Ontario Feeder Cattle Loan Guarantee Program guidelines

The Feeder Cattle Loan Guarantee Program (FCLGP) supports beef cattle farmers by facilitating access to competitive, short-term, low-interest borrowing through Feeder Cattle Co-operatives.

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Effective: May 3, 2022

These Program Guidelines are subject to change from time to time. Consult the Ministry of Agriculture, Food and Rural Affairs' website for the most up-to-date information.

These Program Guidelines are established pursuant to section 15(6) of Order-in-Council 702/2016.

Definitions

For the purposes of these Program Guidelines, the terms below have the following meanings:

"Allocation" means the amount each Co-operative is allocated from the Total Guaranteed Amount;

"Applicant" means a Person who:

Is a Member of a Co-operative,
Is in the business of Producing Cattle, and
Has applied to a Co-operative to be issued a Purchase Order;

"Assurance Account" means a trust account established by a Co-operative in which the Producer Deposit is deposited and includes any other funds the Co-operative may be holding for the Producer;

"Auditor General" means the Auditor General of Ontario;

"Business Day" means any working day, Monday to Friday inclusive, but excluding statutory and other holidays on which the Government of Ontario has elected to be closed for business;

"Cattle" means steers or heifers to be finished for slaughter, but excludes Cattle to be sold for breeding purposes;

"Co-operative" means a feeder Cattle finance Co-operative established under the Co-operatives Corporations Act and, for greater certainty, shall also be defined as a class of farmers to whom a loan can be made for the purposes of section 8(1)(b) of the Ministry of Agriculture, Food and Rural Affairs Act, provided the Co-operative meets the terms and conditions of the Program;

"Crown" means Her Majesty the Queen in Right of Ontario;

"Custom Feeding" means an arrangement where a Producer has another Person Produce Cattle on the Producer's behalf;

"Custom Feeding Agreement" means an agreement between a Producer and another Person whereby the terms and conditions under which that Person will Produce Cattle on behalf of the Producer;

"Defaulting Member" means a Member who has failed to repay a shortfall related to funds spent under one or more Purchase Orders after 20 Business Days have passed since the Member has been given notice that the shortfall exists;

"Emergency Declaration" means a declaration issued by the Minister that a situation has arisen beyond the Producer's control that significantly prevents a Producer's ability to sell marketable cattle.

"Feeder Agreement" means an agreement entered into between a Co-operative and a Producer where the Producer agrees to Produce Cattle;

"Guarantee" means the payment that the Crown will provide to a Lender in the event a Co-operative defaults on repaying any amount of principal or Interest owing under its Loan;

"Guarantee Agreement" means the agreement set out in a form substantially similar to the agreement attached as Schedule "A" to the OIC;

"Guaranteed Amount" means the amount of money secured by a Guarantee being provided under the Program;

"Interest" means the interest payable in respect of a Loan or a Purchase Order, as set out in a Loan Agreement or Purchase Order, as the case may be, but does not include any fees, fines, commissions or other similar charges or expenses or any cost of collection or enforcement of a security interest, any repayment of credit advance or any insurance charge, official fee or any amount required to be paid on account of applicable taxes;

"Lender" means an entity providing a Loan under the Program and includes:

Farm Credit Canada, or successor entity,
Any bank to which the Bank Act (Canada) applies,
A Caisse Populaire, credit union or trust company licensed to carry on business as such in Ontario and has been approved by the Minister to provide loans to Co-operatives under the Program, and
Any other entity approved by the Minister to provide Loans under the Program;

"Loan" means a loan, via the provision of a revolving credit facility or similar financial transaction, by a Lender to a Co-operative;

"Loan Agreement" means an agreement that sets out the terms and conditions upon which a Loan is provided;

"Material Adverse Change" means a change in the financial or other conditions of the Co-operative or Producer, as the case may be, or in the state of circumstances of any property subject to a security interest in relation to a Loan or Purchase Order, as the case may be, that in the opinion of a reasonable and prudent lender would be considered likely to cause a significant diminution in the earnings power or value of the Co-operative or a Producer's business, as the case may be, or in the ability of the Co-operative or a Producer, as the case may be, to perform any obligations with respect to the Loan or Purchase Order, as the case may be;

"Member" means an entity which has paid the Co-operative's annual Membership fee for the current Program Year.

"Member's Debt" means the financial obligations for the Member related to funds spent under one or more Purchase Orders issued by the Co-operative for that Member and any other outstanding fees owed to the Co-operative.

"Minister" means the Minister of Agriculture, Food and Rural Affairs or such other Minister who may be designated from time to time as the responsible Minister in relation to the Ministry of Agriculture, Food and Rural Affairs Act or the Program, as the case may be, in accordance with the Executive Council Act or any other Act of the Legislature that allows another Minister to be designated as the responsible Minister, unless the context indicates otherwise;

Note: The Minister has delegated a number of the powers granted to the Minister under the OIC to staff within the Ministry.

"Minister's Direction" means a direction issued pursuant to sections 15(9), 15(10) or 15(11) of the OIC;

"Ministry" means the ministry of the Minister;

"Ontario" means the Province of Ontario, unless the context indicates otherwise;

"Person" means a legally-recognized entity, and includes individuals or corporations;

"Proceeds" means any money, domestic or foreign, money's worth or any other proceeds derived by a Producer, directly or indirectly, from Producing Cattle;

"Produce Cattle or Producing Cattle" means the further feeding and raising of Cattle or the finishing of Cattle for slaughter;

"Producer" means an entity that has been issued a Purchase Order;

"Producer Deposit" means five percent (5%) of the total value of a Purchase Order;

"Program" means the Ontario Feeder Cattle Loan Guarantee Program;

"Program Guidelines" means this document and includes any other documents setting out the criteria governing the operation of the Program that is posted on the Ministry's website;

"Program Year" means January 1 of one year to December 31 of the same year;

"Purchase Order" means an order issued by a Co-operative to a Producer to purchase Cattle;

"Purchase Order Credit Review" means a review of the Applicant's creditworthiness and includes the following in relation to the Applicant:

A check of the Co-operative's own records,
Searches under the Personal Property Security Act and the Bank Act (Canada),
A check with one or more reputable credit rating agencies,
A check with at least one credit reference provided by Farm Credit Canada, or successor entity, or the Applicant's bank, credit union caisse populaire, trust company licensed to carry on business in Ontario or another Province of Canada as a lender of money or a supplier of Agricultural inputs,
Any information provided by the Ministry regarding any money owing to the Crown, and
Any other requirements set out under the Program Guidelines;

"Related Person" has the same meanings as set out under the Income Tax Act (Canada);

"Requirements Of Law" includes all applicable requirements of law, as may be set out in statutes, regulations, by-laws, codes, rules, ordinances, official plans, approvals, permits, licenses, authorizations, decrees, injunctions, orders and declarations or any other similar requirement of law that could be imposed on a Person from authorities having jurisdiction over that Person;

"Residual Cattle" means any remaining unsold Cattle purchased under a Purchase Order after the Producer has fully repaid the Co-operative from the Proceeds generated by the sale of some of the Cattle purchased under the Purchase Order; and

"Total Guaranteed Amount" means two hundred sixty million dollars ($260,000,000.00).

Acronyms

For the purposes of the Program Guidelines the following acronyms mean:

"GSA" means a general security agreement;

"LGIC" means the Lieutenant Governor in Council;

"OIC" means Order-in-Council 702/2016, as amended; and

"PMSI" means a purchase-money security interest under the Personal Property Security Act.

Part I: Purpose of Program

Purpose of Program

The purpose of this Program is to facilitate access for Co-operatives to low-interest Loans so that a Co-operative can assist its Members in producing Cattle by providing competitive financing and terms.

Part II: Commencement, Transition, Terminiation and Review of the Program

Commencement

This Program began in 1990 and has continued through successive Orders-in-Councils. The current Program OIC came into effect May 4, 2016 and was amended by Order-in-Council 124/2019, effective January 31, 2019 and by Order-in-Council 1368/2021, effective October 7, 2021.

All previous Loans, Purchase Orders, and Feeder Agreements remain in effect and subject to the OIC under which they were issued.

Termination of Program

The Minister may - without liability, cost or penalty to the Crown - terminate this Program at any time.

If the Program is terminated, termination will be done according to the rules set out in sections 9 to 10 of the OIC, including:

Posting a notice on the Ministry's website indicating the Program has been terminated;
Any payments owing under the Program will be paid.

Termination of the Program does not remove any financial obligations outstanding by any party.

Review of the Program

The Minister will review the Program at least once every five (5) years from the date that the Order-in-Council comes into effect to confirm the Program is continuing to meet its objectives and is performing on a cost-benefit basis. The Minister may review the Program at an earlier time to confirm that the Program is continuing to meet its objectives and is performing on a cost-benefit basis.

Part III: Program Administration

Administration of the Program

The Minister is responsible for all aspects of the administration and delivery of the Program and is authorized on behalf of the Crown to enter into a Guarantee Agreement if the Minister deems it appropriate to do so.

The Minister has all authority to issue directions to Lenders and Co-operatives (and Program Administrator if one has been designated) necessary to oversee and operate the Program.

Program Guidelines

Any Program Guidelines for the Program will be posted on the Ministry's website. When Program Guidelines are amended, the amendments will not have any retroactive effect.

Should there be a conflict between the Program Guidelines, OIC, or any statute, the conflict will be resolved in the following way:

The requirements under any statute shall prevail over the OIC, Minister's direction and these Program Guidelines;
The requirements under the OIC shall prevail over the Minister's Direction and these Program Guidelines; and,
The Minister's directions shall prevail over these Program Guidelines.

Part IV: Participant Requirements

Lenders

The Minister may approve one or more entities as a Lender under the Program. Lenders will meet and maintain the requirements set out under the OIC and these Program Guidelines to be eligible to participate in the Program.

Co-operatives

For a Co-operative to be approved to participate in the Program, the Co-operative will meet the requirements set out in the OIC and these Program Guidelines and continue to meet these requirements while participating in the Program. These requirements include:

Be incorporated pursuant to the Co-operative Corporations Act for the sole purpose of financing the production of Cattle;
Be in compliance with all Requirements of Law;
Agree to be bound and comply with the terms and conditions of the OIC, the Guarantee Agreement, these Program Guidelines, its Loan Agreement, its Purchase Orders and its Feeder Agreements;
Not be indebted to the Crown;
Have a minimum of three (3) directors on its board of directors;
Require its board of directors to be responsible for the following:
1. Approving new Members of the Co-operative,
2. Retaining the services of any officers or employees that are necessary to perform the requirements of the Program,
3. Arranging Loans, including entering into a Loan Agreement with the Lender on behalf of the Co-operative,
4. Setting any applicable fees on behalf of the Co-operative,
5. Approving any Custom Feeding Agreements a Member may want to enter into for the purpose of Custom Feeding Cattle, and
6. Issuing Purchase Orders and entering into Feeder Agreements and Custom Feeding Agreements (if applicable) with the Co-operative's Members.
  1. When issuing Purchase Orders, a Co-Operative will ensure that Members who are requesting a Purchase Order or combination of Purchase Orders with a total value of five hundred thousand dollars ($500,000) or less are given priority over Members who are requesting a Purchase Order or combination of Purchase Orders with a total value over five hundred thousand dollars ($500,000)
Appoint a supervisor for the Co-operative responsible for:
1. Inspecting the Cattle forthwith upon delivery to the Member,
2. Ensuring the Cattle are identified as the Co-operative and the Lender previously agreed upon,
3. Monitoring the gain, death loss, relocation and sale of the Cattle, and
4. Determining whether the Member is Producing Cattle in accordance with the terms and conditions of the Feeder Agreement;
Have an annual Membership fee of at least twenty-five dollars ($25.00);
Only allow Members that meet the eligibility requirements set out in of the OIC and these Program Guidelines as Members of the Co-operative;
Have at least twenty (20) Members as part of the Co-operative of which at least three (3) of those Members must have active Purchase Orders outstanding at any one time;
Have an Assurance Account;
Have the appropriate insurance, which includes commercial general liability insurance on an occurrence basis for third party bodily injury, personal injury and property damage at an amount in keeping with normal business practices;
Have a collections policy in place in order to collect any debt arising out of a Purchase Order;
Only enter into or issue Loan Agreements, Purchase Orders and Feeder Agreements that are in compliance with the terms and conditions of the OIC and these Program Guidelines;
Conduct a Purchase Order Credit Review at a mimimum of every five (5) years for each Member, and
1. Upon receiving an application from a potential new member:
  1. Ask the applicant to disclose:
    1. Whether they are a party to any existing litigation where they are being sued for damages, and,
    2. Whether they have filed for bankruptcy in the last seven (7) years.
2. Whenever there is a request for a significant increase in the amount of money the Member is requesting being provided to it under one or more Purchase Orders (e.g. doubling the amount within an 18-month period), and
3. At any other time the Co-op deems appropriate;
Administer all Purchase Orders, Feeder Agreements and Custom Feeding Agreements in a business-like manner;
Enforce any security interests it may have in relation to a Purchase Order when a Member fails to repay to the Co-operative any amount owing under a Purchase Order;
Collect any money owing to the Co-operative under a Purchase Order where a Member owes money under a Purchase Order;
In partnership with their lender, determine the appropriate maximum number of Purchase Orders and Feeder Agreements that a Member may have at any one time with a Co-operative; and
Set additional residency requirements for membership with a Co-operative (if required/deemed necessary by Co-Ops).

For the purposes of collecting annual membership fees, Co-operatives may choose to collect it annually or on a multi-year basis. However, membership fees collected in advance of the year intended are to be held and not used for any purposes other than the intended year's membership fee. Co-operatives should establish a refund policy for unused membership fees.

Co-op Dissolution and Transfer of Members

Where a Co-op intends to dissolve and/or transfer one or more Members, the Co-op must seek prior approval from the Director of the Ministry's Agriculture Development Branch, the Co-operative must provide the Director of the Ministry's Agriculture Development Branch with a written notice outlining its intention to dissolve and/or transfer one or more Members, reasons for the dissolution and/or transfer of one or more Members, as well as a date at which the Co-op intends the dissolution and/or transfer of one or more of its Members to be completed. The Director of the Ministry's Agriculture Development Branch must also receive, in writing, acknowledgement of the Co-op's dissolution and/or transfer of one or more of its Members from affected lenders. To transfer one or more of its Members, the Co-op must:

Coordinate activities related to the transfer of the Members between affected Co-ops, lenders and Members
Maintain clear security transfer over the related Cattle
Confirm there is sufficient allocation cap space for the Co-op(s) to which the Member are transferring

For a Co-op dissolution, the Co-op must wind-down operations as required under the Co-operative Corporations Act, including a majority supported resolution to dissolve. If approved, the Co-op must provide written notification to the Director of the Ministry's Agriculture Development Branch, OMAFRA, of completion of the dissolution and/or transfer of one or more of its Members.

Producer/Member

For an individual to be eligible to participate in the Program, that individual will meet the following requirements and continue to meet these requirements while participating in the Program:

Agree to be bound and comply with the terms and conditions of the Program, as set out in the OIC and these Program Guidelines;
Agree that when producing Cattle on behalf of the Co-operative the Co-operative has all legal, equitable and beneficial ownership over those Cattle;
Not represent or imply to any Person the Producer has any type of legal, equitable or beneficial ownership in the Cattle owned by the Co-operative;
Not be indebted to the Crown and attest to this on the Purchase Order;
Other than producing other Cattle financed by the Co-operative, not be indebted to any Co-operative under the Program and attest to this on the Purchase Order;
Only be a Member of one Co-operative at a time, own or rent farmland in Ontario or have a Custom Feeding Agreement whereby the person producing Cattle owns or rents farmland in Ontario;
Not be a related person to a corporation that is participating under the Program in paragraph f) above;
Provide the Co-operative with a Premises Identification Number;
Provide the Co-operative with the information required to allow the Co-operative to conduct a Purchase Order Credit Review;
Assign any payments the Member is eligible to receive under any program set out in these Program Guidelines to the Co-operative as security for any payments the Producer will be required to make to the Co-operative under a Purchase Order;
Deposit the Producer Deposit into the Co-operative's Assurance Account for each Purchase Order the Co-operative has issued to the Producer and attest on the Purchase Order the Producer Deposit is not from any loan or other form of indebtedness;
Only accept Purchase Orders and enter into Feeder Agreements in compliance with the terms and conditions of the OIC and these Program Guidelines;
Only use the funds from a Purchase Order to purchase Cattle in the name of the Co-operative, which includes all related ancillary fees at the time the Cattle are purchased;
Note: Ancillary fees such as trucking, commission, processing and related product costs, and any interest charged applied by the agent;
Enter into a Feeder Agreement with the Co-operative prior to Producing Cattle;
Produce the Cattle:
1. On farmland that the Member owns or rents in Ontario,
2. In a custom feeding facility in Ontario.

Corporation/Member

The Co-operative may, in its sole and absolute discretion, allow Members to participate as a corporate entity. Where a corporate entity obtains Purchase Orders, the Co-operative will not issue Purchase Orders to other Members who control the corporate entity. Participation under a corporation is not meant to be a means in which a Person can obtain Purchase Orders in an amount greater than the limits set out in this Guidelines. A corporation must provide:

A copy of incorporation;
A list of shareholders;
A resolution from the corporation board to participate in the Program;
Legal name of corporation; and
Business Identification Number;

In addition to the meeting the Producer/Member requirements above, the corporation will meet and maintain the following requirements:

Be lawfully incorporated in Ontario;
Be privately-owned;
Be in compliance with all Requirements of Law;
Other than producing other Cattle financed by the Co-operative, not be indebted to any Co-operative under the Program and attest to this on the Purchase Order;
Not be indebted to the Crown and have a duly authorized signing officer attest to this on the Purchase Order;
Deposit the Producer Deposit into the Co-operative's Assurance Account for each Purchase Order the Member has with the Co-operative and have a duly authorized signing officer attest on the Purchase Order that the Producer Deposit required is not from any loan or other form of indebtedness.

Additional Terms and Requirements for Lenders, Co-operatives and Members

No Lender or Co-operative will enter into a Loan Agreement exceeding the Allocation for that Co-operative.
Co-operatives will not allow the aggregate amount of all outstanding Purchase Orders it issues to exceed its Allocation.
Co-operatives will not use any funds it receives from a Loan for any other purpose other than to issue Purchase Orders.
Co-operatives agree that any failure by the Minister to notify the Co-operative of a contravention identified in an inspection shall not constitute a waiver by the Minister of that contravention.
No Lender will provide a Loan and no Co-operative will accept a Loan under the Program exceeding the Prime Business Rate quoted by the Bank of Canada on its website for that period of time, less 25 basis points, without the prior written consent of the Chief Executive Officer of the Ontario Financing Authority.
If the Minister issues a Minister's Direction to a Lender, Co-operative or Member, the direction will be followed forthwith.

Part V: Assurance Account

Assurance Account

Each Co-operative will establish an Assurance Account with a Lender with which all funds received or otherwise attributed with a Member will be deposited and form a part of that Assurance Account.

Use of Assurance Account

Each Co-operative will deposit the Producer Deposit for each Purchase Order it issues into its Assurance Account and will use its Assurance Account as a common credit insurance pool. No Co-operative will use any money from its Assurance Account to fund its general operations.

If a Member defaults on repaying an amount owing under a Purchase Order, the Co-operative will access the money from that Member's Producer Deposit in the Assurance Account in accordance with the requirements of the OIC and these Program Guidelines.

If a Co-operative has used money from the Assurance Account and:

The use of that money has resulted in one or more Producers having less than the original Producer Deposit for one or more Purchase Orders in the Assurance Account, and
The Co-operative is not in default on the Loan, and
The Co-operative plans on continuing operations

the Co-operative will notify those Producers of the amount used from their respective Producer Deposits and will require those Producers to top-up the Producer Deposit for their respective outstanding Purchase Orders to the normal Producer Deposit amount prior to issuing any new Purchase Orders to those Producers.

A Co-operative will not return any portion of money in its Assurance Account to any Member:

If that Member has outstanding debt related to that Producer Deposit;
The Co-operative is in default of its Loan; or
If a Member has been given 20 days' notice of a shortfall.

A Co-operative may, upon receiving a request from the Member and provided ninety (90) calendar days have passed from the day in which the Member has repaid its financial obligations of the related Purchase Order, return to the Member the Producer Deposit for the cleared Purchase Order(s).

Part VI: Financial Terms and Conditions

Purchase Orders

A Co-operative may impose additional fee(s), provided the fees are reasonable and related to covering costs incurred by the Co-operative for Program participation. Additional fees may be for issuing Purchase Orders, credit checks, tagging/inspecting Cattle, insurance on Cattle, or other administration costs.

Discretion of Co-operative

A Co-operative has the discretion to refuse to issue a Purchase Order to a Member if a payment from the Co-operative's Assurance Account was made in relation to a previous Purchase Order the Co-operative issued to that Member.

Total mount of Outstanding Purchase Orders

The total aggregate of all outstanding Purchase Orders issued to an Applicant shall not at any time exceed:

One million dollars ($1,000,000.00) where the Applicant is an individual and has fed at least one hundred (100) head of Cattle in the previous twelve (12) months or participated in the Program in the previous Program Year and complied with the terms and conditions of the OIC, these Program Guidelines, the Purchase Orders issued to the Applicant and previous Feeder Agreements;
One million five hundred thousand dollars ($1,500,000.00) where the Applicant is a corporation and has fed at least one hundred (100) head of Cattle in the previous twelve (12) months or participated in the Program in the previous Program Year and complied with the terms and conditions of the OIC, these Program Guidelines, the Purchase Orders issued to the Applicant and previous Feeder Agreements; and
One hundred thousand dollars ($100,000) in the case of any Applicant that does not meet the requirements set out above.

Purchase Order Terms and Requirements

A Co-operative will not issue a Purchase Order to a Member unless the following conditions have been met:

The Member is familiar with the General Terms and Conditions for the Purchase Order Agreement/Feeder Agreement Appendix A;
The Member meets the requirements under Part IV of these Program Guildelines;
The Co-operative is issuing the Purchase Order for the sole purpose of the Member purchasing Cattle in the name of the Co-operative, which includes all related ancillary fees at the time the Cattle are purchased;
The Member and Co-operative has fulfilled any outstanding requirements of the Purchase Order Credit Review and the Member's credit review remains acceptable;
The Purchase Order prohibits the assignment of the funds to any other Person;
The Purchase Order requires the payment to the Co-operative of any outstanding balance owing in relation to the Purchase Order within twenty (20) Business Days of notification by the Co-operative that the Proceeds from the sale of the Cattle were insufficient to pay the principal and Interest owing on the Loan related to that Purchase Order;
The Purchase Order requires the Co-operative to make payment to the Member any excess proceeds from the sale of Cattle after related amounts owed by the Member have been deducted where the loan is not in default; and,
The Purchase Order provides notice that if the Co-operative is in default with its Lender, the Lender or Trustee will be able to secure interest in all of the Co-operative's Cattle.

Co-operatives, with the agreement of their Lender, will determine the appropriate maximum number of Purchase Orders that a Member may have at any one time with a Co-Operative. Once established, or subsequently changed, the Co-operative is to report the number to the Director of Agriculture Development Branch, OMAFRA within ten (10) business days of any change.

A Co-operative will not assign a Purchase Order without the prior written consent of the Minister and the Lender.

Purchasing Cattle

A Producer will not purchase any Cattle on behalf of a Co-operative unless the Co-operative has issued a Purchase Order to that Producer before the Cattle is purchased. The Co-operative and the Producer will enter into an agreement using a form that is similar to that set out under Appendix "B" of this Program Guidelines. For greater clarity, Co-ops may continue to use the previous forms for Purchase Orders and Feeder Agreements as long as stock exists.

A Co-operative may authorize a Member to purchase Co-operative-owned Cattle, provided those Cattle are purchased at the fair market value.

A Co-operative may authorize a Member to purchase Member-owned Cattle at 75% of fair market value with estimated weights or up to 100% of fair market value if they were weighed. The fair market value may be reasonably discounted to reflect reduced costs if that Member is already in possession of those Cattle.

A Producer will not encumber or otherwise create, or allow to be created, any security interest in the Cattle purchased pursuant to a Purchase Order.

Feeder Agreements and Producing Cattle

A Co-operative will enter into a Feeder Agreement with each member it has issued a Purchase Order setting out how the Cattle are to be raised, see Appendix A and B.

The Feeder Agreement will set out the terms and conditions in which the Member is to produce the Cattle, including:

The location in which the Member will produce Cattle;
All legal, beneficial and equitable ownership of the Cattle remains with the Co-operative;
Rights of inspection the Co-operative will have in relation to the Cattle;
The Member is to produce Cattle so that the Cattle remain healthy;
The Member is to indemnify the Co-operative;
The grounds in which the Co-operative can re-possess the Cattle;
The Co-operative consents to any enrollment of the Cattle in any type of business risk management program by the Member.

Co-operatives, with the agreement of their Lender, will determine the appropriate maximum number of Feeder Agreements that a Member may have at any one time with a Co-Operative. Once established, or subsequently amended, the Co-operative is to report the maximum number of Purchase Orders to the Director of the Agriculture Development Branch within ten business days (10) of any change.

Custom Feeding

The Co-operative may, in its sole and absolute discretion, offer Custom Feeding arrangements to its Members. If offered, a Member can participate in Custom Feeding if the following conditions are met:

The location of Custom Feeding must be in Ontario, approved by the Co-operative, and must be accessible to supervision by a Co-operative's supervisor or a director of the Co-operative.
The Member must disclose to the Co-operative their intent to custom feed at the time of requesting a Purchase Order.
The Member must enter a Custom Feeding Agreement that is approved and endorsed by the Co-operative. The Custom Feeding Agreement shall include all funds owed to the custom feeder related to a group of Cattle be paid in full before that group of Cattle leaves the custom feeder's care.
The custom feeder must be bound through the Custom Feeding Agreement to provide notice to both the Member and Co-operative of any missed payment(s) for custom feeding services within five (5) Business Days of the missed payment(s).
The person or corporation providing the custom feeding service must be at arm's length to the Member. For greater clarity, this includes the Member not holding any shares or other interests with the custom feeder or the corporation providing custom feeding.
The Member themselves or a corporation the Member hold shares of must not be offering custom feeding services to other Co-operative Members.

The requirement a Producer must have a Custom Feeding Agreement does not prevent a Co-operative's ability to give a Member written consent to place Cattle:

In a community pasture owned by the Association of Community Pastures; or
In a custom feeding facility in the event of an emergency at the Producer's facility.

Repossession of Cattle Conditions

A Co-operative may re-possess its Cattle from the Member where the Member:

Breaches a term or condition in the Feeder Agreement;
Has, or appears to have, abandoned the Cattle;
Is not raising the Cattle in accordance with good agricultural practices, as determined by the Co-operative's supervisor;
Uses any funds under a Purchase Order other than to purchase Cattle;
Fails to pay or meet any obligations or liabilities owed to the Co-operative under any Purchase Order;
Breaches a covenant contained in a Purchase Order or Feeder Agreement and fails to remedy that breach for a period of at least ten (10) Business Days after the Co-operative has provided notice of the breach to the Member;
Becomes insolvent or enters into bankruptcy;
Makes an assignment for the benefit of the Member's creditors;
Fails to provide required information or makes any false or misleading statements in connection with obtaining a Purchase Order or as otherwise required under the Program;
Prevents or fails to co-operate with any audit or other inspection;
Requests that the Co-operative re-possess its Cattle from the Member;
A legal process of any court becomes enforceable against the Member; or
A Material Adverse Change occurs.

If a Co-operative repossesses any Cattle from a Member due to one of the above clauses, the Co-operative will follow the rules for repossessed Cattle as per page 19 of these Program Guidelines.

Selling Cattle

All Cattle purchased pursuant to a Purchase Order will be sold in the name of the Co-operative and all Proceeds from the sale of the Cattle will be paid directly to the Co-operative.

All Cattle purchased pursuant to a Purchase Order will be sold in accordance with the requirements under the Livestock and Livestock Products Act and the Farm Products Payments Act. Farmer to farmer sales are permitted under these Acts; however, it is important to note that the Co-operative will not be covered under the Ontario Beef Cattle Financial Protection Program should there be a failure to pay in a farmer to farmer transaction.

A Co-operative will only make payments to the Member after the related Cattle have been sold and the Member's obligations under that Purchase Order have been paid. A Co-operative will not make any interim payments to a Producer.

Payment from the Sale of Cattle

A Co-operative will, upon receiving the payment from the sale of its Cattle, apply the Proceeds of that sale towards the Member's debt.

When Proceeds is Greater Than Amount Owing

If the Proceeds from the sale of Cattle received by the Co-operative is greater than the Member's debt, the following will occur:

If the Co-operative is not in default of its Loan, the Co-operative will pay to the Member the difference within a reasonable time; or
If the Co-operative is in default of its Loan, the Trustee will record on the Member's behalf the related proceeds used to clear that Member's debt and any potential profits are set aside for that Member while the Co-operative's debt is being settled.

Residual Cattle

Should the Member be in possession of Residual Cattle and:

The Co-op is satisfied that any other Cattle purchased under any other active Purchase Order with that Member are accounted for;
The Member is in good standing with the Co-operative; and
If any other Member has been given Notice of a Shortfall greater than the amount of the Co-operative's Assurance Account, the Co-operative shall consult with the Provincial Program Supervisor prior to initiating the transfer.

The Co-operative may transfer ownership of the Residual Cattle to that Member using a Transfer of Ownership of Cattle form similar to that in Appendix "C".

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When Proceeds is Less Than Amount Owing

If the proceeds from the sale of Cattle received by the Co-operative is less than the Member's debt, the following will occur:

The Co-operative will immediately provide notice to the Member the Proceeds from the sale of Cattle was insufficient to clear the Member's debt and the amount of the outstanding difference. The Member will pay the Co-operative the outstanding amount within twenty (20) Business Days of receiving the notice.
If the outstanding amount is paid, the Co-operative will clear the Member's debt in relation to that Purchase Order and the Member may remain in good standing with the Co-operative.
If the Member does not pay the remaining amount owing under the Member's debt, the Co-operative will use the related funds from that Member's Producer Deposit in the Assurance Account.
1. If the Member's debt is repaid, the Member is entitled to any remaining assurance funds and the Member may remain in good standing with the Co-operative.
2. If there is still an amount owing under the Member's debt, the Member will:
  1. Be in default on that Purchase Order (i.e. the Member is a Defaulting Member), and
  2. Be deemed to be in default on all other Purchase Orders the Member has with the Co-operative and the related Member's Producer Deposit(s) are forfeited.

Where a Member is a Defaulting Member the

Co-operative will immediately notify the Lender, Provincial Program Supervisor and the Minister's designated representative (as noted on the Guarantee Agreement);
Co-operative may re-possess all Cattle the Member purchased under any other Purchase Order the Co-operative has with the Member; and,
Member forfeits any funds from that Member's Producer Deposits in the Assurance Account to the Co-operative.

A Co-operative will only use any forfeited funds in the Assurance Account as follows:

To pay any outstanding balances owing;
If there are any funds remaining after;
1. to pay any additional expenses incurred, including as a result of the Co-operative repossessing the Cattle; and
2. If there are any funds remaining after paragraph (a) to build-up the balance in the Assurance Account for use if any other Member does not have sufficient funds in that Member's portion of the Assurance Account to cover any outstanding debt that Member owes to the Co-operative.
If there is still an outstanding debt after steps set out in paragraphs (a) and (b), the Co-operative will access the following funds in this order to clear the outstanding shortfall:
1. Any other funds or investments the Co-operative holds
2. Funds from other non-defaulting Member's Producer Deposits in the Assurance Account on a pro-rata basis.

If the Co-operative is still unable to clear the remaining debt, the Co-operative has twenty (20) Business Days from the depletion of the Assurance Account (unless an alternative arrangement has been agreed upon with their Lender) to work out any alternative payment arrangements with their Lender.

When Co-operative Does Not Pay Amount Owing

If the Co-operative does not pay the outstanding amount owing on the Loan and is unable to negotiate alternative repayment terms with their Lender, the Co-operative will be in default of the Loan and the Co-operative and the Lender will immediately notify the Provincial Program Supervisor and the Minister's designated representative (as noted on the Guarantee Agreement).

Sale of Repossessed Cattle

When Cattle are repossessed, the Co-operative will keep records of:

The Proceeds from the sale of all of the Cattle that were repossessed;
The principal and interest owing related to the Purchase Order(s) in which the Cattle were repossessed;
The costs related to repossessing the Cattle; and
The amount remaining in the Assurance Account for each Member who is not a Defaulting Member.

If Proceeds are Greater than Amounts Owing

If, the proceeds from the sale of the repossessed Cattle are greater than the Member's debt, the Co-operative will:

Repay the principal and interest owing related to the Purchase Order(s) in which the Cattle were repossessed;
Pay costs related to repossessing the Cattle, including any reasonable costs associated with continuing to raise the Cattle, including reasonable profits pro-rata;
Replenish the assurance accounts of Members who are not Defaulting Members; and,
Pay to the Member any remaining amount.

Part VII: Defaults and Claims

Process Where Co-operative is in Default

Where a Co-operative is in default, the Co-operative will be immediately ineligible to participate in the Program and the Lender will stop providing any further funds to the Co-operative.

Minister's Actions

Upon a Co-operative defaulting, the Minister will, subject to the provisions of the Trustee Act and the Financial Administration Act, or any successor legislation, become the trustee of the Co-operative's Assurance Account and will maintain the records of individual Member assurance deposits and deposit any of those funds into the Consolidated Revenue Fund unless the law allows otherwise.

The Lender and the Minister will agree as to the time and manner of the liquidation of any Cattle and shall take into consideration maximizing the value of the Cattle. The Lender and the Minister do not have to agree as to the time and manner of liquidation of any other security the Lender holds in relation to the outstanding funds.

Maximum Amount of Guarantee Calculation

The Guaranteed Amount is twenty-five percent (25%) of the outstanding principal and interest owing on the Co-operative's debt after all Member Producer Deposits and Co-operative assets have been depleted, but before the liquidation of Co-operative Cattle held by Members who are not Defaulting Members takes place.

Liquidation of Cattle

The Proceeds from liquidation will be divided into two parts:

The amount required to fully discharge each Member's debt; and
The surplus amount owing to each Member who is not a Defaulting Member will be recorded and held separately.

Repayment of Amounts Owing

Any outstanding principal and Interest that the Co-operative owes to its Lender will be repaid in the following order:

All assets of the Co-operative
All proceeds referred to in paragraph (1) above
The Guarantee payment, and if a debt to the Lender remains,
All proceeds referred to in paragraph (2) above pro-rata.
If any funds remain after the step set out in paragraph (d) has been undertaken, those funds will be disbursed pro-rata to Members who are not a Defaulting Member.

When the lender Makes a Claim on the Guarantee

If the Lender makes a claim on the Guarantee and:

The amount owing under the Guarantee is sufficient to fully repay the principal and Interest owing under the Loan, then any funds deposited into the Co-operative's Assurance Account as per paragraph (2) above shall, subject to any other claim having priority on those funds, be paid to the Members that generated those funds on a pro-rata basis.
The amount owing under the Guarantee is not sufficient to fully repay the principal and Interest owing under the Loan, the Lender shall be paid from any funds deposited into the Co-operative's Assurance Account under paragraph (2) above on a pro-rata basis until the outstanding amount of principal and Interest are repaid or the funds in the Co-operative's Assurance Account has been fully depleted, whichever is first.

Default Arising Other than a Co-operative's Default on a Loan

A Co-operative will be in default of its Loan if it breaches its requirements under the Program and fails to remedy the situation as required. The Lender or the Minister, as the case may be, will immediately notify the other of any default to which they become aware. The Co-operative will be immediately ineligible to participate in the Program and the Lender is prohibited from providing any further funds to the Co-operative.

The Lender will demand the Co-operative to pay all amounts owing within thirty (30) Business Days or any other such longer time as the Lender and the Co-operative agree, provided the Lender does not charge interest for that additional time.

If the Co-operative is unable to pay the amount of principal and/or interest owing under the Loan the Co-operative default process shall be initiated.

Part VIII: Emergency Declaration

The Minister may issue an Emergency Declaration setting out that an emergency situation has arisen within all or any part of Ontario. An Emergency Declaration may apply to one or more Lenders, Co-operatives or Producers (i.e. Members of the Co-operative), as the case may be.

The Minister may issue an Emergency Declaration for any of the following situations that significantly prevents Producer's ability to sell marketable Cattle:

Natural disaster,
Disease,
Human or animal health risk,
Accidents,
Decrease in processing capacity,
Closure of interprovincial or international markets for Cattle leaving Ontario

The Minister will only issue an Emergency Declaration where: (1) an emergency arises as a result of any of the situations outlined in the OIC and Program Guidelines; and (2) that the Minister is of the opinion that issuing an Emergency Declaration is reasonably necessary to address an emergency situation.

Where the Minister has issued an Emergency Declaration:

The Lender and the Co-Operative may agree in writing to an extension to the term of the Loan set out in the Loan Agreement by a period that shall not exceed three (3) months beyond any extension the Lender and the Co-Operative may have already agreed to.
The Co-Operative shall extend the term of any Purchase Order the Co-operative has with its Producers in which the Emergency Declaration relates to the day before the Co-operative's Loan with the Lender is due.
The Co-operative shall inform the Director of the Agriculture Development Branch, OMAFRA within ten business days (10) of any extension to the term of the Loan the Co-operative has arranged with its Lender including the length of the extension to the term of the Loan.

The Minister may renew an Emergency Declaration any number of times, provided the grounds for the original declaration remain in effect. Lenders and Co-operatives will be required to re-negotiate loan extensions each time the Emergency Declaration is renewed.

Co-operatives are responsible for identifying all Producer Purchase Orders that will be subject to the extension under the Emergency Declaration and reporting the number of loan extensions to the Ministry.

The existing twelve (12) month loan period and additional three (3) month loan extension period must first be used before loan extensions be offered in an emergency situation. Loans extensions issued under the Emergency Declaration are not repayable until after any agreed upon extension has lapsed.

If a Lender and a Co-operative are unable to agree to an extension of the term of a Loan, whether it is the original Emergency Declaration or a renewal of an Emergency Declaration, then both the Producer's debt with the Co-operative and the Co-operative's Loan with the Lender will become due and payable the day before the Co-operative's loan comes due with their lender.

Part IX: Financial Guarantee

Form of Guarantee

Every Guarantee issued in respect of a Loan under the Program will be in substantially the same form as the Guarantee Agreement set out under Schedule "A" of the OIC.

Maximum Amount of Guarantee

The Guaranteed Amount is twenty-five percent (25%) of the outstanding principal and interest owing on the Loan after all Member Producer Deposits and Co-operative assets have been depleted, but before the liquidation of Co-operative Cattle held by non-defaulting members takes place.

Maximum Guarantee Payment

The maximum guarantee payment shall be the lesser of:

The remaining Co-operative debt after the liquidation of Co-operative Cattle held by Members who are not a Defaulting Member and their related Member debt is cleared; or
The maximum amount of Guarantee.

Eligibility of Loans Delivered by Guarantee

A Loan will not be eligible to be covered by a Guarantee where the Lender issued the Loan in contravention of the terms and conditions of the OIC, these Program Guidelines, the Guarantee Agreement or any Minister's Directions or a Co-operative failed to abide to a Minister's direction to stop issuing Purchase Orders.

Notice to Lender Regarding Payment of Guarantee

The Minister will send a notice to the Lender within sixty (60) days of receiving a claim request if the Minister is to make a payment on a Guarantee or the reasons for denying a claim.

Crown's Right on Payment of Guarantee

If the Minister makes a payment on a Guarantee and the Lender recovers any money in respect of the Loan, the Minister is entitled to a recovery payment.

Lenders / Co-operatives / Members Retaining Records

Program related records and agreements are to be retained by their respective party for a period of at least seven (7) years from the date in which the Loan was issued.

Reporting

Beginning 2018 and annually thereafter, each Lender participating in the Program shall report to the Minister by January 20, the interest rate(s) charged to a Co-operative during the previous calendar year.

Each Co-operative participating in the Program shall provide the Minister with the following reports:

An annual report on a date set out in the Program Guidelines that sets out:
1. Total membership of the Co-operative,
2. Number of Members of the Co-operative that are under forty (40) years of age,
3. Number of active Members as of December 31st,
4. Number of Cattle purchased and sold in the Calendar Year,
5. Number of Cattle remaining as of December 31st,
6. The outstanding Member debt remaining as of December 31st. The total of all Member borrowing during the Calendar Year; and
Any other reports that the Minister may request from time to time in accordance with any requirements set out in the request.

Lenders / Co-operative / Members Audits

All Lenders, Co-operatives and Members parties will consent to any inspection that may be requested by the Minister and will provide reasonable assistance. Any requested information will be provided within ten (10) Business Days of the request being made, unless more time has been provided in the request.

General

Any payments owing to the Crown as a result of the Minister making a payment on the Guarantee will be considered a debt that is owed to the Crown and may be set-off against any other payment the Crown or Her Majesty the Queen in Right of Canada may owe to the person indebted to the Crown in accordance with section 43 of the Financial Administration Act and/or section 155 of the Financial Administration Act (Canada).

The Minister may charge interest on any debt that is owed under this Program at the applicable interest rate that is being charged by the Crown for debts owing to the Crown.

Any Co-operative or Member that provides or has provided false or misleading information under the Program shall have his/her/its/their participation in the Program terminated and shall be prohibited from participating in the Program for a minimum of five (5) years from the date in which the false or misleading information is discovered.

The Minister, Lender, Co-operative - as well as any of their respective employees or agents - may collect, use and/or disclose an individual's Social Insurance Number where that individual operates a business as a sole proprietor or operates within a partnership as an unincorporated entity for tax, auditing and debt collection purposes.

Part X: Loan Requirements

Eligible Loans to the Co-operative

A Loan is eligible under the Program if it meets the requirements set out in the OIC and these Program Guidelines.

Co-operative Loan Requirements

The Loan with a Co-operative will meet the following requirements:

The Loan is for the purposes of providing a Co-operative with funds to allow the Co-operative to issue Purchase Orders so that Members can Produce Cattle;
The Loan prohibits the Co-operative from using any funds provided under the Loan for any other purposes than to allow the Co-operative to issue Purchase Orders;
The Loan is entered into with a Co-operative in good standing;
The Co-operative passes a credit review conducted by the Lender;
The quantum of the Loan shall not be larger than the Co-operative's Allocation;
The Loan is secured by,
1. A registered or otherwise perfected GSA whereby the Lender has a first charge security interest in the Co-operative's Cattle;
2. A priority agreement, where any existing charge or lien with another creditor sets out that the Lender's GSA ranks in priority to the security held by any other creditor; or
3. A PMSI that is registered or otherwise perfected in accordance with the Personal Property Security Act against the Co-operative's Cattle such that the Lender has a first charge security interest in the Co-operative's Cattle;
The debt from the Purchase Order issued to a Member shall be repaid on the earlier of:
1. The Lender's demand, or
2. The expiration of a term of up to twelve (12) months with a provision for an extension of up to three (3) additional months upon the agreement of the Lender and the Co-operative;
The Loan shall be repayable at any time without notice, penalty or bonus;
The Loan complies with the terms and conditions of the OIC, these Program Guidelines and the Guarantee Agreement;
The Loan Agreement prohibits the Co-operative from assigning the Loan;
The Loan Agreement provides that the Loan shall be in default upon the occurrence of any one or more of the following:
1. Any representation made or information the Co-operative provides to the Lender is, or was at the time of its making, false or misleading,
2. The Co-operative uses the funds from the Loan for any other purpose other than to issue Purchase Orders to its Members for the purposes of Producing Cattle,
3. The failure of the Co-operative to pay or otherwise perform as and when due, whether by maturity or by acceleration of, any obligations, liabilities or indebtedness owed to the Lender in relation to the Loan,
4. The Co-operative breaches a covenant in the Loan Agreement and fails to remedy that breach for a period of at least ten (10) Business Days after the Lender has provided notice of the breach,
5. The insolvency of the Co-operative or the appointment of a receiver, manager, trustee or liquidator in respect of any of the Co-operative's property,
6. The Co-operative makes an assignment for the benefit of the Co-operative's creditors,
7. The institution of a proceeding in bankruptcy against the Co-operative, whether voluntary or involuntary, or the institution of proceedings by the Co-operative to obtain relief against the Lender or any other creditors of the Co-operative,
8. Any execution or other legal process of any court becomes enforceable against the Co-operative,
9. The Co-operative discontinues or abandons all or any part of its business operation in relation to the Loan,
10. A material adverse change occurs,
11. The Co-operative prevents or fails to co-operate with any audit or other inspection,
12. The Co-operative fails to provide any information required to be provided under the OIC, the Program Guidelines, the Guarantee Agreement or the Loan Agreement; and

The Lender will not assign all or a part of any Loan to which the Guarantee applies to any other Person without the Minister's prior written consent.

Appendix "A"

General Terms and Conditions for the Purchase Order Agreement/Feeder Agreement

Article 1. Interpretation

1.1 Interpretation. For the purposes of interpreting this Agreement:

Words in the singular include the plural and vice versa;
Words in one gender include all genders;
The headings do not form a part of this Agreement - they are for reference purposes only and will not affect the interpretation of this Agreement;
Any reference to dollars or currency in this Agreement will be to Canadian dollars and currency;
Any reference to a statute means a statute of the Province of Ontario, unless otherwise indicated;
Any reference to a statute is to that statute and to the regulations made pursuant to that statute as they may be amended from time to time and to any statute or regulations that may be passed that have the effect of supplanting or superseding that statute or regulation unless a provision in this Agreement provides otherwise; and
The words "include", "includes", and "including" denote that the subsequent list is not exhaustive.

1.2 Definitions. For the purposes of the Agreement, the terms below will have the following meanings:

"Agreement" means this Purchase Order Agreement/Feeder Agreement, including all amending agreements entered, as may be in effect from time to time;

"Assurance Account" means a trust account established by the Co-op in which the Producer Deposit is deposited and includes any other funds the Co-op may be holding for a Producer;

"Business Day" means any working day, Monday to Friday, inclusive, but excludes statutory and other holidays on which the Government of Ontario has elected to be closed for business;

"Cattle" means steers and heifers to be finished for slaughter, but excludes Cattle to be sold for breeding purposes;

"Co-op" means a feeder Cattle finance Co-operative established under the Co-operatives Corporations Act;

"Draw" means the amount of money the Co-op has made available to the Producer to purchase Cattle under this Agreement, as set out in the Co-op Purchase Order;

"Lender" means the person who lent money to the Co-op;

"Loan Agreement" means the agreement between the Co-op and the Lender setting out the terms and conditions in which the Lender has agreed to provide a Loan to the Co-op;

"Material Adverse Change" means a change in the financial or other condition of the Producer, or in the state or circumstances of any property subject to a security interest in relation to this Agreement the Producer has entered into with the Co-op that in the opinion of a reasonable and prudent lender would be considered likely to cause a significant diminution in the earning power or the value of the business of or in the ability of the Producer to perform any of the Producer's obligations with respect to this Agreement;

"Ministry" means the ministry of the Minister;

"OIC" means Order-in-Council 702/2016, as may be amended;

"Parties" means the Co-op and the Producer collectively;

"Party" means either the Co-op or the Producer, depending on the context;

"Proceeding" means any causes of action, actions, claims, demands, applications, lawsuits or other judicial or quasi-judicial-based proceeding;

"Producer" means an entity that has been issued a Purchase Order;

"Produce Cattle" means the further feeding of Cattle or the finishing of Cattle for slaughter;

"Producer Deposit" means five percent (5%) of the total amount provided under this Agreement that the Producer provides to the Co-op and the Co-op deposits into the Co-op's Assurance Account;

"Program" means the Ontario Feeder Cattle Loan Guarantee Program;

"Purchase Order" means the document issued by the Co-op authorizing the Producer to purchase Cattle up to a certain value and bearing the same number as set out under this Agreement.

"Requirements Of Law" means all applicable statutes, codes, acts, ordinances, orders, approvals, decrees, by-laws, rules, regulations, official plans, permits, licenses, authorizations, directions, injunctions and agreements with all authorities that now or at any time hereafter may be applicable to this Agreement;

"Residual Cattle" means any remaining unsold Cattle purchased under a Purchase Order after the Producer has fully repaid the Co-op from the proceeds generated by the sale of some of the Cattle purchased under the Purchase Order; and

"Supervisor" means the individual who occupies that position within the Co-op.

Article 2. Ownership of Cattle

2.1 Co-operative Retains Ownership Of Cattle. Despite anything else contained in this Agreement, at law or in equity, the Producer agrees the legal ownership, beneficial ownership and the equitable ownership of any Cattle purchased under this Agreement remains with the Co-op.

2.2 Co-operative To Pay Producer Net Balance From Sale Of Cattle. Despite the ownership of the Cattle set out under section 2.1 of this Agreement, the Co-op will pay to the Producer the net balance between the total sale price of the Cattle purchased pursuant to this Agreement and the amount owing under the Draw, including any interest earned thereon, in accordance with section 6.6 of this Agreement.

Article 3. Producer's Representations, Warranties and Covenants

3.1 Producer's Authority To Execute Agreement. The Producer represents and warrants the Producer has:

The full power and authority to enter into this Agreement; and
Taken all necessary actions to authorize the execution of this Agreement.

3.2 Financial Resources To Produce Cattle. The Producer represents and warrants the Producer has the financial resources necessary to Produce Cattle purchased pursuant to this Agreement and will continue to have the financial resources necessary to Produce Cattle purchased pursuant to this Agreement during the term of this Agreement.

3.3 Producer Deposit Is Not From Loan Or Other Indebtedness. The Producer represents and warrants the Producer Deposit being provided in relation to this Agreement is not from a loan or other form of indebtedness.

3.4 No Agreements Restricts Co-operative's Ability To Exercise Rights Under This Agreement. The Producer represents and warrants the Producer is not a party to any agreement restricting the Co-op's ability to exercise any rights the Co-op may have under this Agreement.

3.5 No Proceedings Against Producer That Could Cause Material Adverse Change. The Producer represents and warrants there are no outstanding Proceedings or other expenses or losses owing by the Producer that would cause or is likely to cause a Material Adverse Change during the term of this Agreement.

3.6 Information Producer Provided To Co-operative Is Correct. The Producer represents and warrants any information that the Producer provided to the Co-op in relation to this Agreement is true and accurate in all material respects as of the date the Producer signed this Agreement.

3.7 Producer To Provide Supporting Documentation. The Producer covenants to provide to the Co-op, upon request, and within the time-period set out in the Notice, with documents proving the matters referred to in this Article 3 of the Agreement.

3.8 Producer To Make Sure Representations, Warranties And Covenants Remain True. The Producer covenants to take, or not take, as the case may be, any actions required to ensure the representations, warranties and covenants set out in this Article 3 of the Agreement continue to be true throughout the term of this Agreement.

3.9 Producer To Notify Co-operative Of Any Changes To Representations, Warranties And Covenants. The Producer covenants to advise the Co-op within five (5) Business Days of:

Any changes affecting its representations, warranties and covenants set out in this Article 3 of the Agreement; and
Any Proceedings commenced against the Producer which could or would reasonably adversely affect in a material manner the Producer's ability to comply with the terms and conditions of this Agreement.

3.10 Producer's Representations, Warranties And Covenants For Benefit Of The Co-operative. The Producer acknowledges and agrees the representations, warranties and covenants set out in this Article 3 of the Agreement are for the sole benefit of the Co-op.

3.11 Co-operative's Reliance On Producer's Representations, Warranties And Covenants. The Producer acknowledges and agrees the Co-op is relying on all representations, warranties and covenants set out in this Article 3 of the Agreement.

Article 4. Co-Op's Representations, Warranties and Covenants

4.1 Co-operative's Authority To Execute Agreement. The Co-op represents and warrants it has:

The full power and authority to enter into this Agreement; and
Taken all necessary actions to authorize the execution of this Agreement.

4.2 Co-operative's Representations, Warranties And Covenants For Benefit Of The Producer. The Co-op acknowledges and agrees the representations, warranties and covenants set out in this Article 4 of the Agreement are for the sole benefit of the Producer.

4.3 Producer Reliance On Co-operative's Representations, Warranties And Covenants. The Co-op acknowledges and agrees the Producer is relying on all representations, warranties and covenants set out in this Article 4 of the Agreement.

Article 5. Producer's Obligations Under The Agreement

5.1 Producer To Use Draw From Agreement To Purchase Cattle. The Producer will only use the Draw provided under this Agreement to purchase Cattle. For greater clarity, this includes using the Draw to pay for any related ancillary costs or expenses to the purchase of the Cattle at the time the Cattle are purchased.

5.2 Cattle Purchased In Name Of Co-operative. The Producer will only purchase Cattle in the name of the Co-op with the money provided by the Draw under this Agreement.

5.3 Producer To Inform Any Creditors Or Would-Be Creditors Co-operative Owns The Cattle. The Producer will inform its existing creditors as well as any would-be future creditors the Co-op has all legal, beneficial and equitable ownership in the Cattle purchased under this Agreement and those Cattle will in no way be considered security for any Producer indebtedness or form part of the Producer's estate for the purposes of any insolvency proceedings.

5.4 Access To Facilities Where Cattle Are Being Raised. The Producer will allow employees of the Co-op, the Lender and the Ministry to have reasonable access to the facilities where the Cattle are being raised for the purposes of inspecting the facilities and the Cattle. Without limiting the generality of the foregoing, access includes access to any records under the Producer's charge, management or control related to Producing Cattle or the Producer's participation in the Program.

5.5 Producing Cattle. The Producer will:

Keep the Cattle under the Producer's charge, management or control throughout the term of this Agreement, unless the Producer has received the prior written consent of the Co-op to place the Cattle:
1. In a community pasture owned by the Association of Community Pastures, or
2. In a custom feeding facility;
Produce Cattle in accordance with all Requirements Of Law;
Maintain the health of the Cattle and provide proper veterinary services to the Cattle at the Producer's own expense;
Forthwith notify the Supervisor of any death of the Cattle;
Feed the Cattle and make them ready for market in accordance with good agricultural practices, as determined by the Supervisor and under the Supervisor's overall supervision; and
Deliver the Cattle for sale at such time as may be requested by the Supervisor.

5.6 Proceeds From Sale Of Cattle. The Producer will do or cause to be done anything necessary to ensure the proceeds from the sale of the Cattle are paid to the Co-op.

5.7 Indemnification of Co-operative. The Producer will indemnify and hold harmless the Co-op, its directors, officers, employees and servants, from and against all suits, judgments, claims, demands, expenses, actions, causes of action and losses (including, without limitation, reasonable legal expenses), relating to Producing Cattle or the sale of the Cattle.

Article 6. Co-operative's Obligations Under The Agreement

6.1 Make Draw Available To Producer. The Co-op will make up to the amount set out on the first page of this Agreement available to the Producer via a Co-op Purchase Order.

6.2 Deposit Producer's Producer Deposit Into Co-operative's Assurance Account. The Co-op will deposit the Producer's Producer Deposit into the Co-op's Assurance Account

6.3 Pay Seller Of Cattle In Reasonable Time. The Co-op agrees to pay the seller of Cattle in a reasonable time.

6.4 Allow Producer To Enroll In Risk Management Programs. The Co-op will allow the Producer to enroll in any risk management programs in the Producer's own name and receive any benefits from those risk management programs directly.

6.5 Exception. Despite section 6.4 of this Agreement, the Producer will assign any benefits the Producer may be eligible to receive under a risk management program the Producer has enrolled in to the Co-op as security if required to do so under any terms or conditions set out under the Program

6.6 Co-operative To Pay Producer Net Balance From Sale Price Of Cattle. The Co-op will pay to the Producer the net balance between the total sale price of the Cattle purchased pursuant to this Agreement and the amount owing under the Draw, including any interest earned thereon, provided:

The Producer is not indebted to the Co-op; or
In the event the Producer is indebted to the Co-op, the Co-op may use the net balance between the total sale price of the Cattle purchased pursuant to this Agreement and the amount owing under the Draw the Producer earned from the sale of the Cattle to set-off against any debt that the Producer owes to the Co-op.
The Co-op is not deemed to be in default.

6.7 Return Of Producer's Producer Deposit. The Co-op will return the Producer's Producer Deposit in accordance with Program requirements and Co-op bylaws, provided:

The Producer is not indebted to the Co-op; or
No other producer within the Co-op has been given Notice of a shortfall or is in default of making a payment owing under an agreement that producer entered with the Co-op to Produce Cattle under the Program.

In the event the Producer is indebted to the Co-op, the Co-op may use the Producer's Producer Deposit provided under this Agreement to set-off against any debt that the Producer owes to the Co-op.

6.8 Transfer Of Ownership In Residual Cattle. The Co-op may transfer ownership of any Residual Cattle within a reasonable time to the Producer, provided:

The producer is in good standing with the Co-op
The Co-op is not in default or aware they could be in default of making a payment owing to a Lender.

The Parties agree the Co-op retains all legal, beneficial and equitable ownership in the Cattle until the Co-op executes a transfer or ownership, which upon execution, transfers all legal, beneficial and equitable ownership in the Residual Cattle from the Co-op to the Producer.

Article 7. Note to Producers

7.1 Note To Producers. The Producer may not receive all or part of the proceeds from the sale of Cattle or all or part of any funds held in the Co-op's Assurance Account as per sections 6.6, 6.7, and 6.8 above.

Article 8. Co-operative's Right to Take Possession of Cattle

8.1 Co-operative's Right To Take Possession Of Cattle. The Producer acknowledges and agrees the Co-op may take possession of some or all the Cattle purchased under this Agreement and sell those Cattle if one or more of the following circumstances occurs:

The Producer has, or appears to have, abandoned the Cattle;
The Producer is not Producing Cattle in accordance with good agricultural practices, as determined by the Supervisor;
The Producer requests the Co-op take possession of the Cattle;
The Producer fails to pay or otherwise perform as and when due any obligations or liabilities owed to the Co-op under this Agreement or any other agreement the Producer has entered with the Co-op under the Program;
The Producer fails to comply with a term or condition set out under this Agreement;
The Producer contravenes a term or condition of the Program;
The Producer becomes insolvent or a receiver, manager, trustee or liquidator is appointed in respect of any of the Producer's property;
The Producer makes an assignment for the benefit of the Producer's creditors;
A proceeding in bankruptcy, whether voluntary or involuntary, is initiated against the Producer or the Producer seeks to obtain relief against the Co-op or another creditor of the Producer via another Proceeding;
A representation or warranty the Producer made at the time of making this Agreement was false or misleading;
The Producer fails to provide any information required to be provided under this Agreement or the Program;
The Producer abandons all or any part of its business operations in relation to this Agreement;
An execution or other legal process of any court becomes enforceable against the Producer;
A Material Adverse Change occurs; or
The Producer has prevented or failed to co-operate with any audit or other inspection provided for under the Program for a period of at least ten (10) Business Days after receiving a written demand to provide such assistance.

Where the Co-op takes possession of any Cattle pursuant to this Article 8 of the Agreement, section 6.8 of this Agreement has no application to those possessed Cattle.

Article 9. General

9.1 Representatives May Bind Parties. The Parties represent and warrant their respective representatives have the authority to legally bind them to the extent permissible by law.

9.2 Terms Binding. The Parties will take all reasonable measures to ensure their officers, directors, employees, agents and third-party contractors are bound to observe all terms and conditions of this Agreement.

9.3 Agreement Binding. This Agreement will ensure to the benefit of and be binding upon the Parties, their successors, executors, administrators and their permitted assigns.

9.4 Waivers In Writing. If a Party fails to comply with any term of this Agreement, that Party may only rely on a waiver of the other Party if the other Party has provided a written waiver in accordance with the Notice provisions set out under section 9.13 of this Agreement. Any waiver must refer to a specific failure to comply and will not have the effect of waiving any subsequent failures to comply.

9.5 Tolerance Or Indulgence Of A Breach Not A Waiver. Any failure by one Party to insist on one or more instances of strict compliance by another Party of any of the terms and conditions in this Agreement will not be construed as a waiver by the Party that is tolerating the breach and the obligations of the other Party with respect to such compliance will continue in full force and effect.

9.6 Time Is Of The Essence. Time is of the essence in the performance and observation of the terms and conditions of this Agreement. No extension or variation of time will operate as a waiver of this provision.

9.7 No Assignment. Neither Party will assign this Agreement to any other person without the prior written consent of the Minister and the Lender.

9.8 No Amendment. Neither Party will amend this Agreement without:

Obtaining the prior written consent of the Minister and the Lender; and
An amending agreement in writing, dated and signed by both Parties.

9.9 Severability Of Provisions. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement. Any invalid or unenforceable provision will be deemed to be severed from this Agreement.

9.10 Governing Law. This Agreement and the rights, obligations and relations of the Parties will be governed by and construed in accordance with the laws of the Province of Ontario and the applicable federal laws of Canada. Any actions or proceedings in relation to this Agreement will be conducted in Ontario.

9.11 Term Of Agreement. This Agreement will remain in effect for twelve (12) calendar months from the latter of:

The date indicated at the top of the first page; and
The date in which the Producer first calls upon the Draw set out in the Co-op Purchase Order.

This Agreement may be extended for a period not exceeding three (3) additional calendar months from the latter date of paragraph (a) or (b), provided both Parties agree to the extension, after which it will terminate.

9.12 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter contained herein and supersedes all prior oral or written representations or agreements.

9.13 Notice. Notices will be in writing and will be delivered by postage-prepaid mail, personal delivery, facsimile or Email and will be addressed to the Co-op and the Producer respectively, as set out on the first page of this Agreement.

Notices will be deemed to have been received:

In the case of postage-prepaid mail, five (5) Business Days after such Notice is mailed; or
In the case of personal delivery, facsimile or Email, one (1) Business Day after such Notice is received by the other Party.

In the event of a postal disruption, Notices will be given by personal delivery or by facsimile or Email. Unless the Parties expressly agree in writing to additional methods of Notices, Notices may only be provided by the methods set out in this section 9.13 of the Agreement.

The Parties agree for the purposes of this section 9.13 of the Agreement, the names of the individuals may be changed without amending the Agreement through the Party making the change providing written notice to the other Party of said change.

9.14 Counterparts. This Agreement may be signed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

9.15 Survival. The rights and obligations set out under Articles 1, 2 and 8 as well as sections 6.6, 6.7, 9.6, 9.8, 9.9, 9.10, 9.12 and 9.13 of this Agreement and all applicable definitions, cross-referenced provisions will continue in full force and effect for a period of seven (7) years from the expiry or termination of this Agreement.

Appendix "B"

Purchase Order Agreement/Feeder Agreement Number: ___________

Ontario Feeder Cattle Loan Guarantee Program Purchase Order Agreement/Feeder Agreement

This Agreement is effective as of the ______ day of _________________, 20______.

Between:
_____________________________________

(the "Co-op" - Print)

- and -

________________________________________
(the "Producer" - Print)

In consideration of the covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is expressly acknowledged, the Parties agree as follows:

Instructions

Parts 1 - 3 completed upon issuance of Purchase Order. Part 4 is completed when determining the amount Spent.

Part 1 - Purchase Order Draw

1.1 The Co-op will make up to the following Funds $ ________________ available to the Producer to enable the Producer to purchase Cattle on the Co-op's behalf.

1.2 The Producer will pay simple Interest on what the Producer Spent at a floating rate of ___________% at the end of the Term of this Agreement.

1.3 The Producer will pay the Co-op any shortfall that exists between the sale price of the Cattle and what the Producer Spent, plus Interest and related expenses, within twenty (20) Business Days of notice of the shortfall.

Part 2 - Feeder Agreement Terms

2.1 The Cattle will be identified by a combination of an ear notch and ear tag ____, brand _____ or other _____(indicate cattle identification method)_____________________.

2.2 The Producer will pay insurance at $___________ per head per day, or a fee of $___________ per head.

Part 3 - General

3.1 The Parties acknowledge that Appendix A of the Guidelines forms part of this Agreement and that they have reviewed, understand and agree to Appendix A terms and conditions.

3.2 Capitalized terms not defined herein will have the same meaning as set out in Appendix A of the Guidelines.

3.3 This Agreement includes this document, Appendix A of the Guidelines and the Purchase Order bearing the same number as this Agreement.

In Whitness Whereof the Parties hereto have executed this Agreement according to the dates indicated below:

I have the authority to bind the Producer - Producer Signature _____________________________________

Date __________________________

Co-op's Representative's Name - Print:___________________________________________

Co-op's Representative's Name - Signature: _______________________________________

I have the authority to bind the Co-op

Date: __________________________

Part 4 - Confirmation of Amount Spent

4.1 The Producer will locate the Cattle at ________________________________________________________. The Producer will not relocate the Cattle without the prior written authorization of the Supervisor.

4.2 The following confirms what the Producer Spent in relation to the above-numbered Agreement.

Cost of Cattle $ _______________ Ancillary Charges $ _______________ Co-op Charges $ _______________

Insurance $ _______________ Taxes $ _______________ Other Charges $ _______________

I confirm I Spent $ ______________ is correct

Producer Name - Signature: _________________________________________________

Date: ____________________________

Appendix"C"

Purchase Order Agreement/Feeder Agreement Number: ___________

Ontario Feeder Cattle Loan Guarantee Program
Transfer of Ownership of Residual Cattle

This transfer (the "Transfer") is effective as of the ______ day of _________________, 20______.

Whereas the Producer entered into a Purchase Order Agreement/Feeder Agreement (POA/FA) bearing the number located at the top righthand corner of this Transfer with the Co-op and the Producer has fully repaid the Co-op for the Cattle the Producer purchased with the funds provided under the POA/FA bearing the number located at the top righthand corner of this Agreement;

And whereas there are Residual Cattle (as defined in Order-in-Council 702/2016, as amended) and the Producer is in possession of those Residual Cattle and would like the Co-op to transfer ownership of those Residual Cattle to the Producer as is contemplated under the POA/FA bearing the number located at the top righthand corner of this Transfer;

And whereas the Co-op agrees to transfer ownership of the Residual Cattle to the Producer, as is contemplated under the POA/FA bearing the number located at the top righthand corner of this Transfer;

Now therefore in consideration of the covenants and agreements contained in this Agreement and for other good and valuable consideration provided under the POA/FA bearing the number located at the top righthand corner of this Transfer, the receipt and sufficiency of which is expressly acknowledged, the Residual Cattle are hereby transferred to the Producer based on the terms and conditions set out herein:

1. No Representations Or Warranties In Relation To Residual Cattle. The Co-op makes no representations or warranties in relation to the health or otherwise salability of the Residual Cattle being transferred under this Transfer.

2. Transfer Of Ownership On An As Is Basis. The Producer accepts the transfer of ownership of the Cattle on an "as is" basis.

3. Number Of Cattle Being Transferred. The Co-op is transferring ________ Cattle to the Producer under this Transfer.

Co-op's Representative's Name - Print: ______________________________________________

Co-op's Representative's Name - Signature: __________________________________________I have the authority to bind the Co-op

Date: _______________________________________

Updated: July 23, 2024

Published: July 27, 2022