EXHIBIT 10.3
GENERAL SECURITY AGREEMENT
TO: LASALLE BUSINESS CREDIT,
A DIVISION OF ABN AMRO BANK N.V., CANADA BRANCH
15th Floor, Maritime Life Tower
Toronto-Dominion Centre
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
(hereinafter the "Lender")
GRANTED BY: STEELBANK INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
(hereinafter the "Debtor")
1. GRANT OF SECURITY INTEREST
1.1 SECURITY INTEREST
As general and continuing security for (a) the payment of principal and
interest and all other moneys from time to time owing by the Debtor to the
Lender, including, without limitation under the Loan Agreement (as hereinafter
defined), and (b) the payment and performance of all other indebtedness and
obligations of the Debtor to the Lender under the Loan Agreement (as hereinafter
defined) or any other instruments or documents of security which may now or in
the future be granted by the Debtor to the Lender (all of the foregoing being
herein collectively called the "Obligations") the Debtor, IN CONSIDERATION OF
THE OBLIGATIONS and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby bargains, assigns and
transfers to the Lender, and grants to the Lender a continuing security interest
in, all the property, assets and undertakings of the Debtor of whatsoever nature
and kind, now owned or hereafter-acquired by or on behalf of the Debtor,
wherever located (the "Collateral") including, without limitation:
(a) Accounts Receivable and Contracts
All debts, book debts, accounts, claims, demands, moneys and choses
in action whatsoever including, without limitation, claims against
the Crown and claims under insurance policies, which are now owned
by or are due, owing or accruing due to the Debtor or which may
hereafter be owned by or become due, owing or accruing due to the
Debtor together with all contracts, securities, bills, notes, lien
notes, judgments, chattel mortgages, mortgages and all other rights,
benefits and documents now or hereafter taken, vested in or held by
the Debtor in respect of or as security for the same and the full
benefit and advantage thereof, and all rights of action or claims
which the Debtor now has or may at any time hereafter have
against any person or persons, firm or Debtor in respect thereof
(all of the foregoing being herein collectively called the "Accounts
Receivable");
(b) Inventory
All inventory of whatever kind now or hereafter owned by the Debtor
or in which the Debtor now or hereinafter has an interest or right
of any kind, and all accessions thereto and products thereof,
including, without limitation, all goods, merchandise, raw
materials, goods in process, finished goods, packaging and packing
material and other tangible personal property now or hereafter held
for sale, lease, rental or resale or that are to be furnished or
have been furnished under a contract of service or that are to be
used or consumed in the business of the Debtor (all of the foregoing
being herein collectively called the "Inventory");
(c) Equipment
All goods now or hereafter owned by the Debtor which are not
inventory or consumer goods as defined in the Personal Property
Security Act (Ontario) ("PPSA") including, without limitation, all
fixtures, equipment, machinery, tools, furniture, vehicles and other
tangible personal property (all of the foregoing being herein
collectively called the "Equipment");
(d) Chattel Paper, Instruments, Securities, etc.
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 or other
securities, now or hereafter owned by the Debtor;
(e) Intangibles
All intangibles now or hereafter owned by the Debtor including,
without limitation, all contractual rights, goodwill, patents, trade
marks, trade names, copyrights, industrial designs and other
industrial or intellectual property or rights therein, including
those more particularly set out in Schedule "A" hereto;
(f) Books and Accounts, etc.
With respect to the personal property described in Paragraphs (a) to
(e) inclusive, all books, accounts, invoices, deeds, documents,
writings, letters, papers, security certificates and other records
in any form evidencing or relating thereto and all contracts,
securities, instruments and other rights and benefits in respect
thereof;
(g) Other Property
The uncalled capital, money, rights, bills of exchange, negotiable
and non-negotiable instruments, judgments and securities not
otherwise described in Paragraphs (a) to (f) inclusive;
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(h) Replacements, etc.
With respect to the personal property described in Paragraphs (a) to
(g) inclusive, all substitutions and replacements thereof,
increases, additions and accessions thereto and any interest of the
Debtor therein; and
(i) Proceeds
With respect to the personal property described in Paragraphs (a) to
(h) inclusive, personal property in any form or fixtures derived
directly or indirectly from any dealing with such property or that
indemnifies or compensates for such property destroyed or damaged
and proceeds of proceeds and whether or not of the same type, class
or kind as the original collateral.
1.2 DEFINITIONS AND INTERPRETATION
In this Security Agreement:
(a) Terms used herein and defined in the PPSA shall have the same
meanings as in the PPSA unless the context otherwise requires;
(b) Terms not otherwise defined herein or in the PPSA shall have the
meaning ascribed to them in the Loan Agreement;
(c) Any reference to "Collateral" shall, unless the context otherwise
requires, refer to "Collateral or any part thereof";
(d) The grant of the security interest herein provided for shall
include, without limitation, a fixed mortgage, hypothecation,
pledge, charge and assignment of the Collateral in favour of the
Lender;
(e) "Loan Agreement" shall mean the Loan Agreement by and among the
Lender and the Debtor dated as of the date hereof, as the same may
be amended, supplemented, revised, replaced or restated from time to
time;
(f) The term "security interest" shall include, without limitation, a
fixed mortgage, hypothecation, pledge, charge and assignment;
(g) The term "purchase money security interest" shall mean a purchase
money security interest granted by the Debtor under the PPSA to
secure all or any part of the indebtedness incurred by the Debtor in
connection with the acquisition of property (not in excess of the
acquisition price of such property) or any extension or renewal or
replacement of such indebtedness provided that the principal amount
of such indebtedness is not increased; and
(h) The term "encumbrance" shall include, without limitation, a security
interest, lien, hypothec, claim, charge, deemed trust or encumbrance
of any kind whatsoever.
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1.3 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 be excepted from
the security interest hereby granted and shall not form part of the Collateral,
but the Debtor shall stand possessed of such one day remaining, upon trust to
assign and dispose of the same as the Lender or any assignee of such lease or
agreement shall direct. If any such lease or agreement therefor contains a
provision which provides in effect that such lease or agreement may not be
assigned, sub-leased, charged or encumbered without the leave, license, consent
or approval of the lessor, the application of the security interest created
hereby to any such lease or agreement shall be conditional upon such leave,
license, consent or approval having been obtained.
1.4 DEBTOR REMAINS LIABLE
Notwithstanding anything herein to the contrary:
(a) the Debtor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein to
perform all its duties and obligations thereunder to the same extent
as if this Security Agreement had not been executed;
(b) the exercise by the Lender of any of the rights or remedies
hereunder shall not release the Debtor from any of its duties or
obligations under the contracts and agreements included in the
Collateral; and
(c) the Lender shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of
this Security Agreement, nor shall the Lender be obligated to
perform any of the obligations or duties of the Debtor thereunder or
to take any action to collect or enforce any claim for payment
assigned hereunder.
2. REPRESENTATIONS AND WARRANTIES
2.1 LOAN AGREEMENT
The Debtor has reviewed the representations and warranties made by it
under the Loan Agreement and represents and warrants to and in favour of the
Lender acknowledging that the Lender is relying thereon on the date hereof and
on the date of each borrowing of a loan or issuance of a letter of credit, the
truth and accuracy of each such representation and warranty, and where any act
or thing is to be done by it or not permitted to be done by it or to occur under
the Loan Agreement, the Debtor agrees to do or not to do or not to allow to
occur any such act or thing.
2.2 SURVIVAL
All representations and warranties of the Debtor made herein or in any
certificate or other document delivered by or on behalf of the Debtor to the
Lender are material, shall be deemed to have been relied upon by the Lender
notwithstanding any investigation heretofore or hereafter
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made by or on behalf of the Lender, shall survive the execution and delivery of
this Security Agreement and shall continue in full force and effect without time
limit.
3. COVENANTS OF THE DEBTOR
The Debtor covenants and agrees with the Lender that so long as there
shall remain any Obligations of or affecting any party to this Security
Agreement:
3.1 PAYMENT
The Debtor will pay duly and punctually all sums of money due by it to the
Lender under this Security Agreement and the Loan Agreement at the times and
places and in the manner provided for herein and therein and under any other
agreements forming part of the Obligations.
3.2 LOAN AGREEMENT
The Debtor shall duly observe and perform or cause to be observed or
performed each of its covenants and obligations provided for in the Loan
Agreement and in any of the instruments or documents of security granted by the
Debtor to the Lender in connection therewith.
3.3 NOTICE REGARDING CHANGE OF ADDRESS, ETC.
The Debtor shall notify the Lender in writing:
(a) At least twenty (20) days prior to any change of name of the Debtor;
(b) At least twenty (20) days prior to any transfer of the Debtor's
interest in any part of the Collateral except sales of Inventory in
the ordinary course of the Debtor's business or as otherwise
expressly permitted hereunder;
(c) Promptly upon becoming aware, and in any event within two (2)
Business Days, of any significant loss of or damage to Collateral;
(d) At least twenty (20) days prior to any change in the location(s) of
the Collateral and any records relating thereto; and
(e) Forthwith upon becoming aware of the existence of any condition or
event which could cause or which, with the passage of time or
notice, or both, constitute a Default (as such term is hereinafter
defined) give the Lender notice thereof specifying the nature and
duration thereof and the action being taken or proposed to be taken
with respect thereto, provided that written notice shall be
delivered to the Lender within two (2) Business Days thereafter.
4. COLLECTION OF PROCEEDS
4.1 PAYMENTS RECEIVED IN TRUST
Upon the occurrence and during the continuance of an Event of Default, as
defined in the Loan Agreement, the Debtor shall:
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(a) Collect and enforce payment of all Accounts Receivable (except as
provided for in Section 4.2) and shall dispose of and receive
payment for all Inventory which is ordinarily disposed of in the
Debtor's business;
(b) Receive and hold in trust for the Lender, all payments on or
instruments received in respect of the Collateral, all rights by way
of suretyship or guarantee which the Debtor now has or may hereafter
acquire to enforce payment of Collateral and all rights in the
nature of a security interest whereby the Debtor may satisfy any
Collateral out of property, and all non-cash proceeds of any such
collection, disposition or realization of any of the Collateral
shall be subject to the security interest hereby created;
(c) Endorse to the Lender and forthwith deliver to it all such payments
and instruments in the form received by the Debtor; and
(d) Forthwith deliver to the Lender all property in the Debtor's
possession or hereafter coming into its possession through
enforcement of any such rights.
4.2 ACCOUNT DEBTOR
The Lender may at any time, after the occurrence of an Event of Default
which is continuing, notify an account debtor or debtor under any Account
Receivable of the assignment of the Account Receivable to the Lender and
instruct such person to make payment to the Lender in respect of any of the
Accounts Receivable and the Lender may hold all amounts acquired or received
from any such account debtors or debtors, together with income on such amounts,
as part of the Collateral and as security for the Obligations.
5. DEFAULT
5.1 DEFAULT
Without in any way limiting the demand nature of the Obligations or any of
them, if any, the Obligations secured hereby shall become immediately due and
payable and the security interests hereby constituted shall become enforceable
in each and every of the following events (herein called a "Default"):
(a) if the Debtor fails to make any payment of any of the Obligations
when due; and
(b) if an Event of Default under the Loan Agreement shall occur.
5.2 DEMAND NATURE OF OBLIGATIONS
The Debtor agrees that the provision of defaults in Section 5.1 shall not
derogate from any demand nature of the Obligations as provided in the Loan
Agreement as at any time without restriction, whether or not the Debtor has
complied with the provisions of this Security Agreement or any other agreement
or instrument between it and the Lender. The Debtor agrees that upon the
occurrence of a Default under Section 5.1, the security interests hereby
constituted shall become enforceable and the Lender shall be entitled to
exercise and enforce any or all of the remedies herein provided or which may
otherwise be available to the Lender by statute at law
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or in equity and all amounts secured hereby shall immediately be paid to the
Lender by the Debtor.
6. REMEDIES ON DEFAULT
If the security interests hereby constituted becomes enforceable, the
Lender shall have, in addition to any other rights, remedies and powers which it
may have in the Loan Agreement, at law, in equity or under the PPSA, the
following rights, remedies and powers:
6.1 POWER OF ENTRY
The Debtor shall forthwith upon demand assemble and deliver to the Lender
possession of all of the Collateral at such place as may be specified by the
Lender. The Lender may take such steps as it considers necessary or desirable to
obtain possession of all or any part of the Collateral and, to that end, the
Debtor agrees that the Lender, its servants or agents or Receiver may, at any
time, during the day or night, enter upon lands and premises where the
Collateral may be found for the purpose of taking possession of and/or removing
the Collateral or any part thereof. In the event of the Lender taking possession
of the Collateral, or any part thereof, the Lender shall have the right to
maintain the same upon the premises on which the Collateral may then be situate.
The Lender may, in a reasonable manner, take such action or do such things as to
render any Equipment unusable, provided that the Lender shall not cause
deliberate damage to such Equipment in so doing.
6.2 POWER OF SALE
The Lender may sell, lease or otherwise dispose of all or any part of the
Collateral, as a whole or in separate parcels, by public auction, private tender
or by private contract, with or without notice, except as otherwise required by
applicable law, with or without advertising and without any other formality, all
of which are hereby waived by the Debtor. Such sale, lease or disposition shall
be on such terms and conditions as to credit and otherwise and as to upset or
reserve bid or price as to the Lender, in its sole discretion, may seem
advantageous. If such sale, transfer or disposition is made on credit or part
cash and part credit, the Lender need only credit against the Obligations the
actual cash received at the time of the sale. Any payments made pursuant to any
credit granted at the time of the sale shall be credited against the Obligations
as they are received. The Lender may buy in or rescind or vary any contract for
sale of all or any of the Collateral and may resell without being answerable for
any loss occasioned thereby. Any such sale, lease or disposition may take place
whether or not the Lender has taken possession of the Collateral. The Lender
may, before any such sale, lease or disposition, perform any commercially
reasonable repair, processing or preparation for disposition and the amount so
paid or expended shall be deemed advanced to the Debtor by the Lender, shall
become part of the Obligations, shall bear interest at the highest rate per
annum charged by the Lender on the Obligations or any part thereof and shall be
secured by this Security Agreement.
6.3 VALIDITY OF SALE
No person dealing with the Lender or its servants or agents shall be
concerned to inquire whether the security hereby constituted has become
enforceable, whether the powers which the Lender is purporting to exercise have
become exercisable, whether any money remains due on the security of the
Collateral, as to the necessity or expedience of the stipulations and conditions
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subject to which any sale, lease or disposition shall be made, otherwise as to
the propriety or regularity of any sale or any other dealing by the Lender with
the Collateral or to see to the application of any money paid to the Lender. In
the absence of fraud on the part of such persons, such dealings shall be deemed,
so far as regards the safety and protection of such person, to be within the
powers hereby conferred and to be valid and effective accordingly.
6.4 RECEIVER-MANAGER
The Lender may, in addition to any other rights it may have, appoint by
instrument in writing a receiver or receiver and manager (both of which are
herein called a "Receiver") of all or any part of the Collateral or may
institute proceedings in any court of competent jurisdiction for the appointment
of such a Receiver. Any such Receiver is hereby given and shall have the same
powers and rights and exclusions and limitations of liability as the Lender has
under this Security Agreement, at law or in equity. In exercising any such
powers, any such Receiver shall, to the extent permitted by law, act as and for
all purposes shall be deemed to be the agent of the Debtor and the Lender shall
not be responsible action or error or omission of any such Receiver. The Lender
may appoint one or more Receivers hereunder and may remove any such Receiver or
Receivers and appoint another or others in his or their stead from time to time.
Any Receiver so appointed may be an officer or employee of the Lender. A court
need not appoint, ratify the appointment by the Lender of or otherwise supervise
in any manner the actions of any Receiver. Upon the Debtor receiving notice from
the Lender of the taking of possession of the Collateral or the appointment of a
Receiver, all powers, functions, rights and privileges of each of the directors
and officers of the Debtor with respect to the Collateral shall cease, unless
specifically continued by the written consent of the Lender.
6.5 CARRYING ON BUSINESS
The Lender may carry on, or concur in the carrying on of, all or any part
of the business or undertaking of the Debtor, and may, to the exclusion of all
others, including the Debtor, enter upon, occupy and use all or any of the
premises, buildings, plant and undertaking of or occupied or used by the Debtor
and may use all or any of the tools, machinery, equipment and intangibles of the
Debtor for such time as the Lender sees fit, free of charge, to carry on the
business of the Debtor and, if applicable, to manufacture or complete the
manufacture of any Inventory and to pack and ship the finished product.
Notwithstanding the foregoing, if any such premises are subject to a landlord
waiver, the Lender shall exercise its rights in accordance therewith.
6.6 DEALING WITH COLLATERAL
The Lender may seize, collect, realize, dispose of, enforce, release to
third parties or otherwise deal with the Collateral or any part thereof in such
manner, upon such terms and conditions and at such time or times as may seem to
it advisable, all of which without notice to the Debtor except as otherwise
required by any applicable law. The Lender may demand, ▇▇▇ for and receive any
Accounts Receivable with or without notice to the Debtor, give such receipts,
discharges and extensions of time and make such compromises in respect of any
Accounts Receivable which may, in the Lender's absolute discretion, seem bad or
doubtful. The Lender may charge on its own behalf and pay to others, sums for
costs and expenses incurred including, without limitation, legal fees and
expenses on a solicitor and his own client scale and Receivers' and accounting
fees, in or in connection with seizing, collecting, realizing, disposing,
enforcing or otherwise dealing with the Collateral and in connection with the
protection and enforcement
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of the rights of the Lender hereunder including, without limitation, in
connection with advice with respect to any of the foregoing. The amount of such
sums shall be deemed advanced to the Debtor by the Lender, shall become part of
the Obligations, shall bear interest at the highest rate per annum charged by
the Lender on the Obligations or any part thereof and shall be secured by this
Security Agreement.
6.7 PAY ENCUMBRANCES
The Lender may pay any amounts owing in respect of any encumbrance that
exist or is threatened against the Collateral. In addition, the Lender may
borrow money required for the maintenance, preservation or protection of the
Collateral or for the carrying on of the business or undertaking of the Debtor
and may grant further security interests in the Collateral in priority to the
security interest created hereby as security for the money so borrowed. In every
such case the amounts so paid or borrowed together with costs, charges and
expenses incurred in connection therewith shall be deemed to have been advanced
to the Debtor by the Lender, shall become part of the Obligations, shall bear
interest at the highest rate per annum charged by the Lender on the Obligations
or any part thereof and shall be secured by this Security Agreement.
6.8 APPLICATION OF PAYMENTS AGAINST OBLIGATIONS
Any and all payments made in respect of the Obligations from time to time
and moneys realized on the Collateral may be applied to such part or parts of
the Obligations as the Lender may see fit, the whole in accordance with the
provisions of the Loan Agreement. The Lender shall, at all times and from time
to time, have the right to change any appropriation as it may see fit in
accordance with the provisions of the Loan Agreement.
6.9 SET-OFF
The Obligations will be paid by the Debtor without regard to any equities
between the Debtor and the Lender or any right of set-off or cross-claim. Any
indebtedness owing by the Lender to the Debtor may be set off and applied by the
Lender against the Obligations at any time after the occurrence of an Event of
Default and during the continuation thereof, without demand upon or notice to
anyone.
6.10 DEFICIENCY
If the proceeds of the realization of the Collateral are insufficient to
repay the Lender all moneys due to it, the Debtor shall forthwith pay or cause
to be paid to the Lender such deficiency.
6.11 LENDER NOT LIABLE
The Lender shall not be liable or accountable for any failure to seize,
collect, realize, dispose of, enforce or otherwise deal with the Collateral,
shall not be bound to institute proceedings for any such purposes or for the
purpose of preserving any rights of the Lender, the Debtor or any other person,
firm or Debtor in respect of the Collateral and shall not be liable or
responsible for any loss, cost or damage whatsoever which may arise in respect
of any such failure including, without limitation, resulting from the negligence
of the Lender or any of its
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officers, servants, agents, solicitors, attorneys, Receivers or otherwise other
than its or their gross negligence or wilful misconduct. Neither the Lender nor
its officers, servants, Lenders or Receivers shall be liable by reason of any
entry into possession of the Collateral or any part thereof, to account as a
mortgagee in possession, for anything except actual receipts, for any loss on
realization, for any act or omission for which a mortgagee in possession might
be liable, for any negligence in the carrying on or occupation of the business
or undertaking of the Debtor as provided in Section 6.5 or for any loss, cost,
damage or expense whatsoever which may arise in respect of any such actions,
omissions or negligence other than its or their gross negligence or wilful
misconduct.
6.12 EXTENSIONS OF TIME
The Lender may grant renewals, extensions of time and other indulgences,
take and give up securities, accept compositions, grant releases and discharges,
perfect or fail to perfect any securities, release any part of the Collateral to
third parties and otherwise deal or fail to deal with the Debtor, Subsidiaries
of the Debtor, Guarantors, sureties and others and with the Collateral and other
securities as the Lender may see fit, all without prejudice to the liability of
the Debtor to the Lender or the Lender's rights and powers under this Security
Agreement.
6.13 RIGHTS IN ADDITION
The rights and powers conferred by this Article 6 are in supplement of and
in addition to and not in substitution for any other rights or powers the Lender
may have from time to time under this Security Agreement or under applicable
law. The Lender may proceed by way of any action, suit, remedy or other
proceeding at law or in equity and no such remedy for the enforcement of the
rights of the Lender shall be exclusive of or dependent on any other such
remedy. Any one or more of such remedies may from time to time be exercised
separately or in combination.
7. GENERAL
7.1 SECURITY IN ADDITION
The security hereby constituted is not in substitution for any other
security for the Obligations or for any other agreement between the parties
creating a security interest in all or part of the Collateral, whether
heretofore or hereafter made, and such security and such agreements shall be
deemed to be continued and not affected hereby unless expressly provided to the
contrary in writing and signed by the Lender and the Debtor. The taking of any
action or proceedings or refraining from so doing, or any other dealing with any
other security for the Obligations or any part thereof, shall not release or
affect the security interest created by this Security Agreement and the taking
of the security interest hereby created or any proceedings hereunder for the
realization of the security interest hereby created shall not release or affect
any other security held by the Lender for the repayment of or performance of the
Obligations.
7.2 WAIVER
Any waiver of a breach by the Debtor of any of the terms or provisions of
this Security Agreement or of a Default under Section 5.1 must be in writing to
be effective against and bind
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the Lender. No such waiver by the Lender shall extend to or be taken in any
manner to affect any subsequent breach or Default or the rights of the Lender
arising therefrom.
7.3 FURTHER ASSURANCES
The Debtor shall at all times do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged or delivered all and singular every
such further acts, deeds, conveyances, instruments, transfers, assignments,
security agreements and assurances as the Lender may reasonably require in order
to give effect to the provisions and purposes of this Security Agreement
including, without limitation, in respect of the Lender's enforcement of the
security and its realization on the Collateral, and for the better granting,
transferring, assigning, charging, setting over, assuring, confirming and/or
perfecting the security interest of the Lender in the Collateral pursuant to
this Security Agreement. The Debtor hereby constitutes and appoints any officer
of the Lender at its above address, or any Receiver appointed by the Court or
the Lender as provided herein, the true and lawful attorney of the Debtor
irrevocably with full power of substitution to do, make and execute after the
occurrence and continuance of an Event of Default and during the continuation
thereof all such assignments, documents, acts, matters or things with the right
to use the name of the Debtor whenever and wherever it may be deemed necessary
or expedient. The Debtor hereby authorizes the Lender to file such proofs of
claim and other documents as may be necessary or advisable in order to prove its
claim in any Bankruptcy, proposed winding-up or other proceeding relating to the
Debtor.
Without limiting the generality of the foregoing, the Debtor:
(a) shall, upon the request of the Lender, ▇▇▇▇ conspicuously each
chattel paper evidencing or relating to an Account Receivable and
each related contract and, at the request of the Lender, each of its
records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Lender, indicating that such chattel
paper, related contract or Collateral is subject to the security
interests granted hereby;
(b) shall, if any Accounts Receivable shall be evidenced by a promissory
note or other instrument or chattel paper, deliver and pledge to the
Lender hereunder such note, instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Lender;
(c) shall execute and file such financing or continuation statements, or
amendments, thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Lender may request, in order to
perfect and preserve the security interests granted or purported to
be granted hereby;
(d) hereby authorizes the Lender to file one or more financing or
continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Debtor,
where permitted by law; and
(e) shall furnish to the Lender from time to time statements and
schedules further identifying and describing the Collateral and such
other reports in connection with
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the Collateral as the Lender may request in its reasonable
discretion, all in reasonable detail.
7.4 NO MERGER
Neither the taking of any judgment nor the exercise of any power of
seizure or sale shall operate to extinguish the liability of the Debtor to make
payment of or satisfy the Obligations. The acceptance of any payment or
alternate security shall not constitute or create any novation and the taking of
a judgment or judgments under any of the covenants herein contained shall not
operate as a merger of such covenants.
7.5 NOTICES
Any notice required to be given to the Debtor or the Lender may be
delivered to such party or a responsible officer thereof or may be sent by
prepaid registered mail addressed to the appropriate party at the address above
shown, or such further or other address as such party may notify to the other in
writing from time to time, and if so given the notice shall be deemed to have
been given either on the day of delivery or the day when it is deemed or
otherwise considered to have been received for the purposes of the PPSA.
7.6 CONTINUING SECURITY INTEREST AND DISCHARGE
This Security Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until payment and
performance in full of the Obligations and the termination of the Loan
Agreement, notwithstanding any dealing between the Lender and the Debtor in
respect of the Obligations or any release, exchange, non-perfection, amendment,
waiver, consent or departure from or in respect of any or all of the terms or
provision of any security held for the Obligations.
If the Debtor or any guarantor pays to the Lender the Obligations secured
by this Security Agreement, then the Lender shall at the request and at the
expense of the Debtor: (i) release and discharge the security interest created
hereby, and (ii) in connection therewith, execute and deliver to the Debtor such
deeds and other instruments as the Debtor shall require in its sole discretion,
acting in good faith.
7.7 GOVERNING LAW
This Security Agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada
applicable therein.
7.8 SECURITY INTEREST EFFECTIVE IMMEDIATELY
Neither the execution or registration of this Security Agreement nor any
partial advances by the Lender shall bind the Lender to advance any other
amounts to the Debtor. The parties intend the security interest created hereby
to attach and take effect forthwith upon execution of this Security Agreement by
the Debtor and the Debtor acknowledges that value has been given and that the
Debtor has rights in the Collateral.
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7.9 NO COLLATERAL WARRANTIES
There is no representation, warranty or collateral agreement affecting
this Security Agreement or the Collateral, other than as expressed herein in
writing or in the Loan Agreement and the Other Agreements.
7.10 JOINT AND SEVERAL LIABILITY
If more than one person executes this Security Agreement as debtor, their
obligations under this Security Agreement shall be joint and several.
7.11 PROVISIONS REASONABLE
The Debtor expressly acknowledges and agrees that the provisions of this
Security Agreement and, in particular, those respecting remedies and powers of
the Lender against the Debtor, its business and the Collateral upon default, are
commercially reasonable and not manifestly unreasonable.
7.12 NUMBER AND GENDER
In this Security Agreement, words importing the singular number include
the plural and vice-versa and words importing gender include all genders.
7.13 INVALIDITY
In the event that any term or provision of this Security Agreement shall,
to any extent, be invalid or unenforceable, the remaining terms and provisions
of this Security Agreement shall be unaffected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
7.14 INDEMNITY AND EXPENSES
(a) Subject to the limitations set forth in this Agreement, the Debtor
agrees to indemnify and save harmless the Lender from and against
any and all claims, losses and liabilities arising out of or
resulting out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security
Agreement), except claims, losses or liabilities resulting from the
Lender's gross negligence or wilful misconduct.
(b) The Debtor will upon demand pay to the Lender the amount of any and
all expenses, including the fees and disbursements of its counsel
and of any experts and agents, which the Lender may incur in
connection with (i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights or remedies
of the Lender hereunder or (iv) the failure by the Debtor to perform
or observe any of the provisions hereunder.
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7.15 JUDGMENT CURRENCY
If for the purpose of obtaining judgment in any court it is necessary to
convert an amount due hereunder in the currency in which it is due (the
"Original Currency") into another currency (the "Second Currency"), the rate of
exchange applied shall be that at which, in accordance with normal banking
procedures, the Lender could purchase, in the Toronto foreign exchange market,
the Original Currency with the Second Currency on the date two (2) Business Days
preceding that on which judgment is given. The Debtor agrees that its obligation
in respect of any Original Currency due from it to the Lender hereunder shall,
notwithstanding any judgment or payment in such other currency, be discharged
only to the extent that, on the Business Day following the date the Lender
receives payment of any sum so adjudged to be due hereunder in the Second
Currency the Lender may, in accordance with normal banking procedures, purchase,
in the Toronto foreign exchange market the Original Currency with the amount of
the Second Currency so paid; and if the amount of the Original Currency so
purchased or could have been so purchased is less than the amount originally due
in the Original Currency, the Debtor agrees as a separate obligation and
notwithstanding any such payment or judgment to indemnify the Lender against
such loss. The term "rate of exchange" in this section means the spot rate at
which the Lender in accordance with normal practices is able on the relevant
date to purchase the Original Currency with the Second Currency and includes any
premium and costs of exchange payable in connection with such purchase.
7.16 PRECEDENCE
In the event that any provisions of this Security Agreement contradict and
are otherwise incapable of being construed in conjunction with the provisions of
the Loan Agreement, the provisions of the Loan Agreement shall take precedence
over those contained in this Security Agreement and, in particular, if any act
of the Debtor is expressly permitted under the Loan Agreement but is prohibited
under this Security Agreement, any such act shall be deemed to be permitted
under this Security Agreement.
7.17 SECTIONS AND HEADINGS
The division of this Security Agreement into sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
7.18 RECEIPT OF COPY
The Debtor acknowledges receipt of an executed copy of this Security
Agreement.
7.19 BINDING EFFECT
All rights of the Lender hereunder shall enure to the benefit of its
successors and assigns and all obligations of the Debtor hereunder shall bind
the Debtor and his heirs, executors, administrators, legal personal
representatives, successors and assigns.
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IN WITNESS WHEREOF the Debtor has duly executed this Security Agreement
and is dated as of the day of , 2005.
STEELBANK INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: ASSISTANT SECRETARY
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