MEMORANDUM OF AGREEMENT entered into this 27 day of March, 2003. BETWEEN:
MEMORANDUM OF AGREEMENT entered into this 27 day of March, 2003.
BETWEEN:
CTI DIVERSIFIED HOLDINGS INC.
(hereinafter referred to as “the Lender”)
OF THE FIRST PART
- and -
FLOWRAY INC. and FLOWSTAR TECHNOLOGIES INC.
(hereinafter referred to as “the Borrowers”)
OF THE SECOND PART
WHEREAS the Borrowers have requested the Lender to provide funding for operations, and the Lender is prepared to advance funds to the Borrowers from time to time on the terms and subject to the conditions hereinafter set forth;
AND WHEREAS the Borrowers have already received payments from Xxxxxxx X. Xxxxxx on January 31, 2003 in the amount of $5Q000.00 and on February 13, 2003 in the amount of $100,000.00 (the “Xxxxxx Funds”);
AND WHEREAS the Lender has paid Xxxxxxx X. Xxxxxx the Xxxxxx Funds;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto covenant and agree with each other, except as otherwise stated, as follows:
1. The parties hereto acknowledge and agree that from time to time the Borrowers will request funding from the Lender for operating purposes. Each request for funding by the Borrowers shall be first approved by the Lender who can refuse to approve any such request for any reason whatsoever.
2. Upon approval by the Lender of each funding request by the Borrowers,
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and prior to the advance of each funding request, the Borrowers shall complete, date, execute and provide to the Lender a promissory note for each advance, with each promissory note to be in the form as the promissory note attached hereto as Schedule “A” (the “Promissory Notes”).
3. The Borrowers shall pay interest to the Lender on the Promissory Notes at the rate of 5% per annum, calculated monthly on the last day of the month, not in advance, from the date of each Promissory Note on the outstanding balance owing on the Promissory Notes until the full amount owing on the Promissory Notes, including interest, is paid in full.
4. The Promissory Notes shall be paid by the Borrowers to the Lender as follows:
| 25% of the balance owing on the Promissory Notes | March 30, 2004 | |
| 25% of the balance owing on the Promissory Notes | September 30, 2004 | |
| 25% on the balance owing on the Promissory Notes | March 30, 2005 | |
| Balance together with all accrued interest | September 30, 2005 |
5. The place of repayment of the Promissory Notes shall be at 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, or such other address as is notified by the Lender to the Borrowers in writing.
6. Each of the Borrowers represent and warrant to the Lender the following:
| (a) | The Borrowers are corporations duly
incorporated, validly existing and duly registered or qualified to carry
on business in the Province of Alberta; |
|
| (b) | The execution, delivery and performance
by the Borrowers of this Agreement have been duly authorized by all necessary
actions and do not violate its constating documents or any applicable
laws or agreements to which it is subject or by which it is bound. |
7. Each of the Borrowers covenant and agree with the Lender, while this Agreement is in effect, the following:
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| (a) | The Borrowers will not incur any further
capital expenditures in excess of $100,000.00; |
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| (b) | The Borrowers shall not consent to or
facilitate a change in the ownership of the shares of the Borrowers; |
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| (c) | The Directors of the Borrowers shall
not declare any dividends; |
|
| (d) | The Borrowers shall not advance any
loans to any shareholders or any person, and |
|
| (e) | The Borrowers shall not sell, transfer,
convey, lease or otherwise dispose of any of its properties or assets
other than in the ordinary course of business and on commercially reasonable
terms; |
without the prior written consent of the Lender, such consent not to be unreasonably withheld.
8. The Borrowers further covenant and agree with the Lender, while this Agreement is in effect, to provide the Lender with annual financial statements for the Borrowers within 60 days of the Borrowers’ fiscal year end, which statements shall be reviewed by an accountant who shall provide a “Notice to Reader” report in respect of the same.
9. As security for the repayment to the Lender of the Promissory Notes, and all other sums owing to the Lender pursuant to this Agreement, the Borrowers shall provide contemporaneously with the execution of this Agreement the following:
| (a) | A general security agreement, in the
form attached hereto as Schedule “B” (the “General Security
Agreement”); and |
|
| (b) | A Postponement by Xx. Xxxxxxx Xxxxxxxxx
in favour of the Lender in the form attached hereto as Schedule “C”; |
10. The Lender shall obtain from Xxxxxxx X. Xxxxxx an acknowledgement in writing that the Xxxxxx Funds have been repaid in full and that Xxxxxxx X. Xxxxxx has
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no claim against the Borrowers on account of the Xxxxxx Funds. Upon receipt of the acknowledgement, the Borrowers shall complete, date, execute and provide to the Lender a Promissory Note in the amount of $150,000.00 to be in the form as the Promissory Note attached hereto as Schedule “A”.
11. Each of the parties shall, upon the reasonable request of the other parties, make, do, execute or cause to be made, done, or executed all such further and other lawful acts, deeds, things, documents and assurances of whatsoever nature and kind for the better or more perfect or absolute performance of the terms and conditions of this Agreement.
12. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one in the same Agreement.
13. This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta, and the parties hereto submit to the jurisdiction of the Courts in the Province of Alberta.
14. This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF the parties have hereunto set their hands and affixed their seals as of the day and year first above written.
| CTI DIVERSIFIED HOLDINGS INC. | ||
| Per: | ||
| FLOWRAY INC. | ||
| Per: | /s/ Xxxxxxx Xxxxxxxxx | |
| FLOWSTAR TECHNOLOGIES INC. | ||
| Per: | /s/ Xxxxxxx Xxxxxxxxx | |
Schedule “A”
PROMISSORY NOTE
CND$___________________
Dated: __________________
FOR VALUE RECEIVED, FLOWRAY INC. and FLOWSTAR TECHNOLOGIES
INC.
(collectively, the “Borrowers”), both companies incorporated under
the laws of Alberta and having an office do 0000 - 00 Xxxxxx, Xxxxxxxx, Xxxxxxx,
X0X 0X0, jointly and severally promise to pay to the order of CTI DIVERSIFIED
HOLDINGS, INC. (the “Lender”), do 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0, the principal sum as stated above of lawful money
of Canada, together with interest at the rate of 5% per annum, calculated monthly
on the last day of the month not in advance from the date of advance, as well
after as before maturity or default, on the amount of principal from time to
time remaining unpaid. The principal and all accrued and unpaid interest are
payable to the Lender as follows:
| 25% of the Principle Amount | March 30, 2004 | |
| 25% of the Principle Amount | September 30, 2004 | |
| 25% of the Principle Xxxxxx | Xxxxx 00, 0000 | |
| Xxxxxxx together with all accrued interest | September 30, 2005 |
The borrowers may from time to time repay all or any part of the principal that remains unpaid, together with applicable interest on the principal so paid to the date of payment without notice or bonus.
THE BORROWERS waive demand and presentment for payment, notice of non-payment, protest, and notice of protest of this Note.
| THE CORPORATE SEAL OF | ) | |
| FLOWRAY INC. | ) | |
| was affixed in the presence of | ) | |
| ) | ||
| ) | ||
| ) | ||
| Authorized Signatory | ) | |
| ) | ||
| ) | ||
| ) | ||
| Authorized Signatory | ) | |
| ) | ||
| THE CORPORATE SEAL OF | ) | |
| FLOWSTAR TECHNOLOGIES INC. | ) | |
| was affixed in the presence of: | ) | |
| ) | ||
| ) | ||
| ) | ||
| Authorized Signatory | ) | |
| ) | ||
| ) | ||
| ) | ||
| Authorized Signatory | ) |
Schedule "B"
GENERAL SECURITY AGREEMENT
This Agreement in writing made between:
FLOWRAY INC. and FLOWSTAR TECHNOLOGIES INC.
(hereinafter collectively called the “Debtor”)
- and -
CTI DIVERSIFIED HOLDINGS, INC.
(hereinafter called the “Secured Party”)
| 1. | SECURITY INTEREST |
| 1.1 | (a) For
value received, the Debtor hereby transfers, mortgages, grants and assigns
to the Secured Party, and grants a security interest (the “Security
Interest”) to the Secured Party in all of the present and after-acquired
personal property of the Debtor (or in which the Debtor now or anytime
hereafter has or acquires rights) of any and all kinds whatsoever. Without
limiting the generality of the foregoing, the Security Interest herein
granted extends to all present and after-acquired Goods, (including all
parts, accessories, attachments, special tools, additions and accessions
thereto), Chattel Paper, Documents of Title (whether negotiable or not)
Instruments, Intangibles and Securities which the Debtor now or hereafter
may own or in which the Debtor acquires an interest or rights (including
without limitations such as may be returned to or repossessed by the Debtor)
and all Proceeds and renewals thereof Accessions thereto and substitutions
therefor; and the personal property in which the Security Interest is
granted hereby is collectively herein referred to as the “Collateral”. |
| (b) | In this Agreement, the terms “Goods”,
“Chattel Paper”, “Documents of Title”, “Equipment”,
“Consumer Goods”, “Instruments”, “Intangibles”,
“Securities”, “Proceeds”, “Inventory”, and
“Accession”, whenever used herein shall be interpreted pursuant
to their respective meanings when used in the Personal Property Security
Act of Alberta as amended from time to time, which Act including amendments
thereto, and any Acts substituted therefor and amendments thereto is herein
referred to as the “PPSA”. The term, “Inventory” when
used herein shall include livestock and the young thereof after conception
and crops that become crops within one year of execution of this Security
Agreement. Any reference herein to “Collateral” shall, unless
the context otherwise requires, be deemed to be a reference to “Collateral
or any part thereof’. The term “Proceeds” whenever used
herein and interpreted as above shall by way of example include trade-ins,
equipment, cash, bank accounts, notes, chattel paper, goods, contract
rights, accounts, and any other personal property or obligation received
when such Collateral or Proceeds are sold, exchanged, collected or otherwise
disposed of. |
| (c) | The Security Interest granted hereby
shall not extend to or apply to and Collateral shall not include the last
day of the term of any lease or agreement therefor but |
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upon the enforcement of the Security Interest the
Debtor shall stand possessed of such last day in trust to assign the same
to any person acquiring such term. |
|
| 2. | INDEBTEDNESS SECURED |
The
Security Interest as granted hereby secures payment and satisfaction of
any and all obligations, indebtedness and liability whatsoever of the
Debtor to the Secured Party (including interest thereon and legal fees
and disbursements on a solicitor-and-his-own-client basis), present or
future, direct or indirect, absolute, or contingent, matured or not, extended
or renewed, wheresoever and howsoever incurred and any ultimate unpaid
balance thereof and whether the same is from time to time reduced and
thereafter increased or entirely extinguished and thereafter incurred
again and whether the Debtor be bound alone or with another or others
and whether as principal or surety (hereinafter collectively called “Indebtedness”).
If the Security Interest in the Collateral is not sufficient, in the event
of Default, to satisfy all Indebtedness of the Debtor, the Debtor acknowledges
and agrees that the Debtor shall continue to be liable for any Indebtedness
remaining outstanding and the Secured Party shall be entitled to have
and pursue full payment thereof |
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| 3. | REPRESENTATIONS AND WARRANTIES OF DEBTOR |
The
Debtor represents and warrants, and so long as this Security Agreement
remains in effect shall be deemed to continuously represent and warrant,
to the Secured Party that: |
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| (a) | The Collateral is genuine and owned
by the Debtor free of all security interests, mortgages, liens, claims,
charges or other encumbrances (hereinafter collectively called the “Encumbrances”)
save for the Security Interest and those encumbrances shown on Schedule
“A” hereto or hereafter approved in writing by the Secured Party
prior to their creation or assumption; and further that none of the Collateral
has been sold, transferred, assigned, conveyed or otherwise disposed of
by the Debtor; and |
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| (b) | Each debt, Chattel Paper and Instrument
constituting Collateral is enforceable in accordance with its terms against
the party obligated to pay the same (“Account debtor”) and the
amount represented by the Debtor to the Secured Party from time to time
as owing by each Account debtor or by all Account debtors will be the
correct amount actually and unconditionally owing by such Account debtor
or Account debtors, except for normal cash discounts where applicable,
and no Account debtor will have any defence, set-off, claim or counterclaim
against the Debtor which can be asserted against the Secured Party, whether
in any proceeding to enforce Collateral or otherwise. |
|
Goods in transit to such
locations and Inventory on lease or consignment; and all fixtures or Goods
about to become fixtures and all crops and all oil, gas or other materials
to be extracted and all timber to be cut which forms part of the Collateral
will be situate at one of such locations. |
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| 4. | COVENANT OF THE DEBTOR | |
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So long as this Security Agreement remains in effect the Debtor covenants and agrees with Secured Party:
| (a) | To defend the Collateral
against the claims and demands of all other parties claiming the same
or an interest therein; to keep the Collateral free from all Encumbrances,
except for the Security Interest and those shown on Schedule “A”
or hereafter approved in writing by the Secured Party, prior to their
creation and assumption; and not to sell, exchange, transfer, assign,
lease or otherwise dispose of the Collateral or any interest therein without
the prior written consent of the Secured Party; provided always that,
until default, the Debtor may, in the ordinary course of the Debtor’s
business, sell or lease Inventory and, subject to Clause 7 hereof, use
monies available to the Debtor. |
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| (b) | To notify the Secured Party
promptly of |
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(i) |
any change in the information contained
herein or in the schedule hereto relating to the Debtor, the Debtor’s
business or the Collateral; |
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(ii) |
the details of any significant acquisition
of Collateral; |
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(iii) |
the details of any claims or litigation
effecting the Debtor or the Collateral; |
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(iv) |
any loss or damage to the Collateral; |
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(v) |
any default by any Account debtor in
payment or other performance of his obligations with respect of the Collateral;
and |
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(vi) |
the return to or repossession by the
Debtor of any Collateral. |
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| (c) | To keep the Collateral in
good order, condition and repair and not to use the Collateral in violation
of the provisions of this Security Agreement or any other agreement relating
to the Collateral or any policy insuring Collateral or any applicable
statute, law, by-law, rule, regulation or ordinance; |
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| (d) | To do, execute, acknowledge
and deliver such financing statements and further assignments, transfers,
documents, acts, matters and things (including further schedules hereto)
as may be reasonably requested by the Secured Party of or in respect of
the Collateral in order to give effect to these presents and to pay all
costs for searches and filings in connection therewith; |
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| (e) | To pay all taxes, rates,
levies, duties, assessments and other charges of every nature which may
be lawfully levied, assessed or imposed against or in respect of the Debtor
or the Collateral as and when the same become due and payable; |
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| (f) | To insure the Collateral
for such periods, in such amounts, in such terms and against loss or damage
by fire and such other risks as the Secured Party shall reasonably direct
with loss payable firstly to the Secured Party in form and manner acceptable
to the Secured Party and to pay all premiums therefor; to prevent the |
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Collateral, save Inventory
sold or leased as permitted hereby, from being or becoming an Accession
to other property not covered by this Security Agreement; |
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| (h) | To carry on and conduct
the business of the Debtor in a proper and efficient manner and so as
to protect and preserve the Collateral and to keep, in accordance with
generally accepted accounting principles, consistently applied, proper
books of account for the Debtor’s business as well as accurate and
complete records concerning Collateral, and xxxx any and all such records
and Collateral at the Secured Party’s requests so as to indicate
the Security Interest; |
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| (i) | To deliver to the Secured
Party from time to time promptly on request: |
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(i) |
any Documents of Title, Instruments,
Securities and Chattel Paper constituting, representing or relating to
Collateral; |
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(ii) |
all books of accounts and all records,
ledgers, reports, correspondence, schedules, documents, statements, lists
and other writings relating to Collateral for the purpose of inspecting,
auditing or copying the same or in the event of Default for such other
purposes as the Secured Party may require; |
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(iii) |
all financial statements prepared by
or for the Debtor regarding the Debtor’s business; |
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(iv) |
all policies and certificates of insurance
relating to Collateral; and |
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(v) |
such information concerning the Collateral,
the Debtor and the Debtor’s business and affairs as the Secured Party
may reasonably request. |
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5. USE AND VERIFICATION OF COLLATERAL
Subject to compliance with the Debtor’s covenants contained herein and Clause 7 hereof, the Debtor may, until Default, possess, operate, collect, use and enjoy and deal with the Collateral in the ordinary course of the Debtor’s business in any manner not inconsistent with the provisions hereof, provided always that the Secured Party shall have the right at any time and from time to time to verify the existence and state of the Collateral in any manner that the Secured Party may consider appropriate and the Debtor agrees to furnish all assistance and information and to perform all such acts as the Secured Party may reasonably request in connection therewith and for such purpose to grant to the Secured Party or its agents access to all places where Collateral may be located and to all premises occupied by the Debtor,
6. SECURITIES
If the Collateral at any time includes Securities, the Debtor authorizes the Secured Party to transfer the same or any part thereof into its own name or that of its nominee so that the Secured Party or its nominee may appear of record as the sole owner thereof, provided that, until Default, the Secured Party shall deliver promptly to the Debtor all notices or other
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communications received by it or its nominee as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to the Debtor or its order a proxy to vote and take all action with respect to such security. After Default, the Debtor waives all rights to receive any notices or communications received by the Secured Party or its nominee as such registered owner and agrees that no proxy issued by the Secured Party to the Debtor or its order as aforesaid shall thereafter be effective.
7. COLLECTION OF DEBTS
Before or after Default under this Security Agreement, the Secured Party may notify all or any Account debtors of the security interest and may also direct such Account debtors to make all payments on Collateral to the Secured Party. The Debtor acknowledges that any payments on or other proceeds of Collateral received by the Debtor from Account debtors, whether before or after notification of this Security Interest to the Account debtors and whether before or after default under this Security Agreement shall be received and be held by the Debtor in trust for the Secured Party and shall be turned over to the Secured Party upon request.
8. INCOME FROM AN INTEREST ON COLLATERAL
| (a) | Until Default, the Debtor reserves the
right to receive any monies constituting income or interest on Collateral
and if the Secured Party receives any such monies prior to default, the
Secured Party shall either credit the same to the account of the Debtor
or pay the same promptly to the Debtor. |
|
| (b) | After Default, the Debtor will not request
or receive any monies constituting income from or interest on Collateral
and if the Debtor receives any such monies without any request by it,
the Debtor will pay the same promptly to the Secured Party. |
9. DISPOSITION OF MONIES
Subject to any applicable requirements of the PPSA, all monies collected or received by the Secured Party pursuant to or in exercise of any right it possesses with respect to Collateral shall be applied on account of Indebtedness in such manner as the Secured Party deems best or, at the option of the Secured Party, may be held unappropriated in a Collateral account or released to the Debtor, all without prejudice to the liability of the Debtor or the rights of the Secured Party hereunder, and any surplus shall be accounted for as required by law.
10. EVENTS OF DEFAULT
The happening of any of the following events or conditions shall constitute default hereunder (and is herein referred to as a “Default”):
| (a) | The non-payment when due, whether by acceleration
or otherwise, of any principal or interest forming part of the Indebtedness
or the failure of the Debtor to observe or perform any obligation, covenant,
term, provision or condition contained in this Security Agreement or any
other agreement between the Debtor and the Secured Party; |
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| (b) | The death of or a declaration of incompetency
by a Court of competent jurisdiction with respect to the Debtor, if an
individual; |
|
| (c) | The bankruptcy or insolvency of the
Debtor; the filing against the Debtor of a petition in bankruptcy; the
making of an authorized assignment for the benefit of creditors by the
Debtor; the appointment of a receiver or trustee for the Debtor or for
any assets of the Debtor or the institution by or against the Debtor of
any other type of insolvency proceeding under the Bankruptcy Act or
otherwise; |
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| (d) | If the Debtor is a company, the commencement
of proceedings under or the taking of any benefit by the Debtor under
any statute providing for winding up or for companies creditors arrangements; |
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| (e) | The institution by or against the Debtor
of any formal or informal proceeding for the dissolution or liquidation
or settlement of claims against or winding up of the affairs of the Debtor; |
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| (f) | If any encumbrance effecting Collateral
becomes enforceable against the Collateral; |
|
| (g) | If the Debtor ceases or threatens to
cease to carry on business or makes or agrees to make a bulk sale of assets
without complying with applicable law or commits or threatens to commit
an act of bankruptcy; |
|
| (h) | If any execution, sequestration, extant
or other process of any court becomes enforceable against the Debtor or
if a distress or analogous process is levied upon the assets of the Debtor
or any part thereof, |
|
| (i) | If any certificate, statement, representation,
warranty or audit report heretofore or hereafter furnished by or on behalf
of the Debtor pursuant to or in connection with this Security Agreement,
or otherwise, (including, without limitation, the representations and
warranties contained herein) or as an inducement to the Secured Party
to extend any credit to or to enter into this or any other agreement with
the Debtor, proves to have been false in any material respect at the time
as of which the facts therein set forth were stated or certified, or proves
to have omitted any substantial contingent or unliquidated liability or
claim against the Debtor; or if up on the date of execution of this Security
Agreement, there shall have been any material adverse change in any of
the facts disclosed by any such certificate, representation, statement,
warranty or audit report, which change shall not have been disclosed to
the Secured Party at or prior to the time of such extension. |
11. ACCELERATION
In the event of a Default, the Debtor shall have a period of 60 days from the occurrence of the Default to cure or remedy the Default. If the Default is not cured or remedied within the said 60 days, the Secured Party, in its sole discretion may declare all or any of the indebtedness to be immediately due and payable upon demand being made to the Debtor.
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12. REMEDIES
| (a) | Upon Default, the Secured Party may
appoint or reappoint by instrument in writing, any person or persons,
whether an officer or officers or an employee or employees of the Secured
Party or not, to be a Receiver or Receivers (hereinafter called a “Receiver”
which term when used herein shall include a Receiver and Manager) of the
Collateral (including any interest, income or profits therefrom) and may
remove any Receiver so appointed and appoint another in his stead. Any
such Receiver shall, so far as concerns responsibility for his acts, be
deemed to be the agent of the Debtor and not of the Secured Party, and
the Secured Party shall not be in any way responsible for any misconduct,
negligence, or non-feasance on the part of any such Receiver, his servants,
agents or employees. Subject to the provisions of the instrument appointing
him, any such Receiver shall have power to take possession of the Collateral,
to preserve Collateral or its value, to carry on or concur in carrying
on all or any part of the business of the Debtor and to sell, lease or
otherwise dispose of or concur in selling, leasing or otherwise disposing
of the Collateral. To facilitate the foregoing powers, any such Receiver
may, to the exclusion of all others, including the Debtor, enter upon,
use and occupy all premises owned or occupied by the Debtor wherein Collateral
may be situate, maintain Collateral upon such premises, borrow money on
a secured or unsecured basis and use Collateral directly in carrying on
the Debtor’s business or as security for loans or advances to enable
him to carry on the Debtor’s business or otherwise, as such Receiver
shall, in his discretion, determine. Except as may be otherwise directed
by the Secured Party, all monies received from time to time by such Receiver
in carrying out his appointment shall be received in trust for and paid
over to the Secured Party. Every such Receiver, may, in the discretion
of the Secured Party, be vested with all and any of the rights and powers
of the Secured Party. |
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| (b) | Upon Default, the Secured Party may,
either directly or through its agent or nominee, exercise any or all of
the powers and rights given to a Receiver by virtue of the foregoing subclause
(a). |
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| (c) | The Secured Party may take possession,
collect, demand, xxx on, enforce, recover and receive Collateral and give
valid and binding receipts and discharges therefor and in respect thereof
and, upon Default, the Secured Party may sell, lease or otherwise dispose
of Collateral in such manner, at such time or times and place or places,
for such consideration and upon such terms and conditions as the Secured
Party in its sole discretion determines. |
|
| (d) | In addition to those rights granted
herein and in any other agreement now or hereafter in effect between the
Debtor and the Secured Party and in addition to any other rights the Secured
Party may have at law or in equity, the Secured Party shall have, both
before and after default, all rights and remedies of a Secured Party under
the PPSA. Provided always, that the Secured Party shall not be liable
or accountable for any failure to exercise its remedies, take possession
of, collect, enforce, realize, sell, lease or otherwise dispose of Collateral
or to institute any |
8
proceedings for such purposes. Furthermore,
the Secured Party shall have no obligation to take any steps to preserve
rights against prior parties to any Instrument or Chattel Paper whether
Collateral or Proceeds and whether or not in the Secured Party’s
possession and shall not be liable or accountable for failure to do so. |
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| (e) | The Debtor acknowledges that the Secured
Party or any Receiver appointed by it may take possession of Collateral
wherever it may be located and by any method permitted by law and the
Debtor agrees upon request from the Secured Party or any such Receiver
to assemble and deliver possession of Collateral as such place or places
as directed. |
|
| (f) | The Debtor agrees to pay all costs,
charges and expenses reasonably incurred by the Secured Party or any Receiver
appointed by it, whether directly or for services rendered (including
without limitation legal fees and disbursements on a solicitor-and-his-own-client
basis and auditor’s costs and legal fees and disbursements incurred
by the Receiver (on a solicitor-and-his-own-client basis) and the Receiver’s
remuneration), in operating the Debtor’s accounts, in preparing or
enforcing this Security Agreement, taking custody of, preserving, repairing,
processing, preparing for disposition and disposing of Collateral and
enforcing or collecting Indebtedness and all such costs, charges and expenses,
together with monies owing as a result of any borrowing by the Secured
Party or any Receiver appointed by it, as permitted hereby, shall be a
first charge on the proceeds of realization, collection or disposition
of Collateral and shall be secured hereby. |
|
| (g) | The Secured Party will give the Debtor
such notice, if any, of the date, time and place of any public sale or
of the date after which any private disposition of Collateral is to be
made, as may be required by the PPSA. |
13. MISCELLANEOUS
| (a) | The Debtor hereby authorizes the Secured
Party to file such financing statements, financing change statements,
and other documents and do such acts, matters and things (including completing
and adding schedules hereto identifying Collateral or any permitted encumbrances
effecting Collateral or identifying the locations at which the Debtor’s
business is carried on and Collateral and records relating thereto are
situate) as the Secured Party may deem appropriate to perfect and continue
the security interest, to protect and preserve its interest in Collateral
and to realize upon the Security Interest and the Debtor hereby irrevocably
constitutes and appoints the Manager or Acting Manager from time to time
of the Secured Party with a true and lawful attorney of the Debtor, with
full power of substitution, to do any of the foregoing in the name of
the Debtor whenever and wherever it may be deemed necessary or expedient. |
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| (b) | Without limiting any other right of
the Secured Party, whenever Indebtedness is immediately due and payable
or the Secured Party has the right to declare Indebtedness to be immediately
due and payable (whether or not it has so declared), the Secured Party
may, in its sole discretion, set off against Indebtedness |
9
any and all monies owed to the Debtor
by the Secured Party in any capacity, whether or not due, and the Secured
Party shall be deemed to have exercised such right to set off immediately
at the time of making its decision to do so even though any charge therefor
is made or entered on the Secured Party’s records subsequently thereto. |
||
| (c) | Upon the Debtor’s failure to perform
any of its duties or obligations hereunder, the Secured Party may (but
shall not be obligated to) perform any or all of such duties or obligations,
and the Debtor shall pay to the Secured Party, forthwith upon written
demand therefor, an amount equal to the expense incurred by the Secured
Party in so doing plus interest thereon from the date such expense is
incurred until it is paid at the rate of Eighteen (18%) per cent per annum. |
|
| (d) | The Secured Party may grant extensions
of time and other indulgences, take and give up security, accept compositions,
compound, compromise, settle, grant releases and discharges and otherwise
deal with the Debtor, debtors of the Debtor, sureties and others and with
Collateral and other security as the Secured Party may see fit without
prejudice to the liability of the Debtor or the Secured Party’s right
to hold and realize the Security Interest. Furthermore, the Secured Party
may demand, collect and xxx on Collateral in either the Debtor’s
or the Secured Part’s name, at the Secured Party’s option, and
may endorse the Debtor’s name on any and all cheques, commercial
paper, and any other Instruments pertaining to or constituting Collateral
or Proceeds thereof |
|
| (e) | No delay or omission by the Secured
Party in exercising any right or remedy hereunder or with respect to any
Indebtedness shall operate as a waiver thereof or of any other right or
remedy, and no single or partial exercise thereof shall preclude any other
or further exercise thereof or the exercise of any other right or remedy.
Furthermore, the Secured Party may remedy any default by the Debtor hereunder
or with respect to any Indebtedness in any reasonable manner without waiving
the default remedied and without waiving any other prior or subsequent
default by the Debtor. All rights and remedies of the Secured Party granted
or recognized herein are cumulative and may be exercised at any time and
from time to time independently or in combination. |
|
| (f) | The Debtor waives protest of any Instrument
constituting Collateral at any time held by the Secured Party on which
the Debtor is in any way liable and, subject to Clause 13 (g) hereof,
notice of any other action taken by the Secured Party. |
|
| (g) | This Security Agreement shall enure
to the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns. In any action
brought by an assignee of this Security 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 Secured Party. If more than
one Debtor executes this Security Agreement the obligations of such Debtors
hereunder shall be joint and several. |
|
| (h) | Save for any schedules which may be
added hereto pursuant to the provisions hereof, no |
10
modifications, variation or amendment
of any provision of this Security 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. |
||
| (i) | Subject to the requirements of Clause
13 (g) hereof, whenever either party hereto is required or entitled to
notify or direct the other or to make a demand or request upon the other,
such notice, direction, demand or request shall be in writing and shall
be sufficiently given only if delivered to the party for whom it is intended
at the principal address of such party herein set forth as changed pursuant
hereto or if sent by prepaid registered mail addressed to the party for
whom it is intended at the principal address of such party herein set
forth or as changed pursuant hereto. Either party may notify the other
pursuant hereto of any change in such party’s principal address to
be used for the purposes hereof |
|
| (j) | This Security Agreement and the security
afforded hereby are in addition to and not in substitution for any other
security now or hereafter held by the Secured Party and is, and is intended
to be, a continuing Security Agreement and shall remain in full force
and effect until discharged by the Secured Party. |
|
| (k) | The headings used in this Security Agreement
are for convenience only and are not to be considered a part of this Security
Agreement and do not in any way limit or amplify the terms and provisions
of this Security Agreement. |
|
| (1) | When the context so requires, the singular
number shall be read as if the plural were expressed and the provisions
hereof shall be read with all grammatical changes necessary dependent
upon the person referred to being a male, female, firm or corporation. |
|
| (m) | In the event of any provisions of this
Security Agreement, as amended from time to time, shall be deemed invalid
or void, in whole or in part, by any Court of competent jurisdiction,
the remaining terms and conditions of this Security Agreement shall remain
in full force and effect. |
|
| (n) | Nothing herein contained shall in any
way obligate the Secured Party to grant, continue, renew, extend time
for payment of or accept anything which constitutes or would constitute
Indebtedness or to lend or advance any monies whatsoever to the Debtor
or the Debtor’s account. |
|
| (o) | The Security Interest created hereby
is intended to attach when this Security Agreement is signed by the Debtor
and delivered to the Secured Party. |
|
| (p) | In this Security Agreement and the transactions
evidenced hereby shall be governed by and construed in accordance with
the laws of the Province of Alberta as the same may from time to time
be in effect, including, where applicable, the PPSA. |
14. COPY OF AGREEMENT
The Debtor hereby acknowledges receipt of a copy of this Security Agreement.
11
15. COPY OF FINANCING STATEMENTS
The Debtor hereby waives any and all rights the Debtor has or may have now or hereafter to receive or be given copies of any financing statement or financing change statement filed by or for the Secured Party.
IN WITNESS WHEREOF the Debtor has hereunto affixed its corporate seal by the hand of its proper officer this _____ day of , 2003.
| FLOWRAY INC. | ||
| Per: | ||
| FLOWSTAR TECHNOLOGIES INC. | ||
| Per: | ||
SCHEDULE “A”
(Encumbrances Affecting Collateral)
nil
Schedule "C"
POSTPONEMENT
Subject to what is set out below, Xxxxxxx Xxxxxxxxx hereby agrees to the postponement of his rights as holder of security interests from Flowray Inc. and Flowstar Technologies Inc. (collectively the “Debtor”) under and pursuant to a certain Financing Statement filed at the Alberta Personal Property Registry on the 27th day of June, 2002 as No. 02062710203 and all security agreements and security interests held by him on the property of the Debtor to all the rights and security interests held by CTI Diversified Holdings, Inc. as described in the Financing Statement filed at the Personal Property Registry on the 14th day of March, 2003 as No. 03031423290, and security agreements perfected thereby.
Notwithstanding what is set out above, Xxxxxxx Xxxxxxxxx shall be entitled and authorized to withdraw the sum of $65,032.70 from the Debtor, and obtain reimbursement from the Debtor for expenses incurred in the ordinary course of business in priority to the security interests of CTI Diversified Holdings, Inc.
Dated this _____ day of___________________ , 2003.
| Witness as to the signature of | XXXXXXX XXXXXXXXX | |
| Xxxxxxx Xxxxxxxxx |
AFFIDAVIT OF EXECUTION
| CANADA | ) | I, ________________________________, of the |
| PROVINCE OF ALBERTA | ) | City of Edmonton, in the |
| TO WIT: | ) | Province of Alberta, |
| ) | MAKE OATH AND SAY: |
1. THAT I was personally present and did see Xxxxxxx Xxxxxxxxx named in the annexed instrument, on the basis of the identification provided to me, duly sign and execute the same for the purpose named therein.
2. THAT the same was executed at the City of Edmonton, in the Province of Alberta, and that I am the subscribing witness thereto.
3. THAT I know the said Xxxxxxx Xxxxxxxxx and he is in my belief of the full age of eighteen years.
| SWORN BEFORE ME at the City of | ) | |
| Edmonton, in the Province of Alberta, this | ) | |
| ________ day of ___________________, | ) | |
| 2003. | ) | |
| ) | ||
| ) | ||
| ) | ||
| A COMMISSIONER FOR OATHS IN | ) | |
| AND FOR THE PROVINCE OF | ||
| ALBERTA |
| THIS AGREEMENT DATED THE _____ DAY OF | |
| ___________________________________, 2003 | |
| BETWEEN: | |
CTI DIVERSIFIED HOLDINGS INC. |
|
| - and - | |
| FLOWRAY INC. and | |
| FLOWSTAR TECHNOLOGIES INC. | |
| LOAN AGREEMENT | |
REYNOLDS, MIRTH, XXXXXXXX & XXXXXX LLP Barristers & Solicitors |
