in the united states bankruptcy court for the …chippewa road, suite 200, sherwood park, alberta...

4909137.1

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:

LOCKWOOD HOLDINGS, INC., et al.,1

Debtors.

§ § § § § § § §

Chapter 11

Case No. 18-30197 (DRJ)

Jointly Administered

NOTICE OF STALKING HORSE BIDDER

(EDMONTON PROPERTY)

PLEASE TAKE NOTICE that on July 17, 2018, the Court entered its Order Granting

Debtors’ Expedited Motion Pursuant to Sections 363 and 365 of the Bankruptcy Code and

Bankruptcy Rules 2002, 6004, and 6006 for Order (A) Approving Comprehensive Sale Process,

(B) Approving Bidding Procedures and Certain Bid Protections, (C) Scheduling an Auction and a

Sale Hearing, (D) Approving Form and Manner of Notice Related Thereto, (E) Authorizing Sale

Free and Clear of Liens, Claims, Interests and Encumbrances, (F) Authorizing Assumption and

Assignment of Certain Executory Contracts and Unexpired Leases and Proposed Cure Amounts

with Respect Thereto and (G) Granting Related Relief [Docket No. 513] (the “Bidding Procedures

Order”). Attached to the Bidding Procedures Order approved, among other things, the bidding

procedures attached thereto as Exhibit A (the “Bidding Procedures”).

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number are: Lockwood Holdings, Inc. (9726); LH Aviation, LLC (6984); Piping Components, Inc. (0197); Lockwood International, Inc. (8597); Lockwood Enterprises, Inc. (6504); LMG Manufacturing, Inc. (9468); and 7807 Eagle Lane, LLC (7382).

Case 18-30197 Document 576 Filed in TXSB on 08/10/18 Page 1 of 25

4909137.1 2

PLEASE TAKE FURTHER NOTICE that, pursuant to paragraph 8 of the Bidding

Procedures Order and Section IX of the Bidding Procedures, the Debtors reserved the right to

declare one or more stalking horse bidders for some or all of the Debtors’ assets.

PLEASE TAKE FURTHER NOTICE that pursuant to paragraph 8 of the Bidding

Procedures Order and Section IX of the Bidding Procedures, the Debtors hereby designate

Meniscus Group LLC as the stalking horse bidder for certain nonresidential real property located

at 182 Turbo Drive in Sherwood Park, Alberta, Canada, known as Lot 1B, Block 3, Plan 0227368,

as enumerated and on the terms set forth in the attached Purchase and Sale Agreement.

Respectfully submitted this 10th day of August, 2018.

GRAY REED & McGRAW LLP By: /s/ Jason S. Brookner

Jason S. Brookner Texas Bar No. 24033684

1300 Post Oak Blvd., Suite 2000 Houston, Texas 77056 Telephone: (713) 986-7000 Facsimile: (713) 986-7100 Email: [email protected] -and-

Micheal W. Bishop Texas Bar No. 02354860 Amber M. Carson Texas Bar No. 24075610

1601 Elm Street, Suite 4600 Dallas, Texas 75201 Telephone: (214) 954-4135 Facsimile: (214) 953-1332 Email: [email protected] [email protected] COUNSEL TO THE DEBTORS


mailto:[email protected]:[email protected]:[email protected]

4909137.1 3

CERTIFICATE OF SERVICE

I hereby certify that on 10th day of August, 2018, a true and correct copy of the foregoing pleading was served via CM/ECF on all parties authorized to receive electronic notice in this case.

/s/ Jason S. Brookner Jason S. Brookner


4897520.1 HOU:3906407.5

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT is made and entered into as of August 10, 2018, by and between MENISCUS GROUP LLC ("Buyer"), and LOCKWOOD HOLDINGS, INC. ("Seller").

WHEREAS, Seller is the owner of the Property and other Assets (as such terms are defined below); and

WHEREAS, Seller desires to sell the Property and other Assets to Buyer, and Buyer desires to purchase the Property and other Assets from Seller (collectively, the “Transaction”), on the terms and conditions set forth in this Agreement, subject to approval of the Bankruptcy Court.

1. Definitions

In this Agreement the following terms shall have the following meanings:

(a) "Agreement" means this Purchase and Sale Agreement, including all exhibits attached hereto.

(b) “Assets” means all of the Seller’s right, title, estate and interest in and to the Property, Improvements and Personal Property.

(c) “Applicable Law” means, as to any person or as to the Assets,

i. any statute, regulation, ordinance, decree, treaty or similar requirement made or issued under sovereign or statutory authority, including Canadian Securities Laws, and

ii. any guideline, rule, requirement, policy, Order, judgment, injunction, award or decree of any Governmental Authority whether or not having the force of law,

applicable to or binding upon that person or to which that person or any of his or her property is subject.

(d) “Bankruptcy Court” means the United States Bankruptcy court for the Southern District of Texas, Houston Division, or such other court exercising competent jurisdiction over the Seller in relation to such bankruptcy proceedings.

(e) “Bid Procedures Order” means an Order of the Bankruptcy Court dated July 17, 2018 approving the bidding procedures annexed as an exhibit thereto and providing related relief.

(f) "Broker” has the meaning set forth in section 15(a).


- 2 -

HOU:3906407.5

(g) "Business Day" means any day, other than a Saturday, Sunday or legal holiday in Edmonton, Alberta.

(h) "Buyer's Solicitors" means Gowling WLG, 1 First Canadian Place, 100 King Street, West, Suite 1600, Toronto, Ontario, M5X 1G5, Canada and Hunton Andrews Kurth LLP, 600 Travis, Suite 4200, Houston, Texas 77002.

(i) “Cash” means United States currency represented by bank draft, certified cheque, solicitor's trust cheque, wire transfer or other readily available funds.

(j) “Closing” means the completion of the transaction of purchase and sale contemplated herein.

(k) "Closing Date" means the 30th day following the date that all of the Conditions Precedent are waived or satisfied in accordance with this Agreement or such earlier or later date as may be agreed to by the Seller and Buyer.

(l) "Condition Date" means September 30, 2018.

(m) "Conditions Precedent" means the conditions precedent contained in paragraph 6 hereof.

(n) "Deposit" means the sum set out in paragraph 3 herein.

(o) “Governmental Authority” means any government, government regulatory authority, government department, government agency, government commission, government bureau, government official, government minister, Crown corporation, government board or other governmental law, rule or regulation-making entity:

i. having jurisdiction or purporting to have jurisdiction on behalf of any nation, province, state or other geographic or political subdivision thereof; or

ii. exercising or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power.

(p) "GST" means goods and services tax payable pursuant to the Excise Tax Act (Canada).

(q) “Environmental Laws” means all Applicable Laws relating to the protection of the environment, occupational health and safety or the manufacture, processing, distribution, use, treatment, storage, disposal, discharge, transport, handling or remediation of Hazardous Substances, and includes but is not limited to:

i. Canada Water Act, RSC 1985, c C-11,

ii. Canadian Environmental Protection Act, 1999, SC 1999, c 33,


- 3 -

HOU:3906407.5

iii. Environmental Protection and Enhancement Act, RSA 2000, c E-12,

iv. Environmental Violations Administrative Monetary Penalties Act, SC 2009, c 14, s 126,

v. Municipal Government Act, RSA 2000, c M-26,

vi. Occupational Health and Safety Act, SA 2017, c O-2.1,

vii. Public Lands Act, RSA 2000, c P-40,

viii. Water Act, RSA 2000, c W-3.

(r) "Hazardous Substances" means any pollutants, contaminants, dangerous goods or substances, toxic or hazardous substances or materials, hazardous wastes, petroleum and its derivatives and by-products and other hydrocarbons, all as defined in or regulated pursuant to any Environmental Laws that is prohibited, controlled or regulated by any Governmental Authority pursuant to Environmental Laws.

(s) “Holdback” means the aggregate amount, if any, which the Buyer is entitled to withhold from the Purchase Price pursuant to Section 116 of the Income Tax Act (Canada).

(t) "Improvements" means all buildings, improvements, equipment and fixtures located on or under and forming part of the Property and all plans and specifications relating to the Property and Improvements, including, but not limited to, (i) three 2-ton Jib cranes attached to Building A; (ii) two 10-ton overhead cranes attached to Building B; and (iii) two white fabric buildings located on the Property.

(u) “Order” means any award, decision, injunction, judgment, order, ruling or verdict entered, issued, made or rendered by any court, Governmental Authority or arbitrator.

(v) "Permitted Encumbrances" means all exceptions and encumbrances to the Property implied by law, all non-financial obligations title such as easements, utility right of ways, covenants and conditions that are normally found registered against property of this nature, and specifically but without limitation, those encumbrances, charges and interests set forth and described in Schedule "A" attached hereto. For the avoidance of doubt, the Wells Fargo Mortgage Registrations and any other lien under applicable law, together with any exceptions and encumbrances on the Property created by, through or under Seller from and after the date hereof (other than with the written consent of the Buyer) are not Permitted Encumbrances for the purposes of this Agreement.

(w) "Personal Property" mean all of Seller's right, title and interest, if any, in and to (i) all licenses, permits and other approvals issued by any governmental or quasi-governmental authority pertaining to the Property; (ii) all plans and specifications,


- 4 -

HOU:3906407.5

engineering and other reports and surveys pertaining to the Property; and (iii) all other items of tangible and intangible personal property used in connection with the Property, including all supplies, equipment, chattels and personal property located on the Property and used in the management, operation, maintenance or repair of the Property and Improvements, including, without limitation, the assets described on Schedule “C” attached hereto, provided, however, this does not include inventory and Seller shall be entitled to retain all inventory existing on the Property pursuant to Section 6(c) below.

(x) "Property" means those lands legally described in Schedule "A" attached hereto.

(y) “Purchase Price” means the sum set out in paragraph 3 herein.

(z) “Sale Order” means an order entered by the Bankruptcy Court approving the consummation of the Transaction contemplated in the Agreement that must be in a form acceptable to the Buyer.

(aa) "Seller's Solicitors" means Ahlstrom Wright Barristers + Solicitors, 80 Chippewa Road, Suite 200, Sherwood Park, Alberta T84 4WG.

(bb) “Wells Fargo Mortgage Registrations” means the encumbrances, charges and interests set forth and described in Schedule "B" attached hereto.

2. Offer to Purchase

The Buyer hereby agrees to purchase and the Seller hereby agrees to sell the Assets to the Buyer subject only to the Permitted Encumbrances, on the Closing Date, at and for the Purchase Price and on and subject to the terms and conditions of this Agreement. Upon full execution, this Agreement shall be a binding agreement between Buyer and Seller for the purchase and sale of the Assets on the terms, conditions and provisions set forth in this Agreement. This Agreement supersedes all other written or oral agreements between Buyer and Seller concerning the Transaction.

3. Purchase Price and Terms

The Purchase Price for the Assets (excluding GST) payable by Buyer to Seller shall be an

amount equal to four million eight hundred and thirty thousand dollars and 00/100 United States Dollars (USD$4,830,000.00) (the “Original Purchase Price”) and shall be payable as follows:

(a) Deposit of ten percent (10%) of the Original Purchase Price, equal to four hundred and eighty-three thousand United States Dollars (USD$483,000.00) (the "Deposit"), in Cash, to be deposited by Buyer pursuant to section 4.1(a) within two Business Days following the execution of this Agreement; and

(b) The amount equal to the total Purchase Price less the Deposit to be paid by Buyer to Seller, in Cash, at the Closing, subject to the Holdback and adjustments as hereinafter provided. Unless otherwise agreed to by the Buyer and Seller and writing, Buyer shall retain the


- 5 -

HOU:3906407.5

Holdback and not later than the 30th day after the end of the month in which Closing occurs, remit to:

(i) The Receiver General of Canada such portion of the Holdback required to satisfy the Buyer’s liabilities and obligations under Section 116(5) and 116(5.3) of the Income Tax Act (Canada) and such amounts shall be credited to Buyer as payment on account of the Purchase Price; and

(ii) Seller the balance of the Holdback in satisfaction of the balance of the Purchase Price payable to Seller.

4. Deposit

(a) The Deposit shall be paid by the Buyer to Seller’s bankruptcy counsel, Gray Reed & McGraw LLP, pursuant to wire instructions provided by Seller’s bankruptcy counsel to be invested and disbursed by the Seller in accordance with the terms hereof.

(b) The Deposit and interest accruing thereon shall be repaid to the Buyer if the Conditions Precedent are not satisfied or waived by the Condition Date.

(c) If the Conditions Precedent are satisfied or waived in accordance with the terms hereof and if:

(i) the Buyer fails to close the transaction contemplated herein on the Closing Date (except as a result of a default by the Seller) then the Seller shall thereupon be entitled to the Deposit and all interest thereon as ascertained and liquidated damages and not as a penalty as Seller’s sole and exclusive remedy, and the Buyer shall have no further liability or obligation whatsoever with respect to this Agreement;

(ii) the Seller fails to close the transaction contemplated herein on the Closing Date (except as a result of a default by the Buyer) then the Buyer may terminate this Agreement and Buyer shall thereupon be entitled to return of the Deposit and all interest thereon as ascertained and liquidated damages and not as a penalty as Buyer’s sole and exclusive remedy, and the Buyer shall have no further liability or obligation whatsoever with respect to this Agreement; or

(iii) the transaction contemplated in this Agreement closes, then the Deposit and all interest thereon shall be applied to the Purchase Price.

5. GST

In addition to the Purchase Price, the applicable GST shall be payable by the Buyer on the Purchase Price. If applicable on Closing, the Buyer shall confirm to the Seller’s Solicitor that it is registered for the purposes of Part IX of the Excise Tax Act (Canada) (the "Act"). By virtue of this registration and the provisions of the Act, the Buyer covenants to assume the liability for the GST accruing in respect of this transaction. The Buyer further


- 6 -

HOU:3906407.5

covenants that it shall either pay the GST payable in respect of the transaction or complete and execute such forms, make such filings and reports and do all other things that are necessary or required pursuant to the Act, all within the time limits prescribed in the Act. The Buyer hereby agrees to indemnify and save the Seller harmless from and against all liability, costs and expenses, including legal fees and disbursements on a solicitor and its own client basis that the Seller may incur or become subject to as a result of a default by the Buyer of its obligations pursuant to this paragraph 5. In the event that on the Closing Date the Buyer is not registered under Part IX of the Act, the Seller shall collect and the Buyer shall pay the applicable GST, and the Seller shall remit the same in accordance with the Act.

6. Condition Precedent (Bankruptcy Court Approval)

The obligations of the Buyer and the Seller to complete this Agreement shall be subject to the following conditions precedent:

On or before 5:00 p.m. MT of the Condition Date (the “Condition Time”)

(a) This Agreement shall have been approved by the Bankruptcy Court and the Sale Order shall have been entered by the Bankruptcy Court;

(b) Any conditions imposed in any Order granted by the Bankruptcy Court acceptable to the Buyer and stipulated to be performed or satisfied prior to the performance of this Agreement and the Closing of this transaction shall have been performed or satisfied; and

(c) Buyer and Seller shall have executed a separate entry agreement (the “Entry Agreement”) allowing Seller or Seller’s affiliates or successors to remove all inventory from the Property for a period of ninety (90) days after Closing. No rent or other charges shall be payable by Seller to Buyer in connection with the rights granted in the Entry Agreement, and Buyer agrees that Seller’s willingness to enter into this Agreement for the Purchase Price specified herein is sufficient consideration for the purposes of the Entry Agreement.

The Conditions Precedent are a true condition precedent to the performance and Closing of this Agreement, and may not be waived by either the Buyer or the Seller, it being acknowledged that the Seller is a party to the Bankruptcy Court proceedings and the Buyer shall not be a party to any such proceedings. The Seller shall use its reasonable commercial efforts to notify the Buyer of the status of the Conditions Precedent by notice in writing given to the Buyer within a reasonable period of time before the Condition Date, if possible, but not later than the Condition Time. Seller shall, on or before the Condition Time, give written notice to the Buyer that the applicable Conditions Precedent have been satisfied. If by the Condition Date the Conditions Precedent have not been satisfied, this Agreement shall terminate and be null and void and the Deposit with applicable interest (if any) shall be returned to the Buyer.

7. “AS IS” Sale; Assumption of Risk by Buyer;

Except for the express representations and warranties of Seller in this Agreement, Seller MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE SUITABILITY OR FITNESS OF THE ASSETS FOR ANY PURPOSE, OR AS TO THE MERCHANTABILITY,


- 7 -

HOU:3906407.5

HABITABILITY, VALUE, QUALITY, CONDITION OR SALEABILITY OF THE ASSETS. Subject to the foregoing exception, the sale of the Assets by Seller to Buyer shall be "AS IS" and "WHERE IS", including, without limitation, as to (i) the structural integrity of any Improvements on the Property, the manner, construction, condition and state of repair or lack of repair of any such Improvements, (ii) the conformity of the Improvements to any plans or specifications for the Property, including, but not limited to, any plans and specifications that may have been or which may be provided to Buyer, (iii) the conformity of the Assets to past, current or future applicable zoning or building code requirements, or the compliance with any Applicable Laws (iv) the financial earning capacity from the operation of the Assets, the nature and extent of any right-of-way, easement, lease, right of possession, lien, encumbrance, license, reservation, condition or otherwise, (v) the existence of soil instability, soil additions or conditions of soil fill, (vi) the existence or non-existence of asbestos, underground or above-ground storage tanks, Hazardous Waste or other toxic or hazardous materials of any kind or any other environmental condition, (vii) the Assets’ investment potential or resale at any future date, at a profit or otherwise, or (viii) the tax consequences of ownership of the Assets. The provisions of this paragraph shall survive Closing. Buyer shall have the responsibility to inspect the Assets to conclude whether it is suitable for Buyer's intended use, and execution of this Agreement constitutes irrevocable evidence that the Buyer has already done so to Buyer’s absolute satisfaction and with the acceptance and assumption of all risks associate with the Assets. BUYER FURTHER ACKNOWLEDGES THAT WITHOUT THIS ACCEPTANCE OF RISK, THIS SALE WOULD NOT BE MADE AND THAT SELLER DOES NOT HAVE, AND WILL NOT UNDER ANY CIRCUMSTANCES HAVE, ANY OBLIGATION WHATSOEVER TO UNDERTAKE ANY REPAIR, ALTERATION, REMEDIATION, OR OTHER WORK OF ANY KIND WITH RESPECT TO ANY PORTION OF THE ASSETS. BUYER AND ITS SUCCESSORS AND ASSIGNS HAVE, AND SHALL BE DEEMED TO HAVE, ASSUMED ALL RISK AND LIABILITY WITH RESPECT TO THE PRESENCE OF TOXIC OR HAZARDOUS SUBSTANCES OR WASTE OR OTHER ENVIRONMENTAL CONTAMINATION ON OR WITHIN OR UNDER THE SURFACE OF THE PROPERTY, WHETHER KNOWN OR UNKNOWN, APPARENT, NON APPARENT, PATENT OR LATENT, AND WHETHER EXISTING BEFORE, AT, OR AFTER THE TRANSFER OF THE ASSETS. BUYER AND ITS SUCCESSORS AND ASSIGNS HEREBY RELEASE SELLER OF AND FROM ANY AND ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND CLAIMS, KNOWN OR UNKNOWN, INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION TO TAKE THE ASSETS BACK OR REDUCE THE PURCHASE PRICE, OR ACTIONS FOR CONTRIBUTION OR INDEMNITY, THAT BUYER OR ITS SUCCESSORS AND ASSIGNS MAY HAVE AGAINST SELLER OR THAT MAY ARISE IN THE FUTURE, BASED IN WHOLE OR IN PART, UPON THE PRESENCE OF HAZARDOUS SUBSTANCES OR WASTE OR OTHER ENVIRONMENTAL CONTAMINATION ON OR WITHIN OR UNDER THE SURFACE OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND CLAIMS THAT MAY ARISE UNDER ENVIRONMENTAL LAWS. BUYER FURTHER ACKNOWLEDGES THAT THE PROVISIONS OF THIS DISCLAIMER AND RELEASE HAVE BEEN FULLY EXPLAINED TO BUYER AND THAT BUYER FULLY UNDERSTANDS AND ACCEPTS SAME. THE PROVISIONS OF THIS DISCLAIMER AND RELEASE SHALL SURVIVE CLOSING.

Without in any way limiting the generality of the foregoing, the Buyer further specifically acknowledges and agrees that it has carried out its own inspections and investigations of


- 8 -

HOU:3906407.5

the Property, including title to and any survey or real property report relating to the Property, and despite any information it may have received from the Seller in respect of the Property or title thereof (including a copy of any survey or real property report the Seller may have in its possession or control), is relying solely upon its own inspections and investigations relating to the Property and title thereof. Buyer agrees that the Seller has made no representations, warranties, covenants, conditions or collateral agreements (written or verbal) whatsoever upon which the Buyer has relied with respect to the following matters, and the Seller is under no obligation to:

a. cure or discharge any exceptions or encumbrances that may appear on the title to the Property, (and any such exceptions, encroachments or encumbrances shall be Permitted Encumbrances for the purposes of this Agreement) other than the Wells Fargo Mortgage Registrations and any exceptions and encumbrances on the Property created by, through or under Seller from and after the date hereof (other than with the written consent of the Buyer);

b. provide any survey or real property report (current or otherwise) or any evidence of compliance with Applicable Laws (such as a land use compliance certificate from the local municipality), or to bear the costs of any new survey or real property reports or evidence of compliance that may be required for the Buyer for this purpose;

c. verify the size or measurements of the Property, or size or measurements or existence or non-existence of any buildings or Improvements on the Property, or the existence or non-existence of any encroachments on any rights of way, easements, neighboring lands or any improvements thereon, whether or not shown on any survey or real property report; or

d. cure any exceptions, encroachments or encumbrances that may appear on any such survey or real property report (and any such exceptions, encroachments or encumbrances shall be Permitted Encumbrances for the purposes of this Agreement, except as set forth in paragraph a. above).

8. Seller’s Representations and Warranties Respecting Seller

The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:

(a) The Seller has the capacity, power and authority to sell the Assets, execute and deliver this Agreement and to carry out all of the terms and conditions hereof on the part of the Seller to be carried out. The execution, delivery and performance of this Agreement by Seller has been duly and validly authorized, and no further action or authorization is necessary for Seller to consummate the transaction contemplated by this Agreement, other than Bankruptcy Court approval, including satisfying any conditions imposed by the Bankruptcy Court.


- 9 -

HOU:3906407.5

(b) Performance of this Agreement will not result in any breach of, or constitute any default under, any agreement or other instrument to which Seller is a party or by which Seller is bound.

(c) To the best of Seller’s knowledge, there is no pending expropriation, condemnation or similar proceeding or notice of any local improvement charge, off-site levy, special assessment, or any other levy, assessment or charge (inclusive of assessments for street widening, repair or improvement) affecting the Property. Seller has not heretofore received any notice that any such proceeding or charge is contemplated. Seller has not received any notice indicating a proposed increase in assessed valuation of the Property.

(d) To the best of Seller’s knowledge, there are not any actions, suits, or proceedings pending against or affecting the Property or any portion thereof, by any Governmental Authority, except those pending in the Bankruptcy Court. All judicial proceedings concerning the Property except those pending in the Bankruptcy Court will be finally dismissed and terminated prior to Closing.

(e) Seller hereby represents and warrants, to the best of its knowledge, as follows:

i. To Seller’s best knowledge, there is no pending litigation or proceeding before any court or Governmental Authority in which any person or entity alleges the presence, release, threat of release, placement on or in the Property of any Hazardous Materials, or the generation, transportation, storage, treatment or disposal at the Property of any Hazardous Materials; and

ii. Seller has not received any notice that any Governmental Authority has determined that there is a presence, release, threat of release, placement of any Hazardous Substances on or in the Property, or the generation, transportation, storage, treatment or disposal at the Property of any Hazardous Substances.

(f) Seller has received no notice of any violation by any Governmental Authority having jurisdiction, and no such notice has been received at the time of Closing which has not been cured.

(g) Except to the extent required by the Bankruptcy Court, as of the Closing, no work will have been performed or will be in progress at the Property, and no materials will have been delivered to the Property that might provide the basis for a builders’ lien, garage keepers' lien, or other lien against the Property or any portion thereof. There are no service, supply, operating, management, maintenance or similar agreements affecting the Assets.

(h) There are no service, supply, operating, management, maintenance or similar agreements affecting the Assets.

(i) Seller has no employees who work at the Property.


- 10 -

HOU:3906407.5

(j) The Seller is non-resident of Canada for the purposes of the Income Tax Act of Canada.

9. Buyer’s Representations and Warranties

The Buyer represents and warrants to the Seller that as of the date hereof and as of the Closing Date:

(a) Buyer is a California limited liability company, duly organized and validly existing, and has full power and authority to enter into this Agreement and complete the Transaction, subject to and after giving effect to the approval of the Bankruptcy Court (including satisfying any conditions imposed by the Bankruptcy Court).

(b) Buyer’s acceptance of the terms and provisions of this Agreement and performance thereof, have, or will have, been duly authorized and approved by all necessary parties. Upon execution and delivery of this Agreement by Buyer, this Agreement shall be binding and enforceable against Buyer in accordance with its terms, and upon execution and delivery of the additional documents contemplated by this Agreement by Buyer, they shall be binding and enforceable against Buyer in accordance with their terms.

10. Interim Operations

From and after the date of this Agreement and until Closing or any termination or cancellation of this Agreement, Seller, without the prior written consent of Buyer, shall not (i) grant a lease, lien, pledge, encumbrance, security interest, option, right of first refusal, charge, license, right of way, dedication or easement against or across the Property which will not be released or removed prior to Close of Escrow; (ii) enter into any maintenance, management or service contracts for the Property which will remain in force and effect after the Closing; or (iii) terminate any liability or hazard insurance for the Property prior to Closing.

11. Adjustments

(a) The Purchase Price shall be subject to adjustment as at the Closing Date, it being agreed that the Seller shall be responsible for all expenses and entitled to all revenues derived from the Assets up to the Closing Date and thereafter the Buyer shall be responsible for all expenses and shall be entitled to all revenues derived from the Assets from and including the Closing Date, all on an accrual basis. The adjustment of the Purchase Price shall be carried out in accordance with the following:

(i) all real property taxes, local improvement levies and any other amortized levies or charges on the tax roll for the Property and Improvements prepaid rents or damage deposits or any other prepaid amounts shall be adjusted as at the Closing Date; and

(ii) final readings and final billings for utilities, accrued payable, and other amounts typically adjusted in similar transactions in Alberta will be made


- 11 -

HOU:3906407.5

if possible as of the Closing Date, in which event no proration shall be made at the Closing with respect to such; otherwise a proration shall be made based upon the parties’ reasonable good faith estimate at the Closing;

12. Risk, Insurance and Repair

(a) The Assets shall be and remain at the risk of the Seller until the Closing of the transaction contemplated herein. The Seller shall maintain its existing insurance on the Assets.

(b) Until the Closing, the Seller will hold all insurance policies and any proceeds thereof in trust for the Seller and the Buyer and in the event of loss or damage to, or expropriation or other taking by a Governmental Authority of a portion of, the Assets which would result in a repair cost or loss in excess of USD$ 362,250.00, the Buyer shall have the election on written notice to the Seller to either:

(i) take the proceeds of insurance or right to claim proceeds together with the amount of deductible under any insurance policy which is to be provided by the Seller (if any) and in which case the Seller and Buyer shall complete the transaction contemplated in this Agreement; or

(ii) terminate this Agreement;

(c) In the event of taking, loss or damage the cost of repair or proceeds of which would be less than USD$ 362,250.00 then the Seller shall either repair or remedy the loss or damage prior to the Closing Date or pay or assign to the Buyer (by set off from or adjustment to the Purchase Price, or assignment of proceeds as the case may be) on the Closing Date sufficient funds, as reasonably determined by Buyer and Seller, to enable the Buyer to repair or remedy the loss or damage, or receive such funds from insurer or Governmental Authority, in any case this Agreement remaining in full force and effect.

13. Seller's Closing Documents

The Seller shall, at least seven (7) Business Days prior to the Closing Date, deliver to the Buyer's Solicitors the following documentation:

(a) all usual transfers and conveyances in registrable form and required to transfer the Assets to the Buyer as required herein, subject only to the Permitted Encumbrances;

(b) registrable discharges of only the Wells Fargo Mortgage Registrations against the Assets and any exceptions and encumbrances on the Property created by, through or under Seller from and after the date hereof (other than with the written consent of the Buyer), or undertakings of the Seller and Seller’s Solicitors in favour of and satisfactory to the Buyer and Buyer's Solicitors to obtain and register such discharges within a reasonable time after the Closing Date;


- 12 -

HOU:3906407.5

(c) a Statement of Adjustments;

(d) Original, if available, or copies (to the extent that they are in possession or control of the Seller) of:

(i) all drawings, specifications and plans with respect to the Improvements;

(ii) any survey, real property report (including any soils, engineering and environmental reports), licenses and permits and evidence of municipal compliance (if any) with respect to the Property and Improvements, it being acknowledged that there is no representation, warranty, or covenant by the Seller in relation to same;

(e) the Seller's GST Registration Number as issued under Part IX of the Act together with any other documentation required by the Buyer's Solicitors with respect to the GST payable which will allow the Buyer to make such filings as contemplated in this Agreement;

(f) copies of any Order granted by the Bankruptcy Court in relation to the satisfaction of the Conditions Precedent on Closing;

(g) an executed Entry Agreement;

(h) all other documents which are reasonably and customarily required in conveyancing land in the Province of Alberta and not expressly contemplated in this Agreement.

The above noted documentation is to be in a form satisfactory to the Buyer's Solicitors acting reasonably and will be delivered under trust conditions that are reasonable and would be customarily utilized in a similar transaction.

14. Buyer's Closing Documents

The Buyer shall, at or before the Closing Date, deliver or cause to be delivered to the Seller's Solicitors:

(a) A certified cheque or solicitor's trust cheque or other form of Cash for the adjusted balance of the Purchase Price less the Holdback;

(b) A certificate of the Buyer setting out its registration number for GST purposes together with an indemnity set out in paragraph 5 of this Agreement;

(c) An executed Entry Agreement; and

(d) If applicable, a written notice of the waiver in satisfaction of the Buyer’s Closing Conditions.

15. Real Estate Commission

Concerning any realtor or brokerage commission, Seller and Buyer agree as follows:


- 13 -

HOU:3906407.5

(a) Seller and Buyer warrant, each to the other, that they have not dealt with any finder, broker or realtor in connection with the Transaction other than Keen-Summit Capital Partners (“Broker”).

(b) Seller shall pay a commission to Broker in accordance with a separate agreement between Seller and Broker approved by the Bankruptcy Court. Except for any express written agreement with Seller and Broker, Broker’s commission shall vest only upon the Closing and funding of this Agreement.

(c) Except for the commission payable by Seller to Broker pursuant to this section, Buyer and Seller shall and do hereby indemnify the other party hereto and Broker against, and agree to hold such indemnified parties harmless for and from any claim, demand or suit for any brokerage commission, finder's fee or similar charge in respect of the execution of this Agreement or the Transaction by or through such indemnifying party, and for all losses, obligations, costs, expenses and fees (including legal fees on a solicitor and own client basis) incurred by such indemnified party on account of or arising from any such claim, demand or suit.

The provisions of this Section shall survive the Closing.

16. Break-Up Fee.

This Agreement is subject to consideration by Seller of higher or better competing bids from Qualified Bidders (as defined in the Bid Procedures Order) for the Assets in accordance with the Bid Procedures Order (each an “Alternative Transaction”). Pursuant to the Bid Procedures Order, in consideration for Buyer having expended considerable time and expense in connection with this Agreement and negotiation hereof, and to compensate Buyer for serving as a stalking-horse bidder and providing value to Sellers’ bankruptcy estate, in accordance with and subject to the conditions and findings set forth in the Bid Procedures Order, Buyer shall be entitled to a termination fee equal to one hundred forty-four thousand nine hundred dollars ($144,900), which is equal to 3% of the Purchase Price (such amount, the “Break-Up Fee”). The Break-Up Fee shall be allowed and paid as an administrative expense claim of Buyer under section 503(b)(1) upon the closing of an Alternative Transaction by Buyer.

17. Legal and Conveyancing Fees

Each party shall be responsible for their own legal fees. The Buyer shall pay all fees in connection with the registration of conveyances. The Seller shall pay all fees in connection with the registration of discharges. All other customary purchase and sale closing costs not specifically provided for herein shall be paid by Seller or the Buyer in accordance with the custom in the province where the Property is located.

18. Notice

For the purposes of this Agreement any notice required or permitted to be given hereunder shall be in writing and shall be signed by or on behalf of the party giving or making the same and shall be notice only if it is delivered by personal delivery to the other party at the


- 14 -

HOU:3906407.5

address set forth below and shall be deemed to have been given on the date of such personal service:

If to the Buyer: Meniscus Group 34071 La Plaza Ste. 100 Dana Point, CA 92629 Attn: Tobias Lawry, President [email protected] With a copy to: Hunton Andrews Kurth LLP 600 Travis, Suite 4200 Houston, Texas 77002 Attn: Tad Davidson [email protected] If to Seller: Lockwood Holdings, Inc. 1002 Windfern Road Bldg. B Houston, Texas 77046 With a copy to: Ahlstrom Wright Barristers + Solicitors, 80 Chippewa Road, Suite 200 Sherwood Park, Alberta T84 4WG Attention: Mr. Andrew Rice [email protected] -and- Gray Reed & McGraw LLP 1601 Elm Street, Suite 4600 Dallas, Texas 75201 Attention: Jason S. Brookner [email protected]

19. Applicable Law

This Agreement shall be construed and enforced in accordance with the laws of the Province of Alberta, except with respect to any matters relating to the Bankruptcy Court and any Order granted pursuant to the satisfaction of the Conditions Precedent which may necessarily be governed by the laws of the State of Texas. The Buyer and the Seller agree that any such Order applies to and is deemed incorporated into this Agreement and enforceable in accordance with its terms as if it was an Order of an Alberta Court.

20. Further Assurances

Each of the parties hereto covenant and agree to do such things and execute or cause to be executed such further documents, agreements and assurances as may be deemed necessary or advisable from time to time in order to carry out the terms and conditions of this Agreement in accordance with the true intent and meaning.


- 15 -

HOU:3906407.5

21. Time

Time shall be of the essence of this Agreement.

22. Non-Merger

The registration of any transfer and the execution and delivery of documents at Closing or thereafter as herein contemplated or any independent investigation by the Buyer or its agents shall not merge or affect any of the warranties, representations, covenants, conditions or terms of this Agreement or any agreement or document delivered pursuant to this Agreement, all of which shall survive the Closing of the transaction contemplated in this Agreement.

23. Entire Agreement

This Agreement contains all of the representations, warranties, covenants, agreements and conditions between the Seller and the Buyer concerning the subject matter of this Agreement and with respect to the transaction herein set forth and supercedes all prior agreements, undertakings, negotiations and discussions whether oral or written between the parties hereto.

24. Confidentiality

The parties acknowledge that they each have an interest in keeping confidential the terms and conditions of this Agreement. Each party accordingly covenants in favour of the other that until the Closing, to keep confidential (except for the purposes of legal proceedings between the parties and except to the extent required for a statutory reporting obligation expressly including but not limited the Bankruptcy Court proceedings and any Order granted by the Bankruptcy Court) the terms and conditions of this Agreement and all information and documentation delivered or obtained in connection with this (collectively, the "Confidential Information"), provided that the parties shall be entitled to provide Confidential Information to their respective employees, officers, directors, advisors, counsel or consultants as may be necessary in connection with this Agreement.

25. Exclusivity

The Seller hereby covenants and agrees that from and after the date on which this offer to purchase is accepted and unless this Agreement is terminated, to not accept any offer to purchase or make any offer to sell or otherwise negotiate with any other party respecting the sale of the Assets or any part thereof or any interest therein.

26. Counterparts Facsimile Execution

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. Counterparts may be executed either in original or electronic form and the parties adopt any signatures received in electronic form as original signatures of the parties; provided, however, that any party providing its signature in such manner shall promptly forward to the other party an original of the signed copy of this Agreement.


- 16 -

HOU:3906407.5

27. Assignment by the Buyer

The Buyer may assign this Agreement without Seller’s consent, as long as such assignment is to an entity owned by, controlled by or under common control with the Buyer. The Buyer shall provide Seller with prompt written notice of any such assignment.

28. Severability

The parties hereto intend and believe that each provision in this Agreement comports with all applicable local, state and federal laws and judicial decisions. If, however, any provision in this Agreement is found by a court of law to be in violation of any applicable local, state, or federal law, statute, ordinance, administrative or judicial decision, or public policy, or if in any other respect such a court declares any such provision to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that, consistent with and with a view towards preserving the economic and legal arrangements among the parties hereto as expressed in this Agreement, such provision shall be given force and effect to the fullest possible extent, and that the remainder of this Agreement shall be construed as if such illegal, invalid, unlawful, void, or unenforceable provision were not contained herein, and that the rights, obligations, and interests of the parties under the remainder of this Agreement shall continue in full force and effect.

[Remainder of Page Intentionally Blank]


- 17 -

HOU:3906407.3

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.

BUYER:

MENISCUS GROUP LLC

By:_____________________________ Name: Tobias Lawry Title: President

SELLER:

LOCKWOOD HOLDINGS, INC. By: Name: Its:


- 17 -

HOU:3906407.5

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date

first above written.

BUYER:

MENISCUS GROUP LLC

By:_____________________________

Name: Tobias Lawry

Title: President

SELLER:

LOCKWOOD HOLDINGS, INC.

By:

Name: Mark Shapiro

Its: CRO


4897520.1 HOU:3906407.5

SCHEDULE "A" LEGAL DESCRIPTION OF THE PROPERTY

PLAN 0227368 BLOCK 3 LOT 1B EXCEPTING THEREOUT ALL MINES AND MINERALS AREA: 3.41 HECTARES (8.43 ACRES) MORE OR LESS

MUNICIPALITY: STRATHCONA COUNTY (SHERWOOD PARK)


4897520.1 HOU:3906407.5

PERMITTED ENCUMBRANCES

012 174 614 14/06/2001 UTILITY RIGHT OF WAY 032 178 830 23/05/2003 DISCHARGE OF UTILITY RIGHT OF WAY 012174614 PARTIAL EXCEPT PLAN/PORTION: PORTION 052 106 654 22/03/2005 ZONING REGULATIONS 142 255 002 11/08/2014 CAVEAT


- 2 -

HOU:3906407.5

SCHEDULE "B"

WELLS FARGO MORTGAGE REGISTRATIONS TO BE DISCHARGED:

152 049 395 11/02/2015 MORTGAGE MORTGAGEE - WELLS FARGO BANK, NATIONAL ASSOCIATION INC. 2500 CITY WEST BOULEVARD 11TH FLOOR, SUITE 1100 HOUSTON,TEXAS USA 77042 ORIGINAL PRINCIPAL AMOUNT: $38,031,000 U.S. FUNDS 152 049 396 11/02/2015 CAVEAT RE : ASSIGNMENT OF RENTS AND LEASES CAVEATOR - WELLS FARGO BANK, NATIONAL ASSOCIATION INC. 2500 CITY WEST BOULEVARD 11TH FLOOR, SUITE 1100 HOUSTON,TEXAS USA 77042 AGENT - PAUL K LACHAMBRE 152 398 083 22/12/2015 AMENDING AGREEMENT AMOUNT: $42,411,000 AFFECTS INSTRUMENT: 152049395 US FUNDS 152 398 084 22/12/2015 POSTPONEMENT OF CAVE 142255002 TO MORT 152049395 AMEA 152398083 Personal Property Registry: Registration Number 11102618047 registered on October 26, 2011 in favour of Wells Fargo Bank, National Association, Inc.


4897520.1 HOU:3906407.5

SCHEDULE "C"

SPECIFICALLY INCLUDED PERSONAL PROPERTY


IN THE UNITED STATES BANKRUPTCY COURTHOUSTON DIVISION

NOTICE OF STALKING HORSE BIDDER(EDMONTON PROPERTY)GRAY REED & McGRAW LLPBy: /s/ Jason S. BrooknerJason S. BrooknerFacsimile: (713) 986-7100Dallas, Texas 75201Facsimile: (214) 953-1332Counsel to the Debtors