EXHIBIT 10.67
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GENERAL SECURITY AGREEMENT (ONTARIO)
1. PARTIES TO THIS SECURITY AGREEMENT
ACTIVECORE TECHNOLOGIES LTD.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
(hereinafter referred to as "DEBTOR")
- and -
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS LOCAL UNION 105
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
(hereinafter referred to as "SECURED PARTY")
2. CREATION OF SECURITY INTEREST
WHEREAS the Secured Party has provided financing to the Debtor pursuant to
the terms of a Promissory Note dated the 30th day of July, 2003;
AND WHEREAS it is contemplated that other Lenders may make loan advances to
the Debtor to rank pari passu with the existing loan advance up to a maximum of
$2,000,000.00 U.S. in total advances from all Lenders;
(1) For value received and as a general and continuing collateral security
for the payment of Indebtedness (as defined below), including any ultimate
unpaid balance thereof, owed to the Secured Party and to secure the performance
of the obligations under this security agreement or any Related Documents, the
Debtor hereby grants to the Secured Party a security interest in all the
Debtor's personal property as defined in the Personal Property Security Act,
R.S.O. 1990, c. P.10 (the "PPSA"), and in the undertaking of the Debtor, which
shall constitute Collateral, whether now owned or hereafter acquired directly or
indirectly by the Debtor, whether now existing or hereafter arising, save and
except any leased equipment of the Debtor, which leased equipment shall be
excluded from the security provided hereunder.
(2) Without limiting the foregoing, but for greater certainty, Collateral
includes all of the following:
(a) all Collateral described in the schedules attached to this security
agreement and incorporated by reference in this security agreement; (no
schedules attached);
(b) all patents, trade marks, copyrights and other industrial and
intellectual property; and
(c) all statutory licences, quotas and other transferable rights,
including an equitable right in the Collateral assigned or charged under the
security agreement which might otherwise at law be incapable of being collateral
creating a security interest.
(3) Any reference to "Collateral" shall, unless the context requires
otherwise, be deemed a reference to "Collateral or any part thereof".
(4) This security interest shall not apply to, and Collateral shall not
include leased equipment, or the last day of the term of any lease or agreement
therefor but upon the enforcement of the security interest the Debtor shall
stand possessed of such last day in trust to assign the same to any person
acquiring such term.
3. DEFINITIONS
(1) All phrases which are defined in the PPSA and not otherwise defined in
this security agreement shall have the meaning ascribed by the PPSA, provided
always that the term "goods" shall never include "consumer goods" of the Debtor
as that term is defined in the PPSA.
(2) "Indebtedness" shall mean all liabilities of every kind and
description of the Debtor to the Secured Party, whether now or hereafter owed or
any fixture advance, whether direct, indirect, contingent, and whether the
Debtor be bound alone or with others and whether as principal or guarantor.
(3) "Related Documents" shall mean the promissory notes, loan agreements,
account agreements, guaranties, trust deeds, mortgages, other security
agreements or any other documents executed in connection with this security
agreement or Indebtedness or related to its operation or administration, whether
already existing or executed now or later.
4. RIGHTS AND OBLIGATIONS OF DEBTOR
4.1 TITLE. The Debtor warrants and covenants that it holds title or has
rights in the Collateral sufficient for a security interest to attach to the
Collateral.
4.2 POSSESSION AND USE OF COLLATERAL. Subject to paragraph 6.2, until
default or unless otherwise agreed with the Secured Party, the Debtor may deal
with Collateral in the ordinary course of the Debtor's business in any manner
consistent with the provisions of this security agreement. Except for inventory
sold or accounts collected in the ordinary course of the Debtor's business the
Debtor shall not sell or otherwise transfer the Collateral. All proceeds of the
Collateral, whether or not arising in the ordinary course of the Debtor's
business, will be received by the Debtor as trustee for the Secured Party and
will be immediately paid to the Secured Party pursuant to the fiduciary
obligation as trustee. The Debtor shall not encumber or permit the Collateral to
be encumbered without the prior written consent of the Secured Party, other than
by this security agreement.
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4.3 REMOVAL OF COLLATERAL. The Collateral (or to the extent the Collateral
consists of intangible property such as accounts, the records concerning the
Collateral) is located at the address of the Debtor shown above. Except in the
ordinary course of the Debtor's business, the Debtor shall not remove the
Collateral from its location without the prior written consent of the Secured
Party, which shall not be unreasonably withheld.
4.4 SECURITIES AS COLLATERAL. Where Collateral includes securities, the
Secured Party may require the Debtor to transfer such securities into the
Secured Party's name so that the Secured Party may appear of record as the sole
owner of the securities. Until default, the Debtor may retain by way of proxy
the voting and dividend rights attached to any such securities and the Secured
Party will facilitate exercise of those dividend and voting rights.
4.5 PRESERVATION OF RIGHTS AND COLLATERAL. The Debtor shall defend its own
and the Secured Party's rights in the Collateral against the claims and demands
of all persons. The Debtor shall maintain the Collateral in a condition and
state of repair that preserves the value of the Collateral, reasonable wear and
tear excluded. The Debtor will not commit or permit damage to or destruction of
the Collateral and will effect repair if it occurs. The Debtor shall procure and
maintain policies of fire and other casualty insurance covering the Collateral
on the basis and in at least the amount described above on terms satisfactory to
the Secured Party and with loss payable to the Secured Party and Debtor jointly.
4.6 MATERIAL CHANGES IN INFORMATION. The Debtor shall notify the Secured
Party promptly of:
(a) any material change in the information contained in this agreement
(including the schedules hereto) relating to the Debtor, the Debtor's business
or Collateral, including any address change or establishment of an additional
place of business;
(b) the details of any change in name of the Debtor;
(c) the details of any significant acquisition of Collateral;
(d) the details of any claims or litigation affecting the Debtor or
Collateral;
(e) any loss of or damage to Collateral;
(f) any default by any account debtor in its obligations with respect to
Collateral.
4.7 DEBTOR'S CONDUCT. The Debtor will conduct its business and affairs in
a proper and efficient manner, in accordance with applicable law and keep
records in accordance with generally accepted accounting procedures. The Debtor
shall pay all charges, such as taxes, assessments, claims, liens and
encumbrances relating to the Collateral or the Debtor's business and affairs
when the same become due. The Debtor will deliver to the Secured Party promptly
such information concerning Collateral, the Debtor and the Debtor's business and
affairs as the Secured Party may reasonably request.
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4.8 PROTEST. The Debtor waives protest of any instrument constituting
Collateral at any time held by the Secured Party on which the Debtor is in any
way liable and, subject to the notice requirements of the PPSA, notice of any
other action taken by the Secured Party.
4.9 JOINT AND SEVERAL LIABILITY. If more than one Debtor executes this
security agreement the obligations of such Debtors hereunder shall be joint and
several.
5. EVENTS OF DEFAULT
The Debtor shall be in default under this security agreement or Related
Documents upon occurrence of any of the following:
(a) Non-payment when due, whether by acceleration or otherwise, of
Indebtedness.
(b) Failure to comply within seven days after written notice from the
Secured Party demanding compliance with any provision contained in this security
agreement or Related Documents and if compliance is not practically possible,
failure to take steps that will produce compliance as soon as is reasonably
practical.
(c) Any warranty, representation or statement made or famished to the
Secured Party by or on behalf of the Debtor proves in any material respect to
have been false when made or furnished.
(d) Bankruptcy or insolvency of the Debtor; the filing against the Debtor
of a petition in bankruptcy; the making of an authorized assignment for the
benefit of creditors by the Debtor; the appointment of a receiver, trustee,
monitor, or liquidator for the Debtor or for any assets of the Debtor; or the
institution by or against the Debtor of any type of insolvency proceeding or
creditor rearrangement.
(e) Death or declaration of incompetency of the Debtor (if the Debtor is
an individual) or cessation of the Debtor's viability as a going business
concern (if the Debtor is not an individual), which includes the cessation or
threat by the Debtor to cease to carry on in the normal course of the Debtor's
business or any material part thereof.
(f) On the occurrence of such other events where the Secured Party
considers in good faith and on commercially reasonable grounds that the
Collateral is in jeopardy or that the Secured Party's position is insecure.
6. SECURED PARTY RIGHTS AND OBLIGATIONS
6.1 GENERAL RIGHTS. In addition to the rights granted herein, the Secured
Party may enforce any other rights and remedies it may have at law or in equity,
and specifically shall have all rights and remedies of a Secured Party under the
PPSA. All rights and remedies of the Secured Party are cumulative and one or
more of these rights may be exercised independently or in combination from time
to time, including marshalling.
6.2 COLLECTION OF DEBTS FORMING PART OF COLLATERAL. The Secured Party may
direct account debtors of the Debtor to make all payments owing to the Debtor on
Collateral subject to the security interest directly to the Secured Party, by
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notifying such account debtors of the Secured Party's interest, either before or
after default.
6.3 INSPECTION OF COLLATERAL AND RIGHT OF ACCESS. The Secured Party shall
have the right at any time to confirm the existence and state of the Collateral
in any manner the Secured Party may consider appropriate and the Debtor agrees
to furnish all assistance as the Secured Party may reasonably request in
connection therewith. The Debtor grants to the Secured Party or its agents
access to all places where Collateral may be located and to all premises
occupied by the Debtor for the purposes of inspection or obtaining possession.
6.4 RECEIVERS AND OTHERS. The Secured Party may appoint by instrument or
by application to a court of competent jurisdiction a receiver or other person
to act on its behalf before or after default or in any insolvency or like
proceeding (receiver includes a receiver-manager). The appointee has all the
powers of the Secured Party under this security agreement. In addition, on
instructions from the Secured Party, the receiver shall be entitled to carry on
the business of the Debtor with all the powers that the Debtor would have to
operate its business for such time as the receiver determines it advisable and
in the best interest of the Secured Party. The Secured Party is not liable for
any act or omission by a receiver appointed or selected by a court.
6.5 ACCELERATION. The Secured Party may declare all or any part of
Indebtedness which is not by its terns payable on demand to be immediately due
and payable on the occurrence of any default.
6.6 POSSESSION AND DISPOSITION OF COLLATERAL. The Secured Party may take
possession or constructive possession of, collect, demand, ▇▇▇ on, enforce,
recover and receive Collateral and give binding receipts and discharges
therefor. The Secured Party in possession may use Collateral as it sees fit,
subject to the duty of reasonable care contained in the PPSA providing that any
income from Collateral is applied to the Debtor's account. Upon default, the
Secured Party may also sell, lease or otherwise dispose of Collateral in any
commercially reasonable manner.
6.6 POSSESSION AND DISPOSITION OF COLLATERAL. The Secured Party may take
possession or constructive possession of, collect, demand, ▇▇▇ on, enforce,
recover and receive Collateral and give binding receipts and discharges
therefor. The Secured Party in possession may use Collateral as it sees fit,
subject to the duty of reasonable care contained in the PPSA providing that any
income from Collateral is applied to the Debtor's account. Upon default, the
Secured Party may also sell, lease or otherwise dispose of Collateral in any
commercially reasonable manner.
6.7 COSTS. The Debtor agrees to pay all charges, including solicitors',
auditors', receivers' or like persons' costs and remuneration or other expenses
reasonably incurred by the Secured Party or other party appointed by the Secured
Party in operating the Debtor's accounts and in preparing or enforcing this
security agreement. Such sums shall constitute a future advance increasing the
Indebtedness hereunder.
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6.8 DEFICIENCIES. The failure of the Secured Party to receive full payment
or satisfaction of Indebtedness through its rights and remedies herein provided
shall not in any way release the Debtor from the obligation to satisfy any
deficiency, including any costs of realization.
6.9 WAIVERS.
(1) No variation, amendment (except for any schedules which may be added
hereto pursuant to the provisions of this agreement) or waiver of any provision
of this security agreement shall be effective unless made by written agreement
executed by the parties to this security agreement.
(2) No delay or omission by the Secured Party in exercising any right or
remedy hereunder or with respect to any Indebtedness shall operate as a waiver
of that right or remedy and no single or partial exercise of any right or remedy
shall preclude any other exercise of cumulative rights and remedies.
(3) The Secured Party may remedy any default or perform any duty of the
Debtor hereunder or with respect to any Indebtedness in any reasonable manner
without waiving the default remedied and without waiving any other prior or
subsequent default by the Debtor.
6.10 NOTICE OF INTENTION TO REALIZE. Prior to realization, there is an
obligation on the Secured Party to deliver a notice of intention to realize to
the Debtor under s.244 of the BANKRUPTCY AND INSOLVENCY ACT. Any events which
trigger default, including those within paragraph 5(d), shall be deferred as
required by that legislation. Valid service of this notice will occur upon
sending of the notice to the address herein or as changed by the Debtor through
paragraph 4.6. Pursuant to the PPSA where applicable, the Secured Party shall
also give notice in writing in the appropriate time period to (a) the Debtor;
(b) every person who is known by the Secured Party, before the date that the
notice is served on the Debtor, to be the owner of the collateral or an
obligator who may owe payment or performance of the obligation secured; (c)
every person who has a security interest who has a security interest in the
collateral and whose interest (i) was perfected by possession, the continuance
of which was prevented by the Secured Party who has taken possession of the
collateral, or (ii) is perfected by registration before the date the notice is
served on the Debtor; and (d) every person with an interest in the collateral
who has delivered a written notice to the Secured Party of the interest in the
collateral before the date that the notice is served on the Debtor. This notice
shall include the content stipulated by s. 63(5) of the PPSA.
7. ADDITIONAL LOAN ADVANCES
The Borrower and the Lender acknowledge and agree that further loan
advances by other Lenders to the Borrower are contemplated and that such further
advances will also be covered under the security of this General Security
Agreement, such further advances to rank pari passu with the existing loan
advance up to a maximum amount of indebtedness of $2,000,000.00 U.S. in total
advances from all Lenders.
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8. SUBORDINATION
No action by the Secured Party shall constitute a subordination of its
security interest to any other interest in the Collateral unless such
subordination is effected by an agreement in writing, titled "Subordination
Agreement", signed by the Secured Party.
9. SUCCESSOR INTERESTS
This security agreement shall enure to the benefit of and be binding on the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
10. APPLICABLE LAW
This security agreement and Related Documents shall be governed by the laws
of the Province of Ontario.
11. TERMINATION
This security agreement shall remain in full force and effect until the
Indebtedness has been paid and written notice of discharge by the Secured Party
is received by the Debtor.
12. ACKNOWLEDGMENT OF DEBTOR
The Debtor hereby acknowledges receipt of a copy of this security
agreement.
IN WITNESS WHEREOF the Debtor has executed this security agreement this
30th day of July, 2003.
ACTIVECORE TECHNOLOGIES LTD.
Per: /s/ [▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇]
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Authorized Signing Officer
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