KPMG Inc. and Sunniva Inc.

Headnote

Section 144 -- Application for partial revocation of a cease trade order against an issuer to permit the sale by a court-appointed receiver of common shares held by a shareholder to a creditor as part of the consideration for the reduction of outstanding debt owed by the shareholder to the creditor -- Purchaser of the securities is a sophisticated purchaser who understands the nature of the cease trade order -- Each of the applicant, the shareholder and the purchaser are not aware of any material information regarding the issuer that has not been generally disclosed -- Partial revocation of the cease trade order granted subject to conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.

July 29, 2022

IN THE MATTER OF THE SECURITIES ACT, R.S.O.1990, C. S.5, AS AMENDED (the Act) AND IN THE MATTER OF KPMG INC., IN ITS CAPACITY AS COURT APPOINTED RECEIVER AND MANAGER OF THE PROPERTY OF CURA-CAN HEALTH CORP. AND SUNNIVA INC.

ORDER (SECTION 144)

WHEREAS the securities of Sunniva Inc. (Sunniva) are subject to a cease trade order (the Cease Trade Order) dated June 22, 2020 issued by the British Columbia Securities Commission, as principal regulator, and evidencing the decision of the Ontario Securities Commission (the Commission);

AND WHEREAS the Cease Trade Order was partially revoked on April 26, 2021 by the British Columbia Securities Commission (the 2021 Partial Revocation Order) to permit the issuance by Sunniva of common shares to unsecured creditors, as part of the settlement of their claims pursuant to a plan of compromise and arrangement under the Companies' Creditors Arrangement Act (Canada) (the CCAA);

AND WHEREAS KPMG Inc. (the Filer) has applied to the Commission pursuant to subsection 144(1) of the Act (the Application) for a partial revocation of the Cease Trade Order to permit the sale by the Filer, in its capacity as receiver and manager of the property of Cura-Can Health Corp. (Cura-Can) and The Clinic Network Canada Inc (TCNC), to Avonlea-Drewry Holdings Inc. (ADH) of 50,088,970 common shares of Sunniva registered in the name of Cura-Can (the Sale);

AND UPON the Filer having represented to the Commission that:

1. The Filer is acting solely in its capacity as the court-appointed receiver of the property of Cura-Can and TCNC and not in its personal capacity.

2. Sunniva is a reporting issuer in the provinces of British Columbia, Alberta and Ontario.

3. Cura-Can is a company incorporated under the federal laws of Canada.

4. ADH is a company incorporated under the laws of Ontario. ADH owns 40% of the issued and outstanding equity securities of Cura-Can and is a secured lender of Cura-Can.

5. The Cease Trade Order was issued on June 22, 2020 by the British Columbia Securities Commission, as principal regulator, and evidenced the decision of the Commission, for failure to file the following continuous disclosure documents within the required timeframe:

(a) annual audited financial statements for the year ended December 31, 2019,

(b) annual management's discussion and analysis for the year ended December 31, 2019,

(c) certification of the annual filings for the year ended December 31, 2019.

6. The 2021 Partial Revocation Order was issued on April 26, 2021 by the British Columbia Securities Commission, as principal regulator, and evidenced the decision of the Commission, to partially revoke the Cease Trade Order, subject to certain conditions, solely to permit the issuance by Sunniva of common shares to up to 272 unsecured creditors of Sunniva and its Canadian subsidiaries, as part of the settlement of their claims pursuant to an order of the Supreme Court of British Columbia dated February 12, 2021 implementing an amended and consolidated plan of compromise and arrangement dated January 14, 2021 under the CCAA.

7. Cura-Can holds 50,088,970 common shares of Sunniva (the Subject Sunniva Shares) that were issued on June 18, 2021 in accordance with the 2021 Partial Revocation Order. The Subject Sunniva Shares represent approximately 6.3% of the issued and outstanding common shares of Sunniva.

8. The Filer is not aware of any further issuances of common shares of Sunniva since June 18, 2021.

9. Cura-Can, TCNC and ADH entered into a credit facility agreement dated March 1, 2019, as amended and restated on January 18, 2021 (the Credit Agreement). Pursuant to the Credit Agreement, ADH provided Cura-Can with a term loan facility in the maximum aggregate principal amount of $10,000,000 (the Loan Facility).

10. Cura-Can and TCNC failed to repay amounts owing under the Loan Facility (the Indebtedness) on the maturity date of May 31, 2021. As a result, demands for full repayment of the Indebtedness and duly executed Notices of Intention to Enforce Security under section 244 of the Bankruptcy and Insolvency Act (Canada) (the BIA) were sent by ADH to Cura-Can and TCNC on June 10, 2021.

11. Cura-Can, TCNC and ADH entered into a forbearance agreement dated June 30, 2021 (the Forbearance Agreement). Cura-Can and TCNC have defaulted under the Forbearance Agreement. As a term of the Forbearance Agreement, Cura-Can and TCNC consented to the appointment of a receiver and each provided a duly executed Consent Receivership Order.

12. On February 7, 2022:

(a) ADH brought an application pursuant to section 243 of the BIA and section 13(2) of the Judicature Act (Alberta), seeking the appointment of the Filer as receiver and manager of all the assets, undertakings and properties of Cura-Can and TCNC (the Property);

(b) the Alberta Court of Queen's Bench pronounced an order (the Receivership Order) in Court File No. 2201-01438, appointing the Filer as the receiver and manager of the Property, which includes the Subject Sunniva Shares; and

(c) the Filer took possession and control of the Property.

13. Pursuant to the Receivership Order, the Filer is authorized to market and sell any or all of the Property of Cura-Can and TCNC and negotiate such terms and conditions of sale as the Filer may deem appropriate.

14. The Filer, solely in its capacity as receiver and manager of Cura-Can and TCNC, and ADH entered into an asset purchase agreement dated March 14, 2022 (the APA) providing for the sale by the Filer to ADH of certain Property, including the Subject Sunniva Shares, subject to there being no order in effect prohibiting the purchase and sale thereof. The cost of the acquisition of the Subject Sunniva Shares will be credited against the outstanding debt owed to ADH by Cura-Can.

15. The Sale will occur in Ontario. As the Sale will involve trades and acts in furtherance of trades in securities of Sunniva, the closing of the Sale is conditional on the partial revocation of the Cease Trade Order. The Sale is not conditional upon a full revocation of the Cease Trade Order.

16. ADH is a sophisticated "family office" investment holding company with assets in excess of CAD$50 million. ADH qualifies as an "accredited investor" pursuant to paragraphs (m) and (t) of section 1.1 of National Instrument 45-106 Prospectus Exemptions (NI 45-106). Each of the shareholders of ADH is also an "accredited investor" under the same categories. The directors and officers of ADH, who are also the ultimate beneficial shareholders of ADH, are also "accredited investors" under, among others, paragraphs (k) and (l) of section 1.1 of NI 45-106.

17. ADH is aware of Sunniva's financial condition, the status of the Cease Trade Order and the implications of the Cease Trade Order in respect of trading in the Subject Sunniva Shares. ADH understands that the Subject Sunniva Shares will be subject to the Cease Trade Order until a revocation order is issued by the Commission and that following the Sale, any trades in the Subject Sunniva Shares are prohibited by the Cease Trade Order. The Filer will obtain an acknowledgement from ADH that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

18. ADH will purchase and hold the Subject Sunniva Shares as principal. ADH has no current plans for the Subject Sunniva Shares other than to hold them for future investment or tax planning purposes. Should Sunniva apply to have the Cease Trade Order revoked and successfully apply to have the Sunniva Shares listed on a recognized exchange in Canada, ADH may re-evaluate its position at that time.

19. Cura-Can and ADH are not insiders, control persons or affiliates of Sunniva.

20. Each of the Filer, Cura-Can and ADH is not aware of any material information concerning the affairs of Sunniva that has not been generally disclosed.

21. ADH will be provided with a copy of the Cease Trade Order and a copy of this partial revocation order prior to the Sale.

AND UPON considering the Application and the recommendation of the staff of the Commission;

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED that, pursuant to subsection 144(1) of the Act, the Cease Trade Order is partially revoked solely to permit the Sale to ADH and acts in furtherance of the Sale that are necessary for and are in connection with the Sale and all other acts in furtherance of the Sale that may be considered to fall within the definition of "trade" within the meaning of the Act, provided that:

(a) prior to the Sale, the Filer will:

(i) provide ADH with a copy of the Cease Trade Order;

(ii) provide ADH with a copy of this partial revocation order; and

(iii) obtain from ADH a signed and dated acknowledgement which clearly states that the Cease Trade Order remains in effect, and that the issuance of a partial revocation of a cease trade order does not guarantee the issuance of a full revocation in the future; and

(b) the Filer undertakes to make available a copy of the written acknowledgement referred to in paragraph a(iii) to staff of the Commission upon request.

DATED this 29th day of July, 2022.