EXHIBIT 10.7
Xxxxxx Micro Security Agreement
GENERAL SECURITY AGREEMENT
BETWEEN: XXXXXX MICRO INC. (HEREINAFTER CALLED XXXXXX OR SECURED
PARTY) and, MIAD SYSTEMS LTD. (Debtor's Legal Name)
1. Consideration For valuable consideration, the receipt and sufficiency of
which are acknowledged by each party, the undersigned (hereinafter called the
"Customer") enters into this security agreement with Xxxxxx Micro Inc. of 00
Xxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxx X0X 0X0 (hereinafter called "Xxxxxx
Micro").
2. Obligations Secure The Security Interest (as hereinafter defined) is granted
to Xxxxxx Micro by the Customer as continuing security for the payment of all
present and future indebtedness and liabilities of the Customer to Xxxxxx Micro,
including interest thereon, and for the payment and performance of all other
present and future obligations of the Customer to Xxxxxx Micro, whether direct
or indirect contingent or absolute (including obligations under this security
agreement); and without limiting the generality of the foregoing, specifically
including the obligations of the Customer under any guarantee given by the
Customer to Xxxxxx Micro in respect of the obligations of any other party, and
any xxxx of exchange issued, accepted or endorsed by the Customer of which
Xxxxxx Micro is the holder (collectively, the "Obligations").
3. Creation of Security Interest The Customer hereby grants, mortgages, charges,
transfers, assigns and creates to and in favor of Xxxxxx Micro a security
interest in the following:
(a) Equipment all present and future equipment of the
Customer, including all machinery, fixtures, plant,
tools, furniture, vehicles of any kind or
description, all spare parts, accessories installed
in or affixed or attached to any of the foregoing,
and all drawings, specifications, plans and manuals
relating thereto ("Equipment");
(b) Inventory all present and future inventory of the
Customer, including all raw materials, materials used
or consumed in the business of the Customer,
work-in-progress, finished goods, goods used for
packing, materials used in the business of the
Customer not intended for sale, and goods acquired or
held for sale or furnished or to be furnished under
contracts or rental or service ("Inventory");
(c) Accounts all present and future debts, demands and
amounts due or accruing due to the Customer whether
or not earned by performance, including without
limitation its book debts, accounts receivable, and
claims under policies of insurance; and all
contracts, security interests and other rights and
benefits in respect thereof ("Accounts");
(d) Intangibles all present and future intangible
personal property of the Customer, including all
contract rights, goodwill, patents, trade marks,
copyrights and other intellectual property, and all
other choses in action of the
Customer of every kind, whether due at the present
time or hereafter to become due or owing
("Intangibles");
(e) Documents of Title all present and future documents
of title of the Customer, whether negotiable or
otherwise including all warehouse receipts and bills
of lading ("Documents of Title");
(f) Chattel Paper all present and future agreements made
between the Customer as secured party and others
which evidence both a monetary obligation and a
security interest in or a lease of specific goods
("Chattel Paper");
(g) Instruments all present or future bills, notes and
cheques (as such are defined pursuant to the Bills of
Exchange Act (Canada)), and all other writings that
evidence a right to the payment of money and are of a
type that in the ordinary course of business are
transferred by delivery without any necessary
endorsement or assignment ("Instruments");
(h) Money all present and future money of the Customer,
whether authorized or adopted by the Parliament of
Canada as part of its currency or any foreign
government as part of its currency ("Money");
(i) Securities all present and future securities held by
the Customer, including shares, options, rights,
warrants, joint venture interests, interests in
limited partnership, bonds, debentures and all other
documents which constitute evidence of a share,
participation or other interest of the Customer in
property or in an enterprise or which constitute
evidence of an obligation of the issuer; and
including an uncertificated security within the
meaning of Part VI (Investment Securities) of the
Business Corporations Act (Ontario) and all
substitutions therefor and dividends and income
derived therefrom ("Securities");
(j) Documents all books, accounts, invoices, letters,
papers, documents and other records in any form
evidencing or relating to collateral subject to the
Security Interest ("Documents");
(k) Undertaking all present and future real and personal
property, business, and undertaking of the Customer
not being Inventory, Equipment, Accounts,
Intangibles, Documents of Title, Chattel Paper,
Instruments, Money, Securities or Documents
("Undertaking"); and
(l) Proceeds all personal property in any form derived
directly or indirectly from any dealing with
collateral subject to the Security Interest or the
proceeds therefrom, including insurance proceeds and
any other payment
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representing indemnity or compensation for loss of or
damage thereto or the proceeds therefrom
("Proceeds").
The Inventory, Equipment, Accounts, Intangibles, Documents of Title,
Chattel Paper, Instruments, Money, Securities, Documents, Undertaking and
Proceeds are collectively called the "Collateral". Any reference in this
security agreement to Collateral shall mean Collateral or any part thereof,
unless the context otherwise requires.
Without limiting the generality of the description of Collateral as set
out in this paragraph, for greater certainty the Collateral shall include all
present and future real and personal property of the Customer located on or
about or in transit to or from the address of the Customer set out on this
security agreement and the locations(s) set out in any Schedule "A" attached
hereto, and all present and future personal property of the Customer comprised
of all inventory which may be sold to the Customer by Xxxxxx Micro from time to
time, specifically including the types of inventory described in any schedule
"B" attached hereto.
The grants, mortgages, charges, transfers, assignments and security
interests herein created are collectively called the "Security Interest". In
addition to the grant of the Security Interest, Xxxxxx Micro hereby retains
title to all inventory sold to the Customer by Xxxxxx Micro to secure payment of
the purchase price thereof. For convenience, references in this security
agreement to the "Security Interest" shall include the reservation of title in
favor of Xxxxxx Micro contained herein.
4. Attachment The parties acknowledge that value has been given; the Customer
has rights in the Collateral; and the parties have not agreed to postpone the
time for attachment of the Security Interest. In respect of Collateral in which
the Customer obtains an interest after the execution and delivery of this
security agreement, the Security Interest shall attach thereto immediately upon
the Customer obtaining such rights.
5. Dealings with Collateral Until demand, the Customer may sell its Inventory
and collect its Accounts in the ordinary course of its business; provided that
after the issuance by Xxxxxx Micro of a demand for payment of the Obligations,
all Accounts collected by the Customer shall be immediately remitted to Xxxxxx
Micro. Until remitted all receipts shall be held by the Customer as agent and in
trust for Xxxxxx Micro.
6. Notification to Account Customers Before Demand Xxxxxx Micro may, before as
well as after demand, notify any person obligated to the Customer in respect of
an Account, Chattel Paper or an Instrument to make payment to Xxxxxx Micro of
all such present and future amounts due thereon.
7. Exception re Leasehold Interests and Contractual Rights The last day of the
term of any lease, sublease or agreement therefor is specifically excepted from
the Security Interest, but the Customer agrees to stand possessed of such last
day in trust for any person acquiring such interest of the Customer. To the
extent that the creation of the Security Interest would constitute a breach
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or cause the acceleration of any agreement right, licence or permit to which the
Customer is a party, the Security Interest shall not attach thereto but the
Customer shall hold its interest therein in trust for Xxxxxx Micro, and shall
assign such agreement, right, licence or permit to Xxxxxx Micro forthwith upon
obtaining the consent of the other party thereto.
8. Representation and Warranties The Customer hereby represents and warrants as
follows to Xxxxxx Micro and acknowledges that Xxxxxx Micro is relying thereon:
(a) the Customer has the capacity and authority to incur
the Obligations, create the Security Interest and
generally perform its obligations under this security
agreement;
(b) the execution and delivery of this security agreement
and the performance by the Customer of its obligations
hereunder has been duly authorized by all necessary
proceedings;
(c) except for the Security Interest, and except as
disclosed by the Customer in writing to Xxxxxx Micro,
the Collateral is owned by the Customer free from any
mortgage, lien, charge, encumbrance, pledge, security
interest or other claim whatsoever;
(d) the chief executive office of the Customer is located
at the address of the Customer set- out in this
security agreement;
(e) the Collateral is located at the places warranted
herein and at no other place; and
(f) the Collateral does not include any goods which are
used or acquired by the Customer primarily for
personal, family or household purposes.
9. Covenants of Customer The Customer covenants and agrees as follows:
(a) to pay or satisfy the Obligations when due;
(b) to keep the Collateral free and clear of all taxes,
assessments, liens, mortgages, charges, claims,
encumbrances and security interests whatsoever,
except for the Security Interest and except as
disclosed in writing by the Customer to Xxxxxx Micro;
(c) not to sell, exchange, transfer, assign, lease or
otherwise dispose of or deal in any way with the
Collateral or any interest therein, or enter into any
agreement or undertaking to do so; except as may be
permitted in this security agreement;
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(d) to keep the Collateral in good condition, and to keep
the Collateral located at the places warranted herein;
(e) to obtain from financially responsible insurance
companies and maintain insurance in respect of such
risks and in such amounts as Xxxxxx Micro may
reasonably require from time to time, and shall
include a standard mortgage clause approved by the
Insurance Bureau of Canada, and the Customer agrees to
cause the interest of Xxxxxx Micro to be noted as its
interest might appear on such policies of insurance
(except public liability insurance), and to furnish
Xxxxxx Micro with certificates of insurance and
certified copies of such policies;
(f) to promptly notify Xxxxxx Micro of any loss or damage
to the collateral, any change in any information
provided in this security agreement;
(g) to promptly pay all taxes, assessments, rates,
levies, payroll deductions, vacation pay, workers'
compensation assessments, and any other charges which
could result in the creation of a statutory lien or
deemed trust in respect of the Collateral;
(h) to deliver to Xxxxxx Micro such information
concerning the Collateral or the Customer as Xxxxxx
Micro may reasonably request from time t time
including aged lists of Inventory and Accounts and
annual and monthly financial statements of the
Customer;
(i) to allow Micro to have access to all premises of the
Customer at which Collateral may be located and to
inspect the Collateral and all records of the
Customer pertaining thereto from time to time; and,
(j) to do, make, execute and deliver such further and
other assignments, transfers, deeds, security
agreements and other documents as may be required by
Xxxxxx Micro to establish in favor of Xxxxxx Micro
the Security Interest intended to be created hereby
and to accomplish the intention of this security
agreement.
10. Events of Default The Customer shall be in default under this security
agreement upon the occurrence of any one or more of the following events (an
"Event of Default"):
(a) the Customer fails to satisfy or perform any of the
Obligations when due;
(b) any representation or warranty made by the Customer
herein is or becomes incorrect or untrue, or the
Customer breaches or fails to comply with any term
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of this security agreement or any other agreement or
undertaking now or hereafter given by the Customer to
Xxxxxx Micro;
(c) the Customer becomes insolvent or bankrupt or makes a
proposal under the Bankruptcy and Insolvency Act or
the Companies' Creditors Arrangement Act; a petition
in bankruptcy is filed against the Customer; the
Customer makes an assignment for the benefit of
creditors; a trustee or receiver or manager is
appointed in respect of the Customer or any of its
assets; or steps are taken by or against the Customer
for any other formal or informal type of proceeding
for the settlement of claims against the Customer, or
for the dissolution, liquidation, or winding-up of the
affairs of the Customer;
(d) the Customer ceases or threatens to cease to carry on
business, or makes or agrees to make a bulk sale of
its assets;
(e) an execution or any similar process of any court
becomes enforceable against the Customer, or a
distress or any similar process is levied upon any
property of the Customer;
(f) any encumbrance affecting the Collateral becomes
enforceable; or
(g) Xxxxxx Micro in good faith believes and has
commercially reasonable grounds to believe that the
prospect of payment or performance of the Obligations
is or is about to be impaired or that the Collateral
is or is about to be placed in jeopardy.
11. Acceleration Upon Default; Obligation to Advance Upon the occurrence of an
Event of Default, the Obligations shall be immediately due and payable.
12. Remedies Upon the occurrence of an Event of Default, the Security Interest
shall immediately become enforceable, and Xxxxxx Micro shall have the following
remedies in addition to any other remedies available at law or equity or
contained in any other agreement between the Customer and Xxxxxx Micro, all of
which remedies shall be independent and cumulative:
(a) entry of any premises where Collateral may be located;
(b) possession of Collateral by any method permitted by
law;
(c) the sale or lease of Collateral;
(d) the collection of any rents, income, and profits
received in connection with the business of the
Customer or the Collateral;
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(e) the collection, realization, sale or other dealing
with any Accounts;
(f) the appointment by instrument in writing of a
receiver, or a receiver and manager (each of which is
herein called a "Receiver") of the Collateral;
(g) the exercise by Xxxxxx Micro of any of the powers set
out in paragraph 13, without the appointment of a
receiver;
(h) proceedings in any court of competent jurisdiction for
the appointment of a receiver or a receiver and
manager or for the sale of the Collateral; and
(i) the filing of proofs of claim and other documents in
order to have the claims of Xxxxxx Micro lodged in any
bankruptcy, winding-up, or other judicial proceeding
relating to the Customer.
13. Powers of Receiver Any receiver appointed by Xxxxxx Micro may be any person
or persons, and Xxxxxx Micro may remove any Receiver so appointed and appoint
another or others instead. Any Receiver appointed shall act as agent for Xxxxxx
Micro for the purposes of taking possession of the Collateral, and (except as
provided below) as agent for the Customer for all other purposes, including
without limitation the occupation of any premises of the Customer and in
carrying on the Customer's business. For the purposes of realizing upon the
Security Interest, the Receiver may sell, lease, or otherwise dispose of
Collateral as agent for the Customer or as agent for Xxxxxx Micro as it may
determine in its discretion. The Customer agrees to ratify and confirm all
actions of the Receiver acting as agent for the Customer, and to release and
indemnify the Receiver in respect of all such actions. Any Receiver so appointed
shall have the following powers:
(a) to enter upon, use, and occupy all premises owned or
occupied by the Customer;
(b) to take possession of the Collateral;
(c) to carry on the business of the Customer;
(d) to borrow money required for the maintenance,
preservation or protection of the Collateral or for
the carrying on of the business of the Customer, and
in the discretion of such Receiver, to charge and
grant further security interests in the Collateral in
priority to the Security Interest, as security for
the money so borrowed;
(e) to sell, lease, or otherwise dispose of the
Collateral or any part thereof on such terms and
conditions and in such manner as the Receiver shall
determine in its discretion.
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(f) to demand, commence, continue or defend any judicial
or administrative proceedings for the purpose of
protecting, seizing, collecting, realizing or
obtaining possession or payment of the Collateral,
and to give valid and effectual receipts and
discharges therefor and to compromise or give time
for the payment or performance of all or any part of
the Accounts or any other obligation of any third
party to the Customer; and
(g) to exercise any rights or remedies which could have
been exercised by Xxxxxx Micro against the Customer
or the Collateral.
14. Standards of Sale The Customer agrees that it shall be commercially
reasonable for Xxxxxx Micro to dispose of the Collateral by private sale,
including sale by Ingram to its customers in the ordinary course of its
business, or public sale. If the Collateral is disposed of by public sale, the
sale may be held following one advertisement in a newspaper having general
circulation in the location of the Collateral to be sold at least seven days
prior to such sale, and Xxxxxx Micro may establish a reserve bid in respect of
all or any portion of the Collateral. The Collateral may be disposed of in whole
or in part, for cash or credit, or part cash and part credit. The purchaser or
lessee of such Collateral may be a customer of Xxxxxx Micro.
15. Failure of Xxxxxx Micro to Exercise Remedies Xxxxxx Micro shall not be
liable for any delay or failure to enforce any remedies available to it or to
institute any proceedings for such purposes.
16. Application of Payments All payments made in respect of the Obligations and
all monies received by Xxxxxx Micro or any Receiver appointed by Xxxxxx Micro in
respect of the enforcement of the Security Interest (including the receipt of
any Money) may be held as security for the Obligations or applied in such manner
as may be determined in the discretion of Xxxxxx Micro or the Receiver, as the
case may be, and Xxxxxx Micro may at any time apply or change any such
appropriation of such payments or monies to such part or parts of the
Obligations as Xxxxxx Micro may determine in its discretion. The Customer shall
remain liable to Xxxxxx Micro for any deficiency; and any surplus funds realized
after the satisfaction of all Obligations shall be paid in accordance with
applicable law.
17. Dealings by Xxxxxx Micro Xxxxxx Micro may grant extensions of time and other
indulgences take and give up securities, accept compositions, grant releases and
discharges, and otherwise deal with the Collateral, the Customer, Customers of
the Customer, sureties of the Customer, and others as Xxxxxx Micro may see fit,
without prejudice to the Obligations and the rights of Xxxxxx Micro to hold and
realize upon the Security Interest. Xxxxxx Micro has no obligation to keep
Collateral identifiable, or to preserve rights against prior secured creditors
in respect of any Collateral which includes Chattel Paper or Instruments.
18. Notice Without prejudice to any other method of giving notice, any notice
required or permitted to be given hereunder to any party shall be conclusively
deemed to have been received by
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such party on the date following the sending thereof by fax or by prepaid
private courier to such party at its last known address.
19. Separate Security This security agreement and the Security Interest are in
addition to and not in substitution for any other security now or hereafter held
by Xxxxxx Micro in respect of the Customer, the Obligations or the Collateral.
20. Xxxxxx Micro Not Obliged to Advance Nothing in this security agreement shall
obligate Xxxxxx Micro to advance credit to the Customer, or extend the time for
payment or satisfaction of any Obligations.
21. Severability If any provision of this security agreement shall be deemed by
any court of competent jurisdiction to be invalid or void, the remaining
provisions shall remain in full force and effect.
22. Time of Essence Time shall be of the essence of this security agreement.
23. Grammatical Changes This security agreement is to be read as if al changes
in grammar, number and gender rendered necessary by the context had been made,
specifically including a reference to a person as a corporation and vice-versa.
24. Entire Agreement This security agreement, including any schedules attached
hereto, constitutes the entire agreement between the Customer and Xxxxxx Micro
relating to the subject matter hereof, and no amendment shall be effective
unless made in writing. There are no representations, warranties condition or
collateral agreements in effect between the Customer and Xxxxxx Micro relating
to the subject-matter hereof; and possession of an executed copy of this
security agreement by Xxxxxx Micro constitutes conclusive evidence that it was
executed and delivered by the Customer free of all conditions.
25. Governing Law; Attornment This security agreement shall be interpreted in
accordance with the laws of the Province of Ontario, and without prejudice to
the ability of Xxxxxx Micro to enforce this security agreement in any other
proper jurisdiction, the Customer hereby irrevocably submits and attorns to the
jurisdiction of the courts of the Province of Ontario.
26. Power of Attorney The Customer hereby constitutes and appoints Xxxxxx Micro
or any officer thereof as its true, lawful and irrevocable attorney, with full
power of substitution, to execute all documents and take all actions as may be
necessary or desirable to perform any obligations of the Customer arising
pursuant to this security agreement, and in executing such documents and taking
such actions, to use the name of the Customer whenever and wherever it may be
considered necessary or expedient.
27. Successors and Assigns This security agreement and the Obligations may be
assigned in whole or in part by Xxxxxx Micro to any person, firm or corporation
without notice to or the
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consent of the Customer. This security agreement may not be assigned by the
Customer without the prior written consent of Xxxxxx Micro. This security
agreement is binding upon the parties hereto, and their respective heirs,
executors, administrators, legal personal representatives, successors and
permitted assigns.
28. Amalgamation of Customer If the Customer amalgamates with any other
corporation or corporations, this security agreement shall continue in full
force and effect and shall be binding upon the amalgamated corporation.
29. Copy of Agreement The Customer acknowledges receipt of an executed copy of
this security agreement.
In witness whereof, this security agreement has been executed, sealed and
delivered by the Customer under the hands of its proper officers duly authorized
in that behalf, this 27th day of July, 2000.
MIAD SYSTEM LTD.
00 Xxxxxxx Xxxxx, #0
Xxxxxxx, Xxxxxxx X0X 0X0
SIGNED AND SEALED IN
The presence of
/s/ X. Xxxxx By: /s/ Xxxxxxx Xxxxx c/s
------------------------------ ----------------------------
Signature of Witness Name: XXXXXXX A.S. GREEN
Title: PRESIDENT
X. Xxxxx I HAVE THE AUTHORITY TO BIND THE
------------------------------- CORPORATION
Print Name of Witness
SEE ATTACHED SCHEDULE B
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Note - Schedules to be attached
A -Additional Places where Collateral may be located
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SCHEDULE "B"
As requested by Xxxxxxx A. S. Green the following amendments apply to General
Security Agreement dated this 27th day of July, 2000.
1. XXXXXX MICRO INC. agrees to subordinate to the bank on behalf of MIAD
SYSTEMS LTD. At such time XXXXXX MICRO INC. will reassess the credit
limit of MIAD SYSTEMS LTD.
2. XXXXXX MICRO INC. will take no priority over the debt in the amount of
$74,000 (seventy-four thousand dollars) owed to METCAN INFORMATION
TECHNOLOGIES INC. by MIAD SYSTEMS LTD. for a period of 12 months ending
June 30, 2001.
3. MIAD SYSTEMS LTD. agrees to send XXXXXX MICRO INC. financial statements
on a quarterly basis.
SIGNED AND SEALED IN
The presence of
/s/ A Green By: /s/ Xxxxxxx Xxxxx c/s
------------------------------------- -------------------------------
Signature of Witness Name: XXXXXXX A. S. GREEN
Title: PRESIDENT
X. Xxxxx (I HAVE AUTHORITY TO BIND THE CORPORATION)
-------------------------------------
Print name of Witness
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