Court File No.Court No. 35-21.99056Estate No. 35-2199056
ONTARIOSUPERIOR COURT OF JUSTICE
(IN BANKRUPTCY AND INSOLVENCY)
1N THE MATTER OF THE PROPOSAL OFBG FURNITURE LTD.
OF THE TOWN OF WALKERTONIN THE PROVINCE OF ONTARIO
MOTION RECORD(Motion Returnable December 22, 2016)
VOLUME 1 OF 2
December 19, 2016 Fogler, Rubinoff LLP77 King Street WestSuite 3000, PO Box 95TD Centre North TowerToronto, ON MSK 1 G8
Greg Azeff (LSUC #45324C)Email: ,azeff(c~fo~lers.com
Stephanie DeCaria (LSUC# 68055L)Email: sdecaria(a~fo~lers.com
Tel: (416) 864-9700Fax: (416) 941-8852
Lawyers for the Moving Party, BG Furniture Ltd.
TO: COLLINS BARROW TORONTO LIMITED.Collins Barrow Place11 King Street West, Suite 700Toronto, ON MSH 4C7
Daniel WieszEmail: dweisz(c~,collinsbarrow.com
Brenda WongEmail: bywon c collinsbarrow.com
Tel: (416) 480-0160Fax: (416)480-2646
Trustee in Bankruptcy for the Respondent, BG Furniture Ltd..
AND TO: AIRD & BERLIS LLPBrookfield Place, 181 Bay StreetSuite 1800, Box 754Toronto, ON MSJ 2T9
Ian AversaEmail: iaversa(c~airdberlis.coin
Jeremy NemersEmail:.jnemers(c~~,airdberlis.com
Tel: (416) 863-1500Fax: (416) 863-1515
Lawyers for the Proposal Trustee
AND TO: Tiin Vanular Lawyers Professional Corporation2200 Brock Road N. C10 & 11Pickering, OntarioL1X 2R2
Tim VanularEmail: time e,vanulaw.com
Tel: (905) 427-4886Fax: (905)427-5542
Lawyers for Platinum Investment Group Inc.
AND TO: CNH Industrial Capital Canada Ltd.4475 North Service RoadBurlington, ON L7L 4X7
AND TO: RPG Receivables Purchase Group Inc.300-221 Lakeshore Road EastOakville, ON L6J 1 H7
AND TO: Saugeen Economic Development Corporation515 Mill Street, P.O. Box 117Neustadt, ON NOG 2M0
Rose Austinrose(~sbdc.ca
AND TO: Bruce Coininunity Futures Development Corporation233 Broadway StreetKincaroline, ON N2Z 2X9
Sarb Fisherbfisher(a~bints.com
AND TO: Xerox Canada Ltd.33 Bloor Street E., 3'~d FloorToronto, ON M4W 3H1
Angeline ChilchalinaAngeline. chikhalina(c~r~,xerox. com
AND TO: Blue Chip Leasing Corporation156 Duncan Mill Road, Unit 16Toronto, ON M3B 3N2
AND TO: AVS Systems Inc.201-1325 Polson DriveVernon, BC V1T 8H2
AND TO: Her Majesty in Right of Ontario Represented by the Minister of Finance
5 Park Hoine Avenue, 2"d FloorToronto, OM M2N 6W8
AND TO: DEPARTMENT OF JUSTICEOntario Regional OfficeThe Exchange Tower, Box 36130 Kiizg Street WestSuite 3400Toronto ONMSX 1K6
Diane Winters111a11tO:Diane.Wintcis(a7~justice.~,c•ca
Tel: (416) 973-3172Fax: (416) 973-0810
Lawyers for Canada Revenue Agency
AND TO: Grenville Strategic Royalty Corp.220 Bay Street, Suite 5000Toronto, ON MSJ 2W4
Donnacha RahillDonnacha(a~renvillesrc. com
AND TO: 2544311 Ontaiio Limited77 King Street WestToronto, ON MSKL 1 G8
Rong Jianjunron~j ianjun(~hotmail. com
AND TO: 2110785 Ontario Limited75 Rideout StreetWalkerton, ON NOG 2V0
AND TO: USW Local 1-5001100 Clarence Street SSuite 104 Box 4Brantford, ON N3S 7N8
•
~~ ~~
Court No. 35-2199056Estate No. 35-2199056
ONTARIOSUPERIOR COURT OF JUSTICE
(IN BANKRUPTCY AND INSOLVENCY)
IN THE MATTER OF THE PROPOSAL OFBG FURNITURE LTD.
OF THE TOWN OF WALKERTONIN THE PROVINCE OF ONTARIO
INDEX
TAB DOCUMENT
1 Notice of Motion dated December 19, 2016
2 Affidavit of Adam Hofmann sworn December 19, 2016
A Corporate Profile Report dated November 2, 2016
B Notice of Intention dated December 14, 2016
C Site Plan Map
D PPSA Enquiry Response Certificate dated November 2, 2016
E Parcel Registry dated November 3, 2016
F General Security Agreement dated. July 29, 2014
G Secured Promissory Note dated September 2, 2015
H Assigmnent of Debt and Security dated December 5. 2015
I Convertible Promissory Notes
J Royalty Agreement dated. October 17, 201 C
K Security Agreement —Equipment dated September 2, 2015
L Security Agreement dated September 2, 2015
M Letter Agreement dated March 28, 2014 between BG Furniture Ltd. and MD
TAB DOCUMENT
Financial Corporation; and
Letter Agreement dated July 10, 2015 (revised July 27, 2015) between BG
Furniture Ltd. aild MD Financial Coipoi•ation;
Renewal Agreement dated July 16, 2015 between Platinum Inveshnent Group Inc.
and BG Furniture Ltd.;
Renewal Agreement dated July 25, 2015 between Platinum Investment Group Inc.
and BG Furniture Ltd. in the principal amount of $290,000; aid
Renewal Agreement dated July 25, 2015 between Platinum Investment Group Inc.
and BG Furniture Ltd. in the principal amount of $287,500
N Letter agreements dated August 4, 2015
O General Security Agreement dated April 1, 2015
P Agreement between BG Furniture Ltd and United Steel Workers U.S.W. Local 1-
500
Q Cash Flow Forecast
R DIP Commitment Letter
S Proposed Schedule of Sale and Investment Solicitation Process and Bid
Procedures
T Stalking Horse Invest~7lent Tenn Sheet
U Appraisal Report dated July 23, 2015
V Phase I Survey of the Lands completed in Apri12014
3 Draft Order
Court No. 35-2199056
Estate No. 35-2199056
ONTARIO
SUPERIOR COURT OF JUSTICE
(IN BANKRUPTCY AND INSOLVENCY)
IN THE MATTER OF THE PROPOSAL OF BG FURNITURE LTD.
OF THE TOWN OF WALKERTON IN THE PROVINCE OF ONTARIO
NOTICE OF MOTION
BG FURNITURE LTD. (“BG Furniture” or the “Company”) will make a Motion to a
Judge presiding over the Commercial List on Thursday December 22, 2016 at 10:00 a.m., or as
soon after that time as the Motion can be heard at the court house, 330 University Avenue, 8th
Floor, Toronto, Ontario, M5G 1R7.
PROPOSED METHOD OF HEARING: The Motion is to be heard orally.
THE MOTION IS FOR:
1. an Order substantially in the form attached hereto as Schedule “A”:
(a) abridging the time for service of the Motion Record dated December 19, 2016
including the Affidavit of Adam Hofmann sworn December 19, 2016 and the
Exhibits thereto (the “Hofmann Affidavit”) and dispensing with service on any
person other than those served;
(b) approving and adopting by reference the E-Service Protocol of the Commercial
List (the “Protocol”) such that service of court documents by email in accordance
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with the Protocol shall be deemed valid and effective service in these
proceedings;
(c) approving a DIP Commitment Letter (the “DIP Commitment Letter”) between
BG Furniture and 2544311 Ontario Limited or its nominee (in either case, the
“DIP Lender”) implementing an interim financing facility (the “DIP Facility”),
granting the DIP Charge (as defined below) in the maximum principal amount of
$300,000 and authorizing certain payments from advances under the DIP Facility;
(d) approving a Sale and Investment Solicitation Process (“SISP”) substantially in the
form attached as Exhibit “S” to the Hofmann Affidavit;
(e) approving the execution by BG Furniture of the Stalking Horse Investment Term
Sheet (the “Stalking Horse Investment Term Sheet”, a copy of which is
attached as Exhibit “T” to the Hofmann Affidavit) between the Company and the
DIP Lender or its nominee (the “Stalking Horse Bidder”) for the acquisition of
new shares to be issued by BG Furniture to the Stalking Horse Bidder in
consideration of an investment in the minimum amount of $800,000 in the context
of the restructuring proposal, subject to the terms contemplated in the Stalking
Horse Investment Term Sheet;
(f) approving and ratifying the Stalking Horse Investment Term Sheet and the
transactions contemplated therein;
(g) granting the Administration Charge (as defined below) in the amount of
$150,000;
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(h) granting the D&O Charge (as defined below) in the amount of $25,000;
(i) extending the stay of proceedings granted upon the filing of the Notice of
Intention to Make a Proposal (the “NOI”) to February 5, 2017;
(j) approving the hearing of this motion and transferring this BIA proceeding to the
Commercial List of the Ontario Superior Court of Justice in Toronto; and
(k) Such further and other relief as this Honourable Court may deem just.
THE GROUNDS FOR THE MOTION ARE:
(l) BG Furniture was incorporated under the laws of the Province of Ontario on
January 23, 2014. BG Furniture (including its predecessors) has operated as a
manufacturer of high-quality furniture in Walkerton, Ontario since 1927;
(m) BG Furniture is the successor to Bogdon & Gross Furniture Company Limited,
which filed a Notice of Intention to Make a Proposal under the Bankruptcy and
Insolvency Act (Canada) (the “BIA”) on March 4, 2014. BG Furniture purchased
the assets of Bogdon & Gross Furniture Company Limited through a court-
supervised and approved sale process;
(n) Prior to October 7, 2016, BG had approximately 40 fulltime employees,
approximately 31 of whom were hourly, unionized employees, who are members
of the United Steel Workers, Local 1-500 (the “Union”). BG was at one point
one of the largest employers in the Walkerton, Ontario region;
-4-
(o) On October 7, 2016, BG Furniture ceased ordinary course operations and laid off
its employees;
(p) On December 14, 2016, BG Furniture filed the NOI naming Collins Barrow
Toronto Limited as Proposal Trustee (in such capacity, the “Proposal Trustee”);
(q) Pursuant to the filing of the NOI, all proceedings against BG Furniture have been
stayed for 30 days commencing December 14, 2016;
The DIP Facility
(r) It is critical to BG Furniture's prospects for survival that it secure financing on an
urgent basis. BG Furniture currently has no funds to operate and no further credit
available;
(s) BG Furniture currently has back orders from customers in the aggregate amount
of approximately $470,000. Unless BG Furniture re-commences operations
forthwith it will lose these orders, which are expected to generate positive cash
flow and allow the enterprise to maintain its customers;
(t) BG Furniture cannot re-commence operations without first securing new
financing. Consequently, BG Furniture has entered the DIP Commitment Letter
with the DIP Lender in respect of the DIP Facility (subject to Court approval),
which will provide financing to re-commence operations and complete the BIA
proposal process;
(u) A condition of the DIP Facility is that the DIP Lender be granted a charge over all
of the property, assets and undertaking of BG Furniture (collectively, the
-5-
“Property”) in priority to all creditors in the maximum principal amount of
$300,000 (the “DIP Charge”), save and except that the DIP Charge shall rank
subordinate to the Administration Charge (as defined below);
(v) BG Furniture's secured creditors are expected to claim the aggregate amount in
excess of approximately $2,790,705;
(w) All of BG Furniture's secured creditors will be served with this Notice of Motion
and Motion Record;
(x) Approval of the DIP Facility will allow BG Furniture to preserve going concern
value, which will enhance:
(i) BG Furniture's prospects of making a viable proposal;
(ii) BG Furniture's ability to maximize value and creditor realization through a
sale and investment solicitation process; and
(iii) BG Furniture's prospects of saving jobs;
(y) No creditor will be materially prejudiced by the approval of the DIP Facility, the
granting of the DIP Charge or any of the other relief sought herein;
(z) The Proposal Trustee supports the approval of the DIP Facility, the granting of the
DIP Charge and the other relief sought herein;
The SISP & Stalking Horse Bid
(aa) BG Furniture intends to commence the SISP on the terms set out at Exhibit “S” to
the Hofmann Affidavit;
-6-
(bb) Commencement of the SISP will reduce costs, streamline the restructuring
proceedings and maximize recoveries for all of its creditors;
(cc) In conjunction with the SISP, BG Furniture is also seeking approval of the
Stalking Horse Investment Term Sheet between the Company and the Stalking
Horse Bidder, which will serve as a “baseline” for any bids received in the SISP;
(dd) The Stalking Horse Investment Term Sheet contemplates an equity investment in
the minimum amount of $800,000 (the “Investment Amount”), which will be
used to, among other things, fund a BIA proposal (the “BIA Proposal”) to BG
Furniture's creditors in the event that the Stalking Horse Bidder is the successful
offeror in the SISP;
(ee) The Stalking Horse Investment Term Sheet provides that, in the event that the
Stalking Horse Bidder is the successful offeror in the SISP but the creditors reject
the BIA Proposal (such that BG Furniture is automatically deemed bankrupt), the
Stalking Horse Bidder will have an option to purchase the Property in
consideration of payment of the Investment Amount;
(ff) Approval of the Stalking Horse Investment Term Sheet will not materially
prejudice creditors or other stakeholders. Such approval will provide stability to
the business as it will assist in reassuring customers, employees, suppliers and
other business partners and stakeholders that the business will continue as a going
concern;
-7-
(gg) Approval of the Stalking Horse Investment Term Sheet will discourage interested
parties from submitting "lowball" purchase or investment offers. All parties will
be fully aware of the Investment Amount, and will be free to submit superior
offers through the SISP, whether for part of the Property or en bloc;
Administration Charge
(hh) BG Furniture seeks a first-ranking charge (the “Administration Charge”) over
the Property, in priority to all other charges, to secure the professional fees of the
Proposal Trustee and its counsel and BG Furniture's counsel incurred in
connection with these proceedings, to a maximum amount of $150,000;
(ii) BG Furniture will be unable to proceed with its restructuring efforts unless the
Administration Charge is granted;
(jj) No creditor will be materially prejudiced by the granting of the Administration
Charge;
D&O Charge
(kk) BG Furniture seeks a charge (the “D&O Charge”) over the Property, in priority
to all other charges except the Administration Charge and the DIP Charge, to
indemnify its officers and directors in respect of post-filing liabilities that they
incur in such capacities, to a maximum amount of $25,000;
(ll) The amount of the proposed D&O Charge is fair and reasonable. Re-
commencement of the operations of BG Furniture and conduct of the BIA
proceeding could expose the directors and officers of BG Furniture to liability;
-8-
(mm) No creditor will be materially prejudiced by the granting of the D&O Charge;
Extension of Time for Proposal
(nn) The 30 day initial stay of proceedings pursuant to the NOI will expire on January
12, 2017. The SISP contemplates completion in March 2017. Consequently, BG
Furniture seeks an Order extending the stay of proceedings by 45 days, to
February 5, 2017;
(oo) A further extension of the time within which BG Furniture must file a BIA
proposal with the Official Receiver will be required to enable BG Furniture to
complete the SISP and the BIA proposal process (if necessary);
(pp) The Proposal Trustee and the DIP Lender have reviewed BG Furniture's cash
flow projections;
Transfer of Proceeding
(qq) A transfer of this BIA proceeding to the Commercial List of the Ontario Superior
Court of Justice in Toronto is desirable in the interest of justice, having regard to
its circumstances and the parties involved;
(rr) The Proposal Trustee and the DIP Lender support the relief sought herein;
(ss) Sections 50.6, 50.4(9) and 64.2 of the BIA;
(tt) Rules 1.04, 2.03, 3.02, 13.1, 16.04 and 37 of the Rules of Civil Procedure, R.R.O.
1990, Reg. 194, as amended;
(uu) The inherent jurisdiction of this Honourable Court; and
-9-
(vv) Such further and other grounds as the lawyers may advise.
THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the
Motion:
(ww) The Affidavit of Adam Hofmann sworn December 19, 2016;
(xx) The First Report of Collins Barrow Toronto Limited in its capacity as Proposal
Trustee, to be filed; and
(yy) Such further and other evidence as the lawyers may advise and this Honourable
Court may permit.
December 19, 2016 Fogler, Rubinoff LLP
77 King Street West
Suite 3000, PO Box 95
TD Centre North Tower
Toronto, ON M5K 1G8
Greg Azeff (LSUC #45324C)
Email: [email protected]
Stephanie DeCaria (LSUC# 68055L)
Email: [email protected]
Tel: (416) 864-9700
Fax: (416) 941-8852
Lawyers for the Moving Party, BG Furniture Ltd.
-10-
TO: COLLINS BARROW TORONTO LIMITED.
Collins Barrow Place
11 King Street West, Suite 700
Toronto, ON M5H 4C7
Daniel Wiesz
Email: [email protected]
Brenda Wong
Email: [email protected]
Tel: (416) 480-0160
Fax: (416) 480-2646
Trustee in Bankruptcy for the Respondent, BG Furniture Ltd.
AND TO: AIRD & BERLIS LLP
Brookfield Place, 181 Bay Street
Suite 1800, Box 754
Toronto, ON M5J 2T9
Ian Aversa
Email: [email protected]
Jeremy Nemers
Email: [email protected]
Tel: (416) 863-1500
Fax: (416) 863-1515
Lawyers for the Proposal Trustee
AND TO: Tim Vanular Lawyers Professional Corporation
2200 Brock Road N. C10 & 11
Pickering, Ontario
L1X 2R2
Tim Vanular
Email: [email protected]
Tel: (905) 427-4886
Fax: (905) 427-5542
Lawyers for Platinum Investment Group Inc.
-11-
AND TO: CNH Industrial Capital Canada Ltd.
4475 North Service Road
Burlington, ON L7L 4X7
AND TO: RPG Receivables Purchase Group Inc.
300-221 Lakeshore Road East
Oakville, ON L6J 1H7
AND TO: Saugeen Economic Development Corporation
515 Mill Street, P.O. Box 117
Neustadt, ON N0G 2M0
Rose Austin
AND TO: Bruce Community Futures Development Corporation
233 Broadway Street
Kincaroline, ON N2Z 2X9
Barb Fisher
AND TO: Xerox Canada Ltd.
33 Bloor Street E., 3rd Floor
Toronto, ON M4W 3H1
Angeline Chikhalina
AND TO: Blue Chip Leasing Corporation
156 Duncan Mill Road, Unit 16
Toronto, ON M3B 3N2
AND TO: AVS Systems Inc.
201-1325 Polson Drive
Vernon, BC V1T 8H2
AND TO: Her Majesty in Right of Ontario Represented by the Minister of Finance
5 Park Home Avenue, 2nd Floor
Toronto, OM M2N 6W8
-12-
AND TO: DEPARTMENT OF JUSTICE
Ontario Regional Office
The Exchange Tower, Box 36
130 King Street West
Suite 3400
Toronto ON
M5X 1K6
Diane Winters
mailto:[email protected]
Tel: (416) 973-3172
Fax: (416) 973-0810
Lawyers for Canada Revenue Agency
AND TO: Grenville Strategic Royalty Corp.
220 Bay Street, Suite 5000
Toronto, ON M5J 2W4
Donnacha Rahill
AND TO: 2544311 Ontario Limited
77 King Street West
Toronto, ON M5KL 1G8
Rong Jianjun
AND TO: 2110785 Ontario Limited
75 Rideout Street
Walkerton, ON N0G 2V0
AND TO: USW Local 1-500
1100 Clarence Street S
Suite 104 Box 4
Brantford, ON N3S 7N8
RCP-E 37A (July 1, 2007)
SCHEDULE"A"
Court No. 35-2199056Estate No. 35-2199056
ONTARIOSUPERIOR COURT OF JUSTICE
(IN BANKRUPTCY AND INSOLVENCY)
THE HONOURABLE • THURSDAY, THE 22ND
~ DAY OF DECEMBER, 2016
IN THE MATTER OF THE PROPOSAL OF BG FURNITURE LTD.OF THE TOWN OF WALKERTON IN THE PROVINCE OF ONTARIO
ORDER(re: DIP, SISP &Stalking Horse Bid)
THIS Motion made by BG Furniture Ltd. (the "Debtor") for an Order pursuant to
Sections 50.6, 50.4(9) and 64.2 of the BIA of the Bankruptcy and Insolvency Act (Canada) (the
"BIA"), was heard this day at 330 University Avenue, Toronto, Ontario.
ON READING the affidavit of Adam Hofmann sworn December 19, 2016 and the
Exhibits thereto (the "Hofmann Affidavit") and the First Report of Collins Barrow Toronto
Limited dated December •, 2016 and on hearing the submissions of counsel for the Debtor, the
Respondents and Collins Barrow Toronto Limited in its capacity as Proposal Trustee under the
BIA (in such capacity, the "Proposal Trustee"), no one appearing for any other party although
duly served as appears from the affidavit of service of Chloe Eng sworn December •, 2016 and
on reading the consent of Collins Barrow Toronto Limited to act as the Proposal Trustee,
SERVICE
1. THIS COURT ORDERS that the time for service of the Notice of Motion and the Motion
Record is hereby abridged and validated so that this motion is properly returnable today and
hereby dispenses with further service thereof.
-2-
2. THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the
"Protocol") is approved and adopted by reference herein and, in this proceeding, the service of
documents made in accordance with the Protocol (which can be found on the Commercial List
website at http~//www ontariocourts.ca/sc'/~ractice/practice-directions/tororlto/e-service-
protocol/) shall be valid and effective service. Subject to Rule 17.05 this Order shall constitute
an order for substituted service pursuant to Rule 16.04 of the Rules of Civil PNocedure. Subject to
Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the Protocol, service of
documents in accordance with the Protocol will be effective on transmission. This Court further
orders that a Case Website shall be established in accordance with the Protocol with the
following URL:http•//www collinsbai-row.com/en/toronto-Ontario/cuz7~ent-engagements-
toronto/b~-furniture-ltd
3. THIS COURT ORDERS that if the service or distribution of documents in accordance
with the Protocol is not practicable, the Proposal Trustee is at liberty to serve or distribute this
Order, any other materials and orders in these proceedings, any notices or other correspondence,
by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or
facsimile transmission to the Debtor's creditors or other interested parties at their respective
addresses as last shown on the records of the Debtor and that any such service or distribution by
courier, personal delivery or facsimile transmission shall be deemed to be received on the next
business day following the date of forwarding thereof, or if sent by ordinary mail, on the third
business day after mailing.
4. THIS COURT ORDERS that the E-Service List Keeper (as defined in the Protocol) for
the purpose of this proceeding shall be the Proposal Trustee.
PROPOSAL TRUSTEE
5. THIS COURT ORDERS that the Proposal Trustee continues to be and is hereby
authorized to take all steps as are required to fulfill its duties under the BIA or as an officer of the
Court including, without limitation, to:
(a) monitor the Debtor's receipts and disbursements;
-3-
(b) report to this Court at such times and intervals as the Proposal Trustee
deems appropriate with respect to the Debtor, the Debtor's property, assets
or undertaking (collectively, the "Property") or these proceedings;
(c) assist the Debtor, to the extent required by the Debtor, in its dissemination
of information to the DIP Lender and its counsel of financial and other
information as agreed to between the Debtor and the DIP Lender;
(d) assist the Debtor in its preparation of the Debtor's cash flow statements
and reporting as agreed to between the Debtor and the DIP Lender;
(e) assist the Debtor in its development of a proposal to its creditors;
(~ assist the Debtor, to the extent required by the Debtor, with the holding
and administration of creditors' meetings in respect of these proceedings
including, without limitation, for voting on a proposal;
(g) have full and complete access to the Property, including the premises,
books, records, data (including data in electronic form) and other financial
documents of the Debtor, to the extent that is necessary to adequately
assess the Debtor's business and financial affairs or to perform its duties
arising under this Order;
(h) be at liberty to engage independent legal counsel or such other person as
the Proposal Trustee deems necessary or advisable respecting the exercise
of its powers and performance of its obligations under this Order;
(i) perform such other duties as are required by this Order or by this Court
from time to time; and
(j) to take any steps reasonably incidental to the exercise of these powers or
the performance of any statutory obligations.
6. THIS COURT ORDERS that the Proposal Trustee shall not take possession of any of the
Property and shall take no part whatsoever in the management or supervision of the management
of the Debtor's business and shall not, as a result of this Order or anything done in pursuance of
its duties and powers under this Order, be deemed to have taken or maintained possession or
control of the Debtor's business or the Property or any part thereof.
7. THIS COURT ORDERS that, in addition to the rights and protections afforded to the
Proposal Trustee under the BIA or as an officer of the Court, the Proposal Trustee shall incur no
liability or obligation as a result of its appointment or the carrying out the provisions of this
Order, save and except for any gross negligence or wilful misconduct on its part. Nothing in this
Order shall derogate from the protections afforded the Proposal Trustee under the BIA or by any
other applicable legislation.
ADMINISTRATION CHARGE
8. THIS COURT ORDERS that the Proposal Trustee, counsel to the Proposal Trustee and
counsel to the Debtor shall be paid their reasonable fees and disbursements, in each case at their
standard rates and charges, by the Debtor as part of the costs of these proceedings. The Debtor is
hereby authorized and directed to pay such accounts of the Proposal Trustee, counsel to the
Proposal Trustee and counsel to the Debtor on a bi-weekly basis.
9. THIS COURT ORDERS that each of the Proposal Trustee, counsel to the Proposal
Trustee and counsel to the Debtor shall pass its accounts from time to time, and for this purpose
the accounts of the Proposal Trustee, counsel to the Proposal Trustee and counsel to the Debtor
are hereby referred to a judge of the Commercial List of the Ontario Superior Court of Justice
10. THIS COURT ORDERS that prior to the passing of its accounts, the Proposal Trustee
shall be at liberty from time to time to apply reasonable amounts, out of the monies in its hands,
against its fees and disbursements, including legal fees and disbursements, incurred at the
standard rates and charges of the Proposal Trustee or its counsel, and such amounts shall
constitute advances against its remuneration and disbursements when and as approved by this
Court.
1 1. THIS COURT ORDERS that the Proposal Trustee, counsel to the Proposal Trustee and
counsel to the Debtor shall be entitled to and are hereby granted a charge (the "Administration
Charge") on the Property, which charge shall not exceed an aggregate amount of $150,000, as
-5 -
security for their professional fees and disbursements incurred at the standard rates and charges
of the Proposal Trustee and such counsel, both before and after the making of this Order in
respect of these proceedings. The Administration Charge shall have the priority set out in
paragraphs 21 and 22 hereof.
DIP FINANCING
12. THIS COURT ORDERS that the Debtor is hereby authorized and empowered to borrow
under one or more credit facilities (collectively, the "DIP Facility") granted by 2544311 Ontario
Limited (the "DIP Lender") to be used for the purposes described in the DIP commitment letter
attached as Exhibit "R" to the Hofmann Affidavit (the "DIP Commitment Letter"), provided
that the outstanding principal amount does not exceed $300,000 (or such greater amount as this
Court may by further Order authorize) at any time, at such rate or rates of interest and on such
other terms as are included in the DIP Commitment Letter.
13. THIS COURT ORDERS that the Debtor is hereby authorized and empowered to execute
and deliver such credit agreements, mortgages, charges, hypothecs and security documents as are
contemplated by the DIP Commitment Letter or as may be reasonably required by the DIP
Lender pursuant to the terms thereof (collectively, the "Definitive Documents"), and the Debtor
is hereby authorized and directed to pay and perform all of its indebtedness, interest, fees,
liabilities and obligations to the DIP Lender pursuant to the DIP Commitment Letter and the
Definitive Documents as and when due, notwithstanding any other provision of this Order.
14. THIS COURT ORDERS that the DIP Lender shall be entitled to the benefit of and is
hereby granted a charge (the "DIP Charge") on the Property, which DIP Charge shall not secure
an obligation that exists before this Order is made. The DIP Charge shall have the priority set
out in paragraphs 21 and 22 hereof.
15. THIS COURT ORDERS that, notwithstanding any other provision of this Order:
(a) the DIP Lender may take such steps from time to time as it may deem
necessary or appropriate to file, register, record or perfect the DIP Charge
or any of the Definitive Documents;
~~
(b) upon the occurrence of an event of default under the Definitive
Documents or the DIP Charge, the DIP Lender, upon 3 days' notice to the
Debtor and the Proposal Trustee, may exercise any and all of its rights and
remedies against the Debtor or the Property under or pursuant to the DIP
Commitment Letter, Definitive Documents and the DIP Charge, including
without limitation, to cease making advances to the Debtor and set off
and/or consolidate any amounts owing by the DIP Lender to the Debtor
against the obligations of the Debtor to the DIP Lender under the DIP
Commitment Letter, the Definitive Documents or the DIP Charge, to make
demand, accelerate payment and give other notices, or to apply to this
Court for the appointment of a receiver, receiver and manager or interim
receiver, or for a bankruptcy order against the Debtor and for the
appointment of a trustee in bankruptcy of the Debtor; and
(c) the foregoing rights and remedies of the DIP Lender shall be enforceable
against any trustee in bankruptcy, interim receiver, receiver or receiver
and manager of the Debtor or the Property.
16. THIS COURT ORDERS AND DECLARES that the DIP Lender shall be treated as
unaffected in any proposal filed by the Debtor under the BIA, with respect to any advances made
under the DIP Commitment Letter or the Definitive Documents.
17. THIS COURT ORDERS that: (a) pending expiry of the time for filing a notice of appeal
or application for leave to appeal in respect of this Order and the disposition of any motions to
review, rescind or vary this Order, applications for leave to appeal or appeals from this Order
(collectively, "Challenges"), the Debtor shall be and is hereby authorized to borrow funds under
the DIP Facility in the amounts necessary to implement its restructuring plan; (b) irrespective of
the disposition of any Challenges the DIP Lender shall have the benefit of the DIP Charge and
all other provisions of this Order in respect of all amounts so advanced; and (c) this Order is
subject to provisional execution to the extent necessary to give effect to the foregoing.
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D&O INDEMNITY AND CHARGE
18. THIS COURT ORDERS that the Debtor shall indemnify its directors and officers against
obligations and liabilities that they may incur as directors or officers of the Debtor after the
commencement of these proceedings that arise on or after December 14, 2016 or are otherwise
referable to the period on or after December 14, 2016, except to the extent that, with respect to
any officer or director, the obligation or liability was incurred as a result of such officer's or
director's gross negligence or wilful misconduct.
19. THIS COURT ORDERS that the directors and officers of the Debtor shall be entitled to
the benefit of and are hereby granted a charge (the "D&O Charge") on the Property, which
charge shall not exceed an aggregate amount of $25,000, as security for the indemnity provided
in paragraph 18 hereof. The D&O Charge shall have the priority set out in paragraphs 21 and 22
hereof.
20. THIS COURT ORDERS that, notwithstanding any language in any applicable insurance
policy to the contrary, (a) no insurer shall be entitled to be subrogated to or claim the benefit of
the D&O Charge, and (b) the Debtor's officers and directors shall only be entitled to the benefit
of the D&O Charge to the extent that they do not have coverage under any directors' and officers'
insurance policy, or to the extent that such coverage is denied or insufficient to pay amounts
indemnified in accordance with paragraphs 18 and 19 of this Order.
VALIDITY AND PRIORITY OF CHARGES CREATED BY THIS ORDER
21. THIS COURT ORDERS that the priorities of the Administration Charge, the DIP Charge
and the D&O Charge (collectively, the "Charges"), as between and among them, shall be as
follows:
First —Administration Charge (ta the maximum amount of $150,000);
Second —DIP Charge (to the maximum principal amount of $300,000); and
Third — D&O Charge (to the maximum amount of $25,000).
22. THIS COURT ORDERS that each of the Charges shall constitute a charge on the
Property and such Charges shall rank in priority to all other security interests, trusts, liens,
charges and encumbrances, claims of secured creditors, statutory or otherwise (collectively,
"Encumbrances") in favour of any Person.
23. THIS COURT ORDERS that the filing, registration or perfection of the Charges shall not
be required, and that the Charges shall be valid and enforceable for all purposes, including as
against any right, title or interest filed, registered, recorded or perfected subsequent to the
Charges coming into existence, notwithstanding any such failure to file, register, record or
perfect.
24. THIS COURT ORDERS that except as otherwise expressly provided for herein, or as
may be approved by this Court, the Debtor shall not grant any Encumbrances over any Property
that rank in priority to, or pa~i passu with, either of the Charges, unless the Debtor also obtains
the prior written consent of the Proposal Trustee, the DIP Lender and the beneficiaries of the
Administration Charge, or further Order of this Court.
25. THIS COURT ORDERS that the Charges, the Commitment Letter and the Definitive
Documents shall not be rendered invalid or unenforceable and the rights and remedies of the
chargees entitled to the benefit of the Charges (collectively, the "Chargees") and/or the DIP
Lender thereunder shall not otherwise be limited or impaired in any way by (a) the pendency of
these proceedings and the declarations of insolvency made herein; (b) any applications) for
bankruptcy orders) issued pursuant to the BIA, or any bankruptcy order made pursuant to such
applications; (c) the filing of any assignments for the general benefit of creditors made pursuant
to the BIA; (d) the provisions of any federal or provincial statutes; or (e) any negative covenants,
prohibitions or other similar provisions with respect to borrowings, incurring debt or the creation
of Encumbrances, contained in any existing loan documents, lease, sublease, offer to lease or
other agreement (collectively, an "Agreement") which binds the Debtor, and notwithstanding
any provision to the contrary in any Agreement:
(a) neither the creation of the Charges nor the execution, delivery, perfection,
registration or performance of the DIP Commitment Letter or the
Definitive Documents shall create or be deemed to constitute a breach by
the Debtor of any Agreement to which it is a party;
~~
(b) none of the Chargees shall have any liability to any Person whatsoever as
a result of any breach of any Agreement caused by or resulting from the
Debtor entering into the DIP Commitment Letter, the creation of the
C1larges, or the execution, delivery or performance of the Definitive
Documents; and
(c) the payments made by the Debtor pursuant to this Order, the DIP
Commitment Letter or the Definitive Documents, and the granting of the
Charges, do not and will not constitute preferences, fraudulent
conveyances, transfers at undervalue, oppressive conduct, or other
challengeable or voidable transactions under any applicable law.
26. THIS COURT ORDERS that any Charge created by this Order over leases of real
property in Canada shall only be a Charge in the Debtor's interest in such real property leases.
THE SISP &STALKING HORSE BID
27. THIS COURT ORDERS that the Sale and Investment Solicitation Process and associated
terms, timelines and procedures described at Schedule "A" hereto (the "SISP") be and are
hereby approved, and the Debtor and the Proposal Trustee are hereby authorized to conduct the
SISP and to perform their obligations thereunder.
28. THIS COURT ORDERS that the Stalking Horse Investment Term Sheet executed by the
DIP Lender on behalf of an entity to be formed (the "Stalking Horse Bidder") dated as of
December 18, 2016, substantially in the form attached as Exhibit "T" to the Hofmann Affidavit
(the "Stalking Horse Investment Term Sheet") be and is hereby approved.
29. THIS COURT ORDERS that in the event the Stalking Horse Bidder is not the Successful
Bidder (as defined in the SISP), the Debtor is hereby authorized to pay the Break Fee (as defined
in the Stalking Horse Investment Term Sheet).
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EXTENSION
30. THIS COURT ORDERS that the time for filing of the Debtor's proposal, and the stay of
proceedings herein, are extended in accordance with Section 50.4(9) of the BIA, to and including
February 5, 2017.
TRANSFER
31. THIS COURT ORDERS that the hearing of this motion and transferring this BIA
proceeding to the Commercial List of the Ontario Superior Court of Justice in Toronto be and
they are hereby approved and directed.
GENERAL
32. 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 Debtor, the Proposal Trustee and their respective agents in
carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies
are hereby respectfully requested to make such orders and to provide such assistance to the
Debtor and the Proposal Trustee, as an officer of this Court, as may be necessary or desirable to
give effect to this Order or to assist the Debtor, the Proposal Trustee and their respective agents
in carrying out the terms of this Order.
33. THIS COURT ORDERS that each of the Debtor and the Proposal Trustee be at liberty
and is hereby authorized and empowered to apply to any court, tribunal, regulatory or
administrative body, wherever located, for the recognition of this Order and for assistance in
carrying out the terms of this Order, and that the Proposal Trustee is authorized and empowered
to act as a representative in respect of the within proceedings for the purpose of having these
proceedings recognized in a jurisdiction outside Canada.
34. THIS COURT ORDERS that any interested party (including the Debtor and the Proposal
Trustee) may apply to this Court to vary or amend this Order on not less than seven (7) days'
notice to any other party or parties likely to be affected by the order sought or upon such other
notice, if any, as this Court may order.
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35. THIS COURT ORDERS that this Order and all of its provisions are effective as of
12:01 a.m. Eastern Standard/Daylight Time on the date of this Order.
SCHEDULE "A"
IN THE MATTER OF THE PROPOSAL OF BG FURNITURE LTD.OF THE TOWN OF WALKERTON IN THE PROVINCE OF ONTARIO
Court File No.:Court No. 35-2199056Estate No. 35-2199056
ONTARIOSUPERIOR COURT OF JUSTICE(COMMERCIAL LIST)
Proceedings commenced at Toronto
1' 1
Fogler, Rubinoff LLP77 King Street WestSuite 3000, PO Box 95TD Centre North TowerToronto, ON MSK 1G8
Greg Azeff (LSUC #45324C)Email: ~azeff(u~foglers.com
Stephanie DeCaria (LSUC# 68055L)Email: sdecaria(a~fo~lers.com
Tel: (416) 864-9700Fax: (416) 941-8852
Lawyers for the Moving Party, BG Furniture Ltd.
1N THE MATTER OF THE PROPOSAL OF BG FURNITURELTD. OF THE TOWN OF WALKERTON IN THE PROVINCEOF ONTARIO
Court File No. •
ONTARIOSUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
PROCEEDING COMMENCED ATTORONTO
NOTICE OF MOTION
Fogler, Rubinoff LLP77 King Street WestSuite 3000, PO Box 95TD Centre North TowerToronto, ON MSK 1 G8
Greg Azeff (LSUC #45324C)gazeff(cr~,foglers.com
Tel: (416) 864-9700Fax: {416) 941-8852
Lawyers for the Moving Party, BG Furniture Ltd.
Court No. 35-2199056Estate No. 35-2199056
ONTARIOSUPERIOR COURT OF JUSTICE
(IN BANKRUPTCY AND INSOLVENCY)
IN THE MATTER OF THE PROPOSAL OFBG FURNITURE LTD.
Off' THE TOWN OF WALKERTON1N THE PROVINCE OF ONTARIO
AFFIDAVIT OF ADAM HOFMANN(sworn December 19, 2016)
I, ADAM HOFMANN, of the Town of Hanover, in the Province of Ontario, MAKE
OATH AND SAY AS FOLLOWS:
1. I am the President and Director of BG Furniture Ltd. ("BG Furniture" or the
"Company"). As such, I have personal knowledge of the matters to which I herein depose.
Where the source of my information or belief is other than my own personal knowledge, I have
identified the source and the basis for my information and verily believe it to be true.
Relief Sought
2. This Affidavit is sworn in support of a motion for an Order:
(a) abridging the time for service of the Motion Record dated December 19, 2016
including this Affidavit;
(b) approving and adopting by reference the E-Service Protocol of the Commercial
List (the "Protocol") such that service of court documents by email in accordance
with the Protocol shall be deemed valid and effective service in these
proceedings;
(c) approving the execution by BG Furniture of a DIP Commitment Letter
substantially in the form attached as Exhibit "R" hereto (the "DIP Commitment
Letter") between 2544311 Ontario Limited or its nominee (in either case, the
"DIP Lender") describing the amount, priority, terms and conditions of the
proposed interim financing facility contemplated therein (the "DIP Facility"),
granting the DIP Charge (the "DIP Charge") in the amount of $300,000 and
authorizing certain payments from advances under the DIP Facility;
(d) approving a Sale and Investment Solicitation Process (the "SISP");
(e) approving the execution by BG Furniture of a Stalking Horse Investment Term
Sheet substantially in the form attached as Exhibit "T" hereto (the "Stalking
Horse Investment Term Sheet") between the DIP Lender or its nominee (in
either case, the "Stalking Horse Bidder") and BG Furniture for the acquisition of
new shares to be issued by BG Furniture to the Stalking Horse Bidder in
consideration of a minimum of $800,000 (the "Investment Amount") in the
context of the BIA restructuring proposal;
(fj approving and ratifying the Stalking Horse Investment Term Sheet and the
transaction contemplated therein;
(g) granting the Administration Charge in the amount of $150,000 (the
"Administration Charge");
(h) granting the charge in favour of the directors and officers of BG Furniture in the
amount of $25,000 (the "D&O Charge"); and
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(i) extending the stay of proceedings granted upon the filing of the Notice of
Intention to File a Proposal dated December 14, 2016 (the "NOI") to February 5,
2017).
Background
3. BG Furniture is a corporation incorporated pursuant to the laws of the Province of
Ontario. BG Furniture's registered office is located at its production facility at 75 Ridout Street,
Walkerton, Ontario NOG 2V0 (the "Facility"). A copy of a Corporate Profile Report dated
November 2, 2016 in respect of BG Furniture is attached hereto as Exhibit "A".
4. BG Furniture is the successor to Bogdon &Gross Furniture Company Limited,
which filed a Notice of Intention to File a Proposal under the Bankruptcy and Insolvency Act
(Canada) (the "BIA") on March 4, 2014. BG Furniture acquired the assets of Bogdon &Gross
Furniture Company Limited through the BIA proposal process, in consideration of, among other
things, assumption of a significant quantum ofpre-filing indebtedness.
5. BG Furniture operates as a manufacturer ofhigh-quality solid wood furniture. The
business (including its predecessors) has been in operation since 1927, and has manufactured in
the Facility since 1938.
6. Prior to October 7, 2016, BG Furniture employed approximately 40 full time
employees. Of the full time employees, approximately 31 are hourly, unionized employees, who
are members of the United Steel Workers, Local 1-500 (the "Union").
~~
7. On October 7, 2016, BG Furniture ceased ordinary course operations and laid off
its employees. As noted above, BG Furniture emerged with the business following a BIA
proposal process commenced by Bogdon &Gross Furniture Company Limited in 2014.
However, BG Furniture assumed an unsustainable amount of pre-filing indebtedness as part of
the purchase price for the assets, the cost of its lending arrangements was not affordable and it
had insufficient working capital to succeed.
8. On December 14, 2016, BG Furniture filed the NOI naming Collins Barrow
Toronto Limited as Proposal Trustee (in such capacity, the "Proposal Trustee"). A copy of the
NOI is attached hereto as Exhibit "B".
9. Dirk Nielsen ("Nielsen") and I are BG Furniture's directors. I am BG Furniture's
President, and Nielsen is BG Furniture's Vice President. BG Furniture has no other officers or
directors.
Assets
10. BG Furniture has the following principal assets:
(a) The Facility and the lands upon which the Facility is located (the "Lands").
Attached hereto as Exhibit "C" are maps showing the location of the Lands and
the layout of the Facility. Information regarding the condition and value of the
Lands is set out below at paragraphs 45 through 50;
'l~s'
(b) Equipment, which I estimate has a gross liquidation value of approximately
$470,000 (excluding leased equipment);
(c) Raw materials and inventory, which I estimate has a gross liquidation value of
approximately $70,000; and
(d) Accounts receivable, in the amount of approximately $21,000.
Secured Creditors &Other Liabilities
11. As of November 2, 2016, the following parties have made registrations against
BG Furniture under the Personal Property Security Act (Ontario) (the "PPSA"):
(a) CNH Capital Canada Ltd. ("CNH") (Equipment, Motor Vehicle);
(b) RPG Receivables Purchase Group Inc. ("RPG") (Inventory, Equipment,
Accounts, Other, Motor Vehicle);
(c) Saugeen Economic Development Corporation ("SEDC") and Bruce Community
Futures Development Corporation ("Bruce") (Accounts, Other);
(d) Manorhouse Limited (Inventory, Equipment, Accounts, Other, Motor Vehicle,
Consumer Goods);
(e) Xerox Canada Ltd. ("Xerox") (Equipment, Other);
(~ Blue Chip Leasing Corporation ("Blue Chip") (Equipment, Other);
(g) Platinum Investment Group Inc. ("Platinum") (Other);
(h) Grenville Strategic Royalty Corp. ("Grenville") (Inventory, Equipment,
Accounts, Other, Motor Vehicle);
(i) 2110785 Ontario Inc. ("211", a corporation controlled by Nielsen and me),
Nielsen and me (Inventory, Equipment, Accounts, Other, Consumer Goods), and
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(j) Minister of Finance (Inventory, Equipment, Accounts, Other).
A copy of a certified PPSA Enquiry Response Certificate dated November 2, 2016 is attached
hereto as Exhibit "D".
12. As of November 3, 2016, the following parties have made registrations against the
Lands:
(a) Platinum, with two registered charges in the aggregate amount of $587,500; and
(b) SEDC and Bruce, which jointly registered a charge in the amount of $624,000.
Pursuant to an agreement between the parties, SEDC and Bruce have postponed their registration
in favour of Platinum. Attached at Exhibit "E" is a copy of the Parcel Registry dated November
3, 2016 in respect of the Lands. Further details regarding BG Furniture's indebtedness to
Platinum, SEDC and Bruce are set out at paragraph 21 below.
13. RPG provides a factoring facility to BG Furniture (the "Factoring Facility"). No
amounts are currently owing to RPG by BG Furniture. However, pursuant to the terms of the
Factoring Facility, BG Furniture has an obligation to re-purchase from RPG any receivables
which are deemed uncollectable. As at the date hereof, I estimate the maximum liability under
the re-purchase obligation to be $20,000. This amount will continue to reduce as RPG collects
the accounts receivable it purchased under the Factoring Facility. I also note that RPG is
currently holding a holdback amount from the Factoring Facility in the amount of approximately
$10,000.
14. BG Furniture is currently indebted to Saugeen and Bruce in the aggregate amount
of approximately $664,000. The joint PPSA registration in favour of Saugeen and Bruce is
limited to the proceeds of BG Furniture's scientific and research development tax credit claims.
15. BG Furniture is indebted to 2544311 Ontario Limited (i. e., the DIP Lender) in an
amount of approximately $41,255 pursuant to a Promissory Note dated September 2, 2015 (the
"Manorhouse Note") in the principal amount of $87,814 given by BG Furniture to Manorhouse
Limited. BG Furniture's obligations under the Manorhouse Note are secured pursuant to a
General Security Agreement dated July 29, 2014 (the "Manorhouse GSA"). Pursuant to an
Assignment Agreement dated December 5, 2016 (the "Assignment Agreement"), the
Manorhouse Note was assigned to 2544311 Ontario Limited. Attached hereto as Exhibits "F",
"G" and ~~H", respectively, are copies of the Manorhouse Note, the Manorhouse GSA and the
Assignment Agreement.
16. BG Furniture is indebted to Grenville in the aggregate minimum amount of
$1,289,689 pursuant to the following:
(a) Convertible Promissory Note dated October 30, 2015 in the principal amount of
$100,000;
(b) Convertible Promissory Note dated November 26, 2015 in the principal amount of
$50,000;
(c) Convertible Promissory Note dated December 15, 2015 in the principal amount of
$25,000;
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(d) Convertible Promissory Note dated December 21, 2015 in the principal amount of
$105,000;
(e) Convertible Promissory Note dated January 7, 2016 in the principal amount of
$50,000;
(~ Convertible Promissory Note dated February 5, 2016 in the principal amount of
$70,000;
(g) Convertible Promissory Note dated March 23, 2016 in the principal amount of
$250,000;
(h) Convertible Promissory Note dated July 1, 2016 in the principal amount of
$45,000;
(i) Royalty Purchase Agreement dated October 17, 2014 (the "Royalty Agreement")
including unpaid royalties in the amount of $550,875; and
(j) Unpaid interest amount of $43,814.44
Copies of the Convertible Promissory Notes described at subparagraphs (a) through (h) above
are attached hereto as Exhibit ~~I". A copy of the Royalty Agreement is attached hereto as
Exhibit ~~J".
17. Grenville's security interest is limited to BG Furniture's personal property.
Grenville holds the following security agreements, copies of which are attached hereto as
Exhibits "K" and "L", respectively:
(a) Security Agreement —Equipment dated September 2, 2015; and
(b) Security Agreement dated September 2, 2015.
18. BG Furniture is indebted to Platinum in the aggregate amount of approximately
$622,312.63 pursuant to the following:
(a) Letter Agreement dated March 28, 2014 between BG Furniture Ltd. and MD
Financial Corporation; and
(b) Letter Agreement dated July 10, 2015 (revised July 27, 2015) between BG
Furniture Ltd. and MD Financial Corporation;
(c) Renewal Agreement dated July 16, 2015 between Platinum Investment Group Inc.
and BG Furniture Ltd.;
(d) Renewal Agreement dated July 25, 2015 between Platinum Investment Group Inc.
and BG Furniture Ltd. in the principal amount of $290,000; and
(e) Renewal Agreement dated July 25, 2015 between Platinum Investment Group Inc.
and BG Furniture Ltd. in the principal amount of $287,500.
Copies of each of the documents described at subparagraphs (a) through (e) above are attached
as Exhibit "M".
19. Platinum has registered the following charges in respect of the Lands:
(a) Charge /Mortgage of Land in the principal amount of $300,000 registered July
28, 2014 as Registration No. BR88053; and
(b) Charge /Mortgage of Land in the principal amount of $287,500 registered August
21, 2015 as Registration No. BR99317.
20. Bruce and SEDC have jointly registered the following charge in respect of the
Lands:
(a) Charge /Mortgage of Land in the amount of $624,000 registered July 28, 2014 as
Registration No. BR88055.
21. Pursuant to letter agreements dated August 4, 2015, SEDC and Bruce each agreed
to postpone in favour of Platinum's mortgages. Copies of the letter agreements dated August 4,
2015 are attached hereto as Exhibit "N".
22. Nielsen, 2110785 Ontario Inc. (a corporation controlled by Nielsen and me) and I
are collectively owed an aggregate amount of approximately $836,785 in respect of shareholder
loans and deferred salary. This amount is secured by a general security agreement dated April 1,
2015, a copy of which is attached hereto as Exhibit "O".
23. CNH, Blue Chip and Xerox are all equipment lessors. This includes the
following:
(a) CNH lease on tractor with remaining lease amount owing of approximately
$44,000 (excluding interest and taxes);
(b) Blue Chip lease on NC Omec Chop saw with remaining lease amount owing of
approximately $15,000 (excluding interest and taxes); and
(c) Xerox rental of a photocopier with a monthly rental amount of approximately
$450.
24. BG Furniture is indebted to the Canada Revenue Agency in an amount of
approximately $49,983 in respect of unremitted employee source deductions.
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25. BG Furniture owes an aggregate amount of approximately $420,000 in unsecured
liabilities to trade creditors.
26. BG Furniture owes an amount of approximately $250,222 in unpaid wages to its
employees. BG Furniture has reached an agreement with the Union in respect of unpaid wages
and other issues. A copy of the agreement with the Union is attached hereto as Exhibit "P".
27. BG Furniture has no unpaid pension contributions or accrued pension liabilities.
Purpose of Proceedings
28. The paramount goal of BG Furniture is to preserve, maximize and realize value
for the benefit of all stakeholders. I believe that this can be best accomplished through the
resuscitation and maintenance of BG Furniture's enterprise value, which was for all intents and
purposes lost when ordinary course operations ceased and employees were laid off on October 7,
2016. The restructuring of BG Furniture to be undertaken under the BIA may involve a
refinancing, recapitalization or sale of BG Furniture's business. BG Furniture will explore all
options to maximize value for stakeholders.
29. BG Furniture currently has approximately $470,000 in back orders. Fulfilling
these orders is expected to generate positive cash flow for the Company. Unless BG Furniture
immediately re-commences operations it will lose these orders.
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Cash Flow Forecast
30. BG Furniture has worked with the Proposal Trustee to prepare a cash flow
statement and report in accordance with the BIA (the "Cash Flow Forecast"). Attached hereto
as Exhibit "Q" is a copy of the Cash Flow Forecast. Based on my knowledge of the financial
position of BG Furniture and the assumptions set out in the Cash Flow Forecast, I believe that
the Cash Flow Forecast is fair and reasonable.
31. In order to implement the restructuring plan, to provide BG Furniture with
working capital and to fund BG Furniture's payroll (including unpaid payroll), BG Furniture
identified a prospective financier and business partner and worked with that party toward the DIP
Commitment Letter provided by the DIP Lender.
The DIP Facility
32. The DIP Lender is a corporation incorporated pursuant to the laws of the Province
of Ontario. The DIP Lender is controlled by Jianjung Rong, with whom BG Furniture has
previously done business through his other ventures.
33. The DIP Lender has agreed to provide the DIP Facility to BG Furniture up to the
maximum aggregate amount of $300,000, subject to BG Furniture obtaining an Order in this
proceeding on the terms requested, granting the DIP Charge over all of the property, assets and
undertaking of BG Furniture including the Lands (collectively, the "Property"), in priority to all
creditors, and certain other conditions.
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34. The proposed DIP Charge would rank second in priority to the proposed
Administration Charge. A copy of the DIP Commitment Letter is attached hereto and marked as
Exhibit "R".
35. I believe that the proposed DIP Facility requested by BG Furniture should be
approved because:
(a) The DIP Facility is necessary to fund payroll and recall and keep approximately
34 employees;
(b) The DIP Facility will enable BG Furniture to complete approximately $470,000 in
back orders, generating positive cash flow over the course of these proceedings;
(c) The DIP Facility would enhance the prospects of BG Furniture making a viable
proposal to its creditors by providing sufficient working capital to implement a
restructuring;
(d) I believe the granting of the DIP Facility and the DIP Charge would not adversely
affect creditor recoveries, and would instead provide the opportunity to enhance
such recoveries;
(e) I do not believe any creditor would be materially prejudiced by the approval of
the DIP Facility and the granting of the DIP Charge; and
(~j the Proposal Trustee supports the DIP Facility and the granting of the DIP
Charge.
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SISP
36. BG Furniture seeks an Order authorizing implementation of the SISP described at
Exhibit "S" hereto. Pursuant to the proposed SISP, with the assistance of the Proposal Trustee,
BG Furniture will solicit offers for equity investments as well as offers to purchase some or all of
the Property. I believe that the immediate commencement of the proposed SISP will reduce
costs, streamline BG Furniture's restructuring proceedings and maximize recoveries for all of its
creditors.
37. The proposed SISP contemplates a marketing and solicitation period of
approximately 7 weeks, taking into account the upcoming holiday season. With the assistance of
the Proposal Trustee, the process will involve a combination of targeted (e.g., to other industry
participants) and broad (e.g., newspaper advertisements), and will be supported by the creation
of a "data room" housing all of BG Furniture's confidential and commercially sensitive
information and records. Management will also be available to assist with Facility tours and to
respond to any specific inquiries.
38. The proposed SISP has been reviewed by the Proposal Trustee and the DIP
Lender, and both support its approval and immediate implementation.
Stalking Horse Bid
39. In conjunction with the SISP, BG Furniture is also seeking approval of the
Stalking Horse Investment Term Sheet between the Company and the Stalking Horse Bidder,
~~
which will serve as a "baseline" for any third-party bids submitted through the SISP. A copy of
the Stalking Horse Investment Term Sheet is attached hereto as Exhibit "T"
40. I believe that approval of the Stalking Horse Investment Term Sheet will provide
stability to the business as it will assist in reassuring customers, employees, suppliers and other
business partners and stakeholders that the business will continue as a going concern.
41. The Stalking Horse Investment Term Sheet provides for the Investment Amount
of a minimum of $800,000 to be invested in BG Furniture and distributed to its creditors. The
Stalking Horse Bidder is permitted to increase the Investment Amount at any time during the bid
deadline prescribed in the proposed SISP. For reasons that include those described at paragraphs
45 through 50 below, I believe that the Investment Amount set out in the Stalking Horse
Investment Term Sheet provides for substantially more recovery for each creditor group than
they would realize through a liquidation.
42. The equity investment contemplated in the Stalking Horse Investment Term Sheet
is subject to certain conditions including, without limitation, creditor approval of the BIA
proposal to be submitted to BG Furniture's creditors (the "BIA Proposal"), and an Order of the
Court sanctioning the BIA Proposal and approving the restructuring contemplated in the Stalking
Horse Investment Term Sheet (the "Approval &Sanction Order").
43. Pursuant to the Stalking Horse Investment Term Sheet, the Investment Amount
will be used for the following purposes:
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(a) repayment of any outstanding amounts secured by the Administration Charge
(estimated to be $0 on the proposed closing date);
(b) repayment of the amounts secured by the DIP Charge (estimated to be in an
amount of $250,000 on the proposed closing date); and
(c) funding the BIA Proposal by the Corporation to its secured, preferred and
unsecured creditors.
44. The Stalking Horse Investment Term Sheet provides that in the event that the
Stalking Horse Bidder's offer is accepted by BG Furniture but the creditors do not approve the
BIA Proposal (such that BG Furniture is automatically deemed bankrupt), the Stalking Horse
Bidder will have an option to purchase all of the Property (other than Excluded Assets, as may be
designated by the Stalking Horse Bidder) (collectively, the "Purchased Assets"), exercisable
within 5 business days of the vote against the BIA Proposal, in consideration of payment of the
Investment Amount and subject to Court approval pursuant to an Approval &Vesting Order.
45. I believe that the Investment Amount prescribed in the Stalking Horse Investment
Term Sheet and the anticipated terms of the BIA Proposal will provide significantly better
recoveries for each creditor class than would be realized in a liquidation. Resuscitation and
maintenance of BG's Furniture's enterprise value is critical to maximization of creditor
realization. Furthermore, the nature and condition of the Lands and the Facility would pose
significant challenges to uses other than manufacturing wood furniture.
- 16-
46. Pursuant to an Appraisal Report dated July 23, 2015 (the "Appraisal Report")
the Lands were appraised at a market value of $825,000. A copy of the Appraisal Report is
attached hereto as Exhibit "U". However, I believe that the estimated market value vastly
overstates the gross proceeds that would be realized in a liquidation or other enforcement
process, as it was made based on assumptions which would be inapplicable in those
circumstances. Specifically, the appraisal was made based on continued owner-occupation and
contribution of a rental equivalency by the business, and assumed "highest and best use", and 8
to 10 month marketing process, and a transaction "...between a willing buyer and a willing seller
in an arm's length transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently, and without compulsion."
47. A Phase I survey of the Lands completed in April 2014 (the "Phase I Survey")
identified a loes-to-moderate risk of environmental impact. I note that the Lands have been
subject to almost 120 years of continuous light industry on site. A copy of the Phase I Survey is
attached hereto as Exhibit "V". The Appraisal Report did not incorporate any soil or other
environmental testing. Any change of use of the Lands may require environmental remediation.
48. I note that the 75,000 square foot main building at the Facility is heated with a
wood-burning boiler that is fed with production remnants. This would be highly impractical for
almost any other use of the building and would necessitate an extensive and expensive retrofit of
the building.
-17-
49. As set out in the Appraisal Report, real property sales in the Walkerton area are
generally weak, with supply significantly outstripping demand.
50. Unless the DIP Commitment Letter, SISP and Stalking Horse Investment Term
Sheet are approved and implemented, I do not believe that BG Furniture will be able to:
(a) re-commence operations and re-capture any going-concern value;
(b) complete the significant back orders; or
(c) retain key employees.
Consequently, absent these BIA proceedings and the Order sought on this motion, I believe that
it would be very unlikely that any party would ascribe any enterprise value whatsoever to the
Property, and would in fact significantly discount its value due to the factors described at
paragraphs 45 through 49 above.
Administration Charge
51. BG Furniture is requesting that the Court grant the Administration Charge in
favour of BG Furniture's counsel and in favour of the Proposal Trustee and its counsel to secure
the payment of fees and expenses incurred in connection with these proceedings. BG Furniture
seeks an Administration Charge in the amount of $150,000 to secure payment of the fees and
expenses of BG Furniture's counsel, and the Proposal Trustee and its counsel.
52. As noted above with respect to the DIP Facility, I do not believe that any creditor
would be materially prejudiced by the granting of the Administration Charge. I also note that BG
- 18-
Furniture's restructuring plan would be impossible to implement without the assistance of BG
Furniture's legal counsel, the Proposal Trustee and its legal counsel.
53. The Cash Flow Forecast and the DIP Facility both contemplate payment of
professional fees on a bi-weekly basis through the duration of the BIA proceedings. As such, I
anticipate that at the conclusion of the proceedings there will not be any amounts payable under
the Administration Charge.
D&O Charge
54. BG Furniture is requesting that the Court grant the D&O Charge in favour of the
directors and officers of BG Furniture (i. e., Nielsen and me) in the amount of $25,000.
Extension of Time for Proposal
55. The NOI was filed on December 14, 2016, and as such the 30 day initial stay of
proceedings under the BIA will expire on January 12, 2017. The SISP contemplates completion
in March 2017. Consequently, BG Furniture seeks an Order extending the stay of proceedings by
45 days from the date upon which this motion is scheduled to be heard, to February 5, 2017.
56. Approval of the extension request will reduce procedural costs over the course of
the BIA proceedings, by eliminating the need to prepare and attend two separate extension
motions in order to complete the SISP on the anticipated schedule. It will also assist in reassuring
stakeholders that both the BIA process and business operations will continue beyond the next 4
weeks.
-19-
S7. I believe that having this motion heard in the Commercial List in Toronto is in the
interest of justice, particularly having regard to the si,~bject matter of the proceeding. In addition,
many of the parties including the Proposal Trustee, the DIP Lender at~d other creditors are in
Toronto. Counsel to BG Furnihire, the Proposal Trustee, and a number of creditors are also
located in Toronto.
58. I swear this affidavit in support of BG Furnihire's motion for the relief requested,
and for no other or improper piupose.
SWORN before me at the Town o Walkerton,in the Province of Ontario, t11is , th day ofDecember, 20
ommissioner for ~ °~ ki Affidavits ~.~~~ ~~~~~~~~
Scott StevvartThlhaudeau, a Commissioner, etc.Province of O~ario, for M(d Ontario ParaleflalService, and for work done wtthinyour permitted scope of ptacdceas a Ucensed paralegal to O~torrte. •~' :, •. .,_ . .
-20-
IN THE MATTER OF THE PROPOSAL OF BG FURNITURE LTD.OF THE TOWN OF WALKERTON IN THE PROVINCE OF ONTARIO
Court File No.:Court No. 35-2199056Estate No. 35-2199056
ONTARIOSUPERIOR COURT OF JUSTICE(COMMERCIAL LIST)
Proceedings commenced at Toronto
AFFIDAVIT OF ADAM HOFMANN(Sworn December 19, 2016)
Fogler, Rubinoff LLP77 King Street WestSuite 3000, PO Box 95TD Centre North TowerToronto, ON MSK 1G8
Greg Azeff (LSUC #45324C)Email: gazeff,~a,fo~lers.com
Stephanie DeCaria (LSUC# 68055L)Email: sdecaria~fo~;lers.com
Tel: (416) 864-9700Fax: (416)941-8852
Lawyers for the Moving Party, BG Furniture Ltd.
'MIS iS ~XHtg1T /~ ~tEFERREDTa CN THE A~FtDAVIT OF
Sil+1C7RN BEFO~~ ME t7N TN1~ THE
i ~ aAY o~ p~~= ~a ~ ~
A CQMMIS~1{~NCR, ~iC
Scott Stewart 7hltiaudeau, a Cnmmissianer, etc,Province of Ontario, far NIId Ontario ParalegalService, antl #or work done withinyour permitted scope of practiceas a licensed paralegal In Ontario.
Request ID: 019547383 Province of OntarioTransaction ID: 62626807 Ministry of Government ServicesCategory ID. UN/E
date Report Produced; 2016/11!02Time Report Produced: 11:47:26Page: 1
CORPORATION PROFILE REPORT
Ontario Corp Number Corporation Name Incorporation Date
2404489 BG FURNITURE LTD. 2014/01123
Jurisdiction
ONTARIO
Corporation Type Corporation Status Former Jurisdiction
ONTARIO BUSINESS CORP. ACTIVE NOl' APPLICABLE
Registered Office Address pate Amalgamated Amalgamation Ind.
NQT APPLICABLE NOT APPLICABLE
75 RIDOUT STNew Amal. Number Notice Date
WALKERTON NOT APPLICABLE NOT APPLICABLE
QNTARIO
CANADA NOG 2V0 Letter Date
Malting Address NOT APPLICABLE
Revival Date Continuation Date
75 RIDOUT STREET
P.O. BOX 1240 NOT APP~~CABLE NOT APPLICABLE
WALKERTON Transferred Out Date Cancel/Inactive Date
ONTARIO
CANADA NOG 2V0 NOT APPLICABLE NOT APPLICABLE
EP Licence Eff.Date EP Licenoe 7erm,Date
NOT APPLICABLE NOT APPLICABLE
Number of Directors Date Commenced Rate CeasedMinimum Maximum fn Qntario In Ontario
00001 00015 NOT APPLICABLE NO7 APPLICABLEActivity Classification
NOT AVAILABLE
Request ID: 0195A7383 Province of QntarioTransaction ID. 62626807 Ministry of Government ServicesCategory ID: UN/E
CURPURATION PROFILE REPORTOntario Corp Number Corporation Name
2404489
Corporate Name History
BG FURNITURE LTD,
BG FUF2NITURE LTD.
Effective date
2014101!23
Current Business Names) Exist:
Expired Business Names) Exist:
Administrator:Name (Individual /Corporation)
ADAMM.HOFMANN
Date Began First Director
2014/Q1/23 NOT APPLICABLE
pesignation Officer Type
DIRECTOR
•
Address
257 4TH STREET CRESCENT
HANOVERONTARIOCANADA N4N 3S9
Resident Canadian
Y
Date Report Produced: 2016/11/02Time Report Produced: 11:47:26Page: 2
Request ID: 019547383 Province of OntarioTransaction ID: 62626807 Ministry of Government ServicesCategory iD: UN/E
CORPORATION PROFILE REPORTOntario Corp Number Corporation Name
24044$9 BG FURNITURE LTD.
Administrator:Name (lndivlduai /Corporation) Address
ADAMM. 257 4TH STREET CRESCENTHOFMANN
HANOVERONTARIOCANADA N4N 359
Date Began First Director
2014/01/23 NOT APPLICABLE
Designation Officer Type Resident Canadian
OFFICEC2 PRESIDENT Y
Administrator:Name (Ind(vidual / Corporation) Address
DIRKP. 3Q2 WESTWOOD DRIVENIELSEN
WALKERTONONTARIOCANADA NOG 2V0
Date Began First Director
2014/01/23 NOT APPLICABLE
Designation Offfoer Type Resident Canadian
DIRECTOR Y
Date Report Produced: 2016/11/02Time Report Produced: 11:47:26Page: 3
Request ID: 018547383 Province of OntarioTransaction ID: 62626807 Ministry of Government ServicesCategory Ip: UN/E
CORPORATION PROFILE REPORTQntario Corp Number Corporation Name
2404489
Administrator:Name (Individual /Corporation)
DIRKP.NIELSEN
pate Began First Director
2014/01/23 NOT APPLICABLE
Designation Officer Type
OFFICER VICE-PRESIDENT
BG FURNITURE LTD.
Address
302 WESTWOQD DRIVE
WALKERTONONTARIOCANADA NOG 2V0
Resident Canadian
V
Date Report Produced: 2016/11/02Time Report Produced: 11:47:26Page: 4
Request ID; 019547383 Province of OntarioTransaction ID: 62626807 Ministry of Government ServicesCategory ID: UN/E
Date Report Produced: 2016/11/02Time Report Produced: 11:47:26Page: 5
CORPORATION PROFILE REPORT
Ontario Corp Number
2404489
last pocument Recorded
Act/Code Descrfptton Form
CIA ANNUAL RETURN 2014 1C
Corporation Name
BG FUi2N17URE L7D.
Date
2015/06/06 (ELECTRONIC FILING)
NI H7NE ONTARIO BUSINESS NI FORMATION SY37EM A8TAT TWIE DATE ANO TIME OF PRINTING. ALL PERSONS WHO~ARE` RECORDED ASDCURRENT pIREC70R5 OR OFFICERS ARE INCLUDED IN THE LIST OF ADMINISTRATORS.
ADDITIONAL HISTORICAL INFORMATION MAY EXIST ON MICItOPICHE.
The Issuance of this report in electronic form is authorized by the Ministry of Government Services.
~ t~ I ! h~~ .~1~~'1DAl~(T ~~'
~ v`~'Q ~ I~1 ~3 ~ F=Q i i ~ ili a t~ ~~ t i-~ 1 ~l r
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Scatt Stewart'Chibaudeau, a: Cammtssloner, etc.,Province of t?nterin, inr M(d ontac o Paralepa!Service, and tot work done withinyour permitted scope of practiceas a Gcensad paralegal In Ordarto.
Distract of.Division No.Gourt No.Estate No.
- FORM 33 -Notice of Inten#ion To Make a Proposal(Subsection 50.4(1) of the Act)
Take notice that:
1. I, BG Furniture l.td., an insolvent person, state, pursuant to subsection 50.4(1) of the Act, that I intend to make a proposal to my
creditors,
2. Collins Barrow Toronto Limited of 11 King Street W., Suite 700, Box 27, Toronto, ~N, M5H 4C7, a licensed trustee, has
consented to act as trustee under the proposal. A copy of the consent is attached.
3. A list of the names of the known creditors with claims of $250 or more and the amounts of their claims is also attached.
4. Pursuant to section 69 of the Act, all proceedings against me are stayed as of the date of filing of this notice with the officialreceiver in my locality.
Dated at the City of Toronto in the Province of Ontario, this 14th day of December 2016.
/~~ ~'
•
To be completed by Official Receiver:
Filing Date Official Receiver
Page 1 of 6
District of:Division No.Court No.Estate No.
-FORM 33 -Notice of Intention To Make a Proposal(Subsection 50.4(1) of the Act)
List of Creditors with claims of $Z50 or more.
Creditor Address Account# Claim Amount
2110785 ONTARIO Inc. PO Box 1240 836,785.42Adam Hofmann and Dirk 75 Ridout StreetNielsen Walkerton ON NOG 2V0
25443110ntario Limited 77 King Street West - 3000 40,255.13Jian Jun Rong TD Centre North Tower
Toronto ON M5K 1G8
All Team Glass & Mircor Ltd 281 Hanlan Rd 1,830.50Woodbridge ON L.4L 3R7 .
B & E Ironworks 60 Citation Dr 1,210.95Concord ON L4K 2W9
Biesse Group Canada Mirabel QC J7J OG2 460.84
Blue Chip Leasing 156 Duncan Mill Rd 14,799.00Unft 16Toronto ON M38 3N2
Bruce Community Futures P.O. Box 208 332,000.00Development 233 BroadwayBarb Fisher Kincardine ON N2Z 2X9
CA Spencer Laval QC H7P 171 13,67'8.OD
CaNer Cabinetry 7 Palmer Street East 9,661.50Box 609NpRWICH ON NOJ 1P0
Cherry Forest Products 24 Kerr Cres 2,463.32Pusiinch ON NOB 2J0
CNH Capital p0 Box 5334 43,894.00Burlington ON L7R 4Z8
miture Ltd.olvent Person
Page 2 of 6
District of:Division No.Court No.Estate No.
-FORM 33Notice of intention To Make a Proposal(Subsection 50.4(1) of the Act)
List of Cred(tors with claims of $250 or more.
Creditor Address Account# Claim Amount
Collins Barrow SGB LLP P Q Box 129 7,452.297 Victoria St SWalkerton ON NDG 2V0
Commissions 86,621.61
De Jong Enterprises Inc. Pd Bax 39, 13,106.41RR 3Norwich ON NOJ 1 PO
Dunsmore Wearing LLP Suite 4410 4,101,34PO Box 372Toronto pN M51.1G2
Excel Dowel &Wood Product 800 Baker Drive 316.00Itasca IL 60143 USA
Folmer & Phillippi 1700 20th Street East 5,789.53Owen Sound ON N4K 5W9
Georgian Bay Fire &Safety P 0 Box 460' 1,308.289184 Twiss RdCampbellville ON LOP 1 BO
Gnodfeilow 90 Snow Blvd. 9,340°86Concord ON L4K 4A2
Grenville Strategic Royalty 220 Bay Street 2,789,689.00Corp Suite 550Donnacha Rahill Toronto ON M5J 2W4
Mettich Canada l.P 27052 Network Piace 4,685.33Chicago Il. 60673-1270
Holland PO Box 9021 704.85700 S Waverly RdHolland MI 49422-9021 USA
niture Ltd.Insolvent Person
Page 3 of 6
District of;Division No.Court No.Estate Na.
-FORM 33 -Notice of Intention 7o Make a Proposal(Subsection 50.4(1) of the Act)
List of Creditors with claims of $250 or more.
Creditor Address Account# Claim Amount
Holst Office Supplies PO Box 218 2,546.57Walkerton ON NOG 2V0
Homag Canada Inc 5090 Edwards blvd. 870.81Mississauga ON L5T 2W3
LeanPack 15825 Marsh Hill Rd 5,970.61Port Perry ON L9L 1 Z1
Masker Finishing Supplies PO Box 866 565.67135 Ormont Drive, Unit 22Keeton ON L0~ 1A0
Mattis Cabinetry By Design 75 Kimball Rd. 2,712.00Wallaceburg ON N8A 4L2
Minister ofFinance - EHT PO Box 620 829530971TE0001 20,369.6133 King Street WestOshawa ON L1 H 8E9
Municipality ofBrockton -Prop PO Box 68 41-04-360-006-18800-000 15,458.60Taxes 100 Scott Street 0
Walkerton ON NOG 2V0
Nagonal Compressed Air 376 Sovereign rd. 481.45London ON N6M 1A5
Olympic Forest 39 Erin Park Dr 26,948.23Erin ON NOB 1T0
Ottens Products 11555 NE Sumner Street 790.00Portland OR 97220 USA
Pa11et Valo LLP lawyers &Trade-Mark Agents 92,130.00300-77 City Csntre Dr. West TowerMississauga ON L561M5
miture Ltd,nsolvent Person
Page 4 of 6
pistrict af:Division No.Court No.Estate No.
FgRM 33 -Notice of Intention To Make a Proposal(Subsection 50.4(1) of the Act}
List of Creditors with claims of $250 or more.
Creditor Address Account# Claim Amount
Platinum Investment Graup -896 Brack Rd, Unit 1 622,312.00Inc. Pickering ON L1W 1Z9Stuart des Vignes
Receiver General -Source 875 Heron Rd 82953 0971 RP0001 49,983.00Deductions Ottawa ON K1A 1B1
Richelieu Hardware 7900 Henri-Bourassa Ouest 5,671.83Saint Laurent QC H4S 1V4
RPG Receivables Inc. 300 - 221 Lakeshore Road East 10,120.00Kevin Fagundes Oakville ON L6J 1H7
Saugeen Economic PO Box 177 332,000.00Development Corp. 515 Mill SteetRose Austin Neustadt ON NOG 2M0
Seradex Manufacturing 4460 Harvester Rd 2,000.00Software Burlington ON L7L 4X2
Skyline Elevator Inc 410 Industrial Rd 31,245.00London ON N4V 1T5
Technical Touch Repairs 24 Loma Drive 1,095.58Stoney Creek ON L8G 2W7
TICC The International Centre 8,660.00Anne Larocque 120-6900 Airport Rd
Mississauga ON L4V 1 E8
Union Gas P 0 Box 2Q01 341.92Chatham ON MM 5M1
USW Local 11 DO Clarence St S. 10,009.44Suite 104Brantford ON N3S 7N8
Wages and accrued vacation 250,222,29
B ur iture Ltd.solvent Person
Page 5 of 6
District af:Division No.Court No.Estate No.
-FORM 33 -Notice of Intention To Make a Proposal(Subsection 50.4(1) of the Act)
List of Creditors with claims of $250 or more.
Creditor Address Account# Claim Amount
Waste Management 219 Labrador driveWaterloo ON N2K 4MB
3,222.68
Weber Supply Ca 1830 Strasburg RdKitchener ON N2R 1E9
1,445.91
Wightman Telecom -Telephone
PO Box 70Clifford ON NOG 1M2
658.08
W51B PO Box 4115, Stn AToronto ON M5W 2V3
5651624 42,900.76
Xerox Canada PO Box 4539 Stn AToronto ON M5W 4P5
2,953.00
Total 5,763,837.00
iture Ltd.sn vent Person
Page 6 of 6
~ F ,A. <_Industry Canada Industrie Canada
Office of the Superintendent Bureau du surintendantof Bankruptcy Canada des faiilites Canada
District of OntarioDivision No. 04 -Owen SoundCourt No. 35-2199056Estate No. 35-2199056
In the Matter of the Notice of Intention to make aproposal of:
BG Furniture Ltd.Insolvent Person
COLLINS BARROW TORONTO LIMITEDLicensed insolvency Trustee
Date of the Notice of Intention: December 14, 2016
CERTIFICATE OF FILING OF A NOTICE OF INTENTION TO MAKE A PROPOSALSubsection 50.4 (11
I, the undersigned, Official Receiver in and for this bankruptcy district, do hereby certify that the aforenamedinsolvent person filed a Notice of Intention to Make a Proposal under subsection 50.4 (1) of the Bankruptcy andInsolvency Act.
Pursuant to subsection 69(1) of the Act, all proceedings against the aforenamed insolvent person are stayed as ofthe date of filing of the Notice of Intention.
Date: December 14, 2016, 12:11
E-File/Depot Electronique Official Receiver
Federal Building -London, 451 Talbot Street, Suite 303, London, Ontario, Canada, N6A5C9, (877)376-9902
Canada
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hf, ~If"~ t"..
BG Furniture Ltd.Attn: Mr. A. Hofmann
July 23, 2016File: 15.07.409
Site Plan Sketch
OttoAndCompany.com ~ Londan ~ Kitchener ( Samia
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Personal Property Lien: Enquiry Result Page 1 of 22
Main Menu New Enquiry
Enquiry ResultFile Currency: 01NOV 2016
All Pa es ~ Show All Pages
:Note: All pages hav~a been returned.
Type of Search Business pebtor
Searoh Conducted BG FURNITURE LTD,qn
Ile Currency Q1NOV 2016
Fiie Numbar Family of Families Page of Expiry Date StatusPages
697507524 1 10 'I 23 27JUN 2019
FORM 1C FINANCING STATEMENT /CLAIM FOF2 LIEN
File Number Caution Rage aP Total Motor Vohicle 12egistration Number Registered RegistrationFiling Pages Schedule Under Perlad
69750752A 01 QQ2 201A0627 1040 1529 P PPSA 68606
Individual pebtnr Date of Birth First Given Narno Initial Surname
Businoss b~btor E3usiness Debtor Name Ontario Carporation Numbar
F3G ~UI~NI7UR~ LTD
Address City Province Po~talCode
75 RIDOUT STREET PO BOX 12A0 WALKERTON ON NOG ZVO
individual bebtar Dafe of Birth First Given Name initial Surname
Business Debtor BusinQss Clebtor Name pntario Corporation Numbar
Address City Province Postal Code
5eoured i'a~ky Securod Party /Lion Glaimant
CNH INpUS7RIAL CAPITAL CANAbA L7b.
Address City Province Postal Code
4476 NORTH SERVICE ROAD BURLINGTON ON L7L 4X7
Caliateral Consumer Inventory Equipment Accounts gfher Mptor Vehicle Ampunt Date of No FixedClassification Goods included Maturity Ma4urity Date
or
X X 2QJUN2019
MotarVehicle Year Maka Model V.I,N.C~escrtptinn X012 CASGIH 95 ZCJP50560
General Collateral Ganeral Collateral DescriptionDQscrlptian ~p13 HQRST 7 INCH OTNERAG, SERIAL 13LA36302
2Q13 CASEIN L735 LOADERS, SERIAL YCWL~5584
2013 MORST PALLET I.10RST PALLET FOLKS, SEF2IAL NSN
https://www.persanalpropez~ty.goy.on.ca/ppsrweb/IntexirnController?page index=4&resNu... 11 /2/2016
Personal Property Lien: Enquiry Result Page 2 of 22
Registering Agent Registering Agent.._ ^_~T ____..__.__.._..._....__..__.._._.._.___~..__.._.___.D+H LIMITED PARTNER51-IIP
~PostalCodoµ ~ M ~y ~~W~ Address Ciky f'rovfnae
SUITE 200, 4126 NORLAND AVENUE BURNABY BC V5G 5S8
CONTINUED
ENQ OF FAMILY
Type of Search Business Debtor
BG FURNITURE t~Tp.
Type of Search Business Debtor
Search ConductedOn
file Currency
BG FURNITURE LTD,
01NOV 2016
File Number family of Families Pago ofPages.
Expiry Date Status
6~J7S07524 1 10 ?. 23 27JUN 2019
FAR11A 1C FINANCINCti STATEMENT /CLAIM FOR LIEN
F'(le Nwnber Caukfonfiling
Page at Tatai1'agea
Motgr VohtcieSchedule
Registration Number RogistoredUnder
RegistrationF'erlad
697507524 02 p02 201A0627 1040 1529$606
Individual DabYor pate o~ Birth First Givon Name Initfai Surname
Business Debtor Business Do6tar Name Ontario Corporation Number
Address Gity Province 1'ostai Code
Individual pebtar pate of E31rth ~irsk Criven Name Initial Surname
Business Debtor Business Qebtnr Namo Ontario Corporation Number
Address Ctty Province Pnstai Cado
Secured Party Secured Party ! Lfen Claimant
Address City I~rovince postal Cade
Collateral ~ Consumer Inventory Equipment Accounts Other Motor Vehicle Amount ~ TDa{e of LLM yT~ No fixedClassif(catinn Goads Included Maturity Maturity Date
or
Motor Vehicle Year MakC Model V.I.N.Descriptiarr `~~~' ~~~~~
~~~~Geiyerai Cnllatarai ~ ~~- .LLT~~~~~wGenpral Co}lateral DesariptianDescription 2013 HI.A 380q BI.AgE, 5ERIAI. 147047
Registering Agont ~ Rogistoring Agont
Address C(ty province Postal Code .
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Personal Property Lien: Enquiry Result Page 3 of 22
( Search Conducted (
I. ~n )_....._.._.._ ................~........_...........__...__.._.......__...............................................,.................~...................................._ ..File Currency D1NOV 2016
file Number Family of Families PagQ of Expiry Date StatusPeges
69788~F291 2 10 3 23 1QJUL 2018
FQRIVI 1C FINANCING STATEMENT /CLAIM ~OFt LIEN
File Number Caution Page of Totai MgkOY VBhIC10 Registration Numbar Registered RegistrationFiifng Wages Schedule Under Period
69788421 Q01 1 201A0710131A 1532 P PPSA 4325$
Individual Rebtor DatQ of Birth First Given Name Initial Surname
Business bebtar Business Debtor Name Qntarfo Gorparatton Number
BG rURNITURE LTD.
Address City Pravince Postal Code
75 RIDEOUT STREET, BqX 14Q WALKERTON ON NOG 2V0
Individual Debtor Date of Birth first Given Name Initial Surname
Business Debtor Business Debtor Hama Ontario Carpnratibn Number
Address City Province Postal Code
Secured Party Secured Party /Lien Claimant
RPG RECEIVABLES PURCHASE GROUP INC.
Address Ciry Province postal Code
30Q -X21 LAKESHCJRE RQAp EAST QAKVIILE CAN L6J 1 H7
Collateral Consumer Inventory Equipment Accounts Other Motor Vahicie Amount Date of No FixedGlassificatian Goads included Maturify Maturity Date
or
X X X X X
Motor Vehiole Year Make Model V.I.N,
Gonerai CollateralDescription
Genoral Gollaterel pescripkian
Registering Agent Registering Agent
CSRS.,.._ _.Address City Province Wostal Coda
4126 NORI.AND AVE BURNABY BG V5G 3S6
CONTINUED
Type of Search Business t~e6tor
Search ConductedOn
BG FURNITURE L7D,
_~ _..__.File Currency .~ 01NQV2016~.~
...^._ .._._.._..._..._._~~...._.w .~._..._.-------~..~..~~...._..
Fila Number Family of Families Page of 1'agos
657$842~J1 2 10 4 23
FORM 2C FINANCING GWANG~ STATEIV(EN7 /CHANGE 91'ATEMENT
CautionFiling
Cage of Total Pages Motor VehfaleSchedulo Aktached
f2ogistratfon Numher Fteg[stered Under
01 001 201Q0710 19A91531 67.03
hops://www.personalpraperty. gov.on.ca/ppsrweb/InterimController?page_index=4&resNu... I 1 /2/2016
Pexsonal Property Lien: inquiry Result Page 4 of 22
1.----__.__._.._._..____..__.__------~.....__ Record
.............._......._.........____.._.._.........___._...---------__._._ _-...__.__..._._.~_._.___..._...._.....~._......_.__............._______..._...__....___JFile Number Pago Np S~BCIfIC Chango Roquired RQnowal Correct Period
C2eferenced Amended Page YearsAmonded
697864291 X A AMNpMN"f'
Reference l7ebtor! First Given Namo inittai SurnameTransferor
Buslnoss Debtor Nama
[3G PURNI7UR~ LTD.
Other Change Other Change
t2eason / Reason /DescriptionDescription AMEND C7E6TOF~ AC1~RE55 FROM 75 RIb~OUT STREET, BOX 140, WALKGRTON, ON
NOG 2Vp TD 7a RIt7EQUT STREET, BOX 124Q, WALKERTON, qN NOG 2V0
pebtor! Transferee Date of 0irth Ftrst Given Name in(tial Surname
Business Debtor Name Clntaria CorporationNumber
l3Ca FURNITURE LTD.
Address City Province Postal Code
75 RICiEOUT STREET, BOX 124Q WALKERTON bN NOG 2V0
Assignor Name Assignor Name
Secured Party Secured party, lien clabnant, assignee
Address City Province Postal Code
Cotiaterai Consumer Inventory Equipment Accounts Other Motor Amount Date of Maturity No FfxedClassification Oaods Vehicle or Maturity
Included Date
Mater Vehicle Year Make Model V.I.N.bescription
General Collateral General Collateral Descrfptiant~oscription
12egfstering Agent Registering Agent ar 5acured Party/ l.fen Claimant
CANADIAN SECURITIES REGISTRATION SYSTEMS
Address City Prpvince Pnstai Code
4126 NQRLAND AVENUE ~ESURNABY BC V6G 358
kNp OF FAMILY
Type of Search Business Debtpr
Search Conductedpn
BG FURNITURE I.TI~,
Fits Currency 01NOV 2016~fle Number Fam(ly of Familiss page of
CagesExpiry Date Stratus
._.~.__ __698259748 3 ~ 10 5 2:~ 23JUL 2020 ...-.~, —~....~~~.µ.~-
https://www.personalpropei~ty:gov.on.ca/ppsxweb/InterimController?page index=4&resNu... l 1 /2/2016
Personal Property Lien: Enquiry Result
FC1RNi 1G FINANCING STATEIVIEN7l CLAIIUI FOi2 LIEN
Page 5 of 22
File Number Caution Pago of 7nYai Matnr Vehicle Rec~(straffon Number Registered RogistratinnPiling Pages Schedule Under Period
~~J825~J708 001 002 20140723 13191$62 P PPSA 67063
individual pebtor pate of Birth First Given Name Initial Surname
Business Dohtor Business Debtor Namo Ontario Corporakfon Humber
13G FURNI"fURE l,Tq.
Address City Prgvince Postal Code
75 RIDQUT STREET WAI,.K~R70N ON NOG 2V0
Individual Debkor pate of Birth First Given Name Initial Surname
Business pebtor Business C7ebtor Name Ontario Gorporation Number
Address City Provb~cQ Postal Cade
Secured Party Secured Party f Lion Claimant
SAUGE~N ECONQMIC D~VELOC'M[NT CQRPORATIbN
Address City Province Postal Cpde
515 MILL STREET, f'. d.BqX 177 NEUSTADT ON NOG 2M0
Collateral Gonsumer Inventory Equipment Accounts ether Motor Vehicle Amount pate of No FixedClassification f3oods Included Maturity Maturity Date
or
X X X
MatorVehiale Yaar Make IVlodel V.I.N.Description
General Collateral General Caliateral gescriptionDescription INCLUDES CiU'T NQ'C' LIMITED TQ THE SCIENTIFIC RESEARCH &EXPERIMENTAL
DEVELOPMENT PROGRAM TAX CREDIT ADMINISTERED BY THH FEDERAL GgVERNMENT
AND THE INVES7MCNT TAX GI~EDIT F'F70GRAM AS AGMINISTER~D F3Y 7HN
Registering Agent ~ Registering AgQnt u
GRANT & ACHESON
~~~~~µ _~~~ ,LL Address .~~ J ~Ciky - yW Prgvince Postal Codo
265 BRIpG~ STREET, P.O. FSOX 128 FERGUS ON N1M 2W7
CONTINUED
Type of Search Business Debtor
Search ConductedQn
BG ~URNITUR~ LTD.
file Currency 01 NpV 2016
File Number Famtl~ of Families Page ofpages
Expiry pate Status ~ Y~
698259708 3 td 6 23 7.3JU1 202Q
FORM 1 C FINANCING STATEMENT / CLAIiVI ~O~i Li~N
File Number CeutfnnFiling
page of 7aYalPec~es
Motor VehicleSchedule._.._.__~r
Regfstratlon Number RegisteredUnder
Reg(strationi'eriod
698259708 ,.._ ~,^ 002 002 20140723 1319 18627063
Individual Dehtor Date of Birth First Given Name Initial Surname
Businass Dabtor Business Debtor Name OnYarin Corporation Number
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Personal Propexty Lien: Enquiry Result
I ndividual Debtor
Business CJebtor
Sacured Party
CollateralClassification
Motor Vehiclepescr(ptlon
CONTINUED
Page 6 of 22
Address City Provinco Poetai Code
date of birth Ffrst Ofven Name in(tiai Surname
Business pebtor Name Ontario Corporation Number
Address City Province Pnstai Code
Secured Party 1 Lien Claimant
Bf2UCE COMMUNITY FU7Uf~E5 D~VELOPM~NT CQRPORATIgN
Address City Province Postal Code
233 BROADWAY STREET KINCARDINE ON N27_ 2X9
Consumer Inventory Equipment Accounts Uthkr Motor Vohlcle Amount Dato of No FixedGaods included Maturity Maturity Date
ar
Year Make Modal V.I,N.
C3eneral Collateral Description
Type of 5earoh E~usiness Debtor
5earcl~ ConductedOn
~ileCurrency
BG FURNITURE L7D;
01NOV201G
File Number Family of Families Page of Pages ,__698259708 3 10 7 ~ 23
---.—_.
FC3t2M 2G FINANCING CHANGE 8TA7EMENT !CHANGE STATEMENT
CautionFiling
Page of Total pages Motor VehicioSchedule Attached
Regiskration Number Registered Under
001 2 20140926 1306 2227 4A&0
4~~ChangeRecordReferenced
Ffie Number ~ PageAmended
No SpeclfiaPage
Amended
Required RenewalYears
Garrect Period
69$259708 A AMNDMN7
Reference Debtor! First Given Name Initial SurnameTransferor -""~"---
Business pebtor Name
BCC FURNITURE LTD.
J OtherChange~ _ ~~^— ---~~~~~~.~ Other Change
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General Ca~lateralDescription pRdVINCE OF ONTARIO
Personal Property Lien: Enquiry Result Page 7 of 22
Reason / Reason / pesaription ,:.Description TO AMEND THE GENERAL CgLLA7ERAL DESCRIPTION IN 7t-IE ORIGINAL.
RE~ISTRATI(7N [3Y ftEMtJVINCa t"HE WOC~t05 "INCLUCaES f3UT NOT'
Debtor/ TransfQres pata of ~frth First Givan Namo initial Surname
Business Debtor Name Ontario CprporatianNumber
Address City Province Postal Code
Assignor Name Assignor Name
Secured Party Secured parley, Ifen claimant, assignee
Addross City Province Postal Cade
Collakerai Consumer Inventory ~qutpment Accounts Other Motor Amaw~k Date of Maturity No FixedClz~ssi~fcatfon Gands Vehicle or Maturity
included Date
Motor Vohiclo Year h+laka Modol V.I.N.pescrfption
Genaral CnllatQral General Coilaterel Description,Description LIM{TEq TQ'i'HE SCIENTIFIC RESEARCH &EXPERIMENTAL DEVELOPMENT
f~ROGRAM TAX CREDIT ADMINISTERED BY THE FEDERAL GOVERNMENT AND THE
INVESTMENT TAX CREDIT PROGRAM AS ADMINISTERED BY 7ME PROVINCC OF
Regiskering Agent Reylstering Agant or Secured Parkyl Linn Claimant
GRANT & ACHESON Lt_F'
~~ ~Addresa City~_~
265 BRIDGE STREET, P,O. BOX 128 FERGUS
CgNTINUEq
Postal Coda
N1M 2W7
Type of Search t3usiness pebtor
~ ~ ~~Search CnnduotedOn
BG FURNITURE L.7p,
File Curroncy 01 NOV 2018
_.__~.w_~_ File Number
698259708
Family
3M..n4_~_. of Families10 e...._.. Page8 ----~______...._.~..._ of Pages.~~._Y»_____..._._ ______~....T, w._____._.._._._,_.__._._
FARM 2C FINANCING CHANGE S1'ATEM~NT / CHANCyE STA7EIVIENT
CautionPiling
Page~of Total Rages Motor VehicleSchedule Attached
~ Registration Number~ W Registered Under
pQ2 2 2Q140926 1306 2227 480
RecordReferonood
File Nwnbor PaceAmended
No SpecificPage
Amended
Change Requfrad RenewalYears
Corroct Por(od
698259706 ...__ _~._..... .._.__. _..___ ...~......... _..,_ ,........~ -----~_..._...~._..
Reference pebtor/ First 4iven N~~ne Initial SurnameTrensPeror
Business [7ebtar Name
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Personal Property Lien: Enquiry Result
gtherChanga
ReasantDescription
Page $ of 22
other
Dobtorl 7rai7sfnree Date of Birth
Reason i Description
first Given Name In(tial Surname
Business Debtor Name Ontario CorporaNgnNumber
Address City 'Province F'oskal Cade
Assignor Nome Assigner Name
Secured Party Secured party, lien claimant, assignee
Address Gity PravUice Postal Code
Cailaterai Cons~nner Inventory Equipment Accounts Qkher Motor Amount hate of Mahirity No FixedClassification Goods Vehicle or Miaturity
h~cluded Date
Motar Vehicle Year Make Modai V.I.N.pescription
General Collateral Genaral Cn11~Eeral pescript(nnQoscrlption pNTAF2IQ.
Registering Agent Registering Agent or Secured Partyl Lien Claimant
Address City Province Postal Code
END OF FAMILY
Type of Searc►i Business DebtorSearch Conducted LAG FURNITURE ~7D.
ankiln Currency 01NOV 2016
file Number Family of Families Page of expiry pate statusPages
6993Q7534 4 1Q 9 23 28AUG 2419FpRCVI 1 C ~INANGING 57AT~IUI~N7" / GLAINI FOR LIEN
File Number Caution Pager of Tatal Motor Vehicle Registration Numbsr Registered RegistrationFiling Pages Schadule Under Period
699347934 001 1 20140828 1637 6083 P F'F'SA 57593
Individual Debtor pate of Birth First Given Name Initfaf Surname
Busfi7oss pebtor Business Debtor Namo Ontario Corpar~tion NumberC3G F'URNITUR~ L.TQ.
Address City Province Postal Codo
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Personal Property Lien: Enquiry Result Page 9 of 22
L_..............._...._...__._..__.__~._t75 RIL7EQUT STREET~PO,BOX 124Q,__._...______._..___._..--------..-LWAI.KER70N ---~ON___._..._.........~NOG 2V0_.._.._..._._~ ':
i~ydividual Debtor pate of Birth First Given Name Initial 5urnaine
Business Debtor Businoss Debtor Neme gntario Corporation Numbar
Address City Provinca Postal Cade
Secured Party Secured Porky / l.ten Claimant
MANORHOUSE LIMITED
Address City Province Postal Cnde
54 GRICKLEWQQl7 CRESGENT THORNHILL ON L9T 4T9
Cnilatoral Consumer inventory EqufpmanY Accaimts Okher INotor Vehicle Amount Date oP No FixedClassification Gaods included Maturity Maturity Date
or
X X X X 250000 X
MatorVehiGle Year Make Model V.I.N.Description
General Collateral General Collateral Dascriptian17escriptian
GQNTINUED
Type of Search C3usinoss Debtor~~
---------__._._..._._._3earah Conducted
OnBG FURNITURE LTL7.
~" _
File Currency 01 NOV 2p16
File Number
699347934
Family
Q
of Femilfes
10
Pogo
10
of Pages
23
CORM 2C FINANCING CHANGE STAT" NIEN7 I CHANGE 5TA7~t1A~NT
CautionFiling
Page of Total Pages Mntar VahicieSchedule Attached
Registration Number i~egiskered Under
009 1 2014091717g8 1793 8881
RecordReferenced
File Numfaer PageAmended
No 5pec(ficPage
Amended
Change Raquirod RenewalYears
Correct period
699347934 A AMNDMNT
Reference Debtor/ First Given Name Initial SurnameTransferor
Business pebtor Name
[3G FURNITURE LTD. ~~
Other Change ~~ QtherChange
Reason / Reason 1 gexcriptianDesariptlon rp INCLULIE IN SECURITY GONSUMEI7 GOOCIS AND MOTOFZ VEf•iiCLES
Registering Agent Registering AgenC
~~FESC CORPORATE SERVICES LTD. W
.~..~.. ._.. -_Address.._......_.._.~ ~..._____..~___....w._... C(ty~.. Province Postal Code
____„_4Q0 - 44b KINCn 81~R~,E1' WkST TQRQNTO ON
..__..._.._.._M5V 1K4
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Personal Property Lien: Enquiry Result
gebtarl Transierea Date of Birth First Gfven Name
Eiusiness debtor Name
Address
Page 10 of 22
,,
initial Surname
Ontario Cnrporat(onNumher
City Province Postal Code
Assignor Name Assignor Name
Secured Party Secured party, lien olaimant, assignee
Address Ciky Provfnco Postal Code
Collateral Consumer Inventory Equfpmnnf Accounts Qther Matar Amount Date of Makurity No FixedClassification Goods Vehiafe or Maturity
Included Date
X X
Motor Vehicle Year Make Model V.LN.Description
General Collateral General Cpilaterai QesariptionDescriptCon
Registering Agent Registering Agent or Secured Parly! Lien Claimant
ESC CORPORATE SERVICES LTq.
Address City Prov(nce Postal Code
A45 KINCa STFZCET WEST, SUITE AOQ Tgl"~ON70 ON M5V1K4
ANC) C)F FAMILY
Type of Search
Search ConductedOn
C~usiness Debtor
BG F'UI~NI7UI~E l.Tl~..~._. ................_ _ ...._._..__...__..._.._.._.....~_._....._.~..._..~.~.~.—
File Currency 01NOV 2tl16
Fiis Number Family of Families Page ofPages
Expiry Date Stakus
7Q1243604 .5 14 11 23 03NOV 2020
F(}RM 1C FINANCING S7A7EMENT 1 CLAIM FOR LIEN ~~__~~
File Numher Caution wFipng
~P~ge of 7otaiPages
Motnr VehicleSch~duie
Reglsfration Number RegisteredUnder
RegistrationPeriod
70124360A 01 001 20141103 170314629616
P PPSA C~
~ ~µ~Indivtdual Debtor ~~ Date of Birth uFirst G(ven Name ~ ~ Inikiaiw Surname
Business pebtar ~ ~ Business Debtor Name y Ontario Corporation Number
BG FURNITURE LTb
Address City Province Postal Code
151~IpE0U7 ST WAI.K~RTON ON NOG2V0
Individual Debtor Datn of Birth First Given Name Initial
~
Surname
10MAR1964 ADAM ~W HOFMANN
Business Debkpr Business Debtor Name Ontario Corporation Number
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Personal Property Lien: Enquiry Result
Rnglstering Agent Registering Agent
PPSA CANAC~A INC. - (39~J2)
Address Ctty Province Postal Code
11Q SHEPPARD AVE EAST, SUITE 303 TQRONTQ ON M2N6Y8
i END OF FAMILY
Type of Search Business Debtor
Search Conducted BG I=UF2NITUt~~ LTi7.On
Ffia CurrQncy 01NOV ?.016
F(le Number Famfiy of Families Page of Expiry Date Statuspages
706716855 6 10 12 23 03JUN 2018
PORN! iC FINANCING STA7ENfEN71CLAIIUI ~C3R LIEN
File Number Caution Page of Total Mntor Vehicle Registration Number ~tegistered FtQgistratianFitinc~ Pages Schedule Under Period
706716855 01 002 20150603 1033 8477 P PPSA 33122
Individual pebtor Date of birth
Business Debtor
BG FUF~NI7UC2E l.Tp.
75 FtIQ~'OU7 STF2ECT
Individual bebtor Date of Birth
02FE61986
Bus(~7ess bebtor
First Given Name
Business gebtnr Name
Address
First Given NamQ
DIRK
~3usiness Debtor Name
Initial Surname
Ontario Corporation Number
City Prgvinco Postal CndQ
WALKERTON ON NOG2K0
h~itiai Surname
P NIFLSON
Ontario Cnraoration Number
Address City Province Postal Code
302 W~S7Wq(7p DID SS5 WALKERTON ON NOG 2V0
Secured party Secured Party / i.ien Claimant
~~~~~~~~E3LU~ CHIC' I~~ASING GORPO~tATION~~~Y~ ~
Address City P'rovinco Po&tal Coda
156 (~UNCAN MILL ROAp, UNIT 16 TORON7d ON M3B 3N2
Page 11 of 22
Address City Province Postal Cade
257 47M STREET CRESCENT HANOVER ON NgN359
Soccired ParEy Secured Party !Lien Claimant
XERUX CANADA l.l"D
Address City Province Ppstal Code
33 81.0002 ST. E. 3RD FLQOR TORONTO ON MAW3i•11
Collateral Consumer inventory Equipment Accounts Qther Mator Vehicle Amount Date of No FixedClassificatinit Gnnds I~icludod Maturity Maturity Date
or
X X X
Motor Vehicle Year Make Mlodei V.I. N,Description
General Collateral General Collater~i pescriptionDescripktan
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Personal Property Lien: Enquiry Result Page 12 of 22 ,
Coilztarai Consumer hlvontory Equipmonk Accawil~ Other Motor Vehicle Amaunk Date of Nn fixedClassfficatton Gaods Included Maturity Maturity pate
or
X X X
IVlotor Vohiclo Year IUCake Model V.I.N.Description
General Collateral General Collateral Descriptionpesaription
Registering Agant Registering Agent
REGISTRY = RECQVERY ING. ~mm
Addross City Province Postal Coda
1551 THE QUEENSWAY T~F20NT0 UN M8Z 1T5
CONTINUED
Typo of Search Business Debtor
Search Conducted BG FURNITURC L7G.On
file Currency ~iNOV 2018
File Nwnber Family of Families Pale of Expiry Date Statuspages
7Q6716865 6 10 13 23 03JUN 2418
FORM 1 C FINANCING ST'ATENI~NT /CLAIM FOR 4.IEIV
file Number Cautipn Page of Total Motor Vel7lcie ~2egistration Number Registered RegistrationFiling Pages Schedule Under Period
706716855 02 002 2g150G03 1033 8077s~az
i ndividual Debtor Dato of B(rth First Divan Namn Initial Surname
OZFE61986 t~Ih2K NIEI.SpN
Business Debtor Business pebtor Name Ontario Corporation Number
Address City province Postal Codo
302 WES7WOOq qR S55 WAI.KkRTON ON NOCi 2V0
Individual Debtor bate of Birth First Given Name Initial 5urneme
10MAR1964 AgAM HO~MANN
Bustness De6Cor Business Dabtor Name gntario Corporation Number
Address Giry Province postal Code
257 4TH ST CRES HANOVER ON N4N 3S9
Secured Party Secured party / Lien Gleimant
Addross City Province Postal Code
Collateral Consumer Inventory Equipment Accounts Othor IVlotor Vohicle Ainounf C7efe of No PixedCiassfficatfo~ C~OpQ8 Included Maturity Maturiky Date
or
Motor Vehicle Year Make Model V,I.N.Description
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Personal Property Lien: Enquiry Result
Genaral CniiateralDescription
GONTINUEI~
Goneral Collateral pnscriptiar~
Page 13 of 22
1"ype of Search
Search ConductedOn
Business t7ebtor
RG FURNITURE LTD.
File Currency 01NOV 2Q16 ~ ~ T
File Number Family of Pamilfes Paga of Pages
706716855 6 10 14 23
~(7RIVI ~C FINANCING CHANC~rE STATEMENT / CWANGE STATEMENT
CautionFliinr~
page of Total Pages Motor VohicleSchQdulq Attachod
Registratlnn Nurnbor Registered Under
T Opt 3 LD150901 09A4 1901 8919
Record ~Referenced
File NumbQr ~ PaceAmended
No Specfficpage
Amended
~ Change Required RenewalYears
Corract Period
706716$55 ~ A AD/INDMNT
~ ~rv~~Reference pebtor/~ ~ ~ ~ first Given Name initial~~ ~~~V~~~~SurnameTrahsferor
Business Debtor Name
[3G (=URNITURE LTD.
Other Change Othor Chango
Reason /~ ~~~~ ~~~~~ ~__LL~ Reason ! Doacriptian ~~T~ ~~ ~~~~pescriptian AMEND GENERAL COLLATERAL AMEND bEB7QR FROM ADAM MICHAEL FIOFMANN 257
4TH ST C~tES HANOVER, ON, N4N3S9 (pOCi 10 MAR 196A) TO AgAM MM~ ~~ ~ ~~~~
HbFMANN 257 ATH ST CRE5 HANOVER, ON, N4N3S9 (DOB 10 MAR 1964)
Debtarl Transferee Dete of Birth First Given Name In[tiai Surname
10MAR196A ADAM M HO~MANN
Business 17ubYnr Mamo Ontario CnrporatfonNumber
vAddress City Province Postal Code
257 ATf~I ST CRES MANOVER ON N4N 389
Assignor Name Aasignor Name
Secured Parley ~~~~.~~ .~~~ Secured party, lien claimant, assignee ~-T~~~m~
Address City Provinco Postal Codo
CollateralClassification
ConsumorGoods
Inventory ~quipmont Accounts other MotorVehicle
Included
Arnount Date of Maturityor
No fixedMaturityDatQ
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Personal Property Lien: Enquiry Result Page 14 of 22
MotarVehicle Ysar ... Make . _ ---- ~_,_ Modei V_. . L__..._...____._.~..... 1..__..__.._..._...__............---._......__._.~.....~._____...._l._..__....____CJesCription ~~ ~~ ~ ~~~
General Collateral General Collateral Dascrtptlangescription 1 - UMGA DOUBLE (TWO HEAD) MITRE SAW, WITM VEf~71CAL CLAMC'S,
HORIZQNTAL GLAMC~S ANp ALL CARPENTRY EQUIPMENT OF EVERY NATURE QR KINl7
DESCRIBED IN LEASE NUMBER 4p116 (A0636) BETWEEN THE SECURED PARTY,
Registering Agent Registering A~7ent or Secured Party! Lien Claimant
AVS SYSTEMS INC.
Address City Province Postal Code
201 - 1325 PQLSQN DR. VERNON BC V1T BH2
CONTINUED
Type aP 5earch
Search ConductedOn
Business pel~tar
BG FURNITURE I.TD. "---__._..._._._ .~...._._.__...__...,.._.~.w ............._--~._.~__V.~.____~~._..,.._..~
File Currency 01NOV 2010
File Number Family of Famflios Page _ of Pages
706716855 6 _...._ ~0 v~._~5~_._._...__~_._. ~~ ..__._...._.._.~..~_______._.._._ ~
^ ~ORIVI 2C ~INANC{NC CHANGE STATEMENT /CHANGE S'fATEtVi~NT
CautionFIIir7g
page of Total Pages Motnr Veh{cleSchedule Attached
12egistraYion Number Registered Under
002 3 20150901 09441901 8919
Recordf2eferenced
File Number PageAmended
No SpecificPage
Amended
Changtl Required RenewalYears
Correct Period
706716855 .~
Reference Debtor/ First Given Name Initial SurnameTransferor ""'
Business Debkor Name
.._.._..._....._._~thor Change
-_u,Other
Change.-....______..__._.__.__
~fteason ~~ ~~.~~. ~I Reason / L7escription ~~~~~~ ~~~_G7escription
Debtorl Transferee Date of B{rth first Given Name Inittai Surname
Business Debtor Name Ontario CorporationNwnber
~~~.~ ~W~~WT~_ Address ~ City Province Postal Code
Assignor Name Assignor Name
Secured Party Secured party, Ilen claimant, essfgneo
Address City Prgvince Pastai Code
Inventory Equipment Accounts Other Amount
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Personal Property Lien: Enquiry Result Page 15 of 22
Caliateral Consumer Motor Dato of Maturity Nn FixedClassificat(on Goods ~ ( ~ Vehicle ~ ~ or ( Maturity
includod Date~
Motor Vehicle Year Maka Model V.I.N.Description
GenQral Cnliatc~ral General Collateral DescriptionDescription AS L~530~t ANl7 THE UEBTat~ AS LESSEE, AS AIVIENDEp F~tQM TIME TO 1'IM~,
TOGETHER WITH ALL ATTACHMENTS, ACCESSQRIES, SUBSTITUTIONS AND ALL
PROCEEDS IN ANY FbRM DERIVEtJ C7IRFCTI~Y OR INDIRECTLY FROM ANY DEALING
Regiskerfng Agent Registering Agent or Secured Party/ Lien Claimant
Address ~ ^ Gity Province Postal Codo
CONTINUED
Type of Search Business C7ebtor
Soarch Conducted CiG FURNITUI~~ LTD.Qn
File Curroncy 01 NbV 2016
File Number Family of Families Page of Pages
"t'06'716855 6 1 q 16 23
FOf2M 2C ~INl1NCING CHANGE STATEMENT / CHANCaE STATEMENT
Caution Page of Total Wages Motor Vehicle fisgistration Number Registered finderFfling Schedule Attached
003 3 20150901 0944 19g1 8919
Reoord Filn Number Page No Specific Change Ftequfred F.enewal Cprrect PeriodRaferenced Amended Page Years
Amended
7Q671G865
~teferenae Debtor/ First Given Name Initial SurnameTransferor
Business Debtor Name
Other Chango Other Change
Reason / Reason !Descriptionposariptian
D~btnr/ Transferee Gate of Birth first Given Name Inikial Surname
business Debtor Name tJntario CorporationNumbor
Addrass City province Postal Code
Assignor Name Assignor Name
Secured 1'arly Secured party, Ifen claimant, assignee
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Personal Property Lien: Enquiry Result Page 16 of 22
Address City Province Postal CodeL.----....___...__.._...---.....L__---- _-_-___.._.....__...~_.__.__._....._.._.~._._..__._..__._._.....__........._..~----___ ---_.._..1...._....---.._._...___._...._..-------..1......_.'..........1.._._.~_........__
Cpliateral Consumer Inventory Equipment Acaounta Other Motor Amount Date of Maturity No FixedClassification Goods Vehicle or Mlaturiry
Included pate
Motor Vehicle . Yoar Make Model V.I.N.pescriptlon
Qonerai Collateral General Collateral pescriptinnDescription WIl'H fM~ GOLLATEftAL OR PROCEEDS THEREOF.
Registering Agent Registering Ac~e~t or SecurQd Party/ Lien Claimant
Address City
END OF FAMILY
Code
._J ,;
Type of 5earah Business debkor
Search ConductedAn
BG FURNITURE LTD. ~~~M~
FiloCurrency ~01NOV2016 ~~~~ ~ ~ ~~~
File Number Family of families Page ofPages
Expiry pate Status
709217757 7 1A 17 23 21AUG 2017
~'C)FtM 1C FINANCING 5TATEMENT! CLAIM FOR LIEN ~~~ ~.W
ails Number CautionElting
Page of7ot~lPagQs
Motor V~hiciaSchedulo
f2egistration Numbor FtegistnredUnder
C2egistratfonPeriod
709217757 001 1 ~ 20150821 1712 80835601
P PP5A 2
tndiv(dual Dehtar C7ate of Birth First Given Name Initial Surname
Business Debtor Business Debtor NamQ Ontario Carpor~tian Number.W _BG FURNITUI2~. I.TO. ...... ~ ~~.~..y~
2404488._._.
Address Cfty Province Postal Coda
75 RIpOUT STRECT WALKER7bN bN NOG 2V0
Individual Debtor Date of Birth first Given Name Ittitiai Surname
Bushress Debtor ~ E3usiness pebtor Name c7ntario Corporation Number
Address ~ Ciry C'rovince Postal Code
Secured {'arty Secured Party 1 Lfen Clahna~~t
PLA"1"INUM INVES"FMEN7 GF~OUP INC.
Address City Province Postal Codo
3-109 OLD KING5TgN ROAD AJAX ON L1T 3A6
CollatoraiClassitication
ConsumErGoods
Inventory Equipmonk Accounts
~.
Oxher Makar VehicioIncluded
..~~.,~,___._.287500
Amounk Date ofMaturiky
or._.._~.y_.
No FixedMaturity Date
____~.X ..~.____~.~..x X_.. X x
~~._.._.~__._.,_,.___~__m..._....__.._._...~__ ~.. _ ---_— ___._....~,____ _._.._v~...~_.._.___..___..~.,_... ~...__~~.Year ~..____._ ------ Make Model V.I.N.
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Personal Property Lien: Enquiry Result
Motor VehicleC7Qscriptfon
General Coliaterat General Cgllaferal DescriptionDescription 2ND CHARGE/MbRTGAGE ON THE PRQPERTY LOCATED AT 75 RIDOU7 STREET,
WAL.KERTON, ONTARIO
Page 17 of 22
~~Registering Agent ~~~~ Registoring Agent~~
TIM VANULAF2 LAWYERS PROFES51QNAl CORPORATION
~.—~._._. _...._. ..__ --.---_-
Address ~~M~~ ~~ Ciky Provinta Pastal Cndo
2200 BROCK ROAq N(7R7H, UNITS C10 & C11 PICK[!RING ON I.1X 2R2
CONTINUE47
TTYpe of Search business pebtor -~-- -m ~
Search ConductedOn
{~U 1=UC~tNiTUttk L7C~.
File Currency p1NOV 2016
~Ue Number Family of Families Page of Pages
70~J217757 7 10 18 23
J~ FC3RM zC FINANCING CHANGE STATEMENT / GWANGE STATECNENT
~CautionFiling
Page oP Total Pagos ~Makor VahicioSchedule Attached
Registration Number RagistQreci Under
001 ~1 ~ ~ ~~ 2016p901 17Q5 6083 5849
RacordRetarenced
File Number
709217767
PageAmended
No SpecificPage
Amendad
X
~ Change Required
A AMNDMN7
RenewalYears
Correct period
Reference Debtor/ first Given Name Initial SurnameTransferor
Business pebtar Name
BG FURNITURE LTD.
Other Change Other Change
Reason I ~._....__~.~,._.._.~..._. _._.._.._....
Reason 1 gescription __. __.______.~_.....,__....__~.._._----•----~,.__.
~~~~Desariptfon CfiANGE COLLATERAL CLAS5I~ICATION Td JUST "OTHER" ~~~~~
Debtor! Transferee Date of Birth First Given Name Initial Surname
Business Debtor Name pntario CorporakionNumber
Address Gty Province Postal Code
AsslgnnrName ~~4µ.~__~~~~~ Assignor Name ~~~~u
.._...... ,....,~:._..Secured Party
.._...M.... w ,...~........_...~....._._.. .~,_.._Secured porky, Ifen claimant, assignee
Address City Provinca Postal Code
CollateralClassiFicatinn
GonsumeYGoods
Inventory Equipment AaGaunts Other MotorVehicle
Inciudad
Amoimf Date of Maturityar
Nq fixedMaturityDate
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Personal Property Lien: inquiry Result
x
Page 18 of 22
Motor Vehicle Year Make Model V.I.N,Description"
Goneral Cailateral General Collateral pesoriptionDescription
Registering Agent Registering Agent rrr Secured Party/ Lian Claimant
TIM VANULAR LAtNYERS PftQFEBSIONAL CORP.
Address Ciky Provinco Postal Code
2200 C31~UCK f2p. N., UNI75 C10 & 11 4~~~ C'ICKC~tING ON L1X 2R2
ENl7 OF FAMILY
Typo of Search Business gebtor~ ~~ ~~~
Search ConductedOn
BG FURNI'T'URE l.Tp.
Fite Currency 01NOV 2016 ~ ~~~~~~
File Number Family of Families Page off~apes
Expiry pate Status
7Q95Q8421 8 1Q 19 23 g1SE1~2025
-~~ ^~~.~ FOFtiVi 1C FINANCING S7ATECNENT! CI.AINI F'OR LI~N~~ ~~~ _.
Fife Number Cautionfling
Page of TatarPages
IVlotor VehicleSchedule
Registration Number RegisteredUnder
Rec~fstrationPeriod
709508421 001 1 ~~~ ~ ~20150901 0815 16302566
P PPSA 1d
Individual Debtor Data of Birth first Given Name Initial Surnamo
Business f3ebtor Business pebtor Name Ontar(o Corporation Number
BG FURNITURE LTD, d02A0QQ89
T Address City F'rovinca Postal Code
75 hIUQU7 S7 WALKkR7gN ON NOG 2V0
Individual DehYor Hato of Birth first Given Name Initial Surnamo
~~~Business Debtor ~~ ~Businesa pr~btor Name Ontario Corporation Number
Address City Province Postal Gode
Secured Parry Secured Party /Lien Clairttant
GRENVILLE STRATEGIC RQYAL'fY CORP.
Address City provinca
~
Pastas Gode
224 8AY STREET, SUITE 5000 TORONTq ON M5J 2W4
CollateralGlassificatian
ConsumerGoods
Inventory equipment Accounts Other Motor VehicleIncluded
Amount pate ofMaturity
or
No FixedMaturity Dake
X X~~X X X
Motor Vehicle Year Make Model V.I,N.Description
Genoral Collateral General Collateral Descriptionposcription ~""
hops://www.personalproperty.gov.on.ca/ppsrweb/InterimCantroller?page index=4&resNu... 11 /2/201 G
Personal Property Lien: Enquiry Result
END OF FAMILY
Page 19 of 22
Regi&tering Agent Registering Agent
OWENS WRIGFIT LLP (JUSTINE DE PALMA)
V ~ ~~W Address CityW Province i'osfal Codrt
3q0 - 20 HOLLY STREET TORONTO qN M45 381
Type of Search k3usiness C7ebtor
Search ConductedOn
BG FURNITURE LTD.
Filo Currency ~01NOV 2p16 ~__~_~__~._..._._.~__~~~_._.._..~_ .~.. ._~.._,.._.."..__ ......................_.____
Fila Number Famfly n4 F~mtlies Cage ofPages
Exp(ry pate Status
712901£335 9 10 20 23 24DEC 2020
...~_.- ---~.__.~...—~.__~._. .. ~—_. ~QFtM 1C ~[NANCING STATEMENT i CLAIM FQR LIEN
FiiQ Numbor Caukionfiling
gaga of 7atalPages
Motor VehicleSchedule
Registration Numta~r RagistoradUnder
RegistrationPeriod
712901 $3S 001 3 2Q151224 1045 23500073
P PF'SA 05
individual pebtor C1ato of Birth first Given Name hiitial SuCneme
Business pebtor business Debtor Name Ontario Corporation Number
BG FURNITU(~G LTD, 240AQ89
Address City Province postal Gode
75 RIDgUT STREET WALKERTON ON NQG 2V0
Individual pebtor L7aYe of Birth Firsfi Giuen Name Initial Surname
Businoss pebfor W Business Debtor Name Onlaric~ Corporation Number
Addross City Province Postal Code
._._ ~._.... _..._.._.__.,__.Socured Party
.___.__..._ ,..._______.._....~..w.__._.,._._ .,._.._...Socured Party 1 Lien Claimant
-----~--.~._.__~_. ADAM HUFFMAN._..W..~..~..._...~._~_~_._._.__ _ _..Y._._.. _...._..._.._._.....,,.. ~.___._._.
Address City Province Postal Code
76 RIDgUT STREET ~~ ~~~~ WALKERTQN~N~ NOG 2V0~
CgllateralClassification
CanaumsrGoads
Inventory Equipment Acoaunts Qther Motgr VehicleIncluded
Amaunt gate ofMaturity
or
Nq FixedMaturity Date
X X X X X ~ 1500000 ~ X ~ ~~
Motor Vahicle Yaar Make~--.._...._~..._._._....~.~._.~.~. ..__ Model V.I.N. ~_~_.._
Clescription_ ____..~ ..~
General Coilatera! General Collatorel DescriptionDescription ACCOUNTS, EQUIPMENT, pOCUM~N"I"5, AGFt~EMENt"S, GgODWII.L, I.IGFNC~S,
CHATTELS, INVENTORY, LEASES, SNARES
Rogiskerinq Agent RogistQring Agent
ANDREWS. MACDONA~b
~~ Address City Province Postal Code
A2 WATERLOO STREET SOUI`H 5TRATFQRD QN N5RAA7
CONTINUED
https://www.personalproperty.gov.on. ca/ppsrweb/Interirr~Controller?page_index=4&resNu... 11 /2/2016
Personal Prpperty Lien: Enquiry Result
CONTINUED
Page 20 of 22
Type of Search Business Debtor
Search Gorrductedqn
~ µ ~ ~ ~~
BG FURNITtJFZE L.TD.
File Currency 01 N~V 2016
~~~~~ Filo Number Family of Families Pale ofpages
Exptry Date Stakus
'712501$35 9 1d 21 23 2QpEC 2Q2Q .......—.—._._Fp~'tM 1C FINANCING STAT~NI~NT / CLAl1V1 ~pf~ LIEN
Flle Number CautionFiling
Page of TotalPages
Motor VehicleSchedule
Registration Number 12egisteredUnder
~ZegfstrationReriod
712901835 p02 3 2015122A 1045 235p0073
~ ~individual Qebtor Date of Birth ~ First Given Name~~w~ ~ initial Surname
Business Debtor Business pebtor Name Ontario Corporation Number
Addrebs Gity Province Postal Codo
Individual pebtor Rate of Birth First Given Name Initial Surname
w ~~~~ w ~Business Debkor ~~~ ~~~ ~ Tm Business Debtor Name Ontario Carporetign Number
--.... ._._._ _..~ ...~..w..,...V...... _._.._..,... _Address
...y.City
,W.Province Postal Code
Secured Parry Secured Rarty ! l.len Clafmartt
QIRK PETER NI~I.SQN
Address City Province
~
Postal Cndo
~~ 75 F21pOUT STFt~E'1' WALKERTON ON NOG 2Vp
Coilater~l Consumer inventory Equipment Accounts Other Motor Vehiclo Amount Date of Na FixedCiassffication Goods Included Maturiky Maturity Date
or
Motor Vehicle Year Make IVlodet V.i.N.Description
General Collateral General Cailakeral DescriptionC~escription
Registering Agent Registering Agent
Address City Province postal Code
Type of Search Business ~ebtnr
Search ConductedOn
BG FURNITURE= LTD.
Fite Currency 01NOV 2016
File Number Family of Families Page ofPages~ Expiry Date Status
712901835 9 10 22 23 24pEG 202Q____.~__.______.V.._. ~~.___...~._.._._.._ ~..-C
ORM 1C FINANCING STA7~MENT I Cf~AIM FQR t~I~N --- ------_ __~.~..__ _._____.._
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Pexsonal Property Lien: Enquiry Result Page 21 of 22
I Fife Number Gauklon Page of I Total Motor Vehicle I Registration Number I Registered Registration
.........._..........._ .............._...._.........................~.........._.Fitin9...............~........._........_.............I.......~Pagos_........~...~...........Schedule...._..............i......._......_..__......_.........._._..._........................._...I............_Under~...........~............,__period...............717,901835 003 3 20151224 1045 2350
p073
Individual Debtor Opte of Birth First Given Name Inikial Surname
Ciusiness i~ebtor Business Debtor Name Onfaria Corporation Number
Address City C'rovince Postal Coda
Individual Debtor Date of Birth first Given Name Initial Surname
justness pebtor Businoss Debtor Name Qntarfo Corporation NumUer
Address City province Postal Code
Secured Party Secured Party / i.ien Claimant
2110786 ONTARIO INC.
Address City Provinco Postal Cndo
75 RIQQUT STREET WALKERTON ON NOG 2V0
Coilataral Consumer Inventory equipment Accounts Other MgYor Vehiclo Amount Date of Nn FixedClassification Gnnds included Maturity Maturity bate
or
Motor Vehicle Year Make MoQei V.I.N.Description
Genarai CollateralDescrlptfon
Gan~ral Collateral goscription
I._. I .W..___L__ I_.~..___ _.1
ENq OF FAMILY
__ ._.v _~_.~_..__..____~__I
Type of Search C3usinesa DebYar
Search Conducted BG FURNITURE LT(7.On
File Currency 01 NQV 2016
Fila Nuimber Family of ~amfliea Page of ExpCry Date StatusPages
716991237 10 10 23 23 26MAY 2021
FORM'IC FINANCING STATEMENT /CLAIM FOR 41EN
File Num6Qr Caution Page of Total Motor Vohicie Rogistration Number Ra~gistored Registration~'iiing Pages Scl7edule Under Wer(od
716~J91237 001 001 2016Q526 0952 1031 R F'PSA Q5397tl
Individual Debtor date of Birth First GCven Name
Business Debkor Business debtor Name
i 't3G FURNITURE LTD,
Initial Surname
Ontario Corporation Number
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Personal Property Lien: Enquiry Result - Page 22 of 22
Address Gfty~ Province Postal Cade
76 RIDOUT ST GD WALKERTQN ON NOG 2V0
Individual Debtor pate of Birth First Divan Name Initial Surname
Business Dobtor Business Clebtor Name Ontario Corporation Number
Address City Province Postai Code
Secured Party Secured Party /Lien Claimant
MiER MAJESTY IN RIGHT OF ONTARIO REPRESENTED EiY TMF MINISTER 0~' FINANCE
Address City Province Postal Gode
5 PARK I-IOME AVENUE, 2Nb FLOOR TORONTO ON M2N 6W8
Collateral Consumer Invenkory Equipment Accounts Okher Motor Vehicle Amount Dace of No FixedClassificetipn Gonds includgd Maturity Maturity Datn
or
X X X X 20994 2~MAY2021
Motor Vohicie Year Make Madei V.I.N.Description
General CollateralDescription
General Collateral Description
Registering Agent ~ ~~ Registering AgenE ~~~
MINISTRY Or FINANCE, AM & COLLFG710NS BRANCH, EM7 829530971
Address ~ City Province Postal Code
5 PARK FigM~ AVENUE, 2Nb FLQOR (594!387) TORONTO qN M2N 6W6
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https://~www.personalproperty.gov.on.ca/ppsrweb/interim.Controller?page index=4&resNu... 11 /2/2016
..- q
I 1 ~. ~~ ~' ~ )~ ~
m ~~ i~ ~ l-i ~~-l'i~1-~~Il ~ C~~~
Scott Stewart Thlbaudeau, a Commfsslnner, etr„~ `Prnvince 4f Ontario, ter M!d Oniaria ParalegalService, and fior work done urithinyour permi~ad scope of practfcaas a ifcensed paralapai in O~taatio.
M, PARCEL REGISTER (ABSREVZATED) FOR PROPERTY IDENTIFIER
Y~ ~~ ~f' Ri l~~ ~ J~ ~p~,ry. yppp PAG& 1 OF 3
~r" Ontario =~.~~ ~' ~ REGISTRY PREPARED FOR CWSkippet
~' OFFICE #3 33198-0287 {yT} ON 2016/11/03 AT 16;44:39
• CERTIFIED IN ACCORDANCE WITft THfi LAND TITLES ACT ' SIIB.7ECT TO RfiSfiRVATIONS IN CROWN GRAtTi'
LT 2-12 PI. 1~0; DORL7\ND ST, SHIELDS ST PL 140 QASED BY WR4779; LT 2-6, 12-13, 7-8 BLR B PL 106; PT LT 1 PL 140 AS IN 859132 & 826616; PT LT 21-22 CON
2 SDR BRANT AS IN 855876, Y7K13381; PT LT 9-11 BLK B PL 106; PT ST. JOSEPA ST PL 1Q6 CTASfiD SY WK4779 AS 227 91tt14045 EXCEPT PT 2, 3R4068~ EXCEPT LT 7-S
HLK B PL 106 & EXCEPT PT 1 3A8566; S/T 8233229; S/T WK13381, WK14045 & S(T MI2iSRAL RZGFiTS CONTAILIBA IN 855876; MUNICIPALITY OF SROCXTON
PROPERTY Ri3~iaRICS:
S3TA~',FL03IAT+I FI ER
FES SIMPLE
UT CONVERSION QUALIFIED
OWNERS' NAMES
HG FURN2T[7RE LTD:
Q~~NCLY:
DIVISION FROM 33198-0285
gjJ,~(~F,~TION DATE
2011/06/30
_ _ _____~~._
RBa. NfDi.
___
DATE INSTR~ TYPE E3fOIItiT P]1RTI83 FROM P7JlT28S T6CERTICfit~
* PRSNTO ZNCLIIDSS DOCUMENT TYPES AN D&LETED ZNSTR S SINCB: 2021/06/30 ~~
•~SIIBJSCT~ OPT FIRST R6 ST'RATION UNDER THS TZTL&S AC1',
• SOBSSCTZON (2) OF TA6 LN7D TI FS ACI, fiXCSPT P GRAPH 22, PllRl1GRAPX 14, PROYINCZAL SVCCSSSZOtT DUTIES ~
AttB ESCHEAT OR FOXFSITURS TO 8` CROWN.
• TRS RIGXTS F ANY PERSON WXO WO BIIT FOR TFIB TITLfiS ACT, B8 &NTITLfiD TO THS T+ADID OR ANY PART OF
IT THROUGH &NG771 OP ADVERSE PO SESSION, PRSSCRZ ION, MISDBSCRZPTION OR BOUNDARIES SETTLED BY
• CONV&NTION.
~' Af7Y LEAS$ WHICH THE SUBSSCTI N 70(2) OF THE RS ZSTRY ACT APPLIES.
*DATfi OF NVBRSION LAND TITLES: 2006/ 7/24 •+
WK23381 1945/12/05 ZRANSFER *~* DELETED AGAINST TKIS PROPERTY •**B06DON & GROSS FURNITURE COMPANY LIMZT&D
iPK14095 1948/01/13 TRANSFER *• DELfiTED AGAINST THIS PROPERTY +**BOGDON & GROSS FURNITURE COMPANY LIMITED
828616 1962/09/14 TRANSFER ••t DELETED AGAI2SST THIS PROPERTY •**BOGDON & GROSS FURNITURE COMPANY LIMITED
828617 1462/09/19 TW~NSFER *~• DELETED AGAINST THIS PROPERTY *~•SOGDON E GROSS FURNITURE COMPANY LIMIT&D
854132 1967/Q2/07 TRANSFER ~• DELETED AGAItIST THIS PROPERTY +'•SOGDON & GROSS FURNITI7RE COPSPANY LIMITED
NOTE: ]4UJQINING PROPERTIES SKOULD HE INVESTIGATED TO ASCERTAIN DESCRIPTIVE INCONSISTENCIES, IF ANY, WIT3i DfiSCRZPTION REPRESENTED FOR THIS PROPERTY.
NOTE: ENSURE THAT YOUR PRINTOOT STATES TFIE TOTAL lR1MBER OF PAGES AND 'PNAT YOU HAVE PICKED THII3 ALL UP.
` PARCEL REGISTER {ABBREVIA'i'&D) FOR PROPBRTY IDENTIFIER
~"' Z,pNp PAGE 2 OF 3
Ontario • ~ ~ ~ REGISTRY PRfiPARED FOR CWSkipper
OFFICE #3 33198-0287 (LT) ON 2016/11/03 AT 16:44:39
• CERTIFIED IN ACCORDANCE WITH THE LAND TZTL€S A(`P • SFJBJECT TO RESERVATIONS IN CROSPN GRP.NT
RSG. NQK. DATE ZHSTi21JMENT TYPB A2SOIINT PARTI8S FROM B7~RTI85 TO
CBRT/CHKO
R54212 1967/02/15 TRANSFER *• DELFsTED AGAINST THIS PROPERTY **•
BOGDON 6 GROSS FUHNITUAE COMPANY LIMITED
R54809 1967/04J05 TRANSFER '* DELETE➢ AGAI[dST THIS PROPERTY ~~•BOGDON & GROSS FURNITURfi COMPANY LIMITED
R55876 1967J06/OS TRAIJSFER "'• DfiLETfiD AGAINST TH2S PROPERTY ***
BOGDON ~ GROSS RURNZ7.4JRE COMPANY LIMITED
RS SKST ATTACHED.
3R4068 1987/03/10 PLAN REFERENCE ~
SRI22 2006/11/30 CEiARGE ** DELESfiD AGAINST 4'HIS PROPERTY +**
BOGDON & GROSS FURNITI3RB COMPANY LIMITED BOGDON, BARBARA
BR245 2606/12/01 CHARGE *t DELETED AGA237ST THIS PROPERTY ***
BOGDON & GROSS PURNITi7RE CODiPANY LIMITED SAUGEELF ECOLdOMIC DfiVELOPMBNT CORPORATION
BRUCE COMM~PTITY FUTQRES DEVEIAPMENT CORPORATION
BR257 2006112/01 POSTPONEMENT **< DELETED AGAINST TKIS PROPERRY xrr
HOGDON, HARBARA SAIIGEEN BCONOMIC DEVELOPMENT CORPORATION
BRIICE COM1IDiONZTY FUTUR&S DEVBLOPMENt' CORPORATION
BR122 BR246
SR21326 2008/10/29 CHARGE *6' DELETED AGAINST THIS PROPERTY 'r•
BOGDON &GROSS FURNITURE COMPANY LIMITED 2210785 ONTARIO INC.
BR61641 2012/01/20 DZSCH OF CHARGE *'* COMPLSTBLY DELBTED k~~
BOGDON, HARBNiA
RE BR122.
BR62571 2012/02/24 CHARGE *` COMPLETELY DELETED *•~
BOGDON & GROSS FURNITURE COMPANY LIMITED TCE CAPITAL CORPORATION
BR62572 2012/02/24 POSTPONF1~tENTtE « COMPLETELY DELFT&D x'*
2110785 ONTARIO INC. TCE CAPITAL CORPORATION
RE BIt223 20 BR62572
BR78161 2413/07/25 LIEN '~* COMPLETELY DELETED <t+
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY
THE MINISTER OF FINANCE
R S: TAX L N
NOTB: ADJOINING PROPERTIES SHOiFLD BE INVESTIGATEII TO ASCERTAIN DESCRIPTIVE LNCONSISTENCIfiS, IF AFIY, WITH DESCRIPTI037 REPRESENTED FOR THIS PROPERTY.
NOTE: ENSURE THAT YOUR PRINTOUT SSATES THE TOTAL NUMB&R OF PAGES AND THAT YOU HAVE PICKED THEM ALL UP.
PARCEL REGISTER (ABBREVIATED} FOR PROPERTY IDENTIFIER
LAND
'Ontario ~ • ~ REGISTRY
OFFICE #3 33198-0287 (LT)
* CERTIFZfiD IN ACCORDANCE WITH THS LAND TITLES ACP ~ SI78JECT TO RESERVATIONS IN CROWN GRANT a
PAGE 3 OF 3
PRfiPARED FOR CWSkipper
ON 201b/11/63 AT 16:44:39
itBG. NIIM. DATE INSTRIIt~HT TYPE AM0212iT PERTIES F&OM PARTI85 TO
CS&T/
QED
HR88043 2014J07f28 APL VESTING ORDfiR $469,000 ONi'ARZO SOPBRIOR COIIRT OF .NSTFCE BG FURNITURE LTD. C
BR88053 2014/07/28 CHARGE $3U0,000 SG FORNZTURE LTD. PLATINUM INVESTMENT GROUP INC. C
BRS8055 2014J07/28 CHARGE $624,000 BG FURNZTURfi LTD. SAUGEEN BCONOMIC DEVEIAPMENf CORPORATION C
BRUCE COS+NfUNZTY FDTFJRES DEVfiLOPMENT CORPORATION
BR99317 2015/08/21 CHAitGfi $287,500 BG FURPFITURE LTD. PLATINUM INVESTM&NT GR09P INC. C
SR99318 2015/08/21 POSTPOI1fiM8NT SAIIGEEN ECONOMIC DEVELOPMENT CORPORATION PLATSN[TM INV6STM8NT GROUP INC. C
BRDCS COtR4UNITY FUT[3RES DEVELOPMENT CORPORATION
RS S: BR880 TO BIZ99327~
NOTE: ADJOINING PROPERTIES SHOQLD 88 FNVESTIGATED TQ ASCERTAIN DESCRIPTIVE INCONSIST£sNCIES, IF ANY, WITH DfiSCRIPTION REPRESENTED FOR TFIIS PROPERTY.
NOTE. ENSURE THAT YOUR PRINTOUT STATES TEiE TOTI+L NOMBER OF PAGES AND THAT YOU HAVE PICKED THEM ALL UP.
..,,
y~ 4.. s~roa .en.....w~~.
Scott Stewart 7f~ibaudeau, a Cnmmissioner, etc.Province of Ontario, for MId Ontario paralegalSeryics, and for ~rark done withiqyour permitted scopa of pracficeas a licensed paralepai In Optari0.
SECURED PRUMISSORY NOTE(the "Note"}
bate: September 2, 201 S $87,813.00 CDN.
FQR VALUE RECEIVED, BG Furniture Ltd. (the "PAygt'"), PROMISES TQ PAY to the
Qrder cif Manorhouse Limited (the "Payee"} at Thornhill, Ontario, or at such other place as the
Payee may designate in writing from time to time, the amount of E[GHTY-SEVCN
THOUSAND EIGHT HUNDRED AND TNIRTEEN DOLLARS (~87,~13.00} of lawPu!
money of Canada (the "principal Sum"}, with 4% annual interest compounded monthly As per a
Confirmation Letter dated September 2, 201 S among BG Furniture Ltd. Manorhouse Limited
and Grenville 5trategie Royalty Corp.
This Noke is beirr,~ delivered by the Payor to the Payee as evidence of tl~e Payor's obligation to
pay An oatstandin~ balance to the Payee as set out in a Confirmation Letter dated Sep4ember 2, 2015.
The I'ayor sl~atl have the right and privilege of prepaying the wYaole ar any portion of the
principal under this Nnte from time to time remaining unpaid and outstanding at any time ar timeswithout notice, bongs or penalty.
The Payar hereby waives presentment for payment, notice of hon-payment, protest and notice of
protest and agrees and consents ka all extensions nr renewals of this Nnte without notice.
The Payor ~cknawledges and a,~i-ees that mention in this Note of any particular right or remedyavailable to the Payee in regards to any default by the Payar shall hat preclude the Payee from exercising,or limit the extent of, any other remedy in respect thereof, whether at !aw or in equity, or any otherprovision of this Note. Na remedy available hereunder to the Payee shall be interpreted as beingexclusive ar dependent upon any other remedy, and the Fayee tnay from time to time exercise, at his
aptSnn, any one or more remedies independently or in combination.
No condoning, excusing or overlaokin~; by the Payee of any default by the Payor under this Nate
steal! operate as a waiver of any of the Payee's rights or any of the Fayor's obligations hereunder and nawaiver shall be inferred from or implied by anything done, delayed ar omitted to be done by the Payee,save and except only an express wttiver in writing given by the Payee to the Payor.
Ti}is Note shall be eonstnaed, governed by and interpreted and enforced in accordance with thelaws of the Province oFOntario and the federal laws of Canada applicable therein. The Payar irrevocablysubmits and agrees to attarn to the Courts of the Province of Ontario in the event of Any suit, action orath~r legal proceeding in regards to this Note or any matter arising therefrom.
The obligations of the Payar under this Nnte are secured by way of a general security agreement (the"Security Agreement") executed and delivered by khe Payar to the Fayee with effect as of the elate hereof.Manarhouse Limited, in its sale discretion, may call an their outstanding loan to ~G ~umiture Ltd. at anytime for reason of non-payment in Fu11, until fully paid.
EiG FurnGurc Promissory Notc.d~s:
This Nate shall be binding upon the Payor ►ts successors and permitted assigns. This T~lote shallenure to the benefit of the payee and its successors and permitted assigns.
IN WITNESS WHEREOF the Pnyor has executed this Note.
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Scott Stewart'thidaudeau, a Commisstoner etc,Prov(nce of Onta~ia, iar Mid O~fariq ParalegalService, and #ar wnrk done wfthl~iyour permitted scope of practiceas a licensedparalepa{.In t3~Far1a.r'~'. '7~:a, ,~w.n.,,.,
GENERAL SECURITY AGREEMENT
THIS AGREEMENT made the 29th day of July, 2014
BETWEEN:BG FURNITURE LTD.,(the "Debtor"), a corporation incorporated under the lawsof the Province of Ontario
Address: 75 Ridout Street,Walkerton, Ontario,Canada NOG 2V0
- and -
MANURHOUSE LIMITED(the "Secured Parry"), a corporation incorporated underthe taws of the Province of Ontario
Address: 54 Cricklewood Crescent,Thornhill, Ontario,Canada L3T 4T9
WHEREAS the Secured Party carries on the business of providing financialsolutions to businesses and corporations;
AND WHEREAS the Debtor has requested that the Secured Forty transactbusiness with the Debtor;
AND WHEREAS the Secured Party agreed to transact such business with theDebtor as the Secured Party in its discretion may determine from time to time subject tothe condition that the Debtor execute aad deliver to the Secured Party this Agreement,and in consideration of such agreement, the Debtor agreed to execute and deliver thisAgeeement;
NOW THEREFORE THIS AGREEMENT W~'~`NESSES that for theconsidezatiora hereinbefore recited and other good and valuable consideration, the receiptand sufficiency of which are hereby acknowledged by each of the parties, the partieshe~•eto hereby covenant and agree as #'ollows:
1. Grant of Security Interest: The Debtor hereby grants to the Secured Party asecurity interest (to which tha Personal Property Security Act (Ontario) and theregulations thereto, as the sanne may be amended from time to time (the "PPSA") applies)in and grants, mortgages and charges as and by way of a #fixed and floating mortgage and
f►J
charge to and in favour of the Secured Party, all of the Debtor's rights, title and interestsin and to each and every property described oc referred to below (collectively, the"Collateral"), all pursuant to and in accordance with the provisions of this Agreerr►ent.
2. Description of Coliatei•al: The Collateral includes all of the following personalproperty and fixtures, and all af' the leasehold interests and other property described inparagraph (j) below:
{a) atl goods now ox hereafter comprising part of the inventory of the Debtor andall interests, rights and benefits, both p~~esent and future of the Debtor in or to inventoryincluding, without limitation, goods now or hereafter held For sale or lease or furnished orto be furnished under a contract of service ax that are raw materials, work in process oxmaterials used or consumed in a business oF• prot`ession pr finished goods;
(b) alI equipnnent now or het~eAftec owned by Ehe Debtor and all interests, rightsand benefits, bath present and future, of the Debtor in or to equipment including, withoutlinnitation, office, warehouse and other furniture, fixtures, nnachineiry, tools, rolling stock,vehicles, accessories, spare parts, supplies and other tangible personal propeF-ty;
(c) all fixtures now ar hereafter owned by the De6to~• and all interests, rights andbenefits, bath present and future, of the DeGtor in ar to fixtures;
(d) alI chattel paper now or hereafter owned or held by the Debtor and allinterests, rights and benefits, both peesent and future, of t11e Debtor in, under ox to chattelp~pe1•;
(e} each and every document of title now or hereafter awned by the Debtor or ofwhich the Debtor is or becomes a holder, whether negotiable or nonnegotiable,including, without limitation, each and every warehouse receipt and bill of lading, and allinterests, rights and bEne~ts, bath present and future, of the Debtor in, under or to eachand every document of title;
(fj each and every instrument now or hereafter owned by the Debtor or of whichthe Debtor is or becomes a holder, and all interests, rights and benefits, both present andfuture, of the Debtor in, under or to each and every instrument;
(g) each and every security now or hereafter owned by the Debtor or of which theDebtor is oc becomes a holder including, without limitation, all shares, stock, warrants,bonds, debentures, debenture stock or the like issued by a corporation or other person, ora partnership, association or government, and all interests, rights and benefits, bathpresent and future, of the Debtor in, under ox to each and every security;
(h) all money off' the Debtor and all rraoney hereafter acquired by the Debtor andeach and every account, debt, claim. and demand of every nature and kind which is nowdue, owing or accruing due or which may hereafter become due, owing or accruing due tothe Debtor•, ar which the Debtor• now has or may hereafter have and alI interests, rights
and benefits, both present and future of the Debtor in or to each and every account, debt,claim az~d dennand including, without limitation, claims against the Crown and claimsunder insurance policies;
{i) all goodwill, patents, trade maxlcs, t~~ade names, copyrights and otherintellectual property and industrial property now or hereafter owned by the Debtor and allinterests, rights and benefits, both present and fatu~•e, o~ the Debtor in, under ar to thesame;
(j) each and every lease, agreement to lease and leasehold interest of the Debtorand all interests, rights and benefits, both present and future, of the Debtor, in, under or tothe same, except the last day of any term of years reserved by any such lease or agreementtherefore of which reversion of one day the Debtor shall stand possessed upon trust toassign and dispose of the same as the Secured Party shall direct;
(k) each and every intangible now or hereafter owned by the Debtor ar of whichthe Debtor is or 6ecornes a holder, and all interests, rights and benefits, both present andfuture, oFthe Debtor in, under ar to each and every intangible;
(I) with respect to the property described in each of subparagraphs (a) to (Ic}inclusive, all substitutions and replacements thereof, innprovements, increases, additionsand accessions thereto and aII interests, eights and benefits, both px•esent and future, of theDebtor in, under or to the same;
(m) with respect to the properCy described in each of subparagraphs (a) to (1)inclusive, identifiable or traceable personal property in any fpim derived diz•ectly orindirectly fiotn any dealing with such property ar the proceeds therefrom and includes anypayment representing indemnity or compensation for loss of or damage to such propertyor proceeds therefrom; and
(n) with respect tv the property described in each of subparagraphs (a) to (m)1C1C~US1V8, all books, accounfs, (IIVOtCBS, letters, deeds, GOriCP~CtS, SECUPI~, securities,instruments, bills, notes, writings, papers, docunnents and records in any form evidencingar relating thereto, and all other rights and benefits to which the Debtor is now or mayhereafter become entitled in respect thereof;
7n this Agreement, the words "goods", "inventory", "equipment", "chattel paper","document of title", "instrument", "security", "money", "account", "motor vehicle","vehicle identification number", "pt•oceeds", "intangible" and "accessions" shall have thesame meanings as theit~ defined meanings in the PPSA. In this Agreenr~ent, each referenceto "Co]lateral" shall, unless the context otherwise t~equires, include and be read as"Collateral or any part thereof'.
All of the Collateral, insofar as the same is not intangible property, is now andwill hereafter be kept at the address set out above:
4
3. Secured Obligations: The security interests, morkgages and charges grantedhereby secure all of the following (collectively, the "Obligations"): both the performanceand the payment to the Secured Party of all abligatiotas, debts and liabilities {including,without limitation, on account of damages) of the Debtor to the Secured Party, present oxfuture, direct or indirect, absolute or contingent, liquidated or unliquidaCed, nnatut~ed ornat, wheresoever and howsoever incurred,
(a) whether arising under this or any other agreement (whether wxitten or oral),instrument or writing;
(b} whether arising from dealings between the Secured Party and the Debtor orfrom other dealings or proceedings by which the Secured Party may Ue or become in anymanner whatever a creditor, obligee or promisee oFthe Debtor;
(c) whether incurred by the Debtor alone or with another or others;
(d) whether incurred by the l7ebtor as principal, surety, indemnitor, obligor orpromisor; and
(e) whether such obligations, debts and liabilities are from time to time reducedand thereafter increased or entirely extinguished and thereafter incurxed again;
including, without limitation, the full amounts of all accounts receivable which may atany time be or have been purchased by the Secured Party tram the Debtox and alI amountswhich may at any time be ox become payable by the Debtor to the Secured Forty under orpursuant to any agreement, instrument or document which may be or have been made orentered into by the Debtor with or in favour of the Secuxed Pasty in connection with theassignment of any accounts receivable by the Debtor to the Secured Party, and allincluding, withaat Iimitation, all interest, commissions, legal costs {on a solicitor andclient basis) and oilier costs, charges and expenses payable in connection with any and all
of the foregoing and in addition thereto, the Expenses (provided for and defined below).
4. Attachment: Each of the Debtor and the Secured Party acknowledges andconfirms that the security interests, mortgages and charges granted hereby shall attach:
(a) forthwith upon the date first written abovE (the "Effective Date") with respect
to each and every propei~y included in the Collateral and in which the Debtor then hasrights; and
(b) farthwitl~ upon the Debtor first acquiring rights in each and every property
included in the Collateral and in which the Debtor first acquires such rights subsequent to
the Effective Date.
For greater certainty, without in any way limiting the above, each of the Debtor
and the Secured Far-ty acknowledges and confirms that they have not agreed to postpone
the time for attachment of the said security interests, mortgages and charges.
5. Debtor's VVar•~•autres: The Debtor hereby represents and warrants to andcovenants with the Secured Party as follows and acknowledges that the Secured Party is,in park, relying upon such representations, warranties and covenants in accepting thesecurity interests, mortgages and charges granted upon the terms of this Agreement:
(a) Title to Collateral: The Debtor is the absolute and beneficial owner of theCollateral and none of the Collateral is held in the name of any person other than theDebtor, whether as agent, trustee or other• nominee fbr the Debtor, and all registrationsand flings which may be required to preserve the Debtor's title, rights or other interests inthe Collateral vis-a~vis others have been made,
{b) Right to Grant: The Debtor has and shall at all relevant times have the fullright, power and authority fo enter into and perform its obligations under this Agreementand to grant the security interests, mortgages and charges as het•ein provided.
6. Debtor's Covenants: (a) Obligations: The Debtor agrees to pay, perform,satisfy, fulfill and discharge the Obligations as and when due;
(b) Possession/Description: Forthwith upon request by the Secured Party, theDebtor shall deliver ppssession of the Collateral to the Secured Party and shall, ifrequested by the Secured Party, deliver forthwith to the Secured Party such furtk~ez• detailsrespecting the Collateral. Such further details and legal description so delivered shall bedeemed to be contained in and form part of this Agreement.
7. events of De~'ault: Forthwith aeon the occurrence ot'any of the following evants{an "Event of Default"), the Obligations will, without the Secured Party being required togive notice or demand, at the option of the Secured Party become due and payable 'rn fulland, to the extent applicaGle, be xequiced to be fully performed:
(a) the failure of the Debtor to pad when due any payment of any of theObligations;
(b) tl~e failure of the Debtor to perform any of the Obligations;
(c} any representation, warranty, statement or report which is false or incorrect inany respect having been made o~• given by the Debtor to the Secured Panty, whetherco~ttained herein or in any other agreement (written or oral) instrument or writing;
{d) the failure or inability of the Debtor to pay any of its debts or liabilities as thesame fall due;
(e} the occurrence of a default by the Debtor under any agreement, instrument orwriting entered into by the Debtor with any person(s);
(fl the Debtor rx~aking or agreeing to make an assignment, disposition orconveyance, whether by way of sale ar otherwise, of zts assets in bulk;
(g) the abandonment by the Debtor ofthe Collateral or any part thereof;
(h) the Debtor ceasing or threatening to cease carrying on its business or any of itsbusinesses;
{i) the filing of an application or petition or the passing of a resolution for thewinding-up or dissolution of the Debtor, or the granting ar issuing of an order for thewinding~up or dissolution of the Debtor;
(j) as execution, sequestration or any other process of any court ox• other tribunalbecoming enforceable against tl~e Debtor or a distress or analogous process being taken orissued against the Debtor or Levied upon the property of the Debtor or any part thereofincluding, without litnitatian, a warrant of distress foe any rent or taxes in respect o£ anypremises occupied by the Debtor or in respect of any premises in. or upon which theCollateral or any part thereof may at any time be situate;
{Ic) the appointment of a receiver, receiver and manager, agent, liquidator or othersimilar administrator of any par~(s) of the Collateral or the taking by a secured party orany other encumbrancer of possession of the Collateral or any parts) thereof;
(i) any proceedings which relafie or extend to the Debtor being commenced under.the Cornpan[es' Creditors Arranbement Act or any other legislation of the P~•ovince ofOntario, any other province or territory in Canada, the Parliament of Canada or any othercountry, state ox• jurisdiction, which legislation deals with companies' creditorsarxangenaents ox other creditors' arrangements;
(m) the debtor committing or threatening to commit any act of bankruptcy, dinga vafuntary assignment in bankruptcy, making a proposal under the Bankruptcy andInsolvency Act or otherwise, or taking any action in respect of the settlement of anyclaims of its creditors whether under the provisions of the Bankruptcy and Insolvency Actor otherwise, or any persons) taking any proceedings which may result in the Debtorbeing declared bankrupt;
(n) the loss, damage, destruction ar confiscation of any pant of the Collateral,unless upon sueli event, the Debtor pays to the Secured ~'a~ty forthwith such amount asthe Secured l'ai'ty in its absolute and uncontrolled discretion determines is satisfactory;and
(o) the Secured Pai~y in hood faith and having commercially reasonable groundsfor believing that the ability of the Debtor to pay any monies hereby secuxed or tp performany requirement of any provision contained in this Agreement or any other agreement(written or oral), instrument or writing heretofore o~ hereafter given by the Debtor to theSecured Pat-~y is unpaired or that the Collateral is in danger o~ being lost, damaged,destroyed or confiscated.
8. Rights a nd R~z~nedies: Forthwith upon the occurrence of an Event of Default, thesecurity interests, mortgages and charges granted herein shall be enforceable and theDebtor and the Secured Patty shall have, in addition to and other rights and remediesprovided by law, the rights and remedies of a debtor and a secured party respectivelyunder the PPSA and those provided by this Agreement. In addition, the Secured Partymay take possession of the Collateral and enforce any rights of the Debtor in respect ofthe Collateral by any method available in or permitted by law and may require the Debtorto assennble the Collateral and deliver or make the Collateral available to the SecuredParty at any place within Metropolitan Toronto and surrounding area as may bedesignated by the Secured Party.
9. Expenses: The reasonable costs and expenses of the Secured Party in thepreparation, execution and delivery of this Agreement, the registration of this Agreementar of notices, financing statements or other filings in respect thereof, the reasonable costsand expenses of the Secured Party in connection with the preparation or review ofwaivers, consents, amendments, subordination agreennents or other matters pertaining tothe subject matter of this Agreement, the reasonable costs and expenses expresslyprovided for in the PPSA and, in addition thez•eto, the cost of any insurance, taxes,solicitor's fees, costs and other legal expenses and all other costs, charges and expenses ofar incurred (an a scale as between a solicitor and his own client) by the Secured Panty inrespect of any of the foregoing and in respect of the enforcement of the Obligations,including taking possession, custody, holding, preserving, protecting, repairing, using oroperating, collecting, realizing, processing, preparing for disposition and disposing of theCollateral (collectively, the "Expenses") shall be payable by Che Debtoe to the SecuredParty forthwith upon demand, shall ba deem.ed advanced to the Debtor by the SecuredParty, shall bear interest at a rate equal to 1%per month calculated, both before and afterdemand, maturity, default and judgment, fronn the date each of the Expenses,respectively, were incurred until fully paid by the Debtor and shall be secured by thisAgreement.
The Debtor authorizes the Secured ParCy to designate, in its sole discretion, anynumber of years as the registration period in any financing statement or fnaneing changestatement filed with respect to this Agreement or any ether agreement delivered by theDebtor to the Secured Party {"Designated Period")
The Debtor acknowledges and confirms that:
(a) all eegistration costs in connection with the filing of the aforesaid financingstatements oz• financing change statements are and shall be reasonable and shall form partof the Expenses;
(b) the designation of the number of yea~•s comprising the Designated Period shallnot constitute an acknowledgement by ox commitment or other obligation of the Secured
8
Party to provide financial assistance (whetter by loan, agreement or otherwise) to theDebtor; and
(c} the SecuX•ed Party shall be entitled to exercise ali of its rights and remediesprovided far in this Agreement forthwith upon the occurrence of an Event of Defaultnotwithstanding that such Event of Default may occur prior to the expiration of theDesignated Period.
10. Notice of Disposition: Unless nat required to do so 6y applicable law, theSec~ired Party shall give to the Debtor at least 10 days written notice of the SecuredParty's intention to dispose of the Collateral. Such notice may be sent by registered mailto the last known post office addx•ess of the Debtor.
11. Receiver• -Appointment: The Secured Party may take proceedings in any courtof competent jurisdiction for the appointraaent of a receiver or a receiver and manager {the"receiver") of the Collate~•al or of any pai-~ thereof or may by instrument in writingappoint any person to be a receiver of the Collateral or of any part thereof and mayremove any receiver so appointed by the Secured Party and appoint another in his stead.
12. Receiver -Powers: Any receiver appointed hereunder by instrument in wcitiagshall have power (a) to take possession of the Collateral or any part thereof and, withoutliability or obligation to the Debtor, to maintain; preserve and protect the same; {b) tocarry on or concur in carrying on all or any part of the business or businesses of theDebtor; (c} to borrow money which such receiver, in its sole discretion, determines isrequired in connection with either or both a~'the powers provided for in paragca~h (a) and(b); and (d) to dispose of the Collateral in whole or ire dart, and any such disposition maybe by public sale (whether by auction, tender or otherwise), private sale, lease orothezwise, acid at such time and place and on such terms and for such price and mannex ofpayment thereof, all as such receiver nay, in its sale discretion, determine; provided thatany such receiver shall be and is deemed to lie the agent of the Debtor and the SecuredParty shall not in any way be responsible for any misconduct, negligence or non-feasanceof any such receiver.
13. Proceeds of DispositioniDe~ciency: Any proceeds of any disposition of any ofthe Collateral shall be applied by the Secured k'arty firstly on account of the Expenses,and any balance of such proceeds shall 6e applied by the Secured Party on account of theObligations (other than the Expenses) in such order of application as the Secured Partymay from time to time effect and the same shall not be subject ~a dispute by the Debtor. IFsuch proceeds fail to satisfy the Obligations, the Debtor shall be liable for the full amountof the deficiency resulting to the Secured Party.
14. General Pa-ovisions: {a) Discharge: The Debtor shall not be discharged firom thaObligations by any extension of time, additional advances, renewals, amendments orextensions to this Agreement, the taking of further security, releasing security,extinguishment of the security interests, mortgages and charges as to alI or any part of theCollateral, or any other act except a release or discharge by the Secured Party of thesecurity interests, mortgages and charges granted hereby upon the full payment andpe~•formance of the Obligations, at which time tha Secured Party shall, at the Debtor'sexpense, deliver alI necessary discharges and releases of such security interests,mortgages and charges.
{b) Other Security: (r) The security constituted by this Agreement is in addition toand not in substitution for any other security from time to time held by the Secured Forty;
(ii) The Secured Forty may realize upon all or part of any security fromtime to time held by it in any order it desires and any realization by any means upon anysecurity shall not bar realization upon any other security; and
(iii) The taking of any actipn or proceeding or refraining from so doing yrany other dealir►gs with any other security for the Obligations shall not xelease or affectthe security provided for in this Agreement and the taking of the security hereby grantedor any proceedings hereunder for the realization of the security hereby granted shall notrelease or affect any other security and rights held by the Secured Party for theObligations.
(c) Waiver, etc.: Na failure or delay on the part of the Secured Party to exez~ciseany right provided for in or contemplated by this Agreement and no waiver as to an Eventof Default hereander shall operate as a waiver thereof anless made in writing and signedby the Secured Party and, in that event, such waiver shall operate only as a waiver of theright or Event of Default expressly referred to therein. Nothing ira this Agreement andnothing referred to in the Obligations shall preclude any other remedy by action arotherwise foe the enforcement of this Agreement ar the payment and performance in fullof the Obligations.
(d) Secured Party Assignment: All rights and obligations of the Secured Partyhereunder shall be freely assignable in whole or in parC without the consent ofthe Aebtorand in any action brought by any assignee to enforce such rights, the Debtor shall notassert against such assignee any claim, defence, right of set-off, or the benefit of anyequities which the Debtor novv loos or may hereafter have against the Sacured Party.
(e) Entira Agreennent: This Agreement sets forth the entire intent andunderstanding of the parties relating to the subject-matter hereof and supe~•sedes and~•eplaces aII prior agreements and commitments, whether written or oral, made betweenthe pai~ies and all earlier discussions and negotiations between them. The partias are notrelying upon and there are no collateral or other representations, warranties, agreements,or covenants made by any of the parties hereto which are not contained herein.
[I17
(;~ Further Assurances: Each oftlie panties hereto shall and wilt, from time to tineand at all times hereafter upon every reasonable written request so to do, make, do,execute and deliver, or cause to be made, done, executed and delivered, all such furtheracts, deeds, assurances and things as may be necessary in the opinion of any party arcounsel for any party, acting reasonably, for irnplementin~ and carrying cut moreeffectually the true intent and meaning of this Agreement including, without limitation, toperfect o~• better perfect the security interests, mortgages and charges of the Secured Partyin the Collateral or any part thereof.
{g} Severability: In the event that any covenant or provision contained in thisAgreement is held to be invalid, illegal or unenforceable in whale ar in part, the validity,legality and enforceability of the remaining covenants and provisions shall not be affectedor impaired thereby and all such remaining covenants and provisions shall continue in fullfoz~ce and effect. All covenants and provisions hereof are declared to be separate anddistinct covenants or provisions, as the case maybe.
(h) Headings; All headings and titles in this Agreement are convenience ofreference only and shall not affect the inte~•pretation of the terms hereof.
(i) Gender, etc.: In constX~uing this Agreement, all words and personal pronounsrelating thereto shall be read and construed as the number and gender of the party orparties referred to in each case require, and the verb agreeing therewith shall be construedas agreeing with the required word and pronoun. Woods such as "hereunder", "hereto","hereof ", "herein" and other words commencing with "here" shall, unless the contextclearly indicates the contz~aty, refez• to the whole of this Agreement and i~ot to anyparticular paragraph or part thereof.
(j) Binding Effect: All rights of tl~e Secured T'ar~y hereunder shall enure to thebenefit of its successors and assigns and all obligations of the Debtor hereunder shall bindthe Debtor, its successors and assigns. Each reference to the Secured Party in thisAgreement shall be deemed to include a reference to the Secured Party, its successors andassigns and each reference to the Debtor in this Agreement shall be deemed to include areference to the Debtor, its successors and assigns.
(1<) Multiple Debtors: 7f more than one perso~l executes this A;~•eement as Dabtor,their obligations under this Agreement shall be joint and several.
{1) Governing Law: This Agreement shall b~ governed in all respects exclusively
by the laws of the P~•ovince of Ontarzo and the laws of Canada to the extent they apply
and each of the paz-ties hereto hereby attorns to such jurisdiction.
(m) Notice: Subject to the specific requirements of the FFSA, any demand, notice,consent, approval or other communication required or permitted to be made or given by
any party hereto to any other party hereto in connection with this Agreement shall be inwriting and may be made or given by personal delivery ac 6y transmittal by telex,telecopy, rapifax ar simiIar electronic rr►eans of comnnunication to such party or, if acorporation, to a director thereof ox•, if postal services and deliveries are then operating,
]1
by mailing the same by prepaid registered post to such party at its address noted on page 1of this Agreement or at such other address which the party to wham such communicationis being given may have designated by notice given in accordance with the peovisions ofthis pa~•agraph. Any communication so delivered or transmitted by electronic means ofcommunication shall be deemed to have been given and received on the day of delivery ortransmittal, if a business day, oc if not a business day, on the business day next followingthe day of delivery or transmittal, and any communication so marled shall be deenned tohave been given and received on the fourth business day following and exclusive of thedate of mailing. Irt this paragraph, "business day" means any day except a Saturday,Sunday or statutory holiday in the ~'rovince of Ontario. Either parEy may give notice inwriting to the other in the manner provided in this paragraph of any change o:F address ofthe panty giving such notice, and from and after the giving of such notice, the addresstherein specified shall be deemed to be the address of such party far purposes of thisparagraph.
(n} Failure to Perfect: The Secured Pa~t~ shaiI not be liable ar accountable for anynegligence or failure to perfect its security interests, mortgages and charges grantedherein, seize, collect, realize, self ox obtain payment for the Collateral or any part thereofand shall not be bound to institute proceedings fox the purpose of seizing, collecting,realizing or obtaining possession or payment of the same for the purpose of preserving therights of the Debtor or any other person, arm or corporation in respect of same.
(o) No Amendment: This Agreement may not be amended, altered or qualifiedexcept by a memorandum in writing signed by all of the parties hereto and anyamendment, alteration or qualification hereof by memorandum in writing shall not bebinding upon any party who has not signed such memorandum.
(p} Power of'At~orney: The Secured Party, or any receiver appointed hereunder ishereby irrevocably constituted as the duly appointed lawful attorney of the Debtor in
accotdance with the Powers of Attorney Act (Ontario) artd the Substitute Decisions Act
(Ontario}, as applicable, with full power to make, da, execute and deliver al( such
documents, assignments, acts, nnatters or things on behalf of the Debtor with the right to
use the name of the Debtor r~vhenever and wherever it may be deemed necessary or
expedient. The power of attorney hereby granted is a power coupled with an interest and
shall survive the dissolution, liquidation, winding-up or other termination of existence of
the Debtor. TI~►e Debtor hereby rati~as all acts dona and all documents executed anddelivered by the Secured Party pursuant to the power of attorney hereby granted and theDebtor hereby confirms that the Secured Party and all third parties are entitled to relyupon such ratification.
(q) Tune of Essence: Time shall be strictly o~ the essence of this A.greeznent andof every part thereof and no extension of this Agreement shall operate as a waiver of thisprovision.
(r) Debtor's Receipt: The Debtor hereby acknowledges receipt of a fully signedcopy of this Agreement.
I2
This Agreement shall become e~~ective when it is signed by the Debtor.
IN WITNESS WHEREOF the Debtor and the Secured Farty have executed this
Agree~x►ent under their respective seals and agree to be bound thereby as of the date firstwritten above.
SIGNED, SEALED A.ND DELIVERED
MANORHOUSE LxMXTEDPer:
David Harding -President(I have the authority to bind the Corporation)
BC FURNITURE LTD.
~~''"~
Adam Hofmann ~ President(I have the authox•ity to bind the Corporation)
BG FURNrTURE LTD.Per:
~~.. ,/ ,Dirk Nielsen
(T have the authority to bind the Corporation)
.~ ~ ~w £ C~-' sue.` a ,I y ,: (1~' {"t Y q~. ..., ,..a ~._ ! i S Y ~ z. . s ~ E k~ w„~ 3..,~
~~e r 6.
€......,.
t„< 5.lS,e. ~it~i a.n ~'s«d .. ., d d~y t y
.,.
~G ~~~ 6 ~ 'pvoc~a~.._ ~~ . H_._ ~.._ .~ ~ __.~ ~m~_, y~. . ~ ~ ..r~~ ~.u~
Scott 5tewariThibaudaau, a Cammfss4oner, elc.~i'ravince of Ontario, i~r Mfd Oniaria paralegalService,. arad for work done withinyour permitted scape of practiceas a ifaer~sarf paratsp~i in'O~,ta~io~rte. '~':~, ,,~..,,.,4.
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Scott StawartThibaudeau, a Gommissfaner, eic,,Pravinc~ of pntaria, far Mid gniaria ParalegalService, and#ar work dage withir~your permitted scope ~fi practiceas a 1lcensed paratepal in O~ntarin.
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7
UN[.~SS PERMITTED UNDER SECURIT[ES LEGISLATION, THE HQLDER OF THIS SECURITY,AND ANY SCCURiTIES 15SUED ON CONVERSION HER~C)P, MUST fYOT xIZADE THE5~CURITY.BEFORE THE DATE THAT IS 4 MON'Cf-[5 AND A DAY AF"CER THE [,AT~R C)F (1)
OCTOBER 30, 2[?15, AND (tI) THE DATE THE ISSUER BECAME A REPORTWG ISSUER 1N ANYPROVINCE Clfi THRftS'I'~~tY• CLAUSE ([I) WILL NOT APPLY ~ THE ISSUER BECOMES At2EPORTING ISSUER BY FU.ING A PRCJSPECTUS AFTER OCTOBER 30, 2015 IN ANY OF THHPROVINCES OE ALBERTA, $RITISH COLUMBIA, SASKATCHEWAN, MAACITOBA, ONTAC~lO,QUEBEC, NSW BRUNSWICK OR NOVA SCOTtA AND IS A REPORTING ISSUEit IN AlURISDICTION OF CANADA AT THE TIME (?F THE TRADE.
CONVERTIBLE PRQMISSURY NQTE
BG FURNITURE [,TD.
Incorporated under the laws of the Province of Ontario
PRINCIPAL AMULTNT: CDN$100,000(the "Principal Amount")
BG FIJRIYITURE LTD. (the "Company"}, far value received, acknowledges itself indebted andhereby promises to pay ro Grenville Strategic Royalty Cnrp. (tf~e "Holder") nn khe Maturity date (ashereinafter defined) or such earlier date as the Principal Amount and alt accrued but unpaid interestthereon may become due and paynbte (including in connection witht the occurrence of an Event ofDefauEt), or otherwise convened into Preferred Shfcres of the Company, subject to and in accordance withthe terms, conditions and provisions of 5~hedule "A" attached hereto and forming a part hereof, thePrincipal Amount and any accrued but unpaid interest thereon at the principal offices of the Holder in theCity of Toronto, ~ntar'ro, ar such other place as may h~ designated by the Holder from time to time bynotice in writing to the company (together with al! casts ~►nd expenses which may become payable to theHolder in accordance with Schedule "A" attached hereto), The Principal Amount outstanding ut uny time,and from time to time, and any overdue interest thereon, shall bear interest at a rate of $% per annum,accrued daily. Interest on the Principal Amount shall be calculAt~d feom the date of this Nate andcompounded annually, end shall be calculated on the portion of the Principal Amount that remainsunpaid, body before and after maturity, default or judgment, pad on any overdue interest, until fully paid,nn the basis of the actual number of days for which the Principal Amount is outstanding computed on thebasis o[ A year of 365 days, ar 366 days in the case of a teap year. Any accrued and unpaid interest an thePrincipal Amount owing to the Holder shall be due and payable, or otherwise converted, in accordancewith the terms, conditions and provisions of Schedule "A" utt~ched hereto.
By its execution hereof, the Company and the Hotder acknowledge and ogrse to the terms andconditions hereof, including the terms of Schedule "A" hereto.
~,
IN VtriTNESS WHECtEC)F, the Company and the Holder have caused this Note to be executed asoP 4ctnber 30, 2015.
BG FURNITURE LTD.
Per: ~"dame: ~~~Title: Chief~::«.cut~~Offic~r~ ,~.~'~.~'~hs~,.,ll~
ROYALTY CARP.
~~ y~e~~ ~ ~~ :
iii
TABLE OF CONTENTS TO SCHEDULE "A"
ARTICi.,E 1 INTEItI'ItETATION,....~ ......... ._,... ... ............... ......~..... . , ,..,........,.............,........,..,.,1
1.1 Definitions ........................................~ « ,..~,...r ...~.F. ..,. ..r~ .,.~...,. ....,:.<~....,,,.,,... ....,......~....,.t1.2 Interpretation ........... ................. ... ..... .~.....,.... .,,... .......... , .,...., ..,...... ........,...,...., 21.3 Headings, Etc,,... . .. a .. ..... .... ., . ., ~~ ,< ~.......... ,...~ .,. ,...>. ,..,..21.4 Day Not a Business Day...,. a,... ...... .............>,.... ..,.........,., .... ..,........... . ......,.,..2I.5 Currency .........................................................................................................................................21.6 Interest..:....,~ ........... ......:.. . ..:........... : ...:... ......,........,..... ...,..~.............~.........>...~. .......a....21.7 Prepayment ............................ ~.........M > .x,,. ..,~... .. .. ~.r,..... ....,,.~. ...,.<, ...,~,.,, .,.,A.~.>..,..,~..2
ARTICLE2 COVENANTS ................ ......... ......... ......... ......... ......... ...,..... .....,.................,...,>.22.1 Covenants ............................. ..... .... ......~. ..... . r ..,...,, . ,,. r,,,...,...... .~ .... ,................2
AR'T'ICLE 3 CONVERSION ............................................. . ................................................... ........... ..33.1 Optional Conversion prior to Maturity Date ............ ......... . ..,...... ...,..,. ......... +,.....:...,.,.,..33.2 Whole Shares Only..... .....~..9. ~. .... .....~... ........... .... ~..~...,. ..,..,... .....,......< ,.........,...43.3 No Requirement to Issue Fractional Shares.. h. ~.a. ..a..aF,. ..k..... »........ . , x....~.43.4 Company to Create Preferred Shares .............................................................................................43.5 Corporate Agreements .......... ......... .......,o- >...<,. ....., ,..,... , ....~- ..................,.............. .~...,...43.6 Adjustments ... ...............~,..... .......< ..,.,E.,...>...,..,.. ....,.~.. ...,...,. ....,.... ,....,.., .........,........5
ARTICLE4 ......................................... ........, .. ~...... .,................... ,..... ... »........ .~...,... .~.,...........,..8EVENTS OF DEFALTI,T ........ ..................... ......... _ ........<...,......... ....... ...,. ... .... ... ................., 84.1 Events of Default.....,......~.,~.. .. .~..,.. G......., ....... .. .,.. ......s~ .a .... ... ...... ~.~.. ..... .,.....,.,a.,....~84.2 Consequences of an Event of Default ................................................................~,...,...~.....,....,..,...104.3 Costs of Realization ......................................................................................................................1~
AR"TICI.,E S MISCELLANEUUS..................,..,,: ..............................................................:.~...,.._~........~.~.....10S.1 Discharge...........~ ..... .......... :......... .......:....~.,...,., ~ ....~,... .... .... .....,<.. ..,....., ....,... ~.....,.10S.2 Waiver .......... ................... ........ ...... „ ,,... ..... ........ ..,..,... ........~ ._.. .. ,....1053 Nn Merger or Novation ........ ......... ....... ...... ... ..,...... .......,, .,.,..,.. .,.........,.105.4 Governing Law ............................. ..... .......~.. ......t..,.. ,.,....,................ .e............ ...,...115.5 Notices ....................................................................................................................... ..~...........,..,115.6 Time of the Essence.. .....,.,r ........ ... ......<.. ,..,..... ,,...,,.. ......... ......... .,.,....,...,............,..1 15.7 Maximum Rate Permitted by Law ............................ .;,..,.., ....,.... .... .,,„ .. .,..,.............,....1 IS.$ No Partnership .............................................. ......... ..................... ......~.. ......... ,.....»......,..11S9 Invalidity of any Pravisians ..................................................,................,,......,...~.,.,..,..,......,,..~...,. l 15. l0 Specific Performance ......... .......~....,......... ,.,~,,.,, ,r.. .,... ...<.~,.,..,..... , . .......,, ...~,....,......125.11 Successors and Assigns, etc .. ......... ..<.,....,.,. ,. ".. ...,..,.. ..,........,.,. ... ,........ a ........,~..,,. l25.12 Amendments. ...~ ...... ........ ............. .... .... .... ..... :... ~..:..,.,~< ,. ..... ~ , ,.. ,.,.. .;..,..,.... ,.,,..~ 125.13 Expenses .......................~..,...,.,.......... ,.... ...... .,.. ..,.,........~,. ....,.. ,....,.. ... ,.,....,...,125.14 Counterparts ... ...„.. ,. .......,~ .. _ .~.~. , .... ......a. ....R ... .. .... . ..... ... ... ..... ~. ,...,..12
SCHEDTJI.E "A„
The follawaz~g conditions Ire applicable to the Convertible Promissory Note of BC's Furniture Ltd.
ART[CI.E 1INT~.RPRETATIQN
1.1 llefinitions
In this Note, unless there is something in the subject matter or context inconsistent therewith, the
expressions following shall have the following meanings, namely;
"this lYote", "the Note", "Note", "hereto", "herein", "hereby", "hereunder", "hcreot" and similar
expressions refer to the Note represented hereby and not to any particular Article, Section, subsection,clause, Subdivision ar other portion hereof and include any and every instrument supplemental or
ancillary hereto and every Note issued in replacement hereof;
"Business Day" means a day which is not a Satuxday or'~'ut~da~ or a civic ar statutory haltc~ay in theProvince at CJntario;
"Gammon Shares" n7ac7s the common. shares of the Company;
"Company" means BG Furnituc•e Ltci., a body ce~rporate iilcorparated pursuant to the laws of Province ofO«tario, and includes any successor corporation to or of the Company within the meaning of Section5.11;
"Conversion Price" means $1,667 Baer i'referred Share, as the same may ba adjusted from time to time in
accordance with the terms of this Note;
"Event of Det~nit" means any event specified in Section 4.I which has not been waived, cured orremedied in accordance witka the terms hereof;
°General aecurity Agreement" means the general security agreement dated September 2, 2015 executedand delivered Uy the Company to ('rrenville Strategic Royalty Carp,;
°Hfolder" means the Person froth time to time registered as the haider of thrs Nate;
'"Maturity Date" cncans October 31, 2016;
"Outstanditsg Amount" means, at any given time, the Principal Amount then outsc~nding and all accruedbut unpaid interest thereon;
"Person" means any individual, sale proprietorship, partnership, firm, entity, unincor~or~ted association,
unincorporated syndicate, unincorporated organization, trust, body corporate or gt~verninentat authority,and where the context t•equires, any of the foregoing when they are acting as trustee, executor,
administrator or other legal representative;
"Principal Amoant" means the pritacipal atnoixnt of this Nate as sit Earth nn the face page hereof;
"Royalty Purchase Agreement" means the amended and restdt~d royalty purchase agreement betweenthe Company and Grenville Strategic Roya(t.y Carp. dated September 2, 2015; and
2
"Subsequent Installment" has the meaning ascribed to such term in the Royally Purchase Agreement.
1.2 Interpretation
Words importing the singular number only shall include the plural anti vice versa and. words
importing Che masculine gender shall include the neuter or the femitxine gender and vice versa.
1.3 Headings, Etc.
The division of this Note iota Sections and the insertion of headings are for convenience of
reference only and shall oat affect the construction or inCerpretation of this Note. The terms "hereof',
°hereunder" and similar expressions refer to this Note and not to an.y particular Section or other portion
hereof and include any agreement supplemental hereto. Unless samethin~ in the subject matCer or context
is inconsistent therewith, reference herein to Sactions are to Sections of this Note.
1.4 .Day Not a Business Day
In the event that any day on or before which any action is required to ba taken hereunder is oat a
C3usiness Day, then such action shall be required to he taken. on or before the requisite time o~ the next
succeeding day that is a Business I7ay,
1.5 Currency
All references to currency tiereiri shall be to lawful money of Canada.
1.6 Interest
Interest as calculated under this Note will be payable annually In arrears commencing on January2, 2Q1.6 (and tF~ereafter on January 2 of each calendar year until the Outstanding Amount is fiilly repaid orotherwise converted rn accordance with the terrras of this Note).
1.7 Prepayment
1'he Principal Amount of, and interest on, this Note may not be prepaid by the Company, inwh<71e or in part, without the prior written consent of Che Holder.
ARTICLE ZCOVENANTS
1.1 Covenants
Far So long; as any portion of the Outstanding Amount remains outstanding, the prior writtencansenC of the Holder shall be required before any Qf the following actions are or may be taken (whether
directly ar by amendment, merger, consolidation or otherwise):
(a} the payment or declaration of any divrdend or other distribution by the C~mp~zny;
(6) the entering into by the Company of any contract involving ~~ayments by the Companyindividually in excess of $SO,000 or in the aggregate in excess of $100,000, or the
making of any capital expenditure, individually or in the aggregate, in excess of
ioo,oa~;
(c) the Company creating any subsidiary or ~stab[ishing, acquiring or akherwise becoming
involved in any corporate entity or any parCnership, .joint venture ax similar arrangements
outside tt~e ordinary course of business, ar the Company entering into any advrsary
agreement or other form of agreement in contemplation thereat;
(d) the Company incurring any indebtedness (other than trade payables in the ordinary course
of busi►~ess} oc granting guarantees in excess of $100,000 outside the ordinary caurs~ ofbusiness, or permitting tha creation of liens an the Company's assets (except forcustomary, permitted liens);
(e) the issuance by the Company of any shares or other securities of`the Company (includingany securities or other rights convertible into shares of the Company), other thanissuances made pursuant to tt~e conversion of convertible securities of the Companyoutstanding as of the date hereof;
(~ the creation of airy new clzss or series of shares of the Company;
(g) tlae granting oFany options by the Company;
(h} any change to the primary line o#' business of the Company ar the. making of at~y othermaterial change to the Company's business;
(i) any increase ar decrease in the number of rnemUers of the Board;
(j) the; eraterin.g into or completion by the Company ~f~ any merges, amalgamation,arrangement, other corporate reorganization, including a recapitalization, change ofcontrol ar any transaction in which alt or a material portion of the assets pt the Connpanyor any of its subsidiaries are sold, leased, exchanged, transferred. or exclusively licensed,or any liquidation, dissolution ar winding up of the Company ar any of"its subsidiaries; or
(k} the completion of arty sale, lease, exchange, transfer or other disposition or license c7t anyassets of the Company outside tl~e ordinary course of business.
AR"t'ICLE 3CQNVERSION
3.1 Optional Canversinn prior to Maturiky Date
Ak any time during the period corrunencing on July t, 2f}16 and ending at 11:59 p.m. (TorontoCirce) on the date im:mediateIy prior to ehe Mat~irity llate, the Holder may in its sole discretion elect toconvert the Outstanding Amount (in whole and not in part) into:
(a) additional royalCy interests of the Company pursuant to and in accord~rnce with the termsof the Royalty Ptyrchase Agreement. on the basis that, upon such conversion, for thepurposes of the Royalty I'urci~ase Agceetnent, the 4utstandin~; Atnaunt will he deemedfor all purposes to be a "Subsequent Installment" under floe Royalty Purchase Agreement{tlie "Additional Royalty Interest"). To convert the Outstanding Amount into theAciclitional Royalty Interest, the Holder shall de[ive.r to the Company written notice in thefor~7~ of Fixltibit "A" attached hereto, duly executed by the Holder or its legalrepresentative or attorney duly 1ppainted by an instrument in writing in a t~orrnsatisfactory to the Cam}~any (a "C~nversion Natiee"), exercising such conversion rightin accordance witti the provisions hereof and, affective as of the date of the ConversionNotice, the Outstlnding Amount will he deemed to be a Subsequent Installment in the
4
amount of the C)utstanding Arnount for the purposes of the Royalty Purchase Agreement,
ai d the Company will execute and deliver all such documents and instruments, and take
all such actions, as klie Holder may request to evidence or ef'iectuate such conversion; or
(b} the number of preferred shares of the Company (sounded down to tl~e nearest whole
number) (the "Preferred Shares") bearing the attributes listed in the term sheet attached
hereto as Schedule "fi" (the ""I"erm Sheet"), and such other terms as may be determined
ley the bolder in its sole discretion, determined by reference to the following formula:
Outstanding Amount/Conversion Price
ti` Che Holder elects pursuant to this Section 3.l to convert the Outstanding Amount into PreferredShares, the Holder shall surrender this Note to the Company, together with a Conversion Notice
substantially in the firm of Exhibit "C" attached heretcf, duly executed by the Holder ar iTs legal
representaCive or attorney duly appointed by an instrument in writing in a Form satisfactory to the
Company, exercisicig such conversion right in accordance with tkfe provisions hereai: 1'hereupan, theFioIder or, subject to pay~x~.ent oi' a!1 applicable stamp or security transfer taxes ar other govemmenkal
charges, its nominees) or assignee(s), shall be entitled to be entered in the books o#` the Company as at
the date of the C:'onversian Notice as the holder of the number of Preferred Shares determined pursuant to
this Section 3. I (b) based on the (7utstanding Arnnunt, and, as soon as practicable thereafter, tha Companyshall deliver t~ the Holder ar, subject as aforesaid, to its nominees}, or assignee(s), a certificate arcertificates .fer such PreFerred Shares.
3.2 Whole Shares Qnly
The rights of conversion set f'arth in this Article 3 shall extend only to the maximum number ofwhale Preferred Shares into which the t~~rtstanding Amount may be converted in accordance with theprovisions of this Artiste 3. Fractional intc;rests in Preferred Shares shall be adjusted for in the mannerprpvided in Section 3.3. All Preferred Shares issued rn connection with the cc7nversion o.P the OutstandingAmount wall for all purposes be deemed to be issued and outstanding as fiully paid acid non-assessable.
3.3 No Requirement to Issue Fractional Shares
'C'he Cc~rnpany shall not be required to issue fractional shares upon the conversion of the(Jutstanding Amount into Preferred Shazes. If any fractional interest in a Preferred Share would, exceptfor the provisions of this Section 3.3, ba delivera~ite upon Che conversion ofi the Qutstanding Amount, theCompany shalt, in lieu of delivering any certificate for such fractional intarest, satisfy such fractionalinterest by paying to the T-Colder an amount (computed to the nearest cent) in respect o.f such fractionaldetermined by tl~e directors of the Company, acting reasonably.
3.4 Company to Create Preferred Shares
The Com}~any covenants with the E~older that it will, in connection with tl~ae conversion of the~utslanding Amouc~t into Preferred Shares, take all actions necessary tc~ cause the creation of thePrefez-red Shares in acco►•dance with the terms of this Note and the Term Sheet, and to thereafter at alltimes reserve and keep available out of its authorized shares such number of Areferred Shares as shallthen be issuable upon the conversion of the Outstanding Amount.
3.S Corpors~te Agreements
Notwithstanding anything else contained herein, if thc: Puxch~ser elects to convert theC}utstanding Amount into Preferred Shares the Company, the Holder and each shareholder of the
Company will, c~ntetnporaneously With the issuance of such Preferred Shares to the Holder, enter into an.
investor rights agreoment c7r similar a~;reenleut whr.ch shall include, inter• alia, th.e terms set aut under the
headings ".L3oard ~~,~~ Dr.'rectors", "rorced Sale", "Infnrmatian Rights", "Rights of First ReJusa(. arrct Co
SaXe" and "Drag ACong Rr.'ghts" in the Tenn Sheet (ancl such ether teen7s as may be detern7ined by the
holder i~x its sale discretion), and the Hoicier covenants and agrees to execute and deliver, azid to cause
each of the shareholders of ttie C;ornpany to execute and deliver., all Such documents and instruments, and
take all such actions, as the holder may request in connection with the cc~~aversic~n of the Outstanding
Amount into Pr~;fen~ed Shares.
3.6 Adjustments
f'oilows:z'he (conversion .F'rl.ce in effeck at any date shall be subject to adjustment from time to time as
(a} Tf, at7d whenever at any time and from time to time the Company shall (i} suFidivide,
redivide or change its Chen outstanding Carnmon Shares into ~ greater number of
Common Shares, (ii) reduce, combine, consolidate ox change its then outstanding
Common Shares into a lesser number of Gammon Shares, or (iii) issue Common Shares
(or securities exchangeable or convertible into Common Shares) to the holders of all or
substantially all of its then outstanding Common Shares by way of stock dividend ar
other disCribution (other than a dividend in the ordinary course paid in Common Shares or
s~curilies exchangeable or convertxbte into Gammon Shazes) (any of such events being a
"Shard .Reorganization°), the Ccmversion Price shall be adjusted eFfective immediately
after the effecti~re date or record date for the Share Rearg~niz:~tioiz, by multiplying the
Conversion Pricy in effect inuttediately prior tc~ such efi'ective date car record date by the
quotient obtained when:
A. the ntunber of Common Shares autstandin~ on such eft~;ctive date or
r~.cord date before giving effect tee thy: Share Rear~anization,
is divided by
I3, the number of Commorx Shares outstanding im~n~diately after the
completion of such Share R.eor~aniration abut bc:f'ore giving effect to the
issue cif any C.amzxion Shares issued ~t'ter such record date otherwise than
ati pant cif such Sham Reorganization) ir~clu~iing, in the case where
securities exchangeable car convertible into Cumrnon Shares are
distributed, the number of` Common Shares that would gave been
outstandiri~ bad such sectuities been exchanged for or canvertcd into
Common Shares on such record date.
(b) If a~ld whenever there i.s a capita! reargattizatian of the Company not atl7erwise providetf
t~~r in Sectiaa~ 3.6(a) or a consolidation, merger, arrangement or amalgamation (statutory
or atl~erwise} o.f' the Company with or into another be~ciy corpprate (any such event being
a "'C'apital Reorganization"), if the (outstanding t~mount has not. been converted prior to
the effective date or record date for such Capital Reorganization then khe Holder shall be
entitled to receive and shall accept, upon tl~e conversion oP the Outstanding Amount aC
a.ny time after the effective date or record date kar such Capital 12earganizatian, in lieu of
the number of Preferrad Shares tc~ which the Holder was theretofore entitled. upon
can.version, the a~;gre~;ate number of Preferred Shares,.ar other securities of tl~e Company
or of the corporation or body corporate resulting, suzviving ar cnntinuin~ from the
C;:~pital Itearganization, that the Holder would have been entitled to receive as a restalt of
such Capital Reurganization if; on the effective date or record date, it had been theregistered h~ldec o#' the number a1' Preferred Shares to which it was theretofore antitied
upon the conversion of the OuCstandin~ Arnou.ni:; provided that no such Capital
Reorganization shall be carried onto effect unless all necessary steps shall have beentaken so Chat the I-Tolder shall itramediately thereafter be entitled to receive such dumber
of Preferred Shares or other securities a.f the Company ot• of the corporation or bodycorporate resulting, surviving; or continuing from the Capital Reorganization.
{c) In the case of azay reclassification of, ox other change in, the outstanding Common Sharesother than a Share Reorganization ox a Capital Reorganization, the right of conversion
shall he adjusted immediately after the effective date or record date far suchreclassification or other change so th~.t the Holder shall be entitled to receive, upon tfze
conversion of tlis (?utstanding Amount at any iirne after the effective date or record dateof such reclassification or ether change, such shares, securities ar rights as the Holderwoukd Crave received had the 4utstandic~g Amount been cariverted into Preferred St7aresimn~ediataly print to s~ich effective date or record date, subject to adjustment thereafter inaccordance with provisions the same as nearly may he possible as those cotttained in
Sections 3.6(a} and 3.6(b).
(d) Ct' at any tine or from tirrae to time after the issue of this Note, the Company issues orsells, ar is deemed to have issued or said, Additional Shares (as defined below) for anEffective Price (as defitred below) less than the then effective Conversion Price, then and
in each suc1Y case, the then eFfecCive Conversion Price shall be reduced as of the openingof business nn the date of` such issue or sale, to an amount (calculated to the same numberof decimal places as the original Conversion Price) c~etertnined by multiplying theConversion I'zice then rn effect by a fraction:
(i) A. tt~e numerator of which shall be t}ze sucn of'the Outstanding Issue (as definedbelow} a.nd tl~a nuixiber cal Common Shares that tYae consideration received by theCompany for the total number of Additional Shares so issued (ar deemed to beissued} would ~~urchase at the Conversion Price in effect inunediately prior tosuch issuactce, and
(ii) B. the denominator of which shall be the sum of the Outstsndin~ Issue plus thenumber of such Additional Shares so issued (or deemed to be issued).
Fax illastrativ~ purposes only, if the Conversion Price is $1,50, the 4utstariding Issue is10,000,000 Common Shares and the Company issues 2,000,000 Additional Shares farconsideration of $2,7U(~,000 (being an. Effective Price of $ t.3S for such Additional Shares($2,7~0,~00 / 2,0 0,000 = $ A .35)), the then effective Conversion Price shall be reduced to$1.4H, being the product of $I.Sd x ((10,000,OQQ -~- 1,800,000) 1 (1Q,OOO,OOC1 ~2,000,000}).
(e) For the purposes of this Nate:
(i) the term "Additional Shares" shall mean all C'omman Shares rssued or deemedCo be issued by the C~an~pany after the date of'this Note, other than: (A) CommonShores or Convertible Securities (as defined below} issued pursuant to a ShareR~.ar~;anization, Capital Rcorganizatron ar similar transactions described in thisSectiaa~ 3.6; (B) Common Shares or C'cinvertible Securities issued upon. the
f►1
exercise of other Convertible Securities, ar Camrnan Shares issued upon thecoriversaaa or exchange of Convertible Securities, in each case provided suchissuance is pursuant to the terms of such Convertible Security; (C) CornmanStares or f'anvertible Securities issued to employees ar directors of; orconsultants or advisors ta, the Company or any of i#s subsidiaries pursuant to ap3an, agreement or arzangement approved by the beard of directors of theCompany; (D) Gammon Shares or Convertible Securities issued pursuant to theacquisition of another corporation. by the (:;ampa~~y or any of its subsidiaries byamalgarriation, arrangement, purchase of all or substantially ail of the assets orshares ar other. ceor~aniz~tion ar to a joint vent~ire agreement, provided that suchissuances are approved by the board of directors of the Company; ar (G)Cc~mrnon Sharss issued upon conversion of the Outstanding Amount;
{zi) the tern "C)utstanding Issue" shall mean the sum of: (A) the number of sharesof the Company outstanciin~; rzumediately prior to such issue; plus (.B) the m~n~berof Preferred Shares issuable on the conversion of the UuYstanding Amount,calculated imtnediatGly prior to such issue and ~rinr to effecting any adjustmentto the Conversion Price pursut~nt to Section 3.6{d); and
(iii} the term "F.fFective Pricc" shall mean the quotient determined by dividing theCotal numi~er of Additional Shares issued or sold, or deemed to have been issued.oc sold by tl7c Company, under Section 3.6(d), into the consideration received, ordeemed to have been received by the Company .for such issue, udder Section3.6(d), f'ar such Additional Shares.
(f'} t~or the purpose of making any adjusCment required under SectiaiY 3.6{d):
(t) the consid~raCion received by the Company far at~y issue or sale of securitiesshall (~1) to the exteaat it consists of cash, be computed at the net amount of cashreceived by the Company otter deduction of any underwrit3x~g or similarcommissions, compensation or concessic7ns paid ar allowed by the Ccampaaiy inconnection with such issue or sale but without deduction of any other expensespayable by the Company, (B) to the extent it consists of property other than cash,be cornpuked at the fair value of that property as determined in good faith by thebeard of direcCors of the Company, and (C) to the extent t}~at Additional Shares,Convertible Securities ar rights or options to purchase either Additional Shares orConvertible Securities are issued or sold together with other stock ar securities orother assets of thy; Company f~~r a consid~cration which cnvers both, be computedas the p~rtian aFthe: consideration so received that m~►y be i•easanably determinedin food faith by the board of directors o#' the C:ampany to be atloeable t~ suchAdditional Shares, Convertible Securities or rights nr options.
(ii) if" tl~e Company issues or sills (A} stack or other securities convertible intoAdditional Shares (such convertible stack c~c sec~irities being hereitY referred to as"Convertible Securities"), or (B) rights or options for the purchase of AdditionalShares or Convertible Securities, and if the Effective Price of such AdditionalShares is less than the Conversion Price then in effect, in each case the Companyshall be deemed to have issued at the time of the issuance of such rights oroptions or Convertible Securities the maximum number of Additional Sharesissuable upon exorcise or conversiUn thereof and to have received asconsideration f'ar the issuance of such shares an amount ec{ual to the total amount
of the consideration, if any, received by the Company fior the issuance ~f suchrights or aptioas or Convertible Securikies, plus, in the case of such rights oroptions, the minimum amounts ofi' consideration, if any, payable tc~ the Com~a~yupon the exercise of such rights or options, plus, in the case of` ConvertibleSecurities, the minimum amounts ~f consideration, if any, payable to theCompatxy upon the conversion thereof; provided that if in the case of ConvertibleSecurities the minimum amounts of such consideration cannot be ascertained, butare n #imetion of anti-dilution or similar protective clauses, the CAmpany shall badeemed to have received the minizxium an:~otmts cif consideration withoutreference to suci~ clauses; provided Further that if, at a~~y time and from time totirrie foll~~ving the issuance tl~erec~f; the minimtrm amount of considerationpayable to the Company upon the exercise or con~~ersion of rights, options orConvertible Securities is reduced over time ar arr the occurrence or n~n-occurrence of specified events other than by reason ofanti-dilution adjustments,the effective Price shall be recalculated using the figure to which s~rch minimumamount of consideration is reduced; provided further that i£, at any time and fromtime to time f`ollo~vin~; the issuan.cc theraof,, tk~e minimum amount ofconsideration payable Co the Company upon the exercise nr conversion; of suchrights, options or Convertible Securities is subsey~rently increased, the EffectivePrice; shall be again recalculated using the increased znitaimum amc>nnt ofcc~r~sideration payable to the Company upon the exercise or c~~zversion of suchrights, opt.ioias or Convertible Securities; provided, tiurther that in no event shallthe C'c~nversion Price be adjusted above the Conversion Price in effectimmediately prior to the pa~icular adjustment required under Section 3.G(d). Nofurther adjustment of the C~onversian Price as adjusted upon floe issuance of suchrights, options car Convertible Securities shall be made as a result of the actualissuance at' Additional Shares on the exercise of any such rights or options or theconversion cif any such Convertible Securities. If any such rights or optio~as or theconversion privilege represented by any such C,o~~vertible Securities shall expirewithout having been exercised, the Conversion Price as adjusted upon theissuance of such rights, options or Convertible Securities shall be re~djlasted tothe Conversion Price which would have been in effect hack an adjustment beenmade an the basis that the only Additional Shares so issued were the Additionalshares, if any, actually issued ar sold on the exercise of such rights or options orrights of conversion of such Convertible Securities, and such Additional Shares,i#'any, were issued or sold for: (C) the consideration, if any, actually received bythe Company upon the exercise of such rights ax options or on the conversion ~fsuch Convertible Securities, plus (U) the consideration, if any, acCually receivedby the Camp~ny far the granting aP all such rights or options ac the issue and s~ttc;of the Convertible Securities, whether or not exercised or converted.
ARTICLE.. 4EVENTS OF DEFA[.IC.~T
4.1 Events of llefauft
The occurrence of an.y of the following events shall constitute an Event crf Default undee thisNote:
0
(a) If a default occurs in the payment of any amount awing; to the I~nldc.r hereunder whendue;
(ta} If default occurs in. the perfarnzance o£ at~y other cavena~~.t or obligation of tEae Compaxxyin favour of the Fielder udder this Note, tl~e Royalty Purchase Agreement ar the GeneralSecurity Agreement and such default is not waived in writing by the Flolder or, to theextent such default may be remedied, such default remains uriremedied: (i) in the case ofa d~;fauit under this Note or under the General Security Agreement, tar a period of 10consecutive days following receipt by the Company of written notice from the i-Iolder ofsuch defautt; or (ii) in the case of a default under the Koyalty C'urchase Agreement, forthe period referenced in the [loyalty T'urchase Agreement;
(c) [i' an event of default occurs in payment or performance of any abligatian in favour ofany F'~rson frorra whom the Company has borrowed money, and such default is notwaived. in writing or remains unremedied fir a period of 1Q consec~rtive days after receiptby the Carnpat~y of written notice a#'such default from such Person;
(d) Pl'he Company (i) becomes ansolvant or generally riot able to pay its debts as they becomedue, (ii} admits in writing Sts inability to pad its debts generally or makes a generalassignment For the benefit of creditorsr (iii) institutes or lies Xnstituted against it anyproceeding seeking (x) to adjudicate it a bankrupt nr insolvent, {y) liquidataan, winding-up, reorganization, arrangement, adjustment, protection, relief' or composition of it or itsdebts under any law relating to t~ankruptcy, insolvency, reorganization or relief of debtorsineludin~ at~y plan of compromise ar arrangement or other corporate .proceedinginvc3lvin~ or affecting its creditors, ar (z} the entry of an order f`or relief or theappointment of a receiver, trustee or other similar official for it dr f'or any substantial partof its properties anc~ assets, and in the case of any such proceeding instituted against it(but net instituted by it), either the proceeding remains undismissed or unstayed for aperiod of 30 days, or any of the actia►ls sought in such praceecling (including the entry ofan order for relief against it or the appointment of a receiver, trustee, custodian or othersimilar official for it or far any substantial part of its properties and assets} occurs, or(iv) takes any corporate action to authorize any of the above actions;
(e) If any jt~d~rncnt or order for the ~aayment of money in excess cif $2S,~U~ shall irerendered ~~gainst the C;c~mpany aa~d either (r) enforcement proceedings shall have beencommenced by any creditor upon sueh.juci~ment car order, or (ii) there shall he any periodof 10 conseeutiv~ days during which a stay oi`enforcem~nt of such judgment ar order, byreason of a pending appeal ar otherwise, shall not be in effect;
(t) If any act, matter or thing is done, c>r any action ar proceeding is launched or taken, toterminate the corporate existence of the Company, whether by winding;-up, Iiquiclation orotherwise;
{g) If any proposal is made or any petition is tiled by or against the (:ompany under any lawhaving for its purpose the exte~ision of time for payment, composition or compromise ofthe liabilities of the Company or other reorgani:cation ar arrangement respecting itsliabilities or iE the Cot~pany gives notice of its intention to make ar file any such prnposalor petition includizx~ an application to any court to stay or suspend any pracecdrngs pfcreditors pending the making ar tiling of any such proposal or petition;
{h) 7f any r4ceiver, acirninistrator or manager, receiv~.r-manager or iiaterim receiver of theproperty, :assets car undertaking of the Catnpany or a substantial part thereof is appointed
10
pursuant to the terns of any trust deed, trust indenture, debeiature ar similar instrument or
by or under any judgment or order of any court;
(i) A suspension by the Company of its operations other than in the ordinary course of
business; or
(j) Any representation, warranty, certiFicat~, or ether statement (financial or otherwise) made
or furnished by car on be11a(f oP the Company to the Helder in ~vreting in cannecticm with
this Note, or as an inducement to the Holder to enter into this Note, shall be false,
incorrect, incomplete or misleading in any material respect when made or furnished.
4.2 Corisequcnces of au Event of Default
Upon the occurrence vi` art Event of Def'autt, the Holder may, by notice to the Company, declare
the Outstanding Amount and all other amounts (if any) owing; hereunder to be imme~tiately due and
payable whereupon all such amounts shall immediately become and be due and payable without f'urtlier
dematxd or other notice of any kind, ali of which are expressly waived by the C:~mpany. The Holder shall
thereafter be entitled to take any action, ~•emedy or proceeding available to it under this Note, at law or in
equity. All or piny rights of remedies of the Hc~lcler u~s~n the occurrence of an Event of llefault may from
time to tune be exercised independently ar in any combinfltion.
4.3 Costs of Realezation
The Company agrees Ca pay to the Hulder forthwith upon demand alI reasonable costs, chargesand expenses (including reasonable legal fens on a solicitor and client basis) of, or incurred by, the Holderin recovering c7r enforcing payment of any of Che monies owing hereunder.
ARTICLE 5MISCEIaLANEnUS
5.1 Discharge
L7p~n full payr~ient by the Company to the I-Iolder of, or the conversion of, the UuistandingAmount, the Holder shall, upon the written request of the Company, deliver up this 1`Jote to the Companya~zd shall at the expense of the Company execute and deliver to the Company such deeds and otherdocuments as shall be required to release and discharge this Note,
5.2 W:~iver
No act or. omissio~~ by the Holder in any manner whatever shall extend to or be taken. tc~ affect any
provision hereof ox any subsegixent breach or default or the rights resulting therefrom save only express
waiver in writing. A waiver of default shill not extend to, or be taken in any manner whatsoever to affect
the rights of the Holder with respect to any subsequent default, whether similar or not.
5.3 iYo Merger or Novation
Neither the taking of any judgment nor the exercise of zny power of seizure or sale shall operateto extinguish the liability of` the Company to pay the moneys hereby secured nor shall Che same operate asa merger of any covariant Herein contained, nor 5ha[l the acceptance of any payment or Uther securityconstitute or create any novation.
.5.4 Governing Law
This Note shall be deemed to have been made and sha1F be construed in accordance with the laws
of the Province of Untaria ar~d the laws of Canada applicable theraii~ and shall be treated in ail. respects as
an C7ntario contract. `['he t;e~mpany hereby irrevocably submits tc~ the jurisdiction of Ghe courts of the
Province of Ontario for any action, snit or aziy other ~raceedin~ arising out of or relating to this Note and
any other agreement or instrument mentioned therein ar any of the transactions contemplated thereby.
5.5 Notices
Any notice or other cc~nnm~mication required or which may be given hereunder will be in writing
and will be delivered in accordance with Section 6.:1 of the Royalty Purchase A~;reenient.
5.6 Time of the Ess~nee
"Time shall be of th.e essence of this Note.
5.'7 Maximum Rate Pernnitted by Law
t.7nder na circumstances shall the Holder be entitled to receive nor shall it in fact receive a
payment or partial payment ofinterest, fees ar ether amounts under or in relati<rn to this Notc at a rate that
is prc7hibited by applicable law. Accaxdingly, notwithstanding anything herein or elsewhere contained, if
and to the extent that under any circumstances, the affective annual rate of "interest" (as defined in section
34`7 oP the Criminal Cade of Canada) received or to be received by the Holder (deternlined in accordance
with such secCion) on any amauitt of "credit advanced" (as deCzted in that section) pursuant to these
presents ar any agreement or arrangement cotCatetal hereto entered into in consequence or implementation
hereof would, but for this Section 5.7, be a rate that is prohibited by applicable law, then the effective
annual rate of interest, as so determined, received or to be received by the Holder on such amount of
credit advanced shall be and be deemed to be adjusted to a rate that is one whale percentage point less
than the lowest ef'f'ective annual rate of interest that is so prohibited (tl~e "adjusted rate"}; and, if the
I-Iolder has received a payment or partial payment which would, but for this Section 5.7, be so prohibited
then any amount or aznounts so received by the Holder i~a excess of the lowest effective annual rate that is
sa prohibited shall and shall be deemed to have c~rnpzised a credit to be applied to subsequent payments
an account of interest, Fees or other amounts due to the Holder at the adjusted rate.
5.$ No Partnership
The parties agree that nothing coaatained in this Note, car Y.ha conduct of any party, sha11 in ally
planner whatsoever c~nstihrte or be intended to constitute any parCy as the agent or a representative or
fiduciaz~y of any party nor constitute nr be irzteaded to constitute a parttterslaip ar joint venture amoa~g the
p<~rties.
S.9 Invalidity of any Provisions
Aiay provision cif this No1:e or any provisions of the security contemplated he►-eunder which isp~~ohibited by tl~e laws of`any jurisdiction shall, as to such jurisdiction, be itref#'ective Co the extent of suchprohibition without invalidatir►g the remaining terms and provisions hereof' or thereof and no suchinvalidity skull affect the abli~ation of the Company to repay Che (~utstandin~; Amotenl.
12
5.10 Specific Performance
Tn audition to any and all other remedies that may be available at law in the event of any breach
oI' this Note, the Haider shall be entitled to specific pe:rfarrnance of the agreements of the Company
hereunder and to such other injunctive or other equitable relief as tray be granted in connection therewith.
5.11 Successors and Assigns, etc.
This Nate shall enure tc~ the benefit of and be binding upon the parties and their respective
successors and permitted assigns; provided, however, that neither this Note nor any rights ar obligations
hereunder shAll be assigned by the Company without the prior written consent o~'the Holder.
5.12 Amendments
This Nate may only be amended by a written agreement signed by the Company and tike Holder.
5.13 Expenses
'I`he Company wi11 pay all of the reasonable legal fees and other reasonable out-of-packetexpenses incurred by the I-Ialder in connection with the preparation and execution of this Note and thevarious agreements and documents referred to herein (including all documents referenced in or requirerJby the Term Sheet}, up to a maximum amount of $35,000 (plus alI disbursements incurred by counsel tothe Holder and all applicable taxes on any of the foregoing amounts), which amounts will be deducted
from the Principal Amount and/or paid by the Company on demand by the Holder.
5.14 Counterparts
This Note nnay be executed in separate counterparts, each of whzch when so executed and
delivered shall be deem4d to he an original and at! of such counterparts shall together constitute one and
the same instrument. Tice delivery of an executed counterpart of this Note by facsimile or tel~copy or byelectronic transmission in portable document format (PDF) shall be deemed to be the equivalent of the
delivery of an original execuked copy thereof:
EXHIBIT "A" TO SCHEDULE ~A" C)F CONVERTIBI.F. PROMISSORY NOTE
CCINVER5ItJ~N NOTICE RE ADDITIUNAT, i20YALTY tNTERESTS
To: BG Furniture Ltd.
Reference is made to the Canver~ible Promissory Note dated October 30, 2015 (the "Nate") issued to the
undersigned by BG Fixrniture Ltd. (the "Company"). In accordance with and pursuant to the terms of the
Note, the undersigned hereby elects to convert tha Outstanding Amount into the Additional Royalty
Interest effective as of the date hereof
Initia![y capitalized terms not otherwise defined herein shall have tie meanings ascribed to such terms inthe Note.
Dated khe ~ dad+ of
GRENVILLE STRATEGIC ROYALTY CORP.
By:Name:Title:
EXHIBIT "B" TC) SCHEDUC.E "A" OF CONVERTIBLE PROMISSORY NOTE
TLRM SiIEET
SITMMARY OF PREFERRED SHARE TERMS
Issuer: BG F~~rniture Ltd. (the "Company)
Investor: CTrenvzlle Strategic Itoyaity Corp, ("Grenville"}
Ct~pitalization of the Company: Grenville to invest up to CDN$400,000 in exchange for preferred sharesrepresenting 2t)'10 of the fully dilated shire ownership o.f the Companypast financing.
Price: $XX per share (the "Uriginat Purchase Price"),.
Type of Security: Series A Convertible Preferred Shares (the "Series A Preferred") of thaCompany, initially convertible nn a 1;1 basis into common shares o~'th~Company (the; "Gornman Stnck").
Ran[cing: The Series A .Preferred will rank senior to the Corn~any's CommonStack with respect to dividends, tiquidakion, dissolution, voting; andredemption.
Dividends. The Series A Preferred wi11 carry a cumulative annY~al dividend at therate of 8% of the Original Purchase Price, payable upon a liquidation ,whether or not declared, and pniar and in preference to any declarationor payment of dividends to holders of the Cbmmon Stock. For any otherdividends or similar distributions (other than a return of c~t~ifial), theSeries A Frefez~red will participate with the Common Stock nn an as-ifconverted basis.
Liquidation Preference: In the event of a Liquidation, dissolution ar winding-up of'rhe Company,the proceeds shall be distributed to the stockholders as foilc>ws:
The Series A Preferred shall be entitled to receive, prior and inpreference to the holders of the Common, a per share amount equal to 1times the Original Purchase Price plus all declared and un-paiddividends. Aber such ciistributiori, the remaining assets oi' theCorporation, iI` any, avairable fc7r distribution to shareholders sha11 bedistributed on a pre rata basis to holders vi' the Series A Preferred andthe holders of Conunon Stack.
A .merger, acquisition, sale or transfer c~F 50% or more of the outstandingvoting power of the Company, or sale; or exclusive license of atl or amaterial paz~tlo~ of the assets ar intellectual property cif the Company
shall be deemed to be a liquidation provided, however, Chat a transactionshall not bc. dee~z~ed a liquidation if its sole purpose is to change the stateof'the Company's incorpclration or to crate a holding corn~any khat ~~illbe awned in substantially the same prapartions by the persons who heldthe Company's capital stock immediately prior to such transaction. theholders of at Leask sixty-six and two-thixds percent (66 2/3 %u)af theshares flf 5e;ries A :~refezxed may elect to waive the treatment of such atransaction as a liquidation. event.
Conversion: "I'lie holders of the Series A Prefezxed shall have khe right Co convect Cheirshares of Series A Preferred at any time into shares of C:omman Stock.Tha initial conversion rate shall be l :1, subject to adjustment as providedbelow.
Atatiditution Provisions: The conversion price of~ the Series t1 Preferred shalt be subject to abroad-based weighted average adjustment to reduce dilution in the eventthat the Company issues additional equity securit"r~s (other than sharesreserved as employee shares described under "Employee Matters"below, the issuances c7f stack to banks, equipment lenders, etc. pursuantto debt Financing or equipment Ieasiaag transactions and other cusCotnatye~cceptians) at a purchase price less thaYr the then applicable conversionprig. The conversion price will also be subject to proportionalac~justn~ent far stock splits, suck dividends, recapitalizations and thelike.
Voting Rights: "I'he Series A Pre£en-ed will vote tn~ether with the Common Stock, andnot as a separate class, except as specifically provided herein ar asotherwise required by law. Each share of`the Series A Preferred s1~a11 beentitled to a number of votes equal to the number of shares o~~ GammonStock then issuable upon conversion af~ such share of Series A Preferred.
', I3aard of Directors: `~'he size of the Cc7mpany's IIaard at~ i)zrectc~ra (Che "Hoard") shall be setat three (3) members, all desi~i7~tec~ by the holders oi' the Series APref~.rrc:d ar►d the holders of Cotnman Stock va{ing as a single class.
Grenvil.l.e will be entitled to designate one observer to the Board. Subjectto agreeing t~7 customary con~dentrality restrictions, such observer wi11be provided with ail information anc~ materials provided to the membersofthe Soard.
Forced Sale: At any tune, subject to the approval of t11e holders of at Ieast sixty-si:cand two-thirds percent (66 2/3%) of the Series A .Preferred, the Senies AI'refe.ered holders znay erect to cause the Company be sold pursuant to anasset sale, merger, amalgamation ar same other camb:inatzon transactionand all shareholders wi11 lie required to sell theiz• shares or othervisetender their interest into such a transaction. "C'he: holders of'the Series At'referred Shares will. be entitled to a price per share in any suchtransaction egtr~i to the greater ot` {i) the Original Purchase Price forsuch shire ~~lus all accrued and/ar dec3ared and unpaid dividends and (ii)
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the fair value of such share.
Information Rights: So long as a holder of Series A Preferred continues to hold at least 5% ofits originally issued shares of Series A Preferred or Comman Stockissued upon conversion thereof, the Company shall deliver to each suchholder audited annual financial statements within 120 days of year end,unaudited quazterly financial statements within 45 days oi' quarter endand unaixdited monthly financial statements compared against. the thenexisting business plan within 30 days of mnnth end, and ~vi21 providesuch holder with a copy of the Canlpany's annual aperatin~; plan andbudget vvithia~ 30 days prior. to the begintaing of each fiscal year. Eachsuch holder s1~a11 also U~ entitled to standard inspectio~i and visitationrights.
Rights of First Refusal and Tlie holders of Series A Preferred Shares and ho(d~rs of Comnnari StockCo-Sale: shall have the rrght in the event the C~7mpany proposes to offer eq~~ity
securities, or atlaer securities convertible ic~to equity securities, to anyperson to purchase their pra rata portion ~~f suci~ securities (based axetheir percentage equity ownership ial the Company assuming theconversion of all outstanding convertible securities into CommonStock).
In addition, all current and future holders of Carrunon Stock (other thanthe Investor), ur~i~ss waived by the holders of ~t least sixty-six and. twa-thirds percent (66 2/3%) ai'the shares ~f Series A L'reterred, will executea Rig17t: of First R.efusat and Co-Sale Agre~rnent with the hotders of theSeries A Preferred and the Company pursuant to which the Company(through an affiliate to be designated by it) first and the holders of theSeries A Prefc;rred second, will have a right cif first refusal with respectto any shares proposed to be sold by such holder. The Right of FirstRefusal and Ca-Sale A~,~reement will also contain a right of co-sale infavour of each of the holders of Series A Preferred providing that beforeany sYrch lzplder may sell any of his, her or its shares of Common Stock,he, she or it rvvxll dive the holders of Series A Preferred an opportunity toparticipate: in stich sale on a basis proportionate to the amount ofsecurities held. by the seller anti those held by the holders of Series APz•e:ferred. Srzch restrictions referred to in the prior two sentences willnot apply in the event a holder transfers such shares to a whatly-ownedSubsidiary or otk~er wholly-owned entity provided the transferee agreesto be bound by the terms of such agreement. T'he option agreementgoverning each option granted by the Company shall require, as zcondition to tl~e exercise thereof, that the optio~~ee execute; a counterpartsignature page to Che Right of First Refusal and Co-Sale A~;reerneat. Inaddition, the Company shall require, as a condition to any grant oc saleby the Company of any shares of Coxx~n~on Suck to any party other thanthe holders of Series A Preferred, that such. party execute a counterpartsignature ~aa~e to the Right of First R.Lfi~sal and Co-Sale Agreement.
Drag-Mang Rights: In the event that the holders of at least sixty-six and two-thirds percent(66 2(3%) of the outstanding shares of Series A Pre#'erred propose to selltheir shares of capital stack ar approve a merger, consolidation, solo ofalt. or substantially all of the Company's assets or such other change ofcontrol transaction in which stockholders of the Company immediatelyprier to such transaction hold or own less than a majority of the votingpower of the Company irnrnediately after such transaction, then eachst~axehalder of the Company shall be required t~ sell his, laer oc its sharesof capita! stock and/or vote his, her or its shares in favour of suchtransaction. All shareholders of the Company shall be party to the dzag-atong provision.
D
EXFIIBIT "C" Td SCHF.DUI,E "A" OF CONVERTIBLE PROMISSORY NaTE
CONVERSIf3N NOT.[CE RE PREFERRED SHARES
To: 13G Furniture C.tci.
Reference is trade to the Convertible Promissory Note dated October 30, 2015 (the "Note") issued to Cheundersigned by BG Furniture Ltd. (the "Company"), in accordance with ~tnd pursuant to the terms of theNote, effective as of the date lterer~f the undersigned hereby elects to convert the Outstanding Amountinto such number of Preferred Shares as is determined pui:suant to the terms of the Note and directs thatsuch shares be registered, issued anc~ delivered to the undersigned or as the undersigned may othercvrsedirect in writing.
Initially capitalized terms rat otherwise defined herein shall have the meanings ascribed to such terms inthe Nate.
Dated the day of _~ ~~_
GRENVILLE STRATEGIC R~lYALTY CORP.
Fay:Name:'Title:
DocuSign Envelope ID: 87A10E83-GEDA-4642-88FC-~6A863514EC6
UNI;ESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY,
AND ANY SECURITIES ISSUED ON .CONVERSION HEREOF, MUST NOT TRAT~E 'PHE
SECURITY BEFORE THE DATE THAT IS 4 MONTI~3S AND A DAY AFTER THE LATER OF (I)
NOVEMBER 26, 2015, AN17 (In THE DATE THE ISSUER BECAME A RETORTING ISSUER IN
ANI' PROVII~tCE OR TERRITORY. CLAUSE (II) WILL NQT APPLY IF THE ISSUER BECOMES A
REPORTING ISSiTER BY FILING A PROSFECTUS AFTER NOVEMBER 26, 2015 IN .ANY OF THE
PROVII~CES OB ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN, MANITOBA, ONTARIO,
QUEBEC, NEW BRUNSWICK OR .NOVA SCOTIA AND IS A REPORTING ISSUER IN A
JURISDICTION OF CANADA AT THE TIlVIE OF THE TRAL7E.
CONVERTIBLE PROMISSORY NOTE
BG FURNITURE LTD.
Incorporated. under the laws of the Province of Ontario
PRINCIPAL AMOUNT: CDN$50,000(the. "Principal,Amount")
BG FIJRNII'LTRE LTD. (the "Company"), for value received, acknowledges itself indebted and
hereby promises to pay to Grenville Strategic Royalty Corp. (the '!Holder") on the Maturity 'Date (as
hereinafter defined) or such earlier date. as' the Principal ~Axnount and all accrued but unpaid interest
thereon may become. due and .payable (including in connection witht the occurrence of an Event of
Default), or otherwise converted into Preferred Shares of the Company, subject to. and in accordance with
the terms, conditions and provisions of Schedule "A" attached hereto. and fornung a part hereof, tine
Principal Amount and any accrued but unpaid interest thereon at the principal offices of tfie Holder in the
City of Toronto, Ontario, or such other place as may be designated by the Holder from time to time by
notice iri writing to the Company (together with all costs .arid expenses which may 6ecome.payable to theHolder in accordance with Schedule "A" attached hereto). The Frincipal Amount`outstanding at any Time,
and from time to tune, and any overdue interest. thereon, shall bear interest at a rate of 8% per annum,
accrued daily. Interest on the Principal Amount shall be calculated from the date of this Nate 'and
compounded. annually, and shall be calculated on the portion of the Principal Amount that remains
unpaid, lioth before and after matuxity, default or judgment, and on any overdue interest, until fully paid,
on the basis of the actual number of days for which the Principal Amount is outstanding oomputed on, the
basis of a year of 365 days, or 366 days in the case of a leap. year. Any accrued and unpaid interest on the
Principal Amount owing to the Holder shall be due and payable, or otherwise converted, in accordance
with the terms, conditions and provisions of Schedule. "A" attached hereto.
By its execution hereof, the Company: and the Holder acknowledge and agree to the terms and
conditions hereof, including the terms of Schedule "A" hereto.
DocuSign Envelope ID: 87A10E83-CEDA-4642-88FGF6A863514EC6
11
IN WITNESS WI-IEREOF, the Company and the Holder have caused this Note to be executed as
of November 26, 2015.
BG FUR.NITUR~ LTD.~acu5lgned by:
• 'V ,-^Per:Naive:Title: VP Manufacturing
GRENVILLE STRATEGIC ROYALTY CORP.. DocuSigned by:
U1i(,liau~ ,C.~tll,~ I~ ~a~vpPer:Name: ~ ~ am arp
Title: CEO & Di rector
UNLESS PERMITTED UND~Et SECURITIES LEGISLATION, THE 1HCILDER QF THIS SECURITY,
AND ANY SECURIT[ES ISSUED 4N COIVVERSIUN HEREt?F, MUST NC}T TRADE THESECURITY BEFQRE THB IJATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF' (I)
DECEMBER 15, 2d 15, AND {II) THE DATE THE ISSUER BECAME A REPORTING ISSUER INANY PRQVINCE C1R TERRITpRY. CLAUSE (II} WILL NOT APPLY IF THE ISSUER BECOMES AREPORTING ISSUER BY PILING A PROSPECTUS AFTER DECEMBER 15, 2(ll5 IN ANY O~ THEPROVINCES OF ALBERTA, BRtT[SH COLUMBIA, SASKATCHEWAN, MANITOBA, ONTARIO,QUEBEC, NEW BRUNSWICK OR NtJVA SCOTIA ANL7 1S A IMPORTING ISSUER IN AJURISL}ICTItaN C3F CF~,NADA AT THE TIME Off' THE TRADE.
CUNVERTIBLE PRON.EISSORY NOTE
BG FURNITURE LTD.
Tncarparated under the laws of the Province of Ontario
PRINCIPAL AMOUNT: CDN$25,000(the "Principal Amount"}
BG FURNITURE LTp. (the "Company"), for value received, acknowledges itself indebted andhereby promises to pay to Grenville Strategic Royalty Cprp. (the "Holder") on the Maturity Date (ashereinafter defined) or such earlier date as the PrincipAl Amount and all accrued but unpaid interestthereon may became dus end payable (including in connection witht the occurrence aF an Event ofDefault), or otherwise converted into Preferred Shttras of the Company, subject to and in accordance withthe terms, conditions and provisipns of Schedule "A" attflched hereto and forming a part hereof, theFrincipa! Amount and any accrued but unpaid interest thereon at the principal offices of the Holder in theCity of Toranta, Ontario, or such other place as may be designaked by the Holder from time to time bynotice in writing to the Company (together with all costs and expenses which may became payable to theHolder in a~cardance with Schedule "A" attached hereto). The Principal Amount outstanding at any time,and from time to time, gnd any overdue interest thereon, shalt bear interest at a rate of 8% per annum,1CCCt18a (J81Iy. Interest an the Principal Amount shall be calculated from the date of this 1`Jote andcompounded annually, and shttll be calculated on the pOCkt011 U~ tlt~ Principal Amount that remainsunpaid, bath before and after maturity, deF~ult or judgment, and on nny overdue interest, until fully paid,an the basis of the actual number of days for which the Principal Amount is ~utst~nding computed an the
basis of a year of 365 days, or 366 days in the case of a leap year. Any acorued and unpaid interest on thePrincipal Amount owing to the Haider shat! be due and payable, or otherwise converted, in accordancewith the terms, conditions and provisions of Schedule "A" attached hereto.
By its execution hereof, the Company and the Haider acknowledge and agree to the terms andconditions heceo~, includirr~ the terms of Schedule "A" hereto.
ii
IN WITNESS WHEREC)F, the Company and the Holdee have caused this Noke to be executed asof December 15, 2U15.
BG FUI~LIYITURE LTD.
Per; .~~.,.~.,a., ~_. _ .._~., , ._,_M_. ._.__Name: C~ ; > ~r r~~, ~Title: Chief Executive Q~cer ~ fc~, <"~~,t ~-
GREIVVILLE STR~.TEGIC ROYALTY CORP.
Per:Nams:Title:
iii
"I'AB~.,E C1F CtINTENTS Tt,~ SCI~EDULE "A"
ARTICLE 1 INTERI3RETATLON ................................................................................................................1
1.1 De~nitians ......................................................................................................................................1
I.2 Interpretation ..................................................................................................................................2
t.3 Headings, Etc ..................................................................................................................................21.4 Day Not a Business Day .................................................................................................................21.S Cucrency .........................................................................................................................................21.6 Interest ............................................................................................................................................2t.7 Prepttyment .....................................................................................................................................2
ARTTCGE2 COVENANTS ..........................................................................................................................22.1 Cavenants .......................................................................................................................................2
ARTCCLE3 CUNVERSIQN ........................................................................................................................3
3.! Optional Conversion prior to Maturity Date ..................................................................................3
~.2 Whole Shares Only .........................................................................................................................4
3.3 No Requirement to Issue Frackianat Shares ...........................:........................................................43.4 Carnpany to Create Preferred Shares ..............................................................................................4
3.5 Corporate A~reements ....................................................................................................................5
3.6 Adjustmenks ....................................................................................................................................5
AItTiCLE4 ...................................................................................................................................................9
EVENTSt~F DEFAULT ..............................................................................................................................94.1 Events of Default ............................................................................................................................~
4.2 Consequences of an Event of Default ...........................................................................................104.3 Casts of Realization ......................................................................................................................14
ARTICI..E S MISCELLANEC}US ...............................................................................................................i0
5.l Clischar~e ......................................................................................................................................lU5,~ Waiver ..........................................................................................................................................1a
5.3 No Merger ar Novation ................................................................................................................11
5.4 Governing Law ............................................................................................................................. l ls.s Nax~~s .......................................................................................................................................... ~ r5.6 Time afthe ~ssence ...................................................................................................................... l l
S.7 Maximum Rate Permitted by Law ................................................................................................ l l
S.8 Na Parknership ..............................................................................................................................115.9 Invalidity of any Pravisions ..........................................................................................................11
S.1 U Specific Performance ....................................................................................................................12
5.11 Successors anti Assigns, etc ..........................................................................................................l2
5.12 Amendments .................................................................................................................................12
5,13 Expenses ....................................................................................................................................... 12
5.14 Caunterparts ..................................................................................................................................12
"~`
SCHEDULE "A"'
The following conditions are applicable to the Convertible Prannissnry plate of BG Furniture Ltd.
ARTICLE 1AVTERPRETATiUN
Y.1 Defiaitians
In this Note, artless there is something in the subject matter ar context inconsistent therewith, theexpressions fallowing shall have the fallowing meanings, namely:
"this Note", "the Note", "Note,', "hereto,', "herein", '°hereby", "persuader", "hereof" and similarexpressions refer to the Nate represented hereby and not to any particular Arkicle, Section, subsection,clause, subdivision or other portion hereof and include any and every instrument supplemental or~naillary hereto and every Note issued in replacemenk hereof;
"Business Day" means a day which is not a Saturday ar Sunday ar a civic or statutory holiday in theProvince of 4atario;
"Common Shares" mans the common shares of the Company;
"Company" means $G Furniture Ltd., a body corporate incorporated pursuant to the laws of Province ofC)ntario, and includes any successor corporation to or cif the Company within the meaning a~' Section5.11;
"Conversion Price" means $1,&67 per Preferred Share, as the same tray be adjusted from time to time inaccordance with the terms of this Note;
'"Event of DeC~nit" ►Weans any event specified in Section 4.1 which has not been waived, cured orremedied in accordance with the terms hereof;
"Generml Secarity Agreec~ent" means ttte general security agreement dated September Z, 2015 executedand delivered by the Company to Grenville Strategic Royalty Carp.;
"Holder" means the Person from time to time registered as the holder of this Nate;
"Maturity Llate" means I?ecember 15, 2016;
"t7utstandtng Amount" means, at any given time, the Principal Amount then outistandin~; and a{1 accruedbut unpaid interest thereon;
"Person" means any individual, sale proprietorship, partnership, firm, entiCy, unincorporated association,unincorporated syndicate, unincorporated organization, trtast, body corporate or governmental authority,and where the context requires, any of the foregoing when they are acting as trustee, executor,administrator or outer legal representative,
"principal Amount" means tE~e principal arrtount afthis Note as set forth on the face page hereof;
"Royalty Purchase AgreemenN' means the amended and restated royalty purchase agreement betweenthe Company and Grenville Strategic Royalty Corp. dated September 2, 20I S; and
2
"Su6segaent Lnstallrnent" has the meaning ascribed to such teem in tk~e Royalty Purchase Agreement.
1.2 Interpretatian
Words importing the singular numiber only shag 'rnclude the plural and vice verse and wordsimparting the masculine gender shall include the neuter or the fernenine gender and vice versa.
1.3 Headings, Etc.
The division of this Nate rota Sections and the insertion of headings are far convenience ofreference only and shalt not affect the construction or interpretation of this Note. The terms "hereaP',"hereunder" and similar expressions refer to this Note and not to any particular Section or atE~er portionhereof and include any agreement supplemental hereto. Unless sornethin~ in the subject matter or contextis inconsistent therewith, reference herein to Sections are to Sections of this Note.
l.a Day Not a Business Day
to the event t6~at any day on or before which any ackian is required to be taken hereunder is not aBusiness Day, then such action shall be required to be taken on ar before the requisite time an the nextsucceeding day that is a Business Day.
I.5 Currency
AH1 references to currency l~erein shall he to lawful money of Canada.
1.6 Interest
Interest as calculated under this Note wilt be payable annually in arrears cammencin~ an .Canuary2, 2416 (and thereafter on January ~ of each calendar year until the Outstanding Amount is fully repaid orotherwise converted in accordance with the terms of this Note).
1.7 PCCEDAy'[ttEltt
The Principal Amount af, and interest an, tEsis Note may not be prepaid by the Company, inwhole ax in part, without the prior written consent of the Holder.
1.8 Additional Note
This Note is in addition to, and rat in substitution for. (a} the promissory rate in the principalamount of $1 AO,OpO dated October 30, 201 S issued by the Company to the I-3older; and {b) the promisso►ynote in the principal amount of $50,000 dated November 26, 2Q I S issued by the Company to the Holder.
ARTICLE 2COVENANTS
~.1 Covenants
For So long as any partinn of the Outstanding Amount remains outstanding, the prior writtenconsent of the Holder shalt be required before any of the following actions are or may be taken (whetherdirectly ar by amendment, merger, cansalidation or otherwise):
(a} the payment or declaration of any dividend or other distribution by the Company;
C~, ~~
(b) the entering 'snta by the Company of any contract involving payments by the Companyindividually in excess of $SO,QOQ or in the aggregate in excess of $1Q0,000, ar themaking of any capital expenditure, individually or in the aggregate, in excess of$10(},000;
(c} the Company creating any subsidiary ar establishing, acquiring or otherwise becominginvolved in any corporate entity or any partnership, joint venture or similar arrangementsoutside the ordinary course of business, or the Company entering into any advisoryagreement or other form of agreement in contemplation thereof;
(d) the Company incurring any indebtedness {other than trade puyables in the ordinary courseof business} or granting guarantees in excess of $1 UO,OQO outside the ordinary course ofbusiness, or permitting the creation of liens on the Company's assets (except forcustomary, permitted liens};
{e) the issuance by the Company ~f any shares or other securitees of the Company (includingany securities or other rights convertible into shares of the Company), other thanissuances made pursuant to the conversion of convertible securities of the Companyautstandin~ as ofthe date hereof;
(~ the creation of any new class ar series of shares of the Company;
fig) the granting of a ny nptioas by the Company;
{h) any change to the primary line of business of the Company ar the making of any othermateriel change to the Company's business;
(i) any increase or decrease in tine number of members of the Board;
(j) the entering into or cannpletion by the Company of any merger, amalgamation,arrangement, other corporate reorganiztttian, including a recapitalization, change ofcontrol ar any transaction in which All or a material portion of the assets of the Companyor any of its subsidiaries nre sold, leased, exchanged, transferred ar exclusively licensed,ox any liquidation, dissolution or winding up of the Catnpany or any of its subsidiaries; ar
(k) the completion of any sale, lease, exChan~,e, transfer or other dispasitipn or license of anyassets a~ the Company outside the ordinary course of business.
.ARTICLE 3CO~RSY4N
3.1 C}ptianal Conversion prior to Maturity Date
At any tinne during the period carnmencin~ on July 1, ZO1G and ending at 11.59 p.m. (Torontotime} an the date immediately prior to the Maturity Date, tha Holder rroay in its sole discretion elect toconvert the C}utstandin~ Amount (in whale and not in part) into:
{a) additional royalty interests of the Company pursuant to and in accordance wrth the termsof the Royalty Purchase Agreement an the basis that, upon such. canversian, for thepurposes of the Royalty Purchase Agreement, the t~utstanding Amount will be deemedfor ill purposes to be a "Subsequent Installment'° under the Royalty Purchase Agreement(thy "Additional Royalty Interest"}. To convert the Outstanding Amount into theAdditian~i Ftayalty Interest, the Holder shall deliver to the Company written notice in the
r;
4
form of Exhibit "A" attached hereto, duly executed by tha Holder nr its legalrepresentative or attorney duly appointed by an instrument in writing in a formsatisfactory ko the Company {a "Conversion Notice"}, exercising such conversion rightin accordance with the provisions hereof and, effective as of the data of the ConversionNotice, the Ctutstanding Arnaunt wrill be deenned to be a Subsequent Installment in thearttnunt of the Outstanding Amount for the purposes af'the Royalty Purchase Agreement,and the Company wilt execute and deliver at1 suoh documents and instruments, and tapeall such actions, as the Haider may request to evidence or effectuate such Conversion; ar
(b} the number of preferred shares of the Company (rounded down to the nearest wholenumber) (the "Preferred Shires") bearing the attributes listed in the term sheet attachedhereto as Schedule "B" (the "Term Sheet"}, and such other terms as muy be determinedby the Holder in its sole discretion, determined by reference to the following formula:
Outstanding Amount/Conversion Price
if the F-Inlder elects pursuant to this Section 3.1 to convert the Outskanding Amount into PreferredShares, the Holder shall surrender this Nate to the Company, together with a Conversion Noticesubstantially in the farm of Exhibit "C" attached hereto, duly executed by the Holder or its Ie~aDrepresentative or attorney duly appointed by an instrument in writing in a form satisfactory to EheCompany, exercising such conv$rsion right in accordance with the provisions hereof. Thereupon, theHelder or, subject #a ~aayment of all applicable stamp or security transfer ta7ces ar other governmentalcharges, its nominees) or assignees}, shall be entitled to be entered in the books of the Company as atthe date of the Ganversion Notice as the holder of the number of f'refenred Shares determined pursuant tothis section 3.1(b} based on the C7utstandin~ Amount, and, as soon as pr~aticable thereafter, the Companyshall deliver to the l-tolder ar, subject as aforesaid, to its nominee(s), or assignee(s), a certificate arcerki~cates for such Preferred Shares.
3.2 Who[e Shares Only
The rights of conversion set Earth in this Article 3 shall extend only to the maximum number ofwhale Preferred Shares into which the Outstanding Amount may be converked in accordance with theprovisions of this Article 3. Fractional interests in Preferred Shares shall be adjusted far in the mannerprovided in Section 3.3. All Preferred shares issued in connection with the conversion of the OutstandingAmount will for all purposes be deemed to be issued and autstandin~ as fully paid and nun-assessable.
3.3 No Requirement to Lssue Fractional Shares
The Company shall not be required to issue fractional shares upon the cottversion of theOutstanding Amount into Preferred Shares. If any fractional interest in a Preferred Share wquld, exceptfar the provisions o~'this Section 33, be deliverable upon the canvarsian of the 4u#standin~ Amount, theCompany shall, in lieu of delivering any certificate for such fractional interest, saEisfy such fracEianulinterest by paying to the Holder as amount (computed to the nearest cent) in respect of such fractionaldetermined by the directors of the Company, acting reasonably.
3.4 Company to Create Preferred Shares
The Company covenants with the Holder that it wi{!, in connection with the conversion of the~utstending Arnaunt into Preferred Shares, take all actions necessary to cause the creation of thePreferred Shares in ~ccardance with the terms of this Note and tt~e Term Sheet, and to thereafter at alltimes reserve and keep available out of its authorized shares such number of Freferred Shares as shallthen be issuable upon the conversion of the Outstanding Amount.
3.5 Corporate Agreements
Notwithstand'sng anything else contained herein, if the Purchaser elects to convert theOutstanding Ampunt into Preferred Shares the Company, the Holder arsd each shareholder of thaCompany will, cantemparaneausly with the issuance of such Preferred Shares to the Holder, enter into aninvestor rights agreement or similar agreement which shall include, inter olio, the terms set out under theheadings "Board of .Directors", "Forced Sale", "Infor►rrattan Rights", "Rights of Fr`rst RefusaC and CoSale" and "Drag Along Rights" in the Term Sheet (and such other terms as may be determined by theHolder in its sole discretion}, ttnd the Haider cavenarrts and agrees #a execute and deliver, and to causee~.ch of the shareholders of the Company to execute ttnd deliver, all such documents and instruments, andtake all such actions, as the Holder may request r'n connection with the conversion of tf~e OutstandingAmount ipto Preferred Shares.
3.G Adjustments
follows:The Conversion Price in effect at any date steal! bs subject to adjustment from time to tithe as
(a) If, and wherever at any time and from time to tinne the Company shall (i) sabdivide,redivide ar chan~,e its then nutsEanding Common Shares into a greater number ofCommon Shares, {ii) reduce, combine, consolidate or change iEs then outstandingCommon Shares into a lesser number of Common Shares, ar {iii) issue Common Shares(or securities exchangeable or convertible into Common Shares) to the holders of all orsubstantially all of its then outstanding C~mrnon Shares by way of stock dividend orother distribution (other than a dividend in the ordinary course paid in Common Shares orsecurities exehan~eable nr convertible into Common Shares) (any ~f such events being a"Share 12earganization"), the Conversion Price shall be adjusted effective immediatelyafter the effective dake ar record date for the Share Reorganization, by multiplying theConversion Price in effect immediately prior to such effective date ar record date by thequotient abt~ined when:
A. the number of Common Shares outstanding on such effective date orrecord oats before diving effect to the Share Reorganization,
is dividad by
B. the number of Common Shares nutstandin~ immediately after theeampletion of such Share Reorganization (but before giving; effect to theissue of any Common Shares issued octet suoh record date otherwise t4ianas part of such Share Rearganiration) including, in the case wheresecurities exchangeable or convertible into Common Shares aredistributed, the number of Common Shares that would have beenoutstanding had such securities been exchanged for or converted intoCommon Shares on such record date.
(b) If end whenever there is a capita! reorganization of the Company hat otherwise providedfar in Section 3.6(a} or a consolidation, merger, arrttngement or amalgamation (statutoryor otherwise) of the Company with or into another body corporate (any such event beinga "Capital Rearganizs~tion"), if'the Outstanding Amount has not been eanverted prior tothe effective date or record date for such Capital Rear~anization then the Holder shall be
C~
entitled to receive and shall accept, upon the conversion of the Qutstacading Amount atany time after the effective date or record date for such Capital Reorganization, in lieu ofthe number of Freferred Shares to which the Holder was theretofore entitled uponconversion, the aggregate number of Preferred Shares, ar other securities of the Companyar of the corporation ar body corporate resuSting, surviving; ar cnntirtuin~; from theCapital Reorganiztttian, thAt the Holder would have been entitled to receive as a result ofsuch Capital Reorganization if, on the effective date or record date, it had been theregistered holder of the number of Preferced Shares to which it was theretofore entitledupon the conversion of the Qutstanding Amount; provided that na such CapitalReorganization shall be carried into effect unless elf necessary steps shalt have beentaken so that the Holder shall immediately thereafter be entitled to receive such numberof Preferred Shares ar other securities of the Company ar of the corporation ar bodycorporate resulting, surviving or continuing from the Capital Reorganization.
{c) In the case of any reciassi~icatian of, ar other change in, the autstandin~ Common Shiresother thin a Share Reorganization or a Capital Reorganiratian, the righ# of conversionshall be adjwsted immediately after the effective date or record date for suchreclassi~r.~tion ar other change so that the Holder shall be entitled to receive, upon thecoaversinn of the t~utstanding Amount at any time after the effective dots ar racard dateof such reclassification or ether change, such shares, securities ar rights as the Molderwould have received had the outstanding Amount been converted into Preferred Sharesimmediately prior to such effective date or record date, subject to adjustment thereafter inaccordance with provisions the same as nearly may be possible as those contained inSections 3.6(a) and 3.6(b).
(d} If at any time ar from tithe to time after the issue of this Nate, the Company issues orsells, or is deemed to have issued ar sold, Additional Shares (as defined below} far anEffective Price (as defrned below) less than the then efFective Conversion Price, then tt~ndin each such case, the then effective Conversion Price shall be reduced as of the openingof business on the date of such issue or sale, to an amount (calculated to the same numberof decimal places as the original Conversion Price) determined by multiplying theConversion Price then in affect by a fraction:
{i} A. the numerator of which shall be the sum of the Outstanding Issue {as defrnedbelow} and the number of Common Shares that the consideration received by theCompany for the kotal number of Addit'sanal Shares so issued (ar deemed to beissued) would purchase at the Conversion Price in effect immediately prior tosuch issuance, and
(ii) B, the denaminatnr of which shall be the sum of the Outstanding Issue plus thenumber of such Additional Shares sa issued (ar deemed to be issued).
For il(ustrntive purposes only, if the Conversion Price is $1..50, the Outstanding; Issue is10,0U0,Q00 Common Shares and the Company issues 2,Ot10,{?00 Additirtnal Shares farconsidcratian of $2,700,QOp (being an Effective Price of $1,35 for such Additional Shares($2,700,aoa i x,000,000 ~ $135}), the then effective Conversion Price shall be reduced to$1.48, being the product of $1.50 x ((IQ,OOO,QOQ + 1,84d,OQU) / (l0,Op0,Ud0 +z,000,000~}.
(e) for the purposes of this Note:
r~,~u.~y
(i) the term "A.dditiAnal Shares" shall mean all Common Shares issued ar deemedto be issued by tl~e Company after the date of this Note, other than: (A} CommpnShares yr Convertible Securities {as defined below) issued pursuant to a ShareRearganizatian, Capital Reorganizs~tion ar similar transactions described in thisSection 3.6; {B) Common Shares or Convertible Securities issued upan theexercise of other Convertible Securities, ar Comman Shares issued upon theconversion ar exchange of Convertible Securities, in each case provided suchissuance is pursuant to the terms of such Convertible Security; (C) CommonShares or Convertible Securikies issued to employees or directors of, orconsultants or advisors to, the Company ar any of its subsidiaries pursuant to aplan, agreement or arrangement approved by the board of directors of theCompany; (D) Common Shares or Convertible Securities issued pursuant to theacquisition of another corporation by the Company or any of its subsidiaries byamal~arnatian, arrangement, purchase of all oc substantially a!1 of the assets orshares or other reorbanization or to a point venture agreemenk, provided that suchissuances are approved by the board of directors of the Company; or (G)Common Shares issued upon conversion ofthe Outstanding Amount;
{'ti) the term "t)atstandi~~ Issue" shall mean the sum of (A) the number of sharesof the Company outstanding immediately prior to such issue; plus (B) the numberof Preferred Shares issuable on the conversion of the Outstanding Amount,calculated immediately prior to such issue and prior to effecting any adjustmentto the Canversian Arice pursuant to Section 3.6(d); and
{iii) the term "Efi'ective Price" shall mean the quotient determined by dividing thetotal number of Additional Shares issued ar sold, or deemed to have been issuedpr sold by the Company, under Section 3.6(d), into the consideration received, ardeemed to have been received by the Company for such issue, under Section3.6(d), for such Additiana! Shares.
~ For the purpose of m~kin~; any adjustment required under Section 3.6{d}:
(i) the consideration received by the Company far any issue ar sale of securitiesshall (A) to the extent it consists of cash, be computed at the net amount of coshreceived by tite Comgat~y after deduction of any underwriting or similarcommissions, compensation ax concessions paid or allowed by the Company inconnection with such issue or sale but without deductiar~ of any other expensespayable by the Company, (B} to the zxtent it consists of properky other than cash,bs computed at the fair value of that property a~ determined in food faith by theboard of directors of the Company, and (C} to the extent that Additional Shares,Convertible Securities ar rights nr options to purchase either Additional Shares arConvertible Securities are issued or sold to~echer with other stock or securities orother assets of the Company for a consideration which covers bath, be computedas the portico of the consideration s4 received that may be reasonably determinedin good faith by the board of directors cif the Company to be allocable to suchAdditional Sharss, Convertible Securities or rights or options.
(ii} if the Company issues or sells (A} stock or otf~er securities convertible intoAdditional Shares (such convertible stock ar securities being; herein referred to as"Convertible Securities"}, or (B) rights or options for the purchase of AdditionalShares ar Convertible Securities, and iF the Effentive Price of such Additional
~~
Shares is less thAn the Conversion Price then in effect, in each case the Companyshall be deemed to have issued at the time of the issuance of such rights oroptions or Convertible Securities the maximum number of Additional Sharesissuable upon exercise ar conversion thereof and to have received asconsideration far the issuance of such shares an amount equal to the total amountof the consideration, if any, received by the Company far the issuance of suchrights or options ar Convertible Securities, plus, in the case of such rights nroptions, the minimum amounts of consideration, if any, gayable to the Companyupon the exercise of such rights or options, plus, in the case of Convertible5eaurities, the minimum amounts of consideration, if any, payable to theCompany upon the canvcrsion thereof; provided that if in the case of ConvertibleSecuriCies the minimumamnunts nfsuch consideration cannot be ascertained, butare a function of anti-dilution ar similar protective clauses, the Company shat! bedeemed to have received ti3e minimum amounts of consideration withoutreference to such olauses; provided further that if, at any time and from time totime folfawin~ the issuance thereof, the minimum amount of eansiderAtionpayable to the Company upon the exercise or conversion of rights, options orConvertible Securities is reduced over time or on the occurrence ear non-occurrence of specified events other than by reason of anti-dilution adjustments,the Effective Price shall be recalculated using the figure to which such minimumamount afconsideration is reduced; provided further that if, at any time and fromtime to time following the issuance tl~ereoF, the minimum amount ofconsideration payable to the Company upon the exercise or conversion of suchrights, options or Convertible Securities is subsequenkly increased, the EffectivePrice shat! be again recalculated using the increased minimum amount ofconsideration payable to the Company upon the exercise or conversion of suchrights, options or Convertible Securities; provided, further that in nn event shallthe Conversion Price be adjusted above the Conversion Price in effectimmediately prior to the particular adjustment required under Section 3.d(d). Nafurther adjustment of'the Conversion Price as adjusted upon the issuance of suchrights, options or Convertible Securities sh~l! be made as a result of the actualissuance of Additional Shares on the exercise of Any such rights or options or theconversion afany such Convertible Securities. If any such rights or options or theconversion privilege represented by any such Convertible Securities shalt expirewithout hiving been exercised, the Conversion Price as adjusted upon theissuance of each rights, options or Convertible Securities stall be readjusted tothe Conversion Pricy wlxich would have been in effect had an adjustment beenmade on the basis that the only Additional Shares sa issued were the AdditionalShares, if any, actualiy issued or sold on the exercise of such rights or options arrights of conversion of such Convertible Securities, and such Additional Shores,if any, were issued or sold for: {C} the consideration, if any, actually received bythe Company upon the exercise of such rights or options ar on the aonversian ofsuch Convertible Securities, plus (d} the consideration, if any, actually receivedby the Company for khe granting of all such rights or options ar the issue and saleof the Convertible Securities, whether or nc►t exercised ar converted.
9
ARTICLE QEVENTS OF DEFAULT
4.1 Events of Default
Note:The pccurrenee of any of the following events shall constitute an went of Default under this
(a) if a default occurs in the payment of any amount awing to the Holder hereunder whendue;
(b} If default occurs in the performance of any other covenant or obligation of the Companyin favour of the Holder under this Note, the Royalty Purchase Agreement or the GeneralSecurity Agreement and such default is oat waived in writing by tha 1-Ialder or, to theextent such default rnAy be remedied, such default remains unremedied: (i) in the case ofa default under this Nate or under the General Security A~`eement, for a period of 10consecutive days follgwing receipt by the Company of written notice from the I-laider ofsuciti default; or (ii) in the case of a default under the Royalty Purchase Agreement, farthe period referenced in the Royalty Purchase Agreement;
(c) if an event of default occurs in pttyment ar performance of any obligation in favour ofany Person from wham the Company has bnrrnwed money, and such default is notwaived in writing or remains unremedied for a period of 10 consecutive days after receiptby the Company of written notice of such default from such Person;
(d} The Connpany (i) becomes insolvent or generally not able to pay its debts as they becamedue, (ii}admits in writing its inabriity to pay its debts ~eneraily nr makes a generalassi~nrnent far the benefit of creditors; (iii) institutes or has instituted against it anyproceeding seeking {x} to adjudicate it a bankrupt or insolvent, (y) liquidation, winding-up, rear~anization, arrttn~ement, adjustment, protection, relief or composition of it ar itsdebts under any law relating to bankruptcy, insolvency, reorganization or relief of debtorsincluding any plan of Compromise ar arrangement or other corporate proceeding,involving or affecting its creditors, or (z} the entry of an a~der far relief or theappointment of a receiver, trustee or other similar official far it nr far any substantial partof its p~aperties and assets, and in the case of any such proceeding instihated against it{but not instituted by it), either the proceeding remains undismissed ar unstayed for aperiod of 3q days, or any of the actions sought in such proceeding (including the entry ofan order far relief against it or the appointment of a receiver, U'ustee, custodian or odZersimilar a~cial for it ar fc~r any substttntial part oP iks properties and assets} occurs, or(iv} takes any corporate action to authorize any of the above ~etions;
{e} If any judgment or order for the payment of money in excess of $25,000 shall berendered against the Company and either (i) enforcement proceedings shall have beencommenced by any creditor upon such judgment or order, or (ii) there shalt be any periodof lU consecutive days during which n stay of enforcement of suc(~ judgrcrtent or order, byreason afa pending appeal or otherwise, shall not be in effect;
{fj If any act, matter ar thing is done, or any action or proceeding is launched or taken, toterminate the corporate existence of ehe Company, whether by winding-up, liquidation nrotherwise;
~'~
1d
(g) tf any proposal is made or any petition is filed by or against the Carnpany under any lawhaving far its purpose the extension of time for payment, composition or compromise ofthe liabilities of the Company car other reorganization or arrangement respecting itsliabilities ar if the Company gives notice of its inkentian to make ar file any such proposalor petition including an applicatiofl to any court to stay or suspand any proceedsngs ofcreditors pending the making or filing of any such grnposal ar petition;
{h) If any receiver, administrator or manager, receiver-manager or interim receiver of theproperty, assets or undertaking of the Company ar a substantial part thereof is appointedpursuant to the terms of any trust deed, trust indenture, debenture ar similar instrument orby or under any j udgment or order of any court;
(i} A suspension by the Company of its operations other than in the ordinary course ofbusiness; or
(j) Any representation, warranty, certificate, ar other statement (financial ar othccwise} madeor furnished by or on behalf of the Company to the Holder in writing in connection withthis Note, ar as an inducement to the Holder to enter into this Note, shall b~ false,incorrect, incomplete or misleading in any material respect when made or furnished.
4.2 Consequences of an Event oC DefauCt
Upon the occurrence of an Event of DeFault, the Holder may, by notice to the Gampany, declarethe Clutstanding Amount and all other amounts (if any} owing hereunder to be immediately due andpayable whereupon all such amounts shall immediately became end be due and payable without furtherdemand or other notice of any kind, all of which are expressly waived by the Company. The Holder shat!thereafter be antitled to take any action, remedy or proceeding available to it under this Note, at law or inequity. All or any rights of remedies of tt►e Holder upon the occurrence of an Event of Default may frt~mtime to time be exercised independently or in any combination.
4.3 Costs at' Realization
The Company agrees to pay to the Holder forthwith upon demand All reasonable costs, chargesand expenses {including reasonable legal fees an a solicitor and client basis} of, or incurred by, the Holderin recovering ar enfarein~ payment of any of the monies awing hereunder.
ARTICLE 5MISCELLAl~TEOUS
5.1 Discharge
Upon full payment by the Company to the Holder of, or the conversion of, the Qutstandin~Amount, the Holdar shall, upon the written request of the Carnpany, deliver up this Note to the Companyand sljali at the expense of the Company execute and deliver to the Company sash deeds and ottrerdocuments as shall be required to release and discharge this Nate.
S.2 Waiver
No act or omission by the I-Iotder in any manner whatever shall extend to or be taken to effect anyprovision hereof or any subsequent breach or default or the rights resu{ting therefrorr~ save only expresswaiver in writing. A waiver of default shall not extend ta, or be taken in any manner whatsoever to affectthe rig hts of the Holder with respect to any subsequent default, whether similar or not.
t~~
11
S.3 Na Merger or Novation
Neither the taking of any judgment nor the exercise of any power of seizure pr safe shall operateto extinguish the liability of the Company to pay Che moneys hereby secured nor shall the same operate asa merger of any covenant herein contained, nor shall the acceptance of any payment or ether securityconstitute or create any novatian.
5.4 Governing Law
This Nate shall be deemed to have been nnade and shat) be construed in accordance with the lawsof'the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects asan Ontario contract. The Company hereby irrevoeAbty submits to the jurisdiction of the courts of theProvince of Ontario for any action, suit nr any other proceeding Arising out of or relating to this Note andany ether agreement or instrument mentioned therein oe any of the transactions contertrp[ated thereby.
5.S Notices
Any notice or other communication required ar which tnay be given hereunder wilt be in writingand will be delivered in accordance with Section 6.1 of the Royalty Purchase Agreement.
5.6 time of the Essence
Time shall be of the essence c►fi'this Note.
S.7 Maximum Rate Permitted by Law
Under no circumstances shall the Ho(der be entitled to receive nor shall it in fact receive apayment ar partial payment of interest, fees ar other amounts under or in relation to this Note at a rate thatis prohibited by applicable law. Accordingly, notwithstanding anything herein ter elsewhere contained, ifand to the extant that under any circumstances, the effective annual rate of "interest" {as defined in s$ction347 of the Criminal Code of Canada) received or to be received by the Holder (determined in accordancewith such section} pn any amount of "credit advanced" (as defined in that section) pursuant to thesepresents ar any agreement Qr arrangement capateral hereto entered into in consequence ar implementationhereof waalti, but for this Section 5.7, be a rate that is prohibited by applicable law, then the effectiveannual rate of interest, as so determined, received or to be received by the Holder an such amount ofcredit advanced shalt be and be deemed to be adjusted to a rate that is one whole percentage gr~int lessthan the lowest effective annua) rate of interest that is sa prohibited (the "adjusted rate"}; and, if theHolder his received a payment or partial payment which wc►uDd, but far this Section 5.7, be so prohibitedthen any amount or amounts so received by the Holder in excess of the lowest effective annual rate that issa prohibited shall and shall be deemed to have comprised a credit to be applied to subsequent paymentsan account of interest, fees or other amounts due to the Holder at the adjusted rate.
5.8 Na Partnership
The parties agree that nothing contained in this Note, ar the conduct of any party, shall in anymanner whatsoever constitute ar be intended to constitute any party as the agent or a representative orfiduciary of any party nor constitute or be intended to constitute a partnership or joint venture among theparties.
S.9 Invalidity of any Provisions
Any prevision of this Note or any provisions of tine security contemplated hereunder which isprohibited by the laws of any jurisdiction slial1, as to such jurrsdiatian, be inet~ective to the extent of such
~~~
12
prohibition without invalidating the remaining terms and provisions hereof or thereof and no suchinvalidity shall affect the obligation of the Company to repay the (?utstanding Amount.
5.10 Specific ~'erformance
In addition to any and all other remedies that may be available at law in the event of any breachof this Nate, the Haider shall be entitled to specific performance of the agreements of the Companyhereunder and to such other injunctive ar other equitable relief as snay be granted in connection therewith.
5.11 Suecessors and Assigns, etc.
This Note shall enure to the benefit of and be binding upon the parties and their respectivesuccessors and permitted assigns; provided, however, that neither this Nuke nor any rights ar obligationshereunder shaft be assigned by the Company without the prior written consent of the Holder.
5.12 Amendments
This Note may only be amended by a written agreement signed by the Company end the Holder.
5.13 Expenses
The Company will pay a!I of the reasonable legal fees and outer reasonable out-of-packetexpenses incurred by the Haider in connection with the preparation and execution of this plate and thevarious agreements and documents referred to herein (including all documents referenced in ar requiredby the Term Sheet), up to a maximum amount of $35,(?00 (plus all disbursements incurred by counset tothe Hofder and aU applicable kaxes on any of the foregain~ amounts), whsch amounts will be deductedfrom the Principal Amount and/ar paid by the Company on demand by the Holder.
5.14 Caunter~Arts
This Note may be executed in separate counterparts, each of which when so executed anddelivered shall be deemed to be an ari~inal and all of such counterparts sha11 tagedier constitute one andthe same inskrurn~nt. The delivery of an executed counterpart of tt►is Note by facsimile ax telecapy or byelectronic transmission in portable document format (PDP) shall be deemed to be the equivalent of thedelivery of an ariginaS executed copy thereof.
EXHIBIT "A" TO SCHEDULE "A" OF CONVERTIBLE PItUMISSt}RY MUTE
CONVER5I4N NOTYCE RE ADA~TIONAL TtQYALTY INTERESTS
To: BG Furniture Ltd.
Reference is made to the Convertible Pramissary Note dated Decennber 15, 2U I S (the "Nate") issued tothe undersigned by BG Furniture Ltd. (the "Com~sany"). In accordance with and pursuant to the terms ofthe Nnte, the undersigned hereby elects to convert the Outstanding Amount into the Additiangl RoyaltyInterest effective as of the date hereof.
Initially capitalised terms not otherwise defined herein shall have the meanings ascribed to such terms inthe Nate.
Dated the ~ day of
GRENVILLE STRATEGIC ROYALTY CORP.
By:1"~lame:Title:
2
EXF~IBIT "B" TO SCHEDULE "A" OF CONVERTIBLE PROMISSORY NUTS
TERM SHEET
SUMMARY OF PREFERRED S~](ARE TERMS
dssuer: BG Furniture Ltd. (the "Company)
Investor: Grenville Strategic Royalty Corp. ("Grenville")
Capita(izAtion afthe Company: Grenville to invest up to CQN$4QU,000 in exchange far preferred sharesrepresenting 2Q% of the fully diluted share ownership of the Companypost financing.
Price: $XX per share (the "C7ri~inal Purchase Price"},.
Type of Security: Series A Convertible Preferred Shares (the "Series A preferredrr) of theCompany, initially convertible on a 1:1 basis into common shares of theCompany (the "Common Stock"}.
Raakin~: The Series A Preferred will rank senir~r to the Carnpany's CommonStock with respect to dividends, liquidation, dissolution, voting andredemption.
Dividends: The Series A preferred will carry a cumulative annual dividend at therake of 8% of the Original Purchase Frice, payable upon a liquidation ,whether or not declared, and prior and in preference to any declarationor payment of dividends to holders af'the Camrnan Stock. For any otherdividends ar similar distributions {other than a return of capital), theSeries A Preferred will participate with the Common Stock on an as-ifconverted hasis.
Liquidation Preference: In the event of a liquidation, dissolution or winding-up csf the Company,the proceeds shall be distributed to the stockholders as foElows:
The Series A Preferred shalt be entitled to receive, prior and inpreference to clue holders of the Common, a per share amount equal to 1times the tJriginal Purchase Price plus all dscl~red and un-paiddividends. After such dt5h'l~lUlipS1, the rerriaining assets of theCorporation, if any, available for distribution to shareholders shall bedistributed an a pro rata basis to holders of the Series A Preferred andthe holders of Common Stock.
A merger, acquisition, sale or transfer of SO% or more of the outstandingvoting power of the Company, or sale or exclusive license of all or arnarerial portion of the assts or intellectual property of the Company
shall be deemed to be a liquidation provided, however, that a transactionshall not be deemed a liquidation if its sflte purpose is to change the stateof the Company's incorporation ar to create a holding company that willbe awned in substantially the same proportions by the persons who heldthe Company's capital stock immediately prior to such transaction. Theholders of at least sixty-six and two-thirds percent (66 2J3%}aF theshares of Series A Preferred may elect ka waive the treaknnent of sack atransaction as a liquidation event.
Conversion: The holders of the Series A Preferred shall have the right to convert theirshares of Series A Preferred at any time into shares of Common Strsck.The initial conversion rate shall be 1:1, subjeak tc~ adjustment as providedbelow.
AiItiClllUxi0i1 PCOYISlOt16: The conversion price of the Series A Preferred shalt be subject to abroad-based weighted average adjustment to reduce dilutitsn in the eventthat dte Company issues additional equity securities (other than sharesreserved as emp{ogee shares described under "Employee Matters"below, the issuances of stack to banks, equipment lenders, etc. pursuantto debt ~nancin~ or equipment leasing transactions and other customaryexceptiaas} at a purchase price less than the then Applicable conversionprice. The conversion price will also be subject to proportionaladjustment for stock splits, stock dividends, recapitalizations and thelike.
Voting flights: The Series A Preferred will vote together with the Common Stack, antinot as a separate class, except as specifically provided herein or asotherwise required by law. Each share af'the Series A Preferred shall beentitled to a number of votes equal to the number of shares of CommonStoafc then issuable upon conversion of such share of Series A Preferred.
Board of Directors: The size of the Company's Board of Directors (the "Board") shall be setat three {3) members, al! designated by the holders of the Series APreferred and the holders of Common Stook voting as a single class.
Grenville will be entitled to designate one observer to the Board. Subjectto agreeing to customary confsdentiality restrictions, such observer willbe provided with all inforntatinrt and materials provided to ttte membersof the Board.
Farted Sale: At any time, subject to the approval of the holders of at least sixty-sixand two-thirds percent (66 2/3°/n} of the Series A Preferred, the Series APreferred holders may elect to cause the Company be sold pursuant to anasset sale, merger, atnalgAmation or some other combination transactionand all st~arehotders will 6e required to sell their shares or otherwisetender their interest into such a transaction. The ho3ders of the Series APreferred Shares will be entitled to a price per share in any suchtransaction equal to the greaCer of (i) tlye Qriginal Purchase Price farsuch share plus all accrued and/or declared and unpaid dividends and (ii)
4
the fair value of such share.
Information Rights: So long as a holder of Series A Preferred continues to hold at least S% ofits originafiy issued shares of Series A Preferred ar Car►xmon Stockissued upon conversion thereof, the Company shall deliver to each suchholder audited annual financial statements wsthin 12Q days of year end,unaudited quarterly finanaiat statements within 45 days of quarter endand unaudited monthly financial statements compared against tt~a thenexisting business plan within 3U days of month end, and will providesuch holder with a copy of the Company's annual operat'sng plan andbadget within 3Q days prior to the beginning of each fiscal year. eachsuch balder shall also be entit6ed to standard inspection and visikationrights.
Rights of First Refusal and The holders of Series A Preferred Shires and holders of Common StockCa-Sale: shall have the right in the event the Company proposes to offer equity
securities, r~r other securities cc►nvertible into equity securities, to anyperson to purchase their pra rata portion of such securities (b~zssed ontheir percentage equity ownership in the Cannpany assuming theconversion of all outstanding convertible securities into Cotmm~nStock}.
In addition, all current and future holders of Common Stock (other thanthe Investor), unless waived by the holders of at least sixty-six and twa-thirds percent {6G 2/3°/a) of the shares of Series A Preferred, will executea Right of First Refusal and Co-Sale A~~reement with the holders of theSeries A Preferred at►d the Company pursuant to which the Company(through an affiliate to be designated by iC) first and the holders of theSeries A Preferred second, will base a right of first refusal with respeckto any shares proposed to be sold by such holder. The Right of FirstRefusal and Co-S~le Agreement will also contain a right of co-sale infavour afeach of the holders of Series A T'referred providing that beforeany such holder may sell any of his, her ar its shares of Common Stock,he, she or it will give the holders of Series A Preferred ari opportunity toparticipate in such sale an a bAsis proportionate to the amount ofsecurities held by the seller and those held by ttre holders of Series APreferred. Such restrictions referred to in the prior two sentences willnot apply in the event a holder transfers such shares to a wholly-awnedsubsidiary oc other wholly-owned entity provided the transferee agreesto be bound by the terms of such agreement. The aptian ageement~,overning each option granted by the Company sha{1 require, as acondition to the exercise thereof, that the optionee execute a counterpartsignature page to the Rr~ht of First Refusal and Co-Safe Agreement. In~.ddition, the Company shall require, as a condition to any grant ar safeby the Company of any shares of Common Stack to any party other thanthe holders of Series A Preferred, that suds parley execute a counterparksignature pale to tl~e Right of First Refusal and Co-Sale Agreement.
S
Drab;-Along Rights: In the event that the holders of at least sixty-six and two-thirds percent(66 2I3°!o} of the outstanding shares of Series A Preferred propose to sell#heir shares of capita! stock or approve a rner~er, consolidation, sale ofall or substantially all of the Company's assets or such other change ofcontrol transaction in which stockholders of the Company immediatelyprior to such transaatian hold or own less than a majority of the votingpower of the Cr►mpany immediately after such tratasaction, then eachshareholder ofthe Cprnpany shall be required to sel! his, her ar its shamsof capital stock and/or vote his, her or its shares in favour of suchtransaction. All shareholders of the Company shalt be party to the drag-alon~ provision.
3
EXHIBIT "C" TO SCHEDT3IrE C0A" f1F CO1rTVERTIBLE PRONIYSS4RY NOTE
CQNVERSION NOTICE RE PREFERRED SNARES
To: BG Furniture Ltd.
Reference is made to the Convertible Promissory Note dated December 15, 2015 {the "Note") issued tothe undersigned by BG Furniture Ltd. (the "Company"). In accordance with and pursuant to the ferrns ofthe Nate, effective as of the date hereof the undersigned hereby elects to convert the Qutstanding Amountinto such number of Preferred Shares as is determined pursuant to the terms of the Note and directs thatsuch shares be registered, issued and delivered to the undersigned or as the undersigned may otherwisedirect in waiting.
Initially capitalized terms not otherwise defined herein shall hive the meanings asoribed to such terms inthe Note.
Dated the , day of ,
GRENVILLE STRATEGIC RCIYALTY CORP.
By: ,~Name:Title:
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DocuSign Envelope ID: FCCD52A5-AC26-4582-8364-888770D198F6
UNLESS PERMITTED UNDER SECURITIES LEGISLATIC}N, THE Nt.~LDER O~ THIS 5ECURITY,AND ANY SECUR.tTiES ISSUIED C}N CUNVER51C7N HEREOF, MUST Nf~T TRADE THESECURITY B~~ORE THE DATE THAT tS 4 MUNTHS AND A DAY AFTER THfE LATER (J~' (I)JANUAEtY 7, 2016, AND (II} THE DATA THfE ISSUER BECAME A REP(]RTIIVG ISSUER IN ANYPIt~V[NCE Cti~ TER12TTf~RY. CLA[J~E (IB) WILL Nt7T APPLY IF THE ISSUER BECOMES AR1EPC}LtTING ISSUER BY FILING A PFtC1SP~CTUS AFTBf~ JAI~tUARY 7, 2(116 TN ANY OF THEPROVINCES C}F ALBERTA, BRITISH C(3LUMBIA, SASKATCHEWAN, MAI*1ITC3BA, ONTAR.[Q,QUEBEC, NEW B[tUNSW[CK C)R NOVA SC~T[A AND TS A REPC)RTING ISSUER IN AJURISDICTION C}F CAhtADA ,4T THE TIME C}P THE TRADE.
CONVERTIBLE PR{~MISSURY NOTE
BG FURNITURE LTD.
Incorparated under the laws of the Pravirtce of Ontario
PRINCIPAL AMtJUNT: CDN$5p,0UQ(the "Princ;ipal Amount"}
BG PUI2NITUR~ LTD. (the "Company"), far value received, acknowledges itself indebted andhereby promises to pay to Grenville Strategic Royalty Corp. {the "Haider") on the Maturity Date (itshereinafter defined} or such earlier date ~s the Principal Amount and a[1 accruecS but unpaid interestthereon may become due and payable (including in connection witht the occurrence cif an Event ofDefault}, or otherwise converted into Pret'erred Shares q~ tl~e Company, subject to and in accordance withthe tenris, condikioris and provisions of Schedule "A" ttttached hereto and forming a part hereof, thePrincipal AmounE and uny uc~rued but unpaid interest thereon at the principal offices of the Notder in theCity of Taranto, C3ntaria, or such other place ~s ms~y be designated by the Holder from time to time bynotsce in writing to the Cnrn~►any (together with all costs and expenses which may become payable to theHolder in accordance with Schedule "A" attached hea'eto). The principal Amount outstanding at any time,and from time Eo tune, and any overdue interest thereon, shalt bear interest Ott a rate of 8%a per annum,accrued daily. Interest on the Principal Amount shall be calculated from the date aF this Note andcampaunded annually, and shall be caleutated on the portion of the Principal Amount that remainsunpaid, both before end after maturity, deCautt or judgment, and on any overdue interest, until fully paid,on the basis of the actual number ref days for which the Principal Amount is outscandin~ computed on tinebasis of a year of 365 days, or 3fi6 days in the case of a leap year. Any accrued and unpaid interest an theC'rincipai Amount owing; to the Holder shall be due and payablz, or otherwise cc~nvert~d, in accprdancewith the terms, conditions and provisions of Schedule "A" attached hereto.
~y its execution hereof, the Company and the Holder acknowledge and agree ka the terms andec~nditians hereof, including the terms oP 5checiule "A" hereto.
os
w~~
DocuSign Envelope ID: FCCD52A5-AC26-4582-8364-888770D198F6
iN WITNESS WH R1~C?P, the Ct~mpany and the Holder have caused this Note to be executed asof January "7, 2016.
BG FURNITUTtE LT .
;~°" H~~.Per: ~..~,ri~,,~ aName:
~""" ' ;
Title: Chief Executiv t~~~cer~,fd ~ : ~~ T
GRENVILLE STRATEGIC ROYALTY CC~RP'.DocuSigned by:
Per: :~,~4~asaName: William (Bill) R. TharpTatle
Director and CEo
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY,AND ANY SECURTI'IES ISSUED ON CONVERSION HEREOF, M(7ST NOT TRADE THESECURITY BEFORE THE DATE THAT IS 4 MONTHS .AND A DAY AFTER THE LATER OF (~FEBRUARY 5, 2016, AND (l~ THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANYPROVINCE OR TERRTTORY. CLAUSE (In WII.,L NOT APPLY IF TIC ISSUER BECOMES AREPORTING ISSUER BY FILING A PROSPECTUS AFTER FEBRUARY 5, 2016 IN ANY OF THEPROVINCES OF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN, MANITOBA, ONTARIO,QUEBEC, NEW BRUNSWICK OR NOVA SCOTIA AND IS A REPORTING ISSUER IN AJURISDICTION OF CANADA AT THE TIIVIE OF THE TRADE.
CONVERTIBLE PRONIISSORY NOTE
BG FURNITURE LTD.
Incorporated under the laws of the Province of Ontario
PRINCII'AL AMOUNT: CDN$70,000(the "Principal Amount")
BG FURNITURE LTD. (the "Company"), for valve received, acknowledges itself indebted andhereby promises to pay to Grenville Strategic Royalty Corp. (the "Holder") on the Maturity Date (ashereinafter defined) or such earlier date as the Principal Amount and all accrued but unpaid interestthereon may become due and payable (including in connection witht the occurrence of an Event ofDefault), ar otherwise converted into Preferred Shares of the Company, subject to and in accordance withthe terms, conditions and provisions of Schedule "A" attached haretq and forming a part hereof, thePrincipal Amount and any accrued but unpaid interest thereon at the principal offices of the Holder in theCity of Toronto, Ontario, or such other place as may be designated by the Holder from rime to time bynotice in writing to the Company (together with all costs and expenses which may became payable to theHolder in accordance with Schedule "A" attached hereto). The Principal Amount outstanding at any time,and from time to time, and any overdue interest thereon, shall bear interest at a rate of 8% per annum,accrued daily. Interest on the Principal Elmount shall be calculated from the date of this Note andcompounded annually, and shall be calculated on the portion of the Principal Amount that remainsunpaid, both before and after maturity, default or judgment, and on any overdue interest, until fully paid,on the basis of the actual number of days for which the Principal Amount is outstanding computed on thebasis of a year of 365 days, or 366 days in the case of a leap year. Any accrued and unpaid interest on thePrincipal Amount owing to the Holder shall be due and payable, or otherwise converted, in accordancewith the terms, conditions and provisions of Schedule "A" attached hereto.
By its execution hereof, the Company and the Holder acknowledge and agree to the terms andconditions hereof, including the terms of Schedule "A" hereto.
IN WITNESS WHEREOF, the Company and the Holder have caused this Note to be executed as
of February 5, 2416.
I~l~'i~lil~7~lYllil~i~//YIa
Pei: ~-.""~~".~~''~- ..~,~
Name: ~~ ~ ~'~' µ~~L~Tide: Chief Executive O 1`icer. ~~;,;~' ~ sr~~---
GRENVILLE STRATEGIC ROYALTY CORP.
Per:Name:Title:
UNLESS PERMITTED UNDER SECURT.CIES LEGISLATION, THE HOLDER OF THIS SECURITY,AND ANY SECURITIES ISSUED ON CONVERSION HEREOF, MUST NOT TRADE THESECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER TIC LATER OF (~MARCH 23, 2016, AND (II) THE DATE THE ISSUER BECAME A REPORTIlVG ISSUER IN ANYPROVINCE OR TERRITORY. CLAUSE (T~ WII.,L NOT APPLY IF THE ISSUER BECOMES AREPORTING ISSiJER BY FILING A PROSFECTU5 AFTER MARCH 23, 2016 IN ANY OF THEPROVINCES OF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN, M[ANTi'OBA, ONTARIO,QUEBEC, NEW BRUNSWICK OR NOVA SCOTIA AND IS A REPORTING ISSUER IN AJURISDICTION OF CANADA AT THE TIME OF THE TRADE.
CONVERTIBLE PROMISSORY NOTE
BG FURNITCJRE LTD.
Incorporated under the laws of the Province of Ontario
PRINCII'AL AMOUNT: CDN$250,000(the "Principal Amount")
BG FURNITURE LTD. (the "Company"), for value received, acknowledges itself indebted andhereby promises to pay to Grenville Strategic Royalty Corp. (the "Holder") on the Maturity Date (ashereinafter defined) or such earlier date as the Principal Amount and all accrued but unpaid interestthereon may become due and payable (including in connection witht the occuzrence of an Event ofDefault), or otherwise converted intp Preferred Shares of the Company, subject to and in accordance withthe terms, conditions and provisions of Schedule "A" attached hereto and forming a part hereof, thePrincipal Amount and any accrued but unpaid interest thereon at the grincipal offices of the Holder in theCity of Toronto, Ontario, or such other place as may be designated by the Holder from time to time bynotice in writing to the Company (together with all costs and expenses which may become payable to theHolder in accordance with Schedule "A" attached hereto). The Principal Amount outstanding at any time,and from time to time, and any overdue interest thereon, shall bear interest at a rate of 8% per annum,accrued daily. Interest on the Principal Amount shall be calculated from the date of this Note aadcompounded annually, and shall be calculated on the portion of the Principal Amount that remainsunpaid, both before and after maturity, default or judgment, and on any overdue interest, until fully paid,on the basis of the actual number of days for which the Principal Amount is outstanding computed on thebasis of a year of 365 days, or 366 days in the case of a leap year. Any accrued and unpaid interest on thePrincipal Amount owing to the Holder shall be due and payable, or otherwise converted, in accordancewith the terms, conditions and provisions of Schedule "A" attached hereto.
By its execution hereof, the Company and the Holder acknowledge and agree to the terms andconditions hereof, including the terms of Schedule "A" hereto.
IN WITNESS WHEREOF, the Company and the Holder have caused this Note to be executed asof March 23, 2016.
BG FURNITURE LTD.
"" ~'l
PeName: ~'~ ~ ~~<:...,. - <. ~y .,,,'_~:Title: Chief Executive ~'fic~r
GRENVILLE STRATEGIC ROYALTY CORP.
Per:Name:Title:
'UNLESS PERMITTED UNDER SECURITIES LEGISLATION, TIC HOLDER OF THIS SECURITY,
AND ANY SECURITIES ISSUED ON CONVERSION HEREOF, MUST NOT TRADE THE
SECURITY BEFORE THE DATE T~-IAT IS 4 MONTHS AND A DAY AFTER. THE LATER OF (I)
JULY S, 2016, AND. (In THE DATE THE ISSUER BECAME A REPORTING ISSUER IN .ANY
PROVINCE OR TERRITORY: CLAUSE (In WII.,L NOT APPLY IF THE ISSUER BECOMES A
REPORTING ISSUER BY FILTI~TG A PR(OSPEGTUS AFTER JULX 5, 2016 IN ANY OF THE
PROVINCES OF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN, MANITOBA, ONTARIO,
QUEBEC, NEW BRUNSWICK OR _NOVA SCOTIA, AND IS A REPORTING ISSUER IN A
JURISDICTION OF CANADA AT THE TIME OF THE TRADE.
CONVERTIBLE PROMISSORY NOTE
BG FURI~TITURE` LTD.
Incorporated under the laws of the Province of Ontario
PRINCIPAL AMOUNT: CDN$45,000(the "Principal Amount")
BG FURNITURE LTD. (the "Company"), far value received; acknowledges itself indebted andhereby promises to pay to Grenville. Strategic Royalty Corp. (the "Holder") on the Maturity Date (ashereinafter defined) or such earlier :date as the Principal Amount and all accrued but unpaid interestthereon may become due and payable (including in connection witht the occurrence of an Event ofDefault), or otherwise.converted into Preferred Shares of the Company, subject to and in.accordance withthe terms, conditions and provisions of. Schedule "A" attached hereto and_ fornung a part hereof, thePrincipal Amount and any accrued but unpaid interest thereon at the principal offices of the Holder in the
_ City of Toronto, Ontario, or such other place , as may be .designated by the Holder from time to time by .notice in writing to the Company (together with all costs and expenses which may become. payable to theHolder in accordance with Schedule "A" attached hereto). The Principal. Amount outstanding at any time,and from time to time, and any overdue interest thereon, shall bear interest at a rate of 8% per annum;accrued daily: Interest on the Princip"al Amount shall be calculated from the date of this Note andcompounded annually, and shall be calculated on the :portion of the Principal Amount that remainsunpaid, both before and after maturity, default ar judgment, and on any overdue interest, until fully paid,on the basis of the actual. number of days for which the Frincipal Amount is outstanding. computed on the
basis of a year of 36S days, or 366 days in the case of. a leap year. Any accrued and unpaid interest on thePrincipal Amount owing. to the Holder shall be due and payable, or' otherwise converted, in accordance
with the terms, conditions and provisions of Schedule "A" attached hereto
By its execution hereof, the Company and the Holder acknowledge and agree to the terms andconditions hereof, including the terms of Schedule "A" hereto.
ii
IN WITNESS. WHEREOF, the Company and the Holder have caused this Note to be executed asof July 5, 2016.
BG FURNITURE LTD.
Per:Name: ~~;~
~ j..
,`-7.l~y"Title: Chief Executive fficer
GRENVILLE STRATEGIC ROYALTY CORP.
Per:Name:Title: