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Exhibit 10.33
CONTINENTAL HOLDINGS LTD.
THIS SECURITY AGREEMENT DATED March 27, 1998.
1. DEFINITIONS
The following definitions shall apply herein:
"ACT" means the Personal Property Security Act of the Province of Alberta
in effect on the date hereof;
"ACCESSIONS", "ACCOUNT", "CHATTEL PAPER", "CONSUMER GOODS", "DOCUMENT OF
TITLE", "EQUIPMENT", "FINANCING CHANGE STATEMENT", "FINANCING STATEMENT",
"GOODS", "INSTRUMENT", "INTANGIBLE", "INVENTORY", "MONEY", "PURCHASE MONEY
SECURITY INTEREST" and "SECURITY" shall have the meanings ascribed to them
in the Act and shall be deemed to include both the singular and plural of
such terms. All other capitalized words or terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to them in the
Act and the Regulations passed pursuant thereto;
"AGREEMENT", "HEREIN", and similar expressions refer to the whole of this
Security Agreement and not to any particular section or other portion
thereof and extend to and include every instrument which amends or
supplements this Agreement;
"COLLATERAL" means the specific personal property of the Debtor described
on the attached Schedule "A", together with all Accounts of the Debtor and
all documents, writings, papers, books of account and records relating to
the foregoing and all rights and interests therein, but shall not include:
(a) the last day of any term of years reserved by any lease, verbal or
written, or any agreement therefor now or hereafter held by the
Debtor, it being the intention that the Debtor shall stand possessed
of the reversion remaining in respect of any leasehold interest
forming part of the Collateral upon trust to assign and dispose
thereof as Venture may after default direct,
(b) Consumer Goods, or
(c) those specific items, if any, described on the attached Schedule
"B";
"CREDIT AGREEMENT" means the $4,000,000.00 (U.S.) credit agreement entered
into as of the date hereof between Venture, as lender, and the Debtor, as
borrower, as amended, modified, supplemented, replaced or restated, from
time to time;
"DEBTOR" means Continental Holdings Ltd.;
"DEFAULT" means the happening of any one or more of the events or
conditions described in Section 7 and such term shall be deemed to include
each, any, or all such events or conditions, whether any
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such event is voluntary or involuntary or is effected by operation of law
or pursuant to or in compliance with any judgement, decree or order of any
Court or any order, rule or regulation of any administrative or
governmental body;
"INDEBTEDNESS" means and includes any and all obligations, indebtedness
and liability of the Debtor to Venture pursuant to the Credit Agreement,
(including but not limited to principal, interest and all costs on a full
indemnity basis) present or future, direct or indirect, absolute or
contingent, matured or not, extended or renewed, wherever and however
incurred, together with any ultimate unpaid balance thereof, whether the
same is from time to time reduced and thereafter increased or entirely
extinguished and thereafter incurred again all pursuant to the Credit
Agreement;
"PERMITTED ENCUMBRANCES" means those specific security interests, if any,
whether by way of mortgage, lien, claim, charge or otherwise, listed on
Schedule "A" or hereafter approved in writing by Venture prior to their
creation or assumption;
"PROCEEDS" shall have the meaning ascribed to it in the Act and shall be
interpreted to include bank accounts, cash, trade-ins, Equipment, notes,
Chattel Paper, Goods, contractual rights, Accounts and any other personal
property or obligation received when Collateral or Proceeds thereof are
sold, exchanged, collected or otherwise disposed of;
"RECEIVER" means any one or more persons (whether officers of Venture or
not), firms or corporations appointed pursuant to subsection 9(f) and
shall be deemed to include a receiver, manager, receiver-manager, or
receiver and manager;
"SECURITY INTEREST" means the security interest granted by the Debtor to
Venture pursuant to this Agreement;
"SECURITIES PURCHASE AGREEMENT" means the securities purchase agreement
entered into as of the date hereof among the Debtor, Xxxxxx X. Xxxxx,
Xxxxxx Xxxxx, Xxxxxx X. XxXxxxxx, Xxxxxxx X. Xxxxx, Xxx X. Self and
Venture, as amended, modified, supplemented, replaced or restated, from
time to time;
"SPECIFICALLY DESCRIBED COLLATERAL" means those items, if any, described
in Schedule "A" which comprise part of the Collateral; and
"VENTURE" means Venture Seismic Ltd.
2. GRANT OF SECURITY INTEREST
For value received (the receipt and sufficiency of which is hereby
acknowledged), the Debtor hereby grants, assigns, conveys, mortgages, pledges
and charges, as and by way of a specific mortgage, pledge and charge and grants
a continuing Purchase Money Security Interest to and in favour of Venture in the
Collateral, subject to the Permitted Encumbrances.
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3. INDEBTEDNESS SECURED
The Security Interest secures payment and satisfaction of the Indebtedness;
provided however, that if the Security Interest in the Collateral is not
sufficient to satisfy the Indebtedness of the Debtor in full, the Debtor agrees
that the Debtor shall continue to be liable for any Indebtedness remaining
outstanding and Venture shall be entitled to pursue full payment and
satisfaction thereof.
4. ATTACHMENT OF SECURITY INTEREST
The Security Interest shall attach to the Collateral at the earliest possible
moment in accordance with the Act, there being no intention on the part of the
Debtor and Venture that it attach at any later time.
5. REPRESENTATIONS AND WARRANTIES OF THE DEBTOR
The Debtor represents and warrants, and as long as this Agreement remains in
effect and except for Sections 5(j) and (k) below, shall be deemed to
continuously represent and warrant, that:
(a) the Debtor is duly organized, existing and in good standing under
the laws of its incorporating jurisdiction and of each other
jurisdiction in which the nature of its activities make such
necessary;
(b) the Debtor has the right, power and authority to enter into this
Agreement and to grant the Security Interest;
(c) the execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action and are not in
contravention of any instrument by which the Debtor has been
incorporated or continued, any instrument amending any such
instrument, any internal regulation of the Debtor, any law, or any
indenture, agreement or undertaking to which the Debtor is a party
or by which it is bound;
(d) the Debtor has not previously carried on business, does not
currently carry on business, and shall not, without the prior
written consent of Venture, in the future carry on business under
any name other than the name set forth in paragraph 1;
(e) the Collateral is genuine and is legally and beneficially owned or
leased by the Debtor free of all security interests except for the
Security Interest and the Permitted Encumbrances;
(f) the description of the Specifically Described Collateral contained
herein is complete and accurate in accordance with the PPSA and all
serial numbers affixed or ascribed to any of the Collateral have
been provided to Venture;
(g) each Chattel Paper, Intangible and Instrument constituting
Collateral is enforceable in accordance with its terms against the
party obligated to pay the same (the "ACCOUNT DEBTOR"), the amount
represented by the Debtor to Venture from time to time as owing by
each Account Debtor shall be the correct amount owing by such
Account Debtor;
(h) the locations specified in the attached Schedule "C" as to business
operations and records are accurate and complete and, except for
such portions of the Collateral removed for repair
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and then replaced, and except as otherwise agreed to by Venture, and
except for Goods in transit to such locations and Inventory on lease
or consignment, all Collateral shall be situate at one of such
locations;
(i) all financial statements, certificates and other information
concerning the Debtor's financial condition or otherwise from time
to time furnished by the Debtor to Venture are and shall be in all
material respects complete, correct and fair representations of the
affairs of the Debtor stated in accordance with generally accepted
accounting principles applied on a consistent basis;
(j) as of the date hereof, there has not been a material adverse change
in the Debtor's position, financial or otherwise, from that
indicated by the financial statements which have been delivered to
Venture;
(k) as of the date hereof, there are no actions, suits or proceedings
pending or, to the knowledge of the Debtor, threatened against the
Debtor except as have been disclosed in writing to and approved by
Venture; and
(l) none of the Collateral is or shall be Consumer Goods.
6. COVENANTS OF THE DEBTOR AND OF VENTURE
A. The Debtor covenants:
(a) to defend the Collateral against the claims and demands of all other
parties claiming the same or an interest therein and to keep the
Collateral free from all security interests except for the Security
Interest and the Permitted Encumbrances;
(b) except pursuant to or as contemplated by the Securities Purchase
Agreement or as expressly permitted herein, not to sell, exchange,
transfer, assign, destroy, lease or otherwise dispose of the
Collateral or any interest therein without the prior written consent
of Venture;
(c) except as expressly permitted herein, not to move the Specifically
Described Collateral from its current locations, as indicated on
Schedule "C", without the prior written consent of Venture;
(d) upon Default, to assemble and deliver the Collateral to Venture at
such location as Venture may direct;
(e) to notify Venture promptly in writing of:
(i) any change in the information contained in this Agreement
including any information relating to the Debtor (including
its name), the Debtor's business, the Collateral, or the
locations of the Collateral or the records of the Debtor, so
that Venture shall be constantly advised of all places where
the Debtor conducts its business, maintains the Collateral and
maintains its records,
(ii) the details of any significant acquisition of Collateral
(including serial numbers
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where required under the Act in connection with registration
or as otherwise requested by Venture), and for the purposes of
this Agreement "SIGNIFICANT" shall mean any item or items the
value of which exceeds in the aggregate $100,000.00,
(iii) any Default pursuant to Section 7 hereunder of which the
Debtor is aware,
(iv) the occurrence of any other circumstance which has a
reasonable likelihood of having a material adverse effect on
the Debtor,
(v) the details of any claims or litigation affecting the Debtor
or the Collateral in excess of $25,000.00,
(vi) any material loss or damage to the Collateral,
(vii) any material default by an Account Debtor in payment or other
performance of its obligations with respect to any Collateral,
and
(viii) the return to or repossession by the Debtor of any Collateral
in excess of $25,000.00;
(f) to keep in all material respects all of its property, including the
Collateral, in good order, condition and repair and not to use the
Collateral in violation of the provisions of this Agreement or in
material violation of any other agreement relating to the Collateral
or any policy insuring the Collateral or any applicable statute,
law, by-law, rule, regulation or ordinance having jurisdiction over
the Collateral;
(g) to execute, acknowledge and deliver such further agreements and
documents supplemental hereto (including financing statements,
further schedules to this Agreement, assignments and transfers) and
to do all acts, matters and things as may be reasonably requested by
Venture in order to give effect to this Agreement and to perfect the
Security Interest, including but not limited to any of the same
which may be required to correct or amplify the description of any
Collateral or for any other purpose not inconsistent with the terms
of this Agreement;
(h) to pay all reasonable costs and expenses on a full indemnity basis
(including legal fees as between a solicitor and his own client)
incidental to:
(i) maintaining, protecting and defending the Collateral, the
Security Interest, and all of Venture's rights and interest
arising pursuant to this Agreement, and
(ii) the exercise of any rights or remedies of Venture pursuant to
this Agreement, including but not limited to the reasonable
costs of the appointment of a Receiver and all reasonable
expenditures incurred by such Receiver, the reasonable cost of
any sale proceedings (whether the same prove abortive or not),
and all reasonable costs of inspection, and all other
reasonable costs and expenses incurred by Venture in
connection with or arising out of, directly or indirectly,
this Agreement, all without limitation. All such costs and
expenses shall be payable by the Debtor immediately upon
demand from Venture and until paid shall bear interest from
the
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date incurred by Venture at the rate of interest then
chargeable by Venture to the Debtor on any of the Indebtedness
under the Credit Agreement. The amount of all such costs and
expenses shall be added to the Indebtedness and shall be
secured by this Agreement;
(i) except where being contested in good faith and by appropriate
proceedings, to punctually pay and discharge all taxes, rates,
levies, assessments and other charges of every nature which might
result in any lien, encumbrance, right of distress, forfeiture or
termination or sale, or any other remedy being enforced against the
Collateral and to provide to Venture upon request satisfactory
evidence of such payment and discharge;
(j) to maintain its corporate existence, and to diligently preserve in
all material respects all its material rights, licenses, powers,
privileges, franchises and goodwill;
(k) to observe and perform in all material respects its obligations and
comply in all material respects with all conditions under leases,
licenses and other agreements regarding the Collateral to which it
is a party or pursuant to which any of the Collateral is held;
(l) to carry on and conduct its business in an efficient and proper
manner so as to preserve and protect the Collateral and income
therefrom;
(m) to keep, in accordance with generally accepted accounting principles
consistently applied, proper books of account and records of all
transactions in relation to its business and the Collateral and will
deliver to Venture the following:
(i) within 90 days after the close of each fiscal year of the
Debtor, copies of A. the balance sheet of the Debtor as of the
end of such fiscal year, B. statements of income of the Debtor
for such fiscal year and C. statements of cash flow and
stockholders' equity of the Debtor for such fiscal year,
setting forth in each case in comparative form the
corresponding figures for the previous annual period,
including notes thereto for the foregoing, all in reasonable
detail, prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods involved and certified by Ernst & Young or another
firm of independent chartered accountants of recognized
national standing selected by the Debtor and reasonably
satisfactory to Venture,
(ii) within 45 days after the close of each fiscal quarter of the
Debtor, copies of A. the balance sheet of the Debtor as of the
end of such fiscal quarter, B. statements of income of the
Debtor for such fiscal quarter, C. statements of cash flow of
the Debtor for such fiscal quarter, setting forth in each case
in comparative form the corresponding figures for the
preceding fiscal quarter, for the year to date and for the
comparable periods in the preceding year, all in reasonable
detail, prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods involved and certified in writing by the principal
financial officer of the Debtor as fairly presenting the
financial position and results of operations of the Debtor for
the fiscal quarter indicated, subject to year-end audit
adjustment, and
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(iii) promptly upon, and in any event within 10 days after
their becoming available, a copy of A. all reports,
financial statements and other materials delivered or
sent by the Debtor to its directors and shareholders and
B. all management letters reviewing the Debtor's
accounting and control procedures that the Debtor
receives from its independent chartered accountants. If
for any period the Debtor shall have any subsidiary or
subsidiaries whose accounts are consolidated with those
of the Debtor, then the financial statements delivered
for such period pursuant to the foregoing clauses A. and
B. shall be the consolidated and consolidating financial
statements of the Debtor and all such consolidated
subsidiaries;
(n) to observe and conform in all material respects to all valid
requirements of law and of any governmental or municipal authority
relating to the Collateral or the carrying on by the Debtor of its
business;
(o) at all reasonable times, to allow Venture access to its premises in
order to view the state and condition of the Collateral and to
inspect its books and records in connection with the Collateral and
make extracts therefrom;
(p) to insure the Collateral for such periods, in such amounts, on such
terms, with such insurers and against such loss or damage by fire
and other such risks as Venture reasonably directs, with loss
payable to Venture and the Debtor as insureds, as their respective
interests may appear, to pay all premiums therefor, to deliver
evidence of the same on request, and to do all acts necessary to
obtain payment to Venture of any insurance proceeds payable to
Venture;
(q) to prevent the Collateral from being or becoming an Accession or a
fixture to other property not covered by this Agreement except for
the Permitted Encumbrances;
(r) to deliver to Venture from time to time promptly upon request:
(i) copies of any Documents of Title, Instruments, Securities and
Chattel Paper constituting the Collateral,
(ii) copies of all books of account and all records, ledgers,
reports, correspondence, schedules, documents, statements,
lists and other writings relating to the Collateral,
(iii) copies of all policies and certificates of insurance relating
to the Collateral, and
(iv) such further information concerning the Collateral, as Venture
may reasonably request, subject to material compliance by
Venture with section 6B of this Agreement and except for such
information as the Debtor is prohibited from providing under
confidentiality agreements with the Debtor's customers or
otherwise; and
(s) not to change the present use of the Collateral.
B. Venture covenants that Venture shall and shall cause its respective
affiliates and officers and directors, and shall use its best efforts to cause
all their other respective employees, auditors, attorneys,
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consultants, advisors and agents, to treat as confidential and hold in strict
confidence, unless compelled to disclose by judicial or administrative process,
or, in the opinion of its counsel, by other requirements of law, and after prior
written notice to Continental, all confidential information of Continental
furnished to Venture by Continental, or any of its representatives, in
connection with the Credit Agreement or this Agreement and will not release or
disclose such confidential information to any other person, except their
respective auditors, attorneys, financial advisors and other consultants, and
advisors in connection with the Credit Agreement and this Agreement. After the
Indebtedness is paid in full, (i) such confidence shall be maintained by Venture
and Venture shall cause its officers and directors and affiliates and shall use
its best efforts to cause such other persons to maintain such confidence, except
to the extent such information comes into the public domain (other than as a
result of an action by such party, its officers, directors or such other persons
in contravention of this Agreement), (ii) Venture shall and shall cause its
officers and directors and affiliates and shall use its best efforts to cause
such other persons to refrain from using any of such confidential information
except in connection with this Agreement, and (iii) upon the request of
Continental, Venture shall promptly return to Continental any written materials
remaining in Venture's possession or under its control, which materials were
received from Continental or its representatives.
7. EVENTS OF DEFAULT
The following constitute Default:
(a) non-payment when due, whether by acceleration or otherwise, of any
principal or interest forming part of the Indebtedness;
(b) failure of the Debtor to complete the Equity Conversion (as defined
in the Credit Agreement) on and subject to the terms of the Credit
Agreement;
(c) failure of the Debtor to perform or observe any material obligation,
covenant, term, provision or condition contained in this Agreement
(other than as to payment of monies hereunder and Section 7(b)) and
such default shall remain unremedied 30 days from the date the
Debtor receives notice thereof from Venture;
(d) the Debtor makes a voluntary assignment or proposal in bankruptcy or
otherwise acknowledges its insolvency, a bankruptcy petition is
filed or presented against the Debtor, the making of an authorized
assignment for the benefit of the creditors of the Debtor, the
appointment of a receiver, receiver-manager, receiver and manager or
trustee for the Debtor or any assets of the Debtor, or the
institution by or against the Debtor of any other type of insolvency
proceeding under the Bankruptcy and Insolvency Act, the Companies'
Creditors Arrangement Act or similar legislation in any
jurisdiction;
(e) the commencement of any action or proceeding for, terminating the
corporate existence of the Debtor, whether by way of winding-up,
surrender of charter or otherwise;
(f) any encumbrance or security interest affecting the Collateral
becomes enforceable and has not been remedied by the Debtor within
30 days after the Debtor receives notice thereof; provided, however
the Debtor shall not be in default regarding any such encumbrance or
security interest where (i) the Debtor's obligations thereunder are
not at the time due or delinquent; or (ii) the validity thereof is
being contested by the Debtor in good faith and by appropriate
proceedings and provided that no execution in respect of such
encumbrance or
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security interest has been initiated unless, if initiated, such
execution has been stayed;
(g) any indebtedness for borrowed money of the Debtor in an aggregate
principal amount exceeding $100,000.00 (i) shall be duly declared to
be or shall become due and payable prior the stated maturity
thereof, and is not paid by the Debtor within 30 days of the Debtor
receiving notice thereof or (ii) shall not be paid as and when the
same becomes due and payable, including any applicable grace period,
and is not paid by the Debtor within 30 days of the Debtor receiving
notice thereof;
(h) the Debtor ceases or threatens to cease to carry on its business;
(i) any execution or other process of any Court becomes enforceable
against the Debtor or a distress or analogous process is levied upon
the assets of the Debtor or any part thereof (whether or not forming
part of the Collateral) in excess of $100,000.00 and has not been
remedied by the Debtor within 30 days after the Debtor receives
notice thereof; provided, however, the Debtor shall not be in
default regarding any such execution, distress or process which is
being contested in good faith and by appropriate proceedings,
including any execution or process arising out of any judgment,
order, award or claim against the Debtor with respect to which the
Debtor is in good faith prosecuting an appeal or proceeding for
review, provided that no execution or other process in respect
thereof has been initiated unless, if initiated, such execution has
been stayed;
(j) the Debtor permits any amount which has been admitted as due by it
or is not disputed to be due by it and which forms, or is capable of
being made, a charge upon the Collateral in priority to, or pari
passu with, the charge created by this Agreement to remain unpaid
for 30 days after proceedings have been taken to enforce the same;
(k) the Debtor allows any amount outstanding from it to any governmental
agency pursuant to any state, local, federal or provincial statute,
rule, law or regulation to remain unpaid for 30 days after the
Debtor receives notice of such unpaid amount, provided, however,
that the Debtor is not in default in respect of any payment
obligation with respect thereto if the Debtor is in good faith and
by appropriate proceedings diligently contesting such obligation and
adequate provision is made for the payment thereof;
(l) a corporate dispute occurs within the Debtor between or among any of
its shareholders, directors or officers which may hamper the
business operations of the Debtor or otherwise adversely affect the
Debtor's business, assets or the Collateral; or
(m) any representation or warranty furnished by the Debtor pursuant to
or in connection with this Agreement proves to have been false or
misleading as of the day made in any material respect or to have
omitted any material contingent or unliquidated liability or claim
against the Debtor unless such representation or warranty is
rectified by the Debtor within 30 days after the Debtor receives
notice thereof.
8. ACCELERATION
In the event of a Default Venture, in its sole discretion, may declare all or
any part of the Indebtedness which is not by its terms payable on demand to be
immediately due and payable, without demand, with notice to
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the Debtor. The provisions of this clause shall not in any way affect any rights
of Venture with respect to any Indebtedness which may now or hereafter be
payable on demand.
9. REMEDIES
Upon Default Venture shall have the following rights and powers, which Venture
may exercise immediately:
(a) to enter upon the premises of the Debtor or any other premises where
the Collateral may be situated and to take possession of all or any
part of the Collateral, by any method permitted by law, to the
exclusion of all others, subject to the Permitted Encumbrances,
including the Debtor, its directors, officers, agents and employees,
and the Debtor hereby waives and releases Venture and any Receiver
from all claims in connection therewith or arising therefrom;
(b) to remove all or any part of the Collateral to such place as Venture
deems advisable;
(c) to preserve and maintain the Collateral and to do all such acts
incidental thereto as Venture considers advisable, including but not
limited to making replacements and additions to the Collateral;
(d) to collect, demand, xxx on, enforce, recover and receive Collateral
and give receipts and discharges therefor, and may do any such act
and take any proceedings related thereto in the name of the Debtor
or otherwise as Venture considers appropriate;
(e) to sell, lease, or otherwise dispose of the Collateral in such
manner, at such time or times and place or places, for such
consideration and upon such terms and conditions as Venture deems
reasonable (including without limitation, by deferred payment) all
in Venture's absolute discretion and without the concurrence of the
Debtor, provided however that any sale of the Collateral to Venture
shall be at fair market value at the time of such sale, lease or
disposition, and provided however, that Venture shall not be
required to do so and it shall be lawful for Venture to use and
possess the Collateral for any and all purposes and in any manner
Venture sees fit, all without hindrance or interruption by the
Debtor or any other person or persons, subject to the Permitted
Encumbrances, provided however that none of the foregoing shall
prejudice Venture's right to pursue the Debtor for recovery in full
of the amount of the Indebtedness, including the amount of any
deficiency owing after the application of the proceeds of
realization (and to the extent permitted by law, the Debtor waives
its rights to the protection afforded by any rule of law or
legislation respecting such deficiency);
(f) to appoint by instrument in writing, with or without bond, or by
application to any Court of competent jurisdiction, a Receiver of
the Collateral and to remove any Receiver so appointed and appoint
another or others in his stead. Any such Receiver shall, so far as
concerns responsibility for his acts, be deemed the agent of the
Debtor and not of Venture. Subject to the provisions of the
instrument appointing him, any such Receiver shall have the power to
take possession of the Collateral, to preserve the Collateral or its
value, to carry on or concur in carrying on the business of the
Debtor as it relates to the Collateral and to sell, lease or
otherwise dispose of or concur in selling, leasing or otherwise
disposing of the
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Collateral (including dispositions by way of deferred payment). To
facilitate the foregoing powers, any such Receiver may enter upon,
use and occupy all premises owned or occupied by the Debtor where
Collateral may be situate, to employ and discharge such employees,
agents or professional advisors as the Receiver deems advisable, to
enter into such compromises, arrangements or settlements regarding
the Collateral as the Receiver deems advisable, to borrow or
otherwise raise money on the security of the Collateral and to issue
Receiver's certificates and do all such other acts as the Receiver
deems advisable in connection with any of the powers referred to
herein. Except as may be otherwise directed by Venture, all monies
received from time to time by the Receiver in carrying out his
appointment shall be received in trust for and paid over to Venture.
In addition, every Receiver may, in the discretion of Bank, be
vested with all or any of the rights and powers of Venture under the
Act or any other applicable legislation or under this Agreement or
any other agreement;
(g) to rescind or vary any contract for sale, lease or other disposition
that the Debtor or Venture may have entered into and to resell,
release or redispose of the Collateral;
(h) to deliver to any purchasers of the Collateral good and sufficient
conveyances or deeds for the same free and clear of any claim by the
Debtor. For such purposes, the purchaser or lessee receiving any
disposition of the Collateral need not inquire whether Default under
this Agreement has actually occurred but may as to this and all
other matters rely upon a statutory declaration of an officer of
Venture, which declaration shall be conclusive evidence as between
the Debtor and such purchaser or lessee, and any such disposition
shall not be affected by any irregularity of any nature or kind
relating to the enforcement of this Agreement or the exercise of the
rights and remedies of Venture;
(i) to exercise any of the powers and rights given to a Receiver
pursuant to this Agreement;
(j) to provide written notice to the Debtor that all the powers,
functions, rights and privileges of the directors and officers of
the Debtor with respect to the Collateral, have or shall cease as of
the date notified therein, except to the extent specifically
continued at any time by Venture in writing; and
(k) to take the benefit of or to exercise any other right, proceeding or
remedy authorized or permitted at law or in equity, whether as a
secured party pursuant to the Act as the same is in force from time
to time or otherwise.
All rights and remedies of Venture are cumulative and may be exercised at any
time and from time to time independently or in combination. No delay or omission
by Venture in exercising any right or remedy shall operate as a waiver thereof
or of any other right or remedy, and no singular partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right or remedy. Provided always that Venture shall not be liable or accountable
for any failure to exercise its remedies, take possession of, collect, enforce,
realize, sell, maintain, lease or otherwise dispose of the Collateral, or to
institute any proceedings for such purposes. Venture shall have no obligation to
take any steps to preserve rights against other parties, shall have no
obligation to exercise any of the rights and remedies available to it on Default
and shall not be liable or accountable for not exercising any such rights and
remedies.
Venture may waive any Default but no such waiver shall be effective unless made
in writing and signed by
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an authorized officer of Venture. Any such waiver shall not extend to, or be
taken in any manner whatsoever to affect, any subsequent Default or the rights
resulting therefrom.
By its acceptance of this Agreement, Venture acknowledges that it shall not,
except in the case of the bankruptcy of the Debtor, enforce this Security
Agreement against any personal property of the Debtor used solely for the
personal or household use and enjoyment of the Debtor or the Debtor's immediate
family.
10. VENTURE MAY REMEDY DEFAULT
Venture shall have the right, but shall not be obliged to, remedy any Default of
the Debtor and all sums thereby expended by Venture shall be payable immediately
by the Debtor, together with interest thereon at the rate of interest then
chargeable by Venture to the Debtor on any portion of the Indebtedness under the
Credit Agreement. All such sums shall be added to the Indebtedness and shall be
secured by this Agreement. In no case shall the exercise of Venture's rights
pursuant to this Section 10 be deemed to relieve the Debtor from such Default or
be deemed a waiver of such Default or of any other prior or subsequent Default.
11. USE OF COLLATERAL
Subject to compliance with the Debtor's covenants contained herein and to the
following provisions of this Section 11, until Default the Debtor may:
(a) in the case of Equipment, dispose of the same for the purpose of
immediately replacing it by other Equipment of a similar nature or
of a more useful or convenient character and of at least equal
value;
(b) in the case of Inventory, Accounts and Money, dispose of the same in
the ordinary course of the business of the Debtor and for the sole
purpose of carrying on the same; and
(c) otherwise possess, collect, use, enjoy and deal with the Collateral
in the ordinary course of the Debtor's business in any manner not
expressly or impliedly prohibited herein or otherwise inconsistent
with the provisions of this Agreement.
Notwithstanding the foregoing:
(a) after Default Venture may notify all or any Account Debtors and may
direct such Account Debtors to make all payments owed in respect of
the Collateral directly to Venture; and
(b) the Debtor agrees that any payments on or other Proceeds of
Collateral received by the Debtor, after Default, shall be received
and held by the Debtor in trust for Venture and shall be turned over
to Venture upon request.
If the Collateral at any time includes Securities, after Default, the Debtor
authorizes Venture to transfer the same or any part thereof into its own name or
that of its nominees so that Venture or its nominees may appear on record as the
sole owner thereof. After Default the Debtor waives all rights to receive any
notices or communications in respect of such Securities and agrees that no proxy
issued by Venture to the Debtor or its order as aforesaid shall thereafter be
effective.
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12. APPROPRIATION OF PAYMENTS
All payments made at any time by the Debtor in respect of the Indebtedness and
all Proceeds realized from any Securities held therefor may be applied (and
reapplied from time to time notwithstanding any previous application) in
accordance with the Credit Agreement, all without prejudice to the rights of
Venture hereunder, including Venture's right to collect from the Debtor the
amount of any deficiency remaining after application of all such payments and
Proceeds.
13. POWER OF ATTORNEY AND AUTHORIZATION TO FILE
The Debtor hereby authorizes Venture to file such Financing Statements and other
documents and do such acts, matters and things (including completing and adding
schedules to this Agreement identifying Collateral or locations) as Venture from
time to time deems appropriate to perfect, continue and realize upon the
Security Interest and to protect and preserve the Collateral. In addition, for
valuable consideration, the Debtor hereby irrevocably appoints Venture and its
officers from time to time, or any one or more of them, to be the true and
lawful attorney of the Debtor, with full power of substitution, in the name of
and on behalf of the Debtor to execute and to do all deeds, transfers,
conveyances, assignments, assurances, and other things which the Debtor ought to
execute and do under the covenants and provisions contained in this Agreement
and generally to use the name of the Debtor in the exercise of all or any of the
rights, remedies and powers of Venture pursuant hereto.
14. MISCELLANEOUS
(a) Subject to the terms of this Agreement, Venture may grant extensions
of time and other indulgences, take and give up security, accept
compositions, compound, comprise, settle, grant releases and
discharges and otherwise deal with the Debtor, debtors of the
Debtor, sureties and others and with the Collateral and other
securities as Venture sees fit, all without prejudice to the
liability of the Debtor to Venture or to Venture's rights in respect
thereof. In addition, and subject to the terms of this Agreement, on
Default Venture may demand, collect, and xxx on the Collateral in
either the Debtor's or Venture's name, all at Venture's option, and
may endorse the Debtor's name on any and all cheques, commercial
paper and other Instruments pertaining to or constituting the
Collateral.
(b) Without limiting any other right of Venture, whenever the
Indebtedness is due and payable or Venture has the right to declare
it to be due and payable (whether or not it has been so declared),
Venture may, in its sole discretion, and upon notice to the Debtor
set off against the Indebtedness any and all monies then owed to the
Debtor by Venture or owed pursuant to the Securities Purchase
Agreement to the Debtor by Venture in any capacity, whether or not
due, and Venture shall be deemed to have exercised such right to
set-off immediately at the time of making its decision to do so even
though any charge therefor is made or entered on Venture's records
subsequent thereto.
(c) Neither this Agreement nor the Security Interest may be assigned by
Venture or by the Debtor, without the prior express consent of the
other party.
15. NOTICE
In addition to the notice provisions contained in the Act, whenever the Debtor
or Venture is required or
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entitled to notify or direct the other or to make a demand or request upon the
other, such notice, direction, demand or request shall be in writing and shall
be sufficiently given only if delivered, transmitted by facsimile, or sent by
prepaid registered mail addressed to the party for whom it is intended in
accordance with the Credit Agreement. Either party may notify the other of any
change in such party's address to be used for the purposes hereof. All such
communications shall, in the case of delivery or facsimile, be deemed received
on the date of delivery and, if mailed as aforesaid, shall be deemed received on
the fifth business day following the date of posting. In the case of a
disruption in postal service all such communications shall be delivered or
transmitted by facsimile.
16. INTERPRETATION
(a) This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta.
(b) This Agreement and the security afforded by it is in addition to and
not in substitution for any other security now or hereafter held by
Venture and is intended to be a continuing security agreement and
shall remain in full force and effect until the Indebtedness is paid
in full, except for the provisions of Section 6B of this Agreement
which shall survive the termination of this Agreement. Venture shall
have no obligation to provide such release unless and until the full
amount of the Indebtedness has been paid in full.
(c) If any provision of this Agreement is held invalid, in whole or in
part, by any Court of competent jurisdiction, the remaining terms
and provisions of this Agreement shall remain in full force and
effect and this Agreement shall be enforced to the fullest extent
permitted by law.
(d) The Debtor hereby waives the benefit of all statutory, common law
and equitable rights, benefits and provisions which in any way limit
or restrict Venture's rights and remedies, to the extent that such
waiver is not expressly prohibited by law. The Debtor acknowledges
and agrees that Venture shall have the right to recover the full
amount of the Indebtedness by all lawful means, including the right
to seek recovery of any deficiency remaining after the sale of the
Collateral.
(e) The headings of the sections of this Agreement are inserted for
convenience of reference only and shall not affect or limit the
construction or interpretation of this Agreement.
(f) All schedules, whether attached hereto on the date hereof or
subsequently attached pursuant to the provisions of this Agreement,
form part of this Agreement. With the exception of any schedules
which may be added hereafter by Venture without the concurrence of
the Debtor pursuant to the provisions of this Agreement, no
modification, variation or amendment of this Agreement shall be made
except by a written agreement executed by the Debtor and Venture.
(g) When the context so requires, words importing the singular number
shall be read to include the plural and vice versa, and words
importing gender shall be read with all grammatical changes
necessary to reflect the identity of the parties.
(h) This Agreement shall enure to the benefit of Venture, its successors
and permitted assigns
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and shall be binding upon the Debtor, its successors and permitted
assigns.
(i) Time shall be in all respects of the essence of this Agreement.
17. RECEIPT OF DOCUMENTS
(a) The Debtor hereby acknowledges receiving a copy of this Agreement.
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(b) The Debtor hereby waives its right to receive a copy of any
Financing Statement, Financing Change Statement or verification
statement which may be filed by or issued to Venture pursuant to the
Act.
IN WITNESS WHEREOF the Debtor has executed this Agreement as of the day and year
first above written.
CONTINENTAL HOLDINGS LTD.
Per: /s/ X.X. XXXXX
-------------------------------------
Name: Xxx X. Xxxxx (c/s)
Title: President
Per: /s/ R.D. SELF
-------------------------------------
Name: Xxx X. Self
Title: Vice-President, Geophysical Operations
DEBTOR ADDRESS:
210, 0000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
