Exhibit 10.1

 

GENERAL SECURITY AGREEMENT

 

DATED for reference this 21st day of May, 2019

 

1. LOCALITY SYSTEMS Inc. (the “Debtor”), having an address for notice purposes
at 209 – 810 Quayside Drive, New Westminster, BC V3M 6B9, as continuing security
for the repayment and the performance of each of the Obligations (as defined
herein) grants to each of Kirk Moir, Eddie Ho, James Hallett, Francis Albert
Hallett, and Daryl Harms (collectively, the “Vendors” or “Secured Parties”) that
are signatory to that Share Purchase Agreement, dated May 21, 2019 (the
“Purchase Agreement”), among the Vendors, Kirk Moir, as Vendor’s representative
(the “Vendor’s Representative”), Gairbaldi Capital Advisors Ltd. solely for
purposes of Setion 2.5 and Article VII, the Debtor, Inpixon, and Inpixon Canada,
Inc., as purchaser (the “Purchaser”), a continuing, specific and fixed
assignment, transfer, mortgage, charge and security interest in and to all of
the Collateral (as defined herein).

 

2. Priority.   Each of the Secured Parties and the Debtor hereby acknowledges,
confirms and agrees that the security interests granted in and to the Collateral
shall be fully, unconditionally and irrevocably subordinate in all respects in
favour of any security interests granted by the Debtor from time to time in
favour of Payplant LLC.

 

3. 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 in accordance with the terms of the Purchase
Agreement, when the Debtor executes this Security Agreement.

 

4. Exceptions - Leases. 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 Parties 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 Parties 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.

 

5. 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 and until such consent is obtained or is waived by the third party. In
each such case the Debtor shall, unless the Vendors’ Representative 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 Parties to
any third party who may acquire same as a result of the Secured Parties’
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 5 and without the necessity of any further assurance to effect
the assignment thereof.

 

6. Pending Consent. In any case to which Section 5 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 Parties as additional security for performance of the
Obligations and shall deliver up all such benefit to the Secured Parties
forthwith upon demand by the Secured Parties.

 

 

 

 

7. Collateral. The Company IP, Company IT Systems and Company Software (in each
case as defined in the Purchase Agreement), and all modifications, derivative
works and goodwill arising from the use of the foregoing, are, unless otherwise
specified, herein referred to as the “Collateral”.

 

8. Defined Terms. Unless the context otherwise requires or unless otherwise
specified, all the terms used herein with initial capitals which are defined in
the Personal Property Security Act (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.

 

9. Obligations Secured. The Collateral constitutes and will constitute
continuing security for the payment and performance when due by the Purchaser of
all Installment Cash Consideration (as defined in the Purchase Agreement)
(collectively, the “Obligations”).

 

10. Change of Name.  The Debtor agrees not to change its name or any name under
which it carries on business without giving to the Secured Parties five (5)
day’s prior written notice of the change.

 

11. Disclosure.  The Debtor agrees to deliver to the Secured Parties upon
request such information concerning the Collateral, the Debtor and the Debtor's
business and affairs as the Secured Parties may request.

 

12. Representations and Warranties. The Debtor represents and warrants to the
Secured Parties that:

 

(a)this Security Agreement is granted in accordance with resolutions of the
directors of the Debtor and all other matters and things have been done and
performed so as to authorize and make the execution and delivery of this
Security Agreement, and the performance of the Debtor’s obligations hereunder,
legal, valid and binding; and

 

(b)other than the security interests granted to Payplant LLC, if any, there is
no security interest in, charge, encumbrance or lien over, or claim against any
of the Debtor’s property, assets, or undertakings which ranks or could in any
event rank in priority to or pari passu with any of the security interests
created by this Security Agreement.

 

13. Default.  The Debtor shall be in default under this Security Agreement upon
the occurrence of any of the following events which has not been cured within
thirty (30) days (“Events of Default”):

 

(a)Performance of Obligations. The Purchaser defaults in the payment or
performance of any of the Obligations;

 

(c)Breach of Agreement. The Debtor breaches any term, provision, warranty,
representation or covenant under this Security Agreement;

 

(c)Cease to Carry on Business. The Debtor ceases or threatens to cease to carry
on business;

 

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(d)Bankruptcy, Insolvency. The dissolution, termination of existence,
insolvency, bankruptcy or business failure of the Debtor, or upon the
appointment of a receiver, receiver-manager or receiver and manager of any part
of the property of the Debtor, or the commencement by or against the Debtor 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 by or against any guarantor or surety for the
Debtor, 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 or any part of the
Collateral;

 

(e)Commit Act of Bankruptcy. The Debtor commits or threatens to commit an act of
bankruptcy;

 

(f)Dissolution, Winding Up. The institution by or against the Debtor of any
formal or informal proceeding for the dissolution or liquidation of, settlement
of claims against or winding up of affairs of the Debtor;

 

(g)Transfer of Collateral. Any Collateral is transferred or sold without the
Secured Parties’ prior written consent except for sales of inventory, licenses
or sublicenses of intellectual property to customers in the ordinary course of
Debtor’s business;

 

(h)Destruction of Collateral. Any material portion of the Collateral is damaged
or destroyed except for ordinary wear and tear resulting from its normal and
expected use in Debtor’s business; or

 

(i)Grant of Additional Security in Collateral. The creation or permitting to
exist of any security interest in, charge, encumbrance or lien over, or claim
against any of the Collateral which ranks or could in any event rank in priority
to or pari passu with any of the security interests created by this Security
Agreement, without the prior written consent of the Vendors’ Representative.

 

14. Secured Parties’ Remedies on Default.  Upon the occurrence of an Event of
Default all of the Obligations shall become immediately due and payable without
notice to the Debtor, and the Secured Parties 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 any debts, accounts, claims or monies owed to the Debtor or
otherwise afforded by law, in equity or otherwise. The Secured Parties shall
have the right to enforce one or more remedies successively or concurrently in
accordance with applicable law and the Secured Parties expressly retain 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 but subject in all cases to Section 15, the Secured Parties 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 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 Parties
so far as concerns responsibility for its acts shall be deemed the agent of the
Debtor and not of the Secured Parties. Where the Secured Parties are 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;

 

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(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 Parties a licence 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
Parties’ 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
Parties may, at their discretion establish the terms of such disposition,
including, without limitation, terms and conditions as to credit, upset, reserve
bid or price. The Secured Parties 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
Parties 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 Parties have taken possession of the Collateral;

 

(e)Foreclose. Foreclose upon the Collateral in satisfaction of the Obligations.
The Secured Parties may designate any part of the Obligations to be satisfied by
the foreclosure of particular Collateral which the Secured Parties consider 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
Parties see fit. The Secured Parties 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;

 

(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 Parties any deficiency and the Secured Parties 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 Parties advisable
and without notice to the Debtor. The Secured Parties may charge on their 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.

 

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15. Limitation of Remedies. The Secured Parties’ enforcement of its rights under
Section 14 solely in respect of any modifications or derivative works arising
from the use of the Company IP, Company IT Systems and Company Software after
the date hereof will be limited to use of such modifications and derivative
works pursuant to a non-exclusive, fully-paid, perpetual, sublicensable,
worldwide license in favour of the Secured Parties.

 

16. Secured Parties Not Liable for Failure to Exercise Remedies.  The Secured
Parties shall not be liable or accountable for any failure to exercise any of
its remedies.

 

17. Allocation of Proceeds.  All monies collected or received by the Secured
Parties in respect of the Collateral may be held by the Secured Parties and may
be applied on account of such parts of the Obligations at the sole discretion of
the Secured Parties.

 

18. Extension of Time.  The Secured Parties 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 Parties may see fit without prejudice to the
Obligations, or the Secured Parties’ rights, remedies and powers under this
Security Agreement. No extension of time, forbearance, indulgence or other
accommodation now, heretofore or hereafter given by the Secured Parties to the
Debtor or the Purchaser shall operate as a waiver, alteration or amendment of
the rights of the Secured Parties or otherwise preclude the Secured Parties from
enforcing such rights.

 

19. Effect of Appointment of Receiver.  As soon as the Secured Parties take
possession of any Collateral or appoints a receiver (the “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 Parties or the Receiver.

 

20. Limitation of Liability.  The Secured Parties 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 thereof, to account as mortgagee in possession
or for anything except actual receipts or be liable for any loss on realization
or any act or omission for which a Secured Party in possession might be liable.

 

21. Release by Debtor.  The Debtor hereby releases and discharges the Secured
Parties and the Receiver from every claim of every nature 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 anything done by the Secured Parties or any successor
or assign claiming through or under the Secured Parties or the Receiver under
the provisions of this Security Agreement unless such claim be the result of
dishonesty or gross neglect.

 

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22. Costs.  The Debtor will reimburse the Secured Parties on demand for all
interest, commissions, reasonable costs of realization and other costs and
expenses (including the full amount of all legal fees and expenses paid by the
Secured Parties) incurred by the Secured Parties or any Receiver in connection
with the perpetual registration of any financing statement registered in
connection with the security interests hereby created, the preparation,
execution, perfection, protection, enforcement of and advice with respect to
this Security Agreement, the realization, disposition of, retention, protection,
insuring or collection of any Collateral, the protection or enforcement of the
rights, remedies and powers of the Secured Parties or any Receiver, any costs
incurred in complying with control orders and clean-up orders or liabilities to
third parties arising out of the Debtor's activities or while enforcing the
Secured Parties’ security, and the inspection of, and investigation of title to,
the Collateral. All amounts for which the Debtor is required hereunder to
reimburse the Secured Parties or any Receiver shall, from the date of
disbursement until the date the Secured Parties or the Receiver receives
reimbursement, bear interest at the highest rate per annum charged by the
Secured Parties on any of the Obligations.

 

23. 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 Parties may have under this Security Agreement, at law, in equity or by
or under the PPSA or any other statute.

 

24. 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 the Secured Parties 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.

 

25. 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 Parties 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.

 

26. Acknowledgement.  The Debtor hereby acknowledges receiving a copy of this
Security Agreement.

 

27. Entire Agreement.  This Security Agreement and the agreements referred to
herein, including the Purchase Agreement, constitute the entire agreement
between the Debtor and the Secured Parties and supersede any prior agreements,
undertakings, declarations, representations and understandings, both written and
verbal, in respect of the subject matter hereof. Any amendment of this Security
Agreement shall not be binding unless in writing and signed by the Vendors’
Representative and the Debtor.

 

28. 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.

 

29. Joint and Several Liability.  If more than one person executes this Security
Agreement, their obligations hereunder shall be joint and several.

 

30. 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.

 

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31. Time is of the Essence.  Time shall in all aspects be of the essence in this
Security Agreement and no exception or variation of this Security Agreement or
any Obligation hereunder shall operate as a waiver of this provision.

 

32. Governing Law and Attornment.  This Security Agreement shall be construed
and enforceable under and in accordance with the laws of British Columbia.

 

33. Successors and Assigns.  This Security Agreement shall be binding on the
Debtor, and the Debtor’s successors and assigns and enure to the benefit of the
Secured Parties and the successors and assigns of the Secured Parties.

 

34. Consent and Waiver. The Debtor consents to the Secured Parties filing such
financing statements with respect to this Security Agreement in such
jurisdictions as the Secured Parties deems appropriate or advisable, and the
Debtor waives all rights to receive from the Secured Parties a copy of any
financing statement, financing change statement or verification statement filed
at any time in respect of this Security Agreement.

 

35. Counterparts.  This Security Agreement may be executed in any number of
counterparts, and with respect to any of the Secured Parties, by execution of an
Omnibus Signature Page to this Agreement and the Purchase Agreement, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.  In the
event that any signature is delivered by an e-mail, which contains a copy of an
executed signature page such as a portable document format (.pdf) file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such e-mail of an executed signature page such as a .pdf signature page were an
original thereof.

 

[Signature page follows – remainder of page is intentionally blank]

 

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IN WITNESS WHEREOF the Debtor has executed this Security Agreement on the 21st
day of May, 2019.

 

  Debtor:       LOCALITY SYSTEMS Inc.   by its authorized signatory:       By:
/s/ Eddie Ho                                      Name: Eddie Ho   Title: V.P.
Operations       Acknowledged and agreed to by:       INPIXON CANADA, Inc.   by
its authorized signatory:       By: /s/ Nadir
Ali                                      Name: Nadir Ali   Title: Chief
Executive Officer       See Omnibus Signature Pages to   SPA (Secured Parties do
not sign here)       VENDORS’ REPRESENTATIVE       /s/ Kirk Moir   Kirk Moir