motion record - collins barrow · granting the dip charge ... manufacturer of high-quality...

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

•

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Court No. 35-2199056Estate No. 35-2199056



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 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;

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(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

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“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;

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(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;

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(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;

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(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

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(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)


Tel: (416) 864-9700

Fax: (416) 941-8852


mailto:[email protected]


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TO: COLLINS BARROW TORONTO LIMITED.

Collins Barrow Place

11 King Street West, Suite 700

Toronto, ON M5H 4C7

Daniel Wiesz


Brenda Wong


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


Jeremy Nemers


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


Tel: (905) 427-4886

Fax: (905) 427-5542

Lawyers for Platinum Investment Group Inc.






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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

[email protected]

AND TO: Bruce Community Futures Development Corporation

233 Broadway Street

Kincaroline, ON N2Z 2X9

Barb Fisher

[email protected]

AND TO: Xerox Canada Ltd.

33 Bloor Street E., 3rd Floor

Toronto, ON M4W 3H1

Angeline Chikhalina

[email protected]

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




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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


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

[email protected]

AND TO: 2544311 Ontario Limited

77 King Street West

Toronto, ON M5KL 1G8

Rong Jianjun

[email protected]

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)

mailto:

mailto:



SCHEDULE"A"




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.

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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;

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(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.

-~-

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"


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


1N THE MATTER OF THE PROPOSAL OF BG FURNITURELTD. OF THE TOWN OF WALKERTON IN THE PROVINCEOF ONTARIO

Court File No. •


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





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.

- 10-

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.

-12-

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.

-13-

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-


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


'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


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



Designation Offfoer Type Resident Canadian

DIRECTOR Y


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


Designation Officer Type

OFFICER VICE-PRESIDENT

BG FURNITURE LTD.

Address

302 WESTWOQD DRIVE

WALKERTONONTARIOCANADA NOG 2V0

Resident Canadian

V


Request ID; 019547383 Province of OntarioTransaction ID: 62626807 Ministry of Government ServicesCategory ID: UN/E


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.


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.


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}



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)



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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Scott Steu~~art7hibaudeats, a Commissioner, ei~„,Province of Ontario, #ar Nild Ontario PataiegalService, and for Gvnrk done withinyour pernrifled scope of practiceas a [icense~ paralepa{ in Ontario.r~~. w ~ .

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.


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


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~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.


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

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Motor Vehicle Year MakC Model V.I.N.Descriptiarr `~~~' ~~~~~

~~~~Geiyerai Cnllatarai ~ ~~- .LLT~~~~~wGenpral Co}lateral DesariptianDescription 2013 HI.A 380q BI.AgE, 5ERIAI. 147047

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Address C(ty province Postal Code .

https://www.personalproperty.goo. on. ca/ppsrweb/InterimController?page index=4&resNu... 11 /2/2016


( Search Conducted (

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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


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

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X X X X X

Motor Vehiole Year Make Model V.I.N,

Gonerai CollateralDescription

Genoral Gollaterel pescripkian

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CSRS.,.._ _.Address City Province Wostal Coda

4126 NORI.AND AVE BURNABY BG V5G 3S6

CONTINUED

Type of Search Business t~e6tor

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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.


75 RICiEOUT STREET, BOX 124Q WALKERTON bN NOG 2V0

Assignor Name Assignor Name

Secured Party Secured party, lien clabnant, assignee


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

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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


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

hops://www.personalproperCy. gov.on.ca/ppsrweb/InterimController?page index=4&resNu... 11 /2/2016

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


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

hops://www.personalproperty.gov.on.ca/ppsrweb/InteriinController?page_index=4&resNu... 11 /2/2016

General Ca~lateralDescription pRdVINCE OF ONTARIO


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



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

https://www.personalpraperty.gov.on.ca/ppsrweb/InterimCo~~.troller?page index=4&resNu... 11 /2/2016


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


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

https://www.personalproperty.gov.on.ca/ppsrweb/InteximController?page_index=4&resNu... 11 /2/2016


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

hops://www,personalprnperty.gov.on.calppsrweb/InterimController?page index=4&resNu... ] 1/2/2016


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


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


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

https://www.personalproperty.gov.on.ca/ppsrweb/InterimContraller?page_index=4&resNu... 11 /2/2016


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


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


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

hops://www.personalproperty.gov. on.ca/ppsrweb/IanterimController?page index=4&resNu... 11 /2/2016

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

https://www.personalproperty. gov.on.ca/ppsrweb/InteriinCantroller?page_index=4&resNu... 11 /212016


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

hops://www.personalproperty.gov.on.ca/ppsrweb/InterimCantroller?page index=4&resNu... 11 /2/2016


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.


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


Secured Party Secured party, Ilen claimant, essfgneo

Address City Prgvince Pastai Code

Inventory Equipment Accounts Other Amount

https://www.persanalproperty.gov.on.ca/ppsrweb/InterimContrallex?page_index=4&resNu.,. 11 /2/2016


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


Secured 1'arly Secured party, Ifen claimant, assignee

https: //www.personalproperty. gov. on. ca/ppsrweb/InterimController?page_index=4&resNu... 11 /2/2016


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.

https:l/www.personalproperty.gov.on.ca/ppsrweb/InterimController?page index=4&resNu... 11 /2/2016


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


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._._.. _...._..._.._._.....,,.. ~.___._._.


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


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 --- ------_ __~.~..__ _._____.._

hops://www.personalproperty. gov.on.ca/ppsrweb/InterimController?page_index=4&resNu... 11 /2/2016

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

https://www.personalproperty. gov.on.calppsrweb/InterimController?page index=4&resNu... 11 /2/2016

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.

~~+,w i i{•l~MI~:M~f ~~

r ~~ ~~`,,

UCr Purni[urc 1'romissary TJotr.da:

~.. ~~ ~ ~ ~ i 'r~~ ~== i i ~ ~~~` ~ ~ C;~ M

~, `~'~f is i ~a =~ ~~ ~l~i £~ (~t ~ [ E-~ ~ ~t _i

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)

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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)

4

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


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


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


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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:,I '',

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.


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~~---


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.


BG FURNITCJRE LTD.


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.


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


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.


BG FURI~TITURE` LTD.


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


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


Per:Name:Title: