LEGAL_1:33424802.2

Court File No. CV-14-10672-00CL

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

BETWEEN:

HERIDGE S.A.R.L

Applicant

- and -

GREAT LAKES BIODIESEL INC., EINER CANADA INC. and BIOVERSEL TRADING INC.

Respondents

IN THE MATTER OF AN APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUTPCY AND

INSOLVENCY ACT, R.S.C. 1985 c. B-3 AND SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990, c. 43

SECOND REPORT TO THE COURT SUBMITTED BY KPMG INC.,

IN ITS CAPACITY AS RECEIVER OF

GREAT LAKES BIODIESEL INC., EINER CANADA INC. AND

BIOVERSEL TRADING INC.

January 21, 2014

LEGAL_1:33424802.2

Table of Contents

Page

1.0  INTRODUCTION, TERMS OF REFERENCE AND PURPOSE .................................................. 2 1.1  Introduction ......................................................................................................................... 2 

2.0  SALE PROCESS ............................................................................................................................. 6 2.1  Sale Process Overview ........................................................................................................ 6 2.2  Sale Process Results ............................................................................................................ 8 

3.0  STALKING HORSE APA ............................................................................................................ 10 3.1  The Stalking Horse Asset Purchase Agreement ............................................................... 10 3.2  Appraised Value of the Debtors’ Assets ........................................................................... 11 3.3  Receiver’s Observations in Respect of the Stalking Horse APA ...................................... 13 3.4  Stalking Horse APA Transaction Recommendation ......................................................... 14 

4.0  BIOVERSEL TRADING QST LIABILITY ................................................................................. 18 4.1  The QST Liability ............................................................................................................. 18 4.2  The QST Liability and the Receiver ................................................................................. 19 

5.0  RECEIVER’S ACTIVITIES ......................................................................................................... 22 5.1  Introduction ....................................................................................................................... 22 5.2  Management, Employees and Contractors ....................................................................... 22 5.3  Insurance ........................................................................................................................... 22 5.4  Cash in Bioversel Trading’s Bank Accounts .................................................................... 22 

6.0  ANTICIPATED NEXT STEPS IN THESE PROCEEDINGS ...................................................... 24 

7.0  RECEIPTS, DISBURSEMENTS AND PROJECTED CASH FLOWS ....................................... 25 

8.0  PROFESSIONAL FEES ................................................................................................................ 28 

9.0  RECOMMENDATIONS ............................................................................................................... 30 

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Listing of Appendices

Appendix A - Receiver’s First Report to Court dated November 19, 2014 (without appendices)

Appendix B - Bidding Procedure Order (without Stalking Horse APA) and endorsement of Justice Penny dated November 25, 2014

Appendix C - Advertisements placed by the Receiver in the Globe and Mail and on Biodiesel Magazine’s website

Appendix D - Auction Proposal from DSL Industrial Ltd.

Appendix E - Stalking Horse APA

Appendix F - Interim Receiver’s Statement of Receipts and Disbursements

Appendix G - Receiver’s Statement of Receipts and Disbursements

Appendix H - Receiver’s Projected Receipts and Disbursements through to February 28, 2015

Appendix I - Receiver’s Fee Affidavit

Appendix J - Osler’s Fee Affidavit

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1.0 INTRODUCTION, TERMS OF REFERENCE AND PURPOSE

1.1 Introduction

1.1.1 Great Lakes Biodiesel Inc. (“GLB”) is incorporated under the laws of the province of

Ontario. GLB’s principal asset is a biodiesel refinery plant located in Welland, Ontario

(the “Biodiesel Plant” or the “Facility”). Einer Canada Inc. (“Einer Canada”) is

incorporated under the laws of the province of Ontario and is a holding company that owns

100% of the shares of Bioversel Trading Inc. (“Bioversel Trading”, and together with

GLB and Einer Canada, the “Debtors”), which also incorporated under the laws of the

province of Ontario.

1.1.2 Background information summarizing the Debtors’ proceedings to November 19, 2014 are

included in the Receiver’s First Report which is attached, without appendices, as Appendix

“A”. Terms not defined herein have their meanings as defined in the Receiver’s First

Report.

1.1.3 On November 24, 2014, the Court granted an Order (the “Bidding Procedure Order”):

a) Authorizing and directing the Receiver to execute the agreement of purchase and

sale of substantially all of the assets of the Debtors (the “Stalking Horse Assets”)

between Heridge (the “Stalking Horse Bidder”) and the Receiver dated November

19, 2014 (the “Stalking Horse APA”). The Stalking Horse APA set a minimum

floor price in respect of a competitive marketing and sale process for the Stalking

Horse Assets;

b) Approving the Bidding Procedures (including the marketing and sale process to

be undertaken by the Receiver to solicit bids for the Stalking Horse Assets

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described therein) and authorizing and directing the Receiver to carry out the

activities prescribed by the Bidding Procedures;

c) Deeming the Stalking Horse APA a Qualified Bid (as defined in the Bidding

Procedures) and accepted solely for the purposes of the Stalking Horse Bidder’s

right to participate in the Auction, if any, in accordance with the Bidding

Procedures; and

d) Increasing the aggregate amount that the Receiver is empowered to borrow from

$1,500,000 to $3,500,000.

1.1.4 A copy of the Bidding Procedure Order is attached hereto as Appendix “B”.

1.1.5 This is the Receiver’s second report (the “Second Report”) to the Court and is filed to:

a) Summarize the results of the marketing and sale process (the “Sale Process”)

conducted by the Receiver in accordance with the Bidding Procedure Order to

solicit offers for the acquisition of the Debtor’s assets;

b) Set out the Receiver’s comments and recommendation for the approval by the Court

of the Stalking Horse APA;

c) Seek an order of the Court declaring that the Receiver shall have no liability under

the Tax Administration Act (Quebec) and the Act respecting Quebec Sales Tax

(Quebec);

d) Report on KPMG’s activities in its capacity as Receiver since it filed the Receiver’s

First Report;

e) Detail the anticipated next steps of KPMG in these proceedings;

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f) Seek the approval by the Court of this Second Report as well as the fees and

disbursements of KPMG, in its capacity as Court Officer, Interim Receiver,

Receiver of the Debtors and its legal counsel, Osler Hoskin & Harcourt LLP

(“Osler”), from August 22 to December 31, 2014.

1.1.6 In preparing this Second Report, the Receiver has been provided with, and has relied upon,

unaudited financial information, books and records and financial information (collectively,

the “Information”) prepared by the Debtors and/or their representatives, and discussions

with the Debtors’ management and/or representatives. The Receiver has reviewed the

Information for reasonableness, internal consistency and use in the context in which it was

provided and in consideration of the nature of evidence provided to this Honourable Court,

in relation to the relief being sought herein. However, the Receiver has not audited or

otherwise attempted to verify the accuracy or completeness of the Information in a manner

that would wholly or partially comply with Canadian Auditing Standards (“CAS”)

pursuant to the Chartered Professional Accountants Canada Handbook and, accordingly,

the Receiver expresses no opinion or other form of assurance contemplated under the CAS

in respect of the Information.

1.1.7 Some of the information referred to in this Second Report consists of forecasts and

projections. An examination or review of the financial forecasts and projections, as

outlined in the Chartered Professional Accountants Canada Handbook has not been

performed. Future oriented financial information referred to in this report was prepared

based on the Debtors’ management and/or representatives’ estimates and assumptions.

Readers are cautioned that since projections are based upon assumptions about future

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events and conditions that are not ascertainable, the actual results will vary from the

projections, even if the assumptions materialize, and the variations could be significant.

1.1.8 The information contained in this Second Report is not intended to be relied upon by any

prospective purchaser or investor in any transaction with the Receiver.

1.1.9 All references to monetary amounts in this Second Report are in Canadian dollars unless

otherwise specified.

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2.0 SALE PROCESS

2.1 Sale Process Overview

2.1.1 On November 24, 2014, the Receiver brought a motion to, among other things, approve

the Bidding Procedures (including the Sale Process to be undertaken by the Receiver to

solicit bids for the Stalking Horse Assets) and authorize and direct the Receiver to carry

out the activities described in the Bidding Procedures.

2.1.2 Immediately following the granting of the Bidding Procedure Order, the Receiver

commenced the Sale Process, by carrying out the following activities;

a) Posting the Bidding Procedures, Stalking Horse APA, Confidentiality Agreement

(“CA”) and Teaser Letter on its website;

b) Sending the Teaser Letter and CA to 49 prospective purchasers. The Receiver’s

initial prospective buyers list included 48 strategic parties and eight financial

parties and was developed by the Receiver with input from KPMG’s Corporate

Finance practice and certain representatives of the Debtors. All of these

prospective purchasers were contacted by the Receiver, and the Teaser Letter and

CA were sent to 42 of the parties on the prospective buyers list that expressed an

interest in receiving the sale materials. The Receiver also sent the Teaser Letter

and Confidentiality Agreement to seven parties that had contacted the Receiver on

an unsolicited basis prior to, or during the Sale Process.

c) Placing advertisements regarding the Sale Process in the national edition of the

Globe and Mail on December 1, 2014. The Receiver also placed advertisements

on the website of Biodiesel Magazine, a popular biodiesel industry publication, on

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November 26 and December 3 and 10, 2014. Copies of these advertisements are

attached hereto as Appendix “C”;

d) Requiring each interested party to execute a CA. Following execution of the CA,

interested parties were provided with a copy of a confidential information

memorandum (“CIM”) and access to an online data room established and

maintained by the Receiver. As the Biodiesel Plant had only operated on a start-

up basis, the CIM contained information primarily related to the facility’s

capacity and operating attributes and general biodiesel industry information. Nine

parties (including the Stalking Horse Bidder) returned executed CAs;

e) Arranging tours of the Biodiesel Plant for two interested parties, one of which

included the Stalking Horse Bidder who toured the Biodiesel Plant on two

separate occasions;

f) Arranging tours of the Biodiesel Plant for two auctioneer firms. Only one

auctioneer firm submitted to the Receiver a Net Minimum Guarantee (“NMG”)

auction proposal for the Biodiesel Plant assets (the “NMG Offer”). The NMG

Offer was for all of the Debtors’ equipment (i.e. excluding real property) for a

purchase price of $425,000 plus 93% of all gross auction proceeds in excess of

$480,000. The NMG Offer attributes considerably less value to the Biodiesel

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Plant than is attributed by the Stalking Horse Bidder under the Stalking Horse

APA. A copy of this auction proposal is attached hereto at Appendix “D”.

g) Responding to calls with prospective purchasers wherein the Receiver explained

the Bidding Procedures and Stalking Horse APA; and

h) Contacting all prospective bidders that returned executed CAs prior to the bid

deadline to remind them of the deadline.

2.1.3 The bid deadline to submit offers was 10:00 am, Toronto time on January 7, 2015 (the “Bid

Deadline”).

2.2 Sale Process Results

2.2.1 The sale process results are summarized as follows:

a) Nine parties executed the CA and were provided with the CIM and access to the

Receiver’s online data room;

b) Of the nine parties that executed CAs, two parties, in addition to the Stalking Horse

Bidder, accessed the online data room. Other than the Stalking Horse Bidder and

the two auctioneers, one party attended at the Biodiesel Plant for a tour; and

c) Other than the NMG Offer, no offers were submitted to the Receiver on or prior to

the Bid Deadline. As such, in accordance with the Bidding Procedures, the

Receiver has determined that the Stalking Horse APA is the Successful Bid for the

purchase of the Stalking Horse Assets.

2.2.2 On January 13, 2015, the Receiver received an email from J.R. (James) Clifford

(“Clifford”), the President and CEO of Raw Energy Resources Corp. (“Raw Energy”)

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and other entities, advising that Raw Energy had submitted a bid for the assets of the

Debtors on January 5, 2015 and did not receive a response from the Receiver. To the

Receiver’s knowledge, the Receiver did not receive an offer from Clifford or Raw Energy

on January 5, 2015, nor did the Receiver have any contact with this bidder at any point in

the Sale Process prior to receiving its email on January 13, 2015. The Receiver attempted

to contact Clifford on January 14, 2015 by phone and email. The Receiver exchanged

electronic mail correspondence with Clifford on January 15, 2015 and ultimately advised

that the Sale Process was closed. Clifford did not respond. The Receiver has had no contact

with this prospective bidder since January 15, 2015. The Receiver will be serving Clifford

and Raw Energy with the Receiver’s motion materials.

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3.0 STALKING HORSE APA

3.1 The Stalking Horse Asset Purchase Agreement

3.1.1 As noted in the First Report, the Receiver, Heridge, and their respective counsel negotiated

the terms and provisions of the Stalking Horse APA, a summary of which is below. All

terms not otherwise defined herein have their meanings defined in the Stalking Horse APA,

a copy of which is attached hereto as Appendix “E”.

Transaction Items Terms

Assets Acquired Substantially all of the assets of the Debtors divided into three categories:

Purchased Land;

Purchased Equipment; and

Remaining Assets

Consideration and Purchase Price allocation

Credit bid of the Stalking Horse Bidder’s debt (approximately $17.2 million) and the Purchase Price will be satisfied as follows:

Purchased Land: $1.0 million of the Outstanding Receivership Debt;

Purchased Equipment: US$11.5 million (i.e. principal amount outstanding under the Debenture) plus $1.185 million (i.e. enforcement costs permitted under the Debenture, approximately $14.714 million in total); and

Remaining Assets: the lesser of $1.5 million and the balance of the Receivership Debt outstanding at the Bidding Deadline net of the credit bid amount for the Purchased Land. As of the Bidding Deadline the Receiver had borrowed $3.5 million from Heridge. Accordingly, the Purchase Price for the Remaining Assets is $1.5 million.

Assumption of Liabilities

Heridge will assume certain liabilities, including liabilities arising from and after the Closing time in respect of the Stalking Horse Assets.

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Transaction Items Terms

Conditions Customary insolvency transaction conditions such as that the Purchased Assets will be acquired on an “as is, where is” basis, and:

Heridge being selected as the “Successful Bid” in accordance with the Bidding Procedures discussed below. This condition has been met;

A completed Phase 1 environmental site assessment obtained and the Stalking Horse Bidder satisfied with such Phase 1 assessment and any remedial work that is required to be completed in connection therewith. The Phase 1 report was provided to the Receiver on January 9, 2015 and is being reviewed by Heridge; and

The Purchaser confirming that title to the Land is good and marketable and insurable and free from all Encumbrances except for Permitted Encumbrances, and the Purchaser shall be otherwise satisfied with its investigation of title to the Land and with regard to work orders and notices of deficiency or non-compliance. The Purchaser is working to clear this condition prior to the closing date.

Closing Date As soon as practicable following satisfaction or waiver of all conditions to closing.

Assuming that the Court grants the proposed order approving the Stalking Horse APA and that no appeal filed in respect of such order, the Receiver anticipates that the transaction will close in advance of Termination Date (being February 27, 2015).

3.2 Appraised Value of the Debtors’ Assets

3.2.1 The Receiver obtained an appraisal of the Debtors’ assets from American Appraisal

Canada, Inc. (the “Appraiser”) prior to launching the Sale Process. A copy of the appraisal

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will be filed with the Court in a confidential appendix. The Appraiser’s estimate of the

value of the Biodiesel Plant as at October 31, 2014 is summarized the table below:

Property

Valuation OLV(1) / MV(2) FLV(3) / FSV(4)

Purchased Land 560,000 475,000 Purchased Equipment and Remaining Assets

$3,210,000 $1,725,000

Total $3,770,000 $2,200,000

(1)OLV = Orderly Liquidation Value – value of personal property/equipment if exposed for six months and assuming the seller is compelled to sell (2)MV = Market Value – value of real property if exposed for 12 months and assuming the price is not affected by undue stimulus (3)FLV = Forced Liquidation Value – value of personal property/equipment if sold as quickly as possible, such as at an auction, over a one month period. (4)FSV = Forced Sale Value – value of real property if exposed for six months and assuming a compulsion to sell. Synonymous with “distress sale” or “power of sale” transactions.

3.2.2 As noted above, the Receiver also received an auction proposal, the NMG Offer, which

provides for a NMG of $425,000 for all of the Biodiesel Plant equipment.

3.2.3 The combined value attributed to the Debtors’ assets pursuant to the Stalking Horse APA

is in excess of $17,200,000 as shown below:

Asset Category Stalking Horse APA Value

Canadian $ Value

Purchased Land $1,000,000 $1,000,000Purchased Equipment(1) US$11,500,000 +

$1,185,000$14,714,000

Remaining Assets(2) $1,500,000 $1,500,000Total $17,214,000

(1)US dollar amounts converted at CAD/USD = 0.85/1. US$11.5 million represents the amount due under the Debenture and the balance represents the costs incurred by Heridge in enforcing rights under the debenture. The Debenture was in US dollars and the enforcement costs were incurred in Canadian dollars. (2)Assumes balance of Receivership Debt is greater than $1,500,000

3.2.4 Accordingly, the Stalking Horse APA is well in excess of the value ascribed in the NMG

Offer as well as the appraisal received by the Receiver for the Stalking Horse Assets.

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3.3 Receiver’s Observations in Respect of the Stalking Horse APA

3.3.1 As highlighted to the Court in the First Report, if the transaction outlined in the Stalking

Horse APA is approved, the effect on other creditors of each of the Debtor entities will be

as follows:

a) There will be no cash consideration provided for the Purchased Land owned by

GLB resulting in no distribution to any lien claimants or other creditors that may

have perfected liens on the Purchased Land owned by GLB or any secured or

unsecured creditors of GLB. The Receiver notes that the construction lien claims

of Quantum Murray and Conestogo Electrical registered against the Purchased

Land were registered prior to the date that the Debenture, granted to the Stalking

Horse Bidder by GLB, was registered against the Purchased Land;

b) There will be no cash consideration provided for the Purchased Equipment owned

by GLB resulting in no distribution to any creditors of GLB, secured or otherwise;

and

c) There will be no cash consideration provided for the Remaining Assets, resulting

in the Stalking Horse Bidder using the Receivership Debt, and its Court approved

priority, to acquire the Bioversel Trading Cash and any other assets of the Debtors.

As noted in the First Report, the Stalking Horse Bidder, prior to the commencement

of these proceedings did not have security over any assets of Einer Canada or

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Bioversel Trading, including the Bioversel Trading Cash and only obtained security

through the advancement of the Receivership Debt.

As noted below, the secured claim of Meridian against Einer Canada was satisfied

by the Bioversel Trading Cash. Accordingly, the Stalking Horse Bidder is bidding

up to $1.5 million of Receivership Debt for the Bioversel Trading Cash, which

balance is approximately $1.1 million. As a result, after satisfying Meridian’s

claim, there will be no distributions available to any creditors of Bioversel Trading,

secured or otherwise.

3.3.2 The Receiver notes that all known parties that may be affected by the Bidding Procedure

Order were properly served with the Receiver’s First Report and related motion materials.

Counsel to Quantum Murray, one of the construction lien claimants with a registered lien

on the Purchased Land, attended the motion. The motion to approve the Bidding

Procedures and the Stalking Horse APA was uncontested and there was no appeal of such

Order.

3.4 Stalking Horse APA Transaction Recommendation

3.4.1 The Receiver makes the following observations with respect to the Sale Process and

Stalking Horse APA:

a) In the Receiver’s view, the Sale Process was commercially reasonable, transparent

and carried out in accordance with the Bidding Procedure Order;

b) In the Receiver’s view, the 45-day Sale Process was of sufficient length to allow

the market to be appropriately canvassed and for prospective purchasers to evaluate

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the opportunity and perform diligence. Given the Biodiesel Plant’s “idled” state

and the limited funding available to the Receiver support a longer sale process, the

45-day sale process was appropriate in the circumstances. No interested party

indicated to the Receiver that the time to submit a bid was insufficient;

c) The Debtors’ assets were exposed to a broad universe of potential purchasers,

including 48 strategic parties, eight financial parties and seven unsolicited parties.

In addition, the Receiver advertised the assets for sale in the national edition of the

Globe and Mail and on the website of Biodiesel Magazine, a popular biodiesel

industry publication;

d) The Stalking Horse APA was posted on the Receiver’s website and available

throughout the Sale Process for prospective purchasers to review and consider in

their assessment of the Debtors’ assets;

e) The Receiver followed the Sale Process as outlined in the Bidding Procedures and

was fair to all persons who had indicated an interest in bidding on the Stalking

Horse Assets. The Receiver has properly carried out the mandate it was given;

f) The Stalking Horse APA was negotiated by the Receiver in good faith and the

Receiver is of the belief that the purchase price for the Stalking Horse Assets

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represents the best price that could be obtained for the Stalking Horse Assets in

light of the results of the Sale Process;

g) The credit bid of the Receivership Debt by the Stalking Horse Bidder in the amount

of $1,000,000 over the Purchased Land represents a bid that is higher than the

appraised value on the Purchased Land;

h) The credit bid by the Stalking Horse Bidder for the Purchased Equipment in the

amount of $11,500,000, representing substantially all of the debt owing by GLB to

the Stalking Horse Bidder under the Debenture is a bid that is higher than the

appraised value for the Purchased Equipment;

i) In respect of the Remaining Asset, the credit bid by the Stalking Horse Bidder of

the Receivership Debt in the amount of $1,500,000 is subject to a court ordered

charge. As at January 13, 2015, the Receiver had borrowed $3.5 million from the

Stalking Horse Bidder to fund these receivership proceedings, the full amount

permitted under the terms of the Receivership Order, as amended by the Bidding

Procedures Order;

j) The value attributed to the Stalking Horse Assets in the Stalking Horse APA, both

to each asset category and in the aggregate, is materially greater than the appraised

value of the Stalking Horse Assets as well as the NMG Offer; and

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k) The Stalking Horse APA transaction is the best and only going concern solution

available in the circumstances.

3.4.2 Based on the foregoing, the Receiver respectfully recommends that this Court grant the

proposed Sale Approval and Vesting Order.

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4.0 BIOVERSEL TRADING QST LIABILITY

4.1 The QST Liability

4.1.1 Bioversel Trading is in receipt of a draft of assessment from Revenue Quebec advising that

Bioversel Trading has a pre-filing Quebec sales tax (“QST”) liability (together with all

penalties in addition thereto and interest accrued thereon, the “QSTA Liability”) of

approximately $1,030,227 under the terms of the Act respecting Quebec sales tax (the

“QSTA”). The liability apparently arose as a result of Bioversel Trading having obtained

a net tax refund under the QSTA that it was not entitled to as well as failing to remit QST

collected on biodiesel sales.

4.1.2 The assets of Bioversel Trading principally consist of the BTI Cash as well as other sundry

assets. All of the assets of Bioversel Trading are included under the category of “Remaining

Assets” being purchased by the Stalking Horse Bidder subject to approval by the Court.

4.1.3 Section 32 of the Quebec Tax Administration Act (“TAA”) provides that where the

Ministere de Revenue Quebec (“MRQ”), by error or on the basis of inaccurate or

incomplete information, has refunded to a taxpayer an amount greater than that which

should have been refunded, the MRQ may, within four years following the day on which

the MRQ refunded such excess amount, assess the taxpayer for that amount.

4.1.4 Under the terms of the QSTA and the TAA, the MRQ has no statutory priority to recover

the QSTA Liability from Bioversel Trading relative to other secured creditors of Bioversel

Trading.

4.1.5 In addition to the QSTA and the TAA, under section 2650 of the Quebec Civil Code, claims

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of the Quebec government for amounts due under fiscal laws (including the QSTA and the

TAA) are prior claims which are preferred over other creditors. Pursuant to section 2653

of the Quebec Civil Code, prior claims of the government of Quebec for sums due under

fiscal laws may be executed on moveable property. In this case however, the validity,

perfection and priority of a security interest are governed by the law of jurisdiction where

the collateral is situated. In these circumstances, the assets of Bioversel Trading are situated

in Ontario and therefore the Personal Property Security Act (Ontario) would apply. While

liens arising by operation of law are carved out of the PPSA (Ontario), these are only liens

arising from the exercise of an Ontario provincial statutory right or directly from an Ontario

provincial statute. Accordingly, the priority afforded to the government of Quebec in the

Quebec Civil Code for amounts due under the QSTA or the TAA would not be applicable

against assets of Bioversel Trading located in Ontario.

4.2 The QST Liability and the Receiver

4.2.1 Section 14 of the TAA provides for a derivative tax liability that may be imposed on a legal

representative of a taxpayer in respect of the taxpayer’s liability under any Quebec fiscal

law, including for the QSTA Liability (a “Tax Amount”). Court-appointed receivers are

captured by the definition of legal representative. Trustees in bankruptcy are not captured

by this definition.

4.2.2 In general terms, section 14 of the TAA provides that before distributing property of the

taxpayer under its control, any person, with the exception of a trustee in bankruptcy, who

winds up, administers or controls, among other things, the property or business of a

taxpayer on behalf of the taxpayer or a creditor of the taxpayer, shall give the MRQ prior

notice of the distribution. In considering the application of section 14 of the TAA and its

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predecessor provision, the Quebec courts have interpreted the word “distribution” broadly.

Accordingly, a “distribution” could include, as in these circumstances, an assignment to a

secured creditor of substantially all of the assets of a taxpayer.

4.2.3 In addition, under section 14 of the TAA, a legal representative may not make such

distribution unless it has obtained a certificate (a “Section 14 Certificate”) from the MRQ

establishing that either: (a) no Tax Amount is owing; or (b) that a creditor has priority of

rank over the claim of the MRQ, in which case the certificate shall indicate: (i) the name

of the creditor; (ii) the amount of its claim, and (iii) that the distribution may be made only

to that creditor, up to the amount of the claim.

4.2.4 Finally, section 14 of the TAA provides that every distribution of property made without

obtaining a Section 14 Certificate shall make the offender personally liable for the tax

amounts owing by the taxpayer up to the value of the property distributed.

4.2.5 Notwithstanding the language in the TAA however, MRQ interpretation bulletin LAF. 14-

1/R#: “Distribution of Property – General Principles”, dated June 28, 2013 (the

“Bulletin”), provides that there will be no liability to a person who distributes property

provided that the property is being distributed to one or more creditors having a priority

over the tax claim of the Quebec government or its governmental bodies.

4.2.6 In this circumstance, the sale or “distribution” of the Remaining Assets is being made to

the Stalking Horse Bidder in consideration for the credit bid by the Stalking Horse Bidder

of $1,500,000 of the Receivership Debt. The Receivership Debt represents all amounts

borrowed by KPMG from the Stalking Horse Bidder to fund these receivership

proceedings, which funds are secured by a first priority court-ordered charge over all of the

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assets of the Debtors, including Bioversel Trading, pursuant to the terms of the

Receivership Order and the Bidding Procedures Order. Accordingly, the distribution of the

Remaining Assets on account of the Receivership Debt is a distribution to a creditor having

priority rank over the tax claim of the Quebec government.

4.2.7 As the sale or distribution by the Receiver of the Remaining Assets to the Stalking Horse

Bidder represents a distribution to a creditor having priority rank over the tax claim of the

Quebec government, the Receiver should not be liable for the QSTA Liability or any other

pre-filing QST tax liabilities of Bioversel Trading.

4.2.8 In addition, pursuant to the Receivership Order, the Receiver shall incur no liability or

obligation as a result of its appointment or the carrying out of the provisions of the

Receivership Order, save and except for any gross negligence or wilful misconduct.

4.2.9 The Receiver intends to seek relief from the Court declaring that the Receiver shall have

no liability under the TAA or QSTA for any tax liabilities of Bioversel Trading, including

for the QSTA Liability. The Receiver has contacted the MRQ to explain the relief being

sought by the Receiver and will be serving the MRQ with the motion materials.

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5.0 RECEIVER’S ACTIVITIES

5.1 Introduction

5.1.1 The following sets out the Receiver’s primary activities to date since the issuance of the

Receiver’s First Report.

5.2 Management, Employees and Contractors

5.2.1 As of the date hereof, 16 employees continue to be employed by the Debtors at the

Biodiesel Plant. These employees are trained and qualified in the plant’s operations and

are necessary to ensure that the Debtors meet the minimum number of employees required

in order to safely maintain the Biodiesel Plant in its “idled” state.

5.2.2 The former CFO of GLB has been retained on an as-needed basis to assist the Receiver

with finalizing the books and records of the Debtors.

5.3 Insurance

5.3.1 As noted in the First Report, the Interim Receiver arranged for an extension to GLB’s

comprehensive business and liability insurance coverage at the Biodiesel Plant through to

January 10, 2015. The Receiver obtained a second 90-day extension of this coverage

through to April 10, 2015 on substantially the same terms. The policy is non-refundable

but is transferrable to a purchaser.

5.4 Cash in Bioversel Trading’s Bank Accounts

5.4.1 As noted in the First Report, Bioversel Trading had a bank account with Meridian Credit

Union Limited (“Meridian”), which account had a balance of approximately $2.1 million

Page | 23

(the “Bioversel Trading Cash”) resulting primarily from the receipt of corporate income

tax refunds during the Interim Receivership Period. Meridian was holding these funds in

a frozen account in the name of Bioversel Trading pending confirmation from the Receiver

that Meridian could set off amounts owed to it on a secured basis by Einer Canada and

guaranteed by Bioversel Trading, as described below.

5.4.2 Pursuant to a credit agreement dated May 30, 2012 (the “Credit Agreement”) between

Einer Canada and Meridian, Einer Canada owed approximately $960,000 to Meridian as

at the date of the Receivership (with interest and enforcement costs, approximately

$997,000 as at December 10, 2014). Einer Canada’s obligations under the Credit

Agreement were secured over all of the Property of Einer Canada and were guaranteed on

a secured basis over the GLB Assets and all of the Property of Bioversel Trading.

5.4.3 Osler conducted a review of the security granted by the Debtors in favour of Meridian and

advised the Receiver that Osler is of the view that Meridian had good, valid, and

enforceable security over the Property of the Debtors.

5.4.4 Accordingly, on December 10, 2014, the Receiver advised Meridian that it could satisfy

Einer Canada’s obligation to Meridian from the funds in Bioversel Trading’s account and

remit the net amount to the Receiver.

5.4.5 On December 11, 2014 the Receiver received approximately $1.1 million (i.e. $2.1 million

less $997,000) from Meridian, which funds have been held in the Receiver’s Bioversel

Trading bank account as such amounts form part of the Stalking Horse Assets.

Page | 24

6.0 ANTICIPATED NEXT STEPS IN THESE PROCEEDINGS

6.1.1 Subject to Court approval of the Stalking Horse APA transaction and other relief sought in

this motion, the Receiver anticipates the next steps in these proceedings to include:

a) Subject to the approval of this Honourable Court, working with the Stalking Horse

Bidder and its legal counsel to close the Stalking Horse APA transaction, including

clearing the conditions and finalizing all of the documents and agreements

contemplated in the Stalking Horse APA;

b) Terminating the Biodiesel Plant employees upon closing of the Stalking Horse

APA transaction;

c) Filing final tax returns and resolving all tax matters, including the Bioversel

Trading QST issue described above in respect of the Debtors; and

d) Arranging for post receivership period tax returns to be filed and settling any post

receivership tax obligations or refunds, if any.

Page | 25

7.0 RECEIPTS, DISBURSEMENTS AND PROJECTED CASH FLOWS

7.1 Summary of Total Receipts and Disbursements

7.2 The following table represents a high level summary of total receipts and disbursements

for the period August 27 to December 31, 2014 and projected disbursements through to

February 28, 2015.

7.3 The Receiver is authorized to borrow up to $3.5 million, which amount Heridge has

advanced. Accordingly, the Receiver has sufficient cash on hand to fund the projected

shortfall.

7.4 Interim Receivership Period

7.5 Attached as Appendix “F” is a summary of the Interim Receiver’s statement of receipts

and disbursements for the period August 27 to October 9, 2014.

7.6 The Interim Receiver incurred total costs, net of receipts, of approximately $1,097,252 for

expenses which were primarily incurred in the course of normal operations of the business.

Disbursements were made primarily in respect of salaries, wages and benefits, employee

Interim Receivership Period

Receivership Period

Projected

Aug 27 to Oct 9, 2014

Oct 10 to Jan 7, 2015

Jan 8, 2015 to Feb 28, 2015

Receipts 18,071 14,350 - 32,421 Disbursements - Actual (756,217) (588,397) - (1,344,614) Disbursements - Accrued (574,604) (574,604) Professional Fees - Actual (359,106) (184,861) - (543,967) Professional Fees - Accrued (348,204) (348,204) Net Disbursements Over Receipts (1,097,252) (758,907) (922,808) (2,778,968) Borrowings 1,097,252 758,907 643,840 2,500,000 Net - - (278,968) (278,968)

Total

Page | 26

contractor fees, rent and lease payments and ongoing repairs and maintenance to the

Biodiesel Plant. Receipts consisted of cash on deposit in the Debtors’ accounts when the

Interim Receiver was appointed.

7.7 The Interim Receiver’s disbursements were funded with Receivership Debt advanced from

Heridge pursuant to Receiver Certificates.

7.8 Receivership Period

7.9 Attached as Appendix “G” is a summary of the Receiver’s statement of receipts and

disbursements for the period October 10, 2014 to January 7, 2015 (the “Receiver’s R&D”).

The Receiver made disbursements in excess of receipts, of approximately $758,907 for

expenses that were primarily incurred in the course of preserving the Biodiesel Plant in an

idled state: wages, employee contractor fees, and paying the insurance premium for the

extended 180 day coverage arranged by the Receiver. These disbursements exclude

professional fees incurred by the Receiver and its counsel for the period November 1 to

December 31, 2014, which as described below total approximately $135,000 and $63,000,

respectively. Once such amounts are included in the Receiver’s R&D, the total

disbursements in excess of receipts through to January 7, 2015 are approximately

$956,907.

7.10 The Receiver’s disbursements were funded with Receivership Debt advanced from

Heridge pursuant to Receiver’s Certificates. Following the issuance of the Bidding

Page | 27

Procedure Order, Heridge advanced $2.0 million to the Receiver, bringing the total

incurred Receivership Debt to $3.5 million.

7.11 Anticipated Funding Requirements

7.12 Attached as Appendix “H” is a summary of the combined receipts and disbursements of

the Interim Receiver and Receiver, as well as projected receipts and disbursements through

to February 28, 2015. This projection period coincides with the Receiver’s Sale Process

and the proposed date to close the Stalking Horse APA transaction, which closing is

anticipated to be on or about February 21, 2015, assuming this Court grants the proposed

Sale Approval and Vesting Order and there is no appeal of this order.

7.13 The Receiver projects that the total disbursements (net of nominal asset realizations) of the

Interim Receiver and Receiver for the period August 27, 2014 to February 28, 2015 will

be approximately $2.8 million (including the professional fees and disbursements of the

Information Officer, Interim Receiver, Receiver and their counsel).

7.14 As the Debtors are not operating, there are no sales or receivable collections to fund the

Receivership, the Receiver’s disbursements are funded with borrowings from Heridge. As

noted above, the Interim Receiver and Receiver have, to date, borrowed the entire $3.5

million authorized under the Receivership Order and Bidding Procedure Order. The

Receiver anticipates that it has sufficient funding to permit it to satisfy anticipated expenses

through to the closing of the Stalking Horse APA transaction.

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8.0 PROFESSIONAL FEES

8.1 Court Officer, Interim Receiver and Receiver Fees

8.2 The fees (excluding disbursements and HST) of KPMG Inc. in its capacities as Court

Officer, Interim Receiver and Receiver for the period August 22 to December 31, 2014

total $519,119 as summarized below. Detailed invoices in respect of the fees and

disbursements of the Court Officer, Interim Receiver and Receiver for this period are

provided in appendices to the affidavit of Jorden Sleeth filed by KPMG which is attached

hereto as Appendix “I”.

8.3 The average hourly rate for KPMG over the referenced billing period was $387.17.

8.4 Osler’s Fees

8.5 The fees (excluding disbursements and HST) of Osler as counsel to the Court Officer,

Interim Receiver and Receiver for the period August 22 to December 31, 2014 total

$126,682 as summarized below. Detailed invoices in respect of Osler’s fees and

Invoice 

Number

Invoice 

Date

Period Role Hours Fees Disbursements HST Total Average 

Hourly Rate

8000399733 17‐Sep‐14 August 22 to 26, 

2014

Interim Court 

Officer

126.85      52,670.00$     241.37$               6,878.48$     59,789.85$     415.21$       

8000445097 17‐Nov‐14 August 27 to 

October 9, 2014

Interim 

Receiver

545.55      211,521.25$  3,251.25$            27,920.43$  242,692.93$  387.72$       

8000445096 17‐Nov‐14 October 10 to 

November 8, 2014

Receiver 384.75      139,168.75$  477.29$               18,153.99$  157,800.03$  361.71$       

8000501729 14‐Jan‐15 November 9 to 

December 31, 

Receiver 283.65      115,758.75$  3,638.72$            15,521.67$  134,919.14$  408.10$       

Total 1,340.80 519,118.75$ 7,608.63$           68,474.56$ 595,201.94$  387.17$      

Page | 29

disbursements for this period are provided in appendices to the affidavit filed by Osler

which is attached hereto as Appendix “K”.

8.6 The average hourly rate for Osler over the referenced billing period was $505.31.

8.7 The Receiver is of the view that the hourly rates charged by Osler are consistent with the

rates charged by major law firms practicing in the area of insolvency and restructuring in

the Toronto market, and that the fees charged are reasonable in the circumstances.

Invoice 

Number

Invoice 

Date

Period Role Hours Fees Disbursements HST Total Average 

Hourly Rate

11704379 26‐Sep‐14 August 18 to 28, 

2014

Interim Court 

Officer & 

Interim 

Receiver

50.50        26,109.50$     120.40$               3,402.09$     29,631.99$     517.02$       

11713008 27‐Oct‐14 September 2‐30, 

2014

Interim 

Receiver

38.80        23,388.50$     497.75$               3,105.22$     26,991.47$     602.80$       

11723582 17‐Nov‐14 October 1‐31, 2014 Interim 

Receiver & 

Receiver

48.80        23,569.00$     378.42$               3,113.16$     27,060.58$     482.97$       

11731783 23‐Dec‐14 November 1‐30, 

2014

Receiver 101.90      48,595.00$     2,357.69$            6,623.85$     57,576.54$     476.89$       

11740845 12‐Jan‐15 December 1‐31, 

2014

Receiver 10.70        5,020.00$       31.63$                  656.71$        5,708.34$       469.16$       

Total 250.70    126,682.00$ 3,385.89$           16,901.03$ 146,968.92$  505.31$      

Page | 30

9.0 RECOMMENDATIONS

9.1 We respectfully submit this Second Report to the Court in support of the Receiver’s motion

to:

Approve the Stalking Horse APA transaction(s) and authorize the Receiver’s execution

of any other ancillary documents or agreements necessary to complete the

transaction(s);

Declare that the Receiver shall have no liability under the Tax Administration Act

(Quebec) and the Act respecting Quebec Sales Tax (Quebec);

Approve this Second Report and approve and authorize the activities of the Receiver

as described herein; and

Approve the fees and disbursements of the Court Officer, Interim Receiver and

Receiver as well as its counsel, Osler.

Page | 31

All of which is respectfully submitted this 21st day of January, 2015. KPMG INC., COURT-APPOINTED RECEIVER OF GREAT LAKES BIODIESEL INC., EINER CANADA INC. AND BIOVERSEL TRADING INC. and not in its personal capacity

Per: Phillip J. Reynolds Senior Vice President

Per: Jorden Sleeth Vice President

 

 

Appendix A

Receiver’s First Report to Court dated November 19, 2014

(without appendices)

LEGAL_1:32822035.1

Court File No. CV-14-10672-00CL

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

BETWEEN:

HERIDGE S.A.R.L

Applicant

- and -

GREAT LAKES BIODIESEL INC., EINER CANADA INC. and BIOVERSEL TRADING INC.

Respondents

IN THE MATTER OF AN APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUTPCY AND

INSOLVENCY ACT, R.S.C. 1985 c. B-3 AND SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990, c. 43

FIRST REPORT TO THE COURT SUBMITTED BY KPMG INC.,

IN ITS CAPACITY AS RECEIVER OF

GREAT LAKES BIODIESEL INC., EINER CANADA INC. AND

BIOVERSEL TRADING INC.

November 19, 2014

LEGAL_1:32822035.1

Table of Contents Page

1.0  INTRODUCTION, TERMS OF REFERENCE AND PURPOSE .................................................. 2 1.1  Introduction ......................................................................................................................... 2 

2.0  INTERIM RECEIVER’S ACTIVITIES .......................................................................................... 5 2.1  Ongoing Monitoring ........................................................................................................... 5 2.2  Insurance ............................................................................................................................. 5 

3.0  RECEIVER’S ACTIVITIES ........................................................................................................... 7 3.1  Introduction ......................................................................................................................... 7 3.2  Management, Employees and Contractors ......................................................................... 7 3.3  Record Retention and Office Move .................................................................................... 7 3.4  Office Furniture Realizations .............................................................................................. 8 3.5  Rail Cars ............................................................................................................................. 8 3.6  Demand Letters ................................................................................................................... 9 3.7  Heridge Security Opinion ................................................................................................... 9 3.8  Cash in Bioversel Trading’s Bank Accounts .................................................................... 10 

4.0  ASSETS AND LIABILITIES OF THE DEBTORS ...................................................................... 11 4.1  Assets ................................................................................................................................ 11 4.2  Liabilities .......................................................................................................................... 11 

5.0  STALKING HORSE APA AND RECEIVER’S PROPOSED MARKETING AND SALE PROCESS ................................................................................................................................................... 16 

5.1  The Stalking Horse Asset Purchase Agreement ............................................................... 16 5.2  Proposed Sale Process and Bidding Procedures ............................................................... 18 5.3  Bidding Procedures ........................................................................................................... 19 5.4  Observations in Respect of the Sale Process and the Stalking Horse APA ...................... 21 

6.0  RECEIPTS, DISBURSEMENTS AND PROJECTED CASH FLOWS ....................................... 24 

7.0  RECOMMENDATIONS ............................................................................................................... 26 

Page | 1 LEGAL_1:32822035.1

Listing of Appendices

Appendix A - Interim Order dated August 21, 2014

Appendix B - Interim Receivership Order dated August 27, 2014

Appendix C - Receivership Order dated October 10, 2014

Appendix D - The Honourable Justice Pattillo’s Reasons for Judgement dated October 10, 2014

Appendix E - Simplified Corporate Organization Chart

Appendix F - Interim Receiver’s First Report dated September 18, 2014 (without Appendices)

Appendix G - Sale Process Bidding Procedures

Appendix H - Stalking Horse APA

Appendix I - Form of advertisement of assets offered for sale

Appendix J - Receiver’s Unaudited Projected Cash Flow for the Period August 27, 2014 to January 31, 2015

Appendix K - Interim Receiver’s Statement of Receipts and Disbursements

Appendix L - Receiver’s Statement of Receipts and Disbursements

Page | 2

1.0 INTRODUCTION, TERMS OF REFERENCE AND PURPOSE

1.1 Introduction

1.1.1 On August 21, 2014, the Honourable Justice McEwan issued an interim order, attached hereto as

Appendix “A”, appointing KPMG Inc. (“KPMG”) as the “Court’s Officer” (the “Interim Court

Officer”) on a without prejudice basis, in order to monitor the affairs of Great Lakes Biodiesel Inc.

(“GLB”), Einer Canada Inc. (“Einer Canada”) and Bioversel Trading Inc. (“Bioversel Trading”,

and together with GLB and Einer Canada, the “Debtors”) pending the return of the application by

Heridge S.a.R.L. (“Heridge”) for the appointment of an interim receiver over the property, assets

and undertakings of the Debtors (the “Property”).

1.1.2 On August 27, 2014, the Court issued an order, attached hereto as Appendix “B”, appointing

KPMG as interim receiver (the “Interim Receiver”) over the Property of the Debtors pursuant to

section 43(1) of the Bankruptcy & Insolvency Act (“BIA”), pending the return of the application

by Heridge (the “Receivership Application”) for the appointment of a receiver pursuant to section

243 of the BIA and section 101 of the Courts of Justice Act. The Receivership Application by

Heridge was contested by the Debtors on the basis that GLB did not owe a debt obligation to

Heridge, notwithstanding that a Debenture was granted by GLB in favour of Heridge dated January

1, 2011 (the “Debenture”). The Debenture is secured over all of the personal and real property of

GLB and guaranteed on an unsecured basis by Einer Canada and Bioversel Trading.

1.1.3 On October 10, 2014, the Court granted an Order appointing KPMG as receiver (the “Receiver”)

over all of the Property of the Debtors (the “Receivership Order”, attached hereto as Appendix

“C”). The Honourable Justice Pattillo in his written reasons for the appointment of the Receiver

dated October 10, 2014 and attached hereto as Appendix “D”, found that Heridge did in fact loan

US$20,000,000 to GLB and that GLB received such loan amount, and that actual consideration

was provided by Heridge to GLB.

1.1.4 GLB is incorporated under the laws of the province of Ontario. GLB’s principal asset is a biodiesel

refinery plant located in Welland, Ontario (the “Biodiesel Plant”). Einer Canada is incorporated

under the laws of the province of Ontario and is a holding company that owns 100% of the shares

of Bioversel Trading, which also incorporated under the laws of the province of Ontario.

1.1.5 A simplified organization chart showing the ownership of and relationship between the Debtors is

attached as Appendix “E”.

Page | 3

1.1.6 This is the Receiver’s first report (the “First Report”) to the Court and is filed to:

Report on KPMG’s activities in its capacity as Interim Receiver and Receiver since it filed

the Interim Receiver’s First Report;

Report on and/or seek this Honourable Court’s approval of:

(i) The execution by the Receiver of the proposed Stalking Horse APA (as defined

herein);

(ii) The Receiver’s proposed process for the sale of the Property of the Debtors (the

“Sale Process”);

(iii) The Interim Receiver’s Statement of Receipts and Disbursements for the period

August 27 to October 9, 2014;

(iv) The Receiver’s Statement of Receipts and Disbursements for the period October

10 to November 10, 2014;

(v) The projected cash flows of the Receiver beginning from the week ending

November 7, 2014 through to the week ending January 30, 2015; and

(vi) An increase in the Receiver’s borrowings of up to $2.0 million.

1.1.7 In preparing this report, the Receiver has been provided with, and has relied upon, unaudited

financial information, books and records and financial information (collectively, the

“Information”) prepared by the Debtors and/or their representatives, and discussions with the

Debtors’ management and/or representatives. The Receiver has reviewed the Information for

reasonableness, internal consistency and use in the context in which it was provided and in

consideration of the nature of evidence provided to this Honourable Court, in relation to the relief

being sought herein. However, the Receiver has not audited or otherwise attempted to verify the

accuracy or completeness of the Information in a manner that would wholly or partially comply

with Canadian Auditing Standards (“CAS”) pursuant to the Chartered Professional Accountants

Canada Handbook and, accordingly, the Receiver expresses no opinion or other form of assurance

contemplated under the CAS in respect of the Information.

1.1.8 Some of the information referred to in this First Report consists of forecasts and projections. An

examination or review of the financial forecasts and projections, as outlined in the Chartered

Professional Accountants Canada Handbook has not been performed. Future oriented financial

information referred to in this report was prepared based on the Debtors’ management and/or

representatives’ estimates and assumptions. Readers are cautioned that since projections are based

Page | 4

upon assumptions about future events and conditions that are not ascertainable, the actual results

will vary from the projections, even if the assumptions materialize, and the variations could be

significant.

1.1.9 The information contained in this report is not intended to be relied upon by any prospective

purchaser or investor in any transaction with the Receiver.

1.1.10 All references to monetary amounts in this First Report are in Canadian dollars unless otherwise

specified.

Page | 5

2.0 INTERIM RECEIVER’S ACTIVITIES

2.1 Ongoing Monitoring

2.1.1 The Interim Receiver’s First Report details KPMG’s activities in its capacity as Court Officer and

Interim Receiver beginning from the date of each respective appointment to September 18, 2014.

Between September 18, 2014 and the date of the Receivership Order, the Interim Receiver

continued its preservation and monitoring activities of the Debtors, including:

a) Maintaining security coverage at the Biodiesel Plant and GLB’s head office;

b) Continuing the engagement of TWD Technologies (“TWD”), an independent engineering

consulting firm, to assist with monitoring the operation of the Biodiesel Plant;

c) Reviewing, approving and issuing payments to GLB’s contractors and suppliers for

services and supplies provided during the Interim Receivership;

d) Arranging an extension of GLB’s insurance coverage, as discussed more fully below; and

e) Responding to inquiries from creditors regarding the status of the Debtors and the

consequences of the Interim Receivership.

2.1.2 The Interim Receiver’s First Report (without Appendices) is attached hereto as Appendix “F”.

2.2 Insurance

2.2.1 GLB maintained comprehensive business and liability insurance coverage on the Biodiesel Plant

with a renewal date of October 11, 2014. As the policy was expiring during the Interim

Receivership period, and it was unknown at this time whether a receiver would be appointed, the

Interim Receiver arranged for a 90-day extension of GLB’s current insurance coverage. In the

Interim Receiver’s view, this extension provided an appropriate coverage period if a receiver was

appointed or, if a receiver was not appointed, to ensure that GLB would be able to negotiate a full

renewal or obtain alternative coverage thereafter.

2.2.2 To obtain the extension, the Interim Receiver was required to agree to a non-refundable extension

of coverage for a 90-day term at a total cost of approximately $91,000 which was paid by the

Receiver. The insurance coverage expires on January 10, 2015. The Receiver is advised by its

Page | 6

insurance broker that the incumbent insurer may extend coverage on substantially the same terms

if required beyond that date.

Page | 7

3.0 RECEIVER’S ACTIVITIES

3.1 Introduction

3.1.1 The following sets out the Receiver’s primary activities to date since the issuance of the

Receivership Order.

3.2 Management, Employees and Contractors

3.2.1 Following its appointment, the Receiver met individually with certain head office employees and

employee contractors of GLB. Pursuant to section 17 of the Receivership Order, on October 13,

2014, the Receiver, on behalf of the Debtors, terminated three head office employees. On

November 7, 2014 the CFO was terminated by the Receiver, on behalf of the Debtors. Prior to the

termination of the CFO, the employment of the CFO was continued in order to complete the

Debtors’ financial records and compile due diligence information required by the Receiver for the

Sale Process. The CFO remains available to assist the Receiver as needed and will be compensated

on an hourly basis. Pursuant to its powers under section 4(c) of the Receivership Order, on October

13, 2014 the Receiver advised three independent contractor arrangements that their services will

no longer be needed. On October 29, 2014, the Receiver advised a fourth independent contractor

that their services would no longer be needed.

3.2.2 The Receiver notes that 16 employees continue to be employed by the Debtors at the Biodiesel

Plant. These employees are trained and qualified in the plant’s operations and are necessary to

ensure that the Debtors meet the minimum number of employees required in order to safely

maintain the Biodiesel Plant in its “idled” state.

3.2.3 None of the Debtors’ employees or former employees have any unpaid priority wage claims.

3.3 Record Retention and Office Move

3.3.1 Following its appointment, the Receiver directed GLB staff and representatives of Bioversel

Trading and Einer Canada to update the Debtors’ records and prepare tax and other statutory filings

to the Receivership Date. The Receiver also worked with GLB staff to compile records and

information that would be required by potential purchasers to complete their diligence. Lastly, the

Receiver took possession of the books and records and implemented the necessary protections to

maintain the security of the Debtors’ computer systems.

Page | 8

3.3.2 The Receiver determined that it would not require GLB’s leased head office premises located at 77

Bloor Street West in Toronto, Ontario, beyond October 31, 2014 and wrote the landlord on October

20, 2014 to advise that the Receiver would pay rent for October and vacate the premises on October

31, 2014. On that date, the Receiver and GLB staff moved all of the Debtors’ records to the

Receiver’s office and the Debtors’ head office computers and related assets were moved to the

Biodiesel Plant.

3.3.3 Following the Interim Receiver’s appointment, a director of Bioversel Trading and representative

of Einer Canada, Mr. Arie Mazur (“Mazur”), delivered to GLB’s head office, the physical records

in respect of Einer Canada and Bioversel Trading that were in Mazur’s possession. However, the

Receiver has been unable to locate any records in respect of Bioversel Trading or Einer Canada for

the 2010-2014 period. Mazur advised the Receiver that all of the records in respect of these entities

and that were in his possession had been delivered to the Receiver. Notwithstanding the absence

of these records, the Receiver understands that activity was conducted by these entities as Bioversel

Trading’s 2012 internal financial statements show over $13 million of revenue in that year and

Einer Canada entered into a $3 million lending agreement with Meridian Credit Union in June

2012.

3.3.4 The Receiver advised the Debtors’ counsel of the missing records and requested that they inquire

of their client as to the whereabouts of the missing records for the years 2010 to 2014 for these

entities. Counsel to the Debtors advised the Receiver that such inquiries were repeatedly made of

his clients and he is advised that they have provided all of the records related to Bioversel Trading

and Einer Canada that are in their possession.

3.4 Office Furniture Realizations

3.4.1 The Receiver invited proposals from four auctioneers to outright purchase the office furniture and

equipment at the head office of the Debtors. Two auctioneers submitted written offers. In addition,

the landlord made an offer to purchase the office furniture for $12,000 plus HST, which was the

highest of the offers received. Accordingly, the Receiver accepted the landlord’s offer and

anticipates concluding the sale in the week ending November 21, 2014.

3.5 Rail Cars

3.5.1 GLB leased 25 rail cars under a sub-lease agreement with Dyno-Nobel at a cost of approximately

$39,000 per month. Management advised the Interim Receiver that GLB required the rail cars once

production resumed (i.e. if Heridge’s application for a receiver was unsuccessful). Accordingly,

Page | 9

the Interim Receiver approved a payment to Dyno-Nobel in respect of the Interim Receivership

period (an amount funded through the issuance of Receiver’s certificates).

3.5.2 Following its appointment, the Receiver consulted with Heridge with respect to terminating the rail

car lease with Dyno Nobel and returning the rail cars in order to decrease the overall costs of

maintaining the Biodiesel Plant. As the Receiver does not intend to resume production and ship

biodiesel and the lease contract was not considered to have value to a prospective purchaser, the

Receiver, in consultation with Heridge, terminated the sub-lease on November 5, 2014.

3.6 Demand Letters

3.6.1 The Debtors’ financial statements report amounts due to the Debtors from individuals (e.g.

current/former shareholders, employees, directors and/or officers) or related entities of the Debtors

(the “Related Party Receivables”). The books and records of the Debtors indicate that the Related

Party Receivables total approximately $10 million. On November 7, 2014, the Receiver issued

letters to all such related parties demanding that they issue payment of outstanding amounts to the

Receiver. To date the Receiver has not realized any collections in respect of the aforementioned

amounts due.

3.7 Heridge Security Opinion

3.7.1 At the request of the Receiver, Osler has reviewed the Debenture held by Heridge over the assets

of GLB in Ontario, which includes personal property security and a mortgage registered on the

Welland real property (the “Land”) upon which the Biodiesel Plant is located (collectively, the

“GLB Assets”). Osler has verbally advised the Receiver that, in their view, Heridge has a validly

perfected security interest and properly registered mortgage over the GLB Assets, subject to

standard qualifications. Copies of the opinions will be provided to the Court upon request and to

any interested party requesting a copy of same who confirms certain matters to the Receiver,

including matters relating to privilege, reliance, liability to such party and disclosure.

3.7.2 The Debenture was not registered on the Land prior to the commencement of these Receivership

proceedings. Pursuant to section 13 of the Receivership Order, nothing shall prevent the filing of

any registration to preserve or perfect a security interest or prevent the registration for a claim for

a lien. Accordingly, following the commencement of these Receivership proceedings, on

November 11, 2014, Heridge registered the Debenture over the Land.

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3.8 Cash in Bioversel Trading’s Bank Accounts

3.8.1 Bioversel Trading currently has a bank account with Meridian Credit Union Limited (“Meridian”),

which account has a balance of approximately $2.1M (the “Bioversel Trading Cash”). As

described in the Interim Receiver’s First Report, these funds were received during the Interim

Receivership period on account of corporate income tax refunds previously filed by Bioversel

Trading. Meridian is currently holding these funds in a frozen account.

3.8.2 Meridian extended an operating line to Einer Canada pursuant to a credit agreement dated May 30,

2012 (the “Credit Agreement”) in the principal amount of $3,000,000 with interest at the prime

rate plus 1.50%. Currently, approximately $960,000 remains outstanding and owing to Meridian

under the Credit Agreement. The obligations under the Credit Agreement were secured over all of

the Property of Einer Canada and were guaranteed on a secured basis over the GLB Assets and all

of the Property of Bioversel Trading.

3.8.3 Osler has reviewed the security granted by the Debtors in favour of Meridian and has verbally

advised the Receiver that Osler is of the view that Meridian has good, valid, and enforceable

security over the Property of the Debtors. Copies of the opinions will be provided to the Court upon

request and to any interested party requesting a copy of same who confirms certain matters to the

Receiver, including matters relating to privilege, reliance, liability to such party and disclosure.

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4.0 ASSETS AND LIABILITIES OF THE DEBTORS

4.1 Assets

4.1.1 The Debtors’ assets principally consists of:

a) GLB’s ownership interest in the Biodiesel Plant, which includes the Land, a biodiesel

refinery, related production equipment and a small office building;

b) The Bioversel Trading Cash;

c) The Related Party Receivables; and

d) Other potential assets, including choses in action of the Debtors as well as the permits and

licenses issued to the Debtors.

4.1.2 As noted in the Interim Receiver’s First Report, the Biodiesel Plant is maintained by the Receiver,

in consultation with TWD, in an “idled” state such that the plant and onsite chemicals and inventory

are maintained in a manner that will more effectively permit the plant to resume operations on

relatively short notice.

4.2 Liabilities

4.2.1 The Receiver’s understanding of the Debtors’ liabilities as at the date of the Receivership Order is

summarized in the table below. Detailed amounts for each of the Debtors are presented separately

below.

Claims GLB Einer Canada Bioversel TradingSecured 23,039,808$ 960,000$ 960,000$ Unsecured 7,959,396 21,631,111 17,657,682 Contingent 28,994,000 2,779,500 2,779,500 Total 59,993,204$ 25,370,611$ 21,397,182$

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4.2.2 As noted above, Osler has verbally opined to the Receiver that Heridge has a validly perfected

security interest over the GLB Assets. The Receiver notes that Heridge has advised that it first

registered its security interest on March 29, 2011 and that its security interest was improperly de-

Great Lakes Biodiesel Inc.Summary of secured, unsecured and contingent liabilitiesAs at October 10, 2014

Secured ObligationsCreditor Currency Amount F/X Rate C$ Amount Notes

Heridge Sarl USD $ 11,504,822 1.09 $ 12,540,256 -Confirmed by Justice Patillo on October 10, 2014-Consists of Principal US$20M less repayments US$10.7M plus interest $US2.2M, secured over the GLB assets

Heridge Sarl CDN $ 1,185,464 1.00 $ 1,185,464 -Enforcement expenses related to the Debenture Debt

Reneos Limited CDN $ 6,811,921 1.00 $ 6,811,921 -Registration occurred in June 2014 -Reneos is a related company that controls GLB

Quantum Murray CDN $ 1,100,000 1.00 $ 1,100,000 -Construction lien claim registered on the Land in the amount presented as filed

Conestogo Electircal CDN $ 261,567 1.00 $ 261,567 -Construction lien claim registered on the Land in the amount presented as filed

City of Welland CDN $ 180,000 1.00 $ 180,000 -Unpaid property taxes registered as a charge on the Land

Meridian Credit Union CDN $ 960,600 1.00 $ 960,600 -The debt is secured over all of the Property of the debtors including the Land

Total Secured Obligations $ 23,039,808

Unsecured ObligationsCreditor Currency Amount F/X Rate C$ Amount Notes

Trade creditors - 3rd party CDN $ 2,621,000 1.00 $ 2,621,000 All appear to be third partyAtlantic Coast Renewables (ACR)

CDN $ 4,796,183 1.00 $ 4,796,183 Relates to advances for future sales. ACR is a related entity to GLB. GLB also has a receivable due to it from ACR in respect of Blender's Tax Credits generated from ACR's sale of Biodeisel to 3rd party customers in the US

Einer Energy Sarl CDN $ 542,213 1.00 $ 542,213 Einer Energy Sarl is related to GLB through common ownership

Total Unsecured Obligations

$ 7,959,396

Total Secured & Unsecured Obligations

$ 30,999,204

Contingent ClaimsCreditor Currency F/X Rate C$ Amount Notes

East Guardian SPC ("EG") USD $ 23,000,000 1.09 $ 25,070,000 $30 million advanced, GLB repaid to $21 million + $2 million of accrued interest according to EG materials. Amount as claimed by EG in materials filed in Court

Massive Dynamic Industry Limited

USD $ 3,600,000 1.09 $ 3,924,000 GLB guarantee of funds advanced to Orense by Massive Dynamic

Total Contingent Claims $ 28,994,000

Note: Other than what is discussed herein, the Receiver has not validated any of the above listed creditor claims.

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registered in June 2014. Heridge’s security interest was re-registered by its counsel in August 2014.

The Receiver understands that Heridge intends to bring a motion to the Court for an Order clarifying

the date of its registration of its security interest.

4.2.3 In addition to amounts loaned to GLB under the Debenture, Heridge is the lender to the Receiver

in these Receivership proceedings. Pursuant to the Receivership Order, the Receiver is authorized

to borrow funds (the “Receivership Debt”) in the maximum principal amount of $1.5 million to

fund the Receivership proceedings. To date, the Receiver has borrowed and issued receiver

certificates totalling $1.5 million to fund the disbursements of the Interim Receiver and Receiver.

As discussed below, the Receiver is seeking to increase the Receivership Debt by up to $2.0 million

which, if approved, could increase the Receivership Debt to up to $3.5 million.

4.2.4 The Receiver understands that Reneos is a controlling shareholder of GLB. Reneos’ debt arose

pursuant to a settlement agreement between Orense Investments Limited (“Orense”), Reneos and

GLB dated April 4, 2014 whereby Orense consented to the transfer by GLB of Orense’s debt to

Reneos and Orense forgave the debt due to it from GLB.

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Einer Canada Inc.Summary of secured, unsecured and contingent liabilitiesAs at October 10, 2014

Secured ObligationsCreditor Currency Amount F/X Rate C$ Amount Notes

Meridian Credit Union CDN $ 960,600 1.00 $ 960,600 -The debt is secured over all of the Property of the debtors including the Land

Total Secured Obligations

$ 960,600

Unsecured ObligationsCreditor Currency Amount F/X Rate C$ Amount Notes

Heridge Sarl USD $ 11,504,822 1.09 $ 12,540,256 -Unsecured guarantee of GLB's obligations pursuant to the Debenture

Heridge Sarl CDN $ 1,185,464 1.00 $ 1,185,464 -Unsecured guarantee of GLB's obligations pursuant to the Debenture

Trade creditors CDN $ 370,195 1.00 $ 370,195 All appear to be non-related third party trade payablesTrade creditors USD $ 189,209 1.09 $ 206,238 All appear to be non-related third party trade payablesBioversel Trading Inc. CDN $ 2,357,455 1.00 $ 2,357,455 Einer Canada is the 100% shareholder of Bioversel

TradingSergey Akulov CDN $ 4,814,029 1.00 $ 4,814,029 Former officer and director of Einer CanadaGreat Lakes Biodiesel CDN $ 78,820 1.00 $ 78,820 Per Einer Canada finanical statementsPraveen Investing Inc. CDN $ 78,654 1.00 $ 78,654 Praveen is controlled by MazurKazunaygas Trading AG (formerly Vector Energy AG)

USD $ 71,000,000 1.00 $ 71,000,000 Judgement creditor

Total Unsecured Obligations

$ 92,631,111

Total Secured & Unsecured Obligations

$ 93,591,711

Contingent ClaimsCreditor Currency Amount F/X Rate C$ Amount Notes

Petro Diamond Inc. USD $ 2,550,000 1.09 $ 2,779,500 Judgement against Einer Canada, Verdeo, Bioversel Trading Inc., and Mazur by Superior Court of California dated April 14, 2014

Total Contingent Claims

$ 2,779,500

Note: Other than what is discussed herein, the Receiver has not validated any of the above listed creditor claims.

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Bioversel Trading Inc.Summary of secured, unsecured and contingent liabilitiesAs at October 10, 2014

Secured ObligationsCreditor Currency Amount F/X Rate C$ Amount Notes

Meridian Credit Union CDN $ 960,600 1.00 $ 960,600 Obligation under a Credit Agreement

Total Secured Obligations

$ 960,600

Unsecured ObligationsCreditor Currency Amount F/X Rate C$ Amount Notes

Heridge Sarl USD $ 11,504,822 1.09 $ 12,540,256 -Unsecured guarantee of GLB's obligations pursuant to the Debenture

Heridge Sarl CDN $ 1,185,464 1.00 $ 1,185,464 -Unsecured guarantee of GLB's obligations pursuant to the Debenture

Trade creditors CDN $ 330,847 1.00 $ 330,847 All appear to be third partyPraveen Investing Inc. USD $ 1,500,000 1.09 $ 1,635,000 Praveen is controlled by MazurRoadhouse Enterprises Inc.

USD $ 750,000 1.09 $ 817,500 Roadhouse is controlled by Mazur

Einer Energy Sarl CDN $ 134,101 1.00 $ 134,101 Einer Energy Sarl owned by OrenseOrense CDN $ 1,014,514 1.00 $ 1,014,514 100% owner of Einer Canada and Bioversel Trading,

indirect owner of GLB through ReneosKazunaygas Trading AG (formerly Vector Energy AG)

USD $ 71,000,000 1.09 $ 77,390,000 Judgement creditor

Total Unsecured Obligations

$ 95,047,682

Total Secured & Unsecured Obligations

$ 96,008,282

Contingent ClaimsCreditor Currency Amount F/X Rate C$ Amount Notes

Petro Diamond Inc. USD $ 2,550,000 1.09 $ 2,779,500 Judgement against ECI, Verdeo, Bioversel Trading Inc., and Mazur by Superior Court of California dated April 14, 2014

Total Contingent Claims

$ 2,779,500

Note: Other than what is discussed herein, the Receiver has not validated any of the above listed creditor claims.

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5.0 STALKING HORSE APA AND RECEIVER’S PROPOSED MARKETING AND SALE PROCESS

5.1 The Stalking Horse Asset Purchase Agreement

5.1.1 The Receiver, Heridge, and their respective counsel have negotiated the terms and provisions of

the Stalking Horse APA, a summary of which is as follows. All terms not otherwise defined herein

shall have their meanings defined in the Stalking Horse APA.

Heridge will acquire substantially all of the assets of the Debtors.

The Purchased Assets are divided into three categories:

o The Purchased Land which consists of the Land, the Building and any Fixed

Assets;

o The Purchased Equipment which includes all of the removable assets in or around

the Biodiesel Plant; and

o The Remaining Assets which consist of, inter alia, the Bioversel Trading Cash,

any Assumed Contracts, Intellectual Property and Accounts Receivable.

(collectively, the “Stalking Horse Assets”).

The Stalking Horse APA is in the form of a credit bit for each of the categories of the

Stalking Horse Assets.

The Purchase Price for the three categories of assets will be satisfied in the following

manner:

o For the Purchased Land, by a credit bid by the Stalking Horse Bidder of

$1,000,000 of the outstanding Receivership Debt. The Receivership Debt as of the

date hereof consists of $1,500,000, representing the aggregate outstanding

principal amount borrowed by KPMG to date (in its capacity as Interim Receiver

and Receiver pursuant to the Interim Receivership Order and the Receivership

Order, respectively) which is secured by the Receiver’s Borrowings Charge (as

defined in the Receivership Order), being a first priority charge over all of the

Property;

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o For the Purchased Equipment, by a credit bid by the Stalking Horse Bidder of

the sum of (i) US$11,500,000 million which represents substantially all of the debt

outstanding under the Debenture, plus (ii) CDN$1,185,000 which represents

substantially all of the allowable costs and expenses and other losses incurred in

respect of the Debenture and the enforcement of Heridge’s rights thereunder (the

“Debenture Debt”), which Debenture Debt is secured over all of the personal

property of GLB; and

o For the Remaining Assets, a credit bid by the Stalking Horse Bidder of:

(a) the lesser of (i) $1,500,000 of the Receivership Debt; and (ii) the balance of

the Receivership Debt at the deadline to submit bids under the Bidding

Procedures (the “Bidding Deadline”) net of the credit bid amount for the

Purchased Land of $1,000,000 (as described above). At the Bidding Deadline,

the remaining amount of the Receivership Debt is expected to be

approximately $1.5 million (i.e. $500,000 left over after deduction of the

Purchased Land from the $1.5 million that has been advanced to the Receiver

to date plus further projected borrowings expected to be advanced prior to the

Bidding Deadline of approximately $1,000,000); and

(b) The assumption of the Assumed Liabilities.

As described below, the Receiver intends to seek approval from the Court to increase the

principal amount of borrowings by the Receiver by up to $2,000,000 to fund these

Receivership proceedings. Accordingly, as at November 24, 2014, and provided the Court

grants approval of such increase, the total Receivership Debt amount available to the

Receiver to fund these Receivership proceedings will be up to $3,500,000.

Heridge will assume certain liabilities, including liabilities arising from and after the

Closing Time in respect of the Stalking Horse Assets.

Subject to the comments noted below, the Receiver notes that the terms of the Stalking

Horse APA are generally consistent with standard insolvency transactions, including that

the transaction is to be completed on an “as is, where is” basis with only basic

representations and warranties.

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The Closing Date is to be as soon as practicable following satisfaction or waiver of all

conditions to Closing.

The Stalking Horse APA contemplates that February 27, 2014 would be the Termination

Date, being the date on which the Stalking Horse APA could be terminated should the

transaction not close prior to such date.

The Stalking Horse APA is subject to certain conditions, the following of which are the

only material conditions precedent to the transaction:

o Heridge being selected as the “Successful Bid” in accordance with the Bidding

Procedures discussed below;

o A Phase 1 environmental site assessment shall have been completed and the

Stalking Horse Bidder shall be satisfied with such Phase 1 assessment and any

remedial work that is required to be completed in connection therewith; and

o The Purchaser shall have confirmed that title to the Land is good and marketable

and insurable and free from all Encumbrances except for Permitted Encumbrances,

and the Purchaser shall be otherwise satisfied with its investigation of title to the

Land and with regard to work orders and notices of deficiency or non-compliance.

5.2 Proposed Sale Process and Bidding Procedures

5.2.1 The Receiver and its counsel developed the Sale Process. Among other things, the Sale Process

includes bidding procedures (the “Bidding Procedures”) which incorporates a stalking horse bid

(the “Stalking Horse Bid”) from Heridge (the “Stalking Horse Bidder”) and the ability of the

Receiver to conduct an auction (the “Auction”) if qualified and competitive bids are received. The

Bidding Procedures are attached hereto as Appendix “G”.

5.2.2 The Receiver has negotiated and executed an Asset Purchase Agreement (“APA”) with the Stalking

Horse Bidder (“Stalking Horse APA”), which is attached hereto as Appendix “H”. The Bidding

Procedures and the key terms of the Stalking Horse APA are described below.

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5.3 Bidding Procedures

5.3.1 The key aspects of the Bidding Procedures are summarized in the table below. All capitalized

terms not otherwise defined in this section have the meanings ascribed to them in the Bidding

Procedures.

Term / Event Description

Property offered for sale

Purchased Land;

Purchased Equipment; and

Remaining Assets.

Solicitation The Receiver will prepare a list of potential bidders for the Stalking Horse Assets, which will include strategic and financial parties who may be interested in acquiring the Stalking Horse Assets.

The Receiver shall advertise the acquisition opportunity in the Globe and Mail (National Edition).

The Receiver will also place the advertisement on Biodiesel Magazine’s website (http://www.biodieselmagazine.com/), a leading biodiesel industry publication and website. A form of the advertisement is attached hereto as Appendix “I”.

The Receiver will prepare a teaser letter notifying potential bidders of the existence of the Sale Process and invite them to make an offer to acquire the Stalking Horse Assets. Attached to the teaser letter will be a form of confidentiality agreement (the “CA”).

Due Diligence Upon execution of the CA, potential bidders will be provided with an opportunity to commence due diligence, including reviewing information in an online data room established by the Receiver.

Potential bidders will be provided with a copy of the Stalking Horse APA. Potential bidders will be required to submit any bids in the form of the Stalking Horse APA.

Bidding Deadline

No later than 10:00 a.m. (Toronto time) January 7, 2015.

Material Bid Requirements

Minimum Consideration – Aggregate consideration of a bid(s) for all of the Stalking Horse Assets must be at least $500,000 greater than the total consideration provided for in the Stalking Horse APA. However if a Bidder is bidding only for a part of the Stalking Horse Assets, such Bid shall not be subject to the Minimum Purchase Price.

Deposit – Refundable deposit equal to at least 10% of the total purchase price contemplated by the Bid.

Closing Date – No later than February 27, 2015.

Break Fee There is no entitlement for a break fee or an expense reimbursement.

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Term / Event Description

Qualified Bidder The Receiver shall review all Bids and shall determine, in its reasonable judgment, those Bidders, if any, that are qualified to participate in the Auction (“Qualified Bidders”).

Bidders shall be determined to be Qualified Bidders by the Receiver in accordance with section 6 and section 7 of the Bidding Procedures.

The Stalking Horse Bidder and the Stalking Horse Bid are deemed to be a Qualified Bidder and Qualified Bid, respectively.

The Stalking Horse Bidder shall be permitted to credit bid any additional outstanding Receivership Debt that may be owing to it at the Auction, if one is held.

Auction There will be no Auction if the Receiver determines that there are no Qualified Bids other than the Stalking Horse Bid. The Receiver will then proceed to seek approval of and authority to consummate the Stalking Horse APA and transactions contemplated therein at the Sale Motion.

If the Receiver determines that there is at least one Qualified Bid, or one or more bids that are not overlapping and that when combined provide the Minimum Purchase Price (referred to in the Bidding Procedures as an Aggregated Bid), in addition to the Stalking Horse Bid, then the Receiver will conduct an Auction.

The Auction is to be held on or before January 14, 2015 at 10:00 a.m. at the office of the Receiver’s counsel.

The Receiver shall determine which Qualified Bid or Aggregated Bid constitutes the Opening Bid for the first round of bidding based on the Bid assessment criteria in section 8(d) of the Bidding Procedures.

Overbids after the Opening Bid must be made in increments of at least $100,000.

Following the Auction, the Receiver will seek to obtain the Court’s approval of the Successful Bid(s) by January 28, 2015 so that closing can occur on or before February 27, 2015.

5.3.2 In preparing the Receiver’s marketing program to potential purchasers of the Stalking Horse Assets,

the Receiver requested and received input from Heridge, GLB’s CFO, and members of KPMG’s

Corporate Finance practice. The Receiver has identified 56 potential purchasers (48 strategic and

eight financial) that will be contacted should this Honourable Court approve the Sales Process.

5.3.3 As mentioned above, the Purchase Price for the Remaining Assets under the Stalking Horse APA

is the lesser of: (i) $1,500,000 of the Receivership Debt; and (ii) the balance of the Receivership

Debt at Bidding Deadline, less the credit bid amount of $1,000,000 for the Purchased Land. Until

the Bidding Deadline it will be uncertain as to how much Receivership Debt will be outstanding at

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such time. In order to assist potential bidders in ascertaining their intended Purchase Price for the

Remaining Assets, the Receiver, three days prior to the Bid Deadline, will post in the data room

established by the Receiver, the amount of the Receivership Debt that is outstanding at that time as

well as the Purchase Price that will be payable by the Stalking Horse Bidder in respect of the

Remaining Assets

5.3.1 In carrying out the Sale Process, none of the details of the Sale Process that would not otherwise

be made available to other prospective purchasers will be disclosed by the Receiver to the Stalking

Horse Bidder or its legal counsel, including the identity and number of parties participating in the

Sale Process.

5.4 Observations in Respect of the Sale Process and the Stalking Horse APA

5.4.1 The proposed Sale Process and Bidding Procedures suggest a 45-day period to market the assets to

prospective buyers. In the Receiver’s view, this timeline is sufficient to allow interested parties to

perform diligence and to submit offers. The Receiver does not have sufficient funding to support

the receivership during a lengthy sale process. In addition, as the Stalking Horse Assets primarily

consist of the Biodiesel Plant which is in an “idled” state, it is the Receiver’s view that forty five

days is a sufficient amount of time for prospective purchasers to conduct due diligence on the

Stalking Horse Assets.

5.4.2 The Receiver is of the view that the proposed Sale Process exposes the Debtors’ assets to the market

for a reasonable time, is transparent, and is designed to obtain the highest and best value for the

Debtors’ assets given the stated timeline and available funding.

5.4.3 In analyzing the reasonableness of the Stalking Horse APA and in order to prepare for the Sale

Process, the Receiver has commissioned the following:

a) Real Estate Appraisal – the Receiver retained American Appraisal Canada, Inc. to provide

an updated appraisal of the equipment and Land on an orderly and forced liquidation value

basis, which appraisal appraised the Land at less than the value being bid for the Land by

the Stalking Horse Bidder; and

b) Net Minimum Guarantee Offers (“NMG”) – the Receiver contacted several liquidators in

order to obtain NMG offers for the assets of GLB. Once received, these NMG offers will

be compared to offers in the Sale Process to determine if such offers will be accepted or

rejected and the Biodiesel Plant assets sold to a liquidator.

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5.4.4 The Receiver is only seeking approval of the Stalking Horse APA at this time for the purposes of

facilitating the Sale Process and Bidding Procedures and is not seeking final approval to

consummate the transaction contemplated by the Stalking Horse APA.

5.4.5 The Stalking Horse Bidder is credit bidding the Debenture Debt solely in respect of the Purchased

Equipment. The Purchased Equipment consists only of equipment owned by GLB. There is no

Purchased Equipment that is owned by Einer Canada or Bioversel Trading. Accordingly, the

Debenture Debt is solely being credit bid by Heridge on those assets to which the Stalking Horse

Bidder’s security interest under the Debenture attaches. As mentioned above, the Receiver has

conducted a review of the security held by the Stalking Horse Bidder granted pursuant to the

Debenture. The Receiver’s counsel has verbally opined to the Receiver that the Stalking Horse

Bidder has validly perfected security interests in GLB’s Property, subject to standard qualifications.

5.4.6 The credit bid of the Receivership Debt by the Stalking Horse Bidder in the amount of $1,000,000

over the Purchased Land represents a bid that is higher than the appraised value on the Purchased

Land. In respect of the Remaining Asset, the credit bid of the Receivership Debt of the lesser of:

(i) $1,500,000 of the Receivership Debt; and (ii) the balance of the Receivership Debt at Bidding

Deadline consists of additional amounts of the Receivership Debt to be funded, subject to Court

approval.

5.4.7 The Receiver was authorized and has borrowed the amount of $1,500,000 pursuant to section 24

of the Receivership Order, which debt was funded by the Stalking Horse Bidder and is secured over

all of the Property of each of the Debtor entities. The particular uses of these funds is set out further

in this report.

5.4.8 The Receiver has prepared a projected cash flow projection attached hereto as Appendix “J”,

which projects that the Receiver requires additional funding of approximately $1.6 million to fund

the ongoing costs of these Receivership proceedings, including the Sale Process. Accordingly, the

Receiver is seeking approval from the Court to borrow up to an additional amount of $2,000,000

in order to implement a proper sale process for the assets of the Debtors. The Stalking Horse Bidder

has indicated that it is willing to loan the required funds to the Receiver on substantially the same

terms as it advanced the Receivership Debt to date. That is, that such funds are granted a first

priority charge over the Debtors’ Property that ranks ahead of all of the Debtors’ creditors. In

addition, the Stalking Horse Bidder has advised the Receiver that its willingness to provide any

new advance is conditioned on the fact that it be permitted to bid the Receivership Debt in the

manner set out in the Stalking Horse APA.

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5.4.9 If the Stalking Horse Bidder’s credit bid, as outlined in the Stalking Horse APA is determined to

be the Successful Bid, the effect will be as follows:

a) There will be no cash consideration provided for the Purchased Land resulting in no

distribution to any lien claimants that may have perfected liens on the Purchased Land

owned by GLB. The Receiver notes that the construction lien claims of Quantum Murray

and Conestogo Electrical against the Purchased Land were registered prior to the date that

the Debenture was registered against the Purchased Land;

b) There will be no cash consideration provided for the Purchased Equipment resulting in no

distribution to any creditors of GLB, secured or otherwise; and

c) There will be no cash consideration provided for the Remaining Assets, resulting in the

Stalking Horse Bidder using the Receivership Debt, and its Court approved priority, to

acquire the Bioversel Trading Cash. The Receiver understands that the secured claim of

Meridian against Einer Canada will be satisfied by the Bioversel Trading Cash, with

amounts remaining being purchased by the Stalking Horse Bidder through a credit bid of

the Receivership Debt. As a result, after satisfying Meridian’s claim, there will be no

distributions available to any creditors of Bioversel Trading, secured or otherwise. The

Receiver notes that the Debenture is not secured over any of the assets of Einer Canada or

Bioversel Trading, including over the Bioversel Trading Cash.

5.4.10 The Receiver submits that the Bidding Procedures will provide a public and transparent process

under which potential purchasers will be identified and the Stalking Horse Assets marketed. The

Bidding Procedures have been designed in order to solicit bids that contain the highest price for the

assets of the Debtors given the available time and funding.

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6.0 RECEIPTS, DISBURSEMENTS AND PROJECTED CASH FLOWS

6.1 Summary of Total Receipts and Disbursements

6.2 The following table represents a high level summary of total receipts and disbursements for the

period August 27 to November 10, 2014 and projected disbursements through to January 31, 2015.

6.3 Interim Receivership Period

6.4 Attached as Appendix “K” is a summary of the Interim Receiver’s statement of receipts and

disbursements for the period August 27 to October 9, 2014. The Interim Receiver incurred total

costs, net of receipts, of approximately $1,234,275 for expenses which were primarily incurred in

the course of normal operations of the business. Disbursements were made primarily in respect of

salaries, wages and benefits, employee contractor fees, rent and lease payments and ongoing repairs

and maintenance to the Biodiesel Plant. Receipts consisted of cash on deposit in the Debtors’

accounts when the Interim Receiver was appointed.

6.5 The Interim Receiver’s disbursements were funded with Receivership Debt advanced from Heridge

pursuant to Receiver Certificates.

6.6 The Interim Receiver has accrued approximately $435,000 for disbursements related to the Interim

Receivership period, primarily in respect of the utilities that have not yet invoiced the Interim

Receiver, head office rent and professional fees. The Interim Receiver will pay these invoices with

funds borrowed from Heridge in accordance with the Receivership Order.

6.7 Receivership Period

Interim Receivership Period

Receivership Period

Projected

Aug 27 to Oct 9, 2014

Oct 10 to Nov 10, 2014

Nov 11, 2014 to Jan 31, 2015

Receipts 14,140 12,790 - 26,930 Disbursements - Actual (753,335) (287,288) - (1,040,623) Disbursements - Accrued (74,290) - (864,934) (939,224) Professional Fees - Actual (59,790) - - (59,790) Professional Fees - Accrued (361,000) (158,000) (600,000) (1,119,000) Net Disbursements Over Receipts (1,234,275) (432,498) (1,464,934) (3,131,707) Borrowings 1,234,275 265,725 - 1,500,000 Net - (166,773) (1,464,934) (1,631,707)

Total

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6.8 Attached as Appendix “L” is a summary of the Receiver’s statement of receipts and disbursements

for the period October 10 to November 10, 2014. The Receiver incurred total costs, net of receipts,

of approximately $432,498 for expenses that were primarily incurred in the course of preserving

the Biodiesel Plant in an idled state: wages, employee contractor fees, and paying the insurance

premium for the extended 90 day coverage arranged by the Interim Receiver.

6.9 The Receiver’s disbursements were funded with Receivership Debt advanced from Heridge

pursuant to Receiver’s Certificates.

6.10 Anticipated Funding Requirements

6.11 Attached as Appendix “J” is a summary of the combined receipts and disbursements of the Interim

Receiver and Receiver, as well as projected receipts and disbursements through to January 31,

2015. This projection period coincides with the Receiver’s Sale Process and the proposed date to

complete negotiation of an APA.

6.12 The Receiver projects that the total disbursements (net of nominal asset realizations) of the Interim

Receiver and Receiver for the period August 27, 2014 to January 31, 2015 will be approximately

$3.1 million (including the professional fees and disbursements of the Information Officer, Interim

Receiver, Receiver and their counsel). As the Debtors are not operating, there are no sales or

receivable collections to fund the Receivership and the Receiver’s disbursements are funded with

borrowings from Heridge. As noted above, the Interim Receiver and Receiver have, to date,

borrowed the entire $1.5 million authorized under the Receivership Order. Accordingly, the

Receiver projects a shortfall of approximately $1.6 million will be incurred through to January 31,

2015. With the exception of the funds on deposit in a Bioversel Trading bank account at Meridian

discussed above, there is currently no source of funding to fund this shortfall.

6.13 Accordingly, the Receiver requires an increase of at least $1.6 million to the amount that it is

permitted to borrow. The Receiver respectfully seeks permission of this Honourable Court to

increase the permitted borrowings by up to $2.0 million, such borrowing to be granted, in

accordance with the Receivership Order, a first charge over the assets of the Debtors.

Page | 26

7.0 RECOMMENDATIONS

7.1 We respectfully submit this First Report to this Honourable Court in support of the Receiver’s motion to:

Approve this First Report, and approve and authorize the activities of the Receiver as described herein;

Approve the proposed Sale Process and Bidding Procedures for Property of GLB, Bioversel Trading and Einer Canada;

Authorize the Receiver to execute the Stalking Horse APA;

Authorize the Receiver to borrow up to an additional $2.0 million to fund the ongoing costs of the Receivership.

All of which is respectfully submitted this 19th day of November, 2014.

KPMG INC., COURT-APPOINTED RECEIVER OF GREAT LAKES BIODIESEL INC., EINER CANADA INC. AND BIOVERSEL TRADING INC. and not in its personal capacity

Per: Phillip J. Reynolds Senior Vice President

Per: Jorden Sleeth Vice President

 

 

Appendix B

Bidding Procedure Order and Endorsement of Justice Penny dated November 25, 2014 (without Stalking Horse APA)

14162126492

10:17:26 a.m. 11-25-2014 1 /5

SUPERIOR COURT OF JUSTICE COUR SUPERIEURE DE JUSTICE

Commercial List Office

Telephone: (416) 327-5043 Fax: (416) 327-6228

FAX COVER SHEET Date:

TO: 11,41/_Fy rip/),°/R. FAX NO.:

FROM: Commercial List Office t /lefg ,

TOTAL PAGES (INCLUDING COVER PAGE): tb_

MESSAGE:

The Information contained in this facsimile message is confidential information. If the person actually receiving this facsimile or any other reader of the facsimile is not the named recipient or the employee or agent responsible to deliver it to the named recipient. any use, dissemination, distribution. or copying of the communication is strictly prohibited. If you have received this communication in error, please immediately notify us by telephone and return the original message to us at the above address

Original will NOT follow. If you do not receive all pages, please telephone us immediately at the above number.

14162126492 10:17:45 a.m. 11-25-2014 2/5

CITATION: Heridge SARL v. Great Lakes Biodiesel, 2014 ONSC 6815 COURT FILE NO.: CV-14-10672-00CL

DATE: 20141125

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Heridge S.A.R.L., Applicant

AND:

Great Lakes Biodiesel Inc., Einer Canada Inc. and Bioversel Trading Inc., Respondents

BEFORE: Penny J.

COUNSEL: Caitlin Fell and Marc Wasserman for the Receiver, KPMG Inc.

Ashley Taylor for the Applicant

Chris Hunter for East Guardian

Audrey Warner for Quantum

HEARD: November 24, 2014

ENDORSEMENT

[1] On November 24, 2014 I made an order approving a "stalking horse" credit bid by Heridge and approving a bid process for the sale of the respondents' assets, with reasons to follow. These are my reasons.

[2] By order of October 10, 2014, Pattillo J. appointed KPMG as receiver over all of the assets of GBL, Einer and Bioversal under s. 243 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

[3] On this motion, the receiver seeks an order authorizing it to execute an agreement of purchase and sale with Heridge of substantially all the debtors' assets (the stalking horse bid) and to approve the bidding procedures to be used in conjunction with the solicitation of other offers or proposals for the acquisition of the debtors' assets.

[4] Heridge is GLB's major creditor. It is owed approximately $11.5 million. In addition, Heridge has financed the receiver's initial steps to the tune of $1.5 million and proposes to advance another $2 million to ensure the proposed bidding process can be undertaken.

[5] The debtors' assets principally consist of GLB's ownership interest in a biodiesel plant in Welland, Ontario which includes land, a refinery, production equipment and a small office

14162126492 10:18:06 a.m. 11-25-2014 3/5

- Page 2 -

building; the cash of Bioversal being held in an account at a credit union; related party receivables; and choses in action belonging to the debtors against related parties and permits and licenses issued to the debtors.

[6] It is well settled that although the decision to approve a particular form of sales process is distinct from the approval of the sale itself, the reasonableness and adequacy of any sales process proposed by a court appointed receiver must be assessed in light of the factors which a court will take into account when considering the approval of a proposed sale. Those factors were identified by the Court of Appeal in Royal Bank v. Soundair Corp., 1991 CarswellOnt 205 as follows:

(i) whether the receiver has made sufficient efforts to get the best price and has not acted improvidently;

(ii) efficiency and integrity of the process by which offers are obtained;

(iii) whether there has been unfairness in the application of the process; and,

(iv) the interests of all parties.

[7] When assessing a sales process being proposed by a court-appointed receiver, therefore, the court should assess:

(i) the fairness, transparency and integrity of the proposed process;

(ii) the commercial efficacy of the proposed process in light of the specific circumstances facing the receiver; and

(iii) whether the sales process will optimize the chances, in the particular circumstances, of securing the best possible price for the assets being sold

(CCM Master Qualified Fund Ltd v. bluetip Power Technologies Ltd., 2012 ONSC 1750 at para. 6).

[8] It has also been well recognized that the use of stalking horse bids, including credit bids, can be a reasonable element of a sales process in receivership, BLI and CCAA proceedings.

[9] In this case, the credit stalking horse bid will create a baseline, known to other potential bidders. The proposed bid process provides that any other bid must exceed the value of the stalking horse bid by at least $500,000. The stalking horse bid will not give Heridge any advantage in the bid process. Further, unlike many stalking horse bid arrangements, the proposed credit bid in this case does not provide for a break fee or similar payment to be made if the stalking horse bid is not selected at the end of the bidding process. If the stalking horse bid is ultimately chosen as the successful bid, the proposed bidding procedures require the receiver to return to court, on notice, to seek approval of the sale to Heridge The receiver has commissioned two appraisals of the assets; appraisals of the land and equipment on both an orderly sale and

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- Page 3 -

forced liquidation basis. The receiver is also obtaining net minimum guarantee offers from several liquidators. These will be available to evaluate the stalking horse bid and any other offers when final court approval for a sale is sought.

Fairness, Transparency and Integrity

[10] The credit bid in this case is being put forward with a sale process that allows the opportunity for potential bidders to conduct due diligence on the assets and to make a superior offer in excess of the stalking horse bid. The particulars of the stalking horse bid will be fully disclosed and transparent to potential bidders. The receiver's proposed process will ensure the integrity of the sale process by ensuring that only information provided to other prospective purchasers will be provided to the stalking horse bidder. Any information that is not provided to any other prospective purchaser, including the identity of or number of parties participating in the process, will not be shared with the stalking horse bidder.

[11] The proposed process, in my view, has integrity and is both fair and transparent.

Commercial Efficacy

[12] It is the receiver's view that 45 days is a sufficient amount of time for prospective purchasers to conduct due diligence on the debtor's assets. A number of factors support this decision. First, the assets primarily consist of the biodiesel plant which is in an "idled" state. It is not currently operating. Therefore, the level of due diligence required to assess value is somewhat limited. Second, there is likely a somewhat limited market for the sale and purchase of biodiesel plants. The receiver is aware of other plant owners and operators and has experience with the sale of biodiesel plants. Importantly, as well, the receiver does not have sufficient finding to support the receivership during a lengthy sale process. Thus, time for implementing a solution is running out.

[13] I am also cognizant of the Court of Appeal's reasons in Royal Bank v. Soundair Corp. to the effect that when the court appoints a receiver to use its commercial expertise to sell an asset, the court intends to rely upon the receiver's expertise and not upon its own. The court must place a great deal of confidence in the actions taken and in the opinions formed by the receiver and should be reluctant to second-guess the considered business decisions made by its receiver, (supra, at para. 14).

[14] For these reasons, I conclude that the proposed process is commercially effective having regard to the desired outcome of maximizing value.

Sufficient Effort to Obtain Best Price

[15] Under the proposed sale process, the receiver will advertise in the national edition of the Globe and Mail as well as in leading biodiesel industry publications and websites. The bidding procedures proposed will provide the receiver with the flexibility to assess bids and to pursue one or more transactions in order to earn greater returns. There is provision for an auction process to maximize returns if there is sufficient interest.

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[16] The stalking horse bid represents only the base floor purchase price for the assets. If this is not the highest price obtainable, the market will allow interested parties to bid up the price.

[17] The process, in my view constitutes a reasonable attempt at setting up an opportunity to obtain the best price available.

Additional Super Priority Financing

[18] The receiver has justified the expenditure of the initial post-receivership financing of $1.5 million. This has largely been used up in the cost of rent, insurance, utilities and other property-related expenses, rail car rental, wages and professional and consulting fees. Similar expenses, totaling in excess of another $1.5 million, will be incurred to the end of January 2015, when it is hoped the bidding process will have been concluded.

[19] It is clear that these funds would not have been and will not be made available without the super-priority established by the the initial order. There is no evidence of anyone else ready and willing to advance these necessary funds on more favourable terms. I am satisfied that the expenditure of these funds is necessary for the process to unfold in an orderly manner. The only alternative is a liquidation which, I am prepared to assume, would be a less advantageous way of trying to maximize value.

Summary

[20] For these reasons, the orders sought in connection with the stalking horse bid and the proposed bidding process, and related collateral matters, are granted.

Date: November 25, 2014

 

 

Appendix C

Advertisements placed by the Receiver in the Globe and Mail December 1, 2014 and on Biodiesel Magazine’s website November 26

and December 3 and 10, 2014

 

 

Appendix D

Auction Proposal from DSL Industrial Ltd.

Auction Proposal

of

Great Lakes Biodiesel

Welland, Ontario

On Behalf of

KPMG Inc.

January 2015

Presented by

DSL Industrial Ltd.

37 Kodiak Crescent, Unit 7

Toronto, Ontario, M3J 3E5

Web: www.danburysales.com

Email: info@danburysales.com

Via Email: rduwyn@kpmg.ca January 6, 2014 KPMG Inc. 21 King Street West, Suite 700 Hamilton, ON L8P 4W7 Attention: Mr. George Bourikas Re: Offer to liquidate the assets of Great Lakes Biodiesel Thank you for the opportunity to submit our formal proposal to liquidate the assets of Great Lakes Biodiesel located at 1 St. Clair Drive, Welland, Ontario. This is an important project and there are many details that must be accounted for in a professional manner. This proposal includes a comprehensive description of our history, abilities and strategy designed specifically for this project. Should you have any questions regarding our proposal, please do not hesitate to contact us. We trust this proposal meets all of your requirements and that you will enter into a contract with DSL Industrial Ltd. to conduct this liquidation. Respectfully submitted, DSL Industrial Limited

Jonathan Ordon President JO/dl

Proposal We will conduct a Public Auction Sale of the Assets on or about Late March 2015. The sale will be promoted through an international promotional campaign targeting the industry and interested key market players. DSL would promote the public auction sale live on line via BidSpotter.com.

“This is an En-Bloc Offer for All Owned Equipment”

(As Per inspection Thurs. November 14th, 2014 )

Net Minimum Guarantee Our Net Minimum Guarantee for all assets will be $425,000 exclusive of any applicable taxes. We shall be entitled to:

(a) $55,000 from the sale proceeds, plus a commission of 7% on the gross proceeds, net of taxes after the payment in full of the Net Minimum Guarantee exclusive of the applicable taxes and our buyer’s premium.

Net Minimum Guarantee - Payment Upon acceptance of this proposal we will supply a 20% deposit immediately, and the balance of the net minimum guarantee shall be paid within 30-days of court approval. For greater certainty, both the deposit and balance of the net minimum guarantee payable under the DSL Offer are non-refundable, unless DSL cannot sell the entirety or a portion of the assets because KPMG ceases to have control over same

Accounting DSL shall be responsible for the collection of the gross sales proceeds, and shall prepare and provide an accounting to the Receiver no later than seven (7) business days after the date of the auction.

Terms & Conditions The foregoing is subject to the following commitments and conditions:

1) Insurance: We will be responsible for maintaining fire, theft and other perils insurance, in respect of the Assets until sold. DSL shall provide PLPD of 2,000,000 & WSIB coverage for the entire process. DSL agrees to indemnity and save harmless the Receiver and its representatives and advisors from and against all claims, suffered or incurred by any of them from and after the date hereof as a result of or arising directly or indirectly out of or in connection with any negligence or misconduct of DSL or its employees, contractors, licencees, agents or invitees, and this indemnity shall inure to the benefit of the Receiver and its representatives and advisors and their respective successors and assigns.

2) Premises: We shall be entitled to occupy the Premises until the end of day May 30t, 2015 (or sooner) free of any charges in respect of the occupancy or the normal consumption of utilities. We will not be responsible for the filling of any preexisting holes in the floor, walls or roof. DSL shall be responsible for removing any remaining assets and leave the premises in an orderly and broom-swept condition at the conclusion of the occupation. DSL shall remedy or repair any condition resulting from the removal of assets, including without limitation, removing or capping all electrical wires and air/water/other lines to the buss bar/nearest wall and all bolts “blown off”, placing safety barriers around any pits, but shall have no responsibility to remedy any damages or condition to the premises existing prior to the date of its access thereto.

3) Environmental: We are not responsible for the removal of or the disposition of any environmentally hazardous chemicals, and any other substances found on the premises during our contract. The Receiver shall be responsible for the removal of all hazardous materials. Subject to the Receiver's Written Approval, DSL shall if necessary dispose of all waste, books and records found on the premises and provide the bins and labor to load. The Estate however shall be responsible for the above charges. DSL shall at its own cost clean any spills or oil, lubricants, grease or any other liquid remaining after removal of the assets, as a result of any spill that occurs during the period during which DSL occupies the premises, including during the removal of the assets or any of them, which is caused by DSL or its agents, employees, invitees or guests.

4) Force Majeure: In the event of fire, strike, natural disaster including civic disturbance, acts of terror or inclement weather. DSL Industrial Limited shall be held harmless from any and all liability if, at the sole discretion of DSL, such an event shall affect the conduct of timing of the sale of the assets, or result in a reduction in prices achieved, and commissions payable to DSL.

5) Advertising: The auction sale will be advertised well in advance of the scheduled auction through appropriate means, including advertisements in the major newspapers, email blasts, our website, & Bidspotter.

6) Use of Names: Upon instructions from the court appointed Receiver KPMG Inc. we are offering for sale, by way of an on-site public auction, the Assets of Great Lakes Biodiesel.

7) Collection of Taxes: We shall be solely responsible for:

(a) Collection and remittance of any applicable federal and provincial sales taxes, goods and services taxes or harmonized sales taxes payable under any applicable law in connection with the gross sales proceeds, and shall deliver to the Receiver evidence confirming payment of same.

8) Miscellaneous: Our offer is made to you on the following basis:

(a) In the event that you have been enjoined from completing this agreement by the landlord, or the Assets or any substantial part thereof have been removed from your control by any means or process, or the Assets have been redeemed by any person entitled to redeem them, or any proceeding to enjoin you or remove the Assets from your control is pending or threatened, then you shall be under no obligation to complete this agreement and you may terminate this agreement for our actual out of pocket expenses and a full refund of any funds advanced by DSL.

(b) All assets are free and clear of any liens or encumbrances.

(c) This proposal is governed by the laws of the Province of Ontario

(d) DSL will be entitled to retain a Buyer's Premium on any transaction whether sold privately or by Auction. The Buyer’s Premium will be considered to be included in the Sale Price for all private transactions only. The auctioneer will calculate and retain this amount for their own account

(e) All sales to be “as is, where is”. DSL agrees that all sales will be on the “as is, where is” basis and shall be final, and shall ensure that all advertising signs and promotional materials in connection with its mandate shall advise potential purchasers that all sales are made on an “as is, where is” basis and are final

The above offer is valid until Thursday January 14th, 2014 at 4:00 PM E.S.T. or verbal indication thereof after which this offer is null and void. This offer, when executed is intended to form a binding agreement between the parties with respect to its subject matter. Should the foregoing be acceptable please indicate your acceptance by signing the enclosed copy hereof where indicated below and returning it to us.

Accepted and agreed:

DSL Industrial by: ___________ ____ Jonathan Ordon I have the authority to bind the corporation

Title: President Date: January 6th, 2015 KPMG Inc. In its capacity as Receiver of Great Lakes Biodiesel By: Name: __________________________

Title: Date: ____________________

 

 

Appendix E

Stalking Horse APA

LEGAL_1:32754595.4

KPMG INC., solely in its capacity as the Court-appointed receiver of Great Lakes Biodiesel Inc., Einer Canada Inc., and Bioversel Trading Inc.

and not in its personal or corporate capacity

AND

HERIDGE S.À. R.L.

ASSET PURCHASE AGREEMENT

November 19, 2014

LEGAL_1:32754595.4

THIS ASSET PURCHASE AGREEMENT dated as of the 19th day of November, 2014.

AMONG:

KPMG INC. (“KPMG”), solely in its capacity as the Court-appointed receiver of Great Lakes Biodiesel Inc., a corporation organized pursuant to the laws of the Province of Ontario, Canada (“GLB”), Einer Canada Inc., a corporation organized pursuant to the laws of the Province of Ontario, Canada (“Einer Canada”), and Bioversel Trading Inc. a corporation organized pursuant to the laws of the Province of Ontario, Canada (“Bioversel Trading”), and not in its personal or corporate capacity, (the “Receiver”)

- and -

HERIDGE S.À R.L., a corporation incorporated pursuant to the laws of Luxembourg (the “Purchaser”)

WHEREAS:

A. The Debtors are in the biodiesel refinery business relating to the production and supply of emission-reducing biodiesel and all such other commercial activities incidental and ancillary thereto (the “Business”);

B. KPMG was appointed as Receiver, without security, of all of the assets, undertakings and properties of GLB, Einer Canada and Bioversel Trading (collectively, the “Debtors”) acquired for, or used in relation to a business carried on by the Debtors, including all proceeds thereof (collectively, the “Property”) pursuant to an order (as such order may be amended or restated from time to time, the “Receivership Order”) of the Ontario Superior Court of Justice (Commercial List) (the “Court”) dated October 10, 2014, bearing Court File No. CV-14-10672-00CL (the “Receivership Proceedings”);

C. Pursuant to the terms of the Receivership Order and such further Orders of the Court, the Receiver was authorized to borrow monies from time to time to fund the Receivership Proceedings, which borrowing were secured by the Receiver’s Borrowings Charge (as defined in the Receivership Order), being a first priority charge over all of the Property of the Debtors.

D. The Receivership Order authorizes the Receiver to market any or all of the Property, including advertising and soliciting offers in respect of the Property or any part or parts thereof and to negotiate such terms and conditions of sale as the Receiver in its discretion may deem appropriate;

D. The Purchaser has agreed to act as the “stalking horse bidder” for the Purchased Assets (as defined herein) in connection with the ongoing marketing of the Property for sale by the Receiver in accordance with the Bidding Procedures (as defined herein);

E. The Receiver and the Purchaser acknowledge that if the Receiver determines, in accordance with the Bidding Procedures, that this Agreement is a Successful Bid (as defined herein), the Receiver shall sell, assign and convey and the Purchaser shall be obligated to purchase all of the Receiver’s and the Debtors’ right, title and interest, if any,

3

LEGAL_1:32754595.4

in and to the Purchased Assets on the terms and subject to the conditions set forth in this Agreement including the issuance of the Approval and Vesting Order (as defined herein); and

F. The Receiver has agreed to bring a motion to obtain the Bidding Procedures Order (as defined herein) to, among other things, authorize the Receiver to enter into this Agreement, designate the Purchaser as the stalking horse bidder, approve this Agreement as the stalking horse bid, and authorize and approve a process with respect to the marketing and sale of all of the Receiver’s and the Debtors’ right, title and interest, if any, in and to the Property, including the Purchased Assets, pursuant to the Bidding Procedures.

NOW THEREFORE this Agreement witnesses that in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party (as defined herein) to the other, the Parties agree as follows:

ARTICLE 1 INTERPRETATION

1.1 Definitions

Whenever used in this Agreement the following words and terms shall have the meanings set out below:

In this Agreement:

(a) “Accounts Receivable” means any and all (i) accounts receivable, notes receivable and other amounts receivable owed to the Debtors or the Receiver (whether current or non-current), together with all security or collateral therefor and any interest or unpaid financing charges accrued thereon, including all Claims pertaining to the collection of amounts payable, or that may become payable, to the Debtors or the Receiver, (ii) amounts receivable owing or payable to the Debtors or the Receiver from any Governmental Authority subject to any restrictions on the assignment of debts owed by any Governmental Authority to the Debtors under Applicable Law, and (iii) other amounts due to the Debtors or the Receiver which have historically been classified as accounts receivable on the balance sheets of the Debtors;

(b) “Affiliate” has the meaning ascribed thereto under the Business Corporations Act (Ontario);

(c) “Agreement” means this asset purchase agreement, including all schedules, and all supplements, amendments or restatements, as permitted, and references to “Article”, “Section” or “Schedule” mean the specified Article or Section of, or Schedule to, this Agreement;

(d) “Applicable Law” means, in respect of any Person, property, transaction or event, any domestic or foreign statute, law (including the common law),

4

LEGAL_1:32754595.4

ordinance, rule, regulation, treaty, restriction, regulatory policy, standard, code or guideline, by-law or order that applies in whole or in part to such Person, property, transaction or event;

(e) “Approval and Vesting Order” means one or more orders approving the transactions described herein and vesting title to the Purchased Assets in the Purchaser or its assignees free and clear of all Encumbrances except Permitted Encumbrances, which order(s) shall be substantially agreed to by the Parties acting reasonably;

(f) “Assumed Contracts” means, collectively, (i) the contracts to which the Debtors are a party with respect to property, liability and other insurance maintained by the Debtors in respect of the Business and the Purchased Assets as set out in Schedule 4, (ii) the contracts to which the Debtors are a party with respect to water, hydro, fuel oil, gas and other utility services as set out in Schedule 4, and (iii) the Equipment Leases;

(g) “Assumed Liabilities” has the meaning ascribed thereto in Section 2.3;

(h) “Auction” has the meaning ascribed thereto in the Bidding Procedures;

(i) “Back-Up Bid” has the meaning ascribed thereto in the Bidding Procedures;

(j) “Back-Up Bidder” has the meaning ascribed thereto in the Bidding Procedures;

(k) “Bidding Procedures” means the bidding procedures approved by the Court pursuant to the Bidding Procedures Order substantially in the form appended as Schedule 2 hereto or otherwise as consented to by the Purchaser acting reasonably;

(l) “Bidding Procedures Order” means an order of the Court in form and substance satisfactory to the Purchaser regarding the matters set out in Section 6.1(b);

(m) “Books and Records” means all of the books, records, books of account, supplier and customer lists, business information, research and development information, business analyses and plans, and records, and all other documents, files, records, correspondence, electronic information (including emails and web page content), and other data and information, financial or otherwise related to the Business within the control or possession of the Debtors at the Closing Date, and including all data and information stored by the Debtors electronically, digitally or on computer related media, which can be transferred in accordance with Applicable Law, but excluding any of the foregoing as applicable to any Excluded Asset or any Excluded Liability;

(n) “BTI Cash” means any cash that is or was being held by Meridian Credit Union Ltd. in an account registered in the name of Bioversel Trading at Meridian Credit Union Ltd.

5

LEGAL_1:32754595.4

(o) “Buildings” means, individually or collectively, as the context requires, all of the buildings, structures and fixed improvements located on, in or under the Land, and improvements and fixtures contained in or on such buildings and structures used in the operation of same, and “Building” means any one of the Buildings;

(p) “Business” has the meaning ascribed thereto in the Recitals;

(q) “Business Day” means any day which is not a Saturday, a Sunday or a day observed as a statutory or civic holiday under the laws of the Province of Ontario or the federal laws of Canada applicable in the Province of Ontario, on which the principal commercial banks in the City of Toronto, Ontario are open for business;

(r) “Claim” means any claim, action, demand, cause of action, suit, complaint, proceeding, arbitration, judgment, settlement, award, assessment, re-assessment, order, investigation, enquiry or hearing made or threatened;

(s) “Closing” means the completion of the purchase by the Purchaser and sale by the Receiver of the Purchased Assets in accordance with the terms and subject to the conditions of this Agreement on the Closing Date at the Closing Time;

(t) “Closing Date” means the date on which Closing occurs;

(u) “Closing Time” has the meaning ascribed thereto in Section 8.1(b);

(v) “Consent” means any approval, authorization, consent, order, license, permission, permit (including any environmental permit), qualification, exemption or waiver by any Governmental Authority or other Person;

(w) “Contracts” means all contracts, licences, leases, agreements, obligations, promises, undertakings, understandings, arrangements, documents, commitments, entitlements or engagements to which a Debtor is a party or by which a Debtor is bound or under which a Debtor has, or will have, any liability or contingent liability (in each case, whether written or oral, express or implied) relating to the Business, as same may be amended and/or restated, and including any and all related quotations, orders, proposals or tenders which remain open for acceptance, warranties and guarantees and documents ancillary thereto;

(x) “Court” has the meaning ascribed thereto in the Recitals;

(y) “Credit Bid Amount” means the sum of (i) US$11,500,000 million which represents all of the debt and accrued interest thereon outstanding under the Debenture, which is secured by the Security and is being credit bid by the Purchaser, plus (ii) CDN$1,185,000 on account of costs and expenses and other losses incurred in respect of the Debenture and the enforcement of the Purchaser’s rights thereunder;

(z) “Cure Costs” means: (i) all amounts required to cure any defaults under Assumed Contracts; and (ii) all fees and disbursements of the Receiver incurred in

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LEGAL_1:32754595.4

connection with obtaining the consents in connection with the Assumed Contracts;

(aa) “Debenture” means the debenture effective January 1, 2011 between, among others, the Purchaser and GLB pursuant to which the Purchaser loaned GLB US$20,000,000;

(bb) “Encumbrances” means any and all security interests (whether contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or monetary claims, whether or not they have attached or been perfected, registered or filed and whether secured, unsecured or otherwise including, without limiting the generality of the foregoing: (i) any encumbrances or charges created by Receivership Order or subsequent orders in the Receivership Proceedings; (ii) any mortgages, construction liens or other encumbrances registered against the Land; and (iii) all charges, security interests or claims evidenced by registrations pursuant to the Personal Property Security Act (Ontario) or any other personal property registry system;

(cc) “Environmental Laws” means all Applicable Laws including written policies and guidelines and directives, administrative rulings or interpretations, that are in effect and applicable to the Property or the Debtors as well as the common law and any judicial or administrative order, consent decree or judgment, now in existence or which may come into existence until Closing, governing or regulating the use, generation, storage, removal, recovery, treatment, handling, transport, disposal, control, discharge of, or exposure to Hazardous Materials or intended to protect the environment, including, without limitation, the Atomic Energy Control Act (Canada), the Canadian Environmental Management Act (Canada), the Pest Control Products Act (Canada), the Transportation of Dangerous Goods Act (Canada), the Environmental Protection Act (Ontario), the Environmental Assessment Act (Ontario), the Clean Water Act (Ontario) and the regulations and guidelines promulgated pursuant thereto or issued by any Governmental Authority in respect thereof, and equivalent or similar local and provincial ordinances and statutory programs and the regulations and guidelines promulgated pursuant thereto;

(dd) “Equipment” means all biodiesel technology, lab equipment, production equipment, machinery, handling equipment, tools and accessories, rail and truck terminal equipment, and vehicles used in the business of the Debtors and located on the Land, any of the parts and components thereof and any of the warranties associated therewith and all licenses in respect of the business of the Debtors, and any furniture, furnishings, computer hardware (including all servers regardless of their location), and peripheral equipment in connection therewith, including those assets set forth on Schedule 3;

(ee) “Equipment Leases” means the agreements for the use of Equipment set out in Schedule 4;

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(ff) “Excluded Assets” means all assets of the Debtors, other than the Purchased Assets, including:

(i) the Receiver’s cash on hand and bank accounts, other than the BTI Cash;

(ii) all capital stock of the Debtors;

(iii) subject to Section 8.4, all insurance claims relating to the Business and any proceeds thereof;

(iv) Excluded Contracts;

(v) all Tax attributes of the Debtors or any of them; and

(vi) the Receiver’s rights under this Agreement.

(gg) “Excluded Contracts” means all Contracts other than the Assumed Contracts;

(hh) “Excluded Liabilities” means all Liabilities other than the Assumed Liabilities, including, without limitation, any Encumbrances except Permitted Encumbrances, and any Liabilities relating to any Excluded Contract or any claim for taxes, interest, penalties or fines;

(ii) “Fixed Assets” means all buildings, structures, erections, improvements, appurtenances, and fixtures affixed to, situate on or forming part of the Purchased Land;

(jj) “GAAP” means generally accepted accounting principles in Canada;

(kk) “Goodwill” means the exclusive right to represent oneself as carrying on all business undertakings for or related to the Business, in continuation of and in succession to the Debtors, including the right to use any words, names, internet domain names and trade names indicating that the Business is so carried on;

(ll) “Governmental Authority” means any domestic or foreign government, whether federal, provincial, state, territorial or municipal; and any governmental agency, ministry, department, court (including the Court), Tribunal, commission, stock exchange, bureau, board or other instrumentality exercising or purporting to exercise legislative, judicial, regulatory or administrative functions of, or pertaining to, government or securities market regulation;

(mm) “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority;

(nn) “Hazardous Materials” means any contaminant, substance, pollutant, waste, hazardous material, toxic substance, radioactive substance, petroleum, its derivatives, by-products and other hydrocarbons, dangerous substance or dangerous goods or material that is: (i) deemed hazardous or toxic under

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Environmental Laws; (ii) prohibited, controlled or regulated by any Governmental Authority pursuant to Environmental Laws; or (iii) present to a degree or in an amount in excess of thresholds regulated under Environmental Laws;

(oo) “Income Tax Act” means, collectively, the Income Tax Act (Canada), the Income Tax Application Rules (Canada) and the Income Tax Regulations, in each case as amended to the date hereof;

(pp) “Intellectual Property” means all intellectual and industrial property of any kind used in the Business protected or protectable in any jurisdiction throughout the world, including: all software, computer programs, layouts, interfaces, templates, applications and tools, and code of all types, including object and source code, and including ephemeral aspects, “look and feel”, graphic design and user interface design (“Software”), all image media, including negatives, disks, flash cards, and exposed film (“Image Media”) from photographs taken by the Debtors in the ordinary course of business during the twelve month period prior to the Closing Date, all information and data, databases, database layouts and data structures (whether or not subject to copyright protection) (“Databases”), all literary, graphical, pictorial, artistic, audio-visual and other works, including webpages and webpage designs, templates, scripts, and similar material, and all compilations of any of the foregoing (collectively, together with Software and Databases, “Works”), all trade-marks, trade names, service marks, trade dress, logos and other marks and associated goodwill (“Marks”), all registered domain names; all patents, inventions, discoveries, arts, systems, methods, processes, machines, manufactures, developments and improvements (“Inventions”), all industrial designs; all formulae, confidential information, proprietary information, trade secrets and know how (“Know-How”), and any other works or other subject-matter that is subject to intellectual or industrial property protection under the laws of any jurisdiction throughout the world, in all cases whether or not registrable, registered or the subject of applications for registration, including Intellectual Property Rights;

(qq) “Intellectual Property Rights” means in relation to the Business of the Debtors, (i) any and all statutory, common law or other intellectual and industrial property rights and interests of any kind or nature in and to Intellectual Property provided or protectable under the laws of any jurisdiction throughout Canada, including all copyrights and other rights in and to Works, moral rights and benefits in all waivers of moral rights, patents, patent rights and other rights in and to Inventions, rights to Marks, rights and benefits in and to domain name registrations, industrial design and design patent rights, trade secret rights and other rights in and to Know-How, (ii) all registrations, pending applications for registration, and rights to file applications, and rights of priority, renewal, extensions, continuations (in whole or in part) or other derivative applications and registrations, for any of the foregoing; (iii) all licenses or other contractual rights in and to any of the foregoing (including third party software licenses) and all licenses granted in respect of any of the foregoing Intellectual Property, rights and interests; (iv) all future income and proceeds from any of the foregoing Intellectual Property, rights, interests or licenses; and (v) all rights of enforcement

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and to obtain remedies, including damages and profits, by reason of infringement of any of the foregoing Intellectual Property, rights, interests or licenses;

(rr) “Interim Receiver” means KPMG, solely in its capacity as the Court-appointed Interim Receiver of the Debtors, and not in its personal or corporate capacity;

(ss) “Interim Receivership Order” means the order of the Court dated August 27, 2014, bearing Court File No. CV-14-10672-00CL;

(tt) “Inventory” means all inventories, supplies, work in progress and finished goods of the Debtors related to the Business;

(uu) “KPMG” has the meaning ascribed thereto in the Recitals;

(vv) “Land” means the land located at 1 St. Clair Drive, Welland, Ontario, which is legally described in Schedule “6” hereto;

(ww) “Legal Proceeding” means any trial, investigation, hearing, grievance, arbitration or other proceeding in respect of any Claim, and includes any appeal or review or retrial of any of the foregoing and any application for same;

(xx) “Liabilities” means any and all debts, liabilities and obligations of the Debtors, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Applicable Law, Claim or Governmental Order, and those arising under any contract, agreement, arrangement, commitment or undertaking;

(yy) “Loss” means any and all loss, liability, damage, cost, charge, fine, penalty or assessment, including the costs and expenses of any Legal Proceeding, assessment, judgment, settlement or compromise relating thereto, and all interest, fines and penalties and reasonable legal fees and expenses incurred in connection therewith;

(zz) “Parties” means, collectively, the Purchaser and the Receiver, and “Party” means any one of them;

(aaa) “Permits and Licences” means all permits, consents, waivers, licences, sub-licences, certificates, approvals, authorizations, registrations, franchises, rights, privileges, certification, quotas and exemptions, or any item with a similar effect, issued or granted by any Governmental Authority for or related to the Business;

(bbb) “Permitted Encumbrances” means those Encumbrances described in Schedule “7” hereto;

(ccc) “Person” means individuals, corporations, limited and unlimited liability companies, general and limited partnerships, associations, trusts, unincorporated organizations, joint ventures and Governmental Authorities;

(ddd) “Property” has the meaning ascribed thereto in the Recitals;

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(eee) “Purchase Price” has the meaning ascribed thereto in Section 3.1;

(fff) “Purchased Assets” means;

(i) the Purchased Land;

(ii) the Purchased Equipment; and

(iii) the Remaining Assets;

(ggg) “Purchased Equipment” means all of the right, title and interest of the Debtors and the Receiver in the Inventory and Equipment of the Debtors and does not include the Purchased Land, the Remaining Assets or the Excluded Assets;

(hhh) “Purchased Land” means all right, title and interest of GLB and the Receiver in the Land, the Buildings and the Fixed Assets which form part thereof and shall not include the Purchased Equipment or the Excluded Assets;

(iii) “Purchaser” has the meaning ascribed thereto in the Recitals;

(jjj) “Purchaser’s Solicitors” means the law firm of Stikeman Elliott LLP;

(kkk) “Receiver” has the meaning ascribed thereto in the Recitals;

(lll) “Receiver’s Certificate” has the meaning given in the Receivership Order;

(mmm)“Receiver’s Solicitors” means the law firm Osler, Hoskin & Harcourt LLP;

(nnn) “Receivership Debt Amount” means the aggregate outstanding principal amount borrowed by KPMG (in its capacity as the Interim Receiver and the Receiver pursuant to the Interim Receivership Order and the Receivership Order, respectively) plus any accrued interest and charges thereon, which is secured by the Receiver’s Borrowings Charge and is being credit bid by the Purchaser;

(ooo) “Receivership Order” has the meaning ascribed thereto in the Recitals;

(ppp) “Receivership Proceedings” has the meaning ascribed thereto in the Recitals;

(qqq) “Remaining Assets” means:

(i) the Accounts Receivable;

(ii) the BTI Cash;

(iii) all choses in action of the Debtors;

(iv) the Assumed Contracts;

(v) all Intellectual Property and Intellectual Property Rights;

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(vi) all Permits and Licences, to the extent they may be assigned to the Purchaser;

(vii) all Goodwill;

(viii) all customer lists relating to the Business; and

(ix) all Books and Records;

(rrr) “Representative” means, in respect of a Party, each director, officer, employee, agent, Affiliate, manager, lender, solicitor, accountant, professional advisor, consultant, contractor and other representative of such Party or such Party’s Affiliates and shall include each director, officer, employee, agent, Affiliate, manager, lender, solicitor, accountant, professional advisor, consultant, contractor and other representative of such Affiliate;

(sss) “Security” means the security interest granted by GLB in favour of the Purchaser over all of GLB’s present and after acquired real and personal property;

(ttt) “Specific Conveyances” means all conveyances, bills of sale, assignments, transfers, and other documents or instruments that are reasonably required or desirable to convey, assign and transfer all of the Debtors’ and the Receiver’s right, title and interest, if any, in and to the Purchased Assets to the Purchaser none of which shall contain any representations or warranties of the Receiver except as provided herein, including, but not limited to:

(i) a general conveyance for all of the Purchased Assets;

(ii) a bill of sale;

(iii) an agreement evidencing the assignment to the Purchaser of the Assumed Contracts and the Purchaser’s assumption of the Assumed Liabilities;

(iv) necessary deeds, conveyances, assurances, transfers and assignments and any other instruments necessary or reasonably required to transfer the Purchased Land to the Purchaser; and

(v) specific assignments of each of the Permits and Licences;

(uuu) “Successful Bid” has the meaning ascribed thereto in the Bidding Procedures;

(vvv) “Successful Bidder” has the meaning ascribed thereto in the Bidding Procedures;

(www) “Tax Legislation” means, collectively, the Income Tax Act and all federal, provincial, territorial, municipal, foreign, or other statutes imposing a Tax, including all treaties, conventions, rules, regulations, orders, and decrees of any jurisdiction;

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(xxx) “Tax” or “Taxes” means all taxes, assessments, charges, dues, duties, rates, fees, imposts, levies and similar charges of any kind lawfully levied, assessed or imposed by any Governmental Authority under any applicable Tax Legislation, including Canadian federal, provincial, territorial, municipal and local, foreign or other income, capital, goods and services, sales, harmonized sales, use, consumption, excise, value added, business, real property, personal property, transfer, franchise, withholding, payroll, or employer health taxes, customs, import, anti-dumping or countervailing duties, Canada Pension Plan contributions, employment insurance premiums, and provincial workers’ compensation payments, including any interest, penalties and fines associated therewith;

(yyy) “Termination Date” means February 27, 2015;

(zzz) “Transaction” means the purchase and sale of all of the Receiver’s and the Debtors’ right, title and interest, if any, in and to the Purchased Assets contemplated by this Agreement;

(aaaa) “Transfer Taxes” means all present and future transfer taxes, sales taxes, harmonized sales taxes, use taxes, production taxes, value-added taxes, goods and services taxes, land transfer taxes, registration and recording fees, and any other similar or like taxes and charges imposed by a Governmental Authority in connection with the sale, transfer or registration of the transfer of the Purchased Assets to the Purchaser, or payable upon completion of the Transaction, including under the Excise Tax Act (Canada) and any other provincial or state Tax Legislation but excluding any taxes imposed or payable under the Income Tax Act and any other similar income tax legislation; and

(bbbb) “Tribunal” means any court (including a court of equity), arbitrator or arbitration panel and any other Governmental Authority, stock exchange, professional or business organization or association or other body exercising adjudicative, regulatory, judicial or quasi-judicial powers.

1.2 Currency

All references in this Agreement to monetary amounts, unless indicated to the contrary, are to the currency of Canada.

1.3 Entire Agreement

This Agreement constitutes the entire agreement between the Parties with respect to its subject matter, and supersedes any and all prior negotiations, understandings and agreements between the Parties. This Agreement may not be amended or modified in any respect except by written instrument signed by the Parties. There are no covenants, promises, warranties, representations, conditions, understandings or other agreements, oral or written, express, implied or collateral between the Parties in connection with the subject matter of this Agreement except as specifically set forth in this Agreement and the Purchaser shall acquire all of the Receiver’s and the Debtors’ right, title and interest, if any, in and to the Purchased Assets on an “as is, where is” basis. Any cost estimates, projections or other predictions contained or referred to in any other

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material that has been provided to the Purchaser or any of its Representatives are not and shall not be deemed to be representations or warranties of the Receiver or any of its Representatives. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether or not similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly provided in writing duly executed by the Party to be bound thereby.

1.4 Governing Law

This Agreement is a contract made under and shall be governed by and construed in accordance with the Laws of the Province of Ontario and the federal Laws of Canada applicable in the Province of Ontario. Each Party hereto irrevocably submits to the exclusive jurisdiction of the Court supervising the Receivership Proceedings with respect to any matter arising hereunder or relating hereto.

1.5 Singular, Plural and Gender

Words importing the singular include the plural and vice versa, and words importing gender include the masculine, feminine and neuter genders.

1.6 Certain Words

In this Agreement, the words “including” and “includes” means “including (or includes) without limitation”, and “third party” means any Person who is not a Party.

1.7 Headings and Table of Contents

The headings and any table of contents contained in this Agreement, including the separation of this Agreement into articles, sections, subsections, paragraphs and clauses, are for convenience of reference only, and shall not affect the meaning or interpretation.

1.8 Statutory References

All references to any statute is to that statute or regulation as now enacted or as may from time to time be amended, re-enacted or replaced and includes all regulations made thereunder, unless something in the subject matter or context is inconsistent therewith or unless expressly provided otherwise in this Agreement.

1.9 Actions to be Performed on a Business Day

Whenever this Agreement provides for or contemplates that a covenant or obligation is to be performed, or a condition is to be satisfied or waived on a day which is not a Business Day, such covenant or obligation shall be required to be performed, and such condition shall be required to be satisfied or waived on the next Business Day following such day.

1.10 Schedules

The following are the Schedules attached to and incorporated in this Agreement by reference and deemed to be a part hereof.

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Schedule 1– Receivership Order Schedule 2– Form of Bidding Procedures Order Schedule 3– Equipment Schedule 4– Equipment Leases Schedule 5– Assumed Liabilities Schedule 6– Description of the Land Schedule 7– Permitted Encumbrances

ARTICLE 2 PURCHASE AND SALE OF PURCHASED ASSETS AND ASSUMPTION OF

LIABILITIES

2.1 Agreement of Purchase and Sale

On the Closing Date and subject to the terms and conditions of this Agreement (which conditions, for greater certainty, include the issuance of the Bidding Procedures Order, the determination by the Receiver that this Agreement is a Successful Bid (as defined in and determined in accordance with the Bidding Procedures), and the issuance of the Approval and Vesting Order), the Receiver hereby agrees to sell, assign and transfer to the Purchaser, and the Purchaser agrees to purchase from the Receiver, all of the Debtors’ and the Receiver’s right, title and interest, if any, in and to the Purchased Assets, and such foregoing purchase shall be free and clear of all Encumbrances other than Permitted Encumbrances as provided for in the Approval and Vesting Order.

2.2 Excluded Assets

Notwithstanding anything to the contrary in Section 2.1 or elsewhere in this Agreement, the Purchased Assets shall not include the Excluded Assets, which shall remain the property of the Debtors and nothing herein shall be deemed to sell, transfer, assign or convey the Excluded Assets.

2.3 Assumed Liabilities

Upon the terms and subject to the conditions set forth in this Agreement, subject to Closing, as of the Closing Time the Purchaser shall assume and shall pay, discharge, honour and perform, as the case may be and as and when due, from and after the Closing Date, the liabilities and obligations with respect to the Business and/or the Purchased Assets listed on Schedule “5” hereto (the “Assumed Liabilities”). Subject to Closing, where the Purchaser has, with the consent of the counterparty to an Assumed Contract, assumed the obligations of a Debtor under such Assumed Contract, the Purchaser shall perform such obligations from and following the Closing Time. The Purchaser hereby agrees to indemnify and save harmless the Receiver from all Claims, Liabilities, damages, Losses and other amounts arising directly or indirectly out of or in connection with the Assumed Liabilities.

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2.4 Exclusion of Liabilities

For certainty, the Purchaser shall not, at Closing or otherwise, assume or be liable for the Excluded Liabilities or any other Liabilities of the Debtors whatsoever other than the Assumed Liabilities from and following the Closing Time.

2.5 Assignment and Assumption of Assumed Contracts

(a) Subject to the terms and conditions of this Section 2.5, the Approval and Vesting Order, the Assumed Contracts shall form part of the Purchased Assets assigned and transferred to the Purchaser at Closing, the consideration for which is included in the Purchase Price, and the Purchaser will assume and agree to perform and discharge the Assumed Liabilities under the Assumed Contracts pursuant to this Agreement and the applicable Specific Conveyances;

(b) The Receiver will use its reasonable commercial efforts to take such actions as are necessary to obtain the consents to cause the Assumed Contracts to be assigned by a Debtor to the Purchaser as of the Closing;

(c) The Purchaser will use its reasonable commercial efforts to assist the Receiver in obtaining the Consents and will provide reasonably required documentation other evidence to support its ability to provide adequate assurance of future performance of each assumed Contract, and the Purchaser shall pay all Cure Costs related to such assignments;

(d) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Assumed Contract, to the extent such Assumed Contract is not assignable under Applicable Law without the Consent of any other Person party unless such Consent has been obtained; and

(e) For greater certainty, provided that the Receiver has complied with the covenant to use commercial reasonable efforts as set out in Section 2.5(b) above, if any Consent is required to assign an Assumed Contract, but is not obtained, neither the Receiver nor the Purchaser shall be in breach of this Agreement, nor shall (i) any condition to Closing be unsatisfied (ii) the Purchaser Price be adjusted or (iii) the Closing delayed.

ARTICLE 3 PURCHASE PRICE

3.1 Determination of Purchase Price

The purchase price for the Purchased Assets, exclusive of all applicable Transfer Taxes and Cure Costs, shall be the aggregate of the following (the “Purchase Price”):

(a) For the Purchased Land, $1,000,000 of the Receivership Debt Amount;

(b) For the Purchased Equipment, the Credit Bid Amount; and

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(c) For the Remaining Assets, the lesser of (i) $1,500,000 of the Receivership Debt Amount; and (ii) the balance of the Receivership Debt Amount (after accounting for the application set forth in Section 3.1(a)); and the assumption of the Assumed Liabilities.

The Parties agree to allocate the Purchase Price among the Purchased Assets in such manner as they may mutually agree prior to the Closing. The parties shall report the sale and purchase of the Purchased Assets for all tax purposes in a manner consistent with such allocation, and will complete all tax returns, designations and elections in a manner consistent with such allocation and otherwise follow such allocation for all tax purposes on and subsequent to the Closing Date and may not take any position inconsistent with such allocation.

3.2 Satisfaction of Purchase Price

The Purchase Price shall be paid and satisfied on Closing as follows:

(a) The Credit Bid Amount by providing a credit in the amount of the Credit Bid Amount against GLB’s obligations under the Debenture; and

(b) In respect of that portion of the Receivership Debt Amount bid by the Purchaser, by providing a credit in that amount equal to such portion of the Receivership Debt Amount against the Receiver’s Borrowings Charge.

3.3 Transfer Taxes

The Parties agree that the Purchase Price payable by the Purchaser to the Receiver pursuant to this Agreement does not include any Transfer Taxes and all Transfer Taxes are the responsibility of and for the account of the Purchaser. The Purchaser and the Receiver agree to cooperate to determine the amount of Transfer Taxes payable in connection with the Transaction. If the Receiver is required by Applicable Law or by administration thereof to collect any applicable Transfer Taxes from the Purchaser, the Purchaser shall pay such Transfer Taxes to the Receiver on Closing, unless the Purchaser qualifies for an exemption from any such applicable Transfer Taxes, in which case the Receiver shall not collect any such applicable Transfer Taxes from the Purchaser, provided that the Purchaser, in lieu of payment of such applicable Transfer Taxes to the Receiver, deliver to the Receiver such certificates, elections or other documentation required by Applicable Law or the administration thereof to substantiate and affect the exemption claimed by the Purchaser. The Purchaser shall indemnify the Receiver and the Debtors against any Claims which may arise in connection with such Transfer Taxes the Purchaser further agrees to pay all such amounts including interest and penalties if any, upon written request by the Receiver provided in accordance with the provisions of Section 10.9 hereof.

3.4 Tax Election

With respect to the Taxes:

(a) The Purchaser and the Receiver agree to furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance relating to the Purchased Assets and the Assumed Liabilities as is reasonably necessary for the preparation and filing of any Tax return, claim for refund or other required or

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optional filings relating to Tax matters, for the preparation for and proof of facts during any Tax audit, for the preparation for any Tax protest, for the prosecution of any suit or other proceedings relating to Tax matters and for the answer to any governmental or regulatory inquiry relating to Tax matters;

(b) If applicable, at the Closing, as may reasonably be requested by the Purchaser, the Debtors and the Purchaser shall jointly execute an election under Section 167(1)(b) of the Excise Tax Act (Canada) to have subsection 167(1.1) of the Excise Tax Act (Canada) apply in respect of the sale of all of the Receiver’s and the Debtors’ right, title and interest, if any, in and to the Purchased Assets under this Agreement. The Purchaser shall file the election in the manner and within the time prescribed by subsection 167(1.1) of the Excise Tax Act (Canada). The Purchaser and the Receiver shall also execute and deliver such other Tax elections and forms as they may mutually agree upon; and

(c) Notwithstanding the foregoing, the Purchaser hereby agrees to indemnify the Receiver and the Debtors for any assessment of any Transfer Taxes made against the Receiver and/or the Debtors as a result of the making of the elections hereunder by the Parties with respect to the acquisition of the Purchased Assets by the Purchaser and the Purchaser further agrees to pay all such amounts including interest and penalties if any, upon written request by the Receiver provided in accordance with the provisions of Section 10.9 hereof.

ARTICLE 4 REPRESENTATIONS AND WARRANTIES

4.1 Representations of the Receiver

The Receiver represents and warrants to the Purchaser as follows and acknowledges that the Purchaser is relying on such representations and warranties in connection with entering into this Agreement and performing its obligations hereunder:

(a) The Receiver has been appointed by the Court as receiver of the Property pursuant to the Receivership Order, a copy of which is appended as Schedule 1 hereto;

(b) Subject to the issuance of the Bidding Procedures Order and the Approval and Vesting Order, the Receiver has all necessary power and authority to enter into this Agreement and to carry out its obligations under this Agreement. This Agreement constitutes a legal, valid and binding obligation of the Receiver enforceable against it in accordance with its terms, subject to any limitations imposed by Applicable Law;

(c) The Debtors are registered for harmonized sales tax purposes under Part IX of the Excise Tax Act (Canada) with the following registration numbers: 85923 4213 RT001 (GLB), 85923 6218 RT001 (Einer Canada) and 84883 9353 RT001 (Bioversel Trading), respectively;

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(d) To the knowledge of the Receiver, there is no action, suit, proceeding or Claim against any of the Debtors or the Receiver that is pending or, to the Receiver’s knowledge, threatened against a Debtor or the Receiver in any court or by or before any Governmental Authority that would adversely affect the Receiver’s ability to perform its obligations under this Agreement on a timely basis; and

(e) None of the Receiver or, to the knowledge of the Receiver, the Debtors, is a non-resident of Canada within the meaning of section 116 of the Income Tax Act.

4.2 Representations of the Purchaser

The Purchaser represents and warrants to the Receiver as follows and acknowledges that the Receiver is relying on such representations and warranties in connection with entering into this Agreement and performing its obligations hereunder:

(a) The Purchaser is a corporation duly formed and validly subsisting under the laws of the jurisdiction of its formation and has the requisite power and authority to carry on its business as now conducted by it and to own its properties and assets, and is qualified to carry on business under the Applicable Laws of the jurisdictions where it carries on a material portion of its business;

(b) The Purchaser has taken all necessary action to authorize the entering into and performance by it of this Agreement and completion of the Transaction, and the execution, delivery and performance by the Purchaser of this Agreement does not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) require any Consent or approval under, result in a breach or a violation of, or conflict with, any of the terms or provisions of its constating documents or by-laws or any contracts or instruments to which it is a party or pursuant to which any of its assets or property may be affected, and will not result in the violation of any Applicable Law;

(c) The execution, delivery and performance of this Agreement by the Purchaser does not and will not require any Consent, approval, authorization or other order of, action by, filing with or notification to, any Governmental Authority, except where failure to obtain such Consent, approval, authorization or action, or to make such filing or notification, would not prevent, affect or delay the consummation by the Purchaser of the Transaction;

(d) There is no action, suit, proceeding or Claim against the Purchaser that is pending or, to the Purchaser’s knowledge, threatened against the Purchaser in any court or by or before any Governmental Authority that would adversely affect the Purchaser’s ability to perform its obligations under this Agreement on a timely basis;

(e) This Agreement has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser and is enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,

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reorganization or similar Applicable Laws relating to creditors’ rights generally and subject to general principles of equity; and

(f) The Purchaser of the Purchased Land or its permitted assignee in accordance with Section 10.7 with respect to the Purchased Land will be a registrant for the purposes of the tax imposed under Part IX of the Excise Tax Act (Canada) on or prior to Closing, and agrees that the Purchaser or permitted assignee of the Purchased Land will be liable for any Tax consequences of not so being.

4.3 Limitations

With the exception of the Receiver’s representations and warranties in Section 4.1 and the Purchaser’s representations and warranties in Section 4.2, neither the Receiver nor the Purchaser or their Representatives have made or shall be deemed to have made any other representation or warranty, express or implied, at law or in equity, in respect of the Receiver, the Purchaser, the Purchased Assets or the sale or purchase of the Purchased Assets pursuant to this Agreement.

ARTICLE 5 COVENANTS

5.1 Pre-Closing Cooperation

(a) Prior to the Closing, upon the terms and subject to the conditions of this Agreement, each of the Parties shall use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and cooperate with each other in order to do, all things necessary, proper or advisable under Applicable Law to consummate the Transaction as soon as practicable. Prior to the Closing, the Purchaser may, at its own expense, retain (or the Receiver shall retain at the expense of the Purchaser) a qualified environmental consultant to conduct a Phase I environmental site assessment and review at the Purchased Land, for the purposes of assessing potential liability with respect to environmental matters under Applicable Laws.

(b) The Receiver shall promptly make available to the Purchaser, as the Purchaser may require, copies of all title documents, abstracts of title, deeds, leases, surveys, plans of survey, certificates, building plans, contracts, agreements, studies, sketches, and reports, and such other materials and documents that the Receiver has in its possession pertaining to the Purchased Assets, for the purpose of allowing the Purchaser to investigate at its own expense the title of the Debtors to the Purchased Assets, the condition, merchantability, extent, quality, quantity, fitness for purpose and all other aspects of the Purchased Assets; and

(c) Each of the Receiver and the Purchaser shall promptly notify each other of the occurrence, to such Party’s knowledge, of any event or condition, or the existence, to such Party’s knowledge, of any fact, that would reasonably be expected to result in any of the conditions set forth in Sections 7.1, 7.2, or 7.3 not being satisfied by the Termination Date.

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5.2 Acquisition of Assets on “As Is, Where Is” Basis

The Purchaser hereby acknowledges and agrees as follows:

(a) The Purchased Assets are being purchased on an “as is, where is” basis as they exist at the Closing Time;

(b) It has conducted or will conduct its own searches and investigations relating to the Purchased Assets;

(c) It has conducted such inspections of the Purchased Assets as deemed appropriate, satisfied itself with respect to the Purchased Assets and all matters connected with or related to the Purchased Assets, and has relied entirely upon its own investigations and inspections in entering into this Agreement to acquire all of the Receiver’s and the Debtors’ right, title and interest, if any, in and to the Purchased Assets, without regard to any information made available or provided by the Receiver or its Representatives;

(d) Subject to Closing, the Purchaser will accept the Purchased Assets in their state, condition and location as at the Closing Time. Except as expressly set forth in this Agreement, the Receiver makes no representations, warranties, statements or promises on its own behalf or on behalf of the Debtors in favour of the Purchaser concerning the Purchased Assets, or the Receiver’s or the Debtors’ right, title or interest in or to the Purchased Assets, which the Purchaser acknowledges are being acquired on an “as is, where is” basis (including, without limitation, title thereto and/or the state of any Encumbrances), or the uses or applications of the Purchased Assets, whether express or implied, statutory or collateral, arising by operation of Applicable Law or otherwise, including (i) express or implied warranties of merchantability, fitness for a particular purpose, title, description, quantity, condition or quality, and that any and all conditions and warranties expressed or implied by the Sale of Goods Act (Ontario) or other Applicable Law do not apply to the Transaction and are hereby waived by the Purchaser; (ii) the structural integrity or any other aspect of the physical condition of any Building, (iii) the conformity of any Building to any plans or specifications (including, but not limited to, any plans and specifications that may have been or which may be provided to the Purchaser), (iv) the conformity of the Property to past, current or future applicable zoning or building code requirements or other Applicable Laws, (v) the existence of soil instability, past soil repairs, soil additions or conditions of soil fill or any other matter affecting the stability or integrity of the Land, or any Building situated on or as part of the Land, (vi) the sufficiency of any drainage, (vii) whether the Property is located wholly or partially in a flood plain or a flood hazard boundary or similar area, (viii) the existence or non-existence of underground and/or above ground storage tanks, (ix) the availability of public utilities, access, parking and/or services for the Property, (x) the fitness or suitability of the Property for occupancy or any intended use (including matters relating to health and safety) and the fitness and suitability for use of any of the chattels, (xi) the potential for further development of the Property, (xii) the existence of land use, zoning or building entitlements affecting the Property, (xiii) the presence, release or use of wastes of any nature, Hazardous Materials,

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pollutants, contaminants or other regulated substances (under Environmental Laws or otherwise) in, under, on or about the Property or any neighbouring lands; and

(e) Without limiting the generality of foregoing, it acknowledges and accepts that the description of the Purchased Assets and any portion thereof contained in the Schedules hereto or otherwise provided by the Receiver is for the purpose of identification only; and that no representation, warranty or condition has or will be given by the Receiver or any other Party concerning completeness or the accuracy of such descriptions or with respect to any data room set up by the Receiver.

5.3 Books and Records

The Receiver, any trustee, trustee in bankruptcy or similar official appointed with respect to a Debtor, and each of their Representatives shall, for a period of six (6) years from the Closing Date, have access to, and the right to copy, at their expense to the extent necessary or useful in connection with their administration and discharge of their duties and obligations, including the filing of any Tax return or the defence or settlement of any litigation or to comply with any Applicable Law and during usual business hours, upon reasonable prior notice to the Purchaser, all Books and Records relating to the Business, the Purchased Assets and the Assumed Liabilities which are to be transferred and conveyed to the Purchaser pursuant to this Agreement. The Purchaser shall use reasonable efforts to retain and preserve all such Books and Records for such six (6) year period. The Purchaser shall not be responsible or liable to the Receiver or any other Person for or as a result of any unintentional loss or destruction of or damage to any of the Books and Records.

ARTICLE 6 BID AND AUCTION PROCEDURES; SUPERIOR BIDS

6.1 Bidding Procedures Order; Approval and Vesting Order

(a) The Receiver and the Purchaser acknowledge that (i) the Receiver’s obligations under this Agreement are subject to Court approval of this Agreement, to be evidenced by the issuance of the Bidding Procedures Order, (ii) Closing is subject to this Agreement being determined by the Receiver to be a Successful Bid (as determined in accordance with the Bidding Procedures), and (iii) Closing is subject to the issuance of the Approval and Vesting Order;

(b) As soon as reasonably practicable, the Receiver shall serve and file a motion, which motion shall seek approval of, among other things: (i) the Receiver’s execution of this Agreement as a “stalking horse” asset purchase agreement, (ii) the Bidding Procedures; and (iii) the scheduling of an auction and sale hearing if the conditions for the holding of the Auction are satisfied as contemplated by the Bidding Procedures;

(c) The Receiver shall use its commercially reasonable efforts to have the Court issue and enter the Bidding Procedures Order on November 24, 2014;

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(d) If this Agreement is determined by the Receiver in accordance with the Bidding Procedures to be a Successful Bid, the Receiver shall use its commercially reasonable efforts to promptly file and serve a motion with the Court seeking the Approval and Vesting Order;

(e) If this Agreement is determined by the Receiver in accordance with the Bidding Procedures to be a Successful Bid or Back-Up Bid, or the Successful Bid(s) has/have not yet been determined, and leave to appeal is sought, an appeal is taken or a stay pending appeal is requested with respect to the Bidding Procedures Order or the Approval and Vesting Order, the Receiver shall promptly notify the Purchaser of such leave to appeal, appeal or stay request and shall promptly provide to the Purchaser a copy of the related notice(s) or order(s) and written notice of any motion or application filed in connection with any leave to appeal or appeal from such orders; and

(f) The Receiver shall use commercially reasonable efforts to diligently prosecute the dismissal of any motion for leave to appeal, appeal, or stay request.

ARTICLE 7 CONDITIONS

7.1 Conditions for the Benefit of the Purchaser

The obligations of the Purchaser to complete the Transaction shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent:

(a) All representations and warranties of the Receiver contained in this Agreement shall be true and correct as at the Closing Time with the same force and effect as if made at and as of such time;

(b) The Receiver shall have complied with and performed in all material respects all of its covenants and obligations contained in this Agreement required to be performed by it prior to or by the Closing Time, including those obligations set out in Section 6.1 hereof;

(c) The Receiver shall have delivered or caused to be delivered to the Purchaser all items referred to in Section 8.2;

(d) Between the date hereof and the Closing Time, notwithstanding Section 10.15, if in connection with the Receivership Proceedings or otherwise the Court or any other Governmental Authority determines any provisions of this Agreement are partially or completely invalid or unenforceable and such determination is not acceptable to the Purchaser; and

(e) The Phase I environmental site assessment contemplated in Section 5.1(a) shall have been completed, and the Purchaser shall be satisfied with the results of such assessment; and

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(f) The Purchaser shall have confirmed that title to the Land is good and marketable and insurable and free from all Encumbrances except for Permitted Encumbrances, and the Purchaser shall be otherwise satisfied with its investigation of title to the Land and with regard to work orders and notices of deficiency or non-compliance.

The foregoing conditions are for the exclusive benefit of the Purchaser and non-satisfaction or non-performance of any such condition may only be waived by the Purchaser, in its sole discretion, in whole or in part, at any time and from time to time without prejudice to any other rights which the Purchaser may have. Any such waiver is only binding on the Purchaser if it is made in writing.

7.2 Conditions for the Benefit of the Receiver

The obligations of the Receiver to complete the Transaction shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent:

(a) All representations and warranties of the Purchaser contained in this Agreement shall be true and correct as at the Closing Time with the same force and effect as if made at and as of such time;

(b) The Purchaser shall have complied with and performed in all material respects all of their covenants and obligations contained in this Agreement to be performed by them before or by the Closing Time;

(c) The Purchaser shall have delivered, or caused to be delivered to the Receiver all items referred to in Section 8.3; and

(d) If the Purchaser assigns any of its rights or obligations arising under this Agreement in accordance with Section 10.7, the Purchaser and such assignee shall have executed and delivered to the Receiver an assignment and assumption agreement (pursuant to which the Purchaser shall remain jointly and severally liable) satisfactory to the Receiver, acting reasonably.

The foregoing conditions are for the exclusive benefit of the Receiver and non-satisfaction or non-performance of any such condition may only be waived by the Receiver, in its sole discretion, in whole or in part, at any time and from time to time without prejudice to any other rights which the Receiver may have. Any such waiver is only binding on the Receiver if it is made in writing.

7.3 Mutual Conditions

The obligations of the Parties to complete the Transaction shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent:

(a) The Receiver shall have determined in accordance with the Bidding Procedures that this Agreement is a Successful Bid;

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(b) The Receivership Order, the Bidding Procedures Order and the Approval and Vesting Order shall have been issued and entered by the Court and such orders shall not have been stayed, vacated or appealed and no order shall have been issued which restrains or prohibits the completion of the Transaction; and

(c) There shall be no order issued by any Governmental Authority delaying, restricting or preventing, and no pending or threatened Claim, judicial or administrative proceeding, or investigation against any Party by any Person, for the purpose of enjoining, delaying, restricting or preventing the consummation of this Transaction, or otherwise claiming that this Agreement or the consummation of the Transaction is improper or would give rise to proceedings under any Applicable Law.

The foregoing conditions are for the benefit of all Parties and non-satisfaction or non-performance of any such condition may only be waived by no less than all of them, in their sole discretion, in whole or in part, at any time and from time to time without prejudice to any other rights which they each may have. Any such waiver is only binding on a Party if it is made in writing, however no Party shall be able to delay or prevent Closing due to non-satisfaction of these mutual conditions due to a breach of this Agreement by that Party.

ARTICLE 8 CLOSING

8.1 Closing Date and Place of Closing

(a) If this Agreement is determined by the Receiver in accordance with the Bidding Procedures to be a Successful Bid,

(a) The Purchaser shall provide any information and take such actions as may be reasonably requested by the Receiver to assist the Receiver in obtaining the Approval and Vesting Order and any other order of the Court reasonably necessary to consummate the Transaction; and

(b) the Receiver and the Purchaser, as applicable, hereby covenant and agree to use commercially reasonable efforts to satisfy all conditions set forth in Sections 7.1, 7.2 and 7.3 as soon as practicable; and

(b) Closing shall take place at 10:00 a.m. (the “Closing Time”) on the Closing Date at the offices of the Receiver’s Solicitors, or such other time and location as the Parties may agree upon in writing. Any tender of documents or money hereunder may be made upon the Receiver or the Purchaser or upon the solicitors acting for the Party on whom tender is desired. All proceedings to be taken and all documents to be executed and delivered by all Parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed to have been taken nor documents executed or delivered until all have been taken, executed and delivered. The Parties agree that if the Purchaser has assigned only part of its rights and obligations in accordance with Section 10.7, at the Purchaser’s election, the Closing Time in respect of the Purchaser and the

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Closing Time in respect of the permitted assignee shall take place 5 minutes apart, in the order as determined by the Purchaser in its sole and absolute discretion

8.2 Deliveries on Closing by the Receiver

At the Closing Time, the Receiver shall deliver, or cause to be delivered to the Purchaser:

(a) Pursuant to the Approval and Vesting Order, free and clear title and possession of the Purchased Assets, being free and clear of all Encumbrances other than Permitted Encumbrances, and otherwise on an “as is, where is” basis in accordance with Section 5.2, provided that delivery of the Purchased Assets shall occur in situ wherever such Purchased Assets are located on the Closing Date;

(b) A true and complete copy of the Approval and Vesting Order, as issued by the Court;

(c) The Receiver’s Certificate (as defined in the Approval and Vesting Order) executed by the Receiver;

(d) A bring-down certificate executed by the Receiver, in a form satisfactory to the Purchaser, acting reasonably, certifying that all of the representations and warranties of the Receiver hereunder remain true and correct in all material respects as of the Closing Time;

(e) The elections referred to in Section 3.4, executed by the Receiver on behalf of the Debtors, to the extent such elections are applicable to the Transaction and available to the Purchaser;

(f) The Specific Conveyances to which it is party, executed by the Receiver, in a form satisfactory to the Purchaser, acting reasonably; and

(g) Such other documents as may be reasonably requested by the Purchaser’s Solicitors to effect or evidence Closing and the transfer of the Purchased Assets.

8.3 Deliveries on Closing by the Purchaser

At the Closing Time, the Purchaser shall deliver, or cause to be delivered to the Receiver:

(a) The payment required by Section 3.2(b);

(b) A bring-down certificate executed by the Purchaser, in a form satisfactory to the Receiver, acting reasonably, certifying that all of the representations and warranties of the Purchaser hereunder remain true and correct in all material respects as of the Closing Time;

(c) The elections referred to in Section 3.4, executed by the Purchaser, to the extent such elections are applicable to the Transaction and available to the Purchaser;

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(d) The Specific Conveyances to which the Purchaser or either of them are party, executed by the Purchaser, in a form satisfactory to the Receiver, acting reasonably; and

(e) Such other documents as may be reasonably requested by the Receiver’s Solicitors to effect or evidence Closing and the transfer of the Purchased Assets.

8.4 Risk

The Purchased Assets will be and remain at the risk of the Debtors to the extent of their interest until Closing and at the risk of the Purchaser from and after Closing. If, prior to Closing, a material portion of the Purchased Assets are substantially damaged or destroyed by fire or other casualty, then, at its option, the Purchaser may decline to complete the Transaction (a “Material Property Event”). Such option must be exercised within ten (10) Business Days after receipt of Notice by the Purchaser from the Receiver of the occurrence of damage or destruction (or prior to the Closing Date if such occurrence takes place within ten (10) days of the Closing Date) in which event this Agreement will be terminated automatically. If the Purchaser does not exercise such option, it will complete the Transaction and will be entitled to an assignment of the proceeds of insurance referable to such damage or destruction. Where any damage or destruction is not substantial, the Purchaser will complete the Transaction and will be entitled to an assignment of the proceeds of insurance referable to such damage or destruction provided that such damage or destruction is insured or, otherwise, to an agreed abatement.

8.5 Possession

The Purchaser shall be entitled to possession of the Purchased Assets on and after the Closing Time. On and after the Closing Time, the Receiver shall permit and provide the Purchaser with unrestricted and unconditional access to the Purchased Assets, and the Receiver shall deliver to the Purchaser such authorizations, directions, consents, approvals, keys, lock and safe combinations and other similar items as the Purchaser may require to obtain immediate, exclusive and full occupation and control of the Purchased Assets.

8.6 Employees

The Receiver agrees to cooperate fully with the Purchaser commencing immediately after execution of this Agreement, to allow the Purchaser to review the employment records of all of the non-union employees of the Business and to interview all of such employees. No later than two (2) Business Days prior to the Closing Date, the Purchaser shall advise the Receiver of the names of those non-union employees of the Business whom the Purchaser chooses not to retain, and the Receiver covenants and agrees to effectively terminate the employment of such non-union employees prior to the Closing Date, at its sole cost and expense. Subject to the Closing taking place, the Purchaser hereby agrees to offer employment effective as of the Closing Time on the Closing Date on the substantially the same terms and conditions of employment existing on the Closing Date to all other non-union employees of the Business.

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ARTICLE 9 TERMINATION

9.1 Termination

This Agreement may be terminated at any time prior to the Closing:

(a) Automatically and without any action or notice by either the Receiver or the Purchaser, immediately:

(i) upon the selection by the Receiver of the Successful Bid(s) if this Agreement is neither a Successful Bid nor a Back-Up Bid selected at such time; or

(ii) on closing of a Successful Bid if this Agreement is a Back-Up Bid;

(b) Subject to any required Court approval, by mutual written consent of the Receiver and the Purchaser;

(c) Automatically and without any action or notice by either the Receiver or the Purchaser, immediately upon the issuance of a final and non-appealable order, decree, or ruling or any other action by a Governmental Authority to restrain, enjoin or otherwise prohibit the Transaction;

(d) By either the Receiver or the Purchaser if the Closing has not occurred on or before the Termination Date other than in the circumstances described in Section 9.1(e) and Section 9.1(f);

(e) By the Receiver, if there has been a material violation or breach by the Purchaser of any agreement, covenant, representation or warranty of the Purchaser in this Agreement which would prevent the satisfaction of, or compliance with, any condition set forth in Section 7.2 by the Termination Date and such violation or breach has not been waived by the Receiver or cured by the Termination Date, unless the Receiver is in material breach of its obligations under this Agreement;

(f) By the Purchaser, if there has been a material violation or breach by the Receiver of any agreement, covenant, representation or warranty which would prevent the satisfaction of, or compliance with, any condition set forth in Section 7.1 by the Termination Date and such violation or breach has not been waived by the Purchaser or cured by the Termination Date, unless the Purchaser is in material breach of its obligations under this Agreement;

(g) By any Party, if the conditions set forth in Section 7.3 have not been satisfied by the Termination Date; or

(h) By the Purchaser in the circumstances and upon the terms set out in Section 8.4.

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ARTICLE 10 MISCELLANEOUS

10.1 Disclosure of Agreement

Each of the Parties agree that this Agreement shall be filed in the Receivership Proceedings with such redactions as are agreed upon between the Parties and the Court.

10.2 Liability of the Parties

The Purchaser acknowledges and agrees that in all matters pertaining to this Agreement, including in its execution, KPMG is acting solely in its capacity as Receiver of the Debtors and, as such, its liability under this Agreement, if any, will be in its capacity as Receiver, and KPMG and its Representatives shall have no personal or corporate liability of any kind, whether in contract, in tort or otherwise and in no circumstance will the Receiver be liable for any consequential damages including loss of profit.

10.3 Specific Conveyances

The Purchaser shall, as applicable, be responsible for registering all Specific Conveyances and shall bear all costs incurred registering any Specific Conveyances and in preparing and registering any further assurances required.

10.4 Obligations to Survive

(a) The obligations and covenants of the Parties set out in the following sections and articles of this Agreement shall survive Closing, shall remain in full force and effect, shall not merge as a result of Closing and shall be binding on the Parties thereafter: Section 2.3 [Assumed Liabilities], Section 2.4 [Exclusion of Liabilities], Section 2.5(a) [Assignment and Assumption of Assumed Contracts, Section 3.3 [Transfer Taxes], Section 3.4 [Tax Election], Section 5.2 [Acquisition of Assets on “As Is, Where Is” Basis], Section 5.3 [Books and Records], Section 8.5 [Possession], Section 10.2 [Liability of the Parties], Section 10.3 [Specific Conveyances], Section 10.5 [Damages], Section 10.6 [Further Assurances] and Section 10.9 [Costs and Expenses]; and

(b) The obligations and covenants of the Parties set out in the following sections and articles of this Agreement shall survive termination of this Agreement: Section 10.2 [Liability of the Parties], Section 10.5 [Damages], Section 10.9 [Costs and Expenses] and Section 10.13 [No Brokers].

10.5 Damages

Under no circumstance shall any of the Parties or their Representatives be liable for any special, punitive, exemplary, consequential or indirect damages (including loss of profits) that may be alleged to result, in connection with, arising out of, or relating to this Agreement or the transactions contemplated herein.

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10.6 Further Assurances

Each of the Parties hereto from and after the date hereof shall, from time to time, and at the request and expense of the Party requesting the same, do all such further acts and things and execute and deliver such further instruments, documents, matters, papers and assurances as may be reasonably requested to complete the Transaction and for more effectually carrying out the true intent and meaning of this Agreement. The Receiver’s obligations under this Section shall terminate on its discharge as Receiver.

10.7 Assignment by Purchaser

The Purchaser shall be permitted to assign this Agreement or any of its rights or obligations under this Agreement to one or more of its affiliates (as such term is defined in National Instrument 45-106) , provided that: (a) notice of such assignment is provided to the Receiver, (b) such assignee agrees to be bound by the terms of this Agreement, and (c) such assignment shall not release the Purchaser jointly or severally from any obligation or liability for performance of the Purchaser’s obligations under this Agreement, including Closing, subject to the terms and conditions provided for in this Agreement.

10.8 Time of the Essence

Time shall be of the essence of this Agreement.

10.9 Costs and Expenses

Each Party hereto shall be responsible for all costs and expenses (including the fees and disbursements of legal counsel, bankers, investment bankers, accountants, brokers and other advisors) incurred by it in connection with this Agreement and the transactions contemplated herein, including that the Receiver shall be solely responsible in respect of the Receiver’s costs and expenses relating to all Court applications provided for herein.

10.10 Notices

Any notice, demand or other communication required or permitted to be given to any Party hereunder shall be given in writing and addressed as follows:

(a) In the case of the Receiver:

KPMG Inc. 333 Bay St, #4600, Toronto, ON M5H 2S5 Attention: Philip J. Reynolds Fax: 416-777-8818 Email: pjreynolds@kpmg.ca

And with a copy to the Receiver’s Solicitors:

Osler, Hoskin & Harcourt LLP

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Box 50, 1 First Canadian Place Toronto, ON M5X 1B8

Attention: Marc Wasserman

Fax: 416-862-6666 Email: mwasserman@osler.com

(b) In the case of the Purchaser:

Heridge S.À R.L. 62, Avenue de la Liberté L – 1930 Luxembourg Attention: Daniel Welker

Fax: +41 414 188 219 Email: dcwelker@rr-cap.com

And with a copy to the Purchaser’s Solicitors:

Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, ON M5L 1B9 Attention: Ashley Taylor

Fax: 416-947-0866 Email: ataylor@stikeman.com

Any such notice, if personally delivered (including courier delivery), shall be deemed to have been validly and effectively given and received on the Business Day of such delivery provided such notice is received before 4:00 p.m. (addressee’s local time); and if such notice is received after 4:00 p.m. (addressee’s local time) or if the notice is sent by facsimile or other electronic communication, such notice shall be deemed to have been validly and effectively given and received on the Business Day next following the day it was received.

10.11 Solicitors and Agents and Tender

Any notice, approval, waiver, agreement, instrument, document or communication permitted, required or contemplated in this Agreement may be given or delivered and accepted or received by the Purchaser’s Solicitors on behalf of the Purchaser and by the Receiver’s Solicitors on behalf of the Receiver and any tender of closing documents and the Purchase Price may be made upon the Receiver’s Solicitors and the Purchaser’s Solicitors, as the case may be.

10.12 Successors and Assigns

This Agreement shall be binding upon, and enure to the benefit of, the Parties hereto and their respective successors and permitted assigns.

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10.13 No Brokers

It is understood and agreed that the Purchaser shall not be liable for any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for the Receiver.

10.14 Third Party Beneficiaries

Each Party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the Parties hereto and their successors and permitted assigns, and no Person, other than the Parties hereto and their successors and their permitted assigns shall be entitled to rely on the provisions hereof in any action, suit, proceeding, hearing or other forum, save and except in the event of any action, suit, proceeding, hearing or other forum as it pertains to matters of confidentiality and any particular Representative in connection therewith.

10.15 Severability

If any provision of this Agreement or any document delivered in connection with this Agreement is partially or completely invalid or unenforceable, the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall be construed and enforced as if that invalid or unenforceable provision were omitted. The invalidity or unenforceability of any provision in one jurisdiction shall not affect such provision validity or enforceability in any other jurisdiction.

10.16 Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same agreement. Transmission by facsimile or other electronic means of an executed counterpart of this Agreement shall be deemed to constitute due and sufficient delivery of such counterpart.

10.17 No Strict Construction

The parties have participated jointly in the negotiation and drafting of this Agreement. In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favouring or disfavouring either Party by virtue of authorship of any provision of this Agreement.

[Remainder of Page Intentionally left blank]

[Signature Page Follows]

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IN WITNESS WHEREOF this Agreement has been properly executed by the Parties hereto as of the date first above written.

KPMG INC., solely in its capacity as the Court-appointed Receiver of GREAT LAKES BIODIESEL INC., EINER CANADA INC., AND BIOVERSEL TRADING INC., and not in its personal capacity or corporate capacity

Per: Name: Title:

I have authority to bind the Receiver.

HERIDGE S.À R.L.

Per:

Name: Title:

I have authority to bind the company.

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SCHEDULE 1

RECEIVERSHIP ORDER

[See attached]

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SCHEDULE 2

FORM OF BIDDING PROCEDURES ORDER

[See attached]

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SCHEDULE 3

EQUIPMENT

Item  Vendor 

Steam System Equipment   

Steam boiler  Thermogenics Inc. 

Economizer  Thermogenics Inc. 

Dearator  Thermogenics Inc. 

Condensate tank  Thermogenics Inc. 

Blowdown tank  Thermogenics Inc. 

Desuperheater  Solaris Engineering 

Water Cooling System Equipment   

Cooling towers  WCSI 

Chiller (condenser)  Tranter 

Chiller (evaporater)  Tranter 

Cooling water tank  Tranter 

Service Air Systems Equipment   

Air compressor  Kaeser 

Desiccant dryer  Domnick Hunter 

Air compressor vessel  Service Air 

Nitrogen System   

Air compressor  Kaeser 

Air compressor vessel  Praxair 

Nitrogen back up vessel  Praxair 

Water Treatment Equipment   

Boiler softener  Klenzoid 

Boiler water treatment  Klenzoid 

Process softener  Klenzoid 

Cooling water treatment  Klenzoid 

Waste Water Treatment Equipment   

Waste water storage tank  Precisioneering 

Hot Oil System Equipment   

Heater  Heat Exchanger and Transfer Inc. 

Storage tank  Heat Exchanger and Transfer Inc. 

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SCHEDULE 4

EQUIPMENT LEASES

Lessor  Item  Address  Start Date  Expiry Date 

National Leasing  Lab equipment 1525 Buffalo Place, Winnipeg MB R3T 1L9  1‐Oct‐12 1‐Oct‐17

Praxair Canada Inc.  Nitrogen storage tanks 1 City Centre Drive, Suite 1200, Mississauga Ontario, L5B 1M2  14‐Mar‐12 14‐Mar‐17

Storage Niagara  Sea containers 8540 Earl Thomas Ave, Niagara Falls, ON L2E 6X8  13‐Feb‐13   

37

LEGAL_1:32754595.4

SCHEDULE 5

ASSUMED LIABILITIES

The Assumed Liabilities means:

all of the Debtors’ Liabilities and the Receiver’s, if any, arising from and after the Closing Time from the ownership and/or use of the Purchased Assets after the Closing Time, including all Liabilities under the Assumed Contracts arising in respect of the period after the Closing Time and not related to or arise out of any breach or default occurring prior to at or as a consequence of the Closing.

38

LEGAL_1:32754595.4

SCHEDULE 6

DESCRIPTION OF THE LAND

PT LT 21-22 CON 5 HUMBERSTONE PT 1, 3 & 5 59R10902 & PT 1, 2, 3, 59R11493; S/T RO774166E, RO819377; CITY OF WELLAND, being the whole of PIN 64454-0082 (LT).

39

LEGAL_1:32754595.4

SCHEDULE 7

PERMITTED ENCUMBRANCES

GENERAL ENCUMBRANCES

(a) The reservations, limitations, exceptions, provisos and conditions, if any, expressed in any original grants from the Crown including, without limitation, the reservation of any mines and minerals in the Crown or in any other person.

(b) Subdivision agreements, site plan control agreements, development agreements, heritage easements and agreements relating thereto, servicing agreements, utility agreements, permits, licenses, airport zoning regulations and other similar agreements with Government Authorities or private or public utilities affecting the development or use of the Land, provided same have been complied with, and provided the same are registered on title to the Land on the date hereof.

(c) Rail siding agreements or facility, cost sharing, servicing, reciprocal use or other similar agreements, provided same have been complied with and the provision of certificate from non Vendor party to such agreements on or before Closing that there are no defaults by Vendor thereunder, and provided the same are registered on title to the Land on the date hereof.

(d) Any unregistered easements, rights-of-way or other unregistered interests or claims not disclosed by registered title in respect of the provision of utilities to the Land, provided same have been complied with.

(e) Any rights of expropriation, access or use or any other similar rights conferred or reserved to any Governmental Authority by Applicable Law.

(f) Encumbrances for real property taxes (which term includes charges, rates and assessments) or charges for electricity, power, gas, water and other services and utilities in connection with the Land that are not yet due and owing or, if due and owing, are paid on or before Closing.

(g) Minor encroachments by buildings on the Land over neighbouring lands and/or permitted under agreements with neighbouring landowners and minor encroachments over the Land by improvements of neighbouring landowners and/or permitted under agreements with neighbouring landowners that, in either case, do not materially and adversely impair the current use, operation or marketability of the Land.

(h) The provisions of all Applicable Laws, including by-laws, regulations, ordinances and similar instruments relating to development and zoning of the Land, provided same have been complied with and there are no breaches of same.

(i) On first registration, those additional matters constituting statutory exceptions or reservations pursuant to Subsection 44 (1) of the Land Titles Act (Ontario) (save and except Subsection 44 (1) paragraph 11 (Planning Act), paragraph 14 (Dower

40

LEGAL_1:32754595.4

Rights), Provincial succession duties and escheats or forfeiture to the Crown); the rights of any person who, but for the Land Titles Act (Ontario), would be entitled to the land or any part of it through length of possession, prescription, misdescription or boundaries settled by convention; and any lease to which Subsection 70 (2) of the Registry Act (Ontario) applies.

(j) Security given to a public utility or any Governmental Authority when required by the operations of the Land in the ordinary course of business.

(k) Any statutory liens, charges, adverse claims, prior claims, security interests, deemed trusts or other encumbrances of any nature whatsoever which are not registered on the title to the Land and of which the Vendor does not have notice, claimed or held by Her Majesty the Queen in Right of Canada, Her Majesty the Queen in Right of the Province of Ontario or by any other Governmental Authority under or pursuant to any Applicable Laws, provided the Purchaser at law cannot become responsible to satisfy same.

(l) Any lien, together with any certificate of action (collectively the “Lien”) registered in respect thereof, a claim for which, although registered or of which notice has been given, relates solely to work done by or on behalf of a tenant, and which the vendor has not assumed payment, is not named in and is not responsible for payment of pursuant to the particular construction lien act; provided that Instrument Numbers SN394477, SN 396366, SN404136 and SN407968 are not Permitted Encumbrances.

SPECIFIC ENCUMBRANCES

(a) Transfer Easement registered as Instrument No. RO774166E on October 12, 2001 in favour of Canadian National Railway Company.

(b) Transfer Easement registered as Instrument No. RO819377 on December 21, 2005 in favour of Welland Hydro-Electric System Corp.

(c) Agreement registered as Instrument No. RO819773 on March 3, 2006 in favour of Welland Hydro-Electric System Corp.

 

 

Appendix F

Interim Receiver’s Statement of Receipts and Disbursements

In the matter of the Interim Receivership ofGreat Lakes Biodiesel Inc., Einer Canada Inc., and Bioversel Trading Inc.Statement of Receipts & Disbursements

For the period August 27, 2014 to January 7, 2015 (1)

As at January 7, 2015

Account Description Disbursements Receipts

Receipts (2) 18,071 Plant / Head Office Security 196,989 Salaries and Benefits 173,787 Contractors 102,385 Plant Maintenance 91,349 Rail Cars 60,386 Plant Engineering Consulting - TWD 52,022 Head Office Rent 23,795 Utilities - Hydro 13,169 Other (Fees, Inspections, Tools & Misc.) 11,925 Telephone & Communications 11,545 Insurance - D&O Coverage 10,260

National Leasing 3,379 Uniform Cleaning - Plant 2,626 Storage Tank Rental - Plant 1,610 Locksmith 418 Bank Charges 571 Professional Fees - Court Officer 59,790 Professional Fees - Interim Receiver 242,693 Professional Fees - Legal Counsel 56,623

Total Receipts & Disbursements 1,115,324 18,071

Net Disbursements over Receipts 1,097,252

Funded By Heridge 1,097,252

Net Balance in Estate -

(1) The Interim Receivership Period was from August 27 to October 9, 2014. The Interim Receiver's Statement of Receipts and Disbursements includes payments issued by the Interim Receiver after October 9, 2014 which related to the Interim Receivership period.(2) Cash on deposit at the companies' bank accounts and miscellaneous receipts.

 

 

Appendix G

Receiver’s Statement of Receipts and Disbursements

In the matter of the Receivership ofGreat Lakes Biodiesel Inc., Einer Canada Inc., and Bioversel Trading Inc.Statement of Receipts & DisbursementsFor the period October 10 to January 7, 2015As at January 7, 2015

Account Description Disbursements Receipts

Receipts - Sale of Office Furniture 14,350 Insurance - Plant & Office (1) 182,674

Salaries and Benefits 235,569 Rail Cars (2) 39,870

Plant Engineering Consulting - TWD 28,564

Plant / Head Office Security 13,189

Appraisal Fees - American Appraisal 10,057

Contractors 10,206

Plant Maintenance 30,062

National Leasing 10,138 Lexus Vehicle Lease (3) 1,839

Telephone & Communications 2,292

Utilities - Hydro 1,875

Other (Fees, Inspections, Tools & Misc.) 16,579

Uniform Cleaning - Plant 3,149

Plant Cleaning 1,887

Bank Charges 446

Professional Fees - Receiver 157,800

Professional Fees - Legal Counsel 27,061

Total Receipts & Disbursements 773,257 14,350

Net Disbursements over Receipts 758,907

Funding Provided by Heridge (4) 2,500,000 Cash used to fund Interim Receivership (1,097,252) Cash used to fund Receivership (758,907)

Net Balance in Estate 643,840

(2) Lease terminated November 5, 2014.(3) Vehicle returned on October 23, 2014.

(1) Comprehensive business and liability insurance coverage for the period October 11, 2014 to April 10, 2015.

(4) Heridge has advanced the full $3.5 million that the Receiver is authorized to borrow. The Receiver has kept $1.0 million separate from its operating account as the Receiver does not anticipate requiring access to these funds until February 2015.

 

 

Appendix H

Receiver’s Projected Receipts and Disbursements through to February 28, 2015

Great Lakes Biodiesel

Summary of Receipts & Disbursements

Actuals as at January 7, 2015

Budget to February 28, 2015

Note Ref 29‐Aug‐14 5‐Sep‐14 12‐Sep‐14 19‐Sep‐14 26‐Sep‐14

September 

Total 3‐Oct‐14 10‐Oct‐14 17‐Oct‐14 24‐Oct‐14 31‐Oct‐14 October Total 7‐Nov‐14 14‐Nov‐14 21‐Nov‐14 28‐Nov‐14

November 

Total

GLB Normal Operating Costs

Head Office Rent 1 23,795          23,795          ‐                   ‐                

Lexus Vehicle Lease 2 ‐                1,839               1,839               ‐                

Insurance ‐ Plant & Office 3 ‐                ‐                   90,993          90,993         

Insurance ‐ D&O Coverage 10,260          10,260          ‐                   ‐                

Insurance ‐ Vehicle 2 ‐                688                  688                  ‐                

Telephone & Communications 4 5,864            5,864            3,872            149                171                171                  2,821             2,821            

Office Expenses ‐                ‐                   ‐                

Utilities ‐ Hydro 5 ‐                469                12,701             12,701             898                898               

Utilities ‐ Water 6 ‐                ‐                   ‐                

Utilities ‐ Gas 7 ‐                ‐                ‐                   (3,931)           (3,931)          

Property Taxes 8 ‐                ‐                   ‐                

Uniform Cleaning ‐ Plant 974                974                785                517                351                311                  661                  311                310                621               

Storage Tank Rental ‐ Plant 1,288            322                1,610            ‐                   ‐                

Plant Cleaning ‐                ‐                   ‐                

National Leasing 9 ‐                3,379            3,379               3,379               ‐                

Rail Cars 10 39,842          39,842          ‐                   60,413          60,413         

Other (Fees, Inspections, Tools & Misc.) 756                2,392            5,974            9,121            75                  52                  1,416            1,040            444                  2,901               15                  29                  8,643             8,687            

Wages ‐ Corporate 11 17,306          23,764          41,070          3,997            17,037          47,530          47,530             6,478             1,723             8,201            

Wages ‐ Plant 12 36,147          36,438          72,586          3,402            35,697          2,619            2,619               35,007          33,456          68,463         

Contractors 13 10,499          1,949            2,339            63,960          78,747          6,231            14,338          5,252            3,069               22,659             1,465             1,998             3,462            

Plant Maintenance 31,394          37,376          9,745            78,514          5,088            5,088            1,020            2,070            945                  4,035               1,398             932                13,024          15,354         

Contingency ‐                ‐                   ‐                

Total GLB Operating Costs ‐                20,759          59,182          142,239        140,203        362,383        17,218          68,619          17,126          58,681          23,376             99,183             131,425        65,404          35,180          23,974          255,984       

KPMG Additional Receivership Costs

Plant Engineering Consulting ‐ TWD 11,300          13,550          6,961            31,810          7,692            5,525            11,024          13,677             37,917             6,995             6,995            

Locksmith 418                418                ‐                   ‐                

Phase 1 Environmental 14 ‐                ‐                   ‐                

Appraisal Update ‐                7,345            7,345               2,712             2,712            

Plant / Head Office Security 15 6,665            28,374          35,039          135,287        13,189             148,476          24,941          24,941         

Bank Charges 30                  25                  50                  135                80                  320                25                  80                  75                  225                405                  130                8                    138               

Total + KPMG Additional Receivership Costs 30                  443                18,015          42,059          7,041            67,587          7,717            5,605            135,362        18,594          26,866             194,143          31,936          130                2,712             8                    34,786         

Professional Fees

KPMG 59,790          59,790          ‐                   ‐                

Independent Counsel ‐                ‐                   56,623          27,061          83,684         

Total Professional Fees ‐                ‐                ‐                59,790          ‐                59,790          ‐                ‐                ‐                ‐                ‐                   ‐                   ‐                 56,623          27,061          ‐                 83,684         

Other Realizations

Head Office Asset Sale Proceeds 16 ‐                (340)                 (340)                 ‐                

Total Other Realizations ‐                ‐                ‐                ‐                ‐                ‐                ‐                ‐                ‐                ‐                (340)                 (340)                 ‐                 ‐                 ‐                 ‐                 ‐                

Total GLB ‐                20,759          59,182          142,239        140,203        362,383        17,218          68,619          17,126          58,681          23,376             185,020          131,425        65,404          35,180          23,974          255,984       

Total GLB + Receivership Costs 30                  21,203          77,196          184,298        147,243        429,971        24,935          74,224          152,487        77,275          50,243             379,163          163,361        65,534          37,892          23,982          290,770       

Total GLB + Receivership Costs + Prof. Fees 30                  21,203          77,196          244,088        147,243        489,760        24,935          74,224          152,487        77,275          50,243             379,163          163,361        122,158        64,952          23,982          374,454       

Total GLB + Receivership Costs + Prof. Fees + Realizations 30                  21,203          77,196          244,088        147,243        489,760        24,935          74,224          152,487        77,275          49,903             378,823          163,361        122,158        64,952          23,982          374,454       

Funding Provided ‐ Heridge 250,000        500,000        750,000        750,000        750,000          1,000,000     1,000,000    

Receipts ‐ Other  6,930            6,711            500                ‐                14,140          ‐                ‐                   450                ‐                 450               

Disbursements ‐ Other ‐                ‐                   ‐                 ‐                 ‐                 ‐                 ‐                

STATUS QUO CASHFLOW ‐               

Cash Inflow / (Outflow) 256,900        (14,492)         (76,696)         255,912        (147,243)      274,380        (24,935)         (74,224)         (152,487)      672,725        (49,903)            371,177          (162,911)       (122,158)       (64,952)         976,018        625,996       

Net Cash On Hand 256,900        242,408        165,712        421,623        274,380        274,380        249,445        175,222        22,734          695,459        645,557           645,557          482,645        360,487        295,535        1,271,553     1,271,553    

Weeks Ended Fri

Actuals

Great Lakes Biodiesel

Summary of Receipts & Disbursements

Actuals as at January 7, 2015

Budget to February 28, 2015

Note Ref

GLB Normal Operating Costs

Head Office Rent 1

Lexus Vehicle Lease 2

Insurance ‐ Plant & Office 3

Insurance ‐ D&O Coverage

Insurance ‐ Vehicle 2

Telephone & Communications 4

Office Expenses

Utilities ‐ Hydro 5

Utilities ‐ Water 6

Utilities ‐ Gas 7

Property Taxes 8

Uniform Cleaning ‐ Plant

Storage Tank Rental ‐ Plant

Plant Cleaning

National Leasing 9

Rail Cars 10

Other (Fees, Inspections, Tools & Misc.)

Wages ‐ Corporate 11

Wages ‐ Plant 12

Contractors 13

Plant Maintenance

Contingency

Total GLB Operating Costs

KPMG Additional Receivership Costs

Plant Engineering Consulting ‐ TWD

Locksmith

Phase 1 Environmental 14

Appraisal Update

Plant / Head Office Security 15

Bank Charges

Total + KPMG Additional Receivership Costs

Professional Fees

KPMG

Independent Counsel

Total Professional Fees

Other Realizations

Head Office Asset Sale Proceeds 16

Total Other Realizations

Total GLB

Total GLB + Receivership Costs

Total GLB + Receivership Costs + Prof. Fees

Total GLB + Receivership Costs + Prof. Fees + Realizations

Funding Provided ‐ Heridge

Receipts ‐ Other 

Disbursements ‐ Other

STATUS QUO CASHFLOW

Cash Inflow / (Outflow)

Net Cash On Hand

5‐Dec‐14 12‐Dec‐14 19‐Dec‐14 26‐Dec‐14 31‐Dec‐14

December 

Total 9‐Jan‐14 16‐Jan‐14 23‐Jan‐14 30‐Jan‐14

January 

Total 6‐Feb‐14 13‐Feb‐14 20‐Feb‐14 27‐Feb‐14

February 

Total

Estimated Total 

Disbursements@ 

Feb 28

‐                 ‐                 ‐                 23,795                    

‐                 ‐                 ‐                 1,839                      

‐                 90,993          90,993          ‐                 181,986                  

‐                 ‐                 ‐                 10,260                    

‐                 ‐                 ‐                 688                         

910                51                  961                1,500             1,500             1,500             1,500             12,817                    

‐                 ‐                 ‐                 ‐                          

977                977                20,000          20,000          20,000          20,000          54,576                    

‐                 12,000          12,000          12,000          12,000          24,000                    

‐                 26,400          26,400          26,400          26,400          48,869                    

‐                 ‐                 200,000        200,000        200,000                  

310                   959                1,269             948                310                310                310                1,878             310                310                310                310                1,240             6,643                      

‐                 1,288             1,288             1,288             1,288             4,186                      

987                   899                1,887             1,000             1,000             1,000             1,000             3,887                      

6,758             6,758             3,379             3,379             3,379             3,379             16,896                    

‐                 ‐                 ‐                 100,256                  

29                      6,264             6,293             1,368             1,000             2,368             2,000             2,000             31,370                    

‐                 ‐                 ‐                 96,800                    

35,543              73,214          108,756        36,000          36,000          72,000          36,000          36,000          72,000          396,424                  

850                850                643                1,000             1,643             1,000             1,000             108,361                  

4,262                3,454             2,904             1,421             12,042          1,289             10,000          11,289          12,000          12,000          133,235                  

‐                 25,000          25,000          25,000          25,000          50,000                    

41,131              16,477          80,713          1,472             ‐                 139,793        95,241          36,310          310                138,877        270,738        310                36,310          310                341,877        378,807        1,506,889              

3,863                3,863             5,000             5,000             5,000             5,000             90,585                    

‐                 ‐                 ‐                 418                         

‐                 10,000          10,000          ‐                 10,000                    

‐                 ‐                 ‐                 10,057                    

1,721                1,721             ‐                 ‐                 210,178                  

41                      1                    120                162                150                150                150                150                1,325                      

5,625                1                    120                ‐                 ‐                 5,746             ‐                 ‐                 ‐                 15,150          15,150          ‐                 ‐                 ‐                 5,150             5,150             322,563                  

157,800            242,693        400,493        134,919        134,919        100,000        100,000        695,202                  

‐                 63,285          63,285          50,000          50,000          196,969                  

157,800            ‐                 242,693        ‐                 ‐                 400,493        ‐                 198,204        ‐                 ‐                 198,204        ‐                 ‐                 ‐                 150,000        150,000        892,171                  

(13,560)            (13,560)         ‐                 ‐                 (13,900)                  

(13,560)            ‐                 ‐                 ‐                 ‐                 (13,560)         ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 (13,900)                  

41,131              16,477          80,713          1,472             ‐                 139,793        95,241          36,310          310                138,877        270,738        310                36,310          310                341,877        378,807        1,592,725              

46,756              16,478          80,833          1,472             ‐                 145,539        95,241          36,310          310                154,027        285,888        310                36,310          310                347,027        383,957        1,915,288              

204,556            16,478          323,525        1,472             ‐                 546,032        95,241          234,514        310                154,027        484,092        310                36,310          310                497,027        533,957        2,807,459              

190,996            16,478          323,525        1,472             ‐                 532,472        95,241          234,514        310                154,027        484,092        310                36,310          310                497,027        533,957        2,793,559              

‐                 ‐                 ‐                 2,500,000              

‐                 ‐                 ‐                 14,590                    

‐                    ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                          

(190,996)          (16,478)         (323,525)       (1,472)           ‐                 (532,472)       (95,241)         (234,514)       (310)               (154,027)       (484,092)       (310)               (36,310)         (310)               (497,027)       254,989                  

1,080,556.92   1,064,079     740,553        739,081        739,081        739,081        643,840.05   409,326        409,016        254,989        254,989        254,679        218,369        218,059        (278,968)       (278,968)       (278,968.41)           

iday

Estimates

Notes:

1) The Receiver negotiated an early termination from the lease, effective October 31, 2014.

2) GLB leased a company car used for travel from head office in Toronto to plant in Welland. A third party has taken over responsibility of the vehicle lease.

3) Two separate 3 month extensions to the existing coverage were obtained at a cost of $84,253 + 8% = 90,993.24 each. These premiums are fully earned and no amounts are refundable. Effective Oct 17, 2014. Coverage extends to April 10, 2015.

4) Consists of services provided by Bell and Rogers for cell phones, office phones, internet and television. Certain services will be cancelled as they become unneeded.

5) Estimated Hydro Costs ‐ Based on management estimate.

6) Estimated Water Costs ‐ Based on management estimate.

7) Estimated Gas Costs ‐ Based on prior months invoice. Assume 10% decrease in cost each month as activity winds down.

9) Leasing of laboratory equipment located at the plant used for testing chemicals and products.

10) Rail car lease payments from Sept 24 to Nov 5, 2014, as the leases were terminated on this date.

11) Funding of corporate payroll ‐ Employees paid on the 15th and 30th of each month. Funding due the Wednesday of the week preceding pay day. Corporate staff were terminated as they were no longer required.

12) Funding of plant payroll ‐ Employees paid every two weeks. Funding due the Wednesday of the week preceding payday.

15) Includes payment to 3e of approximately $90,000 in respect of the period Aug 22 ‐ 28, 2014. Security was scaled down significaltly and eventually halted completely during the Receivership period, as the Receiver deemed it to be no longer necessary.

16) The Receiver reached an agreement with Morguard to purchase the furniture from the GLB office for $12K.

14) Estimate for the cost to obtain a Phase I Environmental Report on the real property that a purchaser can use to assess the risk of environmental contamination on the real property. Note that a Phase I Report only identifies potential contaminates and a Phase 

II Report may be required to delineate and quantify identified contamination, if any.

8) Approximately $200K of property taxes owed to the City of Welland. Taxes will need to be paid in order to transfer title on the plant + property. Budget assumes payment on closing. Interest charged on overdue property tax accumulates at [18% or 

approximately $3,000/month].

13) Contractors during the Interim Receivership period included: 2 accounting staff, 1 marketing specialist, 1 industry consultant, 1 logistics & procurement staff. During the Receivership period, contractors' services were relied upon on an as needed basis as 

determined by the Receiver.

 

 

Appendix I

Receiver’s Fee Affidavit

 

 

Appendix J

Osler’s Fee Affidavit