Section 9 (ii) – Insurance on Assets

Section 9 (ii) – Insurance on Assets

• 
  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.
  

PART I – Doing Legal Work for BDC

1. 
   Legal Entities 3
   
2. 
   BDC Expectations and Communications 3
   
3. 
   Acting for BDC 4
   
4. 
   Small Loans 6
   
5. 
   Equipment Line Loans 6
   
6. 
   Loan Disbursement 8
   
7. 
   Reporting 9
   
8. 
   Loan Amendments 11
   

PART II –Security Taking Topics

9. 
   Miscellaneous Topics 12
   

1. 
   Multiple Jurisdictions 12
   
2. 
   Insurance on Assets 12
   
3. 
   Insurance Confirmation Checklist 15
   
4. 
   Life Insurance 15
   
5. 
   Prior Permitted Charges 15
   
6. 
   Searches 16
   
7. 
   Landlord’s Undertakings/Waivers 17
   
8. 
   Loans to Corporations TBI 17
   
9. 
   Share Purchases 17
   
10. 
    Alberta Guarantee Acknowledgement Act 17
    
11. 
    Pari Passu and Asymmetric Co-Lending 17
    

10. 
    Mortgages of Land 17
    

1. 
   Taxes 17
   
2. 
   Readvanceable Mortgages 17
   
3. 
   Existing Readvanceable Mortgages 18
   
4. 
   Existing Mortgages – Surveys 18
   
5. 
   Mortgages Not on Demand 18
   
6. 
   Capped Mortgages 18
   
7. 
   Mortgage of Lease 19
   
8. 
   Ontario Mortgage Forms 19
   
9. 
   Atlantic Mortgage Forms 20
   
10. 
    Condominiums 21
    
11. 
    Holdbacks for Construction Loans 21
    
12. 
    Surveys and Title Insurance 21
    

11. 
    Personal Property Security 24
    
    1. 
       Registration 24
       
    2. 
       Equipment Lists 24
       
    3. 
       Fixture Filings 24
       
    4. 
       Assignment of Shareholder’s Loans & Guarantees 24
       
    5. 
       General Security Agreement 24
       
    6. 
       Existing General Security Agreements 25
       
    7. 
       Charges on Rolling Stock/Railway Equipment 25
       
    8. 
       Intellectual Property 25
       
    9. 
       Charges on Aircraft – International Registry 25
       
    10. 
        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

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
  

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.
  

2. BDC Expectations and Communications

1. Dealing with BDC Staff

2. Form of Correspondence

1. 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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