EXHIBIT 4.2
LOAN AGREEMENT
BY AND BETWEEN:
POWER PHOTO KIOSKS INC., a corporation continued under the laws of
Canada and having its head office and principal place of business
located at 000 Xxxxxxxxx Xxxxx, in the municipality of Xxxxxxx,
Xxxxxxx X0X 0X0, herein represented by R. Xxxxx Xxxxx, Esq, Business
Executive, its Chief Executive Officer and Chief Financial Officer;
(hereinafter referred to as the "Borrower")
AND
MLIC HOLDINGS INC., a corporation duly constituted under the laws of
Canada and having its head office and principal place of business
located at 000, xxxxxxxxx xx Xxxxxxxxxxx Quest, Suite 1775, in the
City and District of Xxxxxxxx XX XXX 0X0, herein represented by Xxxxxx
Xxxxxx, Esq.. Business Executive, its President;
(hereinafter referred to as the "Lender")
The Borrower and the Lender are hereinafter sometimes referred to
collectively as the "parties", and each may be referred to in the
singular as a "party".
A) WHEREAS the Borrower wishes to obtain certain bridge financing from
the Lender and the Lender has agreed to advance certain funds to the
Borrower, provided that the conditions set out in this loan agreement
are met and maintained;
B) WHEREAS for the purposes of the Agreement, the following words,
phrases and expressions shall have the following meanings
respectively.
"Agreement" means this agreement regarding bridge financing executed
on the date recorded in this document between the Borrower and the
Lender;
"Closing Date" means May 10, 1999;
"Interest Rate" means an annual interest rate of twelve per cent (12%)
per annum, payable at the Maturity Date;
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May 10, 1999
"Lender's security" shall mean collectively any present and future
security given pursuant to the Agreement and to the Loan and in
particular refers collectively to to the security interests set out
in Clause 4;
"Lender's Shares" mean the shares of common stock of the Borrower,
issued by the Borrower to the Lender under Paragraph 3.2 of this
Agreement;
"Loan" has the meaning set out in Paragraph 1.1 and, in particular,
means the bridge financing of one million Canadian dollars
($1,000,000.00 CD) which is the subject of this Agreement;
"Loan Agreement", "these presents", "this Agreement', "hereunder",
"therein" or other similar words or expressions shall mean the
Agreement;
"Maturity Date" shall mean the earlier of the date of closing of a
private placement and 30th day of July, 1999;
C) WHEREAS all the recitals of this preamble, together with all
schedules and exhibits form an integral part of the Agreement;
NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES HEREIN CONTAINED AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE ACKNOWLEDGED BY THE
PARTIES, THE BORROWER AND THE LENDER MUTUALLY AGREE AS FOLLOWS:
1. Loan.
1.1 The Lender hereby agrees to lend the Borrower the principal amount of
One Million Dollars ($1,000,000.00), the whole subject to the terms
and conditions contained in the Agreement
1.2 As evidence of the Loan and of the interest payable thereon, the
Borrower agrees to deliver a term promissory note in favour of the
Lender, issued and payable by the Borrower to the order of the
Lender, such term note to constitute a "promissory note" pursuant to
the Bills of Exchange Act, negotiable by endorsement and delivery and
in the form set out in Schedule B.
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May 10, 1999
2. Disbursement of Loan.
2.1 The Lender hereby agrees to advance to the Borrower or to its duly
authorized attorney, on the Closing Date, the total amount of the
Loan due under this Agreement, by certified cheque.
3. Interest and Share Participation
3.1 Interest. The principal amount of the Loan shall bear interest at the
rate of twelve per cent (12%) per annum, payable at the Maturity
Date, calculated from the Closing Date to the Maturity Date in full,
inclusively.
Should the Loan be repaid partially or totally before the Maturity
Date for any reason whatsoever, the Borrower shall not have the right
to any reimbursement of the interest due and payable at the Maturity
Date or the date of repayment, as the case may be.
Any interest not paid on the Maturity Date shall bear interest at the
rate applicable to the principal of the Loan, calculated from the
Maturity Date and computed monthly on the first day of each month and
payable on demand.
3.2 Lender's Share Participation. In further consideration for the
present Loan Agreement, and in addition to the payment of the
interest set out above, the Borrower hereby agrees to issue to the
Lender, on the Closing Date Forty Thousand (40,000) Class "A" common
shares ("Lender's Shares") which amount equals four per cent (4%) of
the common shares of the capital stock of the Borrower, on a fully
diluted basis, based upon a current valuation of the Borrower of
Eight Million Five Hundred Thousand Canadian Dollars ($8,500,000.00
CD) and Nine Hundred and Sixty Thousand (960,000) shares currently
outstanding, before issuance of the 40,000 shares to the Lender.
The Lender's Shares shall be delivered to the Lender at the Closing
Date.
The form of the share certificate to be issued to the Lender is
attached as Schedule C of this Agreement.
The Borrower agrees that the Lender's Shares will not be diluted and
that the Borrower will not issue further common stock, except for any
dilution arising from the issuance of securities of the Borrower in
consideration for the raising of new capital, whether through an
offering of securities or by other means. Nothing in this Paragraph
3.2 shall be deemed or interpreted in such a way as to limit the
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May 10, 1999
right of the Borrower to raise new capital, or to seek to encourage
investors to provide such capital through subscription, whether by
debenture, convertible debenture, bond issue, stock issue or such other
financial instrument as the Borrower deems necessary for its own
corporate planning goals.
4. Lender's Security.
4.1 As a general and continuing collateral security for the Loan and for
the performance by the Borrower of all of its obligations under this
Agreement, including without limiting the foregoing, the obligation to
repay the Loan in principal and interest upon the terms and conditions
set out in this Agreement, the Borrower hereby agrees to:
4.1.1 grant in favour of the Lender a first-ranking security
interest on Fifty (50) Kiosks (Power Photo Kiosks); and
4.1.2 make a specific assignment to the Lender of accounts
receivable for all sales of Power Photo kiosks made by the
Borrower within three (3) days after the shipment of the
said Power Photo Kiosks.
4.2 The Lender's Security will take the form of a Security Agreement,
annexed hereto as Exhibit A and an agreement for Assignment of
Indebtedness, annexed hereto as Exhibit B, and such agreements will be
executed by the Borrower on the Closing Date.
5. Limited Recourse Loan.
5.1 The Borrower covenants that, at all times until repayment of the Loan,:
5.1.1 the Loan shall remain at all times a valid and enforceable
obligation of the Borrower;
5.1.2 the security constituted under Clause 4 of this Agreement is
and shall remain at all times valid and enforceable;
5.1.3 at all times, no encumbrance, lien, chattel mortgage,
hypothec, security interest, pledge, charge or priority of
any kind shall rank ahead of the Lender's Security on the
assets as that security is set out in Clause 4, or has the
effect of reducing the amounts that the Lender is entitled
to receive in repayment of the Loan;
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May 10, 1999
5.1.2 the representations and warranties given by the Borrower
pursuant to this Agreement are true and accurate on the
Closing Date; and
5.1.5 the Borrower shall be in compliance with its obligations
pursuant to Clause 7 of this Agreement; and
in consideration of the foregoing covenants and the terms and
conditions set out in this Agreement generally, the Lender agrees that
it shall be bound to execute and enforce its security under this
Agreement only from the assets charged under the Lender's Security as
set out in Clause 4 and/or the term promissory note, described in
Paragraph 1.1, and not from any other assets.
6. Representations and Warranties.
6.1 The Borrower represents and warrants as follows and does so in full
understanding and acknowledgement that the Lender is relying on the
said representations and warranties in concluding the present
Agreement:
6.1.1 Status: the Borrower is a corporation continued, existing
and in good standing under the Canada Business Corporations
Act. No action has been taken by the directors. officers or
shareholders of the Borrower to dissolve it, and the
Borrower has the corporate power and authority to enter into
the present Agreement and to perform all its obligations
hereunder;
6.1.2 All Necessary Proceedings: the Borrower has taken all
necessary corporate actions and proceedings to enable it to
enter into the present Agreement;
6.1.3 Licences: the Borrower holds all permits, licences, trade
names trade marks and other proprietary or intellectual
property rights required to operate its business as it
currently operates it and intends to operate it and, it
shall continue to comply with all requirements of the
obtaining of any other rights required to carry on its
business activities;
6.1.4 Enforceability: Once signed, the present Agreement is a
legal, valid and binding obligation of the Borrower,
enforceable against it by the Lender in accordance with its
terms, except as the obligations hereunder may be limited by
bankruptcy, insolvency and any other laws affecting the
rights of creditors generally;
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May 10, 1999
6.1.5 No Violation; the Borrower warrants that the execution,
delivery and performance of the present Agreement by it, (1)
do not and will not violate or conflict with any provision
of law or any regulation, or any writ, order judgement or
decree of any court or governmental or regulatory authority,
or any provision of its Articles of Incorporation or
By-laws; and (2) do not and will not, with or without the
passage of time or the giving of notice, result in the
breach of, or constitute a default, cause the acceleration
of performance, or require any consent under, or result in
the creation of any lien, charge or encumbrance upon any of
its property or assets pursuant to any material instrument
or agreement to which it is a party or by which it or its
properties may be bound or affected;
6.1.6 No Material Change: the Borrower warrants that there has
been no detrimental material change in its financial
position or otherwise since the date of its last financial
statements.
7. Undertakings of the Borrower.
7.1 The Borrower hereby represents to the Lender that, for so long as any
amount due to the Lender under this Agreement remains outstanding, it
shall comply with and satisfy each of the following terms and
conditions:
7.1.1 the Borrower will repay or will attend to the timely
repayment of the capital and interest of the Loan;
7.1.2 the Borrower will do all things necessary and attend to all
obligations or act required to maintain its corporate
existence;
7.1.3 the Borrower will maintain insurance coverage of sufficient
value on its insurable assets against fire and against all
other risks as may be reasonable to cover, and such
insurance shall be at the full replacement value of such
assets; copies of such insurance policies will be delivered
to the Lender where required by the Lender;
7.1.4 the Borrower will pay when due all taxes, duties and
assessments imposed by any municipal, provincial, federal or
other governmental authority upon its assets, provided,
however, that in the event any such taxes are contested in
good faith, the Borrower shall not be obliged to pay any
such taxes until there is a final judgment of its case;
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May 10, 1999
7.1.5 the Borrower will keep accounting records in accordance with
generally accepted accounting principles and will provide the
Lender with such information relating to the sale of the
Power Photo Kiosks as the Lender may, from time to time,
reasonably require, including, but not limited to,
notification to the Lender of each sale within three (3) days
of shipment.
7.2 The Loan shall be used to manufacture or have manufactured fifty (50)
Power Photo Kiosks1 to supply them fully for operation and to install
them in locations selected by the Borrower, as described in Schedule
A.
7.3 The Borrower agrees to use the proceeds of the Loan exclusively for
the purpose of manufacturing or securing the manufacture, outfitting
and installation of the fifty (50) Power Photo Kiosks and related
expenses and not for other purposes.
8. Events of Default.
8.1 Each of the following events shall be an event of default, and the
Borrower will be deemed to be in default hereunder in each and every
of the following instances:
8.1.1 where the Borrower defaults in the payment, when due, of the
principal or the interest of the Loan;
8.1.2 where the Borrower makes an assignment of its assets for the
benefit of creditors, or is petitioned into bankruptcy, or
is the subject of a receiving order, or makes any proposal
to or arrangement with its creditors respecting its debts or
cannot generally meet its obligations as they become due in
the ordinary course of business, or avails itself of any
provision of any law relating to bankruptcy and insolvency;
8.1.3 where the Borrower's assets or a material part of them are
subject to any attachment sequestration, garnishment or
seizure;
8.1.4 where the Borrower permits an assignment or transfer of all
or of a significant part of its business; or
8.1.5 where any of the representations and warranties of the
Borrower as set out in Clause B prove to be materially false
or incorrect.
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May 10, 1999
8.2 In each and every event of default provided for in this Clause 8:
8.2.1 the Lender will have the right to notify the Borrower in
writing of the existence of the said default and, if such
default is not remedied within a period of seven (7) days of
the date of receipt of the notification, the principal
amount of the Loan shall then, at the option of the Lender,
become immediately due and payable, together with interest
accrued, all without any obligation on the part of the
Lender to give further notice. The Borrower hereby waives
all right to such further notice; and
8.2.2 following the expiration of the seven-day cure period, the
Lender may realize the Lender's Security to the extent
required to recover the whole of the Loan including
principal and interest which is then due and owing.
8.3 Notwithstanding the foregoing, the Lender will be entitled to waive
its rights under this Clause 8, in writing, or extend the time of a
cure period available to the Borrower, without prejudice in subsequent
events of default to its right to exercise its recourses as set out
herein.
9. Notice.
9.1 Any demand, request or notice to be given under this Agreement shall
be in writing in English and shall be sent by registered mail or by
Email, facsimile or other electronic means, subject to confirmation by
registered mail, to the following address unless otherwise instructed
by written notice of the other Party:
IF TO THE BORROWER: POWER PHOTO KIOSKS INC.,
000 Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx X0X 0X0
Tel: 000-000-0000
Fax: 000-000-0000
IF TO THE LENDER: MLIC HOLDINGS INC.
000 xxxxxxxxx xx Xxxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx XX X0X 0X0
Tel: 000-000-0000
Fax: 000-000-0000
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9.2 When Deemed to have been Sent. All notices shall be deemed to have
been duly given and made, unless otherwise specifically provided in
this Agreement (i) when such registered mail properly addressed to the
registered office or principal place of business shall have been
deposited in the mail, postage prepaid, or (ii) on the day following
the transmission of such e-mail or facsimile notice.
10. Termination by Repayment.
10.1 Upon the repayment in full of the Loan and of all amounts owed by way
of interest, the present Agreement shall be terminated, and with it,
all obligations of the Borrower, saving the obligations set out in
Paragraph 3.2 respecting the Lender's Shares, and the Lender shall
remit to the Borrower the promissory note and shall discharge
forthwith all security interests constituted under Clause 4.
11. General Matters.
11.1 This Agreement shall enure to the benefit of and be binding upon the
successors, assigns or legal representatives of the Lender and the
successors or legal representatives of the Borrower.
11.2 Depending upon the context, the singular shall include the plural, and
vice versa; words denoting the masculine gender shall be deemed to
include the feminine and vice versa.
11.3 The invalidity or nullity of any provision of this Agreement shall not
render any other provision or the whole of this Agreement invalid or
null and void.
11.4 The provisions of this Agreement shall be construed! interpreted and
enforced in accordance with, and respective rights and obligations of
the Parties shall be governed by, the laws of Quebec and Canada
applicable herein.
11.5 All amounts herein recited are denominated in Canadian Dollars.
11.6 The present Agreement may be executed in counterparts, each of which
shall be deemed an original but which together shall constitute one
and the same document.
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May 10, 1999
11.7 Each of the parties shall bear its own costs and expenses in
connection with the present transaction. However, in the event that
the Lender is obliged by an event of default on the part of the
Borrower to incur legal expenses, including attorney's fees, such
legal expenses, if reasonable, shall be borne by the Borrower, and the
Borrower hereby agrees to indemnify and hold the Lender harmless with
respect to such legal expenses .
11.8 The Borrower shall not transfer or assign its rights hereunder or the
amount to be received by it hereunder.
11.9 The Parties have expressly requested that the present Agreement and
any related documents, including schedules and exhibits, be drafted in
English, and they find such draft satisfactory. C'est a la demande
expresse des parties que la presente convention ainsi que tout
document y afferant, y compris les exhibits et annexes, soient rediges
en anglais, et les parties s'en declarent satisfaites.
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
duly executed on the Closing Date by a duly authorized representative.
POWER PHOTO KIOSKS INC.
Per:
/s/ Xxxxxx Xxxxx Xxxxx
Witness
MLIC HOLDINGS INC.
Per:
/s/ Xxxxxx X. Xxxxxx
Witness
/s/ Xxxx (illegible)
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May 10, 1999
SCHEDULE A
Power Photo Kiosks Inc. (the "Company') is a CSCA company which has a
proprietary digital imaging software enabling it to superimpose images in a
scene and to use the highest quality digital photo technology from Sony.
This digital software is made available to the public through specialized,
consumer- operated kiosks; which are to be sold to the intended operators of
the kiosks. The Company will have a continuing stream of revenue from the sale
of photo paper to the owner-operators of the kiosks.
The Company has signed certain licensing agreements with sports organizations
which entitle it to use their superstars, images, brands and marks in the
Company's software programme. The Company also has access to more than 60
colleges and universities, largely in the U.S. It is presently in negotiations
with other sectors, such as the film industry, so as to expand its potential
market.
The Company will produce and sell an initial fifty (50) kiosks with the funds
provided by the bridge financing set out in the Loan Agreement, and will
utilise the one million dollars ($1,000,000.00) of the Loan for this purpose
and expenses related to this initial set of 50 kiosks.
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May 10, 1999
SCHEDULE B
PROMISSORY NOTE
MAY 10, 1999.
FOR VALUE RECEIVED, the undersigned, POWER PHOTO KIOSKS INC., (the
"Borrower") promises to pay to the order of MLIC HOLDINGS INC., (the "Lender"),
the principal amount of ONE MILLION CANADIAN DOLLARS ($1,000,000.00 CD) (the
"Loan") on the 30th day of July, 1999 (the "Maturity Date").
In addition, the undersigned promises to pay interest, on the outstanding
balance of this Note at the rate of twelve per cent (12%) per annum on the
Maturity Date, calculated from the Closing Date until the Maturity Date.
The Borrower shall have the right to repay any part of the Loan and/or
interest before the Maturity Date, without penalty.
The undersigned waives all right to notice of default, and in the event the
Borrower is in default on the principal or interest on the Loan, the Lender
shall have the right immediately to demand payment of the entire amount of the
Loan (together with interest thereon), and the Loan or any balance shall
thereupon become due and payable without further notice.
The Parties have expressly requested that the present Agreement and any
related documents, including schedules and exhibits, be drafted in English, and
they find such draft satisfactory. C'est a la demande expresse des parties qua
la presente convention ainsi que tout document y afferant, y compris les
exhibits et annexes, soient redige's en anglais, at les parties s'en declarent
satisfaites.
In witness whereof, this Promissory Note is signed on May 10, 1999
POWER PHOTO KIOSKS INC.
Per:
/s/ Xxxxxx Xxxxx Xxxxx
the Borrower
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May 10, 1999
SCHEDULE C
SHARE CERTIFICATE
POWER PHOTO KIOSKS INC.
EXHIBIT A
SECURITY AGREEMENT
1. For value received, POWER PHOTO KIOSKS INC., a corporation continued under
the laws of Canada (the "Corporation"), hereby grants, mortgages and charges to
MLIC Holdings Inc., (the "Lender"), as and by way of a fixed and specific
mortgage, charge and security interest, all of the right, title and interest
which the Corporation now has or may hereafter have in the assets, property and
undertaking hereinafter described (collectively, the "Collateral"):
(a) the personal property described in Schedule A;
(b) with respect to the personal property described in paragraph (a), all
proceeds therefrom and any insurance or other payments as indemnity or
compensation for loss of or damage to such property or any right to
such payment.
2. Words used in this agreement which are defined in the PPSA (as hereinafter
defined) shall have the meanings given to such words in the PPSA, unless
specifically modified by this agreement and, in addition, the following words
shall have the following meanings:
(a) "Collateral" means the "Collateral" as defined in section 1 hereof
and/or any part thereof';
(b) "Event of Default" means demand being made by the Lender under the
Loan Agreement (as hereinafter described);
(c) "Lender" means MLIC Holdings Inc., its successors and assigns;
(d) "Loan Agreement" means the loan agreement dated May 10, 1999 between
the Corporation and the Lender;
(e) "PPSA" means the Personal Property Security' Act (Ontario) as amended
or replaced or re-enacted from time to time;
(f) "Prime Rate" means the variable annual rate of interest which is
declared by the Royal Bank of Canada from time to time as its prime
rate for Canadian dollar loans made in Canada; and
(g) "Security Interest" means the mortgages, charges and security
interests granted and created pursuant to this agreement.
3. The security interest granted under this agreement secures payment and
performance to the Lender of all debts, liabilities and obligations, present or
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future, direct or indirect, absolute or contingent, matured or not, whether
extended or renewed, at any time owing or remaining unpaid by the Corporation to
the Lender pursuant to the Loan Agreement, and all interests, commissions, fees,
reasonable legal and other costs, charges and expenses; including without
limitation; the expenses under section 6 of this agreement (all of the foregoing
being herein called, and included in; the "Obligations").
4. The Corporation hereby represents and warrants to the Lender that this
agreement has been properly authorized, executed and delivered by the
Corporation
5. The Corporation hereby agrees that:
(a) the Corporation shall, upon request by the Lender, execute and deliver
all such financing statements, certificates, further assignments and
documents and do all such further acts and things as may, in the
reasonable opinion of the Lender. be necessary or desirable to perfect
and preserve the security interest hereby created and give effect to
the intent of this agreement; and
(b) the Corporation will not change its name, its chief executive office,
location thereof the location or locations at which tangible personal
property forming part of the Collateral is ordinarily located, or the
location where it keeps its books or records without providing thirty
(30) days prior written notice to the Lender;
6. Upon the occurrence of an Event of Default, and subject to the provisions of
applicable law, the security interest created hereby shall become enforceable
and the Lender may proceed to enforce payment of the Obligations and the Lender
shall have, in addition to any other rights and remedies provided by law, the
rights and remedies of a secured parry under the PPSA and as provided by this
agreement and, without limiting the foregoing:
(a) the Lender may require the Corporation, by notice in writing given to
the Corporation, to disclose to the Lender the location or locations
of the Collateral and the Corporation agrees to make such disclosure
when so required by the Lender;
(b) the Lender may take proceedings in any court of competent jurisdiction
for the appointment of a receiver of the Collateral or may by
instrument in writing appoint any person to be a receiver of all or
any part of the Collateral and may remove or replace or institute
proceedings to remove or replace any receiver so appointed and appoint
or institute proceedings to appoint another in his stead; and any such
receiver appointed by instrument in writing may exercise all powers
theLender under this agreement; and without limitation, in connection
with such proceedings and/or appointment, it is agreed that:
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(i) the Lender may appoint any persons, firm or corporation as
receiver, including an officer or employee of the Lender;
(ii) such appointment may be made at any time either before or after
the Lender has taken possession of the Collateral;
(iii)the Lender may from time to time fix the remuneration of the
receiver and direct the payment thereof out of the Collateral;
and
(iv) the receiver shall be deemed to be the agent of the Corporation
for all purposes, and for greater certainty, the Lender shall not
be in any way responsible for any actions, whether wilfull,
negligent or otherwise, of any receiver, and the Corporation
hereby agrees to indemnify and save harmless the Lender from and
against any and all claims, demands, actions, costs, damages,
expenses or payments which the Lender may hereafter suffer, incur
or be required to pay as a result of, in whole or in part any
action taken by the receiver or any failure of the receiver to do
any act or thing unless arising through the wilfull misconduct or
gross negligence of the Lender.
(c) the Lender may at its option, take such steps as it considers
necessary or desirable to obtain possession of all or any part of the
Collateral and to that end the Corporation agrees that the Lender may,
by its servants, agents or receiver, at any time and without prior
notice, except as required by applicable law, enter upon the premises
where the Collateral may be found by any lawful means for the purpose
of taking possession of or removing or immobilizing the Collateral or
any part thereof; and the Corporation shall, upon request of the
Lender, assemble and deliver possession of the Collateral to the
Lender, at such place or places as the Lender may designate and at the
Corporation's expense:
(d) in connection with the realization of the Collateral, the Lender may
carry on all or any part of the business and undertaking of the
Corporation and may enter upon, occupy and use all or any part of the
real or personal property owned or used by the Corporation for such
time as the Lender sees fit, free of charge, and the Lender shall not
be liable to the Corporation for any negligent or imprudent act or
omission in so doing other than acts or omissions of gross negligence
or wilfull misconduct or in respect of any rent, charges, depreciation
or damages in connection with such actions;
(e) the Lender may borrow money for the purpose of carrying on the
business of the Corporation or for the maintenance, preservation or
protection of the Collateral and mortgage, charge, pledge or grant a
security interest in the Collateral, whether or not in priority to
this security interest, to secure repayment of any money so borrowed,
upon such terms and conditions and at such time or times as the Lender
determines advisable;
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(f) the Lender may file such proofs of claim or other documents as may be
necessary or desirable to have its claim lodged in any bankruptcy,
winding-up, liquidation, dissolution or other proceedings (voluntary
or otherwise) relating to the Corporation;
(g) the Lender may, subject to applicable law, seize, collect, realize or
dispose of the Collateral by private sale, public sale, tease or
otherwise upon such terms and conditions as the Lender may determine
and whether or not the Lender has taken possession of the Collateral,
or may otherwise deal with the Collateral or any part thereof in such
manner, upon such terms and conditions and at such times as may seem
to the Lender advisable;
(h) the Lender may repair, process, modify, complete or otherwise deal
with the Collateral and prepare for the disposition of the Collateral,
whether on the premises of the Corporation or otherwise;
(i) the mode of disposition of the Collateral or any part thereof shall be
in the sole discretion of the Lender, and it shall not be deemed to be
commercially unreasonable for the Lender to dispose of the Collateral
or any part thereof in the ordinary course of business and the Lender
may purchase all or any part of the Collateral at a public sale;
(j) the Lender may charge on its own behalf, and pay to others, reasonable
sums for expenses incurred and for services rendered (including legal
fees and fees for receivers, managers, accountants and other
professionals) in connection with Lender's realizing, holding,
repairing, processing, preparing for disposition or disposing of the
Collateral or otherwise dealing with the Collateral in accordance with
the provisions of this agreement or the PPSA and all such sums shall
be payable to the Lender on demand and until paid in full shall bear
interest at the rate of interest provided for in the Loan Agreement
following the occurrence and during the continuance of an Event of
Default, and if the disposition of the Collateral fails to satisfy the
Obligations secured by this agreement and the expenses so incurred in
full, the Corporation shall be liable to pay any deficiency to the
Lender on demand;
(k) the Lender may pay any claim, lien, security interest or other
encumbrance that may exist or be threatened against the Collateral, in
which event the amount so paid, together with all costs and expenses
of the Lender incurred in connection therewith, shall be included in
the Obligations and secured hereby and until paid in full shall bear
interest at the rate of interest provided for in the Loan Agreement
following the occurrence and during the continuance of an Event of
Default;
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(l) Lender shall have the right to postpone indefinitely the sale of the
Collateral or any part thereof and shall further have the right,
pending any such sale, to lease the Collateral, or any part thereof,
to any person for such period as the Lender, in its absolute
discretion, deems necessary in order to recover, or to attempt to
recover, any indebtedness forming a part of the Obligations;
(m) the Lender shall not be liable or accountable for any failure to
realize or otherwise deal with the Collateral, or any part thereof,
and shall not be bound to institute proceedings for the purpose of
effecting any of the foregoing or for the purpose of preserving any
rights of the Lender, the Corporation or any other person in respect
of the Collateral; and
(n) all monies received or collected by the Lender in respect of the
Collateral may be applied on account of such part of the Obligations
as the Lender deems appropriate.
7. When required to do so by the PPSA, the Lender shall give to the Corporation
the written notice required by the PPSA of any intended disposition of the
Collateral by serving such notice personally on the Corporation or by mailing
such notice by registered mail to the last known post office address of the
Corporation or by any other method authorized or permitted by the PPSA.
8. The Corporation and the Lender further agree that:
(a) the Corporation shall not be discharged by an extension of time,
additional adyances, renewals and extensions, the taking of further
security, releasing security, extinguishment of the security interest
as to all or any part of the Collateral, or any other act except a
release or discharge of the security interest upon the full payment of
the Obligations secured by this agreement;
(b) any failure by the Lender to exercise any right set out in this
agreement shall not constitute a waiver thereof; nothing in this
agreement or in the Obligations shall preclude any other remedy by
action or otherwise for the enforcement of this agreement or the
payment in full of the Obligations;
(c) all rights of the Lender hereunder shall be assignable to the extent
permitted under the Loan Agreement;
9. Upon the occurrence of an Event of Default, the Corporation hereby
irrevocably constitutes and appoints the Lender and each of its officers,
holding office from time to time, as the true and lawful attorney of the
Corporation with power of substitution in the name of the Corporation to do any
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such and all such acts and things or execute and deliver all such agreements,
documents and instruments as the Lender, in its sole discretion, considers
necessary or desirable to carry out the provisions and purposes of this
agreement or to exercise any of its rights and remedies hereunder, and to do all
acts or things necessary to realize or collect the proceeds, and the Corporation
hereby ratifies and agrees to ratify all lawful acts of any such attorney taken
or done in accordance with this section. This power of attorney, being a power
coupled with an interest, shall not be revoked or terminated by any act or thing
other than the termination of this agreement.
10. All rights of the Lender hereunder shall enure to the benefit of its
successors and permitted assigns in accordance with the terms of the Loan
Agreement and all obligations of the Corporation hereunder shall bind the
Corporation and its successors and permitted assigns.
11. This agreement shall be construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein.
12. The Corporation acknowledges receipt of an executed copy of this agreement
and, to the extent permitted by applicable law, waives any right to receive
copies of any financing statements, financing change statements or verification
statements which may be filed or issued in connection therewith.
IN WITNESS WHEREOF the Corporation has caused this agreement to be executed
by its duly authorized officer(s), this 10th day of May, 1999
POWER PHOTO KIOSKS INC
By: /s/ Xxxxxx Xxxxx Xxxxx
------------------------
By:
------------------------
WITNESSES:
-------------------------------
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SCHEDULE "A" (OF EXHIBIT A)
FIFTY (5O) POWER PHOTO KIOSKS
EXHIBIT B
ASSIGNMENT OF INDEBTEDNESS
1. FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged, the
undersigned hereby assigns, transfers and sets over unto MLIC Holdings Inc.
(hereinafter called the "Secured Party") and grants to the Secured Party. a
security interest in and to the full benefit of, and all its rights, benefits,
claims, chooses in action and any other interest whatsoever under, all
indebtedness and liability now or hereafter owing (hereinafter called the
"Debts") of the parties as listed in Schedule A hereto and in any subsequent
addendum thereto (hereinafter called the "Account Debtors") to the undersigned,
and the undersigned further assigns and transfers to the Secured Party a
security interest in all deeds, documents, writings, papers, books of account
and other books and records relating to the Debts or by which the Debts are or
may hereafter be evidenced, effected or acknowledged.
2. The undersigned hereby agrees that the Debts shall be held by the Secured
Party as general and continuing collateral security for the fulfilment of all
obligations, present or future, direct or indirect, absolute or contingent,
matured or not, of the undersigned to the Secured Party pursuant to the Loan
Agreement dated the 10th day of May, 1999 between the undersigned and the
Secured Party.
3. The undersigned expressly authorizes the Secured Party after the occurrence
of any default in any of the Obligations, to collect, demand, xxx for, enforce,
recover and receive the Debts and to give valid and binding receipts and
discharges therefor and in respect thereof, the whole to the same extent and
with the same effect as if the Secured Party were the absolute owner thereof and
without regard to the state of accounts between the undersigned and the Secured
Party.
4. All monies received by the undersigned from the collection of the Debts after
the occurrence of any default in any of the Obligations shall be received in
trust for the Secured Party.
5. After the occurrence of any default in any of the Obligations, the Secured
Party may sell either by public or private sale or otherwise dispose of the
Debts in such manner, upon such terms and conditions, for such consideration and
at such time or times as may seem to it advisable and without notice to the
undersigned and without any liability for any loss resulting therefrom.
6. The Secured Party may apply any monies received by it against any of the
Obligations as the Secured Party deems best or hold the same in a separate
collateral account for such time as it may see fit and then apply the same as
aforesaid, the whole without prejudice to its claim for any deficiency.
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7. The Secured Party may compound, compromise, grant extensions or renewals,
take and give up securities, accept compositions, grant releases and discharges
and otherwise deal with the Account Debtors, the undersigned and others, and
with the Debts, as the Secured Party may see fit, without prejudice to the
liability of the undersigned, or the Secured Party's right to hold and realize
the security granted hereunder.
8. The Secured Party need not present, protest, give any notice in connection
with, prevent outlawry of, collect, enforce or realize any of the Debts and need
not protect or preserve them from, and is hereby released from all
responsibility for any depreciation in or loss of value which such Debts may
suffer. The undersigned shall from time to time take all steps as may be
necessary or desirable to perfect or maintain the perfection of its security
interest in the Debts.
9. The undersigned agrees to pay to the Secured Party its charges for receiving,
whether directly or through the undersigned, payments on account of the Debts,
and also to pay to the Secured Party its charges for services in collecting,
enforcing or realizing any of the Debts or attempting so to do and authorizes
the Secured Party to add such charges, sums or expenses to the indebtedness of
the undersigned and/or to retain the same out of monies received by the Secure
Party.
10. The undersigned covenants and agrees with the Secured Party that all of the
obligations of the undersigned and others in respect of the Debts and all other
agreements incidental or ancillary thereto shall be fulfilled, and the
undersigned shall from time to time forthwith on the Secured Party's request
furnish to the Secured Party all writings and information requested relating to
the Debts and the Secured Party shall be entitled from time to time to inspect
any books, papers, documents or records evidencing or relating thereto and make
copies thereof and for such purposes the Secured Party shall have access to all
premises occupied by the undersigned.
11. The undersigned covenants and declares that none of the Debts have been
assigned to or pledged or encumbered in favour of any other person, firm or
corporation and the undersigned covenants and agrees with the Secured Party not
to otherwise assign, pledge or encumber any of the Debts so long as this
agreement remains in force, to or in favour of any other person, firm or
corporation without the written consent of the Secured Party.
12. This agreement shall be binding on the undersigned and its successors and
assigns and shall enure to the benefit of the Secured Party and its successors
and assigns.
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13. This agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF this agreement has been executed under the seal of
the undersigned at Toronto, this 10th day of May, 1999
POWER PHOTO KIOSKS INC
By: /s/ Xxxxxx Xxxxx Xxxxx
------------------------
By:
------------------------
WITNESSES:
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SCHEDULE "A" (OF EXHIBIT B)
