EXHIBIT 99.1
GENERAL SECURITY AGREEMENT
Agreement made as of October 19, 2001 between WaveRider Communications
Inc. (the "Debtor"), 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, X0X 0X0, a
corporation incorporated and subsisting under the laws of the State of Nevada,
and Xxxxxxx X. Xxxxx, an individual resident in Salt Spring Island, British
Columbia, as agent for the benefit of the Secured Parties (in such capacity,
together with its successors in such capacity, the "Agent").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Debtor agrees with the Agent as follows:
ARTICLE 1
INTERPRETATION
1.01 Definitions
In this agreement:
"Applicable Rate" means 8% per annum;
"Event of Default" means the failure of the Debtor to pay, when due,
any amount payable under any Series A Note;
"GAAP" means US generally accepted accounting principles and practices,
consistently applied;
"Liens" means all mortgages, charges, hypothecs, pledges, trusts,
liens, security interests and other encumbrances and adverse claims of every
nature and kind and all other arrangements creating any rights in respect of any
property;
"Obligations" means all present and future debts, liabilities and
obligations of the Debtor to any Secured Parties under or in connection with any
Series A Notes or this agreement;
"PPSA" means the Personal Property Security Act (Ontario);
"Permitted Liens" means (i) Liens for taxes, assessments or
governmental charges or levies not yet due or Liens for taxes being contested in
good faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the property subject
to any such Lien is not yet subject to foreclosure, sale or loss on account
thereof); (ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or pursuant
to customary reservations or retentions of title arising in the ordinary course
of business, provided that such Liens secure only amounts not yet due and
payable or, if due and payable, have not been filed or registered and no other
action has been taken to enforce the same or are being contested in good faith
by appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof);
(iii) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
bids, leases, government contracts, performance and return-of-money bonds and
other similar obligations (excluding obligations in respect of borrowings); (iv)
easements, rights-of-way, restrictions (including zoning restrictions), minor
defects or irregularities in title and other similar charges or encumbrances
not, in any material respect, impairing the use of the encumbered property for
its intended purposes; (v) leases or subleases granted to others not interfering
in any material respect with the business of the Debtor; (vi) normal and
customary rights of setoff upon deposits of cash in favor of banks or other
depository institutions; and (vii) Liens granted in favour of or consented to in
writing by the Agent;
"Secured Parties" means the Agent and the Persons from time to
time holding any Series A Notes; and
"Series A Notes" means the notes designated as Series A Notes
to be issued by the Debtor in an aggregate principal amount not exceeding
US$1,000,000.
1.02 Terms Generally
The plural of any term defined in this agreement in the singular shall
have a corresponding meaning and vice versa and words importing gender shall
include all genders. The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation". Unless the context
otherwise requires (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions in this or any other agreement
in favour of any Secured Parties), (ii) any reference to any Person shall be
construed to include their heirs, legal representatives, successors and assigns,
and (iii) any reference to any Act shall be construed to refer to such Act as it
may be amended and in effect from time to time. The division of this agreement
into articles and sections and the insertion of headings are for convenience
only and shall not affect the interpretation of this agreement.
ARTICLE 2
GRANT OF SECURITY INTEREST
2.01 Security Interest
As general and continuing security for the payment and performance when
due of all Obligations, the Debtor hereby mortgages, pledges, hypothecates,
transfers, assigns and charges to the Agent, and hereby grants to the Agent a
security interest in, (such mortgages, pledges, hypothecations, transfers,
assignments, charges and security interest, collectively, the "Security
Interest"), all present and after-acquired undertaking and property of the
Debtor, other than consumer goods and the last day of the term of any leases or
agreements therefor (such included undertaking and property collectively, the
"Collateral"), including:
(a) Accounts Receivable
All debts, book debts, accounts, claims, demands, money and
choses in action, including, all claims against Her Majesty
the Queen in right of Canada or any Province or Territory and
all claims and benefits under any insurance policies
(collectively, the "Accounts Receivable");
(b) Inventory
All inventory, including, all goods, merchandise, raw
materials, goods in process, finished goods and other tangible
personal property now or hereafter held for sale, lease or
resale or that are to be furnished or have been furnished
under a contract of service or that are used or consumed in
the business of the Debtor (collectively, the "Inventory");
(c) Equipment
All goods which are not inventory or consumer goods,
including, without limitation, all fixtures, equipment,
machinery, vehicles and other tangible personal property
listed in any Schedule of Equipment attached hereto or at any
time hereafter signed by the Debtor and forming part of this
agreement (collectively, the "Equipment");
(d) Chattel Paper, Instruments, Securities
All chattel paper, instruments, warehouse receipts, bills of
lading and other documents of title, whether negotiable or
non-negotiable, shares, stock, warrants, bonds, debentures,
debenture stock and other securities;
(e) Intangibles
All intangibles, including all right, title and interest of
the Debtor in contractual rights, goodwill, patents, patent
applications, trade marks, trade xxxx applications,
copyrights, industrial designs, non-disclosure covenants and
other industrial or intellectual property or rights therein;
(f) Real Property
All real and immovable property, wherever situate, and all
buildings, structures, fixtures, hereditaments and
appurtenances thereon or relating thereto;
(g) Books and Accounts
All books, accounts, invoices, letters, papers, writings,
certificates, receipts, documents and other records and data
in any form or medium evidencing, representing, creating,
giving rise to any rights in respect of or otherwise relating
to the property described in sub-paragraphs (a) to (f),
inclusive; and
(h) Proceeds
All property in any form derived directly or indirectly from
any dealing with any undertaking or property subject to the
Security Interest or that indemnifies or compensates for such
undertaking or property being destroyed, damaged,
expropriated, stolen or lost and proceeds of proceeds whether
of the same type or kind as the original proceeds.
2.02 The Last Day of the Term of Leases
The last day of the term of any lease, oral or written or any
agreement therefor, now held or hereafter acquired by the Debtor shall not form
part of the Collateral, however, the Debtor shall stand possessed of such last
day, upon trust to assign and dispose of same as the Agent or any assignee of
such lease or agreement therefor shall direct.
2.03 Attachment
The Debtor acknowledges that value has been given and agrees
that the Security Interest shall attach to existing Collateral upon the
execution of this agreement and to each item of after-acquired Collateral at the
time that the Debtor acquires any rights therein.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE DEBTOR
3.01 Representations, Warranties and Covenants
The Debtor represents, warrants and covenants to and in favour
of the Secured Parties as follows:
(1) Ownership and Title
The Debtor is the sole legal and beneficial owner of, and has
good and marketable title to, all existing Collateral, and shall be the sole
legal and beneficial owner of, and have good and marketable title to, each item
of after-acquired Collateral upon acquiring any rights therein, in each case,
free and clear of all Liens, other than Permitted Liens. The Debtor shall keep
the Collateral free from all Liens, other than Permitted Liens, and shall defend
the Collateral against the claims of all other Persons.
(2) Insurance
The Debtor shall insure the Collateral against loss or damage
by fire and such other risks and hazards, in such amounts and upon such other
terms as the Agent may from time to time require. All such insurance policies
shall name the Agent as loss payee as its interests may appear and shall be
delivered to the Agent upon request. The Debtor shall pay all premiums in
respect of such insurance when due and shall promptly furnish the Agent with
receipts or other satisfactory evidence of the payment thereof. Any insurance
proceeds received by the Agent pursuant to this agreement may, at the option of
the Agent be applied against any Obligations or released to the Debtor without
prejudicing any rights or remedies of the Secured Parties hereunder or affecting
any Obligations.
(3) Care and Use of Collateral
The Debtor shall carry on and conduct its business in a proper
and efficient manner so as to preserve and protect the Collateral and, without
limiting the generality of the foregoing, shall hold, repair, maintain, use and
operate the Collateral in accordance with all governmental rules, regulations
and laws and the terms and requirements of all insurance policies, licences,
permits and agreements relating thereto.
(4) Books of Account
The Debtor shall keep proper books of account in accordance
with GAAP shall furnish to the Agent such financial information and statements
relating to its business and the Collateral as the Agent may from time to time
require and shall permit the Agent and its authorized agents at any time upon
reasonable notice and during normal business hours to have access to all
premises occupied by the Debtor or any place where any Collateral may be found
in order to inspect the Collateral and to examine the books of account and other
records and reports of the Debtor and to make copies thereof.
(5) Locations of Collateral
The Debtor's places of business and the locations
(collectively, the "Existing Locations") of the Collateral, including all books
and records in respect of Accounts Receivable, are set forth in the attached
Schedule "A". Except for Inventory sold or leased in the ordinary course of
business, the Debtor shall not remove or otherwise permit any Collateral to be
located at any location other than the Existing Locations, without the prior
written consent of the Agent.
(6) Permitted Sales and other Dispositions
Except as permitted in the following sentence, the Debtor
shall not, without the prior written consent of the Agent, sell, lease or
otherwise dispose of any Collateral. So long as no Event of Default has occurred
and is continuing, the Debtor may sell or lease its Inventory in the ordinary
course of business, may collect and, where necessary, enforce the collection of
all amounts due or to become due to the Debtor under any Account Receivable and
may sell or trade-in any Equipment which may from time to time become worn out,
damaged or otherwise unsuitable for its purpose provided that the Debtor
substitutes therefor, subject to the Security Interest, property of equal value
so that the value of the Collateral is not in any way reduced or impaired. The
proceeds of any such sale, lease or other disposition shall be subject to the
Security Interest.
(7) Name and Other Changes requiring Consent
The Debtor shall not, without the prior written consent of the
Agent, which consent shall not be unreasonably withheld, (i) change its name; or
(ii) change the nature of its business
(8) Maintain Corporate Existence
The Debtor shall not dissolve, liquidate or wind-up or take
any steps or proceedings in connection therewith or enter into any transaction
(whether by way of reconstruction, reorganization, consolidation, amalgamation,
merger, transfer, sale, lease or otherwise) whereby all or substantially all of
its property would become the property of any other Person;
(9) Access to Information
The Debtor shall promptly furnish to the Agent, such
information in respect of the Collateral, the Debtor and its business as the
Agent may from time to time request and shall promptly give written notice to
the Agent of all proceedings brought by or against the Debtor or any Collateral
before any court, administrative board or other tribunal which might materially
affect the Debtor or any Collateral and of any significant loss of, or damage
to, any Collateral.
(10) Performance by the Secured Party
In the event that the Debtor fails to perform any obligations
under this agreement, including keeping the Collateral free and clear of all
Liens, other than Permitted Liens, the Agent may, at its option and without
being under any obligation to do so, perform such obligations and the Debtor
shall pay to the Agent, immediately upon demand, all costs and expenses
(including, without limitation, legal fees on a solicitor-client basis) incurred
by the Agent in connection therewith and all such costs and expenses shall form
part of the Obligations, bear interest at the Applicable Rate, both before and
after demand and judgment from the date incurred by the Agent and shall be
secured by the Security Interest. The performance by the Agent of any obligation
of the Debtor hereunder or the curing of any Event of Default by the Agent shall
not constitute a waiver by any Secured Party of any of its rights hereunder or
relieve the Debtor from its default or any consequences thereof.
(11) Costs and Expenses
The Debtor shall pay each Secured Party upon demand, all
reasonable costs and expenses (including, without limitation, reasonable legal
fees on a solicitor-client basis) incurred by the Secured Party in connection
with the preparation, execution, perfection, enforcement and discharge of, and
advice in respect of, the Security Interest and this agreement (including,
without limitation, in connection with the custody, preservation, use,
operation, realization, retaining, protecting, disposing and collecting, of any
Collateral and the protection and enforcement of all other rights and remedies
of the Secured Party hereunder) and all such costs and expenses shall form part
of the Obligations, shall bear interest at the Applicable Rate, both before and
after demand and judgment from the date incurred by the Secured Party and shall
be secured by the Security Interest.
ARTICLE 4
DEFAULT AND ENFORCEMENT
4.01 Enforcement of Security Interest
The Security Interest shall become and be immediately
enforceable at any time that an Event of Default shall have occurred and be
continuing.
ARTICLE 5
RIGHTS AND REMEDIES ON DEFAULT
5.01 Rights and Remedies
In the event that the Security Interest becomes enforceable,
the Agent shall have, in addition to any other rights and remedies which it or
any of the other Secured Parties may have under the PPSA and otherwise at law,
the following rights and remedies:
(1) Entry and Possession
The Debtor shall, upon demand, assemble and deliver to the
Agent possession of the Collateral at such places as the Agent may designate.
The Agent may take such steps as it considers necessary or desirable to obtain
possession of any Collateral and may at any time during the day or night enter
upon any lands or premises where Collateral may be found for the purpose of
taking possession of or removing the Collateral and shall have the right to
maintain possession of any Collateral upon any premises owned, used or occupied
by the Debtor;
(2) Disposition
The Agent may sell, lease or otherwise dispose of any
Collateral as a whole or in separate parcels by public auction or private tender
or by private contract with or without notice and with or without advertising
and without any other formality, all of which are hereby expressly waived by the
Debtor and any such sale, lease or disposition shall be on such terms and
conditions as to credit, as to upset or reserve bid or price and otherwise as
the Agent may consider commercially reasonable. In the event that any
disposition is made on credit or part cash and part credit, the Agent need only
credit the actual cash received at the time of the disposition against the
Obligations and any payments made pursuant to any credit granted at the time of
the disposition shall be credited against the Obligations as and when received.
The Agent may rescind, terminate or vary any contract for the sale, lease or
other disposition of any Collateral and may resell, relet or otherwise redispose
of the Collateral without being accountable or otherwise liable for any loss
occasioned thereby. Any sale, lease or other disposition of any Collateral may
be made by the Agent whether or not it has taken possession of the Collateral.
(3) Receivers
The Agent may, in addition to any other rights it or any of
the other Secured Parties may have, appoint by instrument in writing one or more
receivers or receivers and managers (in each case referred to herein as
"Receivers") of any Collateral or may institute proceedings in any court of
competent jurisdiction for the appointment of one or more Receivers. Each
Receiver is hereby given and shall have the same rights and remedies as the
Agent under this agreement, the PPSA and otherwise at law. In exercising such
rights and remedies, each Receiver shall act as, and shall for all purposes be
deemed to be, the agent of the Debtor, and none of the Secured Parties shall be
responsible for any act or default of any Receiver, including, without
limitation, any negligence. The Agent may from time to time remove, and appoint
replacements for, any Receivers and appoint another or others in their stead
from time to time. The Agent shall be entitled to appoint one or more officers
or employees of any Secured Party as Receivers.
(4) Carrying on Business
The Agent may carry on, or concur in the carrying on of, any
business or undertaking of the Debtor and may to the exclusion of all others,
including the Debtor, enter upon, occupy and use any of the premises, buildings,
plant and undertaking owned, occupied or used by the Debtor and may use any of
the tools, machinery, equipment and intangibles of the Debtor for such time as
the Agent sees fit, free of charge, in order to carry on the business of the
Debtor or to manufacture or complete the manufacture of any Inventory and to
pack and ship finished products. None of the Secured Parties shall be
accountable or otherwise liable to the Debtor for any negligence in the exercise
of any rights and remedies under this section or in respect of any rent,
charges, depreciation or damages arising in connection therewith.
(5) Payment of Liens
The Agent may pay any Liens that may exist or be threatened
against any Collateral, including, any Permitted Liens, and may borrow money for
the maintenance, preservation or protection of any Collateral or for carrying on
any business or undertaking of the Debtor and may grant further security
interests in any Collateral in priority to the Security Interest as security for
the money so borrowed.
(6) Dealings with Collateral
The Agent may seize, collect, realize, dispose of, enforce,
release to third parties or otherwise deal with any Collateral in such manner,
upon such terms and conditions and at such times as the Agent may see fit and
without notice to the Debtor (except as otherwise required by any applicable
law), and may charge on its own behalf and pay to others, sums for costs and
expenses incurred (including, without limitation, legal fees on a
solicitor-client basis, and Receivers', accounting and other professional fees)
in or in connection with seizing, collecting, realizing, disposing, enforcing or
otherwise dealing with the Collateral and the protection and enforcement of the
rights and remedies of the Secured Parties hereunder. The Agent and the other
Secured Parties may file such proofs of claim and other documents as may be
necessary or advisable in order to prove their claims in any bankruptcy,
proposal, winding-up or other proceedings relating to the Debtor.
(7) Retention of Collateral
Upon notice to the Debtor as provided under the PPSA or other
applicable laws, the Agent may elect to retain any Collateral in satisfaction of
any Obligations.
5.02 Secured Parties not Liable
None of the Secured Parties shall be accountable or otherwise
liable for any failure to seize, collect, realize, dispose of, enforce or
otherwise deal with any Collateral and shall not be bound to institute
proceedings for any such purposes or for the purpose of preserving any rights of
the Agent, any other Secured Parties, the Debtor or any other Person in respect
of any Collateral. None of the Secured Parties shall be accountable or otherwise
liable for any loss or damage whatsoever which may arise by reason of any such
failure whether resulting from the negligence of any Secured Party, any
Receivers or otherwise. None of the Secured Parties and Receivers shall be
liable by reason of any entry into possession of any Collateral to account, as a
mortgagee in possession, for anything except actual receipts, or for any loss or
realization or for any act or omission for which a mortgagee in possession might
be liable.
5.03 Extensions of Time
Each Secured Party may grant renewals, extensions of time and
other indulgences, take and give up securities, accept compositions, grant full,
partial and conditional releases and discharges, perfect or fail to perfect any
securities, release any Collateral to third parties and otherwise deal or fail
to deal with the Debtor, debtors of the Debtor, guarantors, sureties and others
and with the Collateral and other securities as the Secured Party may see fit,
all without prejudice to any liability of the Debtor to any Secured Party or any
Secured Party's rights and remedies under this agreement, the PPSA or otherwise
at law.
5.04 Application of Moneys Received
All moneys actually received by the Agent in respect of any
Obligations whether from the realization of any Collateral or otherwise, may,
subject to the terms of the Credit Agreement, be held by the Agent
unappropriated in a collateral account or applied against the Obligations, all
as the Agent may from time to time see fit and without prejudice to any rights
or remedies of any Secured Party hereunder, the PPSA or otherwise at law.
5.05 Deficiency
If the proceeds of realization of the Collateral are
insufficient to repay the Obligations in full, the Debtor shall pay the
deficiency to the Agent, upon demand.
5.06 Rights and Remedies Cumulative
The rights and remedies of each Secured Party under this
agreement are in addition to and not in substitution of any other rights or
remedies of the Secured Party under the PPSA or otherwise at law and all such
rights and remedies are cumulative and may be exercised separately or in
combination.
ARTICLE 6
GENERAL
6.01 Waivers
No delay or omission by any Secured Party in exercising any
rights or remedies hereunder or in respect of any Obligations or the performance
by any Secured Party of any Obligations in default shall operate as a waiver
thereof or of any other rights or remedies of any Secured Party. No single or
partial exercise of any rights or remedies by any Secured Party shall preclude
any other or further exercise thereof or the exercise of any other rights or
remedies. No waiver of any right or remedy shall be effective unless made in
writing and signed by the Agent and any such waiver shall be effective only for
the specific purpose and time, if any, stipulated therein and shall not operate
as a waiver of any other rights or remedies of any Secured Party.
6.02 Security in Addition to Other Security
This agreement is in addition to, and not in substitution of,
any other security now or hereafter held by any Secured Party.
6.03 Receipt of Copy
The Debtor acknowledges receipt of an executed copy of this
agreement.
6.04 Further Assurances
The Debtor shall from time to time execute and deliver all
such further mortgages, charges, pledges, assignments, transfers, security
interests and other agreements, instruments and documents and do all such
further acts and things as the Agent may from time to time require to perfect
and maintain the perfection of the Security Interest and to otherwise protect
its interests in the Collateral and hereby irrevocably constitutes and appoints
any officer for the time being of the Agent and each Receiver, the true and
lawful attorney of the Debtor with full power of substitution to execute and
deliver all such agreements, instruments and documents and to do all such
further acts and things with the right to use the name of the Debtor whenever
and wherever it may be deemed necessary or expedient.
6.05 Amalgamations and Mergers
The Debtor acknowledges and agrees that in the event that it
amalgamates or merges with any other Persons (which it is prohibited from doing
without the prior written consent of the Secured Parties) then the Collateral
and the Security Interest shall extend to and include all like property of the
amalgamated or merged corporation and all references herein to the Debtor shall
extend to and include the amalgamated or merged corporation and all references
herein to Obligations shall extend to and include all of the debts, liabilities
and obligations of every type and kind of the amalgamated or merged corporation.
6.06 Name
The Debtor hereby confirms that the name, including, the
French form thereof, if any, and the address of the Debtor are as set out at the
beginning of this agreement.
6.07 Successors, Assigns and Governing Law
This agreement shall enure to the benefit of and be binding
upon the respective successors and assigns of the Debtor and the Secured Parties
and shall be governed by and construed in accordance with the laws of the
Province of Ontario.
WAVERIDER COMMUNICATIONS INC.
By c/s
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Authorized Signing Officer
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XXXXXXX X. XXXXX, as Agent for the Secured Parties
SCHEDULE "A"
LOCATIONS OF
COLLATERAL AND RECORDS
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Registered Xxxxxx 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx, X0X 0X0
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Chief Place of Business 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx, X0X 0X0
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Location of all Books and Records relating to 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Accounts Receivable Xxxxxxx, X0X 0X0
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Other Locations of Collateral 0000X Xxxxxx X.X.,
Xxxxxxx, Xxxxxxx, X0X 0X0
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