SECURITY AGREEMENT

Exhibit 10.12

To: ROYAL BANK OF CANADA

Ladies and Gentlemen:

1. Security Interest. As security for the Obligations (as hereinafter defined), we pledge and assign to you, and grant to you a continuing security interest in, all of our right, title and interest (whether now existing or hereafter created or acquired by us) in: (a) our accounts receivable and other personal property that constitutes accounts as such term is defined in the Uniform Commercial Code as in effect on the date hereof or as it may be in effect hereafter (collectively, our “Accounts”); (b) our inventory, including goods, merchandise, raw materials, goods in process, finished goods and other tangible personal property that constitutes inventory as such term is defined in the Uniform Commercial Code as in effect on the date hereof or as it may be in effect hereafter but excluding consigned goods and merchandise (collectively, our “Inventory”); (c) our equipment, including all substitutes, replacements, accessions and additions thereto, all tools, parts, accessories and attachments used in connection therewith and all other tangible personal property that constitutes equipment as such term is defined in the Uniform Commercial Code as in effect on the date hereof or as it may be in effect hereafter, but excluding fixtures (other than trade fixtures) (collectively, our “Equipment”); (d) our other tangible personal property that constitutes goods as such term is defined in the Uniform Commercial Code as in effect on the date hereof or as it may be in effect hereafter; (e) our intellectual property, goodwill, trademarks, trade names, servicemarks, copyrights, permits and licenses; (f) all instruments, documents, chattel paper and general intangibles relating to any and all of the foregoing or arising therefrom; and (g) all cash and noncash proceeds and products thereof (all of the foregoing is called the “Collateral”).

2. Obligations Secured. The security interest granted by this Agreement is to secure the payment and performance of any and all of our present or future indebtedness and/or liabilities to you of every kind, nature and description, direct or indirect, secured or unsecured, joint and several, absolute or contingent, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument and whether or not evidenced by any agreement or instrument, and all obligations to perform acts or refrain from taking any action, including, without limitation, any obligations owing to you under a certain loan agreement dated the ______ day of June, 2012 (the “Loan Agreement”) between 2314505 Ontario Inc., as borrower, and Royal Bank of Canada (the “Lender”), as lender, and under a certain guaranty and subordination agreement granted by us to you dated the ______ day of June, 2012 (collectively, the “Obligations”).

3. Unconditional Grant of Security Interest. (a) We agree that this Agreement shall be binding upon us and that our grant of the security interest in the Collateral shall be irrevocable and unconditional, irrespective of the validity, legality or enforceability of the Obligations, the absence of any action to enforce the same, any waiver or consent by you with respect to any provisions thereof, the recovery of any judgment against us or any action to enforce the same or any other similar circumstances. Our obligations and liabilities hereunder shall not be conditioned or contingent upon your pursuit at any time of any right or remedy against any other person or entity that may be or become liable in respect of all or any part of the Obligations or against any collateral security or guaranty therefor or right of offset with respect thereto. We hereby waive diligence, presentment, demand of payment, filing of claims with a court in the event of our merger or bankruptcy, protest or notice with respect to any notes evidencing the Obligations and all demands whatsoever, and we agree that this Agreement will remain in full force and effect so long as any Obligation remains unpaid or unperformed.

(b) Subject to licensing rights existing on the date hereof and licenses to which you give your consent, for the purpose of enabling you to exercise rights and remedies under sections 7 and 8, only at such time as you, without regard to this paragraph (b), shall be lawfully entitled to exercise such rights and remedies and for no other purpose, we hereby grant to you an irrevocable, exclusive license, exercisable at the time of and in accordance with the exercise of such rights and remedies and without present or future payment of royalty or other compensation to us, to use, assign, license or sublicense any of the trademarks or other licenses now owned or hereafter acquired by us and wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

(c) We agree that without notice to or further assent by us, the liability of any other party for or upon any of the Obligations may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised or released by you as you may deem advisable, and that the Collateral or any other collateral or liens for any of the Obligations may, from time to time, in whole or in part, be exchanged, sold or surrendered by you, as you may deem advisable, all without impairing, abridging, affecting or diminishing this Agreement or your rights hereunder or with respect to the Collateral.

4. Representations, Covenants and Warranties. We hereby make the following representations, covenants and warranties, which shall be deemed to be repeated and confirmed upon the creation or acquisition by us of each item of Collateral and upon the creation of any Obligation:

(a) We are a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, have the corporate power to own our properties and to carry on our business as now being conducted, are qualified to engage in business and are in good standing in each jurisdiction in which the character of our properties, the transaction of our business or the collection of any of our Accounts make such qualification necessary and have the corporate power to execute, deliver and perform this Agreement.

(b) Our execution, delivery and performance of this Agreement and our granting of the security interest in the Collateral (i) have been duly authorized by all requisite corporate action; (ii) will not: (A) violate any provision of law, any order of any court, tribunal or agency of government or our certificate of incorporation, bylaws or other charter documents; (B) violate, be in conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any indenture, license, sublicense, agreement or other instrument to which we are a party or by which we or any of our properties are bound; (C) violate any governmental or agency rule or regulation (including, but not limited to, Regulations U and X of the Board of Governors of the Federal Reserve System); or (D) result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the Collateral, except for the security interest created by this Agreement; and (iii) do not require any filing or registration with, any permit, license, consent or approval of, or any exemption by, any governmental or regulatory authority, except filings of Uniform Commercial Code financing statements in the public offices listed on Exhibit “B” hereto.

(c) This Agreement has been duly executed and delivered by us and is our legal, valid and binding obligation, enforceable against us in accordance with its terms, subject only to bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting the enforceability of rights of creditors generally and to general equitable principles that may limit the right to obtain equitable remedies. This Agreement creates in your favor a valid and, upon the filing of the appropriate Uniform Commercial Code financing statements in the public offices listed on Exhibit “B” hereto, perfected (to the extent perfection is obtained by the filing of such financing statements) lien on and security interest in the Collateral, enforceable against us and all third parties and superior in right to all other security interests, liens, encumbrances or charges, existing or future, except as set out in the Loan Agreement or any other document delivered in connection thereto. Upon such filings or recordings, no filing or recording of any other financing statements or other instruments and no recording, filing or indexing of this Agreement is necessary in order to preserve and protect your security interest in the Collateral as a legal, valid and enforceable, perfected (to such extent) security interest in the Collateral, except filing of appropriate continuation statements with respect to Uniform Commercial Code financing statements. No person or entity from which we lease any of our premises has filed any UCC financing statement with respect to any contractual lien that would have priority over your security interest in the Collateral.

(d) On the date hereof and at any time during the term of this Agreement during which a security interest in your favor in the Collateral exists, no financing statement (or similar statement or instrument of registration under the laws of any jurisdiction) is or will be on file or registered in any public office covering any interest of any kind with respect to the Collateral, or intended so to be, other than those relating to the security interest created by this Agreement and those related to Permitted Encumbrances (as defined in the Loan Agreement) and/or as approved by the Lender in writing from time to time, and we will be the lawful owner of the Collateral (other than inventory consigned to us) and will have good right to grant you a security interest therein. Except to the extent that the aggregate value of the Collateral or your ability to enforce your rights under this Agreement would not be materially affected thereby: all documents and agreements held by us with respect to the Collateral will be true and correct and in all respects what they purport to be; all signatures and endorsements that appear thereon will be genuine and such signatories and endorsers will have the full capacity to contract; none of the transactions underlying or giving rise to the Collateral nor any operation or use of any of the Collateral will violate any applicable state or federal law or regulation; and all documents relating to the Collateral will be legally sufficient under such laws and regulations and will be legally enforceable in accordance with their terms. None of the Collateral is or will be affixed to real estate unless we have furnished to you such consents, waivers or disclaimers as are necessary to make your security interest in such of the Collateral valid against persons or entities holding an interest in such real estate. We will defend the Collateral against all claims and demands of all other parties claiming the same or an interest therein, and none of the Collateral will be: (i) sold, assigned or transferred to any person or entity other than you except, with respect to Inventory, in the ordinary course of our business or (ii) in any way pledged, mortgaged or otherwise encumbered except to you or by any of the following liens:

(A) liens for current taxes, assessments or other governmental charges or levies (including local real estate taxes and assessments) that are not delinquent or that are being contested in good faith by appropriate action if we have set aside on our books adequate reserves with respect thereto and such contest does not and is not likely to subject any Collateral to the risk of loss or forfeiture or impair your security interest therein or, if such contest does subject any Collateral to any such risk or impairment, we have either (a) deposited with you as security for the payment thereof cash in an amount equal to such contested taxes, assessments, governmental charges or levies and all related interest and late charges or (b) furnished to you alternative collateral satisfactory in form and amount to you;

(B) carrier’s, warehousemen’s, materialmen’s, mechanics’, workmen’s, employees’, repairmen’s and like liens arising in the ordinary course of business that are not delinquent or that have not remained undischarged or unbonded for more than 30 days or the enforcement of which has been suspended or that are being contested in good faith by appropriate proceedings if we have set aside on our books adequate reserves with respect thereto and such contest does not and is not likely to subject any Collateral to the risk of loss or forfeiture or impair your security interest therein;

(C) deposits or pledges to secure statutory obligations, surety or appeal bonds, bonds for release of attachment, stay of execution or injunctions, performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases in the ordinary course of business or product liability insurance; and

(D) liens in respect of judgments or awards with respect to which an appeal or appropriate proceeding for review is being prosecuted in good faith and a stay of execution pending such appeal or review is in effect.

(e) (i) Except to the extent that the aggregate value of the Collateral or your ability to enforce your rights under this Agreement would not be materially adversely affected thereby, each of our accounts receivable: (A) is on the date hereof and will be at all times during the term of this Agreement a good and valid account receivable representing an undisputed bona fide right to payment from the account debtor with respect thereto for merchandise held subject to delivery or theretofore shipped or delivered pursuant to a contract of sale, for services theretofore performed by us, for property sold, leased, licensed, assigned or otherwise disposed of or arising out of the use of a credit or charge card or information contained on or for use with the card; (B) will not be subject to any defense, offset, counterclaim, holdback, discount or allowance, except as stated in a statement delivered to you pursuant to this paragraph (e); (C) will not have been made with an account debtor under an agreement pursuant to which any reduction or discount may be claimed except as indicated in a statement or invoice furnished to you with reference thereto; and (D) will be an account receivable of which we are the lawful owner and have the right to subject the same to your security interest; and (ii) no action has been or will be taken by us which has or will have the effect of giving to an account debtor any defense, setoff, claim or counterclaim against us that may be asserted against you, whether in any proceeding to enforce the Collateral or otherwise. Any variance from the representations set forth in this paragraph (e) with respect to any account receivable will be noted on any report or statement of accounts receivable delivered to you or will otherwise be reported in writing to you promptly upon our becoming aware of such variance. No account receivable will have been or hereafter will be sold, assigned or transferred to any person or entity other than you or in any way encumbered except to you.

(f) To the best of our knowledge, except to the extent that the aggregate value of the Collateral or your ability to enforce your rights under this Agreement would not be materially adversely affected thereby, each account debtor or guarantor or endorser of an account receivable or other party obligated under an Account that at any time is or becomes subject to a security interest in your favor is and will continue to be solvent and fully able to pay and perform in full when due all Accounts under which such person or entity is obligated, and we will take all steps necessary to preserve the liability of each account debtor, guarantor, endorser, obligor or secondary party whose obligations are part of the Collateral.

(g) We will perform all of the terms, covenants and conditions on our part to be observed or performed under licenses related to the trademarks and other licenses referred to in subsection 4(m) and under the contracts giving rise to our accounts receivable and other Accounts and take all steps necessary to keep such licenses and contracts in full force and effect. Without your prior consent, except to the extent that the aggregate value of the Collateral or your ability to enforce your rights under this Agreement would not be materially adversely affected thereby, we will not compromise, adjust, amend, modify or alter any of the terms, covenants or conditions of any of our accounts receivable or other Accounts (or extend the time for payment thereof) or grant any additional discounts, allowances or credits thereon.

(h) We will promptly notify you if any account receivable becomes evidenced by an instrument, and, upon your request, promptly deliver said instrument to you, appropriately endorsed in your favor to be held as Collateral hereunder.

(i) We will furnish to you at such times as you may request statements, in form and substance satisfactory to you, of all of our accounts receivable, itemized by account debtor, and of the location and aggregate value at each such location of all our Inventory and a statement showing opening Inventory, Inventory acquired, Inventory sold and held for future delivery, Inventory returned or repossessed, Inventory used or consumed in our business and closing Inventory, each such statement to be certified by our chief financial officer, and, promptly from time to time, such other information as you may reasonably request regarding the Collateral and our operations, business, affairs and financial condition.

(j) We will, promptly upon learning thereof, report to you: (i) any material, adverse change in the information contained herein relating to us, our business or the Collateral; (ii) the details of any material, adverse claim or litigation affecting us or the Collateral; (iii) any material loss of or damage to the Collateral; (iv) any reclamation, return or repossession of any material portion of the Collateral, all material delays in performance, notices of default, claims made or disputes asserted by any account debtor or other obligor and any other matters materially, adversely affecting the value, enforceability or collectibility of any of the Collateral; and (v) any use by any person or entity of any term or design likely to cause confusion with any trademark or other license referred to in subsection 4(m) and of any use by any person or entity of any other process or product that infringes upon any such trademark or other license.

(k) We will conduct and carry on our business in a proper and efficient manner so as to protect and preserve the Collateral and maintain, in accordance with generally accepted accounting principles, consistently applied, accurate books and records pertaining to the Collateral and, if so requested by you, we will xxxx each of our ledger cards, books of account and other records relating to the Collateral with appropriate notations, satisfactory to you, disclosing that such Collateral has been assigned and/or transferred to you and that we have granted to you a security interest therein.

(l) All Inventory now owned by us is kept at the locations indicated on Exhibit “A” hereto, and we have not at any time during the past five years kept any of our Inventory at any other location except as indicated on Exhibit “A” hereto. The location of our principal office and chief executive office and the location where the originals of our records pertaining to our Accounts are kept are now, and at all times during the past five years have been, at the address(es) indicated beneath our signature hereto. Our name set forth as our signature hereto is our correct legal name, and we have not within the past five years had any other legal name, nor have we done within such five years nor are we now doing business under any other name, except as set forth on Exhibit “A” to this Agreement. We will not change our legal name, use any other name nor change the form or jurisdiction of our organization without giving you 20 days’ prior written notice thereof. Our correct United States tax identification number and corporate identification number, if any, are set forth below our signature hereto.

(m) Exhibit “C” hereto accurately and completely lists all trademarks and patents owned or used by or licensed or assigned to us. We will maintain the quality of any and all products in connection with which our trademarks and patents are used, consistent with the quality of said products as of the date hereof. We will not enter into any agreement (for example, a license agreement) that is inconsistent with our obligations under this Agreement. If, before the Obligations have been satisfied in full, we obtain rights to any new trademark or patent, or become entitled to the benefit of any trademark, trade name, service xxxx, patent or license not existing on the date hereof, the provisions of section 1 hereof shall automatically apply thereto and we will give you prompt notice thereof in writing. We authorize you to modify this Agreement by amending Exhibit “C” hereto to include any future trademarks, license agreements, trademark applications and registrations, trade names and patents that are included in the Collateral.

(n) We will do or cause to be done all recordings, filings and giving of public notice under any applicable law or ordinance necessary to comply fully with such law or ordinance, including any notices to the United States government under the Federal Assignment of Claims Act, and we will from time to time do whatever you may request by way of obtaining, executing, delivering and/or filing financing statements, landlord’s or mortgagee’s lien waivers and other notices of any kind, and amendments and renewals thereto, and will take any and all steps and will observe such formalities as you may request, all in order to create and maintain your valid, first priority security interest in any and all of the Collateral. We will pay all costs for searches and filings in connection therewith. We agree to execute such financing statements, security agreements or other instruments with respect to any of the Collateral as you may request and authorize you to execute and file at any time such financing statements (including, but not limited to, a financing statement in lieu of continuation statement in the jurisdiction of our organization) without our signature and, if upon request we fail to do so, to execute such security agreements or other instruments on our behalf. You may describe the Collateral on any financing statement as “all assets”, “all personal property” or similar generic descriptions. You may file a photocopy or other reproduction of this Agreement as a financing statement.

(o) We will deliver, or cause to be delivered, to you from time to time promptly upon your request: (i) any documents of title, instruments and chattel paper (and you have been granted a direct security interest in all our chattel paper and your claim thereon is not merely as proceeds of Inventory) constituting, representing or relating to the Collateral; (ii) all books of account, records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to the Collateral for the purpose of inspecting, auditing or copying the same; (iii) all financial statements prepared by or for us regarding our business; (iv) copies of all policies and certificates of insurance relating to the Collateral; and (v) such information concerning the Collateral and our business and affairs as you may reasonably request.

(p) We will at our own expense maintain insurance with insurance companies satisfactory to you on such of our assets, in such amounts and against such risks as is customarily maintained by similar businesses, provided that, with respect to insurance regarding the Collateral, all such insurance policies shall contain loss payable clauses satisfactory to you naming you as a loss payee.

(q) We will take adequate care of the Collateral and pay all costs necessary to preserve the Collateral, including (but not limited to) all taxes, rates, levies, assessments and other charges of every nature that may be lawfully levied, assessed or imposed against or in respect of us or the Collateral as and when they become due and payable.

5. Custody, Inspection, Collateral and Handling of Collateral and Records. (a) Subject to compliance with the covenants contained herein, we may, until we are in default hereunder, possess, operate, collect, use and enjoy and deal with the Collateral in the ordinary course of our business in any manner not inconsistent with the provisions hereof; provided always that you shall have the right at any time and from time to time to verify the existence and state of the Collateral in any manner you may consider appropriate (provided that you may not contact our account debtors before the occurrence and continuance of a default hereunder), and we agree to furnish all assistance and information and to perform all such acts as you may reasonably request in connection therewith and for such purpose to grant to you or your agents access to all places where Collateral may be located and to all premises occupied by our business (provided that any such inspection before the occurrence and continuance of a default hereunder shall be during normal business hours and upon reasonable notice). You shall be privileged at any time and from time to time after we are in default hereunder to hire and maintain on any of our premises a custodian or independent contractor selected by you who shall have full authority to do all acts necessary to protect your interests and to report to you thereon. We agree to cooperate with any such person or entity and to do whatever you may reasonably request by way of leasing warehouses or otherwise preserving the Collateral. All expenses incurred by you by reason of the employment of any such person or entity shall be charged to our account, shall be part of the Obligations and shall be secured by the Collateral.

(b) If the Collateral at any time includes securities, we authorize you to transfer the same or any part thereof into your own name or that of your nominee(s) so that you or your nominee(s) may appear of record as the sole owner thereof; provided that, until the occurrence and continuance of a default hereunder, you shall deliver promptly to us all notices or other communications received by you or your nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to us or our order a proxy vote and take all action with respect to such securities. After the occurrence and continuance of a default hereunder, we waive all rights to receive any notices or communications received by you or your nominee(s) as such registered owner and agree that no proxy issued by you to us or our order as aforesaid shall thereafter be effective.

(c) Until the occurrence and continuance of a default under this Agreement, we reserve the right to receive any moneys constituting income from or interest on the Collateral, and if you receive any such moneys before the occurrence and continuance of a default, you shall either credit such moneys to our account or pay them promptly to us. After the occurrence and continuance of a default, we will not request or receive any moneys constituting income from or interest on the Collateral, and if we receive any such moneys without any request by us, we will pay them promptly to you.

(d) Whether or not upon the occurrence and continuance of a default under this Agreement, we authorize you: (i) to receive any increase in or profits on the Collateral (other than money) and to hold them as part of the Collateral (money so received shall be treated as income for the purposes of paragraph (c) of this section 5 and dealt with accordingly); and (ii) to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the account debtor of any of the Collateral, to surrender such Collateral in exchange for such payment or distribution and to hold any such payment or distribution as part of the Collateral. If we receive any such increase or profits (other than money) or payments or distributions, we will deliver them promptly to you to be held by you as provided in this Agreement.

(e) We will, promptly upon your request, at any time or from time to time, and you may in your sole discretion upon a default by us under this Agreement, notify our account debtors that payment of all Accounts shall be made to us at such address or addresses as you may from time to time specify. Upon such notification, you shall have the right to receive, or your agents or independent contractors shall have the right to receive on your behalf, the proceeds of, and all documents, instruments or papers in connection with, our Accounts at such address or addresses and to receive, endorse, assign or deliver in your name or our name any and all checks, drafts and other instruments for the payment of money relating to our Accounts, and we waive notice of presentment, protest and nonpayment of any instrument so endorsed. We acknowledge that any payments on, or other proceeds of, the Collateral received by us from account debtors, whether before or after notification to account debtors of the security interest granted by this Agreement and whether before or after our being in default under this Agreement, shall be received and held by us in trust for you and shall be turned over to you upon your request to be subject to the provisions of this Agreement. Proceeds of Accounts so received by you or on your behalf shall be credited, subject to collection, to our account with you, subject to your right to withhold credit pending the final collection and settlement of any item and your further right to apply all or part of such proceeds to the then outstanding Obligations. We constitute you or your designee as our attorney-in-fact with power after we are in default hereunder: to endorse our name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral that may come into your possession; to sign our name on any invoice or xxxx of lading relating to our Accounts, drafts against account debtors, assignments and verifications of our Accounts and notices to account debtors; to send verifications of Accounts to any of our account debtors; to notify the postal authorities to change the address for delivery of mail addressed to us to such address as you may designate; and to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or law. This power being coupled with an interest is irrevocable as long as any Obligation remains unpaid or unperformed.

(f) After the occurrence and continuance of a default hereunder, you may, without notice to or consent from us, xxx upon or otherwise collect, extend the time of payment of or compromise or settle for cash, credit or otherwise upon any terms any of our Accounts or any securities, instruments or insurance applicable thereto and/or release the obligor thereon. You are authorized and empowered in your sole discretion to accept the return of the goods represented by any of our Accounts without notice to or consent by us, all without discharging or in any way affecting our liability under this Agreement.

(g) Nothing herein contained shall be construed to constitute you as our agent for any purpose whatsoever except for the limited purposes of receiving proceeds of Accounts as provided in this Agreement and forwarding to us the original or copies of papers or documents received with such proceeds, and you shall not be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever it may be located and regardless of the cause thereof. You shall not, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of our Accounts or any instrument received in payment thereof or for any damage resulting therefrom. You may, without notice to or consent from us, xxx upon or otherwise collect, extend the time of payment of or compromise or settle for cash, credit or otherwise upon any terms any of our Accounts or any securities, instruments or insurance applicable thereto and/or release the obligor thereon. You are authorized and empowered in your sole discretion to accept the return of the goods represented by any of our Accounts without notice to or consent by us, all without discharging or in any way affecting our liability under this Agreement. You do not, by this Agreement or any assignment or otherwise, assume any of our obligations under any contract or agreement assigned to you and shall not be responsible in any way for our performance of any of the terms and conditions thereof. Neither you nor any of your directors, officers, agents or employees shall be liable to any person or entity for any action taken or omitted by you or them under or with respect to any transaction contemplated by this Agreement, except for your or their own gross negligence or willful misconduct.

6. Default. Subject to any applicable remedial periods set out in the Loan Agreement, if we default in the payment or performance of any Obligation when due, if any representation, warranty, report or certificate made in this Agreement or otherwise furnished in writing by us to you in connection with this Agreement proves to have been false or misleading in any material respect when made or deemed made, if we default in the due observance or performance of any other covenant, condition or agreement to be observed or performed pursuant to the terms of this Agreement or if we become involved as the debtor in any bankruptcy or insolvency proceedings, then we will be in default under this Agreement.

7. Rights and Remedies Upon Default. (a) Upon the occurrence and continuance of a default under this Agreement, and at any time thereafter, you may, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, declare any or all of the Obligations to be immediately due and payable.

(b) Upon the occurrence and continuance of a default under this Agreement, you shall also have the right, without notice to or assent by us, and without affecting the Obligations, in our name or in your name or otherwise, to: (i) ask for, demand, collect, receive, compound and give acquittance for the Accounts or any part thereof; (ii) extend the time of payment of, compromise or settle for cash, credit or otherwise, and upon any terms and conditions, any of the Accounts; (iii) endorse our name on any checks, drafts or other orders or instruments for the payment of moneys payable to us issued in respect of any Accounts or other Collateral; (iv) file any claims and commence, maintain or discontinue any actions, suits, or other proceedings deemed by you to be necessary or advisable for the purpose of collecting or enforcing payment of any Accounts; (v) execute any instrument and do any and all other things necessary and proper to protect and preserve and realize upon the Accounts or other Collateral and the other rights contemplated by this Agreement; (vi) notify any or all account debtors under any or all of the Accounts to make payment thereof directly to you for our account and to require us promptly to give similar notice to the account debtors; and/or (vii) require us promptly to account for and transmit to you in the same form as received all proceeds (other than physical property) of collection of Accounts received by us and, until so transmitted to you, to hold such proceeds in trust for you and not commingle them with any other of our funds.

(c) Upon the occurrence and continuance of a default under this Agreement you shall also have the right, without notice to or assent by us (except as provided in clause (i) of this paragraph (c)), and without affecting the Obligations, in our name or in your name or otherwise, to: (i) upon notice to such effect, require us to deliver, at our expense, any or all of the Collateral and all books of account, records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to the Collateral to you at a place designated by you (and after delivery thereof we will have no further claim to or interest in such Collateral); (ii) take possession of any or all of the Collateral and all books of account, records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to the Collateral and, for that purpose, to enter, with the aid and assistance of any person or entity, any premises where the Collateral or any part thereof is or may be placed or assembled, and to remove any of such Collateral and documents; (iii) execute any instrument and do all other things necessary and proper to protect and preserve and realize upon the Collateral and the other rights contemplated by this Agreement; and/or (iv) without obligation to resort to other security, at any time and from time to time, sell, re-sell, assign and deliver all or any of the Collateral, in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein and right of redemption thereof, at public or private sale, for cash, upon credit or for future delivery, and at such price or prices and on such terms as you may determine, with the amounts realized from any such sale to be applied in the manner provided in section 9 of this Agreement.

(d) In addition to any rights and remedies contained in this Agreement or now or hereafter granted under applicable law and not by way of limitation of any such rights and remedies, you shall have all the rights and remedies of a secured party under the Uniform Commercial Code as enacted in any applicable jurisdiction. You may take legal proceedings for the appointment of a receiver or receivers (to which you shall be entitled as a matter of right) to take possession of the Collateral pending the sale thereof pursuant either to the power of sale granted by this Agreement or to a judgment, order or decree made in any judicial proceeding for the foreclosure or involving the enforcement of this Agreement.

(e) We agree that all of the foregoing rights and actions specified in paragraphs (a), (b), (c) and (d) of this section 7 may be executed or effected without demand, advertisement or notice (except as required by clause (i) of paragraph (c) of this section 7, by section 8 hereof or by law), all of which (to the extent permitted by law) are hereby expressly waived. You shall not be obligated to do any of the acts authorized in this Agreement, but if you elect to do any such act, you will not be responsible to us except for your own gross negligence or willful misconduct.

(f) You shall have the right in your sole discretion to determine which rights, security, liens, guarantees, security interests or remedies you will retain, pursue, release, subordinate, modify or take any other action with respect to, without in any way modifying or affecting any other of them or any of your rights under this Agreement. Any of our moneys, deposits, Accounts, balances or other property that may come into your possession at any time or in any manner may in your sole discretion be retained by you and applied to any of the Obligations. Notwithstanding any other rights you may have under applicable law and under this Agreement, we agree that upon the occurrence and continuance of a default at any time under this Agreement, you shall have the right to apply (including, but not limited to, by way of setoff) any of our property held by you (including, but not limited to, deposit account balances) to a reduction of the Obligations. You shall be deemed to have exercised such right of setoff immediately at the time of making your decision to do so even though any charge for such setoff is made or entered on your records subsequent to such time.

8. Sale of Collateral. Upon any sale of any of the Collateral, whether made under the power of sale given by this Agreement or under judgment, order or decree in any judicial proceeding for foreclosure or involving the enforcement of this Agreement: (a) you may bid for the property being sold and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in your own absolute right without further accountability and may, in paying the purchase price for such property, deliver any notes evidencing the Obligations or claims for interest thereon in lieu of cash in payment of the amount equal to the unpaid amount of such notes or claims; (b) you may make and deliver to the purchaser or purchasers a good and sufficient deed, xxxx of sale and instrument of assignment and transfer of the property sold; (c) you are irrevocably appointed our true and lawful attorney-in-fact in our name and stead to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold and for such other purposes as are necessary or desirable to effectuate the provisions of this Agreement, and for that purpose you may execute and deliver all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons or entities with like power, and we ratify and confirm all that our said attorney, or such substitute or substitutes, shall lawfully do by virtue of this appointment, but if so requested by you or by any purchaser we will ratify and confirm any such sale or transfer by executing and delivering to you or to such purchaser all deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (d) all our right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, in and to the property so sold shall be divested, such sale shall be a perpetual bar both at law and in equity against us, our successors and assigns and against any and all persons or entities claiming or who may claim the property sold or any part thereof from, through or under us or our successors or assigns; (e) we will terminate and cease forthwith all use of the property so sold; (f) your receipt or a receipt of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for the purchase money, and such purchaser or purchasers, and such purchaser's or purchasers' assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt, be obligated to see to the application of such purchase money or be in any way answerable for any loss, misapplication or non-application thereof; and (g) to the extent that we may lawfully do so, we agree that we will not at any time insist upon or plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law or any law permitting us to direct the order in which the Collateral or any part thereof shall be sold, now or at any time hereafter in force, that may delay, prevent or otherwise affect the performance or enforcement of this Agreement or the Obligations, and we expressly waive all benefit or advantage of any such law and agree that we will not hinder, delay or impede the execution of any power granted or delegated to you in this Agreement, but will suffer and permit the execution of every such power as though no such law were in force. In the event of any sale of Collateral, you shall, at least ten days before such sale, give us written notice of your intention to sell, except that, if you determine in your sole discretion that any of the Collateral is perishable or threatens to decline speedily in value, any such sale may be made on three days' written notice to us.

9. Application of Moneys. Except as otherwise provided in this Agreement, all moneys you receive in accordance with the provisions of this Agreement shall be applied in the following manner: First, to the payment of all costs and expenses incurred in connection with the administration and enforcement of, or the preservation of any rights under, this Agreement and the realization on the Collateral (including, but not limited to, the fees and disbursements of your counsel (including counsel who are your employees) and agents); and Second, to the payment of all other Obligations in such order as you may choose. Any surplus shall be accounted for as required by law.

10. Waivers, Amendments, Required Notices. We waive notice of acceptance of this Agreement, notice of nonpayment of any of our Accounts, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of Collateral received or delivered or any other action taken in reliance on this Agreement and all other demands and notices of any description, except such as are expressly provided for in this Agreement or which by applicable law may not be waived on the date of this Agreement. No failure on your part to exercise, and no delay in exercising, any right, power or remedy under this Agreement shall operate as a waiver thereof or of any default by us under this Agreement, nor shall any single or partial exercise by you of any right, power or remedy under this Agreement preclude any other or future exercise thereof or the exercise of any other right, power or remedy. No amendment or modification of this Agreement nor any waiver of any provision of this Agreement or consent to any departure by us therefrom shall be effective unless it is in writing and signed by you, and then any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on us in any case shall, of itself, entitle us to any other or further notice or demand in similar or other circumstances. Except as otherwise provided in this Agreement, if notice, whether before or after we are in default under this Agreement, is required by law to be given by you to us, we agree that five days' notice given in the manner provided in section 12 hereof will be reasonable notice.

11. Cumulative Rights and Remedies. This Agreement and the security interest granted by this Agreement are in addition to and not in substitution for any other security interest now or hereafter held by you, and this Agreement is, and is intended to be, a continuing agreement and shall not operate as a merger of any contract debt or suspend the fulfillment of or affect your rights, remedies or powers in respect of any obligation or other security held by you for the fulfillment thereof. The remedies provided in this Agreement are cumulative and are not exclusive of any remedy provided by law.

12. Notices. Any notice given under this Agreement shall be given in writing (including teletransmissions) and mailed, teletransmitted or delivered by the party giving such notice to the other party at the address, if to you, indicated at the foot of this Agreement or, if to us, indicated beneath our signature line hereto or, as to each party, at such other address as may be designated by such party by notice complying with the terms of this section 12. All notices under this Agreement shall be deemed given when deposited in the mails or delivered or teletransmitted, addressed as provided in this section 12.

13. Costs and Expenses. We agree to pay, on demand, whether or not we are in default under this Agreement and whether or not any proceeding to enforce this Agreement or the Obligations has been commenced, all of your costs and expenses, including (but not limited to) all fees and disbursements of your legal counsel (including counsel who are your employees), incurred in connection with the preparation and enforcement of this Agreement, the security interest granted by this Agreement, the receipt of proceeds of our Accounts or other Collateral under this Agreement, the care and preservation of the Collateral or the preparation of any requested amendments to this Agreement, modifications of this Agreement or waivers or consents in connection with this Agreement. Any such expenses so incurred by you shall be charged to our account, shall be part of the Obligations and shall be secured by the Collateral.

If any tax, assessment, charge or claim is claimed or made with respect to the Collateral that in your opinion may possibly create a valid obligation having priority over the security interest granted to you by this Agreement, you may, in your sole discretion and without notice to us, pay such taxes, assessments, charges or claims, and the amount thereof shall be charged to our account, shall be part of the Obligations and shall be secured by the Collateral.

Upon our failure to perform any of our duties under this Agreement, you may, but shall not be obligated to, perform any or all of such duties, and we will pay to you on your written demand an amount equal to the cash or out-of-pocket expense incurred by you in so doing plus interest thereon from the date such expense is incurred until it is paid at a rate per annum equal to the highest rate of interest payable by us from time to time on the Obligations.

14. Successors and Assigns, Governing Law, Survival and Severability. This Agreement, which shall inure to the benefit of and shall be binding upon each of us and our respective successors and assigns, shall be governed by and construed in accordance with the laws of the State of New York. All covenants, agreements, representations and warranties made by us in this Agreement shall survive the execution and delivery of this Agreement and shall continue in full force and effect so long as any Obligation remains unpaid or unperformed. If any part of this Agreement is contrary to, prohibited by or deemed invalid under applicable law or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder of this Agreement shall not be invalidated and shall be given full force and effect so far as possible, and any such prohibition or invalidity in any jurisdiction shall not invalidate such provision or render it unenforceable in any other jurisdiction.

15. Other Currencies. If for the purpose of obtaining or enforcing judgment or realizing upon the Collateral in any court it is necessary to convert any amount received or payable in a currency (“Second Currency”) other than the currency in which the Obligations are payable (“Primary Currency”) into Primary Currency, the rate of exchange that shall be applied shall be that at which in accordance with your normal banking procedures you could purchase Primary Currency with the Second Currency on the business day preceding the day on which final judgment is given. If payment of any amount of the Obligations is made to or received by you in a Second Currency, whether by judicial judgment (and notwithstanding the rate of exchange actually applied in giving such judgment), from the proceeds of the sale or other disposition of Collateral or otherwise, the Obligations shall be discharged only to the extent of the net amount of Primary Currency that you are able in accordance with your normal banking procedures lawfully to purchase with such amount of Second Currency. To the extent that you are not able to purchase with such amount of Second Currency sufficient Primary Currency to discharge the Primary Currency amount of the Obligations, the Obligations shall not be discharged with respect to such difference, and any such undischarged amount will be due as a separate debt and shall not be affected by payment of, or judgment being obtained for, any other sums under or in respect of this Agreement or the Obligations. To the extent that you are able to purchase Primary Currency in an amount in excess of the amount necessary to discharge the Primary Currency amount of the Obligations, you shall promptly remit such excess to us or as a court of competent jurisdiction may direct.

16. No Assumptions of Duties; Limitation on Liabilities. (a) Nothing in this Agreement shall be construed to constitute you as our agent for any purpose whatsoever except for the limited purposes of receiving proceeds of the Collateral as provided in this Agreement and forwarding to us the originals or copies of papers or documents received with such proceeds. You do not, by this Agreement or any assignment or otherwise, assume any of our obligations under any Collateral or any license, contract or agreement relating to any Collateral, and you shall not be responsible in any way for performance of any of the terms and conditions thereof.

(b) Neither you nor any of your directors, officers, agents or employees shall be liable to any person or entity for any action taken or omitted by you or any of your directors, officers, agents or employees under this Agreement or with respect to any transaction contemplated by this Agreement, except for your or such director's, officer's, agent's or employee's own gross negligence or willful misconduct. Without limiting the generality of the foregoing, you shall not be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral, wherever it may be located and regardless of the cause thereof, unless due to your own gross negligence or willful misconduct. You shall not, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of our Accounts or any instrument received in payment thereof or for any damage resulting therefrom. We assume all responsibility and liability arising from the use of the Collateral and will pay, and indemnify and hold you harmless from and against, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to our right, title and interest in, to and under the Collateral, including (without limitation) claims of trademark infringement.

17. Amendments, Modifications and Waivers with Respect to Obligations. We hereby consent that, without the necessity of any reservation of rights against us and without notice to or further assent by us, the liability of any other person or entity on or for any part of the Obligations, or any collateral security or guaranty therefor or right of offset with respect thereto, may from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released and any other collateral security document or guaranty or document delivered in connection therewith to which we are not a party may be amended, modified, supplemented, restated or terminated, in whole or in part, as you may deem advisable from time to time, and any collateral security or guaranty or right of offset at any time held for payment of the Obligations may be sold, waived, surrendered or released, all without the necessity of any reservation of rights against us and without notice to or further assent by us, and we will remain bound hereunder notwithstanding any such renewal, extension, modification, acceleration, compromise, amendment, supplement, restatement, termination, sale, exchange, waiver, surrender or release. We waive any and all notice of or proof of reliance by you on this Agreement, and the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Agreement, and all dealings between you and us shall likewise be conclusively presumed to have been had or consummated in reliance on this Agreement. We waive (to the fullest extent permitted by applicable law) diligence, presentment, protest, demand for payment and notice of default or nonpayment to or on us with respect to the Obligations.

18. No Subrogation. Notwithstanding any payment or payments made by us hereunder, the receipt of any amounts by you with respect to the Collateral or any setoff or application of our funds by you, we shall not be entitled to be subrogated to any of your rights against any collateral security or guaranty or right of offset held by you for the payment of the Obligations, nor shall we seek any reimbursement from 2314505 Ontario Inc. in respect of payments made by us hereunder, until the Obligations have been paid in full.

19. Headings; Construction. The headings used in this Agreement are for convenience only and are not to be considered a part of this Agreement and do not in any way limit or amplify the terms and provisions of this Agreement. When the context so requires, the singular number shall be read as if the plural were expressed and the provisions of this Agreement shall be read with all grammatical changes necessary dependent upon the person or entity referred to being a male, female, firm or corporation.

20. Submission to Jurisdiction. We expressly submit to the jurisdiction of all federal and state courts located in the State of New York, and consent that any order, process, notice of motion or other application to any of said courts or a judge thereof may be served upon us within or without such court's jurisdiction by registered mail or by personal service at the address specified pursuant to section 12 hereof, provided a reasonable time for appearance is allowed. We irrevocably waive any objection we may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing contained in this Agreement shall affect your right to serve legal process in any other manner permitted by law or to bring any action or proceeding against us or our property in the courts of other jurisdictions.

21. Defeasance. Upon indefeasible satisfaction in full of the Obligations, this Agreement shall terminate and be of no further force and effect. Notwithstanding the preceding sentence, the indemnity agreement contained in section 16(b) of this Agreement shall survive the termination of this Agreement.

22. Waiver of Jury Trial. WE AND, BY YOUR ACCEPTANCE OF THIS AGREEMENT, YOU HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT WE OR YOU MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

[Remainder of page intentionally left blank. Signature page follows.]

Dated: June 4, 2012

Very truly yours,

Address for Notices:
		DECISIONPOINT SYSTEMS, INC.
19655 Descartes
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
		By /s/ Xxxxxxxx Xxxx
Fax: (000) 000-0000		Name: Xxxxxxxx Xxxx
Attention: Xxxxxxxx Xxxx, CEO		Title: Chief Executive Officer


with a copy to:

XxXxxxxx LLP
Bookfield Place, 000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0

Fax: (000) 000-0000
Attention: Xxxxx X. Xxxx



Lender’s Address for Notices:

Royal Bank of Canada
Commercial Financial Services
00 Xxxx Xxxxxx Xxxx – 0xx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0

Fax: (000) 000-0000
Attention: Account Manager re: Apex Systems Integrators Inc.

with a copy to:

Xxxxxxxxx Dellelce LLP
Xxxxx 000, 000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Fax: (000) 000-0000
Attention: Xxxxxxxxxxx X.X. Xxxxxxxxx

EXHIBIT “A”

Current Location(s) of Collateral (include county)

19655 Descartes, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000

0 Xxxxxxxxx Xxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000

000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000-0000

00000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000

Blding 200 at Windward Chase, 0000 Xxx Xxxxxxxxxx Xxxx, #000, Xxxxxxxxxx, Xxxxxxx 00000

Other Location(s) of Inventory within past 5 years (include county)

None

Other legal name and/or trade names

Comamtech Inc.

Copernic Inc.

Canusa Capital Corp.

EXHIBIT “B”

UCC Filing Offices

State of Delaware

EXHIBIT “C”

TRADEMARK/SERVICE XXXX/PATENT

Xxxx	Jurisdiction	Registration/Application No.	Date

		None

TRADEMARK/SERVICE XXXX/PATENT LICENSES

None

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SECURITY AGREEMENT

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