EXHIBIT 99.2
SECURITY AGREEMENT
This Security Agreement (this "Agreement") is hereby made as of the 30th
day of March, 2006 by and between NEUTRON ENTERPRISES, INC., a Nevada
corporation with an address at 000 Xxxxxxxx Xxxx. Xxxx 00, Xxxxxxxxxxx, Xxxxxxx
X0X 0X0, Xxxxxx ("Debtor") and GENEVA CAPITAL TRUST, a British West Indies Trust
with an address at 00 xxx xx xx Xxxxxxxxxx, 0000 Xxxxxx, 00 Xxxxxxxxxxx
("Secured Party").
WHEREAS, Debtor and Secured Party entered into a Secured Note of even date
herewith; and
WHEREAS, in connection with the foregoing, the Debtor has agreed to secure
the amounts due under the Note, and any subsequent indebtedness, as set forth
herein;
NOW, THEREFORE, in consideration of the willingness of the Secured Party to
enter into the Note and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Secured Party and Debtor
hereby agree as follows:
1. Security Interest. As security for the Secured Obligations (as defined
herein), the Debtor hereby grants to Secured Party a security interest in and
lien on all of the tangible and intangible property and assets, including
without limitation all personal property and fixtures, of the Debtor, wherever
located, whether now owned or existing or hereafter acquired or arising,
together with any and all additions thereto or replacements and proceeds and
products thereof (collectively, the "COLLATERAL"). The Collateral includes,
without limitation, all of Debtor's:
a. Accounts;
b. Chattel Paper (including Electronic Chattel Paper, if any);
c. Deposit Accounts (excluding clients' funds and other
fiduciary accounts);
d. Documents;
e. Equipment;
f. Instruments;
g. Inventory;
h. Investment Property;
i. Letter-of-credit Rights; and
j. General Intangibles
Each term listed above has the meaning given to such term in Article 9 of
the Uniform Commercial Code, as adopted by the State of Nevada, or any similar
equivalent legislation (the "UCC").
2. Obligations Secured. The security interest granted hereby shall secure
the due and punctual payment and performance of the liabilities and obligations
of the Debtor to the Secured Party (collectively, the "SECURED OBLIGATIONS").
3. Debtor's Representations and Warranties.
a. Debtor represents and warrants that:
i. It is a corporation validly existing, in good standing and
organized under the jurisdiction of the State of Nevada;
ii. Its full legal name as set forth in its Certificate of
Incorporation is Neutron Enterprises, Inc.. Its principal
place of business is located at 000 Xxxxxxxx Xxxx. Xxxx 00,
Xxxxxxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx;
iii. It is the lawful owner of the Collateral and it has the sole
right to grant a security interest therein;
iv. the execution, delivery and performance hereof and of the
Note are within the Debtor's powers, have been duly
authorized, are not in contravention of the terms of
Debtor's charter documents, nor of any indenture, agreement
or undertaking to which the Debtor is a party or by which it
is bound.
4. Debtor's Covenants. Debtor covenants that
a. It will provide the Secured Party with thirty (30) days' prior
notice of any change in (i) its jurisdiction of organization,
(ii) its name, (iii) its principal executive office or any other
place of business, or (iv) the location of any Collateral;
b. It will defend the Collateral against all claims and demands of
all persons and entities.
c. It will keep the Collateral in good order and repair and insured
at all times
d. it will not sell or otherwise dispose of any of the Collateral or
any interest therein except in the ordinary course of business or
as otherwise permitted by an agreement among the parties hereto;
e. It will not incur any indebtedness without the written consent of
the Secured Party, which shall not be unreasonably withheld,
except for:
i. indebtedness outstanding on the date hereof;
ii. accounts payable arising out of trade credit arising in
the ordinary course of business;
iii. accrued expenses arising in the ordinary course of
business; and
iv. taxes arising in the ordinary course of business.
5. General Obligations of Debtor.
a. Financing Statements. At the request of the Secured Party, Debtor
agrees to execute one or more financing statements and such other
documents as the Secured Party reasonably deems necessary to
enable the Secured Party to perfect or from time to time renew
the security interest granted hereby.
b. Reimbursement. Debtor will reimburse Secured Party within thirty
(30) days after demand for any sums paid or advanced by Secured
Party to satisfy any tax, lien or security interest, trade debt
or other encumbrance on the Collateral to the extent attributable
to or caused by Debtor, provided, however, that Secured Party
shall not be obligated to make any such payments and further
provided that Secured Party shall not pay any such sum until the
expiration of thirty (30) days after written notice thereof to
Debtor. Any such sums paid or advanced by Secured Party shall be
deemed secured by the Collateral and constitute part of the
Secured Obligations.
6. Default. Debtor shall be in default under this Agreement upon the
happening of any of the following events or conditions (each an "EVENT OF
DEFAULT"), without demand or notice from Secured Party:
a. Any default (beyond applicable notice and cure periods to the
extent set forth therein) under the Note;
b. Failure of Debtor to perform any of its agreements or covenants
in this Agreement continuing for thirty (30) days after written
notice, provided that Debtor shall not be in default hereunder if
such default is not capable of cure within said thirty-day period
but it diligently proceeds to correct any such failure of
performance and diligently prosecutes such cure to completion;
and
c. Irrevocable dissolution; irrevocable termination of existence,
insolvency or business failure of the Debtor, or the appointment
of a receiver of any part of Debtor's property, or an assignment
or trust mortgage for the benefit of creditors by Debtor.
7. Secured Party's Rights Upon Default. If any Event of Default shall have
occurred and be continuing, the Secured Party may declare all of the Secured
Obligations to be immediately due and payable and shall then have the following
rights and remedies:
a. All rights and remedies available at law or in equity, including
those provided by the UCC;
b. All rights and remedies provided in this Agreement;
c. All rights and remedies provided in the Note or any other
agreement between the parties hereto pertaining to any of the
Secured Obligations.
8. Additional Rights and Remedies of Secured Party. If any Event of Default
shall have occurred and be continuing, the Secured Party shall have the right
to:
a. Notify account debtors and other obligors on the Collateral to
make payments directly to the Secured Party and to enforce the
Debtor's rights against such account debtors and obligors;
b. Take possession of the Collateral and, in addition thereto, enter
upon any premises on which the Collateral or any part thereof may
be situated and remove the same therefrom;
c. Sell, lease or otherwise dispose of the Collateral, provided that
the Secured Party will give the Debtor at least ten (10) days'
prior notice of the time and place of any public sale thereof or
of the time after which any private sale or any other intended
disposition thereof is to be made; and
d. Have a receiver, trustee or liquidator or other similar official
(a "RECEIVER") appointed by a court of competent jurisdiction for
the purposes of collecting all rents, issues, profits, fees,
revenues and other income of the business of the Debtor, or of
liquidating all or any part of the Collateral.
9. Application of Proceeds. In the event that the Secured Party elects to
use and operate the Collateral or a Receiver is appointed, any proceeds shall be
applied to the payment of the Secured obligations in such order of priority as
the Secured Party shall determine (or, in the case of a receivership, as the
court appointing Receiver may direct) and in the event there remains a
deficiency after the application of such proceeds, the Debtor shall remain
liable for such deficiency. Unless otherwise provided by law or by a court of
competent jurisdiction, any surplus shall be returned to the Debtor or to any
person or party lawfully entitled thereto (including, if applicable, any
subordinated creditors of the Debtor).
10. Power of Attorney. Subject to the occurrence of any Event of Default,
the Debtor hereby irrevocably appoints the Secured Party the true and lawful
attorney of the Debtor with full power of substitution, in the name of the
Secured Party or in the name of the Debtor or otherwise, for the sole benefit of
the Secured Party, without notice to or demand upon the Borrower, for the sole
purpose of enforcing any of the rights granted to the Secured Party pursuant to
Sections 5 and 6 of this Agreement.
11. Waivers. Debtor waives demand, presentment, protest, notice of
nonpayment and all other notices (other than such notices as are expressly set
forth herein). No delay or omission by Secured Party in exercising any right
hereunder shall operate as a waiver of such right or any other right. Waiver on
any one occasion shall not be construed as a bar to or waiver of any right,
remedy, and any rights and remedies, whether evidenced hereby or by any other
agreement, instrument or paper, shall be cumulative and may be exercised
singularly or concurrently.
12. Termination; Assignment. This Agreement and the security interest in
the Collateral created hereby shall terminate when all of the Secured
Obligations have been paid and finally discharged in full in cash. In the event
of a sale or assignment by the Secured Party of all or any of the Secured
Obligations held by it, the Secured Party may assign or transfer its rights and
interests under this Agreement in whole or in party to the purchaser or
purchasers of such Secured Obligations, whereupon such purchaser or purchasers
shall become vested with all of the powers and rights of the Secured Party
hereunder with respect to the rights and interests so assigned, and the Secured
Party shall thereafter be forever released and fully discharged from any
liability or responsibility hereunder, with respect to the rights and interests
so assigned.
13. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Secured Party and the Debtor and their respective
successors and assigns.
14. Recourse of Secured Party. The Debtor, its officers, directors,
shareholders, employees or agents shall not be personally liable for the payment
of any obligations under this Agreement, and in any action brought to enforce
any payment obligations of the Debtor the judgment or decree shall be
enforceable by the Secured Party only to the extent of its interest in the
Collateral, if any.
15. Confidentiality. Neither party will disclose any part of this Agreement
to anyone other than its attorneys, accountants or employees who need to know of
its contents in order to perform their duties hereunder, or pursuant to lawful
requests of any court of competent jurisdiction or the Securities and Exchange
Commission, or pursuant to the requirements of any securities law or regulation.
16. Notices. All notices, requests and other communications to the Debtor
or to the Secured Party shall be in writing and shall be given at the address
provided in the first paragraph hereof.
17. Construction. The laws of Nevada, including the Uniform Commercial
Code, as enacted and amended from time to time in New York shall govern the
construction of this Agreement and the rights and duties of the parties hereto;
this Agreement shall be deemed to be under seal and executed as of the day and
date referred above.
18. Severability. In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
19. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date first above written.
SECURED PARTY: GENEVA CAPITAL TRUST
By: /s/ A. Mayboch
DEBTOR: NEUTRON ENTERPRISES, INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
