Motion Record Returnable March 31, 2016

Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

Applicants

MOTION RECORD (Returnable March 31, 2016)

MCINNES COOPER GOODMANS LLP Barristers & Solicitors Barristers & Solicitors Blue Cross Building, South Tower Bay Adelaide Centre 644 Main Street, Suite 400 333 Bay Street, Suite 3400 Moncton, NB E1C 1E2 Toronto, ON M5H 2S7

Chris Keirstead Robert J. Chadwick Michael Costello Logan Willis

Tel: (506) 857-8970 Tel: (416) 979-2211 Fax:(506) 857-4095 Fax: (416) 979-1234

Lawyers for the Applicants Lawyers for the Applicants INDEX Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

INDEX

Tab Document

1. Notice of Motion

2. Draft Order

3. Affidavit of Bryan Inglis sworn March 24, 2016

A. Exhibit “A” – Initial Affidavit (without exhibits)

B. Exhibit “B” – Stay Extension and Priority Order dated July 20, 2015

C. Exhibit “C” – Approval and Vesting Order dated September 15, 2015

D. Exhibit “D” – Mortgage Documentation in respect of Summerside Property

E. Exhibit “E” – Mortgage Documentation in respect of Amherst Property

F. Exhibit “F” – Mortgage Documentation in respect of New Glasgow Property

G. Exhibit “G” – Documentation in respect of Glace Bay Mortgage

H. Exhibit “H” – Agreement of Purchase and Sale re: Summerside Property

I. Exhibit “I” – Assignment Agreement re: Summerside Property TAB 1 1

Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF COUR DU BANC DE LA REINE DU NEW BRUNSWICK NOUVEAU BRUNSWICK TRIAL DIVISION DIVISION DE PREMIERE INSTANCE JUDICIAL DISTRICT OF SAINT JOHN CIRCONSCRIPTION JUDICIARE DE SAINT JOHN IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. C-36, AS AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD. (the “Applicants”) NOTICE OF MOTION AVIS DE MOTION (FORM 37A) (FORMULE 37A) TO: The Service List attached as Schedule “A” DESTINAIRE: The Applicants will apply to the Court at the Saint Le demandeur (ou selon le cas) demandera à la John Court House, 10 Peel Plaza, Saint John, New Cour à ………..(lieu précis) ……….., le …….. Brunswick on the 31st day of March, 2016 at 9:30 19….., à …… h ……., d’ordonner (indiquer a.m. for an Order as set out hereunder. l’ordonnance demandée, les motifs à discuter et les renvois aux dispositions léglislatives ou règles qui seront invoquées); You are advised that: Sachez que: (a) you are entitled to issue documents and (a) vous avez le droit d’émettre des present evidence at the hearing in documents et de présenter votre preuve en English or French or both; français, en anglais ou dans les deux langues; (b) the Applicants intend to proceed in the (b) le demandeur a l’intention d’utiliser la English language; and langue anglais; et (c) if you intend to proceed in the other (c) si vous avez l’intention d’utiliser l’autre official language, an interpreter may be langue officielle, les services d’un required and you must so advise the clerk interprète pourront être requis et vous at least 7 days before the hearing. devrez en aviser le greffier au moins 7 jours avant l’audience. 2

MOTION

1. Co-op Atlantic (“Co-op”), Co-op Energy Ltd. and C A Realty Ltd. (collectively, the “Applicants”) make a motion pursuant to the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “CCAA”) for:1

(a) an Order substantially in the form attached at Tab 2 of the within Motion Record (the “Proposed Order”), inter alia:

(i) extending the Stay Period (as defined below) to May 31, 2016;

(ii) authorizing the Applicants to distribute to Business Development Bank of Canada (“BDC”) the net proceeds from the sale of the Summerside Property (as defined below), subject to BDC releasing and discharging the mortgage held by it in respect of the Summerside Property; and

(iii) lifting the stay of proceedings granted in the Initial Order of this Court dated June 25, 2015, as amended (the “Initial Order”), for the limited purpose of permitting BDC to enforce its mortgages and security in respect of the Amherst Property, New Glasgow Property and Glace Bay Mortgage (each as defined below); and

(b) such further and other relief as this Court deems just.

2. The grounds for the motion are:

(a) on June 25, 2015, the Court granted the Initial Order, inter alia, (i) granting the Applicants a stay of proceedings under the CCAA until July 24, 2015 (the “Stay Period”), which Stay Period has been subsequently extended by Orders of this Court to March 31, 2016, and (ii) appointing KPMG Inc. as CCAA Monitor in respect of the Applicants (the “Monitor”);

1 Capitalized terms that are not defined herein shall have the meaning given to them in the Affidavit of Bryan Inglis sworn March 24, 2016 (the “Inglis Affidavit”), attached at Tab 3 of the within Motion Record. 3

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(b) the Applicants have now sold their core assets and businesses and have limited remaining business operations;

(i) land and building located at 54 Central Street, Summerside, Prince Edward Island (PID# 301762-000 & 301887-000) (the “Summerside Property”);

(ii) the property located at 17 Lawrence Street, Amherst, Nova Scotia (PID# 25376625) (the “Amherst Property”);

(iii) the mortgage in respect of the property (the “Glace Bay Property”) located at 125 Reserve Street, Glace Bay, Nova Scotia (PID# 15397474) (the “Glace Bay Mortgage”); and

(iv) the property located at 451 Merigomish Road, New Glasgow, Nova Scotia (PID# 00858134 & 00938357) (the “New Glasgow Property” and together with the Summerside Property, the Amherst Property and Glace Bay Mortgage, the “BDC Collateral”);

(d) the BDC Collateral is subject to mortgages and security interests granted in favour of BDC as collateral for loans made to the Applicants by BDC;

(e) BDC is the first-ranking secured creditor in respect of the BDC Collateral;

(f) the question of how to address the BDC Collateral has been a continuing challenge for the Applicants during these proceedings due to various difficulties with the BDC Collateral;

(g) the Applicants have been seeking the sale of the Summerside Property since May 2015, when the property was first listed for sale, and have now received an offer for the purchase of the property subject to Co-op obtaining the consent of BDC and the Monitor; 4

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(h) BDC is prepared to consent to the sale of the Summerside Property and to release its mortgage over the Summerside Property to facilitate the sale, provided that it receives the net proceeds from the sale;

(i) the Applicants are no longer conducting business at the Summerside Property; however, the Applicants continue to bear the costs of maintaining the Summerside Property;

(j) the Applicants have concluded that it is appropriate to proceed with the sale of the Summerside Property and, subject to the outcome of an independent security review being conducted by counsel to the Monitor, that it is appropriate to distribute the net proceeds of the sale to BDC;

(k) in addition, BDC has confirmed that it is prepared to enforce its mortgages and security over the remaining BDC Collateral in exchange for a full and final release and discharge of the Applicants’ obligations under the BDC Loans;

(l) while the Applicants are no longer conducting business at the Amherst and New Glasgow Properties, they continue to bear all costs associated with maintaining and attempting to sell the properties, and with respect to the Glace Bay Mortgage, all costs of administering and, if necessary, enforcing the mortgage;

(m) any proceeds that might be obtained from the BDC Collateral are likely to be insufficient to repay the outstanding amounts under the BDC Loans; consequently, the Applicants believe that the most prudent and cost-effective approach is to allow BDC to enforce its interests in exchange for a release of all amounts remaining under the BDC Loans;

(n) in the event the proceeds of the BDC Collateral exceeds the amounts owed under the BDC Loans, BDC has agreed to pay over any such surplus amounts to the Applicants or their estate;

(o) the Applicants have worked diligently to complete the remaining post-closing activities in respect of the various sale transactions and to provide an orderly transition of their business, including employees, to its new owners;

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(p) the Applicants have also been advancing restructuring discussions and proposals with their key stakeholders while concurrently taking all required steps and actions in the adjudication of the pending pension claims litigation (the “Pension Claims Litigation”);

(q) the Applicants require the ongoing benefit of the stay of proceedings while they complete the remaining steps in these CCAA proceedings, including the sale of remaining redundant and non-material assets, the completion of the Claims Procedure, the adjudication of the Pension Claims Litigation and, pending the outcome of the Pension Claims Litigation, the development of a CCAA plan or other mechanism for distributions to creditors;

(r) the Applicants have been acting in good faith and with due diligence throughout these proceedings;

(s) the Monitor has continued to supervise and provide assistance to the Applicants with respect to their sale and restructuring efforts, and the Monitor supports this motion;

(t) the circumstances that exist make it appropriate for the Court to grant the proposed Order and provide the requested advice and directions;

(u) the provisions of the CCAA and this Court’s equitable and statutory jurisdiction thereunder;

(v) Rules 1.02, 1.02.1, 1.03(2), 3.02, 37, 37.01 and 37.04(1) of the Rules of Court; and

(w) such further and other grounds as counsel may advise and this Court may permit.

3. The following documentary evidence will be used at the hearing of this motion:

(a) the Inglis Affidavit and the exhibits attached thereto;

(b) the Seventh Report of the Monitor, to be filed, and any appendices attached thereto; and 6

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Dated March 24, 2016

Chris Keirstead Robert J. Chadwick Michael Costello Logan Willis

Tel: (506) 857-8970 Tel: (416) 979-2211 Fax: (506) 857-4095 Fax: (416) 979-1234

Lawyers for the Applicants Lawyers for the Applicants

SCHEDULE A – SERVICE LIST

Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE AND ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

Applicants

SERVICE LIST (As at March 24, 2016)

TO: MCINNES COOPER Blue Cross Building, South Tower 644 Main Street, Suite 400 Moncton, NB E1C 1E2

Fax: 506-857-4095

Remy Boudreau Tel: 506-877-0849 Email: [email protected]

Chris Keirstead Tel: 506-877-0845 Email: [email protected]

Lawyers for the Applicants 8

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AND TO: GOODMANS LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Fax: 416-979-1234

Robert J. Chadwick Tel: 416-597-4285 Email: [email protected]

Logan Willis Tel: 416-597-6299 Email: [email protected]

Sydney Young Tel: 416-849-6965 Email: [email protected]

Lawyers for the Applicants

AND TO: KPMG INC. Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5

Fax: 416-777-3883

Randy Benson Tel: 416-777-8539 Email: [email protected]

Anamika Gadia Tel: 416-777-3842 Email: [email protected]

The Monitor 9

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KPMG INC. KPMG Tower, 600 de Maisonneuve Boulevard West Suite 1500 Montreal, QC H3A 0A3

Fax: 514-840-2442

Carl Adjami Tel: 514-840-2323 Email: [email protected]

The Monitor

AND TO: BLAKE, CASSELS & GRAYDON LLP 199 Bay Street Suite 4000, Commerce Court West Toronto, ON M5L 1A9

Fax: 416-863-2653

Pamela Huff Tel: 416-863-2958 Email: [email protected]

Bernard Boucher Tel: 514-982-4006 Email: [email protected]

Chris Burr Tel: 416-863-3261 Email: [email protected]

Lawyers for the Monitor

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AND TO: THORNTON GROUT FINNIGAN LLP 100 Wellington Street West, Suite 3200 P.O. Box 329 Toronto-Dominion Centre Toronto, ON M5K 1K7

Fax: 416-304-1313

Grant B. Moffat Tel: 416-304-0599 Email: [email protected]

Michael Shakra Tel: 416-304-0332 Email: [email protected]

Lawyers for National Bank of Canada

AND TO: COX & PALMER LLP Brunswick Square, Suite 1500 1 Germain Street Saint John, NB E2L 4V1

Fax: 506-632-8809

Josh McElman Tel: 506-633-2708 Email: [email protected]

Lawyers for National Bank of Canada 11

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AND TO: OFFICE OF THE ATTORNEY GENERAL Legal Services Branch P.O. Box 6000 Chancery Place 675 King Street, 2nd Floor Fredericton, NB E3B 5H1

Fax: 506-453-3275

Alan Rockwell Tel: 506-444-2453 Email: [email protected]

Philippe Thériault Tel: 506-453-2222 Email: [email protected]

Lawyers for Provincial Holdings Ltd.

AND TO: SUPERINTENDENT OF PENSIONS, FINANCIAL AND CONSUMER SERVICES COMMISSION Andal Building 225 King Street Fredericton, NB E3B 1E1

Fax: 506-457-7266

Angela Mazerolle Email: [email protected]

Jennifer Sutherland Green Email: [email protected]

AND TO: BUSINESS DEVELOPMENT BANK OF CANADA 766 Main Street Moncton, NB E1C 1E6

Bob Prince Email: [email protected]

BUSINESS DEVELOPMENT BANK OF CANADA 70 York Street, Suite 1202 Toronto, ON M5J 1S9

Russell French Tel: 416-954-5004 Email: [email protected] 12

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AND TO: AIRD & BERLIS LLP Brookfield Place, Suite 1800 181 Bay Street Toronto, ON M5J 2T9

Fax: 416-863-1515

Steven L. Graff Tel: 416-865-7726 Email: [email protected]

Lawyers for Business Development Bank of Canada

AND TO: UNIFOR National Office 205 Placer Court Toronto, ON M2H 3H9

Barry E. Wadsworth Email: [email protected]

AND TO: PINK LARKIN 1133 Regent Street, Suite 210 Fredericton, NB E3B 3Z2

Fax: 506-458-1127

Joël Michaud Tel: 506-458-1989 Email: [email protected]

Dominic Caron Tel: 506-458-1989 Email: [email protected]

Lawyers for Unifor

AND TO: UNITED FOOD AND COMMERCIAL WORKERS UNION (UFCW) Suite 300, Sun Tower 1550 Bedford Highway Bedford, NS B4A 1E6

Mark Dobson Atlantic Assistant to the Canadian Director Email: [email protected] 13

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AND TO: PINK LARKIN 1463 South Park Street, Suite 201 P.O. Box 36036 Halifax, NS B3J 3S9

Fax: 902-423-9588

Ronald A. Pink, Q.C. Tel: 902-423-7777 Email: [email protected]

Bettina Quistgaard Tel: 902-423-7777 Email: [email protected]

Lawyers for United Food and Commercial Workers Canada and United Food and Commercial Workers Canada Locals 1288P and 864

AND TO: ECKLER LTD. 1969 Upper Water Street, Suite 503 Halifax, NS B3J 3R7

Derek M. Gerard Tel: 902-490-3315 Email: [email protected]

Administrator of the Co-Op Atlantic Employees’ Pension Plan

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AND TO: STIKEMAN ELLIOTT LLP 5300 Commerce Court West 199 Bay Street Toronto, ON M5L 1B9

Fax: 416-947-0866

Elizabeth Pillon Tel: 416-869-5623 Email: [email protected]

Maria Konyukhova Tel: 416-869-5230 Email: [email protected]

Andrea Boctor Tel: 416-869-5230 Email: [email protected]

Lawyers for Eckler Ltd., Administrator of the Co-Op Atlantic Employees’ Pension Plan

AND TO: HARRISON PENSA LLP 450 Talbot Street London, ON N6A 5J6

Fax: 519-667-3362

Tom Robson Tel: 519-661-6766 Email: [email protected]

Michael Cassone Tel: 519-661-6765 Email: [email protected]

Lawyers for Farm Credit Canada 15

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AND TO: NOVA SCOTIA DEPARTMENT OF JUSTICE Legal Services Division Joseph Howe Building 1690 Hollis Street Halifax, NS B3J 3J9

Fax: 902-424-7120

Sean Foreman Tel: 902-424-6969 Email: [email protected]

Glenna Campbell Tel: 902-424-5073 Email: [email protected]

Lawyers for Nova Scotia Business Incorporated (Successor of Nova Scotia Business Development Corporation)

AND TO: JOHN DEERE FINANCIAL INC. 1001 Champlain Avenue, Suite 401 Burlington, ON L7L 5Z4

Fax: 905-319-5866

Steve A. Watson Tel: 905-319-4958 Email: [email protected]

AND TO: KELLOGG CANADA INC. 5350 Creekbank Road Mississauga, ON L4W 5S1

Blake Moran Tel: 905-290-5227 Email: [email protected] 16

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AND TO: BENNETT JONES LLP 100 King Street West, Suite 3400 Toronto, ON M5X 1A4

Fax: 416-863-1716

Raj Sahni Tel: 416-777-4804 Email: [email protected]

Mark Laugesen Tel: 416-777-4802 Email: [email protected]

Lawyers for Irving Oil

AND TO: BENNETT JONES LLP 100 King Street West, Suite 3400 Toronto, ON M5X 1A4

Fax: 416-863-1716

Ranjan Agarwal Tel: 416-777-6503 Email: [email protected]

Mark Laugesen Tel: 416-777-4802 Email: [email protected]

Lawyers for Nestle Canada Inc.

AND TO: WITTEN LLP, Barristers & Solicitors Suite 2500, Canadian Western Bank Place 10303 Jasper Avenue Edmonton, AB T5J 3N6

Fax: 780-429-2559

Howard J. Sniderman, Q.C. Tel: 780-441-3203 Email: [email protected]

Lawyers for Medicine Shoppe Atlantic Corporation and Medicine Shoppe Canada Corporation

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AND TO: GORMAN NASON 121 Germain Street P.O. Box 7286, Station A Saint John, NB E2L 4S6

Fax: 506-634-8685

Peter H. MacPhail Tel: 506-636-7324 Email: [email protected]

James L. Mockler Tel: 506-636-7320 Email: [email protected]

Lawyers for the Superintendent of Pensions for New Brunswick

AND TO: DE LAGE LANDEN FINANCIAL SERVICES CANADA INC. 3450 Superior Court, Unit 1 Oakville, ON L6L 0C4

Fax: 866-318-3447

Faseeh Ahmad Tel: 855-732-2818 Email: [email protected]

AND TO: COMINAR REAL ESTATE INVESTMENT TRUST Complexe Jules-Dallaire 2820 Laurier Boulevard – T3 Québec, QC G1V 0C1

Fax: 418-681-2946

Manon Deslauriers Email: [email protected]

Philippe Côté Email: [email protected] 18

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AND TO: STEWART McKELVEY Purdy’s Wharf Tower One 900 – 1959 Upper Water Street P.O. Box 997 Halifax, NS B3J 2X2

Fax: 902-420-1417

Maurice P. Chiasson, Q.C. Tel: 902-420-3200 Email: [email protected]

Lawyers for Cominar Real Estate Investment Trust

AND TO: GOWLING LAFLEUR HENDERSON LLP 3700 – 1 Place Ville Marie Montréal, QC H3B 3P4

Fax: 514-876-9048

François Viau Tel: 514-392-9530 Email: [email protected]

Geneviève Cloutier Tel: 514-392-9448 Email: [email protected]

Lawyers for Imperial Oil

AND TO: BINGHAM LAW 95 Foundry Street, Suite 300 Moncton, NB E1C 5H7

Fax: 506-857-2017

Edwin (Ted) Ehrhardt, Q.C. Tel: 506-857-6309 Email: [email protected]

Lawyers for Imperial Oil 19

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AND TO: WICKWIRE HOLM 1801 Hollis Street, Suite 1800 Halifax, NS B3J 2X6

Fax: 902-429-8215

Carl Holm Tel: 902-429-7001 Email: [email protected]

Lawyers for HSBC

AND TO: McCARTHY TÉTRAULT LLP 1000 De La Gauchetière Street West, Suite 2500 Montreal, QC H3B 0A2

Fax: 514-875-6246

Alain N. Tardif Tel: 514-397-4274 Email: [email protected]

Anne-Marie Naud Tel: 418-521-3044 Email: [email protected]

Lawyers for La Coop Fédérée

AND TO: ATLANTIC POULTRY INCORPORATED 791 Belcher Street, RR1 Port Williams, NS B0P 1T0

Ian Blenkharn Tel: 902-670-0616 Email: [email protected]

AND TO: PATTERSON LAW 10 Church Street Truro, NS B2N 3Z6

George L. White Tel: 902-896-6163 Email: [email protected]

Jennifer Hamilton Upham Tel: 902-896-6192 Email: [email protected] 20

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AND TO: TEVA CANADA LTD. 30 Novopharm Court Toronto, ON M1B 2K9

Terry Reid Legal Counsel Tel: 416-940-6798 Email: [email protected]

AND TO: FORBES ROTH BASQUE 814 Main Street, Suite 300 P.O. Box 480 Moncton, NB E1C 8L9

Robert Basque Tel: 506-857-4880 Email: [email protected]

Lawyers for Certain Residential Property Corporations

AND TO: COX & PALMER LLP Brunswick Square, Suite 1500 1 Germain Street St. John, NB E2L 4V1

Fax: 506-632-8809

Peter R. Forestell, QC Tel: 506-633-2715 Email: [email protected]

Jane E. MacEachern Tel: 506-633-2777 Email: [email protected]

Lawyers for CST Canada Co.

AND TO: CONCENTRA FINANCIAL 333 3rd Ave N Saskatoon, SK S7K 2M2

Fax: 306-956-3003

Val Lucyshyn Tel: 306-956-1914 Email: [email protected]

Debenture Trustee

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AND TO: CONCENTRA FINANCIAL 333 3rd Ave N Saskatoon, SK S7K 2M2

Fax: 306-956-3003

Kezia Sonntag Tel: 306-956-5170 Email: [email protected]

Wayne Pederson Email: [email protected]

Lawyers for Concentra Financial

AND TO: TRIPP BUSINESS LAW Place de l’Assomption 770 Main Street, 10th Floor Box 6011 Moncton, NB E1C 1E7

Fax: 888-316-4697

Kevin Moreau Student-at-Law Tel: 506-830-8747, ext. 203 Email: [email protected]

Lawyers for Peak Foods LLC

AND TO: LAWSON CREAMER 133 Prince William Street, Suite 801 Saint John, NB E2L 2B5

Fax: 506-633-0465

Kelly VanBuskirk Tel: 506-633-3535 Email: [email protected]

Lawyers for Co-op General and Co-op Life 22

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AND TO: AIRD & BERLIS LLP Brookfield Place, 181 Bay Street Suite 1800, Box 754 Toronto, ON M5J 2T9

Fax: 416-863-1515

Timothy M. Lowman Tel: 416-865-7715 Email: [email protected]

Ian Aversa Tel: 416-865-3082 Email: [email protected]

Lawyers for Kraft Canada Inc.

AND TO: BINGHAM LAW 95 Foundry Street, Suite 300 Moncton, NB 31C 5H7

Fax: 506-857-2017

Michiel J. Vandenberg Tel: 506-383-6390 Email: [email protected]

Lawyers for Waycar Holdings Ltd.

AND TO: DELEHANTY RINZLER DRUCKMAN 720 Main Street Moncton, NB E1C 1E4

Fax: 506-857-3592

M. Morley Rinzler Tel: 506-858-1800 Email: [email protected]

Lawyers for 684318 NB Ltd.

AND TO: MRS. AVIS E. CHAPMAN 19 Lawrence Street Amherst, NS B4H 3G5

Fax: 902-667-2754 23

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AND TO: MACPHERSON LESLIE & TYERMAN LLP 1500 – 410 22nd Street East Saskatoon, SK S7K 5T6

Jeffrey M. Lee, Q.C. Tel: 306.975.7136 Email: [email protected]

Paul Olfert Tel: 306.956.6970 Email: [email protected]

Lawyers for Interprovincial Cooperative Limited

AND TO: ADVANTAGE COMMUNICATIONS INC. 265 Brackley Point Road Charlottetown, PE C1E 2A3

Jeff Willis Tel: 1.800.296.4522 ext. 4204 Email: [email protected]

AND TO: ATLANTIC CO-OP COUNTRY STORE 17 Lawrence Street Amherst, NS B4H 3G4

Gerry Aldwinckle Tel: 506.858.6262 Email: [email protected]

AND TO: DR. HAROLD MOLYNEAUX 54 Central Street Summerside, PE C1N 3L1

AND TO: THE MEDICINE SHOPPE PHARMACY 54 Central Street Summerside, PE C1N 3L1

Greg Burton Tel: 902.436.4436 Email: [email protected]

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, Court File No: SJM-98-15 R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD. Applicants

COURT OF QUEEN’S BENCH OF NEW BRUNSWICK

Proceeding filed in Saint John

NOTICE OF MOTION (Returnable March 31, 2016)

MCINNES COOPER Barristers & Solicitors Blue Cross Building, South Tower 644 Main Street, Suite 400 Moncton, NB E1C 1E2

Chris Keirstead / Michael Costello Tel: (506) 857-8970 Fax: (506) 857-4095

GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Robert J. Chadwick / Logan Willis Tel: (416) 979-2211 Fax: (416) 979-1234

Lawyers for the Applicants TAB 2 25

Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN

THE HONOURABLE ) THURSDAY, THE 31ST ) JUSTICE STEPHENSON DAY OF MARCH, 2016 )

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

ORDER

THIS MOTION, made by Co-op Atlantic, Co-op Energy Ltd. and C A Realty Ltd. (collectively, the “Applicants”), pursuant to the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “CCAA”) was heard this day at 10 Peel Plaza, Saint John, New Brunswick.

ON READING the affidavit of Bryan Inglis sworn March 24, 2016 and the exhibits thereto (the “Inglis Affidavit”) and the Seventh Report of KPMG Inc. in its capacity as CCAA monitor of the Applicants (the “Monitor”), and on hearing the submissions of counsel for the Applicants, the Monitor and such other counsel as were present and wished to be heard, and on reading the affidavit of service of  sworn , 2016,

SERVICE AND DEFINITIONS

1. THIS COURT ORDERS that the service and notice of this Motion are hereby abridged and validated and this Motion is properly returnable today without further service or notice thereof. 26 - 2 -

2. THIS COURT ORDERS that, unless otherwise indicated or defined herein, capitalized terms used in this Order shall have the meanings given to them in the Inglis Affidavit.

EXTENSION OF THE STAY OF PROCEEDINGS

3. THIS COURT ORDERS that the Stay Period (as such term is defined in and used throughout the Initial Order of this Court in these proceedings dated June 25, 2015 (as amended, the “Initial Order”)) be and is hereby extended to and including 11:59 p.m. on May 31, 2016, and that all other terms of the Initial Order shall remain in full force and effect, unamended, except as may be required to give effect to this paragraph or as otherwise expressly provided in this Order.

DISTRIBUTION OF PROCEEDS TO BUSINESS DEVELOPMENT BANK OF CANADA

4. THIS COURT ORDERS that the Applicants are authorized to pay to Business Development Bank of Canada (“BDC”) the net proceeds from the sale to 101651 P.E.I. Inc. of the property located at 54 Central Street, Summerside, Prince Edward Island (PID# 301762-000 & 301887-000) (the “Summerside Property”), subject to BDC releasing and discharging any and all Encumbrances (as defined in the Initial Order of this Court granted June 25, 2015, as amended) of any kind held by BDC over or in respect of the Summerside Property prior to or upon the sale thereof. For the purpose of this paragraph, “net proceeds” refers to the proceeds from the sale of the Summerside Property less reasonable legal fees and real estate fees and commissions incurred by the Applicants in connection with the sale of the Summerside Property.

ENFORCEMENT OF BDC MORTGAGES AND SECURITY

5. THIS COURT ORDERS that the stay of proceedings pursuant to paragraphs 14 and 15 of the Initial Order is hereby lifted solely for the limited purpose of permitting BDC to enforce the mortgages and security interests granted by the Applicants in favour of BDC (the “BDC Security”) in the following collateral (together with the Summerside Property, the “BDC Collateral”):

(a) the property located at 17 Lawrence Street, Amherst, Nova Scotia (PID# 25376625);

27 - 3 -

(b) the mortgage in respect of the property located on 125 Reserve Street, Glace Bay, Nova Scotia (PID# 15397474) and the $25,028.41 currently held by Co-op Atlantic separately from its other assets on account of payments on the Glace Bay Mortgage in February and March 2015 (the “Received Glace Bay Mortgage Payments”); and

The stay of proceedings pursuant to paragraphs 14 and 15 of the Initial Order shall continue for all other purposes, unamended, subject only to the extension of the Stay Period set forth in paragraph 3 of this Order.

6. THIS COURT ORDERS that the enforcement by BDC of the BDC Security shall result in the full, final and irrevocable satisfaction of all debts and liabilities of any kind owing by the Applicants to BDC, including for greater certainty all amounts owing by the Applicants to BDC in respect of the following loans (the “BDC Loans”):

(a) the Letter of Offer dated April 4, 2005, as amended (identified as Loan #032496- 01); and

(b) the Letter of Offer dated February 14, 2012, as amended (identified as BDC Loan #032496-03).

For greater certainty, BDC shall have no unsecured deficiency claims against the Applicants in the event that its recoveries on the BDC Collateral are less than the amounts owing under the BDC Loans, and BDC shall be deemed to waive any such unsecured deficiency claims.

7. THIS COURT ORDERS that the Applicants shall promptly: (a) pay the Received Glace Bay Mortgage Payments to BDC or as BDC may direct; (b) direct the mortgagor under the Glace Bay Mortgage to direct all future payments on account of the Glace Bay Mortgage to be paid to BDC or as BDC may direct; (c) pay any future payments received by the Applicants on account of the Glace Bay Mortgage to BDC or as BDC may direct; and (d) subject to obtaining the consent of the Monitor, execute and deliver any and all documentation reasonably necessary in order for BDC to enforce the BDC Security or effect a sale at BDC’s direction.

28 - 4 -

8. THIS COURT ORDERS that:

(a) if any of the BDC Collateral is sold following the enforcement by BDC of the BDC Security, BDC shall notify the Applicants and the Monitor in writing of the terms of the sale and the proceeds generated from the sale; and

(b) following the enforcement by BDC of the BDC Security, if the aggregate proceeds of the BDC Collateral (net of reasonable costs incurred by BDC and/or its agents in enforcing the BDC Security and selling the BDC Collateral) exceed the amounts owing to BDC pursuant to the BDC Loans (the “BDC Collateral Surplus”), then BDC shall promptly pay the BDC Collateral Surplus to the Applicants or the Applicants’ estate, as applicable.

9. THIS COURT ORDERS that the consent or non-objection of Eckler Ltd. (as administrator of the Co-op Atlantic Employees’ Pension Plan) (the “Pension Administrator”) to paragraphs 4, 5, 6, 7 and 8 of this Order shall be without prejudice to the rights of the Pension Administrator in respect of the litigation in these proceedings with respect to the claims and priority asserted by the Pension Administrator. No party shall have any rights to recover any amounts in respect of the BDC Collateral from BDC other than the rights of the Applicants to be paid the BDC Collateral Surplus, if any.

GENERAL

10. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or outside Canada to give effect to this Order and to assist the Applicants, the Monitor and their respective agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Applicants and to the Monitor, as an officer of this Court, as may be necessary or desirable to give effect to this Order, to grant representative status to the Monitor in any foreign proceeding, or to assist the Applicants and the Monitor and their respective agents in carrying out the terms of this Order. 29 - 5 -

11. THIS COURT ORDERS that this Order and all of its provisions are effective as of 12:01 a.m. Atlantic Standard/Daylight Time on the date of this Order.

Dated at Saint John, New Brunswick this _____ day of March, 2016.

______

Court File No. SJM-98-15 IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

COURT OF QUEEN’S BENCH OF NEW BRUNSWICK

Proceeding filed in Saint John

ORDER

MCINNES COOPER Barristers & Solicitors Blue Cross Building, South Tower 644 Main Street, Suite 400 Moncton, NB E1C 1E2

Chris Keirstead / Michael Costello Tel: (506) 857-8970 Fax: (506) 857-4095

GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Robert J. Chadwick / Logan Willis Tel: (416) 979-2211 Fax: (416) 979-1234

Lawyers for the Applicants TAB 3 31

Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

Applicants

AFFIDAVIT OF BRYAN INGLIS (sworn March 24, 2016) 32

Court File No. SJM-98-15

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK

TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

Applicants

AFFIDAVIT OF BRYAN INGLIS (sworn March 24, 2016)

I, Bryan Inglis, of the City of Moncton, in the Province of New Brunswick, MAKE

OATH AND SAY:

I. INTRODUCTION

1. I am the interim Chief Executive Officer of Co-op Atlantic (“Co-op”) and have served in that capacity since November 2014. I have been employed by Co-op since 1986 and have served in a variety of executive roles prior to becoming interim Chief Executive Officer, including as

Vice-President of Co-op’s wholesale food business and Vice-President of Co-op’s agricultural business. As such, I have personal knowledge of the matters to which I depose in this affidavit.

Where I do not possess personal knowledge, I have stated the source of my information and, in all such cases, believe it to be true.

2. Co-op, Co-op Energy Ltd. (“Co-op Energy”) and C A Realty Ltd. (“C A Realty” and together with Co-op and Co-op Energy, the “Applicants”) obtained relief under the Companies’

Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “CCAA”) pursuant to an 33 - 2 -

Order (the “Initial Order”) of the Court of Queen’s Bench of New Brunswick (the “Court”)

dated June 25, 2015.1

3. This affidavit is sworn in support of a motion by the Applicants for an Order (the

“Proposed Order”), inter alia:

(a) extending the Stay Period (as defined below) from March 31, 2016 to May 31,

2016;

(b) authorizing the Applicants to distribute to Business Development Bank of Canada

(“BDC”) the net proceeds from the sale of the Summerside Property (as defined

below), subject to BDC releasing and discharging the mortgage held by it in

respect of the Summerside Property; and

of permitting BDC to enforce its mortgages and security in respect of the Amherst

Property, New Glasgow Property and Glace Bay Mortgage (each as defined

below).

II. ACTIVITIES OF THE APPLICANTS

4. The Applicants have now sold their core assets and businesses and have limited remaining business operations. As of March 18, 2016, the Applicants held $32.97 million in proceeds from the sale of their various assets and businesses. I am the only remaining full-time

1 Capitalized terms that are not defined herein have the meanings ascribed to them in the Affidavit of Bryan Inglis sworn June 24, 2015, a copy of which (without exhibits) is attached hereto as Exhibit “A”. 34 - 3 - employee of the Applicants. However, as set out more fully below, several former employees continue to provide part-time support to the Applicants on an as-needed basis.

5. The Applicants continue to work diligently to sell their remaining redundant and surplus assets, wind down their affairs and advance discussions with their stakeholders regarding restructuring matters. In particular, the Applicants have been working to broker a consensual resolution among the parties to the pending pension claims litigation (the “Pension Claims

Litigation”). No resolution has been reached to date, but the Applicants continue to work diligently towards a resolution of that matter.

6. The Applicants’ activities since the most recent general Court appearance on January 26,

2016 (the “January Motion”) have included the following:

(a) The Applicants have attended to various post-closing activities in respect of the

sale of their Agriculture Business, including the provision of transition services to

the purchaser, Atlantic Farm Services (“AFS”), until the completion of the

transition services period on March 8, 2016.

(b) The Applicants completed the transition of fifteen of their remaining sixteen

employees to AFS. The Applicants have made arrangements such that seven of

these employees, including two that are at the managerial or executive level, will

continue to assist the Applicants on a part-time, as-needed basis with remaining

tasks associated with these CCAA proceedings.

and surplus assets to generate additional proceeds. In particular, as described 35 - 4 -

further below, the Applicants have entered into an agreement to sell the

Summerside Property to an entity affiliated with the City of Summerside.

(d) The Applicants have continued their efforts and engagement with The

Cooperators Group Limited in an effort to preserve and derive value from Co-op’s

ownership of membership shares in The Co-operators Group Limited.

(e) The Applicants have disclaimed certain leases in respect of properties and

equipment that were no longer needed by the Applicants or that have been

transferred to the purchasers of the Applicants’ business.

(f) The Applicants, with the assistance of the Monitor, continue to administer the

Claims Procedure established by the Order of the Court dated October 1, 2015

(the “Claims Procedure”). The Applicants have issued a number of notices

revising or disallowing claims and have sought to work with claimants to address

disputed claims.

(g) In accordance with the advice and directions provided by this Court, the

Applicants have acted in good faith in connection with the Pension Claims

Litigation, including:

(i) participating in the development of the Agreed Statement of Facts

prepared by the Monitor;

(ii) negotiating an agreed discovery protocol with National Bank of Canada

(“National Bank”) following its request for documentary discovery (the

“Discovery Protocol”); 36 - 5 -

(iii) undertaking all steps and actions required to comply with the Discovery

Protocol, including searches of physical and electronic records that are

relevant to the Pension Claims Litigation; and

(iv) active involvement in ongoing discussions with the Monitor, the Pension

Administrator, National Bank and the Applicants’ other secured creditors

in an effort to reach a consensual resolution to the Pension Claims

Litigation.

7. I understand that the Seventh Report of the Monitor (the “Monitor’s Seventh Report”), which is to be filed in connection with this motion, will detail the activities of the Monitor since the January Motion.

8. There are a number of activities that remain to be completed in these CCAA proceedings, including the orderly wind-down and disposition of remaining assets and property, the adjudication of the Pension Claims Litigation or, if possible, a consensual resolution to that matter. In either scenario, it is the Applicants’ intention to bring forward a CCAA plan of compromise or arrangement or another form of distribution to the Applicants’ creditors.

III. BDC LOANS AND SECURITY

9. The Applicants’ remaining redundant and non-material assets include three properties and a mortgage receivable that are subject to mortgages and security interests granted in favour of BDC as collateral for loans provided to the Applicants by BDC.

10. Certain distributions were made to BDC earlier in these CCAA proceedings in partial reduction of the amounts owing to BDC. Specifically, the Applicants obtained a release and

37 - 6 -

discharge from BDC in respect its mortgage over a property in Sydney, Nova Scotia (the

“Sydney Property”) in exchange for a distribution to BDC of the net proceeds from the sale of

that property. The Court authorized the distribution to BDC of the net proceeds from the sale of

the Sydney Property by Order dated July 20, 2015 (the “July Order”). No party in these

proceedings objected to the Applicants’ motion requesting that Order. A copy of that Order is

attached hereto as Exhibit “B”.

11. In addition, in September 2015, the Applicants obtained Court authorization to distribute proceeds to BDC from the sale of a property located in Charlottetown, P.E.I. that had been

mortgaged to BDC (the “Queen Street Property”). The Court authorized the distribution to

BDC of the net proceeds from the sale of the Queen Street Property by Order dated September

15, 2015. A copy of that Order is attached hereto as Exhibit “C”.

12. The Applicants’ remaining obligations to BDC consist of the following (the “BDC

Loans”):

(a) Loan 032496-01 dated April 4, 2005, as amended, pursuant to which $304,000

(not including interest or fees) is outstanding;

(b) Loan 032496-03 dated February 14, 2012, as amended, pursuant to which

$773,000 (not including interest or fees) is outstanding.

13. The total amounts owing to BDC under the BDC Loans (not including interest or fees) is

approximately $1.08 million.

14. The BDC Loans are now secured by the following mortgages and security: 38 - 7 -

(a) BDC holds a mortgage over land and building located at 54 Central Street,

Summerside, P.E.I. (PID# 301762-000 & 301887-000) (the “Summerside

Property”). The Applicants previously used the Summerside Property as an oil

and propane retailer within its Energy Business, but closed the retail operations

prior to the sale of the Energy Business to CST Canada Co. (“CST”). CST did

not purchase the Summerside Property as part of its purchase of the Energy

Business. A copy of the mortgage over the Summerside Property is attached

hereto as Exhibit “D”.

(b) BDC holds a mortgage over the property located at 17 Lawrence Street, Amherst,

Nova Scotia (PID# 25376625) (the “Amherst Property”). The Amherst Property

is subject to litigation with the owner of the adjacent property. That litigation

affects property boundary, title and encroachment matters, the settlement of which

would appear to require expenditures and actions by the Applicants that they are

not in a financial position to undertake. The Applicants believe that efforts to sell

the property would be futile without a resolution of the legal dispute, so the

Applicants have not listed the Amherst Property for sale. Counsel for the

Applicants has been in regular contact with the plaintiff in the litigation during

these CCAA proceedings and has confirmed that she will be provided with the

materials for this motion. Counsel for the Applicants has also confirmed to me

that the plaintiff has been notified in advance of BDC’s intention to enforce its

security over the Amherst Property (as described below). A copy of the

documentation relating to the mortgage over the Amherst Property is attached

hereto as Exhibit “E”. 39 - 8 -

Glasgow, Nova Scotia (PID# 00858134 & 00938357) (the “New Glasgow

Property”). Co-op operated a grocery store at the New Glasgow Property until

its closure in 2013. The property has been listed for sale since the

approximate time of closure of the grocery store in 2013; however, the

Applicants have not received any executable offers for the New Glasgow

Property. A copy of the mortgage over the New Glasgow Property is attached

hereto as Exhibit “F”.

(d) BDC is the unconditional assignee of a mortgage receivable in respect of the

property located at 125 Reserve Street, Glace Bay, Nova Scotia (PID# 15397474)

(the “Glace Bay Mortgage”, and together with the Summerside Property,

Amherst Property and the New Glasgow Property, the “BDC Collateral”). Co-

op is the former owner of the Glace Bay property, which it sold to Melmik

Holdings Ltd. (the “Mortgagor”) in 2010. The Mortgagor granted a mortgage on

the Glace Bay property in favour of C A Realty, which C A Realty subsequently

assigned to BDC as security for the BDC Loans. As of March 15, 2016, the

amount outstanding under the Glace Bay Mortgage was approximately $276,000.

At the request of BDC, Co-op is also holding the proceeds of payments on the

Glace Bay Mortgage in the amount of $25,028.41 separate from its other assets.

The Mortgagor has failed to make certain payments on the Glace Bay Mortgage

that recently became due. A copy of the documentation relating to the Glace Bay

Mortgage is attached hereto as Exhibit “G”. 40 - 9 -

15. I understand from counsel to the Applicants that the BDC mortgages and security appear to be the first-ranking secured claims against the BDC Collateral. I understand that the

Monitor has commissioned an independent security opinion in respect of BDC’s mortgages and security and will be reporting on that matter in its forthcoming report to the Court.

16. The question of how to address the BDC Collateral has been a continuing challenge for the Applicants during these proceedings. Other than the Summerside Property (which has only recently become subject to a purchase offer after being listed for sale for many months), the

BDC Collateral is not readily saleable by the Applicants. The Amherst Property is encumbered by litigation, the Glace Bay Mortgage is in default and there has been limited interest to date in the New Glasgow Property.

17. Moreover, with respect to the Summerside, Amherst and New Glasgow Properties, the

Applicants continue to incur property maintenance costs, including insurance, taxes, utilities, snow removal and other costs associated with maintaining and securing the vacant properties.

18. It is anticipated that the aggregate value of the BDC Collateral will not be sufficient to repay the BDC Loans in full. Accordingly, the Applicants have been working with BDC to agree on arrangements for dealing with the BDC Collateral in a manner that would protect

BDC’s rights and avoid unnecessary maintenance and transaction costs to the Applicants.

19. In the course of these discussions, the Applicants received an executable purchase offer for the Summerside Property. As described below, the Applicants intend to complete the sale of the Summerside Property. Completion of this transaction is conditional upon BDC releasing its mortgage over the Summerside Property, which BDC is prepared to do if it receives a distribution of the net proceeds from the sale as a partial repayment on the BDC Loans. 41 - 10 -

20. In addition, BDC has confirmed that it is prepared to enforce its mortgages and security over the remaining BDC Collateral in exchange for a full and final release and discharge of the

Applicants’ obligations under the BDC Loans. As described further below, the Applicants have concluded that this is the optimal outcome for the Applicants in the circumstances given the challenges with the remaining BDC Collateral. The Applicants are requesting a limited lifting of the CCAA stay of proceedings for this purpose.

IV. SALE OF SUMMERSIDE PROPERTY AND DISTRIBUTION TO BDC

21. As part of the Proposed Order, the Applicants are seeking the authorization to pay the net proceeds from the sale of the Summerside Property to BDC, provided that BDC releases and discharges the mortgage it holds in respect of the Summerside Property.

22. The Applicants have been seeking the sale of the Summerside Property since May 2015, when the property was first listed for sale by an independent real estate broker. In July 2015, the

Applicants received an offer to purchase the Summerside Property, but the transaction did not ultimately materialize. Despite a number of showings of the Summerside Property to prospective purchasers, no further offers were made until the beginning of January 2016, when the Applicants received a conditional offer (the “January Offer”) to purchase the Summerside

Property from a company affiliated with the City of Summerside (the “City”), 101651 P.E.I. Inc.

(“101”). 101 has executed an agreement to purchase the Summerside Property for $200,000, a copy of which is attached hereto as Exhibit “H”. Co-op must obtain the consent of BDC and the

Monitor as conditions precedent to the sale transaction.

23. On March 15, 2016, 101 executed an agreement with the City, pursuant to which it assigned its right to acquire the Summerside Property to the City (the “Summerside Assignment 42 - 11 -

Agreement”). A copy of the Summerside Assignment Agreement is attached hereto as Exhibit

“I”.

24. Local media reports have indicated that the City intends to undertake significant

renovations on the Summerside Property and to rent it in late spring 2016 to a call centre

company.

25. BDC is prepared to consent to the sale of the Summerside Property and to release its

mortgage over the Summerside Property to facilitate the sale, provided that it receives the net

proceeds from the sale. I understand from counsel to the Applicants that BDC’s mortgage over

the Summerside Property is the only mortgage registered against title to the Summerside

Property and that BDC therefore has the first claim on the proceeds of any sale.

26. In addition, I understand from the Monitor that the Monitor consents to the sale of the

Summerside Property, subject to the completion of its independent security review, which is in

progress.

27. Pursuant to Section 11(a) of the Initial Order, the Applicants are authorized to sell

redundant or non-material assets with value of up to $1 million in one transaction, or $2.5

million in aggregate. The purchase price for the proposed sale of the Summerside Property to

101 is $200,000, and the aggregate amount of assets sold pursuant to Section 11(a) of the Initial

Order is $1,274,250. Accordingly, the Applicants are not seeking further approval of the Court

for the sale of the Summerside Property. However, the Applicants are seeking the authorization

of the Court to distribute the net proceeds of the sale to BDC in exchange for the release of

BDC’s mortgage over the Summerside Property. 43 - 12 -

28. The Applicants are no longer conducting business at the Summerside Property.

However, they continue to bear the costs of maintaining the Summerside Property, including

property maintenance, utilities, taxes, snow removal and insurance. The proposed transaction

represents the highest and best transaction available for the Summerside Property.

Consequently, in the circumstances, the Applicants have concluded that it is appropriate to

proceed with the sale of the Summerside Property and, subject to the outcome of the independent

security review, that it is appropriate to distribute the net proceeds of the sale to BDC.

V. LIMITED LIFTING OF THE STAY OF PROCEEDINGS

29. As discussed above, while the Applicants are no longer conducting business at the

Amherst and New Glasgow Properties, they continue to bear all of the costs associated with

maintaining and attempting to sell the properties. Similarly, with respect to the Glace Bay

Mortgage, the Applicants would need to continue to bear the cost of administering and, if

necessary, enforcing the mortgage. Since any proceeds that might be obtained from these assets

are likely to be insufficient to repay the outstanding amounts under the BDC Loans, the

Applicants believe that the most prudent and cost-effective approach is to allow BDC to enforce

its interests in exchange for a release of all amounts remaining under the BDC Loans.

30. Consequently, as part of the Proposed Order, the Applicants are also seeking a limited lifting of the stay of proceedings granted in paragraphs 14 and 15 of the Initial Order solely for the purpose of allowing BDC to enforce the mortgages and security interests granted by the

Applicants in the remaining BDC Collateral. 44 - 13 -

31. The Proposed Order provides that BDC would be required to repay to the Applicants any surplus that is generated from the sale of the remaining BDC Collateral over and above the amounts owing under the BDC Loans net of BDC’s reasonable costs.

32. I understand from counsel to the Applicants that the proposed security enforcement by

BDC has been discussed with counsel to the Pension Administrator. At the request of counsel to the Pension Administrator, the Proposed Order includes a proviso that the Pension

Administrator’s consent or non-objection does not in any way prejudice its position in the

Pension Claims Litigation.

33. In the circumstances, I believe that allowing BDC to enforce its mortgages and security is in the best interests of the Applicants. It will reduce ongoing property maintenance costs, avoid future transaction costs and will result in a final settlement of all BDC claims, regardless of whether there is a deficiency in the value of the BDC Collateral relative to the BDC Loans. I understand that the Monitor also supports this approach, subject to the completion of its independent security review.

VI. EXTENSION OF THE STAY OF PROCEEDINGS

34. The Applicants have continued to act diligently and in good faith in respect of all matters relating to the CCAA proceedings. As noted in Part II of this affidavit, the Applicants and their advisors have worked diligently to complete remaining post-closing activities in respect of their various sale transactions and to provide an orderly transition of their business, including employees, to its new owners. They have also been advancing restructuring discussions and proposals with their key stakeholders while concurrently taking all required steps and actions in the adjudication of the Pension Claims Litigation. 45 - 14 -

35. The stay of proceedings granted in the Initial Order (the “Stay Period”) was extended by this Court until March 31, 2016. The Applicants are requesting an extension of the Stay Period until May 31, 2016 while the Applicants work to complete the remaining steps in the CCAA proceedings, including, among other things:

(a) the sale of the Applicants’ remaining redundant and non-material assets;

(b) the completion of the Claims Procedure;

(d) pending the outcome of the Pension Claims Litigation, the development of a

CCAA plan or other mechanism to distribute proceeds to the Applicants’

creditors.

36. I understand that an updated cash flow forecast will be provided together with the

Monitor’s Seventh Report.

37. As a result of their receipt of proceeds from their various sale transactions, the Applicants expect to have sufficient liquidity through the requested extension of the Stay Period. The

Applicants are mindful of the need to complete these CCAA proceedings as quickly and efficiently as possible to preserve value for their stakeholders. To that end, the Applicants intend to continue working towards a negotiated resolution of the Pension Claims Litigation and to bring these proceedings to a successful conclusion as soon as possible. 46 - 15 -

V1I. CONCLUSION

38. For the reasons described above, the Applicants believe that the relief requested in the

Proposed Order is in the best interests of the Applicants and their stakeholders. Accordingly, I swear this affidavit in support of the relief sought by the Applicants,

SWORN before me in the City of Toronto, in the Province of Ontario, on March 24, 2016.

A Co missioner of Oaths Name: Lo4,AN w TAB A 47

THIS IS EXHIBIT "A" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE ME ON MARCH 24,2016

Commissioner of Oath 48

Court File No. ______

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

Applicants

AFFIDAVIT OF BRYAN INGLIS (sworn June 24, 2015) 49

TABLE OF CONTENTS

I. INTRODUCTION ...... 1 II. CORPORATE STRUCTURE ...... 4 (A) Co-op Atlantic ...... 5 (B) Co-op Energy Ltd...... 6 (C) C A Realty Ltd...... 7 (D) Country Ribbon Inc...... 7 III. OVERVIEW OF THE BUSINESS ...... 7 (A) Energy Business ...... 8 (B) Agriculture Business ...... 9 (C) The Food Business ...... 10 (D) Avide Developments ...... 11 (E) Employees ...... 11 (F) Pension Plan ...... 12 IV. FINANCIAL POSITION OF THE APPLICANTS ...... 14 (A) Assets ...... 14 (B) Secured Liabilities ...... 15 (C) Unsecured Liabilities ...... 21 (D) Cash Management System ...... 22 V. BUSINESS CHALLENGES AND PURSUIT OF STRATEGIC ALTERNATIVES ..... 23 (A) Business and Liquidity Challenges ...... 23 (B) Sale and Restructuring Efforts regarding the Food Business and the Gas Business ...... 27 (C) Completion and Effects of the Sobeys Transaction ...... 30 (D) Sale and Restructuring Efforts with respect to the Energy and Agriculture Businesses 31 (E) Continuation of Sale and Restructuring Process Under the CCAA ...... 33 VI. CCAA PROCEEDINGS ...... 34 (A) The Applicants are Insolvent ...... 34 (B) Stay of Proceedings under the CCAA ...... 35 (C) Funding of the Applicants and the DIP Loan ...... 35 (D) Payments during the CCAA Proceedings ...... 39 (E) Monitor and Administration Charge ...... 40 (F) Directors’ Charge ...... 43 (G) Priorities of Charges ...... 44 (H) Annual Meetings of Members and Shareholders ...... 46 VII. CONCLUSION ...... 47

( i ) 50

Court File No. ______

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD.

Applicants

AFFIDAVIT OF BRYAN INGLIS (sworn June 24, 2015)

I, Bryan Inglis, in the City of Moncton, in the Province of New Brunswick, MAKE

OATH AND SAY:

I. INTRODUCTION

1. I am the interim Chief Executive Officer of Co-op Atlantic (the “Company”) and have

served in that capacity since November 2014. I have been employed by the Company since 1986

and have served in a variety of executive roles prior to becoming interim Chief Executive

Officer, including as Vice-President of the Company’s wholesale food business and Vice-

President of the Company’s agricultural business. As such, I have personal knowledge of the

matters to which I depose in this affidavit. Where I do not possess personal knowledge, I have

stated the source of my information and, in all such cases, believe it to be true.

2. This affidavit is sworn in support of an application for an Order (the “Initial Order”)

pursuant to the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the

“CCAA”), in respect of the Company and two of its controlled subsidiaries, Co-op Energy Ltd.

51 - 2 -

(“Co-op Energy”) and C A Realty Ltd (“C A Realty” and, together with the Company and Co- op Energy, the “Applicants”).

3. Founded in 1927 and headquartered in Moncton, New Brunswick, the Company is the largest co-operative in Atlantic Canada and is deeply integrated into the local communities in which it operates. The Company began as an agricultural co-operative society whose principal function was to enable local farmers who were members of the co-operative to promote and sell their agricultural produce. As described further below, the Applicants now operate two primary businesses – an energy marketing and distribution business (the “Energy Business”) and agriculture-related manufacturing, distribution, brokerage and retailing businesses (the

“Agriculture Business”).

4. Until very recently, the Applicants operated a wholesale and retail food business that operated nine corporate-owned grocery stores and supplied more than 150 grocery and convenience stores operating under the Co-op brand name and other banners (the “Food

Business”). The Applicants also operated a wholesale and retail gasoline business that supplied gasoline to retail gas locations across Atlantic Canada and operated a limited number of corporate-owned gas stations (the “Gas Business”). As described in detail below, the Company and Co-op Energy recently completed a sale transaction with Sobeys Capital Incorporated

(“Sobeys”) pursuant to which Sobeys purchased a majority of the assets of the Food Business and the Gas Business (the “Sobeys Transaction”).

5. The Sobeys Transaction is part of a broader process undertaken by the Applicants in recent months to address significant and persistent financial challenges that have ultimately culminated in the commencement of these CCAA proceedings. Since the fall of 2014, the

52 - 3 -

Applicants have carried out an extensive process of exploring and pursuing a variety of options and alternatives to address their financial challenges (the “Sale and Restructuring Process”).

6. As discussed further below, the Applicants retained KPMG Corporate Finance Inc.

(“KPMG CF”) and KPMG Inc. (together with KPMG CF, the “Financial Advisor”) in late

2014 to provide financial and restructuring advisory services. With the assistance of the

Financial Advisor, the Applicants have made significant progress in their efforts to evaluate and pursue solutions to their financial challenges that are in the best interests of the Applicants and their stakeholders. The Applicants have obtained critical support from both the Province of New

Brunswick and the Applicants’ senior-ranking secured creditor, National Bank of Canada

(“National Bank”). As described further below, despite multiple defaults under the Applicants’ secured lending facilities, National Bank agreed in March 2015 to forbear from taking enforcement action on the defaults until June 26, 2015, and extended a new $10 million term loan facility (the “New Term Loan”). The New Term Loan was partially guaranteed by a corporation controlled by the Province of New Brunswick, Provincial Holdings Ltd. (“PHL”), in exchange for the release of PHL under a previous guarantee. The New Term Loan provided the

Applicants with the time and working capital needed to operate their business in the ordinary course while they continued the Sale and Restructuring Process.

7. The Sobeys Transaction represents the first significant transaction in the Applicants’ Sale and Restructuring Process. The Applicants are now in the advanced stages of identifying and reviewing potential transactions, investment opportunities and restructuring alternatives with respect to the Energy Business and the Agriculture Business. 53 - 4 -

8. Despite their significant progress to date, the Applicants have determined that it is no longer possible to continue these efforts without the benefit of protection under the CCAA. The

Applicants will need to scale down their workforce and cost structure in light of the reduced level of operations moving forward. This will give rise to substantial unsecured obligations that the Applicants cannot fully satisfy at the present time. The Applicants intend to continue operating their business while they seek to address their financial challenges. However, to do so, the Applicants require Court-ordered protection and immediate additional financing.

9. The Applicants have determined that it is necessary and in the best interests of their stakeholders to seek CCAA protection at this time. The objective of these proceedings is to provide the Applicants with stability while they continue to pursue the Sale and Restructuring

Process. The Applicants hope to complete one or more sale or restructuring transactions under the CCAA to achieve an outcome that is in the best interests of the Applicants and their various stakeholders, including employees, creditors, customers, suppliers, co-op members and the local communities in which they operate.

10. I believe that the interests of all parties are best served if the Applicants are able to continue operating under the protection of the CCAA while they seek to achieve the best outcome available in the circumstances. Accordingly, I swear this affidavit in support of the

Applicants’ request for an Initial Order under the CCAA.

II. CORPORATE STRUCTURE

11. A copy of the Applicants’ simplified corporate organizational chart is attached hereto as

Exhibit “A”. The Company owns 100% of C A Realty. The Company and five of its senior employees collectively own Co-op Energy. The Company also owns 50% of a Newfoundland

54 - 5 - corporation, Country Ribbon Inc. (“Country Ribbon”). Each of these entities is described in detail below.

12. The Company, Co-op Energy and C A Realty Ltd. are the Applicants in this CCAA proceeding. Country Ribbon is not an applicant in this proceeding.

(A) Co-op Atlantic

13. The Company is a co-operative entity incorporated under the Canada Cooperatives Act,

S.C. 1998, C-1, with its head office in Moncton, New Brunswick. The Company is extra- provincially registered to conduct business in each of New Brunswick, Nova Scotia, Prince

Edward Island, Newfoundland and Labrador and Manitoba.

14. The Company is controlled by approximately 100 co-operatively owned businesses located primarily in the Atlantic provinces (the “Members”), which are themselves governed on a co-operative basis and have their own members. The Members are primarily (though not exclusively) local businesses that, prior to the Sobeys Transaction, operated retail stores under the Co-op banner that were supplied by the Company. Certain of the other Members operate local businesses associated with the Company’s Agriculture Business.

15. As at May 22, 2015, the Members had members’ share capital in the Company with a stated value of approximately $32.5 million. The other equity of the Company consists of member investment shares with a stated value of approximately $5.2 million and membership share capital with a stated value of approximately $1.4 million. The members’ share capital consists of the Members’ voting equity interests in the Company. The member investment shares are non-voting equity investments in the Company. The membership share capital

55 - 6 -

consists of $10 par value non-voting shares issued to individual members of the co-operative

businesses that comprise the Company’s Members. The Members of the Company control the

Company through the election of its board of directors.

16. The Company operates the Agriculture Business and certain aspects of the Energy

Business. Prior to the Sobeys Transaction, the Company operated the Food Business and certain

aspects of the Gas Business.

(B) Co-op Energy Ltd.

17. Co-op Energy (formerly Co-op Fuels Ltd.) is a co-operative entity incorporated under the

Co-operative Associations Act, S.N.B. 1978, c. C-22.1, with its head office in Moncton, New

Brunswick. Co-op Energy is extra-provincially registered to conduct business in Nova Scotia.

The six members of Co-op Energy are the Company and five senior employees of the Company, including me. Co-op Energy is directed and controlled by a board of directors comprised of the same directors that serve on the board of directors of the Company.

18. Co-op Energy operates the aspects of the Energy Business that are not operated by the

Company, including the wholesale supply of petroleum heating products. Co-op Energy previously operated a significant portion of the Gas Business that was acquired by Sobeys in the

Sobeys Transaction.

19. Co-op Energy has a management agreement with the Company pursuant to which the

Company provides managerial services to Co-op Energy, such as accounting, payroll and human resources management services.

56 - 7 -

20. C A Realty is a corporation incorporated under the Business Corporations Act, S.N.B.

1981, c. B-9.1, with its head office in Moncton, New Brunswick. C A Realty is extra- provincially registered to conduct business in PEI and Newfoundland and is a wholly-owned

subsidiary of the Company. C A Realty provides real estate and mortgage-related services,

primarily in connection with the other businesses operated by the Company. For its fiscal year

ended November 30, 2014, C A Realty earned total revenue of approximately $246,000, which

related to the provision of management services and the receipt of interest and lease payments.

Approximately 75% of the revenue earned by C A Realty for its 2014 fiscal year related to

management services provided to, and mortgage interest received from, the Company.

(D) Country Ribbon Inc.

21. Country Ribbon is a corporation incorporated under the laws of Newfoundland, and is an

integrated chicken producer and processor with three operating facilities in or near St. John’s,

Newfoundland. The Company and Atlantic Poultry Incorporated, which is a Member of the

Company, each own 50% of the shares of Country Ribbon. Country Ribbon is not an applicant

in these proceedings.

III. OVERVIEW OF THE BUSINESS

22. Following the sale of the majority of the assets of the Food Business and the Gas

Business in the Sobeys Transaction, the Applicants operate two remaining core businesses: the

Energy Business and the Agriculture Business. The Applicants also operate certain other

ancillary businesses, including in respect of real estate management and the management of

social housing (together with the Energy Business and the Agriculture Business, the “Business”).

57 - 8 -

For the Applicants’ fiscal year ended January 2015, the Food Business accounted for

approximately 55% of consolidated revenue; the Energy Business and the Agriculture Business

generated approximately 25% and 20% of consolidated revenue, respectively. Revenue from the

operation of the Gas Business accounted for approximately 60% of the 2015 revenue of the

Energy Business. The Company also operates a property development and management business

that operates under the “Avide Developments” (“Avide”) business name, which is not a material

source of revenue for the Applicants.

(A) Energy Business

23. The Applicants’ energy business (the “Energy Business”) functions as a marketer and

bulk distributor of furnace oil, gasoline and other petroleum-based heating products to both residential and commercial customers in New Brunswick, Nova Scotia and PEI. The Energy

Business has five active bulk storage facilities and operates a local delivery fleet consisting of 18

trucks. Petroleum products sold in the Energy Business are procured from three separate

refineries in Atlantic Canada.

24. The Energy Business also sells and services a wide range of heating-related equipment,

including heat pumps, boilers, furnaces, wood stoves and fuel tanks.

25. The Gas Business, which was divested as part of the Sobeys Transaction, historically

formed part of the Energy Business. The Applicants are currently in the process of closing

certain remaining retail gas locations that were not acquired by Sobeys. 58 - 9 -

(B) Agriculture Business

26. The Applicants’ agriculture business (the “Agriculture Business”) consists of the following four farm-related business divisions:

(a) feed manufacturing and marketing (the “Feed Division”);

(b) grain and feed inputs brokerage (the “Brokerage Division”);

(d) farm retailing (the “Farm Retailing Division”).

27. The Feed Division is one of Atlantic Canada’s largest integrated manufacturers and marketers of animal feed. The Feed Division produces feed at four production facilities located in Moncton, New Brunswick and in Truro, New Minas and Brooklyn, Nova Scotia. Feed is produced for a variety of animal species, including (but not limited to) chickens, cattle, turkey, swine and horses. The Feed Division sources approximately 75% of its grain requirements from local farmers and sells over 650 customized feed mixes in bagged and bulk form to commercial farming customers and retail outlets.

28. The Brokerage Division connects grain and protein producers with end-users such as local farmers and retail outlets and generates revenue by sourcing feed ingredients, providing risk management services and arranging transportation for its customers. The Brokerage

Division operates out of two offices located in Moncton, New Brunswick and Winnipeg,

Manitoba. Logistics for both the supply and delivery of brokered products are managed by the

Brokerage Division, which outsources delivery to third party transportation companies. The

Brokerage Division actively hedges foreign exchange and commodity price risk.

59 - 10 -

29. The Farm Supply Division consists of the wholesale supply of farm inputs, hardware,

crop inputs and other general merchandise to Member and non-Member retail outlets. The Farm

Supply Division also sells directly to commercial farmers that require larger quantities of farm

and crop inputs that are not serviceable through retail outlets. Products sold in the Farm Supply

Division are warehoused at the Applicants’ Moncton, New Brunswick warehouse and then transported to retail locations by third-party carriers.

30. The Farm Retailing Division operates three corporate retail outlets located in Nova Scotia and New Brunswick under the “Co-op Country” store banner, as well as a fourth corporate outlet located adjacent to the Brooklyn, Nova Scotia feed mill. The Co-op Country stores sell a large selection of livestock feed and chicken feed as well as crop inputs, bird seed, pet food and other merchandise.

31. Prior to the sale of the majority of its assets to Sobeys, the Food Business consisted of the

wholesale supply of food products to over 150 retail food stores throughout Atlantic Canada

operating under the Co-op, Valufoods, VillageMART and RiteStop retail banners or as

independent grocers. The majority of the Co-op brand stores were operated by independent co-

operatives (the “Independent Stores”), each of which has its own member-owners. Nine of the

Co-op brand stores were corporate-owned and operated by the Company. As described further

below, the Company is in the process of closing four corporate-owned stores that were not

acquired by Sobeys. The Food Business was supported by food distribution centres in Moncton,

New Brunswick; Sydney, Nova Scotia; and Gander, Newfoundland. These distribution centres

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were not acquired by Sobeys but will continue to supply certain retail stores for a limited

transition period following the completion of the Sobeys Transaction.

(D) Avide Developments

32. Avide, which operates as a division within the Company, provides engineering and

renovation services for retail stores and carries out certain property management functions. The

Avide operations are not a significant source of revenue for the Applicants.

(E) Employees

33. The Applicants currently employ approximately 850 people across the four Atlantic

provinces, with approximately 65% of those employees working in New Brunswick. The

Applicants employ a limited number of employees in Manitoba in connection with the Brokerage

Division of the Agriculture Business. The Applicants have a unionized work force of

approximately 280 individuals who work primarily at the Applicants’ distribution warehouses

and corporate-owned grocery stores. The unionized employees are represented by a number of different unions, including the Newfoundland and Labrador Association of Public Employees;

United Steelworkers of America; Unifor, Fishermen and Allied Workers; United Food and

Commercial Workers; Bakery and Confectionary and Tobacco Workers; and International

Brotherhood of Carpenters.

34. As a result of the Applicants’ continuing financial challenges and the reduction in the

scope of business to be carried on by the Applicants following the Sobeys Transaction, the

Applicants unfortunately will have to make significant reductions to their workforce as their

existing cost structure is unsustainable. The Applicants anticipate that they will need to

61 - 12 - terminate the employment of approximately 400 of their employees to reflect the reduced level of operations going forward. The workforce reductions are concentrated in function areas that have traditionally supported the Food Business and the Gas Business, including employees at the

Company’s head office, food distribution warehouses and corporate-owned grocery stores and retail gas outlets that were not acquired by Sobeys.

35. Those employees whose employment will be terminated due to the downsizing of the

Applicants’ operations will be paid all salary, wages and vacation pay that they earned prior to their termination. However, in light of the Applicants’ current financial circumstances and the priority of senior-ranking creditors’ claims, the Applicants will not be in a position to satisfy all of their obligations for termination and severance pay that will arise in connection with the workforce reductions. The Boards of Directors of the Applicants have determined that, in the circumstances – including the size of the workforce reductions and the concentration of the employment losses in Atlantic Canada and particularly New Brunswick – it is appropriate to provide affected former employees with certain limited termination and severance payments.

Accordingly, the Applicants are seeking the Court’s approval to make a termination and severance payment to each terminated employee equivalent to approximately four weeks’ of such employee’s standard salary or wages. The total estimated cost of the termination and severance payments is $1.3 million.

(F) Pension Plan

36. The Company is the sponsor of a pension plan (the “Shared Risk Pension Plan”) registered in New Brunswick, which is administered by a board of trustees. The current members of the interim board of trustees are Judy Cairns, Kathy Heppell and Leo LeBlanc, who

62 - 13 - are current or former management employees of the Company. The Shared Risk Pension Plan was converted from a defined benefit plan to a shared risk plan, as defined in the Pension

Benefits Act (New Brunswick), effective January 1, 2013, and the conversion remains subject to final regulatory approval of the New Brunswick Superintendent of Pensions (the

“Superintendent”). At the time of its latest actuarial valuation on December 31, 2014, the

Shared Risk Pension Plan had approximately 650 active members, 190 deferred vested members and 425 retired members. As of that date, the Shared Risk Pension Plan had a solvency deficit of approximately $60 million. For 2015, the Company is required to make normal cost payments in respect of the Shared Risk Pension Plan of $2.3 million and special payments in respect of the solvency deficit of $0.7 million.

37. The Company presently intends to continue to make all required normal cost payments in respect of the Shared Risk Pension Plan during the CCAA proceedings.

38. The Applicants and their advisors are currently exploring a number of options and alternatives relating to the Shared Risk Pension Plan in connection with the restructuring of the

Applicants, and they have engaged in discussions with the Superintendent with respect to potential options moving forward to protect value for pension members.

39. The Company is also the sponsor of a defined contribution pension plan (the “DC

Pension Plan”) for certain employees at the nine corporate-owned food stores. Five of the corporate-owned food stores were acquired by Sobeys and the Company intends to close the other four locations that were not acquired by Sobeys. The Company intends to make all accrued normal cost contributions and payments to the DC Pension Plan for the period prior to the acquisition or closure of the corporate-owned stores.

63 - 14 -

IV. FINANCIAL POSITION OF THE APPLICANTS

40. Copies of the Applicants’ financial statements for their most recent year-ends and copies

of the most recently-prepared financial statements for each of the Applicants are attached hereto

as Exhibit “B”. The Company’s fiscal year-ends on the Friday closest to January 31st of each year and the 2014-2015 fiscal year therefore ended on January 30, 2015. The most recent fiscal year of Co-op Energy ended August 31, 2014 and the most recent fiscal year of C A Realty ended November 30, 2014.

(A) Assets

41. As at May 22, 2015, the Company had total assets with a book value of approximately

$126 million. Following the completion of the Sobeys Transaction, the Applicants have total

assets with a book value of approximately $73 million, including accounts receivable of $19

million and inventories of $11 million.

42. The Company also has intercompany loans receivable from Co-op Energy and C A

Realty of approximately $1.7 million and $0.8 million, respectively. The loans are unsecured,

non-interest bearing obligations with no set terms of repayment.

43. As at its latest fiscal year ended August 31, 2014, Co-op Energy had total assets with a book value of approximately $7.2 million. The book value of Co-op Energy’s assets has since been reduced to approximately $390,000 as a result of the sale of substantially all of the assets of the Gas Business to Sobeys.

44. At its latest fiscal year ended November 30, 2014, C A Realty had total assets with a book value of approximately $1.4 million, principally comprised of owned real property and two

64 - 15 - mortgages receivable. One of the mortgages receivable, in the amount of $261,000, is receivable from the Company.

(B) Secured Liabilities

45. As at May 22, 2015, the Company had total liabilities of approximately $120 million, consisting of $72 million in secured liabilities and $48 million in unsecured liabilities.

Following completion of the Sobeys Transaction, the Company has total liabilities of approximately $65 million, consisting of $28 million in secured liabilities and $37 million in unsecured liabilities. These amounts do not include liabilities that are anticipated to arise following the initiation of these CCAA proceedings, including in respect of advances under the

DIP Loan (as defined below), anticipated termination and severance obligations, and other obligations and liabilities that may arise in connection with the downsizing of the Applicants’ business operations.

46. As at August 31, 2014, Co-op Energy had total unsecured liabilities of approximately

$7.5 million, consisting of accounts payable, unearned revenue and an intercompany loan payable to the Company of $1.7 million. As at November 30, 2014, C A Realty had total liabilities of approximately $1.4 million, comprised principally of $414,000 in secured obligations in respect of loans payable and an unsecured intercompany loan payable to the

Company of $943,000. In addition to the foregoing, each of Co-op Energy and C A Realty is a guarantor of the Bank Indebtedness in an amount of up to $50 million.

47. The primary secured lender of the Applicants is National Bank, which has made available a revolving operating loan (the “Operating Loan”), a currency conversion risk and derivatives facility (the “FX Facility”), a reverse factoring facility (the “Reverse Factoring Facility”) and

65 - 16 -

the New Term Loan (collectively, the “Credit Facilities”). The amount owing to National Bank

under the Credit Facilities (the “Bank Indebtedness”) is a first-ranking secured obligation of the

Company that is guaranteed by Co-op Energy and C A Realty Ltd. (in each case to a maximum

amount of $50 million) on a first-ranking secured basis. The Bank Indebtedness is secured by

the Bank Security (as defined below).

48. Approximately $37.5 million of proceeds of the Sobeys Transaction were used to repay a

portion of the Bank Indebtedness owing to National Bank. The amounts paid to National Bank

were applied to repay in full the obligations under a non-revolving term loan (the “Term Loan”)

and obligations owing under the Operating Loan. The Applicants currently have secured

obligations to National Bank totalling approximately $14.2 million.

(i) Operating Loan

49. The Operating Loan is a secured obligation of the Company established pursuant to an offer of financing dated May 30, 2012, as renewed and amended by letter agreements dated July

17, 2013 and August 6, 2014 (as amended, the “Operating Loan Agreement”) between

National Bank, as lender, the Company, as borrower, and Co-op Energy and C A Realty Ltd., as guarantors. A copy of the Operating Loan Agreement is attached hereto as Exhibit “C”. The

Operating Loan bears interest at a rate of prime plus 2.25%. The FX Facility is also established and governed by the Operating Loan Agreement and bears interest at a rate of prime plus 2.25%.

50. Prior to the completion of the Sobeys Transaction, availability under the Operating Loan was limited to the lesser of $28 million and margin availability, which is determined as a function of the Company’s accounts receivable and inventory balances from time to time.

Approximately $24.2 million of the proceeds of the Sobeys Transaction were used to repay in

66 - 17 -

full the balance of the Operating Loan outstanding following completion of the transaction. The

Applicants have subsequently borrowed additional amounts under the Operating Loan to fund

the ongoing operation of their Business. It is anticipated that at the time of the CCAA filing the

amounts owing under the Operating Loan will be approximately $2.15 million.

(ii) Term Loan

51. Prior to its repayment in full from the proceeds of the Sobeys Transaction, the Applicants

had principal obligations of $12,924,520 in respect of the Term Loan. The Term Loan was a

secured obligation of the Company established pursuant to an offer of term financing dated

September 21, 2005, as amended, between National Bank, as lender, and the Company, as

borrower. The Term Loan had an interest rate of prime plus 1.50%. The Term Loan was

secured by the Bank Security in addition to other security.

52. The obligations of the Company under the Term Loan were originally guaranteed by

PHL pursuant to a guarantee agreement dated November 7, 2005. In connection with the

advance of the New Term Loan in March 2015, National Bank released and discharged PHL from its obligations under an existing guarantee of the Term Loan and PHL guaranteed certain of the obligations of the Applicants under the New Term Loan, as further described below.

(iii) Reverse Factoring Facility

53. Pursuant to an offer of financing dated October 12, 2011, National Bank has made

available to the Company a reverse factoring facility limited to the principal amount of

$2 million (the “Reverse Factoring Facility”), which the Company uses to obtain advances to

finance purchases of petroleum products used in its Energy Business. The obligations in respect

67 - 18 -

of the Reverse Factoring Facility are secured by the Bank Security. The Company has total

principal obligations of approximately $2 million outstanding in respect of the Reverse Factoring

Facility.

(iv) New Term Loan

54. National Bank advanced the New Term Loan in the amount of $10 million to the

Company pursuant to the terms of the Accommodation Agreement (as defined and described

below). The New Term Loan is evidenced by a promissory note dated March 23, 2015. It bears

interest at a rate of prime plus 2.25% and matures upon the termination or expiry of the

Accommodation Agreement, which is June 26, 2015. The obligations of the Company under the

New Term Loan are guaranteed by Co-op Energy and C A Realty and secured by the Bank

Security. The New Term Loan cannot be repaid until payment in full of all other Bank

Indebtedness.

55. Pursuant to the Agreement Regarding PHL Guarantees dated as of March 20, 2015

between the Company, National Bank and PHL (the “PHL Guarantees Agreement”), PHL was

released from its obligations under its previous guarantee in respect of the Term Loan and PHL guaranteed the obligations of the Company to National Bank under the New Term Loan up to the maximum principal amount of $7.5 million (the “PHL Limited Guarantee”). National Bank may demand payment under the PHL Limited Guarantee at any time following the transfer of substantially all of the property and assets of the Applicants. Otherwise, National Bank may not demand payment under the PHL Limited Guarantee until June 26, 2016.

68 - 19 -

(v) Bank Security

56. The Applicants have granted to National Bank an extensive security package as general and continuing security for all present and future obligations of the Applicants to National Bank

(the “Bank Security”), which includes the following:

(a) first ranking security under section 427 of the Bank Act;

(b) the assignment of all shares held by the Company in the capital stock of Country Ribbon and Co-op Energy;

(d) a first-ranking general security agreement over all of the Company’s present and future moveable property, corporeal and incorporeal;

(e) a fixed and floating charge demand debenture in the amount of $75 million from the Company and C A Realty Ltd.;

(f) an agreement from all shareholders of Co-op Energy that the assets of Co-op Energy will be sold and the proceeds from such sale will be deposited with National Bank should any financial covenant breach by the Company under the Operating Loan remain uncured for more than 90 days;

(g) a first-ranking general security agreement over all of the present and future claims and inventory of Co-op Energy to secure the guarantee of the Bank Indebtedness from Co-op Energy in the amount of up to $50 million; and

(h) a first-ranking general security agreement over all of the present and future claims and inventory of C A Realty Ltd. to secure the guarantee of the Bank Indebtedness from C A Realty Ltd. in the amount of up to $50 million.

57. National Bank has registered its security interests in the Company under the relevant

Personal Property Security Act (the “PPSA”) in each of the four Atlantic provinces. National

Bank has registered its security interest in Co-op Energy under the PPSA in New Brunswick and has registered its security interest in C A Realty Ltd. under the PPSA in each of the four Atlantic provinces.

69 - 20 -

(vi) Other Secured Liabilities

58. The Company is the issuer of a series of secured debentures (the “Debentures”) in the principal amount of $2,960,904 pursuant to a deed of trust dated August 19, 1988, as supplemented and amended (the “Trust Agreement”). The Debentures have interest rates of between 1% and 4.50% per annum and mature in a range of years between 2015 and 2023. The

Debentures are secured by a floating charge over all of the present and after-acquired property, assets and undertaking of the Company. The security interest is perfected by registrations against the Company made in favour of Concentra Financial, as assumed by the current trustee,

Concentra Trustee, pursuant to the applicable PPSA in each of the four Atlantic provinces.

National Bank, which also has a floating charge over all of the present and after-acquired property, assets and undertaking of the Company, has an earlier-in-time PPSA registration in each of the Atlantic provinces. The Debentures are held by eight separate holders, certain of whom are Members of the Company.

59. The Applicants also have mortgage obligations of approximately $13.5 million and other equipment loans and capital leases of approximately $4.2 million. These obligations are secured against the related underlying assets.

60. Certain of the Applicants’ mortgage obligations were assumed by Sobeys in connection with the Sobeys Transaction. The remaining mortgage obligations of the Applicants fall into two general categories. The first category is mortgages of assets that are used in the operation of the

Energy and Agriculture Businesses. The second category is mortgages of assets historically used in the operation of the Food Business and the Gas Business that were not acquired by Sobeys.

70 - 21 -

The Applicants intend to address these assets and mortgages as part of the Sale and Restructuring

Process.

61. There are a number of PPSA registrations against the Company in each of the Atlantic

provinces, which registrations generally relate to equipment and motor vehicle leases and

leasehold improvements. All but nine of such registrations were registered after the registrations

in favour of National Bank. The nine prior-ranking registrations appear to relate to discrete, identifiable equipment, vehicles and other assets that were not acquired by Sobeys.

62. The Applicants’ primary existing and near-term unsecured liabilities include the following:

(a) accounts payable and accrued liabilities of approximately $28 million owing to trade creditors;

(b) anticipated employee termination and severance obligations of approximately $8.1 million that are expected to arise in connection with the contemplated workforce reductions (this amount excludes that portion of the termination and severance obligations that the Applicants propose to pay to terminated employees, as described above); and

(c) short term demand loans in the amount of approximately $1 million, provided to the Company primarily by businesses and other entities in Atlantic Canada that have related and overlapping interests with the Applicants or their Members.

63. Prior to the completion of the Sobeys Transaction, the Applicants had annual lease

obligations of approximately $4 million. Certain of the lease obligations have been assumed by

Sobeys in connection with the Sobeys Transaction. The Applicants are reviewing their

71 - 22 -

remaining lease obligations and anticipate that certain leases relating to the Food Business and the Gas Business that have not been assumed by Sobeys and that are no longer needed in the operation of the Business will be disclaimed during the CCAA proceedings.

64. The Applicants expect that additional unsecured liabilities may materialize in connection with their ongoing restructuring efforts, including claims arising from the disclaimer of certain contracts or leases that are no longer necessary in light of the downsizing of operations.

(D) Cash Management System

65. The Applicants maintain bank accounts with National Bank. In the ordinary course of

business, funds are transferred between the bank accounts of the Applicants and cash is centrally

managed by the Company (the “Cash Management System”). The Cash Management System

enables the efficient utilization of funds by the Applicants and therefore minimizes the need for

the maintenance of separate financing arrangements by each of the Applicants.

66. Funds received by the Applicants in the operation of the Business are deposited into their

respective bank accounts. The Company directly pays many of the obligations of the other

Applicants, including those relating to payroll. Co-op Energy and C A Realty pay certain of

their expenses directly from their own cash receipts. On some occasions, and to the extent

required, the Company advances funds to the other Applicants to enable those entities to make

payments to third parties.

67. It is not practicable to separate the banking and financing functions performed by the

Company from the other Applicants due to the integrated nature of the Cash Management

System.

72 - 23 -

68. In connection with the CCAA proceedings, the Applicants are seeking the authority to

continue to operate the Cash Management System to fund the obligations of the Applicants and

to maintain the funding and banking arrangements already in place. Among other things, this

will minimize the cost and disruption that would be associated with implementing alternative

banking arrangements.

V. BUSINESS CHALLENGES AND PURSUIT OF STRATEGIC ALTERNATIVES

(A) Business and Liquidity Challenges

69. In recent years, the Applicants have experienced a number of challenges as a result of

economic conditions and competitive forces in Atlantic Canada. There has been limited growth

in demand for the Applicants’ products and services and the Applicants have faced increased competition in their various business lines, which has had an adverse impact on volume and margins. In particular, there has been intense competition in the Atlantic Canadian food retailing sector, and national and international competitors have invested heavily in customer acquisition.

In the last several years, over 40 Independent Stores and corporate-owned food stores have terminated their supply arrangements with the Company, which has reduced the scale of the

Company’s wholesale food operations and its ability to profitably operate the Food Business.

The Food Business has suffered recurring operating losses that have impaired the Applicants’ ability to sustain their existing high levels of debt and to obtain additional financing necessary to make required capital investments.

70. Since a significant portion of the Business relates to wholesaling activities, the

Applicants require liquidity to bridge the period between the purchase of inputs and the collection of accounts receivable. The Applicants’ liquidity challenges have intensified in the

73 - 24 -

past year due to continued operating losses in the Food Business, and National Bank has at times

permitted the Applicants to draw on financing above the borrowing limit under the Operating

Loan to finance the continued operation of the business. The Applicants have committed certain

defaults under the various agreements governing the Bank Indebtedness, including a failure to

maintain certain financial ratios as required by the Operating Loan Agreement.

71. In the fall of 2014, certain Independent Stores that had historically been supplied by the

Applicants’ Food Business entered into supply agreements with competitors of the Applicants,

and other Independent Stores were considering taking similar actions. The loss of supply arrangements with these Independent Stores threatened to precipitate additional departures that would have destabilized the operation of the Food Business and the Applicants’ extensive network of supplier and customer relationships. The remaining Independent Stores expressed concerns regarding the viability of the Food Business and its ability to ensure the continued supply of the Independent Stores. The Independent Stores strongly encouraged the Applicants to pursue a permanent solution to their liquidity and financial challenges. Management of the

Applicants also became concerned that the acute liquidity challenges faced by the Food Business would impair the ability of the Applicants to operate the Energy and Agriculture Businesses and to make necessary capital investments

72. In response to these challenges, the Applicants engaged KPMG CF in November 2014 to consider and evaluate a broad range of options and alternatives with respect to the Food

Business. Following its engagement, KPMG CF worked closely with the Applicants to develop and evaluate alternatives with respect to the Applicants’ Food Business. The restructuring professionals at KPMG Inc. were separately engaged in December 2014 to, among other things,

74 - 25 -

provide advice and analysis with respect to the Applicants’ liquidity challenges and assist the

Applicants in developing and evaluating restructuring alternatives.

73. In early 2015, the Applicants commenced the Sale and Restructuring Process with a focus

on pursuing strategic transactions with respect to the Food Business. The Food Business

represented the largest potential source of sale proceeds for the Applicants and it was the focal

point of the Applicants’ liquidity challenges and operating losses. The purpose of commencing

the Sale and Restructuring Process was to generate information, including with respect to market

interest, to be used by the Applicants and their advisors to evaluate a broad range of alternatives

with respect to the Food Business. The Gas Business was also evaluated in this initial phase

given its connectivity with the Food Business. The Applicants later expanded the Sale and

Restructuring Process to consider alternatives with respect to the Energy and Agriculture

Businesses when it became apparent that addressing those businesses would be important to an

overall solution to the financial challenges of the Applicants.

74. The Applicants continued to operate their business in the normal course while they undertook the Sale and Restructuring Process; however, they continued to experience intensifying liquidity challenges that impacted operations and threatened to destabilize their network of supplier and customer relationships. Despite fully drawing on their available sources of financing with National Bank, the Applicants continued to have insufficient liquidity to fund their working capital needs. As a result of the Applicants’ continuing defaults on financial covenants, National Bank was in a position to demand repayment in full of the Bank

Indebtedness. The Applicants did not have the ability to repay the Bank Indebtedness in full and

National Bank would therefore have been able to exercise its enforcement rights in respect of the

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Bank Security. It became clear that a failure to obtain access to additional financing could impair the value of the Applicants and their ability to pursue the Sale and Restructuring Process.

75. Following extensive negotiations involving the Applicants, National Bank and PHL, the parties agreed to an interim forbearance and financing arrangement that would provide necessary liquidity to the Applicants and enable them to continue their restructuring efforts. Pursuant to an agreement dated March 19, 2015 between the Applicants and National Bank (the

“Accommodation Agreement”), a copy of which is attached hereto as Exhibit “D”, National

Bank agreed to temporarily permit certain events of default and to forbear from demanding payment or taking enforcement action with respect to the Bank Indebtedness until June 26, 2015

(the “Accommodation Deadline”). In connection with the Accommodation Agreement,

National Bank also made the $10 million New Term Loan available to the Applicants to provide necessary working capital for the operation of the business. The advance of the New Term Loan was facilitated by the agreement of PHL to enter into the PHL Limited Guarantee to guarantee the repayment of up to $7.5 million of the principal obligations under the New Term Loan in exchange for the release and cancellation of an existing guarantee by PHL of the Applicants’ obligations under the Term Loan.

76. The execution of the Accommodation Agreement and the injection of additional liquidity through the New Term Loan has provided breathing room to the Applicants to continue to operate and to continue the Sale and Restructuring Process. As described below, the Applicants have recently completed the Sobeys Transaction, pursuant to which Sobeys has acquired the majority of the assets of the Food Business and the Gas Business, and they are currently pursing strategic transactions or restructuring alternatives with respect to the Energy Business and the

Agriculture Business.

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(B) Sale and Restructuring Efforts regarding the Food Business and the Gas Business

77. The Sobeys Transaction is the result of an extensive process carried out by the

Applicants, with the assistance of the Financial Advisor, to market and sell or obtain an

investment in the Food Business and the Gas Business. This process was undertaken as part of

the overall Sale and Restructuring Process being carried out by the Applicants.

78. At the outset of the process, management of the Applicants and the Financial Advisor

compiled a list of parties that might have an interest in investing in or acquiring the Food

Business and the Gas Business. The Applicants, with the assistance of the Financial Advisor,

approached ten potential interested parties, six of whom executed non-disclosure agreements

(“NDAs”) with the Applicants. The interested parties that executed NDAs were provided with a confidential information memorandum (the “CIM”) prepared by the Applicants and the

Financial Advisor containing detailed financial, operational and industry data with respect to the

Food Business and the Gas Business. Where required, the Applicants and the Financial Advisor held follow-up discussions and provided additional financial and business information to the interested parties.

79. Following their review of the CIM and the discussions noted above, three interested parties submitted expressions of interest with respect to a potential transaction in respect of the

Food Business and the Gas Business. Two of the expressions of interest were submitted in the form of formal letters of intent; the third expression of interest was conveyed verbally to the

Applicants and the Financial Advisor. The other three parties that had signed NDAs indicated that they were not interested in proceeding with a transaction.

80. Based on value and specificity of the letter of intent submitted by Sobeys, the Applicants, with the approval of their Boards of Directors, entered into a due diligence process to enable 77 - 28 -

Sobeys to obtain additional information with respect to the financial and operational condition of

the Food Business and the Gas Business. Concurrently, the Applicants, with the assistance of the

Financial Advisor, advanced discussions with the two other parties that had indicated an interest

in pursuing a transaction. The party that had previously submitted a formal letter of intent

submitted a revised proposal with improved terms; the other party did not advance its offer

beyond a verbal expression of interest.

81. While the formal sale process was ongoing, the Applicants also pursued the potential for

a merger of their entire business, including the Food Business and the Gas Business, with

another interested party that had indicated a potential interest in pursuing such a merger. Despite

detailed due diligence and extensive discussions between the Applicants, the Financial Advisor,

and the interested party and its advisors, the merger did not proceed.

82. Following the termination of the potential merger discussions, the Applicants and their

advisors undertook a thorough review of the terms of the two formal proposals that had been

submitted. After a thorough consideration of the various relevant factors, including the

consideration to be received, the certainty and viability of the potential transactions, and the

impact of the potential transactions on the Applicants’ stakeholders, the Applicants and their advisors determined that the Sobeys offer was clearly the superior and materially better offer for the Food and Gas Business. Following this determination, the Applicants and their advisors entered into extensive negotiations with Sobeys. These negotiations ultimately culminated in the definitive Sobeys Transaction.

83. The Applicants’ Boards of Directors oversaw the conduct of the sale process in respect of the Food Business and the Gas Business and directors were given frequent updates and advice by the Applicants’ management and advisors with respect to ongoing developments. After a

78 - 29 - thorough review of the Sobeys Transaction and the potential transactions and alternatives available to the Applicants, the Applicants’ Boards of Directors determined that the Sobeys

Transaction was the best alternative available in the circumstances. The Applicants’ Boards of

Directors recommended that members and shareholders of the Applicants approve the Sobeys

Transaction.

84. Members of the Company were notified of the Sobeys Transaction at a meeting of

Members on April 25, 2015 and the transaction was also publicly announced at that time. The

Members and shareholders of the Company unanimously approved the Sobeys Transaction at meetings held to consider and vote on the transaction on May 12, 2015. The Sobeys Transaction was also unanimously approved by members of Co-op Energy at a meeting held to consider and vote on the transaction on June 1, 2015. The Sobeys Transaction was consented to by the

Applicants’ senior-secured lender, National Bank and all of the holders of the Debentures. As a condition to the closing of the Sobeys Transaction, the parties sought regulatory approval under the Competition Act (Canada). On June 12, 2015, the Applicants received notice from the

Competition Bureau of Canada that it would take no regulatory action with respect to the Sobeys

Transaction. The Applicants completed the Sobeys Transaction on June 20, 2015.

85. The Sobeys Transaction was an important first step in the restructuring of the Applicants.

It unlocked significant value for the Applicants to repay first-ranking obligations to National

Bank, and it provided a solution to the liquidity and profitability issues that were centred on the

Food Business. The transaction also provides continued employment for certain employees whose employment will be assumed by Sobeys and an opportunity for Independent Stores to enter into new supply arrangements with Sobeys to ensure the continued operation of those stores for the benefit of customers, employees and local communities.

79 - 30 -

86. Pursuant to the Sobeys Transaction, Sobeys acquired certain of the corporate-owned grocery and retail gas locations and the Applicants’ wholesale supply contracts with 90

Valuefoods, VillageMART and RiteStop stores. Sobeys also acquired certain real property assets and equipment, leasehold interests, contracts, inventory and receivables. The purchase price paid by Sobeys for these assets was $37.5 million in cash (net of holdbacks) plus the assumption of certain of the Applicants’ secured liabilities, namely certain mortgages and capital lease obligations, in the approximate amount of $4.3 million.

87. Since the Independent Stores are owned by their own member co-operatives and not the

Applicants, the Independent Stores were not acquired by Sobeys. However, Sobeys has had discussions with substantially all of the Independent Stores with respect to establishing wholesale supply arrangements between Sobeys and the such Independent Stores following the

Applicants’ exit from the food wholesaling business to ensure the continuity of supply to those stores.

88. Certain of the assets of the Food Business and the Gas Business were not acquired by

Sobeys in the Sobeys Transaction. The Applicants are undertaking an orderly wind-down of those remaining portions of the Food Business and the Gas Business. The Applicants and their advisors are reviewing their alternatives with respect to certain corporate-owned and operated grocery stores that were not purchased by Sobeys. Since the Applicants no longer have the capacity to provide wholesale food services to these corporate-owned locations, the Applicants are pursuing the sale or closure of those locations. The Applicants intend to close certain food distribution warehouses that were not acquired in the Sobeys Transaction following a post- closing transition period.

80 - 31 -

89. The proceeds from the Sobeys Transaction have been used to repay a portion of the

Company’s first-ranking obligations to National Bank, which has continued to forbear from enforcing its rights and remedies in respect of its senior-secured Bank Indebtedness pursuant to the terms of the Accommodation Agreement.

90. Moving forward, the Applicants will no longer have access to the revenue they have historically earned from the operation of the Food Business and Gas Business to fund corporate overhead costs and must therefore scale down their operations and cost structure in light of the reduced level of ongoing operations. The downsizing of operations is expected to crystallize certain unsecured obligations of the Applicants that cannot be satisfied through the operation of the remaining Business. The planned reductions in employment described above will also create obligations for employee termination and severance pay that the Applicants will not have the financial resources to satisfy in full. Accordingly, as described further below, the Applicants require the protection of the CCAA to continue operating the remaining Business while they complete their Sale and Restructuring Process.

(D) Sale and Restructuring Efforts with respect to the Energy and Agriculture Businesses

91. With the assistance of the Financial Advisor and their other professional advisors, the

Applicants continue to undertake the Sale and Restructuring Process with respect to the remaining Business. The Applicants are currently pursuing a dual-track strategy to review and consider sale and other restructuring opportunities relating to the Energy Business and the

Agriculture Business. 81 - 32 -

92. In connection with the ongoing Sale and Restructuring Process, the Applicants and their advisors have prepared and populated electronic data rooms containing detailed financial and operational information and have developed confidential information memorandums (the

“CIMs”) with respect to both the Energy Business and the Agriculture Business. The Financial

Advisor has contacted a large number of potential strategic and financial buyers and provided interested parties with the CIMs and data room access. The Applicants and the Financial

Advisor have had follow-up discussions with numerous interested parties and have provided them with additional financial and business information to enable them to assess various opportunities with respect to the Business. Interested parties have conducted site visits and participated in information sessions with management.

93. The Applicants have received multiple expressions of interest relating to the Energy

Business and the Agriculture Business that the Applicants believe constitute commercially-viable and deliverable transactions. The Applicants and their advisors are currently evaluating the value and merits of the potential transactions and their impact on the Applicants and their stakeholders. The Applicants will continue to explore and pursue potential sale transactions in respect of the Energy Business and the Agriculture Business during the CCAA proceedings.

94. The Applicants and their advisors are also reviewing opportunities for the restructuring and continued operation of the Energy Business and the Agriculture Business by the Applicants.

A number of potential transaction structures are under consideration, although the viability and desirability of such structures will ultimately depend on a number of factors, including the nature and magnitude of the Applicants’ remaining liabilities and the availability of other strategic transactions in respect of the Business.

82 - 33 -

95. In connection with the Sale and Restructuring Process, the Applicants and their advisors

are reviewing opportunities with respect to the Company’s 50% interest in Country Ribbon, including a sale of the Company’s interest or retaining the interest in connection with a

restructuring of the Business. The Applicants are also actively marketing residual assets that

were not acquired in connection with the Sobeys Transaction and are not required in the

continued operation of the Energy Business or the Agriculture Business.

96. The Applicants will continue to evaluate and pursue strategic alternatives with respect to

the Energy Business and the Agriculture Business and intend to seek approval of this Court for

any material sale or other transaction to the extent required by the Initial Order.

(E) Continuation of Sale and Restructuring Process Under the CCAA

97. The Applicants have made significant progress to date in addressing their financial

challenges and advancing alternatives with respect to their various divisions. The Sobeys

Transaction has unlocked the value of the Food Business and the Gas Business, enabling the

Applicants to reduce their secured indebtedness and maintain the support of National Bank for

the continuation of the Sale and Restructuring Process. However, given their financial

circumstances, the Applicants require continued stability and additional financing that can only realistically be obtained under the CCAA.

98. The Boards of Directors of the Applicants have thoroughly considered the alternatives available to the Applicants and have determined that it is in the Applicants’ best interests to commence proceedings under the CCAA at this time. Given their financial circumstances, the

Applicants require the protection afforded by the CCAA to protect and preserve the Business while they continue the Sale and Restructuring Process.

83 - 34 -

VI. CCAA PROCEEDINGS

(A) The Applicants are Insolvent

99. The Applicants are experiencing significant liquidity challenges and are presently unable to pay certain of their obligations as they become due. The Applicants have been in default of their Bank Indebtedness for a considerable period of time and have been operating under the

Accommodation Agreement that expires on June 26, 2015. In the absence of these CCAA proceedings, there is no assurance that National Bank will continue to forbear on its rights and remedies beyond the agreed Accommodation Deadline on June 26, 2015.

100. The Applicants owe in excess of $28 million to their unsecured trade creditors. The

Applicants are not in a position to pay these amounts, and certain of these creditors have now commenced debt enforcement actions in respect of the unpaid obligations. The downsizing of the Applicants’ operations is also expected to result in obligations that cannot be sustained by the remaining Business, including certain payables and accrued expenses, lease obligations, anticipated termination and severance obligations and an existing deficiency in respect of the

Shared Risk Pension Plan. The Applicants will no longer benefit from the revenue and margin formerly earned through the Food and Gas Businesses and the Applicants will not be able to generate sufficient funding through operations in respect of the Energy Business and the

Agriculture Business to satisfy these obligations as they become due.

101. The Applicants therefore face a looming liquidity crisis absent CCAA protection. In addition, the realizable value of the Applicants’ property is not sufficient to satisfy their obligations, due and accruing due. The Applicants are therefore insolvent.

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(B) Stay of Proceedings under the CCAA

102. At this time, I believe that, without the benefit of CCAA protection, there could be a

significant erosion of the value of the Applicants to the detriment of all stakeholders. Without

CCAA protection, the liquidity position of the Applicants will deteriorate further and additional

creditor enforcement actions would be expected to occur, threatening to impair the ability of the

Applicants to operate the Energy and Agriculture Businesses in the normal course. A stay of proceedings is necessary to prevent creditor enforcement actions and the disruption of commercial contracts so as to ensure that the Applicants can continue to meet customer needs in the ordinary course and generate needed revenue from the operation of the Energy Business and the Agriculture Business.

103. A stay of proceedings is also necessary to maintain the value of the remaining Business and provide stability while the Applicants advance the Sale and Restructuring Process. Debt enforcement actions or adverse actions by contractual counterparties could impair the value of the Applicants to the detriment of all stakeholders. A stay of proceedings will provide the

Applicants with a controlled opportunity to complete the Sale and Restructuring Processes and pursue transactions or restructuring opportunities that are in the best interests of the Applicants and their stakeholders.

104. As outlined in the Applicants’ 13-week cash flow forecast attached hereto as Exhibit “E”

(the “Cash Flow Forecast”), the Applicants’ principal use of cash during the CCAA

proceedings will consist of the costs associated with the operation of the Business, including

employee compensation and amounts paid to suppliers. In addition to these regular course

85 - 36 - operating expenditures, the Applicants will also incur professional fees and disbursements in connection with the Sale and Restructuring Processes and these CCAA proceedings.

105. As indicated in the Cash Flow Forecast, the Applicants will require additional funding to support their remaining Business operations during the CCAA proceedings. As a result of the current financial circumstances of the Applicants, National Bank has indicated that it is not prepared to advance additional funds to the Applicants without the security of a priority charge over the Property of the Applicants.

106. The Applicants and National Bank are in the advanced stages of negotiating a debtor-in- possession lending facility (the “DIP Loan”) pursuant to which National Bank (in such capacity, the “DIP Lender”) would provide additional availability to ensure that the Applicants have sufficient liquidity during the CCAA proceedings. The Applicants have requested an additional

$13 million of availability under the DIP Loan.

107. It is contemplated that the DIP Lender would be granted a Court-ordered charge over the

Property of the Applicants to secure amounts owing pursuant to the DIP Loan (the “DIP

Lender’s Charge”). For greater certainty, the DIP Lender’s Charge would not secure any amounts advanced by National Bank prior to the date of the Initial Order. The proposed priority of the DIP Lender’s Charge is described below.

108. In it anticipated that the terms of the DIP Loan will be contained in an interim financing term sheet (the “DIP Term Sheet”) substantially in the form attached hereto as Exhibit “F”. The material terms of the DIP Loan include:

(a) the DIP Loan is a revolving credit facility with availability in an amount to be agreed by the DIP Lender and the Applicants which will not exceed the lesser of

86 - 37 -

$13 million and a borrowing base calculated based on the value of inventory and receivables from time to time (the “Maximum Amount”);

(b) the interest rate on all amounts advanced under the DIP Loan is the prime rate plus 2.5% per annum;

(d) the DIP Loan is repayable in full on the earlier of (i) the occurrence of an event of default under the DIP Term Sheet; (ii) the implementation of a plan of compromise or arrangement in respect of the Applicants; (iii) the conversion of the CCAA proceedings into a proceeding under the Bankruptcy and Insolvency Act; (iv) the sale of all or substantially all of the collateral securing the DIP Loan; and (v) six months from the date of the Initial Order;

(e) the Applicants may prepay amounts outstanding under the DIP Loan at any time prior to the maturity date of the DIP Loan without penalty, provided that the Monitor is satisfied that there are sufficient cash reserves to repay obligations of the Applicants that rank in priority to the DIP Loan;

(f) borrowing under the DIP Loan is subject to certain conditions precedent, including the issuance of the Initial Order approving the DIP Loan and granting the DIP Lender’s Charge;

(g) the Applicants are required to provide ongoing financial reporting to the DIP Lender, including updated budgets on a bi-weekly basis, daily cash reporting, and calculations of the borrowing base within ten business days of the end of each of their accounting periods; and

(h) the DIP Term Sheet contains events of default, including:

(i) the issuance of an order terminating the CCAA proceedings or lifting the

stay in the CCAA proceedings to permit enforcement actions against the

87 - 38 -

Applicants or their property, or the appointment of a receiver and

manager, receiver, interim receiver or similar official or the making of a

bankruptcy order against the Applicants;

(ii) the issuance of any Court order granting any lien that is senior or pari

passu with the DIP Lender’s Charge, other than agreed Priority Charges

(as defined in the DIP Term Sheet), or adversely impacting the rights and

interests of the DIP Lender in a material manner;

(iii) the occurrence of a Material Adverse Change (as defined in the DIP Term

Sheet); or

(iv) a failure of the Applicants to perform or comply with any term or

covenant of the DIP Term Sheet.

109. The DIP Term Sheet has not been yet been finalized and executed by the parties; however, the Applicants believe it is in substantially final form. The Applicants are therefore seeking the authority to enter into an agreement substantially in the form of the DIP Term Sheet attached as Exhibit “F” to this affidavit. The Applicants intend to finalize the DIP Term Sheet as expeditiously as possible following the issuance of the Initial Order.

110. In the interim, the Applicants require immediate access to additional funding in order to finance the continued operation of their business. Pending finalization of the DIP Term Sheet,

National Bank has agreed to permit the Applicants to continue borrowing under the Operating

Loan, up to an aggregate principal amount of $8 million, provided that any advances under the

Operating Loan subsequent to the Initial Order are secured by the DIP Lender’s Charge. The

88 - 39 -

Applicants are seeking approval of this limited continuation of the Operating Loan in the Initial

Order. This arrangement is necessary to ensure that the Applicants are able to access required financing pending the final negotiation and execution of the DIP Term Sheet.

111. The DIP Loan and the alternative lending arrangements described above are essential to ensure that the Applicants have the financing and liquidity necessary to continue to operate the business during these CCAA proceedings, which is in the best interests of all stakeholders of the

Applicants. As a result of their present financial circumstances, the Applicants cannot obtain alternative financing from another third party source that would be acceptable to National Bank

(as the Applicants’ first-ranking secured lender). I do not believe that any creditor would be materially prejudiced as a result of the DIP Loan or the DIP Lender’s Charge. The Applicants’ access to and use of the DIP Loan will be supervised by the Monitor. In the circumstances, I believe that the DIP Loan and the DIP Lender’s Charge are necessary and in the best interests of the Applicants and their stakeholders.

(D) Payments during the CCAA Proceedings

112. The Applicants are seeking the authorization, but not the requirement, to pay certain expenses, whether such expenses were incurred prior to or after the date of the Initial Order, including payments to employees in respect of wages, salaries and other employment expenses for services rendered in the ordinary course of business, as well as the fees and disbursements of consultants, accountants and professional advisors retained by the Applicants. The service of these parties is necessary for the continued operation of the remaining Business, the conduct of the CCAA proceedings and the continuation of the Sale and Restructuring Process. The

Applicants are therefore seeking authorization in the Initial Order to continue to make ongoing

89 - 40 -

payments in respect of obligations to these parties, regardless of whether such obligations arose

before or after the commencement of these CCAA proceedings.

113. The Applicants intend to pay all reasonable expenses incurred in carrying on the Business

in the ordinary course after the commencement of the CCAA proceedings, including expenses

reasonably necessary for the preservation of the Business during the CCAA proceedings and

payments for goods and services supplied to the Applicants during the CCAA proceedings . The

Applicants’ ability to satisfy customer demand and generate revenue for the Business is dependent on the Applicants’ ability to obtain an uninterrupted supply of certain goods, services

and inputs. Accordingly, the Applicants are also seeking authority to pay pre-filing obligations

in respect of such expenses if, in the opinion of the Applicants and with the consent of the

Monitor, the supplier of the applicable goods or services is critical to the Business or the ongoing

operations of the Applicants.

(E) Monitor and Administration Charge

114. The Applicants are seeking the appointment of KPMG Inc. as the proposed CCAA

monitor in these proceedings (the “Monitor”). KPMG Inc. is a recognized leader in the

financial restructuring industry. I am advised by Randall Benson, Senior Vice-President of

KPMG Inc., and verily believe, that KPMG Inc. has over 40 dedicated professionals in its

Canadian restructuring and turnaround service line and has extensive experience acting as a

court-appointed monitor and in assisting with restructuring strategies that preserve and enhance

value. KPMG Inc. has consented to act as the Monitor. A copy of its consent is attached at

Tab 5 of the Application Record.

90 - 41 -

115. As noted above, KPMG CF and KPMG Inc. have acted as Financial Advisor since being engaged by the Applicants in late 2014. The Applicants selected the Financial Advisor due to, among other things, its reputation as a market-leading corporate finance and restructuring advisor with expertise in mergers, acquisitions, divestitures, corporate restructurings and debt financing. The Financial Advisor has been compensated on an hourly basis and is not entitled to any success or contingency-based compensation in respect of the Applicants.

116. KPMG LLP has historically been the Applicants’ auditor and tax services provider. The auditing activities undertaken by KPMG LLP were conducted by auditing professionals based in

KPMG LLP’s Moncton office. The restructuring professionals at KPMG Inc., based in Toronto and Montreal, have not conducted any auditing activities in respect of the Applicants. I am informed by Randall Benson, Senior Vice-President of KPMG Inc., and verily believe, that

KPMG Inc. has implemented ethical walls and procedures to ensure there is no information sharing or other communication pertaining to the Applicants between the financial advisory professionals and the auditing professionals. KPMG LLP has not issued an audit opinion with respect to the financial statements of any of the Applicants for their most recent fiscal year-ends.

At the request of the Company, KPMG LLP resigned as the Applicants’ auditor on June 19,

2015.

117. Over the past seven months, professionals in KPMG Inc.’s restructuring practice have worked extensively with the Applicants to address the Applicants’ financial and operational challenges, to identify and pursue strategic options in respect of the Applicants, and to assist

KPMG CF in the pursuit and successful completion of the Sobeys Transaction. KPMG Inc. has the existing knowledge and understanding of the Business and the Applicants to enable it to assume the role of Monitor without delay and without the duplication of significant costs that

91 - 42 - would be required for a different Monitor to familiarize itself with the complex business operations and financial situation of the Applicants and the ongoing Sale and Restructuring

Process. KPMG Inc. would also be in a position to provide effective oversight of the financial position of the Applicants, including with respect to monitoring the Applicants’ use of advances under the DIP Loan and their related reporting requirements to the DIP Lender. Given the complexity of the Business, the Applicants’ financial constraints and the need to proceed expeditiously with a CCAA filing on a cost-effective basis, the Applicants are seeking the appointment of KPMG Inc. as the Monitor. The Applicants believe that KPMG Inc. is best suited in the circumstances to act as Monitor.

118. It is contemplated in the Initial Order that upon its appointment as Monitor, KPMG Inc. would continue to assist the Applicants with the Sale and Restructuring Process, with the supervision of the Court. It is also contemplated that, in carrying out this function, the Monitor would have access to the resources and expertise of KPMG CF.

119. In connection with its appointment, it is contemplated that a Court-ordered charge (the

“Administration Charge”) over the assets, property and undertaking of the Applicants (the

“Property”) would be granted in favour of the Monitor, its counsel, KPMG CF and counsel to the Applicants in respect of their fees and disbursements at their standard rates and charges. The proposed Administration Charge is in an aggregate amount of $750,000. All of the beneficiaries of the Administration Charge have contributed to the Sale and Restructuring Process and/or the initiation of these CCAA proceedings and will continue to contribute to efforts by the Applicants to effectuate a transaction that is in the best interests of the Applicants and their stakeholders.

92 - 43 -

(F) Directors’ Charge

120. The directors and officers of the Applicants have been actively involved in efforts to

address the current financial challenges of the Business, including through the exploration of

strategic alternatives, overseeing the completion of the Sobeys Transaction and the conduct of the Sale and Restructuring Process, communicating with stakeholders and preparing for the initiation of these CCAA proceedings.

121. The directors and officers have been mindful of their duties with respect to the

supervision and guidance of the Applicants in advance of these CCAA proceedings.

Nevertheless, it is my understanding, based on advice from counsel, that in certain circumstances, directors and officers can be held personally liable for certain corporate obligations, including in connection with payroll remittances, vacation pay, harmonized sales

taxes, goods and services taxes, workers compensation remittances, environmental obligations

and certain other obligations.

122. The Company maintains an insurance policy with AXIS Reinsurance Company in respect

of the potential liability of directors and officers of the Applicants (the “D&O Insurance

Policy”). The D&O Insurance Policy insures the directors and officers of the Applicants for

certain claims that may arise against them in their capacity as directors and/or officers of the

Applicants; however, the D&O Insurance Policy contains several exclusions and limitations to

the coverage provided, and there is a potential for there to be insufficient coverage in respect of

potential director and officer liabilities.

123. The directors and officers of the Applicants have expressed their desire for certainty with

respect to potential personal liability if they continue in their current capacities. The Applicants

93 - 44 - require the active and committed involvement of the members of their Boards of Directors and senior officers.

124. The Applicants request a Court-ordered charge (the “Directors’ Charge”) in the amount of $8 million over the Property to secure the indemnity of their directors and officers for liabilities they may incur during the CCAA proceedings in their capacities as directors and officers. The amount of the Directors’ Charge has been calculated based on the estimated exposure of the directors and officers of the Applicants for the potential liabilities noted above and has been reviewed with the prospective Monitor. The proposed Directors’ Charge would apply only to the extent that the directors and officers do not have coverage under the D&O

Insurance Policy.

125. For priority purposes, the Initial Order provides that the Directors’ Charge will consist of two parts. Directors’ Charge – Part 1, in the amount of $4 million, will rank behind the

Administration Charge and in priority to the DIP Lender’s Charge. Directors’ Charge – Part 2, in the remaining amount of $4 million, will rank behind the DIP Lender’s Charge and behind the security interest of National Bank in respect of the Bank Indebtedness.

(G) Priorities of Charges

126. It is contemplated that the priorities of the various charges, as among them, will be as follows (collectively, the “Charges”):

(a) First – the Administration Charge;

(b) Second – the Directors’ Charge – Part 1;

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(d) Fourth – the Directors’ Charge – Part 2.

127. The Initial Order sought by the Applicants provides that each of the Charges shall constitute a charge over all of the Property of the Applicants. The Charges shall rank in priority to all other security interests, trusts, liens, charges, encumbrances and claims of secured creditors, statutory or otherwise (collectively, the “Encumbrances”) in favour of any person, except for any validly perfected security interest in favour of a “secured creditor” as defined in the CCAA existing on the date of the Initial Order, provided that:

(a) the security interest in favour of National Bank in respect of the Bank Indebtedness shall rank subordinate to the Administration Charge, the Directors’ Charge – Part 1 and the DIP Lender’s Charge, and

(b) the Directors’ Charge – Part 2 shall rank subordinate to the security interest in favour of National Bank in respect of the Bank Indebtedness.

The Applicants intend to return to this Court, upon notice to those parties likely to be affected, to seek an Order granting the Charges priority status ahead of all or certain of the Encumbrances.

The proposed Initial Order provides that the Applicants may provide notice to the beneficiaries of the Shared Risk Pension Plan and the DC Pension Plan by serving the trustees of those pension plans.

128. The Applicants believe that the amounts of the Charges are fair and reasonable in the circumstances. The amounts and proposed priority of the Charges has also been reviewed with the proposed Monitor, and I understand that the the proposed Monitor is of the view that the

Charges are fair and reasonable.

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(H) Annual Meetings of Members and Shareholders

129. I am advised by counsel, and do verily believe, that pursuant to the Canada Cooperatives

Act and the by-laws of the Company, the Company is required to hold an annual meeting of its

members not later than the earlier of (a) fifteen months after holding the last annual meeting, and

(b) six months after the end of the preceding financial year. The previous financial year of the

Company ended January 30, 2015 and its last annual meeting was held on May 31, 2014.

Accordingly, the Company is required to hold an annual meeting of members on or prior to July

30, 2015.

130. I am advised by counsel, and do verily believe, that Co-op Energy is required pursuant to

the Co-operative Associations Act (New Brunswick) to hold an annual meeting not later than

four months after the end of its fiscal year. The fiscal year of Co-op Energy ended August 31,

2014 and Co-op Energy held an annual meeting of its members on December 2, 2014.

131. I am advised by counsel, and do verily believe, that pursuant to the Business

Corporations Act (New Brunswick), C A Realty Ltd. is required to hold an annual meeting of shareholders not later than fifteen months after holding the last preceding annual meeting. The last preceding annual meeting of C A Realty Ltd. was held on February 25, 2014.

132. I believe that it would serve no purpose for the Applicants to hold annual meetings of their members or shareholders at this time in light of the insolvency of the Applicants and the supervision of the Applicants and their affairs by the Court and the Monitor pursuant to these

CCAA proceedings. Preparing for and holding annual meetings of members and shareholders would result in unnecessary costs and divert the attention of senior management away from the conduct of the Sale and Restructuring Process. Accordingly, the Applicants are seeking relief in

96 - 47 - the Initial Order to be relieved of any obligation to call and hold annual meetings of their members or shareholders, as applicable, until the completion of these proceedings or further

Order of the Court.

VII. CONCLUSION

133. The Applicants are significant contributors to economic activity in the communities in which they operate. The Applicants have experienced significant financial challenges in recent years, culminating in the liquidity condition that has precipitated these CCAA proceedings. The

Applicants are currently in the midst of the Sale and Restructuring Process, in an effort to achieve solutions to their financial challenges that are in the best interests of the Applicants and their stakeholders, including employees, customers, suppliers, co-op members and local communities.

134. The completion of the Sobeys Transaction was an important first step in unlocking the value of the Applicants’ business. However, the Applicants need additional time and liquidity to continue their efforts.

135. The Applicants, with the assistance of their advisors, are actively pursuing strategic alternatives with respect to the Energy and Agriculture Businesses. The Applicants seek CCAA protection at this time to maintain the stability of the Business, protect value and allow them to continue to operate while they seek to complete the Sale and Restructuring Process. 97 TAB B 98

THIS IS EXHIBIT "B" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE ME ON MARCH 24,2016

ommissioner of Oath 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 TAB C 114

THIS IS EXHIBIT "C" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE ME ON MARCH 24, 2016

A ommissioner of Oath 115 116 117 118 119 120 121 122 123 124 TAB D 125

THIS IS EXHIBIT "D" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE E ON MARCH 24, 2016 (IL A ommissioner of Oath 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 TAB E 145

THIS IS EXHIBIT "E" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE ME ON MARCH 24, 2016

Commissioner of Oath 146 147 148 149 150

Document Registration Number: 82616518 151

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Document Registration Number: 83899824 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 TAB F 218

THIS IS EXHIBIT "F" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEF 1 RE ME ON MARCH 24,2016

/ 1111 A Commissioner of Oath 219

^BDG MORTGAGE

MORTGAGOR: CO-OP ATLANTIC

"the Mortgagor",

MORTGAGEE: BUSINESS DEVELOPMENT BANK OF CANADA

"the Bank",

DATED: the H day of , 2012

FOR: $ 1,850,000.00 ("the Principal Sum") and other indebtedness.

1. DEBT In consideration of the Principal Sum lent by the Bank to the Mortgagor, the Mortgagor promises to pay to the Bank, at such office of the Bank as it may direct, the aggregate of:

(a) the Principal Sum outstanding from time to time, including all present and future advances and re-advances of the Principal Sum made after the repayment of any or all of the Principal Sum, provided that the total Principal Sum shall not at any time exceed the Principal Sum stated

(b) all other present or future debts, liabilities or obligations of the Mortgagor hereunder, or underany letter of offer, commitment letter, guarantee, or any other agreement, with the Bank, including all future advances and re-advances, interest, and interest on overdue interest, whether direct or indirect, absolute or contingent, joint or several, matured or not, extended or renewed, wherever and however incurred, of whatsoever nature or kind, whether or not provided for herein, and whether owed by the Mortgagor to the Bank, as principal, guarantor, indemnitor or othenwise; and

(c) interest on the Principal Sum at the rate equal to the floating base rate of the Bank for commercial and industrial loans denominated in Canadian dollars announced from to time to time plus 10.00% per year, calculated monthly and payable monthly, both after as well as before maturity, default and/or judgment; provided, however, if the Mortgagor and the Bank have agreed In writing in any document constituting or giving rise to or respecting any Secured Obligations, or in any other agreement, that a different interest rate will apply thereto and be the Interest Rate for purposes hereof applicable to the Secured Obligations in question, then that different rate will apply ("the Interest Rate");

MORTGAGE (NFLD.NS.PEI) Page 1 MTG-ATL Rev. May, 2008 220

(d) protective disbursements as provided for in clause 9, on demand;

(e) interest on interest past due at the Interest Rate and calculated in the same manner as interest on the Principal Sum; and

(f) interest on each protective disbursement from the day the protective disbursement is made, at the Interest Rate and calculated In the same manner as interest on the Principal Sum;

All of the foregoing are referred to as the "Secured Obligations".

2. SECURITY

As security for payment of the Secured Obligations and any other debt now or hereafter owed by the Mortgagor to the Bank, and for the performance of the other obligations of the Mortgagor hereunder, the Mortgagor grants, bargains and sells to the Bank the lands (including fixtures, appurtenances, leasehold improvements and rights of way) described in Schedule "A". The Secured Obligations may be reduced to zero from time to time without affecting the continuing nature of this Mortgage as security for any Secured Obligations thereafter incurred. This mortgage is void upon payment of those sums and debts and the performance of those other obligations and the Bank delivering to the Mortgagor a signed release of Mortgage. Notwithstanding the provisions of the Land Registration Act ( Nova Scotial the Bank shall not be required to record the release of this mortgage. In this mortgage the expression "the lands" means all lands including fixtures, appurtenances, leasehold Improvements and rights of way mortgaged pursuant to this clause and the expression "structures" means buildings, structures, equipment and improvements on the lands or used in connection with the lands whether or not such is fixed to the lands. This mortgage is granted in addition to, and not in substitution for, any other security held to secure payment of the sums and debts mentioned in this clause.

3. MORTGAGE OF LEASE

If the Mortgagor's interest Is as a lessee, sub-lessee, licensee or sub-licensee (collectively a "lessee") of the whole or any portion of the lands described in Schedule "A" pursuant to a lease:

(a) the Mortgagor hereby demises, sub-leases and mortgages its interest and the lease to the Bank, by way of a sub-lease, except for the last day of the term of the lease (the "reversion") which is excepted out of the charge created by this mortgage but which shall be deemed to be held by the Mortgagor in trust for the Bank to be assigned or disposed of as the Bank or anyone claiming through the Bank may direct, and the Bank shall have power on any realization to appoint a new person as Trustee of the reversion;

(b) if the lease cannot be effectively charged without consent, any charge intended to be created by this mortgage upon the Mortgagor's interest in the lease shall not become effective until, but shall become effective immediately when, all consents necessary for the validity and effectiveness of such charge have been obtained or waived by all appropriate persons;

(c) the Mortgagor represents to the Bank that the lease is valid and In good standing, in full force and effect and unsurrendered, the Mortgagor has the right to mortgage its interest and the lease to the Bank, all rents or other amounts payable under the lease have been paid and all other obligations under the lease, whether of the Mortgagor or its landlord, have been performed or complied with;

MORTGAGE {NFLD,NS,PEI) Page 2 MTG-ATL Rev. May, 2008 221

(d) the Mortgagor will promptly perform and observe all of the terms, covenants and conditions required to be performed and observed by the Mortgagor under the lease, including payment of rent;

(e) the Mortgagor shall take no action or be guilty of any default which shall or may cause the lease to be terminated or forfeited, or, without the Bank's prior written consent, surrender or give any notice which would have the effect of terminating, or permitting the termination of, the lease;

(f) the Mortgagor will promptly notify the Bank in writing of any default or of any condition that with or without the passage of time or the giving of any notice might result in a default under, or the termination of, the lease, and the Mortgagor will promptly cause a copy of each notice it receives under the lease to be delivered to the Bank;

(g) in the event of any renewal, extension, replacement or substitution of the lease being created, the Mortgagor will immediately so advise the Bank, and provide the Bank with particulars of the same and a true copy of the subject instrument, and when the Bank requests, the Mortgagor will execute such further instrument as the Bank may require;

(h) the Mortgagor will not during the continuance of this mortgage, without the Bank's prior written consent, modify, alter or suffer or permit any modification or alteration of the lease and any such altered or modified lease shall be charged by this mortgage;

(i) the Mortgagor will promptly obtain from the lessor under the lease and deliver to the Bank, a certificate stating that the lease is in full force and effect. Is unmodified or modified as the case may be, that no notice of termination thereon has been served on the Mortgagor thereunder, stating the date to which the rent has been paid and stating whether or not there are any defaults thereunder and specifying the nature of such defaults, if any;

(j) the Mortgagor shall not consent to the subordination of the lease to any mortgage of the interest of the lessor (or leasehold interest of the sub-lessor) thereof in the lands;

(k) the Mortgagor will at the proper time and times take such proceedings, and make, do and execute such acts, deeds, matters and things as may be requisite for obtaining a renewal of the lease; and

(I) the Mortgagor will hold the reversion and any renewals, extensions, replacements or substitutions thereof in trust for the Bank and the Mortgagor will assign and dispose of the same in such manner as the Bank may direct by notice in writing.

4. POSSESSION

The Mortgagor may have possession of the lands until the Bank otherwise directs and, upon such direction, the Bank may enter and have quiet enjoyment of the lands. The Mortgagor becomes a yearly tenant of the Bank at the monthly rent of the payments mentioned in this mortgage but the Bank shall be accountable for actual receipts only and after default may enter without notice.

5. FURTHER CONVEYANCES AND MORTGAGES

The Mortgagor shall not, without the written consent of the Bank, mortgage, convey, lease or charge the lands or any part of them.

MORTGAGE (NFLD,NS,PEI) Page 3 MTG-ATL Rev. May, 2008 222

6. COVENANTS

The Bank and the Mortgagor have entered into an agreement evidenced by an exchange of letters respecting the loan made in consideration of this mortgage; to the extent that they are not inconsistent with the provisions of this mortgage, the Mortgagor adopts and promises to perform the promises and covenants of the borrower In the agreement and, in addition to those promises or covenants and the promises or covenants evidenced by other clauses of this mortgage, the Mortgagor covenants with the Bank:

(a) subject to the rights of the Bank pursuant to clauses 4,12 and 13, the Mortgagor shall retain possession of the lands and it shall keep all the structures In good repair and it shall not allow waste in respect of the lands and it shall immediately notify the Bank of any damage to structures;

(b) the Mortgagor has good title in fee simple to the lands, other than those lands that are expressed herein to be heid in leasehold, and the right to convey the lands as hereby conveyed notwithstanding any act of the Mortgagor;

(c) this mortgage constitutes a first charge on the lands described in Schedule "A" except for any encumbrance that the Bank approves In writing before the advance of funds hereunder;

(d) the Mortgagor will procure such further assurances as the Bank may reasonably require and it shall do so at the Mortgagor's expense;

(e) the Mortgagor shall discharge any debt or obligation that forms a lien, charge, or other encumbrance on the lands or any part of them or that may be the subject of a demand upon the Bank or an agent of the Bank in the event that the Bank enforces one of the remedies;

(f) the Mortgagor shall discharge any debt or obligation In respect of which the lands or any part of them may be deemed to be held in trust and generally any debt or obligation that may affect the net amount the Bank can realize through enforcement of one of the remedies;

(g) the Mortgagor, if it is a company, has taken all necessary corporate action to authorize the execution of this mortgage and to bind the Mortgagor to each of the terms of this mortgage and the Mortgagor shall maintain its corporate existence;

(h) the Mortgagor shall maintain proper books of account and shall not alter or destroy its books of account or permit any incorrect entry therein nor shall it change the nature of its business;

(i) on default the Bank may enter and have quiet enjoyment of the lands;

(j) the Mortgagor shall purchase and maintain direct damage insurance against any insurable loss or damage-that may be caused to any structure on such terms and to such limits as the Bank may prescribe In writing;

(k) where the Bank has not othenwise prescribed terms or limits pursuant to subclause 0), the Mortgagor shall purchase and maintain direct damage insurance against any insurable loss or damage to any structure for the replacement cost value of the structure and it shall cause each policy of insurance to indicate that loss is payable to the Bank and to include, in favour of the Bank, the current standard mortgage clause approved by the Insurance Bureau of Canada or a like clause approved In writing by the Bank;

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(I) in addition to direct damage insurance, the Mortgagor shall purchase such policies of insurance for the protection of any structure or the financial health of the Mortgagor as the Bank may require on such terms and to such limits as the Bank may prescribe in writing;

(m) the Mortgagor shall, within 90 days of the year end of the Mortgagor's business, deliver to the Bank annual financial statements accurately staling the assets and liabilities and the income and expenses of the Mortgagor's business and such other Information as the Bank may direct, and containing, if the Bank so directs, the opinion of an independent, qualified auditor;

(n) the Mortgagor shall do all acts necessary to give the Bank access from time to time to the lands, all property in the control of the Mortgagor and all books and records of the Mortgagor;

(o) the Bank and any of its agents, may at such time and from time to time, as the Bank deems necessary and without the concurrence of any person, enter upon any part of the lands and make arrangements for completing the construction, repairing or putting in of improvements, or for inspecting, appraising, taking care of, leasing, collecting the rents of, and generally managing any or all of the Mortgagor's Interest, as the Bank may deem expedient, including the inspection and copying of the Mortgagor's books and records, whether located at the lands or elsewhere. Further, the Mortgagor consents to the Bank contacting and making inquiries of the Mortgagor's lessors/lessees, as well as environmental officials, assessors, municipal authorities and any taxing body; and

(p) the Mortgagor shall carry on, in a proper business-like manner, the business or businesses it has represented to the Bank as being the present or prospective business of the Mortgagor, and shall maintain in good standing all necessary licenses, permits, approvals and consents, and shall comply with ali laws, regulations and ordinances applicable to the Mortgagor's business.

7. ENVIRONMENTAL MATTERS

7.1 Definitions

(a) "Environmental/Hazardous Materials Claims" means enforcement or other governmental or regulatory actions, agreements or orders threatened, instituted or completed pursuant to any Environmental/Hazardous Materials Laws, together with claims made or threatened by any third party against the Mortgagor or in respect of the lands described in Schedule "A" relating to the environment, health, safety, any Wastes/Hazardous Materials or any Environmental/Hazardous Materials Laws;

(b) "Environmental/Hazardous Materials Laws" means laws, by-laws, rules, ordinances, regulations, notices, approvals, orders, licenses, permits, standards, guidelines and policies from time to time of any level of government or other authorized agency relating to the environment, health, safety or any Wastes/Hazardous Materials;

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(c) "Wastes/Hazardous Materials" means wastes, materials and substances the storage, manufacture, disposal, treatment, generation, use or transport of which is prohibited, controlled or licensed under any Environmental/ Hazardous Materials Laws, or the remediation or release of which into the environment is likely, immediately or in the future, to cause harm or degradation to any of the lands described in Schedule "A" or the environment, including contaminants, pollutants, corrosive substances, toxic substances, special wastes, substances deleterious to fish or wildlife, explosives, radioactive materials, asbestos, urea formaldehyde, and compounds known as chlorobiphenyls.

7.2 No Environmental Risks

The Mortgagor represents and agrees that:

(a) the Mortgagor is not aware of any environmental risks or liabilities in connection with the lands described in Schedule "A" which have not been disclosed to the Bank and approved by the Bank in writing;

(b) the operations on the lands described in Schedule "A" are and will be kept in compliance with all Environmental/Hazardous Materials Laws and the Mortgagor will ensure its staff is trained as required for such purpose;

(c) the Mortgagor has an environmental emergency response plan and all the Mortgagor's officers and employees are familiar with that plan and their duties under it;

(d) the Mortgagor possesses and will maintain all environmental licences, permits and other governmental approvals as may be necessary for the conduct of its business;

(e) the lands described in Schedule "A" are and will remain free of environmental damage or contamination;

(f) the Mortgagor will provide the Bank with copies of all communications from or to any person relating to Environmental/Hazardous Materials Laws and any Environmental/Hazardous Materials Claims in connection with the lands described in Schedule "A" that become known to the Mortgagor, and all environmental studies or assessments prepared for the Mortgagor, and the Mortgagor consents to the Bank contacting and making enquiries of environmental officials or assessors;

(g) the Mortgagor will advise the Bank immediately upon becoming aware of any environmental problem relating to the lands described in Schedule "A" or the Mortgagor's business;

(h) without limiting the above, the Mortgagor will not install in, on or under the lands described in Schedule "A" storage tanks for any Wastes/Hazardous Materials without the Bank's prior written consent and only upon full compliance with the Bank's requirements and the standards and requirements of all boards and governmental authorities having jurisdiction over the lands, and the Mortgagor's activities and assets.

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7.3 Indemnity

The Mortgagor agrees to assume and be responsible for any and all environmental liabilities relating to the lands described in Schedule "A", including any liability for the clean-up of any Wastes/Hazardous Materials in, on or under the lands, and the Mortgagor agrees to protect, save harmless and indemnify the Bank, and any Receiver, and the Bank's respective directors, officers, employees and agents, direct and indirect successors and assigns, and the Bank's interest in the lands, from and against any and all claims, demands, liabilities, losses, damages and expenses, including legal fees and expenses, suffered by any of such persons arising out of or in connection with any and all environmental liabilities relating to the lands. The Mortgagor's liability will arise upon the earlier of the discovery of any Wastes/Hazardous Materials, and the institution of any Environmental/Hazardous Materials Claims, and will not be dependent upon the realization of any loss or damage or the determination of any liability. This indemnity and the Mortgagor's liability hereunder will survive after this mortgage and the charges created hereby have been discharged.

8. INSURANCE PROCEEDS

Notwithstanding subclause 6 0) and (k), the Mortgagor hereby assigns, transfers and sets over to the Bank all policies of insurance now or hereafter made in respect of any structure and the proceeds of such policies of insurance. The Bank may dispose of moneys paid to it pursuant to a policy of insurance under this clause or subclause 6 Q) and (k) as follows:

(a) It may hold the moneys as further security for the payment of the Secured Obligations;

(b) it may use the moneys to restore or improve the lands;

(d) It may deliver the moneys to the Mortgagor under such terms or conditions as the Bank may prescribe.

9. PROTECTIVE DISBURSEMENTS

The Bank may, without notifying the Mortgagor, purchase any material or service and make any payments to preserve, protect or enhance the lands or to remedy any default by the Mortgagor in respect of any promise or covenant contained in this mortgage and, without restricting the generality of the foregoing, the Bank may make such purchases or payments to: (a) retire fees, expenses and borrowings of a receiver;

(b) acquire insurance against direct damage, liability to third parties or any other risk associated with the lands on such terms and at such limits as the Bank may find advisable;

(d) improve the title of the Bank or of any purchaser of the lands who purchases them through a sale having the effect of foreclosing the Mortgagor's interest in the lands or who purchases them from the Bank after the Mortgagor's interest in the lands has been foreclosed;

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(e) discharge any debt or obligation which the Bank may find should be discharged in order to better market, sell or protect the lands;

(f) cause the lands to be inspected, investigated (including environmental audits), appraised, surveyed or subdivided;

(g) cause the Mortgagor's books and records to be audited and the financial health of the Mortgagor's business to be investigated;

(h) retire the fees, commissions or expenses of any agent retained by the Bank to market the lands;

(i) retire all costs and expenses, including legal fees on a solicitor and client basis, in relation to the preparation, execution and delivery of this mortgage and any amendment or discharge of it, in relation to the collection of any amount due hereunder and in relation to the enforcement of any remedy including the actual fees and expenses who act on behalf of the Bank in proceedings for the appointment of a receiver, foreclosure, foreclosure and sale, judicial sale, sale by power of sale or possession of the lands;

G) pay the fees and expenses of a trustee in Bankruptcy of the Mortgagor, should the Bank determine to make itself liable for such;

(k) retire all costs and expenses including fees on a solicitor and client basis in respect of any suit concerning this mortgage, any lands that may be mortgaged hereunder, the Bank's title to the lands, or the priority of the Bank's interest in the lands; and (1) cause any environmental rehabilitation, investigation, removal or repair necessary to protect, preserve or remediate the lands.

A purchase or payment mentioned in this clause is referred to In this mortgage as a "protective disbursement". The Bank is not obliged to make any protective disbursement. All protective disbursements, Including solicitor and client fees and expenses upon foreclosure and sale, are secured by this mortgage and are payable out of the proceeds of the exercise of any remedy notwithstanding that the Bank's liability for the protective disbursement arises after or is discharged after a sale of the mortgaged property.

10. EVENTS OF DEFAULT

The occurrence of any of the following events will constitute an Event of Default:

(a) if the Mortgagor fails, or threatens to fail, to observe or perform any covenant, agreement, condition or obligation in the Bank's favour, whether or not herein contained, including the Mortgagor's failure to pay or perform any of the Secured Obligations when due;

(b) if any representation, warranty or statement made to the Bank either by the Mortgagor or on its behalf and whether or not contained herein or elsewhere, is not or ceases to be true;

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(c) if the Mortgagor, or any other obligant to the Bank, or any other person liable, in respect of any of the Secured Obligations, ceases or threatens to cease to carry on the Mortgagor's or the other obligant's business, as the case may be, or any material part thereof or to sell all or substantially all of the Mortgagor's or the other obligant's assets, or becomes insolvent or files a proposal, a notice of intention to file a proposal, or an assignment for the benefit of creditors under applicable bankruptcy or similar legislation, or if a petition is filed, an order is made, a resolution is passed, or any other step is taken for the Mortgagor's, or such other person's, bankruptcy, liquidation, dissolution, winding-up or reorganization or for any arrangement or composition of the Mortgagor's or the other obligant's debts or any protection from the Mortgagor's or the other obligant's creditors;

(d) if the Mortgagor is in default under any other charge of the lands described in Schedule "A" or under any indebtedness other than Secured Obligations, or the Mortgagor permits to accelerate any indebtedness (other than Secured Obligations) owed by the Mortgagor to any creditor other than the Bank;

(e) if a Receiver, trustee or similar official of any of the Mortgagor's property is appointed;

(f) if the Mortgagor is a corporation and any member or shareholder commences an action against the Mortgagor or gives notice of dissent to the Mortgagor in accordance with the provisions ofany applicable legislation;

(g) the holder of any other charge on, or claim against, any of the lands described in Schedule "A" does anything to enforce or realize on such charge or claim, or any execution, sequestration, or other process becomes enforceable against the Mortgagor, or If a distress, seizure or similar process is levied upon or exercised against any of the lands;

(h) if the lessor under any lease to the Mortgagor of any of the lands described in Schedule "A" takes any step to or threatens to terminate such or othenwise exercise any of its remedies under such lease as a result of any default or alleged default by the Mortgagor under such lease;

(i) if any of the lands described in Schedule "A" are destroyed, substantially damaged, expropriated, or designated or considered for designation as a contaminated site;

(j) if any permit, licence, certification, quota or order granted to or held by the Mortgagor is cancelled, reduced or revoked, or any order against the Mortgagor is enforced, with the effect of preventing the Mortgagor's business from being carried on for more than five days or materially adversely changing the condition (financial or othenvise) of the Mortgagor's business;

(k) if the Mortgagor sells, transfers, conveys, leases, assigns, releases, surrenders or othenwise disposes of or parts with possession of any of the lands described in Schedule "A" or agrees to do so;

(I) if the Mortgagor is in arrears of payment to any taxing authority;

(m) if the Mortgagor causes or allows hazardous materials to be brought upon the lands described In Schedule "A" or incorporated into any of the Mortgagor's assets without the Bank's prior consent, or if the Mortgagor causes, permits or fails to remedy any environmental contamination upon, in or under the lands or fails to comply with any abatement or remediation order given by a responsible authority;

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(n) if the Mortgagor uses any of the monies advanced hereunder for any purpose other than as declared to and agreed upon by the Bank;

(o) if the Bank deems itself insecure or believes that the assets secured hereby are in danger of loss, damage or misuse; or

(p) if there is a deemed Event of Default pursuant to this mortgage.

Upon the occurrence of an Event of Default, at the option of the Bank, without notice to the Mortgagor, the Bank's security shall immediately become enforceable and all of the money hereby secured remaining unpaid shall become due and payable. If, in respect of a default, the Bank chooses not to exercise the option hereby given to it or waives its right to call in the balance of the loan, such does not constitute a waiver of the Bank's rights under this clause in respect of any other default.

11. NOTICE RESPECTING DEFAULT AND ENFORCEMENT

The Bank may exercise any remedy or remedies immediately upon the occurrence of an Event of Default, without making a demand for payment or giving time for payment or notifying the Mortgagor of the Bank's intention to exercise the remedy or remedies. If the Bank chooses to notify the Mortgagor of such an intention or to demand payment, it shall not thereby be taken to have waived its rights under this clause or to have subjected itself to a duty to give reasonable notice to the Mortgagor respecting the Bank's Intention or to give the Mortgagor reasonable time for payment.

12. REMEDIES

On the occurrence of an Event of Default, the Bank may immediately thereupon seek or exercise any remedy as may be available to it in law or equity and it may exercise any of the following remedies:

(a) POSSESSION

Without limiting the rights of the Bank pursuant to clause 4, the Bank may take possession of the lands or any part of them and upon doing so the Bank may do such things as it deems advisable in order to maintain, protect or preserve the lands, it may make improvements or alterations to the lands and the Bank may lease the lands to third parties on such terms as the Bank deems advisable;

(b) POWER OF SALE

The Bank may, without notice to the Mortgagor or those claiming by, through, from or under it. sell the lands by way of public auction, private sale, tender or any other method as the Bank may choose and according to such terms as the Bank may choose to accept and any conveyance by the Bank pursuant to this power conveys to the purchaser the right, title, interest, property and demand of the Mortgagor at the time of the making of this mortgage or any time since and that of any person claiming by, through, from or under the Mortgagor of, in and to the lands sold;

MORTGAGE (NFLD.NS.PEI) Page 10 MTG-ATL Rev. May. 2008 229

The Bank may sue the Mortgagor or any person jointly liable with it or any guarantor and recover judgment, without having exhausted the other remedies available to it and no other remedy or right of the Bank merges in any such judgment;

(d) RECEIVERSHIP

The Bank may appoint a receiver or a receiver and manager (the "receiver") of the lands, and in doing so the Bank may appoint any person it chooses including one of the Bank's employees and, the Bank may remove and replace the person so appointed. A receiver appointed by the Bank is the agent of the Mortgagor and his actions are binding upon the Mortgagor and not upon the Bank. Notwithstanding that the receiver is the agent of the Mortgagor, the Bank may instruct the receiver as regards the exercise of its powers and the discharge of its duties, and the Bank may make such arrangements as it may choose In respect of the receiver's expenses and fees; and

(e) DISTRESS

The Bank may distrain for arrears of rent pursuant to clause 4.

In this mortgage, the term "remedies" means the remedies prescribed in this clause and such other remedies as the Bank may have in law or equity. The remedies are cumulative; the exercise of one does not preclude the use of others. The Bank may exercise any of the remedies against the lands as a whole or in parts, it may enforce one remedy against one part of the lands and other remedies against other parts and it may abandon or discharge whatever parts of the lands as the Bank may choose. Where the exercise of a remedy involves the sale of the lands or part of them, the party making the sale may accept cash, credit or part cash and part credit and, if a sale is made on credit, the Bank need apply, in reduction of the debt or debts secured, only such payments as are actually made.

13. POWERS OF THE RECEIVER

The receiver may; (a) exercise any of the powers of the Bank pursuant to clause 12 except subclause 12(d) and make any purchase or payment as the Bank may make under clause 9;

(b) carry on any business for which the lands are used and conduct the affairs of the Mortgagor in respect of such business;

(c) do any act or thing as could be authorized by the board of directors or the shareholders of the company if the Mortgagor is a company;

(d) do all things necessary to control the lands, manage the lands or to produce income from the lands;

MORTGAGE (NFLD.NS.PEI) Page 11 MTG-ATL Rev. May, 2008 230

(e) where the Bank holds a chattel mortgage in respect of the Secured Obligations and the Bank has not appointed an agent under the chattel mortgage, do any act or thing that may be done by an agent under the chattel mortgage but, in so doing or acting, the receiver is the agent of the Mortgagor as provided in subclause 12(d);

(f) borrow money to carry on any business for which the lands are used, to carry out any power of the receiver or for protective disbursements;

(g) retain and instruct counsel, real estate agents, appraisers, property managers and any person who the receiver may find to be helpful in the discharge of its powers; and

(h) generally, do anything it finds to be necessary for the orderly management or liquidation of the lands.

14. LIABILITY RESPECTING ENFORCEMENT OF SECURITY

Once the Bank has determined to exercise a remedy or remedies, it may deal with and dispose of the lands as the Bank may see fit and neither the Mortgagor nor those claiming by, though from or under it shall maintain any action, advance any claim or rely on any set-off by reason of the order of enforcement of remedies against parts of the lands, the abandonment or discharge of the lands or part of them, the Bank's failure to maintain or insure the lands, the Bank's failure to secure an adequate price for the lands or anything relating to the manner in which the lands are dealt with or disposed of in this clause "the Bank" includes the receiver.

Further, the Bank may, in its sole discretion, realize on various securities (including this mortgage) and any parts thereof in any order that the Bank considers advisable and no realization or exercise by the Bank of any power or right under this mortgage or other security shall in any way prejudice any further realization or exercise until all Secured Obligations are satisfied. All rights and remedies available to the Bank are cumulative and not restrictive of remedies at law and in equity and by statute.

15. RELEASES

The Mortgagor is not released from any of its obligations to pay the Secured Obligations nor is any security heid to secure the Secured Obligations released by reason of the Bank releasing any person who may be obligated to pay the Secured Obligations or any part of them, or by reason of the Bank releasing any security held to secure payment of the Secured Obligations. The Bank is only accountable for money actually received by it in consideration of the release of any person or security.

16. INDULGENCES

The Bank may grant extensions of time and other indulgences, take and give up security, accept compositions, compromise, make settlements, grant releases and discharges, refrain from registering or maintaining registration of charges, and othenwise deal with the Mortgagor, other obligants to the Bank, the Mortgagor's other creditors, sureties and other persons and with the lands and other security, all as the Bank sees fit in its absolute discretion and without prejudice to the Mortgagor's liability or the Bank's rights or remedies. The Mortgagor agrees that it will not be released nor its liability in any way reduced because the Bank has done, not done, or concurred in doing or not doing, anything whereby a surety would or might be released in whole or in part.

MORTGAGE (NFLD.NS.PEI) Page 12 MTG-ATL Rev, May. 2008 231

17. ASSIGNS

This mortgage is binding upon the Mortgagor, its successors, assigns, heirs, executors and administrators and is granted to and for the benefit of the Bank, its successors and its assigns.

18. GENDER AND NUMBER

The use in this mortgage of the neuter gender includes the masculine and the feminine; the use of the plural Includes the singular; the use of the singular includes the plural.

The Mortgagor has properly executed and sealed this mortgage on the day and year stated on the first page.

SIGNED, SEALED and DELIVERED in the presence of

f • • 0/ /yisOnf^i^

J - p-

MORTGAGE (NFLD.NS.PEI) Page 13 MTG-ATL Rev. May, 2008 232

CANADA PROVINCE OF NEW BRUNSWICK CITY OF MONCTON

AFFIDAVIT

I, n'^AfKÛAB , of /\OA^C-l^/^^ make oath and say that:

1. 1 am the TPxû-à-S^Aén. iK C f ^ CO-OP ATLANTIC, the "Corporation" and have a personal knowledge of the matters herein deposed to.

2. I executed the foregoing instrument for and on behalf of the Corporation.

3. I am authorized to execute the foregoing instrument on behalf of the Corporation and thereby bind the Corporation.

4. I acknowledge that the Corporation executed the foregoing Instrument by its proper officer(s) duly authorized in that regard on the date of this affidavit; this acknowledgment is made for the purpose of registering such Instrument pursuant to s.31(a) of the Registry Ac[, R.S.N.S. 1989, c.392 ors. 79(1)(a) of the Land Registration Act as the case may be, for the purpose of registering tlie instrument

5. The Corporation is a resident of Canada under the Income Tax Act (Canada).

6. The ownership of a share or an interest in a share of the Corporation does not entitle the owner of such share or interest in such share to occupy a dwelling owned by the Corporation.

SWORN TO at Moncton, in the Province of New Brunswick, this //^^ day of May, 2012, before me:

A Notary Publiigjin the F 3vince of New Brunswick ADEL A. GONCZI

*******************************************

12565678 l.doc 233 -2-

I CERTIFY that on this /'^ day of May, 2012. CO-OP ATLANTIC, one of the parties hereto, caused the foregoing indenture to be executed on its behalf by^}^///'^ ^^Arilt its duly authorized T^iaSi^-v^r ^«ût CfO in my presence an^that I signed as a witness to such execution.

A Notary PulWc in the Provinc^Qfe^^tBFudêj^fck

12565678 l.doc 234

PARCEL DESCRIPTION REPORT ,@^tiArliiU UA» ^^i^^^^

2012-04-13 16:04:06

PID: 938357 CURRENT STATUS: ACTIVE EFFECTIVE DATE/TIME: 2007-03-16 09:59:43 AI! and singular that certain lot, piece or parcel of land lying, being and situate on the south side of the Merigomish Road, Town of New Glasgow, Province of Nova Scotia, and more particularly described as follows:

Point of Commencement: Commencing at the Intersection of the west side line of lands of Basil MacDonald and the south side line of the Merigomish Road.

Thence north sixty three degrees zero four minutes west two hundred forty decimal zero feet (240.0) to the place of beginning.

Thence north fifty nine degrees eleven minutes west sixty decimal zero feet (60.0) along the south side line of the Merigomish Road to an iron pipe.

Thence south thirty eight degrees twenty five minutes west along the lands retained by the Grantor herein, three hundred fifty decimal nine three feet (350.93) or until it comes to an iron pipe set in the north line of lands now or formerly of one Walter Weir.

Thence south thirty eight degrees zero minutes east along the north line of one Waller Weir one hundred ninety five decimal nine zero feet (195.90) or until it comes to the west side line of lands of Basil MacDonald.

Thence north fifty one degrees twenty minutes east along the west side Une of lands of Basil MacDonald one hundred fifty four decimal eight zero feet (154.80) or until it comes to an iron pipe set in the south east corner of lands of The Director of the Veterans Land Acl.

Thence north forty four degrees fourteen minutes west a distance of one hundred sixty seven decimal zero feet (167.0) or until it comes to an iron pipe set in the south west corner of the lands of The Director of the Veterans Land Act.

Thence north thirty eight degrees twenty two minutes east along the west side line of the lands of The Direclor of the Veterans Land Act two hundred thirty two decimal six zero feet (232.60) or until it comes to the place of beginning.

AU bearings magnetic for the year 1967.

The description for this parcel originates with a deed dated May 31,1967, registered in the registration district of Pictou in Book 519 at Page 235 and the subdivision is validated by Section 291 of the Municipal Government Act.

External Comments: Description Change Details: Reason: Author of New or Changed Description: Name:

Registered Instruments:

Page 1 235

PARCEL DESCRIPTION REPORT SchedUle "A"

2012-04-13 16:09:51

PID: 858134 CURRENT STATUS: ACTIVE EFFECTIVE DATE/TIiVIE: 2005-10-14 12:29:48 I certify that this legal description is intended to describe the same parcel as represented by PID 858134.

An approved plan of subdivision has been filed under the Registry Act in accordance wilh Part IX of Municipal Government Act, namely a Plan of Subdivision of Pictou County Cooperative Limited filed as document number 7702, filing number 3992, filed on December 4, 1992.

All that certain lot, piece or parcel of land situate, lying and being at Merigomish Road, New Glasgow, Pictou County, Nova Scotia, shown as Lol 9BCDE on a plan of consolidation of lands of Pictou County Co-Operative Ltd. prepared by John Sutherland, N.S.L.S. and dated October 29, 1992, said lot being more particularly described as follows:

BEGINNING at the point where the southerly boundary of Merigomish Road meets the westerly boundary of lands of Uda Rebecca Lynch;

Thence south thirteen degrees fifty-nine minutes, forty six seconds west three hundred and fifty-one decimal two three feet along the westerly boundary of lands of Uda Rebecca Lynch to the northerly boundary of lands of Shirley Cromwell;

THENCE north sixty two degrees one minute, forty two seconds west, forty two decimal five three feet along the northerly boundary of lands of Shirley Cromwell;

THENCE south twenty seven degrees thirty minutes, thirty five seconds west, fifty feet along the westerly boundary of lands of Shirley Cromwell to the northeriy boundary of lands of Norman Paris;

THENCE north sixty two degrees, twenty nine minutes, twenty five seconds west, fifteen decimal five five feet along the northerly boundary of lands of Norman Paris;

THENCE south thirty-two degrees, twelve minutes, forty eight seconds west, one hundred and fourteen decimal six eight feet along the westerly boundary of a ten foot wide right-of-way lo the northeasteriy corner of lands of Marie Constance Bowden;

THENCE north sixty-three degrees, thirty-four minutes ten seconds west seventy-four decimal zero four feel along the northerly boundary of lands of Marie Constance Bowden to the easterly boundary of Tremont Street;

THENCE north thirty degrees, twenty-seven minutes, twenty seconds east, fifty decimal four five feet along the easterly boundary of Tremont Street;

THENCE north sixty-one degrees, fifty minutes, one second west, thirty-three decimal zero three feet along the northerly end of Tremont Street;

THENCE south thirty degrees, twenty-seven minutes, twenty seconds west, sixty-five decimal three one feet along the westeriy boundary of Tremont Street to the northeasterly comer of lands of Russell Paris et ux;

THENCE north sixty-three degrees, thirty-four minutes, ten seconds west, forty feet along the northerly boundary of lands of Russell Paris;

THENCE north fifty-seven degrees, fifty-eight minutes, twenty seconds west, fifty-one decimal eight six feet along the northeasterly boundary of lands of Colin MacLean et ux (Lot 5-4A);

THENCE north fifty-one degrees, thirty-four minutes forty eight seconds west, twenty decimal two one feet along the

Page 1 236

PARCEL DESCRIPTION REPORT

2012-04-13 16:09:51

northeasteriy boundary of lands of Bruce MacKay et ux (Lot 10-9 A);

THENCE north fifty-two degrees, forty two minutes, thirty three seconds east, ninety five decimal five five feet along the southeasterly boundary of lands of Bruce MacKay et ux (Lot 10-9A);

THENCE north forty-two degrees, fifty-two minutes, fifty eight seconds west, one hundred and sixty-five decimal seven four feet along the northeasteriy boundary of lands of Bruce MacKay et ux (Lot iO-9A) to the southeasterly boundary of Merigomish Road;

THENCE northeasteriy along the southeasterly boundary of Merigomish Road, along the arc of a curve with radius four hundred and sixty decimal four four feet, a distance of thirty three decimal three three feet;

THENCE north forty-one degrees, thirty-seven minutes, fif^y three seconds east, one hundred and eleven decimal seven three feet along the southeasterly boundary of Merigomish Road;

THENCE northeasterly along the southeasterly boundary of Merigomish Road, along the arc of a curve with radius two hundred and forty-nine feet, a distance of one hundred and seventy-nine decimal six two feet;

THENCE easteriy along the southerly boundary of Merigomish Road, along the arc of a curve with a radius five hundred and eighty-eight decimal zero three feel, a distance of one hundred and forty-three decimal eigiit feet;

THENCE south eighty-three degrees, one minute, thirty one seconds east, sixty feet along the southerly boundary of Merigomish Road to the point of beginning.

CONTAINING 132,710 square feet of land and including lands conveyed to Pictou County Co-Operative by Co-Op Atlantic by deed dated March 31, 1981, and recorded in Book 788 at Page 84; a portion of lands conveyed lo Pictou County Co-Operative Ltd. by Peter Keith (Guardian of Kennelh Sylvester Silvia) by deed dated November 23,1984, and recorded in Book 868 at page 669; lands conveyed lo Piclou County Co-Operative by Meiford D. MacLean by deed dated December 16, 1985 and recorded in book 901 at page 13; a portion of lands conveyed to Pictou County Co• operative Ltd. by Mel MacLean Used Cars Ltd. by deed dated October 20, 1989, and recorded in book 1023 at page 134; a portion of lands conveyed to Pictou County Co-Operative Ltd. by Meiford Dan MacLean by deed dated October 20, 1989, and recorded in book 1023 at page 137; lands conveyed to Pictou County Co-Operative Ltd. by Bruce MacKay by deed dated March 23, 1990, and recorded in book 1036 at page 114; lands conveyed to Pictou County Co-Operative Ltd. by the Town of New Glasgow by Deed dated March 18, 1991, and recorded in book 1068 at page 115; lands conveyed to Pictou County Co-Operative Ltd. by Norman Paris by deed dated November 25, 1991 and recorded in book 1088 at page 233; and lands conveyed lo Pictou County Co-Operative Ltd. by Gordon K. Lynch by deed dated July 31, 1992, and recorded in Book 1107 at page 329.

SUBJECT to a service easement bounded and described as follows:

BEGINNING at the point where the northerly boundary of lands of Marie Constance Bowden meets the easteriy boundary of Tremont Street;

THENCE south sixty-three degrees, thirty-four minutes ten seconds east, seventy-four decimal zero four feet along the northerly boundary of lands of Marie Constance Bowden lo the westerly boundary of a ten foot wide right of way;

THENCE north thirty two degrees, twelve minutes forty-eight seconds east, one hundred and fourteen decimal six eight feet along the westerly boundary of said right-of-way to the northwesterly comer thereof;

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PARCEL DESCRIPTION REPORT

2012-04-13 16:09:51

THENCE north sixty-two degrees twenty-nine minutes, twenty five seconds west, twenty decimal zero seven feet;

THENCE south thirty-two degrees, twelve minutes forty eight seconds west, ninety four decimal nine six feet;

THENCE north sixty-three degrees, thirty-four minutes, ten seconds west, fifty four decimal five six feet to the easteriy boundary of Tremont Street;

THENCE south thirty degrees, twenty-seven minutes twenty seconds west, twenty decimal zero five feet along the easterly boundary of Tremont Street lo the point of beginning.

BEARINGS are referred to the central meridian for zone 4 (61-30W) of the Nova Scotia coordinate survey syslem.

External Comments: Description Change Details: Reason: Author of New or Changed Description: Name:

Registered Instruments:

Comments:

Page 3 238

2012-04-13 16:04:27

PID: 15409774 CURRENT STATUS: ACTIVE EFFECTIVE DATE/TIME: 2005-12-05 15:09:43

Municipality/County: Cape Breton Regional Municipality

Designation of Parcel on Plan: Lot 91-1

Title of Plan: Plan of Subdivision Showing Consolidation of the Lands of Sydney Cooperative Society Limited

Registration County: Cape Breton

Registration Number of Plan: S-2934

Registration Date of Plan: November 28, 1991

SUBJECT TO a Power Line Easement in favour of Eastern Light & Power Co. Ltd. recorded at the Registry of Deeds, Sydney, Nova Scotia on March 7, 1967 in Book 778, Page 147, Document No. 1542.

The parcel originates with an approved plan of subdivision that has been filed under the Registry Act or registered under the Land Registration Act at the Land Registration Office for the registration district of Cape Breton as plan no. S-2934 Document no 13577.

External Comments: Description Change Details: Reason: Author of New or Changed Description: Name:

Registered Instruments:

Comments:

Page 1 TAB G 239

THIS IS EXHIBIT "G" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFO ME ON MARCH 24, 2016

/2/ iCommissioner of Oath 240 241 242 TAB H 243

THIS IS EXHIBIT "H" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE ME ON MARCH 24, 2016

A ommissioner of Oath

6554858 244 245 246 247 248 249 250 251 252 TAB I 253

THIS IS EXHIBIT "I" TO THE AFFIDAVIT OF BRYAN INGLIS SWORN BEFORE E ON MARCH 24, 2016

i / 01 r A mmissionero of Oath 254 255 256 257 258 259 260 261 262 263 264 265

COURT OF QUEEN’S BENCH OF NEW BRUNSWICK Trial Division

Proceeding filed in Saint John

AFFIDAVIT OF BRYAN INGLIS (Sworn March 24, 2016)

MCINNES COOPER Barristers & Solicitors Blue Cross Building, South Tower 644 Main Street, Suite 400 Moncton, NB E1C 1E2

Chris Keirstead / Michael Costello Tel: (506) 857-8970 Fax: (506) 857-4095

GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Robert J. Chadwick / Logan Willis Tel: (416) 979-2211 Fax: (416) 979-1234

Lawyers for the Applicants 6549614 IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, Court File No: SJM-98-15 R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CO-OP ATLANTIC, CO-OP ENERGY LTD. AND C A REALTY LTD. Applicants

COURT OF QUEEN’S BENCH OF NEW BRUNSWICK Trial Division

Proceeding filed in Saint John

MOTION RECORD (Returnable March 31, 2016)

MCINNES COOPER Barristers & Solicitors Blue Cross Building, South Tower 644 Main Street, Suite 400 Moncton, NB E1C 1E2

Chris Keirstead / Michael Costello Tel: (506) 857-8970 Fax: (506) 857-4095

GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Robert J. Chadwick / Logan Willis Tel: (416) 979-2211 Fax: (416) 979-1234

Lawyers for the Applicants