Exhibit 10.63


 


	
  HSBC Bank Canada

  	
  1012083 (10-2003)

  
	
  GENERAL SECURITY AGREEMENT

  	
   

  
	
  (British Columbia, Alberta, New Brunswick,
  Nova Scotia, Newfoundland and Labrador)

  	
   

  



 


This General Security Agreement made as of the 7th day of September, 2010.


 


BETWEEN:


 


0884808 B.C. LTD.


c/o Clean Energy


Suite 400 — 3020 Old Ranch Parkway


Seal Beach, CA, 90740, U.S.A.


 


(the “Debtor”)


 


AND:


 


HSBC BANK CANADA, a chartered bank of Canada, having a head office in
the City of Vancouver, in the Province of British Columbia, and having a branch
at Suite 200 - 885 West Georgia Street, Vancouver, British Columbia, V6C
3E9


 


(the “Bank”)


 


I               Security


 


1.1           For
value received, the Debtor grants and creates the security constituted by this
General Security Agreement and agrees to the terms, covenants, agreements,
conditions, provisos and other matters set out in this General Security
Agreement


 


1.2           As
general and continuing security for the Obligations (as defined in
clause 2.1 hereof), the Debtor:


 


1.2.1        hereby grants to the
Bank, by way of mortgage, charge, assignment and transfer, a security interest
in all presently owned and hereafter acquired personal property of the Debtor
of whatsoever nature and kind and wheresoever situate and all proceeds thereof
and therefrom, renewals thereof, Accessions thereto and substitutions therefor
(all of which are herein collectively called the “Personal Property Collateral”),
including, without limiting the generality of the foregoing, all the presently
owned or held and hereafter acquired right, title and interest of the Debtor in
and to all Goods (including all accessories, attachments, additions and
Accessions thereto), Chattel Paper, Documents of Title (whether negotiable or
not), Instruments, Intangibles (subject to Clause 1.2.2 hereof),
Licences, Money, Investment Property, and all:


 


(a)           Inventory
of whatsoever nature and kind and wheresoever situate;


 


(b)           Equipment
(other than Inventory) of whatsoever nature and kind and wheresoever situate,
including, without limitation, all machinery, tools, apparatus, plant,
furniture, fixtures and vehicles of whatsoever nature and kind;


 


(c)           book
accounts and book debts and generally all Accounts, debts, dues, claims, choses
in action and demands of every nature and kind howsoever arising or secured


 

















 


including
letters of credit, letters of guarantee and advices of credit, which are now
due, owing or accruing or growing due to or owned by or which may hereafter
become due, owing or accruing or growing due to or owned by the Debtor (all of
which are herein collectively called the “Debts”);


 


(d)           deeds,
documents, writings, papers, books of account and other books relating to or
being records of Debts, Chattel Paper or Documents of Title or by which such
are or may hereafter be secured, evidenced, acknowledged or made payable;


 


(e)           contractual
rights and insurance claims and all goodwill;


 


(f)            monies
other than trust monies lawfully belonging to others; and


 


(g)           personal
property described in any schedule now or hereafter annexed hereto; and


 


1.2.2        hereby grants to the
Bank, by way of mortgage and charge a security interest in all presently owned
and hereafter acquired patents, trade-marks, copyrights, industrial designs and
other intellectual property and all proceeds thereof and therefrom, renewals
thereof, Accessions thereto and substitutions therefor (all of which is deemed
to be included in the definition of “Personal Property Collateral” referred to
in Clauses 1.2.1 and 1.3.2. hereof); and


 


1.2.3        hereby charges as and
by way of a floating charge in favour of the Bank all the presently owned or
held and hereafter acquired property, assets, effects and undertakings of the
Debtor of whatsoever nature and kind and wheresoever situate, other than such
of the property, assets, effects and undertakings of the Debtor as are validly
and effectively subjected to the security interest granted to the Bank pursuant
to clause 1.2.1 (all of which property, assets, effects and undertakings
so charged by this clause 1.2.3 are herein collectively called the “Other
Collateral”) including, without limiting the generality of the foregoing, all
presently owned or held and hereafter acquired right, title and interest of the
Debtor in and to real and immovable and leasehold property and rights whether
in fee or of a less estate and all interest in and rights relating to lands and
all easements, rights of way, privilege, benefits, licences, improvements and
rights whether connected therewith or appurtenant thereto or separately owned
or held and all structures, buildings, plant, machinery, fixtures, apparatus
and fixed assets and the charge created by this clause 1.2.3 shall be a
floating charge such that the Debtor shall not have power without the prior
written consent of the Bank to:


 


(a)           create
or permit to exist any Encumbrance against any of the Other Collateral which
ranks or could in any event rank in priority to or pari passu with the security
constituted by this General Security Agreement, save for:


 


(1)           those
Encumbrances shown in the Encumbrance Schedule; and


 


(2)           Encumbrances
approved in writing by the Bank prior to creation or assumption; or


 


(b)           grant,
sell, exchange, transfer, assign, lease or otherwise dispose of the Other
Collateral.


 


1.3           In
this General Security Agreement:


 


1.3.1        any reference to “Premises”
shall mean all property owned or leased by the Debtor;


 


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1.3.2        the Personal Property
Collateral and the Other Collateral are herein together called the “Collateral”;


 


1.3.3        any reference to “Collateral”
shall, unless the context otherwise requires, be deemed a reference to “Collateral
or any part thereof”;


 


1.3.4        any reference to “Debtor”
and the personal pronoun “it” or “its” and any verb relating thereto and used
therewith shall be read and construed as required by and in accordance with the
context in which such words are used depending upon whether the Debtor is one
or more corporations and, if more than one Debtor executes this General
Security Agreement, this General Security Agreement shall apply and be binding
upon each of them jointly and severally and all obligations hereunder shall be
joint and several;


 


1.3.5        any references to “Environmental
Laws” shall mean any laws, regulations, orders, by-laws, permits or lawful
requirements of any governmental authority with respect to environmental
protection or regulating hazardous materials;


 


1.3.6        any reference to “General
Security Agreement” shall, unless the context otherwise requires, be deemed a
reference to this General Security Agreement as amended from time to time by
written agreement together with the schedules hereto and any schedules added
hereto pursuant to the provisions hereof;


 


1.3.7        any reference to “Hazardous
Materials” shall mean 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;


 


1.3.8        any reference to “PPSA”
shall mean the Personal Property Security Act of the Province as amended from
time to time, including any amendments thereto and any Act substituted therefor
and amendments thereto;


 


1.3.9        any reference to the “Province”
shall mean the Province of British Columbia; and


 


1.3.10      the terms “Goods”, “Chattel
Paper”, “Documents of Title”, “Equipment”, “Accounts”, “Consumer Goods”, “Instruments”,
“Intangibles”, “Licences” (Alberta and British Columbia only), “Money”, “Investment
Property”, “Proceeds”, “Inventory” and “Accessions” and other words and
expressions which have been defined in the PPSA shall be interpreted in
accordance with their respective meanings given in the PPSA (either in the
singular or plural thereof), as the context requires unless otherwise defined
herein or unless the context otherwise requires.


 


1.4           The
Bank and the Debtor have not agreed to postpone the time for attachment of the
security interest granted hereby.


 


1.5           The
security interest in Consumer Goods hereby granted shall not become effective
until, but shall become effective immediately when, the Bank notifies the Debtor
in writing that it is effective.


 


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1.6           The
last day of the term of any lease held by the Debtor with respect to any of the
Collateral is excluded from the security constituted by this General Security
Agreement.


 


II             Obligations Secured


 


2.1           The
security constituted by this General Security Agreement is general and
continuing security for payment, performance and satisfaction  of each and every obligation, indebtedness
and liability of the Debtor to the Bank (including interest thereon), present
or future, direct or indirect, absolute or contingent, matured or not, extended
or renewed, wheresoever and howsoever incurred, and any ultimate unpaid balance
thereof, including all future advances and re-advances, and whether the same is
from time to time reduced and thereafter increased or entirely extinguished and
thereafter incurred again and whether the Debtor be bound alone or with another
or others and whether as principal or surety, (all of which obligations,
indebtedness and liabilities are herein collectively called the “Obligations”).


 


2.2           This
General Security Agreement and the security constituted hereby are in addition
to and not in substitution for any other security or Investment Property which
the Bank may now or from time to time hold or take from the Debtor or from any
other person whomsoever.


 


III            Representations and Warranties of
the Debtor


 


3.1           The
Debtor represents and warrants that, and, so long as this General Security
Agreement remains in effect, shall be deemed to continuously represent and
warrant that:


 


3.1.1        this General Security
Agreement has been authorized, executed and delivered in accordance with
resolutions of the directors (and of the shareholders as applicable) 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 General Security
Agreement, the creation of the security constituted hereby and the performance
of the Debtor’s obligations hereunder, legal, valid and binding;


 


3.1.2        the Collateral is
genuine and is owned by the Debtor free of all security interests, mortgages,
liens, claims, charges and other encumbrances (herein collectively called “Encumbrances”),
save for the security constituted by this General Security Agreement, those
Encumbrances shown on the Encumbrance Schedule and those Encumbrances approved
in writing by the Bank;


 


3.1.3        the Debtor has good
and lawful authority to create the security in the Collateral constituted by
this General Security Agreement;


 


3.1.4        each Debt, Chattel
Paper and Instrument included in the Collateral is enforceable in accordance
with its terms against the party obligated to pay the same (the “Account Debtor”),
and the amount represented by the Debtor to the Bank from time to time as owing
by each Account Debtor or by all Account Debtors will be the correct amount
actually and unconditionally owing by such Account Debtor or Account Debtors,
except for normal cash discounts where applicable, and no Account Debtor will
have any defense, set off, claim or counterclaim against the Debtor which can
be asserted against the Bank, whether in any proceeding to enforce the
Collateral or otherwise;


 


3.1.5        with respect to Goods
(including Inventory) comprised in the Collateral, the locations specified in
the Location Schedule are accurate and complete (save for Goods in transit to


 


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such
locations and Inventory on lease or consignment) and all fixtures or Goods
about to become fixtures which form part of the Collateral will be situate at
one of the locations specified in the Location Schedule;


 


3.1.6        none of the Premises
are insulated with urea formaldehyde nor contain any asbestos material or
underground tanks;


 


3.1.7        the Premises are free
of any Hazardous Materials;


 


3.1.8        the 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


 


3.1.9        there are no existing
or threatened claims, actions, orders or investigations under any Environmental
Laws against the Debtor or against the Premises;


 


3.1.10      the Debtor is the
owner of any intellectual property applications and registrations and there are
no outstanding claims of ownership by third parties in respect of these
registrations and applications;


 


3.1.11      all intellectual
property applications and registrations are valid and in good standing;


 


3.1.12      all trade-mark and
industrial designs have been in continuous use and that the use has been proper
in relation to the wares and/or services of the Debtor;


 


3.1.13      only the Debtor has
used the trade-marks, or if there are any third party users of the Debtor’s
trade-marks, such third party users are properly licensed to use such
trademarks;


 


3.1.14      all assignments and
other documents affecting intellectual property rights have been disclosed and
provided to the Bank;


 


3.1.15      there are no outstanding
or threatened claims or proceedings with respect to the intellectual property;
and


 


3.1.16      all necessary
assignments and license agreements have been properly executed by the Debtor
for use of third party intellectual property.


 


IV            Covenants of the Debtor


 


4.1           The
Debtor covenants and agrees that at all times while this General Security
Agreement remains in effect the Debtor will:


 


4.1.1        defend the Collateral
for the benefit of the Bank against the claims and demands of all other
persons;


 


4.1.2        not, without the
prior written consent of the Bank:


 


(a)           create
or permit to exist any Encumbrance against any of the Personal Property
Collateral which ranks or could in any event rank in priority to or pari passu
with the security constituted by this General Security Agreement, save for:


 


(i)            those
Encumbrances shown in the Encumbrance Schedule; and


 


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(ii)           Encumbrances
approved in writing by the Bank prior to creation or assumption; or


 


(b)           grant,
sell, exchange, transfer, assign, lease or otherwise dispose of the Collateral;


 


provided always, that, until default, the
Debtor may, in the ordinary course of the Debtor’s business, sell or lease
Inventory and, subject to clause 5.2 hereof, use monies available to the
Debtor;


 


4.1.3        fully and effectively
maintain and keep maintained valid and effective the security constituted by
this General Security Agreement;


 


4.1.4        notify the Bank
promptly of:


 


(a)           any
change in the information contained herein or in the Schedules hereto relating
to the Debtor, the Debtor’s name, the Debtor’s business or the Collateral;


 


(b)           the
details of any significant acquisition of Collateral;


 


(c)           the
details of any claims or litigation affecting the Debtor or the Collateral;


 


(d)           any
loss or damage to the Collateral;


 


(e)           any
default by any Account Debtor in payment or other performance of obligations of
the Account Debtor comprised in the Collateral; and


 


(f)            the
return to, or repossession by, the Debtor of Collateral;


 


4.1.5        keep the Collateral
in good order, condition and repair (in the locations specified in the Location
Schedule or such other locations as the Bank may approve in writing) and not
use the Collateral in violation of the provisions of this General 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 or ordinance;


 


4.1.6        carry on and conduct
the business of the Debtor in a proper and efficient manner and so as to
protect and preserve the Collateral and to keep, in accordance with generally
accepted accounting principles, consistently applied, proper books of account
for the Debtor’s business as well as accurate and complete records concerning
the Collateral and, at the Bank’s request, mark any and all such records and
the Collateral so as to indicate the security constituted by this General
Security Agreement;


 


4.1.7        forthwith pay:


 


(a)           all
obligations to its employees and all obligations to others which relate to its
employees when due, including, without limitation, all taxes, duties, levies,
government fees, claims and dues related to its employees;


 


(b)           all
taxes, assessments, rates, duties, levies, government fees, claims and dues
lawfully levied, assessed or imposed upon it or the Collateral when due, unless
the Debtor shall in good faith contest its obligations so to pay and shall
furnish such security as the Bank may require; and


 


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(c)           all
Encumbrances which rank or could in any event rank in priority to or pari passu
with the security constituted by this General Security Agreement, other than
the Encumbrances, if any, shown in the Encumbrance Schedule hereto and those
approved in writing by the Bank;


 


4.1.8        prevent the
Collateral, save Inventory sold or leased as permitted hereby, from being or
becoming an Accession to other property not covered by this General Security
Agreement;


 


4.1.9        insure the Collateral
for such periods, in such amounts, on such terms and against loss or damage by
fire and such other risks as the Bank shall reasonably direct (but in any event
in accordance with prudent business practice and for not less than the full
replacement cost thereof) with loss payable to the Bank and the Debtor, as
insureds, as their respective interests may appear, and to pay all premiums for
such insurance;


 


4.1.10      deliver to the Bank
from time to time promptly upon request:


 


(a)           any
Documents of Title, Instruments, Investment Property and Chattel
Paper comprised in or relating to the Collateral;


 


(b)           all
books of account and all records, ledgers, reports, correspondence, schedules,
documents, statements, lists and other writings relating to the Collateral for
the purpose of inspecting, auditing or copying the same;


 


(c)           all
financial statements prepared by or for the Debtor regarding the Debtor’s
business;


 


(d)           all
policies and certificates of insurance relating to the Collateral; and


 


(e)           such
information concerning the Collateral, the Debtor and the Debtor’s business and
affairs as the Bank may reasonably require;


 


4.1.11      forthwith pay all
costs, charges, expenses and legal fees and disbursements (on a solicitor and
his own client basis) which may be incurred by the Bank in:


 


(a)           inspecting
the Collateral;


 


(b)           negotiating,
preparing, perfecting and registering this General Security Agreement and other
documents, whether or not relating to this General Security Agreement;


 


(c)           investigating
title to the Collateral;


 


(d)           taking,
recovering, keeping possession of and insuring the Collateral;


 


(e)           connection
with any disclosure requirements under the PPSA; and


 


(f)            all
other actions and proceedings taken in connection with the preservation of the
Collateral and the confirmation, perfection and enforcement of this General
Security Agreement and of any other security held by the Bank as security for
the Obligations;


 


4.1.12      at the Bank’s request
at any time and from time to time create in favour of the Bank, as security for
the Obligations, a fixed charge or charges upon any of the Other Collateral;


 


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4.1.13      at the Bank’s request
at any time and from time to time execute and deliver such further and other
documents and instruments and do all other acts and things as the Bank
reasonably requires in order to give effect to this General Security Agreement
or to confirm and perfect, and maintain perfection of, the security constituted
by this General Security Agreement in favour of the Bank;


 


4.1.14      permit the Bank and
its representatives, at all reasonable times, access to all the Debtor’s
property, assets and undertakings and to all its books of account and records
for the purpose of inspection and render all assistance necessary for such
inspection;


 


4.1.15      comply with the covenants,
if any, set out in the Additional Covenants Schedule;


 


4.1.16      develop and use the
Premises only in compliance with all Environmental Laws;


 


4.1.17      permit the Bank to
investigate the Premises, any goods on the Premises and the Debtor’s records at
any time and from time to time to verify such compliance with Environmental
Laws and this General Security Agreement;


 


4.1.18      upon the reasonable
request of the Bank, obtain from time to time at the Debtor’s cost a report
from an independent consultant designated or approved by the Bank verifying
compliance with Environmental Laws and this General Security Agreement or the
extent of any non-compliance therewith;


 


4.1.19      not store,
manufacture, dispose, treat, generate, use, transport, remediate or release Hazardous
Materials on or from the Premises without notifying the Bank in writing;


 


4.1.20      promptly remove any
Hazardous Materials from the Premises in a manner which conforms to
Environmental Laws governing their removal;


 


4.1.21      notify the Bank in
writing of:


 


(a)           any
enforcement, clean-up, removal, litigation or other governmental, regulatory,
judicial or administrative action instituted, contemplated or threatened
against the Debtor or the Premises pursuant to any Environmental Laws;


 


(b)           all
claims, actions, orders, or investigations, made or threatened by any third
party against the Debtor or the Premises relating to damage, contribution, cost
recovery, compensation, loss or injuries resulting from any Hazardous Materials
or any breach of the Environmental Laws; and


 


(c)           the
discovery of any Hazardous Materials or any occurrence or condition on the
Premises or any real property adjoining or in the vicinity of the Premises
which could subject the Debtor or the Premises to any fines, penalties, orders
or proceedings under any Environmental Laws;


 


4.1.22      apply to file
applications and complete registrations on any present material intellectual
property which is not currently protected by an application or registration
where commercially reasonable, including any and all improvements to
intellectual property and apply to file registrations on unregistered
trade-marks in Canada and the United States;


 


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4.1.23      apply to file
applications and complete registrations of all after acquired material
intellectual property in all jurisdictions where commercially reasonable;


 


4.1.24      keep up-to-date
witnessed records regarding material intellectual property;


 


4.1.25      enter into
confidentiality agreements with employees and other third parties who may
invent, create, discover, author and/or reduce to practice intellectual
property for the Debtor and who may have access to confidential information of
the Debtor;


 


4.1.26      ensure that all after
acquired material intellectual property obtained from third parties is properly
acquired by way of a written license agreement or assignment;


 


4.1.27      provide, upon written
request by the Bank, a list of all registered and unregistered trade-marks,
patent applications, issued patents, copyright, industrial designs and other
material intellectual property; and


 


4.1.28      mark all products and
advertising appropriately to maintain the validity of all material intellectual
property rights.


 


V             Payments
and Proceeds


 


5.1           After
default under this General Security Agreement, the Bank may notify all or any
Account Debtors of the security constituted by this General Security Agreement
and may also direct such Account Debtors to make all payments on the Collateral
to the Bank.


 


5.2           The
Debtor acknowledges that any payments on or other proceeds of the Collateral
received by the Debtor from Account Debtors, whether before or after
notification of the security constituted by this General Security Agreement to
Account Debtors and after default under this General Security Agreement, shall
be received and held by the Debtor in trust for the Bank and shall be turned
over to the Bank forthwith upon request.


 


VI            Bank Actions


 


6.1           The
Debtor hereby authorizes the Bank to:


 


6.1.1        file such financing
statements and other documents and do such acts, matters and things (including
completing and adding schedules hereto identifying the Collateral or any
permitted Encumbrances affecting the Collateral or identifying the locations at
which the Debtor’s business is carried on and the Collateral and records
relating thereto are situate) as the Bank may deem appropriate to perfect and
continue the security constituted hereby, to protect and preserve the
Collateral and to realize upon the security constituted hereby and the Debtor hereby
irrevocably constitutes and appoints the Bank the true and lawful attorney of
the Debtor, with full power of substitution, to do any of the foregoing in the
name of the Debtor whenever and wherever it may be deemed necessary or
expedient by the Bank; and


 


6.1.2        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 Bank with such written authorization as the
Bank may reasonably require in order to facilitate the obtaining of such
information.


 


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6.2           The
Bank may charge for its reasonable costs incurred in connection with any
disclosure requirements under the PPSA.


 


6.3           If
the Debtor fails to perform any of its Obligations hereunder, the Bank may, but
shall not be obliged to, perform any or all of such Obligations without
prejudice to any other rights and remedies of the Bank hereunder, and any
payments made and any costs, charges, expenses and legal fees and disbursements
(on a solicitor and his own client basis) incurred in connection therewith shall
be payable by the Debtor to the Bank forthwith with interest until paid at the
highest rate borne by any of the Obligations and such amounts shall form part
of the Obligations and constitute a charge upon the Collateral in favour of the
Bank prior to all claims subsequent to this General Security Agreement.


 


6.4           The
Debtor covenants and agrees that the Bank may, but shall be under no obligation
to, at any time or times as the Bank 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 Premises, including, without
limitation, such repairs, replacements and improvements as are necessary so
that the Debtor and the Premises comply with Environmental Laws, and all
reasonable costs, charges and expenses including an allowance for the time and
services of the Bank, the Bank’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 Bank and any amount due hereunder shall be payable forthwith to
the Bank, shall be deemed an advance to the Debtor by the Bank, shall be deemed
to be Obligations, and shall bear interest at the highest rate per annum from
time to time charged by the Bank on any of the other Obligations until paid.


 


VII          Default


 


7.1           The
Debtor shall be in default under this General Security Agreement, unless
otherwise agreed in writing by the Bank, upon the occurrence of any of the
following events:


 


7.1.1        the Debtor makes
default in payment when due of any of the Obligations which are indebtedness or
liabilities or the Debtor fails to perform or satisfy any other of the
Obligations (and such failure to make a payment when due or failure to perform
or satisfy any of the other obligations is not cured by Debtor within five
business days); or


 


7.1.2        the Debtor is in
breach of any term, condition, proviso, agreement or covenant to the Bank, or
any representation or warranty given by the Debtor to the Bank is untrue,
whether or not any such term, condition, proviso, agreement or covenant,
representation or warranty is contained in this General Security Agreement; or


 


7.1.3        the Debtor makes an
assignment for the benefit of its creditors, is declared bankrupt, makes a
proposal or otherwise takes advantage of provisions for relief under the
Bankruptcy and Insolvency Act (Canada), the Companies Creditors’ Arrangement
Act (Canada) or similar legislation in any jurisdiction, or makes an authorized
assignment; or


 


7.1.4        there is instituted
by or against the Debtor any formal or informal proceeding for the dissolution
or liquidation of, settlement of claims against, or winding-up of affairs of,
the Debtor; or


 


7.1.5        the Debtor ceases or
threatens to cease to carry on business or makes or agrees to make a bulk sale
of assets or commits or threatens to commit an act of bankruptcy; or


 


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7.1.6        a receiver, receiver
and manager or receiver-manager of all or any part of the Collateral or of any
other property, assets or undertakings of the Debtor is appointed; or


 


7.1.7        any execution,
sequestration, extent or other process of any court becomes enforceable against
the Debtor or a distress or analogous process is levied upon the Collateral or
any part thereof; or


 


7.1.8        an order is made or
an effective resolution is passed for winding-up the Debtor, or


 


7.1.9        without the prior
written consent of the Bank, the Debtor creates or permits to exist any
Encumbrance against any of the Collateral which ranks or could in any event
rank in priority to or pari passu with the security constituted by this General
Security Agreement; or


 


7.1.10      the holder of any
Encumbrance against any of the Collateral does anything to enforce or realize
on such Encumbrance; or


 


7.1.11      the Debtor enters
into any reconstruction, reorganization, amalgamation, merger or other similar
arrangement with any other person; or


 


7.1.12      the Bank in good
faith believes and has commercially reasonable grounds to believe that the
prospect of payment or performance of any of the Obligations is impaired or
that any of the Collateral is or is about to be placed in jeopardy; or


 


7.1.13      any certificate,
statement, representation, warranty or audit report herewith, heretofore or
hereafter furnished by or on behalf of the Debtor to the Bank, whether in
connection with this General Security Agreement or otherwise, and whether
furnished as an inducement to the Bank to extend any credit to or to enter into
this or any other agreement with the Debtor or not:


 


(a)           proves
to have been false in any material respect at the time as of which the facts
therein set forth were stated or certified; or


 


(b)           proves
to have omitted any substantial contingent or unliquidated liability or claim
against the Debtor;


 


or, upon the date of execution of this General
Security Agreement, there shall have been any material adverse change in any of
the facts disclosed by any such certificate, statement, representation,
warranty or audit report, which change shall not have been disclosed to the
Bank at or prior to the time of such execution.


 


7.2           For
the purposes of Section 198.1 of the Land Title Act of British Columbia,
the floating charge created by this General Security Agreement over land shall
become a fixed charge thereon upon the earliest of:


 


7.2.1        the occurrence of an
event described in any of clauses 7.1.3, 7.1.4, 7.1.5, 7.1.6, 7.1.7 or
7.1.8; or


 


7.2.2        the Bank taking any
action to enforce and realize on the security constituted by this General
Security Agreement.


 


11

















 


VIII         Enforcement


 


8.1           The
Bank may make demand for payment at any time of any or all of the Obligations
which are payable upon demand (whether or not there is any default under this
General Security Agreement) and, upon any default under this General Security
Agreement, the Bank may declare any or all of the Obligations which are not
payable on demand to become immediately due and payable.


 


8.2           Upon
default under this General Security Agreement, the security hereby constituted
will immediately become enforceable.


 


8.3           To
enforce and realize on the security constituted by this General Security
Agreement the Bank may take any action permitted by law or in equity, as it may
deem expedient, and in particular, without limiting the generality of the
foregoing, the Bank may do any one or more of the following:


 


8.3.1        appoint by instrument
a receiver, receiver and manager or receiver-manager (the person so appointed
is herein called the “Receiver”) of the Collateral, with or without bond as the
Bank may determine, and from time to time in its sole discretion remove such
Receiver and appoint another in its stead;


 


8.3.2        enter upon any of the
Premises and take possession of the Collateral with power to exclude the
Debtor, its agents and its servants therefrom, without becoming liable as a
mortgagee in possession;


 


8.3.3        preserve, protect and
maintain the Collateral and make such replacements thereof and repairs and
additions thereto as the Bank may deem advisable;


 


8.3.4        sell, lease or
otherwise dispose of or concur in selling, leasing or otherwise disposing of
all or any part of the Collateral, whether by public or private sale or lease
or otherwise, in such manner, at such price as can be reasonably obtained
therefor and on such terms as to credit and with such conditions of sale and
stipulations as to title or conveyance or evidence of title or otherwise as to
the Bank may seem reasonable, provided that the Debtor will not be entitled to
be credited with the proceeds of any such sale, lease or other disposition
until the monies therefor are actually received; and


 


8.3.5        exercise all of the
rights and remedies of a secured party under the PPSA.


 


8.4           A
Receiver appointed pursuant to this General Security Agreement shall be the
agent of the Debtor and not of the Bank and, to the extent permitted by law or
to such lesser extent permitted by its appointment, shall have all the powers
of the Bank hereunder, and in addition shall have power to carry on the
business of the Debtor and for such purpose from time to time to borrow money
either secured or unsecured, and if secured by a security on any of the
Collateral, any such security may rank in priority to or pari passu with or
behind the security constituted by this General Security Agreement, and if it
does not so specify such security shall rank in priority to the security
constituted by this General Security Agreement.


 


8.5           Subject
to applicable law and the claims, if any, of the creditors of the Debtor
ranking in priority to the security constituted by this General Security
Agreement, all amounts realized from the disposition of the Collateral pursuant
to this General Security Agreement will be applied as the Bank, in its sole
discretion, may direct as follows:


 


12

















 


Firstly:                   in or toward payment of all costs, charges and expenses (including legal
fees and disbursements on a solicitor and his own client basis) incurred by the
Bank in connection with or incidental to:


 


(1)           the
exercise by the Bank of all or any of the powers granted to it pursuant to this
General Security Agreement; and


 


(2)           the
appointment of the Receiver and the exercise by the Receiver of all or any of
the powers granted to the Receiver pursuant to this General Security Agreement,
including the Receiver’s reasonable remuneration and all outgoings properly
payable by the Receiver;


 


Secondly:               in or toward payment to the Bank of all principal and other monies
(except interest) due in respect of the Obligations;


 


Thirdly:                 in or toward payment to the Bank of all interest remaining unpaid in
respect of the Obligations; and


 


Fourthly:               any surplus will be paid to the Debtor.


 


IX            Deficiency


 


9.1           If
the amounts realized from the disposition of the Collateral are not sufficient
to pay the Obligations in full to the Bank, the Debtor will immediately pay to
the Bank the amount of such deficiency.


 


X             Rights
Cumulative


 


10.1         All
rights and remedies of the Bank set out in this General Security Agreement are
cumulative and no right or remedy contained herein is intended to be exclusive
but each will be in addition to every other right or remedy contained herein or
in any existing or future general security agreement or now or hereafter
existing at law or in equity or pursuant to any other agreement between the
Debtor and the Bank that may be in effect from time to time.


 


XI            Appointment of Attorney


 


11.1         The
Debtor hereby irrevocably appoints the Bank or the Receiver, as the case may
be, with full power of substitution, to be the attorney of the Debtor for and
in the name of the Debtor to sign, endorse or execute under seal or otherwise
any deeds, documents, transfers, cheques, instruments, demands, assignments,
assurances or consents that the Debtor is obliged to sign, endorse or execute
and generally to use the name of the Debtor and to do all things as may be
necessary or incidental to the exercise of all or any of the powers conferred
on the Bank or the Receiver, as the case may be, pursuant to this General
Security Agreement.


 


XII          Liability
of Bank


 


12.1         The
Bank shall not be responsible or liable for any debts contracted by it, for
damages to persons or property or for salaries or nonfulfillment of contracts
during any period when the Bank shall manage the Collateral upon entry or
manage the business of the Debtor, as herein provided, nor shall the Bank be
liable to account as mortgagee in possession or for anything except actual
receipts or be liable for any loss or realization or for any default or
omission for which a mortgagee in possession may be liable.


 


13

















 


12.2         The
Bank shall not be bound to do, observe or perform or to see to the observance
or performance by the Debtor of any obligations or covenants imposed upon the
Debtor nor shall the Bank, in the case of Investment Property, Instruments
or Chattel Paper, be obliged to reserve rights against other persons, nor shall
the Bank be obliged to keep any of the Collateral identifiable.


 


12.3         The
Bank shall not be obliged to inquire into the right of any person purporting to
be entitled under the PPSA to information and materials from the Bank by making
a demand upon the Bank for such information and materials and the Bank shall be
entitled to comply with such demand and shall not be liable for having complied
with such demand notwithstanding that such person may in fact not be entitled
to make such demand.


 


12.4         The
Debtor will indemnify the Bank and hold the Bank harmless from and against any
and all claims, costs, losses, demands, actions, causes of action, lawsuits,
damages, penalties, judgments and liabilities of whatsoever nature and kind in
connection with or arising out of any representation or warranty given by the Debtor,
being untrue, the breach of any term, condition, proviso, agreement or covenant
to the Bank, or the exercise of any of the rights and or remedies of the Bank,
or any transaction contemplated in this General Security Agreement.


 


12.5         The
Debtor hereby waives any applicable provision of law permitted to be waived by
it which imposes higher or greater obligations upon the Bank than provided in
this General Security Agreement.


 


12.6         The
Debtor shall indemnify, reimburse and save harmless the Bank, 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 Premises) which may
be paid, incurred or asserted against the Bank 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 Premises or into or
upon any other land, the atmosphere or any watercourse, body of water or
wetland of any Hazardous Materials.


 


12.7         Any
amount owing by the Debtor hereunder shall, from the date of disbursement until
the date the Bank receives reimbursement, be deemed advanced to the Debtor by
the Bank, shall be deemed to be Obligations and shall bear interest at the
highest rate per annum from time to time charged by the Bank on any of the
other Obligations until paid.


 


12.8         The
Debtor agrees that the indemnity obligations hereunder shall survive the
release of the security of this General Security Agreement and the payment and
satisfaction of the indebtedness and liabilities hereby secured.


 


XIII         Appropriation
of Payments and Offset


 


13.1         Subject
to any applicable provisions of the PPSA, any and all payments made in respect
of the Obligations from time to time and monies realized from any security held
therefor (including monies collected in accordance with or realized on any
enforcement of this General Security Agreement) may be applied to such part or
parts of the Obligations as the Bank may see fit, and the Bank may at all times
and from time to time change any appropriation as the Bank may see fit or, at
the option of the Bank, such payments and monies may be held unappropriated in
a collateral account or released to the Debtor, all without prejudice to the
liability of the Debtor or to the rights of the Bank hereunder.


 


14

















 


13.2         Without
limiting any other right of the Bank, whenever any of the Obligations is
immediately due and payable or the Bank has the right to declare any of the
Obligations to be immediately due and payable (whether or not it has so
declared), the Bank may, in its sole discretion, set off against any of the
Obligations any and all monies then owed to the Debtor by the Bank in any
capacity, whether or not due and to do so even though any charge therefor is
made or entered on the Bank’s records subsequent thereto, and the Bank shall be
deemed to have exercised such right to set off immediately at the time of
making its decision.


 


XIV         Liability
to Advance, Etc.


 


14.1         Except
to the extent that the Bank:


 


14.1.1      by accepting bills of
exchange drawn on it by the Debtor; or


 


14.1.2      by issuing letters of
credit or letters of guarantee on the application of the Debtor;


 


is required to advance monies on the maturity
of such bills or pursuant to such letters of credit or letters of guarantee, as
the case may be, none of the preparation, execution, perfection and
registration of this General Security Agreement or the advance of any monies
shall bind the Bank to make any advance or loan or further advance or loan, or
renew any note or extend any time for payment of any indebtedness or liability
of the Debtor to the Bank or extend any term for performance or satisfaction of
any obligation of the Debtor to the Bank.


 


14.2         Nothing
herein contained shall in any way oblige the Bank to grant, continue, renew,
extend time for payment of or accept anything which constitutes or would
constitute Obligations or any of them.


 


XV          Waiver


 


15.1         No
delay or omission by the Bank in exercising any right or remedy hereunder or
with respect to any of the Obligations shall operate as a waiver thereof or of
any other right or remedy, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right or remedy.


 


15.2         The
Bank may from time to time and at any time waive in whole or in part any right,
benefit or default under any clause of this General Security Agreement but any
such waiver of any right, benefit or default on any occasion shall be deemed
not to be a waiver of any such right, benefit or default thereafter, or of any
other right, benefit or default, as the case may be.


 


XVI         Extensions


 


16.1         The
Bank may grant extensions of time and other indulgences, take and give up
security, accept compositions, compound, compromise, settle, grant releases and
discharges, refrain from perfecting or maintaining perfection of security, and
otherwise deal with the Debtor, Account Debtors of the Debtor, sureties and
others and with the Collateral and other security as the Bank may see fit
without prejudice to the liability of the Debtor or the Bank’s right to hold
and realize on the security constituted by this General Security Agreement.


 


XVII       Assignment


 


17.1         The
Bank may, without further notice to the Debtor, at any time mortgage, charge,
assign, transfer or grant a security interest in this General Security
Agreement and the security constituted hereby.


 


15

















 


17.2         The
Debtor expressly agrees that the assignee, transferee or secured party of the
Bank, as the case may be, shall have all of the Bank’s rights and remedies
under this General Security Agreement and the Debtor will not assert any
defence, counterclaim, right of set-off or otherwise any claim which it now has
or hereafter acquires against the Bank in any action commenced by such
assignee, transferee or secured party, as the case may be, and will pay the
Obligations to the assignee, transferee or secured party, as the case may be,
as the Obligations become due.


 


XVIII      Satisfaction
and Discharge


 


18.1         Any
partial payment or satisfaction of the Obligations, or any ceasing by the
Debtor to be indebted to the Bank, shall be deemed not to be redemption or
discharge of the security constituted by this General Security Agreement.


 


18.2         The
Debtor shall be entitled to a release and discharge of the security constituted
by this General Security Agreement upon full payment, performance and
satisfaction of all Obligations, or the securing of the Obligations to the
satisfaction of the Bank, and upon written request by the Debtor and payment to
the Bank of all costs, charges, expenses and legal fees and disbursements (on a
solicitor and his own client basis) incurred by the Bank in connection with the
Obligations and such release and discharge.


 


XIX         No
Merger


 


19.1         This
General Security Agreement shall not operate so as to create any merger or
discharge of any of the Obligations, or any assignment, transfer, guarantee,
lien, contract, promissory note, bill of exchange or security in any form held
or which may hereafter be held by the Bank from the Debtor or from any other
person whomsoever.


 


19.2         The
taking of a judgment with respect to any of the Obligations will not operate as
a merger of any of the terms, conditions, covenants, agreements or provisos
contained in this General Security Agreement.


 


19.3         The
release and discharge of the security constituted by this General Security
Agreement by the Bank shall not operate as a release or discharge of any right
of the Bank to be indemnified and held harmless by the Debtor pursuant to
clause 12.4 hereof or of any other right of the Bank against the Debtor
arising under this General Security Agreement prior to such release and
discharge.


 


XX          Interpretation


 


20.1         In
this General Security Agreement:


 


20.1.1      the invalidity or
unenforceability of the whole or any part of any clause shall not affect the
validity or enforceability of any other clause or the remainder of such clause;


 


20.1.2      the headings have
been inserted for reference only and shall not define, limit, alter or enlarge
the meaning of any provision of this General Security Agreement; and


 


20.1.3      when the context so
requires, the singular shall be read as if the plural were expressed and the
provisions hereof shall be read with all grammatical changes necessary
dependent upon the person referred to being a male, female, firm or
corporation.


 


16

















 


XXI         Notice


 


21.1         Whenever
either the Bank or the Debtor hereto is required or entitled to notify or direct
the other or to make a demand upon or request of the other relating to the
Collateral, this General Security Agreement or the PPSA, such notice,
direction, demand or request shall be sufficiently given if given in writing
and delivered to the party for whom it is intended at the address of such party
herein or as changed pursuant hereto or if sent by prepaid registered mail
addressed to the party for whom it is intended at the address of such party
herein set forth or as changed pursuant hereto.


 


21.2         Either
the Bank or the Debtor may notify the other in accordance herewith of any
change in its principal address to be used for the purposes hereof.


 


XXII       Variation


 


22.1         Save
for any schedules which may be added hereto pursuant to the provisions hereof, no
modification, variation or amendment of any provision of this General Security
Agreement shall be made except by written agreement, executed by the parties
hereto and no waiver of any provision hereof shall be effective unless in
writing.


 


XXIII      Enurement


 


23.1         This
General Security Agreement shall enure to the benefit of the Bank and its
successors and assigns and shall be binding upon the respective heirs,
executors, personal representatives, successors and permitted assigns of the
Debtor.


 


XXIV      Copy
of Agreement and Financing Statement


 


24.1         The
Debtor hereby:


 


24.1.1      acknowledges
receiving a copy of this General Security Agreement; and


 


24.1.2      waives all rights to
receive from the Bank a copy of any financing statement, financing change
statement or verification statement filed at any time or from time to time in
respect of this General Security Agreement.


 


XXV       Governing
Law


 


25.1         This
General Security Agreement shall be governed by and construed in accordance
with the laws of the Province.


 


25.2         For
the purpose of legal proceedings this General Security Agreement shall be
deemed to have been made in the Province and to be performed there and the
courts of the Province shall have jurisdiction over all disputes which may
arise under this General Security Agreement and the Debtor hereby irrevocably
and unconditionally submits to the non-exclusive jurisdiction of such courts,
provided always that nothing herein contained shall prevent the Bank from
proceeding at its election against the Debtor in the courts of any other
Province, country or jurisdiction.


 


17
















 


IN WITNESS WHEREOF the Debtor has executed this General Security Agreement as of the day
and year first above written.


 




	
   

  	
   

  	
  Execution Date

  	
   

  	
   

  
	
  (For Corporation)

  	
   

  	
  Y

  	
   

  	
  M

  	
   

  	
  D

  	
   

  	
  Debtor’s Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10

  	
   

  	
  09

  	
   

  	
   

  	
   

  	
  0884808 B.C. LTD.

  
	
  Officer Signature

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (by its authorized
  signatory(ies))

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per:

  
	
  Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Occupation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (For Individual)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Officer Signature

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
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  Address

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Debtor’s Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Occupation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
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Officer Certification:


 


Your signature constitutes a representation
that you are a solicitor, notary public or other person authorized by the
Evidence Act, R.S.B.C. 1996, c.124, to take affidavits for use in British
Columbia and certifies the matters set out in Part 5 of the Land Title Act
as they pertain to the execution of this instrument.


 


18

















 


ENCUMBRANCE SCHEDULE


 


Prior Encumbrances:


 


Encumbrances existing under the following
agreements:


 


1.                                       Security Agreement, of even date herewith, by and
between Clean Energy Compression Corp. and I.M.W. Industries Ltd.


 


2.                                       Real Property Lease of 43676 Progress Way, Chilliwack,
BC with Highway 1 Business Park Ltd.


 


3.                                       Master Equipment Lease No. 8542401 with Nexcap
Finance Corp.


 


4.                                       Equipment Loan and Security Agreement No. 150010760971
with GE Canada Equipment Financing G.P.


 


5.                                       Equipment Loan and Security Agreement No.150010868977
with GE Canada Equipment Financing G.P.


 


6.                                       Lease Agreement No. 340439 with De Lage Landen
Financial Services Canada Inc.


 


7.                                       Lease Agreement No. 358682 with De Lage Landen
Financial Services Canada Inc.


 


8.                                       Lease Agreement No. 361819 with De Lage Landen
Financial Services Canada Inc.


 


9.                                       Leasing Agreement No. 120005690370 with GE Canada
Leasing Services Company


 


10.                                 Vehicle Lease Agreement with Envision Leasing Ltd.


 

















 


LOCATION SCHEDULE


 


Address(es) of Location of the Collateral:


 


43676 Progress Way

Chilliwack, B.C. VR2 0C3

Canada


 


 


2

















 


ADDITIONAL COVENANTS
SCHEDULE


 


Additional Covenants of the Debtor under Clause
4.1.15:


 


Nil.


 


3