VN Capital Management

July 09, 2013 17:05 ET

VN Capital Solicits Proxies to Terminate Ceres Management Contract

Urges Shareholders to Vote Yes on the Resolutions Proposed at the July 24, 2013 Special Meeting of Ceres Global Ag Corp. Shareholders

TORONTO, ONTARIO--(Marketwired - July 9, 2013) - VN Capital Management, LLC ("VN Capital"), a minority shareholder of Ceres Global Ag Corp. ("Ceres"), publicly announced today that it urges shareholders of Ceres to vote to terminate the management contract between Ceres and Front Street Capital 2004 ("Front Street") at Ceres' July 24th Special Shareholder Meeting because the contract improperly favors Front Street at the expense of the other Ceres shareholders. Proxies in favor of the resolutions proposed by VN Capital are being solicited by way of this press release by VN Capital. VN Capital beneficially owns or exercises control or direction over 1,174,700 common shares or approximately 8.2% of the outstanding common shares of Ceres.

VN Capital believes that the Front Street's management contract with Ceres needs to be terminated because:

  1. Ceres has performed terribly under Front Street's management during the course of the agreement. Front Street's initial strategy of investing in publicly traded agricultural securities soured, costing Ceres millions of dollars when liquidated three years ago. These losses were compounded over the past three years when Front Street mismanaged the Riverland grain storage facilities, turning what was once a profitable business into a chronically losing operation.
  2. The management fees paid to Front Street are excessive. Front Street gets paid over $3 million per year plus other expenses under a hedge fund fee structure, even though Ceres is now an operating company. A study of all publicly traded Canadian companies of similar size and revenue (+ or - $10 million of Ceres' market capitalization) shows that the combined median cost for a CEO/President, CFO, and non-executive chairman is slightly over $1 million. In addition, some of that cost in replacing Front Street with a new, dedicated internal management team can be recouped by eliminating duplicative operating management and systems at Riverland.
  3. Ceres gets poor value for the money spent on Front Street. For instance Ceres' top leadership team of Gary Selke, Michael Detlefsen and Tom Muir spend large amounts of their time operating their own respective businesses, Front Street Capital and Muir Detlefsen & Associates, respectively. In addition, Front Street's team does very little day-to-day management of Ceres' businesses, leaving those details to Riverland management and Stewart Southern Railway's majority partners. Thus, shareholders are paying over $3 million a year for what are essentially part-time capital allocators, and given Front Street's past record, shareholder's aren't exactly getting returns on their capital on a par with those provided by Charlie Munger and Warren Buffet.
  4. The management agreement structurally misaligns Front Street's financial interests from those of Ceres' shareholders. To illustrate, since the company's inception, Front Street has collected $15.4 million of fees plus $2.3 million of additional expenses which has more than offset any losses on Front Street's equity stake in Ceres while the non-Front Street shareholders have lost a collective $53 million based on the July 8 closing price. This depresses Ceres stock price as the market views the company as being run for Front Street's benefit as the expense of its other shareholders.
  5. The market views ending the Front Street management contract positively. Since the public release of the Management Information Circular in respect of the Special Shareholders Meeting on June 28, 2013, and related news articles and press releases, Ceres' stock price has shot up over 15% as investors see the possibility of the biased management contract being terminated.

Ceres shareholders will vote on an extraordinary resolution approving the termination of the management agreement between Ceres and Front Street and provide irrevocable notice of such termination to Front Street. The meeting will be held at the Chairman's Boardroom at One King Street West, Toronto, Ontario on July 24, 2013 at 11:00am (Toronto time).

How to Support VN Capital

Registered Shareholders

Ceres shareholders that have a physical share certificate for Ceres common shares registered in their own name (the "Ceres Registered Shareholders") who wish to support the resolutions to terminate the Front Street management contract can do so by completing, signing, dating and returning the YELLOW form of proxy with the heading "VN CAPITAL FORM OF PROXY" to VN Capital by facsimile at 1-212-393-1148 or by email to jtv@vncapital.net.

The VN CAPITAL FORM OF PROXY can be obtained by contacting VN Capital by telephone at 1-212-393-1140 or by email at jtv@vncapital.net. The VN CAPITAL FORM OF PROXY can also be obtained on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com under Ceres' profile at http://sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00026197.

In order to ensure that a YELLOW VN CAPITAL FORM OF PROXY can be used at Ceres' special shareholders meeting, it should be returned to VN Capital by 5 p.m. on July 19, 2013. VN Capital will continue to accept proxies up until the time of the meeting and will make every effort to deliver any proxies received for use at the meeting.

Ceres Registered Shareholders who wish to vote in favor of the extraordinary resolutions but have already completed a form of proxy appointing someone other than VN Capital may revoke their previously completed form of proxy by completing, signing, dating and returning a VN CAPITAL FORM OF PROXY to VN Capital by facsimile at 1-212-393-1140 or by email to jtv@vncapital.net.

Beneficial Shareholders

Ceres shareholders who do not hold their Ceres Shares in their names (for example, through a bank, trust company, securities dealer or broker or other intermediary) (the "Ceres Beneficial Shareholders") who wish to support the resolutions to terminate the Front Street management contract are urged to complete the voting instruction form received from their intermediary marked to vote "For" on the resolutions and return the voting instruction form in accordance with the instructions provided by their intermediary.

Ceres Beneficial Shareholders who have previously completed a voting instruction form against the resolutions should contact their intermediary as soon as possible in order to either obtain a new voting instruction form that will enable the shareholder to vote "For" the resolutions or change the previous voting instructions from "Against" to "For" on the resolutions.

Information in Support of Public Broadcast Solicitation

VN Capital and its managing members are relying on the exemption under section 9.2(4) of National Instrument 51-102 - Continuous Disclosure Obligations and section 112(1.2) of the Business Corporations Act (Ontario) to make public broadcast solicitations. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations.

Matters to be Acted Upon

Ceres has called a special meeting of shareholders to be held at the Chairman's Boardroom at One King Street West, Toronto, Ontario on July 24, 2013 at 11:00 am (Toronto time) to consider and, if thought fit, to pass the following resolutions proposed by VN Capital:

  1. an extraordinary resolution pursuant to Section 11 of the management agreement between Ceres and Front Street dated December 13, 2007 and amended on April 26, 2010 (the "Management Agreement") approving the termination of the Management Agreement and the provision by Ceres of an irrevocable notice of termination to Front Street terminating such Management Agreement on April 27, 2015 (the "Management Agreement Termination Resolution"); and
  2. a resolution that Ceres shall not enter into any future agreement providing to Ceres any management and administrative services with either Front Street, Front Street Investment Management Inc. or any of its employees, affiliates, officers, directors, shareholders or beneficiaries (the "No Further Agreement Resolution").

The Management Agreement Termination Resolution is an extraordinary resolution and requires approval by 66 2/3% of the votes validly cast on the resolution at the meeting.

Solicitation by VN Capital

This solicitation is being made by VN Capital and not by or on behalf of the management of Ceres.

VN Capital and its managing members may solicit proxies for the Ceres shareholders' meeting in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including through press releases, speeches or publications. In addition, in accordance with applicable Canadian laws, proxies may be solicited by mail, telephone, email or other electronic means as well as by newspaper or other media advertising, and in person by managers, directors, officers and employees of VN Capital, who will not be specifically remunerated therefore. Proxies may also be solicited by any other manner permitted under applicable Canadian laws. No agents have been engaged to assist in soliciting proxies on behalf of VN Capital; however, VN Capital reserves the right to engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on behalf of VN Capital. All costs incurred for the solicitation will be borne by VN Capital.

A registered holder of common shares of Ceres that gives a proxy may revoke it: (a) by depositing an instrument in writing executed by the shareholder or by the shareholder's attorney, who is authorized in writing, or by transmitting, by telephonic or electronic means, a revocation signed by electronic signature by the shareholder or by the shareholder's attorney, who is authorized in writing: (i) to or at the registered office of Ceres at any time up to and including the last business day preceding the day the meeting of Ceres shareholders or any adjournment thereof, or (ii) with the chairman of the meeting on the day of, and prior to the start of, the meeting or any adjournment thereof; or (b) in any other manner permitted by law. The address of Ceres is 33 Yonge Street, Suite 600, Toronto, Ontario M5E 1G4. A non-registered holder of common shares of Ceres will be entitled to revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary.

About VN Capital

James T. Vanasek and Patrick Donnell Noone founded VN Capital in March 2002 and VN Capital launched its first and only fund, the VN Capital Fund I, LP, in June 2002. In addition, since September 2012, pursuant to an investment management agreement VN Capital acts as the investment manager for PVF-JP, LP a Delaware Limited Partnership (the "PVF Partnership"), which is operated in a manner similar to the VN Capital Fund I, LP. VN Capital exercises control or direction over the voting of the securities held by the VN Capital Fund I, LP and the PVF Partnership.

VN Capital was founded on the belief that long term wealth accumulation is derived from exhaustive bottom-up proprietary research coupled with a conservative, value equity investing philosophy exhibiting low portfolio turnover, minimal expenses, and selective hedging. VN Capital manages a concentrated portfolio of six to twelve small and micro-cap stocks that are publicly traded in the United States and Canada from easily understood industries that are either overlooked by the broad investment community or that are unfairly tainted by news affecting their respective economic areas.

VN Capital Fund I, L.P. is a Delaware limited partnership formed to engage in the business of acquiring, holding and disposing of investments in various companies. The general partners of VN Capital Fund I, L.P. are VN Capital and Joinville Capital Management, LLC ("Joinville"). VN Capital and Joinville are Delaware limited liability companies formed to be the general partners of VN Capital Fund I, L.P. Messrs. Vanasek and Noone are the Managing Members of VN Capital and Joinville, and have been since March 2002, and have held no other occupations during that time. The address of the principal offices of VN Capital is 1133 Broadway, Suite 1609, New York, New York 10010. The business address of Messrs. Vanasek and Noone is c/o VN Capital at the foregoing address.

None of VN Capital or Messrs. Vanasek or Noone have been dissidents of any body corporate in the past ten years.

Background to and Nature of VN Capital's Dissident Activities

VN Capital first invested in Ceres on August 6, 2010 and over the next two years Messrs. Vanasek and Noone regularly spoke with Ceres' Chief Financial Officer, Jason Gould, after the company released its quarterly financial results. In addition, Messrs. Vanasek and Noone travelled to Toronto on January 17, 2012 and met with members of Ceres' leadership team - Tom Muir, Chief Transactions Officer, and Mr. Gould. During those conversations, VN Capital repeatedly reiterated the need for Ceres to have better shareholder communications, improved corporate governance and for Ceres to make the transition to a true operating company by terminating the Front Street management agreement and replacing it with an internal management team.

After not seeing any progress by Ceres on those fronts, on November 20, 2012 Mr. Vanasek contacted Mr. Gould and requested a meeting with John Heimbecker, the chair the Nominating and Corporate Governance Committee of the Board of Ceres, to bring these matters to his attention. Mr. Gould arranged a conference call on December 20, 2013 for VN Capital, however Mr. Heimbecker failed to participate. Gary Selke, Chief Executive Officer, and Messrs. Muir and Gould were present on behalf of Ceres.

After making numerous attempts during January 2013 to try and speak with Mr. Heimbecker to no avail, on January 28, 2013 VN Capital sent a letter to Mr. Selke advising of its intention to formally requisition a special meeting of shareholders to vote to terminate the management agreement between Ceres and Front Street. In the letter, VN Capital stated its opinion that the excessive management fees paid to Front Street, the open nature of the management agreement and incentive fee structure, and Ceres' poor corporate governance and inadequate investor relations program had dragged down Ceres stock price.

After speaking with Mr. Selke on January 31, 2013, VN Capital advised Ceres that it would delay requisitioning a special meeting until February 28 to provide Ceres' Board time to respond to the issues raised in VN Capital's letter.

Ceres' Board established a special committee on February 5, 2013 and responded to VN Capital in a letter dated February 21, 2013. Ceres' letter failed to adequately respond to VN Capital's concerns. On March 6, 2013, VN Capital issued a press release announcing the requisition of the special meeting of shareholders and highlighting its concerns that the excessive fees paid to Front Street depress Ceres' stock price because the market feels that Ceres is being run for the benefit of Front Street and not Ceres shareholders. VN Capital called for (i) the termination of Ceres' management agreement with Front Street and (ii) Ceres to adopt a dedicated internal management team to run the company independent of Front Street, ensuring a clean, transparent and accountable financial record.

On March 8, 2013, Front Street issued a press release acknowledging VN Capital's concerns and stating that it would examine all possibilities with respect to moving Ceres forward.

On March 21, 2013, VN Capital provided a proposal to Ceres entitled "A New Vision for Ceres Global Ag Corp. - An Operating Company With An Operating Company Structure". VN Capital proposed:

  1. The Ceres' Board announce a transition period to a "new Ceres".
  2. By April 15, 2013, Ceres reconstitute its Board to a "Transition Board" consisting of (i) the five current directors, (ii) one new director, being Mr. Vanasek, and (iii) three new independent directors not affiliated with Front Street.
  3. The Transition Board would establish a search committee to identify a dedicated internal chief executive officer and chief financial officer, targeting their appointment for September 30, 2013. The compensation for these officers would be based on market comparables.
  4. Upon appointment of the new chief executive officer and chief financial officer, the management agreement between Ceres and Front Street be terminated. Front Street would receive a termination fee, negotiated by an independent committee of the Transition Board, in the form of cash and stock options.
  5. The Transition Board would undertake a strategic review with respect to, among other things, organizational structure, capital allocation and goals and compensation for the management team.
  6. By December 31, 2013, the Transition Board be reconstituted as a "Permanent Board" consisting of (i) Mr. Selke as Chairman, paid as per comparable norms, (ii) the new chief executive officer of Ceres, and (iii) three independent directors from the Transition Board not affiliated with Front Street (each of Messrs. Little, Parniak, Heimbecker and Vanasek would resign).
  7. VN Capital and Front Street agree not to oppose the Permanent Board for an agreed number of years.
  8. Ceres reimburse VN Capital for incurred legal and other expenses, estimated to be $35,000 and in any event to be capped at $50,000.

VN Capital believed that at the end of the transition period the new Ceres would have a dedicated full-time management team, transparent SG&A costs, a conflict-free governance structure, appropriate, shareholder-focused stewardship and a new lease on life, free from its past as a failed closed-end fund with a hedge fund fee structure.

After hearing nothing from the independent committee for almost two months, on May 14, 2013 VN Capital wrote to Brian Little, chairman of the special committee of the Ceres Board, and expressed its concerns about the delay and apparent inaction by the committee to address this urgent matter.

On May 17, 2013 Mr. Little responded and asked VN Capital to sign a non-disclosure agreement. VN Capital refused as such an agreement was not necessary to facilitate discuss of VN Capital's proposed solution and because to do so could lead to VN Capital's managed funds being prohibited from purchasing further Ceres shares.

Ceres filed the Notice of Special Meeting of Shareholders and the Management Information Circular on June 28, 2013. VN Capital issues a press release on July 3, 2013 stating its intention to vote in favour of the resolutions to terminate the Front Street management agreement and to prevent the company from entering into any futures agreements with Front Street to provide management and administrative services. VN Capital's reasons for voting in favour of the resolutions were based on the following:

  1. Front Street's mismanagement of Ceres business interests which lost millions on the former investment portfolio and turned what was once a profitable Riverland business into a loss making enterprise.
  2. The excessive fees of over $3 million per year paid to Front Street.
  3. The management agreement's structure which misaligns Front Street's financial interest from those of Ceres' shareholders, thus allowing Front Street to pocket $17.7 million of fees and other expenses from Ceres since its inception, while non-Front Street shareholders have lost a collective $58 million during that time.
  4. Ceres Board of Directors doing nothing to address these issues.
  5. Ceres Board of Directors and Front Street resorting to questionable legal reasoning in order to try and make the proposed resolutions non-binding if passed and trying to skew the result by allowing Front Street to vote their shares even though they are prohibited from doing so according to the terms of the management agreement.

Ownership of Ceres Common Shares

As of July 8, 2013 VN Capital beneficially owns or exercises control or direction over 1,174,700 shares, representing approximately 8.2% of Ceres' outstanding common shares. Of that amount, 870,000 shares are owned by the VN Capital Fund I, LP while 304,700 shares are owned by the PVF Partnership. Messrs. Vanasek and Noone, as Managing Members of VN Capital, are also considered to beneficially own or otherwise exercise control or direction over the common shares of Ceres owned or over which VN Capital exercises control or direction.

The following table sets out the purchases and sales of Ceres common shares conducted by or for the benefit of VN Capital Fund I, LP and the PVF Partnership.

VN Capital Fund I, LP PVF Partnership
Date Date
Purchased Amount Price Purchased Amount Price
August 6, 2010 3,300 6.23 October 2, 2012 1,500 6.16
August 10, 2010 200 6.24 October 3, 2012 3,600 6.14
August 12, 2010 1,000 6.24 October 5, 2012 1,500 6.15
August 13, 2010 7,500 6.32 October 9, 2012 6,000 6.15
August 16, 2010 4,000 6.33 October 10, 2012 1,000 6.15
August 24, 2010 3,000 6.40 October 11, 2012 11,900 6.14
August 25, 2010 1,000 6.41 October 12, 2012 4,400 6.14
August 26, 2010 1,500 6.43 October 15, 2012 800 6.14
August 27, 2010 1,800 6.45 October 16, 2012 5,300 6.12
August 30, 2010 1,000 6.46 October 17, 2012 7,000 6.11
August 31, 2010 700 6.47 October 18, 2012 6,600 6.09
September 1, 2010 3,600 6.49 October 19, 2012 10,300 6.08
September 2, 2010 8,300 6.55 October 22, 2012 4,800 6.07
September 8, 2010 5,000 6.59 October 23, 2012 9,200 6.07
September 10, 2010 10,000 6.70 October 24, 2012 500 6.07
September 13, 2010 1,500 6.71 October 25, 2012 1,300 6.07
September 14, 2010 400 6.71 October 26, 2012 20,000 6.07
September 15, 2010 2,500 6.73 October 31, 2012 20,000 6.06
September 16, 2010 5,300 6.78 November 1, 2012 200 6.06
September 21, 2010 4,000 6.82 November 5, 2012 2,600 6.06
September 22, 2010 2,000 6.84 November 6, 2012 4,200 6.06
September 23, 2010 300 6.84 November 7, 2012 700 6.06
September 24, 2010 3,000 6.87 November 8, 2012 45,000 6.05
September 27, 2010 2,100 6.88 November 15, 2012 5,600 6.07
September 29, 2010 1,200 6.89 November 16, 2012 10,000 6.09
October 4, 2010 5,000 6.92 November 23, 2012 300 6.09
October 5, 2010 3,000 6.95 November 26, 2012 6,500 6.10
October 6, 2010 700 6.95 November 30, 2012 5,000 6.10
October 14, 2010 8,100 7.04 December 5, 2012 8,600 6.13
October 19, 2010 2,100 7.06 December 6, 2012 5,600 6.14
October 21, 2010 5,000 7.10 December 7, 2012 5,400 6.15
October 22, 2010 700 7.10 December 10, 2012 7,600 6.16
October 25, 2010 500 7.11 December 13, 2012 3,000 6.17
October 26, 2010 400 7.11 December 14, 2012 1,200 6.18
November 16, 2010 400 7.11 December 18, 2012 10,100 6.22
November 23, 2010 10,000 7.17 December 20, 2012 7,800 6.24
December 1, 2010 3,800 7.19 December 21, 2012 1,100 6.24
December 8, 2010 10,000 7.21 December 24, 2012 2,700 6.25
December 8, 2010 10,000 7.21 December 28, 2012 5,000 6.25
December 8, 2010 7,900 7.21 December 31, 2012 10,000 6.28
December 8, 2010 10,000 7.20 January 7, 2013 3,700 6.28
August 5, 2011 1,000 7.20 January 8, 2013 4,000 6.29
August 9, 2011 21,500 7.18 January 11, 2013 22,400 6.34
August 10, 2011 2,300 7.17 April 19, 2013 700 6.34
September 21, 2011 20,000 7.10 May 9, 2013 10,000 6.35
September 22, 2011 5,000 7.08
September 23, 2011 600 7.07
September 26, 2011 100 7.07
September 27, 2011 40,000 6.96
September 28, 2011 4,500 6.96
September 29, 2011 40,000 6.89
September 30, 2011 7,500 6.87
October 3, 2011 400 6.87
October 4, 2011 500 6.87
October 7, 2011 5,000 6.85
October 13, 2011 1,400 6.85
October 14, 2011 1,400 6.85
October 17, 2011 5,500 6.84
October 18, 2011 200 6.84
October 19, 2011 20,400 6.82
October 21, 2011 1,100 6.82
October 24, 2011 1,500 6.82
October 25, 2011 8,600 6.81
October 26, 2011 500 6.81
October 27, 2011 2,000 6.81
October 31, 2011 2,000 6.81
November 1, 2011 20,100 6.78
November 4, 2011 500 6.78
November 17, 2011 2,000 6.78
November 30, 2011 4,000 6.76
March 5, 2012 1,000 6.64
April 30, 2012 1,300 6.64
May 1, 2012 5,000 6.64
May 4, 2012 4,100 6.64
May 9, 2012 5,000 6.64
May 16, 2012 1,600 6.63
June 20, 2012 600 6.63
June 27, 2012 5,000 6.62
July 5, 2012 10,000 6.60
July 9, 2012 3,800 6.59
July 18, 2012 5,000 6.58
July 19, 2012 200 6.58
July 20, 2012 10,000 6.56
July 23, 2012 200 6.56
July 24, 2012 5,100 6.55
July 30, 2012 3,800 6.55
July 30, 2012 1,000 6.54
July 31, 2012 1,000 6.54
August 1, 2012 4,600 6.54
August 2, 2012 5,000 6.53
August 7, 2012 20,000 6.51
August 8, 2012 6,000 6.50
August 9, 2012 2,600 6.50
August 10, 2012 6,000 6.50
August 13, 2012 16,500 6.48
August 14, 2012 4,000 6.47
August 15, 2012 4,900 6.46
August 21, 2012 4,000 6.46
August 22, 2012 1,600 6.46
August 23, 2012 5,000 6.45
August 24, 2012 600 6.45
September 4, 2012 1,300 6.45
September 6, 2012 2,600 6.45
September 7, 2012 3,500 6.45
September 14, 2012 900 6.45
September 18, 2012 3,400 6.45
September 19, 2012 10,600 6.44
September 21, 2012 4,200 6.44
September 24, 2012 5,000 6.44
September 25, 2012 5,400 6.44
September 26, 2012 300 6.44
September 27, 2012 1,500 6.44
September 28, 2012 1,300 6.43
October 1, 2012 3,500 6.43
November 13, 2012 5,400 6.43
January 15, 2013 9,800 6.44
January 16, 2013 7,700 6.45
January 17, 2013 50,000 6.48
January 18, 2013 53,600 6.51
January 22, 2013 3,200 6.51
January 24, 2013 1,600 6.52
January 25, 2013 10,000 6.52
January 29, 2013 12,300 6.53
January 30, 2013 2,000 6.54
February 1, 2013 1,700 6.54
February 4, 2013 6,100 6.54
February 13, 2013 3,000 6.55
February 19, 2013 1,100 6.55
February 21, 2013 10,000 6.56
February 22, 2013 10,000 6.57
March 1, 2013 10,000 6.57
April 1, 2013 1,100 6.57
April 3, 2013 10,000 6.57
April 12, 2013 2,000 6.57
April 18, 2013 10,000 6.57
April 22, 2013 10,000 6.56
April 23, 2013 1,000 6.56
April 24, 2013 1,000 6.56
May 10, 2013 6,900 6.56
May 14, 2013 14,200 6.55
May 16, 2013 1,400 6.55
May 20, 2013 8,700 6.54
May 21, 2013 16,200 6.53
May 22, 2013 1,900 6.53
May 23, 2013 5,400 6.52
May 29, 2013 2,600 6.52
June 20, 2013 10,400 6.52
June 24, 2013 12,300 6.52
June 25, 2013 7,000 6.52
June 26, 2013 1,000 6.51
June 27, 2013 10,000 6.51
Date Sold Amount Price
December 20, 2011 10,000 6.70
December 21, 2011 5,000 6.67
December 21, 2011 5,000 6.64

No funds were borrowed or otherwise obtained for the purpose of acquiring or holding the Ceres common shares. None of VN Capital or Messrs. Vanasek or Noone, as dissidents, nor Joinville, the VN Capital Fund I, LP or the PVF Partnership is or has been within the preceding year, a party to a contract, arrangement or understanding with any person in respect of securities of Ceres, including joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits or the giving or withholding of proxies.

To the knowledge of VN Capital and Messrs. Vanasek and Noone, based on Ceres' public filings, as at June 21, 2013 no persons beneficially owned, directly or indirectly, or exercised control or direction over 10% or more of the voting rights attached to the outstanding common shares of Ceres except: (i) Front Street Capital 2004 (an Ontario general partnership) which held 2,891,120 common shares (including shares held or controlled directly or indirectly by Front Street Capital 2004 partners, as well as by Jason Gould) or approximately 20.2%, and (ii) Wellington Management Company LLP which held 1,820,025 common shares or approximately 12.65%. VN Capital disputes the entitlement of Front Street Capital 2004 and its affiliates to vote at the Ceres shareholders' meeting.

Interest of Certain Persons in Matters to be Acted Upon

Except as described herein, to the knowledge of VN Capital and Messrs. Vanasek and Noone, none of Messrs. Vanasek or Noone or VN Capital or any of its managers, directors or officers, or any associates or affiliates of the foregoing has: (i) any material interest, direct or indirect, in any transaction since the beginning of Ceres' most recently completed financial year or in any proposed transaction that has materially affected or will materially affect Ceres or any of its affiliates; or (ii) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter currently known to be acted upon at the meeting of Ceres shareholders.

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