OUTSOURCING AND ROYALTY AGREEMENT
Exhibit
10.1
THIS AGREEMENT made the ___
day of August,
2009.
B E T W E E N :
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LUMONALL INTERNATIONAL
CORPORATION, a corporation incorporated pursuant to the laws of
British Virgin Islands (hereinafter called the "Grantee")
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OF
THE FIRST PART
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and -
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LUMONALL, INC., a
corporation incorporated pursuant to the laws of the State of Nevada
(hereinafter called the "Grantor")
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OF
THE SECOND PART
WHEREAS the Grantor
beneficially owns the rights to distribute Lumonall and Prolink branded photo
luminescent glow-in-dark signs and safety way guidance products in North America
(the "Master
Rights");
AND WHEREAS the Grantor
desires to grant and the Grantee desires to obtain the exclusive sub right to
distribute photo luminescent products (the “Rights”) under the Master
Rights in North America to non-Government parties, all upon and subject to the
terms and conditions hereinafter set forth;
NOW THEREFORE, in
consideration of the premises and the mutual agreements and covenants herein
contained (the adequacy of which consideration as to each of the parties
hereto is hereby mutually admitted), the parties hereby covenant and agree as
follows.
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
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1.1
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Definitions
- Whenever used in
this Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following words and terms shall have the
respective meanings ascribed to them as
follows:
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(a)"Agreement" means this
Outsourcing and Royalty Agreement and all instruments supplemental
hereto or in amendment or confirmation
hereof;
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(b)"Business" means the
business presently carried on by the Grantor being that of a distribution
businesses selling branded photo luminescent products, and related and
ancillary activities thereto;
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(c)"Business Day" means a
day other than a Saturday, Sunday or any day on which the principal
commercial banks located at Toronto, Ontario are not open for business
during normal banking hours;
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(d)
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"Government" means the
Crown in Right of Canada and all its agencies, all Provinces and
Territories of Canada and all their agencies and Agents of the Crown in
Right of Canada, or of any province, in their capacity as owners or
managers of buildings located within
Canada;
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(e)
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"Note" has the meaning
attributed thereto in Section 2.3
hereof;
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(f)"Parties" means the
Grantor and the Grantee, collectively, and "Party" means any one of
them;
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(g)
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"Person" means any
individual, corporation, partnership, trustee or trust or unincorporated
association, and pronouns have a similarly extended
meaning;
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1.2
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Gender
and Number -
Words importing the singular include the plural and vice versa;
words importing gender include all
genders.
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1.3
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Entire
Agreement -
This Agreement, including the Schedules hereto, together with the
agreements and other documents to be delivered pursuant hereto, constitute
the entire agreement between the Parties pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the Parties and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein and therein.
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1.4
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Waivers,
etc. - No
supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement,
in whole or in part, shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly
provided.
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1.5
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Headings - The Article and
Section headings contained herein are included solely for convenience of
reference, are not intended to be full or accurate descriptions of the
content thereof and shall not be considered part of this
Agreement.
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1.6
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Applicable
Law - This
Agreement and the rights, obligations and relations of the Parties shall
be governed by and construed in accordance with the laws of the Province
of Ontario applicable therein, and the courts of Ontario shall have
exclusive jurisdiction to entertain any action in connection with this
Agreement.
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1.7
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Currency - Unless otherwise
specified, all references to currency herein are deemed to mean lawful
money of United States of America, and all amounts to be paid or
calculated pursuant to this Agreement are to be paid or calculated in
lawful money of United States of
America.
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1.8
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Schedules - The following are the
schedules attached to and incorporated in this Agreement by reference
and deemed to be an integral part
hereof:
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Schedule
A
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Inventory
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Schedule
B
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Note
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Schedule
C
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General
Security Agreement
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ARTICLE 2
GRANT OF
RIGHTS
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2.1
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Royalty - The Grantor hereby
grants the Rights to the Grantee for a royalty to be paid by the Grantee
to the Grantor (the “Royalty”). The Royalty
shall be calculated as ten percent (10%) of gross margin for the ten (10)
year period beginning on the Closing Date (the “Term”). For greater
certainty, the total amount due to the Grantor as Royalty is unlimited
during the ten year Term. Gross margin is defined as gross sales, less
payment discounts, direct cost of goods sold, applicable taxes and sales
commissions. The Royalty shall be paid in arrears on the last business day
of the following month for the calendar month in which the Royalty has
accrued and became payable.
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All
amounts to be paid by the Grantee to the Grantor in terms of this agreement,
shall be paid by the Grantee to the Grantor into a bank account nominated in
writing from time to time by the Grantor without set-off or deduction of any
nature and free of exchange.
Any
amount payable by the Grantee to the Grantor, which is not paid on due date
shall, without prejudice to the Grantor's other rights, bear interest at the
greater of the prime rate plus 3% flat or if such rate exceeds the maximum rate
permissible by law, the then maximum interest rate permitted by law calculated
from due date for payment thereof or, in the case of an amount payable by way of
damages with effect from the due date those damages are sustained, to date of
actual payment.
The
Grantee shall provide the Grantor with documentary confirmation in respect of
each and every payment made to the Grantor as the case may be, under this
Agreement by fax on the date of each such payment to the address detailed in 6.4
of this Agreement.
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2.2
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Business
Assets -
The Grantor hereby sells and the Grantee hereby purchases inventory
of the Grantor (the “Inventory”) as described
in Schedule A, for cash consideration of $17,521 at
Closing.
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2.3
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Tradename - The Grantor hereby
sells and the Grantee hereby purchases all intellectual property,
websites, Internet domain names associated with the tradename “Lumonall”
(the “Tradename”),
for a $200,000 secured promissory note (the “Note”) in form as
described in Schedule B. The Note shall bear interest at Canadian bank
prime rate per annum, payable at maturity and shall mature on the earlier
of; i) the transfer, sale or assignment of the Tradename by the Grantee,
or ii) five years from the Closing Date. The Grantee agrees to pledge the
Tradename as the security for the payment of the Note and execute a first
charge General Security Agreement in favour of the Grantor as security for
the Note.
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2.4
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Reporting
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On or
before the last business day of each and every month during the term hereof, the
Grantee shall deliver to the Grantor, a written statement, in such form as the
Grantor shall reasonably require, certifying by the Grantee the gross sales for
the preceding calendar month. The Grantee shall keep and preserve
full and complete records of all Gross Sales for at least six (6) years after
the end of each calendar year during the term, in manner and form satisfactory
to the Grantor and shall also deliver such additional financial, operating and
other information and reports as the Grantor may reasonably request, on the
forms and in the manner prescribed by the Grantor from time to time. The Grantee
further agrees to submit within ninety (90) days after the end of each fiscal
year of his operation, a profit and loss statement and balance sheet (and, if
requested by the Grantor, certified by a Chartered Accountant approved by the
Grantor, and after consultation with the Grantor), covering each fiscal period
of operation. The original of all statements and reports required by
this paragraph shall be delivered to the Grantor.
The
Grantor or his representative shall have the right to inspect and audit the
accounts, books, records, at all reasonable times, to ensure that the Grantee is
complying with the terms of this Agreement.
Any such
inspection, examination and/or audit shall be at the cost of the Grantor unless
same is either necessitated by failure of Grantee to prepare and deliver its
Statement of Gross Sales or Statements, or to keep and preserve records as
herein provided. In the event that the audit shall disclose that
gross sales as reported by the Grantee shall have been understated by an amount
in excess of 3% of the Gross Sales reported by the Grantee, then the cost of the
audit shall be paid by the Grantee forthwith upon presentation to the Grantee of
the auditor's account together with all outstanding Royalty Fees and interest
chargeable thereon as otherwise provided for in this Agreement.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES
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3.1
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Representations
and Warranties of the Grantor - The Grantor hereby
represents and warrants to the Grantee as
follows.
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(a)
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Organization
and Valid Existence; the Grantor - The Grantor is a
corporation duly incorporated and organized and is validly existing under
the laws of State of Nevada, and the Grantor has all necessary corporate
power, authority and capacity to grant the Rights. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder have been duly authorized by all
necessary corporate action on the part of the
Grantor.
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(b)
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Enforceability
of Obligations - This Agreement constitutes a valid and
binding obligation of the Grantor enforceable against it in accordance
with its terms, subject, however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which
they are sought.
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(c)
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Right
to Grant - The Grantor:
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(i)is
the sole beneficial owner of the Master
Rights;
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(ii)has
the exclusive right to grant the Rights as herein provided and such grant
will not violate, contravene, breach or offend against or result in
any default under any indenture, mortgage, lease, agreement, instrument,
charter or by-law provision, statute, regulation, order, judgment, decree
or law to which the Vendor is a party or subject or by which the Grantor
is bound or affected; and
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(iii)
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is
the holder of record of the Master Rights, free and clear of any liens,
charges, encumbrances or rights of others (other than the rights of the
Grantee hereunder) and no Person (other than the Grantee hereunder) has
any agreement, option or any rights capable of becoming an agreement or
option for the acquisition of the
Rights.
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(d)
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Consents,
Authorizations and Registrations - All consents, approvals, orders
and authorizations of any Persons or governmental authorities in Canada or
elsewhere (or
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registrations, declarations, filings or
recordings with any such authorities) required in connection with this
Agreement, have been obtained.
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(f)
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Change
of Name –the Grantor hereby undertakes to change its name as soon
as practically possible under business and securities law following the
execution of this Agreement
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3.2
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Representations
and Warranties of the Grantee - The Grantee hereby
represents and warrants to the Grantor as
follows:
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(a)
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Organization
and Valid Existence - The Grantee is
corporation duly incorporated, organized and validly existing under the
laws of the British Virgin Islands and has all necessary power, authority
and capacity to enter into this Agreement and to carry out its obligations
hereunder.
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(b)
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Enforceability
of Obligations - This Agreement constitutes a valid and
binding obligation of the Grantee enforceable against it in accordance
with its terms, subject, however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which
they are sought.
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(c)
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Absence
of Conflicting Agreements - The Grantee is
not a party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, instrument, statute, regulation, order,
judgment, decree or law which would be violated, contravened or
breached by, or under which any default would occur, as a result of the
execution and delivery of this Agreement or the consummation of any
of the transactions provided for
herein.
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(d)
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Residence
of the Grantee - The Grantee is not a non-resident Canadian within
the meaning of the Investment Canada
Act.
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(e)
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Litigation
- There is no suit, action, litigation, arbitration proceeding or
governmental proceeding, including appeals and applications for review, in
progress, pending or, to the best of the knowledge, information and belief
(after due enquiry) of the Grantee, threatened against or involving the
Grantee or any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
which, in any such case, might adversely affect the ability of the Grantee
to enter into this Agreement or to consummate the transactions
contemplated hereby. The Grantee is not aware of any existing
ground on which any such action, suit or proceeding may be commenced with
any reasonable likelihood of
success.
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(f)
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Consents,
Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Persons or governmental authorities in
Canada or elsewhere (or registrations, declarations, filings or recordings
with any such authorities) required in connection with this
Agreement, have been obtained.
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3.3
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Nature
and Survival of Representations, Warranties and Covenants - All statements
contained in any certificate or other instrument delivered by or on behalf
of a Party pursuant to or in connection with the transactions contemplated
by this Agreement shall be deemed to be made by such Party
hereunder. All representations, warranties, covenants and
agreements herein contained on the part of each of the Parties shall
survive the Closing, the execution and delivery hereunder of share or
security transfer instruments and other documents of title to the Rights
and the payment of the consideration therefor, provided that the
representations and warranties contained in Sections 3.1 and 3.2 (except
with respect to tax matters or the title of the Grantor to the Rights
which shall survive forever), shall only survive for a period of 2 years
from the date of the execution of this Agreement, if no claim shall, prior
to the expiry of the said period, have been made hereunder against a Party
hereto with respect to any incorrectness in or breach of any such
representation or warranty, such Party shall have no further liability
hereunder with respect to such representation or
warranty.
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ARTICLE 4
GENERAL
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4.1
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Assignment
─ The
Grantee shall not directly, indirectly or contingently, sell, assign,
transfer, convey, mortgage or encumber, in any way, this Agreement or any
right or interest herein or hereunder, or suffer or permit any such
assignment, transfer or encumbrance to occur either voluntarily or by
operation of law unless the written consent of the Grantor is first had
and obtained (which consent may be arbitrarily withheld) save and except
for the assignment of the Tradename by the Grantee to Lumonall
International Corporation, a BVI corporation, to which the Grantor hereby
grants its consent to such
assignment.
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4.2
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Grantee
not an Agent ─
The Grantee shall have no authority, express or implied, to act as
agent of the Grantor, or any of their affiliates for any
purpose. The Grantee is, and shall remain, an independent
contractor responsible for all obligations and liabilities of, and for all
loss or damage to its business including any personal property, equipment,
fixtures or real property connected therewith and for all claims or
demands based on damage or destruction of property or based upon injury,
illness or death of any person or persons, directly or indirectly,
resulting from the operation of the
Business.
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4.3
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Material
Breach ─
The parties agree that the happening of any of the following events
shall constitute a material breach of this Agreement and violate the
essence of the Grantee's obligations and, without prejudice to any other
of its rights or remedies at law or equity, the Grantor, at its option,
may forthwith terminate this Agreement upon the happening of any of the
following events:
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(a)
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If
the Grantee shall default in the performance of any of the terms,
covenants, undertakings or conditions of this Agreement including its
obligation to make prompt payment of Royalties when
due;
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(b)
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If
the Grantee shall be adjudicated a bankrupt, become insolvent, or if a
receiver, whether permanent or temporary, for all or substantially all of
the Grantee's property, shall be appointed by any person, or if the
Grantee shall make a general assignment for the benefit of his creditors,
or shall make a proposal under the Bankruptcy Act, or commence any
proceedings to wind-up or liquidate or dissolve his
business;
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(c)
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if
any judgment or judgments or any federal, provincial or legal tax lien
against the Grantee remains unsatisfied or unbonded of record in excess of
thirty (30) days;
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(d)
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If
the Grantee shall violate the terms of this Agreement by the use Tradename
and carrying on of business with Government parties in contravention of
this Agreement.
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(e)
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If
any assignment, pledge, hypothecation, sale or other transfer of
any
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interest of the Grantee in the
Tradename shall occur without the prior written
consent of the Grantor;
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(f)
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If
the Grantee shall falsify the report to the Grantor of the Gross Sales and
gross margin used to calculate the Royalty payable to the
Grantor;
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In
addition to and without prejudice to the rights and remedies of the Grantor to
terminate the Agreement, the Grantor shall have the right to seek judicial
enforcement of its rights and remedies including, and not by way of limitation,
injunctive relief, damages or
specific
performance.
Upon
termination of this Agreement for any reason, the Grantee shall immediately
discontinue the use of the Tradename in conjunction with the Business. The
Grantee agrees to execute all documents on the Grantor's behalf to give effect
to the foregoing. The Grantee named in this Agreement and any permitted assignee
acknowledges and agrees that all its warranties, representations, covenants,
obligations, agreements and undertakings set out in the Agreement shall survive
the assignment and the termination of this Agreement, whether such termination
be by expiration or for any other reason, notwithstanding the termination of the
Grantee rights under this Agreement.
No waiver
by the Grantor of any default in performance on the part of the Grantee, or a
like waiver by the Grantor of any breach or a series of breaches, shall
constitute a waiver of any subsequent breach or default or a waiver of the terms
of this Agreement. Any waiver to be binding upon the Grantor shall be
in writing and signed by the Grantor.
If the
Grantor institutes any action at law or in equity against the Grantee to secure
or protect the Grantor's rights under or to enforce the terms of this Agreement,
the Grantor shall be entitled to recover in addition to any judgment entered in
its favour, such reasonable solicitor's fees as may be allowed by the Court,
together with court costs and expenses of such litigation and such costs and
damages as may be provided by law.
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4.4
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Public
Notices - Except for
disclosures required by law, all public notices to third parties and all
other publicity concerning the transactions contemplated by this Agreement
shall be jointly planned and co-ordinated by the Grantor and the Grantee
and no Party shall act unilaterally in this regard without the prior
approval of the Grantor and the Grantee or the other of them, such
approval not to be unreasonably
withheld.
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4.5
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Expenses - All costs and
expenses (including, without limitation, the fees and disbursements of
legal counsel) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such
expenses.
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4.6
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Time - Time shall be of the
essence hereof.
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| 4.7 | Notices - Any notice, direction or other document required or permittted to be given herunder or for the purposes herof (hereinafter in this Section 6.4 called a "notice") to any Party shall be in writing and shall be sufficiently given if delivered, if sent by prepaid registered mail or if transmitted by facsimile tested prior to transmission to such Party: |
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(a)
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in
the case of a notice to the Grantor
at:
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0000
Xxxx Xxxx, Xxxx 000
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Xxxx Xxxx, Xxxxxxx X0X 0X0
with a facsimile number of
905-833-9847
Attention: Xxxx Xxxxxxxx
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(b)in
the case of a notice to the Grantee if delivered or sent by facsimile as
above at:
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X/X 000 Xxxxxx
Xxxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
with a facsimile number
of 000-000-0000
Attention: Xxxxxx Xxxxxxxx
or at
such other address as the Party to whom such writing is to be given shall have
last notified the Party giving the same in the manner provided in this
section. Any notice delivered to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid
shall be deemed to have been given and received on the third Business Day
following the date of its mailing. Any notice transmitted by
facsimile communication shall be deemed given and received on the first Business
Day after its transmission.
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4.8
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Assignment - Neither this
Agreement nor any rights or obligations hereunder shall be assignable
by any Party without the prior written consent of the other Party hereto,
not unreasonably withheld. This Agreement shall enure to the
benefit of and be binding upon the Parties and their respective heirs,
executors, administrators and successors and permitted
assigns.
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4.9
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Further
Assurances -
The Parties hereto shall with reasonable diligence do all such
things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each Party shall
provide such further documents or instruments required by any other Party
as may be reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions, whether before or after the
Closing.
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4.10
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Severability - If any covenant or
provision of this Agreement is prohibited in whole or in part in any
jurisdiction, such covenant or provision shall, as to such jurisdiction,
be ineffective to the extent of such prohibition without invalidating the
remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of
such prohibition.
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4.11
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Counterparts - This Agreement may be
executed by the Parties in separate counterparts each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same
instrument.
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IN WITNESS WHEREOF the Parties
have hereunto duly executed this Agreement as of the date first written
above.
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LUMONALL,
INC.
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By:
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Name:
Xxxx X. Xxxxxxxx
Title:
CEO
I
have authority to bind the
Corporation
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LUMONALL
INTERNATIONAL CORPORATION
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By:
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Name:
Xxxxxx Xxxxxxxx
Title:
President
I
have authority to bind the
Corporation
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Schedule
A
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INVENTORY
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Omitted
Intentionally
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Schedule
B
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PROMISSORY
NOTE
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AMOUNT: US$200,000
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·DATE: August 20,
2009
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FOR VALUE RECEIVED the
undersigned promises to pay to LUMONALL INC. (the "Holder"), or as the Holder may
direct in writing, the principal sum of $200,000 (the “Principal Sum”) in lawful
money of the United States of America payable at the address of the Holder at
0000 Xxxx Xxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxx, X0X 0X0 or at such other place as
the Holder may designate in writing. The Principal Sum is to be payable on the
earlier of; i) August 20, 2014, or ii) the date the undersigned transfers,
assigns or sells the tradename “Lumonall”.
The
Holder shall have no recourse to enforce such payment except that the Holder may
enforce against the tradename “Lumonall” pursuant to the terms of the General
Security Agreement of the date hereto.
Interest
shall accrue in respect of the Principal Sum hereunder at a rate of Canadian
Schedule A bank prime and shall be paid at maturity. The undersigned
shall have the right to prepay the whole or any part of the principal amount of
this promissory note from time to time without notice, bonus or
penalty. Any and all monies payable hereunder shall be paid to the
Holder or as it may otherwise direct.
Demand,
presentment, protest and notice of non-payment are hereby waived by the
undersigned.
Time
shall be of the essence hereof.
This
promissory note shall be construed and interpreted in accordance with the laws
of the Province of Ontario and the laws of Canada applicable
therein.
This
promissory note shall enure to the benefit of the Holder and the Holder's
successor and assigns, and shall be binding on the undersigned and its
successors and assigns.
IN WITNESS WHEREOF, the
undersigned has duly executed this promissory note this 20th day of
August, 2009.
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LUMONALL
INTERNATIONAL CORPORATION
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Per:
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Name:
Title
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I
have the authority to bind the
corporation.
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Schedule
C
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GENERAL SECURITY
AGREEMENT
THIS AGREEMENT made this 20th day of
August, 0000,
X X X X X
X X:
LUMONALL INTERNATIONAL CORPORATION,
a corporation incorporated
pursuant
to the laws of the British Virgin Islands with offices care of 000
Xxxxxx Xxxxx,
Xxxxxxx,
Xxxxxxx, X0X 0X0
(hereinafter
referred to jointly and severally as the “Debtor”)
OF
THE FIRST PART
- and
-
LUMONALL, INC. a corporation
incorporated pursuant to the laws of the
State of
Nevada
(hereinafter
referred to as the “Secured Party”)
OF
THE SECOND PART
WITNESSES
THAT:
WHEREAS
pursuant to an Outsourcing and Royalty Agreement dated August 20, 2009 Lumonall
International Corporation (the “Corporation”) agreed to purchase the Rights and
Tradename of “Lumonall” from the Secured Party and agreed to provide a general
security agreement from the
Corporation
to secure the payment of promissory note due to the Secured Party;
AND
WHEREAS the Corporation is now the owner of all assets including the Tradename,
“Lumonall” (the “Assets”);
AND
WHEREAS the Debtor has acknowledged the indebtedness to the Secured Party in the
amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) (“Indebtedness”) for the
payment of the purchase price for the Tradename and have delivered a promissory
note (the “Note”) to the Secured Party;
AND
WHEREAS the Debtor has agreed to grant, as general and continuing security for
the payment and performance of all of its obligations to the Secured Party, the
security interest, assignment and mortgage and charge granted
herein;
NOW THEREFORE, in consideration of
these premises, the covenants and agreements hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby covenant and agree as
follows:
ARTICLE 1–
INTERPRETATION
1.1 Definitions. Whenever
used in this Agreement or in any schedules hereto, unless something in the
subject matter or context is inconsistent therewith:
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“Collateral”
- has the meaning set forth in section 2.1
hereof;
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“Event
of Default” - has the meaning set forth in section 5.1
hereof;
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“Obligations”
- means all Indebtedness of the Debtor to the Secured
Party together with all of the other obligations of the Debtor
to the Secured Party set forth
herein;
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“Permitted
Encumbrances” - means the security interests, liens, charges, pledges,
encumbrances, mortgages, adverse interests or title retention agreements
described in Schedule A
hereto;
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“PPSA”
- means the Personal
Property Security Act (Ontario), as now enacted or as the same may
from time to time be amended, re-enacted or replaced;
and
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“Receiver”
- has the meaning set forth in paragraph 5.2(a)
hereof.
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1.2 Extended
Meanings. In this Agreement, unless something in the subject
matter or context is inconsistent therewith, words importing:
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(a)
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the
singular number shall include the plural and vice
versa;
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(b)
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any
gender shall include all genders;
and
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(c)
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persons
shall include individuals, partnerships, corporations, bodies corporate,
unincorporated organizations, associations, trusts, trustees,
government agencies and any other form of entity or organization
whatsoever.
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The terms
“accessions”, “accounts”, “chattel paper”, “documents of title”, “goods”,
“instruments”, “intangibles”, “inventory”, “money”, “proceeds” and “securities”
and any other terms defined in the PPSA shall have the meanings
ascribed thereto therein, unless otherwise defined herein.
1.3 Sections and
Headings. The division of this Agreement into articles,
sections and paragraphs and the use of headings are for convenience of reference
only and shall not affect the construction or interpretation
hereof. The terms “this Agreement”, “hereof”, “hereunder” and similar
expressions refer to this Agreement in its entirety and not to any particular
article, section, paragraph or other subdivision or portion hereof and include
any agreement or instrument supplemental or ancillary hereto. Unless
something in the subject matter or context is inconsistent therewith, references
herein to article, section and paragraph numbers are to articles, sections and
paragraphs of this Agreement.
1.4 Schedules. The
following are the schedules annexed hereto and incorporated by reference and
deemed to form part of this Agreement:
Schedule A - Permitted
Encumbrances
Schedule B - Locations of
Collateral
Schedule C - Description of
Equipment
1.5 Accounting
Principles. Wherever in this Agreement reference is made to
any accounting principles, terms or concepts, such reference shall be deemed to
be to, and shall be interpreted in accordance with, the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date in
respect of which such reference is made or required to be made.
1.6
Entire
Agreement. Except as otherwise provided herein, this
Agreement, including any schedules now or hereafter annexed hereto, constitutes
the entire agreement between the Debtor and the Secured Party with respect to
the subject matter hereof and cancels and supersedes any prior understandings
and agreements between the parties hereto with respect thereto. There
are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the Secured Party
and the Debtor except as expressly set forth herein.
1.7 Severability. If
any provision of this Agreement is determined to be illegal, invalid or
unenforceable in whole or in part, such illegality, invalidity or
unenforceability shall attach only to such provision or part thereof and the
remaining part of such provision and all other provisions hereof shall continue
in full force and effect. To the extent permitted by applicable law
the parties hereby waive any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
1.8 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
ARTICLE 2 – GRANT OF
SECURITY INTEREST
2.1 Security
Interest. As general and continuing security for the payment
and performance of the Obligations, the Debtor hereby grants to the Secured
Party a first priority purchase-money security interest in all of the Assets,
together with:
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(a)
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Substitutions,
Etc. All replacements of, substitutions for and
increases, additions and accessions to the Assets;
and
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(b)
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Proceeds. All
proceeds of the Assets and the property described in paragraph 2.1(a), including,
without limiting the generality of the foregoing, all personal property in
any form or fixtures derived directly or indirectly from any dealing with
such property or that indemnifies or compensates for the loss of or damage
to such property;
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(collectively,
the “Collateral”), and as further general and continuing security for the
payment and performance of the Obligations, the Debtor hereby assigns the
Collateral to the Secured Party and mortgages and charges the Collateral as and
by way of a fixed and specific mortgage and charge to the Secured Party,
provided that the said assignment and mortgage and charge shall not (i) extend
or apply to the last day of the term of any lease or any agreement therefor now
held or hereafter acquired by the Debtor, but should the Secured Party enforce
the said assignment or mortgage and charge, the Debtor shall thereafter stand
possessed of such last day and shall hold it in trust to assign the same to any
person acquiring such term in the course of the enforcement of the said
assignment and mortgage and charge, or (ii) render the Secured Party liable to
observe or perform any term, covenant or condition of any agreement, document or
instrument to which the Debtor is a party or by which it is bound.
2.2 Attachment of Security
Interest. The Debtor acknowledges that value has been given
and agrees that the security interest granted hereby shall attach when the
Debtor signs this Agreement and the Debtor has any rights in the
Collateral.
2.3 Exclusions. Notwithstanding
any other provisions hereof, the security interest granted hereby does not and
shall not extend to, and Collateral shall not include any agreement, right,
franchise, license or permit (the “contractual rights”) to which the Debtor is a
party or of which the Debtor has the benefit, to the extent that the creation of
the security interest herein would constitute a breach of the terms of or permit
any person to terminate such contractual rights, but the Debtor shall hold its
interest therein in trust for the Secured Party and shall assign such
contractual rights to the Secured Party forthwith upon obtaining the consent of
the other party thereto. The Debtor agrees that it shall, upon the
request of the Secured Party, use its best efforts to obtain any consent
required to permit such contractual rights to be subjected to the security
interest.
ARTICLE
3
– REPRESENTATIONS,
WARRANTIES AND COVENANTS
3.1 Representations and
Warranties. The Debtor hereby represents and warrants to the
Secured Party, as follows:
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(a)
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Incorporation and
Subsistence. The Corporation is incorporated and
subsisting under the laws of the jurisdiction hereinbefore set
forth.
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(b)
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Corporate Power and
Authority. The Debtor has the corporate power and
capacity to enter into, and to perform its obligations under, this
Agreement. This Agreement has been duly authorized by all
necessary corporate action on the part of the
Debtor.
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(c)
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Enforceability. This
Agreement has been duly executed and delivered by the Debtor and
constitutes a legal, valid and binding agreement enforceable against the
Debtor in accordance with its
terms.
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(d)
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No
Contravention. The making and performance of this
Agreement will not result in the breach of, constitute a default under,
contravene any provision of, or result in the creation of, any lien,
charge, security interest, encumbrance or any other rights of others upon
any property of the Debtor pursuant to any agreement, indenture or other
instrument to which the Debtor is a party or by which the Debtor or any of
its property may be bound or
affected.
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(e)
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Financial
Information. All financial information provided by the
Debtor to the Secured Party is true, correct and complete and all
financial statements have been prepared in accordance with generally
accepted accounting principles consistently
applied.
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(f)
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Title to
Collateral. Except for Permitted Encumbrances ranking
junior to the security interests granted hereby, all of the Collateral is
the sole property of the Debtor free from any security interests, liens,
charges, pledges, encumbrances, mortgages, adverse interests, title
retention agreements or any rights of others, whether they rank prior or
junior to, or pari
passu with, the security interest, assignment and mortgage and
charge granted hereby.
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(g)
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Location of
Records. The address of the Debtor’s chief executive
office and the office where it keeps its records respecting the
Receivables, is that set forth on the first page
hereof.
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3.2 Covenants. The
Debtor covenants with the Secured Party that the Debtor shall:
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(a)
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ensure
that the representations and warranties set forth in section 3.1 shall be true and correct at all
times;
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(b)
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maintain,
use and operate the Collateral in a lawful and business-like manner and
comply in all material respects with all applicable laws, rules,
regulations and orders, including, without limitation, those relating to
environmental and occupational health and safety
matters;
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(c)
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not
permit the Collateral to be affixed to real or personal property so as to
become a fixture or accession without the prior written consent of the
Secured Party;
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(d)
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defend
the Collateral against all claims and demands respecting the Collateral
made by all persons at any time and, except for the Permitted Encumbrances
ranking junior to the security interests granted hereby, shall keep the
Collateral free and clear of all security interests, mortgages, charges,
liens and other encumbrances or interests except for
those
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(e)
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permitted
hereby or hereafter approved in writing by the Secured Party prior to their
creation or assumption;
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(f)
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not
change its chief executive office or the location of the office where it
keeps its records respecting the Receivables, or move any of the
Inventory, Securities, Equipment or other Collateral from their current
locations, as the same may be specified in Schedule B hereto, without the prior
written consent of the Secured
Party;
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(g)
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pay
all rents, taxes, levies, assessments and government fees or dues lawfully
levied, assessed or imposed in respect of the Collateral or any part
thereof as and when the same shall become due and payable, and shall
exhibit to the Secured Party, when required, the receipts and vouchers
establishing such payment;
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(h)
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keep
proper books of account in accordance with sound accounting practice,
furnish to the Secured Party such financial or other information relating
to the Debtor and the Collateral as the Secured Party may from time to
time require and permit the Secured Party or its authorized agents at any
time and at the expense of the Debtor to inspect the Collateral and to
examine the books of account and other financial records and reports of
the Debtor and to make copies thereof and take extracts therefrom and for
such purposes the Secured Party shall have access to all premises occupied
by the Debtor or where the Collateral may be
found;
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(i)
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not
change its name and, if the Debtor is a corporation, shall not amalgamate
with any other corporation, without first giving notice to the Secured
Party of its new name and the names of all amalgamating corporations and
the date when such new name or amalgamation is to become effective;
and
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(j)
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pay
to the Secured Party forthwith upon demand all reasonable costs and
expenses (including, without limiting the generality of the foregoing, all
legal, Receiver's and accounting fees and expenses) incurred by or on
behalf of the Secured Party in connection with the preparation, execution
and perfection of this Agreement and the carrying out of any of the
provisions of this Agreement including, without limiting the generality of
the foregoing, protecting and preserving the security interest, assignment
and mortgage and charge granted hereby and enforcing by legal process or
otherwise the remedies provided herein; and all such costs and expenses
shall be added to and form part of the Obligations secured
hereunder.
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3.3 Insurance. The
Debtor shall obtain and maintain, at its own expense, insurance against loss of
or damage to the Collateral including, without limiting the generality of the
foregoing, loss by fire (including so-called extended coverage), theft,
collision and such other risks of loss as are customarily insured against on
this type of Collateral, in an amount not less than the full replacement value
thereof, in such form and with such insurers as shall be reasonably satisfactory
to the Secured Party. If any such policies of insurance contain a
co-insurance clause, the Debtor shall either cause any such co-insurance clause
to be waived or maintain at all times a sufficient amount of insurance to meet
the requirements of any such co-insurance clause so as to prevent the Debtor
from becoming a co-insurer under the terms of any such policy. All
such policies shall name the Secured Party as an additional insured and loss
payee thereof, as the Secured Party's interests may appear, and shall provide
that the insurer will give the Secured Party at least 30 days written notice of
intended cancellation. At the Secured Party's request, the Debtor
shall furnish the Secured Party with a copy of any policy of insurance and
certificate of insurance or other evidence satisfactory to the Secured Party
that such insurance coverage is in effect. The Debtor shall give the
Secured Party notice of any damage to, or loss of, the Collateral forthwith upon
the occurrence of any such damage or loss. Should the Debtor fail to
make any payment or perform any other obligation provided in this section, the
Secured Party shall have the right, but not the obligation, without notice or
demand upon the Debtor and without releasing the Debtor from any obligation
hereunder or waiving any rights to enforce this Agreement, to perform any or all
of such obligations.
3.4
The
amount of all such payments made and all costs, fees and expenses incurred by
the Secured Party in performing such obligations shall be immediately due and
payable by the Debtor and shall form part of the Obligations hereby
secured.
ARTICLE 4 – DEALING WITH
COLLATERAL
4.1 Dealing with Collateral by
the Debtor. The Debtor shall not sell, lease or otherwise
dispose of any of the Collateral without the prior written consent of the
Secured Party, except that the Debtor may, until an Event of Default occurs,
sell items of Inventory in the ordinary course of its business so that the
purchaser thereof takes title thereto free and clear of the security interest,
assignment and mortgage and charge granted hereby, but all proceeds of any such
sale shall continue to be subject to the security interest, assignment and
mortgage and charge granted hereby and all money received by the Debtor shall be
received as trustee for the Secured Party and shall be held separate and apart
from other money of the Debtor and shall be paid over to the Secured Party upon
request.
4.2 Registration of
Securities. The Secured Party may have any Securities
registered in its name or in the name of its nominee and shall be entitled but
not bound or required to exercise any of the rights that any holder of such
Securities may at any time have, provided that until an Event of Default has
occurred and is continuing, the Debtor shall be entitled to exercise, in a
manner not prejudicial to the interests of the Secured Party or which would
violate or be inconsistent with this Agreement, all voting power from time to
time exercisable in respect of the Securities. The Secured Party
shall not be responsible for any loss occasioned by its exercise of any of such
rights or by failure to exercise the same within the time limited for the
exercise thereof. The Debtor shall from time to time forthwith upon
the request of the Secured Party deliver to the Secured Party those Securities
requested by the Secured Party duly endorsed for transfer to the Secured Party
or its nominee to be held by the Secured Party subject to the terms of this
Agreement.
4.3 Notification of Account
Debtors. Before an Event of Default occurs, the Secured Party
may give notice of this Agreement and the security interest and assignment
granted hereby to any account debtors of the Debtor or to any other person
liable to the Debtor and, after the occurrence of an Event of Default, may give
notice to any such account debtors or other person to make all further payments
to the Secured Party, and any payment or other proceeds of Collateral received
by the Debtor from account debtors or from any other person liable to the Debtor
whether before or after any notice is given by the Secured Party shall be held
by the Debtor in trust for the Secured Party and paid over to the Secured Party
on request.
4.4 Application of
Funds. Except where the Debtor, when not in default hereunder,
so directs in writing at the time of payment, all money collected or received by
the Secured Party in respect of the Collateral may be applied on account of such
parts of the Obligations as the Secured Party in its sole discretion determines,
or may be held unappropriated in a collateral account, or in the discretion of
the Secured Party may be released to the Debtor, all without prejudice to the
Secured Party's rights against the Debtor.
4.5 Limitation of
Liability. The Secured Party will not be liable or responsible
for any failure to seize, collect, realize, or obtain payment with respect to
the Collateral and is not bound to institute proceedings or to take other steps
for the purpose of seizing, collecting, realizing or obtaining possession or
payment with respect to the Collateral or for the purpose of preserving any
rights of the Secured Party, the Debtor or any other person, in respect of the
Collateral.
ARTICLE 5– DEFAULT AND
REMEDIES
5.1 Events of
Default. The Debtor shall be in default under this Agreement
upon the occurrence of any one or more of the following events (herein referred
to as an “Event of Default”):
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(a)
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the
Debtor fails to make any payment, or any portion thereof, due to the Secured
Party, when due, and such default is not remedied within five business days
following such due date;
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(b)
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the
Debtor does not perform when due any of its obligations under section 3.3;
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(c)
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the
Debtor does not observe or perform any covenant or obligation of the
Debtor contained in this Agreement (other than a covenant or condition the
breach or default in performance of which is specifically dealt with
elsewhere in this section 5.1) and
such default is not remedied within 10 days after notice has been given by
the Secured Party to the Debtor specifying such
default;
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(d)
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any
representation or warranty made by the Debtor herein or in any document or
certificate provided at any time to the Secured Party in connection
herewith shall prove to be incorrect or misleading in any material
respect;
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(e)
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the
Debtor is in default under any other agreement with the Secured Party; or
under any material agreement with any other
person;
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(f)
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any
event of default, subject to expiry of any applicable cure periods, under
any other security held by the Secured Party for the Obligations, whether
such other security is provided directly by the Debtor or by any other
person;
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(g)
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any
change in the legal or effective ownership or control of the Debtor
without the prior written consent of the Secured
Party;
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(h)
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the
Debtor ceases or threatens to cease to carry on the business currently
being carried on by it or a substantial portion thereof or makes or agrees
to make an assignment, disposition or conveyance, whether by way of sale,
lease, exchange or otherwise, of its assets in
bulk;
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(i)
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the
Debtor shall be an insolvent person within the meaning of the Bankruptcy and Insolvency
Act (Canada) or commit or threaten to commit any act of
bankruptcy;
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(j)
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the
commencement of any proceeding or the taking of any step by or against the
Debtor for the dissolution, liquidation or winding-up of the Debtor or for
any relief under the laws of any jurisdiction relating to bankruptcy,
insolvency, reorganization, arrangement, compromise or winding-up, or for
the appointment of one or more of a trustee, receiver, receiver and
manager, custodian, liquidator or any other person with similar powers
with respect to the Debtor or the Collateral or any part
thereof;
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(k)
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the
Collateral or any part thereof is seized or otherwise attached by anyone
pursuant to any legal process or other means, including distress,
execution or any other step or proceeding with similar effect, and the
same is not released, bonded, satisfied, discharged or vacated within the
shorter of a period of 15 days and 10 days less than such period as would
permit such property or any part thereof to be sold pursuant thereto;
or
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(l)
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the
Secured Party believes in good faith that the prospect of payment or
performance of any of the Obligations is impaired or that the Collateral
is in danger of being lost, damaged or confiscated, or of being encumbered
by the Debtor or seized or otherwise attached by anyone pursuant to any
legal process.
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5.2 Remedies. On
or after the occurrence of any Event of Default, any or all of the Obligations
shall at the option of the Secured Party become immediately due and payable or
be subject to immediate
performance,
as the case may be, without presentment, protest or notice of dishonour, all of
which are expressly waived; the obligation, if any, of the Secured Party to
extend further credit to the Debtor shall cease; any or all security granted
hereby shall, at the option of the Secured Party, become immediately
enforceable; and in addition to any right or remedy provided by law, the Secured
Party will have the rights and remedies set out below, all of which rights and
remedies will be enforceable successively, concurrently or both:
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(a)
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the
Secured Party may by appointment in writing appoint a receiver or receiver
and manager (each herein referred to as the “Receiver”) of the Collateral
(which term when used in this section shall include the whole or any part
of the Collateral) and may remove or replace such Receiver from time to
time or may institute proceedings in any court of competent jurisdiction
for the appointment of a Receiver of the Collateral; and the term “Secured
Party” when used in this section shall include any Receiver so appointed
and the agents, officers and employees of such Receiver; and the Secured
Party shall not be in any way responsible for any misconduct or negligence
of any such Receiver;
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(b)
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the
Secured Party may take possession of the Collateral and require the Debtor
to assemble the Collateral and deliver or make the Collateral available to
the Secured Party at such place or places as may be specified by the
Secured Party;
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(c)
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the
Secured Party may take such steps as it considers desirable to maintain,
preserve or protect the Collateral;
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(d)
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the
Secured Party may carry on or concur in the carrying on of all or any part
of the business of the Debtor;
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(e)
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the
Secured Party may enforce any rights of the Debtor in respect of the
Collateral by any manner permitted by
law;
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(f)
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the
Secured Party may sell, lease or otherwise dispose of the Collateral at
public auction, by private tender, by private sale or otherwise either for
cash or upon credit upon such terms and conditions as the Secured Party
may determine and without notice to the Debtor unless required by
law;
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(g)
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the
Secured Party may accept the Collateral in satisfaction of the Obligations
upon notice to the Debtor of its intention to do so in the manner required
by law;
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(h)
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the
Secured Party may, for any purpose specified herein, borrow money on the
security of the Collateral in priority to the security interest,
assignment and mortgage and charge granted by this
Agreement;
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(i)
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the
Secured Party may enter upon, occupy and use all or any of the premises,
buildings and plant occupied by the Debtor and use all or any of the
Equipment and other personal property of the Debtor for such time as the
Secured Party requires to facilitate the realization of the Collateral,
free of charge, and the Secured Party will not be liable to the Debtor for
any neglect in so doing or in respect of any rent, charges, depreciation
or damages in connection with such
actions;
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(j)
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the
Secured Party may charge on its own behalf and pay to others all
reasonable amounts for expenses incurred and for services rendered in
connection with the exercise of the rights and remedies of the Secured
Party hereunder, including, without limiting the generality of the
foregoing, reasonable legal, Receiver and accounting fees and expenses,
and in every such case the amounts so paid together with all costs,
charges and expenses incurred in connection therewith, including interest
thereon at such rate as the Secured
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(k)
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Party
deems reasonable, will be added to and form part of the Obligations hereby
secured; and
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(l)
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the
Secured Party may discharge any claim, lien, mortgage, charge, security
interest, encumbrance or any rights of others that may exist or be
threatened against the Collateral, and in every such case the amounts so
paid together with costs, charges and expenses incurred in connection
therewith shall be added to the Obligations hereby
secured.
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5.3 Additional
Rights. The Secured Party may (i) grant extensions of time,
(ii) take and perfect or abstain from taking and perfecting security, (iii) give
up securities, (iv) accept compositions or compromises, (v) grant releases and
discharges, and (vi) release any part of the Collateral or otherwise deal with
the Debtor, debtors of the Debtor, sureties and others and with the Collateral
and other security as the Secured Party sees fit without prejudice to the
liability of the Debtor to the Secured Party or the Secured Party's rights
hereunder.
5.4 Application of
Proceeds. The Secured Party may apply any proceeds of
realization of the Collateral to payment of expenses in connection with the
preservation and realization of the Collateral as above described and the
Secured Party may apply any balance of such proceeds to payment of the
Obligations in such order as the Secured Party sees fit. If there is
any surplus remaining, the Secured Party may pay it to any person having a claim
thereto in priority to the Debtor of whom the Secured Party has knowledge and
any balance remaining must be paid to the Debtor. If the disposition
of the Collateral fails to satisfy the Obligations secured by this Agreement and
the aforesaid expenses, the Debtor will be liable to pay any deficiency to the
Secured Party forthwith on demand.
ARTICLE 6 –
GENERAL
6.1 Multiple
Debtors. If there is more than one Debtor named herein, the
term “Debtor” shall mean all and each of them, their obligations under this
Agreement shall be joint and several, the Obligations shall include those of all
or any one of them and no Debtor shall have any right of subrogation,
exoneration, reimbursement or indemnity whatsoever and no right of recourse to
the Collateral for the Obligations hereunder unless and until all of the
Obligations have been paid or performed in full.
6.2 Power of
Attorney. Upon the occurrence of an Event of Default that is
continuing, the Debtor hereby irrevocably constitutes and appoints any
representative for the time being of the Secured Party the true and lawful
attorney of the Debtor, with full power of substitution, to do, make and execute
all such statements, assignments, documents, acts, matters or things with the
right to use the name of the Debtor whenever and wherever such representative
may deem necessary or expedient and from time to time to exercise all rights and
powers and to perform all acts of ownership in respect of the Collateral in
accordance with this Agreement.
6.3 Additional Continuing
Security. This Agreement and the security interest, assignment
and mortgage and charge granted hereby are in addition to and not in
substitution for any other security now or hereafter held by the Secured Party
and this Agreement is a continuing agreement and security that shall remain in
full force and effect until discharged by the Secured Party.
6.4 Enurement. This
Agreement shall be binding upon the heirs, executors, administrators, successors
and permitted assigns of the Debtor (including, without limitation, any
corporation resulting from an amalgamation with the Debtor) and shall benefit
the heirs, executors, administrators, successors and assigns of the Secured
Party.
6.5 No
Waiver. No delay or failure by the Secured Party in the
exercise of any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude the other or further
exercise thereof or the exercise of any other right.
6.6 Notices. Any
demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and may be given by personal delivery,
courier, telecopy or registered mail addressed to the recipient at the address
set forth on the first page hereof or to such other address, or to the attention
of such other individual, as may be designated by notice by any party to the
other in accordance herewith. No such communication shall be deemed
to be received until actually delivered or transmitted to the address specified
herein or in accordance herewith.
6.7 Modification and
Assignment. This Agreement may not be amended or modified in
any respect except by written instrument signed by the party intended to be
bound hereby. The rights of the Secured Party under this Agreement may be
assigned by the Secured Party without the prior consent of the
Debtor. The Debtor may not assign its obligations under this
Agreement.
6.8 Further
Assurances. The parties hereto shall promptly do, make,
execute or deliver, or cause to be done, made, executed or delivered, all such
further acts, documents and things as the other party hereto or its or her
counsel may reasonably require from time to time for the purpose of giving
effect to this Agreement and shall use reasonable efforts and take all such
steps as may be reasonably within its or her power to implement to the full
extent the provisions of this Agreement.
6.9 Discharge. The
Debtor shall not be discharged from any of the Obligations or from this
Agreement except by a release or discharge signed in writing by the Secured
Party upon payment in full of the Indebtedness.
6.10 Executed
Copy. The Debtor acknowledges receipt of a fully executed copy
of this Agreement.
IN WITNESS WHEREOF the parties hereto
have executed this Agreement as of the date first above written.
|
LUMONALL
INTERNATIONAL CORPORATION
Per: c/s
Name:
Title:
President
|
|
LUMONALL,
INC.
Per:
________________________________c/s
Name:
Xxxx Xxxxxxxx
Title:
CEO
|
||
Schedule
A
Permitted
Encumbrances
A.1 Liens
for taxes, assessments or governmental charges or levies not at the time due and
delinquent or the validity of which is being contested at the time by the Debtor
in good faith by proper legal proceedings and provided that such proceedings
effectively postpone enforcement of any such lien.
A.2 Liens
of any judgement rendered or claim filed against the Debtor which the Debtor
shall be contesting in good faith by proper legal proceedings and provided that
such proceedings effectively postpone enforcement of any such lien.
A.3 Encumbrances
resulting from the deposit of cash or securities in connection with contracts,
tenders or expropriation proceedings or to secure worker’s compensation, surety
or appeal bonds, costs of litigation when required by law, public and statutory
obligations and, subject to the terms otherwise set out in this Agreement, liens
or claims incidental to current construction, repair, storage, carrier or
similar liens.
A.4 Any
security given to a public utility or any municipal or governmental or other
public authority when required by such utility or other authority in connection
with the operations of the Debtor in the ordinary course of its
business.
Schedule
B
Locations
of Collateral
000
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, the Debtor’s registered head office, or
wherever located
Schedule
C
Description
Tradename : “Lumonall” and
equipment, inventory, accounts receivable and any proceeds thereof.
