D002 | S018 | 2603-07923 Mechanical extraction of the PDF’s existing text layer. No OCR performed. Reading order, stamps, handwriting, tables and symbols may be incomplete or inaccurate. Compare quotations with the unchanged original PDF; PDF page numbers refer to file pages, not necessarily printed page labels. Extraction is not court authentication or legal verification. PDF page 1 — text-layer available 93651809\28 Clerk's Stamp Form 10 Rule 3.25 COURT FILE NO. COURT COURT OF KING'S BENCH OF ALBERTA JUDICIAL CENTRE EDMONTON PLAINTIFF LTR EQUIPMENT INC., TROIS-RIVIERES LOCATION INC. DEFENDANT(S) XCMG CANADA LTD., XCMG AMERICA FINANCIAL LLC, XCMG NORTH AMERICA CORPORATION, JOHN DOE CORPORATION I, JOHN DOE CORPORATION II, AND JOHN DOE CORPORATION III, JOHN DOE I, JOHN DOE II, AND JOHN DOE III DOCUMENT STATEMENT OF CLAIM ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT Gowling WLG (Canada) LLP 1600, 421 – 7th Avenue SW Calgary, AB T2P 4K9 Telephone (403) 298-1000 Facsimile (403) 263-9193 File No. G10017830 Attention: Theresa Nolan/ Caitlin Milne/ Naomi Austin NOTICE TO DEFENDANT(S) You are being sued. You are a defendant. Go to the end of this document to see what you can do and when you must do it. Statement of facts relied on: FILED DIGITALLY2603 07923Apr 10, 2026 8:58 AM PDF page 2 — text-layer available - 2 - 93651809\28 A. THE PARTIES 1. The Plaintiff, LTR Équipment Inc. (formerly 9432-01999 Quebec Inc. ) (“LTR”), is a Québec - based heavy-equipment dealer incorporated under the Business Corporations Act (RSQ c. C- 38). LTR sells and services construction machinery throughout Québec and is located at 2255 Bellefeuille Road, Trois-Rivières. LTR is a wholly owned subsidiary of LTR Location. 2. The Plaintiff, Trois-Rivieres Location Inc. (also operating as LTR Location) (“LTR Location”) is a Québec based corporation incorporated under the Business Corporations Act (RSQ c. C-38), located at 2255 Bellefeuille Road, Trois-Rivières, and is the parent company of LTR. 3. The Defendant, XCMG Canada Ltd. is an Alberta corporation (“XCMG Canada”) and a wholly owned subsidiary of the Xuzhou Construction Machinery Group Co. Ltd (“XCMG China”). It imports and distributes equipment nationwide through facilities in Stony Plain, Alberta , and Hamilton, Ontario. 4. The Defendant, XCMG America Financial, LLC (“ XCMG Financial ”), is a limited liability company incorporated in Delaware, U.S.A., with its principal office in Houston, Texas, and is ultimately controlled either directly or indirectly by XCMG China. XCMG Financial acts as a non- arm's-length lender to distributors of XCMG equipment in North America, including in Canada , and provided financing to LTR, and LTR Location as co -borrower, in connection with the acquisition of the XCMG Equipment, as defined below. 5. The Defendant, XCMG North America Corporation (“XCMG North America”), is a limited liability company incorporated in Delaware, U.S.A., and is ultimately controlled either directly or indirectly by XCMG China. XCMG North America is the manufacturer of the XCMG Equipment pursuant to the Financing Agreement, as defined below, sold by XCMG Canada pursuant to the Dealer & Distributor Agreements, as defined below. 6. XCMG Canada acted as an agent of XCMG Financial, and XCMG North America . XCMG Canada, XCMG Financial, and XCMG North America (collectively, the “ XCMG Group ”), operated as a single enterprise in respect of some or all of the (a) the design and manufacture of equipment and parts ; (b) the supply and distribution of equipment and parts; ( c) warranty, dealer support, and technical assistance; (d) the provision of financing; and (e) the management of dealer relationships. John Doe Defendants 7. The Defendants, John Doe Corporation I, John Doe Corporation II, and John Doe Corporation III (collectively, the “John Doe Corporations”), are corporations whose identities are presently unknown to the Plaintiffs. The John Doe Corporations are a parent, affiliate, subsidiary, or otherwise related entity to the XCMG Group, or is a party that participated in, directed, authorized, or benefited from the acts and omissions described herein. 8. The Defendants, John Doe I, John Doe II, and John Doe III (collectively, the “ John Doe Individuals”), are individuals whose identities are presently unknown to the Plaintiffs. The John Doe Individuals were, at all material times: (a) an officer, director, employee, or agent of one or more of the corporate Defendants; or (b) otherwise a person who participated in, directed, authorized, or acquiesced in the acts and omissions described herein. PDF page 3 — text-layer available - 3 - 93651809\28 9. The John Doe Individuals acted for the benefit of the corporate Defendants, and are jointly and severally liable for the conduct described in this Claim. 10. The John Doe Corporations and the John Doe Individuals are collectively referred to as the “John Doe Defendants”. 11. The Plaintiffs will seek leave to amend this Claim to substitute the true names of the John Doe Corporations and the John Doe Defendants once their identities become known. Relationship Between the Parties 12. LTR entered into a commercial relationship with the XCMG Group pursuant to which it agreed to purchase, promote, market, sell, lease, and service XCMG -branded equipment (“XCMG Equipment”), and agreed to obtain financing for the XCMG Equipment within its assigned territory in Québec. 13. LTR Location is included as a “Party” in the Dealer & Distributor Agreements, as defined below, as a co-signee of LTR’s responsibilities and obligations, though no signature from LTR Location was affixed to the Dealer & Distributor Agreements. 14. LTR Location entered into a Master Financing Agreement with XCMG Financial dated April 1, 2024 (the “Financing Agreement”) as Co-Borrower alongside LTR. The Financing Agreement imposed joint payment and security obligations on LTR and LTR Location in connection with the XCMG Equipment inventory. 15. LTR invested in facilities, personnel, inventory, and customer support necessary to establish, develop, and grow a market for XCMG Equipment in Québec. 16. In turn, the XCMG Group, including XCMG Canada, XCMG Financial, and XCMG North America, agreed, expressly or by necessary implication, to: (a) design and manufacture equipment for sale and distribution; (b) supply equipment for sale and distribution; (c) provide adequate spare parts, training, and technical support; (d) honour warranty and after-sales obligations; and (e) support LTR in operating a viable and commercially sustainable dealership business. 17. XCMG Financial provided financing for the acquisition of the XCMG Equipment via the Financing Agreement. XCMG Financial obtained security interests in LTR’s inventory of XCMG Equipment and was granted rights of inspection, control, and enforcement in respect of that inventory and related assets. LTR Location was a co-borrower with LTR under the Financing Agreement. 18. The supply of XCMG E quipment, the provision of dealer support, and the financing arrangements were presented to LTR and LTR Location as components of an integrated commercial relationship with the XCMG Group. PDF page 4 — text-layer available - 4 - 93651809\28 B. THE CONTRACTS Dealership and Distributor Agreement in December 2023 19. On March 31, 2023, representatives of XCMG Canada, including Chris Li, Vice President, (“Li”) and Victor Jiang, Vice President and Chief Executive Officer (“Jiang”), met with LTR to discuss a prospective dealership relationship. During that meeting, XCMG Canada presented its product lineup and XCMG Financial’s floor plan financing arrangements. 20. At that meeting, XCMG Canada, on behalf of XCMG Financial, introduced a floor plan financing arrangement under which a lender would finance LTR’s acquisition of equipment inventory, with repayment tied to the sale or rental of that equipment in the ordinary course. XCMG Canada, on behalf of XCMG Financial, advised that the financing to be provided by XCMG Financial would include an initial interest -free period, and that the financing terms would form part of the commercial framework for the proposed dealership relationship. 21. On December 14, 2023, LTR entered into a Dealership Agreement, and a Distributor Agreement, with XCMG Canada (collectively, the “Dealer & Distributor Agreements”). 22. Under the Dealership Agreement, XCMG Canada appointed LTR as its exclusive dealer in Québec for listed categories of construction machinery and compact construction equipment. 23. Under the Distributor Agreement, XCMG Canada also appointed LTR as distributor for specified categories of construction machinery including telehandlers, rotary telescopic handlers, scissor Lift, boom lift and forklift, forklifts, parts, and accessories in Québec, including exclusive rights for Telescopic Handlers and Rotary Telescopic Handlers in Quebec, except Montreal Island. 24. The Dealer & Distributor Agreements contemplated material sales targets, parts orders, territorial rights, training, parts support, warranties, and ongoing cooperation. 25. XCMG Canada’s obligations pursuant to t he Dealership Agreement, included the following , pursuant to Section 16: (a) supply equipment for sale and distribution in Québec; (b) respond to order inquiries without delay for acceptance or rejection and provide an estimated delivery time frame; (c) provide French and English technical and scientific information, manuals, and catalogues necessary for marketing and support; (d) send technicians on reasonable requirements of the Dealer, provide training, and maintain after-sales and quality-assurance support; (e) process warranty claims; (f) sell and supply the spare parts necessary for sustained after-sales service; (g) provide quality assurance services as described in [the] guarantee book; (h) cooperate with LTR in developing the Québec market; PDF page 5 — text-layer available - 5 - 93651809\28 (i) act consistently with the contractual grants of exclusivity, dealer support, and ongoing business cooperation; and (j) perform its obligations in good faith. 26. The Dealer & Distributor Agreements established the commercial framework governing the parties’ relationship, and contemplated an ongoing manufacturer-dealer/distributor arrangement pursuant to which XCMG Canada and XCMG North America would manufacture and supply equipment of merchantable quality and compliant with applicable standards, and LTR would promote, market, sell, lease, and service that equipment within its Québec territory. 27. The Dealership Agreement further included the following relevant terms: (a) Section 3. Breach: Means any misrepresentation, inaccuracy, error, omission, non - compliance, infringement, failure, claim or other circumstance relating to a representation, warranty, covenant, obligation or other provision of the Agreement leading to: (i) Any infringement of the Agreement; or (ii) Any claim by any person or other occurrence or circumstance which (i) is inconsistent with a covenant, obligation or other provisions of the Agreement and (ii) causes damage to such person; (b) Section 9. Authorized Territory: describes LTR’s sales territory as the geographical area of the Province of Quebec, and Section 10 granted LTR an “Exclusive Dealership” subject to the Sales Targets defined Section 11. (c) Section 14. Indemnification: (i) Requires the parties to indemnify the other for any “Loss” which includes “any and all damages, fines, fees, penalties, deficiencies, liabilities, losses and expenses, including without limitation, interest, reasonable expenses of investigation, court costs, reasonable fees and expenses of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment, incurred in connection with: (A) The investigation or defence of any third person claims; or, (B) Successfully asserting or disputing any rights under the Agreement against any Party hereto or otherwise […]. (ii) Scope is defined to include, “any Loss which [the Party] sustains or incurs resulting from: (A) any misrepresentation, inaccuracy or erroneous statement made by them in the Agreement; (B) Any negligent or willful action or omission by them […]; and, PDF page 6 — text-layer available - 6 - 93651809\28 (C) failure to perform [the Parties’] duties and obligations under the Agreement; (iii) any Product or service warranty made by them other than its usual warranty. (d) Section 15. Obligations of Dealer: (i) Requires the Dealer to maintain a sufficient stock of component and spare parts in quantity and type and ensure that products and spare parts are provided to customer in the authorized territory within a reasonable time.” (ii) Section 15 also states that: (A) Product quality shall not be a reason that Dealer refuses to pay; (B) If Dealer refuses to pay according to the payment terms, the warranty for the concerned Products shall expire automatically; (C) If there is a quality issue, Dealer shall send a claim to Manufacturer in written form timely and both parties shall commence negotiations accordingly; (D) Manufacturer shall not accept any quality claims for more than six months, in this case Dealer cannot accept a claim (quality claim) more than 6 months after the sale to a user; (E) Manufacturer shall not accept any quality claims for more than six months, in this case Dealer cannot accept a claim (quality claim) more than 6 months after the sale to a user; (F) Dealer shall issue a warranty certificate to all buyers who purchase new products setting forth warranty terms and conditions at least on the same level as the Manufacturer’s normal warranty terms and conditions; (G) Regarding spare parts, LTR was required to purchase spare parts from XCMG Canada, and if it purchased spare parts elsewhere the Agreement stated that “under no circumstances shall Manufacturer be liable for the breach of its warranty”. (e) Section 17.9 Amendment states that the Agreement may be amended at any time by mutual consent of the Parties. However, any amendment must be set forth in writing and signed by each of the Parties to the Agreement. It shall be deemed effective as of the day of its recording in a written instrument duly signed by the Parties. 28. The Distributor Agreement included the same or similar terms to the Dealership Agreement: (a) Section 7 detailed the obligations of Party B, LTR, and those obligations are substantially the same as described in paragraph 2 7(d)(ii) above, regarding Section 15 of the Dealership Agreement. (b) Section 17 states: PDF page 7 — text-layer available - 7 - 93651809\28 This agreement it not completely matters concerned, both parties shall sign supplementary agreement through negotiations, and the supplementary agreement has the same legal effect. [sic] C. INITIAL INVENTORY AND FINANCING (MARCH - APRIL 2024) 29. On February 27, 2024, LTR advised XCMG Canada that telehandler units (models XTF1256/1056) had begun arriving at LTR’s yard. LTR raised immediate concerns including: the absence of French operator's manuals (without which the units could not be released) and excessive hours/mileage on telehandlers received (even though they were represented as “brand new units"). 30. As of March 5, 2024, the following telehandler units were delivered to LTR with excessive hours at delivery, notwithstanding the fact that the telehandlers were represented as being “brand new”: No. Model / Year Serial Number Hours at Delivery KM at Delivery 1 XTF1256K 2024 XUG1256KPPAD00275 41.6 H 63.7 KM 2 XTF1256K 2024 XUG1256KKPAD00276 61.0 H 113.5 KM 3 XTF1256K 2024 XUG1256KJPAD00277 48.7 H 63.2 KM 4 XTF1256K 2024 XUG1256KVPAD00296 42.5 H 67.0 KM 5 XTF1256K 2024 XUG1256KVPAD00315 35.9 H 64.8 KM 6 XTF1256K 2024 XUG1256KHPAD00318 36.7 H 62.3 KM 7 XTF1256K 2024 XUG1256KEPAD00319 40.2 H 2.6 KM 8 XTF1256K 2024 XUG1256KVPAD00329 51.3 H 74.7 KM 9 XTF1256K 2024 XUG1256KAPAD00333 44.4 H 60.8 KM 10 XTF1256K 2024 XUG1256KCPAD00337 41.6 H 66.2 KM 11 XTF1256K 2024 XUG1256KTPAD00338 38.5 H 69.9 KM 12 XTF1256K 2024 XUG1256KJPAD00344 35.3 H 64.1 KM 13 XTF1256K 2024 XUG1256KCPAD00345 32.9 H 67.0 KM 14 XTF1256K 2024 XUG1256KVPAD00332 35.8 H 80.2 KM 15 XTF1256K 2024 XUG1256KEPAD00336 35.4 H 61.4 KM 16 XTF1256K 2024 XUG1256KPPAD00342 38.5 H 76.8 KM 17 XTF1256K 2024 XUG1256KAPAD00347 36.3 H 64.0 KM 18 XTF1256K 2024 XUG1256KHPAD00349 38.9 H 66.0 KM 31. Following delivery of the telehandler units described above, XCMG Canada agreed to provide a discount of $2,000 CAD per unit for the excessive hours and kilometers at delivery. Despite this, the telehandlers could not be placed into service due to deficiencies in documentation provided by XCMG Canada, including certificates of origin and French-language operator manuals. 32. The certificates of origin XCMG Canada supplied for the telehandler and wheel loader units did not comply with the requirements of the Société de l'assurance automobile du Québec ("SAAQ"), as they omitted the actual equipment weight or Gross Combined Weight Rating PDF page 8 — text-layer available - 8 - 93651809\28 (GCWR). Without compliant certificates of origin, LTR's customers were unable to register or plate the equipment for road use, rendering the units unsaleable to end-users. 33. Similarly, XCMG Canada failed to provide French -language operator's manuals for the XTF1256K telehandlers, notwithstanding that such manuals were required by Québec law before the equipment could be released from LTR's yard. 34. LTR made repeated follow -up requests to XCMG Canada seeking compliant certificates of origin, French-language operator manuals, and other required documentation; XCMG Canada failed or refused to sufficiently resolve these issues in a timely manner or at all. Finalizing Floor Plan and Financing Agreement 35. As of M arch 25, 2024, representatives of LTR and XCMG Canada, including Li on behalf of XCMG Canada, exchanged communications and reached agreement regarding the transfer, financing, and support of XCMG Equipment inventory located in Stony Plain, Alberta . In particular, XCMG Canada represented and agreed: (a) that the equipment would be sold at a price reflecting an approximate 8% discount from the list price; (b) that XCMG Canada would provide, for each unit of equipment, all documentation required to permit LTR to place the equipment into service, including certificates of origin, operator manuals, and French-translated materials; (c) that XCMG Canada would provide LTR with parts lists and filters for the equipment on a timely basis, and that LTR would be able to order the necessary parts such that the required parts inventory would be available no later than 25 days after that date; (d) that the equipment would be subject to XCMG Canada’s 2024 warranty policy, including standard warranty coverage and the availability of extended warranty options; (e) that the equipment would be delivered in new condition, with usage levels consistent with new equipment, being approximately 10 hours of use or less; (f) XCMG Canada further represented and agreed on behalf of XCMG Financial that: (i) the equipment would be financed through a floor plan agreement providing an initial interest-free period of six months, with an additional three -month interest- free extension for units not sold within that period; and, (ii) that the commencement of the floor plan financing period would be contingent upon the delivery of complete and compliant documentation for each unit. 36. LTR advised XCMG Canada and XCMG Financial that LTR would act as borrower under the proposed Financing Agreement and its parent, LTR Location, would also rent equipment to customers. On March 27, 2024, Joe Bellanca of XCMG Financial confirmed that XCMG Financial would accommodate that structure under the floor plan agreement, and that the financing arrangement contemplated the sale and rental of equipment by LTR Location in the ordinary course of business. PDF page 9 — text-layer available - 9 - 93651809\28 37. On or about April 1, 2024, LTR entered into the Financing Agreement with XCMG Financial, and LTR Location was a co-borrower pursuant to an Addendum to the Financing Agreement. The Financing Agreement was a standard pre-printed form imposed on LTR by XCMG Financial, the terms of which could not be negotiated. It was presented as a "take it or leave it" affair." XCMG Financial agreed to advance funds to LTR to finance the acquisition of XCMG Equipment supplied by the defendant, manufacturers, XCMG North America, and XCMG Canada and sold by XCMG Canada. D. EQUIPMENT DEFECTS AND ONGOING OPERATIONAL FAILURES (APRIL – JUNE 2024) 38. On April 3, 2024, LTR reported to XCMG Group representatives that since execution of the Dealer and Distributor Agreements in December 2023, XCMG Canada had not provided the materials and support required for LTR to operate its dealership, including parts lists, inventory pricing, and French-language documentation necessary for the Québec market. 39. LTR was unable to obtain spare parts, parts manuals, or timely technical support from XCMG Canada, and XCMG Canada’s responses to inquiries were delayed, including where equipment required repair. As a result, LTR could not sell, rent, or service the equipment and placed a hold on further inventory acquisition. 40. On April 10, 2024, Li advised LTR that parts inventory lists and pricing would be provided within one to two weeks, and that a parts ordering system would be implemented at a later date. 41. On April 16, 2024, LTR advised XCMG Canada of a safety-critical defect in the XTF1256K Telehandlers involving a brake-steering interlock failure. Specifically, when an operator applied the brakes, the power steering became inoperative, rendering the machine uncontrollable during braking. 42. On April 29, 2024, LTR, together with other XCMG dealers in Canada (including JAPA Machinery Group, Artic Machinery, CanLift, and North West Crane ), advised representatives of XCMG North America and XCMG Financial that they were experiencing common issues, including inadequate spare parts availability and deficiencies in warranty support. 43. On May 27, 2024, LTR advised XCMG Group representatives that XCMG Canada had failed to supply spare parts, provide parts pricing, deliver equipment and parts in accordance with agreed timelines, and provide warranty documentation necessary to support sales. 44. On June 4, 2024, LTR reported to XCMG Group representatives that a XC968U Wheel Loader experienced a mechanical failure during a customer demonstration, including loss of hydraulic power and multiple system warnings, rendering the equipment inoperable at the work site. 45. Between April 2024 and June 2024, LTR identified multiple defects in the equipment supplied by XCMG Canada, including hydraulic deficiencies, component failures, and operational malfunctions affecting performance and use (the “ Equipment Defects ”). XCMG Canada repeatedly failed or refused to repair or replace the XCMG Equipment or resolve the Equipment Defects. 46. During the same period, LTR experienced ongoing and material issues in its dealings with XCMG Canada, including, without limitation: (a) failing or refusing to repair Equipment Defects or replace equipment in accordance with the Dealer & Distributor Agreements; PDF page 10 — text-layer available - 10 - 93651809\28 (b) failing to provide parts lists and inventory information necessary to support ongoing operations; (c) failing to supply sufficient spare parts and failing to provide parts pricing necessary to order parts; (d) failing to provide timely technical support or qualified technical personnel capable of diagnosing and resolving defects; (e) failing to provide training materials and documentation in French and English required for operation and sale in Québec; (f) failing to provide and maintain a proper warranty claim submission system portal, and; (g) failing to provide compliant certificates of origin and documentation required to register and deliver equipment to customers (the “Operational Breaches”). 47. As a result of the Equipment Defects and Operational Breaches, LTR was unable to market, sell, and service the XCMG Equipment in its inventory. 48. XCMG Canada acknowledged the Equipment Defects and Operational Breaches, continually representing that it would take steps to address and resolve them. 49. On June 10, 2024, LTR advised XCMG Canada that it had two weeks to provide parts, and that if it failed to do so, LTR would return all equipment and require credits for the returned machines. E. AMENDING AGREEMENT IN JULY 2024 50. On or about June 12, 2024, Quan Liu, CEO of XCMG North America (“Liu”) advised LTR that XCMG Canada had now designated two points of contact specifically for LTR, established direct communication channels with the XCMG Group factory engineers, and that factory engineers and factory technicians had been sent to Trois-Rivières for onsite training and service. He also advised that French translations of manuals and brochures were in progress, acknowledged delays, and proposed a further meeting to address ongoing issues. 51. On June 27, 2024, LTR representatives, David and Jacques Guilbert , and XCMG Canada representatives, Li, and Jacob Cao (“Cao”), met to discuss the ongoing crisis. Following the meeting, Cao circulated the agreed resolution terms and asked LTR to “ review the attached memo, confirm its accuracy, and sign the document to indicate agreement with the content .” LTR provided its feedback on the final draft terms, and the parties agreed on the terms of the “Final Meeting Memo between LTR Equipment and XCMG Canada Lt d.” (the “ Amending Agreement”). 52. On July 17, 2024, Li returned the signed Amending Agreement on behalf of XCMG Canada, and David Guilbert signed the Amending Agreement on behalf of LTR. The parties initialled each page of the 5-page Amending Agreement. 53. Pursuant to the Amending Agreement, some of the terms XCMG Canada agreed to include: PDF page 11 — text-layer available - 11 - 93651809\28 (a) Supply Parts and Inventory Support: Deliver seven (7) containers of spare parts, representing approximately two hundred (200) crates, to arrive by the end of August 2024; (b) Grant a 25 % Discount on Future Parts Orders: Apply a 25 % discount to all future parts orders placed by LTR when ordered by container; (c) Assist in Building LTR’s Parts Inventory: Assist LTR in building up its own parts inventory after the arrival of the seven containers of spare parts; (d) Assign a Full -Time Project Manager: Appoint a dedicated XCMG project manager, from XCMG Canada, to provide full-time support to LTR; (e) Guarantee Responsive Communication: Maintain a “one -hour response system,” under which XCMG would respond to any LTR “questions or concerns”; (f) Provide Technician Training in Canada: Schedule and facilitate the travel of at least one LTR technician to Edmonton for in-person training, providing LTR with at least two non-stop flight options and three hotel options, and at XCMG’s cost including booking and paying for the flights and accommodation; (g) Ensure Technical Support and Troubleshooting: Supply all necessary parts requested by LTR and provide prompt, technically competent answers to service and troubleshooting questions; (h) Honor Agreed Delivery Schedules: Deliver all machines in accordance with the delivery dates specified in LTR’s purchase orders; (i) Permit Return of Defective Machines: Accept return of any machine that LTR was unable to repair within two (2) weeks, with transportation costs borne by XCMG, and either: (i) Replace the returned machine with a new, identical unit; or (ii) If a replacement was unavailable, issue a credit for the machine’s full original cost, applicable to all units with fewer than 250 hours or sold within six months; (j) Provide French Documentation: Translate all operating and service manuals for the models sold by LTR into French and deliver those translations no later than September 2024, to ensure compliance with Québec language laws; (k) Maintain Quality Control: Supply products and parts meeting Canadian and Québec safety standards and cooperate with LTR to correct any defects that compromise the safe or intended use of the machines (the “XCMG Equipment Terms”). 54. The Amending Agreement further includes the following terms regarding the Financing Agreement: (a) Provide Financing Relief: Grant financing relief to LTR by extending a twelve -month (12-month) interest-free floor-plan period for all machines that were delivered later than PDF page 12 — text-layer available - 12 - 93651809\28 the agreed purchase -order schedule, and by also providing a further three -month (3- month) interest-free period on all equipment already held in LTR’s yard as of the date of the Amending Agreement; (b) Apply a Financing Subsidy: Subsidize two percent (2%) of the retail financing interest rate charged to LTR by third-party financial institutions; (c) “The floorplan of the machines which LTR has put into its rental fleet should immediately get started”; (d) “LTR shall immediately sign the financing agreement upon signing this meeting memo”; (e) “LTR shall immediately sign the financing agreement and immediately get the floorplan started right after both XCMG Canada and LTR sign this meeting memo”; and, (f) “If LTR does not sign the financing agreement and start the floor plan after signing this meeting memo, all points agreed upon above in this meeting memo will be revoked and go ineffective” (“Financing Amendment Terms”) (the XCMG Equipment Terms and Financing Amendment Terms collectively the “Amending Agreement Terms”). 55. Prior to the Amending Agreement, LTR had purchased and financed a total of $2,548,350.00 in XCMG Equipment. Pursuant to the Financing Agreement, when units are sold and financed, a document is issued which details the price and financing terms, this document is referred to as a floorplan, and LTR must sign this floorplan to agree to the financing terms for the new floorplan order to proceed with the order (the “Floorplan”). The Floorplan includes details of the XCMG Equipment sold to LTR, the price, and details of the payment due to XCMG Financial under the terms of that Floorplan. LTR was required to sign a Floorplan financing agreement for each new Floorplan, and each Floorplan became a schedule to the Financing Agreement. 56. The implementation of the Amending Agreement was expressly contingent upon the Financing Amendment Terms and required LTR to enter into new Floorplan financing agreemen ts with XCMG Financial in respect of XCMG Equipment. Following the execution of the Amending Agreement on July 17, 2024, and pursuant to the terms of the Amending Agreement, LTR agreed to finance a significant increase in LTR’s floorplan. LTR signed the following Loan Schedules to the Financing Agreement to purchase significantly more XCMG Equipment: (a) Floor Plan 1: August 7-12, 2024: $509,670.00 (b) Floor Plan 2: July 19, 2024 - $5,113,827.18; (c) Floor Plan 3: September 11, 2024 - $2,349,228.00 (d) Floor Plan 4: November 20, 2024 - $333,480.00 (The “Floorplan Loan Schedules”). 57. Based on the terms set out in the Amending Agreement and the representations made by the XCMG Group, Qiu on behalf of XCMG North America and XCMG Financial, and Li and Jiang on PDF page 13 — text-layer available - 13 - 93651809\28 behalf of XCMG Canada, LTR entered into the Floorplan Loan Schedules with XCMG Financial to purchase significantly more XCMG Equipment inventory. 58. LTR purchased and financed an additional $8,306,205.18 of XCMG Equipment following the Amending Agreement. Between April 1, 2024, and November 20, 2024, LTR purchased and financed a total of $10,854,555.18 of XCMG Equipment. F. CONTINUED BREACHES AFTER AMENDING AGREEMENT (JULY TO DECEMBER 2024) 59. Following execution of the Amending Agreement on July 17, 2024, the Equipment Defects and Operational Breaches persisted and intensified. 60. By August 2024, XCMG Canada had failed to perform key obligations, including the following Operational Breaches: (a) failing to deliver the seven containers of spare parts by August 2024 as required by the Amending Agreement, depriving LTR of the ability to service customers and fulfil warranty obligations; (b) failing to deliver equipment in accordance with the delivery schedules specified in LTR’s purchase orders. Certain units were shipped months earlier than requested, forcing LTR to pay premature floorplan financing charges, while others arrived well after the agreed dates, depriving LTR of the ability to sell or rent the equipment to its customers during peak seasonal demand; (c) failing to honour its commitment to maintain a “one -hour response system” for dealer communications. LTR’s repeated technical and commercial inquiries routinely went unanswered for days or weeks, despite urgent operational issues involving multiple customers. This chronic non -responsiveness obstructed LTR’s performance, delayed service to end -users, and demonstrate d a lack of good -faith cooperation as required under the Dealer & Distributor Agreements; and (d) failing to provide the technical training and quality -assurance services required by the Dealer & Distributor Agreements . XCMG Canada’s technicians lacked sufficient knowledge of the equipment, and LTR was forced to obtain training from a third -party dealer at its own expense. This absence of qualified instruction contributed directly to recurring equipment malfunctions. 61. The XCMG Equipment inventory continued to exhibit Equipment Defects , including but not limited to: (a) drive-train instability, electrical and control system faults, and excessive vibration during operation; (b) on August 16, 2024, a telehandler (model XTF1256K) exhibit ed a persistent steering defect when operating under load, notwithstanding a prior repair attempt by XCMG; (c) wheel loaders (models XC968U and XC938U) exhibited defects including: (i) hydraulic deficiencies causing a dead zone in the joystick such that small inputs produced no response and larger inputs produced rough/uncontrolled movement; PDF page 14 — text-layer available - 14 - 93651809\28 (ii) deformation of the front tyres during operation; (iii) a cracked boom pin bushing on the left side of an XC968U boom, which appeared to have been poorly welded during manufacture and was discovered by a customer during demonstration; (iv) a non-adjustable steering column that could not accommodate operators of differing heights; (v) malfunction of the Lincoln auto -lubrication system on both the XC968U and XC938U models, causing audible and disconcerting cracking sound during operation; and, (vi) overheating of the planetary gears on the XC968U during travel resulting in unsafe temperatures (the foregoing are further “Equipment Defects”). 62. Pursuant to the Amending Agreement, XCMG Canada and XCMG Financial agreed to provide a 12-month interest-free floorplan financing arrangement for all units that could not meet the delivery schedule (the " Late Arrival Machines"), and that LTR would receive a credit for any financing charges incurred on those units during the interest -free period. XCMG Canada and XCMG Financial failed to honour this commitment, and failed to provide LTR with a credit for the Late Arrival Machines, which included the following units of equipment: No. Model Description Serial Number Financial Cost 1 XE18U Mini Excavator XUGC018UJPKA05440 $31,384.50 2 XE18U Mini Excavator XUGC018UVPKA05439 $31,185.00 3 XE18U Mini Excavator XUGC018UCPKA05438 $31,185.00 4 XE18U Mini Excavator XUGC018UKPKA05436 $31,531.50 5 XE35U Excavator XUGH035UEPKA05470 $50,484.00 6 XE35U Excavator XUGH035UPPKA05473 $50,484.00 7 XE35U Excavator XUGH035UTPKA05472 $50,484.00 8 XE35U Excavator XUGH035UTPKA05469 $50,484.00 9 XE35U Excavator XUGH035UCPKA05471 $50,484.00 10 XE55U Excavator XUGB055UHPKA01788 $74,361.00 11 XE55U Excavator XUGB055UHPKA01791 $74,361.00 12 XE80U Excavator XUGB0805ARKA00559 $120,141.00 13 XE80U Excavator XUGB0805VRKA00558 $120,141.00 14 XE155UCR Excavator XUGA1555CPKA00409 $169,470.00 15 XC7-SV12 Scissor Lift XUG0SV12VPCB15110 $58,695.00 16 XC7-SV12 Scissor Lift XUG0SV12APCB15108 $58,695.00 17 XC7-TV12 Boom Lift XUG0TV12ERCB05120 $74,235.00 18 XC7-TV12 Boom Lift XUG0TV12TRCB05119 $74,235.00 19 XC948U Wheel Loader XUG00948CRCB09953 $166,740.00 20 XC948U Wheel Loader XUG00948LRCB03820 $172,200.00 PDF page 15 — text-layer available - 15 - 93651809\28 21 XC948U Wheel Loader XUG00948ARCB03816 $166,740.00 22 XC948U Wheel Loader XUG00948HRCB03818 $166,740.00 23 XC948U Wheel Loader XUG00948LRCB03817 $166,740.00 24 XC948U Wheel Loader XUG00948CRCB09953 $166,740.00 25 XC958U Wheel Loader XUG00958CRCB03643 $198,135.00 26 XC968U-EV Electric Wheel Loader XUG00968PRCB09475 $313,194.00 Inducement to Proceed with Additional Financing 63. In the Fall of 2024, LTR continued to report Equipment Defects, including hydraulic, braking, and component failures affecting telehandlers, wheel loaders, and other equipment. 64. On September 3, 2024, Li of XCMG Canada advised LTR that the Amending Agreement remained in effect and that XCMG Canada would comply with its terms. Li also advised that the XCMG Group, presumably XCMG Financial, would provide additional financing relief, including extending the interest-free period for certain units for 30 days. 65. On September 16, 2024, LTR emailed Qiu, Jiang, and Li to raise additional issues with XCMG Canada’s technical support provided pursuant to the Amending Agreement , and advised that LTR would not sign a pending Floorplan Loan Schedule. 66. On October 4, 2024, XCMG Financial offered LTR a credit in connection with equipment returns in exchange for LTR proceeding with additional financing, including a credit of $200,000 for returned equipment. LTR proceeded with additional financing in reliance on XCMG Financial’s and XCMG Canada’s representations that the defects and operational issues would be addressed. 67. Notwithstanding the foregoing, LTR continued to experience Equipment Defects affecting electrical systems, control systems, and core equipment functions, and XCMG Canada failed to provide technical resolutions or repairs to resolve Equipment Defects. 68. By November 2024, XCMG Canada had not provided a functional parts ordering system. When access was provided, the system lacked accurate pricing and lead -time information, displayed duplicate serial numbers, and could not be used to order parts. In addition, portions of the system and parts descriptions appeared in Chinese rather than English or French. As a result, LTR remained unable to obtain parts required to repair or service the XCMG Equipment. Escalation of Equipment Defects and Customer Impact 69. In December 2024, LTR reported further Equipment Defects affecting steering, hydraulic performance, lifting capability, and operational control in multiple units, including equipment deployed for municipal operations. LTR removed equipment from service and received customer complaints and returns due to Equipment Defects, non-performance, and non-conformity. During this period: (a) Between December 3–10, 2024, LTR withdrew four (4) XC948U wheel loaders from the City of Trois-Rivières snow-removal contract after the City imposed a driving ban on the machines due to a critical steering malfunction that caused two near-accidents, and the City issued a formal letter on or about December 10, 2024, threatening to terminate the PDF page 16 — text-layer available - 16 - 93651809\28 contract and impose a penalty of $250,000.00 if the machines were not operational by the end of the week; (b) On December 19, 2024, the Ville de Chambly issued a formal notice to LTR stating that the XCMG wheel loader delivered for Lot No. 2 of the municipal snow -removal contract remained non -conforming with the tender specifications, and gave LTR a 24 -hour ultimatum to resolve the situation, failing which the City would rent substitute equipment at LTR's expense; (c) Six (6) defective units were returned to XCMG Canada's Hamilton facility. XCMG Financial provided credit for the returned units; however, it failed or refused to reimburse LTR for the cost of transporting the defective equipment; and (d) XCMG Canada initially authorised the return of two Electric Wheel Loaders (Serial Nos. XUG00968PRCB09475 and XUG00968KRCB09476) but subsequently withdrew that authorisation without explanation. 70. At all material times, since February 2024 and throughout the commercial relationship, LTR reported the Equipment Defects within the required time period and in accordance with the Dealer & Distributor Agreements, and the Amending Agreement. Continued Breaches and Breakdown of the Relationship (2025) 71. Beginning in February 2025, LTR delivered a series of written demands and notices of breach to the XCMG Group seeking remedies including the acceptance of returned equipment, credits for defective units, reimbursement of costs incurred as a result of the Equipment Defects and Operational Breaches, and relief from financing obligations. In particular: (a) On or about February 3, 2025, LTR delivered a written demand to XCMG Canada, and XCMG Financial, including Jiang, Li, and Qiu, demanding that XCMG Canada and XCMG Financial do the following: (i) give LTR the full credits for equipment returned in December 2024; (ii) give LTR the full credits for equipment to be returned in February 2025; (iii) repossess all used equipment acquired by LTR in accordance with a deduction to be negotiated between the parties; (iv) repossess the new equipment acquired by LTR without any deductions; (v) cancel, without any costs, fees, or penalties, any equipment ordered by LTR; (vi) provide maintenance services and parts for LTR customers who have acquired XCMG equipment during the term of the Dealer & Distributor Agreements; (vii) provide a full and complete liberation [release] of all financial obligations under the Dealer & Distributor Agreements and the Financing Agreement; (viii) defend and indemnify LTR regarding any claims advanced by LTR’s customers regarding the XCMG equipment sold to those customers; and PDF page 17 — text-layer available - 17 - 93651809\28 (ix) void all restrictive clauses in the Dealer & Distributor Agreements, including the exclusivity and non-competition provisions. (b) On or about March 7, 2025, LTR delivered a detailed Notice of Breach to the XCMG Group’s Canadian counsel identifying specific contractual violations of the Dealer & Distributor Agreements and the Amending Agreement committed by XCMG Canada, and XCMG Financial. Those breaches remain unresolved and are detailed in this claim. (c) On or about August 14, 2025, LTR issued a letter to the XCMG Group’s Canadian counsel regarding outstanding credits owed to LTR for equipment returned to XCMG Canada in December 2024, as well as credits relating to transportation costs of the returned equipment. 72. The XCMG Group refused to act in accordance with its obligations, denied that the XCMG Equipment was defective, and refused to accept further returns of faulty XCMG Equipment. DISCOVERY OF YEAR-OF-MANUFACTURE DISCREPANCY Serial Number Coding and Equipment Identification 73. Each unit of XCMG Equipment bears a serial plate affixed by the manufacturer listing the serial number unique to that unit, the stated year of manufacture, and other specifications. Each serial number contains an encoded sequence generated through the XCMG Group’s internal processes, which includes the model description, production sequence, year of manufacture, place of origin, and compliance status of the unit. 74. The invoices issued by XCMG Canada to LTR for the XCMG Equipment stated a year of manufacture for each unit. The year of manufacture stated on the invoices was consistent with the year of manufacture stated on the serial plates affixed to each unit. 75. LTR purchased, financed, and marketed the equipment to its customers on the basis of the year of manufacture stated on the serial plates and invoices provided by XCMG Canada. The year of manufacture is material to the market value, resale price, and financ ing terms of each unit of equipment. 76. In March 2026, LTR became aware of information indicating that the year of manufacture encoded within the serial numbers of certain XCMG Equipment units did not correspond to the year of manufacture stated on the serial plates and invoices provided by XCMG Canada (the “Manufacture Year Discrepancy”). 77. LTR obtained information enabling it to decode the year of manufacture from the serial numbers assigned by XCMG to each unit. Upon decoding the serial numbers, LTR determined that the year of manufacture encoded in the serial number of numerous units was one year (and in one instance, two years) earlier than the year of manufacture stated on the serial plates and invoices. 78. LTR commenced an audit of its inventory to determine the full extent of the Manufacture Year Discrepancy. As of the date of this Statement of Claim, LTR has identified 4 1 units of XCMG Equipment in its inventory that are affected by the Manufacture Year Discrepancy. 79. LTR’s audit requires it to also audit XCMG Equipment that has been sold to customers to determine whether units sold to third parties are also affected by the Manufacture Year Discrepancy. PDF page 18 — text-layer available - 18 - 93651809\28 80. In each case, the serial plate and invoice stated a more recent year of manufacture than the year of manufacture. The units identified to date are as follows: Serial Number Year of Manufacture According to Serial Number Year of Manufacture as Represented in Invoices and on Serial Plates XUG1256KPPAD00275 2023 2024 XUG1256KKPAD00276 2023 2024 XUG1256KJPAD00277 2023 2024 XUG1256KVPAD00296 2023 2024 XUG1256KVPAD00315 2023 2024 XUG1256KHPAD00318 2023 2024 XUG1256KEPAD00319 2023 2024 XUG1256KVPAD00329 2023 2024 XUG1256KAPAD00333 2023 2024 XUG1256KCPAD00337 2023 2024 XUG1256KTPAD00338 2023 2024 XUG1256KJPAD00344 2023 2024 XUG1256KCPAD00345 2023 2024 XUG1256KVPAD00332 2023 2024 XUG1256KEPAD00336 2023 2024 XUG1256KPPAD00342 2023 2024 XUG1256KAPAD00347 2023 2024 XUG1256KHPAD00349 2023 2024 XUGH035UCPKA05471 2023 2024 XUG0102AHPRL39472 2023 2024 XUG0102ACPRL39474 2023 2024 XUGA2505CNKA00010 2022 2023 XUG0244SHPRL22536 2023 2024 XUGB0805HPKA00481 2023 2024 XUGC018UJPKA05437 2023 2024 XUG0TV12TPCB18983 2023 2024 XUG0SV12KPCB17483 2023 2024 XUGB055UEPKA01789 2023 2024 XUGB055ULPKA01790 2023 2024 XUGC018UJPKA05440 2023 2024 XUGC018UVPKA05439 2023 2024 XUGC018UCPKA05438 2023 2024 XUGC018UKPKA05436 2023 2024 XUGB055UHPKA01788 2023 2024 XUGB055UHPKA01791 2023 2024 XUGH035UEPKA05470 2023 2024 XUGH035UPPKA05473 2023 2024 PDF page 19 — text-layer available - 19 - 93651809\28 XUGH035UTPKA05472 2023 2024 XUG0SV12VPCB15110 2023 2024 XUG0SV12APCB15108 2023 2024 XUGA1555CPKA00409 2023 2024 81. The 41 units identified to date span multiple equipment categories, including telehandlers (XTF1256K and XTF1046K), excavators (XE18U, XE35U, XE55U, XE80U, XE155UCR, and XE250U), boom lifts (XC7 -TV12), scissor lifts (XC7 -SV12), and a telehandler model XTF2506K. LTR’s audit is ongoing. 82. The serial plates, invoices, and associated documentation containing the year -of-manufacture information were generated and provided by XCMG Canada. LTR had no means of independently verifying the year of manufacture of any unit other than by reference to the serial plates and invoices provided by XCMG Canada, and did not become aware of the Manufacture Year Discrepancy until it obtained information enabling it to decode the serial numbers. 83. LTR has also been made aware of similar serial number Manufacture Year Discrepanc ies, experienced by other Canadian XCMG Equipment dealers in Ontario and British Columbia. 84. The Manufacture Year Discrepancy resulted in financial loss, some particulars of which include: (a) LTR paid prices for the affected units calculated on the basis that the units were of the represented model year; the actual value of the units, based on their true year of manufacture, is lower than the price paid; (b) LTR unknowingly and in good faith marketed and, in certain instances, sold or leased the affected units to customers on the basis of the represented year of manufacture, exposing LTR to potential claims or loss of confidence from those customers; (c) the Floorplan Loan Schedules, and the floorplan financing obligations incurred by LTR in respect of the affected units were calculated on the basis of the represented year of manufacture and the corresponding equipment value, and are therefore in excess of what would have been appropriate for equipment of the actual year of manufacture; and (d) LTR's inventory valuation, which is used for business planning, insurance, and financial reporting purposes, was overstated to the extent that it was based on the represented rather than the actual year of manufacture of the affected units. G. CAUSES OF ACTION Breach of Contract Breach of the Dealer & Distributor Agreements 85. XCMG Canada breached the Dealer & Distributor Agreements and Amending Agreement by, among other things: (a) supplying defective and unmerchantable equipment , in breach of Section 16 of the Dealership Agreement, and the Distributor Agreement; PDF page 20 — text-layer available - 20 - 93651809\28 (b) failing to provide adequate spare parts, training, and technical support necessary to maintain adequate after -sales support, in breach of Section 16 of the Dealership Agreement; (c) failing to provide LTR with technical information, documents, leaflets, and catalogues necessary for marketing the XCMG Group’s products in both English and French, in breach of Section 16 of the Dealership Agreement, and Section 8 of the Distributor Agreement; (d) failing to provide working support systems and documentation, a functional online parts- ordering system, and a functional warranty management system, in breach of Section 16 of the Dealership Agreement, and Section 8 of the Distributor Agreement; (e) failing to provide a functional warranty programme aligned with LTR's floorplan financing obligations, including by setting warranty start periods that expired while equipment remained unsold in inventory; (f) misrepresenting the year of manufacture XCMG Equipment; and (g) erroneously, and in bad faith, providing notice to LTR that it was revoking LTR ’s Authorized Territory pursuant to section 9 of the Dealership Agreement on January 6, 2026, without justification. Breach of the Amending Agreement 86. XCMG Canad a and XCMG Financial breached the ir respective obligations pursuant to Amending Agreement by, among other things: (a) failing to honour return, replacement, and credit obligations for defective machines, and more specifically, failing to accept the return of equipment that could not be fixed by XCMG Canada within 2 weeks of return, in breach of page 4 of the Amending Agreement; (b) failing to deliver equipment pursuant to the timelines and terms of the Purchasing Orders submitted by LTR thereby resulting in increased costs to LTR, in breach of page 1 of the Amending Agreement; (c) failing to fulfil shipments of spare parts to LTR and failing to provide fulsome parts lists , pricing or ordering systems, thereby depriving LTR of its ability to place orders for spare parts, in breach of page 1 of the Amending Agreement; (d) failing to maintain sufficient stock of spare parts, failing to provide LTR with the ability to purchase spare parts at a 25% discount, and failing to assist LTR to build its XCMG part inventory, in breach of page 1 of the Amending Agreement; (e) failing to provide a 12 -month interest free floor plan for the late-arriving equipment, in breach of page 3 of the Amending Agreement; (f) failing to provide a 3 -month interest free period for all machines LTR maintained in its possession up until the time of the Amending Agreement, and charging interest to LTR for these machines for the months of August, September, and October, in breach of page 3 of the Amending Agreement; PDF page 21 — text-layer available - 21 - 93651809\28 (g) failing to provide a 2% subsidy off the interest rates applicable to the retail financing costs provided by third -party financial institutions as applied to LTR equipment, in br each of page 3 of the Amending Agreement; (h) failing to schedule and facilitate training of LTR’s technicians at XCMG Canada’s expense, in breach of page 2 of the Amending Agreement; (i) failing to provide LTR with a full-time project manager from XCMG Canada to provide assistance and support to LTR specifically, in breach of page 1 of the Amending Agreement; (j) failing to provide LTR with French-translated manuals for all models in LTR’s possession by September of 2024, in breach of page 3 of the Amending Agreement; (k) failing to respond within the promised one-hour response time, and failing to respond to many of LTR’s inquiries and concerns for a period of days or weeks, in breach of page 1 of the Amending Agreement; and (l) failing to provide financing relief and subsidies , in breach of page 3 of the Amending Agreement. Breach of the Duty of Honest Performance 87. XCMG Canada and XCMG Financial materially breached the Dealer & Distributor Agreements, and the Amending Agreement and deprived LTR of substantially the whole benefit of those contracts. 88. Further and in the alternative, XCMG Canada and XCMG Financial breached the duty of honest performance of contractual obligations by: (a) making representations in the Amending Agreement and in the course of performance that XCMG Canada knew, or ought to have known, it could not or would not fulfil, including commitments to deliver spare parts, provide training, assign a dedicated project manager, respond within one hour, and accept returns of defective equipment; (b) misrepresenting the year of manufacture of approximately 41 units of XCMG Equipment by affixing serial plates and issuing invoices that stated a more recent year of manufacture than the year of manufacture encoded in the serial numbers generated by the XCMG Group's own internal processes; and (c) making representations to induce LTR to sign the Floorplan Loan Schedules and thereafter failing to honour the terms upon which that execution was obtained. Breach of Implied Warranties of Quality and Fitness 89. XCMG Canada , as the distributor and manufacturer, and X CMG North America , as the manufacturer, were required to supply the XCMG Equipment pursuant to the following: (a) the implied condition of merchantable quality under section 16(2) of the Sale of Goods Act, RSA 2000, c S-2; PDF page 22 — text-layer available - 22 - 93651809\28 (b) the implied condition of fitness for purpose under section 16(1) of the Sale of Goods Act, RSA 2000, c S-2. LTR made known to XCMG Canada the particular purposes for which the equipment was required, including for sale, rental, and deployment in heavy -duty industrial and municipal applications in the Québec market; and (c) the implied warranty that goods sold in the course of business correspond to their description and are of a quality and in a state and condition to serve the purposes for which goods of that kind are ordinarily purchased. 90. XCMG Canada , as the distributor and manufacturer , and X CMG North America , as the manufacturer, supplied XCMG Equipment that was not of merchantable quality and was unfit for its ordinary and intended purpose. 91. The Equipment Defects including the steering failures, hydraulic power loss, electrical faults, joystick delay, drive shaft failures, and structural defects, demonstrate that the machines were unfit for their represented purpose, unsafe for normal operation, and unsuited to the conditions for which they were purchased. Negligence for Dangerous and Defective Equipment 92. XCMG North America as the manufacture r, and XCMG Canada as the distributor and manufacturer of the XCMG Equipment in Canada, owed LTR and LTR Location a duty of care with respect to the quality, safety, distribution, and supply of the XCMG Equipment, the particulars of which include without limitation: (a) the duty to design and manufacture the XCMG Equipment in accordance with all applicable laws in Canada, codes and industry standards, such that the XCMG Equipment was free from defects and deficiencies, of merchantable quality, fit or suitable for their intended or ordinary purpose; (b) the duty to ensure the design and manufacture would not pose a risk or danger to persons or property; and, (c) the duty to warn LTR, LTR Location, and its customers of any potential safety risks or dangers associated with the design, manufacture, or supply of the XCMG Equipment. 93. By designing, manufacturing, supplying and distributing the XCMG Equipment, XCMG Canada and XCMG North America expressly or impliedly represented and warranted to LTR and LTR Location, and their customers, that the XCMG Equipment was safe and fit for their intended purpose and would not cause injury. 94. XCMG North America and XCMG Canada breached its duty of care to LTR, LTR Location, and their customers creating a foreseeable and substantial risk of danger to the public and other property arising out of the Equipment Defects, including the steering failures, hydraulic power loss, electrical faults, joystick delay, drive shaft failures, and structural defects. Some particulars of which include, without limitation: (a) failing to design and manufacture the XCMG Equipment in accordance with applicable laws, safety standards, industry standards , and best practices of a reasonable and knowledgeable manufacturer; PDF page 23 — text-layer available - 23 - 93651809\28 (b) failing to design and manufacture the XCMG Equipment to ensure it was fit for its intended purposes and of merchantable quality; (c) failing to take any, or any adequate steps to resolve the Equipment Defects, such that they posed a risk of injury to person and property; (d) failing to incorporate proper or adequate materials in the design and manufacture of the XCMG Equipment; (e) failing to design and manufacture the XCMG Equipment to operate in Quebec’s climate, and to withstand Quebec’s cold climate conditions; (f) failing to properly or adequately test the XCMG Equipment; (g) failing to employ, supervise, and adequately train its design and manufacturing personnel in the proper and safe design of the XCMG Equipment; (a) failing to employ, supervise, and adequately train its technicians and mechanics in the proper and safe repair of the XCMG Equipment; and, (h) failing to warn of the dangers associated with operating the XCMG Equipment. 95. Due to XMCG Canada and XCMG North America’s breaches of their duties, LTR and LTR Location has suffered and will continue to suffer damages, including without limitation an inability to use the XCMG Equipment entirely, or limited use to avoid injury, and an inability to sell or rent the XCMG Equipment to customers. Negligent or Fraudulent Misrepresentation 96. The Defendants, on behalf of the XCMG Group, made representations to LTR and LTR Location, expressly or by necessary implication, in connection with the supply, distribution, support, and financing of XCMG Equipment (the " Representations"). The Representations were communicated through written agreements, operational communications, and direct interactions between LTR, LTR Location, and the Defendants. 97. The Representations included that: (a) the XCMG Equipment supplied complied with applicable Canadian safety and regulatory standards; (b) the XCMG Equipment was of merchantable quality and fit for its ordinary and intended purpose in the Canadian and Québec market; (c) the XCMG Equipment could be sold, leased, and supported in the ordinary course; (d) the XCMG Equipment was properly identified and accurately described, including with respect to its year of manufacture and other manufacturing particulars; (e) the XCMG Equipment was suitable collateral for financing and floorplan arrangements; (f) the supply of XCMG E quipment would be supported by adequate parts availability, technical support, training, and warranty service; PDF page 24 — text-layer available - 24 - 93651809\28 (g) delivery schedules and inventory support would be reliable and commercially reasonable; (h) defective equipment would be addressed through repair, replacement, return, or credit in accordance with the parties' arrangements; (i) the Defendants would comply with and perform their obligations under the Amending Agreement; and (j) the XCMG Equipment's value was accurate and any financing arrangements in respect of the equipment were commercially viable and supported by the underlying equipment's year of manufacture, specifications, and quality. 98. The Representations were false, misleading, or made without reasonable grounds . The Defendants knew or ought to have known that the Representations were false, or were reckless as to their truth, including because: (a) they controlled or had superior knowledge of the supply chain, technical specifications, manufacturing processes, certification history, and identifying information of the XCMG Equipment; (b) they were repeatedly notified by LTR of defects, support failures, and documentation deficiencies from as early as February 2024 and on an ongoing basis thereafter; (c) the Manufacture Year Discrepancy was systemic, affecting approximately 41 units across multiple equipment categories, and could not have occurred without the knowledge or involvement of the XCMG Group’s manufacturing and administrative processes; and (d) they nonetheless continued to supply, invoice, finance, and insist upon payment for the affected equipment. 99. The Defendants made the Representations knowing that LTR and LTR Location would rely upon them, or in circumstances where they ought reasonably to have foreseen such reliance, in deciding whether to purchase, distribute, rent, service, and finance XCMG Equipment. 100. LTR and LTR Location did in fact rely on the Representations, and in such reliance were induced to: (a) purchase XCMG Equipment; (b) enter into the Financing Agreement and the Floorplan Loan Schedules with XCMG Financial; (c) purchase and finance significant quantities of XCMG Equipment and incur substantial indebtedness to XCMG Financial; and (d) continue investing in and operating its XCMG related business. 101. LTR would not have entered into the Dealer & Distributor Agreements , the Amending Agreement, the Financing Agreement, or the Floorplan Loan Schedules, would not have PDF page 25 — text-layer available - 25 - 93651809\28 purchased the XCMG Equipment, and would not have incurred the indebtedness and operational commitments described herein, but for the Defendants' Representations. 102. LTR Location would not have agreed to be a co -borrower to the Financing Agreement, or the Floorplan Loan Schedules, would not permitted its subsidiary to purchase the XCMG Equipment, and would not have incurred the indebtedness and operational commitments described herein, but for the Defendants' Representations. 103. LTR and LTR Location suffered damages as a direct and foreseeable result of their reliance on the Defendants' Representations, as particularised in the Damages section of this Statement of Claim. 104. Further, or in the alternative to the claim in negligent misrepresentation, the Defendants made the Representations fraudulently, with knowledge of their falsity, or recklessly, without regard to whether they were true or false, with the intention that LTR and LTR Location would act upon them. XCMG Financial is liable for the acts of its Agent, XCMG Canada 105. XCMG Canada acted as agent for XCMG Financial in its dealings with LTR, and had actual or ostensible authority to bind XCMG Financial. In particular: (a) XCMG Canada negotiated, executed, and administered the Amending Agreement, which imposed obligations on both XCMG Canada and XCMG Financial, including the Amending Financing Terms; (b) XCMG Canada imposed obligations on LTR in favour of XCMG Financial through the Amending Agreement, including the requirement that LTR sign the Floorplan Loan Schedules as a condition of the Amending Agreement's continued effectiveness; (c) Qiu, acting on behalf of XCMG Canada and/or XCMG Financial, made representations to LTR regarding credits, returns, and financing relief, to induce LTR to sign the pending Floorplan Loan Schedules; and (d) XCMG Financial received the benefit of the Floorplan Loan Schedules executed by LTR in reliance on the representations made by Qui, Jiang, and XCMG Canada and its representatives. 106. By reason of the foregoing, XCMG Financial is liable for the acts and representations of its agent, XCMG Canada, including the breaches of the Amending Agreement and the Representations described herein. XCMG North America is liable for the acts of its Agent, XCMG Canada 107. XCMG Canada acted as agent for XCMG North America as its distributor for the XCMG Equipment manufactured by XCMG North America , and in its dealing with LTR regarding the Equipment Defects, some particulars of which include: (a) XCMG Canada as distributor failed or refused to return the defective XCMG Equipment to XCMG North America as the manufacturer in breach of its duty as a distributor and for the benefit of XCMG North America; and, PDF page 26 — text-layer available - 26 - 93651809\28 (b) XCMG Canada on behalf of XCMG North America, the manufacturer, denied in bad faith that the Equipment Defects existed, or alternatively, that the Equipment Defects were due to a design or manufacturing issue; and, (c) XCMG Canada on behalf of XCMG North America, the manufacturer, alleged in bad faith that the Equipment Defects were caused or contributed to by LTR. Rescission of the Financing Agreement 108. The Defendants' made negligent and/or fraudulent misrepresentations described herein as the Representations and intended LTR to act upon those Representations. LTR was induced to enter into the Financing Agreement and the Floorplan Loan Schedules with XCMG Financial , and LTR Location was induced to permit its subsidiary to enter into these agreements for which it was a co-borrower. 109. Alternatively, LTR, in good faith, entered into the Financing Agreement, and Floorplan Loan Schedues, to finance the XCMG Equipment that’s value was based upon it being operational, fit for purpose, safe, and described accurately including with regard to the year of manufacture. Due to the Representations, including the Manufacturer Year Discrepancy , there is a failure of consideration and LTR is entitled to rescission. 110. The Representations were material to the decision for LTR to enter into the Financing Agreement and Floorplan Loan Schedules. 111. The Financing Agreement and the Floorplan Loan Schedules are voidable and should be set aside, or in the alternative LTR and LTR Location is entitled to damages in lieu of rescission, on the grounds that: (a) LTR and LTR Location’s consent to the financing obligations was vitiated by the Defendants' fraudulent or negligent misrepresentations regarding the quality, condition, year of manufacture, and supportability of the financed equipment; (b) the consideration for LTR and LTR Location’s financing obligations was the Defendants' supply of equipment that conformed to the Representations, which consideration has failed or is substantially deficient; and (c) the Defendants induced LTR and LTR Location to enter into and maintain the financing obligations through ongoing representations that were not honored. Rescission of the Dealer & Distributor Agreements 112. The Defendants made negligent and/or fraudulent misrepresentations described herein as the Representations and intended LTR to act upon those Representations. LTR was induced to enter into the Dealer & Distributor Agreements with XCMG Canada, and LTR Location was induced to permit its subsidiary to enter into these agreements. 113. Alternatively, LTR, in good faith, entered into Dealer & Distributor Agreements to purchase the XCMG Equipment that’s value was based upon it being operational, fit for purpose, safe, and described accurately including with regard to the year of manufacture. Due to the Representations, including the Manufacturer Year Discrepancy, the re is a failure of consideration and LTR is entitled to rescission. PDF page 27 — text-layer available - 27 - 93651809\28 114. The Representations were material to the decision for LTR to enter into the Dealer & Distributor Agreements. 115. The Dealer & Distributor Agreements are voidable and should be set aside, or in the alternative LTR is entitled to damages in lieu of rescission, on the grounds that: (a) LTR’s consent to the Dealer & Distributor Agreements was vitiated by the Defendants' fraudulent or negligent misrepresentations regarding the quality, condition, and year of manufacture of the XCMG Equipment; (b) the consideration for LTR’s obligations pursuant to the Dealer & Distributor Agreements was the Defendants' supply of equipment that conformed to the Representations, which consideration has failed or is substantially deficient; and (c) the Defendants induced LTR to enter into the Dealer & Distributor Agreements and continue purchasing XCMG Equipment through ongoing representations that were not honored. Unjust Enrichment 116. XCMG Canada and XCMG North America received payment for LTR’s purchases of XCMG Equipment and received commercial benefits from LTR’s performance under the Dealer & Distributor Agreements, and the Amending Agreement. LTR was induced by the Defendants ’ Representations to enter into the Dealer & Distributor Agreements, Financing Agreement, Amending Agreement, and Floorplan Loan Schedules. LTR Location was induced to permit its subsidiary to enter into these agreements for which it was a co-borrower. 117. XCMG Financial received payments, security, priority rights, and commercial benefits from financing arrangements induced by the Defendants’ misrepresentations and by XCMG Canada’s breaches of the Dealer & Distributor Agreements, and Amending Agreement. 118. LTR and LTR Location suffered a corresponding deprivation through principal, interest, carrying costs, enforcement exposure, and the loss of value of defective or unmarketable financed inventory. 119. There is no juristic reason for XCMG Canada, XCMG North America, and XCMG Financial’s enrichment, including because the benefits retained were obtained in connection with transactions tainted by misrepresentation, failure of consideration, breach of contract, and coordinated misconduct by the XCMG Group enterprise. Indemnification 120. In the alternative, LTR seeks indemnification from XCMG Canada pursuant to section 14 of the Dealership Agreement, which provides that XCMG Canada and LTR agree to indemnify and hold each other harmless from and against any “Loss”, as defined therein, arising from, among other things: (a) any misrepresentation, inaccuracy, or erroneous statement made in the Dealership Agreements; (b) any negligent or wilful act or omission by a party or its representatives; PDF page 28 — text-layer available - 28 - 93651809\28 (c) any failure to perform obligations under the Dealership Agreement; (d) any taxes, interest, or penalties attributable to a party; (e) any infringement of third-party intellectual property; (f) any breach of applicable law; and (g) any product or service warranty made other than the usual warranty. 121. LTR has suffered losses that constitute “Loss” within the meaning of Section 14 and arise from conduct falling within one or more of the foregoing categories, including misrepresentation, breach of contract, and failure to perform. 122. By reason of the foregoing, XCMG Canada is liable to indemnify LTR for its Loss, including any amounts claimed or asserted against LTR by XCMG Financial, XCMG North America, or any other affiliate of the XCMG Group arising from or in connection with the matters described herein. 123. LTR Location has suffered losses that constitute “Loss” within the meaning of Section 14 associated with defective equipment purchased for rental purposes, and is a “Party” named in the Dealership Agreement, or alternatively , is “any person” within the meaning of a Section 3 Breach of the Dealership Agreement who suffered damages as a consequence of XCMG Canada’s breaches of the Dealership Agreement. 124. By reason of the foregoing, XCMG Canada is liable to LTR Location for its Loss, including any amounts claimed or asserted against LTR Location as co-borrower by XCMG Financial, XCMG North America, or any other affiliate of the XCMG Group arising from or in connection with the matters described herein. H. DAMAGES 125. As a direct and foreseeable result of the Defendants’ conduct, the Plaintiffs suffered damages including: (a) the purchase price, carrying costs, and loss in value of defective equipment currently estimated at $10,854,555.18; (b) financing costs associated with the estimated principal of $10,854,555.18, including interest, charges, and related indebtedness currently estimated at $234,438.82; (c) transportation, return, storage, and handling costs currently estimated at $60,000.00; (d) costs of substitute equipment and modifications required to meet customer commitments, currently estimated at $105,202.21; (e) cost of retrofits, repairs, and attempted remediation currently estimated at $100,000.00; (f) internal overhead, management time, and operational losses arising from support failures and downtime currently estimated at $100,000.00; (g) lost profits, lost rentals, lost sales, and lost business opportunities currently estimated at $1,000,000.00; PDF page 29 — text-layer available - 29 - 93651809\28 (h) loss of goodwill and reputational harm with public and private customers currently estimated at $5,000,000.00; and, (i) consequential damages. 126. The Plaintiffs’ damages are estimated and are exclusive of continuing financing losses, interest, additional consequential losses, and costs, with further particulars to be provided. 127. The Plaintiffs’ losses are ongoing and cumulative and continue to accrue by reason of continuing financing obligations, impaired inventory value, unresolved return and credit issues, and the continuing consequences of the Defendants’ conduct. I. REMEDY SOUGHT: 128. The Plaintiff seeks the following relief from this Honorable Court as against the Defendants: (a) damages for breach of contract, breach of warranty, negligent design and manufacture, fraudulent and/or negligent misrepresentation, and/or unjust enrichment currently estimated at $17,454,196.21; (b) a declaration that the Financing Agreement, including the Floorplan Loan Schedules, are void or voidable, and are rescinded, and that LTR and LTR Location has no further obligations thereunder; (c) alternatively, a declaration that all of the Dealer & Distributor Agreements , Amending Agreement, and Financing Agreements, including the Floorplan Loan Schedules are void or voidable, in whole or in part; (d) in the further alternative, damages in lieu of rescission of the Dealer & Distributor Agreements, Amending Agreement, Financing Agreement , and Floorplan Loan Schedules currently estimated at $17,454,196.21; (e) in the further alternative, disgorgement, restitution, or other equitable relief as against the Defendants; (f) in the further alternative, an Order that XCMG Canada indemnify and hold the Plaintiffs harmless from and against any and all Losses, including LTR Location’s losses, and any amounts claimed by XCMG Financial, together with all related costs and expenses; (g) an order restraining or enjoining the Defendants, or any of them, from enforcing or taking steps to enforce the Financing Agreement , including the Floorplan Loan Schedules, pending determination of this action; (h) punitive or exemplary damages as against all or some of the Defendants due to the ir actions, including the fraudulent or negligent misrepresentations, and in connection with the Manufacture Year Discrepancy; (i) pre-judgment and post-judgment interest pursuant to the applicable legislation, including the Judgment Interest Act; (j) costs on a solicitor-client, full indemnity, or enhanced basis; and PDF page 30 — text-layer available - 30 - 93651809\28 (k) such further and other relief as this Honourable Court deems just. J. REAL AND SUBSTANTIAL CONNECTION TO ALBERTA 129. A real and substantial connection exists between Alberta and the facts on which this Action is based as: (a) The Dealer & Distributor Agreement s, and Amending Agreement , between LTR and XCMG Canada contain a forum selection clause designating the court of Edmonton, Alberta, Canada as the appropriate forum; (b) The Dealer & Distributor Agreements , and Amending Agreement , between LTR and XCMG Canada contain a governing law clause designating the law of Alberta as the governing law; (c) The within Action relates to breach of the Dealer & Distributer Agreements and Amending Agreement which are governed by the law of Alberta; (d) The torts alleged in the within action were committed in Alberta; (e) The defendant XCMG Canada is resident in Alberta. XCMG Canada is a corporation registered pursuant to the laws of Alberta with its registered office located in Edmonton, Alberta; (f) The named co-defendants are necessary and proper parties to the Action; (i) The Defendant XCMG Financial is a company related to XCMG Canada and provided financing to LTR, and LTR Location as co-borrower, with respect to the acquisition of the equipment sold by XCMG Canada pursuant to the Dealer & Distributor Agreements; (ii) The Defendant XCMG North America is a company related to XCMG Canada and the manufacturer of some or all of the equipment sold by XCMG Canada to LTR pursuant to the Dealer & Distributor Agreement; and, (iii) XCMG Canada acted as agent of both XCMG Financial and XCMG North America in relation to the claims in the within Action. PDF page 31 — text-layer available - 31 - 93651809\28 NOTICE TO THE DEFENDANT(S) You only have a short time to do something to defend yourself against this claim: 20 days if you are served in Alberta 1 month if you are served outside Alberta but in Canada 2 months if you are served outside Canada You can respond by filing a statement of defence or a demand for notice in the office of the clerk of the Court of King’s Bench at Edmonton, Alberta, AND by serving your statement of defence or a demand for notice on the plaintiff's(s') address for service. WARNING If you do not file and serve a statement of defence or a demand for notice within your time period, you risk losing the law suit automatically. If you do not file, or do not serve, or are late in doing either of these things, a court may give a judgment to the plaintiff(s) against you.