| Construction loan payable |
| 14. |
Construction loan payable
|
|
|
|
|
|
|
|
|
|
| |
|
2017 |
|
|
2016 |
|
|
First advance
|
|
$ |
6,304 |
|
|
$ |
— |
|
|
Less: transaction costs (net of amortization)
|
|
|
(1,122 |
) |
|
|
— |
|
|
Add: accrued interest
|
|
|
185 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,367 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
On August 23, 2017, Peace Naturals, as borrower,
entered into a construction loan agreement with Romspen Investment
Corporation as lender, to borrow $40,000, to be funded by way of
multiple advances. The aggregate advances are limited to $35,000
until the lender receives an appraisal valuing the property in
British Columbia at an amount of not less than $8,000. The loan
bears interest at a rate of 12% per annum, calculated and
compounded monthly, in arrears, on the amounts advanced from the
date of each advance. The term of the loan is two years, with the
borrower’s option to extend for another twelve months. The
loan is guaranteed by Cronos Group, Hortican, OGBC, the
responsible-person-in-charge
and the senior-
person-in-charge of OGBC and Peace Naturals. The loan is secured by
the following:
| (a) |
first-ranking charge on the land owned
by OGBC, Peace Naturals, and Hortican, (the
“Property”) with a net book value of
approximately $1,558 as at December 31, 2017;
|
| (b) |
first-ranking general assignment of
all present and future leases of each Property;
|
| (c) |
general security agreements creating first-ranking
security interests charging all the personal property of Peace
Naturals and the corporate guarantors including without limitation,
goods, chattels, paper, documents, accounts, intangible assets,
securities, monies, books and records;
|
| (d) |
specific assignment of each Property’s right,
title, and interest in the construction project for which the loan
is being used to fund, including licenses, permits, plans and
specifications, development approvals and agreements;
|
| (e) |
acknowledgement of the status and terms of any
contracts affecting or with respect to each Property including
without limitation, any pertaining to ownership, insurance, shared
facilities, passageway agreements, or similar matters, confirming
the good status of such contracts, and the rights of the lender
under such contracts;
|
| (f) |
the subordination of all other indebtedness of
Peace Naturals;
|
| (g) |
an unconditional, joint and several covenant by the
guarantors as principal debtor for the performance of obligations
by Peace Naturals, it being understood that the lender is not
obliged to proceed against Peace Naturals or exhaust any security
before proceeding against the guarantors;
|
| (h) |
assignment, postponement, and subordination by the
corporate guarantors in favour of the lender;
|
| (i) |
assignment of all insurance policies with respect
to each Property and the construction project;
|
| (j) |
pledge of the shares of Peace Naturals, OGBC, and
Hortican;
|
| (k) |
an environmental indemnity from Peace Naturals and
the corporate guarantors; and
|
| (l) |
deficiency and completion guarantee from Peace
Naturals and the corporate guarantors.
|
|