See revised insurance requirements for:
PROPERTY (building and equipment located outside of Canada) - NEW
BUILDER’S RISK OR COURSE OF CONSTRUCTION
TRANSPORTATION RISK (CARGO) – no longer a requirement to have coverage for property transported by marine vessels shipped “under deck”
Insurance When Commitment over $25 million - this clause has been eliminated as solicitors are responsible for verifying insurance for all charged assets for loans over $500,000, unless otherwise specified in the Service Standards.
TABLE OF CONTENTS
PART I – Doing Legal Work for BDC
Legal Entities 3
BDC Expectations and Communications 3
Acting for BDC 4
Small Loans 6
Equipment Line Loans 6
Loan Disbursement 8
Reporting 9
Loan Amendments 11
PART II –Security Taking Topics
Miscellaneous Topics 12
Multiple Jurisdictions 12
Insurance on Assets 12
Insurance Confirmation Checklist 15
Life Insurance 15
Prior Permitted Charges 15
Searches 16
Landlord’s Undertakings/Waivers 17
Loans to Corporations TBI 17
Share Purchases 17
Alberta Guarantee Acknowledgement Act 17
Pari Passu and Asymmetric Co-Lending 17
Mortgages of Land 17
Taxes 17
Readvanceable Mortgages 17
Existing Readvanceable Mortgages 18
Existing Mortgages – Surveys 18
Mortgages Not on Demand 18
Capped Mortgages 18
Mortgage of Lease 19
Ontario Mortgage Forms 19
Atlantic Mortgage Forms 20
Condominiums 21
Holdbacks for Construction Loans 21
Surveys and Title Insurance 21
Personal Property Security 24
Registration 24
Equipment Lists 24
Fixture Filings 24
Assignment of Shareholder’s Loans & Guarantees 24
General Security Agreement 24
Existing General Security Agreements 25
Charges on Rolling Stock/Railway Equipment 25
Intellectual Property 25
Charges on Aircraft – International Registry 25
Security Over Fishing Licences and Marine Mortgages 27
Schedule A – Title Insurance Endorsement (First Canadian) 28
Schedule B – Title Insurance Endorsement (Stewart Title) 30
Schedule C – Title Insurance Endorsement (Chicago Title) 33
PART I – Doing Legal Work for BDC
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 – BDC is the general partner and until recently most of the loans/investments made by the Subordinate Financing Group of BDC have been made under AlterInvest II Fund LP. 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 is now used primarily by our Subordinate Financing Group for new clients.
BDC Expectations and Communications
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.
Written correspondence with the S&D Officer may be conducted by e-mail, surface mail or fax.
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 Instructing Letter 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.
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