SERVICE STANDARDS - LOAN TAKING - QUEBEC
The following provisions constitute instructions and are deemed incorporated into any
mandate or instructions given by BDC to a solicitor. Acceptance of any mandate
incorporates acceptance of these terms. This form will change from time to time and
should be checked on line for changes when instructions are received.
Recent changes :
-Part 1 3) Cession of rank for universal hypothecs- claims and inventory
-Part 1 3) Certificate of independent legal advice: clarification
-Part 1 6) Deletion of Proof borrower’s contribution
-Part 1 7ii) Prior charges – clarification
-Part 2 9ii) Insurance – condominium
-Part 2 11i) Moveable hypothec – precision
PART I – Doing Legal Work for BDC .................................................................................... 2
1) Legal Entities ............................................................................................................... 2
2) BDC Expectations and Communications ..................................................................... 2
3) Acting for BDC ............................................................................................................. 3
4) Small Loans ................................................................................................................. 5
5) Equipment Line Loans ................................................................................................. 6
6) Loan Disbursement ..................................................................................................... 8
7) Final Reporting ............................................................................................................ 9
8) Loan Amendments .................................................................................................... 11
PART II –Security Taking Topics – Quebec ........................................................................ 12
9) Miscellaneous Topics ................................................................................................ 12
10) Immoveable Security .............................................................................................. 17
11) Moveable security .................................................................................................. 22
Schedule A..................................................................................................................... 25
Schedule B ..................................................................................................................... 27
Schedule C ..................................................................................................................... 30
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PART I – Doing Legal Work for BDC
1) Legal Entities

Business Development Bank of Canada - BDC is a federal crown corporation created by
the Business Development Bank of Canada Act. It is a continuation of the former Federal
Business Development Bank and stands possessed of all security granted to the FBDB
that may still be outstanding.

Business Development Bank of Canada Act S.C. 1995, Chapter 28
Continuation of Federal Business Development Bank -- s. 3(1)
3. (1) The Federal Business Development Bank established by the Federal Business
Development Bank Act is continued as a body corporate under the name "Business
Development Bank of Canada".

Alterinvest Fund LP and Alterinvest II Fund LP – the Subordinate Financing arm of BDC
is currently making most of its loans/investments under Alterinvest II LP wherein BDC is
the general partner. Older loans and investments were made under Alterinvest Fund LP
and prior to that under BDC. The Subordinate Financing Group and a Business Centre
sometimes have a common client. In that case a priority agreement may be required
between BDC and an LP.

BDC Capital Inc. – this subsidiary may be used for a loan by our Subordinate Financing
arm in rare cases, but otherwise you will not likely encounter it in your work for BDC.
2) BDC Expectations and Communications
i)
Dealing with Business Centre Staff
You will direct all your correspondence and inquiries to, and receive your instructions from,
the BDC representative who issued your instructing letter (the “S&D Officer”). You may
contact BDC’s internal Legal Services directly for technical questions, if required.
ii) Form of Correspondence
Written correspondence with the S&D Officer may be conducted by e-mail, surface mail or
fax.
iii) Reliance



We are completely relying on you to place the required security in an enforceable fashion and
in the rank of registration as per each Letter of Offer we may send to you. We will not be
reading or checking any security that you provide.
You will not provide BDC with legal documents for our review. If you require BDC’s direction
as to a particular form or change to a form, you are to provide your recommendation to the
S&D Officer together with sufficient commentary so that BDC can make a decision on the
question.
Documents, such as priority agreements, presented to the S&D Officer for signing should
only be presented with your recommendation that they should be signed and not for BDC’s
consideration or review. If you require a decision as to some specific issue in the form, you
should set that out in writing to the S&D Officer and provide your recommendation.
iv) Letter of Offer
Our Letter of Offer constitutes our only loan contract and sets out our required security and
the rank of registration of that security that we require you to obtain. Any change in the
security requirements requires an amendment to the Letter of Offer, which the S&D Officer
will arrange to have prepared after the change is approved and arrange to have signed. If
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you recommend any change in the security, please do so in writing to the S&D Officer or
instructing office and await approval in writing before making any changes.
If you receive a change in instructions orally you are to confirm that change in writing back to
the S&D Officer.
v) Response Times
Feedback from BDC clients indicates concerns about the time required to complete security
in many cases. While BDC appreciates that there can be any number of causes of delay
outside your direct control, in an effort to avoid delays and to identify problems quickly, please
adhere, as a minimum, to the following requirements:
 The client is to be advised of the documentation and information you require within two
(2) business days of your receipt of the Instructing letter;
 If the client has not responded within two (2) business days of your request, follow-up by
telephone is required, and advise BDC;
 Searches must be ordered within two (2) business days of receipt of the search data;
 BDC is to be advised immediately of any problems encountered in the searches; and
 All the documentation should be submitted only when the file is complete. If you cannot
complete the security within forty-five (45) days of the date of the Instructing Letter,
advise BDC.
3) Acting for BDC
i)
Contact Solicitor

BDC will direct its loan taking work to a Solicitor in a firm who will be responsible for the
relationship with BDC and conduct of BDC loan taking files in that firm for that city or province
(the “Contact”).

Where a firm has offices in more than one city, there may be different Contacts named by
BDC for different cities.

Instructing Letters for loan taking work going to that firm will normally be directed to the
Contact. If instructions are to be sent directly to another solicitor in that firm the written
approval of the Contact is required.
ii) Delegation
Regular Loan Taking (loans for $10M or less) - The Contact may delegate all or part of the
legal work to other professionals in their firm to limit costs or satisfy client preferences provided
that the delegated professional satisfies BDC’s requirements for errors and omissions insurance.
The Contact may engage legal professionals of their choice in other jurisdictions as necessary for
searches, registration or security completion. Involvement of professionals at a higher hourly rate
requires the approval of the S&D Officer.
Loans where the loan amount is over $10M – The Contact has been selected for their personal
skill and qualities and must remain in active control of all files instructed. They may delegate parts
of the work to other professionals in the firm or agents at the same or lower hourly rate, as they
feel appropriate within this limitation. The Contact may engage the services of legal professionals
of their choice in other jurisdictions as necessary for searches, registration or security completion.
Use of another professional or agent at a higher hourly rate requires the approval of the S&D
Officer. The Contact is the professional required by BDC to sign the Final Report.
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iii) Acting For BDC and the Borrower
This is not permitted on loans over $3,000,000 without the consent of internal BDC Counsel. It is
permitted on loans under that amount if there is clearly no conflict.
iv) Insurance
You will maintain per claim errors and omissions insurance in an amount at least equal to the
amount of any loan instructed to you.
v) Confidentiality
BDC owes its clients an obligation of confidentiality as set out in section 37 of the Business
Development Bank of Canada Act and you are required to keep the borrower’s and guarantor’s
information confidential beyond such release as is necessarily permitted for the loan security
taking process.
37. (1) Subject to subsection (2), all information obtained by the Bank in relation to its
customers is privileged and a director, officer, employee or agent of, or adviser or
consultant to, the Bank must not knowingly communicate, disclose or make available the
information, or permit it to be communicated, disclosed or made available.
(2) Privileged information may be communicated, disclosed or made available
(a) for the purpose of the administration or enforcement of this Act and legal
proceedings related to it;
(b) for the purpose of prosecuting an offence under this Act or any other Act of
Parliament;
(c) to the Minister of National Revenue solely for the purpose of administering or
enforcing the Income Tax Act or the Excise Tax Act; or
(d) with the written consent of the person to whom the information relates.
To maintain the private character of the Letter of Offer, it must never be deposited in the Land
register for publication. However, the true copies of the deeds intended for BDC and the borrower
must contain a copy of the duly certified schedules.
vi) Security Forms

You will use the standard BDC forms available on the Internet - www.bdc.ca/forms. If you
require the forms in French, please contact Legal Services. If it is necessary to use a
different form where a standard BDC form of that type is available you must obtain the prior
consent of internal BDC Counsel.

Tip Sheets – some forms come with a disposable coversheet with specific instructions as to
the use or completion of that form. These coversheets constitute instructions.

Modification of Forms – the body of the standard BDC forms should not generally require
modification but if you feel it is necessary to make minor changes in order to provide valid,
effective and enforceable security you may make those changes but must advise as to the
particulars and nature of those changes in your Solicitor’s Report. The deeds for universal
hypothecs on moveable assets incorporate permitted cessions of rank, in which BDC cedes
priority of rank in favour of another lender granting operating loans or credits in relation to
present and future claims and inventory. Please refer to the appropriate section in the deeds
to obtain the specific wording.

Priority Agreements – although there is a priority agreement in the package of standard BDC
documents its use is not mandatory as the circumstances of loans vary widely and we look to
you to use such forms and wording as you feel appropriate to put BDC in the required priority
position. You do not have to comment in your report on changes to that form, if any.
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
Other Forms – if forms other than those standard forms provided by BDC are required we
expect you to prepare such forms.
vii) Document Signing
The signature of documents must be completed in your presence unless this requires the client to
travel an unreasonable distance, in which case you are authorized to proceed as follows:

Obtain a power of attorney from the client appointing the mandatary of your choice (on a
power of attorney form that you have completed) duly signed and accompanied by, in the
case of a company, a certified extract by the president or secretary of the resolution
authorizing this appointment and, in the case of an individual, a copy of two pieces of
identification. In cases where a power of attorney has to be notarized, it can be signed by
the client before the notary of his choice; or

Transmit the documents to be signed to a professional chosen by the client, who will
have to receive the client’s signature and return everything to you.
BDC’s form of Borrower’s Resolution consolidates all the deeds that must be signed in a single
document. You have to delete the paragraphs irrelevant to the file and date the resolution the
same date as the date of acceptance of the Letter of Offer. A special Borrower’s Resolution is
available for Hypothecs For Present And Future Obligations.
The security documents are structured taking into account in most cases, a notary will attest to
the signature and will provide explanations to the borrower or guarantor. Should this not be the
case and if no advice is given, we would expect that you would have such persons sign an
additional document indicating that no legal advice was sought or given, that they had the
opportunity to seek other counsel, etc.
Exception:
You will be expected to require independent legal advice for a borrower or guarantor where the
circumstances of a file raises concerns with regards to the validity of the consent, either in
relation to their understanding of the documents to sign or in relation to another defect of consent
(for example, not limited to: a business is partially owned by a party who does not participate in
the operational decisions, guarantee by a spouse not involved in the business, the person does
not seem to understand the effects and scope, for any reason, possible undue influence etc).
The solidary guarantors should intervene in the same document. Otherwise each guarantor signs
a guarantee agreement individually.
4) Small Loans
The Instructing Letter may identify a loan as a "Small Loan" for security taking purposes, and for
which reduced requirements apply. As to Small Loans only, where there is a conflict between this
section and requirements elsewhere in this document, the requirements of this section govern.
i)

Searches/Priorities - Restricted Requirements
Movable hypothec
Our only requirement is that you give confirmation of registration of the hypothec by providing the
pertinent extract from the RDPRM. Although the Letter of Offer requires a particular ranking of
security, you are not expected to complete searches or confirm priority of registration.
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
Immovable hypothec
Our only requirement is that you give confirmation of registration of the hypothec and of its rank.
You are not expected to complete title searches.
ii) Insurance/Taxes/Certificate of Location
Unless specifically instructed otherwise, you are not expected to:



Confirm that insurance is in place;
Confirm that property taxes have been paid on mortgaged Immovable; or
Obtain a certificate of location.
iii) Company Status
No opinion is required as to the corporate capacity of either the borrower or the guarantor.
However, we do expect you to search the appropriate registries to confirm the identity, the
existence and the registration of the corporation.
iv) Final Report

No Final Security Status Report is required. We only require your written
confirmation that security has been received and registrations are completed, in
accordance with BDC instructions.
v) Loan Disbursement
Funds will be disbursed to the borrower directly by the Business Centre unless your assistance is
specifically requested prior to disbursement. Prior to disbursement we will require you to submit:



Written confirmation that security has been completed and registered;
Confirmation on priority of registration of BDC’s immovable hypothec, if applicable; and
Your final account.
vi) Your Account
Your account, when received at the same time as your confirmation that security is complete, will
be paid from loan funds. Subsequent to disbursement, you must collect any outstanding amount
directly from the client.
5) Equipment Line Loans
The Instructing Letter may indicate that we have authorized an Equipment Line Loan (EL Loan).
Such loans may be processed separately or concurrently with a regular term loan. An EL Loan
establishes a loan facility that can be drawn upon by the borrower through multiple (nonrevolving) disbursements, over a period of 12 months, to facilitate the purchase of specific items
of equipment. Normally the equipment purchased under the EL Loan will not be identified at the
time the security is prepared and registered. However, you may occasionally receive equipment
lists relating to equipment financed under an EL Loan. When that happens, you will need to
assess BDC’s priority in respect of the listed equipment, as described below.
As to EL Loans only, where there is a conflict between this section and requirements elsewhere
in this document, the requirements of this section govern.
i) Searches/Registrations
(The special requirements for Small Loans contained elsewhere in these Service
Standards, do not apply to EL Loans.)
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For all EL Loans, you will obtain the security called for in the Letter of Offer relating to the EL
Loan and will complete all Corporate and securities searches required in that regard. You must
either register a hypothec or confirm that BDC has an existing hypothec that is properly registered
and enforceable against the Borrower’s assets. In addition, you must specifically determine
whether BDC has priority on equipment that may be financed by BDC under the EL Loan in the
future.
At the time that you are instructed to prepare security, you may receive a list of equipment,
prepared by BDC, which is being financed in connection with an EL Loan. If so, you must not
only determine whether BDC has priority on future equipment that may be financed under the EL
Loan (as outlined above), but you must also complete such additional searches and registrations
as are necessary, including registrations against any ‘serial numbered goods’, to confirm that
BDC has a first security interest on the specific equipment shown on BDC’s list.
You are not expected to negotiate priority agreements in connection with EL Loans. However,
using the Security Confirmation form described below, you must provide BDC a list of all creditors
that may have priority over equipment financed by BDC under the EL Loan, including both future
equipment purchases and any equipment shown on BDC’s equipment list.
ii) Loan Disbursement
You will not be involved in the disbursement of EL Loans. All disbursements on EL Loans will be
handled directly by BDC’s Security & Disbursement Group.
iii) Security Confirmation
Immediately upon execution and registration of the security required in the Letter of Offer relating
to an EL Loan, you will prepare a Security Confirmation form and send it by email to the BDC
representative from the Security & Disbursement Group who instructed you on the EL Loan. The
“Security Confirmation – Equipment Line Loan” form can be downloaded from our website at:
[www.bdc.ca/forms].
When completing the Security Confirmation form you must check all boxes that apply to a
particular loan. In general terms, we require that you indicate whether BDC has priority on the
goods listed in any BDC equipment list that has been provided to you, and whether BDC has
priority on all other equipment that may be financed under the EL Loan in the future.
In the Security Confirmation form you must provide a list of all creditors that may have priority
over BDC’s security interest in equipment. You should only list creditors with general registrations
ahead of BDC, or subsequent general registrations that have priority over BDC by operation of an
existing priority agreement. You are not required to provide a list of item specific registrations or
serial numbered goods unless such registrations are an exact match to pieces of equipment
shown on an equipment list that has been provided to you by BDC in connection with the EL
Loan.
Your Security Confirmation will be relied upon by our Security & Disbursement Group to prepare
and obtain item specific waivers/priority agreements from the creditors that you have identified as
having priority over BDC’s security interest.
iv) Insurance
You verify insurance coverage on EL Loans in the same manner that you would for any other
loan. Those requirements are set forth in the Insurance Section of these Service Standards.
v) Final Report
You will issue your Final Security Status Report and deliver the security documentation for the EL
Loan as soon as possible after security is complete. This should be done regardless of whether
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the loan has been disbursed. Please follow the standard reporting procedures contained in these
Service Standards.
vi) Your Account
The EL Loan Program requires that BDC pay the legal costs associated with obtaining security
for, and disbursing of the EL Loans. Accordingly, you will render a separate invoice to BDC for
the costs associated with the preparation and registration of security for the EL Loan. That invoice
will be paid directly by BDC and you should not deduct the costs associated with the EL Loan
from any disbursement made to the borrower. Your invoice for the EL Loan should be submitted
for payment to the representative of BDC’s Security and Disbursement Group who instructed you.
In the event you are concurrently instructed to complete an EL Loan and a Term Loan, you will
invoice BDC for the EL Loan and deduct your fees and disbursements for the Term Loan when
that loan is disbursed.
6) Loan Disbursement
Prior to the release of any funds to you, BDC requires notice in writing that the security called for
in the Letter of Offer is complete, in accordance with BDC instructions. In doing so, you will use
the Certificate of Registration form, unless you obtain prior BDC consent to use any other form.
Funds will be released to you upon your request, but should only be requested if you are in a
position to disburse them to the client immediately. Any delay in the release of funds must be
reported to the S&D Officer Centre as early as possible.

Conditions precedent to disbursement – Satisfaction of conditions precedent is
generally dealt with directly between the S&D Officer and the borrower but must be
satisfied prior to disbursement so you should confirm this with the S&D Officer before
requesting funds.

Condition precedent Contract Review – The Letter of Offer may require review of a
lease, franchise or other agreement to be satisfactory to BDC’s lawyers or BDC’s legal
advisors. We are expecting you to conduct this review and advise as to the basic outline
and effect of the contract, whether it is consistent with the terms of the loan’s “Project and
Financing”, security and underlying and contingent conditions as set out in the Letter of
Offer and if there are any unusual terms that would negatively affect BDC’s position.

It is possible we ask that you provide us with a draft of certain documents, such as the
deed of sale or a purchase agreement, prior to proceeding to the disbursement.

Except for “Fast Track” disbursements, loans will normally be disbursed through your office
and funds will be wired to you in trust. Please provide the S&D Officer with a voided trust
account cheque to provide account information for the transfer.

Fast Track refers to the early advance of part of the loan directly from the S&D Officer to
the borrower prior to the security being completed. In this case a promissory note is taken
by the S&D Officer and held temporarily until the security is complete. This is only done on
some loans and may be referred to in an underlying condition in the Letter of Offer.

At the time each loan disbursement is wired or otherwise delivered to your office, you will
receive a covering letter from BDC that may contain additional specific instructions. In the
event of a discrepancy between that letter and these instructions, that letter will govern.
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
If BDC gives you specific instructions to direct the funds in whole or in part to a third party,
you will obtain prior written consent from the borrower to do so, while mentioning the
amount of funds directed.

Any use of the borrowed funds or any request that you direct funds in a manner not in
accordance with the “Loan Purpose and Funding” set out in the Letter of Offer must be
reported to the S&D Officer in writing immediately.

Loan proceeds used to repay existing BDC loans will be applied internally by journal
entry. No cheque will be issued for such amounts.

Proof of Borrower’s Contribution – If the borrower provides you with a cheque
representing part of the “Loan Purpose and Funding”, as set out in a Letter of Offer, please
forward us a copy, as we require it to satisfy our preconditions to disbursement.

Construction/Renovation Loans – Prior to any progressive or final disbursement, you are to
obtain:
7) Final Reporting
i) Form of Report
BDC’s form of Final Security Status Report (“Final Report”) must be used in all cases unless
another form is otherwise previously approved by Legal Services. The Final Report can be
downloaded at www.bdc.ca/en/lfb_30
Where existing hypothec(s) for present and future obligations are used, they are to be referred to
in the Final Report.
ii) Prior Charges
We require the Final Report to opine as to the priority of registration of BDC’s charges as
against other registered charges, to indicate which prior registered charges are to remain
outstanding (must be permitted) and which are to be discharged. BDC recognizes that you
cannot certify as to priority over movable property absolutely given the uncertainty of title in it and
unregistered charges that might appear, but we do expect you to do the usual searches as you
deem necessary and to address any registered hypothecs or other charges encountered.
It is not acceptable to attach a RDPRM search and advise that BDC security is subject to the
charges listed. You are to do that analysis and confirm that our security is in the required priority
of registration given the dates and terminology of the registrations located.
If your Final Report indicates certain charges which will be discharged, you must as soon as
possible thereafter provide your confirmation of their discharge. In the context of a discharge from
BDC for a loan being refinanced by the loan for which you are mandated, please see to it that the
discharge is obtained and proceed to publication as per section 9x).
iii) Corporate Opinions and opinions for partnerships and trusts
Traditional opinions as to capacity, authorization and execution are required for corporations and
all non-corporate entities (partnerships, trusts, etc) where the loan amount (total of all concurrent
loans instructed to you) exceeds $5,000,000. However, when the total of all concurrent loans
does not exceed $5,000,000, we do not require the traditional opinion. This is intended to reduce
cost and time and to eliminate the practise of asking borrower’s counsel to provide a certificate on
these points. In such circumstances, and absent any contrary knowledge, you will limit your
investigation of capacity and authorization:
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a)
for corporate borrowers or guarantors to:
i)
Officers Certificate confirming incumbent officers and signatories and confirming
there are no proceedings for winding up;
ii)
Searches of the provincial/territorial corporate registry and, to the extent locally
possible, certificates from those registries confirming the corporation’s
incorporation, status and directors and officers; and
iii)
Certified copy of Director’s Resolution approving the transaction.
b)
for borrowers or guarantors constituted as partnerships or trusts to:
i)
ii)
iii)
A review of the Partnership/Trust Agreement;
Conducting and reviewing searches of the provincial/territorial registry and, to the
extent locally possible, certificates from those registries confirming the
partnership’s registration; and
Obtaining a statutory declaration from the partner/trustee confirming that the
partnership/trust authorizes the loan, has capacity to provide the requested
security and to stand as a borrower or guarantor on the loan, and confirming the
name of the person authorized to execute the loan documents to bind the
partnership/trust.
Corporations, Partnerships and Trusts not granting security – Where a corporation,
partnership or trust is a borrower or guarantor, jointly or individually, under the Letter of Offer but
is not granting a mortgage, general security agreement or other security, we would still expect the
corporate/partnership/trust opinion issue to be addressed in accordance with this section.
iv) Foreign Corporations
Given the high cost of obtaining opinions relative to foreign corporations, you are to discuss with
the S&D Officer whether such opinions are required on a particular loan. You may take their
written direction on this point but must refer to it in your Solicitor’s Report. In any case where we
are taking security over foreign assets we will want confirmation of enforceability which may
require opinions from foreign counsel. If foreign counsel is required, please see Section 9i)
Multiple Jurisdictions below.
v) Delivery of Security Documents and Report
Format and delay
We require both paper and electronic versions of the completed security documents as well as an
electronic copy of your account, to be delivered to BDC not later than 30 days after the date of
your first request for disbursement of the loan. If all of the security documents have not been
finalized within that time frame, the available documents should be sent to BDC, and additional
documents delivered as they are available (e.g., title insurance certificates, updated RDPRM
registrations, surveys, insurance confirmation, discharges and releases etc.). When there are
multiple disbursements on a loan, an interim account should be issued to the Borrower, and a
copy should be delivered to BDC together with the security package. We do not require delivery
of subsequent disbursement accounts.
You are to forward to Legal Services the following documents:
Paper - the originals of all security documents bearing signatures unless registered, in which
case a copy showing registration particulars will suffice along with your Final Report.
EFSC Legal Services
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BDC Building
5 Place Ville Marie
Suite 400
Montreal (Quebec) H3B 5E7
Original Letter of Offer - BDC will sometimes proceed with a loan based on a faxed copy of the
accepted Letter of Offer. If you are advised that BDC has not received the original, please ensure
that it is obtained and forwarded to BDC along with all other documents.
Electronic – All security documents, your Final report, your account and transmission letter in
PDF format (one document per PDF) to the following address: csse.juridique@BDC.ca


If you are instructed for multiple loans, send the security documents using a separate
email for each loan multiple
The subject line of your e-mail must include:
 Borrower’s name;
 Account number and loan multiple (one per email)
 Instructing Business Centre or Department.
Electronic Files Naming – there is no longer a mandatory requirement to include the account or
multiple number in the name of the document. There also is no longer a mandatory requirement
for the use of abbreviations for the type of document. All security documents should be named
using the following naming convention:


Type of document (e.g., Hyp or Hypothec or any other version as long as the document
type is easily identifiable to BDC)
Only if there are multiple documents of the same type for the specific loan multiple (e.g.,
2 hypothecs or 2 guarantees), indicate the name of one of the parties to the document
vi) Your Account
You are to recover your fees and disbursements from the loan disbursements or directly from the
client, before releasing the final disbursement. Unless specifically otherwise approved, BDC will
not pay your account.
We require a copy of your account for fees and disbursement for the mandate in all cases.
8) Loan Amendments
From time to time, amendments to our loans will require that supplemental security be prepared.
We will send you an Instructing Letter enclosing the amendment requiring the supplemental
security, as well as any other documents you may need to prepare the additional security.
In accordance with our reporting requirements in Section 7, we require both paper and electronic
versions of the completed security documents and the Solicitor’s Report not later than 30 days
after the security has been completed. Please indicate in the Solicitor’s Report which sections are
not applicable to the completed security.
The outstanding balance of all loans being amended will be provided in the Instructing Letter.
Where the total outstanding balance exceeds $5,000,000, you are expected to provide opinions
as to capacity, authorization and execution for corporations and all non-corporate entities
(partnerships, trusts, etc.) granting the supplemental security required by the loan amendment.
Do not provide opinions for any other loan parties.
You are to recover your fees for all amendment work directly from the borrower or the borrower’s
solicitor, as there will be no loan disbursement from BDC for amendments. You do not need to
send a copy of your account for loan amendment work with your Solicitor’s Report.
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PART II –Security Taking Topics – Quebec
9) Miscellaneous Topics
i) Multiple Jurisdictions
Where you are instructed to take security on a loan where there is security outside the Province
of Quebec we anticipate you will use local law firms as required but look to you to ensure the
required security is taken. BDC will not instruct firms in each jurisdiction.
Where you are instructed to take security on a loan where a foreign corporation is giving security
and a foreign opinion is required, we anticipate that you will use local law firms as required but
look to you to ensure the required security is taken. BDC will not instruct a firm in the foreign
jurisdiction. The exception to the foregoing is if BDC’s loan is to specifically finance a project in
the U.S, in which case, we will require that specific U.S. counsel be used. If the loan falls into this
category, BDC will advise you and provide you with the contact information for the U.S. counsel
to be used.
ii) Insurance on Assets
The Letter of Offer sets out the required insurance policies and terms thereof (if any). Although
the borrower is required to insure its assets for their full insurable value under the terms of the
Letter of Offer we do not require you to verify insurance is in place in all cases. You are required
to verify insurance for all charged assets for loans over $500,000. For loans up to and
including $500,000, verification of insurance is only required for:

buildings;

aircraft; and

marine vessels.
Written confirmation is required prior to the first disbursement that insurance coverage is in
force. The certificates should include the following information for each policy:
1. Insured (must correspond to client or guarantor who owns the assets)
2. Address of insured assets (must correspond to address of secured assets)
3. Assets Insured (must correspond to secured assets)
4. Policy number
5. Length of policy
6. Type of coverage
7. Insurance company
8. Amounts insured and deductible
Forwarding Insurance Certificates – please forward to the S&D Officer certificates or policies
relating to aircraft or marine vessels as soon as possible. For all other types of insurance, a copy
of the certificate of insurance must be included with delivery of the security documents and your
report to Legal Services.
BDC’s requirements for the applicable types of insurance are as follows:
PROPERTY (building and equipment):
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This insurance is required when BDC has taken realty, equipment and/or business inventory as
security. Coverage must include:
 Building and equipment insured on an “All Risks or Broad Form” and full “Replacement
Cost” basis.
 BDC included as Mortgagee as its interests may appear.
 “Standard Mortgage Clause (approved by the Insurance Bureau of Canada)” in favour
of BDC for all realty (buildings).
 BDC included as Loss Payee for equipment/contents as its interests may appear
 30 days prior notice of cancellation in favour of BDC. The clause is acceptable even if
only “endeavour to provide”
Note: Condominiums – Insurance should be confirmed both for the building policy held by the
condominium corporation and for the owner’s policy covering the unit contents. BDC is only
required to be named as loss payee on the owner’s policy. The Loss Payee and Standard
Mortgage clause are not required on the condominium corporation policy.
.
EQUIPMENT BREAKDOWN (Boiler & Machinery):
This insurance is required when a building pledged as security has pressure vessels for heating
and/or other process machinery and equipment. Coverage must include:
 Standard Comprehensive All-Risks or Broad Form, Repair or Replacement Cost basis
 BDC included as Loss Payee as its interests may appear
 30 days prior notice of cancellation clause in favour of BDC
BUILDERS’ RISK OR COURSE OF CONSTRUCTION:
This insurance is required to cover loss or damage to buildings while they are under
construction for construction loans. The construction contract should specify which party is
responsible for procuring the insurance; it can be the future owner of the completed building,
the project manager or the general contractor. Coverage must include:
 Building and equipment insured on an All Risks or Broad Form, Soft Costs, Replacement
Cost basis
 BDC included as Mortgagee as its interests may appear
 Standard Mortgage Clause (approved by the Insurance Bureau of Canada) in favour of
BDC for all realty (buildings)
 BDC included as Loss Payee for equipment/contents as its interests may appear
 30 days prior notice of cancellation clause in favour of BDC
Note: The amount of insurance should reflect the construction costs as well as the soft
costs such as architectural and engineering fees. Evidence of property insurance is
required once construction has been completed.
TRANSPORTATION RISK (CARGO):
This insurance covers loss or damage to property while in the course of transportation and is
required when BDC calls for a charge on equipment and the amount disbursed on equipment in
transit will exceed $500,000. Coverage must include:
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 Property transported and insured on an All Risks, Replacement Cost basis, including
loading or unloading, covering any and all modes of transport used
 Property transported by marine vessels shipped “under deck”
 BDC as Loss Payee as its interest may appear
 30 days prior notice of cancellation clause in favour of BDC (not relevant if the coverage
is arranged for a single voyage or trip and is imminent)
MARINE:
This insurance is required when a marine vessel is pledged as security. A copy of the certificate
of insurance must be provided to the S&D Officer for forwarding to our Enterprise Risk
Management Department – Insurance for review prior to disbursement. Coverage must include:
 Marine vessels insured for full value of the vessel under a Standard Hull & Machinery
insurance clause in customary use for the occupation of the vessel.
 BDC included as Loss Payee as its interests may appear.
 Mortgagee Interest Clause in favour of BDC (required for vessels with a Current
Liquidation Value (CLV) ≥ $500,000). The S&D Officer can advise you as to the CLV
 Protection & Indemnity (third party liability) coverage in the minimum amounts of:
o $1,000,000 for pleasure craft
o $2,000,000 for commercial use
o or as required by Transport Canada or as specified in the Letter
of Offer
 BDC included as an Additional Insured (should be requested but may not be available if
the vessel is insured through a P&I – protection & indemnity club)
 30 days prior notice of cancellation clause in favour of BDC. The clause is acceptable
even if only “endeavour to provide”
AVIATION:
This insurance is required when an aircraft is pledged as security. A copy of the certificate of
insurance must be provided to the S&D Officer for forwarding to our Enterprise Risk Management
Department – Insurance for review prior to disbursement. Coverage must include:
 Aircraft hull insured on an “All Risks” basis for the full value of the aircraft.
 Hull War Risk and Related Perils (required if aircraft operated outside Canada/USA)
 Insurance to include In-Flight coverage
 Third Party Liability (including passenger) coverage in the minimum amounts of: (refer to
Aircraft Schedule B – General Security Agreement)
o $1,000,000 for private aircraft
o $2,000,000 for commercial use plus $1,000,000 per passenger
o or as required by Transport Canada or as specified in the Letter of Offer

BDC included as an Additional Insured (should always be requested but may not always
be available for small private aircraft)
 Breach of Warranty clause in favour of BDC.
 BDC included as Loss Payee as its interests may appear.
 30 days prior notice of cancellation clause in favour of BDC. The clause is acceptable
even if only “endeavour to provide”
BDC will accept AVN67C or AVN28B or its equivalent
Note: Breach of Warranty clause provides protection to BDC similar to the Standard
Mortgage Clause in Property insurance. AVN67C and AVN28B are endorsements
available in the London market for leased/financed aircraft. AVN67C is used for Airline
operations while AVN28B applies to commercial general aviation risks. They include the
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Loss Payee, Breach of Warranty, and cancellation clauses. AVN67C also includes
Additional Insured clause for financiers. If aircraft is grounded, coverage must include
liability insurance for ground risk. This is referred to as Static Liability.
AVIATION GENERAL LIABILITY:
Clients that operate aircraft hangars that provide fuelling, maintenance and/or repair services to
third parties must provide evidence of this insurance. Coverage must include:
 $1,000,000 limit of Hanger Keepers liability per occurrence or the maximum value of
aircraft in the hangar at any one time
 Aviation Products Liability in the minimum amount of $1,000,000 per occurrence and in
the annual aggregate
 BDC included as an Additional Insured
 30 days prior notice of cancellation clause in favour of BDC
MOTOR VEHICLES:
This insurance is required when motor vehicles are pledged as security. Coverage must include:
 “All Risks” or “Collision and Comprehensive” insurance
 Automotive Civil liability for a minimum amount of $1,000,000 per occurrence
 Lienholder Endorsement naming BDC as Loss Payee (should be requested but may not
always be available – e.g. government owned car insurance entities will not typically
provide this).
 30 days prior notice of cancellation. The clause is acceptable even if only “endeavour to
provide” or equivalent language.
iii) Insurance When Commitment over $25,000,000
With the exception of life insurance, you are not required to confirm satisfaction of BDC's
insurance requirements where, after disbursement of the subject loan, the amount owing by the
Borrower under all loans from BDC will exceed $25 million. BDC’s insurance department will
handle these cases and the Borrower will be required to provide insurance certificates or copies
of the policies for review. If you receive these certificates or policies please forward them to the
S&D Officer as soon as possible.
iv) Insurance Confirmation Checklist
The S&D Officer gives the borrower an Insurance Confirmation Checklist which the borrower can
take to its insurers to simplify placing insurance. This form will not normally come to you and if it
does should not be considered a change in instructions. The insurance called for in the
Insurance Confirmation Checklist should be the same as in the Letter of Offer as amended but in
the event there is a difference we expect you to meet the requirements of the Letter of Offer
rather than the Insurance Confirmation Form.
v) Life Insurance
When life insurance is required, we require that you arrange for the execution of a notice of
assignment form, and the registration of same with the Insurer. The Insurer's form may be used
provided it does not contain unreasonable restrictions.
vi) Prior Permitted Charges on Immovable or Movable Property
You are expected to conduct priority searches and confirm the priority of registration of the
charge. Where we permit a prior charge up to a dollar amount, we require you to satisfy yourself
and confirm to us that the prior charges do not and cannot in the future exceed the permitted
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amounts (except for interest and costs of enforcement). A priority agreement to restrict the priority
of future advances may be required.
If your searches reveal the following types of charges that are not specifically permitted by the
security description in the Letter of Offer, they are to be treated as follows:
IMMOVABLE PROPERTY
Charge
Treatment
Servitudes to utility companies (hydro,
No action required
telephone, sewer, etc.)
Private servitudes or rights-of-way for access
You are to advise, in writing, to the S&D
to adjoining lot, encroachments, etc.
Officer as to nature and effect of the charge
and advise if it does or does not unreasonably
affect the use or saleability of the property. If it
does not, nothing further is required. If it does,
Governmental (including municipal) restriction
commentary as to the effect is to be provided
on use of property not arising from dealings
so that the BDC can assess and, if approved,
with the property owner (e.g. flood plain
prepare a loan amendment.
agreement, height restriction)
Governmental building approval – restricts use
to particular construction may require posting
of bonds, construction target dates, penalties
Developer’s building restrictions
Other covenants and restrictions
Registered Leases
You are to advise the S&D Officer in writing.
Non-disturbance agreement
Authorization required by loan amendment.
MOVABLE PROPERTY
Charge
Treatment
Other hypothecs only on inventory and/or You are to make sure that priority is over
receivables where we have already allowed receivables only and not over “debts” of all
priority to operating lender
nature. BDC has priority over debts resulting
from the renting or selling of charged assets or
insurance indemnities applicable to charged
assets.
Leases and conditional sales agreements of You are to provide list of leased/sold
specific equipment
equipment for sign-off by the S&D Officer
Other charges on vehicles only
Solicitor is to provide list of leased/sold
vehicles for sign-off by the S&D Officer
Other specific or universal hypothecs on
movable property
Charge to be postponed/discharged or loan
Legal hypothecs, Notices of seizure registered amendment permitting priority
in RDPRM
vii) Searches
We require you to make all necessary searches to establish the priority of registration of our
security. Ownership searches of charged vehicles should be made where possible.
SEARCH
RDPRM
Land Title Office
REQUIRED
when personal
property charged
when real property
interest charged
SEARCH
Employment
Standards (wages)
Bank Act
REQUIRED
no
where nature of
business indicates
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Real Property Tax
Corporations
registrar
Worker’s
Compensation
GST/PST sales Tax
Enforcement
procedures/Executio
ns
Manufactured Home
Registry
Canada Shipping
when land charged
Yes
Zoning
Revenue Canada
and we have not
subordinated our
position on
inventory
no
no
No
Actions / judgments
no
No
where easily
searched in PPR or
general register
as applicable
where lot charged
If an aircraft is
charged
Bankruptcy
no
Condominium fees
Registration of
aircraft with
Transport Canada
International Aircraft
Registry
Certificate of air
worthiness
Municipal by-law
search
as applicable
where applicable
yes
no
NOTE: In any particular case you feel it would be wise to conduct a non-mandatory search due
to the particular facts of the file please discuss that with the S&D Officer.
viii) Loans to Corporations to be Incorporated (TBI’S)
In many cases, the only document signed by the borrower that contains the terms of a particular
loan is the Letter of Offer. Where a corporation, intended to be a borrower, does not exist at the
time the Letter of Offer is accepted, we require a subsequent written adoption of the Letter of
Offer from that corporation and its acceptance of the terms of the loan.
ix) Share Purchases
In many cases, the target corporation is to be a borrower or guarantor under a loan providing
funds to buy the shares of that corporation. In the event the Letter of Offer has not been signed
by the company under its incumbent officers, then you must ensure that it is adopted and
confirmed by the corporation by the authorized signatories at closing.
x) Discharge – release – voluntary cancellation or reduction – servitude – cadastral change
When you have to prepare one of these deeds, you must forward your draft and we will complete
and send you a specific power of attorney.
10) Immoveable Security
i) Collateral Hypothecs
Where a hypothec is granted by a third party and not the borrower, you are required to use the
appropriate “Collateral” security forms.
ii) Immoveable hypothecs or immoveable hypothec for Present and Future Obligations
The Letter of Offer may refer to a Hypothec or may also refer to a Hypothec for Present and
Future Obligations. Contrary to the first, the Hypothec for Present and Future Obligations allows
BDC to grant one or more successive loans to its borrowers and make new advances up to a
total commitment that does not exceed the principal indicated in the Hypothec for Present and
Future Obligations. We are relying on you to use the right form accordingly.
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NOTE: Where the face amount of the hypothec is different from the amount of the loan you are
working on, the “Loan Amount” for use in the guarantee is the loan amount not the face amount of
the hypothec.
These hypothec forms are used to hypothecate a named immovable, all the present and future
rents, all the movable property that are or will be physically attached or joined to the immovable
and the insurance indemnities covering the said rents.
iii) Universal hypothec and universal hypothec for Present and Future Obligations
These forms allow BDC to hypothecate the universality of all of the constituent’s property,
movable and immovable, corporeal and incorporeal, present and future, wherever it may be
found. The description of the property in the Deed of Hypothec and in the application for
registration shall be identical to the description appearing in the Letter of Offer. Should you have
comments as to the description, please submit them in writing to the instructing S&D Officer.
Note that the hypothec created under a universal hypothec is subordinated and ranks after any
other hypothec on inventory and receivables that may be granted by the debtor in favour of any
bank or financial institution granting it operating loans or operating credit.
iv) Taxes
Realty taxes which have been billed and are due as of the date of the initial disbursement must
be paid prior to initial disbursement. If the loan is being disbursed in stages over the current year,
you have to ascertain that the taxes for the current year must have been paid proportionally to the
date of the final disbursement or at least that the current taxes are paid in accordance to the
schedules allowed by the municipalities if the last disbursement occurs after these schedules.
We will rely on you to this end and do not require further documentation or certificates. Please
provide confirmation in your Final Report.
v) Supplementary or superseding loans relying on existing immoveable hypothecs for
present and future obligations
When you are instructed to take security for a loan where an existing Hypothec for Present and
Future Obligations is to be used, we expect you to:

Obtain a copy of the existing hypothec – if not sent by the S&D Officer, obtain from Legal
Services or Land Registry ;

Examine the hypothec for patent defects. You will not be responsible for any defects in
preparation, execution or registration that are not patent. After informing the Business
Center, any that are should be addressed.

Verify that the face amount of the hypothec is sufficient to cover the existing loan as well
as the additional loan;

Verify that the building location survey/location certificate provided upon registration of
the hypothec illustrates the actual state of the immovable. If it is not the case, obtain a
new survey/certificate or obtain title insurance. If an existing title insurance policy in favor
of BDC has already been issued upon initial registration of the hypothec, please validate
the coverage for the new loan with the title-insurer;

Do searches to determine proper registration and no unauthorized registered prior
charges. Search requirements in 7 above apply;
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
Verify the final effective date of the existing hypothec and proceed to its renewal for the
term of the new advance plus two years if it appears to expire prior to the end of the term
of the new advance;

Obtain confirmation from the S&D Officer that:
o
o
o
o
there is no undertaking by BDC to advise and/or obtain the consent of a third party
prior to re-using the hypothec for present and future obligations; if there is such an
undertaking, you must ensure that the required notice was given and that it is
sufficient;
no assignment of rank was granted by BDC;
no partial discharge or reduction of the hypothec was granted by BDC;
that a verification was made with respect to the status of real estate taxes and
Crown claims.
Refer to the existing hypothec in your Final Report.
vi) Construction loans/renovation loans
Prior to any progressive disbursement and/or final disbursement, you must obtain:
When a general contractor is involved in the project:

From the owner of the immovable, a written statement concurrently with such
disbursement, relating to all written notices received by him from sub-contractors (an
example of such statement can be found in Schedule B).

From the general contractor, i) receipt and lien waiver to the legal hypothec for payment
received from each sub-contractor who has given notice of his contract, and ii) receipt
and lien waiver by the general contractor of his own rights to the legal hypothec on the
immovable, for payment received.
When a general contractor is not involved in the project:

From each contractor involved in the project, receipt and lien waiver to the legal hypothec
on the immovable, for payment received.

BDC normally retains holdbacks of 10% from its disbursements on construction loans
until 35 days after the work has been completed. However, BDC does not retain
holdbacks on construction projects of $500,000 or less (cost of the construction project
component).
vii) Surveys and Title insurance
Where a loan relies on a mortgage, new or existing, on land with buildings you are to obtain and
review either a building location survey/location certificate or title insurance. Survey requirements
must be fulfilled prior to disbursement of the loan. Exceptions:
 For some rural properties over 5 acres, the S&D Officer may accept a sketch plan drawn
to scale by the account officer or the borrower.
 Surveys are not required for registered condominium or strata lots, unless there is a bare
land condominium or strata plan.
 “Small Loans” as discussed in section 4 above.
1. Building Location Survey / Location Certificate
BDC is prepared to accept an existing survey provided that it is no more than 10 years
old at the time of the financing and shows all existing structures (including additions) on
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the property and is accompanied by a statutory declaration from the owner stating that
there have been no alterations, additions, or demolitions to those structures since the
date of the survey (If the survey has been prepared contemporaneously with the loan the
statutory declaration is not required). However, if the survey is either more than 10
years old at the time of the financing or less than 10 years old but does not show all
existing structures, then either a new survey or title insurance is required.
BDC only requires a copy of the survey.
For loans which are not used to finance a construction, the requirements regarding
surveys must be satisfied prior to the first disbursement of the loan.
2. New Construction/renovations
For any new construction, BDC requires either title insurance or a survey/location
certificate once foundation is in place. Alternatively, an implantation certificate can be
accepted until such time as a certificate of location can be prepared (as soon as possible
following the end of the construction). The survey/location certificate will have to be
updated before last disbursement to ensure there are no above ground overhang
encroachments. Title insurance is simpler and provides better protection for
disbursements made prior to building completion.
3. Title Insurance

Where a survey/location certificate is required, title insurance from FCT (First Canadian
Title), Stewart Title Guaranty Company or Chicago Title Insurance Company Canada (the
“Approved Insurers”) may be used instead at the borrower’s option and cost.

BDC will accept such title insurance to cover off the “gap” caused by slow Land Titles
Office procedures in Alberta and Manitoba.

Title Insurance may be available to protect against known title defects such as
encroachments and BDC may be willing to accept this in a particular fact situation.

Please advise the S&D Officer in writing providing details of the title problem together
with your opinion that the problem can be appropriately covered by title insurance and
further written instructions will be provided. In any case where title insurance is used, we
will expect you to be satisfied that the policy obtained covers the risk(s) to be insured
(survey, known defects).

In all cases, should BDC be prepared to accept title insurance, we require that the policy
be issued through one of the Approved Insurers with BDC as the insured, for the amount
of the mortgage and for a term equivalent to the life of the loan. BDC will only accept title
insurance issued through the Approved Insurers, as they provide a special
readvanceable endorsement for BDC mortgages (see section below re: Subsequent
Advances). Please do not request that another insurer provide the coverage.
 CONSTRUCTION LOANS: Should the loan include a construction component, the
Approved Insurer must be notified so the appropriate construction endorsement can be
added to the policy when it is issued.
a. First Canadian Title Insurance (First Canadian) for Subsequent Advances
When obtaining title insurance through First Canadian, the Subsequent Loan Facilities
Endorsement (see Schedule A for 04/10 revision – confirm with First Canadian that you
have the current version) is deemed included in any policy issued in favour of BDC when
a new or existing readvanceable BDC mortgage form is used. If making a supplementary
loan relying on an existing readvanceable mortgage for which a First Canadian policy is
already in place, that policy can be used for the new loan although some modification and
additional fee is required in some cases as follows:
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1. Where the total amount of the new loan and existing loan(s) are less than the
existing policy amount:
a. No notice to First Canadian required;
b. You must follow the requirements of the Subsequent Loan Facilities
Endorsement as to sub searches, prior charges and payment of taxes. No
confirmation of these searches, etc. is sent to First Canadian but must be
retained on your file.
2. Where the total amount of new loan and existing loan(s) are greater than the
existing policy amount:
a. First Canadian is to be advised at their Oakville Office as to:
 borrower;
 policy number;
 new insured amount (total amount of loans);
 date of advance of new monies
b. An additional fee will be required based on the difference between the cost of
a new policy for the existing insured amount and a new policy for the new
insured amount;
c. You must follow the requirements of the Subsequent Loan Facilities
Endorsement as to sub searches, prior charges and payment of taxes.
Confirmation of these searches, etc. is sent to First Canadian as for a new
policy;
d. First Canadian will issue an amended policy where the amount of insurance
will be increased and the date of policy brought forward.
b. Stewart Title Guaranty Company Title (Stewart) Insurance for Subsequent
Advances
When obtaining a title insurance policy through Stewart, the Subsequent Loan Facilities
Endorsement (Special) 05/06/2008 revision (see Schedule B - confirm with Stewart that
you have the current version) is to be called for. If making a supplementary loan relying
on an existing readvanceable mortgage for which such a Stewart title Insurance policy is
already in place, that policy can be used for the new loan although some modification and
additional fee is required in some cases as follows:
1. Where the total amount of the new loan and existing loan(s) are less than the
existing policy amount:
a. No notice to Stewart is required;
b. You must follow the requirements of the Endorsement as to sub searches,
prior charges and payment of taxes. No confirmation of these searches, etc.
is sent to Stewart but must be retained on your file.
2.
Where the total amount of new loan and existing loan(s) are greater than the
existing policy amount:
a. Stewart is to be advised as to:
 borrower;
 policy number;
 new insured amount (total amount of loans);
 date of advance of new monies
b. An additional fee will be required based on the difference between the cost of
a new policy for the existing insured amount and a new policy for the new
insured amount;
c. You must follow the requirements of the Subsequent Loan Facilities
Endorsement as to sub searches, prior charges and payment of taxes.
Confirmation of these searches, etc. is sent to Stewart as for a new policy;
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d. Stewart will issue an amended policy where the amount of insurance will be
increased and the date of policy brought forward.
c. Chicago Title Insurance for Subsequent Advances
The Subsequent Loan Facilities Endorsement (see Schedule C – confirm with Chicago
Title that you have the current version) is deemed included in Chicago Title Insurance
when a new or existing readvanceable BDC mortgage form is used on an insured loan.
Therefore, if making a supplementary loan relying on an existing readvanceable
mortgage for which a Chicago Title Insurance policy had been obtained as to an earlier
loan, that policy can be used for the new loan although some modification and additional
fee is required in some cases as follows:
1. Where the total amount of the new loan and existing loan(s) are less than the
existing policy amount:
a. no notice to Chicago Title required;
b. you must follow the requirements of the Subsequent Loan Facilities
Endorsement as to sub searches, prior charges and payment of
taxes. No confirmation of these searches, etc. is sent to Chicago
Title but must be retained on your file.
2. Where the total amount of new loan and existing loan(s) are greater than the
existing policy amount:
a. Chicago Title is to be advised as to:
 borrower;
 policy number;
 new insured amount (total amount of loans);
 date of advance of new monies
b. An additional fee will be required based on the difference between
the cost of a new policy for the existing insured amount and a new
policy for the new insured amount;
c.
You must follow the requirements of the Subsequent Loan Facilities
Endorsement as to sub searches, prior charges and payment of
taxes. Confirmation of these searches, etc. is sent to Chicago Title
as for a new policy;
d. Chicago Title will issue an amended policy where the amount of
insurance will be increased and the date of policy brought forward.
viii) Notice of address
The BDC notice of address is 6000349.
11) Moveable security
i) Hypothec on movable property and hypothec on movable property for present and future
obligations
Those two forms may be used both to hypothecate a specific list of property, the universality of
movable property or one of more classes of universality of movable property. In the event of a
specific hypothec or a hypothec on a class or classes of universality of movable property other
than receivables and inventories, it is possible for you to delete Section IV of those forms.
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Under a specific hypothec, the list of property transmitted and verified by the S&D Officer must be
reproduced in the Deed. PLEASE NOTE THAT a hypothec on equipment “to be acquired
under the program” is a specific hypothec and you are responsible for obtaining a list of
equipment (confirmed by the S&D Officer). We will not accept a certified statement indicating
“equipment to be acquired under the project”. If no sufficiently detailed list is available upon
security taking, contact the S&D Officer to confirm if you should register a universal hypothec with
undertaking to reduce to the specific property under the project when the exact description is
known. It is your responsibility to see to it to obtain the list moveable property prior to the
disbursement in order to obtain the desired rank and to see to the reduction of the hypothec
concurrently to the final disbursement of the loan.
ii) Application for registration to the RDPRM
In the application for registration, mention:

Interest rate: 25% PER YEAR.

In the description of the property include the enumeration of paragraph 2 of the
“Hypothec”, which completes the term "hypothecated property" of paragraph 1 of the
deed of hypothec on movable property.

In “Other Mentions” indicate the additional hypothec of 20% and, if applicable, indicate
Hypothec for Present and Future Obligations and indicate the priority given in respect of
receivables and inventory.

the BDC notice of address number in the RDPRM is 000353.

as the final effective date; 10 years after the date the Letter of Offer is signed.
iii) Supplementary or superseding loans relying on existing moveable hypothecs for
present and future obligations
When you are instructed to take security for a loan where an existing Hypothec for Present and
Future Obligations is to be used, we expect you to:







Obtain a copy of the existing hypothec – if not sent by the S&D Officer, obtain from Legal
Services or Land Registry ;
Examine the hypothec for patent defects. You will not be responsible for any defects in
preparation, execution or registration that are not patent. After informing the Business
Center, any that are should be addressed.
Verify that the face amount of the hypothec is sufficient to cover the existing loan as well
as the additional loan;
Verify that the building location survey/location certificate provided upon registration of
the hypothec illustrates the actual state of the immovable. If it is not the case, obtain a
new survey/certificate or obtain title insurance. If an existing title insurance policy in favor
of BDC has already been issued upon initial registration of the hypothec, please validate
the coverage for the new loan with the title-insurer;
Do searches to determine proper registration and no unauthorized registered prior
charges. Search requirements in 7 above apply;
Verify the final effective date of the existing hypothec and proceed to its renewal for the
term of the new advance plus two years if it appears to expire prior to the end of the term
of the new advance;
Obtain confirmation from the S&D Officer that:
o
there is no undertaking by BDC to advise and/or obtain the consent of a third party
prior to re-using the hypothec for present and future obligations; if there is such an
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
undertaking, you must ensure that the required notice was given and that it is
sufficient;
o
no assignment of rank was granted by BDC;
o
no partial discharge or reduction of the hypothec was granted by BDC;
o
that a verification was made with respect to the status of real estate taxes and
Crown claims.
Refer to the existing hypothec in your Final Report.
iv) Moveable assets permanently attached to an immoveable
We will rely on you to determine if it is necessary to register an immoveable hypothec for any
moveable assets permanently physically attached or joined to an immoveable.
v) Charges on Rolling Stock/Railway Equipment
Where BDC is taking security over rolling stock as defined under the Canada Transportation Act,
we will expect filing of our security agreement under that Act through the registry maintained by
Industry Canada as well as at the applicable Personal Property Registries.
vi) Intellectual Property
When a specific hypothec on copyright, trademarks, patents or source code is taken, we expect
filing of a notice of our hypothec (not the hypothec in itself) against the interest’s registration in
the applicable federal registry as well as at the applicable Personal Property Registries. You are
not expected to automatically do the federal filings when only a universal hypothec is called for. If
you think it is warranted in any case, please discuss that with the S&D Officer.
vii) Charges on Aircraft at the International Registry of Mobile Assets (International Aircraft
Registry)
Canada is a signatory to the Capetown Convention pursuant to which the priority of interests on
certain airframes, aircraft engines and helicopters will be determined. Ratification by the Federal
Government and a number of provinces and territories has occurred and registration in the
international registry will be required for qualifying aircraft and engines. Where applicable,
searches should be conducted in the international registry and registrations performed. BDC
expects that you will determine if searches and/or registration in the International Registry are
required and also requires that you register in the applicable Personal Property Registries. If you
are not provided sufficient particulars to enable you to perform the necessary searches and
registration, please request such information from the S&D Officer. BDC‘s agent through whom
all registrations in the international registry are to take place is:
Ann Lowenberg
Commercial and Banking & Finance Paralegal
Parlee McLaws LLP
Barristers & Solicitors, Patent & TradeMark Agents
3400 Suncor Energy Centre
150 Sixth Avenue SW
Calgary, Alberta T2P 3Y7
Direct dial: (403) 294-7074
Fax: (403) 294-7082
Web site: www.parlee.com
Dale Spackman Q.C. of that firm is the backup contact
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Schedule A
Subsequent Loan Facilities - BDC
Loan
Canada (revised 04/10)
ENDORSEMENT
Attached to and forming a part of Title Insurance Policy No. 
Issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
2235 Sheridan Garden Drive,
Oakville, Ontario L6J 7Y5
Telephone: 905-287-3112 or 1-866-804-3112
1.
Amend Date of Policy: Subsequent Advances
On the creation of future indebtedness and liability up to the Amount of Insurance, other than
pursuant to advances contemplated by the Revolving Credit Operating Line Facility
endorsement, the Company will deem the Date of Policy to be the date of the creation of such
future indebtedness and liability, provided that, as of the date of the creation of such future
indebtedness and liability, the Insured:
(i)
(ii)
(iii)
2.
conducts a subsearch of the Public Records (including searching executions) and confirms
there are no liens, encumbrances or adverse interests registered against Title;
does not have actual Knowledge of any liens, encumbrances or adverse interests; and
confirms realty taxes are not in arrears.
Priority of subsequent advances: Date of Policy
The Insured acknowledges and agrees that on the creation of future indebtedness, other than
pursuant to advances contemplated by the Revolving Credit Operating Line Facility
endorsement, and if the Date of Policy is not deemed to be amended as provided for in
paragraph 1, the Company is not liable for any loss or damage sustained by the Insured by
reason of any matters covered under the policy arising or created subsequent to the Date of
Policy.
3.
Increasing Amount of Insurance
Additional indebtedness may be created by the mortgagor to an amount which exceeds the
Amount of Insurance and in such case, the Company will increase the Amount of Insurance to
the amount requested by the Insured, not to exceed the amount of the Insured Mortgage, and will
amend the Date of Policy to the date of the creation of such additional indebtedness and liability,
provided that, as of the date of the creation of such additional indebtedness, the Insured:
(i)
conducts a subsearch of the Public Records (including searching executions) and confirms
there are no liens, encumbrances or adverse interests registered against the Title;
(ii) does not have actual Knowledge of any liens, encumbrances or adverse interests;
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Subsequent Loan Facilities BDC
Loan
Canada (revised 04/10)
(iii)
(iv)
4.
confirms realty taxes are not in arrears; and
agrees to pay the Company the premium at the then applicable rates for the increase in the
Amount of Insurance.
Limitation of Company’s liability
The Insured acknowledges and agrees that:
(i) in the event the total indebtedness of the mortgagor exceeds the Amount of Insurance and
the Insured has not increased the Amount of Insurance as provided for herein, the
Company’s liability for loss or damage arising from matters covered under the policy will be
limited to losses not exceeding the amount by which the value of the Land at the time of loss
falls below the Amount of Insurance; and
(ii) if the indebtedness of the mortgagor is increased at any time subsequent to the Date of Policy
so that the total Indebtedness of the mortgagor exceeds the Amount of Insurance and if the
Date of Policy is not amended as provided for herein, the Company is not liable for any loss
or damage sustained or incurred by the Insured by reason of any matters covered under the
policy arising or created subsequent to the Date of Policy
This endorsement is issued as part of the policy. Except as it expressly states, it does not
(i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii)
extend the Date of Policy or (iv) increase the Amount of Insurance. To the extent a provision of
the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the
terms and provisions of the policy and of any prior endorsements to it.
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
Thomas H. Grifferty, Regional Vice President,
International Operations
Issuing Guidelines:
In order to issue the Subsequent Loan Facilities endorsement the Insured must comply with the
provisions stated in the endorsement. As to paragraph 1, it is not necessary to advise us of each
subsequent advance, but you must maintain a record of your searches (including confirmation of
taxes) and the date of each advance.
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Schedule B
ENDORSEMENT TO TITLE POLICY
Attached to and forming part of Policy No. M-7762
Charge $Nil
05/06/2008 – Loan
ISSUED BY
STEWART TITLE
G U A R A N T Y
C O M P A N Y
HEREIN CALLED THE COMPANY
SUBSEQUENT LOAN FACILITIES ENDORSEMENT (SPECIAL)
1.
Insurance covers all indebtedness and liability and payments do not reduce the Amount of
Insurance
The Company acknowledges and agrees that the Insured Mortgage secures all present and future
indebtedness and liability of the mortgagor up to the amount of insurance, as amended from time to time as
provided for hereunder (the “Amount of Insurance”) and that, notwithstanding the terms and conditions of the
policy and any endorsement, the Amount of Insurance shall not be reduced by payments made on any such
indebtedness and liability.
2.
Request to amend Date of Policy
On creation of future indebtedness and liability up to the Amount of Insurance, other than pursuant to
advances contemplated by the Revolving Credit Endorsement, the Company will deem the Date of Policy to
be the date of the creation of such future indebtedness and liability, provided that, as of the date of the
creation of such future indebtedness and liability, the Insured:
i) conducts a subsearch of the Public Records (including searching executions) and confirms there are no
liens, encumbrances, or adverse interests registered against the Title;
ii) does not have Knowledge of any liens, encumbrances or adverse interests; and
iii) confirms realty taxes are not in arrears.
3.
Priority of subsequent advances: Date of Policy
The Insured acknowledges and agrees that on the creation of future indebtedness and liability, other than
pursuant to advances contemplated by the Revolving Credit Endorsement, and if the Date of Policy is not
deemed to be amended as provided for herein, the Company is not liable for any loss or damage sustained
or incurred by the Insured by reason of any matters covered under the policy arising or created subsequent
to the Date of Policy.
This Endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior
endorsements thereto. Except to the extent expressly stated, this Endorsement neither modifies any of the terms and
provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and prior
endorsements, nor does it increase the face amount thereof. Signed under seal for the Company, but this Endorsement
is to be valid only when it bears an authorized countersignature, dated 10 mars, 2016.
Countersigned:
Authorized Countersignature
Stewart Title Guaranty Company
Toronto, Ontario, Canada
ENDORSEMENT TO TITLE POLICY
Attached to and forming part of Policy No. M-7762
Charge $Nil
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05/06/2008 – Loan
ISSUED BY
STEWART TITLE
G U A R A N T Y
C O M P A N Y
HEREIN CALLED THE COMPANY
SUBSEQUENT LOAN FACILITIES ENDORSEMENT (SPECIAL)
- Page 2 4.
Increasing Amount of Insurance
Additional indebtedness and liability may be created by the mortgagor to an amount which exceeds the Amount of
Insurance and in such case, the Company will increase the Amount of Insurance to the amount requested by the
Insured, not to exceed the amount of the Insured Mortgage, and will amend the Date of Policy to the date of the
creation of such additional indebtedness and liability, provided that, as of the date of the creation of such additional
indebtedness and liability, the Insured:
i) conducts a subsearch of the public records (including searching executions) and confirms there are no liens,
encumbrances, or adverse interests registered against the title;
ii) does not have Knowledge of any liens, encumbrances or adverse interests;
iii) confirms realty taxes are not in arrears; and
iv) agrees to pay the Company the premium at the then applicable rates for the increase in the Amount of Insurance.
5.
Limitation of Company’s liability
The Insured acknowledges and agrees that:
in the event the total indebtedness and liability of the mortgagor exceeds the Amount of Insurance and the Insured
has not increased the Amount of Insurance as provided for herein, the Company’s liability for loss or damage arising
from matters covered under the policy will be limited to losses not exceeding the amount by which the value of the
Land at the time of loss falls below the Amount of Insurance; and
This Endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior
endorsements thereto. Except to the extent expressly stated, this Endorsement neither modifies any of the terms
and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and prior
endorsements, nor does it increase the face amount thereof. Signed under seal for the Company, but this
Endorsement is to be valid only when it bears an authorized countersignature, dated 10 mars, 2016.
Countersigned:
Authorized Countersignature
Stewart Title Guaranty Company
Toronto, Ontario, Canada
ENDORSEMENT TO TITLE POLICY
Attached to and forming part of Policy No. M-7762
Charge $Nil
05/06/2008 – Loan
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ISSUED BY
STEWART TITLE
G U A R A N T Y
C O M P A N Y
HEREIN CALLED THE COMPANY
SUBSEQUENT LOAN FACILITIES ENDORSEMENT (SPECIAL)
- Page 3 if the indebtedness and liability of the mortgagor is increased at any time subsequent to the Date of Policy so that the
total indebtedness and liability of the mortgagor exceeds the Amount of Insurance and if the Date of Policy is not
amended as provided for herein, the Company is not liable for any loss or damage sustained or incurred by the
Insured by reason of any matters covered under this Policy arising or created subsequent to the Date of Policy.
Issuing Guidelines:
This endorsement is not applicable in construction situations. If any subsequent registrations become apparent
through a subsearch of title, or otherwise, these are to be reported to the Company prior to any amendment to the
Date of Policy or Amount of Insurance and the Company reserves the right to provide further underwriting.
This Endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior
endorsements thereto. Except to the extent expressly stated, this Endorsement neither modifies any of the terms
and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and prior
endorsements, nor does it increase the face amount thereof. Signed under seal for the Company, but this
Endorsement is to be valid only when it bears an authorized countersignature, dated 10 mars, 2016.
Countersigned:
Authorized Countersignature
Stewart Title Guaranty Company
Toronto, Ontario, Canada
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Schedule C
Issued by:
CHICAGO TITLE INSURANCE COMPANY
Endorsement
Subsequent Loan Facilities (BDC 04/10)
1.
Insurance covers all indebtedness and liability and payments do not reduce the Amount of
Insurance
The Company acknowledges and agrees that the Insured Mortgage secures all present and future
indebtedness and liability of the mortgagor up to the amount of insurance as amended from time to time as
provided for hereunder (the "Amount of Insurance") and that, notwithstanding the terms and conditions of
the policy and any endorsement, the Amount of Insurance shall not be reduced by payments made on any
such indebtedness and liability.
2.
Amend Date of Policy: Subsequent Advances
On the creation of future indebtedness and liability up to the Amount of Insurance, other than pursuant to
advances contemplated by the revolving credit facility endorsement the Company will deem the Date of
Policy to be the date of the creation of such future indebtedness and liability provided that, as of the date
of the creation of such future indebtedness and liability, the insured:
(i) conducts a subsearch of the public records (including searching executions) and confirms
there are no liens, encumbrances or adverse interests registered against the title;
(ii) does not have actual knowledge of any liens, encumbrances or adverse interests; and
(iii) confirms realty taxes are not in arrears.
3.
Priority of subsequent advances: Date of Policy
The insured acknowledges and agrees that on the creation of future indebtedness and liability, other than
pursuant to advances contemplated by the revolving credit facility endorsement, and if the Date of Policy is
not deemed to be amended as provided for in paragraph 2, the Company is not liable for any loss or damage
sustained or incurred by the insured by reason of any matters covered under the Policy arising or created
subsequent to the Date of Policy.
4.
Increasing Amount of Insurance
Additional indebtedness and liability may be created by the mortgagor to an amount which exceeds the
Amount of Insurance and in such case, the Company will increase the Amount of Insurance to the amount
requested by the insured, not to exceed the amount of the Insured Mortgage, and will amend the Date of
Policy to the date of the creation of such additional indebtedness and liability, provided that, as of the date
of the creation of such additional indebtedness and liability; the insured:
i)
conducts a subsearch of the public records (including searching executions) and confirms
there are no liens, encumbrances or adverse interests registered against the title;
ii) does not have actual knowledge of any liens, encumbrances or adverse interests;
iii) confirms realty taxes are not in arrears; and
iv) agrees to pay the Company the premium at the then applicable rates for the increase in the
Amount
of Insurance.
5.
Limitation of Company's liability
The insured acknowledges and agrees that:
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i) in the event the total indebtedness and liability of the mortgagor exceeds the Amount of
Insurance and the insured has not increased the Amount of Insurance as provided for herein, the
Company's liability for loss or damage arising from matters covered under the policy will be
limited to losses not exceeding the amount by which the value of the land at the time of loss falls
below the Amount of Insurance; and
ii) if the Indebtedness and liability of the mortgagor is increased at any time subsequent to the
Date of
Policy so that the total indebtedness and liability of the mortgagor exceeds the Amount of
Insurance and if the Date of Policy is not amended as provided for herein, the Company is not
liable for any loss or damage sustained or incurred by the insured by reason of any matters
covered under the Policy arising or created subsequent to the Date of Policy
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of
the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy,
or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous
endorsement is inconsistent with an express provision of this endorsement, this endorsement controls.
Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior
endorsements.
Dated:
CHICAGO TITLE INSURANCE COMPANY
Authorized Signatory
Note: This endorsement shall not be valid or binding until countersigned by an authorized signatory.
Issuing Guidelines:
In order to issue the Subsequent Advance Endorsement the insured must comply with the provisions
stated in the endorsement.
As to paragraph 2, it is not necessary to advise us of each subsequent advance, but you must maintain a
record of your searches (including confirmation of taxes) and the date of each advance.
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