letter and the Loan and Security including, without limitation, the legal fees and disbursements of our solicitors, and the fees and disbursements of our agents or consultants. Such costs may be deducted from the Loan proceeds advanced.
In addition, you agree to pay all reasonable costs, charges and expenses incurred by us in connection with the operation or enforcement of this commitment letter, the Loan or the Security, or any amendment, extension, variation, discharge or renewal thereof, including, without limitation, costs of registration of financing statements or financing change statements and searches in connection therewith, periodic property inspections and Tax verifications and other similar costs, and any fees or charges of agents or other third parties retained by us for the purpose of conducting such activities on our behalf. In addition, you agree to pay our reasonable administration fees in connection with our administration of the Loan, including the provision of mortgage statements, provision of discharges, processing late payments and
cheques or automatic debits which are dishonoured or not accepted by the financial institution, the amount of each such administration fee being a liquidated amount to cover administrative costs of the Mortgage and not a penalty. If you fail to pay any such costs, charges or expenses upon demand, the amount of the cost, charge or expense will be added to the outstanding principal amount of the Loan and shall be secured by the Security.
APPLICATION FEE: A fee of $100,000.00 is payable at or before the time of your acceptance of this commitment letter to validate your acceptance hereof. This fee is non refundable and shall have been earned by us at the time of acceptance as compensation for time, effort and expense incurred in processing, approving and providing this commitment, excluding all costs and fees referred to herein.
CONDITIONS PRECEDENTTO ADVANCE:
Our obligation to advance the Loan is conditional upon receipt by us or oursolicitors of the following, all in form and substance satisfactory to us or our
solicitors:
a) a duly executed copy of this commitment letter, together with the$100,000.00 application fee, on or before the time indicated in the section of this commitment letter entitled “Acceptance”;
b) duly executed copies of the Security and evidence of registration of same, in the manner and with the priorities required by us, in all appropriate governmental offices;
c) certificate of insurance coverage pursuant to policies as required under the terms hereof, to be delivered to our solicitors within 10 business days after execution of the commitment letter;
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d) an original up-to-date survey of the Property prepared for us, at your expense, by a qualified land surveyor, to be delivered to our solicitors. Such survey must show the boundaries of the Property, the location of all rights of-way and easements, the location of all entrances and exits to and from the Property, the locations and dimensions of all parking areas of the Property and the location of all buildings and other improvements situated on the Property at the date of your acceptance of this commitment letter and the distances of all such buildings and improvements from all lot lines, and the information disclosed by such survey must be acceptable to us in our absolute discretion. If you don’t have an original up-to-date survey of the Property as described above, title insurance from FCT Insurance Company Ltd., First American Title Insurance Company, Chicago Title Insurance Company Canada or Stewart Title Guaranty Company will be required;
e) a reliance letter, at your expense, addressed to us from Pinchin confirming that we may rely on the Phase I environmental site assessment of the Property located at 12100 Macleod Trail SE, Calgary, Alberta, dated September 11, 2026 with reference number 378754.000;
f) a reliance letter, at your expense, addressed to us from Pinchin confirming that we may rely on the Phase I environmental site assessment of the Property located at 12445 Lake Fraser Drive SE, Calgary, Alberta, dated September 11, 2026 with reference number 378754.002;
g) evidence of payment of Taxes due and owing in respect of the Property together with Schedule C hereto, containing information satisfactory to the Bank;
h) evidence of compliance with all applicable laws, by-laws and governmental and municipal regulations, orders or requirements including, without limitation, those dealing with planning, zoning, use, occupancy,
environmental matters or fire including, without limitation, all requirements under any applicable fire retrofit provisions, and that there are no outstanding work orders, deficiency notices or like violations
outstanding against the Property. If the buildings or improvements situated on the Property were constructed or substantially renovated within 12 months prior to the date of this commitment letter, we require evidence the buildings and improvements on the Property may be lawfully occupied, which evidence shall include an occupancy certificate / permit, if
applicable. Alternatively, title insurance from one of the above noted title insurers satisfactory to the mortgagee shall be acceptable in lieu of thereof;
i) directors’ resolutions, certificates of officers and opinions of counsel to the Mortgagee and the Mortgagor and any guarantor, confirming corporate capacity and the due authorization, execution, delivery, enforceability and priority of the Security, as may be required by us; and
j) any other information and documentation as we may reasonably request. ONGOING CONDITIONS:
a) A copy of a satisfactory groundwater sampling report to be provided every
three (3) years, completed by Pinchin or a consultant acceptable to us in our sole discretion, which include recommendations for further
assessment (if required), areas of contamination shown on a figure, including commentary and data showing the stability or decrease of the contamination over time in the wall(s), which findings and conclusions are to be satisfactory to us in our sole discretion;
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b) A copy of satisfactory final results from the petition submission to the City of Calgary and Alberta Environment and Protected Areas, including the Domestic Use Aquifar exposure pathway, satisfactory to us in our sole discretion.
RIGHT OF TERMINATION: We shall have the right to terminate our agreement to provide the Loan to you and be relieved of all obligations in connection therewith in the event any of the following events occur prior to the time of the advance (or any final advance) of the Loan hereunder:
a) you fail or are unable or unwilling for any reason whatsoever to comply with any of the terms and conditions set out in this commitment letter within the time indicated for such compliance;
b) you fail or refuse to execute and deliver any documentation required by this commitment letter or requested by us or our solicitors in connection herewith;
c) you refuse to accept any funds when advanced;
d) you or any guarantor or any tenant of the Property with a Major Lease shall become insolvent or bankrupt, or subject to proceedings under the Companies’ Creditors Arrangement Act or other similar legislation, or subject to any other bankruptcy, receivership, insolvency, winding-up or other similar proceedings, whether voluntary or involuntary;
e) there has been in our sole opinion a material adverse change in your financial condition or the condition of the Property or in the actual or anticipated revenues from the Property from the amounts set out in
Schedule “A” hereto, or a lease referenced in Schedule “A” has beenamended or terminated without our prior written consent, or any event has occurred that could reasonably be expected to result in any of the
foregoing;
f) we are advised of or are made aware that any material containing asbestos or other substances considered harmful by us been used, or will be used in the Property, or there is in, on or about the Property any
product or substance (including PCB’s), contaminants or hazardous materials, equipment, or any other thing which, in our opinion, constitutes or may constitute an environmental hazard or contravenes
any environmental law, regulation, order or directive;
g) you have not complied with all the provisions of applicable provincial construction / builders / mechanics lien legislation to our or our solicitor’s satisfaction or you have not paid any sum or complied with any
obligation that may confer right on a third party in respect of the Property or in the actual or anticipated revenues from the Property;
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h) any representation or warranty made by you in this commitment letter is not true and accurate as of the date of advance;
i) we or our solicitors are not satisfied with any of the matters set out in the section entitled “Title” in the attached Schedule of Standard Mortgage Loan Terms;
j) the net proceeds of the Loan have not been fully advanced on or beforeDecember 23, 2026. We require 3 business days prior written notice to advance funds from the date that all Conditions Precedent to Advance have been fulfilled;
k) if any person, including a federal, provincial or municipal authority, other than you, requires or claims from us the full or partial amount of any sums advanced hereunder.
If, in accordance with the foregoing, we elect to terminate our agreement to provide the Loan to you prior to the advance of the entire Loan amount, the amount advanced on the Loan, if any, together with interest thereon at the rate set out herein shall become immediately due and payable and we shall, whether or not any amount has been advanced on the Loan, and without prejudice to our right to recover from you all costs and fees incurred by us, be entitled to retain the holding deposit as compensation for all damages sustained by us, it being agreed that the amount of such holding deposit is a
fair estimate of the damages which will be suffered by us in such event.
MORTGAGE RATE: For registration purposes only, the mortgage will provide for an interest rate of18.0% per annum, calculated semi-annually, not in advance, and the payment terms of the Mortgage will be based on that rate.
Notwithstanding the foregoing or any other provisions of this commitment letter or the Security, the actual interest rate and payment terms applicable to the Loan during the term will be determined in accordance with the sections of this letter entitled “Interest Rate and Repayment”.
SCHEDULES: The attached schedules are incorporated into this commitment letter by reference and form a part hereof.
ASSIGNMENT: You and any guarantors cannot assign any of your rights or obligations under this commitment letter or the Loan to a third party. You agree that we may transfer and assign at no additional costs to the Mortgagor or Guarantors, without your consent and without notice to you, our rights and obligations under this commitment letter, the Loan, the Security and any related documentation (the “Mortgage Loan and Security”) to any affiliate or other third party. We may also syndicate, securitize or grant participation interests in the Mortgage Loan and Security, without your consent or notice to you. You agree that we may disclose confidential information relating to the Mortgage Loan and Security, including any financial information provided by you or any guarantor at any time or otherwise relating to you, or any guarantor, or to the Property and any plans, drawings or other documentation or information regarding the Property, to any associate or third party in connection with any of the transactions contemplated in this section.
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TIME: Time is of the essence hereof.
AMENDMENT: No amendment or waiver of any provision of this agreement will be effective unless it is in writing and signed by the Mortgagor and the Mortgagee. No failure or delay, on the part of the Mortgagee, in exercising any right or power hereunder shall operate as a waiver thereof. All other parties to this commitment letter hereby agree that the amendment or waiver of any provision of this commitment letter (other than agreements, covenants or representations expressly made by such other party hereunder, if any) may be made without and do not require the consent or agreement of, or notice to, such other parties.
GOVERNING LAW: The agreement constituted by your acceptance of this commitment letter shall be governed by the laws of the province in which the Property is situated. SURVIVAL: The terms and conditions of this commitment letter shall, after acceptance by you, survive the execution and registration of the Security and there shall be no merger of these provisions or conditions in the Mortgage or other Security;
provided that in the event of any conflict between the provisions of this commitment letter and the Standard Mortgage Loan Terms and the provisions of the Security, the terms of this commitment letter and Standard MortgageLoan Terms shall prevail.
JOINT AND SEVERAL: Where more than one person is liable as Mortgagor or as a guarantor or otherwise for any obligation under or pursuant to this commitment letter, then the liability of each such person for such obligation is joint and several (inQuebec, solidary) with each other such person. Notwithstanding the foregoing, the Mortgagee agrees that the guarantee of Peter Tong, Grace Eng Choo Tong, Timothy Tong, and Calvin Yi-Yi Tong, and Solid Gem Properties Ltd. shall be several, not joint and several. (in Quebec, shall be joint, not solidary).
E-MAIL AND FAX TRANSMISSION:
The Mortgagee is entitled to rely on any agreement, document, instrument, report or certificate provided to the Mortgagee by the Mortgagor or any Guarantor by way of e-mail or fax transmission as though it were an originally signed agreement, document, instrument, report or certificate. The Mortgagee is further entitled to assume that any communication from the Mortgagor or any Guarantor received by e-mail or fax transmission is a reliable communication from the Mortgagor or Guarantor.
ELECTRONIC IMAGING: The parties hereto agree that, at any time, the Mortgagee may convert paper records of this commitment letter and all other documentation delivered to the
Mortgagee (each, a “Paper Record”) into electronic images (each, an “Electronic Image”) as part of the Mortgagee’s normal business practices. The parties agree that each such Electronic Image shall be considered as an authoritative copy of the Paper Record and shall be legally binding on the parties and admissible in any legal, administrative or other proceeding as conclusive evidence of the contents of such document in the same manner as the original Paper Record.
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ACCEPTANCE: The terms of this commitment letter are open for acceptance by you and all guarantors by your executing the original of this letter where indicated below and returning the original of this letter, together with the application fee of $100,000.00 to our office at 335 8 Ave SW, Calgary, AB, T2P 1C9, Attention: Jonathan Ozenua on or before 2:00 p.m. on November 23, 2026, after which date and time this commitment letter shall lapse and be of no further force oreffect, unless it is extended by the Mortgagee in its sole discretion.
USE OF LOAN PROCEEDS BY MORTGAGOR:
The Mortgagor covenants and agrees with the Mortgagee that the Mortgagor will not use the proceeds of the Loan for the benefit or on behalf of any Person other than the Mortgagor. “Person” includes an individual, a partnership, a joint venture, a trust, an unincorporated organization, a company, a corporation, an association and any other incorporated or unincorporated entity.
LANGUAGE: The parties acknowledge that they have requested that the present agreement, as well as all notices and communications contemplated hereby, be drafted in the English language.
SCHEDULE OF STANDARD MORTGAGE LOAN TERMS
Attached to and forming part of a commitment letter dated October 23, 2026
between Royal Bank of Canada, as Mortgagee, and Next Generation Properties Ltd., as Mortgagor.
Title
You will be the registered and beneficial owner of the Property and have a good and marketable title in fee simple to the Property, and you will be the legal and beneficial owner of all personal property now or hereafter situated on the Property, and we will be first in priority in respect of the Property and all such personal property over all other encumbrances, leases, agreements for leases, restrictions, liens, assignments, easements and other rights or interests whatsoever to the full extent of the Loan, except for such encumbrances to which we may in writing consent.
We may, at our option, require that all present and future non-residential leases of the Property be postponed by way of a registered postponement agreement in favour of our interest in the Property. You undertake to consult with us and to obtain our approval in writing prior to concluding any future non-residential lease for leased premises in excess of 20% of the rentable area of building(s) on the Property or where the revenue from such lease will be in excess of 20% of the gross income from the Property.
The Property and all improvements thereon shall have been duly authorized and shall comply, in all respects, with all applicable laws, by-laws and governmental regulations orders or requirements, whether federal, provincial or municipal, including, without restriction, those dealing with planning, zoning, use, occupancy, subdivision, parking, historical designations, fire, access, loading facilities, landscaped areas, pollution of the environment, toxic materials or other environmental hazards, building construction, public health and safety, and there shall be no outstanding work orders, deficiency notices or other like violations against the Property or the improvements or any part thereof.
You shall provide such certificates or other written confirmation as we or our solicitors may reasonably require, certifying that no control orders, stop orders or prosecutions exist with respect to the Property or any activity or operation carried out thereon pursuant to any federal, provincial, municipal or local environmental, health and safety laws or regulations as may apply to the Property or the activities or operations carried out thereon.
Prepayment
If the loan is a fixed rate loan, you have no right to prepay the loan, or any part of the loan, prior to its maturity date. Any prepayment of the loan prior to its maturity date, in whole or in part, requires an amendment of the terms of this agreement and your agreement to pay the
Prepayment Fee.
The Prepayment Fee shall also be payable by you in the event we demand repayment of the outstanding principal of the loan on the occurrence of a default. Your obligation to pay the Prepayment Fee will be in addition to any other amounts then owing by you to us, will form part of the loan amount and will be secured by the security described herein.
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Insurance
You will maintain at all times the following insurance with respect to the Property:
(a) all risk property insurance on a replacement cost basis (including earthquake andflood coverage) with the Lender as mortgagee;
(b) boiler and machinery insurance for not less than the full replacement cost of suchboilers, pressure vessels and other insurable objects;
(c) business interruption or rental loss insurance for an indemnity period of not less than 12 months and with coverage of not less than 100% of the resulting loss of rent or other revenue received from the operation of the building situated on the Property; and
(d) general liability (including cross liability and severability of interests clauses) insurance in an amount of not less than $2,000,000 with the Lender as additional
insured.
If the Property includes condominium/strata unit(s), the insurance referred to in paragraph (a) above will be obtained in respect of all fixtures, improvements and betterments owned
by you within such condominium/strata unit(s) provided such fixtures, improvements and betterments are not insured by the condominium/strata corporation under a master insurance policy
for the condominium/strata building. You will advise the condominium/strata corporation of our interest in the Property. You will also seek compliance by the condominium/strata corporation with
all insurance requirements contained in the documents or statute that created the condominium/strata corporation.
The insurance policy(ies) will be:
(a) endorsed to provide the Lender with 30 days’ prior written notice of cancellation, expiration or termination (for non-renewal or otherwise);
(b) maintained with insurers licensed to do business in Canada rated at least “A” by AM Best or Standard and Poors;
(c) endorsed to provide the Lender with a revised certificate of insurance immediately upon renewal of or any amendment to the policy(ies).
If you fail to comply with the insurance obligations herein, we may take out the insurance we deem adequate, and you shall pay to us, on demand, all sums we paid for that purpose plus accrued interest up to the reimbursement date at the rate payable under the commitment letter.
In the event of a loss, you shall immediately advise us and shall not undertake any repairs or renovations without our consent. We reserve the right to apply any insurance proceeds against the Loan, whether due or not, or to the full or partial payment of the reconstruction of the improvements erected on the Property, without reducing, in either case, our rights hereunder.
Interest on Tax Escrow Account
If amounts are being paid to us by instalments with respect to Taxes, we will establish a tax escrow account and you shall be charged interest monthly at the mortgage interest rate on any debit balance in the tax escrow account from the date of payment of Taxes by us until such debit balance is fully repaid. Any debit balance together with interest thereon shall be secured by the mortgage.
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Environmental Provisions
You represent and warrant that; to your knowledge having no reason to believe otherwise, except as disclosed in writing:
(a) no environmental hazard, or circumstances which might give rise to an environmental hazard, exists on the Property or on any adjacent land;
(b) no claim, complaint or notice of any action or proceeding of any kind has been made or issued relating to an environmental hazard on the Property; and
(c) the Property is being used in compliance with all applicable statutes, regulations, orders and by-laws relating to the protection of the environment.
You agree to give us immediate written notice of any change in circumstances which would make any of the foregoing representations untrue or materially affect our Security.
You covenant and agree that you will:
(a) not create, nor allow anyone else to create, any environmental hazards on the Property;
(b) take appropriate remedial action with respect to any violation of any applicable statute, regulation, order or by-law relating to the protection of the environment;
(c) permit us at any time to conduct an environmental investigation in respect of the Property and will provide us with all information about the Property required by us from time to time to determine compliance with these environmental provisions;
and
(d) defend and indemnify us and our directors, officers, employees and agents against all liabilities, costs or damages arising out of any hazards caused by use of the Property by anyone or by contamination of or from the Property.
Default
In the event that you or any guarantor do not perform or comply with any of the provisions of the commitment letter, including this schedule, or of the Security or any other agreement between you or any guarantor and us relating to the Loan such non-performance or failure to comply shall constitute a default under the terms of the commitment letter and the Security and we shall have the right to immediately demand payment of any amounts advanced, together with interest at the rate set out in the commitment letter, as well as any other amounts due under
the commitment letter or the Security.
Due on Sale or Ownership Change
In the event you:
(a) sell, convey, transfer, exchange, assign or otherwise dispose of, or enter into any agreement for sale, transfer, exchange or other disposition of, the Property, or otherwise part with possession of the Property, to a purchaser, grantee or transferee not approved, in writing by us, in our sole discretion, whether for valuable or nominal consideration; or
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(b) issue or sell, or permit the assignment or transfer by any means, including a transfer or deemed transfer by operation of law, of the legal or beneficial interest in all or any part of your capital stock, whether for valuable or nominal consideration, resulting in a change of your control, or there is otherwise a change of your control, unless the entire transaction or series of transactions resulting in the change of control have been approved, in writing by us, in our sole discretion, then, at our option, you shall repay the unpaid principal balance of the Loan, all accrued interest thereon, any other monies owing hereunder, plus a prepayment indemnity.
Access to the Lands
We shall have the right at any reasonable time or times to fully inspect the interior and exterior of the Property and all building(s) thereon, so long as any monies remain outstanding under the Loan.
Subsequent Encumbrances
You agree that there will be no subsequent encumbrances on the Property, save and except with our prior written consent.
Appointment of Receiver
In the event that you or any guarantor shall be in default in the observance or performance of any of the terms, conditions, covenants or payments contained herein or in the Security, then we may, by notice in writing, appoint any person, whether an officer or employee of the Mortgagee or not, to be a receiver of the Property and the rents and profits derived therefrom, and may remove the receiver so appointed and appoint another in his stead. The term “receiver” as used herein includes a receiver and manager. The following provisions shall apply to any such receiver:
(a) the receiver so appointed is conclusively your agent and you shall be solely responsible for the acts or defaults and for the remuneration and expenses of the receiver. We shall not be responsible in any way for any misconduct or negligence on the part of the receiver and may, from time to time, fix the remuneration of the receiver and be at liberty to direct the payment thereof from any proceeds collected;
(b) nothing contained herein and nothing done by us or by the receiver shall render us a mortgagee in possession or responsible as such;
(c) all monies received by the receiver, after providing for payments and charges ranking prior to the Loan and for all applicable costs, shall be applied in or towards satisfaction of the remaining monies payable under the Loan;
(d) the receiver so appointed shall have power to:
(i) take possession of the Property, collect rents and profits and realize upon additional or collateral security granted by you to us and for that purpose may take proceedings, be they legal or otherwise, in your name or otherwise;
(ii) carry on or concur in carrying on the business which you are conducting on and from the Property and for that purpose borrow money on the security of the Property in priority to the Loan, and
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(iii) lease all or any portion of the Property and for this purpose execute contracts in your name which contracts shall be binding upon you.
(e) the rights and powers conferred herein are supplemental to and not in substitution for any other rights which we may have from time to time or at any time.
Consent to Disclosure
You grant your consent (such grant to remain in force as long as the Loan is outstanding) to any governmental body or authority or other person having information relating to Goods and Services Tax (“GST”) or to any other amount required to be paid by you, where the failure to pay such other amount could give rise to a claim ranking or capable of ranking in priority to the Security, to release such information to us at any time upon our request. You agree to provide signed third party authorizations in support of the foregoing at any time upon our request, prior to or after disbursement of the Loan.
Parking Area
Any use of any parking area, other than strictly for the parking of vehicles, requires our prior written approval, such approval not to be unreasonably withheld.
Expropriation
The entire proceeds from any expropriation affecting the whole or any part of the Property shall be paid to us in priority to the claims of any other party.
Mortgagee Expenses and Administration Fees You agree to pay all costs, charges and expenses incurred by us in connection with the operation or enforcement of the commitment letter, the mortgage or other Security, or any amendment, extension, variation, discharge or renewal thereof, including, without limitation, costs of registration of financing statements or financing change statements and searches in connection therewith, periodic property inspections and Tax verifications and other similar costs, and any fees or charges of agents or other third parties retained by us for the purpose of conducting such
activities on our behalf. In addition you agree to pay our administration fees in connection with our administration of the Loan, including the provision of mortgage statements, provision of discharges,processing late payments and cheques or automatic debits which are dishonoured or not accepteby the financial institution, the amount of each such administration fee being a liquidated amount to cover administrative costs of the mortgage and not a penalty. If you fail to pay any such costs, charges or expenses upon demand, the amount of the cost, charge or expense will be added to
the outstanding principal amount of the Loan and shall be secured by the mortgage registered against the Property.
Residential Rental Properties
You represent and warrant that, with respect to the Property:
(a) except as permitted under laws applicable to residential housing:
(i) no demolition, conversion, renovation, repair or severance has taken place with respect to the Property; and
(ii) there have been no increases in the rental rate charged for any residential rental unit or units on the Property.
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(b) as provided in laws applicable to residential housing:
(i) all rents charged with respect to the Property or any part thereof are lawful rents and all required rebates have been paid; and
(ii) all required filings have been made and were timely, accurate and complete.
(c) pursuant to laws applicable to residential housing:
(i) no applications, investigations or proceedings have been commenced or made, and
(ii) there are no outstanding orders or decisions made by any ministry, board or commission with respect to the Property or any residential rental unit or units on the Property.
On or before the date of the first advance you agree to provide a statutory declaration, by an officer/director of the Mortgagor, that the above representations and warranties
are true and correct. You agree to deliver to us on or before the date of the first advance all documents required to establish the legality of rents on the Property.
You authorize all government ministries, boards or commissions having jurisdiction over residential housing to release to us or our solicitors any and all information contained in their
files.
You agree to comply with the provisions of all laws applicable to residential housing during the term of the Loan. In the event of a breach of this covenant or in the event that any of the representations and warranties contained in this provision are false, the outstanding principal amount and any accrued interest shall, at our option, become immediately due and payable.
Condominium Provisions
In addition to your obligations herein to insure the Property, you agree to provide to us, from time to time upon our request, evidence satisfactory to us that the corporation (the “Condominium Corporation”) incorporated to administer the strata/condominium lands and buildings (the “Condominium”) of which the Property is part keeps the Condominium insured in
favour of us against all risks of direct physical loss or damage on a replacement cost basis for an amount equal to the full replacement value of the Condominium; provided that, if the Condominium
Corporation neglects to keep the Condominium insured as aforesaid, we shall be entitled but shall not be obligated to insure the Condominium.
As a member of the Condominium Corporation, you agree to seek the full compliance by the Condominium Corporation with the requirement that the Condominium Corporation insure the Condominium; and you hereby release to us all your claims upon the Condominium Corporation, subject to the terms of the said insurance policy. At all times and from time to time, you agree to observe and perform all duties and
obligations imposed on you by legislation affecting condominiums and by the Declaration, the Bylaws and the Rules and Regulations, as amended from time to time, of the Condominium
Corporation, and by virtue of your ownership of the Property. Any breach of the said duties and obligations shall constitute a breach of covenant under the Loan.
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Without limiting the generality of the foregoing, you agree to pay promptly when due any contributions to common expenses or any and all assessments as levied by the Condominium Corporation required of you as owner of the Property and in the event of default in doing so we, at our option, may pay the same and exercise all or any of its rights as provided for in the event of default herein whether or not any payment in default has priority to the Loan or any part of the monies secured by the mortgage. We may distrain for arrears of instalments and for payments arising under or pursuant to this clause.
You irrevocably authorize and empower us to exercise your rights as an owner of the Property to vote or to consent in all matters relating to the affairs of the Condominium Corporation provided that:
(a) we may at any time or from time to time give notice in writing to you and the Condominium Corporation that we do not intend to exercise the right to vote or consent and, in that event, until we revoke the said notice, you may exercise the right to vote. Any such notice may be for an undetermined period of time or for a limited period of time or for a specific meeting or matter; and
(b) we shall not by virtue of the assignment to the Bank of the right to vote or consen be under any obligation to vote or consent or to protect your interests and the right to vote does not constitute us a mortgagee in possession.
You agree to advise the Condominium Corporation to send all notices to us and to immediately notify us of any breaches by the Condominium Corporation of which you become aware, in order that we may be kept fully informed. You agree to provide to us immediately upon your receipt thereof, copies of all financial and operating statements provided to you by the Condominium Corporation, including any reports on the reserves maintained by the Condominium Corporation.
Interest On Interest
Interest shall be payable on all past due interest from the due date of such interest, at the interest rate applicable to the Loan as well before as after maturity, judgement or default.
Any overdue interest shall be payable on demand.
Record of Indebtedness
We shall keep accounts showing the status of the Loan. We shall keep records of the sums borrowed, of principal and interest repayments and of all other sums due under this commitment letter. In the absence of manifest error, our records shall constitute conclusive evidence of your indebtedness to us hereunder.
Appraisals and Assessments
All appraisals, inspections, assessments and information with respect to the Property provided to us are provided only for the purpose of assisting us in determining whether to grant the Loan and the amount thereof, and no acceptance, use of or adoption of any such appraisal, inspection, assessment or information by us shall be construed as any agreement by us
as to the value or soundness of the Property.
Payments of Amounts Owing to Third Parties, including Government Authorities During the term of the Loan, and any renewal or extension thereof, you will pay, when due, all amounts owing to any entity or governmental authority which, if unpaid, would give such entity recourse for such amounts ranking in priority to the Security and the failure to pay any such amount, when due, will constitute a default under the Security.
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Loan Purpose
For greater certainty, if you are an individual, you confirm that you are entering into this transaction primarily for business purposes and not for personal, family, household or farming purposes.
Language
The parties acknowledge that they have requested that the present agreement, as well as all notices and communications contemplated hereby, be drafted in the English language.
