SECURITY AGREEMENT
BETWEEN
CARING PRODUCTS INTERNATIONAL INC.
AND
H.J. FOREST PRODUCTS INC.
SECURITY AGREEMENT
TABLE OF CONTENTS
Section 1. SECURITY INTEREST...................................................1
1.1 Creation of Security Interest.......................................1
1.2 Floating Charge.....................................................2
1.3 Nature of Security Interests........................................2
1.4 Attachment..........................................................3
1.5 Exceptions..........................................................3
1.6 Statement...........................................................3
1.7 Where Consent Required..............................................3
1.8 Pending Consent.....................................................3
Section 2. DEFINITIONS.....................................................3
2.1 Collateral..........................................................4
2.2 Defined Terms.......................................................4
2.3 General Terms.......................................................4
Section 3. OBLIGATIONS SECURED.............................................4
3.1 Obligations Secured.................................................4
3.2 Reduction of Obligations............................................5
Section 4. DEBTOR'S REPRESENTATIONS AND WARRANTIES.........................5
4.1 General.............................................................5
4.2 Incorporation, Licenses and Qualifications..........................5
4.3 Corporate Power.....................................................5
4.4 Enforceability......................................................5
4.5 No Actions or Material Adverse Changes..............................5
4.6 Non-Conflict........................................................5
4.7 No Default..........................................................6
4.8 Ownership and Collateral Free of Encumbrances.......................6
4.9 No Other Corporate Names or Styles..................................6
4.10 Places of Business of Debtor.......................................6
4.11 Serial Numbered Goods..............................................6
4.12 Insurance..........................................................6
4.13 Account Debtor.....................................................6
4.14 Amounts Due From Account Debtor....................................6
4.15 Financial Information..............................................6
4.16 Survival and Reliance..............................................7
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Section 5. DEBTOR'S COVENANTS.............................................7
5.1 General............................................................7
5.2 Keep Collateral in Good Repair.....................................7
5.3 Conduct of Business................................................7
5.4 Servicing of Payables..............................................7
5.5 Compliance with Agreements and Laws................................7
5.6 Notice of Encumbrances and Proceedings.............................7
5.7 No Accessions or Fixtures..........................................7
5.8 Marking the Collateral.............................................7
5.9 Disposition of Collateral..........................................8
5.10 Encumbrances......................................................8
5.11 Change of Places of Business, Collateral and Names................8
5.12 Serial Numbered Goods.............................................8
5.13 Notice of Loss of Collateral......................................8
5.14 Inspection of Records and Collateral..............................8
5.15 Access to Computer Information....................................8
5.16 Delivery of Documents.............................................9
5.17 Risk and Insurance................................................9
5.18 Proceeds in Trust.................................................9
5.19 No Amalgamation..................................................10
5.20 Dividends........................................................10
5.21 Performance and Default by Debtor................................10
5.22 Default under Agreements.........................................10
5.23 Environmental Law................................................10
Section 6. COLLECTION OF ACCOUNTS........................................11
6.1 Collection of Accounts............................................11
6.2 Trust Provision...................................................11
Section 7. DEFAULT.......................................................11
7.1 Default...........................................................11
7.2 Crystallization...................................................13
7.3 Demand Obligations................................................13
7.4 Waiver not to Affect Subsequent Breach............................13
Section 8. SECURED PARTY'S REMEDIES ON DEFAULT...........................13
8.1 Indebtedness Due and Rights and Remedies..........................13
8.2 Assemble the Collateral...........................................15
8.3 Secured Party Not Liable for Failure to Exercise Remedies.........15
8.4 Allocation of Proceeds............................................15
8.5 Extension of Time.................................................15
8.6 Forbearance is not Waiver.........................................16
8.7 Effect of Appointment of Receiver.................................16
8.8 Limitation of Liability...........................................16
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8.9 Release by Debtor.................................................16
8.10 Performance by Secured Party.....................................16
Section 9. MISCELLANEOUS.................................................16
9.1 Costs.............................................................16
9.2 Appointment of Attorney...........................................17
9.3 No Obligation to Make Advances....................................17
9.4 Security Interests Effective Immediately..........................18
9.5 Security in Addition and not in Substitution, Remedies Cumulative.18
9.6 Statutory Waivers.................................................18
9.7 Provisions Reasonable.............................................18
9.8 Further Assurances................................................18
9.9 Notices...........................................................18
9.10 Discharge........................................................19
9.11 Delivery of Copy/Waiver..........................................19
9.12 Release of Information...........................................19
9.13 Inspection, Management and Repairs...............................19
9.14 Hazardous Materials and Environmental Laws.......................20
9.15 Authorization of Inquiries.......................................20
9.16 Indemnification..................................................20
Section 10.INTERPRETATION................................................21
10.1 Entire Agreement/Amendment.......................................21
10.2 Severability.....................................................21
10.3 Joint and Several Liability......................................21
10.4 Headings.........................................................21
10.5 Included Words...................................................21
10.6 Applicable Law...................................................21
10.7 Binding Effect...................................................22
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated for reference April 9, 1997
SECTION 1. SECURITY INTEREST
1.1 CREATION OF SECURITY INTEREST CARING PRODUCTS
INTERNATIONAL INC. (the "Debtor"), having its chief executive
office at 200 First Avenue West, Suite 200, Seattle,
Washington, 98119, as continuing security for the repayment
and the performance of each of the Obligations (as defined
herein) of the Debtor to H.J. FOREST PRODUCTS INC. (the
"Secured Party") having an office at Suite 638, 375 Water
Street, Vancouver, British Columbia, V6B 5C6, grants to the
Secured Party a continuing, specific and fixed assignment,
transfer, mortgage, charge and security interest in all of the
Debtor's property, assets, rights and undertaking of every
nature, item and kind, now or at any time and from time to
time, wherever situate, including those described in this
clause 1.1, namely:
(a) ACCESSIONS. All increases, additions, accretions and
accessions to, and all extensions, reversions, renewals,
continuations or replacement of any of the Collateral (as
defined in Section 2.1) (collectively the "Accession");
(b) ACCOUNTS. All debts, accounts, claims and monies which
now are, or which may at any time hereafter, be, due or
owing to or owned by the Debtor or in which the Debtor
now or hereafter has any other interest, and also all
securities, bills, notes and other documents now held or
owned or which may be hereafter taken, held or owned by
the Debtor or anyone on behalf of the Debtor in respect
of the said debts, accounts, claims and monies, and any
part thereof (collectively, the "Accounts");
(c) CHATTEL PAPER. All chattel paper in which the Debtor now
or hereafter has an interest, any part thereof (the
"Chattel Paper");
(d) DOCUMENTS OF TITLE. All documents of title, whether
negotiable or non-negotiable, including, without
limitation, all warehouse receipts and bills of lading,
in which the Debtor now or hereafter has an interest, and
any part thereof (collectively, the "Documents of Title");
(e) EQUIPMENT. All goods in which the Debtor now or
hereafter has an interest other than Inventory or
consumer goods and any part thereof, including, without
limitation, all tools apparatus, fixture, plant
machinery, furniture, chattels, vehicles, vessels, air
conditioning, heating, ventilating, electrical,
mechanical, plumbing, communications and data systems,
elevators, escalators and other conveyancing devices,
boilers, furnaces, carpets, blinds, window coverings,
curtains, awnings, lighting fixtures, doors, windows,
demising walls and partitions, wiring, pipes, conduits,
seasonal decorations, and the equipment
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described in Schedule A hereto, if any, or any schedule
hereafter annexed hereto (collectively, the "Equipment");
(f) INSTRUMENTS. All letters of credit, advices of credit
and all other instruments in which the Debtor now or
hereafter has an interest, and any part thereof
(collectively, the "Instruments");
(g) INTANGIBLES. All intangible property of whatever kind in
which the Debtor now or hereafter has an interest,
including, without limitation, all of the Debtor's choses
in action, contractual rights, agreements, leases of
personal property, license rights, licenses, permits,
goodwill, patents, trade marks, trade names, quotas,
industrial designs, copyrights and other industrial or
intellectual property (collectively, the "Intangibles");
(h) INVENTORY. All personal property of whatever kind and
wherever situated, which now or hereafter forms part of
the inventory of the Debtor, in which the Debtor now or
hereafter has an interest, including without limitation,
all goods, merchandise, raw materials, goods in process,
work in progress, finished goods and other tangible
personal property now or hereafter held for sale, lease,
resale or exchange or furnished or to be furnished under
contracts for service or that are used or consumed in the
business of the Debtor, and any part thereof
(collectively, the "Inventory");
(i) MONEY. All money in which the Debtor now or hereafter
has an interest and any part thereof (the "Money");
(j) PROCEEDS. All proceeds and personal property in any form
derived directly or indirectly from any dealing with the
Collateral or any part thereof and all proceeds of
proceeds and any part thereof (collectively, the
"Proceeds");
(k) RECORDS. All books, papers, documents, writings, tapes,
magnetic or other machine readable data and records, and
all other information, however stored, recording or
relating to any of the Collateral (collectively, the
"Records"); and
(l) SECURITIES. All shares, stock, warrants, bonds,
debentures, debenture stock, mortgages and other
securities in which the Debtor now or hereafter has an
interest, and any part thereof (collectively, the
"Securities").
1.2 FLOATING CHARGE. As security for the repayment and the
performance of each of the Obligations (as defined herein),
the Debtor grants a floating charge to the Secured Party on
all the Debtor's interest in real property, including without
limitation, all fixtures, crops and improvements, both present
and future, other than such as are validly and effectively
charged under Section 1.1 or excluded under Section 1.5.
1.3 NATURE OF SECURITY INTERESTS. Notwithstanding the
Debtor's right to deal with the Inventory in the ordinary
course of business as provided herein, the security interests
created hereby shall operate as fixed and specific mortgages
and charges of all of the
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Collateral presently existing, and with respect to all future
Collateral, shall operate as fixed and specific mortgages and
charges of such future Collateral which shall attach at the
moment the Debtor acquires any right or interest therein. The
security interest created by Section 1.2 is intended as a
floating charge which shall attach at the time provided in
Section 1.4.
1.4 ATTACHMENT. The Debtor acknowledges that value has been
given. The security interests created hereby are intended to
attach, as to all of the Collateral in which the Debtor has an
interest, forthwith when the Debtor executes this Security
Agreement, and, as to all Collateral in which the Debtor
acquires any right or interest after the execution of this
Security Agreement, when the Debtor acquires such right or
interest.
1.5 EXCEPTIONS. The last day of any term reserved by any
lease, verbal or written, or any agreement therefor, now held
or hereafter acquired by the Debtor is hereby excepted out of
the security interests created hereby. The Debtor shall assign
and dispose of such last day of any term reserved by any such
lease in such manner as the Secured Party may from time to
time direct in writing. Upon any sale, assignment, sublease
or other disposition of such lease or agreement to lease, the
Secured Party shall, for the purpose of vesting the aforesaid
residue of any such term in any purchaser, assignee, sublessee
or such other acquirer of the lease, agreement to lease or any
interest therein, be entitled by deed or other written
instrument to assign to such other person, the aforesaid
residue of any such term in place of the Debtor and to vest
the same freed and discharged from any obligation whatsoever
respecting the same.
1.6 STATEMENT. The Debtor acknowledges that a security
interest is taken in all of the Debtor's present and after
acquired property.
1.7 WHERE CONSENT REQUIRED. Nothing herein shall constitute
an assignment or attempted assignment of any right, privilege,
benefit, contract, permit, policy or other document or
instrument which by the provisions thereof or by law is not
assignable or which requires the consent of any third party to
its assignment unless such is obtained or is waived by the
third party. In each such case the Debtor shall, unless the
Secured Party otherwise agrees in writing, forthwith obtain
the consent of any necessary third party to its assignment
hereby and for its further assignment by the Secured party to
any third party who may acquire same as a result of the
Secured Party's exercise of remedies after an Event of
Default. Upon such consents being obtained or waived, this
Security Agreement shall apply thereto without regard to this
Section 1.7 and without the necessity of any further assurance
to effect the assignment thereof.
1.8 PENDING CONSENT. In any case to which Section 1.7
applies, unless and until consent to assignment is obtained as
therein provided, the Debtor shall, to the extent it may do so
by law or pursuant to the provisions of the document or
interest therein referred to, hold all benefit to be derived
therefrom in trust for the Secured Party as additional
security for performance of the Obligations and shall deliver
up all such benefit to the Secured Party forthwith upon demand
by the Secured Party.
SECTION 2. DEFINITIONS
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2.1 COLLATERAL. The property, assets, rights and undertaking
charged hereunder including all of such Accessions, Accounts,
Chattel Paper, Documents of Title, Equipment, Instruments,
Intangibles, Inventory, Money, Proceeds, Records and
Securities together with all increases, additions,
improvements and accessions thereto, and all substitutions or
any replacements thereof are, unless otherwise specified,
herein referred to as the "Collateral".
2.2 DEFINED TERMS. Unless the context otherwise requires or
unless otherwise specified, all the terms used herein without
initial capitals which are defined in the PERSONAL PROPERTY
SECURITY ACT, 1989 (British Columbia) or the regulations
thereunder, as they may be amended, restated or replaced by
successor legislation of comparable effect (collectively, the
"PPSA"), have the same meaning herein as in the PPSA.
2.3 GENERAL TERMS.
(a) "AGREEMENT" means any contract, instrument, permit,
policy or other document forming part of the Collateral,
or creating or evidencing any right, privilege or benefit
forming part of the Collateral;
(b) "BUSINESS PREMISES" means real property which the Debtor
uses in its business, if any;
(c) "ENVIRONMENTAL LAWS" means any laws, regulations, order,
by-laws, permits or lawful requirements of any
governmental authority with respect to environmental
protection or regulating hazardous materials; and
(d) "HAZARDOUS MATERIALS" means any asbestos material, urea
formaldehyde, explosives, radioactive materials,
pollutants, contaminants, hazardous substances, corrosive
substances, toxic substances, special waste or waste of
any kind including, without limitation, compounds known
as chlorobiphenyls and any substance the storage,
manufacture, disposal, treatment, generation, use,
transport, remediation or release of which into the
environment is prohibited, controlled or licensed under
Environmental Laws.
SECTION 3. OBLIGATIONS SECURED
3.1 OBLIGATIONS SECURED. The Collateral constitutes and will
constitute continuing security for the following obligations
(collectively, the "Obligations") of the Debtor to the Secured
Party:
(a) INDEBTEDNESS. The prompt payment, as and when due and
payable, of all amounts now or hereafter owing by the
Debtor to the Secured Party, including by way of
guarantee or indemnity, whether now existing or hereafter
incurred, matured or unmatured, direct, indirect, joint
or several, or contingent including any extensions and
renewals thereof, and all future advances and
re-advances; and
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(b) PERFORMANCE OF AGREEMENTS. The strict performance and
observance by the Debtor of all agreements, warranties,
representations, covenants and conditions of the Debtor
made pursuant to this Security Agreement or any other
agreement between the Debtor and the Secured Party all as
now in effect or as hereafter entered into or amended.
3.2 REDUCTION OF OBLIGATIONS. The Obligations may be reduced
to zero from time to time without affecting the validity,
perfection or enforceability of this Security Agreement or the
security interests created hereby until this Security
Agreement is discharged in accordance with Section 9.10.
SECTION 4. DEBTOR'S REPRESENTATIONS AND WARRANTIES
4.1 GENERAL. The Debtor represents and warrants to and for
the benefit of the Secured Party and so long as this Security
Agreement remains in effect shall be deemed to continuously
represent and warrant as set out in this Section 4.
4.2 INCORPORATION, LICENSES AND QUALIFICATIONS. The Debtor
is a body corporate, duly incorporated, properly organized and
validly existing under the laws of British Columbia and is
duly registered and qualified to do business under the laws of
each other jurisdiction in which the character of the
properties owned by it or the nature of the activities
conducted by it make such registration or qualification
advisable or necessary.
4.3 CORPORATE POWER. The Debtor has full power and lawful
authority to enter this Security Agreement and to grant the
security interests hereby created.
4.4 ENFORCEABILITY. This Security Agreement constitutes a
valid and legally binding obligation of the Debtor enforceable
against the Debtor in accordance with its terms, subject only
to bankruptcy, insolvency or other statutes or judicial
decisions affecting the enforcement of creditors' rights
generally and to general principles of equity.
4.5 NO ACTIONS OR MATERIAL ADVERSE CHANGES. There is no
action or proceeding pending or to the knowledge of the Debtor
threatened against the Debtor before any court, administrative
agency, tribunal, arbitrator, government or governmental
agency or any fact known to the Debtor and not disclosed to
the Secured Party which might involve any material adverse
change in the properties, business, prospects or condition of
the Debtor, or which question the validity of this Security
Agreement or any other material agreement to which the Debtor
is a party (or the Debtor's ability to perform its obligations
under this Security Agreement) and there are no outstanding
judgments, writs of execution, work orders, injunctions,
directives against the Debtor or its properties.
4.6 NON-CONFLICT. Neither the execution nor the performance
of this Security Agreement requires the approval of any
regulatory agency having jurisdiction over the Debtor nor is
this Security Agreement in contravention of or in conflict
with the articles, by-laws or resolutions of the directors or
shareholders of the Debtor or of the provisions of any
agreement to which the Debtor is a party or by which any of
its property may be
5
bound or of any statute, regulation, by-law, ordinance or
other law, or of any judgment, decree, award, ruling or order
to which the Debtor or any of its property may by subject.
4.7 NO DEFAULT. The Debtor is not in breach of any breach of
any agreement to which it is a party.
4.8 OWNERSHIP AND COLLATERAL FREE OF ENCUMBRANCES. The
Debtor is the owner of or has rights in the collateral free
and clear of all other security interests, mortgages,
hypothecs, pledges, liens, claims, charges, whether fixed or
floating, or other encumbrances whatsoever (collectively the
"Encumbrances") other than the permitted encumbrances, if any,
set forth in Schedule B hereto (the "Permitted Encumbrances").
4.9 NO OTHER CORPORATE NAMES OR STYLES. The Debtor does not
now carry on business under or use any name or style other
than the name(s) specified in this Security Agreement.
4.10 PLACES OF BUSINESS OF DEBTOR. The locations specified in
Schedule C hereto are the Debtor's only places of business
(the "Places of Business") where the Debtor conducts its
business operations or keeps or stores the collateral and
records in respect thereof and of the Debtor's business.
4.11 SERIAL NUMBERED GOODS. The complete, accurate and
appropriate serial number (as specified in the regulations
under the PPSA) for each item of Equipment that is serial
numbered goods in which the Debtor now has any interest, is
set out in Schedule A hereto.
4.12 INSURANCE. The Collateral is insured in accordance with
the terms hereof.
4.13 ACCOUNT DEBTOR. Each Account, Chattel Paper, Security
and Instrument constituting Collateral is genuine and
enforceable in accordance with its terms against the party
obligation to pay thereunder (the "Account Debtor").
4.14 AMOUNTS DUE FROM ACCOUNT DEBTOR. The amount represented
by the Debtor to the Secured Party from time to time as owing
by each Account Debtor or by all Account Debtors shall, to the
best of the Debtor's knowledge be the correct amount actually
and unconditionally owing by such Account Debtor or Account
Debtors, save and except for normal cash discounts where
applicable.
4.15 FINANCIAL INFORMATION. In all information and financial
statements supplied for the benefit of the Secured Party, the
Debtor has made no untrue statement of any material fact, and
has revealed all material facts the omission of which would
make such information and statements misleading. The Debtor
has disclosed all facts which materially adversely affect or,
so far as the Debtor can reasonably foresee, will materially
adversely affect the business, properties, prospects or
financial condition of the Debtor or the ability of the Debtor
to perform its obligations hereunder. All accounting
information and financial statements supplied for the benefit
of the Secured Party have been prepared in accordance with
generally accepted accounting principles.
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4.16 SURVIVAL AND RELIANCE. All representations and
warranties of the Debtor made herein or in any certificate or
other document delivered by or on behalf of the Debtor for the
benefit of the Secured Party are material, shall survive the
execution and delivery of this Security Agreement and shall
continue in full force and effect without time limit. The
Secured Party is deemed to have relied upon each such
representation and warranty notwithstanding any investigation
made by or on behalf of the Secured Party at any time.
SECTION 5 DEBTOR'S COVENANTS
5.1 GENERAL. Unless compliance with the following covenants
is waived by the Secured Party in writing or unless
non-compliance with any such covenants is otherwise consented
to by the Secured Party by written agreement with the Debtor,
the Debtor covenants and agrees with the Secured Party to
observe and perform each of the covenants set out in this
Section 5.
5.2 KEEP COLLATERAL IN GOOD REPAIR. The Debtor will keep the
Collateral in good order, condition and repair.
5.3 CONDUCT OF BUSINESS. The Debtor will carry on and
conduct its business in a proper and efficient manner so as to
protect and preserve the Collateral.
5.4 SERVICING OF PAYABLES. The Debtor will pay when due all
amounts which are payable by it howsoever arising, including
without limiting the generality of the foregoing, all rents,
charges, taxes, rates, levies, assessments, fees and duties of
every nature which may be levied, assessed or imposed against
or in respect of the Collateral or Debtor and will provide the
Secured Party with evidence of such payment upon request.
5.5 COMPLIANCE WITH AGREEMENTS AND LAWS. The Debtor will not
use the collateral in violation of this Security Agreement or
any other agreement relating to the Collateral or any policy
insuring the Collateral or any applicable statute, law,
by-law, rule, regulation, court order or ordinance.
5.6 NOTICE OF ENCUMBRANCES AND PROCEEDINGS. The Debtor will
promptly notify the Secured Party of any Encumbrance made or
asserted against any of the Collateral, and of any suit,
action or proceeding affecting any of the Collateral or which
could affect the Debtor. The Debtor will, at its own expense,
defend the Collateral against any and all such Encumbrances
and against any and all such suits, actions or proceedings.
5.7 NO ACCESSIONS OR FIXTURES. The Debtor will prevent the
Collateral from becoming an accession to any property other
than the Collateral or from becoming a fixture unless the
security interests hereby created rank prior to the interests
of all other persons in the realty.
5.8 MARKING THE COLLATERAL. The Debtor will, at the request
of the Secured Party, mark, or otherwise take appropriate
steps to identify, the Collateral to indicate clearly that it
is subject to the security interests hereby created.
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5.9 DISPOSITION OF COLLATERAL. The Debtor will not assign,
transfer, sell, lease, exchange, or otherwise dispose of the
Collateral or any interest therein except for:
(a) Inventory in the ordinary course of business on customary
trade terms; and
(b) Equipment which has become worn out, damaged or otherwise
unsuitable for its purpose, on condition that the Debtor
substitute for such Equipment property of equal value
free from all Encumbrances, except in favour of the
Secured Party. Such substituted property shall become
part of the Collateral as soon as the Debtor acquires any
interest in it.
5.10 ENCUMBRANCES. Except for the Permitted Encumbrances, the
Debtor will not create, assume or suffer to exist any
Encumbrance in, of or on any of the Collateral.
5.11 CHANGE OF PLACES OF BUSINESS, COLLATERAL AND NAMES. The
Debtor will not change its Places of Business, chief executive
office, the location of any of the Collateral, or the records
in respect thereof or change its name or any name or style
under which it carries on business without giving to the
Secured Party 20 day's prior written notice of the change or
of the new name or style, applicable.
5.12 SERIAL NUMBERED GOODS. The Debtor will, at or before the
time that it acquires any interest in any item of Equipment
that is serial numbered goods, give the Secured Party a
written notice setting out the complete, accurate and
appropriate serial number (as specified in the regulations
under the PPSA) of such item of Equipment.
5.13 NOTICE OF LOSS OF COLLATERAL. The Debtor will give
immediate written notice to the Secured Party of:
(a) all loss or damage to or loss or possession of the
Collateral otherwise than by disposition in accordance
with the terms hereof; and
(b) any failure of any Account Debtor in payment or
performance of obligations due to the Debtor which may
affect the Collateral.
5.14 INSPECTION OF RECORDS AND COLLATERAL. The Debtor will at
all times deep accurate and complete records of the Collateral
as well as proper books of account for its business all in
accordance with generally accepted accounting principles,
consistently applied. The Debtor will permit the Secured
Party or its authorized agents to have access to all premises
occupied by the Debtor or any place where the Collateral may
be found to inspect the Collateral and to examine the books of
accounts, financial records and reports of the Debtor and to
have temporary custody of, make copies of and take extracts
from such books, records and reports.
5.15 ACCESS TO COMPUTER INFORMATION. In the event that the
use of a computer system is required to access any information
and data which the Secured Party is entitled to access and
examine hereunder, the Debtor will allow the secured Party the
use of its computer system for such purpose and will provide
assistance in that regard. If for any
8
reason such information and data cannot be accessed and
retrieved at the Debtor's premises the Secured Party may
remove the medium in which such information or data is stored
from the Debtor's premises to any other place which has a
computer system that will give the Secured Party the
opportunity to retrieve, record or copy such information and
data. The Secured Party is hereby authorized to reproduce and
retain a copy of any such information and data in any format
whatsoever.
5.16 DELIVERY OF DOCUMENTS. The Debtor will promptly deliver
to the Secured Party upon request:
(a) DOCUMENTS OF TITLE. Any Chattel Paper, Instruments,
Securities, and Documents of Title, and upon such
delivery, where applicable, duly endorse the same for
transfer in blank or as the Secured Party may direct;
(b) BOOKS OF ACCOUNT. All computer software, tapes, discs,
drums and cards, all books of account and all records,
ledgers, reports, correspondence, schedules, documents,
statements, lists and other writings relating to the
Collateral or the Debtor's business for the purpose of
inspecting, auditing or copying the same;
(c) FINANCIAL STATEMENTS. All financial statements prepared
by or for the Debtor regarding the Debtor's business;
(d) POLICIES OF INSURANCE. All policies and certificates of
insurance relating to the Collateral.
(e) AGREEMENTS. All agreements, licenses, permits and
consents relating to the Collateral and the Debtor's
business; and
(f) OTHER INFORMATION. Such information concerning the
Collateral, the Debtor and the Debtor's business and
affairs as the Secured Party may request.
5.17 RISK AND INSURANCE. The Debtor will bear the sole risk
of any loss, damage, destruction or confiscation of or to the
Collateral during the Debtor's possession thereof or
otherwise. The Debtor will insure the Collateral with
insurers acceptable to the Secured Party against loss or
damage by fire, theft or other insurable perils customarily
insured against by persons having an interest in such
Collateral for the full insurable value thereof with the
Secured Party as a named insured and with loss payable to the
Secured Party as its interest may appear. All such policies
of insurance shall provide that the insurance coverage
provided thereunder shall not be changed or cancelled except
on 30 days' prior written notice to the Secured Party. If the
Debtor shall fail to so insure, the Secured Party may, but
shall not be required to, insure the Collateral and the
premiums for such insurance shall be added to the Obligations
and be secured hereby.
5.18 PROCEEDS IN TRUST. The Debtor will and shall be deemed
to hold all Proceeds in trust, separate and apart from other
Money, Instruments or property, for the benefit of the Secured
Party until all amounts owing by the Debtor to the Secured
Party have been paid in full.
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5.19 NO AMALGAMATION. The Debtor will not change the nature
of its business or amalgamate or otherwise merge with any
person or permit all of or a substantial portion of its
property to become the property of any other person, whether
in one or a series of transactions, and the Debtor shall not
do any act or thing that would materially adversely affect its
business, property, prospects or financial condition.
5.20 DIVIDENDS. The Debtor will not pay any dividends to the
shareholders of any of the classes of shares in the capital of
the Debtor, and the Debtor shall not repurchase or redeem any
of the shares in the capital of the Debtor without the prior
written approval of the Secured Party, which approval will not
be unreasonably withheld.
5.21 PERFORMANCE AND DEFAULT BY DEBTOR. The Debtor will
observe and perform all the obligations imposed on the Debtor
by or in respect of the Collateral, maintain the Collateral in
good standing and not do or permit to be done anything to
impair, and not omit to do anything that would prevent the
impairment of, the security interest hereby created. The
Debtor will give to the Secured Party prompt notice of any
default by the Debtor in the performance of its covenants to
the Secured Party under this Security Agreement.
5.22 DEFAULT UNDER AGREEMENTS. The Debtor will not default
under any provision of any Agreement or any other agreement
which creates a security interest in or otherwise affects the
Collateral or, without the prior written consent of the
Secured Party, amend any Agreement or give any consent,
concession or waiver of the terms of, or exercise any option
of the Debtor permitted under such terms, or cancel or
terminate any Agreement or accept the surrender thereof. The
Debtor will give to the Secured Party notice of any default by
the Debtor under any Agreement or any other agreement which
creates a security interest in or otherwise affects the
Collateral, promptly upon becoming aware of the occurrence of
such default, but in all events, if the Debtor is aware of the
default, in sufficient time to afford the Secured Party an
opportunity to cure any such default prior to any other party
to any Agreement or any such other agreement terminating or
otherwise enforcing its rights and remedies under the
Agreement or such other agreement.
5.23 ENVIRONMENTAL LAW. The Debtor covenants and agrees with
the Secured Party to:
(a) develop and use the Business Premises only in compliance
with all Environmental Laws;
(b) permit the Secured Party to investigate the Business
Premises, any goods on the Business Premises and the
Debtor's records at any time and from time to time to
verify such compliance with Environmental Laws and this
Security Agreement;
(c) upon the request of the Secured Party, obtain from time
to time at the Debtor's cost a report from an independent
consultant designated or approved by the Secured Party
verifying compliance with Environmental Laws and this
Security Agreement or the extent of any non-compliance
therewith;
10
(d) not store, manufacture, dispose, treat, generate, use,
transport, remediate or release Hazardous Materials on or
from the Business Premises without notifying the Secured
Party in writing;
(e) promptly remove any Hazardous Materials from the Business
Premises in a manner which conforms to Environmental Laws
governing their removal; and,
(f) notify the Secured Party in writing of:
(i) any enforcement, clean-up, removal, litigation or
other governmental, regulatory, judicial or
administrative action instituted, contemplated
or threatened against the Debtor or the
Business Premises pursuant to any Environmental
Laws;
(ii) all claims, actions, orders or investigations,
made or threatened by any third party against
the Debtor or the Business Premises relating
damage, contribution, cost recovery,
compensation, loss or injuries resulting from
any Hazardous Materials or any breach of the
Environmental Laws; and
(iii) the discovery of any Hazardous Materials or any
occurrence or condition on the Business
Premises or any real property adjoining or in
the vicinity of the Business Premises which
could subject the Debtor or the Business
Premises to any fines, penalties, orders or
proceedings under any Environmental Laws.
SECTION 6 COLLECTION OF ACCOUNTS
6.1 COLLECTION OF ACCOUNTS. The Secured Party may, whether
before or after default under this Security Agreement, notify
and direct any Account Debtor to make all payments whatever to
the Secured Party. The Secured party may hold all amounts
acquired from any Account Debtor and any Proceeds as part of
the Collateral.
6.2 TRUST PROVISION. Any payments received by the Debtor
whether before or after notification to Account Debtors, shall
be held by the Debtor in trust for the Secured party in the
same medium in which received, shall not be commingled with
any assets of the Debtor and shall, at the request of the
Secured Party, be turned over to the Secured party not later
than the next business day following the day of their receipt.
SECTION 7 DEFAULT
7.1 DEFAULT. The Debtor shall be in default under this
Security Agreement upon the occurrence of any of the following
events ("Events of Default"):
(a) PERFORMANCE OF OBLIGATIONS. The Debtor defaults in the
payment or performance of any of the Obligations;
(b) BREACH OF AGREEMENT. The Debtor breaches any term,
provision, warranty, representation or covenant under
this Security Agreement or any other agreement
11
between the Debtor and the Secured party, all as in effect
or as hereafter entered into or amended;
(c) GUARANTOR OR INDEMNITOR DEFAULT. Any person who from
time to time guarantees, assumes or otherwise becomes
liable for the Obligations or who covenants and agrees to
indemnify the Secured Party for any loss, costs or
damages as a result of the Debtor's failure to perform
the Obligations (the "Guarantor/Indemnitor"), commits a
breach of, or fails to observe or perform, any covenant,
representation or warranty in favor of the Secured Party;
(d) CEASE TO CARRY ON BUSINESS. The Debtor or
Guarantor/Indemnitor ceases or threatens to cease to
carry on business;
(e) BANKRUPTCY, INSOLVENCY. The dissolution, termination of
existence, insolvency, bankruptcy or business failure of
the Debtor or Guarantor/Indemnitor, or upon the
appointment of a receiver, receiver-manager or receiver
and manager of any part of the property of the Debtor or
Guarantor/Indemnitor, or the commencement by or against
the Debtor or Guarantor/Indemnitor of any proceeding
under any bankruptcy, arrangement, reorganization,
dissolution, liquidation, insolvency or similar law for
the relief of or otherwise affecting creditors of the
Debtor or Guarantor/Indemnitor, or by or against any
guarantor or surety for the Debtor or
Guarantor/Indemnitor, or upon the issue of any writ of
execution, warrant, attachment, sequestration, levy,
third party demand, notice of intention to enforce
security or garnishment or similar process against the
Debtor, Guarantor/Indemnitor or any part of the
Collateral;
(f) COMMIT ACT OF BANKRUPTCY. The Debtor or
Guarantor/Indemnitor commits or threatens to commit an
act of bankruptcy;
(g) DISSOLUTION, WINDING UP. The institution by or against
the Debtor or Guarantor/Indemnitor of any formal or
informal proceeding for the dissolution or liquidation
of, settlement of claims against or winding up of affairs
of the Debtor or Guarantor/Indemnitor;
(h) SALE IN BULK. The Debtor or Guarantor/Indemnitor makes
or proposes to make any sale of its assets in bulk;
(i) CHARGE AGAINST COLLATERAL. If any right of distress is
levied or is threatened to be levied against the
Collateral or if any Encumbrance affecting the Collateral
becomes enforceable against the Collateral or any part
thereof;
(j) DESTRUCTION OF COLLATERAL. Any material portion of the
Collateral is damaged or destroyed;
(k) OTHER DEFAULT. The Debtor or any Guarantor/Indemnitor
defaults under any agreement with respect to any
indebtedness or other obligation to any person other than
the Secured Party, if such default has resulted in, or
may result, with notice
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or lapse of time or both, in, the acceleration of any
such indebtedness or obligation or the right of such
person to realize upon any Collateral; and
(l) PERFORMANCE IMPAIRED. The Secured Party in good faith
believes the prospect of payment or performance of the
Obligations hereunder is or is about to be impaired or
that any Collateral is or is about to be placed in
jeopardy.
7.2 CRYSTALLIZATION. The floating charge created by Section
1.2 shall become a fixed charge as soon as:
(a) the Secured Party gives notice to that effect to the Debtor;
(b) the Secured Party takes any step to accelerate or demand
payment of the Obligations, or gives notice of its
intention or takes any steps to enforce its security; or
(c) an Event of Default described in Subsection 7.1(e) or (g)
occurs in respect of the Debtor.
7.3 DEMAND OBLIGATIONS. The fact that this Security
Agreement provides for Events of Default and rights of
acceleration shall not derogate from the demand nature of any
Obligation payable on demand.
7.4 WAIVER NOT TO AFFECT SUBSEQUENT BREACH. The Secured
party may waive default or any breach by the Debtor of any of
the provisions contained in this Security Agreement. No
waiver shall extend to a subsequent breach or default, whether
or not the same as or similar to the breach or default waived.
No act or omission of the Secured Party shall extend to or be
taken in any manner whatsoever to affect any subsequent breach
or default of the Debtor or the rights of the Secured Party
resulting therefrom. Any such waiver must be in writing and
signed by the Secured Party to be effective.
SECTION 8 SECURED PARTY'S REMEDIES ON DEFAULT
8.1 INDEBTEDNESS DUE AND RIGHTS AND REMEDIES. Upon the
occurrence of an Event of Default all of the Obligations shall
become immediately due and payable without notice to the
Debtor, the Secured Party may, at its option, proceed to
enforce payment of same and to exercise any or all of the
rights and remedies contained herein, including, without
limitation, the signification and collection of the Debtor's
Accounts, or otherwise afforded by law, in equity or
otherwise. The Secured Party shall have the right to enforce
one or more remedies successively or concurrently in
accordance with applicable law and the Secured Party expressly
retains all rights and remedies not inconsistent with the
provisions herein including all the rights it may have under
the PPSA, and, without restricting the generality of the
foregoing, the Secured Party may upon such Event of Default:
(a) APPOINTMENT OF RECEIVER. Appoint by instrument in
writing a receiver, receiver-manager or receiver and
manager (herein a "Receiver") of the Debtor and of all or
13
any part of the Collateral and remove or replace such
Receiver from time to time or may institute proceedings
in any court of competent jurisdiction for the
appointment of a Receiver. Any Receiver appointed by the
Secured Party so far as concerns responsibility for its
acts shall be deemed the agent of the Debtor and not of
the Secured Party. Where the Secured Party is referred
to in this Section the reference includes, where the
context permits, any Receiver so appointed and the
officers, employees, servants or agents of such Receiver;
(b) ENTER AND REPOSSESS. Immediately and without notice
enter the Debtor's premises and repossess, disable or
remove the Collateral and the Debtor hereby grants to the
Secured Party a license to occupy any premises of the
Debtor for the purpose of storage of the Collateral;
(c) RETAIN THE COLLATERAL. Retain and administer the
Collateral in the Secured Party's sole and unfettered
discretion, which the Debtor hereby acknowledges is
commercially reasonable;
(d) DISPOSE OF THE COLLATERAL. Dispose of any Collateral by
public auction, private tender or private contract with
or without notice, advertising or any other formality,
all of which are hereby waived by the Debtor. The
Secured party may, at its discretion establish the terms
of such disposition, including, without limitation, terms
and conditions as to credit, upset, reserve bid or price.
The Secured Party may also lease the Collateral on such
terms as it deems appropriate. The payments for
Collateral, whether on a disposition or lease, may be
deferred. All payments made pursuant to such
dispositions shall be credited against the Obligations
only as they are actually received. The Secured Party
may buy in, rescind or vary any contract for the
disposition of any Collateral and may dispose of any
Collateral again without being answerable for any loss
occasioned thereby. Any such disposition may take place
whether or not the Secured Party has taken possession of
the Collateral;
(e) FORECLOSE. Foreclose upon the Collateral in satisfaction
of the Obligations. The Secured Party may designate any
part of the Obligations to be satisfied by the
foreclosure of particular Collateral which the Secured
party considers to have a net realizable value
approximating the amount of the designated part of the
Obligations, in which case only the designated part of
the Obligations shall be deemed to be satisfied by the
foreclosure of the particular Collateral;
(f) CARRY ON BUSINESS. Carry on or concur in the carrying on
of all or any part of the business of the Debtor and may,
in any event, to the exclusion of all others, including
the Debtor, enter upon, occupy and use all premises of or
occupied or used by the Debtor and use any of the
personal property (which shall include fixtures) of the
Debtor for such time and such purposes as the Secured
Party sees fit. The Secured Party shall not be liable to
the Debtor for any neglect in so doing or in respect of
any rent, costs, charges, depreciation or damages in
connection therewith;
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(g) PAYMENT OF ENCUMBRANCES. Pay any Encumbrance that may
exist or be threatened against the Collateral. In any
such case the amounts so paid together with costs,
charges and expenses incurred in connection therewith
shall be added to the Obligations secured by this
Security Agreement;
(h) PAYMENT OF DEFICIENCY. If the proceeds of realization
are insufficient to pay all monetary Obligations, the
Debtor shall forthwith pay or cause to be paid to the
Secured Party any deficiency and the Secured Party may
sue the Debtor to collect the amount of such deficiency;
and
(i) DEALING WITH COLLATERAL. Subject to applicable law
seize, collect, realize, borrow money on the security of,
release to third parties, sell (by way of public or
private sale), lease or otherwise deal with the
Collateral in such manner, upon such terms and
conditions, at such time or times and place or places and
for such consideration as may seem to the Secured Party
advisable and without notice to the Debtor. The Secured
Party may charge on its own behalf and pay to others sums
for expenses incurred and for services rendered
(expressly including legal services, consulting,
receivers and accounting fees) in or in connection with
seizing, collecting, realizing, borrowing on the security
of, selling or obtaining payment of the Collateral and
may add such sums to the Obligations secured by this
Security Agreement.
8.2 ASSEMBLE THE COLLATERAL. To assist the Secured Party in
the implementation of such rights and remedies the Debtor
will, at its own risk and expense and at the Secured Party's
request, assemble prepare for removal such items of the
Collateral as are selected by the Secured Party as shall, in
the Secured Party's sole judgment, have a value sufficient to
cover all the Obligations.
8.3 SECURED PARTY NOT LIABLE FOR FAILURE TO EXERCISE
REMEDIES. The Secured Party shall not be liable or
accountable for any delay or failure to exercise its remedies,
take possession of, seize, collect, realize, sell, lease or
otherwise dispose of or obtain payment for the Collateral. The
Secured Party shall not be bound to institute proceedings for
such purpose or for the purpose of preserving any rights,
remedies or powers of the Secured Party, the Debtor or any
other person in respect of the Collateral or against any
Account Debtor.
8.4 ALLOCATION OF PROCEEDS. All monies collected or received
by the Secured Party in respect of the Collateral may be held
by the Secured Party and may be applied on account of such
parts of the Obligations at the sole discretion of the Secured
Party.
8.5 EXTENSION OF TIME. The Secured Party may grant
extensions of time and other indulgences, take and give up
securities, accept compositions, grant releases and
discharges, release the Collateral to third parties and
otherwise deal with the Debtor's guarantors or sureties and
others and with the Collateral and other securities as the
Secured Party may see fit without prejudice to the liability
of the Debtor to the Secured Party, or the Secured Party's
rights, remedies and powers under this Security Agreement.
15
8.6 FORBEARANCE IS NOT WAIVER. No extension of time,
forbearance, indulgence or other accommodation now, heretofore
or hereafter given by the Secured Party to the Debtor shall
operate as a waiver, alteration or amendment of the rights of
the Secured Party or otherwise preclude the Secured Party from
enforcing such rights.
8.7 EFFECT OF APPOINTMENT OF RECEIVER. As soon as the
Secured Party takes possession of any Collateral or appoints a
Receiver, all powers, functions, rights and privileges of the
directors and officers of the Debtor with respect to that
Collateral shall cease, unless specifically continued by the
written consent of the Secured Party or the Receiver.
8.8 LIMITATION OF LIABILITY. The Secured Party shall not be
liable by reason of any entry into or taking possession of any
of the Collateral hereby charged or intended so to be or any
part thereto, to account as mortgagee in possession or for
anything except actual receipts or be liable for any loss or
realization or any act or omission for which a Secured Party
in possession might be liable. The Debtor acknowledges and
agrees that any and all payments, responsibilities,
obligations and liabilities in respect of the Collateral shall
remain those of the Debtor and no such payments,
responsibilities, obligations or liabilities are assigned
hereby nor are assumed or incurred by the Secured Party
hereunder.
8.9 RELEASE BY DEBTOR. The Debtor hereby releases and
discharges the Secured Party and the Receiver from every claim
of every nature, whether sounding in damages or not, which may
arise or be caused to the Debtor or any person claiming
through or under the Debtor by reason or as a result of any
act or omission of the Secured Party or any successor or
assign claiming through or under the Secured Party or the
Receiver under the provisions of this Security Agreement
unless such claim is the result of dishonesty or gross neglect.
8.10 PERFORMANCE BY SECURED PARTY. Nothing herein shall
obligate the Secured Party to assume or perform any obligation
of the Debtor to any third party in respect or arising out of
the Collateral. The Debtor agrees to indemnify and save
harmless the Secured Party from any and all claims of such
third parties. The Secured Party may however at its option
assume or perform any such obligations which the Secured Party
considers necessary or desirable to obtain the benefit of the
Collateral, or any part thereof, free of any set off,
deduction or abatement and any money so expended by the
Secured Party shall form part of the Obligations and shall
bear interest at the highest rate per annum from time to time
charged by the Secured Party on any of the other Obligations.
SECTION 9 MISCELLANEOUS
9.1 COSTS. The Debtor will indemnify and reimburse the
Secured Party on demand for all interest, commissions, costs
of realization and other costs and expenses (including the
full amount of all legal fees and expenses paid by the Secured
Party) incurred by the Secured Party or any Receiver in
connection with:
16
(a) the perpetual registration of any financing statement
registered in connection with the security interests
hereby created;
(b) the preparation, execution, perfection, protection,
enforcement of and advice with respect to this Security
Agreement;
(c) the realization, disposition of, retention, protection,
insuring or collection of any Collateral;
(d) the protection or enforcement of the rights, remedies and
powers of the Secured Party or any Receiver, including,
without limitation, participation, preparation and advice
with respect to any actions or proceedings commenced or
threatened by or against the Debtor or any
Guarantor/Indemnitor;
(e) the inspection of the Collateral;
(f) investigating title to the Collateral;
(g) the compliance by the Secured Party with all demands made
upon the Secured Party to amend, extend, cancel or
discharge any registrations and filing related hereto; and
(h) any other cost related hereto.
All amounts of which the Debtor is required hereunder to reimburse the Secured
Party or any Receiver shall, from the date of disbursement until the date the
Secured Party or the Receiver receives reimbursement, be deemed advanced to the
Debtor by the Secured Party, shall be deemed to be Obligations and shall bear
interest at the highest rate per annum from time to time charged by the Secured
Party on any of the other Obligations.
9.2 APPOINTMENT OF ATTORNEY. The Debtor hereby constitutes
and appoints the Secured Party, or any Receiver, the true and
lawful attorney of the Debtor irrevocably with full power of
substitution to do, make and execute all such assignments,
documents, acts, matters or things with the right to use the
name of the Debtor whenever and wherever it may be deemed
necessary or expedient. The Debtor hereby declares that the
irrevocable power of attorney granted hereby, being coupled
with an interest, is given for valuable consideration.
9.3 NO OBLIGATION TO MAKE ADVANCES. Nothing herein shall
obligate the Secured Party to make any advance or loan or
further advance or extend credit to the Debtor and, in
particular, nothing herein shall obligate the Secured Party to
advance any unadvanced portion of any loan or credit to the
Debtor after the occurrence of an Event of Default. Except to
the extent that the Secured Party:
(a) by accepting bills of exchange drawn on it by the Debtor; or
(b) by issuing letters of credit or letters of guarantee on
the application of the Debtor,
17
is required to advance monies on the maturity of those bills or pursuant to
those letters of credit or letters of guarantee, as the case may be, none of the
preparation, execution, perfection or registration of this Security Agreement or
the advance of any monies by the Secured Party shall bind the Secured Party to
make any further advance.
9.4 SECURITY INTERESTS EFFECTIVE IMMEDIATELY. Neither the
execution of, nor any filing with respect to, this Security
Agreement shall bind the Secured Party to grant any credit to
the Debtor, but the security interests hereby created shall
take effect forthwith upon the execution of this Security
Agreement by the Debtor.
9.5 SECURITY IN ADDITION AND NOT IN SUBSTITUTION, REMEDIES
CUMULATIVE. The rights, remedies and powers conferred by this
Security Agreement are in addition to, and not in substitution
for, any other rights, remedies or powers the Secured Party
may have under this Security Agreement, at law, in equity or
by or under the PPSA or any other statute. The Secured Party
may proceed by way of any action, suit or other proceeding at
law or in equity and no right, remedy or power of the Secured
Party shall be exclusive of or dependent on any other. The
Secured Party may exercise any of its rights, remedies or
powers separately or in combination and at any time.
9.6 STATUTORY WAIVERS. To the fullest extent permitted by
law, the Debtor waives all of the rights, benefits and
protection given by the provisions of any existing or future
statute which imposes limitations upon the rights, remedies or
powers of a Secured Party or upon the methods of realization
of security, including any seize or sue or anti-deficiency
statute or any similar provisions of any other statute. In
particular, the Debtor waives all rights, benefits and
protection given by the SEIZURE ACT and sections 47 and 50 of
the LAW OF PROPERTY ACT of the Province of Alberta insofar as
they extend to or relate to any of the Collateral. The
LIMITATION OF CIVIL RIGHTS ACT of the Province of Saskatchewan
shall not apply to the security interests hereby created or
any of the rights, remedies or powers of the Secured Party or
any Receiver.
9.7 PROVISIONS REASONABLE. The Debtor acknowledges that the
provision of this Security Agreement and, in particular, those
respecting rights, remedies and powers of the Secured Party
and any Receiver against the Debtor, its business and any
Collateral upon an Event of Default, are commercially
reasonable and not manifestly unreasonable.
9.8 FURTHER ASSURANCES. The Debtor shall at all times, do,
execute, acknowledge and deliver or cause to be done,
executed, acknowledged or delivered all such further acts,
deeds, transfers, assignments, security agreements and
assurances as the Secured Party may reasonably require in
order to give effect to the provisions hereof and for the
better granting, transferring, assigning, charging, setting
over, assuring, confirming or perfecting the security
interests hereby created and the priority accorded to them by
law or under this Security Agreement.
9.9 NOTICES.
(a)Every notice, demand and other communication in connection
with this Security Agreement (including, without limitation, notices required
or permitted under the BANKRUPTCY
18
AND INSOLVENCY ACT) and all legal process in regard hereto shall be validly
given, made or served if in writing and delivered to, or mail, postage prepaid,
or telecopied or telexed or sent by other similar form of communication
(collectively "Electronic Communication") to the intended recipient at its
address first written above and if to the Debtor to the attention of Mr. William
H. W. Atkinson and if to the Secured Party to the attention of Mr. W.G. Kanke or
to such other address or person as the other party may from time to time
designate by notice.
(b)Any notice, requisition, demand or other instrument,
(including, without limitation, notice required or permitted under the
BANKRUPTCY AND INSOLVENCY ACT) if delivered, shall be deemed to have been
given or made on the day on which it was delivered and if sent by Electronic
Communication shall be deemed to have been given or made on the business day
next following the day on which it was so sent, and if mailed shall be deemed
to have been given or made on the third business day following the day on
which it was so mailed. Any party hereto may given written notice of a
change of address in the same manner, in which event any notice shall
thereafter be given to it as above provided at such changed address.
9.10 DISCHARGE. Upon payment and performance by the Debtor of
the Obligations secured hereby the Secured Party shall upon
request in writing by the Debtor deliver up this Security
Agreement to the Debtor and shall at the expense of the Debtor
cancel and discharge the security interests hereby created and
execute and deliver to the Debtor such documents as shall be
requisite to discharge the security interests hereby created.
9.11 DELIVERY OF COPY/WAIVER. The Debtor hereby acknowledges
receiving a copy of this Security Agreement. The Debtor
waives all rights to receive from the Secured Party a copy of
any financing statement or financing change statement
registered or verification statement issued at any time in
respect of this Security Agreement.
9.12 RELEASE OF INFORMATION. The Debtor hereby authorizes the
Secured Party to provide a copy of this Security Agreement and
such other information (including full details of the
Obligations) as may be requested of the Secured Party by
persons entitled thereto under the PPSA.
9.13 INSPECTION, MANAGEMENT AND REPAIRS. The Debtor covenants
and agrees that the Secured Party may, but shall be under no
obligation to, at such time or times as the Secured Party
deems necessary and without the concurrence of the Debtor or
any other person make such arrangements for the repairing,
finishing and putting in order of the Business Premises,
including, without limitation, such repairs, replacements and
improvements as are necessary so that the Debtor and the
Business Premises comply with Environmental Laws, and all
reasonable costs, charges and expenses including an allowance
for the time and services of the Secured Party, the Secured
Party's servants or agents or any other person or persons
appointed for the above purposes including, without
limitation, the full amount of all legal fees, disbursements,
costs, charges and expenses incurred by the Secured Party and
any amount due hereunder shall be payable forthwith to the
Secured Party, shall be deemed an advance to the Debtor by the
Secured party, shall be deemed to be Obligations, and shall
bear interest at the highest rate per annum from time to time
charged by the Secured Party on any of the other Obligations
until paid.
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9.14 HAZARDOUS MATERIALS AND ENVIRONMENTAL LAWS. The Debtor
represents and warrants to the Secured Party that:
(a) the Business Premises are not insulated with urea
formaldehyde and do not contain any asbestos material or
underground tanks;
(b) the Business Premises are free of any Hazardous Materials;
(c) the Business Premises are not currently used in a manner,
and, to the Debtor's knowledge, after having made due
inquiry, no prior use has occurred, which is contrary to
any laws, regulations, orders, bylaws, permits or lawful
requirements of any Environmental Laws; and
(d) there are no existing or threatened claims, actions,
orders or investigations under any Environmental Laws
against the Debtor or against the Business Premises.
9.15 AUTHORIZATION OF INQUIRIES. The Debtor hereby authorizes
the Secured Party to make enquiries from time to time of any
governmental authority with respect to the Debtor's compliance
with Environmental Laws and the Debtor agrees that the Debtor
will from time to time provide to the Secured Party with such
written authorization as the Secured Party may reasonably
require in order to facilitate the obtaining of such
information.
9.16 INDEMNIFICATION
(a) The Debtor shall indemnify, reimburse and save harmless
the Secured Party, any receiver, its directors, officers,
employees, agents, and successors and assigns, from any
and all liabilities, actions, damages, claims, losses,
costs and expenses whatsoever (including without
limitation, the full amount of all legal fees, costs,
charges and expenses and the cost of removal, treatment,
storage and disposal of any Hazardous materials and
remediation of the Business Premises) which may be paid,
incurred or asserted against the Secured Party for, with
respect to or as a direct or indirect result of the
presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, the
Business Premises or into or upon any other land, the
atmosphere or any watercourse, body of water or wetland
of any Hazardous Materials.
(b) Any amount owing by the Debtor hereunder shall, from the
date of disbursement until the date the recipient
receives reimbursement, be deemed advanced to the Debtor
by the Secured Party, shall be deemed to be obligations
and shall bear interest at the highest rate per annum
from time to time charged by the Secured Party on any of
the other Obligations until paid.
(c) The Debtor agrees that the indemnity obligations
hereunder shall survive the release of the security of
this Security Agreement and the payment and satisfaction
of the indebtedness and liabilities hereby secured, but
only insofar as such indemnity obligations relate to
liabilities, actions, damages, claims, losses,
20
costs and expenses arising in connection with Hazardous
Material that were on the Business Premises prior to such
release, payment and satisfaction.
SECTION 10 INTERPRETATION
10.1 ENTIRE AGREEMENT/AMENDMENT. This Security Agreement
contains the entire agreement between the parties relating to
the security interests hereby created. Any amendment of this
Security Agreement shall not be binding unless in writing and
signed by the Secured Party and the Debtor. The Debtor
confirms that there are not representations, warranties,
covenants or acknowledgments affecting, or relied upon in
entering this Security Agreement.
10.2 SEVERABILITY. Any provision of this Security Agreement
prohibited by law or otherwise ineffective shall be
ineffective only to the extent of such prohibition or
ineffectiveness and shall be severable without invalidating or
otherwise affecting the remaining provisions hereof.
10.3 JOINT AND SEVERAL LIABILITY. If more than one person
executes this Security Agreement as Debtor, their obligations
hereunder and the liability resulting therefrom shall be joint
and several.
10.4 HEADINGS. All headings and titles in this Security
Agreement are for reference only and are not to be used in the
interpretation of the terms hereof.
10.5 INCLUDED WORDS. Wherever the singular or the masculine
are used herein, the same shall be deemed to include the
plural or the feminine or the body politic or corporate where
the context or the parties so require.
10.6 APPLICABLE LAW. This Security Agreement shall be
construed and enforceable under an in accordance with the laws
of British Columbia. The Debtor hereby irrevocably submits
and attorns to the jurisdiction of the British Columbia
Supreme Court sitting at Vancouver, British Columbia.
21
10.7 BINDING EFFECT. This Security Agreement shall be binding
on the Debtor and its successors, heirs, administrators and
executors and shall ensure to the benefit of the Secured Party
and its successors and assigns.
Officer Signature(s) Transferor(s) Signature(s)
- -------------------------------- CARING PRODUCTS
INTERNATIONAL, INC.
By its authorized signatory
/S/ WILLIAM H.W. ATKINSON
-------------------------
William H.W. Atkinson
LIST OF SCHEDULES
Schedule A - Specific Equipment Description
Schedule B - Permitted Encumbrances
Schedule C - Debtor's Places of Business
22
Schedule A
Specific Equipment Description
None
Schedule B
Permitted Encumbrances
1. financing statement in favour of Toronto Dominion with respect to a
security agreement charging proceeds from deposit account 0902-310240 and
2. financing statement in favour of Toronto Dominion with respect to a
security agreement charging demand account 0902-310240 as amended by a
financing change statement registered on March 21, 1996 being a one-year
renewal.