Exhibit 10.1
GENERAL SECURITY AGREEMENT
TO: CALEDONIA CORPORATE MANAGEMENT GROUP LIMITED
▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
# ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
PO BOX C8-1235
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, MANAGING DIRECTOR
RECITALS:
A. Neutron Enterprise, Inc. (the "Debtor") is or may become indebted or
liable to Caledonia Corporate Management Group Limited (the "Creditor").
B. To secure the payment and performance of the Liabilities (this term, and
other capitalized terms used in this Agreement, have the meanings set forth
in Section 1), the Debtor has agreed to grant to the Creditor security
interests in respect of the Collateral in accordance with the terms of this
Agreement.
For good and valuable consideration, the receipt and adequacy of which are
acknowledged by the Debtor, the Debtor agrees with and in favour of the
Creditor as follows:
1. DEFINITIONS. In this Agreement:
"Accessions", "Account", "Chattel Paper", "Consumer Goods",
"Document of Title", "Equipment", "Goods", "Instrument", "Intangible",
"Inventory" and "Proceeds" have the meanings given to them in the PPSA.
"Books and Records" means all books, records, files, papers,
disks, documents and other repositories of data recording in any form or
medium, evidencing or relating to the Collateral which are at any time
owned by the Debtor or to which the Debtor (or any Person on the Debtor's
behalf) has access.
"Business Day" means any day other than a Saturday, Sunday or
statutory holiday in the Province of Ontario.
"Collateral" means all of the present and future undertaking,
Personal Property and real property (of the Debtor (including all such property
at any time owned, leased or licensed by the Debtor, or in which the Debtor at
any time has any interest or to which the Debtor is or may at any time become
entitled) and all Proceeds thereof, wherever located.
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"Contracts" means all contracts, licences and agreements to which
the Debtor is at any time a party or pursuant to which the Debtor has at any
time acquired rights, and includes (i) all rights of the Debtor to receive money
due and to become due to it in connection with a contract, licence or agreement,
(ii) all rights of the Debtor to damages arising out of, or for breach or
default in respect of, a contract, licence or agreement, and (iii) all rights of
the Debtor to perform and exercise all remedies in connection with a contract,
licence or agreement.
"Default" means the occurrence of any of the following events or
conditions:
(a) the Debtor does not pay any of the Liabilities when due;
(b) the Debtor does not observe or perform any of the Debtor's
obligations under this Agreement or any other agreement or
document existing at any time between the Debtor and the
Creditor;
(c) any representation, warranty or statement made by or on
behalf of the Debtor to the Creditor, in this Agreement or
otherwise, is untrue in any material respect when made;
(d) the Debtor ceases or threatens to cease to carry on in the
normal course all or any material part of the Debtors
business;
(e) if the Debtor is a corporation, there is, in the Creditor's
opinion (acting reasonably), a change in effective control
of the Debtor, or if the Debtor is a partnership, there is,
in the Creditors opinion (acting reasonably), a dissolution
or change in the membership of the partnership;
(f) the Debtor becomes insolvent or bankrupt, or makes or files
a proposal, a notice of intention to make a proposal or an
assignment for the benefit of creditors under the Bankruptcy
and Insolvency Act (Canada) or comparable legislation in
Canada or any other jurisdiction; a petition in bankruptcy
is filed against the Debtor; or, if the Debtor is a
corporation, proceedings are initiated under any legislation
by or against the Debtor seeking its liquidation,
winding-up, dissolution or reorganization or any arrangement
or composition of its debts;
(g) a Receiver, trustee, custodian or other similar official is
appointed in respect of the Debtor or any of the Collateral;
(h) any Person holding a Security Interest in respect of any
part of
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the Collateral takes possession of all or any material part
of the Collateral, or a distress, execution or other similar
process is levied against all or any material part of the
Collateral;
(i) the Debtor challenges or threatens to challenge the validity
or enforceability of this Agreement or the Security
Interests created by this Agreement; or
(j) the Creditor, acting in good faith and upon commercially
reasonable grounds, believes that the prospect of payment or
performance of any of the Liabilities is or is about to be
impaired or that all or any material part of the Collateral
is or is about to be placed in jeopardy.
"Intellectual Property Rights" means all industrial and
intellectual property rights, including copyrights, patents, trade-marks,
industrial designs, know how and trade secrets and all Contracts related to
any such industrial and intellectual property rights.
"Liabilities" means all present and future indebtedness,
liabilities and obligations of every kind, nature and description (whether
direct or indirect, joint or several, absolute or contingent, matured or
unmatured) of the Debtor to the Creditor, wherever and however incurred,
and any unpaid balance thereof, including without limitation the principal
amount of the Note any and all accrued interest thereon as described in the
Note and the conversion rights described in the Note;
"Money" has the meaning given to it in the PPSA or, if there is
no such meaning given in the PPSA, means a medium of exchange authorized or
adopted by the Parliament of Canada as part of the currency of Canada, or
by a foreign government as part of its currency.
"PPSA" means the Personal Property Security Act of the Province
of Ontario, as such legislation may be amended, renamed or replaced from
time to time (and includes all regulations from time to time made under
such legislation).
"Permits" means all permits, licences, authorizations, approvals,
franchises, rights-of-way, easements and entitlements that the Debtor has,
requires or is required to have, to own, possess or operate any of its
property or to operate and carry on any part of its business.
"Person" will be broadly interpreted and includes an individual,
a corporation, a limited liability company, a partnership, a trust, a joint
venture, an association, an unincorporated organization, the government of a
country or any political subdivision thereof, any agency or department of any
such government, a regulatory agency or any other juridical entity and the
heirs, executors, administrators or other legal representatives of an
individual.
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"Personal Property" means personal property and includes
Accounts, Books and Records, Chattel Paper, Contracts, Documents of Title,
Equipment, Goods, Instruments, Intangibles (including Intellectual Property
Rights and Permits), Inventory, Money and Securities.
"Receiver" means a receiver, a manager or a receiver and manager.
"Securities" has the meaning given to it in the PPSA, or if there
is no such meaning given in the PPSA but the PPSA defines "security" instead, it
means the plural of that term.
"Security Interest" means any mortgage, charge, pledge,
hypothecation, lien (statutory or otherwise), assignment, finance lease, title
retention agreement or arrangement, security interest or other encumbrance or
adverse claim of any nature, or any other security agreement or arrangement
creating in favour of any creditor a right in respect of a particular property.
2. GRANT OF SECURITY INTEREST. As general and continuing collateral security for
the due payment and performance of the Liabilities, the Debtor mortgages,
charges and assigns to the Creditor, and grants to the Creditor a security
interest in, the Collateral.
3. LIMITATIONS ON GRANT OF SECURITY' INTEREST. If the grant of any Security
Interest in respect of any Contract, Intellectual Property Right or Permit under
Section 2 would result in the termination or breach of such Contract,
Intellectual Property Right or Permit, then the applicable Contract,
Intellectual Property Right or Permit will not be subject to any Security
Interest under Section 2 but will be held in trust by the Debtor for the benefit
of the Creditor and, on exercise by the Creditor of any of its rights under this
Agreement following Default, assigned by the Debtor as directed by the Creditor.
In addition, the Security Interests created by this Agreement do not extend to
the last day of the term of any lease or agreement for lease of real property.
Such last day will be held by the Debtor in trust for the Creditor and, on the
exercise by the Creditor of any of its rights under this Agreement following
Default, will be assigned by the Debtor as directed by the Creditor.
4. ATTACHMENT; NO OBLIGATION TO ADVANCE. The Debtor confirms that value has been
given by the Creditor to the Debtor, that the Debtor has rights in the
Collateral (other than after-acquired property) and that the Debtor and the
Creditor have not agreed to postpone the time for attachment of the Security
Interests created by this Agreement to any of the Collateral. The Security
Interests created by this Agreement will have effect and be deemed to be
effective whether or not the Liabilities or any part thereof are owing or in
existence before or after or upon the date of this Agreement. Neither the
execution of this Agreement nor any advance of funds shall oblige the Creditor
to advance any funds or any additional funds.
5. REPRESENTATION AND WARRANTIES. The Debtor represents and warrants to the
Creditor that:
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(a) PLACES OF BUSINESS, NAME, LOCATION OF COLLATERAL. The Debtor's
principal place of business and chief executive office, and the place where it
keeps its Books and Records, is at the address specified on the signature page
of this Agreement, and its full legal name, and any other name under which it
conducts its business, is specified on the signature page of this Agreement. The
location of all other existing places where the Debtor carries on business or
keeps tangible Personal Property, the location of all jurisdictions in which
account debtors of the Debtor are located, and the location of all real property
owned by the Debtor, are set out in Schedule A to this Agreement.
(b) NO OTHER SECURITY INTERESTS. Except for (i) the Security Interests
created by this Agreement; (ii) any other Security Interests permitted in
writing by the Creditor; and (iii) Security Interests fully subordinate to the
Security Interests of the Creditor, the Debtor owns (or, with respect to any
leased or licensed property forming part of the Collateral, holds a valid
leasehold or licensed interest in) the Collateral, free and clear of any
Security Interests. No security agreement, financing statement or other notice
with respect to any or all of the Collateral is on file or on record in any
public office, except for filings in favour of, or permitted in writing by, the
Creditor.
(c) AMOUNT OF ACCOUNTS. The amount represented by the Debtor to the
Creditor from time to time as owing by each account debtor or by all account
debtors in respect of the Accounts will at such time be the correct amount so
owing by such account debtor or debtors and, unless disclosed in writing by the
Debtor to the Creditor at that time, will be owed free of any dispute, set-off
or counterclaim.
(d) AUTHORITY; CONSENTS. The Debtor has full power and authority to
grant to the Creditor the Security Interests created by this Agreement and to
execute, deliver and perform its obligations under this Agreement, and such
execution, delivery and performance does not contravene any of the Debtors
constating documents or by-laws or any agreement, instrument or restriction to
which the Debtor is a party or by which the Debtor or any of the Collateral is
bound. Except for any consent that has been obtained and is in full force and
effect, no consent of any party (other than the Debtor) to any Contract or any
obligor in respect of any Account is required, or purports to be required, for
the execution, delivery and performance of this Agreement. Except as disclosed
in writing by the Debtor to the Creditor, neither the Debtor nor (to the best of
the Debtors knowledge) any other party to any Account or Contract is in default
or is likely to become in default in the performance or observance of any of the
terms of such Account or Contract.
(e) EXECUTION AND DELIVERY; ENFORCEABILITY. This Agreement has been
duly authorized, executed and delivered by the Debtor and is a valid and binding
obligation of the Debtor enforceable against the Debtor in accordance with its
terms, subject only to bankruptcy, insolvency, liquidation, reorganization,
moratorium and other similar laws generally affecting the enforcement of
creditors' rights, and to the fact that equitable remedies (such as specific
performance and injunction) are discretionary remedies.
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6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements, representations,
warranties and covenants made by the Debtor in this Agreement are material, will
be considered to have been relied on by the Creditor and will survive the
execution and delivery of this Agreement or any investigation made at any time
by or on behalf of the Creditor and any disposition or payment of the
Liabilities until repayment and performance in full of the Liabilities and
termination of all rights of the Debtor that, if exercised, would result in the
existence of Liabilities.
7. COVENANTS. The Debtor covenants and agrees with the Creditor that:
(a) FURTHER DOCUMENTATION. The Debtor will from time to time, at the
expense of the Debtor, promptly and duly authorize, execute and deliver such
further instruments and documents, and take such further action, as the Creditor
may request for the purpose of obtaining or preserving the full benefits of, and
the rights and powers granted by, this Agreement (including the filing of any
financing statements or financing change statements under any applicable
legislation with respect to the Security Interests created by this Agreement).
The Debtor acknowledges that this Agreement has been prepared based on the
existing laws in the Province of Ontario and that a change in such laws, or the
laws of other jurisdictions, may require the execution and delivery of different
forms of security documentation. Accordingly, the Debtor agrees that the
Creditor will have the right to require that this Agreement be amended,
supplemented or replaced, and that the Debtor will immediately on request by the
Creditor authorize, execute and deliver any such amendment, supplement or
replacement (i) to reflect any changes in such laws, whether arising as a result
of statutory amendments, court decisions or otherwise, (ii) to facilitate the
creation and registration of appropriate security in all appropriate
jurisdictions, or (iii) if the Debtor merges or amalgamates with any other
Person or enters into any corporate reorganization, in each case in order to
confer on the Creditor Security Interests similar to, and having the same effect
as, the Security Interests created by this Agreement.
(b) DELIVERY OF CERTAIN COLLATERAL. Promptly upon request from time to
time by the Creditor, the Debtor will deliver (or cause to be delivered) to the
Creditor, endorsed and/or accompanied by such instruments of assignment and
transfer in such form and substance as the Creditor may reasonably request, any
and all Instruments, Securities, Documents of Title and Chattel Paper included
in or relating to the Collateral as the Creditor may specify in its request.
(c) PAYMENT OF EXPENSES; INDEMNIFICATION. The Debtor will pay on
demand, and will indemnify and save the Creditor harmless from, any and all
liabilities, costs and expenses (including legal fees and expenses on a
solicitor and own client basis and any sales, goods and services or other
similar taxes payable to any governmental authority with respect to any such
liabilities, costs and expenses) (i) incurred by the Creditor in the
preparation, registration, administration or enforcement of this Agreement, (ii)
with respect to, or resulting from, any failure or delay by the Debtor in
performing or observing any of its obligations under this Agreement, or (iii)
incurred by the Creditor in performing or observing any of the other covenants
of the Debtor under this Agreement.
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(d) MAINTENANCE OF RECORDS. The Debtor will keep and maintain accurate
and complete records of the Collateral, including a record of all payments
received and all credits granted with respect to the Accounts and Contracts. At
the written request of the Creditor, the Debtor will ▇▇▇▇ any Collateral
specified by the Creditor to evidence the existence of the Security Interests
created by this Agreement.
(e) RIGHT OF INSPECTION. The Creditor may, at all times during normal
business hours, without charge, examine and make copies of all Books and
Records, and may discuss the affairs, finances and accounts of the Debtor with
its officers and accountants. The Creditor may also, without charge, enter the
premises of the Debtor where any of the Collateral is located for the purpose of
inspecting the Collateral, observing its use or otherwise protecting its
interests in the Collateral. The Debtor, at its expense, will provide the
Creditor with such clerical and other assistance as may be reasonably requested
by the Creditor to exercise any of its rights under this paragraph.
(f) LIMITATIONS ON OTHER SECURITY INTERESTS. The Debtor will not
create, incur or permit to exist, and will defend the Collateral against, and
will take such other action as is necessary to remove, any and all Security
Interests in and other claims affecting, the Collateral, other than the Security
Interests created by this Agreement or as permitted in writing by the Creditor,
or as are fully subordinate to the Security Interest created by this Agreement
and the Debtor will defend the right, title and interest of the Creditor in and
to the Collateral against the claims and demands of all Persons.
(g) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Debtor will not,
without the Creditors prior written consent, sell, lease or otherwise dispose of
any of the Collateral, except that Inventory may be sold, leased or otherwise
disposed of, and subject to Section 17, Accounts may be collected, in the
ordinary course of the Debtors business. Following Default, all Proceeds of the
Collateral (including all amounts received in respect of Accounts) received by
or on behalf of the Debtor, whether or not arising in the ordinary course of the
Debtors business, will be received by the Debtor as trustee for the Creditor and
will be immediately paid to the Creditor.
(h) LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS. Other than as
permitted by paragraph (i) below, the Debtor will not (i) amend, modify,
terminate or waive any provision of any Permit, Contract or any document giving
rise to an Account in any manner which is or could reasonably be expected to be
materially adverse to the Debtor or the Creditor, or (ii) fail to exercise
promptly and diligently its rights under each Contract and each document giving
rise to an Account if such failure is or could reasonably be expected to be
materially adverse to the Debtor or the Creditor.
(i) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF ACCOUNTS.
Other than in the ordinary course of business of the Debtor consistent with
previous practices, the Debtor will not (i) grant any extension of the time for
payment of any Account, (ii) compromise, compound or settle any Account for less
than its full amount, (iii) release, wholly or partially, any Person liable for
the payment of any Account, or (iv) allow any credit or discount of any Account.
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(j) MAINTENANCE OF COLLATERAL. The Debtor will maintain all tangible
Collateral in good operating condition, ordinary wear and tear excepted, and the
Debtor will provide all maintenance, service and repairs necessary for such
purpose.
(k) INSURANCE. The Debtor will keep the Collateral insured with
financially sound and reputable companies to its full insurable value against
loss or damage by fire, explosion, theft and such other risks as are customarily
insured against by Persons carrying on similar businesses or owning similar
property within the vicinity in which the Debtor's applicable business or
property is located. The applicable insurance policies will be in form and
substance satisfactory to the Creditor, and will (i) contain a breach of
warranty clause in favour of the Creditor, (ii) provide that no cancellation,
material reduction in amount or material change in coverage will be effective
until at least 30 days after receipt of written notice thereof by the Creditor,
(iii) contain by way of endorsement a mortgagee clause in form and substance
satisfactory to the Creditor, and (iv) name the Creditor as loss payee as its
interest may appear. The Debtor will, from time to time at the Creditor's
request, deliver the applicable insurance policies (or satisfactory evidence of
such policies) to the Creditor. If the Debtor does not obtain or maintain such
insurance, the Creditor may, but need not, do so, in which event the Debtor will
immediately on demand reimburse the Creditor for all payments made by the
Creditor in connection with obtaining and maintaining such insurance, and until
reimbursed any such payment will form part of the Liabilities and will be
secured by the Security Interests created by this Agreement. Neither the
Creditor nor its correspondents or its agents will be responsible for the
character, adequacy, validity or genuineness of any insurance, the solvency of
any insurer, or any other risk connected with insurance.
(l) FURTHER IDENTIFICATION OF COLLATERAL. The Debtor will promptly
furnish to the Creditor such statements and schedules further identifying and
describing the Collateral, and such other reports in connection with the
Collateral, as the Creditor may from time to time reasonably request, including
an updated list of any motor vehicles or other "serial number' goods owned by
the Debtor and classified as Equipment, including vehicle identification
numbers.
(m) NOTICES. The Debtor will advise the Creditor promptly, in
reasonable detail, of (i) any Security Interest (other than the Security
Interests created by this Agreement and any Security Interest permitted in
writing by the Creditor) on, or claim asserted against, any of the Collateral,
(ii) the occurrence of any event, claim or occurrence that could reasonably be
expected to have a material adverse effect on the value of the Collateral or on
the Security Interests created by this Agreement, (iii) any change in the
location of any place of business (including additional locations) or the chief
executive office of the Debtor, (iv) any change in the location of any of the
tangible Collateral (including additional locations), (v) any acquisition of
real property by the Debtor, (vi) any change in the name of the Debtor, (vii)
any merger or amalgamation of the Debtor with any other Person, (viii) any
additional jurisdiction in which material accounts debtors of the Debtor are
located, and (ix) any material loss of or damage to any of the Collateral. The
Debtor agrees not to effect or permit any of the changes referred to in clauses
(iii) to (viii) above unless all filings have been made and all other actions
taken that are required in order for the Creditor to continue at all times
following such change to have a valid
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and perfected Security Interest in respect of all of the Collateral.
(n) DELIVERY OF AGREEMENTS. RE INTELLECTUAL PROPERTY RIGHTS. The
Debtor will promptly, following demand from time to time by the Creditor,
authorize, execute and deliver any and all agreements, instruments, documents
and papers that the Creditor may request to evidence the Creditors Security
Interests in any Intellectual Property Rights and, where applicable, the
goodwill of the business of the Debtor connected with the use of, and symbolized
by, any such Intellectual Property Rights.
8. RIGHTS ON DEFAULT. On Default, all of the Liabilities will, at the option of
the Creditor, become immediately due and payable and the security constituted by
this Agreement will become enforceable, and the Creditor may, Personally or by
agent, at such time or times as the Creditor in its discretion may determine, do
any one or more of the following:
(a) RIGHTS UNDER PPSA, ETC. Exercise all of the rights and remedies
granted to secured parties under the PPSA and any other applicable statute, or
otherwise available to the Creditor at law or in equity.
(b) DEMAND POSSESSION. Demand possession of any or all of the
Collateral, in which event the Debtor will, at the expense of the Debtor,
immediately cause the Collateral designated by the Creditor to be assembled and
made available and/or delivered to the Creditor at any place designated by the
Creditor.
(c) TAKE POSSESSION. Enter on any premises where any Collateral is
located and take possession of, disable or remove such Collateral.
(d) DEAL WITH COLLATERAL. Hold, store and keep idle, or operate, lease
or otherwise use or permit the use of, any or all of the Collateral for such
time and on such terms as the Creditor may determine, and demand, collect and
retain all earnings and other sums due or to become due from any Person in
respect of any of the Collateral.
(e) CARRY ON BUSINESS. Carry on, or concur in the carrying on of, any
or all of the business or undertaking of the Debtor and enter on, occupy and use
(without charge by the Debtor) any of the premises, buildings, plant and
undertaking of, or occupied or used by, the Debtor.
(f) ENFORCE COLLATERAL. Seize, collect, receive, enforce or otherwise
deal with any Collateral in such manner, on such terms and conditions and at
such times as the Creditor deems advisable.
(g) DISPOSE OF COLLATERAL. Realize on any or all of the Collateral and
sell, lease, assign, give options to purchase, or otherwise dispose of and
deliver any or all of the Collateral (or contract to do any of the above), in
one or more parcels at any public or private sale, at any exchange, brokers
board or office of the Creditor or elsewhere, on such terms and conditions as
the Creditor may deem advisable and at such prices as it may deem best, for cash
or on credit or
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for future delivery.
(h) COURT-APPROVED DISPOSITION OF COLLATERAL Apply to a court of
competent jurisdiction for the sale or foreclosure of any or all of the
Collateral.
(i) PURCHASE BY CREDITOR. At any public sale, and to the extent
permitted by law on any private sale, bid for and purchase any or all of the
Collateral offered for sale and, upon compliance with the terms of such sale,
hold, retain and dispose of such Collateral without any further accountability
to the Debtor or any other Person with respect to such holding, retention or
disposition, except as required by law. In any such sale to the Creditor, the
Creditor may, for the purpose of making payment for all or any part of the
Collateral so purchased, use any claim for Liabilities then due and payable to
it as a credit against the purchase price.
(u) COLLECT ACCOUNT. Notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to the Creditor and direct such
account debtors or obligors to make payment of all amounts due or to become due
to the Debtor in respect of such Accounts directly to the Creditor and, upon
such notification and at the expense of the Debtor, enforce collection of any
such Accounts, and adjust, settle or compromise the amount or payment of such
Accounts, in such manner and to such extent as the Creditor deems appropriate in
the circumstances.
(k) TRANSFER OF SECURITIES. Transfer any Securities forming part of
the Collateral into the name of the Creditor or its nominee, with or without
disclosing that the Securities are subject to the Security Interests arising
under this Agreement
(I) EXERCISE OF RIGHTS. Exercise any and all rights, privileges,
entitlements and options pertaining to any Securities forming part of the
Collateral as if the Creditor were the absolute owner of such Securities.
(m) PAYMENT OF LIABILITIES. Pay any liability secured by any Security
Interest against any Collateral. The Debtor will immediately on demand reimburse
the Creditor for all such payments.
(n) BORROW AND GRANT SECURITY INTERESTS. Borrow money for the
maintenance, preservation or protection of any Collateral or for carrying on any
of the business or undertaking of the Debtor and grant Security Interests on any
Collateral (in priority to the Security Interests created by this Agreement or
otherwise) as security for the money so borrowed. The Debtor will immediately on
demand reimburse the Creditor for all such borrowings.
(o) APPOINT RECEIVER. Appoint by instrument in writing one or more
Receivers of the Debtor or any or all of the Collateral with such rights, powers
and authority (including any or all of the rights, powers and authority of the
Creditor under this Agreement) as may be provided for in the instrument of
appointment or any supplemental instrument, and remove and replace any such
Receiver from time to time. To the extent permitted by applicable law, any
Receiver appointed by the Creditor will (for purposes relating to responsibility
for the Receivers
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acts or omissions) be considered to be the agent of the Debtor and not of the
Creditor.
(p) COURT-APPOINTED RECEIVER. Apply to a court of competent
jurisdiction for the appointment of a Receiver of the Debtor or of any or all of
the Collateral.
(q) CONSULTANTS. Require the Debtor to engage a consultant of the
Creditors choice, or engage a consultant on its own behalf, such consultant to
receive the full cooperation and support of the Debtor and its employees,
including unrestricted access to the premises, books and records of the Debtor;
all reasonable fees and expenses of such consultant shall be for the account of
the Debtor and the Debtor hereby authorizes any such consultant to report
directly to the Creditor and to disclose to the Creditor any and all information
obtained in the course of such consultant's employment.
The Creditor may exercise any or all of the foregoing rights and
remedies without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except as required by applicable law) to or
on the Debtor or any other Person, and the Debtor by this Agreement waives each
such demand, presentment, protest, advertisement and notice to the extent
permitted by applicable law. None of the above rights or remedies will be
exclusive of or dependent on or merge in any other right or remedy, and one or
more of such rights and remedies may be exercised independently or in
combination from time to time. Without prejudice to the ability of the Creditor
to dispose of the Collateral in any manner which is commercially reasonable, the
Debtor acknowledges that a disposition of Collateral by the Creditor which takes
place substantially in accordance with the following provisions will be deemed
to be commercially reasonable:
(i) Collateral may be disposed of in whole or in part;
(ii) Collateral may be disposed of by public auction, public tender or
private contract, with or without advertising and without any other formality;
(iii) any purchaser or lessee of Collateral may be a customer of the
Creditor;
(iv) a disposition of Collateral may be on such terms and conditions
as to credit or otherwise as the Creditor, in is sole discretion, may deem
advantageous; and
(v) the Creditor may establish an upset or reserve bid or price in
respect of Collateral.
9. GRANT OF LICENCE. For the purpose of enabling the Creditor to exercise its
rights and remedies under Section 8 when the Creditor is entitled to exercise
such rights and remedies, and for no other purpose, the Debtor grants to the
Creditor an irrevocable, non-exclusive licence (exercisable without payment of
royalty or other compensation to the Debtor) to use, assign or sublicence any or
all of the Intellectual Property Rights, including in such licence reasonable
access to all media in which any of the licensed items may be recorded or
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stored and to all computer programs used for the compilation or printout of the
same.
10. SALE OF SECURITY. The Creditor is authorized, in connection with any offer
or sale of any Securities forming part of the Collateral, to comply with any
limitation or restriction as it may be advised by counsel is necessary to comply
with applicable law, including compliance with procedures that may restrict the
number of prospective bidders and purchasers, requiring that prospective bidders
and purchasers have certain qualifications and restricting prospective bidders
and purchasers to Persons who will represent and agree that they are Purchasing
for their own account or investment and not with a view to the distribution or
resale of such Securities. The Debtor further agrees that compliance with any
such limitation or restriction will not result in a sale being considered or
deemed not to have been made in a commercially reasonable manner, and the
Creditor will not be liable or accountable to the Debtor for any discount
allowed by reason of the fact that such Securities are sold in compliance with
any such limitation or restriction.
11. APPLICATION OF PROCEEDS. All Proceeds of Collateral received by the Creditor
or a Receiver may be applied to discharge or satisfy any expenses (including the
Receivers remuneration and other expenses of enforcing the Creditors rights
under this Agreement), Security Interests in favour of Persons other than the
Creditor, borrowings, taxes and other outgoings affecting the Collateral or
which are considered advisable by the Creditor or the Receiver to protect,
preserve, repair, process, maintain or enhance the Collateral or prepare it for
sale, lease or other disposition, or to keep in good standing any Security
Interests on the Collateral ranking in priority to any of the Security Interests
created by this Agreement, or to sell, lease or otherwise dispose of the
Collateral. The balance of such Proceeds may, at the sole discretion of the
Creditor, be held as collateral security for the Liabilities or be applied to
such of the Liabilities (whether or not the same are due and payable) in such
manner and at such times as the Creditor considers appropriate and thereafter
will be accounted for as required by law.
12. CONTINUING LIABILITY OF DEBTOR. The Debtor will remain liable for any
Liabilities that are outstanding following realization of all or any part of the
Collateral and the application of the Proceeds thereof
13. CREDITOR'S APPOINTMENT AS ATTORNEY IN FACT. The Debtor constitutes and
appoints the Creditor and any officer or agent of the Creditor, with full power
of substitution, as the Debtor's true and lawful attorney-in fact with full
power and authority in the place of the Debtor and in the name of the Debtor or
in its own name, from time to time in the Creditors discretion after a Default,
to take any and all appropriate action and to execute any and all documents and
instruments as, in the opinion of such attorney acting reasonably, may be
necessary or desirable to accomplish the purposes of this Agreement These powers
are coupled with an interest and are irrevocable until this Agreement is
terminated and the Security Interests created by this Agreement are released.
Nothing in this Section affects the right of the Creditor as secured party or
any other Person on the Creditors behalf, to sign and file or deliver (as
applicable) all such financing statements, financing change statements, notices,
verification agreement and other documents relating to the Collateral and this
Agreement as the Creditor or such other Person considers appropriate.
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14. PERFORMANCE BY CREDITOR OF DEBTORS OBLIGATION. If the Debtor fails to
perform or comply with any of the obligations of the Debtor under this Agreement
the Creditor may, but need not, perform or otherwise cause the performance or
compliance of such obligation, provided that such performance or compliance will
not constitute a waiver, remedy or satisfaction of such failure. The expenses of
the Creditor incurred in connection with any such performance or compliance will
be payable by the Debtor to the Creditor immediately on demand, and until paid,
any such expenses will form part of the Liabilities and will be secured by the
Security Interests created by this Agreement.
15. INTEREST. If any amount payable to the Creditor under this Agreement is not
paid when due, the Debtor will pay to the Creditor, immediately on demand,
interest on such amount from the date due until paid, at a nominal annual rate
equal at all times 24%. All amounts payable by the Debtor to the Creditor under
this Agreement, and all interest on all such amounts, compounded monthly on the
last Business Day of each month, will form part of the Liabilities and will be
secured by the Security Interests created by this Agreements.
16. SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective
to the extent of such prohibition or unenforceability and will be severed from
the balance of this Agreement all without affecting the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction
17. Rights of Creditor; Limitations on Creditor's Obligations.
(a) LIMITATIONS ON CREDITORS LIABILITY. The Creditor will not be
liable to the Debtor or any other Person for any failure or delay in exercising
any of the rights of the Debtor under this Agreement (including any failure to
take possession of, collect, sell, lease or otherwise dispose of any Collateral,
or to preserve rights against prior parties). Neither the Creditor, a Receiver
nor any agent of the Creditor (including, in Alberta or British Columbia, any
sheriff) is required to take, or will have any liability for any failure to take
or delay in taking, any steps necessary or advisable to preserve rights against
other Persons under any Collateral in its possession. Neither the Creditor nor
any Receiver will be liable for any, and the Debtor will bear the full risk of
all, loss or damage to any and all of the Collateral (including any Collateral
in the possession of the Creditor or any Receiver) caused for any reason other
than the gross negligence or wilful misconduct of the Creditor or such Receiver.
(b) DEBTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS.
Notwithstanding any provision of this Agreement the Debtor will remain liable
under each of the documents giving rise to the Accounts and under each of the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by the Debtor thereunder, all in accordance with the
terms of each such document and Contract. The Creditor will have no obligation
or liability under any Account (or any document giving rise thereto) or Contract
by reason of or arising out of this Agreement or the receipt by the Creditor of
any payment relating to such Account or Contract pursuant hereto, and in
particular (but without limitation), the Creditor will not be obligated in any
manner to perform any of the obligations of the Debtor
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under or pursuant to any Account (or any document giving rise thereto) or under
or pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Account (or any document giving rise
thereto) or under any Contract, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time.
(c) COLLECTIONS ON ACCOUNTS AND CONTRACTS. The Creditor hereby
authorizes the Debtor to collect the Accounts and payments under the Contracts
in the normal course of the business of the Debtor and for the purpose of
carrying on the same. If required by the Creditor at any time, any payments of
Accounts or under Contracts, when collected by the Debtor, will be forthwith
(and, in any event, within two Business Days) deposited by the Debtor in the
exact form received, duly endorsed by the Debtor to the Creditor if required, in
a special collateral account maintained by the Creditor, and until so deposited,
will be held by the Debtor in trust for the Creditor, segregated from other
funds of the Debtor. All such amounts while held by the Creditor (or by the
Debtor in trust for the Creditor) and all income in respect thereof will
continue to be collateral security for the Liabilities and will not constitute
payment thereof until applied as hereinafter provided, If a Default has occurred
and is continuing, the Creditor may apply all or any part of the amounts on
deposit in said special collateral account on account of the Liabilities in such
order as the Creditor may elect. At the Creditors request, the Debtor will
deliver to the Creditor any documents evidencing and relating to the agreement
and transactions which gave rise to the Accounts and Contracts, including all
original orders, invoices and shipping receipts.
(d) ANALYSIS OF ACCOUNT. The Creditor will have the right to analyze
and verify the Accounts in any manner and through any medium that it reasonably
considers advisable, and the Debtor will furnish all such assistance and
information as the Creditor may require in connection therewith. The Creditor
may in its own name or in the name of others (including the Debtor) communicate
with account debtors on the Accounts and parties to the Contracts to verify with
them to its satisfaction the existence, status, amount and terms of any Account
or any Contract. At any time and from time to time, upon the Creditors
reasonable request and at the expense of the Debtor, the Debtor will furnish to
the Creditor reports showing reconciliation aging and test verifications of, and
trial balances for, the Accounts.
18. DEALINGS BY CREDITOR. The Creditor will not be obliged to exhaust its
recourse against the Debtor or any other Person or against any other security it
may hold in respect of the Liabilities before realizing upon or otherwise
dealing with the Collateral in such manner as the Creditor may consider
desirable. The Creditor may grant extensions of time and other indulgences, take
and give up security, accept compositions, grant releases and discharges and
otherwise deal with the Debtor and any other Person, and with any or all of the
Collateral, and with other security and sureties, as the Creditor may see fit,
all without prejudice to the Liabilities or to the rights and remedies of the
Creditor under this Agreement. The powers conferred on the Creditor under this
Agreement are solely to protect the interests of the Creditor in the Collateral
and will not impose any duty upon the Creditor to exercise any such powers.
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19. COMMUNICATION. Any communication required or permitted to be given under
this Agreement will be in writing and will be effectively given if (i) delivered
Personally, (ii) sent by prepaid courier service or mail, or (iii) sent prepaid
by facsimile transmission or other similar means of electronic communication, in
each case to the address or facsimile number of the Debtor or Creditor set out
in this Agreement. Any communication so given will be deemed to have been given
and to have been received on the day of delivery if so delivered or on the day
of facsimile transmission or sending by other means of recorded electronic
communication provided that such day is a Business Day and the communication is
so delivered or sent prior to 5:00 p.m. (Toronto Time). Otherwise, such
communication will be deemed to have been given and to have been received on the
following Business Day. Any communication sent by mail will be deemed to have
been given and to have been received on the fifth Business Day following
mailing, provided that no disruption of postal service is in effect. The Debtor
and the Creditor may from time to time change their respective addresses or
facsimile numbers for notice by giving notice to the other in accordance with
the provisions of this Section.
20. RELEASE OF INFORMATION The Debtor authorizes the Creditor to provide a copy
of this Agreement and such other information as may be requested of the Creditor
by Persons entitled thereto pursuant to any applicable legislation and otherwise
with the consent of the Debtor.
21. WAIVERS AND INDEMNITY. To the extent permitted by applicable unconditionally
and irrevocably waives (i) all claims, damages and demands against the Creditor
arising out of the exercise by the Creditor or any Receiver law, the Debtor it
may acquire of any rights or remedies under this Agreement or at law, and (ii)
all of the rights, benefits and protections given by any present or future
statute that imposes limitations on the rights, powers or remedies of a secured
party or on the methods of, or procedures for, realization of security,
including any "seize or ▇▇▇" or "anti-deficiency" statute or any similar
provision of any other statute. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Creditor. The Creditor will not, by any act
or delay, be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Creditor, any right, power or Privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or Privilege
hereunder will preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by the Creditor of any right or
remedy hereunder on any one occasion will not be construed as a bar to any right
or remedy which the Creditor would otherwise have on any future occasion.
Neither the taking of any judgment nor the exercise of any power of seizure or
sale will extinguish the liability of the Debtor to pay the Liabilities, nor
will the same operate as a merger or any covenant contained in this Agreement or
of any other liability, nor will the acceptance of any payment or other security
constitute or create any novation. The Debtor agrees to indemnify the Creditor
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (except by reason of the gross negligence or willful
misconduct of the Creditor or any of its agents or employees) which may be
imposed on, incurred by, or asserted against the Creditor and arising by reason
of any action (including any action referred to in this Agreement) or inaction
or omission to do any act legally required by the
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Debtor. This indemnification will survive the satisfaction, release or
extinguishment of the Liabilities and the Security Interests created by this
Agreement.
22. ENVIRONMENTAL LICENSE AND INDEMNITY. The Debtor hereby grants to the
Creditor and its employees and agents an irrevocable and non-exclusive license,
subject to the rights of tenants, to enter any of the premises of the Debtor to
conduct audits, testing and monitoring with respect to hazardous substances and
to remove and analyze any hazardous substance at the cost and expense of the
Debtor (which cost and expense will form part of the Liabilities and will be
payable immediately on demand and secured by the Security Interests created by
this Agreement). The Debtor will indemnify the Creditor and hold the Creditor
harmless against and from all losses, costs, damages and expenses which the
Creditor may sustain, incur or be or become liable at any time whatsoever for by
reason of or arising from the past, present or future existence, clean-up,
removal or disposal of any hazardous substance on or about any property owned or
occupied by the Creditor or compliance with environmental laws or environmental
orders relating thereto, including any clean-up, decommissioning, restoration or
remediation of any premises owned or occupied by the Debtor or other affected
lands or property This indemnification will survive the satisfaction, release or
extinguishment of the Liabilities and the Security Interests created by this
Agreement.
23. AMALGAMATION. If the Debtor is a corporation, the Debtor acknowledges that
if it amalgamation with any other corporation or corporations, then (i) the
Collateral and the Security Interests created by this Agreement will extend to
and include all the property and assets of the amalgamation corporation and to
any property or assets of the amalgamation corporation thereafter owned or
acquired, (ii) the term "Debtor', where used in this Agreement will extend to
and include the amalgamated corporation, and (iii) the term "Liabilities", where
used in this Agreement will extend to and include the Liabilities of the
amalgamation corporation.
24. GOVERNING LAW; ATTORNMENT. This Agreement will be governed by and construed
in accordance with the laws of the Province of Ontario. Without prejudice to the
ability of the Creditor to enforce this Agreement in any other proper
jurisdiction the Debtor irrevocably submits and attorns to the non-exclusive
jurisdiction of the courts of such province. To the extent permitted by
applicable law, the Debtor irrevocably waives any objection (including any claim
of inconvenient forum) that it may now or hereafter have to the venue of any
legal Proceeding arising out of or relating to this Agreement in the courts of
such Province.
25. INTERPRETATION. Unless otherwise expressly provided in this Agreement if any
matter in this Agreement is subject to the consent or approval of the Creditor
or is to be acceptable to the Creditor, such consent, approval or determination
of acceptability will be in the sole discretion of the Creditor. If any
provision in this Agreement refers to any action taken or to be taken by the
Debtor, or which the Debtor is prohibited from taking, such provision will be
interpreted to include any and all means, direct or indirect, of taking, or not
taking, such action. The division of this Agreement into sections and
Paragraphs, and the insertion of headings, is for convenience of reference only
and will not affect the construction or interpretation of this Agreement. Unless
the context otherwise requires, words importing the singular include the plural
and vice versa, and words importing gender include all genders. When used in
this Agreement the word
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"including" (or includes) means "including (or includes) without limitation".
Any reference in this Agreement to a "Section" means the relevant Section of
this Agreement If more than one Debtor executes this Agreement their obligations
under this Agreement are joint and several.
26. SUCCESSORS AND ASSIGNS. This Agreement will enure to the benefit of, and be
binding on, the Debtor and its successors and permitted assigns, and will enure
to the benefit of, and be binding on, the Creditor and its successors and
assigns. The Debtor may not assign this Agreement or any of its rights or
obligations under this Agreement without the prior written consent of the
Creditor. If the Debtor or the Creditor is an individual, then the term "Debtor'
or "Creditor" as applicable, will also include his or her heirs, administrators
and executors.
27. ACKNOWLEDGMENT OF RECEIPT/WAIVER. The Debtor acknowledges receipt of an
executed copy of this Agreement and, to the extent permitted by applicable law,
waives the right to receive a copy of any financing statement, financing change
statement or verification statement in respect of any registered financing
statement or financing change statement prepared, registered or issued in
connection with this Agreement.
Dated the 23rd day of March, 2007.
NEUTRON ENTERPRISE, INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
I have the authority to bind the
Corporation
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▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
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SCHEDULE A
LOCATIONS OF COLLATERAL (PARAGRAPH 5(a)
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▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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JURISDICTIONS OF ACCOUNT DEBTORS (PARAGRAPH 5(a)
Ontario