Court File No. CV-20-00650857-00CL
ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE TORONTO-DOMINION BANK Applicant and
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT , R.S.C. 1985, c. B-3, AS AMENDED
MOTION RECORD (Returnable January 4, 2021)
December 29, 2020 MLT AIKINS LLP 360 Main St 30th Floor, Winnipeg, MB R3C 4G1 Tel: (204) 957-0050
J.J. Burnell [email protected] (204) 957-4663
- and -
ROBINS APPLEBY LLP Barristers + Solicitors 2600 - 120 Adelaide Street West Toronto ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected] Tel: (416) 360-3795
Lawyers for the Receiver, BDO Canada Limited
TO: SERVICE LIST
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Court File No. CV-20-00650857-00CL
ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE TORONTO-DOMINION BANK Applicant - and –
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT , R.S.C. 1985, c. B-3, AS AMENDED
INDEX
Notice of Motion, returnable January 4, 2021 1
Second Report of the Receiver to the Court, dated December 28, 2020 2
Appendix A Supplemental Report to the Receiver’s First Report A
Appendix B Promissory Note B
Appendix C Guarantee C
Appendix D Collateral Mortgage D
Appendix E Security Agreement E
Appendix F Assignment of Debt and Security F
Appendix G Toll Processing Agreement G
Appendix H Intercreditor Agreement H
Appendix I The October 26 Correspondence from GFI I
Appendix J The November 23 Correspondence from GFI J
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Appendix K Inventory Sale Agreement K
Appendix L Escrow Agreement L
Draft Approval and Vesting Order (Inventory Sales Transaction) 3
Blackline against Model Approval and Vesting Order (Inventory Sales Transaction) 4
Draft Approval and Vesting Order (Mortgage Order) 5
Blackline against Model Approval and Vesting Order (Mortgage Order) 6
Service List 7
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Court File No. CV-20-00650857-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE TORONTO-DOMINION BANK Applicant - and –
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
NOTICE OF MOTION (Returnable January 4, 2021)
BDO Canada Limited ("BDO"), in its capacity as the Court-appointed receiver and manager (the "Receiver") of the assets, undertakings and properties, without security, of all of the assets, undertakings and properties of each of Globeways Canada Inc. (“Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global Grain” and collectively with Globeways and Canpulse, the “Debtors”) acquired for, or used in relation to a business carried on by the Debtors, will make a motion to a judge presiding over the Ontario Superior Court of Justice (Commercial List) (the "Court") on January 4, 2021 at 10:30 a.m., or as soon after that time as the motion may be heard by judicial videoconference due to the COVID-19 emergency via Zoom, coordinates to be circulated.
PROPOSED METHOD OF HEARING: The motion is to be heard orally.
THE MOTION IS FOR:
1. An abridgement of the time for service of the Notice of Motion herein, Motion Record, and the Second Report of BDO, in its capacity as Receiver, dated December 28, 2020 (the "Second Report") so that this Motion is properly returnable on January 4, 2021, and dispensing with further service thereof;
Error! Unknown document property name. 000002
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2. An Order substantially in the form attached hereto as Tab 3 to the Motion Record (the “Inventory Sale Approval and Vesting Order”), among other things:
(a) approving the Inventory Sale Agreement (the “ISA”) between the Receiver as vendor and Global Food and Ingredients Inc., GFI LP and 11567403 Canada Inc. (together “GFI” or the “Purchaser”) as purchaser dated effective December 16, 2020, and the transaction contemplated therein (the “Inventory Sale Transaction”);
3. An Order substantially in the form attached hereto as Tab 5 to the Motion Record (the “Mortgage Assignment Approval and Vesting Order”), among other things:
(a) assigning and vesting all right, title, and interest of Canpulse in and to the collateral mortgage (the “Mortgage”) granted in favour of Canpulse by 11567403 Canada Inc., dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry as Interest Register #123754248 to and in The Toronto-Dominion Bank (“TD”);
(b) directing the Saskatchewan Registrar of Titles to accept an application to assign Interest Register #123754248 and to effect a change in the interest holder from Canpulse to TD pursuant to section 109 of The Land Titles Act, 2000, S.S. 2000, c. L-5.1 and section 12 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01; and
(c) authorizing the Receiver to effect the assignment to TD of any registrations (the “PPR Registrations”) in the Saskatchewan Personal Property Registry which name Canpulse as a secured party; and
4. Approving the Second Report and the activities of the Receiver described therein;
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5. Such further and other relief as counsel may request and this Honourable Court deems just.
THE GROUNDS FOR THE MOTION ARE:
BACKGROUND
6. On November 19, 2020, the Honourable Madam Justice Conway granted an order (the “Receivership Order”), appointing BDO as Receiver pursuant to s. 243 of the Bankruptcy and Insolvency Act (Canada) (“BIA”) of all the assets, undertakings and property of the Debtors;
7. The Receivership Order authorizes the Receiver to market and sell the property of the Debtors;
8. Canpulse and Global Grains are in the business of purchasing various grains from farmers and cleaning and sorting that inventory for re-sale;
9. Globeways purchases inventory from Canpulse and Global Grains;
10. Canpulse owns and operates a grain processing plant in Kindersley, Saskatchewan ( the “Kindersley Plant”) and Global Grain owns and operates a grain processing plant in Plum Coulee, Manitoba (“Plum Coulee Plant”);
APPROVAL OF THE ISA AND THE ASSIGNMENT OF THE MORTGAGE AND PPR REGISTRATIONS
11. Pursuant to an asset purchase agreement dated as of November 26, 2019 between Canpulse, as seller, GFI LP, as buyer, and Global Food and Ingredients Inc., Globeways, and Hakan Agro DMCC, as additional parties (the “Canpulse Asset Purchase Agreement”), GFI LP acquired certain assets, including certain real property assets (together the “Assets”) from Canpulse;
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12. Pursuant to a vendor take back promissory note between Canpulse and GFI LP, Canpulse extended a loan to GFI LP in the amount of the unpaid portion of the purchase price for the Assets (the “VTB Loan”)), and to secure the payment and performance of the VTB Loan, 11567403 Canada Inc. granted the Mortgage to Canpulse and GFI LP entered into a general security agreement which was registered in the Saskatchewan Personal Property Registry (collectively, the “VTB Security”);
13. TD agreed to provide certain loans and other credit accommodation to Canpulse (the “TD Bank Financing”) secured by the granting of security interests by Canpulse over all of its present and after-acquired personal property including the VTB Loan and the VTB Security (collectively, as the same may be amended, restated, modified, supplemented and replaced from time to time, the “TD Bank Security”);
14. It was a condition of the TD Bank Financing that Canpulse provide TD with a specific assignment of the VTB Loan and the VTB Security;
15. By an assignment dated November 29, 2019 Canpulse then assigned the VTB Loan and the VTB Security to TD;
16. Effective December 16, 2020, the Receiver and the Purchaser entered into the ISA for the sale of substantially all of the Debtors’ Inventory. This includes Inventory located at the Plum Coulee Plant, the Kindersley Plant and at third party facilities;
17. Concurrent with the ISA, on December 16, 2020 TD entered into an agreement (the “Escrow Agreement”) with GFI for the discharge of the Mortgage and the PPR Registrations;
18. The ISA authorizes certain payments to be held in escrow pending full completion of the terms of the ISA. Upon full completion of the ISA and the discharge the Mortgage and the PPR Registrations by TD the amounts held in escrow shall be released to the Receiver;
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19. TD has agreed to discharge the Mortgage and the PPR Registrations held by TD subject to the terms of the Escrow Agreement and the discharge shall be held in escrow;
20. Canpulse assigned the Mortgage and the PPR Registrations to TD; however, TD is not able to complete the discharge the Mortgage without the assignment requested herein;
21. The Receiver no longer has an interest in the Mortgage;
22. The Receiver recommends that the Court approve the ISA and the assignment of the Mortgage and PPR Registrations for the following reasons:
(a) the Purchaser’s offer is unconditional except for obtaining Court approval;
(b) the Purchaser is an arm’s-length party;
(c) the Inventory Sale Transaction is fair and reasonable;
(d) the Inventory will be sold above prevailing published market prices to one purchaser without the necessity of shipping;
(e) the ISA contains price adjustment clauses that addresses Inventory weight and grade discrepancies;
(f) pursuant to the ISA, the Purchaser is responsible for managing the processing and removal of the Inventory at its sole expense;
(g) the Receiver is advised by TD, the Debtors’ senior arm’s-length secured creditor, that it supports the Inventory Sale Transaction; and
(h) Canpulse previously assigned the VTB Loan and the VTB Security;
GENERALLY
23. The circumstances that exist make the Order sought by the Receiver appropriate;
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24. The provisions of the BIA, as amended, and this Honourable Court’s equitable and statutory jurisdiction thereunder;
25. Paragraphs 3(h), (k), (l) and (r), and 27 of the Receivership Order;
26. The reasons set out herein;
27. Rules 1.04, 2.03, 3.02 and 37 of the Rules of Civil Procedure (Ontario); and
28. Such further and other grounds as counsel may advise and this Court permit.
THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the motion:
(a) The Order of the Honourable Madam Justice Conway dated November 19, 2020;
(b) The Pre-filing Report of the Proposed Receiver dated November 13, 2020;
(c) First Report of the Receiver dated December 9, 2020;
(d) The Supplementary Report to the First Report of the Receiver dated December 10, 2020
(e) The Second Report of the Receiver dated December 28, 2020; and
(f) Such further material as counsel may advise and this Honourable Court may permit.
December 29, 2020 MLT AIKINS LLP 360 Main St 30th Floor, Winnipeg, MB R3C 4G1 Tel: (204) 957-0050 Fax: (204) 957-0840
J.J. Burnell [email protected] (204) 957-4663
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TO: SERVICE LIST
THE TORONTO-DOMINION BANK AND GLOBEWAYS CANADA INC. et al
000008 Applicant Respondents
Court File No. CV-20-00650857-00CL ______
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST PROCEEDING COMMENCED AT TORONTO
NOTICE OF MOTION
MLT AIKINS LLP 3000-360 Main Street Winnipeg, MB R3C 4G1
J.J. Burnell [email protected] (204) 957-4663
- and-
ROBINS APPLEBY LLP 2600-120 Adelaide Street West Toronto, ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected] (416)360-3795
Lawyers for the Receiver BDO Canada Limited
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Court File No. CV-20-006500857-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE TORONTO-DOMINION BANK Applicant
- and -
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD.
Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
SECOND REPORT OF BDO CANADA LIMITED IN ITS CAPACITY AS RECEIVER AND MANAGER OF GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD.
December 28, 2020
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TABLE OF CONTENTS
INTRODUCTION AND PURPOSE OF THIS REPORT ...... 3 Introduction ...... 3 Purpose of this Report ...... 3 Disclaimer ...... 4 BACKGROUND ...... 4 THE CANPULSE VENDOR TAKE BACK LOAN AND SETTLEMENT ...... 5 SALE OF INVENTORY ...... 8 ASSIGNING AND VESTING THE MORTGAGE TO TD ...... 10 ESCROW AGREEMENT ...... 10 RECEIVER’S RECOMMENDATION ...... 11 SUMMARY AND RECOMMENDATIONS ...... 11
Appendices Supplemental Report to the Receiver’s First Report A Promissory Note B Guarantee C Collateral Mortgage D Security Agreement E Assignment of Debt and Security F Toll Processing Agreement G Intercreditor Agreement H The October 26 Correspondence from GFI I The November 23 Correspondence from GFI J Inventory Sale Agreement K Escrow Agreement L
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INTRODUCTION AND PURPOSE OF THIS REPORT
Introduction
1. This report dated December 28, 2020 (the “Second Report”) is filed by BDO Canada Limited (“BDO”) in its capacity as the receiver and manager (the “Receiver”) over the property, assets and undertakings (collectively, the “Assets”) of Globeways Canada Inc. (“Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global Grain”) (collectively the “Company”). BDO was appointed as Receiver on November 19, 2020 on an application by The Toronto-Dominion Bank (“TD”) pursuant to an order of the Honourable Madam Justice Conway (the “Receivership Order”) of the Ontario Superior Court of Justice (the “Court”).
2. This Second Report and all other court materials and orders issued and filed in these receivership proceedings are available on the Receiver’s case website at: https://www.bdo.ca/en- ca/extranets/globeways/ and will remain available on the website for a period of six (6) months following the Receiver’s discharge.
3. The purpose of this Second Report is to provide additional information to the Court with respect to the Receiver’s proposed sale of substantially all of the Company’s inventory (the “Inventory”) to a single purchaser. The Receiver previously reported to the Court of its intention to sell the Inventory in its Supplementary Report to the First Report. A copy of the Supplementary Report is attached hereto as Appendix “A”.
Purpose of this Report
4. The purpose of the Receiver’s Second Report is to provide information to the Court with respect to:
a. approving this Second Report and the actions and activities of the Receiver described herein;
b. approving the sale of substantially all of the Company’s Inventory to Global Food and Ingredients Inc., GFI LP and 11567403 Canada Inc. (the general partner of GFI LP) (collectively the “GFI Group” or the “Purchaser”);
c. approving the Inventory Sale Agreement (“ISA”) between the Receiver as vendor and the GFI Group as Purchaser effective December 16, 2020 and the transaction contemplated therein (the “Inventory Sale Transaction”);
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d. assigning and vesting all right, title, and interest of Canpulse in and to the collateral mortgage (the “Mortgage”) granted in favour of Canpulse by 11567403 Canada Inc., dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry in TD;
e. directing the Saskatchewan Registrar of Titles to accept an application to assign Interest Register #123754248 and to effect a change in the interest holder from Canpulse to TD pursuant to section 109 of The Land Titles Act, 2000, S.S. 2000, c. L-5.1 and section 12 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01; and
f. authorizing the Receiver to effect the assignment to TD of any registrations (the “PPR Registrations”) in the Saskatchewan Personal Property Registry which name Canpulse as a secured party.
Disclaimer
5. This Second Report has been prepared for the use of this Court and the Company’s stakeholders to provide general information to assist the Court in making a determination on whether to grant the relief sought herein. Accordingly, the reader is cautioned that this Second Report may not be appropriate for any other purpose.
6. Except as otherwise described in this Second Report, the Receiver has not audited, reviewed or otherwise attempted to verify the accuracy or completeness of the information in a manner that would wholly or partially comply with Canadian Auditing Standards pursuant to the Chartered Professional Accountants of Canada Handbook. The Receiver expresses no opinion or other form of assurance with respect to such information except as expressly stated herein.
7. Capitalized terms used herein and not defined in this Second Report shall have the meaning ascribed to them in either the Receivership Order or the Receiver’s First Report and corresponding Supplemental Report.
8. All monetary amounts contained herein are expressed in Canadian dollars unless otherwise noted.
BACKGROUND
9. Globeways purchases inventory from its subsidiaries Canpulse and Global Grain and sells the product domestically and internationally. Customers are located world-wide including countries in South America, the Middle East and Asia. Products sold include, but are not limited to, beans (kidney, pinto, black), lentils, and cranberries.
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10. Canpulse and Global Grain own and operate grain processing plants in Kindersley, Saskatchewan (“Kindersley Plant”) and Plum Coulee, Manitoba (“Plum Coulee Plant”), respectively (collectively the “Plants”). Neither Canpulse nor Global Grain grow the Grains they sell to Globeways, the Plants instead clean and sort the various Grains received from farmers. The Plum Coulee Plant predominately processes a variety of beans and cranberries and the Kindersley Plant predominately processes lentils and canary seed.
11. The primary assets of the Company include the head office real estate (Mississauga) (subject to this Court’s sale approval order dated December 14, 2020), the Plum Coulee Plant, the Kindersley Plant, inventory and accounts receivable. Pursuant to the proposed Receivership Order, the Receiver is authorized to sell, convey, transfer, lease or assign the Property or any part or parts thereof out of the ordinary course of business, subject to the limits set out therein.
12. On December 14, 2020, Madam Justice Dietrich issued an order approving the Receiver’s proposed Sales Process for the sale of the Plants. Such Sales Process is described in the Receiver’s First Report and includes providing potential purchasers with a Bid Letter which sets out the following timeline. The Closing Date is anticipated to be in late February or early March 2021.
Milestone Deadline
Non-Binding Expression of Interest Deadline December 23, 2020 Binding APA Deadline January 25, 2021 Selection of Successful Bidder February 8, 2021 Sale Approval Motion ASAP after selection of Successful Bidder Closing Date 10 days after approval of the Sale transaction
THE CANPULSE VENDOR TAKE BACK LOAN AND SETTLEMENT
13. In November 2019 Canpulse together with its shareholders, Globeways and Hakan Agro DMCC, sold certain real properties to GFI LP and Global Food and Ingredients Inc. (the “Canpulse Transaction”). The agreement of purchase and sale was dated November 26, 2019 (the “Canpulse Asset Purchase Agreement”) and pertained to real properties located in Zealandia, Saskatchewan (the “Zealandia Asset”) and Lajord, Saskatchewan (the “Lajord Asset” and together with the Zealandia Asset, the “Assets”). Prior to the sale, the Assets formed part of TD’s security pursuant to loans advanced to the Company by TD (the “TD Financing”).
14. The Canpulse Asset Purchase Agreement included a vendor take back promissory note (the “Note”) dated November 26, 2019 between Canpulse and GFI LP in the amount of the unpaid portion of the
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purchase price, $3,000,000, for the Assets (the “VTB Loan”) and guarantee by Global Foods and Ingredients Inc. dated November 2019 (the “Guarantee”). As part of the Canpulse Transaction, 11567403 Canada Inc. granted a collateral mortgage dated November 26, 2019 to Canpulse to secure the payment and performance of the VTB Loan (the “Mortgage”), and a security agreement dated November 26, 2019 from GFI LP to Canpulse (the “Security Agreement”) and together with the Mortgage, the “VTB Security”). The Note, the Guarantee, the Mortgage and the Security Agreement are attached as Appendices “B”, “C”, “D” and “E”, respectively.
15. The TD Financing was secured by the granting of security interests by Canpulse over all of its present and after-acquired personal property which included the VTB Loan and the VTB Security. It was a condition of the TD Financing that Canpulse provide TD with a specific assignment of the VTB Loan and the VTB Security. On November 29, 2019 by way of an assignment, Canpulse assigned the VTB Loan and the VTB Security to TD (the “VTB Assignment”). The VTB Assignment is attached as Appendix “F”.
16. The Canpulse Transaction also included a toll processing agreement between GFI LP and Global Food and Ingredients Inc. Canpulse, Globeways and Hakan Agro DMCC dated November 26, 2019 (the “TPA”). The Toll Agreement is attached as Appendix “G”.
17. Payments are not due under the Note for 4 years from November 26, 2019 and the Note does not fully mature until 6 years thereafter, being approximately 5 years after the date of the receivership. The VTB Loan is subordinated to a first ranking mortgage (the “FCC Mortgage”) in favour of Farm Credit Canada (“FCC”). TD and FCC entered into a priority and standstill agreement dated July 6, 2020 (the “Intercreditor Agreement”) which prevent payment on the VTB Loan until the FCC Mortgage is fully repaid. The Intercreditor Agreement is attached as Appendix “H”.
18. On October 26, 2020, counsel to the GFI Group advised the Company that pursuant to the TPA Canpulse was required to pay the GFI Group approximately $10.2 million to by the end of the term of the TPA which is November 26, 2024 (the “October 26 Correspondence”). The GFI Group further indicated that the payments under the TPA “far exceeds the $3 million payable by GFI to CanPulse under the Promissory Note dated November 26, 2019….GFI does not intend to apply its set-off rights under the Promissory Note until the balance payable by CanPulse under the TPA is reduced to $3 million”. A copy of the October 26 Correspondence is attached hereto as Appendix “I”.
19. On November 23, 2020 the GFI Group’s counsel wrote to the Receiver advising that under the TPA, Canpulse and Globeways agreed to “indemnity GFI for all “Claims” arising from “any failure by Canpulse or a Guarantor to observe or perform any covenant or obligation contained in [the TPA] or any document delivered pursuant to this Agreement” (the “November 23 Correspondence”). Included in the November 23 Correspondence was a calculation of the GFI Group’s estimated future
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loss as a result of Canpulse’s non-performance of the TPA. Such losses were estimated to be in the range of $10,392,937.68 and $10,738,975.68. A copy of the November 23 Correspondence is attached hereto as Appendix “J”.
20. The Company has 2,715.3 metric tons of unprocessed Inventory at the Plants and 305 metric tons of unprocessed Inventory at the GFI Group’s locations. In addition, certain producers are in possession of approximately 489.5 metric tons of Inventory which is the property of Canpulse. Processing, selling and transporting the Inventory to potential purchasers would be require significant effort and cost on the part of the Receiver and could take a significant amount of time.
21. The GFI Group has agreed, subject to the approval of this Court, to purchase the Inventory from the Receiver at or above market prices in exchange for both the Inventory and a release of the VTB Security and has further agreed to process and move the Inventory at their own expense which saves the Receiver significant expense and ensures maximum recovery on Inventory as well as enables the closing of a sale transaction for the Plants to be occur without delay.
22. A condition of the GFI Group’s offer was that TD discharge the Mortgage and any personal property registrations. The Receiver is advised that TD is prepared to release its interest in the VTB Security and discharge the mortgage should GFI assist by purchasing and removing the all Inventory at a favourable price and has entered into an escrow agreement (“Escrow Agreement”) with the Purchaser to that effect. However, since the Receiver’s last appearance before this Court the parties have learned that due to the way in which the assignment was registered in the Saskatchewan Land Titles neither TD nor the Receiver can discharge the Mortgage and for the reasons set out below there is not sufficient time to make alternate arrangements. A copy of the Escrow Agreement is attached as Appendix “K”.
23. The Receiver does not regard the VTB Security as having any realizable value because it is subject to a large claim for set off, it is not fully matured for another 5 years, and repayment is not permitted until such time as the first secured creditor of GFI LP and Global Food and Ingredients (being FCC) has been paid in full. The current holder of the mortgage, TD, has agreed with the Receiver that there would be no reasonable prospect of realizing any value for the VTB Security and has agreed to provide a discharge of that security to facilitate the Receiver’s sale under the ISA for the benefit of all stakeholders. The Receiver understands that the discharge of the VTB Security is of benefit to the GFI Group in order to clean up its balance sheet and the title to its properties which provides incentive for them to complete their obligations under the ISA, which, for the reasons set out in this Second Report, is of benefit to the Receiver in the realization of the Inventory.
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SALE OF INVENTORY
24. Effective December 16, 2020 (executed December 24, 2020) the Receiver entered into the ISA with the GFI Group for the sale of substantially all of the Company’s Inventory located at the Plum Coulee Plant, the Kindersley Plant and at the GFI Group’s facilities for $2,750,000 (the “Purchase Price”). In addition, the ISA provides for the sale of Inventory currently at producers’ locations for additional consideration. Attached hereto as Appendix “K” is a copy of the ISA.
25. A summary of the quantum of Inventory at each location, book value and the Purchase Price is provided in the following table. The prices and allocation of the Purchase Price were negotiated between the Receiver and the GFI Group, with the input of TD. A more detailed schedule presenting the allocation of the Purchase Price by product and location is appended to the ISA. As shown in the table, the book value of the inventory is $2,232,166. The Purchase Price of $2,750,000 represents a mark-up of approximately 23% over the book value.
Inventory Summary and Purchase Price Weight (MT) Book Value Purchase Price Mark up Inventory at - GFI's Locations 305.00 $ 535,052 $ 750,000 140% Inventory located at - Kindersley 995.40 175,555 175,000 100% Inventory located at - Plum Coulee 1,719.90 1,521,559 1,825,000 120% Total 3,020.30 $ 2,232,166 $ 2,750,000 123%
26. Salient terms of the ISA include:
(a) As discussed above, the allocation of the Purchase Price is summarized in the table above and the prices were negotiated between the Receiver and the GFI Group. A schedule detailing the allocation of the Purchase Price by product and location is appended to the ISA.
Inventory at GFI Locations
(b) The Purchase Price for the Inventory located at the GFI Group’s locations ($750,000) shall be paid to the Receiver no later than 72 hours following the satisfaction of the conditions precedent to the ISA and title shall pass to GFI at the time of payment.
(c) The Inventory at the GFI Group’s locations is purchased on an “as is where is” with no representations, warranties or purchase price adjustment for quantity, grade or otherwise.
Inventory at Kindersley Location (the “Kindersley Inventory”)
(d) The Purchaser shall pay the Receiver the purchase price ($175,000) for the Kindersley Inventory in two installments (the “Kindersley Price”). Specifically the Purchaser shall pay
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the Receiver $75,000 within 24 hours following the first shipment by the Purchaser and $100,000 within 48 hours following the final shipment by the Purchaser.
(e) Title to the Kindersley Inventory will pass to the Purchaser as payments are made.
(f) The Kindersley Price is subject to price adjustments for weight and grade.
(g) The Purchaser is responsible to manage the process of removing the Kindersley Inventory from the Kindersley Plant at its own cost and the Purchaser will use its best commercial efforts to remove all of the Kindersley Inventory for the Kindersley Location by January 29, 2021.
Inventory at Plum Coulee Location (the “Plum Coulee Inventory”)
(h) The Purchaser shall pay the Receiver the purchase price ($1,825,000) for the Plum Coulee Inventory in weekly installments (the “Plum Coulee Price”) based upon the amount of product removed from the Plum Coulee location. Specifically the Purchaser shall pay the Receiver each Wednesday for the Inventory removed from the Plum Coulee location during the previous week. The final payment shall be made to the Receiver within 72 hours following the final removal of the Plum Coulee Inventory from the Plum Coulee Plant.
(i) The Plum Coulee Price is subject to price adjustments for weight and grade.
(j) The Plum Coulee Inventory is to be cleaned and bagged at the Plum Coulee Plant by the Purchaser using the equipment at the facility. Processing the Inventory at the Plum Coulee Plant is necessary as transporting unprocessed/unbagged inventory can cause damage to the Inventory which degrades its market value.
(k) If necessary the Receiver will attempt to temporarily recall the Company’s former employees to assist the Purchaser in processing the Inventory. This is seen as necessary as the Purchaser does not have either operations or employees in Manitoba and Manitoba has imposed COVID related travel restrictions which limits GFI’s ability to use its own employees who are based in Saskatchewan. The Purchaser has agreed to reimburse the Receiver for up to $100,000 for all costs (including the cost of retaining the former employees), associated with cleaning, bagging and loading of the Plum Coulee Inventory.
(l) Title to the Plum Coulee Inventory will pass to the Purchaser as and when each truck-load of the Plum Coulee Inventory is removed from Plum Coulee.
(m) The Purchaser will use it best commercial efforts to remove all of the Plum Coulee Inventory from the Plum Coulee Plant by February 15, 2021 (the “Inventory Removal Date”). If
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however, the Purchaser advises the Receiver that the Inventory cannot removed the Inventory Removal Date, then the Purchaser must remove the Plum Coulee Inventory by February 28, 2021 unless:
(i) the closing date for the sale of the Plum Coulee facility is extended beyond February 28, 2021; or
(ii) the Purchaser enters into an agreement with the purchaser of the Plum Coulee facility to allow for the Inventory to be removed after the date for removal in the ISA.
Non-Site Inventory
(n) Certain producers received inventory from Plum Coulee (the “Non-Site Inventory”) prior to the date of receivership in excess of the amounts of their respective elevator tickets. The amount of the Non-Site Inventory is estimated to be approximately 470,000 pounds of pinto beans and 19,500 pounds of black beans. The Receiver has agreed to provide the Purchaser with the information in its possession in respect of such producers and the Purchaser agrees to contact these producers and recover the Non-Site Inventory.
(o) The Purchaser has agreed to purchase the Non-Site Inventory recovered and will pay to the Receiver, a price equal to 80% of the prices reflected in the Adjustment Schedule, within 72 hours of the Purchaser acquiring possession of the Non-Site Inventory.
(p) The Purchaser is solely responsible for all costs associated with the recovery and acquisition of the Non-Site Inventory.
ASSIGNING AND VESTING THE MORTGAGE TO TD
27. As set out above, the Receiver understands that Canpulse assigned the Mortgage and the PPR Registrations to TD as part of the TD Financing; however, because of the way in which the assignment was registered TD is not able to complete the discharge of the Mortgage without the assignment of Canpulse’s interest in the Mortgage to TD. The Receiver is further advised that assignment to TD is necessary as the Province of Saskatchewan does not have a mechanism to allow the Receiver to directly discharge the Mortgage.
ESCROW AGREEMENT
28. The ISA authorizes certain payments to be held in escrow pending full completion of the terms of the ISA. Concurrent with the ISA, TD entered into an agreement the Escrow Agreement with GFI which includes the discharge of the Mortgage and the PPR Registrations.
000019 -11-
29. TD has agreed to discharge the Mortgage and the PPR Registrations held by it subject to the terms of the Escrow Agreement and such discharge shall be held in escrow pending completion of the ISA. Upon full completion of the ISA and the discharge of the Mortgage and the PPR Registrations by TD, the amounts held in escrow shall be released to the Receiver.
RECEIVER’S RECOMMENDATION
30. The Receiver believes the Inventory Sale Transaction is fair and reasonable for the recommends that the Court approve the ISA and the assignment of the Mortgage and PPR Registrations for the following reasons:
(a) The Purchaser’s offer is unconditional except for obtaining Court approval;
(b) The Purchaser is an arms-length party;
(c) The Inventory Sale Transaction is fair and reasonable;
(d) The Inventory will be sold at or above prevailing published market prices to one purchaser without the necessity of shipping;
(e) The ISA contains price adjustment clauses that addresses Inventory weight and grade discrepancies;
(f) Pursuant to the ISA, the Purchaser is responsible for managing the processing and removal of the Inventory at its sole expense; and
(g) The Receiver is advised by TD, that it supports the Inventory sale transaction.
SUMMARY AND RECOMMENDATIONS
31. Based on the foregoing, the Receiver respectfully requests that the Court grant an Order:
(a) approving this Second Report and the actions and activities of the Receiver described herein;
(b) approving the Inventory Sale Transaction between the Receiver and the Purchaser effective December 16, 2020 and the transaction contemplated in the ISA;
(c) assigning and vesting all right, title, and interest of Canpulse in and to the Mortgage granted in favour of Canpulse by 11567403 Canada Inc., dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry in TD;
000020 -12-
(d) directing the Saskatchewan Registrar of Titles to accept an application to assign Interest Register #123754248 and to effect a change in the interest holder from Canpulse to TD pursuant to section 109 of The Land Titles Act, 2000, S.S. 2000, c. L-5.1 and section 12 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01; and
(e) authorizing the Receiver to effect the assignment to TD of any PPR Registrations in the Saskatchewan Personal Property Registry which name Canpulse as a secured party.
All of which is respectfully submitted this 28 day of December, 2020.
BDO CANADA LIMITED, in its capacity as the Proposed Court-appointed Receiver of Globeways Canada Inc. Canpulse Foods Ltd. and Global Grain Canada Ltd. and not in its personal or corporate capacity
Per:
Name: Josie Parisi, CPA, CA, CBV, CIRP, LIT Title: Senior Vice-President
000021
Court File No.No. CV-20-006500857-00CLcV-го-оов5оов57-оосL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE TORONTO-DOMINIONTORONTO-DOMINION BANK Applicant
- and -
GLOBEWAYS CANADA INC., CANPULSE FOODSFOODS LTD. AND GLOBAL GRAIN CANADA LTD.
RespondentsRespondents
APPLICATION UNDER SUBSECSUBSECTIONTION 243(1) OF THE BANKRUPTCYBANKRUPTCYAND AND INSOLVENCY ACT,ACT, R.S.C.R.S.C. 1985, c. B-3, AS AMENDED
SUPPLEMENTARY REPORT TO THE FIRST REPORT OF BDOBDO CANADA LIMITED ININ ITSITS CAPACITY AS RECEIVERRECEIVER AND MANAGER OF GLOBEWAYS CANADA INC., CANPULSE FOODSFOODS LTD. AND GLOBAL GRAIN CANADA LTD.
December 10, 2020 000022
TABLE OF CONTENTS
INTRODUCTION AND PURPURPOSEPOSE OF THIS REPORTREPORT ...... 3 SALE OF INVEINVENTORYNTORY ...... 3
000023
INTRODUCTIONINTRODUCTION AND PURPOSE OF THIS REPORT
1.1. This supplementary report dated December 10,10, 2020 (the “"SupplementarySupplementary ReportReport")”) is filed by BDO Canada Limited (“("BDO")BDO”) in its capacity as the receiver and manager (the “"Receiver")Receiver”) over the property, assets and undertakings (collectively,(collectively, the “"Assets")Assets”) of Globeways Canada Inc.Inc. (“("Globeways"),Globeways”), Canpulse Foods Ltd. (“("Canpulse")Canpulse”) and Global Grain Canada Ltd. (“("GlobalGlobal GrainGrain")”) (collectively(collectively the “"Company").Company”). BDO was appointed as Receiver on November 19,19, 2020 on an application by The Toronto-DominionToronto-Dominion Bank (“("TO")TD”) pursuant to an order of the Honourable Madam Justice Conway (the “"ReceivershipReceivership OrderOrder")”) of the Ontario Superior Court of Justice (the “"Court").Court”).
2. This Report and all other court materials and orders issued and filed in these receivership proceedings are available on the Receiver’sReceiver's case website at: hthttps://www.bdo.caien-tps://www.bdo.ca/en- ca/extranets/globeways/ca/extranetsiglobeways/ and wwillill remain available on the websitwebsitee for a period of six (6) months following the Receiver’sReceiver's discharge.
3. The purpose of the Receiver’sReceiver's Supplementary Report is to proprovidevide information to the Court with respectrespect to the Receiver’sReceiver's proposed sale of substantially all of the Company’sCompany's inventoryinventory to a single purchaser.
4. Capitalized terms used herein and not defined in this SuppleSupplementarymentary Report shall have the meaning ascribed to them in either the ReReceivershipceivership Order or the ReceivReceiver'ser’s First Report.
5. All monetary amounts contained herein are expressed in CanadCanadianian dollars unless otherwise notednoted..
SALE OF INVENTORY
6. Pursuant to paragraph 3(c) of the Receivership Order the RecReceivereiver is empowered and authorized to carry on the business of the Company in the ordinary course of business. As set out in the Pre-Pre- Filing Report and the First Report Canpulse and Global Grains aarere in the business of purchasing various grains (the “Inventory”"Inventory")) from farmers and clcleaningeaning and sorting tthathat Inventory for re-sre-sale.ale.
7.7 The Receiver has engaged in discussions with, an arm’s-lengtarm's-lengthh purchaser (the “"Purchaser")Purchaser”) regardingregarding the sale of substantially all of the Company’sCompany's InventInventoryory wherever situated. This includes InventoryInventory at the Plum Coulee Plant, the Kindersley Plant and at third party facilities. An agreement between the parties is currently being prepared and isis expected to be finalized next week and the transaction will close immediatelyimmediately thereafter.
8. Based upon current discussions with the Purchaser, the agreeagreementment will incorporate the following terms: 000024
(a)(a) The inventoryinventory will be sold at or above prevailing published market prices and will be negotiated between the parties;
(b)(b) The Receiver will make availavailableable to the Purchaser, the CompCompany'sany’s facility Plum Coulee Plant to allow for the Inventory to be processed and avoid movmovementement of the Inventory which could cause damage and reducereduce its market value;
(c)(c) Payment of the InventoryInventory will occur concurrent with the remremovaloval of the Inventory from the Plants on a shipment by shipment basis;
(d)(d) Price adjustmenadjustmentt clauses will be incorpincorporatedorated to address weight and grade discrepancies;
(e)(e) The Purchaser will be responresponsiblesible for managing the processing and removal of the InventoryInventory at itsits sole expense;
(f)(f) To the extent possible, the Receiver will introduce the PurPurchaserchaser to the formformerer employees of the Company to assist with acaccesscess to the facilities, processprocessinging and removalremoval of the Inventory.Inventory. Any costs associated with the foregoing wwillill be at the PurchPurchaser'saser’s expense. Due to COVID travel restrictions, the use of the Company’sCompany's former employees may be necessary to expedite the procprocessingessing and removal; and
(g)(g) Full removalremoval of the InventorInventoryy is anticipated to occur by FeFebruarybruary 15,15, 2021 however may be extended as necessary.
9. The Receiver is of the view that the transaction with the PuPurchaserrchaser isis a sale inin the ordinary course and is acceptable to the Receiver as it is considered commerciacommerciallylly reasonable and resultsresults inin monetizing the Inventory, which isis perishable, at market values in a single transaction.
All of which is respectfully submitted this 1010'th day of December, 2020.
BDO CANADA LIMITED, inin itsits capacity as the CourCourtt-appointed-appointed Receiver of Globeways Canada Inc., Canpulse Foods Ltd. and Global Grain Canada Ltd. and not in its personal or corporate capacity
Per:
Name: Josie Parisi, CPA, CA, CBV, CIRP, LIT Title: Senior VViceice-President-President 000025
Execution Version
PROMISSORY NOTE
Date: November 26__, 2019
$3,000,000.00
FOR VALUE RECEIVED, GFI LP, unconditionally (except as set out below) promises to pay to the order of Canpulse Foods Ltd. (“Canpulse”) the sum of $3,000,000.00 in lawful money of Canada as follows:
(a) by annual payments of the sum of $1,000,000.00 the first payment being due on the date that is four years from the date hereof and continuing annually thereafter on the same date for two additional consecutive years.
(b) any unpaid amounts shall be fully due and payable on the date that is six years from the date hereof.
(c) in the event of default of any payment as required hereunder:
(i) the undersigned shall pay interest on any unpaid balance from the date of default until the date of payment or satisfaction at the variable rate equal to the Toronto Dominion Bank prime rate of interest in effect from time to time at plus 3% per annum, calculated and compounded monthly;
(ii) the entire balance and interest thereon shall at the option of Canpulse become due and payable upon demand together with interest as aforesaid.
The undersigned hereby waives presentment for payment, demand, notice of non-payment, notice of protest of this promissory note, and all other notices in connection with the delivery, acceptance, performance, or enforcement of, or default under, this promissory note (other than demand for payment upon default as provided above).
The undersigned agrees that the proper law of this instrument is the law of Saskatchewan and that this instrument shall be governed by and construed in accordance with the laws thereof, and the undersigned further agrees that any legal suit, action or proceeding brought upon or arising out of or relating to this instrument may be instituted in accordance of such Province and the undersigned accepts and irrevocably submits to and attorns to the exclusive jurisdiction of the said courts of such Province, and agrees to be bound by any judgment thereof, providing that nothing herein shall limit the right of Canpulse to bring proceedings against the undersigned elsewhere.
This promissory note is given in respect of and pursuant to the terms of an Asset Purchase Agreement dated as of the date hereof between the undersigned, as purchaser, Global Food and Ingredients Inc. (“GFI”), Canpulse, as seller and others. The obligations hereunder are unconditional and irrevocable and not subject to any demand, set-off, counterclaim, claim for contribution, damages, reduction or other matter whatsoever except as set out below.
The amounts payable by the undersigned under this promissory note shall be subject to the ability of the undersigned to deduct from the annual payments or from any other amounts owing hereunder:
000026
Signature page to Promissory Note
(a) any amounts invoiced to Canpulse by the undersigned and duly and properly owing by Canpulse to the undersigned;
(b) any losses or damages incurred by the undersigned as a result of a material breach by Canpulse, Hakan Agro DMCC and or Globeways Canada Inc. under the toll processing agreement between the undersigned, as processor, and Canpulse dated the date hereof, as may be amended from time to time (the “Toll Processing Agreement”;
(c) in the event of early termination of the Toll Processing Agreement for any reason by any of Canpulse, Hakan Agro DMCC and or Globeways Canada Inc., all minimum remaining payments that were contemplated under the Toll Processing Agreement had it not been terminated early, provided that if such minimum payments exceed the amount then remaining payable under this promissory note, the undersigned shall have no further obligations for payment(s) under this promissory note.
(c) any amounts owing by Canpulse to the undersigned pursuant to a claim for indemnification in favour of the undersigned under the Asset Purchase Agreement referred to above.
It is acknowledged that the undersigned, GFI, Canpulse and Farm Credit Canada are parties to an assignment, postponement, subordination and standstill agreement (the “FCC Subordination Agreement”) dated at or about the date of this promissory note. It is further acknowledged that the FCC Subordination Agreement restricts the ability of the undersigned to make the payments required under the terms of this promissory note and imposes restrictions on the ability of Canpulse to take action against the undersigned in the event of the failure of the undersigned to fulfil its obligations hereunder, but such shall not relieve or otherwise affect the undersigned from its obligations to Canpulse under this promissory note. The indebtedness evidenced by this promissory note, including the principal hereof and interest (if any) hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Arm’s Length Indebtedness,” whether now outstanding or hereafter incurred. The term “Arm’s Length Indebtedness” shall mean the principal of and premium, if any, and interest on indebtedness (other than this promissory note) for money borrowed by GFI LP or GFI from (or indebtedness for money guaranteed by GFI LP or GFI) any individuals or other persons dealing at arm’s length with GFI LP or GFI (as such term is interpreted for the purposes of the Income Tax Act (Canada)). CanPulse hereby agrees to enter into postponement, subordination and standstill agreements with any future lenders of Arm’s Length Indebtedness on substantially similar terms of the FCC Subordination Agreement, mutatis mutandis.
This promissory note and every part hereof shall be binding upon the undersigned, and shall enure to the benefit of, and be enforceable by Canpulse and any administrator, successor or permitted assigns. This promissory note may not be assigned without the written consent of GFI LP by its general partner.
[Signature page follows]
000027
26th 000028
26th 000029
GUARANTEE
WHEREAS GFI LP. (hereinafter referred to as the “Purchaser”) is indebted to CANPULSE FOODS LTD. (hereinafter referred to as the “Seller”) in respect of certain amounts owing by the Purchaser to the Seller as part of the purchase price payable to the Seller by the Purchaser in the amount of $3,000,000.00 (the “Unpaid Purchase Price”) pursuant to an Asset Purchase Agreement dated November ____, 2019 (the “Asset Purchase Agreement”);
AND WHEREAS Global Food and Ingredients Inc. (the “Guarantor”) has agreed to provide this Guarantee in respect of the obligations of the Purchaser for payment of the Unpaid Purchase Price in consideration of the Seller agreeing to accept the Unpaid Purchase Price in accordance with the terms of a Promissory Note made by the Purchaser in favour of the Seller and dated as of November ____, 2019 (the “Promissory Note”) for other good and valuable consideration;
NOW THEREFORE the Guarantor covenants, promises and agrees in favour of and with the Seller as follows:
1. Subject only to clause 2 below and the setoff provisions in the Promissory Note, the Guarantor unconditionally guarantees to the Seller the due payment by the Purchaser of the said principal amount of the Unpaid Purchase Price, together with interest if applicable under the Promissory Note at the times and in the manner agreed to by the Purchaser in the Promissory Note and the Asset Purchase Agreement and the due performance and observance by the Purchaser of all covenants, conditions, stipulations and provisos in connection with the Unpaid Purchase Price.
2. This shall be an unlimited guarantee and shall secure the full amount due and owing by the Purchaser to the Seller from time to time under the Promissory Note. Notwithstanding the generality of the foregoing, the Guarantor shall, from and after a demand for payment, be liable to pay interest on the amounts due and owing at the interest rate set forth in the Promissory Note (as amended from time to time) from and after the date of demand until payment of the same.
3. As between the Seller and the Guarantor, the Guarantor is and shall continue to be liable as principal debtor under all the covenants contained in the Promissory Note and under this Guarantee, notwithstanding any transaction which may take place between the Seller and the Purchaser or any neglect or default of the Seller which might otherwise operate as a discharge, whether partial or absolute, of the Guarantor as if it were surety only of the Purchaser and without restricting the generality of the foregoing, notwithstanding the release in whole or in part of the properties and assets mortgaged or charged as security for the obligations of the Purchaser or the granting of time or other indulgences to the Purchaser.
4. This Guarantee is given as additional security for the obligations of the Purchaser to the Seller, and in particular in addition to and not in substitution for any other security or agreements given in favour of the Seller, including, but not limited to, any additional guarantees given by other parties now or at any time in respect of the obligations of the Purchaser to the Seller.
5. The Seller, in its absolute discretion or in the absolute discretion of any officer or agent, and without diminishing the liability of the Guarantor, may grant time or may vary the terms of repayment or may grant other indulgences to the Purchaser and any other person or persons now or hereafter liable to the Seller in respect of the said Unpaid 000030
Purchase Price and interest as applicable and may give up, modify, vary, exchange, renew or abstain from perfecting or taking advantage of any security in whole or in part and may discharge any part or parts or accept any composition or arrangements or realize upon security for the obligations of the Purchaser when and in such manner as the Seller or any officer thereof may think expedient, and in no case shall the Seller be responsible for any neglect or omission with respect to any such security. Any account stated by or between the Seller and the Purchaser, or admitted by or on behalf of the Purchaser, may be adduced by the Seller and shall in that case be accepted by the Guarantor as conclusive evidence that the balance or amount thereof thereby appearing is due by the Purchaser to the Seller.
6. The Guarantor will not at any time claim to be subrogated in any manner to the position of the Seller and will not claim the benefit of any security at any time held by the Seller. PROVIDED HOWEVER that in the event of the Guarantor paying to the Seller all the monies owing by the Purchaser to the Seller pursuant to the Promissory Note, then the Guarantor shall be entitled, on demand made in writing to the Seller, to the assignment of such of any security remaining in the Seller at the time such payment and demand is received by the Seller.
7. The Seller shall not be bound to exhaust its recourse against the Purchaser or any other parties or in respect of any security it may hold before requiring payment from the Guarantor, and the Seller may enforce the various remedies available to it and may realize upon the various securities held by it, or any part hereof, in such order as the Seller may determine.
8. If default shall occur under any or all of the security held by the Seller for the obligations of the Purchaser, the Guarantor shall forthwith upon demand being made upon it by the Seller, pay to the Seller all principal, interest, costs and expenses due by virtue of this Guarantee and perform or cause to be performed all obligations owing to the Seller by the Purchaser under and in respect of the Promissory Note and any security therefor.
9. Notwithstanding anything to the contrary, the Seller will not in any way be responsible for either the holding or the supervision of the insurance policies required to be maintained under any covenants to insure, if any, and the Seller’s permissive power to place insurance on the assets mortgaged to it contained in the Security is in its sole and absolute discretion. The Guarantor acknowledges that the Seller’s action or lack of action in such holding, supervision, verification or in its permissive powers shall in no way diminish its liability hereunder.
10. No change in the name, objects, capital stock or constitution of the Purchaser shall in any way affect the liability of the Guarantor, either with respect to transactions occurring before or after any such change and the Seller shall not be concerned to see or inquire into the powers of the Purchaser, or any of its agents acting or purporting to act on its behalf, and monies, advances, renewals or credits in fact obtained by the Purchaser shall be deemed to be and form part of the debts and liabilities hereby guaranteed, notwithstanding that such borrowing may be in excess of the powers of the Purchaser, its directors, or its agents, or be in any way irregular, defective, or informal.
11. Nothing in this Guarantee shall limit or affect or derogate from, nor shall this Guarantee be limited, affected or derogated by, any other guarantee or indemnity given by the Guarantor to the Seller for any other purpose. 000031
12. This Guarantee shall extend to and enure to the benefit of the Seller and its successors and assigns and reference herein to the undersigned or to the Guarantors is a reference to and shall be construed as including their successors, administrators and assigns.
13. Provided that the Purchaser is not in default of its obligations to the Seller in respect of the Unpaid Purchase Price in respect of which this Guarantee is given, and provided that no demand has been made upon the Guarantor in respect of its obligations hereunder, the Seller shall release this Guarantee upon satisfaction by the Purchaser of all obligations to the Seller in respect of the said Unpaid Purchase Price and amounts owing under the Asset Purchase Agreement with the Purchaser, subject to the condition that the reasonable costs and expenses of the Seller for such releases and discharges be paid by the Purchaser.
14. Without restricting the generality of any provision hereof, the Guarantor hereby agrees that this Guarantee shall continue to apply and be binding upon on the Guarantor in the event of any amalgamation effecting the Purchaser and upon the occurrence of such an amalgamation, this Guarantee shall be applicable to the obligations of the amalgamated corporation as such continue to be binding upon the amalgamated corporation. The Guarantor shall, if required to do so by the Seller, deliver such further and other agreements, documents and assurances as required by the Seller.
15. It is acknowledged that the Guarantor, the Purchaser, Canpulse and Farm Credit Canada are parties to a postponement, subordination and standstill agreement (the “FCC Subordination Agreement”) dated at or about the date of this Guarantee. It is further acknowledged that the FCC Subordination Agreement restricts the ability of the Guarantor to make the payments required under the terms of this Guarantee and imposes restrictions on the ability of Canpulse to take action against the Guarantor or to receive payment from the Guarantor after a demand for payment is made upon the Guarantor under this Guarantee, but such restrictions or limitations shall not relieve or otherwise affect the Guarantor from its obligations to Canpulse under this Guarantee. The term “Arm’s Length Indebtedness” shall mean the principal of and premium, if any, and interest on indebtedness (other than the Promissory Note) for money borrowed by the Purchaser or Guarantor from (or indebtedness for money guaranteed by the Purchaser or Guarantor) any individuals or other persons dealing at arm’s length with the Purchaser or Guarantor (as such term is interpreted for the purposes of the Income Tax Act (Canada)). The Seller hereby agrees to enter into postponement, subordination and standstill agreements with any future lenders of Arm’s Length Indebtedness on substantially similar terms of the FCC Subordination Agreement, mutatis mutandis.
16. This Guarantee shall be governed in all respects by the laws of the Province of Saskatchewan.
[Signature page follows] 000032 000033
COLLATERAL MORTGAGE
11567403 Canada Inc. (the “Mortgagor”), as general partner of GFI LP (the “Debtor”), being the registered owner of an estate in fee simple in the lands described as follows:
LEGAL DESCRIPTION:
Surface Parcel #145169185 Reference Land Description: Blk/Par A Plan No 98MW19933 Extension 1
Surface Parcel #202892519 Reference Land Description: Blk/Par K Plan No 102144046 Extension 0
Surface Parcel #111788219 Reference Land Description: Blk/Par A Plan No 101331425 Extension 10
(hereinafter referred to as the “Lands”); for good and valuable consideration, the receipt and sufficiency of which is acknowledged, hereby covenants with CANPULSE FOODS LTD. (hereinafter referred to as the “Mortgagee”), whose address for service is 110 – 2570 Matheson Blvd. E, Mississauga ON L4W 4Z3, as follows:
1. Definitions: In this Agreement the following terms shall have the following meanings:
(a) “Asset Purchase Agreement” means the asset purchase agreement dated November ____,26 2019 entered into between the Mortgagee and the Debtor, among others, whereby the Mortgagee agreed to sell the Lands to the Debtor.
(b) “Enforcement Obligations” means all amounts payable hereunder, including but not limited to the Liabilities and the costs referred to herein.
(c) “Liabilities” means all amounts owing to the Mortgagee by the Mortgagor or the Debtor from time to time under and pursuant to a Promissory Note made by the Mortgagor (in its capacity as general partner of the Debtor) in favour of the Mortgagee (the “Promissory Note”) and this Mortgage, and all other debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owed, or remaining unpaid, by the Debtor or the Mortgagor to the Mortgagee under the Promissory Note or this Mortgage.
2. Charging Clause: The Mortgagor hereby encumbers, mortgages and charges the Lands and each and every building and other improvement located on or under the Lands (the “Improvements”) which now or hereafter may be erected thereon (the Lands and the Improvements being hereinafter referred to as the “mortgaged property”) as security for the repayment of the Liabilities and the Enforcement Obligations.
3. Liabilities: The Debtor shall repay all Liabilities to the Mortgagee in accordance with the terms of the Promissory Note and as continuing security for payment of all Liabilities, the Mortgagor grants this Mortgage to the Mortgagee. The principal amount secured by this Mortgage shall not exceed the principal amount of $3,000,000.00 (the “principal”). The accounts and records of the Mortgagee shall, in the absence of manifest error, constitute a prima facie evidence of the amount of Liabilities outstanding and owing from time to time by the Debtor to the Mortgagee.
#43155629V2 43155629.5 000034
Collateral Mortgage
4. Interest: No interest shall be payable by the Debtor or the Mortgagor to the Mortgagee in respect of the Liabilities, provided that in the event of default in payment of the amounts owing as required herein, interest shall be accrue and be payable on any amount(s) in default from the date of such default until the amounts owing are satisfied at the Toronto Dominion Bank prime rate of interest in effect from time to time plus 3% per annum, calculated and compounded monthly.
5. Repayment: The Debtor shall pay to the Mortgagee the amounts owing and secured hereby in accordance with the terms of the Promissory Note. Without limiting the generality of the foregoing, all amounts owing in accordance with the terms of the Promissory Note shall be due and payable, subject to acceleration of payment upon default, on November 22, 2025.
6. Prepayment: The Purchaser may prepay any portion of the Liabilities, together with any accrued interest thereon, if any, in advance at any time without notice, bonus or penalty.
7. Enforcement Obligations: In the event of a default by the Debtor or the Mortgagor in the performance of its obligations to the Mortgagee, as provided in clause 12 hereof, all costs (as therein described) incurred by the Mortgagee in enforcement of this mortgage and collection of the Liabilities shall be due and payable by the Mortgagor and shall be added to the Liabilities and be secured by the mortgage and charge granted hereunder. All Enforcement Obligations shall be payable by the Debtor or the Mortgagor to the Mortgagee upon demand therefore by the Mortgagee to the Mortgagor after the occurrence of an event of default.
8. No Merger: Neither the granting of this mortgage nor any proceeding taken hereunder or with respect hereto or under any securities or evidences of securities taken by the Mortgagee, nor any judgment obtained in such proceeding, shall operate as a merger of the Liabilities or of any simple contract debt or in any way suspend payment of, affect or prejudice the rights, remedies or powers, legal or equitable, which the Mortgagee may hold in connection with the Liabilities and any securities which may be taken by the Mortgagee in addition to, by way of renewal of, or in substitution for any present or future obligation or security evidencing the Liabilities or a part thereof, or be deemed a payment or satisfaction of the Liabilities or any part thereof or merger therein and any right reserved to the Mortgagee under any document may be exercised by the Mortgagee concurrently or consecutively with or to any other rights reserved to it.
9. Covenants: The Mortgagor, and to the extent applicable, the Debtor, further covenants with the Mortgagee that the Mortgagor or the Debtor, as the case may be:
(a) has a good title to the mortgaged property;
(b) has the right to mortgage the mortgaged property and that on default the Mortgagee shall have quiet possession of the mortgaged property free from all encumbrances except for encumbrances permitted herein and Permitted Encumbrances (as that term is defined in the Asset Purchase Agreement);
(c) will execute such further assurances of the mortgaged property as may be requisite;
(d) has done no act to encumber the mortgaged property other than the encumbrances in favour of Farm Credit Canada, Conexus Credit Union 2006 and the Permitted Encumbrances; 000035
Collateral Mortgage
(e) that it shall fulfill obligations owing in respect of any encumbrances ranking in priority to or pari passu with the obligations to the Mortgagee as secured by the mortgage hereunder.
10. Further Covenants: The Mortgagor further covenants with the Mortgagee that:
(a) Insurance: Subject to the terms of the FCC Credit Agreement (as defined in the FCC Subordination Agreement defined below), the Mortgagor will forthwith insure and during the continuance of this mortgage keep insured in favour of the Mortgagee against loss or damage by the perils of fire and such other perils as the Mortgagee may require, the Improvements, for a total amount not less than the lesser of the replacement cost of the Improvements and the amount of the Mortgagee’s interest therein, with an insurance company and under policies satisfactory to the Mortgagee; and each policy of insurance shall provide that every loss shall be payable to the Mortgagee as its interest may appear in accordance herewith, subject to a standard form of mortgage clause approved by the Mortgagee; and each policy of insurance shall provide that the Mortgagee shall receive at least thirty (30) days prior notice of any cancellation or material alteration thereof; and the Mortgagor will forthwith assign, transfer and deliver to the Mortgagee the policies of insurance and all renewal receipts pertaining thereto; and no insurance will be carried on the Improvements other than such as is made payable to the Mortgagee in accordance with the provisions of this paragraph; and the Mortgagor will not do or omit or cause anything to be done, omitted or caused whereby the policies of insurance may become void; and the Mortgagor will pay all premiums necessary for such purposes promptly as the same shall become due and will deliver evidence of renewal to the Mortgagee at least seven (7) days prior to the expiration of any policy of insurance; and, in the event of any breach of the foregoing covenants respecting insurance, the Mortgagee, without prejudice to its other rights hereunder, may, at its option, effect such insurance to a value deemed, in the sole opinion of the Mortgagee, adequate to protect the Mortgagee’s insurable interest and any amount paid therefore by the Mortgagee shall be payable by the Debtor and the Mortgagor to the Mortgagee on demand and shall constitute a Liability; and forthwith on the happening of any loss or damage, the Mortgagor will furnish at its own expense all necessary proofs and do all necessary acts to enable the Mortgagee to obtain payment of the insurance monies and the production of this mortgage shall be sufficient authority for the insurance company to pay every such loss to the Mortgagee, and the insurance company is hereby directed thereupon to pay the same to the Mortgagee; and any insurance monies received may, at the option of the Mortgagee, be applied in rebuilding, reinstating or repairing the Premises or be paid to the Mortgagor or the Debtor or be applied or paid partly in one way and partly in another, or it may be applied, in the sole discretion of the Mortgagee, in whole or in part on the Liabilities or any part thereof whether due or not then due; and the Mortgagor and the Debtor each hereby releases to the Mortgagee all its claims upon the mortgaged property subject to the said provisos;
(b) Taxes and Encumbrances: The Mortgagor will pay when and as the same fall due all taxes, rates, levies, assessments, liens, charges, encumbrances or claims which are or may be or become charges or claims against the mortgaged property or on this mortgage or on the Mortgagee in respect of this mortgage; and in default of payment, the Mortgagee may pay the amount of such taxes, rates, levies, assessments, liens, charges, encumbrances and claims, and all 000036
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monies so paid by the Mortgagee shall be payable by the Debtor and the Mortgagor to the Mortgagee on demand and shall constitute a Liability;
(c) Assignment of Rents and Leases: For the better securing to the Mortgagee the payment of the Liabilities, the Mortgagor hereby gives, grants, assigns, transfers and sets over unto the Mortgagee all leases, agreements, tenancies, quotas and licenses which affect the mortgaged property whether written, verbal or otherwise howsoever, including all renewals or extensions thereof, together with all rents and other monies payable thereunder and all rights, benefits and advantages to be derived therefrom; provided that nothing done in pursuance hereof shall have or be deemed to have the effect of making the Mortgagee responsible for the collection of rent, or of any part thereof, or any income or revenue whatsoever of and from the mortgaged property, or for the performance or observance of any provision of such leases and agreements;
(d) Fixtures: Without restricting the generality of the term “fixtures”, fences, plumbing, air-conditioning, ventilating, lighting and water heating equipment, cooling and refrigeration equipment, window blinds, storm windows and storm doors, window screens and screen doors, and all appliances and appurtenances relating thereto which now are or may hereafter be placed upon the mortgaged property by the Mortgagor or which now are or may hereafter be attached to the mortgaged property by the Mortgagor, and even though not attached to the Lands otherwise than by their own weight, shall be deemed to be fixtures and all fixtures shall form a part of the mortgaged property and are charged by and subject to this mortgage;
(e) Good Repair: The Mortgagor will not remove any fixtures of any kind from the mortgaged property, and will keep the Improvements for the time being subject to this Mortgage in good and substantial repair, and will at all times make such repairs to, and if incomplete, will complete such buildings and improvements as may be required by the Mortgagee in writing; and will not without the consent in writing of the Mortgagee, commit or permit any kind of waste on the mortgaged property; and in default of any of the foregoing the Mortgagee may at his option enter upon the mortgaged property from time to time in order to inspect, and may at his option complete, repair and keep in repair the said Improvements without thereby becoming liable as mortgagee in possession and the amount expended by the Mortgagee in doing all or any of the foregoing things shall be payable by the Debtor and the Mortgagor to the Mortgagee on demand and shall constitute a Liability;
(f) Erection of Improvements: Neither the Mortgagor nor the Debtor shall, without the consent of the Mortgagee in writing, erect or permit to be erected on the mortgaged property any improvement, or enter into any contract that may cause the mortgaged property to be encumbered by a lien for work done, labor provided, services performed or material supplied and will keep the mortgaged property free from same;
(g) Inspection: The Mortgagee, his agent, employees, and independent contractors may at any time enter upon the mortgaged property to inspect the mortgaged property, and where deemed necessary and/or advisable by the Mortgagee, to conduct investigations thereon, including, without limiting the generality of the foregoing, intrusive testing and sampling on the mortgaged property for the purpose of determining the presence of or the potential for environmental 000037
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pollution, and the reasonable cost of such inspection and investigations paid for by the Mortgagee including any intrusive testing and sampling shall be payable by the Debtor and the Mortgagor to the Mortgagee on demand and shall constitute a Liability;
(h) No Other Encumbrances: Except as otherwise provided herein, neither the Mortgagor nor the Debtor shall, without the prior consent of the Mortgagee in writing, grant, create, assume or suffer to exist any mortgage, charge, lien or other encumbrance against the mortgaged property, whether ranking in priority to or subsequent to this mortgage. In the event of a default by the Mortgagor or the Debtor under any mortgage or encumbrance ranking in priority to or pari passu with the mortgage and charge in favour of the Mortgagee, the Mortgagee may in its discretion pay the amount of any such mortgage or encumbrance, whether now or hereafter existing upon the mortgaged property. All monies so paid by the Mortgagee shall be payable by the Debtor and the Mortgagor to the Mortgagee on demand and shall constitute a Liability and interest shall be payable by the Debtor and the Mortgagor to the Mortgagee at the same rate or rates as were applicable in respect of such mortgage or encumbrance as paid by the Mortgagee;
(i) Further Acts: The Mortgagor will execute such further assurances in respect of the mortgaged properties as may be requisite; and
(j) Compliance with Laws: The Debtor and the Mortgagor covenant with the Mortgagee to at all times promptly observe, perform, execute and comply with all applicable laws, including without limiting the generality of the foregoing, those dealing with zoning, use, occupancy, subdivision, parking, historical designations, fire, access, loading facilities, Landscaped area, building construction, builders’ liens, or public health and safety, and all private covenants and restrictions affecting the mortgaged property or any portion thereof and the Debtor and the Mortgagor will from time to time, upon request of the Mortgagee, provide to the Mortgagee evidence of such observance and compliance and will at its own expense make any and all improvements thereon or alterations to the mortgaged property, structural or otherwise, and will take all such other action as may be required at any time by any such present or future law, and the Mortgagor will cause its tenants, agents and invitees to comply with all the foregoing at their own expense.
11. Remedies for Breach of Covenants: In the event of non-payment when due of the Liabilities or a part thereof, or upon breach of or default under any provision of any agreement evidencing or relating to the Liabilities or a part thereof, or upon breach of or default in any provision of this mortgage:
(a) Liabilities Due: The Liabilities shall immediately become due and payable at the option of the Mortgagee unless such non-payment, breach or default is waived or postponed by the Mortgagee;
(b) May Enter on to Mortgaged Property to Lease or Sell: The Mortgagee may on giving the minimum notice, if any, according to applicable law, enter on and lease or sell the mortgaged property; and the Mortgagee may collect the rents and profits and lease or sell as aforesaid without entering into possession of the mortgaged property; and the Mortgagee is hereby irrevocably appointed the attorney of the Debtor and of the Mortgagor for the purpose of making such lease 000038
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or sale, and for recovering all rents and sums of money that may become or are due or owing to the Mortgagor in respect of the mortgaged property, and for enforcing all agreements binding on any lessee or occupier of the mortgaged property or on any other person in respect of it, and for taking and maintaining possession of the mortgaged property, and for protecting it from waste, damage or trespass, and for making arrangements for completing the construction of, repairing or putting into order any buildings or other improvements on the mortgaged property, and for conducting remediation to bring the mortgaged property in compliance with recognized environmental standards, statutory or otherwise, and for executing all instruments, deeds and documents pertaining thereto, and for doing all acts, matters and things that may be necessary for carrying out the powers hereby given; and any such sale may be either for cash or on credit, or part cash and part credit, and by private sale or public auction, and at such sale the whole or any part of the mortgaged property may be sold; and the Mortgagee may vary or rescind any contract of sale made by virtue of these presents, and may buy in and resell the mortgaged property or any part thereof, without being responsible for any loss or deficiency on resale or expense occasioned thereby, and may sell on such terms as to credit or otherwise as to it shall seem appropriate, and for such prices as can reasonably be obtained therefore, and make any stipulation as to title or evidence or commencement of title or otherwise as to it may seem proper, and no purchaser or lessee under such power shall be bound to inquire into the legality or regularity of any sale or lease under the said power, or to see to the application of the proceeds thereof, nor shall any omission, irregularity or want of notice invalidate or in any way affect the legality of any such sale or lease; and out of the money arising from such sale or lease the Mortgagee shall be entitled to retain an amount equal to the Liabilities together with all expenses incurred in or about taking, recovering or keeping possession of the mortgaged property, selling or leasing the same or otherwise by reason of any default of the Debtor or the Mortgagor hereunder, including solicitor’s fees and disbursements as between a solicitor and his own client, and any balance of monies remaining after the satisfaction of all claims of the Mortgagee, as hereinbefore provided, shall be paid to the Debtor the Mortgagor but the Mortgagee shall in no event be liable to pay to the Debtor or Mortgagor any monies except those actually received by the Mortgagee;
(c) Foreclosure: The Mortgagee may take foreclosure or foreclosure and sale proceedings in respect of the mortgaged property in accordance with the provisions of the laws of the jurisdiction in which the mortgaged property is situate; and in the event of any deficiency on account of the Liabilities remaining due to the Mortgagee after realizing all the mortgaged property, then the Debtor will pay to the Mortgagee on demand the amount of such deficiency.
(d) Distraint: The Mortgagee may distrain for arrears of the Liabilities, and as part of the consideration for any advance or creation of the Liabilities, each of the Debtor and the Mortgagor agrees to waive, and hereby waives, on the exercise of any such right of distress all rights to exemptions from seizure and distress under any law applicable in the jurisdiction in which the mortgaged property is situate;
(e) Receivership: The Mortgagee may appoint a receiver of the mortgaged property and of the income of the mortgaged property, or any part thereof, and every such receiver shall be the agent of the Debtor and the Mortgagor shall be solely responsible for the receiver’s acts or defaults; and such receiver shall have 000039
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power to demand, recover and receive all the income of the mortgaged property, by action, distress or otherwise, either in the name of the Debtor and/or the Mortgagor or of the Mortgagee, and to give effectual receipts for the same; and the receiver may lease the mortgaged property and execute contracts in the name of the Debtor and/or the Mortgagor; provided that such receiver may be removed and a new receiver appointed from time to time by the Mortgagee, by writing under the hand of any authorized agent or solicitor; and it is further agreed that such receiver shall be entitled to retain out of the monies received by it a commission of up to five percent (5%) of the gross receipts, or such higher rate as any judge of any court having jurisdiction may allow upon application by it for that purpose, and also its disbursements in the collection of such income, and thereafter shall apply all monies received by it as such receiver as follows: namely, in discharge of all taxes, rates and accounts payable whatsoever affecting the mortgaged property and all liens, charges (including, without limitation, those imposed under environmental laws), annual sums or other payments and interest thereon, if any, having priority to this mortgage; in payment of the premiums on insurance payable under this mortgage; in payment of the cost of all necessary or proper repairs to the mortgaged property; and the balance, if any, thereafter upon the Liabilities; provide further that neither the existence of the foregoing relating to attornment, to distraint for arrears, to entry upon the mortgaged property, to foreclosure and to the said receivership, nor anything done by virtue thereof, shall render the Mortgagee a mortgagee in possession so as to be accountable for any monies except those actually received; and
(f) Performance of Obligations: The Mortgagee, at its option, may by and on behalf of the Debtor and/or the Mortgagor and at the sole cost and expense of the Debtor and to such extent as the Mortgagee deems advisable, observe and perform or cause to be observed and performed, any provision with respect to which default has occurred hereunder or under any provision of any agreement or dealing evidencing the Liabilities and for such purpose make such payments as are contemplated herein, and all monies expended by the Mortgagee for any such purpose shall be payable by the Debtor to the Mortgagee upon demand and shall constitute a Liability; provided however that nothing herein contained shall be deemed to hold the Mortgagee responsible for and the Mortgagee shall not be responsible for any loss arising out of its or its agents’ or employees’ observance or performance of any such provision. No remedy herein conferred is intended to be exclusive of any other remedy or remedies hereunder or under any security collateral hereto, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under any security collateral hereto or now or hereafter existing at law or in equity.
12. Costs to Protect Security: All fees, charges, costs (including solicitor’s fees and disbursements as between a solicitor and his own client) or expenses levied or charged by any solicitors or inspectors retained by or on behalf of the Mortgagee for the preparation, taking, registration, maintenance, protection or enforcement of this mortgage and any other securities which may be taken by the Mortgagee in connection with the Liabilities or any part thereof, together with the costs of any sale or abortive sale and of taking, recovering and keeping possession of the mortgaged property, the costs of inspecting or managing the same and generally any costs in any other proceeding, matter or thing taken or done in connection with or for completing the construction of, repairing or putting in order any buildings or other improvements on the mortgaged 000040
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property, or for remediation to bring the mortgaged property into compliance with recognized environmental standards, statutory or otherwise, or to protect or realize upon this mortgage or any other security taken in connection with the Liabilities, or to perfect the title of the mortgaged property, or relating to expropriation of part or all of the mortgaged property, shall be payable by the Debtor and the Mortgagor to the Mortgagee on demand and shall constitute a Liability. If the Mortgagor shall default in payment of a Liability on demand, all Liabilities shall at the option of the Mortgagee forthwith become due and payable unless such default is waived or postponed by the Mortgagee. In the event The Saskatchewan Farm Security Act or The Cost of Credit Disclosure Act, 2002 shall apply to this mortgage, the costs and expenses and fees chargeable to the Mortgagor or the Debtor shall be limited to those allowed under The Saskatchewan Farm Security Act or The Cost of Credit Disclosure Act, 2002.
13. Extension or Replacement of Covenants: The Mortgagee may, in its discretion and with or without the consent of the Mortgagor or the Debtor or any guarantor or surety, in respect of the Liabilities or any part thereof give an extension of time, take the covenant of any purchaser of the equity of redemption of the mortgaged property or any part thereof, or any security whatsoever from them or from any other person, for the assumption and payment of the whole or any part of the Liabilities or for the due performance of any of the provisions hereof and any such action on the part of the Mortgagee shall not release the Debtor or the Mortgagor or any guarantor or surety from payment of the Liabilities or any part thereof or the performance of the said provisions or any of them; and the Mortgagee may also, in its discretion, compound with or release the Debtor and/or the Mortgagor or any one claiming under it or them, or any other person liable for payment of the Liabilities, or surrender, release or abandon or omit to perfect or enforce any securities, remedies or proceedings which the Mortgagee may now or hereafter hold, take or acquire, and may pay all monies received from the Debtor or others, or from securities upon such part of the Liabilities as the Mortgagee may think best without prejudice to or in any way limiting or lessening the liability of the mortgaged property or of any surety or obligor or any other person liable for payment of the Liabilities; and the Mortgagee shall incur no liability to any person by reason of anything aforesaid; any provision or liability aforesaid shall continue in full force as long as any of the Liabilities remain unpaid, but the Mortgagee shall not be bound to exhaust his recourse or remedies against the mortgaged property or the Debtor or the Mortgagor or other parties or the securities it may hold before being entitled to payment from any guarantor or surety of the Liabilities.
14. Release of Lands: The Mortgagee may, in his discretion and with or without the consent of the Mortgagor or the Debtor or any guarantor or surety, release any part of the mortgaged property or any other security for the Liabilities either with or without any consideration therefore, and without being accountable for the value thereof or for any monies except for those actually received by it and without thereby releasing any other part of the mortgaged property, or any provision hereof, including any covenants or agreements on the part of any guarantor or surety for the payment of the Liabilities and the performance of the provisions hereof.
15. No Waiver: The permitting of or the acquiescence in the non-performance or non- observance of or the extension of time for the performance of any of the provisions of this mortgage shall not be or constitute any waiver of or cure any continuing or subsequent default, and shall not justify any default or delay on any other occasion and no waiver shall be inferred from or implied by anything done or omitted by the Mortgagee, except by express agreement. 000041
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16. No Apportionment: Every part, lot or unit into which the mortgaged property is or may hereafter be divided stands charged with the whole of the Liabilities and no person shall have any right to require the Liabilities to be apportioned on or in respect of any such part, lot or unit, or to require the charge of this mortgage to be released or discharged in respect of any such part, lot or unit, and the Debtor and the Mortgagor each hereby waives any provision of any legislation which provides for such right.
17. All Taxes Paid: The Mortgagor represents and warrants that it has paid all taxes, interest and penalties payable by it under the provisions of federal, provincial and municipal statutes or by-laws relating thereto, and which may create a charge or lien upon the mortgaged property.
18. Expropriation: In the event that the whole or any material portion of the mortgaged property is expropriated by any entity empowered to do so, then at the option of the Mortgagee all Liabilities shall forthwith become due and payable. The Debtor and the Mortgagor hereby waive the provisions of any law applicable in the jurisdiction in which the mortgaged property is situate which would restrict recovery under this mortgage to recovering the market value of this mortgage at the date of any expropriation if the market value is then less than the amount of the Liabilities. In the event such market value is less than the amount of the Liabilities and the Mortgagee receives from the expropriating authority the market value of this mortgage, the Mortgagor and the Debtor shall, notwithstanding the provisions of any such law, forthwith upon demand pay to the Mortgagee the remaining portion as a separate debt together with interest thereon until paid at a rate equal to the Interest Rate, calculated and payable monthly not in advance, both before and after maturity, default and judgment, with interest on overdue interest at the rate aforesaid. The proceeds from any expropriation affecting the whole or any part of the mortgaged property shall be paid to the Mortgagee in priority to the claims of any other person.
19. Discharge: Neither the Debtor nor the Mortgagor shall be entitled to a discharge of this mortgage unless and until the Liabilities have been paid in full or are no longer in existence, the Mortgagee has no further obligations to the Mortgagor or the Debtor in respect of any Liabilities and each of the Mortgagor and the Debtor has kept and performed all of the provisions hereunder and under any provision of any agreement evidencing the Liabilities; and the Mortgagee shall have a reasonable time after payment or termination of the Liabilities within which to prepare or have prepared an executed discharge of this mortgage, and interest, if any, shall continue to run and accrue until all Liabilities have been paid and actual payment in full has been received by the Mortgagee and all legal and other expenses for the preparation and execution of such discharge and any administration fee of the mortgagee in connection therewith shall be borne by the Mortgagor and the Debtor. This Mortgage shall continue as a full, valid and enforceable security until the repayment of all sums due and owing with respect to the Liabilities and shall continue notwithstanding any amendments or changes to the manner of repayment or other issues.
20. Due on Sale or on Change in Ownership: The Liabilities shall forthwith become due and payable at the option of the Mortgagee, in the event of any of the following occurrences:
(a) the Mortgagor sells, conveys, transfers or otherwise disposes of the mortgaged property or any portion thereof, or enters into any agreement to sell, convey, transfer or otherwise dispose of or lose title thereto; 000042
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(b) where the Mortgagor is a corporation, there is a sale or sales which result in a transfer of the legal or beneficial interest of a majority of the shares in the capital of the Mortgagor or there is a change in the effective control of a majority of the voting shares in the capital of the Mortgagor; or
(c) the Mortgagor or the Debtor commits or allows to be committed any act or omission, which in the opinion of the Mortgagee, shall decrease the value of the mortgaged property or otherwise impair the marketability of the mortgaged property.
21. Cross Default: In the event that the Mortgagor or the Debtor defaults under any mortgage, charge, lien or other encumbrance against the mortgaged property ranking or claiming priority over this mortgage, the same shall constitute default under this mortgage and the Liabilities shall at the option of the Mortgagee forthwith become due and payable, and the Mortgagee shall be at liberty to exercise its rights under this mortgage.
22. No Obligation to Advance: Neither the execution nor registration of this mortgage nor the advancing or creation of any part of the Liabilities shall bind the Mortgagee to advance or create any further Liabilities; and notwithstanding anything herein contained, all payments to be made on or by virtue of this mortgage shall be made in lawful money of Canada to the Mortgagee at such place as the Mortgagee may, from time to time, in writing designate.
23. Ownership of the Mortgaged Property: The Mortgagor represents and warrants to the Mortgagee that it has a fee simple interest in possession in the mortgaged property and that it has full power to mortgage the mortgaged property. The Mortgagor further represents and warrants that it is the general partner of the Debtor and that it holds title to the mortgaged property as general partner of the Debtor.
24. Special Provisions: Each of the Mortgagor and the Debtor covenants and agrees with the Mortgagee that:
(a) The Land Contracts (Actions) Act, 2018 of the Province of Saskatchewan shall have no application to an action, as defined in the said Act, with respect to this mortgage; and
(b) The Limitation of Civil Rights Act of the Province of Saskatchewan, or any provision thereof shall have no application to this mortgage or any agreement or instrument renewing or extending or collateral to this mortgage, or the rights, powers or remedies of any other person under this mortgage, or any such agreement or instrument renewing or extending or collateral to this mortgage.
25. Severability: If any provision of this mortgage or the application thereof to any person is to any extent held invalid or unenforceable, the remainder of this mortgage or the application of such provision to persons other than those with respect to which it is held invalid or unenforceable shall not be affected thereby and shall continue to be enforceable to the fullest extent permitted by law.
26. Joint and Several: In the event there is more than one Mortgagor hereunder, the terms, conditions and other obligations of each Mortgagor hereunder shall be joint and several. 000043
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27. Interpretation: The words used herein which import the singular number and neuter shall be read and construed as plural and feminine or masculine, as the case may be, and the terms of this mortgage shall be binding upon and apply to the party’s heirs, executors, administrators, successors or assigns, as applicable.
28. Statutory Mortgage Clause: And for better securing to the Mortgagee the repayment in the manner aforesaid of the Liabilities, the Mortgagor hereby mortgages to the Mortgagee all of the Mortgagor’s and the Debtor’s estate and interest in the mortgaged property.
29. Land Titles Act: It is understood and intended that this mortgage is made with reference to and under The Land Titles Act, 2000 (Saskatchewan).
30. Entitlement to Security. No surety, endorser, or other person entitled to indemnity or contribution from the Mortgagor or the Debtor, in respect of any sum hereby secured, shall be entitled to the benefit of this security.
31. Readvance. The Mortgagee and the Debtor (and the Mortgagor) agree, and notice is hereby given to all third parties, that provided that the Mortgagor is not in default, the Debtor may request, and the Mortgagee may in his sole discretion, re-advance any principal portion of the said indebtedness which has been repaid by the Debtor to the Mortgagee, but only to an amount such that the principal balance outstanding shall not exceed the amount of the original principal sum secured. The parties also agree that notwithstanding that the Mortgage may be reduced and re-advances made, this Mortgage secures all sums ultimately due and owing by the Debtor to the Mortgagee in respect of this loan, including any re-advancement of principal moneys made by the Mortgagee to the Debtor or the Mortgagor at any time. No change to the terms of repayment, the obligations of the Debtor, the obligations of the Mortgagor or the manner or amount of interest shall operate as a release or discharge of this Mortgage. Without limiting the generality of the foregoing, in the event that any of the indebtedness secured by this Mortgage is in respect of a revolving credit facility, this Mortgage shall secure all of the amounts owing from time to time and at all times under such revolving credit facility by the Mortgagor to the Mortgagee.
32. Bankruptcy: If either the Mortgagor or the Debtor shall commit an act of bankruptcy within the meaning of the Bankruptcy and Insolvency Act, become bankrupt or insolvent or shall be subject to the provisions of the Bankruptcy and Insolvency Act, the Companies Creditors Arrangement Act, the Winding Up Act or any other Act for the benefit of creditors or relating to bankrupt or insolvent debtors or go into liquidation either voluntarily or under an order of a court of competent jurisdiction or make a general assignment of the benefit of its creditors or otherwise acknowledge its insolvency, the same shall constitute a breach of covenant pursuant to this mortgage.
33. Guarantees. This provision applies only if this mortgage is given in support of a guarantee given by the Debtor or the Mortgagor to the Mortgagee guaranteeing the repayment of any obligations owing to the Mortgagee by a third party (the “Guarantee”). If this mortgage is in support of a Guarantee it will be payable on the terms set forth in the Guarantee or if the terms of payment are not set forth in the Guarantee then this Mortgage will be payable on demand by the Mortgagee.
34. Counterparts and Transmission by Fax. This Mortgage may be signed in counterparts. Each counterpart will be an original document and all of the counterparts will constitute one instrument. Any faxed or electronic copy of a signature will be 000044
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deemed to be an original signature until such time as an original signature has been received by the other party or parties to this Mortgage.
35. Subordination. The rights of the Mortgagee under this Mortgage, including the right to realize upon the Lands, are acknowledged to be restricted by and are subject to a postponement, subordination and standstill agreement entered into between the Debtor, Global Food and Ingredients Inc. (“GFI”), the Mortgagor, the Mortgagee, and Farm Credit Canada (the “FCC Subordination Agreement”). In the event of a conflict between the terms of this Mortgage and the terms of the FCC Subordination Agreement, the terms of the FCC Subordination Agreement will be paramount to the extent of the conflict and will prevail over the terms of this Mortgage. The term “Arm’s Length Indebtedness” shall mean the principal of and premium, if any, and interest on indebtedness (other than the Promissory Note) for money borrowed by the Debtor or GFI from (or indebtedness for money guaranteed by the Debtor or GFI) any individuals or other entities dealing at arm’s length with the Debtor or GFI (as such term is interpreted for the purposes of the Income Tax Act (Canada)). Mortgagee hereby agrees to enter into a postponement, subordination and standstill agreements with any future lenders of Arm’s Length Indebtedness on substantially similar terms of the FCC Subordination Agreement, mutatis mutandis.
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26th 000047
THIS AGREEMENT is made this _____ day of November, 2019.
B E T W E E N: GFI LP, (hereinafter referred to as the "Debtor")
- and -
CANPULSE FOODS LTD. (hereinafter referred to as the "Secured Party")
SECURITY AGREEMENT
WHEREAS the Secured Party has sold certain assets to the Debtor pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between the Secured Party, as seller, the Debtor, as purchaser, Global Food and Ingredients Inc. (“GFI”) and the Debtor is indebted to the Secured Party pursuant to a promissory note in the amount of Three Million Dollars ($3,000,000.00) dated the hereof (the “Promissory Note”) as a portion of the purchase price payable under the Purchase Agreement;
AND WHEREAS as part of the security for the amounts owing to the Secured Party, the Debtor has agreed to grant a security interest over all its present and after-acquired property upon the terms hereinafter set forth;
NOW THEREFORE in consideration of the sum of Three Million Dollars ($3,000,000.00) of lawful money of Canada (hereinafter sometimes referred to as the "Principal Sum") owing by the Debtor by the Secured Party, the Debtor hereby agrees with the Secured Party as follows:
1. SECURITY INTEREST AND COLLATERAL
The Debtor hereby grants to the Secured Party a security interest in all of the Purchased Assets (as that term is defined in the Purchase Agreement), of whatever kind and description and wheresoever situate (which undertaking and property is sometimes hereafter referred to as the "collateral" or the “property” when reference is made to the property secured hereby).
The security interest herein granted:
(a) shall in no way hinder or prevent the Debtor from carrying on business in the usual course unless and until the Debtor defaults under its obligations to the Secured Party, or any related party defaults under its obligations to the Secured Party in connection with the transaction herein dealt with, or if for any other reason the security interest herein shall become enforceable;
(b) shall not extend to the last day of any term of any lease; and
(c) shall not extend to any consumer goods of the Debtor.
000048
The security interest herein granted shall be a general and continuing security for all obligations, indebtedness and liabilities of the Debtor to the Secured Party pursuant to the Promissory Note and this Security Agreement (hereinafter collectively referred to as the "Obligations").
Without limiting the generality of the foregoing, this Security Agreement shall be collateral to the Promissory Note between the Debtor and the Secured Party dated as at the date hereof and shall be read and interpreted subject to the Promissory Note.
2. DEBTOR'S WARRANTIES
The Debtor hereby warrants and guarantees to the Secured Party that, at the time of signing this Agreement, no other security interests, liens, contracts, debts, charges and encumbrances exist with respect to the collateral in which any security interest is granted under this Agreement, which security interest, lien, contract, debt, charge or encumbrance would rank in priority to or pari passu with the security interest of the Secured Party herein, except as follows: (a) security interest in favour of Farm Credit Canada; (b) security interest in favour of Conexus Credit Union 2006; and (c) Permitted Encumbrances (as that term is defined in the Purchase Agreement).
3. DEBTOR'S COLLATERAL OBLIGATIONS
The Debtor hereby covenants with the Secured Party that during the continuance of this Agreement, the Debtor:
(a) will keep the collateral free from any and all distraint, charges, pledges, encumbrances, attachments, forfeitures or claims whatsoever and from any and all liens, whether statutory, possessory or of whatsoever kind (except as provided in paragraph 2 above and otherwise herein);
(b) will provide safe storage for the collateral on the Debtor's premises and properly care for the said collateral and make all proper repairs thereto and maintenance thereof. Except in the ordinary course of business, the Debtor agrees that it will not use the collateral for hire, nor attempt to sell or dispose of or part with the possession of the same nor permanently remove the same from the above premises without the prior written consent of the Secured Party, and shall promptly notify the Secured Party of any loss or damage of or to the said collateral and the Debtor shall at all times use, operate and enjoy the same strictly in accordance with all laws from time to time enforced;
(c) will keep the Collateral insured against any loss or damage in a sum not less than the full insurable value thereof and the Debtor will produce the said receipts for such insurance to the Secured Party for inspection on demand;
(d) will perform all obligations owing to any party having a security interest over the Collateral that ranks in priority to the security interest in favour of the Secured 000049
Party or which ranks on a pari passu basis with the security interest in favour of the Secured Party;
(e) will not sell or otherwise dispose of the collateral described above without first obtaining the written permission of the Secured Party, other than any disposition on the ordinary course of business by the Debtor;
(f) subject to the rights of permitted lenders that rank in priority to the Secured Party, will retain all moneys collected or received in respect of accounts, chattel paper, instruments, intangibles, choose in action or rights to payment, whether collected or received before or after default as trustee for the Secured Party and shall account to and pay over such sums to the Secured Party upon demand.
4. POWERS OF SECURED PARTY OVER COLLATERAL
At the option of the Secured Party and at any time without notice, the Secured Party may, but shall not be obligated to:
(a) pay off any lien, security interest, charge and encumbrance which may be charged against the collateral or any part thereof that is not permitted under paragraph 2 above and as otherwise provided hereunder;
(b) maintain such insurance as it may deem necessary and reasonable in the circumstances; and
(c) perform or cause to be performed for and on behalf of the Debtor any action, condition, obligation or covenant that the Debtor fails or refuses to perform. All advances, charges and expenses, including reasonable solicitor's fees (on a solicitor and his own client basis and full indemnity basis), incurred or paid by the Secured Party in exercising any right, power or remedy confirmed by this Agreement, or any enforcement thereof, shall become part of the indebtedness secured by this Agreement and shall be paid to the Secured Party by the Debtor immediately and until repaid shall be added to the debt hereby secured and shall be charged upon the security and shall bear interest at the same rate from the date of such payment.
5. DEFAULT
The Debtor shall be in default hereunder if:
(a) the Debtor fails to pay, when due, any amount payable to the Secured Party under the Promissory Note or this Security Agreement or if the Debtor should default in the performance of any obligations to the Secured Party under the Promissory Note or this Security Agreement;
(b) the Debtor defaults in any agreement with any other secured lender with respect to indebtedness or other loan obligations of the Debtor;
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(c) the Debtor becomes insolvent or makes an assignment not permitted by this Security Agreement (without the consent of the Secured Party) or bulk sale of its assets or if a petition in bankruptcy is filed or presented against the Debtor or if the Debtor makes an assignment for the benefit of creditors;
(d) any execution, sequestration, extent or any other process of any Court becomes enforceable against the Debtor or if a distress or analogous process is levied upon the property of the Debtor or any part hereof;
(e) the Debtor ceases or threatens to cease to carry on business, or if the Debtor commits or threatens to commit any act of bankruptcy;
(f) the property of the Debtor becomes encumbered by a tax lien or a tax lien is attached or levied (excluding unregistered deemed trust tax liens in respect of amounts collected by the Debtor on behalf of the Crown that are not yet required to be remitted to the Crown) in trust for or a receiver is appointed;
(g) the Secured Party deems itself insecure or decides that the collateral is in jeopardy and the Secured Party has commercially reasonable grounds to believe that the prospect of payment or performance is or is about to be impaired or that the collateral is or is about to be placed in jeopardy;
(i) the Debtor sells or attempts to sell any of the collateral other than in the ordinary course of business without first obtaining the prior written consent of the Secured Party; and
(j) the Debtor fails, or threatens to cease, to diligently carry on business and maintain proper records and accounts of all of its business.
6. REMEDIES UPON DEFAULT
Upon such default:
(a) all indebtedness secured hereby shall become immediately due and payable at the Secured Party's option, without notice or demand to the Debtor, and the Secured Party may proceed to enforce payment of the same and to exercise any and all of the remedies afforded by The Personal Property Security Act, 1993 by this or any other agreement, or otherwise possessed by the Secured Party, including but not limited to the taking or retaking of possession of the collateral secured hereby;
(b) the Debtor agrees to pay all reasonable costs incurred by the Secured Party in enforcing the Secured Party's rights and remedies after default under this Agreement, including legal costs on a solicitor and his own client basis (and on a full indemnity basis), and such costs shall be added to the indebtedness secured hereby;
(c) for the purposes of removal and possession of the collateral, the Secured Party or its representatives may enter any premises of the Debtor at any time without legal 000051
process, and the Debtor hereby waives and releases the Secured Party of and from any and all claims in connection therewith or arising therefrom;
(d) the Secured Party may appoint a receiver or receiver-manager over all of the undertaking and property of the Debtor, whose rights and duties shall be as follows:
(1) to take possession of and to collect the property secured hereunder and to act in the name of the Debtor or otherwise as the receiver or receiver-manager considers necessary;
(2) to carry on or concur in carrying on the business of the Debtor, to employ or retain and discharge any persons including legal counsel, accountants, engineers and other reasonably necessary experts or consultants (upon the terms and at the remuneration the receiver or receiver-manager considers proper) to keep and repair the collateral secured hereunder and to do all necessary things to carry on the business of the Debtor and to protect the collateral secured hereunder;
(3) to make any compromise or other arrangements which the receiver or receiver-manager considers expedient in the interest of the Secured Party and to consent to any modifications of this Agreement, and to exchange any part or parts of the property secured hereunder for any other property suitable for the purposes of the Debtor on such terms as the receiver or receiver-manager considers expedient, either with or without payment of money for equality of exchange or otherwise;
(4) to borrow money to carry on the businesses of the Debtor or to maintain the whole or any part of the property secured hereunder in any manner that will, in the opinion of the receiver or receiver-manager, be sufficient to obtain, upon the security of the whole or any part of the property secured hereunder, the amount from time to time required and in so doing the receiver or receiver-manager may issue certificates that may be payable when the receiver or receiver-manager under any receiver's certificate shall charge the property secured hereunder in priority to this Agreement;
(5) to sell or lease or concur in the selling or leasing of the whole or any part of the property secured hereunder;
(6) to execute and prosecute all suits, proceedings and actions which the receiver or receiver-manager in its opinion considers necessary for proper protection of the property secured hereunder, to defend all suits, proceedings or actions against the Debtor, or the receiver or receiver-manager, to appear in and conduct the prosecution and defence of any suit, proceeding or action then pending or thereafter instituted and to appeal any suit, proceeding or action;
(7) to sell the whole or any part of the property secured hereunder at public auction, by public or private tender, or by private sale, as the receiver or receiver-manager considers appropriate and expedient; 000052
(8) to effect a sale or lease by conveying in the name of or on behalf of the Debtor or otherwise;
(9) to make any stipulation as to title or conveyance or commencement of title;
(10) to rescind or vary any contract of sale or lease;
(11) to re-sell or re-lease without being answerable for any loss occasioned thereby;
(12) to sell on terms as to credit as shall appear to be most advantageous to the receiver or receiver-manager and if a sale is on credit, the receiver or receiver- manager shall not be accountable for any monies until actually received; and
(13) to go into possession of and to manage any real property of the Debtor to the extent such possession or management is, in the sole discretion of the receiver or receiver-manager, necessary for or incidental to realizing on or dealing with the property secured hereunder or the exercise of any rights and duties granted to or imposed upon the receiver or receiver-manager under this Agreement.
The net profits of the businesses managed by the receiver or receiver-manger hereunder shall be applied by the receiver or receiver-manager in any manner the receiver or receiver- manager shall see fit provided that the said net profits shall be applied in a commercially reasonable manner, and the net proceeds of any disposal of the property secured hereunder shall be applied by the receiver or receiver-manager in the manner set forth in The Personal Property Security Act, 1993, (Saskatchewan), as amended or replaced from time to time.
The receiver or receiver-manager shall not be liable for any loss unless it is caused by the receiver or receiver-manager's own gross negligence or willful default. The receiver or receiver-manager shall be considered to be the agent of the Debtor and the Debtor shall be solely responsible for the receiver's or receiver-manager's acts, defaults and remuneration.
7. GENERAL REMEDIES
The rights and remedies herein conferred upon the Secured Party shall be cumulative and not alternative and shall be in addition to and not in substitution or derogation of rights and remedies conferred by The Personal Property Security Act, 1993, (Saskatchewan), as amended or replaced from time to time, and any other applicable law.
The failure of the Secured Party to exercise any right or remedy, including acceptance by the Secured Party of partial or delinquent payments, shall not constitute a waiver of any obligation from the Debtor or right of the Secured Party or constitute a waiver of any other similar default subsequently occurring.
8. FURTHER ASSURANCES
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The Debtor shall from time to time forthwith on the Secured Party's request, do, make and execute all such financing statements, further assurances, documents, acts, matters and things as may be required by the Secured Party of and with respect to the collateral or any part thereof or as may be required to give effect to this Agreement. The Debtor hereby irrevocably constitutes and appoints the Secured Party, or such person as may be chosen by the Secured Party, to be the lawful attorney of the Debtor, to do any act or any thing and to execute any assurance or instrument in the exercise of the powers hereby conferred upon him or which the Debtor ought to do or execute hereunder and to exercise all the powers of the Debtor in carrying out or effecting any of the powers hereby conferred upon the Secured Party.
9. PROPER LAW
The Debtor expressly covenants and agrees that the proper law of this Security Agreement is the law of the Province of Saskatchewan and this Security Agreement shall be governed by and construed in accordance with the laws thereof. The Debtor hereby agrees that any legal suit, action or proceeding brought upon or arising out of or relating to this Security Agreement or any promissory note or other agreement referred to herein may be instituted in the courts of such province, and the Debtor hereby accepts and irrevocably submits and attorns to the exclusive jurisdiction of the said courts and acknowledges their competence and agrees to be bound by any judgment thereof, provided that nothing herein shall limit the Secured Party's right to bring proceedings against the Debtor elsewhere.
10. NO OTHER REPRESENTATIONS
There are no representations, warranties, agreements or conditions express or implied, statutory or otherwise, affecting the rights and liabilities of the parties hereto other than as specifically contained herein.
11. INSURANCE
The Debtor shall keep the property fully insured in a sum not less than the replacement value of such property, and the proceeds of any insurance whether paid by reason of loss, injury, return premium or otherwise shall be applied towards the replacement of the property or payment of the Obligations secured hereunder at the option of the Secured Party. The Secured Party may require any insurance on such property to be cancelled and new insurance effected in any office to be named by it and may also, on its own accord, effect or maintain such insurance. All monies paid by it in respect thereof shall forthwith be added to the Obligations secured hereunder and shall be forthwith due and payable by the Debtor to the Secured Party at the Secured Party's option. The Debtor hereby assigns to the Secured Party the right to any refund or premium that may accrue by reason of the cancellation of any contract of insurance covering the property and the Debtor appoints the Secured Party its attorney or agent to commence and prosecute in its name any action to enforce payment of any contract of insurance covering such property and to make and file in its name any claim or proof of loss therefor, and to execute in its name any release or receipt in connection therewith.
12. COSTS 000054
If the Debtor defaults in the payment of any costs, expenses, levies, rates, fees or other charges payable by the Debtor to any third party in respect of the property secured hereby, the Secured Party may pay the amounts so owing, which shall be added to the Obligations secured by this Security Agreement and shall be payable forthwith.
In addition, in any action, proceeding, or processes taken by the Secured Party, the Debtor agrees that it shall pay all costs incurred by the Secured Party, including legal costs on a solicitor and his own client basis, (and full indemnity basis) and all such costs shall be added to the obligations and secured by this Agreement and shall be payable forthwith.
13. DEFICIENCY
In case the sum of money realized under any sale is not sufficient to pay the whole amount of any principal, interest, costs, charges and expenses according to the provisions of this Agreement or the Purchase Agreement, the Debtor shall and will forthwith pay or cause to be paid unto the Secured Party all such deficiencies and shall remain liable for the balance of the obligations until fully satisfied and performed. Notwithstanding anything herein, the Secured Party shall not be obligated to realize on any security before taking action against the Debtor or any other party.
14. NOTICE
Any demand or notice referred to in this Agreement may be effectively given in the manner provided for in The Personal Property Security Act, 1993, (Saskatchewan), as amended or replaced from time to time, at the following address:
(a) in respect of the Debtor:
GFI LP 43 Colborne Street, Suite 400, Toronto, ON, M5E 1E3, Canada Attention: David Hanna Email: [email protected]
(b) in respect of the Secured Party:
Canpulse Foods Ltd. 110 – 2570 Matheson Blvd. E Mississauga ON L4W 4Z3 Attention: Tanvir Zaidi Email: [email protected]
15. PROCEEDS HELD IN TRUST
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Subject to the rights of permitted lenders that rank in priority to the Secured Party, all proceeds from the sale or other disposition of any property hereunder realized by the Debtor or any agent on the Debtor's behalf shall be held in trust by the Debtor for the Secured Party.
16. ADDITIONAL COVENANTS OF THE DEBTOR
The Debtor hereby further covenants with the Secured Party that:
(a) all necessary corporate proceedings of the Debtor and all other things necessary have been done to authorize and make the creation and the issue of this Agreement and its execution and delivery legal and valid;
(b) neither the Debtor nor any subsidiary is subject to any litigation or proceedings before any Court, administrative board or other tribunal which, if decided against the Debtor or any subsidiary would materially adversely affect their respective businesses or financial status and all material claims against and contingent liabilities of the Debtor or any subsidiary have been disclosed to the Secured Party;
(c) neither the Debtor nor any subsidiary is a party to or bound by any contract or agreement which will materially adversely affect the business, properties, operations or financial status and all material claims against and contingent liabilities of the Debtor or any subsidiary have been disclosed to the Secured Party;
(d) the Debtor has good and marketable title to the property specifically secured hereunder, free and clear of all charges and encumbrances and will defend the title to any property secured specifically hereby for the benefit of the Secured Party against any adverse claim;
(e) the Debtor will duly pay to the Secured Party all of the obligations secured by this Agreement;
(f) the Debtor will duly pay all taxes, rates or other impositions, imposed by any lawful authority on the property secured hereunder or on the Debtor or on the Agency in respect of the property secured hereunder except where the validity of any tax, rate or other imposition is being contested in good faith and the Debtor has satisfied the Secured Party that the contestation will not involve forfeiture of all or any part of the property secured hereunder;
(g) the Debtor will observe and perform all obligations and all matters and things necessary or expedient to be observed or performed under or by virtue of any lease, license, concession or other franchise forming part of the property secured hereunder in order to preserve, protect and maintain all the rights of the Debtor thereunder;
(h) the Debtor will duly exercise every right of renewal of any lease, license, concession and franchise and will obtain a new lease, license, concession or franchises for the longest time or times, if advantageous, and upon the most 000056
favorable terms obtainable including all rights of further renewal, and will forthwith assign to the Secured Party any new or renewal lease, license, concession or franchise which forms a part of the property specifically secured hereunder;
(i) the Debtor will, at all times, maintain its existence as a limited partnership;
(j) the Debtor shall not amalgamate or merge with any other corporation, including any subsidiary, or partnership;
(k) unless agreed to by the Secured Party in writing, or as otherwise provided herein the Debtor will not create any mortgage or charge on the property secured hereunder ranking in priority to or equally with the charge or security interest in favour of the Secured Party; and
(l) the Debtor will forthwith from time to time, execute all deeds, assignments, notices, instruments and other documents and shall do all things which, in the opinion of the Secured Party's legal counsel, are necessary or advisable, either before or after any default hereunder, to carry out effectively the intent of (including realization under) this Agreement.
17. WAIVER
Insofar as the law of the Province of Saskatchewan allows, The Land Contracts (Actions) Act (Saskatchewan), shall have no application to any action, as defined in the said Act, with respect to this Security Agreement, and The Limitation of Civil Rights Act (Saskatchewan) shall have no application to this Security Agreement, or any agreement or instrument renewing or extending or collateral to any charge or other security referred to or mentioned in this paragraph, or the rights, powers or remedies of the Secured Party under this Security Agreement or under any mortgage, charge, other security or agreement or instrument referred to herein.
18. GENERAL PROVISIONS
(a) The Debtor shall keep, at its principal place of business, accurate books and records of the property secured hereunder, whether or not in default, and hereby authorizes the Secured Party, its representatives and agents, to enter upon the premises of the Debtor at all reasonable times, to inspect the books and records of the Debtor; and the Debtor shall from time to time on request furnish to the Secured Party in writing all information requested by the Secured Party relating to the property secured hereunder or any part thereof. The Secured Party shall be entitled from time to time to inspect the property secured hereunder wherever located, and the Secured Party shall have access to all places where the property secured hereunder or any part thereof is located and to all premises occupied by the Debtor.
(b) The Debtor acknowledges having received a duplicate executed copy of this Security Agreement on the date of its execution.
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(c) The Debtor hereby waives the right to receive a copy of any financing statement in respect of this Security Agreement, or any financing change statements in respect thereof, and in respect of any amendments, extensions or additions to this Agreement hereafter.
(d) There are no representations, warranties, agreements or conditions, express or implied, statutory or otherwise, effecting the rights and liabilities of the parties hereto other than as specifically contained herein. This Agreement constitutes the entire agreement between the parties, save or otherwise expressly stated, and save and except the Loan Agreement and other documents and agreements related thereto.
(e) The rights of the Secured Party under this Agreement, including the right to realize upon Collateral are acknowledged to be restricted by and are subject to a postponement, subordination and standstill agreement entered into between the Debtor, Canpulse and Farm Credit Canada (the “FCC Subordination Agreement”). In the event of a conflict between the terms of this Security Agreement and the terms of the FCC Subordination Agreement, the terms of the FCC Subordination Agreement will be paramount to the extent of the conflict and will prevail over the terms of this Security Agreement. The term “Arm’s Length Indebtedness” shall mean the principal of and premium, if any, and interest on indebtedness (other than the Promissory Note) for money borrowed by Debtor or GFI from (or indebtedness for money guaranteed by Debtor or GFI) any individuals or other persons dealing at arm’s length with Debtor or GFI (as such term is interpreted for the purposes of the Income Tax Act (Canada)). The Secured Party hereby agrees to enter into postponement, subordination and standstill agreements with any future lenders of Arm’s Length Indebtedness on substantially similar terms of the FCC Subordination Agreement, mutatis mutandis.
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ASSIGNMENT OF DEBT AND SECURITY
This Assignment of Debt and Security (“Assignment”) effective as of November 29, 2019 (the “Effective Date”), is made by and between CanPulse Foods Ltd. (“CanPulse”) and The Toronto Dominion Bank (“TD Bank”).
RECITALS:
(a) Pursuant to an asset purchase agreement dated as of November ____26 , 2019 between CanPulse, as seller, GFI LP (the “Buyer”), as buyer, and Global Food and Ingredients Inc. (“Global”), Globeways Canada Inc (“Globeways”), and Hakan Agro DMCC, as additional parties (the “CanPulse Asset Purchase Agreement”), GFI LP acquired the Purchased Assets (as defined therein) from CanPulse;
(b) Pursuant to a vendor take back note between CanPulse and the Buyer, CanPulse has extended a loan to the Buyer in the amount of the unpaid portion of the Purchase Price (as defined in the CanPulse Asset Purchase Agreement (the “VTB Loan”)), and the Buyer has granted certain security to CanPulse to secure the payment and performance of the VTB Loan (collectively, the “VTB Security”);
(c) Pursuant to a postponement, subordination and standstill agreement dated as of November ____, 2019 between CanPulse, Global, the Buyer, 11567403 Canada Inc. and Farm Credit Canada (“FCC”), the VTB Loan and the VTB Security is postponed and subordinated in favour of FCC (the “FCC Subordination Agreement”);
(d) TD Bank has agreed to provide certain loans and other credit accommodation to CanPulse (the “TD Bank Financing”) secured by the granting of security interests by CanPulse over all of its present and after-acquired personal property including the VTB Loan and the VTB Security (collectively, as the same may be amended, restated, modified, supplemented and replaced from time to time, the “TD Bank Security”); and
(e) It is a condition of the TB Bank Financing that CanPulse provide TD Bank a specific assignment of the VTB Loan and the VTB Security.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements set forth herein, the parties hereto agree as follows:
1. Assignment: In consideration of the TD Bank Financing, CanPulse hereby absolutely, unconditionally and irrevocably assigns, transfers, conveys and sets over to TD Bank as and by way of security its entire right, title and interest in and to, and the benefits enuring to CanPulse under the VTB Debt and the VTB Security. The assignment shall include the full benefit of its rights in and to the VTB Security and any registrations made in respect of the VTB Security. CanPulse shall provide all agreements and documents relating to or evidencing the VTB Loan and the VTB Security in its possession or control, to have and to hold the same for TD Bank’s use and benefit absolutely, together with all rights, claims, benefits and advantages now or hereafter accruing with respect thereto or derived or to be derived therefrom.
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2. Liability: This Assignment shall not constitute a transfer or an assignment by CanPulse to TD Bank or an assumption by TD Bank of any liabilities or obligations of CanPulse with respect to the VTB Loan or the VTB Security or otherwise. TD Bank shall not be, and nothing contained herein shall be construed as rendering TD Bank, liable or responsible, directly or indirectly, for any liabilities or obligations of CanPulse with respect to the CanPulse Asset Purchase Agreement, the VTB Loan or the VTB Security, including, but not limited to any claim by any of the parties to the VTB Loan or the VTB Security for damages, set-offs, warranties, interest, costs, fees, charges or other expenses.
3. Representations and Warranties: CanPulse does hereby represent and warrant to TD Bank: (i) it has the full right, power, legal capacity and authority to enter into this Assignment and to sell, assign, transfer and grant the VTB Loan and VTB Security to TD Bank; (ii) it has not previously assigned, granted, or agreed to assign to any party, any right, title, license, privilege, interest or property in the VTB Loan and VTB Security; (iii) the total amount of the VTB Loan remains due and payable; (iv) TD Bank has the right to collect, recover and realize the full amount of the VTB Loan and to enforce the provisions of the VTB Security, subject only to the FCC Subordination Agreement; (v) the VTB Security has not been amended, released or discharged; (vi) the VTB Security is enforceable against the parties to such VTB Security in accordance with its terms; (vii) it has not and will not at any time after this Assignment takes effect, receive or accept any of the VTB Loan, or any part of it, or do any act in which TD Bank may be prevented or hindered from collecting the full amount of the VTB Loan; (viii) there are no threatened, pending or outstanding claims, lawsuits, litigation or grievances of any kind in connection with the VTB Security which could in any way impair, limit, diminish or infringe upon the VTB Security.
4. No other representations: Notwithstanding the foregoing, CanPulse does not make any representations or warranties respecting the VTB Loan or the VTB Security except as expressly stated above, and without limiting the foregoing, CanPulse does not make any representation or warranty as to the payment by or on behalf of the Buyer, Global or any other party as to the whole or any part of the VTB Loan or the VTB Security. Nothing in this Agreement amends, releases or abrogates the obligations of CanPulse under the TD Bank Financing or the TD Bank Security.
5. Indemnification: CanPulse agrees to indemnify and hold harmless TD Bank and its successors and assigns, from and against any and all damages, losses, judgments, costs and expenses (including reasonable legal fees) sustained, suffered, paid or incurred by TD Bank or its successors or assigns as a result of or in connection with any breach of any warranty, undertaking, representation or agreement made or entered into hereunder by CanPulse. This indemnification shall survive the assignment, transfer and conveyance of the VTB Loan and the VTB Security made to TD Bank hereunder.
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6. Governing Law. This Assignment and the rights of the parties hereunder shall be interpreted in accordance with the laws of the Province of Saskatchewan (exclusive of its choice of law rules) that are applicable to agreements that are to be performed wholly therein.
7. Further Assurances: The parties shall promptly do, make, execute and deliver or cause to be done, made, executed or delivered all such further acts, documents instruments or things as may be necessary or desirable to evidence, give effect to or confirm this Assignment, and any of the terms and conditions herein, including without limitation any financing change statements or assignments of mortgage.
8. Additional Security: CanPulse acknowledges and agrees that this Assignment is in addition to and not in substitution for any and all security granted to TD Bank pursuant to the TD Bank Financing.
9. Miscellaneous: This Assignment may be executed in any number of counterparts (including by facsimile, PDF or similar electronic counterparts) and all such counterparts taken together shall be deemed to be one and the same instrument. If any provision of this Assignment shall be deemed by a court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect. This Assignment shall be binding upon CanPulse and its successors and assign, and shall enure to the benefit of TD Bank and its successors and assigns.
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43298303.2 000063 000064 000065
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POSTPONEMENT, SUBORDINATION AND STANDSTILL AGREEMENT
TO Farm Credit Canada (“FCC”) Customer number: 200839292 DATE November 26, 2019
Whereas FCC has agreed to provide credit facilities to GLOBAL FOOD AND INGREDIENTS INC. (“GFI”) and to GFI LP (together with GFI, collectively the “Borrowers”) based on the terms and conditions set out in a credit agreement dated November 22, 2019 between, inter alia, FCC, as lender, and the Borrowers, as borrowers (as the same may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time, the “Credit Agreement”);
And whereas 11567403 Canada Inc. (“11567403”), the general partner of GFI LP, has guaranteed the payment and performance of the obligations of the Borrower to FCC, and each of the Borrowers and 11567403 (collectively, the “Credit Parties” and each individually, a “Credit Party”) have granted security to FCC on their respective assets to secure the payment and performance of their respective obligations;
And whereas the execution and delivery of this postponement, subordination and standstill agreement (this “Agreement”) is a condition precedent to FCC's decision whether to extend or continue loans or advances to the Borrowers under the Credit Agreement;
And whereas GFI LP is indebted to CANPULSE FOODS LTD. (the “Subordinator”), such indebtedness has been guaranteed by the Credit Parties and the Credit Parties have granted certain security to the Subordinator;
Now therefore in consideration of FCC granting the credit facilities to the Borrowers or maintaining or continuing credit facilities previously granted to the Borrowers and for other valuable consideration, the receipt and sufficiency of which are acknowledged, the Subordinator agrees and undertakes as follows:
1. Postponement and subordination
From the date of signing until all indebtedness, obligations and liabilities of the Credit Parties to FCC under the Credit Agreement or those arising under any other agreement between FCC and the Credit Parties are repaid in full (collectively, the “FCC Obligations”), and unless otherwise authorized by FCC in the Credit Agreement, in this Agreement or otherwise in writing, the Subordinator agrees:
(a) to postpone and subordinate in favour of FCC the payment and satisfaction by the Credit Parties of all debts, demands and liabilities now due, owing or accruing due and those that may become due, owing or accruing due to the Subordinator by the Credit Parties and all interest accruing thereon (collectively, the “Subordinated Obligations”) arising from or relating to the following documents (collectively and each, the “VTB Agreement”) :
(i) the agreement of purchase and sale dated November 26, 2019 between GFI, GFI LP, the Subordinator, Globeways Canada Inc. and Hakan Agro DMCC;
(ii) the promissory note dated November 26, 2019 executed by GFI LP in favour of the Subordinator; and 000103
(iii) all security documents, instruments and agreements granted by the Credit Parties to the Subordinator from time to time (and the security interests arising therefrom) as security for the repayment of the Subordinated Obligations (collectively, the “Subordinated Security”);
(b) that the Subordinated Obligations are subordinated in right of payment or priority to all FCC Obligations;
(c) that except with FCC's prior written consent, neither the Subordinated Obligations nor any monies owing or which may become owing by the Credit Parties to the Subordinator in relation to the Subordinated Obligations, shall be withdrawn, transferred, pledged, encumbered, assigned or otherwise dealt with by the Subordinator. FCC consents to the assignment by the Subordinator to The Toronto-Dominion Bank (“TD Bank”) of the VTB Agreement and the Subordinated Obligations as security for the obligations of the Subordinator to TD Bank, provided that TD Bank executes and delivers to FCC an acknowledgment in form satisfactory to FCC confirming that such assignment and TD Bank are subject to and bound by the terms of this Agreement. The amounts of the Subordinated Obligations shall remain on the books of the Credit Parties at all times for so long as any monies remain owing to FCC by the Credit Parties under the Credit Agreement or otherwise; and
(d) not to demand or accept payment of all or any part of the Subordinated Obligations except as permitted hereunder.
Provided, however, that the FCC Obligations shall not include any Independent Borrowing Obligations of GFI. For the purposes hereof, “Independent Borrowing Obligations” means the indebtedness, liabilities and obligations of GFI under any loan or loans extended or granted or renewed by FCC to GFI where GFI LP is not a co-borrower of such loan or loans or where GFI LP is not a guarantor of such loan or loans.
2. Insolvency
In the event of the bankruptcy, closure of operations, or winding up of any Credit Party or of any distribution of the assets of any Credit Party or proceeds thereof among its creditors in any manner whatsoever, FCC shall be entitled to receive the distributions payable in respect of the Subordinated Obligations. These distributions shall be applied to part or parts of the applicable Credit Party’s current indebtedness as FCC deems fit, until the whole of indebtedness has been paid in full.
3. Subordinator consent to registrations
The Subordinator consents to FCC filing financing statements, financing change statements and any similar registrations or filings, if any, in any and all appropriate jurisdictions with respect to the postponement and subordination of the Subordinated Obligations granted herein. Upon the written request of FCC, the Subordinator shall complete such registrations or filings in prescribed form. To facilitate FCC's filing of financing statements, financing change statements or similar registrations or filings, the Subordinator authorizes FCC or its solicitors to prepare, execute and/or file these registrations or filings as agent of the Subordinator. The Subordinator waives all rights to receive a copy of the financing statement, verification statement, financing change statement or other filing or registration made pursuant to this section.
2 000104
4. Subordinator as trustee
In the event any payments are made by any Credit Party to the Subordinator in violation of this Agreement, the Subordinator shall hold such payments in trust for FCC and shall immediately pay them to FCC.
5. General
(a) The Subordinator shall do all things and execute all documents that FCC deems necessary or desirable to give full effect to this Agreement.
(b) The Subordinator acknowledges that he, she or it is benefitted by FCC extending credit to the Borrowers.
6. Interpretation
Words importing the singular number include the plural, and vice-versa. Words importing the use of any gender shall include the masculine, feminine and neuter genders and words importing natural persons include an individual, a trust, a partnership, a corporation, an association or other incorporated or unincorporated organization or entity.
7. Governing law and attornment
This Agreement shall be governed by and construed in accordance with the laws of the province of Saskatchewan and the laws of Canada applicable therein. The parties agree that any action under or for the enforcement of this Agreement may be brought in the courts of the provinces of Saskatchewan or Ontario and the parties attorn to the non-exclusive jurisdiction of those courts.
8. Enurement
This Agreement shall extend and enure to the benefit of and be binding upon FCC and the Subordinator and their respective successors and assigns, heirs, estate, executors and personal representatives, as applicable.
9. FCC rights
The Subordinator understands and agrees that this Agreement shall not suspend or otherwise affect the present or future rights or remedies of FCC related to the present or future indebtedness or liability of the Credit Parties to FCC or the securities that FCC now holds or may receive from the Credit Parties as collateral to the indebtedness or any other liability.
10. Subordination of security
(a) The Subordinator hereby expressly, irrevocably and unconditionally postpones and subordinates all Subordinated Security to any and all security granted to FCC (collectively, the “FCC Security”) as security for the repayment of any and all indebtedness, liabilities and obligations of the Credit Parties to FCC (and the security interests arising therefrom), with the intent that the FCC Security shall have full and absolute priority over the Subordinated Security, and the Subordinated Security shall in all respects and for all purposes be subordinated and postponed and rank junior to the FCC Security.
3 000105
(b) The Subordinator agrees that, it shall not take any enforcement action (including, without limitation, demand for payment, acceleration of debt, realization on security, commencing an action for payment, commencing any bankruptcy proceedings, foreclosure, sale, power of sale, or appointing or making application to the court for an order appointing a receiver or receiver and manager) against any Credit Party in respect of any Subordinated Obligations until the Subordinator is released from this Agreement unless:
(i) written notice of a default or event of default under the VTB Agreement has been given to FCC,
(ii) a period of 120 days after the date upon which FCC has received notice in writing of the occurrence of any such default or event of default has expired, unless FCC has commenced enforcement proceedings against the Credit Parties (“FCC Enforcement Proceedings”) during such 120 day period but is not diligently pursuing such FCC Enforcement Proceedings, and
(iii) such default or event of default is continuing and has not been waived by the Subordinator.
Upon the commencement of FCC Enforcement Proceedings within the standstill period noted above, the Subordinator may take the following actions:
(i) the Subordinator may accelerate or otherwise declare the indebtedness of the Credit Parties to be immediately due and payable for the purposes of crystallizing the amount of such indebtedness;
(ii) the Subordinator may file proofs of claim under the provisions of the Bankruptcy and Insolvency Act (“BIA”) and the CCAA or under similar legislation or jurisdictions in order to preserve, but not take steps to enforce, its claims against the Credit Parties, provided that if the Subordinator receives any payment or distribution as a result of such filing, such payment or distribution shall be subject to the provisions of this Agreement; and
(iii) the Subordinator may send to the Credit Parties a Notice of Intention to Enforce Security under the BIA and issue notices under the applicable Personal Property Security Acts in Saskatchewan and Ontario for the purpose of commencing the notice periods required under that legislation vis-à-vis the Credit Parties for future enforcement.
(c) The Subordinator shall not sell, assign, transfer, pledge or otherwise dispose of or encumber the Subordinated Obligations, the Subordinated Security or any other security held for the Subordinated Obligations, or any part thereof, without the prior written consent of FCC or unless such assignee or transferee agrees to be bound by the terms of this Agreement (except as provided in paragraph 1(d) herein). FCC may sell, assign, transfer, pledge and otherwise dispose of and encumber any indebtedness, liabilities and obligations of the Credit Parties to FCC, the Credit Agreement and any other agreements, documents or instruments delivered in connection therewith without the consent of the Subordinator. FCC shall provide written notice to the Subordinator concurrent with any such sale, assignment, transfer, pledge or other disposition.
(d) The Subordinator agrees that it shall at all times do, execute, acknowledge and deliver, at the expense of the Borrowers, all such acts, deeds, statements, proofs of claim, transfers, assignments and agreements as may be reasonably necessary or desirable to 4 000106
give effect to the terms and provisions of this Agreement including any and all acts, deeds or agreements as may be necessary for the purpose of registering or filing notice of the terms and provisions of this Agreement, and including the filing by FCC and its counsel of one or more financing change statements (subordinations) under the Personal Property Security Act (Saskatchewan) (the “PPSA”) against any PPSA registration or filing representing the Subordinated Security.
(e) The Subordinator agrees that it will not at any time, including without limitation in connection with any proceeding or enforcement action, contest the validity, perfection, priority or enforceability of any indebtedness, liabilities and obligations of the Credit Parties to FCC, the FCC Security or any agreements, documents or instruments in respect thereof.
11. Permitted payments
Notwithstanding anything contained herein, the Borrowers may make the following Restricted Payments (as defined under the Credit Agreement) to the Subordinator in accordance with the terms of the Credit Agreement:
(i) the only permitted payments on account of the Subordinated Obligations are payments of $1,000,000 on each of the fourth, fifth and sixth anniversaries of the date of this Agreement (the “VTB Permitted Payments”) provided that, at the time of and immediately after making a VTB Permitted Payment, (A) no Default or Event of Default (as each such term is defined in the Credit Agreement) shall have occurred; (B) the Borrowers shall be in compliance with the financial covenants set out in the Credit Agreement and have delivered to FCC a Compliance Certificate (as defined in the Credit Agreement) 30 days prior to making such payment;
(ii) if with the making of any VTB Permitted Payment the Borrowers will not be in compliance with the financial covenants set out in the Credit Agreement, then the amounts of such VTB Permitted Payments shall be reduced to the maximum amount that might be paid by the Borrowers for them to still remain in compliance with the financial covenants set out in this Agreement (the “VTB Reduced Permitted Payments”). For greater clarity, the Subordinator shall be permitted to allocate a portion of any VTB Reduced Permitted Payment to the payment of accrued interest provided that the aggregate amount of such VTB Reduced Permitted Payment does not increase as a result thereof; and
(iii) no interest shall accrue or be payable on or in respect of the Subordinated Obligations until such time as a default or event of default shall have occurred under the VTB Agreement, and no such interest shall be paid by the Borrowers or received by the Subordinator without the prior written consent of FCC except as permitted under paragraph 11(ii) immediately above.
12. Continued application
This Agreement shall continue to apply to the Subordinator for so long as any Subordinated Obligations are owed by the Credit Parties or any of them to the Subordinator.
13. Toll Processing Obligations
For greater clarity, the present and future indebtedness, liabilities and obligations of the Borrowers to the Subordinator under or pursuant to the Toll Processing Agreement between GFI 5 000107
LP, as the processor, GFI, the Subordinator, Globeways Canada Inc. and Hakan Agro DMCC made as of November 22, 2019 (as amended, restated, modified, supplemented, extended, renewed or replaced from time to time, the “Toll Processing Agreement”) or any internal or stand-alone guarantee granted by the Borrowers or 11567403 in connection therewith (collectively, the “Toll Processing Obligations”) shall not be included in the Subordinated Obligations and shall not otherwise be restricted by this Agreement provided the Toll Processing Obligations remain at all times unsecred obligations of the Credit Parties and are not subject to or included in the Subordinated Security. For avoidance of doubt, the guarantee of the Toll Processing Obligations by GFI shall not be considered to result in the Toll Processing Obligations being secured within the meaning of this provision.
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6 000108 000109 000110 000111
TOR_LAW\ 10070975\4
FCC, GFI, VTB Postponement, Subordination and Standstill 000112
MCKERCHER „,
October 26, 2020
Reply To: Caroline J. Smith Direct Dial: (306) 664-1350 Email: [email protected] CanPulse Foods Ltd. 110 - 2570 Matheson Blvd E Assistant: Lindsay Foster Mississauga, ON L4W 4Z3 Direct Dial: (306) 664-1379
ATTENTION: TANVIR ZAIDI VIA EMAIL ([email protected]) and Dear Sir: VIA COURIER
Re: Toll Processing Agreement dated November 26, 2019 between CanPulse Foods Ltd., GFI LP, Global Food & Ingredients Inc. et al.
I represent GFI LP and Global Food & Ingredients Inc. (collectively, "GFI") in this matter.
I write to demand payment of the amount CanPulse Foods Ltd. ("CanPulse") owes GFI under the Toll Processing Agreement, which is set out in the enclosed Statement of Account.
If the outstanding amount is not paid in full, including interest, on or before October 28, 2020, GFI will initiate legal proceedings against CanPulse. GFI requests that payment be made via wire transfer in accordance with the enclosed instructions.
Additionally, the next quarterly progress payment for the three-month period ending November 30, 2020 is due under the TPA by December 10, 2020 and will amount to $878,063, less any payments made to GFI for processing services during that quarter. Please ensure that CanPulse initiates the required procedures to make that payment when invoiced, failing which GFI will add this amount to its claim against CanPulse.
Our File Reference: 123009.5 PLEASE REPLY TO:
MCKERCHER LLP BARRISTERS & SOLICITORS mckercher.ca 374 Third Avenue South Saskatoon, SK S7K 1M5 Canada MEMBER OF RISK MANAGEMENT COUNSEL OF CANADA ASSOCIATED WORLDWIDE (306) 653-2000 F(306) 653-2669 MEMBER OF LAWYERS MEMBER OF EMPLOYMENT LAW ALLIANCE LEGAL OFFICES IN SASKATOON & REGINA 000113
McKercher LLP Canpulse Foods Ltd. Page 2 of 2 Finally, GFI wishes to remind CanPulse that pursuant to the TPA, the balance payable by CanPulse to GFI from the current date until the expiry of the TPA on November 30, 2024 stands at $10.2 million. This amount far exceeds the $3 million payable by GFI to CanPulse under the Promissory Note dated November 26, 2019 (the "Promissory Note"). GFI does not intend to apply its set-off rights under the Promissory Note until the balance payable by CanPulse under the TPA is reduced to $3 million.
Yours truly,
McKercher LLP
Per:
Caroline J. Smith
Enclosures: Statement of Account dated October 26, 2020 GFI wire instructions c Miller Thomson LLP 600 — 2103 11th Avenue Regina, SK S4P 3Z8 Attention: Rick M. Van Beselaere, QC [email protected]
PA Vz Summary AR
To: Canpulse Food Ltd. 318 Wellman Saskatoon, SK S7T 0G3
Canpulse - Procurement AR As of: 26-Oct-20
Invoice No. Desc. Invoice Date Due date Overdue Days Amount Due
Total - Prucurement AR
Trade AR - contract under Globeways AR Invoice No. Desc. Invoice Date Due date Overdue Days Amount Due
Total - Trade AR GFI LP - TPA & Other AR Invoice No. Desc. Invoice Date Due date Overdue Days Amount Due PROAUG3120CAN Progress Charge - Aug 31, 2020 31-Aug-20 10-Sep-20 46 651,370.45 Payment Progress Payment 16-Oct-20 100,000.00 Sept 15, 2020 Billing Outbound, Inbound, Storage 15-Sep-20 25-Sep-20 31 46,425.95 Sept 30, 2020 Billing Outbound, Inbound, Storage 30-Sep-20 10-Oct-20 16 51,411.20 Oct 15, 2020 Billing Interest To Date 15-Oct-20 25-Oct-20 1 5,136.83 Oct 15, 2020 Billing Outbound, Inbound, Storage 15-Oct-20 25-Oct-20 1 39,740.57 DM-8 / RE:Inv-0529 Demurrage at Lajord 26-Oct-20 05-Nov-20 4,600.00
Total - TPA 698,685.00
Total AR for Canpulse from all sources 698,685.00 000114 000115
Retail and Business Service Centre 4715 Tahoe Blvd. Mississauga, Ontario L4W OB4, Canada Scotiabank
March 19, 2020
GLOBAL FOOD AND INGREDIENTS INC 43 COLBORNE STREET SUITE 400 TORONTO, Ontario M5E 1E3 Canada
To Whom it May Concern,
This letter is to confirm that GLOBAL FOOD AND INGREDIENTS INC has business account with the Bank of Nova Scotia. Kindly refer to the attached funds transferred template in order to facilitate the processing of the incoming wire.
If you require further information, please feel free to contact the undersigned.
Sincerely,
Asma Jindanil Service Officer, Retail and Business Service Centre Phone:1-888-855-1234 Email: [email protected] 000116 Incoming Wire Instructions: To Canada in currencies other than USD
Beneficiary Information Beneficiary Name: GLOBAL FOOD AND INGREDIENTS INC Beneficiary Address: P.O. Box not accepted
Beneficiary Account Number (12 digits): Beneficiary Bank Information Bank Name: Bank Identifier (SWIFT Code or Canadian Clearing Code) Bank Address: (Input based on use of either the SWIFT Code or the Canadian Clearing Code) 000117 Incoming Wire Instructions: To Canada in USD
Beneficiary Information(MT Beneficiary Name: GLOBAL FOOD AND INGREDIENTS INC Beneficiary Address: P.O. Box not accepted
Beneficiary Account Number (12 digits): Beneficiary Bank Information Bank Name: Bank Identifier (SWIFT Code or Canadian Clearing Code) Bank Address: (Input based on use of either the SWIFT Code or the Canadian Clearing Code)
Intermediary Bank Information Bank Name: Bank Address:
Bank Identifier (SWIFT Code or ABA Number)
Note: Intermediary Bank Information may not be required for payments coming from outside the US 000118
MCKERCHER „,
November 23, 2020
Reply To: Caroline J. Smith Direct Dial: (306) 664-1350 Email: [email protected] MLT Aikins LLP 360 Main Street, Suite 3000 Assistant: Lindsay Foster Winnipeg, MB R3C 4G1 Direct Dial: (306) 664-1379
ATTENTION: J. J. BURNELL VIA EMAIL ([email protected]) Dear Madam:
Re: Receivership of Canpulse Foods Ltd. ("Canpulse") and Globeways Canada Inc. ("Globeways"), Ontario Superior Court of Justice File No. CV-20-006500857-00CL
As you know, I represent GFI LP and Global Food & Ingredients Inc. (collectively, "GFI") in this matter. I write to provide information on GFI's claims against Canpulse and Globeways.
Toll Processing Agreement
Canpulse, Globeways, and their parent company Hakan Agro DMCC are parties to a Toll Processing Agreement with GFI dated November 26, 2019 (the "Toll Processing Agreement"), a copy of which is attached.
The Toll Processing Agreement is a "take-or-pay" arrangement under which GFI agrees to be available to process the volumes of certain products specified in Schedule B to the Toll Processing Agreement for Canpulse, and Canpulse agrees to pay GFI the amounts specified in Schedule B whether or not it delivers those volumes to GFI for processing (Section 2.2). The Toll Processing Agreement has a term of five years and is in effect from November 26, 2019 to November 26, 2024 (Section 10.1).
Under Section 13.1(b) of the Toll Processing Agreement, Canpulse and Globeways agree to indemnify GFI for all "Claims" arising from "any failure by Canpulse or a Guarantor to observe or perform any covenant or obligation contained in this Agreement or any document delivered pursuant to this Agreement[.]" "Claims" is defined to include "legal fees on a solicitor and own client basis" (Section 1.1(i)).
Our File Reference: 123009.5 PLEASE REPLY TO: mckercher.ca MCKERCHER LLP BARRISTERS & SOLICITORS MEMBER OF RISK MANAGEMENT COUNSEL OF CANADA 374 Third Avenue South Saskatoon, SK S7K 1M5 Canada MEMBER OF LAWYERS ASSOOATED WORLDWIDE
(306) 653-2000 F(306) 653-2669 MEMBER OF EMPLOYMENT LAW ALLIANCE LEGAL OFFICES IN SASKATOON & REGINA 000119
McKercher LLP
MLT Aikins LLP Page 2 of 4
Globeways Guarantee
Globeways unconditionally guaranteed Canpulse's obligations under the Toll Processing Agreement under a guarantee dated November 26, 2019 (the "Globeways Guarantee"), a copy of which is attached.
Pursuant to the Globeways Guarantee, Globeways agrees to be, as principal obligor, jointly and severally liable with Canpulse for the performance of all of Canpulse's obligations under the Toll Processing Agreement (Section 1.1(a)); this obligation survives Canpulse's receivership or insolvency (Section 2.1(g)). The Globeways Guarantee also provides that Globeways would indemnify GFI for all expenses incurred by GFI as a result of Canpulse's failure to pay any amount due under the Toll Processing Agreement, including "all reasonable legal fees" and other expenses of proceedings against Globeways pursuant to the Globeways Guarantee (Sections 1.2 and 4.1).
Outstanding Payments
Under the Toll Processing Agreement, Canpulse must make a "Quarterly Progress Payment" to GFI within ten business days of the end of each quarter (Section 9.5). A Quarterly Progress Payment is one quarter of the annual Overall Volume Commitments (as defined in Section 9.1), multiplied by the processing and bagging rates in Schedule B to the Toll Processing Agreement. The amounts of the Quarterly Progress Payments are set out in Schedule C to the Toll Processing Agreement.
The Toll Processing Agreement also states that GFI may provide and invoice Canpulse for services other than those set out on Schedule B; see for example Sections 3.4, 6.1(b), 7.1(c), and 9.4. Section 9.8 requires Canpulse to pay invoices issued by GFI within 10 business days of receiving them.
As of November 19, 2020, a total of $710,246.68 was outstanding under the Toll Processing Agreement, calculated as follows:
Reference Description Amount Q3 progress payment N/A $ 878,063.00 N/A Payment $ (326,693.00) Sept 15, 2020 Billing Outbound, Inbound, Storage $ 46,425.95 Sept 30, 2020 Billing Outbound, Inbound, Storage $ 51,411.20 Oct 15, 2020 Billing Interest Oct 15, 2020 $ 5,136.83 Oct 15, 2020 Billing Outbound, Inbound, Storage $ 39,740.57 DM-8 / RE:Inv-0529 Demurrage at Lajord $ 4,600.00 DN/2019-20/0001 Wait time Volume Freight - CREDIT $ (330.75) Oct 31, 2020 Billing Outbound, Inbound, Storage $ 5,679.76 INTOCT3120 Interest (Oct. 16-31, 2020) $ 1,694.65 LAJ00151MG00118/ZEA00132 Storage (Nov. 1-19, 2020) $ 2,286.28 INTNOV1920 Interest (Nov. 1-19, 2020) $ 2,232.19 TOTAL 710,246.68
mckercher„ca 000120
McKercher LLP
MLT Aikins LLP Page 3 of 4
Additionally, Canpulse and Globeways currently owe GFI approximately $24,000 in respect of the legal fees and disbursements GFI has incurred to date on this matter, for which Canpulse and Globeways are obliged to indemnify GFI.
Future Loss
As noted above, the Toll Processing Agreement is a take-or-pay commitment with a five-year term. Assuming that the Toll Processing Agreement will be cancelled by the Receiver rather than affirmed or assigned to a third party, GFI will incur a loss in respect of the remaining four years of its term. There are two ways of calculating the loss GFI will suffer: on the basis that Canpulse would have delivered the minimum volume of product specified under Schedule B (the "Minimum Take Calculation"), and on the basis that Canpulse would not have delivered any further product to GFI and instead would have made the minimum payments required under the Toll Processing Agreement (the "Minimum Pay Calculation").
Minimum Take Calculation
Attached is a spreadsheet calculating the profit GFI would have made if CanPulse had delivered the minimum volume of product specified under Schedule B for the remainder of the term of the Toll Processing Agreement. The total future lost profit is $10,004,729.
Minimum Pay Calculation
If Canpulse does not deliver any further product to GFI, Section 2.2 of the Toll Processing Agreement requires Canpulse to pay GFI as though it had delivered and GFI had processed the minimum product set out in Schedule B. Those minimum payments are the quarterly progress payments set out in Schedule C. The Quarterly Progress Payments for the remainder of the term of the Toll Processing Agreement total $9,658,691, calculated as follows:
Quarter Amount Year 1 - Q4 $ 878,063.00 Year 2 - Q1 $ 878,063.00 Year 2 - Q2 $ 878,063.00 Year 2 - Q3 $ 878,063.00 Year 2 - Q4 $ 878,063.00 Year 3 - Q1 $ 658,547.00 Year 3 - Q2 $ 658,547.00 Year 3 - Q3 $ 658,547.00 Year 3 - Q4 $ 658,547.00 Year 4 - Q1 $ 439,031.00 Year 4 - Q2 $ 439,031.00 Year 4 - Q3 $ 439,031.00 Year 4 - Q4 $ 439,031.00 Year 5 - Q1 $ 219,516.00 Year 5 - Q2 $ 219,516.00 Year 5 - Q3 $ 219,516.00 Year 5 - Q4 $ 219,516.00 TOTAL $9,658,691.00
k5w,kercho c- 000121
McKercher LLP
MLT Aikins LLP Page 4 of 4
Amount Owinq
Based on the above, the total amount Canpulse and Globeways owe to GFI is between $10,392,937.68 and $10,738,975.68, which is comprised of the outstanding payments, the future loss, and GFI's legal fees to date.
I would be pleased to further discuss if you wish.
Yours truly,
McKercher LLP
Per:
Caroline J. Smith
Copy to: Jeff Lee, Q.C. [email protected])
Enclosures: Toll Processing Agreement dated November 26, 2019 Guarantee dated November 26, 2019 Spreadsheet
rackercrner.ca 000122
Inventory Sale Agreement
This agreement made as of the 16th day of December, 2020:
BETWEEN
GLOBAL FOOD AND INGREDIENTS INC. , GFI LP, 11567403 CANADA INC. (collectively referred to hereinafter as “GFI” or the “Purchasers”, or individually as a “Purchaser”)
AND
Globeways Canada Inc., Canpulse Foods Ltd. and Global Grain Canada Ltd. by its court appointed receiver and manager BDO CANADA LIMITED (the “Vendor”)
WHEREAS Globeways Canada Inc. (‘Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global” and together with Globeways and Canpulse the “Company”) had been engaged in the business of purchasing, sorting, grading, packaging and distributing grain products consisting primarily of pulse products (“Grain”);
AND WHEREAS in the course of their business, Globeways and Canpulse entered into a Toll Processing Agreement (the “Toll Processing Agreement”) with GFI LP and Global Food and Ingredients Inc. whereby Canpulse reserved certain processing capacity and provided Grains for processing to GFI LP and Globeways entered into a Commercial Guarantee dated November 26, 2019 (the “Guarantee”) guaranteeing Canpulse’ performance under Toll Processing Agreement;
AND WHEREAS BDO Canada Limited was appointed as Receiver of Globeways, Canpulse and Global pursuant to an order made by the Honourable Madam Justice Conway before the Ontario Superior Court of Justice on Thursday November 19, 2020 (the “Receivership”);
AND WHEREAS pursuant to the Receivership, BDO Canada Limited has taken possession of the remaining inventory of the Company and has been granted authority to sell such inventory in the ordinary course of business;
AND WHEREAS GFI is desirous of securing a continued supply of inventory consisting of Grains from Canpulse and Global, including that inventory currently situated at GFI premises;
AND WHEREAS Canpulse had received from GFI LP a promissory note for the sum of $3 million dated November 26, 2019 (the “Promissory Note”) which note was secured by a mortgage granted by 11567403 Canada Inc. to Canpulse upon the properties of Canpulse as Interest Numbers 186671234, 186671245 and 186671256 (the “Mortgages”) and by a general security agreement granted by GFI LP to Canpulse (the “GSA”);
AND WHEREAS the Promissory Note, the Mortgages and the GSA are collectively referred to as the “GFI Security”; 000123
AND WHEREAS Canpulse assigned to the Toronto-Dominion Bank all of the GFI Security pursuant to an assignment agreement dated November 26, 2019;
NOW THEREFORE in consideration of the mutual premises or covenants and agreements as herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties, the parties hereto agree as follows:
1. Definitions
In this agreement:
(a) “Adjustment Schedule” shall mean the adjustments to be made pursuant to the rate of adjustment set out in the Adjustments Schedule attached as Schedule “B” hereto for any shortfall or overage or grade differential in respect of the inventory actually received by GFI in fulfillment to this agreement.
(b) “GFI Locations” means the processing locations owned and operated by GFI located at Vigro, Zealandia and Lajord, Saskatchewan.
(c) “Inventory” refers to the remaining Grain inventory of Canpulse and Global as set out on Schedule “A” hereto, in the expected amounts and at the locations as described in such schedule, including (without limitation) the Kindersley Inventory, the Plum Coulee Inventory and the Non-Site Inventory.
(d) “Kindersley” refers to the Kindersley, Saskatchewan processing plant formerly operated by Canpulse.
(e) “Kindersley Inventory” means that portion of the Inventory more particularly described on Schedule “A” hereto as being located at Kindersley.
(f) “Non-Site Inventory” means that portion of the Inventory described below in paragraph 7 hereof.
(g) “Plum Coulee” refers to the processing plant formerly operated by Global at Plum Coulee, Manitoba.
(h) “Plum Coulee Inventory” means that portion of the Inventory more particularly described on Schedule “A” hereto as being located at Plum Coulee.
2. Acquisition of Inventory at GFI Locations
GFI agrees to purchase from the Vendor, and the Vendor agrees to sell to GFI, all of the Inventory situated at the GFI Locations as more particularly described on Schedule “A” hereto, at a purchase price of CAD$750,000 (the “GFI Price”). Subject to paragraph 8 hereof, the GFI Price shall be paid by GFI to the Vendor by wired funds for receipt by the Vendor no later than 72 hours following the satisfaction of the conditions precedent to this Agreement as set out in section 11 herein and title to such Inventory shall pass to Global Food and Ingredients Inc., or such other 000124
party as directed by GFI in writing to the Vendor at the time of such payment. The parties agree there will be no adjustment to the GFI Price for quantity or grade or any other matter whatsoever.
3. No Representations or Warranties
GFI acknowledges and agrees that:
(a) the Vendor makes no representations or warranties as to the title, encumbrances, description, condition (environmental or otherwise), defect (patent or latent), quality, quantity, fitness for use, collectability, merchantability, value, or any other representation or warranty whatsoever as to the Inventory, and GFI acknowledges that it is acquiring the Inventory “as is” and “where is” without warranty and at its present locations;
(b) any information provided by the Vendor or its agents to GFI is for information purposes only and no condition, warranty, or representation has been or will be given by the Vendor concerning the accuracy, completeness or any other matter concerning those descriptions, and this information should not be relied upon by GFI as being accurate;
(c) GFI must rely on its own judgment, inspection and investigation of the Inventory and it has had a full opportunity to conduct any and all due diligence, and has conducted, such tests, examinations, inspections, and investigations as it deems necessary and advisable to fully acquaint itself with the Inventory, its title, fitness for particular purpose, location, existence, condition, quality, quantity, merchantability, suitability for intended purpose and with any other attributes that it considers relevant;
(d) GFI is satisfied that the Inventory is in a condition that is satisfactory to its requirements and has not relied on any advice from the Vendor or any of its representatives;
(e) all insurance maintained by the Vendor in respect of the Inventory shall be cancelled upon GFI taking title to that portion of the Inventory and GFI shall be responsible for placing its own insurance on that portion of the Inventory thereafter;
(f) no warranties or conditions, express or implied, pursuant to the Sale of Goods Act (Saskatchewan) or similar legislation in other jurisdictions apply hereto and all of the same are hereby waived by GFI; and
(g) except for its express rights under this Agreement, GFI waives all rights and remedies (whether now existing or hereinafter arising and including all common law, tort, contractual and statutory rights and remedies) against the Vendor and its representatives in respect of the Inventory and the transactions contemplated herein or any representation or statements made or information or data furnished to GFI or its representatives in connection herewith.
000125
4. Purchase of Kindersley Inventory
GFI agrees to purchase from the Vendor, and the Vendor agrees to sell to the Vendor, all of the Kindersley Inventory upon the following terms:
(a) The purchase price to be paid by GFI to the Vendor for the Kindersley Inventory shall be the sum of CAD$175,000, subject to the adjustments hereinafter described (the “Kindersley Price”) and shall be paid as set out in subparagraph 4(d) hereof;
(b) The Kindersley Price shall be adjusted only for any shortfall or overage of weight or any grade differential in accordance with the Adjustment Schedule;
(c) GFI agrees that it will use its best commercial efforts to remove, or cause to be removed, all of the Kindersley Inventory, with all loading, transportation and other associated costs to be at GFI’s expense, on or before January 29, 2021;
(d) Subject to paragraph 8 hereof, GFI will pay CAD$75,000 to the Vendor by wired funds for receipt by the Vendor within 24 hours following the first shipment by GFI of the Kindersley Inventory from Kindersley and will pay the balance of the Kindersley Price to the Vendor within 48 hours following the final shipment by GFI of the Kindersley Inventory from Kindersley, with title to the Kindersley Inventory to pass to Global Food and Ingredients Inc, or such other party as otherwise directed by GFI to the Vendor in writing as payment has been made; and
(e) GFI will manage the process of removal of the Kindersley Inventory from Kindersley at its own expense, including costs for trucks, loading, freight, logistics, bags and other incremental costs. The Vendor shall provide a contact person at Kindersley at the Vendor’s expense to coordinate access to Kindersley and shipments by GFI from such premises.
5. Purchase of Plum Coulee Inventory
GFI agrees to purchase from the Vendor, and the Vendor agrees to sell, all of the Plum Coulee Inventory upon the following terms:
(a) The purchase price to be paid by GFI to the Vendor for the Plum Coulee Inventory shall be the sum of CAD$1,825,000, subject to the adjustments hereinafter described (the “Plum Coulee Price”), allocated among the Grain products as indicated on Schedule A and shall be paid as set out in subparagraph 5 (f) hereof;
(b) The Plum Coulee Price shall be adjusted only for any shortfall or overage of weight or any grade differential in accordance with the Adjustment Schedule;
(c) All of the Plum Coulee Inventory will be cleaned and bagged by GFI into 100- pound bags as provided by GFI. Cleaning and packing will be completed and all machinery will be operated, where possible, by former employees of Global under the supervision and direction of GFI, and GFI agrees to pay to the Vendor, in addition to the Plum Coulee Price, all costs associated with the cleaning, bagging 000126
and loading of the Plum Coulee Inventory, including the costs of the former Global staff utilized in the process of cleaning, bagging and loading the product, inclusive of salaries, benefits, workers compensation and insurance, to a maximum of $100,000, forthwith on receipt of an invoice from the Vendor for such amounts. For greater clarity, the Vendor will not be reimbursed for the costs of its own personnel, or for the attendance of one senior former employee of Global as contact person to coordinate access to Plum Coulee and shipments by GFI from Plum Coulee;
(d) The Vendor and the Company shall have no liability to GFI in respect of the cleaning, bagging and loading of the Plum Coulee Inventory;
(e) GFI agrees that it will use its best commercial efforts to remove, or cause to be removed, all of the Plum Coulee Inventory, with all loading, transportation and other associated costs to be at GFI’s expense, by no later than February 15, 2021;
(f) If, notwithstanding GFI’s best commercial efforts in section 5(e), Plum Coulee Inventory remains at Plum Coulee on February 15, 2021, then GFI shall ensure that the Plum Coulee Inventory is removed prior to February 28, 2021 unless either of the following occur:
(i) If the transfer of title to the Plum Coulee facility is extended beyond the anticipated closing date of February 28, 2021 then the deadline for GFI to remove the Plum Coulee Inventory will be extended for such time as is necessary to complete promptly the removal of the remaining Plum Coulee Inventory but in no event past the day that is one day prior to the revised closing date; or
(ii) GFI enters into an agreement with the purchaser of the Plum Coulee facility to allow for the Inventory to be removed after the date for removal in this agreement. GFI acknowledges that the Vendor is under no obligation to provide the identity or contact information of any potential purchaser of the Plum Coulee facility to GFI.
(g) Subject to paragraph 8 hereof, GFI will make payment to the Vendor on Wednesday of each week for the estimated proportion of the product removed during the week ending the prior Friday. GFI will make payment to the Vendor of the final balance of the Plum Coulee Purchase Price from the $1,825,000 initial Plum Coulee Purchase Price, as adjusted by the Adjustment Schedule, within 72 hours following the final removal of the Plum Coulee Inventory product by GFI from Plum Coulee, or the final date for removal of the Plum Coulee Inventory, whichever first occurs. Title to the Plum Coulee Inventory will pass from the Vendor to GFI as and when the Plum Coulee Inventory is removed from Plum Coulee.
(h) The Vendor will, notwithstanding any other term of this Agreement or the satisfaction of the conditions precedent in section 11, immediately upon execution 000127
of this Agreement provide GFI with the contact information of the site managers at Plum Coulee to coordinate personnel in advance of Court approval.
6. Determination of Adjustments
In respect of the adjustments described in paragraphs 4(b) and 5(b) hereof, the parties agree that confirmation of weight and grade shall be performed by SGS Canada Inc. (“SGS”), which determination shall then adjust the Kindersley Price and the Plum Coulee Price in accordance with the rate of adjustment set out in the Adjustment Schedule, and that all good faith determinations by SGS shall be final and binding upon the parties. GFI agrees to pay all expenses and charge of SGS associated with the work related to this contract.
7. Purchase of Non-Site Inventory
The parties understand that certain producers received inventory from Plum Coulee (the “Non- Site Inventory”) prior to the date of receivership in excess of the amounts of their respective elevator tickets. The amount of the Non-Site Inventory is estimated to be approximately 470,000 pounds of pinto beans and 19,500 pounds of black beans. The Vendor agrees that it will provide to GFI the information in its possession in respect of such producers holding such over-returns and GFI agrees to contact such producers to seek recovery of the Non-Site Inventory. GFI agrees that it will purchase from the Vendor all Non-Site Inventory recovered by GFI from such producers and shall pay to the Vendor for such Non-Site Inventory, a price equal to 80% of the prices reflected in the Adjustment Schedule, within 72 hours of GFI acquiring possession of such Non- Site Inventory. For clarity, GFI shall not be obligated to undertake any formal proceedings or extraordinary recovery efforts to recover such Non-Site Inventory, but GFI shall assume responsibility for all costs associated with the recovery and acquisition of such Non-Site Inventory.
8. Direction to Escrow Agent
The Vendor hereby authorizes and directs GFI to make payment to Aird & Berlis LLP in trust for the Vendor, as Escrow Agent (the “Escrow Agent”) to be held by the Escrow Agent and released to the Vendor in accordance with the terms of the separate escrow agreement entered into at or about the date hereof, from the GFI Price, the Kindersley Price and the Plum Coulee Price as paid, the following amounts:
(a) $150,000 of the amount payable in respect of Inventory at GFI Locations;
(b) $50,000 of the amount payable in respect of the Kindersley Inventory; and
(c) $300,000 of the first amounts payable in respect of the Plum Coulee Inventory.
In respect of the Inventory described in paragraph 7 hereof, no amounts shall be payable under this paragraph. The Vendor will confirm to the Escrow Agent upon the transfer of all Inventory described in this Agreement and payment by GFI of all amounts to be paid in this Agreement. 000128
9. Provision of Broker Information
For the same consideration as set out herein, the Vendor agrees to provide to GFI information and documentation concerning existing unfulfilled broker contracts for the Inventory between the Company and third parties, including details as to pricing, product and quantities. The Vendor consents to GFI making use of such information for its own business purposes. Nothing in this Agreement shall constitute an assignment of any brokerage contract, nor shall GFI assume any liability or obligation for performance of any such contract.
10. Conveyance of GFI Security
The Vendor agrees that, it shall seek an Order (the “Vesting Order”) of the Ontario Superior Court of Justice:
(a) assigning and vesting all right, title, and interest of Canpulse in and to the Mortgage to and in The Toronto-Dominion Bank (“TD”);
(b) directing the Saskatchewan Registrar of Titles to accept an application to assign Interest Register #123754248 and to effect a change in the interest holder from Canpulse to TD pursuant to section 109 of The Land Titles Act, 2000, S.S. 2000, c. L-5.1 and section 12 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01 (the “Application”); and
(c) authorizing the Receiver to effect the assignment to TD of any registrations in the Saskatchewan Personal Property Registry which name Canpulse as a secured party; and
As soon as practicable after the granting the Vesting Order, the Vendor shall file the Application with the Saskatchewan Registrar of Titles and the assignment in the Saskatchewan Personal Property Registry.
11. Condition on Court Approval
The Vendor and GFI agree that the obligations of the Vendor and the Purchaser pursuant to this Agreement are conditional upon: (a) receipt of the Vesting Order, and (b) the Vendor receiving Court approval for this Agreement and for the completion of the transactions in the manner provided for herein.
12. Execution in Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed to be an original and which taken together will be deemed to constitute one and the same instrument. Counterparts may be executed either in original or portable document format (“PDF”) form and the parties adopt any signatures received by emailed PDF as original signatures of the parties, provided, however, that any party providing its signature in such manner will promptly forward to the other party an original of the signed copy of the Agreement which was so emailed.
[Signatures to follow] 000129 000130
IN WITNESS WHEREOF the parties have executed this agreement as of the date first above mentioned.
GLOBAL FOOD AND INGREDIENTS INC.
Per: Dated Name: Title:
GFI LP By its General Partner 11567403 Canada Inc.
Per: Dated Name: Title:
11567403 CANADA INC.
Per: Dated Name: Title:
Globeways Canada Inc., Canpulse Foods Ltd. and Global Grain Canada Ltd. by its court appointed receiver and manager BDO Canada Limited
Per: Dated Name: Title: 42864563.2 000131
Schedule A
Weight Location Commodity Value ($) CAD (MT) Kindersley SK Canadian Brown Mustard Seeds Gr 2 9.5 6,185 Oriental Mustard Seeds #2 94.5 53,249 Green lentils (Laird Gr. 2) 48.9 35,370 Green lentils (Laird Gr. 3) 16.4 8,533 Red Lentils - Crimson - Gr.2 74.2 43,320 Red Lentils - Crimson - Gr.3 61.5 28,343 Kindersley SK total $ 175,000
GFI Green Lentils - Eston - Gr.1 100.0 84,048 Green Lentils - French - Gr.1 88.4 67,188 Green Lentils - Laird - Gr.2 229.5 232,635 Green Lentils - Laird - Gr.2 25.4 25,715 Red Lentils - Crimson - Gr.2 103.2 83,557 Red Lentils - Crimson - Gr.2 110.8 89,848 Green Peas - Canada - Grade 2 187.5 94,178 Green Peas - Canada - Grade 2 105.2 52,849 Maple Peas - Canada - Gr 2 0.9 478 Yellow Whole Peas Gr.2 44.5 19,504 GFI locations Total $ 750,000
Plum Coulee, MB CDN#1 Black Beans 266.1 258,749 CDN#1 Cranberry Beans 445.6 491,348 CDN#1 Dark Red Kidney Beans 322.0 398,421 CDN#1 Light Red Kidney Beans 250.2 343,321 CDN#1 Pinto Beans 436.0 333,160 Plum Coulee, MB total $ 1,825,000 Total sale price $ 2,750,000 000132
Schedule B
Price applied to Shortfall/Overage Reduction per Grade $ Per $ Per CDN#1 Black Beans 0.36 Ilb 0.06 Ilb CDN#1 Cranberry Beans 0.46 Ilb 0.06 Ilb CDN#1 Dark Red Kidney Beans 0.50 Ilb 0.06 Ilb CDN#1 Light Red Kidney Beans 0.50 Ilb 0.06 Ilb CDN#1 Pinto Beans 0.32 Ilb 0.06 Ilb Green Lentils - Eston - Gr.1 0.29 Ilb 0.04 Ilb Green Lentils - French - Gr.1 0.24 Ilb 0.04 Ilb Green Lentils - Laird - Gr.2 0.33 Ilb 0.06 Ilb Green lentils (Laird Gr. 3) 0.27 Ilb 0.06 Ilb Red Lentils - Crimson - Gr.2 0.25 Ilb 0.04 Ilb Red Lentils - Crimson - Gr.3 0.21 Ilb 0.04 Ilb Green Peas - Canada - Grade 2 9.50 Bushel 1.00 Bushel Maple Peas - Canada - Gr 2 10.50 Bushel 1.00 Bushel Yellow Whole Peas Gr.2 9.00 Bushel 1.00 Bushel Canadian Brown Mustard Seeds Gr 2 0.29 Ilb 0.04 Ilb Oriental Mustard Seeds #2 0.27 Ilb 0.04 Ilb 000133
AGREEMENT
This agreement (“Agreement”) made as of the 16th day of December, 2020 as between:
11567403 CANADA INC., as general partner on behalf of GFI LP (“GFI”)
AND
THE TORONTO-DOMINION BANK (“TD Bank”)
AND WHEREAS GFI LP as Buyer entered into an asset purchase agreement dated as of November 26, 2019 with Canpulse Foods Ltd. (“Canpulse”) as Seller (“Asset Purchase Agreement”) whereby 11567403 Canada Inc. , as general partner on behalf of GFI, acquired legal title to certain properties identified as Surface Parcel #111788219, #202892519 and #145169185 in the Province of Saskatchewan (the “Properties”);
AND WHEREAS in connection with the Asset Purchase Agreement, Canpulse received a Promissory Note in the amount of $3,000,000 from GFI LP as a portion of the purchase price (the Promissory Note”);
AND WHEREAS the Promissory Note was secured by Mortgages granted by 11567403 Canada Inc. upon the title to the Properties recorded as interest numbers 186671234, 186671245 and 186671256 against the title to the Properties and registration in the Saskatchewan Personal Property Registry (“PPR Registration”);
AND WHEREAS Canpulse was a borrower from TD Bank and subject to certain security interests granted by Canpulse to TD Bank, including a specific assignment of the Promissory Note and the Mortgages;
AND WHEREAS Canpulse was obligated to GFI LP and others pursuant to a toll processing agreement (the “Toll Processing Agreement”) to provide inventory for processing to the production plants operated by GFI;
AND WHEREAS the Promissory Note and the Mortgage were assigned by Canpulse to TD Bank pursuant to an Assignment of Debt and Security dated November 29, 2019;
AND WHEREAS Canpulse is insolvent and ceased to carry on business as of the date of its receivership, namely November 19, 2020, and is therefore no longer fulfilling its obligations under the Toll Processing Agreement;
AND WHEREAS BDO Canada Limited was appointed as Receiver of Canpulse and related entities on November 19, 2020 (in such capacity the “Receiver”);
AND WHEREAS prior to the receivership GFI LP commenced legal proceedings against Canpulse for damages incurred by GFI LP as a result of its breach of the Toll Processing Agreement; 000134
AND WHEREAS in mitigation of such damages and the covenants of TD Bank in this Agreement, GFI LP has agreed to purchase from the Receiver of Canpulse and its affiliates certain inventories of those entities pursuant to an Inventory Sale Agreement entered into as of the date hereof between GFI and BDO Canada Limited in its capacity as Receiver of Globeways Canada Inc., Canpulse Foods Ltd. and Global Grain Canada Ltd. (the “Inventory Sale Agreement”);
AND WHEREAS under the Inventory Sale Agreement a portion of the purchase price has been directed to being paid to an escrow agent as defined in the said agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the parties hereto do hereby agree as follows:
1. TD Bank agrees that it will release all security held in respect to GFI, and will execute and deliver to Aird & Berlis LLP (the “Escrow Agent”) in trust for the benefit of GFI, a discharge of the Mortgages in the form appended as Schedule “A” hereto, discharge of the PPR Registration, and an Acknowledgement of Satisfaction of the Promissory Note in the form appended as Schedule “B” hereto, which documents shall be held by the Escrow Agent and released to GFI immediately upon the fulfilment of the requirement in section 2 of this Agreement;
2. TD Bank authorizes and directs the Escrow Agent to release to the solicitors of GFI LP for registration the discharge of Mortgages and PPR Registration and the Acknowledgement of Satisfaction of the Promissory Note upon GFI having fully performed the following obligations in the Inventory Sale Agreement:
(a) Purchase of the Kindersley Inventory, Inventory at GFI Locations and Plum Coulee Inventory, subject to all adjustments for volume and quality, and the payment of all amounts required to be paid by GFI for the purchase of such Inventory, upon the terms set out in the Inventory Sale Agreement, confirmed to the Escrow Agent by the Receiver; and
(b) has completed the removal for the Kindersley Inventory and the removal of the Plum Coulee Inventory, or made the alternative arrangements therefore as provided at Section 5 of the Inventory Sale Agreement;
3. GFI directs the Escrow Agent to release the funds received by it under the Inventory Sale Agreement to the Receiver as and when the Escrow Agent has released to GFI the discharges and Acknowledgement in accordance with Section 2 hereof.
4. TD Bank warrants and represents that, as of the granting of the Vesting Order, it will have the authority to grant the discharge of the Mortgage and PPR Registration and provide the Acknowledgement of Satisfaction of the Promissory Note as herein provided, and that it has done no act to release or discharge its security interest over the Mortgages and Promissory Note.
5. The parties acknowledge and agree that the covenants and obligations in this Agreement are subject to the execution and delivery of the Inventory Sale Agreement and the Receiver 000135
receiving Court approval for the Inventory Sale Agreement and the completion of the transactions in the manner provided for herein.
6. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and which taken together will be deemed to constitute one and the same instrument. Counterparts may be executed either in original or portable document format (“PDF”) form and the parties adopt any signatures received by emailed PDF as original signatures of the parties, provided, however, that any party providing its signature in such manner will promptly forward to the other party an original of the signed copy of the Agreement which was so emailed.
IN WITNESS WHEREOF the parties have placed their hands as of the date first above noted.
THE TORONTO-DOMINION BANK
Per: Dated Name: Title:
GFI LP by its general partner 11567403 CANADA INC.
Per: Dated Name: Title:
Internal 000136 000137
SCHEDULE “A” (Discharge of Mortgage)
000138 Interest Authorization Corporate Entity with No Seal Affixed Page 1 of 2
Authorization
, authorizes by the signature of its proper signing officer: (Corporation Name)
Assignment to of Interest Register Number ______Interest Number(s)/Share Number(s)
Amendment of Interest Register Number ______
Full Discharge of Interest Register Number ______
Partial Discharge of Interest Register Number ______Interest Number(s)
Date (day, month, year) Witness Signature Corporate Officer Signature
Check if Witness is Lawyer for the Province of Saskatchewan ______Lawyer Name
Affidavit Verifying Corporate Signing Authority (if no corporate seal)
I, of in the Province of ______Corporate Signing Officer Place make oath and say that:
1. I am of named in this document. (position) (Corporation Name) 000139 Interest Authorization Corporate Entity with No Seal Affixed Page 2 of 2
2. I am authorized by the corporation to execute the document without affixing a corporate seal.
Sworn before me at in the Province of on Date (day, month, year) Corporate Officer Signature
A Commissioner for Oaths for Ontario OR Notary Public for the Province of
My commission/appointment expires
OR Being a Solicitor Date (day, month, year) Affidavit of Execution (if witness is not a Saskatchewan lawyer)
I, of in the Province of ______Witness Name Place make oath and say that:
1. I personally know who is (person whose signature was witnessed) Or I have satisfied myself that is (person whose signature was witnessed)
the individual who signed this document on behalf of the Corporation Named in this document and I was personally present when it was signed.
2. The individual whose signature I witnessed is in my belief the full age of eighteen years.
Sworn before me at in the Province of on ______Date (day, month, year) Witness Signature
A Commissioner for Oaths for Ontario OR Notary Public for the Province of
My commission/appointment expires
OR Being a Solicitor Date (day, month, year)
ISC-LTR-INS0001-2005 06 06 000140
SCHEDULE “B” (Acknowledgement of Satisfaction of the Promissory Note)
000141
ACKNOWLEDGEMENT of SATISFACTION of PROMISSORY NOTE
WHEREAS GFI LP by its General Partner, 11567403 Canada Inc. (“GFI”) granted a promissory note dated November 26, 2019 (the “Promissory Note”) to CanPulse Foods Ltd. (“Canpulse”) whereby GFI LP unconditionally promised to pay to the order of Canpulse the principal sum of $3 million;
AND WHEREAS Canpulse, together with Hakan Agro DMCC and Globeways Canada Inc., entered into a Toll Processing Agreement with GFI on or about the same date as the Promissory Note, being November 26, 2019 (the “Toll Processing Agreement”);
AND WHEREAS the Promissory Note together with any and all security granted for said Promissory Note, was assigned by Canpulse to The Toronto-Dominion Bank (“TD Bank”) pursuant to an assignment of debt and security dated November 29, 2019 (the “Assignment”);
AND WHEREAS Canpulse became insolvent and subject to the appointment of a court appointed receiver as of November 19, 2020;
AND WHEREAS by reason of its insolvency, Canpulse has been unable to perform the obligations that it had pursuant to the Toll Processing Agreement;
AND WHEREAS GFI and TD Bank have agreed that there are currently no amounts presently due for payment under the promissory note;
NOW THEREFORE in consideration of the sum of $2.00, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledges, TD Bank hereby acknowledges and confirms that:
(a) all amounts owing or payable by GFI to TD Bank under the Promissory Note, currently or in the future, are hereby satisfied, released and waived; and
(b) TD Bank releases GFI of and from any and all claims or demands under or arising under the Promissory Note or any security held therefore.
TD Bank warrants that it is the present holder of the Promissory Note and the security, and that it has done no act to reassign or otherwise encumber such a Promissory Note or security.
DATED at Toronto, this _____ day of December, 2020.
THE TORONTO-DOMINION BANK
Per: Name: ASO Title:
I have the authority to bind the Corporation.
Internal 000142
Internal 000143 000144
Court File No. CV-20-00650857-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE HONOURABLE MR. ) MONDAY, THE 4TH DAY ) JUSTICE CAVANAGH ) OF JANUARY, 2021
THE TORONTO-DOMINION BANK Applicant - and –
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
APPROVAL AND VESTING ORDER (Inventory Sales Transaction)
THIS MOTION, made by BDO Canada Limited in its capacity as the Court-appointed receiver and manager (the "Receiver"), without security, of all of the undertaking, property and assets of each of Globeways Canada Inc. (“Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global Grain” and collectively with Globeways and Canpulse, the “Debtors”) acquired for, or used in relation to a business carried on by the Debtors, for an order, inter alia, approving the sale transaction (the "Inventory Sales Transaction") contemplated by an Inventory Sale Agreement (the "ISA") between the Receiver in its capacity as Receiver of the Debtors as vendor and Global Food and Ingredients Inc., GFI LP and 11567403 Canada Ltd. (together the "Purchaser") as purchaser dated effective December 16, 2020, was heard this day via teleconference due to the COVID-19 crisis.
ON READING the Motion Record of the Receiver, the Second Report of the Receiver dated December 28, 2020 (the “Second Report”), and on hearing the submissions of counsel for
000145
Page 2
the Receiver, counsel for The Toronto-Dominion Bank, counsel for Farm Credit Canada and such other counsel that were present, no one appearing for any other person on the service list, although properly served as appears from the affidavit of *** sworn December ***, 2020 filed December ***, 2020.
1. THIS COURT ORDERS that the time for service of the Notice of Motion, Motion Record and the Second Report is hereby abridged and validated so that this Motion is properly returnable today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS AND DECLARES that the Inventory Sales Transaction is hereby approved, and the execution of the ISA by the Receiver is hereby authorized and approved, with such minor amendments as the Receiver may deem necessary. The Receiver is hereby authorized and directed to take such additional steps and execute such additional documents as may be necessary or desirable for the completion of the Inventory Sales Transaction and for the conveyance of the Inventory to the Purchaser.
3. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its 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 Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order.
______
THE TORONTO-DOMINION BANK AND GLOBEWAYS CANADA INC. et al
000146 Applicant Respondents
Court File No. CV-20-00650857-00CL ______
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST PROCEEDING COMMENCED AT TORONTO
APPROVAL AND VESTING ORDER
MLT AIKINS LLP 360 Main St, 30th Floor, Winnipeg, MB R3C 4G1 Tel: (204) 957-0050
J.J. Burnell [email protected] (204) 957-4663
- and - ROBINS APPLEBY 2600-120 Adelaide Street West Toronto, ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected]
Lawyers for the Receiver BDO Canada Limited
DOCSTOR: 1201927\14
000147
Revised: January 21, 2014
Court File No. CV-20-00650857-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE HONOURABLE MR. ) MONDAY, THE 4TH DAY ) JUSTICE CAVANAGH ) OF JANUARY, 2021
THE HONOURABLE ) WEEKDAY, THE # ) JUSTICE ) DAY OF MONTH, 20YR
B E T W E E N:
PLAINTIFF
Plaintiff
THE TORONTO-DOMINION BANK Applicant - and –– DEFENDANT
Defendant
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
APPROVAL AND VESTING ORDER (Inventory Sales Transaction) DOCSTOR: 1201927\14
000148 Page 2 2
THIS MOTION, made by [RECEIVER'S NAME]BDO Canada Limited in its capacity as the Court-appointed receiver and manager (the "Receiver"), without security, of all of the undertaking, property and assets of [DEBTOR] (the "Debtor") for an ordereach of Globeways Canada Inc. (“Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global Grain” and collectively with Globeways and Canpulse, the “Debtors”) acquired for, or used in relation to a business carried on by the Debtors, for an order, inter alia, approving the sale transaction (the "Inventory Sales Transaction") contemplated by an agreement of purchase and sale (the "Inventory Sale Agreement (the "ISA") between the Receiver and [NAME OF PURCHASER] (the "Purchaser") dated [DATE] and appended to the Report of the Receiver dated [DATE] (the "Report"), and vesting in the Purchaser the Debtor’s right, title and interest in and to the assets described in the Sale Agreement (the "Purchased Assets"), was heard this day at 330 University Avenue, Toronto, Ontarioin its capacity as Receiver of the Debtors as vendor and Global Food and Ingredients Inc., GFI LP and 11567403 Canada Ltd. (together the "Purchaser") as purchaser dated effective December 16, 2020, was heard this day via teleconference due to the COVID-19 crisis.
ON READING the ReportMotion Record of the Receiver, the Second Report of the Receiver dated December 28, 2020 (the “Second Report”), and on hearing the submissions of counsel for the Receiver, [NAMES OF OTHER PARTIES APPEARING], counsel for The Toronto-Dominion Bank, counsel for Farm Credit Canada and such other counsel that were present, no one appearing for any other person on the service list, although properly served as appears from the affidavit of [NAME]*** sworn [DATE]December ***, 2020 filed1: December ***, 2020.
1. THIS COURT ORDERS AND DECLARES that the Transaction is hereby approved,2 and the execution of the Sale Agreement by the Receiver3 is hereby authorized and approved,
1 This model order assumes that the time for service does not need to be abridged. The motion seeking a vesting order should be served on all persons having an economic interest in the Purchased Assets, unless circumstances warrant a different approach. Counsel should consider attaching the affidavit of service to this Order. 2 In some cases, notably where this Order may be relied upon for proceedings in the United States, a finding that the Transaction is commercially reasonable and in the best interests of the Debtor and its stakeholders may be necessary. Evidence should be filed to support such a finding, which finding may then be included in the Court's endorsement. 3 In some cases, the Debtor will be the vendor under the Sale Agreement, or otherwise actively involved in the Transaction. In those cases, care should be taken to ensure that this Order authorizes either or both of the Debtor and the Receiver to execute and deliver documents, and take other steps. DOCSTOR: 1201927\14
000149 Page 3 3 with such minor amendments as the Receiver may deem necessary. The Receiver is hereby authorized and directed to take such additional steps and execute such additional documents as may be necessary or desirable for the completion of the Transaction and for the conveyance of the Purchased Assets to the Purchaserthat the time for service of the Notice of Motion, Motion Record and the Second Report is hereby abridged and validated so that this Motion is properly returnable today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS AND DECLARES that upon the delivery of a Receiver’s certificate to the Purchaser substantially in the form attached as Schedule A hereto (the "Receiver's Certificate"), all of the Debtor's right, title and interest in and to the Purchased Assets described in the Sale Agreement [and listed on Schedule B hereto]4 shall vest absolutely in the Purchaser, free and clear of and from any and all security interests (whether contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or monetary claims, whether or not they have attached or been perfected, registered or filed and whether secured, unsecured or otherwise (collectively, the "Claims"5) including, without limiting the generality of the foregoing: (i) any encumbrances or charges created by the Order of the Honourable Justice [NAME] dated [DATE]; (ii) all charges, security interests or claims evidenced by registrations pursuant to the Personal Property Security Act (Ontario) or any other personal property registry system; and (iii) those Claims listed on Schedule C hereto (all of which are collectively referred to as the "Encumbrances", which term shall not include the permitted encumbrances, easements and restrictive covenants listed on Schedule D) and, for greater certainty, this Court orders that all of the Encumbrances affecting or relating to the Purchased Assets are hereby expunged and discharged as against the Purchased Assets.the Inventory Sales Transaction is hereby approved, and the execution of the ISA by the Receiver is hereby authorized and approved, with such minor amendments as the Receiver may deem necessary. The Receiver is hereby authorized and directed to take such additional steps and execute such additional documents as may be necessary
4 To allow this Order to be free-standing (and not require reference to the Court record and/or the Sale Agreement), it may be preferable that the Purchased Assets be specifically described in a Schedule. 5 The "Claims" being vested out may, in some cases, include ownership claims, where ownership is disputed and the dispute is brought to the attention of the Court. Such ownership claims would, in that case, still continue as against the net proceeds from the sale of the claimed asset. Similarly, other rights, titles or interests could also be vested out, if the Court is advised what rights are being affected, and the appropriate persons are served. It is the Subcommittee's view that a non-specific vesting out of "rights, titles and interests" is vague and therefore undesirable. DOCSTOR: 1201927\14
000150 Page 4 4 or desirable for the completion of the Inventory Sales Transaction and for the conveyance of the Inventory to the Purchaser.
3. THIS COURT ORDERS that upon the registration in the Land Registry Office for the [Registry Division of {LOCATION} of a Transfer/Deed of Land in the form prescribed by the Land Registration Reform Act duly executed by the Receiver][Land Titles Division of {LOCATION} of an Application for Vesting Order in the form prescribed by the Land Titles Act and/or the Land Registration Reform Act]6, the Land Registrar is hereby directed to enter the Purchaser as the owner of the subject real property identified in Schedule B hereto (the “Real Property”) in fee simple, and is hereby directed to delete and expunge from title to the Real Property all of the Claims listed in Schedule C hereto.
4. THIS COURT ORDERS that for the purposes of determining the nature and priority of Claims, the net proceeds7 from the sale of the Purchased Assets shall stand in the place and stead of the Purchased Assets, and that from and after the delivery of the Receiver's Certificate all Claims and Encumbrances shall attach to the net proceeds from the sale of the Purchased Assets with the same priority as they had with respect to the Purchased Assets immediately prior to the sale8, as if the Purchased Assets had not been sold and remained in the possession or control of the person having that possession or control immediately prior to the sale.
5. THIS COURT ORDERS AND DIRECTS the Receiver to file with the Court a copy of the Receiver's Certificate, forthwith after delivery thereof.
6. THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal Information Protection and Electronic Documents Act, the Receiver is authorized and permitted to disclose and transfer to the Purchaser all human resources and payroll information in the Company's records pertaining to the Debtor's past and current employees, including personal information of those employees listed on Schedule "●" to the Sale Agreement. The Purchaser shall maintain and protect the privacy of such information and shall be entitled to use the
6 Elect the language appropriate to the land registry system (Registry vs. Land Titles). 7 The Report should identify the disposition costs and any other costs which should be paid from the gross sale proceeds, to arrive at "net proceeds". 8 This provision crystallizes the date as of which the Claims will be determined. If a sale occurs early in the insolvency process, or potentially secured claimants may not have had the time or the ability to register or perfect proper claims prior to the sale, this provision may not be appropriate, and should be amended to remove this crystallization concept. DOCSTOR: 1201927\14
000151 Page 5 5 personal information provided to it in a manner which is in all material respects identical to the prior use of such information by the Debtor.
7. THIS COURT ORDERS that, notwithstanding:
(a) the pendency of these proceedings;
(b) any applications for a bankruptcy order now or hereafter issued pursuant to the
Bankruptcy and Insolvency Act (Canada) in respect of the Debtor and any
bankruptcy order issued pursuant to any such applications; and
(c) any assignment in bankruptcy made in respect of the Debtor;
the vesting of the Purchased Assets in the Purchaser pursuant to this Order shall be binding on any trustee in bankruptcy that may be appointed in respect of the Debtor and shall not be void or voidable by creditors of the Debtor, nor shall it constitute nor be deemed to be a fraudulent preference, assignment, fraudulent conveyance, transfer at undervalue, or other reviewable transaction under the Bankruptcy and Insolvency Act (Canada) or any other applicable federal or provincial legislation, nor shall it constitute oppressive or unfairly prejudicial conduct pursuant to any applicable federal or provincial legislation.
8. THIS COURT ORDERS AND DECLARES that the Transaction is exempt from the application of the Bulk Sales Act (Ontario).
3. 9. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its 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 Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order. DOCSTOR: 1201927\14
000152 Page 6 6 ______DOCSTOR: 1201927\14
000153
Revised: January 21, 2014
Schedule A – Form of Receiver’s CertificateTHE TORONTO-DOMINION BANK AND GLOBEWAYS CANADA INC. et al Applicant Respondents
Court File No. CV-20-00650857-00CL ______ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
B E T W E E N:
PLAINTIFF
Plaintiff
- and –
DEFENDANT
Defendant
RECEIVER’S CERTIFICATE
RECITALS DOCSTOR: 1201927\14
000154
- 2 - A. Pursuant to an Order of the Honourable [NAME OF JUDGE] of the Ontario Superior Court of Justice (the "Court") dated [DATE OF ORDER], [NAME OF RECEIVER] was appointed as the receiver (the "Receiver") of the undertaking, property and assets of [DEBTOR] (the “Debtor”).
B. Pursuant to an Order of the Court dated [DATE], the Court approved the agreement of purchase and sale made as of [DATE OF AGREEMENT] (the "Sale Agreement") between the Receiver [Debtor] and [NAME OF PURCHASER] (the "Purchaser") and provided for the vesting in the Purchaser of the Debtor’s right, title and interest in and to the Purchased Assets, which vesting is to be effective with respect to the Purchased Assets upon the delivery by the Receiver to the Purchaser of a certificate confirming (i) the payment by the Purchaser of the Purchase Price for the Purchased Assets; (ii) that the conditions to Closing as set out in section ● of the Sale Agreement have been satisfied or waived by the Receiver and the Purchaser; and (iii) the Transaction has been completed to the satisfaction of the Receiver.
C. Unless otherwise indicated herein, terms with initial capitals have the meanings set out in the Sale Agreement.
THE RECEIVER CERTIFIES the following:
1. The Purchaser has paid and the Receiver has received the Purchase Price for the Purchased Assets payable on the Closing Date pursuant to the Sale Agreement;
2. The conditions to Closing as set out in section ● of the Sale Agreement have been satisfied or waived by the Receiver and the Purchaser; and
3. The Transaction has been completed to the satisfaction of the Receiver.
4. This Certificate was delivered by the Receiver at ______[TIME] on ______[DATE]. DOCSTOR: 1201927\14
000155
- 2 - DOCSTOR: 1201927\14
000156
Revised: January 21, 2014
[NAME OF RECEIVER], in its capacity as Receiver of the undertaking, property and assets of [DEBTOR], and not in its personal capacity
Per: Name: Title: DOCSTOR: 1201927\14
000157
Revised: January 21, 2014
Schedule B – Purchased Assets
Schedule C – Claims to be deleted and expunged from title to Real Property DOCSTOR: 1201927\14
000158
- 2 -
Schedule D – Permitted Encumbrances, Easements and Restrictive Covenants related to the Real Property
(unaffected by the Vesting Order)
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST PROCEEDING COMMENCED AT TORONTO
APPROVAL AND VESTING ORDER
MLT AIKINS LLP 360 Main St, 30th Floor, Winnipeg, MB R3C 4G1 Tel: (204) 957-0050
J.J. Burnell [email protected] (204) 957-4663
- and - ROBINS APPLEBY 2600-120 Adelaide Street West Toronto, ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected]
Lawyers for the Receiver BDO Canada DOCSTOR: 1201927\14
000159
- 2 -
Limited
robapp\ 000160
Document comparison by Workshare 9.5 on December 29, 2020 10:37:36 AM Input: file://C:\Users\jbugden\Dropbox\My PC Document 1 ID (D01LIT101)\Desktop\Stuff for DOM\approval-and-vesting-order-EN (Model Order).doc Description approval-and-vesting-order-EN (Model Order) file://C:\Users\jbugden\Dropbox\My PC Document 2 ID (D01LIT101)\Desktop\Stuff for DOM\4 - ISA Order v.6.docx Description 4 - ISA Order v.6 Rendering set Standard
Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell 000161
Statistics: Count Insertions 54 Deletions 94 Moved from 3 Moved to 3 Style change 0 Format changed 0 Total changes 154 000162
Court File No. CV-20-00650857-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE HONOURABLE MR. ) MONDAY, THE 4TH DAY ) JUSTICE CAVANAGH ) OF JANUARY, 2021
THE TORONTO-DOMINION BANK Applicant - and –
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
APPROVAL AND VESTING ORDER (Mortgage Assignment)
THIS MOTION, made by BDO Canada Limited in its capacity as the Court-appointed receiver and manager (the "Receiver"), without security, of all of the undertaking, property and assets of each of Globeways Canada Inc. (“Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global Grain” and collectively with Globeways and Canpulse, the “Debtors”) acquired for, or used in relation to a business carried on by the Debtors, for an order, inter alia, approving the assignment and vesting all right, title and interest of Canpulse in and to the collateral mortgage (the “Mortgage”) granted in favour of Canpulse by 11567403 Canada Inc. dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry as Interest Register #123754248 by the Receiver in its capacity as Receiver of the Debtors to and in The Toronto-Dominion Bank (“TD”), and directing the Saskatchewan Registrar of Titles to accept an application to assign the Interest Register #123754248 and effect a change in the interest holder from Canpulse to TD, was heard this day via teleconference due to the COVID-19 crisis.
000163
Page 2
ON READING the Motion Record of the Receiver, the Second Report of the Receiver dated December 28, 2020 (the “Second Report”), and on hearing the submissions of counsel for the Receiver, counsel for TD, counsel for Farm Credit Canada and such other counsel that were present, no one appearing for any other person on the service list, although properly served as appears from the affidavit of *** sworn December ***, 2020 filed December ***, 2020.
1. THIS COURT ORDERS that the time for service of the Notice of Motion, Motion Record and the Second Report is hereby abridged and validated so that this Motion is properly returnable today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS AND DECLARES that the assignment of the Mortgage is hereby approved and that the Receiver is hereby authorized and directed to take such additional steps and execute such additional documents, including an application to assign Interest Register #123754248, as may be necessary or desirable for the completion of the Transaction and for the assignment of the Mortgage to TD.
3. THIS COURT ORDERS AND DECLARES that all right, title, and interest of Canpulse in and to the Mortgage granted in favour of Canpulse by 11567403 Canada Inc., dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry as Interest Register #123754248, hereby vests absolutely in TD.
4. THIS COURT ORDERS AND DECLARES that the Saskatchewan Registrar of Titles shall be and is hereby directed to accept an application to assign Interest Register #123754248, and to effect a change in the interest holder, from Canpulse into the name of TD pursuant to section 109 of The Land Titles Act, 2000, S.S. 2000, c. L-5.1 and section 12 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01.
5. THIS COURT ORDERS AND DECLARES that the Receiver shall be and is hereby authorized to effect the assignment to TD of any registrations in the Saskatchewan Personal Property Registry which name Canpulse as a secured party.
6. THIS COURT ORDERS that, notwithstanding:
(a) the pendency of these proceedings;
000164
Page 3
(b) any applications for a bankruptcy order now or hereafter issued pursuant to the
Bankruptcy and Insolvency Act (Canada) in respect of the Debtors and any
bankruptcy order issued pursuant to any such applications; and
(c) any assignment in bankruptcy made in respect of the Debtors;
the vesting of the Purchased Assets in the Purchaser pursuant to this Order shall be binding on any trustee in bankruptcy that may be appointed in respect of the Debtors and shall not be void or voidable by creditors of the Debtors, nor shall it constitute nor be deemed to be a fraudulent preference, assignment, fraudulent conveyance, transfer at undervalue, or other reviewable transaction under the Bankruptcy and Insolvency Act (Canada) or any other applicable federal or provincial legislation, nor shall it constitute oppressive or unfairly prejudicial conduct pursuant to any applicable federal or provincial legislation.
7. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its 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 Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order.
8. THIS COURT ORDERS that the Second Report and the activities of the Receiver described therein be and are hereby approved.
______
000165 THE TORONTO-DOMINION BANK AND GLOBEWAYS CANADA INC. et al Applicant Respondents
Court File No. CV-20-00650857-00CL ______
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST PROCEEDING COMMENCED AT TORONTO
APPROVAL AND VESTING ORDER
MLT AIKINS LLP 360 Main St, 30th Floor, Winnipeg, MB R3C 4G1 Tel: (204) 957-0050
J.J. Burnell [email protected] (204) 957-4663
- and - ROBINS APPLEBY 2600-120 Adelaide Street West Toronto, ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected]
Lawyers for the Receiver BDO Canada Limited
DOCSTOR: 1201927\14
000166
Revised: January 21, 2014
Court File No. CV-20-00650857-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE HONOURABLE MR. ) MONDAY, THE 4TH DAY ) JUSTICE CAVANAGH ) OF JANUARY, 2021
THE HONOURABLE ) WEEKDAY, THE # ) JUSTICE ) DAY OF MONTH, 20YR
B E T W E E N:
PLAINTIFF
Plaintiff
THE TORONTO-DOMINION BANK Applicant - and –– DEFENDANT
Defendant
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD. Respondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
APPROVAL AND VESTING ORDER (Mortgage Assignment) DOCSTOR: 1201927\14
000167 Page 2 2
THIS MOTION, made by [RECEIVER'S NAME]BDO Canada Limited in its capacity as the Court-appointed receiver and manager (the "Receiver"), without security, of all of the undertaking, property and assets of [DEBTOR] (the "Debtor") for an order approving the sale transaction (the "Transaction") contemplated by an agreement of purchase and sale (the "Sale Agreement") between the Receiver and [NAME OF PURCHASER] (the "Purchaser") dated [DATE] and appended to the Report of the Receiver dated [DATE] (the "Report"), and vesting in the Purchaser the Debtor’seach of Globeways Canada Inc. (“Globeways”), Canpulse Foods Ltd. (“Canpulse”) and Global Grain Canada Ltd. (“Global Grain” and collectively with Globeways and Canpulse, the “Debtors”) acquired for, or used in relation to a business carried on by the Debtors, for an order, inter alia, approving the assignment and vesting all right, title and interest of Canpulse in and to the assets described in the Sale Agreement (the "Purchased Assets"), was heard this day at 330 University Avenue, Toronto, Ontariocollateral mortgage (the “Mortgage”) granted in favour of Canpulse by 11567403 Canada Inc. dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry as Interest Register #123754248 by the Receiver in its capacity as Receiver of the Debtors to and in The Toronto-Dominion Bank (“TD”), and directing the Saskatchewan Registrar of Titles to accept an application to assign the Interest Register #123754248 and effect a change in the interest holder from Canpulse to TD, was heard this day via teleconference due to the COVID-19 crisis.
ON READING the ReportMotion Record of the Receiver, the Second Report of the Receiver dated December 28, 2020 (the “Second Report”), and on hearing the submissions of counsel for the Receiver, [NAMES OF OTHER PARTIES APPEARING], counsel for TD, counsel for Farm Credit Canada and such other counsel that were present, no one appearing for any other person on the service list, although properly served as appears from the affidavit of [NAME]*** sworn [DATE]December ***, 2020 filed1: December ***, 2020.
1. THIS COURT ORDERS that the time for service of the Notice of Motion, Motion Record and the Second Report is hereby abridged and validated so that this Motion is properly returnable today and hereby dispenses with further service thereof.
1 This model order assumes that the time for service does not need to be abridged. The motion seeking a vesting order should be served on all persons having an economic interest in the Purchased Assets, unless circumstances warrant a different approach. Counsel should consider attaching the affidavit of service to this Order. DOCSTOR: 1201927\14
000168 Page 3 3
2. 1. THIS COURT ORDERS AND DECLARES that the Transaction is hereby approved,2 and the execution of the Sale Agreement by the Receiver3 is hereby authorized and approved, with such minor amendments as the Receiver may deem necessary. Theassignment of the Mortgage is hereby approved and that the Receiver is hereby authorized and directed to take such additional steps and execute such additional documents, including an application to assign Interest Register #123754248, as may be necessary or desirable for the completion of the Transaction and for the conveyanceassignment of the Purchased AssetsMortgage to the PurchaserTD.
3. 2. THIS COURT ORDERS AND DECLARES that upon the delivery of a Receiver’s certificate to the Purchaser substantially in the form attached as Schedule A hereto (the "Receiver's Certificate"), all of the Debtor's right, title and interest in and to the Purchased Assets described in the Sale Agreement [and listed on Schedule B hereto]4 shall vest absolutely in the Purchaser, free and clear of and from any and all security interests (whether contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or monetary claims, whether or not they have attached or been perfected, registered or filed and whether secured, unsecured or otherwise (collectively, the "Claims"5) including, without limiting the generality of the foregoing: (i) any encumbrances or charges created by the Order of the Honourable Justice [NAME] dated [DATE]; (ii) all charges, security interests or claims evidenced by registrations pursuant to the Personal Property Security Act (Ontario) or any other personal property registry system; and (iii) those Claims listed on Schedule C hereto (all of which are collectively referred to as the "Encumbrances", which term shall not include the permitted encumbrances, easements and restrictive covenants listed on Schedule D) and, for greater certainty, this Court orders that 2 In some cases, notably where this Order may be relied upon for proceedings in the United States, a finding that the Transaction is commercially reasonable and in the best interests of the Debtor and its stakeholders may be necessary. Evidence should be filed to support such a finding, which finding may then be included in the Court's endorsement. 3 In some cases, the Debtor will be the vendor under the Sale Agreement, or otherwise actively involved in the Transaction. In those cases, care should be taken to ensure that this Order authorizes either or both of the Debtor and the Receiver to execute and deliver documents, and take other steps. 4 To allow this Order to be free-standing (and not require reference to the Court record and/or the Sale Agreement), it may be preferable that the Purchased Assets be specifically described in a Schedule. 5 The "Claims" being vested out may, in some cases, include ownership claims, where ownership is disputed and the dispute is brought to the attention of the Court. Such ownership claims would, in that case, still continue as against the net proceeds from the sale of the claimed asset. Similarly, other rights, titles or interests could also be vested out, if the Court is advised what rights are being affected, and the appropriate persons are served. It is the Subcommittee's view that a non-specific vesting out of "rights, titles and interests" is vague and therefore undesirable. DOCSTOR: 1201927\14
000169 Page 4 4 all of the Encumbrances affecting or relating to the Purchased Assets are hereby expunged and discharged as against the Purchased Assets.all right, title, and interest of Canpulse in and to the Mortgage granted in favour of Canpulse by 11567403 Canada Inc., dated November 26, 2019 and registered in the Saskatchewan Land Titles Registry as Interest Register #123754248, hereby vests absolutely in TD.
3. THIS COURT ORDERS that upon the registration in the Land Registry Office for the [Registry Division of {LOCATION} of a Transfer/Deed of Land in the form prescribed by the Land Registration Reform Act duly executed by the Receiver][Land Titles Division of {LOCATION} of an Application for Vesting Order in the form prescribed by the Land Titles Act and/or the Land Registration Reform Act]6, the Land Registrar is hereby directed to enter the Purchaser as the owner of the subject real property identified in Schedule B hereto (the “Real Property”) in fee simple, and is hereby directed to delete and expunge from title to the Real Property all of the Claims listed in Schedule C hereto.
4. THIS COURT ORDERS that for the purposes of determining the nature and priority of Claims, the net proceeds7 from the sale of the Purchased Assets shall stand in the place and stead of the Purchased Assets, and that from and after the delivery of the Receiver's Certificate all Claims and Encumbrances shall attach to the net proceeds from the sale of the Purchased Assets with the same priority as they had with respect to the Purchased Assets immediately prior to the sale8, as if the Purchased Assets had not been sold and remained in the possession or control of the person having that possession or control immediately prior to the sale.THIS COURT ORDERS AND DECLARES that the Saskatchewan Registrar of Titles shall be and is hereby directed to accept an application to assign Interest Register #123754248, and to effect a change in the interest holder, from Canpulse into the name of TD pursuant to section 109 of The Land Titles Act, 2000, S.S. 2000, c. L-5.1 and section 12 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01.
6 Elect the language appropriate to the land registry system (Registry vs. Land Titles). 7 The Report should identify the disposition costs and any other costs which should be paid from the gross sale proceeds, to arrive at "net proceeds". 8 This provision crystallizes the date as of which the Claims will be determined. If a sale occurs early in the insolvency process, or potentially secured claimants may not have had the time or the ability to register or perfect proper claims prior to the sale, this provision may not be appropriate, and should be amended to remove this crystallization concept. DOCSTOR: 1201927\14
000170 Page 5 5
5. THIS COURT ORDERS AND DIRECTSDECLARES that the Receiver to file with the Court a copy of the Receiver's Certificate, forthwith after delivery thereof.shall be and is hereby authorized to effect the assignment to TD of any registrations in the Saskatchewan Personal Property Registry which name Canpulse as a secured party.
6. THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal Information Protection and Electronic Documents Act, the Receiver is authorized and permitted to disclose and transfer to the Purchaser all human resources and payroll information in the Company's records pertaining to the Debtor's past and current employees, including personal information of those employees listed on Schedule "●" to the Sale Agreement. The Purchaser shall maintain and protect the privacy of such information and shall be entitled to use the personal information provided to it in a manner which is in all material respects identical to the prior use of such information by the Debtor.
6. 7. THIS COURT ORDERS that, notwithstanding:
(a) the pendency of these proceedings;
(b) any applications for a bankruptcy order now or hereafter issued pursuant to the
Bankruptcy and Insolvency Act (Canada) in respect of the DebtorDebtors and any
bankruptcy order issued pursuant to any such applications; and
(c) any assignment in bankruptcy made in respect of the DebtorDebtors;
the vesting of the Purchased Assets in the Purchaser pursuant to this Order shall be binding on any trustee in bankruptcy that may be appointed in respect of the DebtorDebtors and shall not be void or voidable by creditors of the DebtorDebtors, nor shall it constitute nor be deemed to be a fraudulent preference, assignment, fraudulent conveyance, transfer at undervalue, or other reviewable transaction under the Bankruptcy and Insolvency Act (Canada) or any other applicable federal or provincial legislation, nor shall it constitute oppressive or unfairly prejudicial conduct pursuant to any applicable federal or provincial legislation. DOCSTOR: 1201927\14
000171 Page 6 6 8. THIS COURT ORDERS AND DECLARES that the Transaction is exempt from the application of the Bulk Sales Act (Ontario).
7. 9. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its 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 Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order.
8. THIS COURT ORDERS that the Second Report and the activities of the Receiver described therein be and are hereby approved.
______DOCSTOR: 1201927\14
000172
Revised: January 21, 2014
Schedule A – Form of Receiver’s Certificate
THE TORONTO-DOMINION BANK AND GLOBEWAYS CANADA INC. et al Applicant Respondents
Court File No. CV-20-00650857-00CL ______ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
B E T W E E N:
PLAINTIFF
Plaintiff
- and –
DEFENDANT
Defendant
RECEIVER’S CERTIFICATE
RECITALS DOCSTOR: 1201927\14
000173
- 2 - A. Pursuant to an Order of the Honourable [NAME OF JUDGE] of the Ontario Superior Court of Justice (the "Court") dated [DATE OF ORDER], [NAME OF RECEIVER] was appointed as the receiver (the "Receiver") of the undertaking, property and assets of [DEBTOR] (the “Debtor”).
B. Pursuant to an Order of the Court dated [DATE], the Court approved the agreement of purchase and sale made as of [DATE OF AGREEMENT] (the "Sale Agreement") between the Receiver [Debtor] and [NAME OF PURCHASER] (the "Purchaser") and provided for the vesting in the Purchaser of the Debtor’s right, title and interest in and to the Purchased Assets, which vesting is to be effective with respect to the Purchased Assets upon the delivery by the Receiver to the Purchaser of a certificate confirming (i) the payment by the Purchaser of the Purchase Price for the Purchased Assets; (ii) that the conditions to Closing as set out in section ● of the Sale Agreement have been satisfied or waived by the Receiver and the Purchaser; and (iii) the Transaction has been completed to the satisfaction of the Receiver.
C. Unless otherwise indicated herein, terms with initial capitals have the meanings set out in the Sale Agreement.
THE RECEIVER CERTIFIES the following:
1. The Purchaser has paid and the Receiver has received the Purchase Price for the Purchased Assets payable on the Closing Date pursuant to the Sale Agreement;
2. The conditions to Closing as set out in section ● of the Sale Agreement have been satisfied or waived by the Receiver and the Purchaser; and
3. The Transaction has been completed to the satisfaction of the Receiver.
4. This Certificate was delivered by the Receiver at ______[TIME] on ______[DATE]. DOCSTOR: 1201927\14
000174
- 2 - DOCSTOR: 1201927\14
000175
Revised: January 21, 2014
[NAME OF RECEIVER], in its capacity as Receiver of the undertaking, property and assets of [DEBTOR], and not in its personal capacity
Per: Name: Title: DOCSTOR: 1201927\14
000176
Revised: January 21, 2014
Schedule B – Purchased Assets
Schedule C – Claims to be deleted and expunged from title to Real Property DOCSTOR: 1201927\14
000177
- 2 -
Schedule D – Permitted Encumbrances, Easements and Restrictive Covenants related to the Real Property
(unaffected by the Vesting Order)
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST PROCEEDING COMMENCED AT TORONTO
APPROVAL AND VESTING ORDER
MLT AIKINS LLP 360 Main St, 30th Floor, Winnipeg, MB R3C 4G1 Tel: (204) 957-0050
J.J. Burnell [email protected] (204) 957-4663
- and - ROBINS APPLEBY 2600-120 Adelaide Street West Toronto, ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected]
Lawyers for the Receiver BDO Canada DOCSTOR: 1201927\14
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- 2 -
Limited robapp\ 000179
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Court File No. CVCV-20-00650857-00CL-20-00650857-00CL
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
THE TORONTO--DOMINIONDOMINION BANK Applicant - and -
GLOBEWAYS CANADA INC., CANPULSE FOODS LTD. AND GLOBAL GRAIN CANADA LTD.LTD. RespondentsRespondents
APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT,ACT, R.S.C. 1985,1985, c. BB-3,-3, AS AMENDED AND SECTION 101 OF THE COURTSCOURTS OFOF JUSTICE ACT,ACT, R.S.O. 19901990 c. C.43
SERVICE LISTLIST (Current as of DecemberDecember 111,1, 20202020))
AIRD & BERLIS LLP D. Robb English Brookfield Place [email protected] 181181 Bay Street, Suite 18001800 Toronto, ON M5J 2T9 Kyle Plunkett [email protected]
Damian Lu [email protected]@airdberlis.corn
Lawyers for TheThe TorontoToronto--DominionDominion Bank Tel: 416416-863-1500-863-1500
THE TORONTO--DOMINIONDOMINION BANKBANK Andrea Jamnisek TDTO BankBank Tower, [email protected] 66 Wellington Street West, 39th FloorFloor Michael Vos Toronto, ON M5KM5K 1E91E9 [email protected]
Mathieu Lafortune [email protected]@td.com
BDO CANADA LIMITED Josie Parisi 25 Main Street West, Suite 805 [email protected]@bdo.ca Hamilton, ON L8PL8P 1H11H1 Anna Koroneos Receiver [email protected]
23436565v1 000182
MLT AIKINS LLP J.J. Burnell 360 Main Street, Suite 3000 [email protected] Winnipeg, MBMB R3C 4G1 Jeff LeeLee Lawyers for the Receiver [email protected]@mltaikins.com
Tel: 204204-957-4663-957-4663
ROBINS APPLEBY Dominique Michaud 120120 Adelaide Street West, Suite 2600 [email protected] Toronto, Ontario M5H 1T11T1
CoCo--CounselCounsel for the Receiver Tel: 416416-360-3795-360-3795
SIMMONS DA SILVA LLP PuneetPuneet S. KohliKohli Suite 200, 201 Country Court Blvd [email protected] Brampton, ON L6W 4L2 Pathik Baxi Lawyers for the Respondents [email protected]
Tel: 905905-861-2819-861-2819
MILLER THOMPSON LLP RickRick M. Van Beselaere 6th Floor,Floor, Bank of Montreal Building [email protected]_millerthomson.com 2103 11th11th Ave. Regina, SK S4P54P 3Z8 Tel: 306306-347-8350-347-8350 Lawyers for the Respondents
GLOBEWAYS CANADA INC. Tanvir Zaidi 2570 Matheson Blvd.Blvd. East [email protected] Units 110110 and 111111 Mississauga, ON L4W 4Z3
--and-and-
CANPULSE FOODS LTD. #600, 2013 11th11th Avenue Regina, SK S4P54P 3Z8
--and-and-
GLOBAL GRAIN CANADA LTD. 17001700-242-242 Hargrave Street Winnipeg, MBMB R3C 0V1
Respondents
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ONTARIO MINISTRY OF FINANCE Kevin O’HaraO'Hara Legal Services BranchBranch [email protected] 777 Bay Street, 1111thth Floor Toronto, ON M5G 2C8208
DEPARTMENT OF JUSTICE (CANADA) Diane Winters The ExchangeExchange Tower [email protected] 34003400-130-130 King Street West P.O. Box 36 Ontario Regional Office Toronto, ON M5X 1K61K6 [email protected]
MANITOBA JUSTICE –— LEGALLEGAL SERVICES Shelley L.L. Haner BRANCH [email protected] 730730-405-405 Broadway Winnipeg, MBMB R3C 3L6 Sean Boyd [email protected]
SASKATCHEWAN JUSTICE –— CIVIL LAWLAW Michael Morris BRANCH [email protected]@gov.sk.ca 900900-1874-1874 Scarth Street Regina, SK S4P54P 4B3
CANADA GRAIN COMMISSION LorenaLorena Morales 330 Main Street [email protected]@grainscanada.gc.ca Winnipeg, MBMB R3C 3G8
HONDA CANADA FINANCE INC. Account Services 180180 Honda Blvd.Blvd. [email protected] Markham, ON L6C 0H9
GOWLING WLG (CANADA) LLP DomDom Glavota 100100 King Street W, #1600 [email protected]@gowlingw1g.com Toronto, ON M5X 1G51G5 Clifton P. Prophet Lawyers for Farm CreditCredit CanadaCanada [email protected]@gowlingw1g.com
Tel: 416416-862-7525-862-7525
BORDEN LADNERLADNER GERVAIS LLP Roger Jaipargas Bay--AdelaideAdelaide Centre EastEast Tower [email protected]@blq.com 22 Adelaide Street West Toronto, ON M5H 4E3 Tel: 416416-367-6266-367-6266
Lawyers for GATXGA TX Rail CanadaCanada CorporationCorporation
FARM CREDIT CANADA 11331133 St. George Blvd., Suite 104104 Moncton, NB E1E 4E1
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VW CREDIT CANADA INC. 4865 Marc--BlainBlain St., Suite 300 St--Laurent,Laurent, QC H4RH4R 3B2
JENGA HOLDING CORP. 200 Princeton Tower 123123--2nd2nd Avenue South Saskatoon, SK S7K 7E6
GATX RAIL CORPORATION C/O0/0 GATX CORPORATION 233 S. Wacker DriveDrive Chicago, ILIL 60606
INTACTINTACT INSURANCEINSURANCE Jay Rampersad 260 Hearst Way, Suite 402 [email protected] Ottawa, ON K2LK2L 3H1
MCKERCHER LLP Caroline J. Smith 374 Third Avenue South [email protected] Saskatoon, SK S7K 1M51M5
CounselCounsel to GFIGFI LP
MCKERCHER LLP Colin D. Ouellette 374 Third Avenue South [email protected] Saskatoon, SK S7K 1M51M5 Tel: (306) 664664-1305-1305 CounselCounsel to Intact Insurance and TheThe GuaranteeGuarantee CompanyCompany of North America
ATB Corporate Financial Services DawnDawn Walby-ParchomaWalby-Parchoma Eighth Avenue Place West Tower [email protected]©atb.com Suite 600 585 -88thth Ave SW Calgary, Alberta T2P 1G11G1 Tel: (403) 463463-0115-0115
ObserverObserver
NSWB Law Firm Michael R. Weger Box 8, Souris Ave. N.E.N.E. [email protected]@nswb.com Weyburn, SK S4H54H 2J8 Tel: ((306)306) 842842-4654-4654 CounselCounsel to MainilMa/nil Farms Ltd.
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EMAIL SERVICE LIST [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected] [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected]@gowlingw1g.com ;; [email protected]@grainscanada.gc.ca ;; [email protected]@mItaikins.com ;; [email protected]@mItaikins.com ;; [email protected]@gov.mb.ca ;; [email protected]@gov.mb.ca ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected]@gowlingw1g.com;; [email protected] ;; [email protected] ;; [email protected];; [email protected] ;; [email protected] ;; [email protected] ;; [email protected] ;; [email protected]
23436565v1 000186
42209650.3
23436565v1
THE TORONTO-DOMINION BANK AND GLOBEWAYS CANADA INC. et al
000187 Applicant Respondents
Court File No. CV-20-00650857-00CL ______
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST PROCEEDING COMMENCED AT TORONTO
MOTION RECORD
MLT AIKINS LLP 3000-360 Main Street Winnipeg, MB R3C 4G1
J.J. Burnell [email protected] (204) 957-4663
- and-
ROBINS APPLEBY LLP 2600-120 Adelaide Street West Toronto, ON M5H 1T1
Dominique Michaud LSO No.: 56871V [email protected] (416)360-3795
Lawyers for the Receiver BDO Canada Limited