Quantum Solar Power Corp.: Exhibit 10.7 - Filed by newsfilecorp.com





SECURITY AGREEMENT 

This Security Agreement is dated the 8th day of May, 2012
between: 

SIMON FRASER UNIVERSITY, a corporation continued under
the University Act of British 
Columbia having an address at 8888 University
Drive, Multi-Tenant Facility, Burnaby, British Columbia, 
Canada V5A 1S6


  (the “Secured Party”), 

- and - 

0935493 B.C. LTD., a corporation duly incorporated under
the Business Corporations Act of British 
Columbia having an address
at Suite #202 – 1128 West Broadway, Vancouver, British Columbia, Canada 
V6H
1G5 

  (the “Debtor”) 

1.          
Creation of Security Interest 

1.1         As
general and continuing security for the payment and performance when due of all
Indebtedness (defined below), the Debtor hereby mortgages, pledges,
hypothecates, transfers, assigns and charges to the Secured Party, and hereby
grants to the Secured Party a security interest in all the Debtor’s right, title
and interest in the personal property of the Debtor listed in Schedule “A”
hereto, and the Proceeds therefrom (collectively, the “Collateral”).

1.2         The
mortgages, pledges, hypothecations, transfers, assignments, charges and security
interests created in Section 1.1 of this Security Agreement are collectively
called the “Security Interest”. 

1.3         Any
reference to “Collateral” shall, unless the context requires otherwise, be
deemed a reference to “Collateral or any part thereof”. 

1.4         This
Security Interest shall not apply to, and Collateral shall not include, the last
day of the term of any lease or agreement therefore but upon the enforcement of
the Security Interest the Debtor shall stand possessed of such last day in trust
to assign the same to any person acquiring such term. 

2.         
 Definitions 

2.1         All
phrases which are defined in the Personal Property Security Act (British
Columbia) (the “PPSA”), and not otherwise defined in this Security Agreement
shall have the meaning ascribed by the PPSA, provided always that the term
“goods” shall never include “consumer goods” of the Debtor as that term is
defined in the PPSA. 

2.2        
“Indebtedness” means all liabilities of every kind and description of the Debtor
to the Secured Party (including, without limitation, under the Guarantee dated
as of May 8, 2012 between the Debtor and SFU), whether now or hereafter owed or
any future advance, whether direct, indirect, contingent, and whether the Debtor
be bound alone or with others and whether as principal or surety. 

2.3         “Liens”
means all mortgages, charges, hypothecs, pledges, trusts, liens, security
interests and other encumbrances and adverse claims of every nature and kind and
other arrangements creating any rights in respect of any property. 




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2.4         “Related
Documents” means the promissory notes, loan agreements, account agreements,
guaranties, trust deeds, mortgages, other security agreements or any other
documents executed in connection with this Security Agreement or Indebtedness or
related to its operation or administration, whether already existing or executed
now or later. 

3.         
 Rights and Obligations of Debtor

3.1         Information.
The Debtor warrants and covenants that all information supplied by the Debtor
for this Security Agreement, including the Debtor’s legal name, place of
business and the location of the Collateral save for Collateral in transit to
such locations and inventory on lease or consignment, is correct. 

3.2         Title.
The Debtor warrants and covenants that it is the sole legal owner of, and has
the consent of the beneficial owner to enter into this agreement, and has good
and marketable title to all existing Collateral and shall be the sole, legal
owner of, and have good and marketable title to, each item of after acquired
Collateral upon acquiring any rights therein, in each case free and clear of all
Liens. The Debtor shall keep the Collateral free from all Liens, and shall
defend the Collateral against the claims of all other persons. The Debtor
warrants that the Collateral is not a fixture. 

3.3        
Authorization. The Debtor warrants and covenants that this Security
Agreement is granted in accordance with resolutions of the directors (and of the
shareholders as applicable) of the Debtor and all other matters and things that
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. 

3.4        
Possession and use of Collateral. Until default or unless otherwise
agreed with the Secured Party, the Debtor may deal with Collateral in the
ordinary course of the Debtor’s business in any manner consistent with the
provisions of this Security Agreement. Except for accounts collected in the
ordinary course of the Debtor’s business, the Debtor shall not sell, lease,
dispose, or otherwise transfer the Collateral, except that with the prior
written consent of the Secured Party, which consent shall not be unreasonably
withheld, the Debtor may sell all or a portion of the Collateral from time to
time pursuant to cash sales to arm’s length third parties if the full proceeds
of such sales are immediately remitted to Secured Party to reduce the
Indebtedness. The Debtor shall not encumber or permit the Collateral to be
encumbered without the prior written consent of the Secured Party, other than by
this Security Agreement. 

3.5         Removal
of Collateral, The Collateral (or to the extent the Collateral consists of
intangible property such as accounts, the records concerning the Collateral) is
located as specified in Schedule A. Except in the ordinary course of the
Debtor’s business, and except as permitted by Section 3.4 hereof, the Debtor
shall not remove the Collateral from its location without the prior written
consent of the Secured Party, which shall not be unreasonably withheld. 

3.6        
Risk. The goods are at the Debtor’s risk until all amounts due to the
Secured Party or any judgment obtained shall have been paid in full. The Debtor
shall insure the Collateral against loss or damage by fire and such other risks
and hazards, as required to protect the Collateral. All such insurance policies
shall name the Secured Party as loss payee and copies thereof or certificates in
respect of the coverage provided thereby shall be delivered to the Secured
Party. The Debtor shall pay all premiums in respect of such insurance when due
and shall promptly furnish the Secured Party with receipts or other satisfactory
evidence of the payment thereof. Any insurance proceeds received by the Secured
Party pursuant to this Security Agreement may, at the option of the Secured
Party, be applied against any Indebtedness or released to the Debtor without
prejudicing any rights or remedies of the Secured Party hereunder or affecting
any Indebtedness. 




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3.7        
Preservation of rights and Collateral. The Debtor shall defend its own
and the Secured Party’s rights in the Collateral against the claims and demands
of all persons. The Debtor shall maintain the Collateral in a condition and
state of repair that preserves the value of the Collateral, reasonable wear and
tear excluded. The Debtor will not commit or permit damage to or destruction of
the Collateral and will effect repair if it occurs. 

3.8         Material
changes in information. The Debtor shall notify the Secured Party promptly
of: 

	 	(a) 	
      any material change in the information contained in this
      Security Agreement (including the schedules hereto) relating to the
      Debtor, the Debtor’s business or Collateral, including any address change
      or establishment of an additional place of business;

	 	 	 
	 	(b) 	
      the details of any change in name of the
Debtor;

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

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

	 	 	 
	 	(e) 	
      any loss of or damage to Collateral;

	 	 	 
	 	(f) 	
      any default by any account debtor in its obligations with
      respect to Collateral;

	 	 	 
	 	(g) 	
      the return to or repossession by Debtor of
    Collateral.



3.9         Debtor’s
conduct. The Debtor will conduct its business and affairs in a proper and
efficient manner so as to preserve and protect the Collateral, in accordance
with applicable law and keep records in accordance with generally accepted
accounting principles. The Debtor shall pay all charges, such as taxes,
assessments, storage, handling, packing, and processing fees and costs, claims,
liens and encumbrances relating to the Collateral or the Debtor’s business and
affairs when the same become due. The Debtor will deliver to the Secured Party
promptly such information concerning Collateral, the Debtor and the Debtor’s
business and affairs as the Secured Party may reasonably request.

3.10       Protest. The
Debtor waives protest of any instrument constituting Collateral at any time held
by the Secured Party on which the Debtor is in any way liable and, subject to
the notice requirements of the PPSA, notice of any other action taken by the
Secured Party. 

3.11       Joint and several
liability. If more than one Debtor executes this Security Agreement the
obligations of such Debtors hereunder shall be joint and several. 

4.         
 Events of Default 

The Debtor shall be in default under this Security Agreement or
Related Documents, documents incorporated by reference or upon occurrence of any
of the following: 

4.1         Non-payment
when due, whether by acceleration or otherwise, of Indebtedness. 

4.2         Failure to
comply within seven days after written notice from the Secured Party demanding
compliance with any provision contained in this Security Agreement or Related
Documents and if compliance is not practically possible, failure to take steps
that will produce compliance as soon as is reasonably practical. 




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4.3         The Debtor
is in breach of any term, condition, obligation or covenant to the Secured Party
or any warranty, representation or statement made or furnished to the Secured
Party by or on behalf of the Debtor proves in any material respect to have been
false when made or furnished. 

4.4         Bankruptcy
or insolvency of the Debtor; the filing against the Debtor of a petition in
bankruptcy; the making of an authorized assignment for the benefit of creditors
by the Debtor; the appointment of an interim receiver, receiver, trustee,
monitor, or liquidator for the Debtor or for any assets of the Debtor; or the
institution by or against the Debtor of any type of insolvency proceeding or
creditor rearrangement proceedings or restructuring proceedings under the
Bankruptcy & Insolvency Act (Canada) and/or the Companies’
Creditors Arrangement Act. 

4.5         Cessation
of the Debtor’s viability as a going business concern, which includes the
cessation or threat by the Debtor to cease to carry on in the normal course of
the Debtor’s business or any material part thereof. 

4.6         The
Debtor ceases or threatens to cease to carry on in the normal course of the
Debtor’s business all or any material part thereof. 

4.7         Any
interest, including an encumbrance affecting the Collateral that is held by a
third party, has become enforceable against the Collateral. 

4.8         On the
occurrence of such other events where the Secured Party considers in good faith
and on commercially reasonable grounds that the Collateral is in jeopardy or
that a material adverse change has occurred in the Secured Party’s financial
condition. 

5.         
 Secured Party Rights and Remedies 

5.1         General
rights. In addition to the rights granted herein, the Secured Party may
enforce any other rights and remedies it may have at law or in equity, and
specifically shall have all rights and remedies of a Secured Party under the
PPSA. All rights and remedies of the Secured Party are cumulative and one or
more of these rights may be exercised independently or in combination from time
to time including marshalling. The Secured Party shall not be liable for failing
to exercise its rights and remedies and shall have no obligation to take any
steps to preserve its rights against prior parties to any instrument or chattel
paper whether Collateral or Proceeds and whether or not in the Secured Party’s
possession and shall not be liable or accountable for failure to do so. 

5.2         Collection
of debts forming part of Collateral. Upon default, the Secured Party may
direct account debtors of the Debtor to make all payments owing to the Debtor on
Collateral subject to the Security Interest directly to the Secured Party, by
notifying such account debtors of the Secured Party’s interest. In addition to
the interest held by the Secured Party in the Collateral, the Secured Party also
has a Security Interest in the Proceeds of the Collateral. 

5.3        
Inspection of Collateral and right of access. The Secured Party shall
have the right at any time to confirm the existence and state of the Collateral
in any manner the Secured Party may consider appropriate and the Debtor agrees
to furnish all assistance as the Secured Party may reasonably request in
connection therewith. The Debtor grants to the Secured Party or its agents
reasonable access to all places where Collateral may be located and to all
premises occupied by the Debtor for the purposes of inspection or obtaining
possession. 

5.4        
Receivers and others. The Secured Party may appoint by instrument or by
application to a court of competent jurisdiction a receiver or other person to
act on its behalf with respect to the Collateral before or after default or in any insolvency or like proceeding
(receiver includes an interim receiver and a receiver-manager). The Secured
Party may also remove the receiver and appoint another in its stead. Any
receiver appointed by the Secured Party shall be considered to be the Debtor’s
agent. The appointee has all the powers of the Secured Party under this Security
Agreement. The Secured Party is not liable for any act or omission by any
receiver appointed or selected by a court. 




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5.5         Acceleration.
The Secured Party may declare all or any part of Indebtedness which is not by
its terms payable on demand to be immediately due and payable on the occurrence
of any default, whereupon all of the Indebtedness shall become and be
immediately due and payable, without presentment, demand, protest or further
notice, all of which are hereby expressly waived by the Debtor. 

5.6        
Possession and disposition of Collateral. Upon default, the Secured Party
may take possession or constructive possession of, retain in satisfaction of any
Indebtedness, collect, demand, sue on, enforce, recover and receive Collateral
and give binding receipts and discharges therefor. The Secured Party in
possession may use Collateral as it sees fit, subject to the duty of reasonable
care contained in the PPSA and providing that any income from Collateral is
applied to the Debtor’s account. Upon default, the Secured Party may also sell,
lease or otherwise dispose of Collateral in any commercially reasonable manner.


5.7        
Costs. The Debtor agrees to pay all charges, including solicitors’,
auditors’, receivers’ or like persons’ costs and remuneration or other expenses
reasonably incurred by the Secured Party or other party appointed by the Secured
Party in enforcing this Security Agreement. Such sums shall constitute a future
advance increasing the Indebtedness hereunder. 

5.8        
Deficiencies. The failure of the Secured Party to receive full payment or
satisfaction of Indebtedness through its rights and remedies herein provided
shall not in any way release the Debtor from the obligation to satisfy any
deficiency, including any costs of realization. 

5.9         No
Setoff. The Indebtedness shall be paid by the Debtor without regard to any
equities between the Debtor and the Secured Party or any right of set-off or
cross-claim. Any indebtedness owing by the Secured Party to the Debtor may be
set-off and applied by the Secured Party against any Indebtedness before or
after maturity, and without any demand upon or notice to the Debtor or any other
persons. 

5.10       Waivers.


	 	(a) 	
      No variation, amendment (except for any schedules which
      may be added hereto pursuant to the provisions of this Security Agreement)
      or waiver of any provision of this Security Agreement shall be effective
      unless made by written agreement executed by the parties to this Security
      Agreement.

	 	 	 
	 	(b) 	
      No delay or omission by the Secured Party in exercising
      any right or remedy hereunder or with respect to any Indebtedness shall
      operate as a waiver of that right or remedy and no single or partial
      exercise of any right or remedy shall preclude any other exercise of
      cumulative rights and remedies.

	 	 	 
	 	(c) 	
      The Secured Party may remedy any default or perform any
      duty of the Debtor hereunder or with respect to any Indebtedness in any
      reasonable manner without waiving the default remedied and without waiving
      any other prior or subsequent default by the
Debtor.







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6.          
Subordination 

No action by the Secured Party shall constitute a subordination
of its Security Interest to any other interest in the Collateral unless such
subordination is effected by an agreement in writing, titled “Subordination
Agreement”, signed by the Secured Party. 

7.          
Successor Interests 

This Security Agreement shall enure to the benefit of and be
binding on the parties hereto and their respective heirs, executors,
administrators, successors and assigns. The Debtor shall not assign this
Security Agreement without the Secured Party’s prior written consent. 

8.          
Attachment 

The Debtor acknowledges and confirms that the Security Interest
hereby created attaches upon the execution of this Security Agreement, that
value has been given, and that the Debtor has rights in the Collateral. The
parties do not intend to postpone attachment of any Security Interest created by
this Security Agreement.

9.          
Amalgamation 

In the event that the Debtor amalgamates with another company,
the term “Debtor” shall apply to each of the amalgamating companies and the
amalgamated company, such that the Security Interest created in this Security
Agreement shall extend to Collateral, as defined in this Security Agreement,
owned by each of the amalgamating companies and the amalgamated company at the
time of amalgamation and to any Collateral subsequently acquired by the
amalgamated company. The Security Interest shall secure the Indebtedness, as
described in this Security Agreement, of each of the amalgamating companies and
the amalgamated company at the time of amalgamation to the Secured Party. The
Security Interest shall attach to the Collateral of the amalgamating companies
and the amalgamated company at the time of amalgamation and shall attach to any
after-acquired Collateral immediately upon the amalgamated company acquiring
rights in such Collateral. 

10.         Copy
of Financing Statement 

The Debtor hereby expressly waives the right to receive a copy
of any Financing Statement or Financing Change Statement, or a copy of the
statement confirming the filing or registration of any Financing Statement or
Financing Change Statement that may be filed or registered by the Secured Party
under the PPSA, and amendments thereto, in connection with any Security Interest
created under this Security Agreement or under any future agreement with the
Secured Party. 

11.         Deficiency


If the amounts realized from the disposition of the Collateral
are not sufficient to pay the Indebtedness in full, the Debtor will immediately
pay to the Secured Party the amount of such deficiency. 

12.         Notice


Notice may be given to either party by sending it through the
post by prepaid mail or delivered to the party for whom it is intended, at the
principal address of such party provided herein or at such other address as may
be given in writing by such party to the other, and any notice if posted shall
be deemed to have been given when there is no interruption of postal
services, at the expiration of three business days after posting and if
delivered, on delivery. 




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13.         Appointment
of Attorney

The Debtor hereby irrevocably appoints the Secured Party and
any of its managers or acting managers or the receiver, as the case may be, with
full power of substitution for the Secured Party, at its option, wherever and
whenever it may deem necessary or expedient to be the true and lawful 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 Secured Party or the receiver, as the case may be,
pursuant to this Security Agreement and to file such Financing Statements and
other documents and do such acts, matters and things (including completing and
adding Schedules hereto identifying Collateral or any permitted encumbrances
affecting Collateral or identifying the locations at which the Debtor's business
is carried on and Collateral and records relating thereto are situate) as the
Secured Party may deem appropriate to perfect and continue the Security
Interest, to protect and preserve Collateral and to realize upon the Security
Interest. 

14.        
Assignment 

The Secured Party may, without further notice to the Debtor, at
any time assign, transfer or grant a security interest in this Security
Agreement and the security interests granted hereby. The Debtor expressly agrees
that the assignee, transferee or secured party, as the case may be, shall have
all of the Secured Party's rights and remedies under this Security Agreement and
the Debtor will not assert any defence, counterclaim, right of set-off or
otherwise assert any claim which it now has or hereafter acquires against the
Secured Party in any action commenced by such assignee, transferee or secured
party, as the case may be, and will pay the Indebtedness to the assignee,
transferee or secured party, as the case may be, as the Indebtedness become due.


15.         Satisfaction
and Discharge 

Any partial payment or satisfaction of the Indebtedness, or any
ceasing by the Debtor to be indebted to the Secured Party, shall be deemed not
to be a redemption or discharge of this Security Agreement. The Debtor shall be
entitled to a release and discharge of this Security Agreement upon full payment
and satisfaction of all Indebtedness and upon written request by the Debtor and
payment to the Secured Party of all reasonable discharge fees, costs, charges,
expenses and legal fees and disbursements (as between solicitor and own client)
incurred by the Secured Party in connection with the Indebtedness and such
release and discharge. 

16.         Further
Assurances 

The Debtor shall from time to time execute and deliver all such
further mortgages, charges, pledges, assignments, transfers, security interests
and other agreements, instruments and documents and do all such further acts and
things as the Secured Party may from time to time reasonably require to perfect
and maintain the perfection of the Security Interest and to otherwise protect
its interests in the Collateral and hereby irrevocably constitutes and appoints
any officer for the time being of the Secured Party and any receiver, the true
and lawful attorney of the Debtor at any time that a default shall have occurred
and be continuing, with full power of substitution to execute and deliver all
such agreements, instruments and documents and to do all such further acts and
things with the right to use the name of the Debtor whenever and wherever it may
be deemed necessary or expedient. 




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17.         Applicable
Law 

This Security Agreement and Related Documents shall be governed
  by the laws of the Province of British Columbia.

18.         Termination
of this Agreement 

This Security Agreement shall remain in full force and effect
until the Indebtedness has been paid. 19. Acknowledgments of Debtor The
Debtor hereby acknowledges receipt of a copy of this Security Agreement. 

20.         Time of
the Essence

Time is of the essence of the Debtor’s obligations under this
Security Agreement. 

IN WITNESS WHEREOF the Debtor has executed this Security
Agreement this 8th day of May, 2012. 

0935493 B.C. LTD. 

	 	  	/s/ Daryl J. Ehrmantraut
    
	 	Per: 	  
	 	Name: 	Daryl J. Ehrmantraut 
	 	Title: 	Director 
	 	  	(I have authority to bind the
      Corporation) 






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Schedule “A” - Collateral 


	Manufacturer 	Model 	Serial Number 	Location 	Year 
	Kurt J. Lesker 	PVD 75 Deposition Tool 	PRD060525 	4D Labs, SFU, Burnaby, BC 	2011 
	Kurt J. Lesker 	PVD 75 Deposition Tool 	PRD064578 	4D Labs, SFU, Burnaby, BC 	2011 
	Kurt J. Lesker 	PVD 75 Deposition Tool 	PRD072561 	4D Labs, SFU, Burnaby, BC 	2011