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Court File No. CV-13-10279-00CL ONTARIO SUPERIOR COURT OF JUSTICE (Commercial List) IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT WITH RESPECT TO GROWTHWORKS CANADIAN FUND LTD. (the “APPLICANT”) MOTION RECORD Approval of Settlement and Extension of the Stay Period (Returnable May 26, 2015) May 21, 2015 McCarthy Tétrault LLP Suite 5300, Toronto Dominion Bank Tower Toronto ON M5K 1E6 Sharon Kour LSUC#: 58328D Tel: (416) 601-8305 Fax: (416) 868-0673 [email protected] Kevin P. McElcheran Professional Corporation 420-120 Adelaide St W Toronto ON M5H 1T1 Kevin McElcheran LSUC#: 22119H Tel: (416) 855-0444 [email protected] Lawyers for the Applicant

ONTARIO SUPERIOR COURT OF JUSTICE (Commercial List)cfcanada.fticonsulting.com/GCFL/docs/GrowthWorks - Motion Recor… · Court File No. CV-13-10279-00CL ONTARIO SUPERIOR COURT OF

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Page 1: ONTARIO SUPERIOR COURT OF JUSTICE (Commercial List)cfcanada.fticonsulting.com/GCFL/docs/GrowthWorks - Motion Recor… · Court File No. CV-13-10279-00CL ONTARIO SUPERIOR COURT OF

Court File No. CV-13-10279-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(Commercial List)

IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLANOF COMPROMISE OR ARRANGEMENT WITH RESPECT TO

GROWTHWORKS CANADIAN FUND LTD.(the “APPLICANT”)

MOTION RECORDApproval of Settlement and Extension of the Stay Period

(Returnable May 26, 2015)

May 21, 2015 McCarthy Tétrault LLPSuite 5300, Toronto Dominion Bank TowerToronto ON M5K 1E6

Sharon Kour LSUC#: 58328DTel: (416) 601-8305Fax: (416) [email protected]

Kevin P. McElcheran ProfessionalCorporation420-120 Adelaide St WToronto ON M5H 1T1

Kevin McElcheran LSUC#: 22119HTel: (416) [email protected]

Lawyers for the Applicant

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INDEX

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Court File No. CV-13-10279-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(Commercial List)

IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLANOF COMPROMISE OR ARRANGEMENT WITH RESPECT TO

GROWTHWORKS CANADIAN FUND LTD.(the “APPLICANT”)

INDEX

TAB DOCUMENT DESCRIPTION

1 Notice of Motion

A Schedule “A” – Order to Approve the Settlement

B Schedule B – Order to Extend the Stay Period

2 Affidavit of C. Ian Ross (sworn May 21, 2015)

A1 Exhibit “A1” – Participation Agreement

A2 Exhibit “A2” - Security Agreement

B Exhibit “B” – Investor Advisory Agreement

C Exhibit “C” – Form of Settlement Agreement

D Exhibit “D” – Copy of email from counsel for the Applicant toMr. Fields setting out the Fund’s position

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TAB 1

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Court File No. CV-13-10279-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(Commercial List)

IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLANOF COMPROMISE OR ARRANGEMENT WITH RESPECT TO

GROWTHWORKS CANADIAN FUND LTD.

NOTICE OF MOTION(For approval of a settlement an extension of the stay)

(Returnable May 26, 2015)

GrowthWorks Canadian Fund Ltd. (the “Applicant” or the “Fund”) will make a motion

before a judge of the Ontario Superior Court of Justice (Commercial List) on May 12, 2015 at

10:00 a.m. or as soon after that time as the motion can be heard at 330 University Avenue, in

Toronto.

THE MOTION IS FOR:

(a) an order approving an agreement settling claims between Roseway Capital S.a.r.l.

(“Roseway”) and the Fund in the form of the draft order attached as Schedule

“A”;

(b) an order in the form attached as Schedule “B” extending the stay period (the

“Stay Period”) as defined in paragraph 14 of the order of the Honourable Mr.

Justice Newbould dated October 1, 2013 as amended and restated on October 29,

2013 (the “Initial Order”), to December 15, 2015; and

(c) such other relief as this Honourable Court may allow.

1

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THE GROUNDS FOR THE MOTION ARE:

Extension of the Stay Period

1. The Fund has been under Companies’ Creditors Arrangement Act (“CCAA”) protection

since October 1, 2013, on which date the Initial Order was granted. The Initial Order provided

for a stay of proceedings that has since been extended and currently expires on May 31, 2015.

2. The Fund is continuing to seek out viable exit opportunities to maximize value from its

largely illiquid portfolio. The Fund has acted in good faith and with due diligence since the

granting of the Initial Order. Among other things, it has negotiated and entered into settlements

with its significant secured creditor, Roseway. Accordingly, the Fund seeks an extension of the

Stay Period to December 15, 2015.

The Roseway Settlement

3. The Fund has negotiated a settlement of a number of matters in dispute with its

significant secured creditor, Roseway:

(a) a dispute between them in respect of the Fund’s exercise of warrants of

Cytochroma Inc. (the “Old Money Warrants”);

(b) a dispute in respect of a follow-on investment made by Roseway in PerspecSys

Inc. pursuant to an investment advisor agreement (the “IAA”) between Roseway

and the Fund; and

(c) The amount of debt owing under the IAA.

4. The Fund now seeks an order approving the Settlement Agreement and the settlement of

all claims between the Fund and Roseway pursuant to its terms.

2

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5. The Fund relies upon the following:

(a) Section 11.02 and other provisions of the CCAA and the inherent and equitable

jurisdiction of this Court;

(b) Rules 1.04, 2.03, 3.02 and 37 of the Rules of Civil Procedure, R.R.O. 1990, Reg.

194, as amended; and

(c) Such further and other grounds as counsel may advise and this Honourable Court

may permit.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the

motion:

1. Affidavit of C. Ian Ross sworn May 21, 2015 in support of the motion for the Order

Approving Settlement;

2. Such further and other materials as counsel may advise and this Court may permit.

May 21, 2015 McCarthy Tétrault LLPSuite 5300, Toronto Dominion Bank TowerToronto ON M5K 1E6

Sharon A. Kour LSUC#: 58328DTel: (416) 601-8305Fax: (416) 868-0673

Kevin P. McElcheran Professional Corporation

Kevin McElcheran LSUC#: 22119HTel: (416) 855-0444

Lawyers for the Applicant

TO: ATTACHED SERVICE LIST

3

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Schedule A

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MT DOCS 14240360

Court File No.: CV-13-10279-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

THE HONOURABLE )

)

JUSTICE )

, THE

DAY OF , 2015

IN THE MATTER OF THE COMPANIES' CREDITORS

ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLAN

OF COMPROMISE OR ARRANGEMENT WITH RESPECT TO

GROWTHWORKS CANADIAN FUND LTD.

ORDER APPROVING SETTLEMENT

THIS MOTION, made by GrowthWorks Canadian Fund Ltd. (the “Fund”) for an order

approving an agreement settling claims between Roseway Capital S.a.r.l. (“Roseway”) and the Fund,

was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the Motion Record of the Fund, including the Affidavit of C. Ian Ross sworn

●, the ● report of FTI Consulting Canada, Inc. (the “Monitor”), and on hearing the submissions of

counsel for the Fund, Roseway, and the Monitor, no one else appearing although properly served as

appears from the Affidavit of Service of C. Ian Ross, sworn ●, 2015:

1. THIS COURT ORDERS that the time for service of the Motion Record is hereby

abridged and validated such that this Motion is properly returnable today and hereby dispenses

with further service thereof.

2. THIS COURT ORDERS AND DECLARES that the settlement agreement settling the

respective claims of Roseway and the Fund, made between Roseway and the Fund and with the

consent of the Monitor, dated as of ●, 2015 (the “Settlement Agreement”), is hereby approved

in substantially the same form attached as Exhibit “●” of the Affidavit of C. Ian Ross sworn ●,

2015.

4

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- 2 -

MT DOCS 14240360

3. THIS COURT ORDERS that the Fund is authorized to execute and deliver the

Settlement Agreement and shall perform its obligations thereunder, including but not limited to:

a. adding $1,045,462 to the Investment Advisor Debt (as defined in the Settlement

Agreement);

b. adding to the Investment Advisor Debt the amount of $500,000 on account of

fees, costs and expenses owing by the Fund to Roseway pursuant to Section 8.19

of the Security Agreement (as defined in the Settlement Agreement) and in

connection with the Fund’s proceedings under the Companies’ Creditors

Arrangement Act;

c. payment to Roseway of 24% of any additional earn-in consideration received by

the Fund after the date of the Settlement Agreement by way of a distribution on

the GW Cdn OTYC Shares (as defined in the Settlement Agreement), pursuant to

the OPKO Purchase Agreement (as defined in the Settlement Agreement); and

d. payment to Roseway of the Outstanding IAD (as defined in the Settlement

Agreement) as soon as reasonably practicable, taking into account the Fund’s

commercially reasonable estimate of the actual and projected (i) liquidity and

capital resources of the Fund, and (ii) expenditures of the Fund.

4. THIS COURT ORDERS that notwithstanding:

a. the pendency of these proceedings;

b. any applications for a bankruptcy order now or hereafter issued pursuant to the

Bankruptcy and Insolvency Act (Canada) in respect of the Fund and any

bankruptcy order issued pursuant to any such applications; and

c. any assignment in bankruptcy made in respect of the Fund;

the Fund’s performance of its obligations under the Settlement Agreement shall be binding on

any trustee in bankruptcy that may be appointed in respect of the Fund and shall not be void or

5

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MT DOCS 14240360

voidable by creditors of the Fund, nor shall it constitute nor be deemed to be a settlement,

fraudulent preference, assignment, fraudulent conveyance or other reviewable transaction under

the Bankruptcy and Insolvency Act (Canada) or any other applicable federal or provincial

legislation, nor shall it constitute oppressive or unfairly prejudicial conduct pursuant to any

applicable federal or provincial legislation.

_____________________________

6

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MT DOCS 14240360

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS

AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR

ARRANGEMENT WITH RESPECT TO GROWTHWORKS CANADIAN FUND LTD.

Court File No. CV-13-10279-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

(Commercial List)

Proceeding Commenced at Toronto

ORDER APPROVING

ROSEWAY SETTLEMENT

McCARTHY TÉTRAULT LLP

Suite 5300, Toronto Dominion Bank Tower

Toronto ON M5K 1E6

Sharon Kour LSUC#: 58328D

Tel: (416) 601-8305

Fax: (416) 868-0673

[email protected]

Kevin P. McElcheran Professional Corporation

Kevin McElcheran LSUC#: 22119H

Tel: (416) 855-0444

[email protected]

Lawyers for GrowthWorks Canadian Fund Ltd.

14294877

7

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Schedule B

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SCHEDULE “B”

Court File No.: CV-13-10279-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

THE HONOURABLE )

)

JUSTICE )

, THE

DAY OF , 2015

IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PROPOSED PLANOF COMPROMISE OR ARRANGEMENT WITH RESPECT TO

GROWTHWORKS CANADIAN FUND LTD.

ORDER TO EXTEND THE STAY PERIOD

(Motion returnable May 26, 2015)

THIS MOTION, made by GrowthWorks Canadian Fund Ltd. (the “Applicant”) for an order

extending the stay period defined in paragraph 14 of the initial order of the Honourable Justice

Newbould made October 1, 2013 in these proceedings, as amended and restated on October 29, 2013

(the “Stay Period”), was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the Motion Record of the Fund, including the Affidavit of C. Ian Ross sworn

May 21, 2015, the ● report of FTI Consulting Canada, Inc. (the “Monitor”), and on hearing the

submissions of counsel for the Fund, Roseway, and the Monitor, no one else appearing although

properly served as appears from the Affidavit of Service of ●, sworn ●:

1. THIS COURT ORDERS that the time for service of the Motion Record is hereby

abridged and validated such that this Motion is properly returnable today and hereby dispenses

with further service thereof.

8

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2. THIS COURT ORDERS that the Stay Period is hereby extended until and including

December 15, 2015.

3. THIS COURT ORDERS that the ● Report of the Monitor dated ●, and the activities

described therein are hereby approved.

____________________________

9

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IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c.C-36, AS AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISEOR ARRANGEMENT WITH RESPECT TO GROWTHWORKS CANADIAN FUND LTD.

Court File No. CV-13-10279-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(Commercial List)

Proceeding Commenced at Toronto

ORDER EXTENDING STAY(May 26, 2015)

McCARTHY TÉTRAULT LLPSuite 5300, Toronto Dominion BankTowerToronto ON M5K 1E6

Sharon Kour LSUC#: 58328DTel: (416) 601-8305Fax: (416) [email protected]

Kevin P. McElcheran ProfessionalCorporation

Kevin McElcheran LSUC#: 22119HTel: (416) [email protected]

Lawyers for GrowthWorks Canadian FundLtd.

14515361

10

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Tab 2

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EXHIBIT "A 1"

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EXHIBIT "A2"

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Exhibit B

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Exhibit C

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Exhibit D

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Kouri Sharon

Ib! . E hlbi: \1 D <I I d . .IS IS X I I ••••••••••••••••••••••••••••••• retetre to In tne

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sworn before me, thiS ..•d.L .From:Sent:Subject:

. day of ......•.••••••.•••. ...1.71:,:;. 20 ..15 .Kevin McElcheran <[email protected]> -Wednesday, May 13, 2015 1:39 PM " iA/lJA!1A!hvxRE:Growthworks Canadian Fund Ltd. and cornerst·one1>1g~t~~~~a;;~FA#i~~~;~Claim") now for $638,378.75 and Cornerstone Proof of Claim No.2 ( the "0 & 0 Proofof Claim") now for $638,378.75 - Court File No. CV-13-10279- OOCL- Our File No. 8114

Dear Mr. Fields

We have reviewed the binder that you provided to me on Thursday, May 8,2015. We note the following:

I) There is no affidavit supporting Cornerstone's request for a consent order permitting it to file a proof of claimin the CCAA proceedings of Growthworks Canadian Fund Ltd. (the "Fund"). As a consequence of there beingno affidavit, there is no admissible evidence supporting the claim. You have provided some documents but thecommentary included in the binder is not evidence because it is not sworn.

2) The key document on which you rely, the engagement letter dated April 8,20 I0 (the "Engagement Letter"), issigned by "Matrix Asset Management Inc. ("Matrix") on behalf of itself and its affiliates per: David Levi.President and Chief Executive Officer". Throughout your unsworn commentary you state incorrectly that theengagement letter was signed by David Lev i as CEO of the Fund. (for example, on page 8 of tab 1) Asdemonstrated by the engagement letter itself, such statements are clearly false.

3) The copy of the Engagement Letter included in the binder is incomplete in that all of the schedules are blank.As a consequence. none of the transactions for which Cornerstone was to be the financial intermediary aredisclosed.

4) The Fund is not an affiliate of Matrix. Clearly, as a financial advisor to Matrix and as a lawyer, you know thatthe Fund is not an affiliate of Matrix. In fact, the org. chart that you have provided in the binder clearly showsthat the Fund is not an affiliate but is subject to a management contract. Throughout your unsworn commentary,you refer to the public disclosure made by both the Fund and Matrix. That disclosure, at all times, made clearthat the Fund is a widely held labour sponsored investment fund and at no time was controlled by Matrix.

5) There is nothing included in your binder that supports your assertion that the Fund is bound by the EngagementLetter or should be responsible for any of Cornerstone's fees for services provided under the EngagementLetter.

For these reasons the Fund will not consent to an order permitting a late-filed claim by Cornerstone. Cornerstone wasnot provided notice of the claims bar order by the Fund because it is not a creditor of the Fund. Because it has no claimagainst the Fund, Cornerstone was not affected by the claims bar order and is not entitled to relief from the provisionsof that order which prevent Cornerstone from now filing a claim. We have been advised by the Monitor that it has alsoreviewed the materials you provided and, as a result of the lack of evidence supporting Cornerstone's assertions, it willnot consent to an order permitting Cornerstone to file a claim.

In light of the position of the Fund and the Monitor, a 9:30 appointment with a Judge of the Commercial List will benecessary to set a timetable for the hearing of Cornerstone's motion. I am available to attend a 9:30 appointment anyday next week.

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The timetable for the hearing of a motion should include a deadline for the service of a notice of motion, draft order andaffidavit of the moving party (Cornerstone, in this case), a deadline for responding parties to file evidence - in thiscontext, it is important to remember that other creditors of the Fund have an interest in this motion and are entitled tofile response material and oppose Cornerstone's motion, a time period for cross examinations, a deadline for filingwritten argument (a factum) and finally a hearing date. As the moving party, Cornerstone should suggest a timetable forcomments by the Fund and the Monitor.

In the binder, you mention confidentiality concerns as a reason for not providing the Fund with a complete copy oftheEngagement letter. If Cornerstone is to bring a motion, it must serve admissible evidence of its alleged claim against theFund on the service list including the Fund and the Monitor and will have to file that evidence in the court. However, it ispossible to seek an order of the court that confidential evidence be sealed in the court file. The Fund will consent to sucha sealing order if you can satisfy the court that some of Cornerstone's evidence is confidential. We can discuss a sealingorder with the judge at the 9:30 appointment.

Yours truly

Kevin McElcheran

From: Kevin McElcheranSent: May 13, 2015 11:24 AMTo: 'Gerry Fields'; [email protected]; [email protected]: lynne SilverSubject: RE:Growthworks Canadian Fund ltd. and Cornerstone Proof of Claim No.1 (the "Fund Claim") now for$638,378.75 and Cornerstone Proof of Claim No.2 ( the "0 & 0 Proof of Claim") now for $638,378.75 - Court File No. CV-13-10279- OOCl- Our File No. 8114

Mr. Fields

I acknowledge your email of last evening and receipt of the binder of documents you delivered to my office on theevening of Thursday, May s". We will be responding to your request today, but possibly not before your noon deadline.

Kevin McElcheran

From: Gerry Fields [mailto:[email protected]]Sent: May 12, 2015 6:57 PMTo: [email protected]; Kevin McElcheran; [email protected]: Gerry Fields; lynne SilverSubject: Growthworks Canadian Fund ltd. and Cornerstone Proof of Claim No.1 (the "Fund Claim") now for $638,378.75and Cornerstone Proof of Claim No.2 (the "0 & 0 Proof of Claim") now for $638,378.75 - Court File No. CV-13-10279-OOCl- Our File No. 8114Importance: High

Dear Ms. Fell and Mr. McElcheran,

Re: Growthworks Canadian Fund Ltd.Ontario Court of Justice - Commercial List - CCAA ProceedingsCourt File No. CV-13-10279-00CLOffice of the Superintendent of Bankruptcy CanadaOSB File No. 000017202013-0NOur File No. 8114

2

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Kindly provide me by email by Noon tomorrow with alternative hearing dates when you are available to attendin Chambers next week as I am now setting this matter down for a 9:30 Hearing next week.

Cornerstone will be relying on the confidential materials that have previously been delivered to you strictly on aprivileged, confidential and conditional basis.

Thank you.

Gerry Fields, LL.B., J.D.President and General CounselCORNERSTONE GROUP ™The Exchange Tower130 King Street WestSuite 1800, P.O. Box 427Toronto, OntarioM5X 1E3

Email:Tel.:Fax:Mobile:

[email protected](416) 862-8000(416) 862-8001(416) 567-7000/ (917) 965-5490

This email (includinganyattachments)maycontaininformationthatisconfidential.privileged and exempt fromdisclosure. It is intended only for the person(s) named above. Any other use or disclosure is prohibited. If youhave received this message in error, please delete it and notify us immediately by telephone or by return email.Thank you.

3

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