GENERAL SECURITY AGREEMENT
THIS AGREEMENT made as of the ________ day of ______________ 2001
BETWEEN:
XXXXXXX.XXX INC., a corporation organized and existing under the laws
of Ontario
(hereinafter called the "Creditor")
- and -
*, a corporation organized existing under the laws of, with its
principal place of business and chief executive office at *
(hereinafter called the "Debtor")
WHEREAS the Debtor has provided the Creditor with a promissory note (the
"Note") dated the date hereof in the principal amount of $500,000 USD.
AND WHEREAS in order to provide security for the Note, the Debtor has
executed this General Security Agreement in favour of the Creditor;
IN CONSIDERATION OF good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Debtor, the Debtor agrees to
enter into this Agreement on the terms and conditions hereinafter set out.
ARTICLE I
INTERPRETATION
1.1 Defined Terms - In this Agreement, unless there in something in the context
or subject matter inconsistent therewith,
(a) "Act" means the Personal Property Security Act, 1989 (Ontario), as
amended from time to time, and any regulations thereto;
(b) "Collateral" has the meaning set out in Section 2.1 hereof;
(c) "Obligations" means the aggregate of all indebtedness, obligations and
liabilities of the Debtor to the Creditor and its successors and
assigns in respect of the Note and this Agreement; and
(d) "Permitted Encumbrances" means security given to suppliers to secure
the payment of the purchase price or lease payments for equipment and
other assets required by the Debtor in the ordinary course of its
business.
1.2 Other Usages - References to "this Agreement", "hereof", "herein", "hereto"
and like references refer to this General Security Agreement and not to any
particular article, section or other subdivision of this Agreement.
1.3 Plural and Singular - Where the context so requires, words importing the
singular number include the plural and vice versa.
1.4 Headings - The insertion of headings in this Agreement is for convenience of
reference only and will not affect the construction or interpretation of this
Agreement.
1.5 Currency - Unless otherwise specified herein, all statements of or
references to dollar amounts in this Agreement will mean lawful money of Canada.
ARTICLE II
SECURITY INTEREST
2.1 Description of Collateral - The following undertaking, property and assets
of the Debtor will be subject to the security interest in favour of the Creditor
created by this Agreement:
(a) Accounts - all debts, accounts, demands, claims and choses in action
which now are, or which may at any time hereafter be, due or owing to
or owned by the Debtor; all securities, mortgages, bills, notes and
other documents now held or owned, or which may be hereafter taken,
held or owned, by or on behalf of the Debtor, in respect of the said
debts, accounts, demands, claims and choses in action or any part
thereof; and all books, documents and papers recording, evidencing or
relating to the said debts, accounts, demands, claims and choses in
action or any part thereof, all of which are herein collectively
called the "Accounts";
(b) Documents - all books, accounts, invoices, letters, papers, documents
and other records in any form evidencing or relating to collateral
subject to the Security Interest, all of which are herein collectively
called the "Documents";
(c) Documents of Title - any writing now or hereafter owned by the Debtor
that purports to be issued by or addressed to a bailee and purports to
cover such goods and chattels in the bailee's possession as are
identified or fungible portions of an identified mass, whether such
goods and chattels are Inventory or Equipment, and which writing is
treated as establishing that the person in possession of such writing
is entitled to receive, hold and dispose of the said writing and the
goods and chattels it covers, and further, whether such writing is
negotiable in form or otherwise, including bills of lading and
warehouse receipts, all of which are herein collectively called the
"Documents of Title";
(d) Equipment - all tools, machinery, equipment, plant, furniture,
chattels, fixtures, vehicles of any kind, parts, accessories and other
tangible personal property now owned or hereafter acquired by the
Debtor which are not Inventory, all of which is herein collectively
called the "Equipment";
(e) Instruments - all present and future bills, notes and cheques (as such
are defined pursuant to the Bills of Exchange Act (Canada)), and all
other writings that evidence a right to the payment of money and are
of a type that in the ordinary course of business are transferred by
delivery without any necessary endorsement or assignment, all of which
are herein collectively called the "Instruments";
(f) Intangibles - all intangible property now owned or hereafter acquired
by the Debtor and which is not Accounts including, without limitation,
all customer lists, contractual rights, chattel paper, goodwill,
patents, trademarks, trade names, copyrights and other intellectual
property of the Debtor, all of which are herein collectively called
the "Intangibles";
(g) Inventory - all present and future inventory of the Debtor, including
all raw materials, materials used or consumed in the business or
profession of the Debtor, work-in-progress, finished goods, goods used
for packing, materials used in the business of the Debtor not intended
for sale, and goods acquired or held for sale or furnished or to be
furnished under contracts of rental or service, all of which is herein
collectively called the "Inventory";
(h) Money - all present and future money of the Debtor, whether authorized
or adopted by the Parliament of Canada as part of its currency or any
foreign government as part of its currency, all of which is herein
collectively called the "Money";
(i) Securities - all present and future securities, as defined in the
Securities Act (Ontario), held by the Debtor, including shares,
options, rights, warrants, joint venture interests, interests in
limited partnerships, bonds, debentures and all other documents which
constitute evidence of a share, participation or other interest of the
Debtor in property or in an enterprise or which constitute evidence of
an obligation of the issuer; and including an uncertificated security
within the meaning of Part VI (Investment Securities) of the Business
Corporations Act, 1982 (Ontario) and all substitutions therefor and
dividends and income derived therefrom, all of which are herein
collectively called the "Securities";
(j) Undertaking - all present and future personal property, business, and
undertaking of the Debtor not being Inventory, Equipment, Accounts,
Intangibles, Documents of Title, Instruments, Money, Securities or
Documents all of which is herein collectively called the
"Undertaking"; and
(k) Proceeds - all personal property in any form derived directly or
indirectly from any dealing with collateral subject to the Security
Interest or the proceeds therefrom, and including any payment
representing indemnity or compensation for loss of or damage thereto
or the proceeds therefrom, all of which are herein collectively called
the "Proceeds";
all of the above mentioned undertaking, property and assets of the Debtor are
herein called the "Collateral".
2.2 Further Description of Collateral - Without limiting the generality of the
description of Collateral as set out in Section 2.1, for greater certainty the
Collateral shall include the personal property of the Debtor as described in
Section 2.1 hereof, located on or about or in transit to or from the address of
the Debtor set out on the first page of this Agreement and the location(s) set
out in any Schedule "A" attached hereto. The Debtor agrees to promptly inform
the Creditor in writing of the acquisition by the Debtor of any personal
property which is not of the nature or type described herein, and the Debtor
agrees to execute and deliver at its own expense from time to time amendments to
this Agreement or additional security agreements as may be reasonably required
by the Creditor in order that the Security Interest shall attach to such
personal property.
2.3 Grant of Security Interest - As general and continuing security for the
payment and performance of all Obligations, the Debtor hereby grants to the
Creditor a security interest in the Collateral.
2.4 Attachment of Security Interest - The Debtor and the Creditor hereby
acknowledge their mutual intention that the Security Interest will attach to the
Collateral when the Debtor executes and delivers this Agreement and hereby
acknowledge and agree that the Debtor has rights in the Collateral and that
value has been given, and the Debtor and Creditor have not agreed to postpone
the time for attachment of the Security Interest.
2.5 Schedules - This Agreement will be in full force and effect whether or not
Schedule "A" has been completed.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEBTOR
3.1 Representations and Warranties - The Debtor hereby represents and warrants
as follows to the Creditor and acknowledges that the Creditor is relying thereon
(and each of such representations and warranties shall be deemed to be a
condition):
(a) the Debtor has the capacity and authority to incur the Obligations,
create the Security Interest and generally perform its obligations
under this Agreement;
(b) the execution and delivery of this Agreement and the performance by
the Debtor of its Obligations hereunder has been duly authorized by
all necessary proceedings;
(c) except for the Security Interest and Permitted Encumbrances, the
Collateral is owned by the Debtor free from any mortgage, lien,
charge, encumbrance, pledge, security interest or other claim
whatsoever;
(d) the chief executive office of the Debtor is located at the address of
the Debtor as set out on the first page of this Agreement;
(e) the Collateral, except for Inventory in transit, is located at the
places as set out in Schedule "A" attached hereto and at no other
place;
(f) the Collateral does not include any goods which are used or acquired
by the Debtor for use primarily for personal, family or household
purposes; and
(g) the Debtor is not a party to, bound by or subject to any indenture,
mortgage, lease, agreement, instrument, charter or by-law provision,
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 by the Debtor of this
Agreement or the performance by the Debtor of any of the terms hereof.
3.2 Covenants - The Debtor hereby covenants and agrees as follows:
(a) the Debtor will keep the Collateral in good order, condition and
repair and not use the Collateral in violation of the provisions of
this Agreement or any other agreement relating to the Collateral or
any applicable statute, law, by-law, rule, regulation or ordinance;
(b) the Debtor will pay all rents, taxes, rates, levies, assessments and
any other charges of every nature which may be lawfully imposed upon
the Collateral, or any part thereof, and upon the income and profits
of the Debtor, when the same becomes payable;
(c) the Debtor will obtain, observe and perform all its obligations under
leases, licences and agreements necessary for the proper conduct of
its business and the preservation and protection of the Collateral and
the income therefrom;
(d) the Debtor will perform all obligations, incidental to any trust
imposed upon it by statute and will ensure that any breaches of the
said obligations and the consequences of any such breach will be
promptly remedied;
(e) the Debtor will permit a representative of the Creditor to inspect the
Collateral and the operations of the Debtor and for that purpose to
enter the Debtor's premises and any other location where the
Collateral may be situated during reasonable business hours and upon
reasonable notice;
(f) the Debtor will deliver to the Creditor from time to time, promptly
upon request:
(i) any Documents of Title, Instruments, Securities or Chattel Paper
constituting, representing or relating to the Collateral;
(ii) all books of account and all records, ledgers, reports,
correspondence, schedules, documents, statements, lists and other
writings relating to the Collateral for the purpose of
inspecting, auditing or copying the same;
(iii) all financial statements prepared by or for the Debtor regarding
the Debtor's business;
(iv) all policies and certificates of insurance relating to the
Collateral; and
(v) such information concerning the Collateral, the Debtor and the
Debtor's business and affairs as the Creditor may reasonably
request;
(g) the Debtor will keep proper books of account and records covering all
its business and affairs on a current basis and will permit a
representative of the Creditor to inspect the Debtor's books of
account, records and documents and to make copies therefrom during
reasonable business hours and upon reasonable notice;
(h) the Debtor will pay all costs and expenses of the Creditor, its
agents, officers and employees (including without limitation legal
fees and disbursements on a solicitor and his own client basis)
incurred with respect to:
(i) the exercising of any or all of the rights, remedies and powers
of the Creditor under this Agreement; and
(ii) recovering or repossessing the Collateral and any other
proceedings taken for the purpose of enforcing the remedies
provided herein, including without limitation, the appointment of
a Receiver (as hereinafter defined), whether by order of the
court or by private appointment;
(i) the Debtor will indemnify the Creditor for all costs and expenses as
set out in Section 3.2(h) and agrees that all such costs and expenses
will be payable by the Debtor to the Creditor on demand and will bear
interest at the rate of 15% per annum calculated and compounded
monthly both before and after default and judgement until actual
payment;
(j) if the Debtor changes its name, it will promptly notify the Creditor
in writing of the details of such change;
(k) the Debtor shall insure and keep insured the Collateral against loss
or damage by fire, theft and other insurable risks specified by the
Creditor and obtain and maintain public liability insurance in the
amount which is specified by the Creditor (acting reasonably). All
such insurance shall contain provisions and be with insurers which are
satisfactory to the Creditor. The Debtor shall duly pay all premiums
and other monies payable for maintaining such insurance and shall
cause such insurance to be payable to the Creditor as its interest may
appear and to contain a standard mortgage clause in a form
satisfactory to the Creditor. The Debtor hereby assigns to the
Creditor by way of security all such insurance and all proceeds
arising therefrom. The Debtor shall deliver to the Creditor, at the
Creditor's request, certified copies of each insurance policy,
evidence of the payment of such premiums and other monies, and
evidence of the assignment of such insurance to the Creditor.
(l) the Collateral, other than inventory in transit, is now and will be
located at the address or addresses set forth on Schedule "A"; and
(m) the Debtor shall promptly notify the Creditor of any changes in the
location(s) of Collateral and of any new location(s) of Collateral and
of any change in any information provided in this Agreement and of any
actual or potential claim affecting the Debtor, the Collateral or the
Security Interest.
3.3 Performance of Covenants by the Creditor - The Creditor may, in its sole
discretion and upon notice to the Debtor, perform any covenant of the Debtor
under this Agreement that the Debtor fails to perform and that the Creditor is
capable of performing, including any covenants the performance of which requires
the payment of money, provided that the Creditor will not be obligated to
perform any such covenant on behalf of the Debtor and no such performance by the
Creditor will require the Creditor further to perform the Debtor's covenants nor
operate as a derogation of this rights and remedies of the Creditor under this
Agreement.
ARTICLE IV
RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL
4.1 General Restrictions - Except as herein provided, the Debtor will not,
without the prior written consent of the Creditor, which consent will not be
unreasonably withheld:
(a) sell, lease or otherwise dispose of the Collateral or any part
thereof;
(b) release, surrender or abandon possession of the Collateral or any part
thereof; or
(c) move or transfer the Collateral or any part thereof from its present
locations, being the location set out in Schedule "A" attached hereto.
4.2 Proceeds Held in Trust - After am event of default hereunder occurs, all
Proceeds that are moneys collected or received by the Debtor will be received by
the Debtor in trust for the Creditor and will be forthwith paid to the Creditor.
4.3 Permitted Sales - The Debtor may, at any time, provided that there is no
event of default hereunder, without the consent of the Creditor:
(a) lease, sell, license, consign or otherwise deal with items of
Inventory in the ordinary course of its business so that the purchaser
thereof takes title clear of the security interest created by this
Agreement but if such sale or lease results in an Account, such
Account will be subject to the security interest created by this
Agreement;
(b) sell or otherwise dispose of such part of its Equipment which is not
necessary to or useful in connection with its business and
undertaking, or which has become worn out or damaged or otherwise
unsuitable for its purpose.
ARTICLE V
DEFAULT AND ENFORCEMENT
5.1 Events of Default - Payment of all of the Obligations not payable on demand
will immediately become due and the security hereby constituted will immediately
become enforceable in each and every one of the following events:
(a) if the Debtor defaults in payment or performance of any of the
Obligations;
(b) if the Debtor defaults in making any payment hereby required or in
performing or complying with any covenant, undertaking, condition or
obligation contained herein or in any other agreement between the
Debtor and the Creditor, or if any of the warranties of the Debtor
contained herein or in any other Agreement between the Debtor and the
Creditor are or become untrue;
(c) if any event occurs which results in the acceleration of the maturity
of any of the indebtedness of the Debtor to others under any
indenture, agreement or undertaking;
(d) if proceedings are commenced for the dissolution, liquidation or
winding-up of the Debtor or for the suspension of the operations of
the Debtor;
(e) if the Debtor becomes insolvent within the meaning of the Bankruptcy
and Insolvency Act (Canada), makes any general assignment in
bankruptcy or makes any other assignment for the benefit of creditors,
makes any proposal under the Bankruptcy and Insolvency Act (Canada) or
any comparable law, is adjudged bankrupt, files a petition or proposal
to take advantage of any act of insolvency, consents to or acquiesces
in the appointment of a trustee, receiver, receiver and manager,
interim receiver, custodian, sequestrator or other person with similar
powers, of itself or of all or any substantial portion of its property
or assets, or files a petition or otherwise commences any proceeding
seeking any reorganization, arrangement, composition or readjustment
under any applicable bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting creditors' rights or
consents to, or acquiesces in, the filing of such a petition;
(f) if a trustee, receiver, receiver and manager, interim receiver,
custodian, sequestrator or any other person with similar powers shall
be appointed of the Debtor or of all or any substantial portion of its
property or assets, a judgment or an order is made by a tribunal of
competent jurisdiction restraining its ability to deal with all or any
substantial portion of its property and assets or a judgment or order
is made by a tribunal of competent jurisdiction approving any
reorganization, arrangement, composition or readjustment under any
applicable bankruptcy, insolvency, moratorium, reorganization or other
similar law affecting creditors' rights and such appointment, judgment
or order is not vacated, stayed, set aside or diligently contested by
the Debtor in good faith in proceedings before a court of competent
jurisdiction within 30 days of the date thereof;
(g) if a writ of execution, distress, attachment or similar process is
issued or levied against all or a substantial portion of the property
or assets of the Debtor in connection with any default by it in the
payment of any amount in excess of $1,000 or a final judgment or order
in respect of such a default shall be rendered against the Debtor by a
court of competent jurisdiction and such judgment or order shall not
be satisfied in accordance with its terms and shall continue unstayed
and in effect for 30 days or shall not be diligently contested by the
Debtor in good faith in proceedings before a court of competent
jurisdiction;
(h) if a default under any indenture or instrument under which the Debtor
has at the date of this Agreement or shall hereafter have outstanding
indebtedness in excess of $1,000 or the equivalent amount thereof in
another currency shall occur and be continuing and any such
indebtedness shall have been accelerated or shall be or become due and
payable prior to the date on which the same would otherwise have
become due and payable;
(i) if any guarantor of the Debtor to the Creditor is in default under its
guarantee to the Creditor; or
(j) if the Creditor, in good faith, believes and has commercially
reasonable grounds to believe that the prospect of payment or
performance of any of the Obligations is or is about to be impaired or
that the Collateral is or is about to be placed in jeopardy.
5.2 Remedies - At any time after the happening of any event by which the
security hereby constituted becomes enforceable, the Creditor will have the
following rights, powers and remedies, subject to compliance with the Act:
(a) to appoint any person to be an agent or any person to be a receiver,
manager or receiver and manager (herein called the "Receiver") of the
Collateral and to remove any Receiver so appointed and to appoint
another if the Creditor so desires; it being agreed that any Receiver
appointed pursuant to the provisions of this Agreement will have all
of the powers of the Creditor hereunder, and in addition, will have
the power to carry on the business of the Debtor;
(b) to make payments to parties having prior charges or encumbrances on
properties on which the Debtor may hold charges or encumbrances;
(c) to take possession of all or any part of the Collateral with power to
exclude the Debtor, its agents and its servants therefrom;
(d) to preserve, protect and maintain the Collateral and make such
replacements thereof and additions thereto as the Creditor may deem
advisable;
(e) to enjoy and exercise all powers necessary or incidental to the
performance of all functions provided for in this Agreement,
including, without limitation, the power to purchase on credit, the
power to borrow in the Debtor's name or in the name of the Receiver,
the power to borrow on all or any part of the Collateral in priority
to this Agreement or otherwise for such purposes as may be approved by
the Creditor to be evidenced by a Receiver's Certificate, and to
advance its own money to the Debtor at such rates of interest as it
may deem reasonable, provided that the Receiver may borrow money only
with the prior consent of the Creditor;
(f) to sell, lease or dispose of all or any part of the Collateral whether
by public or private sale or lease or otherwise in such manner and on
such terms as to the Creditor may seem commercially reasonable,
including, without limitation, terms that provide time for payment or
credit, provided that:
(i) the Creditor or the Receiver will not be required to sell, lease
or dispose of the Collateral, but may peaceably and quietly take,
hold, use, occupy, possess and enjoy the Collateral, without
molestation, eviction, hindrance or interruption by the Debtor or
any other person or persons whomsoever;
(ii) the Creditor or the Receiver may convey, transfer and assign to a
purchaser or purchasers the title to any of the Collateral so
sold; and
(iii)subject to Section 5.7, the Debtor will be entitled to be
credited with the actual proceeds of any such sale, lease or
other disposition only when such proceeds are received by the
Creditor or the Receiver in cash;
(g) to seize, collect, demand, enforce, recover and receive all or any
part of the Accounts, and to notify account debtors of the Debtor to
pay such Accounts to the Creditor or the Receiver, and to give valid
and binding receipts and discharges therefor and in respect thereof,
and to compromise all or any part of the Accounts that may seem bad or
doubtful to the Creditor or the Receiver, and to give time for payment
thereof, with or without security;
(h) to enjoy and exercise all of the rights and remedies of a secured
party under the Act;
(i) to dispose of all or any part of the Collateral in the condition in
which it was on the date possession of it was taken, or after any
commercially reasonable repair, processing or preparation for
disposition;
(j) if the Collateral is perishable, or the Creditor or the Receiver
believes on reasonable grounds that the Collateral will decline
speedily in value, the Collateral is of a type customarily sold on a
recognized market, the cost of care and storage of the Collateral is
disproportionately large relative to its value, or the Receiver
disposes of the Collateral in the course of the Debtor's business then
the Creditor or Receiver may sell or otherwise dispose of that part of
the Collateral without giving any notice whatsoever;
(k) to commence, continue or defend proceedings in any court of competent
jurisdiction in the name of the Creditor, the Receiver or the Debtor
for the purpose of exercising any of the rights, powers and remedies
set out in this Section 5.2, including the institution of proceedings
for the appointment of a receiver, manager or receiver and manager of
the Collateral; and
(l) at the sole option of the Creditor elect to retain all or any part of
the Collateral in satisfaction of the Obligations.
5.3 Receiver as Agent - The Receiver will be deemed to be the agent of the
Debtor for the purpose of establishing liability for the acts or omissions of
the Receiver and the Creditor will not be liable for such acts or omissions and,
without restricting the generality of the foregoing, the Debtor hereby
irrevocably authorizes the Creditor to give instructions to the Receiver
relating to the performance of its duties as set out herein.
5.4 Expenses of Enforcement and Borrowings - The Debtor will pay to the Receiver
the remuneration of the Receiver and all costs and expenses (including, without
limitation, legal fees and disbursements on a solicitor and his own client
basis) incurred by the Receiver pursuant to its appointment and the exercise of
its powers hereunder, and will pay to the Creditor and the Receiver as required
all amounts of money (including interest thereon) borrowed or advanced by either
of them pursuant to the powers set out herein, and the obligations of the Debtor
to the Creditor and the Receiver pursuant to this Section 5.4 will be payable on
demand and will bear interest at the highest rate borne by any of the
Obligations, which interest will be calculated and payable in the same manner as
the highest rate borne by any of the Obligations.
5.5 Indulgences and Releases - Either the Creditor or the Receiver may grant
extensions of time and other indulgences, take and give up securities, accept
compositions, grant releases and discharges, release any part of the Collateral
to third parties and otherwise deal with the Debtor, debtors of the Debtor,
sureties and others and with the Collateral and other security as the Creditor
or the Receiver may see fit without prejudice to the Obligations or the right of
the Creditor and the Receiver to hold and realize the Collateral.
5.6 Creditor Not Liable for Failure to Exercise Remedies - Neither the Creditor
nor the Receiver will be liable or accountable to the Debtor or to any other
person for any failure to exercise any of the rights, powers and remedies set
out in Section 5.2, and neither of them will be bound to commence, continue or
defend proceedings for the purpose of exercising the same or for the purpose of
preserving or protecting any rights of the Creditor, the Debtor or any other
party in respect of the same.
5.7 Proceeds of Disposition - Subject to the claims, if any, of the prior
secured creditors of the Debtor, all moneys received by the Creditor or by the
Receiver pursuant to Section 5.2 will be applied as follows:
(a) first, in payment of all costs and expenses incurred by the Creditor
in the exercise of all or any of the powers granted to it under this
Agreement, including, without limitation, the costs and expenses in
Subsection 3.2(h), payment of all of the remuneration of the Receiver
and all costs and expenses incurred by the Receiver in the exercise of
all or any of the powers granted to it under this Agreement,
including, without limitation, the remuneration, costs and expenses
referred to in Section 5.4;
(b) second, in payment of all amounts of money borrowed or advanced by
either of the Creditor or the Receiver pursuant to the powers set out
in this Agreement and any interest thereon;
(c) third, in payment of the Obligations, provided that if there are not
sufficient moneys to pay all of the Obligations, the Creditor may
apply the moneys available to such part or parts thereof as the
Creditor, in its sole discretion, may determine;
(d) fourth, in satisfaction of any indebtedness or liability secured by
any security interest in the Collateral subordinate to the security
interest created by this Agreement if written demand therefor is
received by the Creditor or the Receiver before the distribution of
the proceeds of disposition of the Collateral is completed; and
(e) fifth, in payment of any surplus to the Debtor.
5.8 Debtor Liable for Deficiency - If the moneys received by the Creditor or by
the Receiver pursuant to Section 5.2 are not sufficient to pay the claims set
out in Section 5.7(a), (b) or (c), the Debtor will immediately pay to the
Creditor the amount of such deficiency.
5.9 Restriction on Debtor - Upon the Creditor taking possession of the
Collateral or the appointment of a Receiver, all the powers, functions, rights
and privileges of the Debtor or any officer, director, servant or agent of the
Debtor with respect to the Collateral will be suspended unless specifically
continued by the written consent of the Creditor; however, all other powers,
functions, rights and privileges of the Debtor or any officer, director, servant
or agent of the Debtor will be unaffected by such events.
5.10 Rights Cumulative - All rights and remedies of the Creditor set out in this
Agreement will be cumulative and no right or remedy contained herein is intended
to be exclusive but each will be in addition to every other right or remedy
contained herein or in any existing or future security document or now or
hereafter existing at law or in equity or by statute. The taking of a judgment
or judgments with respect to any of the Obligations will not operate as a merger
of any of the covenants contained in this Agreement.
ARTICLE VI
GENERAL
6.1 Document Filings - Debtor hereby authorizes the Creditor to file such
financing statements and other documents and do such acts, matters and things
(including completing and adding schedules hereto identifying the Collateral or
any Permitted Encumbrances affecting the Collateral or identifying the locations
at which the Debtor's business is carried on and the Collateral and records
relating thereto are situate) as the Creditor may deem appropriate to perfect
and continue the Security Interest, to protect and preserve the Collateral and
to realize upon the Security Interest.
6.2 Set-Off - Without limiting any other right of the Creditor, whenever the
Obligations are immediately due and payable or the Creditor has the right to
declare the Obligations to be immediately due and payable (whether or not it has
so declared), the Creditor may, in its sole discretion, set off against the
Obligations any and all monies then owed to Debtor by the Creditor in any
capacity, whether or not due, and the Creditor shall be deemed to have exercised
such right of set off immediately at the time of making its decision to do so
even though any charge therefor is made or entered on the Creditor's records
subsequent thereto.
6.3 Waiver - The failure of any party to this Agreement to enforce at any time
any of the provisions of this Agreement or any of its rights in respect thereto
or to insist upon strict adherence to any term of this Agreement will not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Agreement or deprive the applicable party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. The exercise by any party to this Agreement of any of its
rights provided by this Agreement will not preclude or prejudice such party from
exercising any other right it may have by reason of this Agreement or otherwise,
irrespective of any previous action or proceeding taken by it hereunder. Any
waiver by any party hereto of the performance of any of the provisions of this
Agreement will be effective only if in writing and signed by a duly authorized
representative of such party.
6.4 Creditor as Attorney - The Debtor hereby irrevocably appoints the Creditor
and any person further designated by the Creditor to be the attorney of the
Debtor, so long as a default is continuing, for and in the name of the Debtor to
sign, execute or do any deeds, documents, transfers, demands, assignments,
assurances, consents or things that the Debtor is obliged to sign, execute or do
hereunder and, after the happening of any event by which the security hereby
constitutes becomes enforceable, to commence, continue or defend any proceedings
authorized to be taken hereunder and generally to xxx in the name of the Debtor
in the exercise of all or any of the powers hereby conferred on the Creditor.
6.5 Protest - The Debtor waives protest of any Instrument constituting the
Collateral at any time held by the Creditor on which the Debtor is in any way
liable and notice of any other action taken by the Creditor.
6.6 Successors and Assigns - The Creditor shall be entitled to assign this
Agreement at any time upon giving written notice thereof to the Debtor. This
Agreement is not assignable by the Debtor without the prior written consent of
the Creditor. Subject to the foregoing, this Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. In any action brought by an assignee of this Agreement
and the Security Interest or any part thereof to enforce any rights hereunder
the Debtor shall not assert against the assignee any claim or defence which the
Debtor now has or hereafter may have against the Creditor.
6.7 Amendments - Save for any schedules which may be added hereto pursuant to
the provisions hereof, no modification, variation or amendment of any provision
of this Agreement shall be made except by a written Agreement, executed by the
parties hereto and no waiver of any provision hereof shall be effective unless
in writing.
6.8 Notices - All payments and communications which may be or are required to be
given by either party to the other herein, shall (in the absence of any specific
provision to the contrary) be in writing and delivered or sent by facsimile to
the parties at their following respective addresses:
For the Seller: c/o Network Commerce Inc.
000 Xxxxx Xxx Xxxxx, Xxxxx 000X
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx, Senior Vice
President
For the Buyer: *
Facsimile: *
Attention: Xxxxxx Xxxxxxxxxxx, CEO
and it shall be conclusively deemed to have been received at the time of
delivery or facsimile transmission as the case may be. Either party may from
time to time change its address for service set forth by notice to the other of
them in accordance with this section.
6.9 Further Assurances - Each party hereto agrees from time to time, subsequent
to the date hereof, to execute and deliver or cause to be executed and delivered
to the others of them such instruments or further assurances as may, in the
reasonable opinion of any other of them, be necessary or desirable to give
effect to the provisions of this Agreement.
6.10 Additional Security - The Security Interest is in addition to and not in
substitution for any other security now or hereafter held by the Creditor and is
intended to be a continuing Agreement and shall remain in full force and effect.
The taking of any action or proceedings or the refraining from so doing, or any
other dealing with any other security for the moneys secured hereby, shall not
release or affect the Security Interest hereby granted or any proceedings
hereunder for the realization of the security hereby granted and shall not
release or affect any other security held by the Creditor for the moneys hereby
secured.
6.11 No Obligation to Advance - Neither the execution nor delivery of this
Agreement will obligate the Creditor to advance any moneys to the Debtor.
6.12 Binding Effect - This Agreement will enure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
6.13 Governing Law - This Agreement and the rights and obligations and relations
of the parties hereto shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein (but without giving effect to any conflict of laws rules). The parties
hereto agree that the Courts of Ontario shall have jurisdiction to entertain any
action or other legal proceedings based on any provisions of this Agreement.
Each party hereto does hereby attorn to the jurisdiction of the Courts of the
Province of Ontario.
6.14 Time of the Essence - Time shall be of the essence of this Agreement and of
every part hereof and no extension or variation of this Agreement shall operate
as a waiver of this provision.
6.15 Partial Invalidity - If any provision of this Agreement or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each provision of
this Agreement shall be valid and enforced to the fullest extent permitted by
law and be independent of every other provision of this Agreement.
6.16 Construction Clause - This Agreement has been negotiated and approved by
counsel on behalf of all parties hereto and, notwithstanding any rule or maxim
of construction to the contrary, any ambiguity or uncertainty will not be
construed against any party hereto by reason of the authorship of any of the
provisions hereof.
6.17 Receipt of Copy - The Debtor acknowledges having received a signed copy of
this Agreement.
IN WITNESS WHEREOF the Debtor has executed this Agreement.
-----------------------------------
Per:
I have the authority to bind the
Corporation
